Vinod Kumar Bung , Hyderabad V. Asst. Commissioner of Income Tax, Circle-8(1), Hyderabad

ITA 1493/Hyd/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1899 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 18-06-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 06-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: MANOJ KUMAR DAGA
• Keywords: Reopening of assessment; Business income
• Section: 143(3); 143(1); 131

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.1493/HYD/2018 ASSESSMENT YEAR: 2011 - 12 VINOD KUMAR BUNG, HYDERABAD. PAN: ADHPB 1885 G VS. ACIT, CIRCLE - 8(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI MANOJ KUMAR DAGA REVENUE BY: SRI NILANJAN DEY, DR DATE OF HEARING: 18/06/2019 DATE OF PRONOUNCEMENT: 26 /06/2019 ORDER PER A. MOHAN ALANKAMONY. AM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - 2, HYDERABAD IN APPEAL NO. 10470/2017 - 18, DATED 30/05/2018 PASSED U /S . 143(3) R.W.S 147 / 148 & 250(6) OF THE ACT FOR THE ASSESSMENT YEAR 2011 - 12. 2. IN THIS AP PEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ASSESSMENT ORDER AND DISMISSING THE APPEAL FILED AGAINST THE ASSESSMENT ORDER. 2. THE LD. CIT(A) WITHOUT APPRECIATING THE FACTS AND WITHOUT PROPER APPLICATION OF LAW ERRED IN CONFIRMING THE ADDITION OF RS. 36,05,170/ - AND UPHOLDING THE DENIAL OF EXEMPTION CLAIMED U/S 10(38) OF IT ACT 1961. 3. THE LD. CIT(A) ERRED IN DISMISSING THE GROUND THAT NON - SUPPLY OF REASONS FOR REOPENING ASSESSM ENT WHICH IS MANDATORY AS PER 2 PROCEDURE LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFT INDIA LTD VS. ITO (259 ITR 19) WILL VITIATE THE RE - ASSESSMENT PROCEEDINGS AND RENDER THE REASSESSMENT ORDER BAD IN LAW AS DECIDED BY COURTS IN A NUMBER OF DECISIONS RELIED UPON BY THE APPELLANT. 4. THE LD. CIT(A) ERRED IN LAW IN APPLYING THE PROVISIONS OF SECTION 292B AND SECTION 292BB TO THE APPELLANTS CASE EVEN THOUGH AS PER JUDGMENT OF THE APEX COURT SUPPLYING OF REASONS FOR REOPENING IS MANDATORY. 5 . THAT THE LD. CIT(A) ERRONEOUSLY UPHELD THE REOPENING OF ASSESSMENT BY THE A.O. ONLY ON THE GROUND THAT CERTAIN INFORMATION HAS BEEN RECEIVED FROM INVESTIGATION WING AGAINST PERSONS OTHER THAN THE APPELLANT WITHOUT APPLICATION OF MIND AND WITHOUT ESTABLI SHING A LIVE LINK BETWEEN THE INFORMATION RECEIVED AND BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. HE OUGHT TO HAVE HELD THE REOPENING AND SUBSEQUENT RE - ASSESSMENT ONLY BAD IN LAW. 6. THAT THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE APPELLAN T HAS DISCHARGED THE INITIAL ONUS OF FILING EVIDENCES IN SUPPORT OF ITS CLAIM OF LTCG WHICH HAVE NOT BEEN FOUND TO BE DEFECTIVE OR WRONG OR FABRICATED BY THE A.O. OR BY LD. CIT(A). 7. THE LD. CIT(A) ERRED IN HOLDING THAT THE STATEMENT RECORDED ON OATH U/S 131 FROM THE BROKERS / PROMOTERS / OPERATORS WITHOUT ANY REFERENCE TO THE APPELLANT IS A CIRCUMSTANTIAL EVIDENCE AGAINST THE APPELLANT. 8. THAT THE LD. CIT(A) ERRED IN UPHOLDING THE ORDER OF THE A.O. WHERE THE CLAIM OF THE APPELLANT HAS BEEN REJECTED ON TH E BASIS OF CERTAIN FINDING BY THE INVESTIGATING OFFICERS IN RESPECT OF OTHER PERSONS AND NOT IN RESPECT OF THE APPELLANT, IN PARTICULAR EVEN THOUGH THERE IS ABSOLUTELY NO REFERENCE TO THE APPELLANT IN THE REPORT RELATING TO SUCH INVESTIGATION. 9. THE LD. C IT(A) ERRED IN UPHOLDING ORDER OF THE A.O. WHICH IS BASED ON SUSPICION AND DOUBT. HIS SUSPICION HOWEVER STRONG CANNOT TAKE THE PLACE OF PROOF AS WAS HELD BY HONBLE SUPREME COURT IN THE CASE OF UMACHARAN SHA W AND BROTHERS VS. CIT, WEST BENGAL (37 ITR 271) (SC) AND DHAKESHWARI COTTON MILLS LTD VS. CIT (26 ITR 775) (SC). 10. THE LD. CIT(A) ERRED IN APPLYING THE THEORY OF HUMAN PROBABILITY TO APPELLANTS CASE OVERLOOKING THE FACT THAT ALL THE TRANSACTIONS WERE MADE THROUGH RECOGNIZED STOCK EXCHANGE, DEMAT ACCO UNT AND BANKING CHANNELS WHICH ARE SUBJECT TO REGULATIONS OF STATUTORY REGULATORY LIKE SEBI AND ALL TRANSACTIONS LEAVE AUDIT TRIAL FOR VERIFICATION. 11. THAT THE LD. CIT(A) ERRED IN NOT FOLLOWING THE RULE OF STATUTORY INTERPRETATION ACCORDING TO WHICH WHER E TWO VIEWS ARE POSSIBLE THE VIEW FAVOURING THE ASSESSEE SHOULD BE ACCEPTED AS HELD IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD (88 ITR 192)(SC) AND CIT VS. JK HOSIERY FACTORY (159 ITR 85) (SC). 3 12. THE LD. CIT(A) ERRED IN RELYING ON THE DECISIONS IN CAS E OF SUMATHI DAYAL VS. CIT (214 ITR 801) AND MC DOWELL & COMPANY LIMITED VS. CTO (1986 AIR 649), WITHOUT APPRECIATING THE FACT THAT THE FACTS IN APPELLANTS CASE ARE DIFFERENT FROM FACTS OF THESE CASES. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL EARNING INCOME FROM HOUSE PROPERTY, BUSINESS INCOME AND INCOME FROM OTHER SOURCE, FILED HIS RETURN OF INCOME FOR THE A.Y. 2011 - 12 ON 17/12/2011 DECLARING TOTAL INCOME OF RS. 21,85,130/ - AFTER CLAIM ING EXEMPTION U/S. 10(38) OF THE ACT FOR RS. 36,05,170/ - . INITIALLY, THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT AND SUBSEQUENTLY THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT. ACCORDINGLY, NOTICE U/S 148 AND OTHER STATUTORY NOTICES WERE SERVED ON THE ASSESSEE AND IN RESPONSE THE ASSESSEE F URNISHED THE REQUIRED INFORMATION THROUGH HIS AUTHORISED REPRESENTATIVE. ON PERUSAL OF THE SUBMISSIONS MADE BY THE ASSESSEE AND AFTER DISCUSSING THE ISSUE AT LENGTH WITH RESPECT TO THE CLAIM OF LTCG EXEMPT BY VIRTUE OF SECTION 10(38) OF THE ACT , THE LD . A. O HELD THAT THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE WERE TO BRING UNACCOUNTED MONEY IN THE GUISE OF EXEMPTED LONG TERM CAPITAL GAINS AND THEREFORE IT IS SHAM TRANSACTION . THEREFORE, THE ENTIRE LONG - TERM CAPITAL GAINS OF RS. 36,05,170/ - CLAIMED AS EXE MPT U /S . 10(38) BY THE ASSESSEE WAS BROUGHT TO TAX BY THE LD . AO . ON APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE LD . A.O BY AGREEING WITH HIS VIEW AND THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE US . 4 4. AT THE OUTSET, LD . AR SUBMITTED BEFORE US THAT THE ASSESSEE HAD REQUESTED THE LD . AO TO PROVIDE THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT VIDE HIS LETTER DATED 13/10/2016. HOWEVER, THE LD . AO WITHOUT FURNISH ING THE SAME REOPENED THE ASSESSMENT U/S 147 R.W.S 148 OF THE ACT AND COMPLETED THE ASSESS MENT ON 22/12/2017 BY DISALLOWING THE CLAIM OF DEDUCTION U/S.10(38) OF THE ACT TOWARDS LONG - TER M CAPITAL GAIN ACCRUED OUT OF THE SALE OF SHARES . IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD RAISED THE GROUND WITH RESPECT TO THE REOPENING BEFORE THE LD CI T (A) ALSO. HOWEVER, THE LD . CIT (A) WITHOUT REJECTING THE PRAYER OF THE ASSESSEE UPHELD THE ORDER OF THE LD . AO CITING SECTION 292B AND SECTION 292BB OF THE I.T. ACT. THE LD . AR THEREFORE PLEADED BEFORE US THAT THE MATTER MAY BE REMITTED BACK TO THE FILE O F THE AO WITH DIRECTIONS TO THE LD . AO TO PROVIDE REASONS FOR REOPENING THE ASSESSMENT IN ORDER TO PROVID E AN OPPORTUNITY TO THE ASSESSEE TO CHALLENGE THE REOPENING AND THEREAFTER PROCEED WITH THE MATTER IN ACCORDANCE WITH LAW AND MERITS. 5. THE LD. DR COULD NOT CONTROVERT TO THE SUBMISSION OF THE LD . AR WITH RESPECT TO THE FACT THAT THE REASONS FOR REOPENING OF THE ASSESSMENT WAS NOT PROVIDED TO THE ASSESSEE BY THE LD . AO . 6. AFTER HEARING BOTH SIDES IT IS OBVIOUS FROM THE FACTS OF THE CASE THAT THE LD . AO HAS FAILED TO PROVIDE THE ASSESSEE WITH T HE REASONS FOR REOPENING OF THE ASSESSMENT. THUS, THE ASSESSEE HAS LOST AN 5 OPPORTUNITY TO CHALLENGE THE ISSUE WITH RESPECT TO THE VALIDITY OF THE REOPENING OF ASSES SMENT BEFORE THE LD . REVENUE AUTHORITIES. THEREFORE, IN THE INTEREST OF JUSTICE AND AS PER THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF GKN DRIVE S HAFT INDIA LTD VS. ITO (259 ITR 19) WE HEREBY REMIT THE MATTER BACK TO THE FILE OF THE AO WITH DIRECTION S TO FURNISH THE ASSESSEE WITH REASONS FOR REOPENING OF THE ASSESSMENT IN THE CASE OF THE ASSESSEE AND IF THE ASSESSEE CHALLENGES THE SAME THE LD . AO SHAL L DISPOSE OF F SUCH OBJECTIONS BY PASSING A SPEAKING ORDER AND THEREAFTER PROCEED WITH THE AS SESSMENT IN ACCORDANCE WITH LAW AND MERIT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 26 TH JUNE 2019. SD/ - SD/ - (P. MADHAVI DEVI) (A. MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 26 TH JUNE 2019 OKK COPY TO: - 1) VINOD KUMAR BUNG, 1 - 2 - 379, GAGANMAHAL ROAD, DOMALGUDA, HYDERABAD. 2) ACIT, CIRCLE - 8(1), HYDERABAD. 3) THE CIT (A) - 2, HYDERABAD. 4) THE PR. CIT - 8(1), HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE