ACIT, Thanjavur V. Shri T.Samiappan, Thanjavur

ITA 1129/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52043 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-11-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 16-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Keywords: Unexplained investment; Reason to believe
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI D BENCH, CHENNAI. BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER & SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 1129/MDS/2011 ASSESSMENT YEAR: 2002-03 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I, THANJAVUR. VS. SHRI T. SAMIAPPAN, NO.947, EAST GATE, THANJAVUR. [PAN: ANDPS3666G] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.E.B. RENGARAJAN, JR. STANDING COUNSEL ASSESSEE BY : NONE DATE OF HEARING : 1 6 . 1 1 .2011 DATE OF PRONOUNCEMENT : 18.11.2011 ORDER PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), TIRUCHIRAPALLI DATED 23.03.2011 BY TAKING T HE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF LEARNED CIT(A) IS CONTRARY TO LAW, FA CTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. LEARNED CIT(A) FAILED TO APPRECIATE THE FACT TH AT THE ASSESSMENT WAS REOPENED AS PER THE DIRECTIONS OF LEARNED CIT(A) CO NTAINED IN ORDER DATED 07.01.2008 IN ITA NOS.273, 274 & 275/CIT(A)/2006-07 /580. 2.1 LEARNED CIT(A) FAILED TO OBSERVE THAT NOTICE I SSUED U/S 148 OF THE I.T.ACT TO GIVE EFFECT TO FINDING OR DIRECTION CONT AINED IN AN ORDER PASSED BY LEARNED CIT(A) VIDE ITA NOS.273, 274 & 275/CIT(A)/2 006-07/580 DATED I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1129 129129 129/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 2 07.01.2008 IS VERY MUCH VALID AS PER THE PROVISIONS OF SECTION 150 OF THE I.T.ACT. 3. LEARNED CIT(A) FAILED TO APPRECIATE THE FACT TH AT HE CAN'T REVISE THE ORDER OF HIS PREDECESSOR. 4. LEARNED CIT(A) FAILED TO NOTICE THAT THE SOURCE FOR INVESTMENT CONSIDERED IN THE HANDS OF T.SAMIAPPAN(HUF) CANNOT BE THE SOURCE OF INVESTMENT FOR SHRLT.SAMIAPPAN(INDIVIDUAL) AT THE S AME POINT OF TIME. 5. FOR THESE AND OTHER REASONS THAT MAY BE ADDUCED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED CIT(A) MAY BE' CA NCELLED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. NOTICE OF HEARING WAS SENT TO THE RESPONDENT AS SESSEE BY RPAD ON 08.09.2011 AND WAS RECEIVED BY THE ASSESSEE ON 10.0 9.2011 AS PER THE AD CARD OF THE POSTAL AUTHORITY PLACED ON RECORD. NONE WAS PRESENT ON BEHALF OF THE RESPONDENT ASSESSEE WHEN THE CASE WAS CALLED FO R HEARING NOR ANY ADJOURNMENT APPLICATION WAS FILED. HENCE, THE APPEA L WAS HEARD EX-PARTE QUA THE ASSESSEE AND IS BEING DECIDED ON THE BASIS OF THE ARGUMENTS OF THE LD. DR AND THE MATERIAL AVAILABLE ON RECORD. 3. WE HAVE HEARD THE LD. DR, PERUSED THE ORDERS OF LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. THE SHORT ISSUE T O BE DECIDED BY US IN THE REVENUES APPEAL IS THAT WHETHER THE REOPENING OF T HE ASSESSMENT MADE UNDER SECTION 147 OF THE ACT ON THE DIRECTIONS OF T HE LD. CIT(A), TRICHY VIDE ITA NOS. 273, 274 & 275/CIT(A)/2006-07/580 DATED 07 .01.2008 IS PROPER OR NOT. WE FIND FROM THE ASSESSMENT ORDER AT PAGE 2 TH AT THE ASSESSING OFFICER HAS RECORDED AS UNDER: THE ASSESSEE'S ASSESSMENT FOR THE ASST. YEAR 2000- 01 TO 2001-02 I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1129 129129 129/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 3 WERE ALSO COMPLETED BY MAKING ADDITIONS IN RESPECT OF UNACCOUNTED INVESTMENTS MADE IN CONSTRUCTION OF COMMERCIAL COMP LEX. THE ASSESSEE HAS WENT ON APPEAL AGAINST THE ASST. YEAR 2000-01 T O 2002-03 BEFORE THE CIT(APPEALS) TRICHY. THE CIT(APPEALS) TRICHY VIDE I TA NO.273, 274 & 275/CIT(A)/2006-07/580 DATED 7/1/2008 HAS CONFIRMED THE ADDITIONS MADE IN RESPECT OF THE ASSESSMENT FOR THE ASST. YEA R 2000-01 & 2001-02. IN RESPECT OF ASST. YEAR 2002-03, THE CIT(APPEALS) HAS GIVEN A FINDING THAT NO ADDITION HAS BEEN MADE BY THE A.O R EGARDING THE UNDISCLOSED INVESTMENT IN THE CONSTRUCTION OF A SHO PPING COMPLEX IN THE ASST. YEAR 2002-03 FOR THE REASONS BEST KNOWN TO TH E ASSESSING OFFICER AND VIEWED THAT INCOME HAS ESCAPED ASSESSMENT IN TH IS ASST. YEAR BECAUSE THE ASSESSEE HAS MADE PAYMENT OF ` .25.81 LAKHS DURING THE YEAR TO THE CONTRACTORS AND OTHERS TOWARDS COST OF CONST RUCTION OF SHOPPING COMPLEX, SOURCE OF WHICH HAS NOT BEEN EXAMINED BY T HE ASSESSING OFFICER. HE HAS ALSO STATED THAT THE ASSESSING OFFI CER MAY TAKE SUITABLE REMEDIAL ACTION. BASED ON THE ABOVE, THE ASSESSMENT WAS REOPENED U/S 147 BY ISSUE OF NOTICE U/S 148 DATED 17/3/2009. .. 4. A READING OF THE ABOVE SHOWS THAT IT WAS THE OP INION OF THE LD. CIT(A), TRICHY THAT INCOME HAS ESCAPED ASSESSMENT FOR THE I MPUGNED ASSESSMENT YEAR 2002-03. ACCORDING TO SECTION 147 OF THE ACT, IF THE ASSESSING OFFICER HAS REASONS TO BELIEVE THAT ANY INCOME CHARGEABLE T O TAX HAS ESCAPED ASSESSMENT, HE MAY, SUBJECT TO THE PROVISIONS OF SE CTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME BY ISSUE OF NOTICE U NDER SECTION 148 OF THE ACT. THUS, FOR ISSUANCE OF NOTICE UNDER SECTION 148 , IT HAS TO BE THE BELIEF OF THE ASSESSING OFFICER THAT INCOME HAS ESCAPED ASSES SMENT. IN THE INSTANCE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1129 129129 129/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 4 CASE, WE FIND THAT THE ASSESSING OFFICER HAS REOPEN ED THE ASSESSMENT ONLY ON THE BASIS OF THE OPINION EXPRESSED BY THE LD. CI T(A) IN ITS ORDER WHILE DECIDING THE APPEAL FOR THE ASSESSMENT YEARS 2000-0 1 AND 2001-02. THEREFORE, IN OUR CONSIDERED OPINION, THE REOPENING OF THE ASSESSMENT IS BAD IN LAW AND HENCE, THE REASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER DATED 31.12.2009 UNDER SECTION 143(3) R.W.S . 147 OF THE INCOME TAX ACT IS LIABLE TO BE CANCELLED. 5. THE LD. CIT(A) CANCELLED THE REASSESSMENT ORDER BY OBSERVING AS UNDER: 5. I HAVE GONE THROUGH THE RECORDS, THE REASONS R ECORDED FOR RE- OPENING OF THE ASSESSMENT AND THE ORIGINAL ASSESSME NT MADE ON 31.3.2005. IN THE ASSESSMENT COMPLETED U/S 143(3) R EAD WITH 147, ON 31.3.2005, THE AO HAD BROUGHT ON RECORD THAT THE AP PELLANT OBTAINED LOAN FROM LIC IN THE JOINT NAMES OF SHRI S.R.THANGA VEL PILLAI (FATHER) AND SHRI T.SAMIAPPAN, THAT THE AO HAD ACCEPTED THE SOURCES FOR A SUM OF ` .5,17,000/- BEING THE AMOUNT RECEIVED FROM APPELLAN T'S FATHER, THAT THE RENTAL INCOME, RENT ADVANCE RECEIVED AND OTHER INCOME OFFERED FOR THE YEAR WERE SUFFICIENT TO MEET THE COST OF CONSTR UCTION ON COMMERCIAL COMPLEX. THE AO, WITHOUT ANY SHADOW OF DOUBT RECORD ED IN THE ORDER THAT THE SOURCES FOR THE AMOUNT SPENT DURING THE PR EVIOUS YEAR WAS TREATED TO BE EXPLAINED. IN THIS BACKGROUND THE AO, AS EVIDENT FROM HIS LETTER DATED 20.11.2009 HAD REOPENED THE ASSESSMENT IN ORDER TO EXAMINE THE SOURCES OF THE INVESTMENT. IN PARTICULAR, THE A O FAILED TO RECORD HIS SATISFACTION THAT HE HAD REASON TO BELIEVE THAT INC OME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. IN ORDER TO CONSTITUTE A VA LID REASON TO BELIEVE THERE MUST BE SOME NEW MATERIAL COMING INTO LIGHT W ITH THE AO. IT IS I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1129 129129 129/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 5 NOTICED THAT THE AO HAD NOT BROUGHT ON RECORD ANY N EW MATERIAL TO ENTERTAIN A BELIEF THAT INCOME HAD ESCAPED ASSESSME NT. IN THE INSTANCE CASE, THE APPELLANT DISCLOSED ALL BASIC FACTS IN TH E ORIGINAL ASSESSMENT AND AFTER DUE SCRUTINY, THE ASSESSMENT WAS COMPLETE D U/S 143(3) READ WITH 147. UNDER THESE CIRCUMSTANCES, IT IS NOTICED THAT THE REOPENING OF THE ASSESSMENT WAS NOT VALIDLY INITIATED AND, CONSE QUENTLY, THE ASSUMPTION OF JURISDICTION U/S 148 BY THE AO, WAS B AD IN LAW. THEREFORE, THE RE-ASSESSMENT MADE ON 31.12.2009 IS HEREBY CANC ELLED. 6. BEFORE US, THE LD. DR SUBMITTED THAT IN VIEW OF THE PROVISIONS OF SECTION 150 OF THE ACT, THE LD. CIT(A) WAS NOT JUST IFIED IN CANCELLING THE IMPUGNED REASSESSMENT ORDER. WE FIND THAT SECTION 1 50 OVERRIDES PROVISION OF SECTION 149 OF THE ACT, WHICH PROVIDES FOR TIME LIMIT OF ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. THE PROVISION OF SECT ION 150 DOES NOT OVERRIDE THE PROVISION OF SECTION 147 OF THE ACT OR SECTION 148 OF THE ACT. SECTION 148 OF THE ACT PRESCRIBED THAT BEFORE ISSUANCE OF NOTIC E UNDER SECTION 148, THE ASSESSING OFFICER MUST HAVE REASONS TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. SUCH BELIEF HAS TO B E OF THE ASSESSING OFFICER AND NOT OF ANY OTHER PERSON. FURTHER, SECTI ON 148 REQUIRES THE ASSESSING OFFICER TO RECORD HIS REASONS FOR WHICH H E BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT IS A S ETTLED POSITION OF LAW THAT NOTICE UNDER SECTION 148 CANNOT BE ISSUED MERELY FO R VERIFYING THE INFORMATION ALREADY AVAILABLE OR FOR MAKING A ROAMI NG OR FISHING ENQUIRY. THE LD. CIT(A) RECORDED A FINDING THAT THE CONDITIONS L AID DOWN IN SECTION 147 AND I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1129 129129 129/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 6 148 OF THE ACT ARE NOT FULFILLED IN THE INSTANT CAS E, WHICH COULD NOT BE DISPUTED BY THE REVENUE. FURTHER, IN VIEW OF THE EX PLANATION 2 AND 3 TO SECTION 153 OF THE ACT, IN OUR CONSIDERED VIEW, NO DIRECTION FOR THE PURPOSE OF SECTION 150 WAS GIVEN BY THE LD. CIT(A), TRICHY IN HIS ORDER DATED 07.01.2008 IN ITA NOS. 273, 274 & 275/CIT(A)/2006-07/580. IN T HE ABOVE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY MERITS IN THE APP EAL OF THE REVENUE AND HENCE IT IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.11.2011. SD/- SD/- (GEORGE MATHAN) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER CHENNAI, DATED, THE 18.11.2011 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.