TaxTMI 
TaxTMI 
2018 (11) TMI 791
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....arranted by law and are wrong and illegal. 4. That the appellant a cooperative society is liable to exemptions u/s 80P(2) VI of the Income Tax Act, 1961 to invoke for mutual interest of employment." 3. The appellant assessee is a cooperative society, which is primarily having object of promoting the economic interest of manual labourers by providing suitable and profitable employment to them by obtaining contract work from government or private. The assessee filed its return of income on 21 6 2007 claiming deduction under section 80 P (2) of the income tax act, 1961. The return of income was accepted as it is wide order under section 143 (1) (A) of the act on 19/11/2007. 4. Subsequently show cause notice under section 154/155 was issued on 21/8/2009 of the income tax act to disallow deduction of Rs. 5 40639/- claimed under section 80P (2) of the act out of the total income of Rs. 590639/-. Once again, notice under section 154 read with section 155 was issued on 25/11/2010 and such proceedings were not finalized. 5. Meanwhile further notice under section 148 of the income tax act was issued on 25/3/2011 and served upon the assessee to withdraw deduction amounting t....
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.... and adoption of the accepted method of valuation of stocks, followed by the petitioner. 4. The Assessing Officer did not issue any notice of inquiry in respect of the return under section 142(1) of the Income-tax Act. Nor did the Assessing Officer issue any notice under section 143(2) of the Income-tax Act calling upon the petitioner to substantiate any claim in the return of any loss, exemption, deduction, allowance or relief. 5. The Assessing Officer issued an intimation under section 143(1) of the Income-tax Act on November 20, 2001, accepting the original return filed by the petitioner and informing the petitioner that Rs. 2,61,50,812 was refundable to the petitioner along with interest of Rs. 79,75,994 after giving credit for advance tax paid and taxes deducted at source. 6. On or about January 3, 2003, the petitioner received a notice under section 154 of the Income-tax Act dated December 24, 2002, whereby the Assessing Officer proposed to rectify mistakes which had allegedly occurred in an intimation issued under section 143(1) dated March 27, 2002. 7. According to the petitioner, the petitioner had not, till then been served with any int....
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....pugned notice under section 148. 15. The petitioner was later furnished with reasons for reopening assessment, which are practically the same as the reasons for the notice under section 154 of the Incometax Act, for rectification of the alleged mistakes in the revised assessment order. The rectification notice had been dropped by the same Assessing Officer. 16. In brief, the reasons were as follows : (i) The difference of Rs. 307.56 lakhs between unpaid customs and excise duty on opening stock at the beginning of the accounting year and closing stock at the end of the accounting year, was not allowable in view of section 43B of the Incometax Act. The Department contended that the issue was squarely covered by the decision of this court in CIT v. Berger Paints (India) Ltd. (No. 1)reported in [2002] 254 ITR 498. (ii) The claim of the petitioner to reduction of income by Rs. 3,27,37,810, on account of difference in valuation of the stockin- trade of Rajdoot Paints Ltd. not debited to the profit and loss account, allegedly upon change in accounting procedure and adoption of the procedure followed by the petitioner, after amalgamation of Rajdoot Paint....
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.... Ltd. (No. 1)[2002] 254 ITR 498 on which this ground is based, has been reversed by the Supreme Court in Berger Paints ( India) Ltd. v. CIT reported in [2004] 266 ITR 99. 20. Dr. Pal rightly argued that the second ground disclosed for issuance of the impugned notice is the same as the fourth ground disclosed in the rectification notice under section 154 of the Income-tax Act, which had been dropped upon consideration of the submission of the petitioner, in its reply thereto. 21. Dr. Pal submitted that the contention of the Assessing Officer, that the petitioner had not disclosed the difference in the accounting procedure of Rajdoot Paints, was unfounded. 22. Dr. Pal further submitted that the stocks of Rajdoot Paints Ltd. a company incorporated under the Companies Act, 1956, which was amalgamated with the petitioner with effect from October 1, 1998, had earlier been valued as per the accounting methods of Rajdoot Paints Ltd. After amalgamation there was a change in the accounting method and the more acceptable method of accounting so long followed by the petitioner was applied for valuation of the stocks of Rajdoot Paints Ltd. 23. Dr. Pal argued ....
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....once the Department has accepted a decision on a particular issue by not challenging the same before any higher forum it is not open for it to contend in the contrary on the same issue in a later year. We would reiterate that in the present case the Department has accepted the basis of allocation of common head office and selling expenses in the assessment year 1998-99 and there is no dispute as to the fact that the same basis has been adopted by the assessee in the assessment year 2000-01 which are before us. Following the ratio laid down in the decisions rendered by the hon'ble Supreme Court, we uphold the decision of the Commissioner of Income-tax (Appeals) on this issue and thus dismiss ground Nos. (iii) and (iv) raised by the Department." 28. By an order dated January 4, 2006, passed in exercise of power under section 263 of the Income-tax Act, the Commissioner of Income-tax (Appeals) disallowed the deduction of Rs. 12.39 crores claimed by the petitioner for the assessment year 2003- 04 under section 80-IB of the Income-tax Act in respect of the Pondicherry and Goa units. 29. The Income-tax Appellate Tribunal, "E" Bench, Kolkata, relying on its earlier or....
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....s deducted towards sales tax in the profit and loss account, had not been realized from customers and there was no excess debit. 33. The petitioner, in dealing with the fifth reason for reopening assessment, made a categorical assertion that sales tax realized from customers was neither credited nor debited in the profit and loss account. Nor was any deduction claimed in respect of the same. 34. The petitioner was, apparently liable to turnover tax, under the sales tax laws, based on its aggregate turnover during the financial year. Turnover tax is not recoverable from customers separately. The petitioner claims to have debited turnover tax of Rs. 194.61 lakhs, paid by the company, which had not been recovered from customers, in the profit and loss account. 35. It is patently clear that assessment has been sought to be reopened on the basis of the same materials, on change of opinion. From the reasons, it is apparent that there were no new materials before the Assessing Officer wherefrom it could be deduced that the sum of Rs. 194.61 lakhs, claimed as deduction or any part thereof was realized from customers. 36. As argued by Dr. Pal, the sixth a....
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....ng under section 147 is not limited, as under section 154, merely to rectifying the result which may have been vitiated due to mistake apparent from the record. It would, therefore, follow that in cases of mistake resulting in escapement, which is the area where both the provisions would become relevant, the Assessing Officer will have to consider whether he was required by the nature of escapement to reconsider the question of how he would ascertain and assess income that has escaped assessment and reopen the assessment or if that is not required then merely to rectify the mistaken result on the basis of the existing record. If he chooses to resort to the former, i.e., section 147 read with section 148 proceedings, he cannot be compelled to resort to section 154 because that would impinge upon his subjective satisfaction under section 147. But if he resorts to section 154 on the ground that the mistake in the order apparent from the record has resulted in escapement which could be rectified by amending the order and enhancing the assessment, then he, on finding that there is no such mistake apparent from the record warranting rectification since the view taken is plausible, cannot....
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....ngs on the basis of the same reasons. 43. The Assessing Officer has not disclosed the reasons for the Assessing Officer to still believe that income that was the subject-matter of rectification had still escaped assessment though that was not due to any obvious mistake, borne out from existing records. 44. The judgment in GKN Driveshafts (India) Ltd. v. ITO reported in [2003] 259 ITR 19, cited by Mr. Bhowmik was rendered by the Supreme Court in the particular facts of that case. The Supreme Court held (page 20) : "We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under section 148 of the Income-tax Act is issued, the proper course of action for the noticee is to file a return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons) the noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the Assessing Officer has to dispose ....