Sakti Prasad Royburman, Kolkata V. ADIT(IT),2(1),Kolkata, Kolkata

ITA 1017/KOL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1627 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2013
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 03-07-2012
• Court: TRIBUNAL
• Department Lawyers: A H CHOWDHURY
• Assessee Lawyers: K K SARKAR
• Keywords: Tangible material; Difference of opinion; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [ () . .. . . .. . , ,, , , ! ''# $ ''# $ ''# $ ''# $ ] ]] ] [BEFORE HONBLE SRI P.K.BANSAL, AM & HONBLE SRI GEORGE MATHAN, JM] !& !& !& !& /ITA NO.1017/KOL/2012 '( )*/ ASSESSMENT YEAR : 2004-05 ($, / APPELLANT ) - - ( ./$, /RESPONDENT) SAKTI PRASAD ROYBURMAN A.D.I.T.,(IT)-2(1) KOLKATA -VERSUS- KOLKATA (PAN: AFGPR 8497 H ) $, 0 1 / FOR THE APPELLANT: SHRI K.K.SARKAR ./$, 0 1 / FOR THE RESPONDENT: SHRI A.H.CHOWDHURY, SR.DR 2 3 0 4 /DATE OF HEARING : 07.02.2013 5) 0 4 /DATE OF PRONOUNCEMENT : 07.02.2013. 6 / ORDER PER BENCH THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. C.I.T. (A)-VI, KOLKATA DATED 02.04.2012. 2. EVEN THOUGH THE ASSESSEE HAS TAKEN FOUR EFFECTI VE GROUNDS OF APPEAL GROUND NO.1 IS ON MERIT WHILE GROUND NOS.2 ,3 AND 4 RELATE TO THE JURISDICTION OF THE ASSESSING OFFICER FOR MAKING ASSESSMENT U/S 147 R.W.S.143(3) OF THE IT ACT. SINCE GROUND NOS. 2 AND 3 RELATE TO THE VALIDITY OF THE ASSESSMENT WE, THEREFORE TAKE UP GROUND NO.2 AND 3. 3. IN THIS CASE THE BRIEF FACTS RELATING TO THESE GROUNDS ARE THAT THE ASSESSMENT U/S 143(3) OF THE ACT WAS PASSED IN THIS CASE ON 21.12. 2006. SUBSEQUENTLY THE ASSESSING OFFICER ISSUED NOTICE U/S 148 OF THE ACT ON 31.3.20 08 BY QUOTING THE FOLLOWING REASONS :- SAKTI PRASAD ROY BURMAN (A.Y.2004-05) REASONS FOR ISSUE OF NOTICE U/S 148 ITA NO.1017/KOL/2012 2 THIS CASE WAS SELECTED FOR SCRUTINY AFTER TAKING AP PROVAL FROM DIT (INT,. TAXN.) KOLKATA, INTER ALIA ON THE GROUND THAT THE RECEIPT OF RS.10, 05,496/- ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION, THOUGH ADDED TO THE CAPITAL A CCOUNT BUT NO CORRESPONDING INCOME WAS CREDITED TO THE P&L A/C. IN RESPONSE TO QUERY I N THIS REGARD, THE ASSESSEE SUBMITTED THAT THE GRAIN DUE TO FOREIGN EXCHANGE FLUCTUATION WAS IN THE NATURE OF CAPITAL APPRECIATION AND HENCE NOT OFFERED FOR TAXATION. SU CH EXPLANATION OF THE ASSESSEE WAS ACCEPTED. ASSESSEES EXPLANATION WAS PRIMA FACIE UNACCEPTA BLE DUE TO THE FOLLOWING REASONS : I) EXCHANGE RATE FLUCTUATION GAIN IS A TANGIBLE GAIN AND HENCE IN THE NATURE OF INCOME CHARGEABLE TO TAX. II) THAT IT WAS NOT NOTIONAL IN NATURE WAS EVIDENT FROM THE FACT THE ASSESSEE HAD APPARENTLY MADE INVESTMENTS DURING THE EAR BY UTILI ZING SUCH RESOURCE. III) THE EXCHANGE FLUCTUATION RATE VIS--VIS THE APPRECI ATION IN ASSESSEES FOREIGN EXCHANGE BALANCE IN THE FCNR A/C APPEARS TO BE DISP ROPORTIONATE IN THE SENSE THAT THE GAIN WAS TOO HIGH COMPARED TO THE BALANCE. THE CUMULATIVE EFFECT OF THE ABOVE FACTS LEADS TO THE CONCLUSION THAT MAJOR PART OF THE CREDIT IN ASSESSEES CAPITAL ACCOUNT UNDER THE GARB OF FOREIGN EXCHANGE FLUCTUATION GAIN WAS NOTHING BUT ASSESSEES INCOME FROM UNDISC LOSED SOURCES WHICH HAS ESCAPED ASSESSMENT. BESIDES, IT IS ALSO OBSERVED THAT RENTA L INCOME OF LAST YEAR RECEIVED DURING THE YEAR WAS NOT OFFERED TO TAX DURING THE LAST YEA R ON ACCRUAL BASIS AND SHOULD HAVE BEEN CHARGED TO TAX IN THIS YEAR. IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEV E THAT INCOME HAS ESCAPED ASSESSMENT. ISSUE NOTICE U/S 148 TO THE ASSESSEE. SD/- (ABHIJIT KUNDU) ADIT-(IT)-II, KOL 4. THE ASSESSMENT HAS BEEN REOPENED ON ACCOUNT OF R ECEIPT OF RS.10,05,496/- ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION. THIS ISSUE REGARDING THE RECEIPT OF RS.10,05,496/- AS APPARENT FROM THE REASONS RECORDE D BY THE AO WAS CONSIDERED IN THE ASSESSMENT ORDER U/S 143(3) AND THE AO CORRESPONDIN GLY ACCEPTED THE EXPLANATION OF THE ASSESSEE AND DID NOT MAKE ANY ADDITION IN THE A SSESSMENT. SUBSEQUENTLY THE ASSESSMENT WAS REOPENED FOR MAKING THIS ADDITION. U LTIMATELY ASSESSMENT U/S 147 R.W.S.143(3) OF THE ACT WAS MADE AND ADDITIONS ON T HIS ACCOUNT WERE MADE TO THE EXTENT OF RS.9,38,012/-. THE ASSESSEE WENT IN APPEA L BEFORE THE LD. CIT(A) BOTH ON LEGALITY AND ON MERIT. THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDER ED THE SAME. AS APPARENT FROM THE REASONS RECORDED BY THE ASSESSING OFFICER U/S 148(2) IT IS A CLEAR CASE OF ITA NO.1017/KOL/2012 3 CHANGE OF OPINION. THUS THE REASONS RECORDED BY THE AO, IN OUR OPINION, ARE NOT BONA FIDE. THIS ISSUE IS NO MORE RES JUDICATE IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS KELVINATOR OF INDIA LIM ITED 320 ITR 561 WHICH HELD AS UNDER :- THE CONCEPT OF CHANGE OF OPINION ON THE PART OF THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT DOES NOT STAND OBLITERATED AFTER THE SUB STITUTION OF SECTION 147 OF THE INCOME-TAX ACT, 1961, BY THE DIRECT TAX LAWS (AMEND MENT) ACTS, 1987 AND 1989, AFTER THE AMENDMENT, THE ASSESSING OFFICER HAS TO HAVE RE ASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, BUT THIS DOES NOT IMPLY THAT TH E ASSESSING OFFICER CAN REOPEN AN ASSESSMENT ON MERE CHANGE OF OPINION. THE CONCEPT O F CHANGE OF OPINION MUST BE TREATED AS AN IN-BUILT TEST TO CHECK THE ABUSE OF P OWER. HENCE AFTER APRIL 1, 1989, THE ASSESSING OFFICER HAS POWER TO REOPEN AN ASSESSMENT , PROVIDED THERE IS TANGIBLE MATERIALS TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASON MUST HAVE A LINK WITH THE FORMAT ION OF THE BELIEF. 5.1. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) AND QUASH THE RE- ASSESSMENT FRAMED BY THE AO. THUS WE ALLOW GROUND N OS 2 TO 4 OF THE ASSESSEE. SINCE WE HAVE ALREADY QUASHED THE RE-ASSESSMENT, IN OUR O PINION, GROUND NO.1 ON MERIT WILL NOT SURVIVE AND DOES NOT REQUIRE ANY ADJUDICATION. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 07.02.2013. SD/- SD/- [ .''# $ , ] [ .., ,, , ] [ GEORGE MATHAN ] [P.K.BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (4 4 4 4) )) ) DATE: 07.02.2013. R.G.(.P.S.) ITA NO.1017/KOL/2012 4 6 0 .''7 87)9- COPY OF THE ORDER FORWARDED TO: 1. SAKTI PRASAD ROYBURMAN, 6, LITTLE RUSSEL STREET, 5 TH FLOOR, KHADIM INDIA LTD., KOLKATA-700071. 2 ASST.DIRECTOR OF INCOME TAX (IT)-2(1), KOLKATA 3 . CIT KOLKATA 4 . CIT(A)-VI, KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. /7 .'/ TRUE COPY, 62/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES