High Court Of Madras
Narmadha Chemicals (P.) Ltd. Vs. ACIT, Circle –I
Assessment Year : 2007-08
Section : 260A, 32
W.P. No. 8839 Of 2013
April 29, 2013
1. By consent of the learned counsel on either side, this Writ Petition is taken up for final disposal.
2. Heard Dr. Anitha Sumanth, learned counsel for the petitioner and Mr. T. Pramod Kumar Chopda, learned counsel appearing for the respondent.
3. This Writ Petition is filed seeking to quash the Assessment Order dated 22.03.2013 passed by the respondent herein vide proceedings in P.A.No.G.I.No.AABCN2036R/N-1001 relating to the Assessment Year 2007-08.
4. According to the petitioner, it is a company registered in terms of the provisions of the Indian Companies Act, 1956, engaged in the business of manufacture of Soaps, Detergents, Sulphuric Acid and Power Generation from Wind Mill. It maintains regular books of accounts and files returns of income under the provisions of the Income Tax Act. The return of income included the claim of depreciation at a rate of 80% and the same was in tandem with the claim in respect of earlier years. Along with the return of income for the Assessment Year 2005-2006, the petitioner exercised its option before the Assessing Authority claiming depreciation under Section 32(1)(i) of the Act under Written Down Value method for the Power Generating Unit as per the rate applicable and prescribed in Rule 5(1) of the Income Tax Rules, 1962 (in short ‘Rules’). In respect of the Assessment Year 2005-2006, being the first year of claim, a Return of Income was filed on 30.10.2007 returning Nil income. A notice under Section 143(2) of the Act was issued calling upon the petitioner to file various particulars that was duly complied with. The petitioner furnished books of accounts, such as Cash Book, Bank Book, General Ledger Journal and Stock Register and various other details called for and the respondent completed the assessment under Section 143(3) of the Act vide order dated 07.12.2009.
5. While so, the petitioner was surprised to receive a notice dated 28.03.2012 issued by the respondent under Section 148 of the Act alleging that he had reason to believe that there was escapement of income in respect of Assessment Year 2007-2008 and he was called upon to file a return of income duly disclosing the same. The petitioner requested the respondent, by a communication dated 14.04.2012, to treat the return filed originally on 30.10.2007 as filed in response to the notice under Section 148 of the Act. Thereafter, the petitioner sought reasons for re-opening of the assessment vide communication dated 20.06.2012 and reminder dated 15.10.2012. The respondent, vide communication dated 04.09.2012 furnished reasons for reopening of the assessment.
6. It is the case of the petitioner that the depreciation claimed is clearly reflected in the statement of income as well as Depreciation Schedule for the Wind Mill Division, which forms part of the return of income, and the issue had been specifically discussed and queried by the Assessing Officer. The averment of the assessing officer that the company had claimed higher depreciation on windmills in contravention of Rule 5(1A) is not correct. Further, the option to claim depreciation has been exercised in respect of the Assessment Years 2005-2006 and 2006-2007 and the same has been accepted by the Department. The petitioner would state that the claim for the year 2007-08 is thus in accordance with law, duly disclosed to the Department and is not liable to be disturbed.
7. The petitioner filed objections dated 26.11.2012 to the respondent that the proposed assessment was not tenable in law or on facts. Pursuant thereto, the petitioner received an order dated 06.02.2013 from the respondent arbitrarily rejecting the objections filed by the petitioner. Being aggrieved by the said order, seeking to quash the same, the petitioner filed W.P.No.7545 of 2013 and this Court, after hearing the submissions on either side, granted an order of status quo till 02.04.2013, vide order dated 26.03.2013. However, to the utter shock and surprise, the petitioner received an order of assessment dated 22.03.2013 raising a demand of Rs.2,23,15,887/-, which is impugned in this Writ Petition.
8. The respondent has filed counter affidavit and has stated that the petitioner’s claim of depreciation at 80% without exercising an option as per Rule 5(1) of the I.T. Rules within the due date of filing return, came to notice only after completion of assessment under Section 143(3) of the Act and hence, they reopened the proceedings under Section 147 of the Act. According to the respondent, the petitioner claims higher depreciation and it has to exercise such option as per Rule 5(1) and in the absence of exercise of such an option as per the above will not enable the petitioner to claim higher rate of depreciation.
9. Dr. Anitha Sumanth, learned counsel for the petitioner would assail the impugned order on the ground that this Court after hearing her and looking into the apprehension made by her that if no interim order is granted by this Court, the Department may proceed against the petitioner under Section 147 of the Income Tax Act in view of the closing of the Financial Year 2012-2013, adjourned the matter to 02.04.2013 to hear the learned counsel for the parties on the material objections and granted an order of Status Quo till then. Such an order of Status Quo has not been looked into by the respondent. Therefore, the order is vitiated in law.
10. On the other hand, learned counsel for the respondent submits that in view of the closing of the financial year 2012-2013, the Assessing Officer had no other option except to scrutinize the Assessment and pass final orders and therefore, the impugned order has been passed as against which, an appeal will lie before the Commissioner, which is an effective statutory remedy.
11. It is not in dispute that the petitioner is an assessee and filed its return of Income Tax for the Assessment Year 2007-2008 on 30.10.2007 and declared the total income as ‘nil’, after claiming deduction of Rs.1,56,07,769/- under Section 80IB of the Act. Assessment under Section 143(3) was completed on 07.12.2009 determining the total income at Rs.4,79,581/- after disallowing certain expenses relating to legal expenses, guest house expenditure and vehicle maintenance. However, for tax calculation, book profit determined under Section 115JB admitted by the assessee-company was taken. Subsequently, on verification of records, the Department found that the depreciation claimed is excessive and therefore issued a notice under Section 148 and then proceeded to reassess the same and finally passed an order. The same is questioned as there was an interim order of status quo and without considering the same, the respondent has proceeded to conclude the proceedings.
12. The above aspects are concerned with the material information and only on the apprehension of the petitioner, this court intended to hear the learned counsel on either side and therefore, passed an order of status quo. That could not be a factor to interfere with the order passed by the Assessing Officer, when there is an effective appeal remedy available before the Commissioner (Appeals) within a period of thirty days. Therefore, without availing such remedy, the petitioner has approached this Court. In the absence of any infringement of fundamental rights, violation of principles of natural justice or anything contrary to law, there is no possibility of any scope of interference of this nature, when such a matter can be adjudicated before the appellate authority.
13. For the foregoing reasons and discussions, this Writ Petition is disposed of with a direction to the petitioner move the appellate authority within a period of four (4) weeks from the date of receipt of a copy of this order and take all other course available and on such appeal being made, it is for the appellate authority to look into the same in accordance with law. Till the petitioner moves the appellate authority, the respondent shall maintain status quo as on today. No costs. Consequently, connected M.P.No.1 of 2013 is closed.
14. The Registry is directed to return the Original Assessment Order to the counsel for the petitioner, to enable the petitioner move the Appellate Authority.
[Citation : 357 ITR 45]