Tejas Ispat Pvt. Ltd., Jamshedpur V. ITO,Ward-3(2), Jamshedpur

ITA 121/RAN/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8303 (ITAT-RANCHI)
• Duration Of Justice: 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 13-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JAGDISH KHANDELWAL
• Keywords: Unexplained cash credit; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: RANCHI BENCH, RANCHI BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER I.T.A NO.121/RAN/2019 ASSESSMENT YEAR: 2012-13 TEJAS ISPAT PVT. LTD. 431-433, ASHIANA TRADE CENTRE, ADITYAPUR, JAMSHEDPUR-831013 VS. ITO-3(2), JAMSHEDPUR PAN/GIR NO. : AACCT4977A ( APPELL ANT ) .. (RESPONDENT) APPELLANT BY SHRI JAGDISH KHANDELWAL, FCA RESPONDENT BY SHRI AJAY KUMAR, ADDL. CIT DATE OF HEARING 05.03.2020 DATE OF PRONOUNCEMENT 05.03.2020 O R D E R S. S. GODARA(ORAL): THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS), JHARKHAND DATED 07.02.2019 PASSED IN CASE NO.27/JSR/2018-19 INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. WITH RESPECT TO ASSESSEES LEGAL GROUNDS CHALLENGING VALIDITY OF REOPENING, PAGE 58 OF THE PAPER-BOOK INDICATES THAT THE ASSESSING OFFICER HAD INITIATED SECTION 148/147 PROCEEDINGS REGARDING BOGUS LTCG/STCL OF RS.15,00,000/- AS AGAINST ADDITION OF RS.17,00,000/- OF UNEXPLAINED CASH CREDITS MADE IN THE COURSE OF REASSESSMENT WITHOUT RECORDING ANY SPECIFIC REOPENING REASON TO THIS EFFECT. THIS TRIBUNALS COORDINATE BENCHS DECISION IN SANJU JALAN VS. ITO: ITA NO.634/KOL/2017 DATED 10.01.2018 TAKES NOTE OF THE VERY PROPOSITION TO DECIDE THE ISSUE IN ASSESSEES FAVOUR AS UNDER: 18. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ON THE OTHER GROUNDS OF APPEAL VI., GR.NO.6 TO 8, IT IS THE PLEA OF THE ASSESSEE BEFORE US THAT WHEN AN ASSESSMENT IS REOPENED FOR ONE REASON BUT NO ADDITION IS MADE IN THE REASSESSMENT PROCEEDINGS IN RESPECT OF THAT REASON OR WHEN THE SAID ADDITION I.T.A NO.121/RAN/2019 TEJAS ISPAT PVT. LTD. 2 IS DELETED, THEN, NO FURTHER ADDITION CAN BE MADE IN THE REASSESSMENT PROCEEDINGS. IN THIS REGARD LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS INDIA LTD., 331 ITR 326 (BOM), WHEREIN THE HONBLE BOMBAY HIGH COURT HELD THAT IF AO DOES NOT ASSESS INCOME FOR WHICH REASONS WERE RECORDED U/S 147 OF THE ACT, HE CANNOT ASSESS OTHER INCOME U/S 147 OF THE ACT. THE HONBLE COURT OBSERVED THAT (I) S. 147 PROVIDES THAT THE AO MAY ASSESS THE INCOME WHICH HAS ESCAPED ASSESSMENT AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION. EXPLANATION 3 TO S. 147 INSERTED BY F (NO. 2) ACT, 2009 W.R.E.F 1.4.1989 PROVIDES THAT THE AO MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE NOTWITHSTANDING THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RECORDED (II) THE WORDS AND ALSO INDICATE THAT REASSESSMENT MUST BE WITH RESPECT TO THE INCOME FOR WHICH THE AO HAS FORMED AN OPINION AND ALSO IN RESPECT OF ANY OTHER INCOME WHICH COMES TO HIS NOTICE SUBSEQUENTLY. HOWEVER, IF THE AO ACCEPTS THE OBJECTION OF THE ASSESSEE AND DOES NOT ASSESS THE INCOME WHICH WAS THE BASIS OF THE NOTICE, IT IS NOT OPEN TO HIM TO ASSESSEE INCOME UNDER SOME OTHER ISSUE INDEPENDENTLY; (III) EXPLANATION 3 TO S. 147 WAS INSERTED TO SUPERSEDE THE JUDGMENTS IN VIPIN KHANNA 255 ITR 220 (P&H) & TRAVANCORE CEMENTS 305 ITR 170 (KER) WHERE IT WAS HELD THAT THE AO COULD NOT ASSESS INCOME IN RESPECT OF ISSUES UNCONNECTED WITH THE ISSUE FOR WHICH THE NOTICE WAS ISSUED. HOWEVER, EXPLANATION 3 DOES NOT AFFECT THE JUDGMENTS IN SHRI. RAM SINGH 306 ITR 343 (RAJ) & ATLAS CYCLE INDUSTRIES 180 ITR 319 (P&H) WHERE IT WAS HELD THAT IF THE AO ACCEPTED THAT THE REASONS FOR WHICH THE NOTICE WAS ISSUED WERE NOT CORRECT, HE WOULD CEASE TO HAVE JURISDICTION TO PROCEED WITH THE REASSESSMENT; (IV) EXPLANATION 3 LIFTS THE EMBARGO INSERTED BY JUDICIAL INTERPRETATION ON THE MAKING OF A S. 147 ASSESSMENT IN RESPECT OF ITEMS NOT REFERRED TO IN THE RECORDED REASONS. HOWEVER, IT DOES NOT AND CANNOT OVERRIDE THE SUBSTANTIVE PART OF S. 147 THAT THE INCOME FOR WHICH THE NOTICE WAS ISSUED MUST BE ASSESSABLE. THE LEARNED DR RELIED ON THE ORDER OF THE CIT(A). 19. WE HAVE CONSIDERED THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE IN THE LIGHT OF THE JUDGMENT OF THE HONBLE BOMBAY IN THE CASE OF JET AIRWAYS (I) LTD. (SUPRA). WE ARE OF THE VIEW THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE PRESENT CASE THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS INDIA LTD. (SUPRA)IS SQUARELY APPLICABLE. AS WE HAVE ALREADY SEEN THAT THE ASSESSMENT WAS REOPENED FOR THE REASON THAT THE JEWELLERY PURCHASED BY THE ASSESSEE WAS FROM UNDISCLOSED SOURCES AND THE PURCHASES WERE BOGUS. THAT ADDITION HAS NOT BEEN SUSTAINED NOW. THE ASSESSING OFFICER HOWEVER, PROCEEDED TO MAKE AN ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN (LTCG) ON SALE OF SHARES. THIS WAS CLEARLY BEYOND THE SCOPE OF THE PROCEEDINGS UNDER SECTION 148 OF THE ACT. THE ASSESSING OFFICER, THEREFORE, COULD NOT HAVE PROCEEDED TO MAKE THE IMPUGNED ADDITION OF BOGUS LTCG. SIMILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES VS. CIT, ITA 148 OF 2008 DATED 3/6/2011. THE HONBLE DELHI HIGH COURT FOLLOWED THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS (SUPRA). IN THAT VIEW OF THE MATTER WE HOLD THAT THE ADDITION BY TREATING THE LTCG AS BOGUS CANNOT BE SUSTAINED AS IT WAS BEYOND THE SCOPE OF THE PROCEEDINGS UNDER SECTION 147 OF THE ACT. WE THEREFORE DELETE THE SAID ADDITION ALSO AND ALLOW GROUND NO.6 TO 8. 3. I ADOPT THE VERY REASONING MUTATIS MUTANDIS TO QUASH THE IMPUGNED ADDITION. ALL OTHER PLEADINGS ARE RENDERED INFRUCTUOUS. I.T.A NO.121/RAN/2019 TEJAS ISPAT PVT. LTD. 3 4. THIS ASSESSEES APPEAL IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 05.03.2020. SD/- (S. S. GODARA) JUDICIAL MEMBER DATED: 05.03.2020. RS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) - 5. THE DR, ITAT, RANCHI 6. GUARD FILE BY ORDER SR. P.S., ITAT, RANCHI (ON TOUR)