Appeal details
Counselvise Citation
128221114 RSA 2012
Assessee PAN
Bench
Appeal Number
Duration Of Justice
10 month(s) 13 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
14-08-2013
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
C
Assessment Year
2008-2009
Appeal Filed On
01-10-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI N.V. VASUDEVAN, JUDICIAL MEMBER ITA NOS.1314 & 1315/BANG/2012 ASSESSMENT YEARS : 2003-04 & 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 12(3), BANGALORE. VS. M/S. SHRIRAM CHITS (KARNATAKA) PVT. LTD., NO.259/31, I FLOOR, 10 TH CROSS, WILSON GARDEN, BANGALORE 560 027. PAN: AACCS 2078R APPELLANT RESPONDENT ITA NOS.1281 & 1282/BANG/2012 ASSESSMENT YEARS : 2003-04 & 2008-09 M/S. SHRIRAM CHITS (KARNATAKA) PVT. LTD., NO.259/31, I FLOOR, 10 TH CROSS, WILSON GARDEN, BANGALORE 560 027. PAN: AACCS 2078R VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 12(3), BANGALORE. APPELLANT RESPONDENT REVENUE BY : SHRI FARAHAT HUSSAIN QURESHI, CIT-II(DR) ASSESSEE BY : SHRI S. ANANTHAN, C.A. ITA NO.1315/BANG/2012 PAGE 2 OF 12 DATE OF HEARING : 06.08.2013 DATE OF PRONOUNCEMENT : 14.08.2013 O R D E R PER BENCH ITA NOS.1315 & 1282/BANG/2012 ITA NO.1315/BANG/2012 IS AN APPEAL BY THE REVENUE AND ITA NO.1282/BANG/2012 IS AN APPEAL BY THE ASSESSEE. BO TH THESE APPEALS ARE DIRECTED AGAINST THE ORDER DATED 30.07.2012 OF THE CIT(APPEALS)-III, BANGALORE RELATING TO A.Y. 2008-09. ITA NO.1315/BANG/2012 2. THE GROUNDS OF APPEAL BY THE REVENUE READS THUS: - 1. THE ORDER OF THE LEARNED CIT(A) IS OPPOSED TO L AW AND FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN ALLOWING THE DEDUCTION TOWA RDS BID LOSS WITHOUT APPRECIATING THE FACT THAT SUCH BID LOSS PE RTAINS TO PERIOD BEYOND THE ACCOUNTING PERIOD RELEVANT TO THE ASSESS MENT YEAR UNDER CONSIDERATION AND THE SAME SHOULD NOT HAVE BE EN ALLOWED FOR THE SAKE OF CONSISTENCY. 3. THE CIT(A) ERRED IN ALLOWING THE CLAIM OF BID L OSS RELYING ON THE ORDER OF THE HONBLE ITAT IN ITA NO. 1 547/B/2010 WITHOUT APPRECIATING THE FACT THAT THE I SSUE HAS NOT REACHED FINALITY AND THE APPEAL OF THE DEPARTMENT O N THE SAME ISSUE IN THE CASE OF THE ASSESSEE FOR THE AY 2005-0 6 IS PENDING BEFORE THE HONBLE HIGH COURT OF KARNATAKA. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT( A) IN SO FAR AS IT ITA NO.1315/BANG/2012 PAGE 3 OF 12 RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND TH AT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND / OR DELETE ANY OF THE GROUNDS MENTIONED ABOVE. 3. THE ASSESSEE IS A COMPANY WHICH IS ENGAGED IN T HE BUSINESS OF CONDUCTING CHITS. WHILE COMPLETING THE ASSESSMENT FOR THE A.Y. 2008-09, THE AO HELD THAT THE BID LOSS CLAIMED IN THE MEMO O F INCOME CANNOT BE ALLOWED AS A DEDUCTION. THE ASSESSEE IS IN THE BUS INESS OF CONDUCTING CHITS. THE ASSESSEE ON ITS OWN BIDS AT THE AUCTION . WHEN THE ASSESSEE SUCCEEDS IN HIS BID, THE DIFFERENCE BETWEEN THE VAL UE OF THE CHIT AND THE AMOUNT AT WHICH THE ASSESSEE BIDS AT THE AUCTION IS BOOKED AS A LOSS. THE REMAINING TENURE OF THE CHIT IN RESPECT OF WHICH TH E ASSESSEE IS A SUCCESSFUL BIDDER MIGHT EXTEND BEYOND THE PREVIOUS YEAR. THE ASSESSEE BOOKS THE LOSS AND SPREADS IT OVER THE REMAINING PE RIOD OF THE CHIT GROUP. IN THE BOOKS OF ACCOUNTS THE ASSESSEE BOOKS ONLY TH E LOSS THAT IS APPORTIONED FOR THE PERIOD RELEVANT TO THE PREVIOUS YEAR. IN THE RETURN OF INCOME HOWEVER THE LOSS FROM OWN BIDDING FOR THE WH OLE TENURE OF THE CHIT GROUP IS CLAIMED AS A DEDUCTION. IN THE PRESENT A. Y. THE MANNER IN WHICH THE ASSESSEE CLAIMED LOSS ON BIDDING WAS AS FOLLOWS : PROFIT AS PER P & L ACCOUNT RS.3,24,197 LESS: BID LOSS ACCRUED DURING THE YEAR RS.6,47,16 ,536 LESS: BID LOSS DEBITED TO P & L A/C. RS.5,96, 73,493 RS.50,43,043 ITA NO.1315/BANG/2012 PAGE 4 OF 12 4. THE AO ALLOWED THE BID LOSS TO THE EXTENT DEBITE D IN THE PROFIT AND LOSS ACCOUNT AND REFUSED TO ALLOW THE CLAIM FOR DED UCTION OF THE SUM OF RS.50,43,043/- WHICH IS THE BID LOSS REFERABLE TO T HE PERIOD BEYOND THE PREVIOUS YEAR. ON APPEAL BY THE ASSESSEE, THE CIT( APPEALS) AFTER TAKING NOTE OF THE SUBMISSIONS OF THE ASSESSEE ON THE BID LOSS AND THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 2005-06 , DELETED THE ADDITION MADE BY THE AO OBSERVING AS FOLLOWS:- 4.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE LEA RNED COUNSEL FOR THE APPELLANT AND THE REASONS GIVEN BY THE AO I N HIS ORDER FOR REJECTING THE CLAIM OF BID LOSS. THE AO HAS DISALLO WED THE ADDITIONAL BID LOSS CLAIMED IN THE COMPUTATION OF I NCOME ON THE GROUNDS THAT ACCOUNTING STANDARDS 1 & 2 ARE VIOLATE D BY THE PRACTICE FOLLOWED BY THE APPELLANT, AND THAT THE M ATCHING PRINCIPLE OF ACCOUNTING IS IGNORED. THE DISPUTE IS WITH REGARD TO THE PERIOD TO WHICH THIS LOSS RELATES. THE APPELLA NT INSISTS THAT THE CLAIM AMOUNT PERTAINS FULLY TO THE FINANCIAL YEAR R ELEVANT TO THIS APPEAL ITSELF, AND THAT THE AO IS INCORRECT IN UNDE RSTANDING THE SAME TO PERTAIN TO A FUTURE PERIOD INVOLVING THE RE MAINING PERIOD OF THE CHIT. 4.4. I FIND THAT THE ISSUE HAS BEEN DECIDED IN THE APPELLANTS FAVOUR FOR THE AY: 2005-06 BY MY PREDECESSOR CIT(A) AFTER DUE EXAMINATION OF THE ACCOUNTING PROCESS INVOLVED. THI S ORDER HAS BEEN UPHELD BY THE ITAT BANGALORE IN ITA NO.1547/B/ 2010. I SEE THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL I S IDENTICAL TO THE ONE RAISED FOR THAT AY 2005-06. I ALSO NOTE THAT N O ADDITION WAS MADE ON THIS POINT BY THE AO FOR AY 2006-07. WITH R ESPECT TO AY: 07-08, THE ADDITION MADE BY THE AO WAS DELETED BY THE CIT(A), AGAINST WHICH ORDER THE DEPARTMENT DID NOT FILE ANY SECOND APPEAL BEFORE THE ITAT. IN VIEW OF THE WRITT EN SUBMISSIONS OF THE APPELLANT ON THIS ISSUE, AND ON A REVIEW OF THE FACTS OF THE CASE, I FIND THAT THE APPELLANTS CLAI M HAS MERIT. THE TREATMENT GIVEN TO THE BID LOSS OVER THE YEARS HAS BEEN CONSISTENT. IN THE CIRCUMSTANCES, I HOLD THAT THE APPELLANT IS ENTITLED TO SUCCEED IN THIS POINT AND THE AO IS DIRECTED TO ALL OW THE SUM OF ITA NO.1315/BANG/2012 PAGE 5 OF 12 RS.50,43,043/- AS BID LOSS AS A DEDUCTION IN COMPUT ING THE TOTAL INCOME. 5. AS CAN BE SEEN FROM THE GROUNDS OF APPEAL, THE O NLY GRIEVANCE OF THE REVENUE IS THAT THE DECISION OF THE TRIBUNAL HA S NOT BEEN ACCEPTED AND AN APPEAL HAS BEEN PREFERRED BY THE REVENUE BEFORE THE HONBLE HIGH COURT. WE ARE OF THE VIEW THAT THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL ON AN IDENTICAL ISSUE HAS TO BE FOLLOWED. IN THE EVENT OF ANY DECISION BY THE HONBLE HIGH COURT SUPPORTING THE V IEW TAKEN BY THE REVENUE, THE REVENUE IS AT LIBERTY TO TAKE APPROPRI ATE STEPS. PENDENCY OF AN APPEAL BEFORE THE HIGH COURT CANNOT BE A GROUND NOT TO FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL. ACCORDINGLY, WE DO NOT FIND ANY MERITS IN THE APPEAL BY THE REVENUE AND THE SAME IS DISMISSED. ITA NO.1282/BANG/2012 6. AS FAR AS THIS APPEAL IS CONCERNED, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READS AS FOLLOWS:- 1. THE ORDER OF THE LEARNED COMMISSIONER (APPEALS ) IS BAD IN LAW AND AGAINST THE FACTS OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN SUSTAINING THE ADDITION ON ACCOUNT OF FOREMANS DIVIDEND AMOUNTING TO RS.52,09,740/-. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THE FACT THAT THE FOREMANS DI VIDEND IS NOT TAXABLE ON GROUNDS OF MUTUALITY. ITA NO.1315/BANG/2012 PAGE 6 OF 12 FOR ALL THESE AND OTHER GROUNDS WHICH MAY BE URGED AT THE TIME OF THE HEARING OF THIS APPEAL, THE APPELLANT PRAYS THA T ITS APPEAL BE ALLOWED. 7. IT WAS FAIRLY SUBMITTED BY THE PARTIES BEFORE US THAT IN VIEW OF THE DECISION OF THE COORDINATE BENCH IN ASSESSEES OWN CASE ON AN IDENTICAL ISSUE IN ITA NO.601/BANG/07 FOR AY 03-04 ORDER DATE D 23.5.2008, WHEREIN SIMILAR WAS DECIDED ISSUE AGAINST THE ASSESSEE, THE RE ARE NO GROUNDS TO INTERFERE WITH THE ORDER OF THE CIT(APPEALS). AS A RESULT, THE APPEAL BY THE ASSESSEE IS ALSO DISMISSED. ITA NOS.1281 & 1314/BANG/2012 8. ITA NO.1281/B/12 IS AN APPEAL BY THE ASSESSEE, W HILE ITA NO.1314/BANG/2012 IS AN APPEAL BY THE REVENUE. BOT H THESE APPEALS ARE DIRECTED AGAINST THE ORDER DATED 30.07.2012 OF THE CIT(APPEALS)-III, BANGALORE RELATING TO A.Y. 2003-04. ITA NO.1314/BANG/2012 9. AS FAR AS THIS APPEAL BY THE REVENUE IS CONCERNE D, IT IS IDENTICAL TO THE ISSUE RAISED BY THE REVENUE IN ITA NO.1315/BANG /2012 FOR THE A.Y. 2008-09. FOR THE REASONS STATED WHILE DECIDING THA T APPEAL FOR THE A.Y. 2008-09, THE APPEAL OF THE REVENUE FOR THE A.Y. 200 3-04 IS DISMISSED. ITA NO.1315/BANG/2012 PAGE 7 OF 12 ITA NO.1281/BANG/2012 10. AS FAR AS THIS APPEAL OF THE ASSESSEE IS CONCER NED, THE GROUNDS OF APPEAL READ AS FOLLOWS:- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) IS BAD IN LAW AND AGAINST THE FACTS OF TH E CASE 2. (A) THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) FAILED TO APPRECIATE THE FACT THAT THE RE-OPENING O F THE ASSESSMENT U/S 147 OF THE INCOME TAX ACT, 1961 IS B AD IN LAW. (B) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THE FACT THAT THE FIRST PROVIS O TO SEC 147 IS APPLICABLE IN THIS CASE AND AS SUCH THE RE-O PENING IS BAD IN LAW. FOR ALL THESE AND OTHER GROUNDS WHICH MAY BE URGED AT THE TIME OF THE HEARING OF THIS APPEAL, THE APPELLANT PRAYS THA T ITS APPEAL BE ALLOWED. 11. IT CAN BE SEEN THAT THE ASSESSEE HAS CHALLENGED THE VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS U/S. 147 OF THE ACT. THE FACTS WHICH ARE MATERIAL FOR DECIDING THE ISSUE RAISED BY THE A SSESSEE IN ITS APPEAL ARE AS FOLLOWS: 12. THE ASSESSEE FILED RETURN OF INCOME FOR THE A.Y . 2003-04 ON 28.11.2003 AND AN ORDER WAS PASSED ON 28.02.2006 U/ S. 143(3) OF THE ACT. THIS ORDER OF ASSESSMENT WAS SOUGHT TO BE REOPENED BY ISSUE OF A NOTICE U/S. 148 OF THE ACT DATED 22.03.2010. IT CAN BE SE EN THAT THE ASSESSMENT IS SOUGHT TO BE REOPENED AFTER A PERIOD OF FOUR YEA RS FROM THE END OF THE ITA NO.1315/BANG/2012 PAGE 8 OF 12 RELEVANT ASSESSMENT YEAR. AS PER THE PROVISO TO SE CTION 147 OF THE ACT, WHERE AN ASSESSMENT HAS ALREADY BEEN MADE U/S. 143( 3) OF THE ACT AND SUCH ASSESSMENT IS SOUGHT TO BE REOPENED BY ISSUE O F A NOTICE U/S. 148 OF THE ACT, THEN THE FURTHER CONDITION TO BE SATISFIED IS THAT ESCAPEMENT OF INCOME SHOULD HAVE ARISEN BY THE REASON OF ASSESSEE S FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS FOR ITS ASSESSME NT FOR THAT ASSESSMENT YEAR. IN THIS REGARD, IT IS NECESSARY TO REPRODUCE THE RE ASONS RECORDED BY THE AO BEFORE ISSUE OF NOTICE U/S. 148 OF THE ACT. THE SAM E READS THUS:- ON PERUSAL OF ACCOUNTS ENCLOSED TO THE RETURN FILE D AND STATEMENT OF COMPUTATION OF INCOME, IT WAS OBSERVED THAT LOSS ON OWN BIDDING I.E., BID LOSS AMOUNTING TO RS.7,20,32,155/ - WAS DEBITED TO P & L ACCOUNT AND RS.7,14,76,L02/- WAS SEPARATEL Y CLAIMED IN THE STATEMENT OF COMPUTATION INCOME FILED ALONG WIT H RETURN OF INCOME. THE AO IN THE PAGE 9 OF THE ASSESSMENT ORDE R DATED 28- 2-2006 ADDED BACK RS.7,14,76,102/-, WHEREAS IT IS O BSERVED THAT AN AMOUNT OF RS.7,20,32,155/- HAS BEEN ADDED BACK W HILE COMPUTING THE INCOME IN THE ASSESSMENT ORDER DATED 28-2-2006. BUT, IN ITS SUBMISSIONS, BEFORE THE CIT(A), THE ASS ESSEE SUBMITTED THAT BOTH THE FIGURES ARE SAME AND BY MISTAKE THEY WERE SHOWN AS SEPARATE. IN OTHER WORDS, IT IS UNDERSTOOD THAT T HE SAME AMOUNT WAS CLAIMED TWICE RESULTING IN INCREASE OF LOSS AND TO THAT EXTENT THE INCOME HAS ESCAPED ASSESSMENT. BESIDES, THE BID LOSS ARISES FROM DISCOUNTING THE CHIT VALUE ON BIDDING THE AUCTION AS A MEMBER OF THE CHIT GROU P, WHEN THE REGULAR MEMBERS LEAVE/DEFAULT IN PAYING REGULAR CHI T AMOUNT. THE ASSESSEES CONTENTION HAS BEEN THAT SUCH BID LOSS I S TO BE ALLOWED IN THE SAME FINANCIAL YEAR OF BIDDING AGAINST THE C OMMISSION EARNED BY IT DURING THAT YEAR AND THE ASSESSEE DEBI TED A PORTION OF SUCH BID LOSS OF THE RELEVANT FINANCIAL YEAR TO THE P & L ACCOUNT, AND THE BALANCE WAS REDUCED IN MEMO OF COMPUTATION OF INCOME. WHEREAS THE DEPARTMENT, ALL ALONG IS HOLDING THAT S UCH LOSS SHOULD BE SPREAD OVER THE TERM OF THE CHIT AND CLAI MED IN RESPECTIVE ASSESSMENT YEARS. FOR THE INSTANT YEAR, EVEN IF THE BID LOSS IS ALLOWABLE AS PER THE ORDER OF THE ITAT, IF IT IS ALREADY ITA NO.1315/BANG/2012 PAGE 9 OF 12 DEBITED TO P & L, THE SAME CANNOT BE FURTHER CLAIME D IN THE MEMO OF COMPUTATION. HENCE, ON THIS REASONING RS.7,14,76,102/- IS NOT ALLOWABLE. THIS ASSUMES IMPORTANCE BECAUSE OF THE ORDER OF H IGH COURT OF KARNATAKA DATED 17-11-2009. BECAUSE, FOR T HE INSTANT ASSESSMENT YEAR, THE AO ADDED BACK RS.7,20,32,155/- . THE CIT(A) CONFIRMED THE DISALLOWANCE BUT THE ITAT HAD GIVEN RELIEF TO THE ASSESSEE. BESIDES, THE ASSESSEE HAS BEEN REL YING ON THE DECISION OF APEX COURT IN THE CASE M/S BILAHARI INV ESTMENTS AND CLAIMING THE BID LOSS IN BOTH P & L A/C AND THE MEM O OF COMPUTATION OF INCOME. IN THE APPEAL OF THE DEPARTM ENT U/S 260A, THE HONBLE HIGH COURT OF KARNATAKA, VIDE ORD ER DATED 17.11.2009 FOR A.Y. 1998-99, DIFFERED FROM THE DECI SION OF APEX COURT IN M/S BILAHARI INVESTMENTS AND SET ASIDE TH E MATTER TO THE FILE OF THE ASSESSING OFFICER. THE HONBLE HIGH COU RT OF KARNATAKA ACCEPTED THE ARGUMENTS OF THE REVENUE, TH AT NOTIFICATION NO.69E DATED 25-1-1996 AND S.145(2) HA D NOT BEEN BROUGHT TO THE NOTICE OF THE HONBLE SUPREME COURT AND THERE WAS NO OCCASION FOR THE SUPREME COURT TO CONSIDER T HE EFFECT OF THE NOTIFICATION AND AMENDMENT TO S 145(2) AND STAT ED THAT THE HONBLE SUPREME COURT CONFINED ITS DECISIONS TO ASS ESSMENT YEARS IN APPEAL. BECAUSE OF THIS DECISION OF HIGH COURT OF KARNATAKA, THE JUDGEMENT OF BILAHARI CASE IS NOT AP PLICABLE. HENCE, THE ACTION OF THE ASSESSEE OF DEBITING THE B ID LOSS IN P & L A/C AND CLAIMING AGAIN IN THE COMPUTATION STATEMENT , RESULTS IN EXCESS CLAIM. FOR THESE REASONS, I HAVE REASONS TO BELIEVE THAT T HE MISTAKE IN COMPUTATION OF INCOME HAS RESULTED IN ESCAPEMENT OF INCOME FROM ASSESSMENT TO THE EXTENT TO THE EXTENT OF RS.7 ,1476,103 (BID LOSS ) AND RS.20,632/- (INCOME FROM HOUSE PROPERTY OMITTED TO BE INCLUDED. 13. IT CAN BE SEEN THAT IN THE REASONS RECORDED, TH E AO HAS NOT SPECIFICALLY ALLEGED THAT ESCAPEMENT OF INCOME WAS DUE TO THE ASSESSEES FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FA CTS NECESSARY FOR HIS ITA NO.1315/BANG/2012 PAGE 10 OF 12 ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR. IT IS NOT IN DISPUTE BEFORE US THAT THE PROVISO TO SECTION 147 IS APPLICABLE IN TH E PRESENT CASE. 14. IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSE E HAS DRAWN OUR ATTENTION TO A DECISION OF THE ITAT, BANGALORE BENC H IN THE CASE OF M/S. DHFL VYSYA HOUSING FINANCE LTD. V. ACIT, ITA NO.1416/BANG/2010 FOR THE A.Y. 1996-97, ORDER DATED 11.01.2013 WHEREIN THIS TRIBUNAL ON AN IDENTICAL ISSUE HAS HEL D THAT INITIATION OF REASSESSMENT PROCEEDINGS IS NOT VALID. 15. THE LD. DR, ON THE OTHER HAND, SUBMITTED THAT T HERE WAS ESCAPEMENT OF INCOME AND REASSESSMENT PROCEEDINGS WERE VALIDLY INITIATED. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT THIS TRIBUNAL IN THE CASE OF DHFL VYSYA HOUSING FINANCE LTD. (SUPRA) HAS HELD AS FOLLOWS:- 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FR OM A PERUSAL OF THE REASONS RECORDED BY THE AO BEFORE ISSUING NO TICE U/S. 148 OF THE ACT, IT IS CLEAR THAT THE AO HAS NOT, IN THE REASONS RECORDED, MADE AN ALLEGATION THAT INCOME CHARGEABLE TO TAX HA S ESCAPED ASSESSMENT BY REASON OF THE ASSESSEES FAILURE TO D ISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT FOR THE RELEVANT ASSESSMENT YEAR. IT IS NOT IN DISPUTE THA T FOR A.Y. 1996- 97, AN ASSESSMENT U/S. 143(3) HAD ALREADY BEEN MADE IN THE CASE OF THE ASSESSEE BY AN ORDER OF ASSESSMENT DATED 31. 03.1998. ADMITTEDLY NOTICE U/S. 148 OF THE ACT WAS ISSUED ON 17.03.2003 WHICH IS BEYOND THE PERIOD OF FOUR YEARS FROM THE E ND OF THE RELEVANT ASSESSMENT YEAR (1996-97). THE PROVISO TO SECTION 147 WAS THEREFORE CLEARLY ATTRACTED. IT IS CLEAR FROM THE DECISION OF THE HONBLE BOMBAY HIGH COURT AS WELL AS THE HONBLE KA RNATAKA ITA NO.1315/BANG/2012 PAGE 11 OF 12 HIGH COURT, REFERRED TO BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US, THAT THERE SHOULD BE A SPECIFIC AVERMENT IN THE REASONS RECORDED THAT ESCAPEMENT OF INCOME CHARGEABLE TO TA X WAS BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT FOR THAT ASSESSMENT YEAR. SUCH AN ALLEGATION IS ADMITTEDLY ABSENT IN THE REASONS RECORDED. THE LD. CIT(A) HAS IN HIS ORDER HAS ATTEMPTED TO GIVE DIFFERENT REASONS FOR RESORTING TO REASSESS MENT PROCEEDINGS. THE LAW IS WELL SETTLED THAT VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS HAVE TO BE JUDGED ON THE B ASIS OF REASONS RECORDED BY THE AO AND IT IS NOT POSSIBLE T O SUBSTITUTE, DELETE OR ADD ANYTHING TO SUCH REASONS RECORDED BY THE AO. IT IS ALSO NOT POSSIBLE TO DRAW ANY INFERENCE BASED ON TH E REASONS NOT RECORDED. IN THE LIGHT OF THE LAW AS LAID DOWN IN THE AFORESAID DECISIONS, WE ARE OF THE VIEW THAT INITIATION OF RE ASSESSMENT PROCEEDINGS BY THE AO IN THE PRESENT CASE IS NOT IN ACCORDANCE WITH THE LAW. THE ORDER OF REASSESSMENT IS THEREFO RE LIABLE TO BE ANNULLED AND THE SAME IS HEREBY ANNULLED. 15. IN VIEW OF THE DECISION ON THE VALIDITY OF INI TIATION OF REASSESSMENT PROCEEDINGS, THE OTHER ISSUES RAISED B Y THE ASSESSEE ON MERITS DO NOT REQUIRE ANY CONSIDERATION. CONSEQ UENTLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 17. THE ABOVE REASONING ADOPTED BY THE TRIBUNAL WIL L APPLY TO THE PRESENT CASE. IN THE REASONS RECORDED, NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR HAS BEE N ALLEGED. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT INITIATION O F REASSESSMENT PROCEEDING IS NOT VALID. ACCORDINGLY, THE ORDER O F REASSESSMENT IS ANNULLED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.1315/BANG/2012 PAGE 12 OF 12 18. IN THE RESULT, ITA NO.1281/BANG/2012 IS ALLOWED , WHILE ALL THE OTHER THREE APPEALS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF AUGUST, 2013. SD/- SD/- ( N. BARATHVAJA SANKAR ) ( N.V. VASU DEVAN ) VICE PRESIDENT JUDIC IAL MEMBER BANGALORE, DATED, THE 14 TH AUGUST, 2013. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.
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