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TMI Blog2023 (2) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Commissioner of Income Tax (Appeals) vide has stated that the directions of the CIT (A)-1, Coimbatore in his order was only consequential in nature to alter the Calculation of 115 JA while giving effect to his orders in the original calculation of regular profits. The return that was filed was not a proper return. The returns that was filed, had incorrect entries and contrary to the mandate of Section 115JA of the Income Tax Act, 1961. While in taxing matters assessment are intended to bring a finality, they are not to be continued, if the returns filed were inspired within a view to cheat the Government. Therefore, the decision cited in the case of Commissioner of Income Tax vs. Kelvinator of India Limited [ 2010 (1) TMI 11 - SUPREME COURT] and other decisions cannot be applied to the facts of the present case. As invocation of power under Section 147 r/w 143 of the Income Tax Act, 1961 was not motivated any kind of change of opinion. The impugned order of the Appellate Tribunal correctly holds that the power to make assessment or reassessment, where the initiation has been made within four years of the end of the relevant assessment year, would be attracted even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case, the Tribunal was right in disallowing the unabsorbed depreciation of the amalgamating company applying the provisions of clause (iii) of Explanation to Section 115JA of the Act? iii. Whether in the absence of any formation of opinion regarding business loss and unabsorbed depreciation in the original assessment order under Section 143(1) of Income Tax Act, 1961 on 09.05.2002 would entitle the Income Tax Department to reopen the assessment under Section 148 r/w 147 of Income Tax Act, 1961? 2. This Tax Case Appeal has been filed by the Assessee against order dated 27.03.2009 passed by the Income Tax Appellate Tribunal, Chennai A Bench, in I.T.A.No.737/Mds/2007.By the impugned order, the Appellate Tribunal has dismissed the appellant s appeal against Order dated 3.1.2007 of the Appellate Commissioner in Appeal No.436/05-06. 3. Relevant and the operative position of the impugned order of the Appellate Tribunal reads as under:- 16. We have considered the rival submissions in the light of material on record and the precedent cited. The CIT(A) has noted in paragraph 4.1 of his order that a company M/s.IPBM having accumulated loss of Rs.1,55,13,974/- an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IPBM was written off in the Books of account of the Company, as a result of the merger with the appellant company. The break up of Rs.1,55,13,974/- towards business loss and books of account of the appellant as on 31.03.1999 as IPBM was an Books of the appellant company. Clause(iii) of sub-section (2) of section 115JA is applicable only to the amount of loss and unabsorbed depreciation, whichever is lower, as per the books of account of the assessee company. Since this amount of loss or depreciation was not brought forward as per the books of account of the appellant company, as on 31.03.1999, the Assessing Officer is clearly wrong in making an addition to the extent of Rs.2,52,32,329/- by relying on section 115JA(20)(iii). 20. The above argument was rejected by the CIT(A) and we see no infirmity in the order. The language of section 72A(1) and of clause(iii) of Explanation to section 115JA(1), as reproduced above, are unambiguous and leave no scope for doubt. The admitted facts in the present case are that the assessee-company had loss brought forward as well as unabsorbed depreciation and therefore, applicability of clause(iii) of the said Explanation cannot be avoided. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iating the proceedings u/s.147 of the I.T.Act,1961 to reopening the assessment earlier completed u/s.143(3) is to be held invalid. After due considering of the appellant s submissions, I am of the view that it has misconceived the facts. The directions of the CIT(A)-I, Coimbatore in his order dated 22.03.2005 was only consequential in nature to alter the Calculation of 115JA while giving effect to his orders in the original calculation of regular profits. The issue now under consideration was never dealt with at the time of original assessment of the following appellate stage. In view of this, it can be clearly said that no opinion was cannot be any change of opinion on these issues. In view of this, I hold that the reassessment proceedings initiated u/s.147 of the Act, 1961 followed by issue of notice u/s.148 on 30.04.2004 to be valid and consequently the assessment order passed u/s.143(3) r.w.sec.147 of the Act, dated 08.02.2006 for A.Y.2000-01 which is the subject matter of this appeal, to be a order valid in law. 5. Disallowance of unabsorbed loss and Depreciation of the amalgamated company (viz) IPBM to the extent of Rs.2,52,32,324/- 5.1. 5.2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sha International Limited , (2012) 348 ITR 0485; iv. Apollo Tyres Ltd vs. Commissioner of Income Tax, (2002) 255 ITR 0273; v. Commissioner of Income Tax vs. HCL Comnet Systems Services Ltd., (2008) 305 ITR 0409; vi. Sri Hariram Hotels (P) Ltd vs. Commissioner of Income Tax III , (2016) 237 Taxman 0564; vii. Commissioner of Income Tax vs. Bisleri Sales Ltd., (2015)377 ITR 0144 (Bom); viii. Tamil Nadu Cements Corporation Ltd vs. Joint Commissioner of Income Tax, (2012) 349 ITR 0058; ix. Commissioner of Income Tax vs. Echjay Forgings (P) Ltd., (2001) 251 ITR 0015; 6. The learned counsel for the appellant submits that notice was issued on 07.05.2004 even before the CIT(A) had passed the order in the appeal against the original Assessment Order. The reason for reopening was computation of relief under Section 80 HHC. As this was subject matter of appeal, the issue merged with the order of the CIT(A) and cannot be reopened. 7. In the original assessment, the income under the normal provisions were assessed as the total income and not the Bank profits. Hence there can be no escapement of income at the time of notice under Section 148 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mfrs. Limited (herein after referred to as IPBM Limited)merged with the appellant with effect from 1.4.1999. 16. The book profit of the appellant as per the Income Tax Return tiled under Section 139 of the Income Tax Act, 1961 was Rs.18,93,68,237/-. 17. The said company M/s. IPBM Limited which stood amalgamated with appellant had an accumulated loss of Rs.5,62,77,825/- as is evident from a reading of the Order dated 29.1.200 passed under Section 154 of the Income Tax Act, 1961. 18. The book profit of the appellant was arrived by adding the accumulated loss of Rs.5,62,77,825/- of IPBM Limited to the book profit of the appellant of Rs.18,93,68,237/-to arrive at Rs.24,56,77,825/- [Rs.18,93,68,237+ Rs.5,62,77,825]. 19. From the aforesaid amount of Rs.24,56,77,825/- [Rs.18,93,68,237+ Rs.5,62,77,825],an amount of Rs.4,07,46,303/- was deducted as Loss of IPBM Limited charged to the P L Account. 20. However, a reading of the records filed, indicate that the break of Rs.4,07,46,303/- represents an amount of Rs.2,52,32,329/- of unabsorbed depreciation of the said IPBM Limited and Rs.1,55,13,974/-, the accumulated loss of the said company. 21. Section 72 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice under Section 154 of the Income Tax Act, 1961 was issued to the appellant. The aforesaid notice culminated in an order dated 29.01.2001 under Section 154 of the Act. 29. One of the issue pertained to deduction claimed on unabsorbed loss of Rs.5,62,77,588/- from the net profit to arrive as the book profit. While passing order dated 29.01.2001 under Section 154 of the Act , the Additional Commissioner Of Income Tax accepted the reply of the appellant. The book profit was re-computed and the taxable income was marginally increased to Rs.5,81,69,850/-. This was an erroneous determination. 30. Meanwhile, the case was selected for scrutiny after issue of notice under Section 143(2) of the Income Tax Act, 1961 on 23.11.2001. An Assessment order was passed under Section 143(3) of the Income Tax Act, 1961 on 09.05.2002. Thereafter, a notice dated 30.04.2004, under Section 148 of the Income tax was issued. 31. It appears that, an appeal was also filed pursuant to order of the assessing officer in Appeal No. 180/2002-03 before the Appellate Commissioner which culminated in an order dated 22.3.2005 of the Appellate Commissioner. However, copy of order dated 22.3.2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled for the reduction of the amount of loss brought forward or unabsorbed depreciation, which ever was less as per the books of account. As per the above Explanation to Section 115JA of the Income Tax Act, 1961, the appellant could reduce the income only by Rs.1,55,13,974/- only from the loss brought forward. However, in the returns filed by the appellant, the appellant had reduced both the amount namely the loss brought forward and the unabsorbed depreciation. 41. The appellant had mislead the Department regarding the deduction available under Section 115 JA of the Income Tax Act, 1961 which was sought to be rectified by invoking under Section 148 for the purpose of Section 147 r/w 143(3) of the Income Tax Act, 1961. 42. In case, Assessing Officer found a cause or justification to believe that income had escaped assessment. The Assessing Officer was not required to base his belief on any final adjudication of the matter. 43. The Commissioner of Income Tax (Appeals) vide dated 03.01.2007 in Appeal No.436/2005-2006, has stated that the directions of the CIT (A)-1, Coimbatore in his order dated 22.03.2005 was only consequential in nature to alter the Calculation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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