ACIT, CHENNAI V. Shri M.Arun, CHENNAI

ITA 140/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64465 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-10-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 23-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: G BASKAR
• Keywords: Reopening of assessment
• Section: 40A(3); 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER] I.T.A.NO.140/MDS/2012 ASSESSMENT YEAR : 2002-03 THE ACIT CENTRAL CIRCLE II(4) CHENNAI VS SHRI M.ARUN NO.64, TELUGU CHETTY STREET OLD WASHERMANPET CHENNAI 600 021 (APPELLANT) (RESPONDENT) APPELLANT BY : DR.S.MOHARANA, CIT/DR RESPONDENT BY : SHRI G. BASKAR, ADVOCATE DATE OF HEARING : 30.10.2012 DATE OF PRONOUNCEMENT : 31 . 10 . 2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-II, CHENNAI, DATED 27.10.2008, RAISING FOLLO WING GROUNDS OF APPEAL: 1.A. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION M ADE BY THE A.O. TOWARDS DISALLOWANCE U/S 40A(3) AMOUNTING TO RS. 12,11,580. I.T.A.NO. 140/12 :- 2 -: 1.B THE LEARNED CIT(A) FAILED TO NOTE THAT THE H ON'BLE SUPREME COURT IN THE CASE OF ATTAR SINGH GURMUKB SINGK VS I.T.O. 50 TAXMAN 11(SC) (1991) HAS HELD THAT THE WORD 'EXPENDITURE' IS A WORD OF WIDE IMPORT AND MEANS AL L OUTGOINGS FOR THE PURPOSE OF THE SECTION AND THAT T HE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS A.D. JAYAVEERAPANDIA NADAR & SONS 162 TAXMAN 195(MAD) (2007) HAS HELD THAT PAYMENTS IN CASH CANNOT AUTOMATICALLY BE ALLOWED MERELY FOR THE REASON THAT THE PAYMENTS WERE MADE TO ASSOCIATE CONCERNS. 1.C THE LEARNED CIT(A) FAILED TO NOTE THAT THE P ROVISIONS OF SECTION 40A(3) ARE DETERRENT AND HENCE EXCEPTIONS CAN BE ALLOWED ONLY AS PER RELEVANT IT. RULES, 1962. 2. THE APPELLANT CRAVES LEAVE TO, ADD TO AMEND O R ALTER THE ABOVE GROUNDS OF APPEAL AS MAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL THE ORDER OF THE LEARNED CIT (APPEALS) MAY BE SET A SIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. AT THE OUTSET, THE A.R OF THE ASSESSEE SUBMITTED T HAT AS THE RESPONDENT IN TERMS OF RULE 27 OF THE INCOME TAX AP PELLATE TRIBUNAL RULES 1963, THOUGH HE MAY NOT HAVE APPEALED, MAY SU PPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECIDED AGAI NST HIM. HE SUBMITTED THAT BEFORE THE CIT(A) HE HAD CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT U/S 147 OF THE ACT ON THE GROUND THAT COMPLETION OF ASSESSMENT WITHOUT FURNISHING REASONS IS VIOLATIVE OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF GK N DRIVESHAFT (INDIA) LTD VS ITO & OTHERS, 259 ITR 19, AND THE AS SESSMENT ORDER I.T.A.NO. 140/12 :- 3 -: REQUIRES TO BE SET ASIDE. HE HAS FURTHER ARGUED TH AT NON-SUPPLY OF REASONS FOR REOPENING OF ASSESSMENT RENDERS THE ASS ESSMENT VOID AS WAS HELD BY THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF BALWANT RAI WADHWA VS ITO, 308 ITR (AT) 38. HE SUBMITTED THAT THE CIT(A) HAS DISMISSED THE GROUND OF APPEAL OF THE ASSESSEE OBS ERVING THAT FROM THE RECORD IT IS SEEN THAT THE ASSESSING OFFICER RE CORDED THE REASONS FOR REOPENING THE ASSESSMENT, OBTAINED THE PRIOR AP PROVAL OF ADDL. CIT AND THEN ISSUED NOTICE U/S 148 OF THE ACT TO THE ASSESSEE. THOUGH REASONS RECORDED WERE NOT FURNISHED DURING THE ASSE SSMENT PROCEEDINGS, AMPLE OPPORTUNITY ON THE ISSUE FOR REO PENING WAS GIVEN BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROC EEDINGS AND THEREFORE, THERE WAS NO INFIRMITY IN THE NOTICE ISS UED U/S 148 OF THE ACT. HE SUBMITTED THAT THE ASSESSMENT YEAR INVOLVED WAS 2002-03 FOR WHICH ASSESSMENT U/S 143(3) WAS COMPLETED ON 28.3.2003 AND THE NOTICE U/S 148 OF THE ACT WAS ISSUED ON 31.3.2009 W HICH WAS BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. HE SUBMITTED THAT ACCORDING TO THE PROVISO TO SECTION 151(1), AF TER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, FOR WHICH ASSESSMENT HAS BEEN MADE U/S 143(3) OF THE ACT, NO NOTICE U/S 148 SHALL BE ISSUED UNLESS THE CHIEF COMMISSIONER OR CO MMISSIONER IS SATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER THAT IT IS A FIT I.T.A.NO. 140/12 :- 4 -: CASE FOR THE ISSUE OF SUCH NOTICE. HE SUBMITTED TH AT THE CIT(A) HAS RECORDED IN THE ORDER THAT PRIOR APPROVAL OF ADDL. CIT WAS OBTAINED BEFORE ISSUE OF NOTICE U/S 148 TO THE ASSESSEE. THUS, AS NO APPROVAL OF THE CHIEF COMMISSIONER OR COMMISSIONER WAS OBTAI NED ON THE REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPE NING OF THE ASSESSMENT, THE NOTICE ISSUED U/S 148 WAS BAD IN L AW AND ANY PROCEEDING PURSUANT TO SUCH NOTICE WAS ALSO BAD IN LAW AND THEREFORE, NO INTERFERENCE WITH THE ORDER OF THE CIT(A) IS CAL LED FOR. 3. HE RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS MAHARAJA PRATAPSINGH BAHADUR OF GIDH AUR, 41 ITR 421(S.C) WHERE IT WAS HELD THAT THE NOTICE ISSUED B Y THE ITO WITHOUT COMPLYING WITH THE REQUIREMENT OF AMENDED SECTION 3 4 REQUIRING THE ITO TO OBTAIN THE APPROVAL OF CIT ON THE REASONS RE CORDED BY HIM FOR REOPENING OF THE ASSESSMENT, WAS INVALID AND SO ALS O THE ENTIRE PROCEEDINGS OF REASSESSMENT. HE FURTHER RELIED ON THE DECISION OF HON'BLE PATNA HIGH COURT IN THE CASE OF CIT VS DUMR AON COLD STORAGE AND REFRIGERATION SERVICE, 97 ITR 137(PAT) WHERE IN WAS HELD THAT REASSESSMENT NOTICE ISSUED WITHOUT THE SANCTION OF COMMISSIONER, REASSESSMENT WAS NOT JUSTIFIED. HE FURTHER RELIED ON THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF GIRDHAR GOPAL GULATI VS UNION OF INDIA & ANOTHER, 269 ITR 45 (ALL) WHERE IT WAS HELD THAT THE I.T.A.NO. 140/12 :- 5 -: NOTICE U/S 148 ISSUED WITHOUT TAKING THE NECESSAR Y SANCTION OF THE DY. CIT U/S 151(2) OF THE ACT WHERE THE ASSESSMENT ORDER FOR WHICH THE ASSESSMENT WAS SOUGHT TO BE REOPENED WAS AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THE IMPUGNED NOTICE AND ASSESSMENT PROCEEDINGS WERE INV ALID AND WERE ACCORDINGLY QUASHED. HE FURTHER RELIED ON THE DEC ISION F THE HON'BLE CALCUTTTA HIGH COURT IN THE CASE OF EAST INDIA HOTE LS LTD VS DY. CIT, 204 ITR 435(CAL) WHERE IT WAS HELD THAT NOTICE ISSU ED U/S 148 BEYOND FOUR YEARS AFTER THE END OF THE RELEVANT ASSESSMENT YEAR WAS BAD IN LAW AS APPROVAL OF CHIEF COMMISSIONER OR COMMISSION ER WAS NOT OBTAINED. 4. THE DR VERY FAIRLY CONCEDED THAT THE APPROVAL FOR I SSUANCE OF NOTICE U/S 148 OF THE ACT WHICH WAS ISSUED AFTER F OUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WAS OBTAINED FR OM ADDL. CIT AND NOT FROM CHIEF COMMISSIONER OR COMMISSIONER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND THE MATERIA LS AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ORIGINAL ASSESSMENT FOR THE ASSESSMENT YEAR 2002-03 WAS MADE U/S 143(3 ) ON 28.3.2003. IT IS ALSO NOT IN DISPUTE THAT THE NOTICE U/S 148 OF THE ACT DATED 31.3.2009 ISSUED TO REOPEN THE ASSESSMENT WAS BEYON D FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR 2002-0 3. FURTHER IT IS I.T.A.NO. 140/12 :- 6 -: ALSO NOT IN DISPUTE THAT THE APPROVAL FOR ISSUE OF NOTICE U/S 148 ON THE REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPE NING OF THE ASSESSMENT WAS OBTAINED FROM ADDL. CIT AND NOT FROM THE CHIEF COMMISSIONER OR COMMISSIONER. THUS, IT IS OBSERVED THAT A PRECONDITION SPECIFIED IN PROVISO TO SECTION 151(1) FOR ISSUANCE OF A VALID NOTICE U/S 148 WAS NOT FULFILLED IN THE INST ANT CASE. THEREFORE, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVEN UE AND ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 31 ST OF OCTOBER, 2012, AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 31 ST OCTOBER, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR