TaxTMI 
TaxTMI 
2018 (11) TMI 791
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....llant 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 to Rs. 5 90639/- claimed under section 80P (2) (a) (vi) of the act. Conseq....
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.... 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 intimation dated March 27, 2002, under section 143(1) of the Income-tax Act. 8. After receipt of the said notice d....
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.... 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 Paints Ltd. with the petitioner. It was alleged that the accounting procedure followed by Rajdoot Paints Ltd. had not been disclosed, and the deduction was in violation of section 145 of the Income-tax Act. ....
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....e 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 that the difference in the accounting procedure had been discussed in the auditor's note to the statement of accounts filed with the Assessing Officer along with the revised return. The petitioner had also explained the difference in its reply. The Assessing Officer was d....
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....n 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 order dated October 17, 2006, set aside the order dated January 4, 2006, of the Commissioner of Income-tax (Appeals). The Tribunal held as follows : "In our considered opinion, the claim under section 80-IB for the Pondicherry unit has already been considered and the facts of the claim of deduction under section 80-....
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..... 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 and seventh grounds disclosed by the Assessing Officer for reopening assessment, were also the second and third grounds for the notice under section 154 for rectification of the assessment order. The rectification proceedings having been dropped, reassessment proceedings could not have been started on the basis of the same materials. 37. As rightly pointed out b....
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....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 in the absence of any other ground on the basis of which he has still reason to believe that the income has escaped assessment, start proceedings again under section 147. If he finds that there is no such mistake since the result was warranted from the record, there would be no occasion to amend the assessment order, where the rectification could not be done on the ground that there were two views ....
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....mik 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 of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years." 45. The condition precedent for initiation of reassessment proceedings is, in any case, the formation of the belief, based on new materials that any income had escaped assessment. A notice under section 148 of the Income-tax Act may not be issued merely on change of opinion. 46....