Commissioner Of Income Taxchennai v. M/S.thejo Engineering Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE : 15.12.2014 CORAM THE HONOURABLE MR. JUSTICE R.SUDHAKARAND THE HONOURABLE MR. JUSTICE R.KARUPPIAH T.C.A. NO. 257 OF 2014 Commissioner of Income TaxChennai. .. Appellant - Vs - M/s.Thejo Engineering Ltd.41, Cathedral RoadChennai 600 086. .. Respondent Appeal filed under Section 260-A of the Income Tax Act against the order dated 14.11.13 passed by the Income Tax Appellate Tribunal, Madras 'D' Bench, made in ITA No.1103/Mds/2013. For Appellant: Ms. Hema Muralikrishnan for Mr. T.Ravikumar For Respondent: Mr. Vijayaraghavan for M/s.Subbaraya Iyer JUDGMENT (DELIVERED BY R.SUDHAKAR, J.) Aggrieved by the order of the Appellate Tribunal in dismissing the appeal filed by it, the Revenue is before this Court challenging the said order by filing the present appeal by raising the following questions of law :- “1) Whether on the facts and circumstances of the case, the Tribunal was right in holding that the validity of reopening was not proper? 2) Whether the finding of the Tribunal is proper by holding that there was no failure on the part of the assessee in disclosing fully and truly all material facts in the course of assessment proceedings and that the order passed was not sustainable in the eyes of law especially when the assessee is bearing the liability by paying excise duty on contract works?” 2. The respondent in respect of Assessment Year 2001-2002 filed original return of income on 31.10.01 declaring total income of Rs.91,16,490/=. No assessment under Section 143 (1) was made on the said return. Subsequently, a notice under Section 148 of the Act was issued on 26.3.08 on the plea of income having escaped assessment. Notice under Section 148 of the Act was contested on merits before the Assessing Officer unsuccessfully and the assessee went on appeal before the CIT (Appeals), who confirmed the order of the Assessing Officer. Aggrieved against the said order, the assessee filed appeal before the Tribunal and the Tribunal, in its turn, took a different route in the matter and came to hold that in respect of the assessment year 2001-2002, reopening notice was issued on the assessee on 26.3.08 well after a period of four years from the date of the impugned assessment order. Reliance was also placed on Section 147 and proviso thereto, which is quoted hereunder :- Income escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject-matter of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.” Provided further that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject-matter of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.” 3. The Tribunal came to hold that there was no material to show that the assessee failed to disclose fully and truly any material facts necessary for assessment for that assessment year and, therefore, the Department had failed to discharge the requirement of proviso to Section 147 and as a result, the notice issued on 26.3.08 is beyond four years and, therefore, bad and, accordingly, the appeal was allowed. 4. The above order of the Tribunal is challenged by the Department in the present appeal contending that for invoking proviso to Section 147, the pre-condition is that there should be an assessment under sub-section (3) of Section 143, which is absent in the present case and the Tribunal fell in error to come to the conclusion that there was a case of assessment under Section 143 (3) and, therefore, the proviso will apply. 5. It is not disputed by the respondent, as has already been recorded by this Court, that the return was filed on 31.10.01 and no order has been passed on the said assessment. Therefore, it is abundantly clear that proviso to Section 147 of the Act does not get attracted. The Tribunal, admittedly, fell in error in holding that it is a case falling under proviso to Section 147. On this legal plea, the objection raised by the Department is sustainable and, accordingly, the same is sustained. 6. In such view of the matter, this Court is not venturing into the questions of law raised by the Revenue. On the above stated reasons, the order of the Tribunal is set aside and the matter is remanded back to the Tribunal to consider all the issue on merits. 7. In the result, this appeal filed by the Revenue is allowed by way of remand. However, there shall be no order as to costs. Index : Yes/No Internet : Yes/No GLN (R.S.J.) (R.K.J.) 15.12.2014 To 1. The Income Tax Appellate Tribunal Madras 'D' Bench Chennai. Madras 'D' Bench Chennai. 2. Commissioner of Income Tax Chennai. Chennai. 5 R.SUDHAKAR, J. AND R.KARUPPIAH, J. GLN T.C.A. NO. 257 OF 2008 15.12.2014