Shri Habib H.Halani, Vapi V. The ACIT.,Vapi Circle, Vapi

CO 110/AHD/2013

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4224 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 13-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Income from undisclosed sources; Reason to believe
• Section: 147; 148; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA.NO.773/AHD/2013 WITH CO NO.110/AHD/2013 / ASSTT. YEAR: 2009-2010 ACIT, VAPI CIRCLE VAPI. VS SHRI HABIB H. HALANI B/302, NEW BUILDING BANI FATIMI CO-OP. HSG. SOCIETY KABRASTAN ROAD VAPI 396 195. PAN : AAJPH 1175 J ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI JAMES KURIAN, SR.DR ASSESSEE BY : SHRI S.N.SOPARKAR, WITH SHRI PARIN SHAH, AR / DATE OF HEARING : 04/08/2016 / DATE OF PRONOUNCEMENT: 05/08/2016 $%/ O R D E R THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINS T THE ORDER OF THE LD.CIT(A)-VALSAD, DATED 31.12.2012 PASSED FOR THE A SSTT.YEAR 2009-10. ON RECEIPT OF NOTICE IN THE REVENUES APPEAL, THE ASSE SSEE HAS FILED CO BEARING NO.110/AHD/2013. 2. IN THE CO THE ASSESSEE HAS CHALLENGED UPHOLDING THE REOPENING OF THE ASSESSMENT AT THE END OF THE LD.CIT(A). SINCE THE FIRST ISSUE AGITATED IN THE CO IS A JURISDICTIONAL ISSUE, THEREFORE, WE PROCEED TO TAKE THE CO FIRST. ITA NO.773/AHD/2013 (WITH CO) 2 3. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OUT SET SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE BY THE ORDER OF THE ITAT IN ITA NOS.770 TO 772/AHD/2013 FOR THE ASS TT.YEAR 2006-07 TO 2008-09. HE HAS PLACED ON RECORD COPY OF THE TRIBU NALS ORDER. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORDER OF THE CIT(A) . 4. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD. THE ASSESSEE HAS CHALLENGED REOPENING OF T HE ASSESSMENT VIDE GROUND NO.1 BEFORE THE LD.CIT(A). THIS GROUND READS AS UN DER: 1. THE LD.AO HAS ERRED IN BOTH THE LAW AND ON FACT S FRAMING AN ASSESSMENT UNDER S. 144 R.W.S. 147 R.W.S. 142(2A). THERE BEING NO REASON TO BELIEVE AS REQUIRED UNDER S. 147, THE O RDER PASSED BY LD.AO IS WITHOUT JURISDICTION AND BAD IN LAW. IT B E SO HELD NOW AND THE SAID ORDER DATED 19.06.2012 BE QUASHED. 5. THE LD.CIT(A) HAS RECORDED THE FOLLOWING FINDING ON GROUND NOS.1 TO 4: GROUND NOS. I TO 4 ; AT THE OUTSET, THE RE-ASSES SMENT IN THIS CASE WAS BASED ON THE REPORT FROM DDIT(INV.), UNIT-3, SU RAT WHO HAD INQUIRED CASH DEPOSITS IN THE BANK ACCOUNTS OF THE APPELLANT ON THE BASIS OF THE FIU-IND INFORMATION. IN THE REPORT THE DDIT(INV.), UNIT-3, SURAT HAS CATEGORICALLY MENTIONED IN THE CONCLUSION INTER-ALIA THAT 'THE ENQUIRY HAS COMES TO ITS LOGICAL END AFTER THE DETE CTION OF UNACCOUNTED INCOME IN THE HANDS OF THE FIRM AS WELL AS PARTNERS . TOTAL 44.64 CRORES IS UNDISCLOSED INCOME IN THE HANDS OF THE FIRMS( RS. 18.70 CRORES IN THE HAND OF BHOOMI TRACTORS AND RS. 25.94 CRORES IN THE HANDS OF KIRAN TRACTORS) AND RS.25.79 CRORES IN THE HANDS OF THE P ARTNERS OF THE FIRMS (RS.11.71 CRORES IN THE HANDS OF THE PARTNERS OF BH OOMI /TRACTORS AND RS. 14.08 CRORES IN THE HANDS OF PARTNERS OF KIRAN TRACTORS). FURTHER, THIS REPORT SPEAKS OF NON-CO-OPERATION OF THE APPEL LANT BY NOT FURNISHING BOOKS OF A/C. AND RELEVANT DETAILS DURIN G THE INVESTIGATION. THEREFORE, THE ASSESSMENT / RE-ASSESSMENTS OF 4 YEA RS (I.E. A.YS. 2006- 07 TO 2008-09 & 2009-10 RESPECTIVELY) IN THE CASE O F THE FIRM M/S. BHOOMI TRACTOR SALES & SERVICE WERE COMPLETED. THE APPELLANT AGGRIEVED WITH THE ADDITIONS MADE FILED APPEALS FOR ALL 4 YEARS BEFORE ME. IDENTICAL TECHNICAL GROUNDS WERE RAISED IN THE CASE OF FIRM VIDE APPEAL NOS. CIT(A)/VLS/76 TO 79/12-13 WHICH WERE DI SPOSED AFTER DUE DELIBERATION AND BY PASSING SPEAKING ORDERS. THE CO NTENTIONS RAISED ITA NO.773/AHD/2013 (WITH CO) 3 GROUNDS I TO 5 IN THIS CASE IS IDENTICAL AND THE FA CT AND CIRCUMSTANCES REMAIN SAME AS IN THOSE APPEALS. MOREOVER, THE ADDI TIONS MADE IN THE PARTNER HAND IS ON PROTECTIVE BASIS. THEREFORE, FOR THE SAKE OF AVOIDING DUPLICATION, MY DECISIONS IN THESE GROUNDS ARE SAME IN THOSE APPEAL REFERRED ABOVE WHERE THE ISSUES WERE DISCUSSED COMP REHENSIVELY. ACCORDINGLY, GROUNDS 1 TO 5 ARE DISPOSED. 6. IN THE ASSTT.YEARS 2006-07 TO 2008-09, AN IDENTI CAL GROUND WAS TAKEN BY THE ASSESSEE BEFORE THE LD.CIT(A) AS WELL AS BEF ORE THE TRIBUNAL IN ITS CO. THE TRIBUNAL HAS ALLOWED THE GROUND TAKEN IN THE CO AND QUASHED THE RE- ASSESSMENT ORDER. THE FINDING OF THE TRIBUNAL READ S AS UNDER: 2. GROUND NO.1 OF THE CROSS-OBJECTION IN ALL THE TH REE YEARS READS AS UNDER:- LD. CIT(A) OUGHT TO HAVE HELD THAT LD. AO ERRED IN LAW AND ON FACTS IN FRAMING ASSESSMENT U/S 144 R.W.S. 147 R.W. S. 142 (2A) OF THE ACT. LD. CIT(A) FAILED TO APPRECIATE THAT THERE BEING NO REASON TO BELIEF AS REQUIRED UNDER SECTION 147, T HE ORDER PASSED BY AO IS WITHOUT JURISDICTION AND BAD IN LAW . 3. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE REFERRED TO THE REASONS FOR REOPENING OF ASSESSMENT AND POINTED OUT THAT IN THE REASONS RECORDED, THE ASSESSING OFFICER HAS MENTIONED THAT THE ASSESSEE IS A PARTNER IN THE FIRM M/S. BHOOMI T RACTOR SALES AND SERVICES. THERE IS HUGE CASH DEPOSIT IN THE BANK AC COUNT OF THE FIRM AND THEREFORE, IN THE CASE OF THE FIRM, THE CREDITWORTH INESS AND GENUINENESS OF CASH CREDIT REFLECTED IN THE BOOKS OF ACCOUNTS C OULD NOT BE PROVED. ON THIS SOLITARY GROUND, HE REOPENED THE ASSESSMENT OF THE PARTNER AS THE ASSESSEE IS ALSO ONE OF THE PARTNERS OF THE FIR M. THE LD. COUNSEL STATED THAT UNDER THE SCHEME OF INCOME-TAX ACT, THE PARTNERSHIP FIRM IS A SEPARATE LEGAL ENTITY. HE ALSO POINTED OUT THAT T HE ASSESSMENT OF THE FIRM HAS ALREADY BEEN REOPENED. HE, THEREFORE, SUBM ITTED THAT FOR VERIFICATION OF THE BANK ACCOUNT OF THE FIRM OR VER IFICATION OF THE CASH CREDIT IN THE BOOKS OF THE FIRM, THE ASSESSMENT OF THE PARTNER CANNOT BE REOPENED. HE, THEREFORE, SUBMITTED THAT SINCE THERE IS NO ESCAPEMENT OF INCOME IN THE CASE OF THE FIRM, THE REOPENING OF AS SESSMENT CANNOT BE SAID TO BE VALID. ITA NO.773/AHD/2013 (WITH CO) 4 4. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE REASONS RECORDED FOR REOPENING OF ASSESSMENT READ AS UNDER: - THE REOPENING OF ASSESSMENT U/S 147 OF THE I.T. AC T, 1961 HAS BEEN MADE ON THE FOLLOWING REASONS. THE ASSESSEE IS A PARTNER IN THE FIRM M/S. BHOOMI T RACTOR SALES & SERVICES. THE FIRM IS ENGAGED IN THE DEALERSHIP B USINESS OF TRACTORS AND AGRICULTURAL EQUIPMENTS. ON VERIFICATI ON, IT IS NOTICED THAT IN THE BANK ACCOUNT OF THE FIRM, THE H UGE CASH AMOUNT HAS BEEN DEPOSITED FROM A.Y. 2006-07 TO AY 2 009-10 AND IN THE CASE OF FIRM CREDITWORTHINESS AND GENUIN ENESS OF CASH CREDIT REFLECTED IN THE BOOKS OF ACCOUNTS COULD NOT BE PROVED. SINCE THE ASSESSEE IS ALSO ONE OF THE PARTNERS OF S AID FIRM AND TO THE EXTENT OF SHARE OF PROFIT THE ASSESSEE IS ALSO LIABLE TO PROVE THE SAME. THEREFORE, I HAVE REASON TO BELIEVE THAT INCOME OF MORE THAN RS.1 LAC IS ESCAPED ASSESSMENT AND CASE I S FIT FOR REOPENING U/S 147 OF THE ACT BY ISSUING NOTICE U/S 148 OF THE ACT 6. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE IS A PARTNER IN THE FIRM M/S. BHO OMI TRACTOR SALES AND SERVICES. ON VERIFICATION OF THE BANK ACCOUNT OF TH E FIRM, IT WAS FOUND THAT THERE WAS HUGE CASH DEPOSIT IN THE SAID ACCOUN T. AS PER ASSESSING OFFICER, THE CREDITWORTHINESS AND GENUINENESS OF CA SH CREDIT REFLECTED IN THE BOOKS OF ACCOUNTS OF THE FIRM COULD NOT BE P ROVED. THUS, THE ASSESSING OFFICER DOUBTED EITHER ABOUT THE SOURCE O F CASH DEPOSIT IN THE BANK ACCOUNT OF THE FIRM OR THE GENUINENESS OF THE CASH CREDIT REFLECTED IN THE BOOKS OF ACCOUNTS OF THE FIRM. AS PER ASSESS ING OFFICER, SINCE THE ASSESSEE IS PARTNER OF THE FIRM, TO THE EXTENT OF H IS SHARE, THE ASSESSEE IS LIABLE TO PROVE THE SAME. THUS, AS PER ASSESSING OF FICER, THE ASSESSEE BEING A PARTNER OF THE FIRM IS LIABLE TO PROVE THE HUGE CASH DEPOSIT IN THE BANK ACCOUNT OF THE FIRM OR THE CASH CREDIT IN THE ACCOUNTS OF THE FIRM. THERE CANNOT BE ANY DISPUTE TO THIS PROPOSITI ON OF THE ASSESSING OFFICER THAT THE ASSESSEE BEING A PARTNER OF THE FI RM IS LIABLE TO PROVE THE CASH DEPOSIT IN THE BANK ACCOUNT OF THE FIRM OR THE CASH CREDIT IN THE BOOKS OF ACCOUNTS OF THE FIRM; BUT, THAT IS TO BE E XAMINED IN THE CASE OF THE FIRM. UNDISPUTEDLY, UNDER THE INCOME-TAX ACT, T HE PARTNERSHIP FIRM AND THE PARTNERS ARE ASSESSED TO TAX SEPARATELY. TH EREFORE, FOR ITA NO.773/AHD/2013 (WITH CO) 5 VERIFICATION OF THE HUGE CASH DEPOSIT IN THE BANK A CCOUNT OF THE FIRM OR THE CASH CREDIT IN THE BOOKS OF ACCOUNTS OF THE FIR M, THE ASSESSMENT OF THE PARTNERS CANNOT BE REOPENED. WHETHER THERE IS A NY ESCAPEMENT OF INCOME OR NOT IN THE CASE OF THE FIRM WOULD ONLY AF FECT THE ASSESSMENT OF THE FIRM AND THEREFORE, FOR THE ALLEGED ESCAPEME NT OF INCOME OF THE PARTNERSHIP FIRM, THE ASSESSMENT OF PARTNER CANNOT BE REOPENED. IN VIEW OF THE ABOVE, WE HOLD THE REOPENING OF THE ASS ESSMENT OF THE PARTNER TO BE INVALID, BECAUSE NO CASE HAS BEEN MAD E OUT FOR THE ESCAPEMENT OF INCOME OF THE PARTNER. WE, THEREFORE, HOLD THAT THE REOPENING OF ASSESSMENT IS NOT VALID; ACCORDINGLY, THE SAME IS QUASHED. ONCE THE REOPENING OF ASSESSMENT IS HELD TO BE INVA LID, THE CONSEQUENTIAL ASSESSMENT ORDER PASSED U/S 144 R.W.S . 147 IS ALSO QUASHED. 7. SINCE WE HAVE QUASHED THE ASSESSMENT ORDER, THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE SAID ASSESSMENT ORDER WHICH IS CHALLENGED ON MERIT IN THE REVENUES APPEAL AND ALSO IN THE OT HER GROUNDS OF THE ASSESSEES CROSS-OBJECTION DO NOT SURVIVE FOR ADJUD ICATION, BECAUSE THE ASSESSMENT ITSELF HAS BEEN QUASHED. 8. IN VIEW OF ABOVE, ALL THE THREE CROSS-OBJECTIONS FILED BY THE ASSESSEE ARE DEEMED TO BE ALLOWED AND THE REVENUES APPEALS ARE DEEMED TO BE DISMISSED. 7. IN THE CO FOR THE PRESENT ASSTT.YEAR I.E. A.Y.20 09-10, THE ASSESSEE HAS TAKEN VERBATIM SAME GROUND OF APPEAL, WHICH READS A S UNDER: LD. CIT(A) OUGHT TO HAVE HELD THAT LD. AO ERRED IN LAW AND ON FACTS IN FRAMING ASSESSMENT U/S 144 R.W.S. 147 R.W. S. 142 (2A) OF THE ACT. LD. CIT(A) FAILED TO APPRECIATE THAT THERE BEING NO REASON TO BELIEF AS REQUIRED UNDER SECTION 147, THE ORDER PASSED BY AO IS WITHOUT JURISDICTION AND BAD IN LAW. 8. A PERUSAL OF THESE MATERIAL WOULD INDICATE THAT THE LD.CIT(A) HAS RECORDED A COMMON FINDING FOR THE ASSTT.YEARS 2006- 07 TO 2009-10. ACCORDING TO THE LD.CIT(A), THERE IS NO DISPARITY O N FACTS, AND THE LD.CIT(A) HAS RELIED UPON THIS ORDER PASSED IN THE ASSTT.YEAR 2006-07 TO 2008-09. IN THE ASSTT.YEAR 2006-07 TO 2008-09, IDENTICAL GROUND WAS TAKEN IN THE CO BY THE ASSESSEE AND THE TRIBUNAL HAS QUASHED THE REOPENING OF ASSESSMENT. ITA NO.773/AHD/2013 (WITH CO) 6 THEREFORE, THE GROUND NO.1 IN THE CO DESERVES TO BE ALLOWED. RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH IN ITA NOS.770 TO 772/AHD/2013 EXTRACTED (SUPRA), WE ALLOW THE GROUND OF APPEAL RAISED IN CO AND QUASH THE RE-ASSESSMENT ORDER. CONSEQUENTLY, THE APPEAL OF THE REVENUE BECOMES RE DUNDANT, HENCE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND THE CO OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 5 TH AUGUST, 2016 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER