ITO, CHENNAI V. Shri Ashok G.Wadhwa, CHENNAI

ITA 1137/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64213 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 23-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VI KRAMADITYA
• Keywords: Reopening of assessment
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI. BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 1137/MDS/2012 ASSESSMENT YEAR: 2002- 03 THE INCOME TAX OFFICER, BUSINESS WARD XII(1), ROOM NO. 607, NEW BLOCK, AAYAKAR BHAVAN, 121, M. G. ROAD, CHENNAI 600 034. VS. SHRI ASHOK G. WADHWA, PROP. KWALITY BRIGHT STEEL ALLY, NEW NO. 25, OLD NO. 137, SIDCO INDUSTRIAL ESTATE, CHENNAI 600 098. [PAN: AACPA9621M] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIKRAMADITYA, JCIT RESPONDENT BY : NONE DATE OF HEARING : 24.07.2012 DATE OF PRONOUNCEMENT : 28.08.2012 ORDER PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE DEPARTMENT AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) XII, CHENNAI D ATED 15.02.2012 IN ITA NO. 249/2009-10 FOR THE ASSESSMENT YEAR 2002-03 . SHRI VIKRAMADITYA, JCIT REPRESENTED ON BEHALF OF THE REVENUE. NONE APP EARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE [AD ON RECORD]. HENCE WE PROCEEDED TO DECIDE THE APPEAL AFTER HEARING THE COUNSEL FOR THE REVENUE. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.11 1111 113 33 37 77 7/M/ /M/ /M/ /M/1 11 12 22 2 2 2. THE ISSUE IN THE GROUNDS OF APPEAL OF THE REVE NUE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDI NG THAT REOPENING OF THE ASSESSMENT IS NOT VALID AND ERRED IN CANCELLING THE REASSESSMENT ORDER. COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO NOTE THAT THE SHORT TERM CAPITAL GAINS TO BE TAXED IN THE HANDS OF THE ASSES SEE AS THE ENTIRE TRANSACTIONS ARE ROUTED THROUGH HIS ACCOUNT. 3. FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN T HE BUSINESS OF MANUFACTURING BRIGHT STEEL BARS, FILED HIS RETURN O F INCOME FOR THE ASSESSMENT YEAR 2002-03 ON 30.09.2002 ADMITTING TOTAL INCOME O F ` .27,20,110/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT ON 30.03.2005 DETERMINING THE TOTAL INCOME AT ` .28,34,010/-. LATER, THE ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE UNDER SECTION 148 AND R EASSESSMENT WAS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 14 7 ON 24.12.2009 DETERMINING THE TOTAL INCOME AT ` .44,16,310/-. WHILE COMPLETING THE REASSESSMENT, THE ASSESSING OFFICER MADE ADDITION O F ` .15,82,300/- AS SHORT TERM CAPITAL GAINS ON ACCOUNT OF TRANSFER OF PROPER TY IN AMBATTUR INDUSTRIAL ESTATE. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COM MISSIONER OF INCOME TAX (APPEALS) RAISING GROUNDS ON REOPENING O F ASSESSMENT AS WELL AS ON MERITS. THE ASSESSEE CONTENDED BEFORE THE COM MISSIONER OF INCOME TAX (APPEALS) THAT THE ASSESSMENT WAS ORIGINALLY CO MPLETED UNDER SECTION I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.11 1111 113 33 37 77 7/M/ /M/ /M/ /M/1 11 12 22 2 3 143(3) AND REOPENED BEYOND 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IN WHICH THE ASSESSMENT WAS MADE UN DER SECTION 143(3). THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING ALL MATERIAL FACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT AN D THEREFORE, IN VIEW OF THE PROVISO TO SECTION 147, REOPENING OF ASSESSMENT IS BAD IN LAW. ASSESSEE ALSO CONTENDED THAT HE IS HAVING ONLY TH SHARE IN THE PROPERTY AND THE CAPITAL GAINS RELATING TO TH OF HIS SHARE WAS DULY REFLECTED IN THE RETURN OF INCOME FILED BY HIM AND THE OTHER CO-OWNERS ALSO FI LED RETURN OF INCOME DECLARING THEIR SHARE OF SHORT TERM CAPITAL GAINS I N THEIR RESPECTIVE RETURNS. THEREFORE, THE ENTIRE SHORT TERM CAPITAL GAINS CANN OT BE ASSESSED IN THE HANDS OF THE ASSESSEE ALONE. 5. THE COMMISSIONER OF INCOME TAX (APPEALS), IN HI S ORDER HELD THAT THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) AND R EOPENED AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT IN ORDER TO REOPE N THE ASSESSMENT UNDER SECTION 147, THERE MUST BE REASON OR MATERIAL TO SH OW THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE MATERIA L FACTS TRULY AND FULLY. THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT IN T HE INSTANT CASE, THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY SUC H FAILURE ON THE PART OF THE ASSESSEE TO FURNISH THE MATERIAL FACTS NECESSAR Y FOR COMPLETION OF ASSESSMENT BEFORE REOPENING THE ASSESSMENT UNDER SE CTION 147. THEREFORE, I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.11 1111 113 33 37 77 7/M/ /M/ /M/ /M/1 11 12 22 2 4 THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE ACTION OF THE ASSESSING OFFICER IN REOPENING THE ASSESSMENT IS NO T IN ACCORDANCE WITH LAW. THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO HELD THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN ASSESSING THE ENTIRE SHORT TERM CAPITAL GAINS IN THE HANDS OF THE ASSESSEE WHEN THE ASSESSE ES SHARE WAS ONLY TH IN THE LAND AND WHEN OTHER CO-OWNERS HAVE ALREADY D ECLARED THEIR SHARE OF CAPITAL GAINS IN THEIR RESPECTIVE RETURNS. 6. THE COUNSEL FOR THE REVENUE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 7. WE HAVE HEARD THE COUNSEL FOR THE REVENUE AND P ERUSED THE ORDERS OF LOWER AUTHORITIES. ON GOING THROUGH THE ASSESSME NT ORDER AND THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), WE FIND T HAT THE ASSESSMENT WAS COMPLETED IN THIS CASE UNDER SECTION 143(3) ON 30.03.2005. THIS ASSESSMENT WAS REOPENED AFTER EXPIRY OF 4 YEARS FRO M THE END OF THE ASSESSMENT YEAR. THE ASSESSEE IN HIS RETURN OF INCO ME ORIGINALLY FILED ADMITTED SHORT TERM CAPITAL GAINS OF ` .4,87,855/- BEING OF HIS SHARE. WE ALSO FIND FROM THE REASSESSMENT ORDER THAT THE ASSE SSING OFFICER DID NOT GIVE ANY REASON OR MATERIAL TO SHOW THAT THERE WAS FAILU RE ON THE PART OF THE ASSESSEE TO DISCLOSE THE MATERIAL FACTS NECESSARY F OR COMPLETION OF ASSESSMENT. THE ASSESSING OFFICER HAS NOT BROUGHT O N RECORD ANY SUCH FAILURE BY THE ASSESSEE WHILE COMPLETING THE REASSE SSMENT UNDER SECTION I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.11 1111 113 33 37 77 7/M/ /M/ /M/ /M/1 11 12 22 2 5 147. THEREFORE, SINCE NOTHING IS PLACED ON RECORD B Y THE ASSESSING OFFICER TO SHOW THAT THERE IS FAILURE ON THE PART OF THE ASSES SEE IN FURNISHING THE MATERIAL FACTS NECESSARY FOR COMPLETION OF ASSESSME NT, REOPENING OF ASSESSMENT UNDER SECTION 147 IS BAD IN LAW. THEREFO RE, WE SUSTAIN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN HOLD ING THAT THE ACTION IN REOPENING OF ASSESSMENT IS NOT IN ACCORDANCE WITH L AW. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON TUESDAY, THE 28 TH OF AUGUST, 2012 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER CHENNAI, DATED, THE 28.08.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.