M/S.mohan Breweries And Distilleries Ltd.rayala Towers, 2[Nd] Floor,158, Anna Salai,Chennai v. The Chief Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 17.10.2019 CORAM THE HONOURABLE DR. JUSTICE ANITA SUMANTH W.P.No.21335 of 2011MP.No.1 of 2011 M/s.Mohan Breweries and Distilleries Ltd.Rayala Towers, 2[nd] Floor,158, Anna Salai,Chennai-600002 ...Petitioner --Vs-- 1.The Chief Commissioner of Income Tax Range II 124, MG Road Chennai-600034. 2.The Commissioner of Income Tax, Range-III 124, MG Road Chennai-600034. 3.The Assistant Commissioner of Income Tax, Company Circle IV (3) Chennai-600034 ... Respondents Prayer: Writ Petition filed under Article 226 of theConstitution of India, to issue a Writ or order of direction orany other Writ in the nature Writ of Certiorarified Mandamus,calling for the records on the files of the 3[rd] respondent andquash the impugned order in PAN:AACM2415L/2004-05 DATED26.07.2011 and consequently the notice for reopening u/s.148 inPAN.AAACM2164L, dated 24.03.2011 and direct the 3[rd] respondent todrop the reassessment proceedings. For Petitioner : Mr.R.Venkata Narayanan for M/s.Subbaraya Aiyar For Respondents : Mrs.Hema Muralikrishnan Senior Standing Counsel O R D E R The petitioner challenges an order rejecting the objectionsraised on assumption of jurisdiction for proceedings ofreassessment under the Income Tax Act, 1961 (in short 'Act') inrelation to Assessment Year 2004-05. 2. Heard Mr.R.Venkata Narayanan, learned counsel for thepetitioner and Mr.Hema Muralikrishnan, learned Senior StandingCounsel for the respondent. 3. The admitted facts are as follows: i. The petitioner is engaged in the business ofpower generation and is also running a distillery. ii. A return of income was filed by the petitionerclaiming deduction under Section 80IA of the Act. iii. The petitioner filed a Report in Form 10CCCas prescribed under Rule 18BBE in support of its claimof deduction under Section 80IA of the Act. iv. The returns were selected for scrutiny by theAssessing Officer and notice under Section 143(2) dated21.10.2005 issued calling for attendance of thepetitioner along with various details in support of thequeries raised by the officer. v. Questionnaire dated 26.10.2006 was issuedindicating various points on which the AssessingAuthority sought particulars. The questionnairespecifically refers to the claim under Section 80IAcalling for the year of commencement of claim, detailsregarding the claim of deduction, profit and lossaccounts maintained for the undertaking and balancesheet of each unit. vi. The petitioner also filed a detailed replydated 23.12.2006 furnishing all materials called for bythe officer. vii. On 29.12.2006, an order of assessment waspassed rejecting the deduction claimed under Section80IA. viii. The order of assessment was confirmed by anorder passed by the first Appellate Authority on21.03.2007, which was carried in appeal to the IncomeTax Appellate Tribunal (Tribunal) and was allowed bythe Tribunal on 31.10.2007, granting benefit ofdeduction under Section 80IA on the current year profitto the petitioner. ix. This order has, admittedly, been affirmed bythis Court and by the Supreme Court in the case of thisvery petitioner in Commissioner of Income Tax Vs. MohanBreweries and Distilleries Ltd in Tax Case AppealNo.918 of 20018 and in Special Leave Petition (Civil)No.1729 of 2011 . x. An order giving effect to the order of theTribunal was passed by the Assessing Officer on04.03.2008. xi. A show cause notice dated 23.11.2009 wasissued under Section 263 of the Act by the Commissionerof Income Tax seeking to revise the order of giveeffect, dated 04.03.2008. 4. The points on which revision was sought to be effectedare: a. The petitioner had filed Form No.10CCC in termsof Rule 18BBE along with return of income Tax which isan incorrect form as per the prescription. The correctform to be filed is Form No. 10CCB. x. An order giving effect to the order of theTribunal was passed by the Assessing Officer on04.03.2008. xi. A show cause notice dated 23.11.2009 wasissued under Section 263 of the Act by the Commissionerof Income Tax seeking to revise the order of giveeffect, dated 04.03.2008. 4. The points on which revision was sought to be effectedare: a. The petitioner had filed Form No.10CCC in termsof Rule 18BBE along with return of income Tax which isan incorrect form as per the prescription. The correctform to be filed is Form No. 10CCB. b. No separate books of accounts have beenmaintained in respect of unit claiming eligibility fordeduction under Section 80IA. c. While allowing deduction under Section 80IA,the Authority has failed to take into account theprovisions of section 80IA(9). 5. After considering the objections raised by the petitionerto the proposal for revision, an order came to be passed by theCommissioner of Income Tax on 26.03.2010 dropping the proposalfor revision on points (a) and (b) above. As far as point (c) isconcerned, that is, the application of the provisions of Section80IA(9) of the Act, the proposal was confirmed and the issueremanded to the file of the Assessing Authority. 6. Thereafter, a notice under Section 148 of the Income Taxwas issued on 24.03.2011. The petitioner, vide its communicationdated 24.03.2011, requested the Assessing Authority to treat thereturn of income originally filed, as filed in response to thenotice under Section 148 and also sought a copy of the reasonsupon which the reopening had been effected. 7. On 12.05.2011, four fold reasons were furnished by theAssessing Authority. They are: https://hcservices.ecourts.gov.in/hcservices/ i. Form prescribed in support of the claim underSection 80IA had not been filed. ii. Separate books of account had not been maintainedfor the unit claiming eligibility. iii. Depreciation had been claimed in respect of aWindmill which was not eligible for deduction as perthe provisions of the Act. iv. Depreciation has been claimed on an imported carwhich was not liable to be granted in terms of proviso (1) to Section 32 (1) of the Act. 8. Objections were filed by the petitioner in line with thejudgment of the Supreme Court in the case of Gkn Driveshafts(India) Ltd vs Income Tax Officer And Ors [259 ITR 19], whichset out the appropriate procedure to be followed in the matterof reassessments as follows: 4. We see no justifiable reason to interfere withthe order under challenge. However, we clarify thatwhen a notice under Section 148 of the Income tax Actis issued, the proper course of action for the noticeeis to file return and if he so desires, to seek reasonsfor issuing notices. The assessing officer is bound tofurnish reasons within a reasonable time. On receipt ofreasons, the noticee is entitled to file objections toissuance of notice and the assessing officer is boundto dispose of the same by passing a speaking order. Inthe instant case, as the reasons have been disclosed inthese proceedings, the assessing officer has to disposeof the objections, if filed, by passing a speakingOrder before proceeding with the assessment in respectof the abovesaid five assessment years. 9. Overruling the objections, the Assessing Officer haspassed the impugned order confirming that the jurisdictionassumed by him was proper, as against which, petitioner hasfiled the present writ petition. 10. The legal question raised for resolution is whether theimpugned proceedings are barred by limitation. The provisions ofSection 147 of the Act provide for a limitation of four yearsfor initiation of proceedings for reassessment. A further periodof two years is granted in those cases where the conditionsstipulated in the proviso to Section 147 are satisfied. Therelevant provision and the proviso thereto are extracted below: Income escaping assessment 147. If the Assessing Officer has reason to believe 9. Overruling the objections, the Assessing Officer haspassed the impugned order confirming that the jurisdictionassumed by him was proper, as against which, petitioner hasfiled the present writ petition. 10. The legal question raised for resolution is whether theimpugned proceedings are barred by limitation. The provisions ofSection 147 of the Act provide for a limitation of four yearsfor initiation of proceedings for reassessment. A further periodof two years is granted in those cases where the conditionsstipulated in the proviso to Section 147 are satisfied. Therelevant provision and the proviso thereto are extracted below: Income escaping assessment 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escapedassessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess orreassess such income and also any other incomechargeable to tax which has escaped assessment andwhich comes to his notice subsequently in the course ofthe proceedings under this section, or recompute theloss or the depreciation allowance or any otherallowance, as the case may be, for the assessment yearconcerned (hereinafter in this section and in sections148 to 153 referred to as the relevant assessmentyear): Provided that where an assessment under sub-section (3)of section 143 or this section has been made forrelevant assessment year, no action shall be takenunder this section after the expiry of four years fromthe end of the relevant assessment year unless anyincome chargeable to tax has escaped assessment forsuch assessment year by reason of the failure on thepart of the assessee to make a return under section 139or in response to a notice issued under sub-section (1)of section 142 or section 148 or to disclose fully andtruly all material fact necessary for his assessment,for that assessment year: 11. The conditions precedent provided for availment of theextended period of limitation are (i) that the escapement ofincome should be by virtue of failure of the assessee to file areturn of income or (ii) to disclose fully and truly allmaterial facts necessary for the assessment of income for thatyear. In the present case, the petitioner has, admittedly, notdefaulted in the filing of a return of income. Thus, the onlycondition to be satisfied by the revenue would be theestablishment of the fact that there has been a failure by theassessee to make a full and true disclosure of materialparticulars. 12. Adverting to paragraph 8 of this order setting out thereasons for re-assessment, I note that items (i) and (ii),have, admittedly, been considered by the Commissioner of IncomeTax in his order under Section 263 dated 26.03.2010 and thus, itdoes not lie in the mouth of the Department to state thatmaterial particulars in regard to those two issues were notavailable on record. 13. As far as deduction under Section 80IA, is concerned, aperusal of the proceedings commencing from the filing of returnof income by the petitioner would reveal that all materialparticulars in respect of the claim under Section 80IA wereavailable on file. If at all the Officer was of the view thatthe materials had been incomplete or did not support the claim https://hcservices.ecourts.gov.in/hcservices/ adequately, it was for the Authority to have taken action inthat regard even at the first instance and not by way of re-assessment. It is also relevant to state that the reasons forre-assessment commence with the phrase 'upon an examination ofthe return of income and other enclosures'. Thus, theproceedings for re-assessment are initiated based wholly on thematerials available on record only and this is an admittedposition. https://hcservices.ecourts.gov.in/hcservices/ adequately, it was for the Authority to have taken action inthat regard even at the first instance and not by way of re-assessment. It is also relevant to state that the reasons forre-assessment commence with the phrase 'upon an examination ofthe return of income and other enclosures'. Thus, theproceedings for re-assessment are initiated based wholly on thematerials available on record only and this is an admittedposition. 14. Revenue counsel relies on the judgment of the SupremeCourt in the case of Calcutta Discount Co.Ltd. Vs. Income TaxOfficer [41 ITR 191]. This judgment hardly supports the case ofthe Revenue in so far as the ratio therein is that a re-assessment would be legally tenable only if the assessee hadfailed to disclose primary and material particulars. In thepresent case, the primary and material particulars as far asdeduction under Section 80IA are concerned, are admittedly, onrecord. 15. I am thus of the considered view that the impugnedproceedings for re-assessment are barred by limitation. I drawsupport in this regard on a judgment of the Supreme Court in thecase of Assistant Commissioner of Income Tax, Mumbai and OthersVs. ICICI Securities Primary Dealership Ltd [348 ITR 299]wherein, the Bench holds that the extended period of limitationcannot be availed by the Department when all primary particularswere, admittedly, available on file. The judgment is extractedbelow: Leave granted.2. We have heard learned counsel on bothsides. 3. The assessee had disclosed full details inthe return of Income in the matter of its dealingin stocks and shares. According to the assessee,the loss incurred was a business loss, whereas,according to the Revenue, the loss incurred was aspeculative loss. Rejection of the objections ofthe assessee to the re-opening of the assessmentby the Assessing Officer vide his Order dated 23rdJune, 2006, is clearly a change of opinion. In thecircumstances, we are of the view that the orderre-opening the assessment was not maintainable.4.Thecivilappealis,accordingly,dismissed. 16. The assessee in this case has disclosed all materialsparticulars relating to the issue of deduction under Section80IA concerned even at the original instance and thus, the re-assessment in so far as it relates to this issue, is quashed. 17. Coming to the issue of grant of depreciation on importedcar, I find that this issue has not been challenged and the re-assessment on this score is thus confirmed. The writ petition isallowed to the extent indicated above. Consequently, connectedmiscellaneous petition is closed. No costs. Sd/- Assistant Registrar(CS VI) //True Copy// Sub Assistant Registrar To 1.The Chief Commissioner of Income Tax, Range II, 124, MG Road, Chennai-600034. 2.The Commissioner of Income Tax, Range-III, 124, MG Road, Chennai-600034. 3.The Assistant Commissioner of Income Tax, Company Circle IV (3), Chennai-600034. +1cc to Mr.Subbaraya Aiyar Padmanabhan, Advocate Sr.87144+1cc to Mrs.Hemamuralikrishnan, Advocate Sr.87058 W.P.No.21335 of 2011MP.No.1 of 2011 ev[co]srg 23/01/2020