Shri Amit K.Shah, Vapi V. The Income tax Officer,Vapi Ward-1, Vapi

CO 140/AHD/2012

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2277 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 30 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 21-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reason to believe; Reassessment proceedings
• Section: 40A(3); 143(3); 147

Judgement Text

I.T. A. NO . 1340 /AHD/ 20 1 2 & C.O. NO.140/AHD/2012 ASSESSMENT YEAR: 200 7 - 08 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD C BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM AND RAJPAL YADAV JM ] I.T.A. NO. 1340 /AHD/ 20 1 2 ASSESSMENT Y EAR : 200 7 - 08 INCOME TAX OFFICER, VAPI WARD - 1, VAPI . .... .......... .APPELLANT VS. AMIT K SHAH, ............. . RESPONDENT 201/D, ADARH VIHAR, NR. GUNJAN CINEMA, GIDC, VAPI. [ PAN: A OAPS 0443 M ] C.O. NO.140/AHD/2012 (IN I.T.A. NO. 1340 /AHD/201 2) ASSESSMENT Y EAR: 200 7 - 08 AMIT K SHAH, ............. . ....APPELLANT 201/D, ADARH VIHAR, NR. GUNJAN CINEMA, GIDC, VAPI. [ PAN: A OAPS 0443 M ] VS. INCOME TAX OFFICER, VAPI WARD - 1, VAPI . .... .......... RESPONDENT APPE ARANCES BY: ANIL KUMAR BHARDWAJ , FOR THE REVENUE RAJESH UPADHYAY , FOR THE ASSESSEE D ATE OF CONCLUDING THE HEARING : MAY 16 TH , 201 6 DATE OF PRONOUNCING THE ORDER : MAY 20 TH , 201 6 O R D E R PER PRAMOD KUMAR AM : BY WAY OF THIS APPEAL FILED BY THE ASSESSING OFFICER AND CROSS OBJECTION FILED BY THE ASSESSEE, THE ASSESSING OFFICER AS ALSO THE ASSESSEE HAVE CHALLENGED CORRECTNESS OF THE ORDER DA T ED 30.03.2012 PASSED BY T HE L EARNED CIT(A) IN THE MATTER OF I.T. A. NO . 1340 /AHD/ 20 1 2 & C.O. NO.140/AHD/2012 ASSESSMENT YEAR: 200 7 - 08 PAGE 2 OF 5 ASSESSMENT UNDER SECTION 143(3) REA D WITH SECTION 147 OF THE INCOME TAX ACT, 1961 ( THE ACT FOR SHORT) , FOR THE ASSESSMENT YEAR 2007 - 08. 2. WHEN THIS APPEAL WA S C ALLED OUT FOR HEARING, LEARNED CO UNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE CROSS OBJECTION, WHICH SEEKS TO CHALLENGE C ORRECTNESS OF THE LEARNED CIT( A ) S UPHOLDING THE REASSESSMENT PROCEEDINGS, AND URGED THUS TO T A KE UP THE CROSS OBJECTION FIRST , SINCE IT D E ALS WITH A FUNDAMENTAL ISSUE AND, IF ALLOWED, WILL RENDER REVENUE S APPEAL INFRUCTUOUS. LEARNED DEPARTMENTAL REPRESE NTATIVE DOES NOT OPPOSE THIS SUBMISSION. IN THIS BACKGROUND , WE TAKE UP THE CROSS OBJECTION FIRST. 3. THE GRIEVANCE RAISED IN THIS CROSS OBJECTION ON WHICH OUR ADJUDICATION SOUGHT IS, IN SUBSTANCE, THAT THE LEARNED CIT(A) ERRED IN UPHOLDING INITIATION OF REASSESSMENT PROCEEDINGS ON THE FACTS OF THIS CASE. WITH THE CONSENT OF PARTIES, THE C ROSS O BJECTION H A S BEEN HE A RD ON THIS GRIEVANCE . 4. BRIEFLY ST ATED THE RELEVANT MATERIAL FACTS ARE LIKE HIS. ON 01.03.2011 THE ASSESSING OFFICER RECORDED THE FOLLOWING REASONS FOR REOPENING THE ASSESSMENT : ON VERIFICATION, IT IS FOUND THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS MADE THE CASH WITHDRAWAL OF RS.25,43,500/ - . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF WASTE PAPERS. THESE WITHDRAWAL S TOWARDS PURCHASE OF WASTE PAPER ARE VERY MUCH IN DOUBT. FURTHER, PROVISIONS OF SECTION 40A(3) OF THE ACT IS ALSO VERY APPLICABLE IN THE CASE OF THE ASSESSEE AS THE ABOVE WITHDRAWALS ARE SAID TO BE UTILISED FOR CASH PURCHASES. IN VIEW OF THIS FACT, I HA VE REASON TO BELIEVE THAT INCOME TO THE EXTENT OF MORE THAN ONE LAKH HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT . 5. T HE ASSESSEE DID OBJECT TO T H IS REOPENING VIDE GROUND NO.1 BEFORE THE L EARNED CIT(A). BUT THE L E A RNED CIT ( A ) SIMPLY BRUSHED ASIDE THE SAME EVEN THOUGH HE GRANTED RELIEF NEVERTHELESS ON MERITS. THE ASSESSEE IS NOT SATISFIED AND IN FURTHER APPEAL BEFORE US. I.T. A. NO . 1340 /AHD/ 20 1 2 & C.O. NO.140/AHD/2012 ASSESSMENT YEAR: 200 7 - 08 PAGE 3 OF 5 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CA SE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 7. WE FIND THAT THERE IS NO DISPUTE, AS EVIDENT FROM A PLAIN R EA DING OF THE REASONS DATED 01.03.2011 RECORDED BY THE ASSESSING OFFICER THAT THE ONLY CAUSE FOR REOPENING THE ASSESSMENT IS CASH WITHDRAWAL OF R S.25,43,500/ - AND THE ASSESSING OFFICER S OBSERVATION TO THE EFFECT THAT THESE WITHDRAWALS TOWARDS PURCHASE OF WASTE PAPER WAS VERY MUCH IN DOUBT . THERE IS NOTHING TO EVEN REMOTELY SUGGEST THAT THE ASSESSING OFFICER HAD ANY REASONS TO HOLD THE BEL IEF THAT ANY INCOME HAS ESCAP E D ASSESSMENT. WH AT HE HAS NOTED IN THE REASONS RECORDED IN THE REOPENING OF THE ASSESSMENT IS MERE SUSPICION OR APPREHENSION WHICH IS SEEN FROM THE FACT THAT THE ASSESSEE DID MAKE CASH WITHDRAWAL FROM THE BANK. THAT DOES NOT INDICATE ESCAPEMENT OF INCOME. WHEN WE PUT TO THE LD . DEPARTMENTAL REPRESENTATIVE , HE STATED ABOUT CERTAIN OTHER FACTS WHICH ARE NOT BORNE OUT OF THE MATERIAL ON RECORD AND SUBMITTED THAT THOUGH IT HAS NOT BEEN STATED BY THE ASSESSING OFFICER IN SO MA N Y WORDS , THE ASSESSING OFFICER HAD GOOD AND SUFFICIENT REASON TO HOLD THE BELIEF THAT INCOME HAS INDEED ESCAPED ASSESSMENT. FOR THE REASONS WE WILL SET OUT IN A SHORT WHILE , IT IS NOT REALLY NECESSARY TO NOT E THIS CONTENTION OF THE LD. DEPARTMENTAL REPRESEN TATIVE IN ANY FURTHER DETAIL. 8. THE IMPORTANT POINT I S THAT EVEN THOUGH REASONS RECORDED MAY NOT NECESSARILY PROVE ESCAPEMENT OF INCOME AT THE STAGE OF RECORDING REASONS, SUCH REASON MU S T POINT OUT TO THE INCOME ESCAPING ASSESSMENT AND NOT MERELY NEED ANY ENQUIRY WHICH MAY REQUIRE DETECTION OF INCOME ESCAPING ASSESSMENT. IN THE PRESENT CASE AT BEST CASE OF THE ASSESSING OFFIC ER FALLS IN THE SECOND CATEGORY . AS REGARDS OTHER F A CTORS WHICH LD. DEPARTMENTAL REPRESENTATIVE ATTEMPTED TO RAISE, WE CAN ONLY REFER TO THE JUDGEMENT OF HON BLE BOMBAY HIGH COURT, IN THE CASE OF HINDUSTAN LEVER LTD. VS. R.B. WADKAR I.T. A. NO . 1340 /AHD/ 20 1 2 & C.O. NO.140/AHD/2012 ASSESSMENT YEAR: 200 7 - 08 PAGE 4 OF 5 [(2004) 268 ITR 332] WHEREIN THEIR LORDSHIPS HAVE INTER ALIA OBSERVED TH A T IT IS NEEDLESS TO MENTION THAT THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE A SSESSING OFFICER . NO SUBSTITUTION OR DELETION IS PERMISSIBLE. NO ADDITIONS CAN BE MADE TO THOSE REASONS. NO INFERENCE CAN BE ALLOWED TO BE DRAWN ON THE BASIS OF REASONS NOT RECORDED. IT IS FOR THE A SSESSING OFFICER TO DISCLOSE AND OPEN HIS MIND THROUGH THE REASONS RECORDED BY HIM. HE HAS TO SPEAK THROUGH THE REASONS.' THEIR LORDSHIPS FURTHER ADDED THAT ' T HE REASONS RECORDED SHOULD BE SELF - EXPLANATORY AND SHOULD NOT KEEP THE ASSESSEE GUESSING FOR REASONS. REASONS PROVIDE LINK BETWE EN CONCLUSION AND THE EVIDENCE .'. THEREFORE, THE REASONS ARE TO BE EXAMINED ONLY ON THE BASIS OF THE REASONS AS RECORDED. TH E EFFORTS OF THE LD. DEPARTMENTAL REPRESENTATIVE ARE , THEREFORE , OF NO USE. 9. W E HAVE ALSO NOTICED THAT IN THE PRESENT CASE T HE ONLY REASON IS IT S CASH WITHDRAWAL FROM THE BANK ACCOUNT. DEALING WITH SOMEWHAT SIMILAR SITUATION, H ON BLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF VISHAL EXPORTS OVERSEAS LIMITED VS. DCIT , INTER ALIA , OBSERVED AS FOLLOWS : - 10. THUS, FROM THE REASONS RECORDED IT IS MANIFEST THAT ACCORDING TO THE ASSESSING OFFICER, T HE PETITIONER HAS WITHDRAWN RS. 2,54,00,000 FROM THE BANK ACCOUNTS MAINTAINED BY IT IN CASH AND HAS NOT EXPLAINED THE UTILISATION THEREOF. HOWEVER, FOR THE PURPOSE OF INVOKING SE CTION 147 OF THE ACT, AS NOTICED EARLIER, THE PRIMARY REQUIREMENT IS THAT THERE SHOULD BE ESCAPEMENT OF INCOME CHARGEABLE TO TAX FOR THE RELEVANT ASSESSMENT YEAR. MERE WITHD RAWAL OF CASH FROM THE BANK ACCOUNTS MAINTAINED BY THE ASSESSEE, CAN, BY NO STRETC H OF IMAGINATION BE TERMED AS ESCAPEMENT OF INCOME, AS ENVISAGED UNDER SECTION 147 OF THE ACT. THUS, FROM THE REASONS RECORDED, THERE IS NOTHING TO INDICATE THAT ANY INCOME CHARGEABLE TO TAX IN THE CASE OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THE SOLE BASI S FOR REOPENING THE ASSESSMENT IS THAT THE PETITIONER ASSESSEE HAS WITHDRAWN AN AMOUNT OF RS.2,54,00,000 IN CASH AND HAS NOT EXPLAINED THE UTILISATION. THUS, CASH WITHDRAWALS FROM BANK ACCOUNTS MAINTAINED BY THE ASSESSEE HAVE BEEN TERMED AS ESCAPEMENT OF I NCOME BY THE ASSESSING OFFICER. ONE FAILS TO COMPREHEND AS TO HOW THE CASH WITHDRAWALS FROM ACCOUNTS MAINTAINED BY THE ASSESSEE CAN BE SAID TO AMOUNT TO ESCAPEMENT OF INCOME WITHIN THE MEANING OF SECTION 147 OF THE ACT, AS STATED BY THE ASSESSING OFFICER, WHEN IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE AMOUNT DEPOSITED BY THE ASSESSEE IN ITS BANK ACCOUNTS IS UNDISCLOSED INCOME. I.T. A. NO . 1340 /AHD/ 20 1 2 & C.O. NO.140/AHD/2012 ASSESSMENT YEAR: 200 7 - 08 PAGE 5 OF 5 10 . IN VIEW OF THESE DISCUSSIONS A ND BEARING IN MIND ENTIRETY OF THE CASE , WE ARE OF THE CONSIDERED VIEW THAT RE ASONS AS RECORDE D BY THE ASSESSING OFFICE R FOR REOPENING THE IMPUGNED ASSESSMENT ARE CLEARLY UNSUSTAINABLE IN LAW. W E , THEREFORE, QUASH THE REASSESSMENT PROCEEDINGS. 11 . THE C R OSS OBJECTION FILED BY THE ASSESSEE IS ACCORDINGLY A LLOWED. 12 . AS THE CROSS OBJECTIO N FILED BY T HE ASSESSEE HAS BEEN ALLOWED AND THE VERY REASSESSMENT PROCEEDINGS ARE QUASHED, THE GRIE V ANCE RAISED BY THE ASSESSING OFFICER IN APPEAL I.E. RESTRICTING THE NET PROFIT TO 2% IS NOW WHOLLY ACADEMIC. WE, THEREFORE, DECLINE TO DEAL WITH THE SAME AND DISMISS THE APPEAL FILED BY T HE ASSESSING OFFICER AS INFRUCTUOUS. 1 3 . IN THE RESULT, ASSESSING OFFICER S APPEAL IS DISMISSED A S INFRUCTUOUS WHILE THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COUR T TODAY ON THE 20 TH DAY OF MAY , 2016 . SD/ - SD/ - RAJPAL YADAV PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 20 TH DAY OF MAY , 2016. COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) C IT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD