Ajay Kumar Thakkar, Kolkata V. ACIT, CIR-43, KOLKATA, Kolkata

CO 48/KOL/2014

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2823 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S M SURANA; SUNIL SURANA F
• Assessee Lawyers: S M DAS
• Keywords: Search and seizure; Cost of acquisition; Difference of opinion; Revised return; Reason to believe; Change of opinion
• Section: 143(3); 147; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.433/KOL/2014 C.O. NO.48/KOL/2014 (A/O ITA NO.433/KOL/2014) ASSESSMENT YEAR:2008-09 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-43, 3, GOVT. PLACE (W), KOLKATA-700 001 SHRI AJAY KUMAR THAKKAR, 192, J.L. BAJAJ STREET, KOLKATA-007 / V/S . / V/S . SHRI AJAY KUMAR THAKKAR, 192, J.L.BAJAJ STREET, KOLKATA-700 007 [ PAN NO.ABLPT 6548 A ] ACIT, CIRCLE-43, 3, GOVT. PLACE (W), KOLKATA-001 /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI S.M. DAS, ADDL. CIT-DR /BY REVENUE SHRI S.M. SURANA, ADVOCATE & SHRI SUNIL SURANA,, FCA /DATE OF HEARING 14-02-2017 /DATE OF PRONOUNCEMENT 17-03-2017 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XXX, KOLKATA DATED 18.11.2013 FOR THE ASSESSMENT YEAR 2008- 09 AND SAME IS BEING DISPOSED OF ALONG WITH THE CRO SS OBJECTION (CO) HAS BEEN FILED BY THE ASSESSEE. SHRI S.M. SURANA LD. ADVOCATE AND SHRI SUNIL SURANA , LD. AUTHORIZED REPRESENTATIVE APPEARED ON BEHALF OF ASSESSEE AND SHRI S.M. DAS, L D. DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF REVENUE. THE GROUNDS RAISED BY THE REVENUE PER ITS APPEAL AR E AS UNDER:- ITA NO.433/KOL/2014 & CO 48/KOL/2014 A.Y. 2008-09 ACIT CIR-43,KOL. VS. SH. AJAY KR. THAKKAR PAGE 2 I) THAT ON THE ACTS AND IN THE CIRCUMSTANCES OF T HE CASE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION WITHOUT FINDING OUT ANY MI STAKE IN CALCULATION OF OPENING STOCK AS MADE BY THE AO IN HIS ASSESSMENT O RDER. II) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A)S CONTENTION, THAT THE ADDITION IS MADE NOT SUPPORTE D BY ANY DETAILS / EVIDENCE IS NOT TENABLE AS THE A.O DETERMINED THE OPENING ST OCK FROM THE VALUE OF STOCK OF INVESTMENT ACTIVITIES AND TRADING ACTIVITIES AS DISCLOSED BY THE ASSESSEE IN HIS REVISED RETURN. III) THAT THE PETITIONER CRAVES LEAVE TO ALTER/MODI FY OR ADDUCE FURTHER GROUNDS OF APPEAL, IF NECESSARY AT THE TIME OF HEARING OF A PPEAL. THE GROUND RAISED BY ASSESSEE PER ITS CO ARE AS UND ER:- 1. FOR THAT THE LD. CIT(A) SHOULD HAVE HELD THAT T HE AO CANNOT REVALUE THE OPENING STOCK OF THE CURRENT YEAR WHICH CAN ALWAYS BE THE CLOSING STOCK OF THE EARLIER YEAR AND EVEN IF THE METHOD OF VALUATION OF CLOSING STOCK IS CHANGED THE SAME CANNOT BE APPLIED TO THE OPENING STOCK AND SHO ULD HAVE DIRECTED TO TAKE THE CLOSING STOCK OF THE LAST YEAR AS THE OPENING S TOCK OF THE CURRENT YEAR. 2. FOR THAT THE LD. CIT(A)S ORDER WAS IN ACCORDANC E WITH LAW IN SO FAR AS THE REOPENING OF THE ASSESSMENT U/S. 147 WAS CONCERNED WHICH WAS WRONGLY REOPENED BY THE AO. 3. FOR THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND BEFORE OR AT THE TIME OF HEARING. 2. WE FIRST DECIDED TO ADJUDICATE THE LEGAL ISSUE R AISED IN GROUND NO. 2 IN THE CO FILED BY THE ASSESSEE WHEREIN THE VALIDITY OF REASS ESSMENT PROCEEDINGS U/S 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) WAS CHALLENGED. 3. AT THE OUTSET THE LD AR FOR THE ASSESSEE BEFORE US SUBMITTED THAT THE ISSUE OF OPENING STOCK HAS BEEN DULY CONSIDERED BY THE ASSES SING OFFICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT WHICH IS EVIDENT FROM THE ORDER OF AO. THIS IS A SETTLED LAW THAT WHEN ANY ISSUE IS EXAMIN ED IN DETAIL DURING SCRUTINY PROCEEDINGS U/S 143(3) BY THE ASSESSING OFFICER, IT AMOUNTS TO FORMING AN OPINION ON THE SUBJECT MATTER, DESPITE THE FACT THAT NO ADDITI ON HAS BEEN MADE ON THIS ACCOUNT BY THE AO. SUBSEQUENT REOPENING ON THE SAME MATERIAL W HICH WAS ALREADY AVAILABLE ON RECORD AND ALSO EXAMINED BY THE AO WOULD TANTAMOUNT TO CHANGE OF OPINION WHICH IS NOT PERMISSIBLE AND THUS ORDER PASSED U/ S 147 IS V OID AND LIABLE TO BE QUASHED. ITA NO.433/KOL/2014 & CO 48/KOL/2014 A.Y. 2008-09 ACIT CIR-43,KOL. VS. SH. AJAY KR. THAKKAR PAGE 3 ON THE OTHER HAND THE LD DR VEHEMENTLY SUPPORTED TH E ORDER OF AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE RECORDS. WE FIND THAT IN THIS CASE ORIGINAL ASSESSMENT WAS MADE U/S 143(3) OF THE ACT. DURING THE ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) OF THE A CT, WE FIND THAT THE ISSUE OF THE OPENING STOCK WAS DULY EXAMINED BY THE AO. THE RELE VANT EXTRACT OF THE AO ORDER DATED 06-08-2010 IS REPRODUCED AS UNDER : OPENING STOCK OPENING INVESTMENT OF RS.4,90,80,417/- AS PER ORIG INAL PERSONAL BALANCE SHEET VALUED AT COST OR MARKET PR ICE WHICHEVER IS LOWER AT RS.4,52,49,724/-. THE VALUATI ON HAS BEEN WORKED OUT ON THE BASIS OF STOCK EXCHANGE OPERATION RS. 4,52,49,724/- RS.12,69,23,378/- LESS : PURCHASE COST OF SHARES SOLD: (6,75,60,449 + 1,55,86,931) I.E. RS. 8,31,47,380/- ADD: SHARES AS ON 31.3.08 (COST) RS. 8,34,74,727/ - RS.16,66,22,107/- LESS; SHARES AS ON 01.04.07(COST)RS. 4,90,80,417/- RS. 11,75,41,690/- RS. 93,81,688/- LESS: EXPENSES/LOSS DEBITED TO PERSONAL P/L A/C RS . 28,06,716/- RS. 65,75,972/- FROM THE ABOVE, WE NOTE THAT THE AO HAS DULY CONSID ERED THE ISSUE OF THE OPENING STOCK. HENCE IT CANNOT BE SAID THAT THE AO WAS NOT AWARE OF THE VALUE OF THE OPENING STOCK DECLARED BY THE ASSESSEE. AO HAS ALSO CONSIDE RED AND CHOSEN NOT TO MAKE ANY ADDITION ON ACCOUNT OF VALUATION OF THE OPENING STO CK. THUS, THE AO AFTER CONSCIOUS APPLICATION OF MIND HAS CHOSEN NOT TO MAKE ANY ADDI TION. HENCE, IT IS CLEAR THAT THE AO HAS APPLIED HIS MIND REGARDING THE VALUATION OF OPENING STOCK SHOWN BY THE ASSESSEE. 4.1 NOW IN THIS BACKGROUND, WE NOTE THAT WHILE REOP ENING OF THE ASSESSMENT ON THE GROUND OF UNDERSTATEMENT OF OPENING STOCK IS NOTHIN G BUT CHANGE OF OPINION. THUS, WE NOTE THAT NO NEW FACT HAS COME TO THE NOTICE OF AO FOR REOPENING THE ISSUE OF OPENING STOCK. THE ISSUE OF OPENING STOCK WAS DULY DEALT BY THE AO AT THE TIME OF ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT. AO CONSCIOUSLY MA DE A DECISION NOT TO MAKE ANY DISALLOWANCE IN THIS REGARD. HENCE, ON THE SAME ISS UE WHEN THE REOPENING IS DONE AND ITA NO.433/KOL/2014 & CO 48/KOL/2014 A.Y. 2008-09 ACIT CIR-43,KOL. VS. SH. AJAY KR. THAKKAR PAGE 4 THE AO CHANGES HIS OPINION AND COMES TO THE DECISIO N THAT THE ASSESSEE SHOULD HAVE BEEN SHOWN MORE AMOUNT OF INCOME, IT IS CLEARLY A C HANGE OF OPINION. IT IS A FRESH APPLICATION OF MIND ON THE SAME SET OF FACTS. THIS, IN OUR CONSIDERED OPINION, IS NOT PERMISSIBLE AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD . REPORTED IN 320 ITR 561 (SC). THE RELEVANT EXTRAC T OF THE JUDGMENT IS EXTRACTED BELOW:- THEREFORE, POST - 1ST APRIL 1989, POWER TO REOPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS ' REASON TO BELIEVE ' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIV E ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSMENTS ON THE BASI S OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW A ND POWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS TH E POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILLMENT OF CERT AIN PRECONDITIONS AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTE NDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSE SSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF ' CHANGE OF OPINION ' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. THUS, THE DECISIONS REFERRED TO THE ABOVE SUPPORTS THE CASE OF THE ASSESSEE. ONCE THE AO HAS CONSIDERED THE DETAILS OF THE OPENING STOCK AND CHOSEN NOT TO MAKE ANY DISALLOWANCE, REOPENING AND ADDITION ON THIS ACCOUN T IS MERELY A CHANGE OF OPINION AND IS NOT PERMISSIBLE. MOREOVER, IF IT IS CONSIDER ED THAT WHEN THE DETAILS WERE AVAILABLE AND AO CHOSE NOT TO MAKE ANY DISALLOWANCE S, THEN REMEDY LIES WITH THE COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT. THIS CANNOT BE MADE A SUBJECT- MATTER OF REOPENING U/S 147 OF THE ACT AND FRESH AP PLICATION OF MIND BY ANOTHER ASSESSING OFFICER. IN THESE CIRCUMSTANCES, WE HOLD THAT REOPENING IN THIS CASE IS BAD IN LAW. SINCE, WE HAVE QUASHED THE ORDER OF ASSESSMENT DATED FOR THE YEAR UNDER CONSIDERATION AS BEING INVALID AND UNSUSTAINABLE IN LAW, WE THEREFORE, DO NOT PROPOSE TO GO INTO THE MERITS OF THE ISSUES RAISED IN ASSES SEES CO. IN THE RESULT, CO OF THE ASSESSEE IS ALLOWED ON LEGAL GROUND OF THE ASSESSEE THEN REMAINING GROUNDS OF THE ASSESSEES CO ON MERITS BECOMES ACADEMIC AND INFRUC TUOUS. COMING TO REVENUES APPEAL NO.433/KOL/2014 . 5. SINCE, WE HAVE ALREADY QUASHED THE RE-ASSESSMENT PROCEEDINGS U/S. 147 OF THE ACT MADE BY ASSESSING OFFICER IN FAVOUR OF ASSESSEE ON LEGAL GROUNDS IN ASSESSEES ITA NO.433/KOL/2014 & CO 48/KOL/2014 A.Y. 2008-09 ACIT CIR-43,KOL. VS. SH. AJAY KR. THAKKAR PAGE 5 CO (48/KOL/2014), HENCE, GROUNDS RAISED BY REVENUE IN REGARD TO A.Y. 2008-09 ON MERITS BECOMES ACADEMIC AND INFRUCTUOUS AND WE DISM ISS THE SAME AS HAVING BECOME INFRUCTUOUS. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 7. IN THE RESULT, CO OF ASSESSEE IS ALLOWED ON LEGAL G ROUNDS AND THAT OF REVENUES APPEAL IS DISMISSED AS HAVING BECOME INFR UCTUOUS. ORDER PRONOUNCED IN OPEN COURT ON 17/03/2017 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S '#$ - 17/03/2017 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /REVENUE-ACIT, CIRCLE-43, 3, GOVT. PLACE (W) KOLKAT A-1 2. /ASSESSEE -SHRI AJAY KR. THAKKAR, 192, J.L. BAJAJ STREET, KOLKATA-007 3. ##%& ' / CONCERNED CIT 4. ' - / CIT (A) 5. ()* ++%& , %& / DR, ITAT, KOLKATA 6. *,- / GUARD FILE. BY ORDER/ , /TRUE COPY/ / # %&,