Shri Prahladsinh Juwansinh Parmar, Surendranagar V. The Commissioner of Income Tax (Appeals) XVI, Ahmedabad

ITA 10/RJT/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7309 (ITAT-RAJKOT)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 17-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: J C RANPURA
• Keywords: Reopening of assessment; Income from undisclosed sources; Search and seizure; Tangible material; Difference of opinion; Assessment record; Reason to believe; Change of opinion
• Section: 143(3); 147; 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH SMC, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) I.T.A. NO.10/RJT/2011 - AY 2004-05 PRAHLADSINH JUVANSINH PARMAR VS ACIT, SURENDRANAGA R CIRCLE DILKUNJ, CAUSEWAY ROAD SURENDRANAGAR JORAVARNAGAR DIST : SURENDRANAGAR PAN : AHLPP0061A (APPELLANT) (RESPONDENT) I.T.A. NO.11/RJT/2011 - AY 2004-05 DEVENDRASINH JUVANSINH PARMAR VS ACIT, SURENDRANAG AR CIRCLE DILKUNJ, CAUSEWAY ROAD SURENDRANAGAR JORAVARNAGAR DIST : SURENDRANAGAR PAN : AHLPP0064F (APPELLANT) (RESPONDENT) APPELLANTS BY : SHRI JC RANPURA RESPONDENT BY : : SHRI AVINASH KUMAR O R D E R BOTH THESE APPEALS FILED BY DIFFERENT ASSESSEES AR E DIRECTED AGAINST THE ORDERS OF CIT(A)-XVI BOTH DATED 06-12-2010 FOR THE ASSESSMENT YEAR 2004-05. 2. THE COMMON GROUNDS RAISED IN BOTH THE APPEALS AR E BASED ON IDENTICAL SET OF FACTS. THEREFORE, FOR THE SAKE OF CONVENIEN CE, BOTH THE APPEALS ARE DECIDED BY THIS COMMON ORDER. 3. THE FIRST COMMON GROUND RAISED IN BOTH THE APPEA LS IS IN RESPECT OF REOPENING OF ASSESSMENT AND THE SECOND GROUND PERTA INS TO QUANTUM ADDITION OF RS. 2,08,500 IN CASE OF SHRI PRAHLADSINH J PARMAR AND RS. 2,74,000 SHRI DEVENDRASINH J PARMAR. THE LEARNED REPRESENTATIVES OF THE PARTIES SUBMITTED ITA NO.10/RJT/2011 ITA NO.11/RJT/2011 2 THAT A DETAILED DISCUSSION OF THE CASE IS IN CASE O F PRAHLADSINH J PARMAR. I ACCORDINGLY CONSIDER THE FACTS NARRATED IN THE CASE OF PRAHLADSINH J PARMAR. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED RETURN OF INCOME DATED 29-10-2004. THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 25-09-2006. THE CASE WAS REOPENED AND NOTICE U/S 148 WAS ISSUED ON 12-12-2008. THE REASONS RECORDED BY THE ASSESSING OFFICER AS PER TH E ASSESSMENT ORDER ARE THAT WHILE SCRUTINIZING THE CASE OF SHRI JUVANSINH PARM AR, FATHER OF THE ASSESSEE FOR ASSESSMENT YEAR 2004-05 IN RELATION TO AGRICULTURAL ACTIVITIES AND CONSEQUENT SALE PROCEEDS IT WAS FOUND THAT THE ASSESSEE HAS CL AIMED TO HAVE SOLD TAL FOR RS.92,000 TO SHRI SADRUDDIN KALYANBHAI OF CHUDA VIL LAGE. A SUMMONS U/S 131 OF THE ACT WAS ISSUED BY THE THEN ASSESSING OFFICER TO SHRI SADRUDDIN KALYANBHAI AND HIS STATEMENT WAS RECORDED ON OATH. THE SAID P ERSON CATEGORICALLY DENIED TO HAVE PURCHASED THE QUANTITY OF TAL AS REFLECTED IN LETTERHEAD. HE ALSO DENIED TO HAVE SIGNED THE LETTER OR ANY COMMUNICATION FOR PURCHASE OF TAL. THUS, THE SALE PROCEEDS WERE CONSIDERED BOGUS AND INGENUINE A ND THEREFORE, SALE PROCEEDS OF TAL OF RS.92,000 WAS TREATED AS INCOME FROM UNDISCLOSED SOURCES OF SHRI JUVANSINH PARMAR. ON THE BASIS OF THAT ADDITI ON OF RS.92,000 HAS BEEN MADE BY THE THEN ASSESSING OFFICER WHICH HAS BEEN L ATER CONFIRMED BY CIT(A) AND THE ITAT. THE ASSESSING OFFICER THEREFORE OBSE RVED THAT ON THE SIMILAR GROUNDS AS THE SALE PROCEEDS CONSISTED THE NAME OF SHRI PRAHLADSINH PARMAR SELLING TAL TO SHRI SADRUDDIN KALYANBHAI FOR RS.2,0 8,500 IS ALSO REQUIRED TO BE ADDED IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER, AFTER CONSIDERING ASSESSEES SUBMISSION MADE THE ADDITION OF RS.2,08, 500 ON ACCOUNT OF SALE OF TAL CONSIDERING IT AS BOGUS AND UNEXPLAINED AND TAX ED THE SAME U/S 68 OF THE ACT. 5. THE CIT(A) CONFIRMED THE ADDITION BY OBSERVING T HAT THE FACT MENTIONED IN THE ASSESSEES CASE ARE EXACTLY THE SAME AS IN THE CASE OF JUVANSINGH J PARMAR IN WHOSE CASE THE ITAT HAS CONFIRMED THE ADDITION O N THE BASIS OF SAME PAPER. AS REGARDS REOPENING OF THE ASSESSMENT IS CONCERNED , THE CIT(A) HELD THAT THE ITA NO.10/RJT/2011 ITA NO.11/RJT/2011 3 SAME IS IN ORDER BECAUSE AN OUTSIDE INFORMATION HAS COME ON THE BASIS OF WHICH THE ASSESSMENT WAS REOPENED. 6. THE LD.AR WHILE REFERRING TO THE ORIGINAL ASSESS MENT ORDER DATED 25-09- 2006 OF WHICH COPY HAS BEEN PLACED A T PAGES 1 TO 5 OF ASSESSEES PAPER BOOK HAS SUBMITTED THAT THE ASSESSING OFFICER HAS EXAMIN ED THE AGRICULTURAL INCOME IN DETAIL. AFTER DETAILED EXAMINATION OF AGRICULTURAL INCOME, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DID NOT MAINTAIN ANY REG ULAR BOOKS OF ACCOUNT FOR CREDITING / DEBITING THE AGRICULTURAL INCOME. AFTER EXAMINING THE DOCUMENTS RELATING TO AGRICULTURAL INCOME, THE ASSESSING OFFI CER NOTED CERTAIN FACTS AT PAGES 3 & 4 OF THE ORIGINAL ASSESSMENT ORDER. THE ASSESS ING OFFICER ALSO EXAMINED THE BILLS OF TAL OBTAINED BY THE ASSESSEE. AT PARAGRAP H 4.2 THE ASSESSING OFFICER NOTED THAT THESE BILLS ARE OBTAINED COMMONLY FOR AL L THE THREE ASSESSEES, VIZ. JUVANSINH J PARMAR, FATHER OF THE ASSESSEE, SHRI PR AHLADSINH J PARMAR AND SMT. NANDKUWARBAI PARMAR, MOTHER OF THE ASSESSEE AND SHR I DEVENDERSINH JUWANSINH PARMAR, BROTHER OF THE ASSESSEE AND ALSO FOR THE ASSESSEE HIMSELF. AFTER EXAMINING ALL THESE, THE ASSESSING OFFICER ES TIMATED AGRICULTURAL INCOME OF RS.2,30,000 AND THE BALANCE AMOUNT OF RS.32,892 IS TREATED AS INCOME FROM OTHER SOURCES AND TAXED U/S 68 OF THE ACT. THE LD.A R SUBMITTED THAT IT IS CLEARLY A CASE OF CHANGE OF OPINION AND IN CASE OF CHANGE OF OPINION, THE CASE CANNOT BE REOPENED. THE LD.AR RELIED UPON THE JUDGMENT OF GU JARAT HIGH COURT IN THE CASE OF VIKAS PRINTERY VS ACIT (INV) 270 ITR 68 (GUJ) AN D CIT VS KELVINATOR OF INDIA LTD 320 ITR 561 (SC). IT IS ALSO THE SUBMISSION OF THE LD.AR THAT THE ASSESSEE FILED AN AFFIDAVIT OF SHRI SADRUDDIN KALYANBHAI BEF ORE THE CIT(A) WHEREIN IT HAS BEEN ADMITTED THAT TAL WAS SOLD. THE LD.AR SUBMITT ED THAT THE CIT(A) ERRED IN NOT CONSIDERING THE SAID AFFIDAVIT. THE LD.AR IN S UPPORT OF HIS CONTENTION HAS RELIED UPON THE FOLLOWING DECISIONS: MEHTA PARIKH & CO VS CIT 30 ITR 181 (SC) DILIP KUMAR ROY VS CIT 94 ITR 1 (BOM) ACIT VS VASANTLAL C MEHTA 77 ITD 76 (RAJ) ITA NO.10/RJT/2011 ITA NO.11/RJT/2011 4 IT IS ALSO THE SUBMISSION OF THE LD.AR THAT THE ASS ESSING OFFICER DID NOT PROVIDE COPY OF REASONS RECORDED INSPITE OF REQUESTS FOR TH E SAME. 7. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE OR DER OF CIT(A) AND ASSESSING OFFICER. 8. I HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES, RECORD PERUSED. THE ADMITTED FACTS OF THE CASE ARE THAT IN ORIGINAL ASSESSMENT, THE ASSESSING OFFICER HAS EXAMINED THE ISSUE RELATING TO AGRICULT URAL INCOME. THE SO-CALLED BILLS OF TAL SOLD WHICH WAS NOTICED DURING THE COURSE OF SCRUTINY OF ASSESSMENT IN THE CASE OF SHRI JUVANSINH J PARMAR, FATHER OF THE ASSE SSEE HAS ALSO BEEN CONSIDERED BY THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT. AFTER DETAILED EXAMINATION AND RECORDING THE FACTS AT THE TIME OF ORIGINAL ASSDESSMENT, THE ASSESSING OFFICER ACCEPTED THE AGRICULTURAL INC OME ON ESTIMATE BASIS TO THE EXTENT OF RS.2,30,000 AGAINST THE ASSESSEES CLAIM FOR AGRICULTURAL INCOME OF RS.2,62,892. IT WILL BE RELEVANT TO REPRODUCE THE FINDINGS OF THE ASSESSING OFFICER FROM THE ORIGINAL ASSESSMENT: 4.2 THUS, THE EXPENSES CLAIMED TO HAVE INCURRED TO EARN AGRICULTURAL INCOME ARE NOT FOUND TO BE SUPPORTED W ITH SUPPORTING VOUCHERS, MONEY RECEIPTS, ETC. THE ASSESSEE HAS BE EN ASKED TO FURNISH THE FULL NAMES AND ADDRESSES OF THESE PERSO NS SO AS TO VERIFY THE PAYMENTS MADE TO THEM. THE ASSESSEE HAS SOLD THE TAL TO ONE SHRI SADFDRUDIN KALYANBHAI OF CHUDA WHO IS C OTTON YARN AND COTTON WEST MERCHANT BUT HE HAS PURCHASED TAL. THE SE BILLS ARE OBTAINED COMMONLY FOR ALL THE THREE ASSESSEES, I.E. JUWANSINGH J PARMAR (FATHER OF THE ASSESSEE), SHRI PRAHLADBHAI J PARMAR (BROTHER OF THE ASSESSEE), NANDKUNVERBA J PARMAR (M OTHER OF THE ASSESSEE) AND THE ASSESSE HIMSELF. THE DATES FOR P URCHASE OF TAL IN RESPECT OF THE ASSESSEE IS OF RS.96000/- ON 4.2. 2004 AND RS.1,12,500/- ON 18.07.2003. THE TAL IS SOLD AT TH E PLACE WHERE THEY WERE GROWN I.E. IN THE AGRICULTURAL LANDS. HO WEVER, NO LOCATION OF AGRICULTURAL LAND IS GIVEN BY THE ASSESSEE. FRO M THE ABSTRACTS OF VILLAGE SPECIMEN 7/12, IT IS SEEN THAT FOR THE ASSE SSMENT YEAR 2004-05 (PREVIOUS YEAR 2003-04), IN THE PRINTED FOR M, IT IS MENTIONED THAT DETAILS ARE NOT AVAILABLE WITH NAYAB MAMLATDAR OF ITA NO.10/RJT/2011 ITA NO.11/RJT/2011 5 MULI TALUKA. HOWEVER, THROUGH HANDWRITING, THE DET AILS OF JIRU, TAL AND KAPAS IS MENTIONED. THE 7/12 FORMS ARE COMPUTE RIZED FILLED DATA DULY SIGNED BY A RESPONSIBLE OFFICER AND NO MA NUAL ENTRY IS NOT POSSIBLE. THEREFORE, IT IS EVIDENT THAT THE PANCHA YAT HAS NO RECORD OF AGRICULTURAL CROPS TAKEN IN THE FARMS MENTIONED. THERE IS NO EVIDENCE IN POSSESSION OF THE ASSESSEE THAT HE HAS PURCHASED THE RAW SEEDS WHICH ARE NECESSARY AND INITIAL PROCESS O F AGRICULTURAL OPERATIONS. HOWEVER, SINCE THE ASSESSEE IS A AGRIC ULTURIST AND IN HIS PAST ASSESSMENT RECORDS, THE AGRICULTURAL AND A GRICULTURAL INCOME IS NOT DENIED, FOR THE PRESENT ASSESSMENT YE AR, THE AGRICULTURAL INCOME IS NOT DENIED. HOWEVER, SINCE FULL RECORDS HAVE NOT BEEN MAINTAINED BY THE ASSESSEE FOR INCOME AS W ELL AS FOR EXPENSES, THE AGRICULTURAL INCOME IS ESTIMATED AT R S.2,30,000/- AND THE BALANCE AMOUNT OF RS.32,892/- IS TREATED AS INC OME FROM OTHER SOURCES AND TAXED U/S 68 OF THE ACT. 9. I AM CONSCIOUS OF THE CIRCUMSTANCES THAT IN THE PRESENT CASE, THE REOPENING OF THE ASSESSMENT IS SOUGHT TO BE EFFECTE D WITHIN A PERIOD OF FOUR YEARS AFTER THE EXPIRY OF THE RELEVANT ASSESSMENT Y EAR. HOWEVER, IT IS NOW WELL SETTLED POSITION OF LAW THAT A MERE CHANGE OF OPINI ON WOULD NOT JUSTIFY THE ASSESSING OFFICER TO SEEK RECOURSE TO POWER U/S 147 / 148 AND THERE MUST BE TANGIBLE MATERIAL BEFORE THE ASSESSING OFFICER TO P ROVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE PRINCIPLE THAT THE RE MUST BE TANGIBLE MATERIAL ON THE BASIS OF WHICH AN ASSESSMENT IS SOUGHT TO BE REOPENED EVEN WITHIN THE PERIOD OF FOUR YEARS IS NOW ESTABLISHED IN VIEW OF THE JUDGMENT OF SUPREME COURT IN THE CASE OF CIT VS KELVINATOR INDIA LTD 320 ITR 561 (SC). THE SUPREME COURT HAS HELD THUS - THEREFORE, POST 1 ST APRIL, 1989, POWER TO RE-OPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATI ON TO THE WORDS REASON TO BELIEVE FAILING WHICH, WE ARE AFRAID, S ECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO R E-OPEN ASSESSMENTS ON THE BASIS OF MERE CHANGE OF OPINION , WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KE EP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND P OWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO RE VIEW; HE HAS THE POWER TO RE-ASSESS. BUT RE-ASSESSMENT HAS TO B E BASED ON FULFILLMENT OF CERTAIN PRE-CONDITION AND IF THE CON CEPT OF CHANGE OF OPINION IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF RE-OPENING THE ASSESSMENT, REV IEW WOULD TAKE ITA NO.10/RJT/2011 ITA NO.11/RJT/2011 6 PLACE. ONCE MUST TREAT THE CONCEPT OF CHANGE OF O PINION AS AN IN- BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1 ST APRIL, 1989, ASSESSING OFFICER HAS POWER TO RE-OPE N, PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. 10. IN THE PRESENT CASE THERE WAS NO FRESH TANGIBL E MATERIAL ON THE BASIS OF WHICH THE ASSESSMENT COULD HAVE BEEN REOPENED. WHA TEVER THE MATERIAL RELIED UPON FOR REOPENING HAS ALREADY BEEN CONSIDERED IN O RIGINAL ASSESSMENT. THEREFORE, THIS IS A CASE OF MERE CHANGE OF OPINION WITHOUT TANGIBLE MATERIAL. THE REOPENING OF THE ASSESSMENT ON THIS GROUND IS H ENCE UNSUSTAINABLE. 11. THE LD.AR MADE SUBMISSION ON ALTERNATIVE GROUND IN RESPECT OF THE QUANTUM BUT SINCE I HAVE DECIDED THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE, I DO NOT THINK NECESSARY TO GO INTO THOSE CONTENTIONS RA ISED BY THE LD.AR 12. THE LD.REPRESENTATIVE SUBMITTED THAT THE FACTS OF THE CASE IN DEVENDRASINH J PARMAR ARE IDENTICAL AND THEREFORE THAT APPEAL IS DECIDED ACCORDINGLY. 13. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED, AS INDICATED ABOVE ORDER PRONOUNCED IN THE OPEN COURT ON 18- 03-2011 . SD/- (A.L. GEHLOT) ACCOUNTANT MEMBER RAJKOT, DT : 18 TH MARCH, 2011 PK/- ITA NO.10/RJT/2011 ITA NO.11/RJT/2011 7 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-XVI, AHMEDABAD 4. THE CIT-V, AHMEDABAD 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT