Shri Nawab Mir Barkat Ali Khan Bahadur, Secunderabad V. DCIT, Circle-9(1), Hyderabad

ITA 1434/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61840 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 08-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K C DEVDAS SHRI M S RAO
• Keywords: Reopening of assessment; Tangible material; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 1434/HYD/2011 ASSESSMENT YEAR 2005-06 SRI NAWAB MIR BARKAT ALI KHAN BAHADUR, REP. BY GPA SYED KHAIRUDDIN ALI KHAN HYDERABAD PAN: AFDPK2116B VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-9(1), HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SHRI K.C. DEVDAS RESPONDENT BY: SHRI M.S. RAO DATE OF HEARING: 17.04.2012 DATE OF PRONOUNCEMENT: 17.04.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-VI, HYDERABAD DATED 27.6.2011 FOR ASSESS MENT YEAR 2005-06. 2. THE FIRST ISSUE FOR OUR ADJUDICATION IS AS FOLLOWS: I. THE ORDER OF THE CIT(A)-VI, HYDERABAD, IN CONFIRMIN G THE ASSESSMENT OF INCOME FROM FALAKNUMA PALACE AT RS. O NE CRORE IS UNSUSTAINABLE 2005-06. II. THE LEARNED CIT(A)-VI, HYDERABAD, FAILED TO NOTE TH AT NO INCOME ACCRUED TO THE ASSESSEE FROM FALAKNUMA PLACE FOR THE ASSESSMENT YEAR 2005-06. 3. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINI ON THAT THIS ISSUE CAME FOR CONSIDERATION BEFORE THIS TRIBUNAL I N ASSESSEES OWN CASE IN I.T.A. NO. 326 TO 332/HYD/07 FOR ASSESS MENT YEARS 1998-99 TO 2004-05 ORDER DATED 11.2.2011 WHEREIN TH E TRIBUNAL HELD IN PARA 22 INTER-ALIA AS FOLLOWS: I.T.A. NO. 1434/HYD/2011 SRI NAWAB MIR BARKAT ALI KHAN BAHADUR ============================== 2 AFTER CONSIDERING THE TOTALITY OF FACTS AND THE CIRCUMSTANCES OF THE CASE, PERUSING THE RECORDS, PA PER BOOK FILED BY THE ASSESSEE AND CASE LAWS RELIED UPO N BY BOTH THE PARTIES, WE FIND MERIT IN THE FINDINGS OF THE LOWER AUTHORITIES THAT VARIOUS SUMS RECEIVED OR RECEIVABLE FROM IHC BY THE ASSESSEE WAS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY IN TH E RE-ASSESSMENT PROCEEDINGS. ACCORDINGLY, WE UPHOLD THE ORDERS OF THE AUTHORITIES BELOW. 4. IN VIEW OF THE ABOVE ORDER, WE ARE INCLINED TO DECI DE THE ISSUE AGAINST THE ASSESSEE. 5. THE NEXT ISSUE RAISED BY THE ASSESSEE IS AS FOLLOWS : III. THE LEARNED CIT(A)-VI, HYDERABAD FAILED TO NO TE THAT THE ISSUE OF NOTICE U/S. 148 TO RE-ASS THE INC OME OF THE ASSESSEE WAS INVALID, AS NO NOTICE U/S. 143(2) WAS ISSUED WITHIN TWELVE MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN OF INCOME WAS FI LED AND, THEREFORE, TO RE-ASSESS THE INCOME U/S. 148 TO CIRCUMVENT THIS LAPSE IS WHOLLY UNSUSTAINABLE IN LA W AND ON FACTS. IV. THE ASSESSEE WHILE FILING THE RETURN OF INCOME ORIGINALLY DISCLOSED TRULY AND FULLY THE FACTS IN T HE NOTES TO THE RETURN OF INCOME FILED WHICH WERE THE SUBJEC T MATTER OF RE-ASSESSMENT AND THUS THE REOPENING OF T HE ASSESSMENT HAS NO NEXUS WITH THE REASONS RECORDED AND, THEREFORE, THE CIT(A)-VI, HYDERABAD OUGHT TO H AVE QUASHED THE ASSESSMENT AS BAD AND INVALID IN LAW. 6. IN THIS CASE RETURN OF INCOME WAS FILED ON 31.3.200 6 AND WAS PROCESSED U/S. 143(1) ON 30.3.2007. A NOTICE U /S. 148 WAS ISSUED ON 12.11.2007 AND SERVED ON THE ASSESSEE ON 20.11.2007. THE CONTENTION OF THE ASSESSEES COUNSEL IS THAT TH ERE WAS NO FAILURE ON ASSESSEES PART TO SUBMIT ALL THE NECESS ARY DETAILS AND THERE IS NO FRESH TANGIBLE MATERIAL CAME TO THE POS SESSION OF THE ASSESSING OFFICER TO ISSUE A NOTICE U/S. 148 FOR RE OPENING OF THE ASSESSMENT. ACCORDING TO THE LEARNED COUNSEL FOR T HE ASSESSEE REOPENING OF ASSESSMENT IS BAD IN LAW. THE LEARNED AR RELIED ON THE ORDER OF THE TRIBUNAL BOMBAY BENCH IN THE CASE OF H.V. I.T.A. NO. 1434/HYD/2011 SRI NAWAB MIR BARKAT ALI KHAN BAHADUR ============================== 3 TRANSMISSIONS LTD. IN ITA NO. 2230/MUM/2010 FOR A.Y . 2001-02 DATED 7 TH OCTOBER, 2011 WHEREIN THE TRIBUNAL HELD THAT REOPE NING IS BAD IN LAW AS THERE IS NO TANGIBLE MATERIAL BEFO RE THE ASSESSING OFFICER FOR ISSUING THE NOTICE TO REOPEN THE ASSESS MENT. THE LEARNED AR ALSO SUBMITTED THAT THE JUDGEMENT OF JUR ISDICTIONAL HIGH COURT IN THE CASE OF PUSALAL & CO. (169 ITR 21 5) (AP) IS NOT APPLICABLE TO THE FACTS OF THE CASE AS IT IS DELIVE RED IN THE CONTEXT OF THE LAW AS PREVAILING IN ASSESSMENT YEAR 1974-75. HE DREW OUR ATTENTION TO THE AMENDED PROVISIONS OF SECTION 143( 1) OF THE I.T. ACT. ACCORDING TO THE AR, THE ISSUE WHETHER AN ASS ESSMENT COULD BE REOPENED U/S. 147 WHEN A NOTICE UNDER THE PROVIS O TO SECTION 143(2) IS NOT ISSUED WAS NOT THERE BEFORE THE JURIS DICTIONAL HIGH COURT IN PUSALA & CO. CASE (CITED SUPRA). HE REL IED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF RAJKUMAR CHAWLA VS. INCOME TAX OFFICER (277 ITR 225) (AT) (DELHI SPECIAL BENCH) AN D ALSO 94 ITD 110 (DELHI SPECIAL BENCH) AND ALSO RELIED ON THE OR DER OF THE TRIBUNAL IN THE CASE OF ACIT VS. GANGES SUGAR MILLS (69 ITD 14) AND RAKESH S. MARDIA (94 TTJ 836) (AHD) AND ON THE JUDGEMENT OF MADRAS HIGH COURT IN THE CASE OF BAPALAL & CO. EXPO RTS VS. JCIT (289 ITR 1) AND CIT VS. CHELLAPPAN & ANR. (281 ITR 444). 7. WE HAVE ALSO CAREFULLY GONE THROUGH ALL THE JUDGEME NTS CITED BY THE LEARNED AR. THE TRIBUNAL IN THE CASE OF H .V. TRANSMISSIONS LTD. (SUPRA). IN THIS CASE THE ASSES SEE INCURRED EXPENSES TOWARDS ENTERPRISE RESOURCE PLANNING SOFTW ARE AMOUNTING TO RS. 95.14 LAKHS. IN THE ACCOUNTS THE ASSESSEE HAS DEBITED 25% OF THIS AMOUNT I.E., RS. 23,78,500 WHER EAS IN THE COMPUTATION OF INCOME, THE ASSESSEE HAS CLAIMED THE ENTIRE AMOUNT OF RS. 95.14 LAKHS AS DEDUCTION. THE EXPENS ES INCURRED BY THE ASSESSEE ARE PAYMENT FOR ACQUISITION OF SOFT WARE WHICH IS CAPITAL IN NATURE. HENCE THE ASSESSMENT IS REOPENE D TO DISALLOW THE SAME. ON APPEAL TO THE TRIBUNAL, IT WAS HELD T HAT THERE WAS NO MATERIAL COMING TO THE POSSESSION OF THE ASSESSI NG OFFICER ON I.T.A. NO. 1434/HYD/2011 SRI NAWAB MIR BARKAT ALI KHAN BAHADUR ============================== 4 THE BASIS OF WHICH THE ASSESSMENT COMPLETED U/S. 14 3(1) WAS REOPENED AND THIS POSITION HAS NOT BEEN DISPUTED EV EN BY THE DR. BEING SO, IN THE PRESENT CASE WE ARE NOT IN A POSIT ION TO APPLY THE RATIO LAID DOWN BY THAT DECISION BECAUSE CLAUSE (B) TO EXPLANATION 2 TO PROVISO 2 OF SECTION 147 CLEARLY AUTHORISES TH E ASSESSING OFFICER TO REOPEN THE ASSESSMENT. THIS PROVISION I S TO BE CONSIDERED FOR THE PURPOSE OF ADJUDICATING THIS ISS UE. IN VIEW OF THE JUDGEMENT OF THE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS P. LTD., 291 ITR 500, THE RELIANCE PLACED BY THE LEARNED AR ON VARIOUS JUDGEMENTS CITE D SUPRA IS MISPLACED. IT WAS HELD IN THE CASE OF ACIT VS. RAJ ESH JHAVERI STOCK BROKERS P. LTD., 291 ITR 500 THAT TAXING INCO ME ESCAPING ASSESSMENT IN THE CASE OF AN INTIMATION UNDER SECTI ON 143(1)(A) IS COVERED BY THE MAIN PROVISION OF SECTION 147 AS SUB STITUTED WITH EFFECT FROM APRIL 1, 1989 AND INITIATING REASSESSME NT PROCEEDINGS IN THE CASE OF INTIMATION WOULD BE COVERED BY THE M AIN PROVISION OF SECTION 147 AND NOT THE PROVISO THERETO. ONLY ONE CONDITION HAS TO BE SATISFIED. FAILURE TO TAKE STEPS UNDER SECTION 143(3) WILL NOT RENDER THE ASSESSING OFFICER POWERLESS TO INITIATE REASSESSMENT PROCEEDINGS WHEN INTIMATION UNDER SECTION 143(1) HA S BEEN ISSUED. 8. IN THE PRESENT CASE, THE ASSESSING OFFICER NOTICED THAT (A) THE ASSESSEE HAS NOT SHOWN ANY INCOME FROM FALAKNUM A PALACE DESPITE A FINDING TO THE EFFECT THAT THE SAI D PROPERTY IS CAPABLE OF FETCHING RS. 1 CRORE, IN THE ASSESSME NT FOR THE IMMEDIATELY PRECEDING YEAR, I.E., A.Y. 2004-05; (B) THE ASSESSEE HAS DECLARED LOSS OF (-) RS. 2,23,673 FROM PROPERTY CHOWMOHALLA PALACE AS AGAINST THE ALV TH E PROPERTY WOULD FETCH WAS DETERMINED BY THE ASSESSIN G OFFICER FOR THE IMMEDIATELY PRECEDING YEAR AT RS. 1 ,99,673, I.E., RELEVANT TO A.Y. 2004-05 (NET OF ALL DEDUCTIO NS); I.T.A. NO. 1434/HYD/2011 SRI NAWAB MIR BARKAT ALI KHAN BAHADUR ============================== 5 (C) AS PER THE DOCUMENT OF THE ASST. SUB-REGISTRAR, HYD ERABAD INFORMATION IN ITS (INDIVIDUAL TRANSACTION STATEMEN T) THE ASSESSEE PURCHASED PROPERTY WORTH RS. 1 CRORE BUT T HE SAME WAS NOT REFLECTED IN THE RETURN OF INCOME. IN VIEW OF THE ABOVE FACTS, REOPENING OF THE ASSESS MENT IS VALID TO BRING THE INCOME ESCAPED FROM TAX. 9. FURTHER AT THIS POINT, WE DREW SUPPORT FROM THE ORD ER OF THE CO-ORDINATE BENCH IN THE CASE OF ELEGANT CHEMICALS ENTERPRISES PVT. LTD. (271 ITR 56 (AT) WHEREIN HELD THAT TO INI TIATE THE PROCEEDINGS U/S. 148 OF THE ACT, THE AMENDED PROVIS IONS OF SECTION 147/148 PROVIDE AMPLE POWER TO THE ASSESSING OFFICE R TO INITIATE RE-ASSESSMENT PROCEEDINGS WHEN HE IS OF THE OPINION THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. MERELY B ECAUSE RETURN WAS PROCESSED U/S. 143(1) OF THE IT ACT DOES NOT DI SENTITLE THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT. ACCEP TING OF RETURN U/S. 143(1) OF THE IT ACT CANNOT BE EQUATED TO AN A SSESSMENT. THE ASSESSING OFFICER HAS TWO OPTIONS TO COMPLETE THE A SSESSMENT; ONE IS TO PROCESS THE RETURN U/S. 143(1) AND ANOTHER IS TO COMPLETE ASSESSMENT U/S. 143(3) OF THE IT ACT BY ISSUING NOT ICE U/S. 143(2) OF THE ACT. IF THE ASSESSING OFFICER NOT PROCEEDED WITH THE COMPLETION OF ASSESSMENT U/S. 143(3) OF THE I.T. AC T BY ISSUING U/S. 143(2) OF THE ACT, IT DOES NOT ITSELF DISENTIT LE THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT BY ISSUING NOTICE U/S. 148 OF THE ACT. IN VIEW OF THIS DISCUSSION, THE GROUND RELAT ING TO REOPENING OF ASSESSMENT IS DECIDED AGAINST THE ASSESSEE. 10. IN THE RESULT, ASSESSEE'S APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH APRIL, 2012. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 17 TH APRIL, 2012 I.T.A. NO. 1434/HYD/2011 SRI NAWAB MIR BARKAT ALI KHAN BAHADUR ============================== 6 COPY FORWARDED TO: 1. SRI NAWAB MIR BARKAT ALI KHAN BAHADUR, REP. BY G PA SYED KHAIRUDDIN ALI KHAN, C/O. M/S. SEKHAR & CO., CHARTERED ACCOUNTANTS, 133/4, R.P. ROAD, SECUNDERAB AD. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-9( 1), HYDERABAD. 3. THE CIT(A)-VI, HYDERABAD 4. THE CIT-VI, HYDERABAD. 5. THE DR B BENCH, ITAT, HYDERABAD. TPRAO