2024 (3) TMI 1148 - AT - Income Tax

Framing assessment u/s 143(3) without serving notices at the registered e-mail address - changing of the e-mail id - assessee on failure to provide reasonable and adequate opportunity of hearing, thus sought for setting aside the order impugned - HELD THAT - Assessee had partially complied to notice issued u/s 143(2) and the notice u/s 142 (1) dated 01/02/2020, which proves that the assessee was accessing to his registered e-mail address till 1st February, 2020. It is the claim of the assessee before the AO that the assessee had changed the e-mail id subsequently, therefore, the notice has not been served on the Assessee. It is seen that the said changing of the e-mail id has not been brought to the notice of the Revenue Authorities, in such events, the A.O. cannot be found fault of not serving the notices. Thus, we find no merit in Ground raised by assessee. Disallowance in respect of exceptional items claimed in the profit and loss account - Assessee claimed expenditure in form of exceptional item - Assessee has entered into concession agreement with Ramagundam Fertilizer Chemical Limited (RFCL) on 23/03/2016 towards grant of right and concessional to RFCL with regard to facility area - HELD THAT - It is an admitted fact that the assessee has given right of lease of 99 years of the property of the Assessee to RFCL vide concession agreement dated 23/03/2016. In view of the said lease, RFCL has issued 11% of the total capital expenditure of the said property as equity shares to the Assessee valuing at Rs. 144.49 crores. The assessee charged the said amount to P L account claiming as exceptional item, thus, the Assessee claimed as Revenue expenditure while computing the income of the Assessee. The said claim of the assessee was not based on any prudent accounting principles. The same is an income earned by the Assessee on giving the right to use the land at a concession rate. In any normal circumstances, if any third party would be required to pay Rs. 144.49 crore to acquire those shares. The shares were acquired in lieu of right to use the Assessee s capital assets by RFCL. Thus, we find no merit in the grounds of Appeal of the Assessee. AR made an oral submission that the Assessee had indeed offer to tax this sum in AY 2020-21. As we have already held herein above that income had indeed accrued to the Assessee during the year under consideration sum of Rs. 144.49 crores, which has been received by the Assessee in the form of shares in the Joint Venture Company to the tune of Rs. 92.51 crores, remaining sum of Rs. 51.98 crores has been shown as receivable in the balance sheet of the Assessee, in case if the said sum has been again offered to tax by the Assessee in subsequent years, the same should be deleted in the Assessment Year, in order to avoid double taxation. In our considered opinion, this direction is given to the Ld. A.O. to avoid double taxation and to meet the ends of justice.

Summary

Issues Involved:
1. Validity of assessment under Section 143(3) without proper notice.
2. Disallowance of Rs. 144.49 crores in respect of exceptional items claimed in the profit and loss account.
3. Charging of interest under Sections 234A and 234B.

Summary:

Issue 1: Validity of Assessment under Section 143(3) Without Proper Notice
The Assessee contended that the assessment under Section 143(3) was invalid due to failure to serve notices at the registered e-mail address, resulting in a lack of reasonable and adequate opportunity of hearing. The Tribunal found that the Assessee had partially complied with notices issued under Sections 143(2) and 142(1), indicating access to the registered e-mail address until February 1, 2020. The Assessee's claim of a subsequent change in e-mail id was not communicated to the Revenue Authorities. Thus, the Tribunal found no merit in this ground and dismissed it.

Issue 2: Disallowance of Rs. 144.49 Crores in Respect of Exceptional Items
The Assessee argued that the disallowance of Rs. 144.49 crores was erroneous, asserting that the shares issued by RFCL were capital in nature and not intended as income. The Tribunal noted that the Assessee had entered into a concession agreement with RFCL, resulting in the issuance of shares valued at Rs. 144.49 crores in lieu of the right to use the Assessee's capital asset. The Tribunal upheld the disallowance, stating that the shares were acquired as a result of the exploitation of capital assets, which should be treated as revenue income. The Tribunal also directed the A.O. to ensure that the same amount is not taxed again in subsequent years to avoid double taxation.

Issue 3: Charging of Interest Under Sections 234A and 234B
The Tribunal did not provide specific details on this issue in the judgment summary, implying that the primary focus was on the first two issues.

Conclusion:
The appeal filed by the Assessee was dismissed, with the Tribunal upholding the assessment and disallowance made by the A.O. and the CIT(A). The Tribunal provided directions to avoid double taxation of the disputed amount in subsequent years.