Ita/204/2012 Of The Commissioner Of Income Tax v. B.mohanachandran Nair

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE TUESDAY, THE 22ND DAY OF OCTOBER 2013/30TH ASWINA, 1935 ITA.No. 204 of 2012 () ----------------------- (AGAINST THE ORDER OF ITAT, COCHIN BENCH IN ITA.NO. 152/COCH/2009 DATED 25-01-2012) ------------------------------------------ APPELLANT/RESPONDENT: -------------------------------------------- THE COMMISSIONER OF INCOME TAX, THIRUANANTHAPURAM. BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/APPELLANT: ------------------------------------------------ B.MOHANACHANDRAN NAIR, PRASANTHI CASHEW CO, MANGAD, KOLLAM - 691 015. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 22-10-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts ITA.NO.204/2012 APPENDIX PETITIONER'S ANNEXURES: ANNEX ACOPY OF THE ORDER OF THE ASSESSING OFFICER U/S 143(3)/147 DATED 29/08/2008DATED 29/08/2008 ANNEX BCOPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 21/01/2009(APPEALS) DATED 21/01/2009 ANNEX CCOPY OF THE ORDER OF THE APPELLATE TRIBUNAL DATED 25/01/201225/01/2012 RESPONDENT'S ANNEXURES: NIL /TRUE COPY/ P.A.TO.JUDGE sts MANJULA CHELLUR, C.J.& A.M.SHAFFIQUE, J. ---------------------------------------------------- I.T.Appeal No. 204 of 2012 --------------------------------------------------- Dated this the 22[nd] October,2013 J U D G M E N T Shaffique, J. This appeal is filed by the Revenuechallenging the order passed by the Income TaxAppellate Tribunal, Cochin Bench in I.T.A No.152/2009. The issue relates to assessment year2002-2003. The Tribunal allowed the appeal filedby the assessee on the ground that the AssessingOfficer cannot take any action after expiry of fouryears, on the basis of the amended provision toSection 80 HHC of the Income Tax Act. 2. The facts as disclosed would indicate thatthe assessment under Section 143 (3) of the I.T Act completed on 22.8.2004 was sought to bereopened by notice issued under Section 148 ofthe Act on 26.3.2008. It was inter alia indicatedthat the assessee is not eligible for provisodeduction under Section 80 HHC in view of theretrospective amendment made to the saidprovision by the 2005 amendment, that loss fromexport of trading goods is to be set off againstprofits from export of manufactured goods in viewof the judgment of the Supreme Court anddeduction of 90% of margin on processingcommission from the business profits wasagainst the Supreme Court decision. 3. The assessee contended that theassessment cannot be reopened after four years.Assessing Officer rejected the said claim and assessed the total income. The matter was carriedin appeal. One of the arguments raised by theappellant is that once the assessment is completedunder Section 143(3) it ought to have beenreopened before the expiry of four years from theend of the relevant assessment year as providedunder proviso to Section 147 of the I.T Act. In sofar the limitation period expired on 31.3.2007 andthe notice is issued under Section 148 after theexpiry date of limitation, the Assessing Officer hadcommitted serious error of law in re-opening theassessment. The first appellate authority dismissedthe appeal. 4. The assessee filed appeal before theTribunal and it is held that in so far as theassessee has filed the return of income as per law assessed the total income. The matter was carriedin appeal. One of the arguments raised by theappellant is that once the assessment is completedunder Section 143(3) it ought to have beenreopened before the expiry of four years from theend of the relevant assessment year as providedunder proviso to Section 147 of the I.T Act. In sofar the limitation period expired on 31.3.2007 andthe notice is issued under Section 148 after theexpiry date of limitation, the Assessing Officer hadcommitted serious error of law in re-opening theassessment. The first appellate authority dismissedthe appeal. 4. The assessee filed appeal before theTribunal and it is held that in so far as theassessee has filed the return of income as per law in existence as on 1[st] day of April of the respectiveassessment year, it may not be possible to say thatthe assessee was negligent in filing the materialfact as required by the subsequent retrospectiveamendment. It is found that no one can expect theassessee to anticipate an amendment in law infuture and file the required material in advance.Hence the Tribunal came to a finding that therewas no negligence on the part of the assesee infurnishing the return of the income and thatsubsequent amendment of law to section 80HHCand interpretation of the Supreme Court cannot bea reason for the assessing officer to reopen thecompleted assessment under section 143(3) afterexpiry of four years. Reference is made to theproviso to section 147, which clearly indicate that where an assessment under section 143(3) hasbeen made for the relevant assessment year, noaction can be taken under Section 147 after theexpiry of four years from the end of relevantassessment year, unless any income chargeable totax has escaped assessment for such assessmentyear by reason of the failure on the part of theassessee to make a return under Section 139 oron failure to disclose fully and truly all materialfacts on receipt of notice under section 142(1) orSection 148 of the Act. The Tribunal thereforefound that when admittedly the notice underSection 148 is issued after expiry of four yearsbased on the amended provision to section 80HHCof the Act, it was found that a situation aswarranted under Sections 147 or 148 had not arisen and hence dismissed the appeal. 5. The revenue raised the following substantial questions of law” “(i) Whether the retrospective amendment of law and subsequent judgment of apexcourt after filing of the return of incomeand completion of assessment u/s.143(3)can be a basis for reopening forassessment u/s 147 of the Income Tax Act,1961” (ii) Whether on the facts and in thecircumstances of the case and also in thelight of the decisions noted in the groundsraised, is not the reassessment based on aretrospectively amended provision inaccordance with law and the Tribunal isright in law in interfering with theassessment order?. 6. We do not think that the above questionsarise for consideration in the above appeal. First ofall on undisputed facts the assessee cannot beblamed for filing a return by contemplating apossible amendment to Section 80- HHC of theAct. Therefore one cannot state that there was anescaped assessment of tax which could bereopened within a period of four years from theend of the relevant assessment year. Admittedlythe amendment and the judgment relied upon bythe Assessing Officer was subsequent to thefinalisation of the assessment proceedings. It istrite law that such subsequent amendments orsubsequent interpretation of the statute is not aground to reopen concluded transactions.Admittedly the assessment had been completed 6. We do not think that the above questionsarise for consideration in the above appeal. First ofall on undisputed facts the assessee cannot beblamed for filing a return by contemplating apossible amendment to Section 80- HHC of theAct. Therefore one cannot state that there was anescaped assessment of tax which could bereopened within a period of four years from theend of the relevant assessment year. Admittedlythe amendment and the judgment relied upon bythe Assessing Officer was subsequent to thefinalisation of the assessment proceedings. It istrite law that such subsequent amendments orsubsequent interpretation of the statute is not aground to reopen concluded transactions.Admittedly the assessment had been completed under Section 143(3) of the Act and in order toreopen the same, necessarily it has to be donewithin a period of four years. The first proviso tosection 147 reads as under: “Provided that where an assessmentunder sub-section (3) of section 143 or thissection has been made for the relevantassessment year, no action shall be takenunder this section after the expiry offour years from the end of relevantassessment year, unless any incomechargeable to tax has escapedassessment for such assessment year byreason of the failure on the part of theassessee to make a return under section139 or in response to a notice issuedunder sub-section (1) of section 142 orsection 148 or to disclose fully and trulyall material facts necessary for hisassessment for that assessment year”. 7. On a perusal of the assessment order we do not find any material to indicate that an eventuality as envisaged under the above provisohad occurred in the case to ignore the limitationperiod. Hence we do not think that the assessingofficer was justified in reopening the assessment. Viewed in that manner, the questions of law raisedby the revenue does not arise for consideration inthe above appeal. Accordingly the appeal isdismissed. Sd/- MANJULA CHELLUR, CHIEF JUSTICE Sd/-JUDGE A.M.SHAFFIQUE, rka /true copy/ I.T.Appeal No. 204 of 2012