Sadiqali Gulamhusain Savjani, Bhavnagar V. The ACIT (OSD), Ward-2(4), Bhavnagar

ITA 1118/AHD/2018

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The case involves Sadiqali Gulamhusain Savjani, the appellant, who contested the reassessment order for the Assessment Year 2010-11 issued by the Assessing Officer under Section 147 of the Income Tax Act, 1961. The reassessment was based on the belief that income had escaped assessment, specifically an amount of Rs.15,22,100, which was initially misinterpreted by the Assessing Officer as the assessee's gross receipts. However, it was later clarified that this amount pertained to purchases made by the assessee, on which Tax Collected at Source (TCS) was deducted. The Tribunal found that the Assessing Officer's initial belief was based on a misinterpretation of the data from Form No. 26AS and constituted a non-application of mind, leading to the setting aside of the reassessment order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299908 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-03-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 02-05-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS; Set aside; FORM 26AS
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MRS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No. 1118/Ahd/2018 िनधा रणवष /Assessment Year: 2010-11 Sadiqali Gulamhusain Savjani, Gulubhai ni wadi, Gopinath Road, Talaja, Bhavnagar-364 140 PAN : AFQPS 3553 P Vs. The ACIT (OSD), Ward 2(4), Bhavnagar / (Appellant) / (Respondent) Assessee by : Shri Parimalsinh B. Parmar, AR Revenue by : Shri B.P. Makwana, Sr. DR सुनव ई क त र ख/Date of Hearing : 22.03.2023 घोषण क त र ख /Date of Pronouncement: 29.03.2023 आदेश/O R D E R The present appeal has been filed by the assessee against order of the learned Commissioner of Income-tax (Appeals)-6, Ahmedabad [hereinafter referred to as "CIT(A)" for short] dated 06.03.2018 passed under Section 250(6) of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short] for the Assessment Year (AY) 2010-11. 2. Ground No.1 raised by the assessee challenges the validity of the assessment framed in the present case under Section 147 of the Act. The ground raised reads as under:- “1. The Ld. CIT(A) has erred, both in law and on the facts of the case, in not appreciating that action of reopening under section 147 of the Act is not justified at all.” 3. I have heard both the parties. In the facts of the present case, reassessment proceedings were initiated by the Assessing Officer and assessment framed under Section 147 of the Act on account of the Assessing (SMC) ITA No. 1118/Ahd/2018 Sadiqali Gulamhusain Savjani Vs. The ACIT AY : 2010-11 2 Officer being in possession of information that the income of the assessee had escaped assessment to the tune of Rs.15,22,100/-. Perusal of the assessment order reveals that the information in possession of the Assessing Officer was that the gross receipts of the assessee during the year were Rs.15,22,100/- and TDS thereon amounted to Rs.15,244/-; but the assessee had declared taxable income of Rs.1,42,043/- only. This is evident from paragraph No.1 of the assessment order where the Assessing Officer notes the above facts and thereafter mentions that, after recording of reasons, notices were served to the assessee. This information was gathered by the Assessing Officer from Form No. 26AS, which is assessee-wise data of all transactions on which TDS/TCS is deducted and is collated in Form No. 26AS by the Department. A further perusal of the assessment order reveals that on the assessee responding to the notices issued by the Assessing Officer during the reassessment proceedings and pointing out that the amount of Rs.15,22,100/- did not represent his gross receipts but in fact related to purchase made by him on which tax was collected at source (TCS) of Rs.15,244/-, the Assessing Officer goes on to treat the impugned amount of Rs.15,22,100/- as unexplained expenditure of the assessee and makes addition of the same to his income on not being satisfied with the reply filed by the assessee explaining and substantiating the source of making the said purchase. 4. It is amply clear from the above that the Assessing Officer, despite having clear information relating to the assessee from 26AS before him, that the transactions of Rs.15,22,100/- reflected therein related to purchase made by the assessee and the amount collected there from was TCS, he still read the data in Form 26AS as representing the receipts of the assessee on which TDS was deducted. This is a classic case of non-application of mind by the (SMC) ITA No. 1118/Ahd/2018 Sadiqali Gulamhusain Savjani Vs. The ACIT AY : 2010-11 3 Assessing Officer to the information before him .On account of this non- application of mind, the Assessing Officer’s belief of escapement of income, on account of unaccounted receipts of the assessee amounting to Rs.15,22,100/- was a wrong and incorrect belief. And on the basis of this incorrect belief, I hold, the assumption of jurisdiction by the Assessing Officer surely to reassess the income of the assessee was invalid and not in accordance with law. 5. Even otherwise, the mere information that the assessee had gross receipts or for that matter that he had made purchases to the tune of Rs.15,22,100/- during the year, cannot lead to the formation of belief of escapement of income, when the Assessing Officer notes that the assessee had filed return of income declaring taxable income of Rs.1,42,043/-. The Assessing Officer has shown no correlation between the gross-receipts and the taxable income which the assessee ought to have reflected on account of the same. The gross receipts or the purchases surely could not have formed his total taxable income. There was no other information in the possession of the Assessing Officer to the effect that this gross receipt or purchase was not considered by the assessee while computing his taxable income at Rs.1,42,043/-. In the absence of any correlation between the information of gross receipts/purchase of the assessee during the year and the income reflected by him, the information in the possession of the Assessing Officer cannot even have lead to any suspicion of escapement of income. 6. Therefore, for the above reasons, we hold the jurisdiction assumed by the Assessing Officer to reopen the case of the assessee under Section 147 of the Act was not based on a valid belief of escapement of income which is a (SMC) ITA No. 1118/Ahd/2018 Sadiqali Gulamhusain Savjani Vs. The ACIT AY : 2010-11 4 necessary prerequisite for the same; and, therefore, the assessment framed as a consequence is liable to be set aside as invalid. 7. Ground of appeal No.1 is accordingly allowed. 8. Remaining grounds raised by the assessee on merits of the case need no separate adjudication since they are mere academic in nature. 9. In the result, the appeal of the assessee is allowed in above terms. Order pronounced in the open Court on 29 th March, 2023 at Ahmedabad. Sd/- (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad; Dated 29/03/2023 **bt आदेश आदेशआदेश आदेश क琉 क琉क琉 क琉 灹ितिलिप 灹ितिलिप灹ितिलिप 灹ितिलिप अ灡ेिषत अ灡ेिषतअ灡ेिषत अ灡ेिषत/Copy of the Order forwarded to : 1. अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸 / The Appellant 2. 灹瀄यथ牸 灹瀄यथ牸灹瀄यथ牸 灹瀄यथ牸 / The Respondent. 3. संबंिधत संबंिधतसंबंिधत संबंिधत आयकर आयकरआयकर आयकर आयु猴 आयु猴आयु猴 आयु猴 / Concerned CIT 4. आयकर आयकरआयकर आयकर आयु猴 आयु猴आयु猴 आयु猴)अपील अपीलअपील अपील (/ The CIT(A)- 5. िवभागीय िवभागीयिवभागीय िवभागीय 灹ितिनिध 灹ितिनिध灹ितिनिध 灹ितिनिध ,आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण/DR,ITAT, Ahmedabad, 6. गाड榁 गाड榁गाड榁 गाड榁 फाईल फाईलफाईल फाईल /Guard file. आदेशानुसार आदेशानुसारआदेशानुसार आदेशानुसार/ BY ORDER, TRUE COPY सहायक सहायकसहायक सहायक पंजीकार पंजीकारपंजीकार पंजीकार (Asstt. Registrar) आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण ITAT, Ahmedabad 1. Date of dictation ...24.03.2023... 2. Date on which the typed draft is placed before the Dictating Member :..... 24.03.2023.......... 3. Other Member........................ 4. Date on which the approved draft comes to the Sr.P.S./P.S...27.03.2023....................... 5. Date on which the fair order is placed before the Dictating Member for pronouncement......29.03.2023. 6. Date on which the fair order comes back to the Sr.P.S./P.S...29.03.2023................ 7. Date on which the file goes to the Bench Clerk......30.03.2023.......... 8. Date on which the file goes to the Head Clerk... 9. The date on which the file goes to the Assistant Registrar for signature on the order............ 10. Date of Despatch of the Order..................