The Commissioner Of Income Tax I, Chennai v. M/S. Tvs Motor Company Ltd

Date:- 04.08.2009 Coram The Honourable Mr. Justice F.M. IBRAHIM KALIFULLA and The Honourable Mr. Justice B. RAJENDRAN Tax Case(Appeal) No.717 of 2009 The Commissioner of Income Tax I,Chennai. ... Appellant ..vs.. M/s. TVS Motor Company Ltd. ... Respondent Tax Case Appeal against the order dated 16.1.2009 passed by the Income Tax Appellate Tribunal,Madras 'D' Bench in ITA No.489/Mds/2008. For Appellant : Mr. Arun Kurian Joseph JUDGMENT (Judgment was delivered by B. RAJENDRAN, J.) The assessee has filed its return of income for the assessment year 1999-2000 and the Departmenthas also completed the assessment under Section 143(3) of the Income Tax Act, 1961 (hereinafterreferred to as "the Act"). Later on, the Department found that there was some reasons to believethat the income chargeable to tax had escaped assessment and initiated the proceedings for re-assessment, after issuing notice under Section 148 of the Act. 2. The main reason put forth by the Department was that the assessee has claimed deduction ofexcise duty on stock in bonded warehouse under Section 43B of the Act from the excise duty onclosing stock. Later on, the Department found that the said excise duty was not actually paid duringthe relevant year as the goods had not been cleared before the close of the previous year andtherefore, the contention of the Department is that such a deduction could not be claimed for thatassessment year and therefore the Assessing Officer disallowed the said deduction in the re-assessment on the re-opening of the case. It is pertinent to point out that such re-assessment isbeyond the period of four years. 3. Aggrieved by the orders of the Assessing Officer, the assessee has filed an appeal before theCommissioner of Income Tax (Appeals), who held that the assessee had disclosed fully and truly allmaterial facts necessary for completion of assessment while filing the return and as such the re-opening beyond four years is bad in law and without any jurisdiction. 4. Aggrieved by the orders of the Commissioner of Income-tax (Appeals), the Revenue filed an appealbefore the Income-tax Appellate Tribunal. The Appellate Tribunal also held that the re-assessment,having been initiated after four years from the end of the assessment year and there being nofinding that there was any failure on the part of the assessee to make a full and true disclosure ofmaterial facts, the re-assessment is bad in law and accordingly, dismissed the appeal preferred bythe revenue. 5. Aggrieved by the orders passed by the Appellate Tribunal, the revenue has filed this appeal beforethis Court. 6. We heard Mr. Arun Kurian Joseph, learned counsel appearing for the appellant. On a cursoryperusal of the order of the Tribunal clearly indicates that section 147 of the Act empowers theRevenue to reopen the assessment. In the proviso, which clearly stipulates the reason for reopeningin the case which falls under the category that there was a concealment and only in certain cases,the Authority is empowered to reopen the case. It also clearly makes it mandatory that there shouldbe a failure to disclose fully and truly all material facts. The proviso is extracted below:- " Provided that where an assessment under sub-section (3) of section 143 or this section has beenmade for the relevant assessment year, no action shall be taken under this section after the expiry offour years from the end of the relevant assessment year, unless any income chargeable to tax hasescaped assessment for such assessment year by reason of the failure on the part of the assessee tomake a return under section 139 or in response to a notice issued under sub-section (1) of section142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, forthat assessment year." " Provided that where an assessment under sub-section (3) of section 143 or this section has beenmade for the relevant assessment year, no action shall be taken under this section after the expiry offour years from the end of the relevant assessment year, unless any income chargeable to tax hasescaped assessment for such assessment year by reason of the failure on the part of the assessee tomake a return under section 139 or in response to a notice issued under sub-section (1) of section142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, forthat assessment year." 7. Relying upon the aforesaid proviso, the Tribunal has given a clear finding that when there was nofailure on the part of the assessee to disclose the material facts, such assessment cannot be re-opened after expiry of four years from the end of the relevant assessment year, if the originalassessment was completed under Section 143(3) of the Act. 8. At this juncture, it is pertinent to point out that it was not the case of the department that theassessee had not at all revealed the payment of excise duty, but what they have stated is that theyhave shown the expenditure, claiming exemption under Section 43B of the Act. Since the goods werenot cleared in that particular year, they ought not to have claimed the exemption during the relevantyear. When admittedly, this material fact was fully and correctly disclosed and available even at thetime of assessment itself, the Assessing Officer or the Authority concerned have not given anyreason, much less sufficient reason, to say that this matter was not brought to the knowledge of thedepartment and that there was a wilful suppression of material so as to treat this as an escapedassessment. 9. In such view of the matter, as rightly pointed out by the Tribunal, the following decisions havebeen rendered by this Court:- (i) In the decision reported in the case of CIT v. ANNAMALAI FINANCE LTD. (275 ITR 451), it isheld as follows:- " Held, (i) that the notice for the two assessment years 1992-93 and 1993-94 was issued after theexpiry of the period of four years from the end of respective assessment years, violating the provisoto section 147. The notices were not valid. (ii) That section 147 of the Act does not postulate conferment of power upon the Assessing Officer to initiate reassessment proceedings upon a mere change of opinion. The Assessing Officer proposed toreopen the assessment for the year 1994-95 purely based on the change of opinion, namely, thechange in the method of accounting of overdue interest on cash or actual receipt basis, when theassessee was following the mercantile system of accounting. The reassessment proceedings werenot valid." (ii) In the decision reported in the case of CIT v. ELGI ULTRA INDUSTRIES LTD. (296 ITR 573), it isheld as follows:- " dismissing the appeal, that there was no finding that there was failure on the part of the assesseeto disclose fully and truly all material facts. Further, all the material facts were available at the timeof making the original assessment. The Tribunal applying the right principles had come to thecorrect conclusion. There was no error or legal infirmity in the order of the Tribunal so as to warrantinterference." (iii) In the decision reported in the case of CIT v. ELGI FINANCE LTD. (286 ITR 674), it is held asfollows:- " Held, dismissing the appeal, that when the factual finding was that the assessee-company had fullyand truly disclosed all material facts necessary for computing the depreciation allowance in thecourse of the original assessments completed under Section 143(3) itself, the period of limitationapplicable to the reopening for these two years would be a period of four years prescribed in theproviso to section 147. The reassessments for the assessment years 1992-93 and 1993-94 wereclearly barred by limitation." The Tribunal, following the aforesaid decisions, has rightly held that there is no reason for reopeningthe case and dismissed the state appeal. (iii) In the decision reported in the case of CIT v. ELGI FINANCE LTD. (286 ITR 674), it is held asfollows:- " Held, dismissing the appeal, that when the factual finding was that the assessee-company had fullyand truly disclosed all material facts necessary for computing the depreciation allowance in thecourse of the original assessments completed under Section 143(3) itself, the period of limitationapplicable to the reopening for these two years would be a period of four years prescribed in theproviso to section 147. The reassessments for the assessment years 1992-93 and 1993-94 wereclearly barred by limitation." The Tribunal, following the aforesaid decisions, has rightly held that there is no reason for reopeningthe case and dismissed the state appeal. 10. Inasmuch as in the present case, there was no finding at all with regard to concealment, as weare governed by the aforesaid ruling, we are satisfied that the order of the Tribunal does not call for any interference and the reasoning given by the Tribunal is sound and correct. Hence, the appealfiled by the revenue is dismissed. No costs. (F.M.I.K.J.) (B.R.J.)04.08.2009Index:- Yes.Internet:- Yes..ssa.ToThe Commissioner ofIncome Tax I,Chennai. F.M. IBRAHIM KALIFULLA,J.&B. RAJENDRAN,J. ssa. T.C.(A) No.717 of 2009