Period of limitation for the purpose of CIT order u/s 263 in respect of an issue which is not the subject matter of reassessment proceedings will commence from the date of the original order and not from the date of the reassessment order
INCOME TAX APPELLATE TRIBUNAL MUMBAI
ITA No. 3449/Mum/2009
(Asst Year 2001- 02)
Century Textiles & Industries Ltd Vs The Dy Commissioner of Income Tax
ORDER
R K PANDA,
This appeal filed by the assessee is directed against the order dated 30.3.2009 passed by the CIT-VI, Mumbai under section 263 of the Act for the Assessment Year 200 i-02.
2 Facts of the case, in brief, are that the original assessment in the case of the assessee for Assessment Year 2001-02 was completed by the ACIT, Circle 6(2), Mumbai , u/s 143(3) of the I T Act on 22.3.2004 determining the book profit u/s 115JB of the I T Act at Rs.55,45,06,947/-. Thereafter, the case was reopened u/s 147 of the I T Act on the ground that book profit u/s 115JB of the I T Act had been under assessed. Subsequently, order u/s 143(3)/147 was passed by the ACIT, Circle 6(2) Mumbai on 29.11.2006. On going through the said order dated 29.11.2006, it was noticed by the ld CIT that while completing the reassessment, the Assessing Officer has failed to make necessary disallowance in terms of clause (f) of explanation (1) to section 115JB of the Act in respect of dividend income claimed exempt u/s 10 of the I T Act, which resulted in under assessment of book profit u/s 115JB of the I T Act. Therefore, the CIT was of the opinion that the order passed by the Assessing Officer u/s 143(3)/147 on 29.11.2006 was erroneous in so far as its is prejud1c1al to the interest of the revenue. Accordingly, proceedings u/s 263 were initiated by the CIT.
2.1 In response to the not1ce issued u/s 263, its was submitted that wh1le completing the assessment u/s 143(3)/147 on 29.11.2006, the Assessing Officer had made two additions viz Rs. 6.87 crores in respect of arrears of depreciation and Rs. 1.35 crores in respect of revaluation reserve for the purpose of computing book profit u/s 115JB of the Act. Both these additions were subsequently knocked down by the CIT(A). It was submitted that in view of the CIT(A)’s order and the Supreme Court’s decision in the case of CIT vs Apollo Tyres Ltd reported in 255 ITR 273, there was no case for dis allowance in terms of clause (f) of explanation (1) to section 115JB of the Act in respect of dividend income claimed exempt u/s 10 of the I T Act for the purpose of computation of book profit u/s 115JB of the I T Act. Accordingly, its was submitted that since there was no error in the assessment order passed by the Assessing Officer; therefore, the CIT was not justified in initiating proceedings u/s 263.
2.2 However, the CIT was not convinced with the various explanations given by the assessee. He noted that the issues dealt in by the CIT(A) were altogether different. He was of the opinion that the decision of the Hon’ble Supreme Court in the case of Apollo Tyres Ltd (supra) has no relevance to the issue raised in the notice u/s 263. It was observed by the CIT that the issue raised in the notice u/s 263 relates to failure on the part of the Assessing Officer to make dis allowance in terms of clause (f) of Explanation (1) to section 115JB of the Act in respect of dividend income claimed exempt u/s 10 of the I T Act. Since the Assessing Officer has failed to make necessary addition to the book profits u/s 115JB in terms of clause (f) of explanation (1) to sec. 115JB of the I T Act, therefore, the assessment order passed by him u/s 143(3)/147 of the I T Act on 29.11.2006 was erroneous in so far as its is prejudicial to the interest of revenue. Accordingly, he set aside the assessment order and directed the Assessing Officer to pass fresh assessment order computing book profits u/s 115JB of the Act after making necessary adjustment to the book profits in terms of clause (f) of explanation (1) to section 115JB of the Act and after giving reasonable opportunity of being heard to the assessee.
3 Aggrieved with such order of the CIT, the assessee is in appeal here before us with the following grounds;
“1. On the facts and circumstances of the case and in law, the ld CIT-VI, erred in invoking provisions of sec 263 of the I T Act and directing revision of the assessment order dated 29.11.2006 passed u/s 143(3) r.w.s 147 of the act by the ACIT Cir 6(2), on the alleged ground that the assessment order was erroneous and prejudicial to the interest of the revenue.
The appellant prays that order passed u/s 263 of the Act to be struck down as null and void-ab-initio.
2. On the facts and circumstances of the case and in law, the CIT erred in invoking provisions of section 263 of the Act and directing the revision of assessment order dated Nov 29, 2006 passed u/s 143(3) r. w.s147 of the Act without appreciating the fact that the CIT(A)/VI has deleted all the additions/deletions/adjustments made by the AIO in the said order and thus, the order of the Cit (A) got merged with assessment order passed by the Assessing Officer u/s 143(3) r. w.s 147.
The appellant prays that order passed u/s 263 of the Act to be struck down as null and void-ab-initio.
3. On the facts and circumstances of the case and in law, the CIT erred in directing the Assessing Officer to compute book profits u/s 115JB of the Act after making necessary adjustment to the book profits in terms of clause (f) of explanation (1) to sec.115JB of the act.
The appellant prays that its b held that on the facts and circumstances, invoking section 263 for directing such dis allowance is not in accordance with law and that no addition to the book profits u/s 115JB in terms of clause (f) of explanation (1) to sec. 115JB of the act is called for”
The assessee has also taken additional ground which reads as under:
“The order dated 30.3.2009 passed by the CIT u/s 263 of the IT Act is beyond the limitation period as the issue on which revision has been made by him is on an items which was not subject matter of reassessment proceedings and therefore, period of limitation begins from original assessment made on 22.3.2004.
4 The ld counsel for the assessee, at the time of hearing, submitted that the above additional ground relating to limitation period is filed in view of the decision of the Hon’ble Supreme Court in the case of CIT vs Alagendran Finance Ltd reported in 293 ITR 1(SC). He submitted that the additional ground relating to limitation goes to the root of the matter and the same does not require any fresh investigation of the facts. Referring to various decisions, he submitted that the additional ground should be accepted for adjudication.
4.1 The ld counsel for the assessee, at the outset drew the attention of the Bench to the chart giving the chronology of events which is as under:
