Lalchand Mehrumal Jagwani, Pune V. Income-tax Officer, Ward - 7 (3), Pune

ITA 1241/PUN/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7638 (ITAT-PUNE)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 16-08-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV MATHUR
• Assessee Lawyers: HARI KRISHAN
• Keywords: Reason to believe; Reassessment proceedings; Set aside
• Section: 143(3); 147; 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER . / ITA NO.1241/PUN/2019 / ASSESSMENT YEAR : 2009-10 MR. LALCHAND MEHRUMAL JAGWANI, B-37, MARIGOLD PREMISES, BEHIND GOLD ADLAB BIG CINEMA, WADGAONSHERI, PUNE 411 014. PAN : ADSPJ8025F. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 7(3), PUNE. . / RESPONDENT ASSESSEE BY : SHRI HARI KRISHAN. REVENUE BY : SHRI RAJEEV MATHUR. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) 8, PUNE DATED 07.06.2 019 FOR A.Y. 2009-10. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM BUSINESS, HOUSE PROPERTY, AND OTHER SOURCES. IN THIS CASE, AO ISSUED NO TICE U/S 148 OF THE ACT DT.27.03.2015 AND IT WAS SERVED UPON THE ASSESS EE. IN RESPONSE TO WHICH ASSESSEE INTER-ALIA SUBMITTED THAT THE ORIGINAL / DATE OF HEARING : 09.10.2019 / DATE OF PRONOUNCEMENT: 16.10.2019 2 RETURN OF INCOME FILED BY THE ASSESSEE FOR A.Y. 2009-10 BE CONSIDERED AS RETURN OF INCOME IN RESPONSE TO NOTICE U/S 148 OF THE ACT. THEREAFTER, THE CASE OF THE ASSESSEE WAS TAKEN UP FOR S CRUTINY AND ASSESSMENT WAS FRAMED U/S 147 R.W.S 143 OF THE ACT VIDE ORDER DATED 09.02.2016 AND THE TOTAL INCOME WAS DETERMINED AT RS.14,2 3,530/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD.CIT(A), WHO VIDE ORDER DATED (IN APPEAL NO.PN/CIT(A)-8/IT O WD.7(3)/413/18-19) DISMISSED THE APPEAL OF THE ASSESSEE. A GGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL AND H AS RAISED THE FOLLOWING GROUNDS : 1. THE REASSESSMENT PROCEEDINGS INITIATED BY ISSUI NG NOTICE U/S 148 OF THE ACT ARE AB-INITIO VOID, INVALID AND UNSUSTAINAB LE IN LAW. THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT M ERELY FOR VERIFICATION OF TRANSACTIONS OF CREDITS IN THE BANK ACCOUNTS OF THE ASSESSEE. THE REASSESSMENT PROCEEDINGS CANNOT BE IN ITIATED FOR VERIFICATION. IN THE REASONS RECORDED FOR REOPENIN G THE ASSESSMENT, THE ASSESSING OFFICER HAS NOT MENTIONED AS TO WHAT INCO ME THAT WAS CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND WHAT I S THE BASIS FOR THAT. 1.1 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN HOLDING THAT THE ASSESSING OFFICER HAD REASONS TO BELIEVE T HAT INCOME HAS ESCAPED WITHIN THE MEANING OF SECTION 147 OF THE AC T. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN HOLDING THAT THE ASSESSING OFFICER HAS RIGHTLY TREATED THE CASH DEPOSITS OF RS.3,88,316/- AS INCOME FROM OTHER SOURCES, INSTEAD OF THE INCOME FROM HOUSE PROPERTY. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE HELD THAT THE INCOME OF RS.3,88,316/- WAS ASSE SSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 3. BEFORE ME, LD.A.R. WITH RESPECT TO GROUND NO.1 CHALLENGING THE RE-ASSESSMENT PROCEEDINGS, SUBMITTED THAT IN THIS CASE, ASSESSEE HAD ORIGINALLY FILED HIS RETURN OF INCOME FOR A.Y. 2009-10 ON 09.03.2 010 DECLARING TOTAL INCOME OF RS.14,23,530/-. THE CASE WAS SELE CTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143 (3) OF THE ACT VIDE ORDER DATED 11.10.2011 AND THE TOTAL INCOME WAS DE TERMINED AT 3 RS.15,76,320/-. HE POINTED TO THE COPY OF THE ASSESSMENT ORDER PLACED AT PAGES 6 TO 9 OF THE PAPER BOOK. HE SUBMITTED THAT SUBSEQUENTLY, NOTICE U/S 148 OF THE ACT WAS ISSUED TO T HE ASSESSEE. HE POINTING TO THE COPY OF THE REASONS WHICH ARE PLACED AT PAGES 10 AND 11 POINTED TO THE FACT THAT THE CASE HAS BEEN RE- OPENED FOR VERIFICATION OF THE CASH AND CHEQUE DEPOSITS IN THE BANK A CCOUNT. HE SUBMITTED THAT ADMITTEDLY, NOTICE U/S 148 OF THE ACT WAS ISSUED BEYOND A PERIOD OF FOUR YEARS AND WHEN THE ASSESSMEN T IS SOUGHT TO BE RE-OPENED BEYOND A PERIOD OF 4 YEARS, THEN AN ADDITIO NAL CONDITION NEEDS TO BE SATISFIED NAMELY THAT THERE MUST BE FAILURE O N THE PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. HE SUBMITTED THAT IN THE PRESENT CASE IN T HE REASONS RECORDED FOR RE-OPENING, THERE IS NO ALLEGATION ON THE PAR T OF THE ASSESSEE OF FAILURE TO DISCLOSE MATERIAL FACTS AND THEREFORE, THE CONDITION OF 1 ST PROVISO OF SEC.147 OF THE ACT HAS NOT BEEN SATISFIED. HE POINTED TO THE COPY OF THE COMPUTATION OF INCOME WHICH IS PLACED AT PAGE 2 OF THE PAPER BOOK AND POINTED TO THE INCOME FROM RENT SHOWN BY THE ASSESSEE. HE SUBMITTED THAT THE AO IN THE RE-A SSESSMENT ORDER HAS HELD THE INCOME TO BE UNDER THE HEAD OF INCOME FRO M OTHER SOURCES AND THAT THERE IS NO MATERIAL TO INDICATE THAT T HE INCOME WAS ASSESSABLE UNDER INCOME FROM OTHER SOURCES. HE FURTHER SUBMITTED THAT THE RE-OPENING OF THE ASSESSMENT CANNOT BE MADE FOR VERIFICATION. HE THEREFORE SUBMITTED THAT THE RE-ASSESSMENT ORDER P ASSED BY THE AO BE SET ASIDE. LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF LOWER AUTHORITIES. 4 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPEC T TO RE-OPENING OF THE ASSESSMENT. THE LAW ON RE-OPENING OF AN ASSESS MENT UNDER THE ACT, IS FAIRLY SETTLED. THE ASSESSING OFFICER CAN RE-OPEN AN ASSESSMENT ONLY IN ACCORDANCE WITH THE EXPRESS PROVISIONS PROVIDED IN SECTION 147/148 OF THE ACT. IT IS ONLY ON THE ASSESSING OFFICER ST RICTLY SATISFYING THE PROVISIONS OF SECTION 147 OF THE ACT THAT HE ACQUIRES JURISDICTION TO RE-OPEN AN ASSESSMENT. SECTION 147 OF THE ACT, CLOTHES THE ASSESSING OFFICER WITH JURISDICTION TO REOPEN AN ASSESS MENT ON SATISFACTION OF THE FOLLOWING: (A) THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT (B) INCOME CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT AND (C) IN CASES WHERE THE ASSESSMENT SOUG HT TO BE REOPENED IS BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THEN AN ADDITIONAL CONDITION IS T O BE SATISFIED VIZ: THERE MUST BE FAILURE ON THE PART OF THE ASSE SSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. 5. IN THE PRESENT CASE, NOTICE U/S 148 OF THE ACT HAS BEEN ISSUED ON 27.03.2015 IN RELATION TO A.Y. 2009-10. HENCE, THE RE-OPE NING OF ASSESSMENT IS BEYOND THE PERIOD OF FOUR YEARS FROM THE E ND OF RELEVANT ASSESSMENT YEAR. IN SUCH A SCENARIO, AS PER THE 1 ST PROVISO TO SEC.147 OF THE ACT, NO ACTION FOR INITIATION OF RE-ASSESSMENT PROC EEDINGS FOR A.Y. 2009-10 COULD HAVE BEEN TAKEN UNLESS THE AO HAD RE ASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED THE A SSESSMENT FOR A REASON OF FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE READING O F THE REASONS PLACED BY THE ASSESSEE IN THE PAPER BOOK SHOW S THAT THERE IS NOT EVEN AN ALLEGATION THAT THERE WAS ANY FAILURE ON THE PART OF THE 5 ASSESSEE TO DISCLOSE ANY MATERIAL FACTS WHICH LEAD TO ANY INCOME CHARGEABLE TO TAX HAD ESCAPED THE ASSESSMENT. FURTHE R, EVEN ON THE READING OF THE REASONS RECORDED, IT CANNOT BE SAID THAT IT SUGGESTS ABOUT ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. IT IS NOW WELL S ETTLED THAT THE REASONS WHICH ARE RECORDED BY THE A.O. FOR REOPENING THE ASSESSMENT ARE THE ONLY REASONS WHICH CAN BE CONSIDER ED AND NO SUBSTITUTION OR DELETION IS PERMISSIBLE. THE REASONS WHICH A RE RECORDED BY THE ASSESSING OFFICER FOR REOPENING AN ASSESSMENT ARE THE ONLY REASONS WHICH CAN BE CONSIDERED WHEN THE FORMATION OF T HE BELIEF IS IMPUGNED. FURTHER, THE READING OF THE REASONS FOR RE-OP ENING OF THE ASSESSMENT, IT IS SEEN THAT THE NOTICE HAS BEEN ISSUED AND RE- ASSESSMENT HAS BEEN SOUGHT FOR VERIFICATION OF THE CASH A ND CHEQUE TRANSACTIONS IN THE BANK ACCOUNT OF THE ASSESSEE. I FIND THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF INDUCTOTHERM (INDIA) P. LTD. VS. M. GOPALAN , REPORTED IN 2013 356 ITR 481 HAS OBSERVED THAT FOR A MERE VERIFICATION OF THE CLAIM, THE POWER OF RE-OPENING OF THE ASSESSMENT COULD NOT BE EXERCISED AND IT FURTHER OBSERV ED THAT AO UNDER THE GUISE OF POWER TO RE-OPEN THE ASSESSMENT C ANNOT SEEK TO UNDERTAKE AN UNDERTAKING A FISHING OR ROVING INQUIRY OR SEEK TO VERIFY THE CLAIM AS IF HE IS THE SCRUTINY OFFICER. 6. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS AND IN VIE W OF THE DECISION CITED HEREIN ABOVE, I AM OF THE VIEW THAT IN THE PRESENT CASE, NOTICE FOR RE-OPENING OF THE ASSESSMENT U/S 147 OF THE ACT IS NOT AS P ER THE MANDATE OF SEC.147 OF THE ACT AND THEREFORE THE RE -OPENING IS NOT PERMISSIBLE. I AM THEREFORE OF THE VIEW THAT THE NOTICE ISS UED FOR RE- OPENING HAS TO BE SET ASIDE AND THE SAME DESERVES TO BE QUASHED. I 6 THEREFORE QUASH THE IMPUGNED RE-ASSESSMENT PROCEEDINGS FOR A.Y. 2009-10 AND THUS, SET ASIDE THE SAME. SINCE I HAVE HER EINABOVE SET ASIDE THE ASSESSMENT FRAMED U/S 143(3) R.W.S 147 OF THE A CT AND HELD IT TO BE VOID AND THEREFORE, THE ISSUE ON MERITS HAVE BE EN RENDERED ACADEMIC AND REQUIRES NO ADJUDICATION. THUS, THE GROUND NO.1 OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED ON 16 TH DAY OF OCTOBER, 2019. /- SD/- ( ANIL CHATURVEDI ) ' / ACCOUNTANT MEMBER PUNE; DATED : 16 TH OCTOBER, 2019. YAMINI #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-8, PUNE. PR. CIT-4, PUNE. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // // 012%3&4 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.