Precision Camshafts Ltd. (Formerly known as Clancy Precision Components Pvt. Ltd.) v. The Asst. Commissioner of Income Tax, Circle-1, Solapur
[Citation -2016-LL-0930-127]

Citation 2016-LL-0930-127
Appellant Name Precision Camshafts Ltd. (Formerly known as Clancy Precision Components Pvt. Ltd.)
Respondent Name The Asst. Commissioner of Income Tax, Circle-1, Solapur
Court ITAT-Pune
Relevant Act Income-tax
Date of Order 30/09/2016
Assessment Year 2006-07
Judgment View Judgment
Keyword Tags reassessment proceedings • unabsorbed depreciation • reassessment order • assessment record • limitation period • original return • issue of notice • business loss
Bot Summary: The issue vide grounds of appeal No.1 to 5 raised by the assessee is against re-assessment proceedings completed against the assessee under section 147/148 of the Act being null and void in the absence of any notice issued under section 143(2) of the Act. The assessee challenged the re-assessment proceedings on the ground that no notice under section 143(2) of the Act was issued and served upon the assessee before completing the assessment under section 143(3) of the Act. The CIT(A) vide paras 5 to 5.2.8 considered the issue and observed that where the assessee had not furnished fresh return in response to notice under section 148 of the Act and had merely filed a letter and where the assessee had appeared before the Assessing Officer and never challenged the issue of notice under section 143(2) of the Act, there is no merit in the arguments of assessee that the re-assessment had become invalid for non-issue of notice under section 143(2) of the Act. The assessee is in appeal against the preliminary issue of completion of re- assessment under section 143(3) r.w.s. 147 of the Act without the issue of notice under section 143(2) of the Act. Applying the said ratio to the facts of the present case and following the proposition laid down by the jurisdictional Hon ble High Court in ACIT Vs. Geno Pharmaceuticals Ltd., we hold that in the absence of any notice being issued under section 143(2) of the Act after the reassessment proceedings are initiated against the assessee under section 148 of the Act and the assessee has filed the return of income or filed a letter stating that the return of income filed by it should be treated as filed in response to notice under section 148 of the Act, then reassessment order is vitiated. Once no notice under section 143(2) of the Act is issued to the assessee, then the reassessment order passed is null and void, since the issue of notice under section 143(2) of the Act in reassessment proceedings under section 147 / 148 of the Act is mandatory. We find no merit in the opinion of CIT(A) that where the assessee has only filed letter stating that original return of income filed by it should be treated as filed in response to notice under section 148 of the Act implies that no return of income has been filed in response to notice issued under section 148 7 ITA No.557/PN/2014 Precision Camshafts Ltd. of the Act, is misplaced.


IN INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM ITA No. 557/PN/2014 Assessment Year: 2006-07 Precision Camshafts Ltd. (Formerly known as Clancy Precision Components Pvt. Ltd.) D-5, MIDC, Chincholi, Solapur - 413255 Appellant PAN: ABCC1368H Vs. Asst. Commissioner of Income Tax, Circle-1, Solapur Respondent Appellant by : Shri Nikhil Pathak Respondent by : Shri Hitendra Ninawe Date of Hearing : 29.09.2016 Date of Pronouncement: 30.09.2016 ORDER PER SUSHMA CHOWLA, JM: This appeal filed by assessee is against order of CIT(A)-III, Pune, dated 29.01.2014 relating to assessment year 2006-07 against order passed under section 143(3) r.w.s. 147 of Income Tax Act, 1961 (in short Act ). 2 ITA No.557/PN/2014 Precision Camshafts Ltd. 2. assessee has raised following grounds of appeal :- 1] learned CIT(A) erred in holding that reasst. u/s 147 was valid in law without appreciating that no notice u/s.143(2) was issued to assessee and accordingly, reasst. order should have been held to be null and void. 2] learned CIT(A) erred in holding that since assessee had attended during asst. proceedings and had not raised objection of non issue of notice u/s. 143(2), assessee was precluded from said objection in appellate proceedings in view of provisions of Section 292BB. 3] learned CIT(A) failed to appreciate that provisions of Section 292BB were not applicable to facts of present case and therefore, assessee had right to agitate validity of reasst. order even though assessee had not raised objection during reasst. proceedings. 4] learned CIT(A) ought to have appreciated that since no notice u/s. 143(2) was issued by learned A.O., reasst. order was not valid and accordingly, same should have been declared null and void. 5] learned CIT(A) further erred in holding that since assessee had not filed return of income in response to notice u/s 148 but had requested A.O. to treat original return filed as return filed in response to the. notice issued u/s 148, in such scenario, A.O. was not required to issue notice u/s 143(2) and consequently, reasst. is justified in law. 6] learned CIT(A) erred in holding that reopening u/s 148 was valid without appreciating that there was no tangible material with A.O. to believe that income had escaped asst. and therefore, reopening was not valid in law and accordingly, reasst. order be declared null and void. 7] learned CIT(A) erred in holding that deduction u/s 10B is to be allowed only after set off of brought forward losses and unabsorbed depreciation relating to earlier years. 8] learned CIT(A) erred in not appreciating that deduction u/s 10B was to be allowed while computing profits and gains of undertaking and unabsorbed losses and depreciation were to be set off only against resultant profits and gains of business, if any, after allowing deduction u/s.10B. 3. issue vide grounds of appeal No.1 to 5 raised by assessee is against re-assessment proceedings completed against assessee under section 147/148 of Act being null and void in absence of any notice issued under section 143(2) of Act. 3 ITA No.557/PN/2014 Precision Camshafts Ltd. 4. Briefly, in facts of case, assessee had originally filed return of income on 08.11.2006 declaring total income at Nil. said return of income was processed under section 143(1) of Act. Assessing Officer noted that assessee had claimed deduction under section 10B of Act at Rs.1,87,74,968/-. But assessee had not adjusted brought forward depreciation loss and business loss before claiming deduction under section 10B of Act. Hence reasons were recorded for reopening assessment under section 147 of Act. Further, notice under section 148 of Act was served upon assessee on 03.11.2010. In response thereto, assessee vide letter dated 30.12.2010 submitted that original return of income filed on 08.11.2006 to be treated as return filed in response to notice under section 148 of Act. Thereafter, assessment was completed under section 143(3) r.w.s. 147 of Act. 5. Before CIT(A), assessee challenged re-assessment proceedings on ground that no notice under section 143(2) of Act was issued and served upon assessee before completing assessment under section 143(3) of Act. CIT(A) vide paras 5 to 5.2.8 considered issue and observed that where assessee had not furnished fresh return in response to notice under section 148 of Act and had merely filed letter and where assessee had appeared before Assessing Officer and never challenged issue of notice under section 143(2) of Act, there is no merit in arguments of assessee that re-assessment had become invalid for non-issue of notice under section 143(2) of Act. second aspect addressed by CIT(A) was that in view of provisions of section 292BB of Act and where assessee had participated in assessment proceedings, then such plea cannot be raised against re-assessment proceedings. 4 ITA No.557/PN/2014 Precision Camshafts Ltd. 6. assessee is in appeal against preliminary issue of completion of re- assessment under section 143(3) r.w.s. 147 of Act without issue of notice under section 143(2) of Act. 7. learned Authorized Representative for assessee pointed out that no notice under section 143(2) of Act was issued to assessee. 8. learned Departmental Representative for Revenue was asked to produce assessment record to verify whether any notice under section 143(2) of Act was issued to assessee. On next date of hearing, learned Departmental Representative for Revenue fairly admitted that there is no evidence available on record with regard to issue of notice under section 143(2) of Act and even order sheet entries are silent on this. copies of order sheet entries have been filed on record. 9. learned Authorized Representative for assessee in this regard pointed out that in view of ratio laid down by Hon ble Bombay High Court in ACIT Vs. Geno Pharmaceuticals Ltd. (2013) 32 taxmann.com 162 (Bom), issue of notice under section 143(2) of Act is mandatory in re-assessment proceedings under section 148 of Act. 10. We have heard rival contentions and perused record. first jurisdictional issue arising in present appeal is against re-assessment order passed in case of assessee after recording reasons for reopening assessment under section 147 of Act. Admittedly, Assessing Officer had issued notice under section 148 of Act, which was served upon assessee 5 ITA No.557/PN/2014 Precision Camshafts Ltd. on 03.11.2010. In response thereto, assessee had filed letter dated 30.12.2010 that original return of income filed on 08.11.2006 may be treated as return of income filed in response to notice under section 148 of Act. After this communication of assessee, Assessing Officer in order to complete re-assessment proceedings had to follow procedure laid down in Act i.e. issue notice of hearing under section 143(2) of Act. Assessing Officer in present case has admittedly not issued any notice under section 143(2) of Act. assessment records have been produced before us and learned Departmental Representative for Revenue admits that no notice issued under section 143(2) of Act is available on record. Further, even order sheet entries are silent on such issue of notice under section 143(2) of Act. said notice is to be issued within limitation period, which admittedly, has not been followed by Assessing Officer. In such circumstances, assessee s claim is that re-assessment order passed against assessee is vitiated in law. Where issue of notice under section 143(2) of Act is mandatory in order to complete re-assessment proceedings against assessee and which has not been followed by Assessing Officer, then consequent re-assessment order passed against assessee does not stand and same is to be declared as null and void. 11. Hon ble Bombay High Court in ACIT Vs. Geno Pharmaceuticals Ltd. (supra) has upheld order of Tribunal in holding that notice issued under section 143(2) of Act is mandatory and in absence of such service, Assessing Officer cannot proceed to make enquiry on return filed in compliance with notice issued under section 148 of Act. In facts of case before Hon ble Bombay High Court, admittedly, no notice under section 143(2) of Act 6 ITA No.557/PN/2014 Precision Camshafts Ltd. had been issued while making assessment under section 143(3) r.w.s. 147 of Act. Tribunal in said case had relied on judgment of Apex Court in R. Dalmia Vs. CIT (1999) 236 ITR 480 (SC) to conclude that issue of notice under section 143(2) of Act was mandatory. Tribunal following said judgment of Apex Court had held that notice under section 143(2) of Act was mandatory and in absence of said service, Assessing Officer could not proceed to make enquiry on return filed in compliance with notice issued under section 148 of Act. order of Tribunal was confirmed by Hon ble High Court. 12. Applying said ratio to facts of present case and following proposition laid down by jurisdictional Hon ble High Court in ACIT Vs. Geno Pharmaceuticals Ltd. (supra), we hold that in absence of any notice being issued under section 143(2) of Act after reassessment proceedings are initiated against assessee under section 148 of Act and assessee has filed return of income or filed letter stating that return of income filed by it should be treated as filed in response to notice under section 148 of Act, then reassessment order is vitiated. Once no notice under section 143(2) of Act is issued to assessee, then reassessment order passed is null and void, since issue of notice under section 143(2) of Act in reassessment proceedings under section 147 / 148 of Act is mandatory. We hold that reassessment order passed in present case under section 143(3) r.w.s. 147 of Act is null and void. We find no merit in opinion of CIT(A) that where assessee has only filed letter stating that original return of income filed by it should be treated as filed in response to notice under section 148 of Act implies that no return of income has been filed in response to notice issued under section 148 7 ITA No.557/PN/2014 Precision Camshafts Ltd. of Act, is misplaced. Reversing order of CIT(A), we hold that reassessment proceedings completed against assessee are without any jurisdiction. 13. Although, we have decided preliminary issue in favour of assessee but issue raised on merits i.e. working of deduction under section 10B of Act, whether same is to be allowed before setting off of brought forward depreciation loss and business loss or after same is set off, is squarely covered by order of Tribunal in assessee s own case in ITA Nos.70/PN/2012 and 72/PN/2012, relating to assessment year 2007-08, order dated 10.11.2015. relevant findings of Tribunal are in paras 15 to 17 of said order, under which reliance was placed on ratio laid down by Pune Bench of Tribunal in M/s. Vishay Components India Pvt. Ltd. Vs. Addl. CIT & Anr. in ITA Nos.551/PN/2014 and 736/PN/2014, relating to assessment year 2005-06, vide order dated 08.10.2015 and ratio laid down by Hon ble Bombay High Court in CIT Vs. Black & Veatch Consulting Pvt. Ltd. (2012) 348 ITR 72 (Bom) to hold that deduction under section 10B of Act was to be computed before adjusting brought forward unabsorbed losses and / or depreciation losses. issue arising in present appeal is identical to issue before Tribunal in assessee s own case in assessment year 2007-08 and following same parity of reasoning, we hold that assessee is entitled to claim deduction under section 10B of Act against eligible profits of business and in case there are any leftover profits, then same are to be adjusted against brought forward unabsorbed depreciation / loss as claimed by assessee. Hence, issue raised in grounds of appeal No.7 and 8 is decided in favour of assessee. learned Authorized Representative for assessee has not pressed ground of 8 ITA No.557/PN/2014 Precision Camshafts Ltd. appeal No.6 and hence, same is dismissed as not pressed. grounds of appeal raised by assessee are thus, partly allowed. 14. In result, appeal of assessee is partly allowed. Order pronounced on this 30th day of September, 2016. Sd/- Sd/- (ANIL CHATURVEDI ) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Pune; Dated : 30th September, 2016. GCVSR Copy of Order is forwarded to : 1. Appellant; 2. Respondent; 3. CIT(A)-III, Pune; 4. CIT-IV, Pune; 5. DR B , ITAT, Pune ; 6. Guard file. BY ORDER, //True Copy // Sr. Private Secretary ITAT, Pune Precision Camshafts Ltd. (Formerly known as Clancy Precision Components Pvt. Ltd.) v. Asst. Commissioner of Income Tax, Circle-1, Solapur
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