Shri Chetanbhai Prahladbhai Gami {Patel), Surat V. The Income Tax Officer, Ward 9(1), Surat

ITA 1532/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1192 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-07-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 24-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANTONY PARIATH
• Assessee Lawyers: M J SHAH
• Keywords: Reopening of assessment; Unexplained investment; Reason to believe; Reassessment proceedings
• Section: 143(3); 147

Judgement Text

SMC-ITA NO. 1532/AHD/2013 SHRI CHETANBHAI PRAHLADBHAI GAMI (PATEL)VS. ITO ASSESSMENT YEAR: 2006-07 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD [ BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ] ITA NO.1532/AHD/2013 ASSESSMENT YEAR: 2006-07 SHRI CHETANBHAI PRAHLADBHAI GAMI (PATEL) ....... ........APPELLANT 33-34, INTERCITY TOWNSHIP, PUNA KUMBHARIA ROAD, SURAT-395011 PAN : ABEPP 6880 C VS. INCOME TAX OFFICER, ........................... .RESPONDENT WARD 9 (1), SURAT APPEARANCES BY: M J SHAH, FOR THE APPELLANT ANTONY PARIATH, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JULY 5TH, 2016 DATE OF PRONOUNCING THE ORDER : JULY 7 TH , 2016 O R D E R BY WAY OF THIS APPEAL, THE ASSESSEE-APPELLANT HAS C HALLENGED CORRECTNESS OF THE CIT(A)S ORDER DATED 05.03.2013 FOR THE ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS:- 1. THE CIT (APPEALS) ERRED IN UPHOLDING THE REOPENING OF ASSESSMENT U/S 147/148 OF THE IT ACT, 1961 AND HELD THAT ALL THE CONDITIONS LAID DOWN FOR REOPENING THE COMPLETED ASSESSMENT HAVE BEEN FULFILLED. 2. THE CIT(APPEALS) FURTHER ERRED IN CONFIRMING THE ADDI TION OF RS.3,70,000/- AS UNEXPLAINED INVESTMENT OVERLOOKING THE OVERALL CIRCU MSTANCES AS WELL AS EVIDENCES PLACED ON RECORD. 2. BRIEFLY STATED THE RELEVANT MATERIAL FACTS ARE L IKE THIS. IT IS A CASE OF REOPENED ASSESSMENT. THE ASSESSMENT WAS REOPENED, AS EVIDEN T FROM OBSERVATIONS OF THE ASSESSING OFFICER AT PAGE NO.2 OF THE ASSESSMENT ORDER, ON TH E FOLLOWING GROUNDS:- SMC-ITA NO. 1532/AHD/2013 SHRI CHETANBHAI PRAHLADBHAI GAMI (PATEL)VS. ITO ASSESSMENT YEAR: 2006-07 PAGE 2 OF 4 ASSESSEE HAS FILED RETURN OF INCOME FOR AY 2006-07 O N 26.12.2006 SHOWING TOTAL INCOME OF RS.3,81,580/-. THE SAME IS PROCESSED U/S 143(1) OF THE IT ACT. IN THIS CASE, ASSESSMENT WAS COMPLETED BY THE ITO (OSD), RANGE-9, S URAT ON 17.12.2008 U/S 143(3) OF THE ACT DETERMINING TOTAL INCOME AT RS.4,19,750/- . ON VERIFICATION OF AUDIT REPORT FOR THE AY 2007 -08 FILED BY THE ASSESSEE IN PART D OF FIXED ASSETS IT IS OBSERVED THAT THE ASSESSEE HAS SHOWN THE OPENING WDV AS ON 01.04.2006 OF RESIDENTIAL BUILDING IS RS.1,55,000/- AND RS.2,15,000/-, WHEREAS THERE TWO RESIDENCES ARE NOT APPEARING IN THE BALANCE SHEET AS ON 31.03.2006, I.E. AY 2006-07. AS THE ASSESSEE HAS NOT SHOWN THESE TWO PROPERTIES IN THE RETURN OF INCOME FOR THE AY 2006-07, I HAVE REASON TO BELIEVE THAT THE UNEXPLAINE D SOURCE OF INVESTMENT IN THIS RESIDENTIAL BUILDING HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. THE CASE IS REQUIRED TO BE REOPENED U/S 147 OF THE I.T. ACT FOR VERIFICATION. 3. AGGRIEVED, INTER ALIA , BY THE REOPENING OF ASSESSMENT, THE ASSESSEE CARR IED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND MADE ELABORATE SUBMISSIONS POINTING OUT THAT THE REASONS FOR WHICH THE ASSESSMENT IS REOPENED HAVE N O BEARING ON ANY INCOME ESCAPING ASSESSMENT. IT WAS EXPLAINED BY THE ASSESSEE THAT T HE AMOUNT FOR PURCHASE OF THE PROPERTIES IN QUESTION WAS PAID BY CHEQUE ON 11.09.2004, BUT T HE AMOUNT SO PAID WAS, BY MISTAKE, SHOWN AS ADVANCE TO THE OWNER OF THE PROPERTIES. IT WAS ALSO POINTED OUT THAT THE MISTAKE IF AT ALL WAS IN ACCOUNTING ENTRIES IN AS MUCH AS THER E WAS AN ERROR IN TRANSFERRING THE ADVANCE TO ASSET BLOCK. WHILE THIS CLAIM OF THE ASSESSEE W AS NOT REJECTED, THE LD. CIT(A) NEVERTHELESS PROCEEDED TO UPHOLD THE REASSESSMENT PROCEEDINGS AS ALSO THE ADDITION ON QUANTUM, ON THE GROUND THAT THE INVESTMENT IN PROPERTIES WAS NOT PR OPERLY DISCLOSED EARLIER. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE ME. 4. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTS OF THE CASE IN THE LIGHT OF TH E APPLICABLE LEGAL POSITION. I FIND THAT THE REASONS FOR WHICH THE REOPENING OF ASSESSMENT IS DO NE CLEARLY DO NOT REFLECT ANY ESCAPEMENT OF INCOME INASMUCH AS, BEYOND ANY DISPUT E OF CONTROVERSY, THE MISTAKE OF THE ASSESSEE IS ONLY AN ACCOUNTING ERROR WHICH HAS NO B EARING ON ANY INCOME ESCAPING ASSESSMENT. ONCE THE INVESTMENT IN PROPERTY IS DUL Y ACCOUNTED FOR AND PAYMENTS FOR THE SAME ARE MADE THROUGH BANKING CHANNEL, THERE CANNOT BE ANY OCCASIONS TO HOLD THAT SUCH INVESTMENT IN THE PROPERTY IS UNEXPLAINED. THE INV ESTMENT STANDS DULY EXPLAINED. THE ERROR OF NOT SHOWING THE AMOUNT PAID FOR PROPERTY AS FIXE D ASSET CANNOT LEAD TO THE CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT. IN THIS VIEW O F THE MATTER, I AM OF THE CONSIDERED VIEW THAT IT WAS NOT A FIT CASE FOR REOPENING THE ASSESS MENT AS ALSO FOR MAKING THE IMPUGNED SMC-ITA NO. 1532/AHD/2013 SHRI CHETANBHAI PRAHLADBHAI GAMI (PATEL)VS. ITO ASSESSMENT YEAR: 2006-07 PAGE 3 OF 4 QUANTUM ADDITION OF RS.3,70,000/-. I, THEREFORE, Q UASH THE IMPUGNED REASSESSMENT PROCEEDINGS AS IT IS NOT SUSTAINABLE IN LAW. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT TODAY ON 7 TH JULY, 2016 SD/- PRAMOD KUMAR (ACCOUNTAN T MEMBER) AHMEDABAD, THE 7 TH DAY OF JULY, 2016 BT* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD