Parul Bhupendra Patel, Valsad V. The Income Tax Officer, Ward-2, Vapi

ITA 1346/AHD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94649 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 15-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA HARDASANI
• Keywords: Question of law; Initiation of penalty proceedings; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 234B; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) I.T. A. N O. 1346 /AHD/2015 (ASSESSME NT YEAR: 2008-09) PARUL BHUPENDRA PATEL MAHYAVANSHI FALIA, SANJAN MAROLI ROAD, TALUKO: UMBERGAON, VALSAD V/S INCOME TAX OFFICER, WARD- 2, VAPI (APPELLANT) (RESPONDENT) PAN: AMJPP 9329A APPELLANT BY : SHRI PARIN SHAH, AR RESPONDENT BY : SMT. ANITA HARDASANI, SR. D. R. ( )/ ORDER DATE OF HEARING : 11-09-201 5 DATE OF PRONOUNCEMENT : 30 -10-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A), VALSAD DATED 19.03.2015 FOR A.Y. 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. ITA NO 1346/ AHD/2015 . A.Y. 2008-09 2 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE DERIVING INC OME FROM TUTIONS AND OTHER SOURCES. SHE FILED HER RETURN OF INCOME FOR A.Y. 0 8-09 ON 21.03.2007 DECLARING TOTAL INCOME OF RS. 1,44,954/-. THE RETUR N OF INCOME WAS INITIALLY PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENLTY NOTI CE U/S. 148 OF THE ACT WAS ISSUED ON 30 TH MARCH, 2013 AND THE CASE WAS REOPENED AND THEREAFT ER THE ASSESSMENT WAS FRAMED U/S. 143(3) R.W.S. 147 VIDE O RDER DATED 30.12.2013 AND THE TOTAL INCOME WAS DETERMINED AT RS. 3,44,950 /-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE L D. CIT(A) WHO VIDE ORDER DATED 19.03.2015 DISMISSED THE APPEAL OF THE ASSESS EE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASSESSEE IS NOW IN A PPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING RE - OPENING OF ASSESSMENT U/S 148 OF THE ACT IGNORING FACT THAT NO NEW TANGIBLE M ATERIAL BROUGHT ON RECORD AND RE- OPENING MERELY ON THE BASIS OF DETAILS / INFORMATIO N FILED ALONG WITH RETURN OF INCOME. LD. CIT (A) OUGHT TO HAVE QUASHED REASSESSMENT ON P LEA THAT LAND PURCHASED BY THE APPELLANT IS DULY SHOWN IN BOOKS OF ACCOUNTS, NO NE W TANGIBLE MATERIAL BROUGHT ON RECORD BY AO AND THERE IS NO ESCAPEMENT OF INCOME B Y THE APPELLANT. IT BE SO HELD NOW. 2. WITHOUT PREJUDICE TO THE ABOVE LD. CIT (A) OUGHT TO HAVE GIVEN HIS FINDINGS ON MERITS AS DETAILS REGARDING SOURCE OF INVESTMENT ARE SUBMI TTED TO AO AND DULY REFLECTED IN STATEMENT OF FACTS FILED BEFORE HIM. LD. CIT (A) OU GHT TO HAVE ADJUDICATED GROUND NO. 3 RAISED BEFORE HIM AND GIVE HIS FINDING ON IT. IT BE SO HELD NOW. 3. LD. CIT (A) OUGHT TO CONSIDER SOURCE OF CASH DEPOSI TED IN BANK ACCOUNTS ARE THE TUITION FEES EARNED BY THE APPELLANT, DETAILS OF LI ST OF STUDENTS ALSO SUBMITTED TO AO AND EARLIER CASH ON HAND BALANCE DULY ACCOUNTED IN BOOKS AND REFLECTED IN RETURN OF INCOME, SINCE EVIDENCES SUBMITTED IN SUPPORT OF INC OME HENCE INVESTMENT OF RS. 2, 00,000/- MADE BY THE APPELLANT IS CONSIDERED AS EXP LAINED. IT BE SO HELD NOW. 4. LEVY OF INTEREST U/S 234A, 234B & 234C OF THE ACT IS NOT JUSTIFIED. 5. INITIATION OF PENALTY PROCEEDINGS U/S 271 (L)(C) IS UNJUSTIFIED. ITA NO 1346/ AHD/2015 . A.Y. 2008-09 3 4. BEFORE US, LD. A.R. SUBMITTED THAT THOUGH ASSESSEE HAS RAISED SEVERAL GROUNDS BUT THE ONLY EFFECTIVE GROUND IS WITH RESPE CT TO RE-OPENING OF ASSESSMENT AND THE ADDITIONS MADE IN REASSESSMENT P ROCEEDINGS. 5. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND FURTHER SUBMITTED THAT THE PRESENT CASE WAS REOPENED WITHIN A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR. HE SUBMITTED THAT THE RE-OPENING HAS BEEN MADE ON THE BASIS OF M ATERIAL WHICH WAS ALREADY AVAILABLE ON RECORD OF A.O AND THE REOPENIN G WAS NOT BASED ON ANY NEW MATERIAL. HE RELYING ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. KELVINATOR INDIA LTD. 320 ITR 561 SUBMIT TED THAT REASON TO BELIEVE DOES NOT GIVE ARBITRARY POWERS TO REOPEN AN ASSESSMENT AND THAT CHANGE OF OPINION CANNOT BE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. HE SUBMITTED THAT IN THE AB SENCE OF ANY NEW MATERIAL, THE A.O CANNOT RE-OPEN THE ASSESSMENT. HE FURTHER PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ORIENT CRAFT LTD. (ITA NO. 555/A/2012 ORDER DATED 12.12.2012). HE FUR THER SUBMITTED THAT LD. CIT(A) HAS DECIDED THE ISSUE ON THE LEGAL ASPECT OF REOPENING BUT HAS NOT ADJUDICATED THE ISSUE ON MERITS. HE THEREFORE SUBMI TTED THAT SINCE THE REASSESSMENT ITSELF BEING NOT AS PER LAW THE SAME N EEDS TO BE QUASHED. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A .O. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ORIGINAL RETURN OF INCO ME FOR A.Y. 08-09 WAS PROCESSED U/S. 143(1) AND THE NOTICE FOR RE-OPENING U/S. 148 HAS BEEN ISSUED ON 30 TH MARCH, 2013 I.E. WITHIN A PERIOD OF 4 YEARS FROM T HE END OF THE RELEVANT ASSESSMENT YEAR AND IN SUCH A CASE THE JUR ISDICTION TO REASSESS THE ITA NO 1346/ AHD/2015 . A.Y. 2008-09 4 ASSESSEE UNDER THE ACT CAN ONLY ARISE IF THE CONDIT IONS SPECIFIED IN SECTION 147 OF THE ACT IS SATISFIED. THE CONDITIONS THAT AR E TO BE FULFILLED ARE THAT THE A.O MUST HAVE REASON TO BELIEVE THAT INCOME CHARGEA BLE TO TAX FOR THE ASSESSMENT YEAR CONCERNED HAS ESCAPED ASSESSMENT AN D SUCH REASON TO BELIEVE MUST BE BASED UPON SOME TANGIBLE MATERIAL L EADING TO THE BELIEF. THUS IN THE ABSENCE OF CUMULATIVE SATISFACTION OF R EASON TO BELIEVE AND IN THE ABSENCE OF ANY INCOME CHARGEABLE TO TAX ESCAPING AS SESSMENTS OF THE A.O IS NOT EMPOWERED WITH JURISDICTION TO REOPEN THE ASSES SMENT. IN THE PRESENT CASE, THE REASONS DISCLOSED BY THE A.O VIDE INTIMAT ION DATED 17.06.2013, WHICH HAS ENABLED HIM TO REACH THE BELIEF THAT THER E WAS ESCAPEMENT OF INCOME WAS AS PER THE INFORMATION AVAILABLE WITH T HIS OFFICE . THUS IT CAN BE SEEN THAT THERE WAS NO NEW MATERIAL BEFORE A.O W HICH PROMPTED HIM TO ISSUE NOTICE U/S. 148 BUT ON THE CONTRARY THE REASO NS WAS ON THE BASIS OF MATERIAL ALREADY AVAILABLE ON RECORD MEANING THEREB Y THAT THE ASSESSMENT HAS BEEN REOPENED ON THE BASIS OF CHANGE OF OPINION, WH ICH IS NOT PERMISSIBLE AS PER LAW EVEN THOUGH WHEN THE ORIGINALLY INTIMATION WAS ISSUED U/S. 143(1) OF THE ACT AND FOR WHICH WE FIND SUPPORT BY THE DECISI ON OF HONBLE DELHI HIGH COURT IN THE CASE OF ORIENT CRAFTS LTD (SUPRA) WHERE THE HONBLE HIGH COURT HAS MADE THE FOLLOWING OBSERVATIONS:- 13. IN OTHER WORDS, THE EXPRESSION 'REASON TO BELIE VE' CANNOT HAVE TWO DIFFERENT STANDARDS OR SETS OF MEANING, ONE APPLICABLE WHERE THE ASSESSMENT WAS EARLIER MADE UNDER SECTION 143(3) AND ANOTHER APPLICABLE WHERE A N INTIMATION WAS EARLIER ISSUED UNDER SECTION 143(1). IT FOLLOWS THAT IT IS OPEN TO THE ASSESSEE TO CONTEND THAT NOTWITHSTANDING THAT THE ARGUMENT OF 'CHANGE OF OPI NION' IS NOT AVAILABLE TO HIM, IT WOULD STILL BE OPEN TO HIM TO CONTEST THE REOPENING ON THE GROUND THAT THERE WAS EITHER NO REASON TO BELIEVE OR THAT THE ALLEGED REASON TO BEL IEVE IS NOT RELEVANT FOR THE FORMATION OF THE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPE D ASSESSMENT. IN DOING SO, IT IS FURTHER ITA NO 1346/ AHD/2015 . A.Y. 2008-09 5 OPEN TO THE ASSESSEE TO CHALLENGE THE REASONS RECOR DED UNDER SECTION 148(2) ON THE GROUND THAT THEY DO NOT MEET THE STANDARDS SET IN T HE VARIOUS JUDICIAL PRONOUNCEMENTS. 14. IN THE PRESENT CASE THE REASONS DISCLOSE THAT T HE ASSESSING OFFICER REACHED THE BELIEF THAT THERE WAS ESCAPEMENT OF INCOME 'ON GOING THROU GH THE RETURN OJ INCOME' FILED BY THE ASSESSEE AFTER HE ACCEPTED THE RETURN UNDER SECTION 143(1) WITHOUT SCRUTINY, AND NOTHING MORE. THIS IS NOTHING BUT A REVIEW OF THE EARLIER P ROCEEDINGS AND AN ABUSE OF POWER BY THE ASSESSING OFFICER, BOTH STRONGLY DEPRECATED BY THE SUPREME COURT IN CIT VS. KELVINATOR (SUPRA). THE REASONS RECORDED BY THE ASS ESSING OFFICER IN THE PRESENT CASE DO CONFIRM OUR APPREHENSION ABOUT THE HARM THAT A LESS STRICT INTERPRETATION OF THE WORDS 'REASON TO BELIEVE' VIS-A-VIS AN INTIMATION ISSUED UNDER SECTION 143(1) CAN CAUSE TO THE TAX REGIME. THERE IS NO WHISPER IN THE REASONS RECO RDED, OF ANY TANGIBLE MATERIAL WHICH CAME TO THE POSSESSION OF THE ASSESSING OFFICER SUB SEQUENT TO THE ISSUE OF THE INTIMATION. IT REFLECTS AN ARBITRARY EXERCISE OF THE POWER CONFERR ED UNDER SECTION 147. 15. FOR THE ABOVE REASONS, WE ANSWER THE SUBSTANTIA L QUESTION OF LAW FRAMED BY US IN THE AFFIRMATIVE, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. THERE SHALL BE NO ORDER A S TO COSTS. 7. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT THE IMPUGNED REASSESSMENT ORDER PASSED BY THE A.O CANNO T BE UPHELD. WE THEREFORE QUASH THE RE-ASSESSMENT ORDER PASSED BY T HE A.O ON 30.12.2013 AND THUS THE GROUNDS OF ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30 - 10 - 2015 . SD/- SD/- (S.S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY