Shri Debabhash Dey, Kolkata V. ITO, WD, 56(3), KOLKATA, Kolkata

ITA 1242/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9411 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 02-06-2016
• Court: TRIBUNAL
• Assessee Lawyers: M GHOSH; K N KUNDU
• Keywords: Reopening of assessment; Presumptive income; Tangible material; Difference of opinion; Validity of assessment; Assessment record; Reason to believe; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

I.T.A. NO. 1242/KOL./2016 ASSESSMENT YEAR: 2004-2005 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 1242/KOL/ 2016 ASSESSMENT YEAR: 2004-2005 SHRI DEBABHASH DEY,................................ ..................................APPELLANT UDAYAN, H/J-2/1, RAJARHAT ROAD, ASWINI NAGAR, KOLKATA-700 059 [PAN: AGJPD 6909 N ] -VS.- INCOME TAX OFFICER,................................ .....................................RESPONDENT WARD-56(3), KOLKATA APPEARANCES BY: SHRI K.N. KUNDU, ADVOCATE & SHRI M. GHOSH, ADVOCATE , FOR THE ASSESSEE SHRI AMITAVA BHATTACHARJEE, ADDITIONAL CIT, D.R., F OR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : DECEMBER 21, 2016 DATE OF PRONOUNCING THE ORDER : FEBRUARY 03, 2017 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-12, KOLKATA DA TED 10.02.2016. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO CARRIES ON THE BUSINESS OF TRANSPORTATION IN THE NAME OF HIS PROPR IETARY CONCERN M/S. KIRON ROADLINES AS WELL AS IN HIS PERSONAL NAME. TH E RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 31 .10.2004 DECLARING TOTAL INCOME OF RS.5,68,816/-. IN THE SAID RETURN, A LOSS OF RS.2,46,687/- WAS DECLARED BY THE ASSESSEE IN RESPECT OF THE TRAN SPORTATION BUSINESS CARRIED ON IN HIS PERSONAL NAME. IN THE ASSESSMENT ORIGINALLY COMPLETED UNDER SECTION 143(3), THE SAID LOSS SHOWN BY THE AS SESSEE WAS ACCEPTED BY THE ASSESSING OFFICER, ALTHOUGH AN ADDITION OF R S.1,32,000/- WAS MADE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOU NT OF UNEXPLAINED/UNPROVED LIABILITIES. THE TOTAL INCOME OF THE ASSESSEE, ACCORDINGLY, WAS DETERMINED BY THE ASSESSING OFFICE R AT RS.7,00,816/- IN I.T.A. NO. 1242/KOL./2016 ASSESSMENT YEAR: 2004-2005 PAGE 2 OF 6 THE ASSESSMENT ORIGINALLY COMPLETED UNDER SECTION 1 43(3) VIDE AN ORDER DATED 19.12.2006. THEREAFTER THE ASSESSING OFFICER NOTICED FROM THE BALANCE-SHEET OF THE ASSESSEE FILED IN RESPECT OF T RANSPORTATION BUSINESS CARRIED ON IN THE PERSONAL NAME THAT ALTHOUGH THE A SSESSEE WAS THE OWNER OF SEVEN TRUCKS, THE PROFITS EARNED FROM HIRING THE SAME WERE NOT OFFERED ON PRESUMPTIVE TAXATION BASIS AS PROVIDED IN SECTIO N 44AE OF THE ACT. HE, THEREFORE, REOPENED THE ASSESSMENT AFTER RECORDING THE REASONS AND ISSUED A NOTICE TO THE ASSESSEE UNDER SECTION 148. PURSUANT TO THE SAID NOTICE, REASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER UNDER SECTION 143(3)/147 OF THE ACT VIDE AN ORDER DATED 2 8.11.2011, WHEREIN HE DISALLOWED THE LOSS OF RS.2,46,846/- CLAIMED BY THE ASSESSEE IN RESPECT OF TRANSPORTATION BUSINESS CARRIED ON IN HIS PERSONAL NAME AND DETERMINED THE INCOME OF THE SAID BUSINESS AT RS.2,94,000/- AS PER SECTION 44AE OF THE ACT THEREBY MAKING AN ADDITION OF RS.5,40,687/- TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3)/147, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) CHALLENGING THE VALIDITY OF THE SAID O RDER AND ALSO DISPUTING THE ADDITION OF RS.5,40,687/- MADE THEREIN TO THE T OTAL INCOME ON MERIT. THE LD. CIT(APPEALS), HOWEVER, DID NOT FIND MERIT I N THE SAID APPEAL OF THE ASSESSEE AND AFTER UPHOLDING THE VALIDITY THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3)/147 AND CONF IRMING THE ADDITION MADE THEREIN ON MERIT, HE DISMISSED THE SAME. AGGRI EVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED TH IS APPEAL BEFORE THE TRIBUNAL. 4. THE PRELIMINARY ISSUED RAISED BY THE ASSESSEE IN THIS APPEAL RELATES TO THE VALIDITY OF ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECTION 143(3)/147. APROPOS THIS ISSUE, THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ORIGINAL ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED BY THE ASSESSING OFFICER UNDER SECTIO N 143(3) OF THE ACT I.T.A. NO. 1242/KOL./2016 ASSESSMENT YEAR: 2004-2005 PAGE 3 OF 6 AFTER VERIFYING ALL THE RELEVANT RECORDS INCLUDING THE BOOKS OF ACCOUNT OF THE ASSESSEE. 5. APROPOS THIS ISSUE, THE LD. COUNSEL FOR THE ASSE SSEE CONTENDED THAT THE ORIGINAL ASSESSMENT FOR THE YEAR UNDER CONSIDER ATION WAS COMPLETED BY THE ASSESSING OFFICER IN THE CASE OF THE ASSESSE E UNDER SECTION 143(3) OF THE ACT AFTER VERIFYING ALL THE RELEVANT RECORDS INCLUDING THE BOOKS OF ACCOUNT OF THE ASSESSEE AND IN THE ABSENCE OF ANY N EW INFORMATION OR MATERIAL COMING TO THE POSSESSION OF THE ASSESSING OFFICER, THE REOPENING OF ASSESSMENT ON THE BASIS OF SAME RECORDS WAS BASE D ON A MERE CHANGE OF OPINION, WHICH IS NOT PERMISSIBLE IN LAW. IN SUP PORT OF THIS CONTENTION, HE RELIED ON THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF CIT VS.- KELVINATOR OF INDIA LIMITED REPORTED IN 320 I TR 561 AS WELL AS THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF MANMOHAN KEDIA VS.- ITO REPORTED IN 344 ITR 187. 6. THE LD. D.R., ON THE OTHER HAND, STRONGLY RELIED ON THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) IN SUPPORT OF THE REV ENUES CASE ON THIS ISSUE AND CONTENDED THAT THE ASSESSMENT HAVING BEEN REOPENED BY THE ASSESSING OFFICER ON THE NEW ISSUES, WHICH HAD NOT BEEN SPECIFICALLY DECIDED IN THE ASSESSMENT ORIGINALLY COMPLETED UNDE R SECTION 143(3) AS EVIDENT FROM THE REASONS RECORDED BY HIM, THE REOPE NING WAS IN ACCORDANCE WITH LAW. 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN ORDER TO APPRECIATE THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE ON T HE PRELIMINARY ISSUE RAISED IN THIS CASE CHALLENGING THE VALIDITY OF REO PENING OF ASSESSMENT, IT IS RELEVANT TO REFER TO THE REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING, WHICH ARE EXTRACTED BELOW:- THE ASSESSEE AN INDIVIDUAL, CARRIED ON THE BUSINES S OF HIRING TRUCKS. HE WOULD MAINTAIN THE ACCOUNTS SEPARATELY F OR HIS PROPRIETARY BUSINESS NAMED AFTER M/S. KIRON ROADLIN ES AS WELL AS THAT IN HIS SELF NAME. I.T.A. NO. 1242/KOL./2016 ASSESSMENT YEAR: 2004-2005 PAGE 4 OF 6 WHILE THE ACCOUNTS OF M/S. KIRON ROADLINES WERE GOT AUDITED U/S 44AB OF THE I.T. ACT, THE ACCOUNTS PERTAINING T O HIM WAS NOT AUDITED. IN THE UNAUDITED P&L A/C (IN SELF NAME), A LOSS OF RS.2,46,687/- WAS DECLARED WHICH WAS SET OFF AGAINS T THE PROFIT OF OTHER UNIT, M/S. KIRON ROADLINES. THE ASSESSMENT U/S 143(3) WAS COMPLETED ON 19.12.06 ACCEPTING THE SAID LOSS. IT APPEARS FROM THE BALANCE SHEET FOR HIS SELF BUSINESS THAT T HE ASSESSEE OWNED 7 TRUCKS. THE PROFITS EARNED FROM HIRING THES E TRUCKS WERE NOT OFFERED ON PRESUMPTIVE TAXATION BASIS AS PROVID ED IN SECTION 44AE OF THE I.T. ACT. THE SUB-SECTION (7) OF SECTIO N 44AE LAYS DOWN THAT IN CASE THE ASSESSEE HAS PREFERRED TO CLA IM LOWER PROFIT THAT WHAT HE IS ENTITLED TO CLAIM ON ESTIMAT ION AS IN SUB- SEC. (2) OF SEC. 44AE OF THE ACT, HE IS REQUIRED TO GET HIS ACCOUNTS AUDITED U/S 44AB OF THE I.T. ACT. SINCE THE ASSESSEE HAS FAILED TO GET HIS ACCOUNTS A UDITED AS SUCH, THE TRANSPARENCY OF THE FINANCIAL RESULT OF H IS BUSINESS (SELF) HAD NOT CRYSTALLIZED SO AS TO ACCEPT THE LOS S CLAIMED BY HIM. THE FACT OF UNDERSTATEMENT OF SUCH INCOME HAS GOT ITS SUPPORT WHEN THE DISCREPANCY BETWEEN THE DEBTORS ( M/S. KIRON ROADLINES) BALANCE IN ITS SELF BALANCE SHEET WHICH IS RS.9,97,533/- AND THE CORRESPONDING CREDITORS BALAN CE OF RS.7,21,996/- IN THE SEPARATE BALANCE SHEET OF M/S. KIRON ROADLINES IS DETECTED WITH DUE DILIGENCE. THE ABOVE MENTIONED REASONS APPEAR TO BE SUFFICIEN T TO FORM BELIEF THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPE D ASSESSMENT U/S 147 OF THE I.T. ACT. THE AFORESAID REASONS ARE HEREBY SENT TO THE LD. C IT-XXI, KOLKATA FOR SANCTION OF ISSUE OF NOTICE U/S 148 OF THE I.T. ACT AS IS PROVIDED U/S 151(1) OF THE I.T. ACT. 8. A PERUSAL OF THE AFORESAID REASONS RECORDED BY T HE ASSESSING OFFICER MAKES IT ABUNDANTLY CLEAR THAT THE ASSESSMENT ORIGI NALLY COMPLETED BY HIM UNDER SECTION 143(3) WAS REOPENED BY THE ASSESS ING OFFICER ON THE BASIS OF THE SAME RECORDS AS WAS AVAILABLE BEFORE H IM WHILE COMPLETING THE ORIGINAL ASSESSMENT UNDER SECTION 143(3) AND TH ERE WAS NO NEW TANGIBLE MATERIAL THAT HAD COME TO HIS POSSESSION O N THE BASIS OF WHICH THE ASSESSMENT WAS REOPENED BY HIM. AT THE TIME OF HEARING BEFORE ME, THE LD. D.R. HAS NOT DISPUTED THIS POSITION. THE ON LY CONTENTION RAISED BY HIM IS THAT THE REOPENING OF ASSESSMENT BY THE ASSE SSING OFFICER WAS BASED ON ALTOGETHER NEW ISSUES, WHICH HAD NOT BEEN EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF ORIGINAL PRO CEEDINGS UNDER SECTION I.T.A. NO. 1242/KOL./2016 ASSESSMENT YEAR: 2004-2005 PAGE 5 OF 6 143(3). HOWEVER, AS SUBMITTED BY THE LD. COUNSEL FO R THE ASSESSEE, THE RELEVANT RECORDS INCLUDING THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE DULY EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ONLY AFTER HAVING SATISFIED WITH TH E SAME, THE CLAIM OF THE ASSESSEE WAS ACCEPTED BY HIM IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3). THE CONTENTION RAISED BY THE LD. D. R. IN THIS REGARD, EVEN OTHERWISE RUNS CONTRARY TO THE DECISION OF THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF DEBASHIS MOULIK VS.- ACIT REP ORTED IN 370 ITR 660, WHEREIN THE ASSESSMENT ORIGINALLY COMPLETED UNDER S ECTION 143(3) WAS SOUGHT TO BE REOPENED BY THE ASSESSING OFFICER ON T HE BASIS OF NEW FACTS DISCOVERED FROM THE ASSESSMENT RECORDS AND IT WAS H ELD BY THE HONBLE CALCUTTA HIGH COURT THAT THE ASSESSMENT WAS REOPENE D BY THE ASSESSING OFFICER MERELY ON THE BASIS OF CHANGE OF OPINION, W HICH WAS NOT PERMISSIBLE IN LAW. 9. IN THE CASE OF CIT VS.- KELVINATOR OF INDIA LIM ITED (SUPRA), CITED BY THE LD. COUNSEL FOR THE ASSESSEE, IT WAS HELD BY TH E HONBLE SUPREME COURT THAT AFTER THE AMENDMENT MADE W.E.F. 1 ST APRIL, 1989, THE ASSESSING OFFICER HAS TO HAVE REASON TO BELIEVE THAT INCOME H AS ESCAPED ASSESSMENT, BUT THIS DOES NOT IMPLY THAT THE ASSESSING OFFICER CAN REOPEN AN ASSESSMENT ON A MERE CHANGE OF OPINION. IT WAS HELD THAT THE CONCEPT OF CHANGE OF OPINION MUST BE TREATED AS AN IN-BUILT TEST TO CHECK THE ABUSE OF POWER AND HENCE THE ASSESSING OFFICER EVEN AFTER THE AMENDMENTS MADE IN THE RELEVANT PROVISIONS FROM APRIL 1, 1989 HAS THE POWER TO REOPEN AN ASSESSMENT PROVIDED THERE IS TANGIBLE MAT ERIAL TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. APPLYING THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LIMITED (SUPRA) AND BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DEBASHIS MOULIK VS.- ACIT (SU PRA), I HOLD THAT THE REOPENING OF ASSESSMENT MADE BY THE ASSESSING OFFIC ER IN THE PRESENT CASE WAS BAD IN LAW AS THE SAME WAS BASED MERELY ON THE CHANGE OF OPINION AND THE ASSESSMENT COMPLETED BY HIM UNDER S ECTION 143(3) READ WITH SECTION 147 IN PURSUANCE THEREOF IS INVALID AN D THE SAME IS LIABLE TO I.T.A. NO. 1242/KOL./2016 ASSESSMENT YEAR: 2004-2005 PAGE 6 OF 6 BE CANCELLED. I ORDER ACCORDINGLY AND ALLOW THE GRO UNDS OF APPEAL RAISED BY THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 03, 2017. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 3 RD DAY OF FEBRUARY, 2017 COPIES TO : (1) SHRI DEBABHASH DEY, UDAYAN, H/J-2/1, RAJARHAT ROAD, ASWINI NAGAR, KOLKATA-700 059 (2) INCOME TAX OFFICER, WARD-56(3), KOLKATA (3) COMMISSIONER OF INCOME TAX(APPEALS)-12, KOLKA TA; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.