Md Sahabuddin, Kolkata V. ITO, Ward-38(4), Kolkata, Kolkata

ITA 1265/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78337 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 04-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S M SURANA; SUNIL SURANA
• Keywords: Reopening of assessment; Depreciation; Reassessment proceedings
• Section: 147

Judgement Text

I.T.A. NO. 1265/KOL./2012 ASSESSMENT YEAR: 2005-06 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER), AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO. 1265/KOL. / 2012 ASSESSMENT YEAR : 2005-06 MD. SAHABUDDIN,.................................... ...............................APPELLANT 370/A, RABINDRA SARANI, KOLKATA-700 006 [PAN : ARPPS 1530 H] -VS.- INCOME TAX OFFICER,.................. ...APPELLANT WARD-38(4), KOLKATA, 18, RABINDRA SARANI, PODDAR COURT, KOLKATA-700 001 APPEARANCES BY: SHRI S.M. SURANA, ADVOCATE AND SHRI SUNIL SURANA, A DVOCATE, FOR THE ASSESSEE SHRI APURVA KUMAR DAS, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JUNE 03, 2014 DATE OF PRONOUNCING THE ORDER : JUNE 04, 2014 O R D E R PER GEORGE MATHAN : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXIV, KOLKATA IN APPEAL NO. 676/CIT(A)-XXIV/38(4)/09-10 DATED 18.06.2012 FOR TH E ASSESSMENT YEAR 2005-06. 2. SHRI S.M. SURANA, ADVOCATE AND SHRI SUNIL SURANA , ADVOCATE, REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI APUR VA KUMAR DAS, JCIT, SR. D.R., REPRESENTED ON BEHALF OF THE REVENUE. 3. IN THE ASSESSEES APPEAL, THE ASSESSEE HAS RAISE D THE FOLLOWING GROUNDS:- (1) FOR THAT THE ORDER OF THE LD. CIT(A) IS ARBITRA RY, ILLEGAL AND BAD IN LAW. I.T.A. NO. 1265/KOL./2012 ASSESSMENT YEAR: 2005-06 PAGE 2 OF 6 (2) FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IS NOT FILING THE PROCEEDINGS INITIATED U/S. 147 OF TH E I.T. ACT, 1961, WHEN THE AO WAS SATISFIED THAT THE INCOM E OF THE APPELLANT HAS NOT ESCAPED ASSESSMENT ON THE GRO UNDS OF REASONS RECORDED FOR INITIATION OF PROCEEDINGS U /S. 147 OF THE I.T. ACT, 1961. (3)FOR THAT THE LD. AO HAVING BEEN SATISFIED THAT T HERE WAS NO ESCAPED INCOME ON THE BASIS OF RECORDED REAS ONS, THE PROCEEDINGS INITIATED U/S. 147 SHOULD HAVE BEEN DROPPED. (4)FOR THAT ON THE FACTS OF THE CASE THE PROCEEDING S INITIATED AND CONTINUED U/S. 147 IS BAD IN LAW AND THE ASSESSMENT WAS LIABLE TO BE QUASHED. (5) FOR THAT THE FINDINGS OF THE LD. CIT(A) DIRECTI NG THE AO TO ADD THE SUM OF RS.12,37,716/- IN ASSESSMENT YEAR 2004- 05 WHEN SUCH FINDING OR DIRECTION WAS NEITHER NECES SARY NOT REQUIRED FOR THE PURPOSE OF DISPOSING OFF THE A PPEAL BEFORE HIM. (6) FOR THAT THE LD. CIT(A) EVEN OTHERWISE ERRED IN DIRECTING TO REOPEN THE ASSESSMENT FOR ASSESSMENT Y EAR 2004-05 WHEN THE PROCEEDINGS FOR THE SAID YEAR COUL D NOT HAVE BEEN TAKEN UNDER NORMAL PROVISION OF SEC. 147 AT THE TIME WHEN THE LD. CIT(A) PASSED THE DIRECTION. (7) FOR THAT EVEN OTHERWISE THERE WAS NO JUSTIFICAT ION TO DIRECT THE AO TO INCLUDE THE AMOUNT AS INCOME IN ASSESSMENT YEAR 2004-05 WHEN THERE WAS NO INVESTIGA TION OR ENQUIRY NOR ANY FACTS ON RECORD TO CONCLUDE THAT THE SAID AMOUNT WAS INCOME AND THAT TOO FOR THE ASSESSM ENT YEAR 2004-05. (8) FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WITHOUT PREJUDICE TO THE GROUNDS OF APPEAL NO. 2 TO 7 ABOVE, THE LD. CIT(A) ERRED IN CONFIRMING DISALLOWA NCE OF DEPRECIATION ON VEHICLES FOR RS.60,000/- OUT OF RS.1,37,487/-. (9) FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WITHOUT PREJUDICE TO THE GROUNDS OF APPEAL NO. AT 2 TO 7 ABOVE, THE LD. CIT(A) ERRED IN CONFIRMING DISALLOWA NCE OF INTEREST TO BANK RS.87,825/- OUT OF RS.1,84,300/-. I.T.A. NO. 1265/KOL./2012 ASSESSMENT YEAR: 2005-06 PAGE 3 OF 6 (10) FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WITHOUT PREJUDICE TO THE GROUNDS OF APPEAL NO. 2 TO 7 ABOVE, THE LD. CIT(A) ERRED IN TREATING INVESTMENT IN IMMOVABLE PROPERTIES FOR RS.12,37,716/- IN IMMEDIAT ELY PRECEDING ASSESSMENT YEAR 2004-05 AS UNEXPLAINED AN D CONSEQUENTLY ERRED IN GIVING DIRECTION U/S. 150 OF THE I.T. ACT, 1961 TO ASSESS THE SAME AS UNEXPLAINED INVESTM ENT IN PRECEDING ASSESSMENT YEAR 2004-05. (11) FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE CIT(A) BE MODIFIED AND THE ASSESSE E BE GIVEN THE RELIEF PRAYED FOR. (12) FOR THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALT ER OR AMEND ANY GROUND BEFORE OR AT THE TIME OF HEARING. 4. AT THE TIME OF HEARING, LD. A.R. FOR THE ASSESSE E ARGUED THAT THE ISSUE OF REOPENING WAS TO BE RECONSIDERED FIRST. LD . A.R. DREW OUR ATTENTION TO THE REASONS FOR REOPENING, WHICH WERE RECORDED IN THE ASSESSMENT ORDER AT PAGE 2. IT WAS THE SUBMISSION T HAT THE REASON ASSIGNED FOR REOPENING OF THE CASE WAS THAT THE ASS ET SIDE OF THE BALANCE SHEET WAS MORE THAN THE LIABILITY SIDE WHICH IMPLIE D THAT THE ASSESSEE HAD MADE INVESTMENTS MORE THAN THE KNOWN SOURCES OF INC OME AMOUNTING TO RS.5,75,506/-, WHICH WAS THE DIFFERENCE. IT WAS THE SUBMISSION BY THE LD. A.R. THAT THE REOPENING HAD BEEN DONE ON A SPECIFIE D REASON THAT THE ASSET SIDE WAS MORE THAN THE LIABILITY SIDE. ASSESSEE HAD EXPLAINED THE SAID DISCREPANCY AND THE SAME HAD BEEN ACCEPTED BY THE A SSESSING OFFICER AND NO ADDITION MADE ON THE SAID COUNT. IT WAS THE SUBM ISSION THAT CONSEQUENTLY THE VERY FOUNDATION OF THE REOPENING N O MORE SURVIVED. IT WAS THE SUBMISSION THAT ONCE THE REASON FOR THE REO PENING HAS BEEN EXPLAINED AND SUCH EXPLANATION HAS BEEN ACCEPTED TH EN THE REOPENING NO MORE SURVIVED AND CONSEQUENTLY NO FURTHER ADDITION CAN BE MADE BY RESORTING TO REASSESSMENT PROCEEDINGS. FOR THIS PRO POSITION, HE PLACED RELIANCE ON THE DECISION OF THE HONBLE MUMBAI HIGH COURT IN THE CASE OF CIT VS.- JET AIRWAYS INDIA LIMITED REPORTED IN 331 ITR 236, AS ALSO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF RANBAXY LABORATORIES LIMITED VS.- CIT REPORTED IN 336 ITR 136 AS ALSO THE I.T.A. NO. 1265/KOL./2012 ASSESSMENT YEAR: 2005-06 PAGE 4 OF 6 DECISION OF THE HONBLE MUMBAI HIGH COURT IN THE CA SE OF HINDUSTAN LEVER LIMITED REPORTED IN 268 ITR 332. HE ALSO PLACED REL IANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS .- SUN ENGINEERING WORKS (P) LTD. REPORTED IN 198 ITR 297 (SC). IT WAS THE SUBMISSION THAT THE REASSESSMENT HAVING BEEN INITIATED ON A PARTICU LAR GROUND AND SINCE NO ADDITION HAD BEEN MADE IN RESPECT OF THE SAME, E NTIRE REASSESSMENT IS VITIATED IN LAW. 5. IN REPLY, LD. D.R. VEHEMENTLY SUPPORTED THE ORDE RS OF ASSESSING OFFICER AND CIT(APPEALS). IT WAS THE SUBMISSION THA T THE REOPENING HAVING BEEN DONE VALIDLY JUST BECAUSE THERE WAS NO ADDITIO N MADE ON THE GROUNDS ON WHICH THE REOPENING WAS DONE. IT WOULD N OT MAKE THE REOPENING OR THE REASSESSMENT BAD IN LAW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF HIN DUSTAN LEVER LTD. CLEARLY SHOWS THAT WHAT IS DECIDED IN THE CASE WAS THAT THE REASONS ARE REQUIRED TO BE READ AS THEY ARE RECORDED BY THE ASS ESSING OFFICER AND NO SUBSTITUTION OR DELETION IS PERMISSIBLE. NO ADDITIO N CAN BE MADE TO THOSE REASONS. NO INFERENCE CAN BE ALLOWED TO BE DRAWN ON THE BASIS OF THE REASONS NOT RECORDED. IN THE PRESENT CASE, CLEARLY THE ASSESSING OFFICER HAS SPECIFIED IN HIS REASONS RECORDED THAT THE REOP ENING WAS ON ACCOUNT OF THE DIFFERENCE IN THE BALANCE-SHEET IN SO FAR AS THE ASSET SIDE WAS MORE THAN THE LIABILITY SIDE BY AN AMOUNT OF RS.5,75,506 /-. A PERUSAL OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF RANBAXY LABORATORIES LTD. AS ALSO THE DECISION OF THE HONB LE MUMBAI HIGH COURT IN THE CASE OF JET AIRWAYS INDIA LIMITED REFERRED T O SUPRA, IT CLEARLY SHOWS THAT THE HONBLE HIGH COURTS HAVE HELD THAT WHERE NO ADDITION IS MADE IN RESPECT OF THE GROUND FOR WHICH REASSESSMENT IS INI TIATED, EVEN IF IT CAN BE TREATED AS A VALID GROUND, NO OTHER ADDITION MADE I N RESPECT OF OTHER INCOMES . A PERUSAL OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SUN ENGINEERING WORKS (P) LTD. REFERRED TO SUPRA, THE ISSUE BEFORE THE HONBLE SUPREME COURT WAS WHERE AN ITEM UNCONN ECTED WITH THE I.T.A. NO. 1265/KOL./2012 ASSESSMENT YEAR: 2005-06 PAGE 5 OF 6 ESCAPEMENT OF INCOME HAS BEEN CONCLUDED FINALLY AGA INST THE ASSESSEE, HOW FAR IN REASSESSMENT ON AN ESCAPED ITEM OF INCOM E IS IT OPEN TO THE ASSESSEE TO SEEK A REVIEW OF THE CONCLUDED ITEM FOR THE PURPOSE OF COMPUTATION OF THE ESCAPED INCOME. IN THE PRESENT CASE, ADMITTEDLY THERE IS NO ADDITION MADE ON THE BASIS OF THE REASONS REC ORDED FOR THE PURPOSE OF REOPENING. HERE THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF GKN DRIVE SHAFTS (INDIA) LTD. VS. ITO REPORTE D IN 259 ITR 19 (SC) WOULD HAVE SUBSTANTIAL BEARING. THE HONBLE SUPREME COURT IN THE CASE OF GKN DRIVE SHAFTS (INDIA) LTD. HAS SPECIFICALLY HELD THAT WHEN REOPENING OF ASSESSMENT IS BEING DONE, THE REASONS RECORDED FOR THE PURPOSE OF REOPENING ARE TO BE GIVEN TO THE ASSESSEE AND HIS O BJECTIONS, IF ANY, ARE TO BE DISPOSED OF BEFORE PROCEEDINGS WITH THE ASSESSME NT. THIS CLEARLY IS BECAUSE IF A PARTICULAR REASON HAS BEEN RECORDED FO R THE PURPOSE OF ASSESSMENT AND THE ASSESSEE IS ABLE TO GIVE EXPLANA TION AND CONVINCE THE ASSESSING OFFICER THAT THE REOPENING WAS NOT REQUIR ED TO BE DONE ON THE REASONS AS RECORDED BY THE ASSESSING OFFICER THEN T HE REOPENING ITSELF CAN BE DROPPED. HERE IN THE PRESENT CASE CLEARLY THE AS SESSEE HAS EXPLAINED VARIATION WHICH HAS BEEN ASSIGNED FOR THE REASONS F OR REOPENING OF THE ASSESSMENT IN THE ASSESSEES CASE. ONCE THE REASON RECORDED FOR THE PURPOSE OF REOPENING HAS BEEN EXPLAINED AND SAME HA S ALSO BEEN ACCEPTED BY THE ASSESSING OFFICER, THEN OBVIOUSLY T HE REOPENING NO MORE SURVIVES AND CONSEQUENTLY WE ARE OF THE VIEW THAT T HE REASSESSMENT DID NOT HAVE ANY LEGS TO STAND AND CONSEQUENTLY REASSES SMENT IS LIABLE TO BE QUASHED AND WE DO SO. IN THESE CIRCUMSTANCES, WE AR E NOT ADJUDICATING THE GROUNDS RAISED BY THE ASSESSEE ON MERITS AS WE HAVE ALREADY HELD THAT THE REASSESSMENT IS INVALID. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JUNE, 2014. SD/- SD/- SHAMIM YAYHA GEORGE MATHAN (ACCOUNTANT MEMBER) (JU DICIAL MEMBER) KOLKATA, THE 4 TH DAY OF JUNE, 2014 I.T.A. NO. 1265/KOL./2012 ASSESSMENT YEAR: 2005-06 PAGE 6 OF 6 COPIES TO : (1) MD. SAHABUDDIN, C/O. SHRI R.P. SHARMA, ADVOCATE, 19-D, MUKTARAM BABU STREET, KOLKATA-700 007 (2) INCOME TAX OFFICER, WARD-38(4), KOLKATA, 18, RABINDRA SARANI, PODDAR COURT, KOLKATA-700 001 (3) COMMISSIONER OF INCOME-TAX (APPEALS) (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.