The judgment of the court was delivered by
M. R. Shah J- Feeling aggrieved and dissatisfied with the impugned common judgment and order passed by the learned Income Tax Appellate Tribunal "C" Bench, Ahmedabad (hereinafter referred to as "the tribunal") dated 05/09/2014 in ITA No.2687/Ahd/2010 and Cross Objection No.153/Ahd/2013 for the Assessment Year 2003-04 by which the learned tribunal has allowed the Cross Objections preferred by the assessee and dismissed the appeal preferred by the revenue, by holding that initiation of the reassessment proceedings / reopening of the assessment, which was admittedly beyond the period of four years, was invalid, the revenue has preferred the present Tax Appeals with the following proposed questions of law;
Tax Appeal No.135/2015
"Whether the Appellate Tribunal has erred in law and on facts by not upholding the issuance of notice under Section 148 as per provisions available as per explanation 2(c)(iii) and 2(c)(iv) given below Section 147 of the Income Tax Act, by Assessing Officer and thereby allowing deduction claimed by the assessee under Section 80IB of the Income Tax Act without appreciating the fact that deduction under Section 80IB is eligible for SSI Unit only where the investment in fixed assets on Plant & Machinery does not exceed Rs. 3 crore whereas the total value of the Plant & Machinery as per the balance sheet for all the three assessment years under consideration was above 3 crore?"
Tax Appeal No.136/2015
"Whether the Appellate Tribunal has erred in law and on facts in holding that the issuance of notice under Section 148 was bad in law which was issued as per provisions available as per explanation 2(c) (iii) and 2(c)(iv) given below Section 147 of the Income Tax Act?"
(2.0) The facts leading to the present Tax Appeals in nutshell are as under;
(2.1) The assessee filed the return of income for the Assessment Year 2003-04 and claimed deduction under Section 80IB of the Income Tax Act (hereinafter referred to as "the Act"). The assessee also produced the balance sheet alongwith the return in which the total value of the Plant & Machinery was certified at Rs. 4,73,81,571/- as on 01/04/2002 i.e. at the beginning of the Financial Year 2002-03 relevant to the Assessment Year 2003-04. The Assessing Officer granted the deduction under Section 80IB of the Act as claimed. Thereafter, after a period of four years of completing the Assessment Year 2003-04, the Assessing Officer initiated the reassessment proceedings under Section 147 of the Act mainly on the ground that though the assessee ceased to be an SSI Unit as it exceeded the limit of investment of Plant & Machinery i.e. exceeding the limit of Rs. 1 Crore and thus it is not eligible for deduction under Section 80IB of the Act. The assessee was served with the reasons for reopening of the assessment by submitting that as for the Assessment Year 2003-04 the investment of Plant & Machinery was beyond Rs. 1 Crore and thereby the assessee being ceased to be an SSI unit is not eligible under Section 80IB of the Act and despite the same the assessee claimed and was allowed deduction under Section 80IB of the Act of Rs. 35,40,963/- for the Assessment Year 2003-04 and, therefore, the income chargeable to tax has escaped under Section 147 of the Act. The Assessing Officer passed the reassessment order for the Assessment Year 2003- 04 and deleted the deduction under Section 80IB of the Act amounting to Rs. 38,07,493/- and revised the income.
(2.2) Feeling aggrieved and dissatisfied with the reassessment order passed by the Assessing Officer under Section 147 of the Act for the Assessment Year 2003-04 of disallowance of deduction under Section 80IB of the Act amounting to Rs. 38,07,493/- the assessee preferred appeal before the CIT(A). It was also contended on behalf of the assessee that initiation of the assessment proceedings under Section 147 of the Act, which was beyond the period of four years, was illegal and not permissible as there was no commission and / or suppression on the part of the assessee. The learned CIT(A) held that initiation of the proceedings under Section 147 of the Act was justified and was permissible. However, on merits, the learned CIT(A) deleted the disallowance of deduction under Section 80IB of the Act.
(2.3) Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A) in deleting the disallowance of deduction under Section 80IB of the Act on merits, the revenue preferred appeal before the learned tribunal, being ITA No.2687/Ahd/2010. Against the finding recorded by the learned CIT(A) holding the initiation of the reassessment proceedings under Section 147 of the Act as legal and permissible, the assessee preferred Cross Objection No.153/Ahd/2013 before the learned tribunal. By the impugned judgment and order the learned tribunal has allowed the Cross Objections preferred by the assessee and held that initiation of the reassessment proceedings for the Assessment Year 2003-04 was bad in law. Consequently, the learned tribunal did not decide the appeal preferred by the revenue on merits.
(2.4) Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned tribunal in ITA No.2687/Ahd/2010 and Cross Objection No.153/Ahd/2013, the revenue has preferred the present Tax Appeals.
(3.0) We have heard Shri Manish Bhatt, learned Counsel appearing on behalf of the appellant at length and we have perused the order passed by the Assessing Officer under Section 147 of the Act as well as the order passed by the learned CIT(A) as well as the impugned judgment and order passed by the learned tribunal. At the outset, it is required to be noted that admittedly the reassessment proceedings for the Assessment Year 2003-04 was beyond the period of four years and, therefore, the parameters, which would be applicable for initiation of the proceedings under Section 147 of the Act within the period of four years, would defer from initiation of the proceedings beyond four years. From the record, it appears and it is not disputed by Shri Bhatt, learned Counsel appearing on behalf of the revenue that as such alongwith the original return for the Assessment Year 2003-04 the assessee had produced the balance sheet in which the total value of the Plant and Machinery was Rs. 4,73,81,571/. Despite the above, the Assessing Officer allowed the deduction under Section 80IB of the Act and, therefore, as such, it cannot be said that there was any omission and / or suppression on the part of the assessee in not disclosing the true and correct facts. If that be so, it cannot be said that the learned tribunal has committed any error in holding the reassessment proceedings for the Assessment Year 2003-04 as bad in law. It is true that the learned tribunal has not specifically so observed. However, from the facts borne out from the record and even it is not disputed by Shri Bhatt, learned Counsel appearing on behalf of the revenue that alongwith the original return for the Assessment Year 2003-04 the assessee did produce the balance sheet in which the value of the Plant and Machinery was certified at Rs. 4,73,81,571/- and, therefore, there was no omission and / or suppression on the part of the assessee that the assessee did not disclose true and correct facts. We confirm the finding recorded by the learned tribunal that initiation of the reassessment proceedings for the Assessment Year 2003-04 was not permissible and was not legal and as such was bad in law. Under the circumstances, the learned tribunal has rightly not considered the appeal preferred by the revenue which was on merits of deletion of disallowance under Section 80IB of the Act. Under the circumstances, there is no substance in the present Tax Appeals and the same deserves to be dismissed and are accordingly dismissed. As such, no substantial question of law arise in the present Tax Appeals.
(3.1) At this stage, Shri Bhatt, learned Counsel appearing on behalf of the appellant-revenue has requested to make observation that the present order shall not come in the way of the revenue in other Appeals with respect to the Assessment Years 2004-05 and 2005-06 where initiation of proceeding were within the period of four years. Under the circumstances, it is clarified that the present order shall be applicable with respect to the Assessment Year 2003-04 as initiation of the reassessment proceedings was beyond the period of four years and it was found that there was no suppression and / or omission on the part of the assessee.
With this, the both the Tax Appeals are dismissed.