M/s. Jain Brothers, V. Income-tax Officer,

ITA 1573/PUN/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7075 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 21-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMITRA BANERJI
• Keywords: Reopening of assessment; Audit objection; Non passing of speaking order; Reason to believe; Reassessment proceedings
• Section: 40A(3); 143(3); 194C; 148; 154

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO.1573/PUN/2016 ' ' / ASSESSMENT YEAR : 2009-10 M/S. JAIN BROTHERS, POLAN PETH, JALGAON -1 . / APPELLANT PAN: AABFJ8512H VS. ITO, WARD-2(1), JALGAON . RESPONDENT / APPELLANT BY : SHRI NARESH KUMAR / RESPONDENT BY : MS. SUMITRA BANERJI DATE OF HEARING : 15.12.2016 / DATE OF PRONOUNCEMENT: 15.02.2017 / ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-2, NASHIK DATED 09.06.2016 RELATING TO ASSESSMENT YEAR 2009-10 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : (1) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N CONFIRMING THE DISALLOWANCE/ADDITION OF RS.5,72,768/- MADE U/S. 40 (A)(IA) OF THE IT ACT, 1961, BEING FREIGHT CHARGES TO DRIVERS ON THE PURCH ASES OF KEROSENE. ITA NO.1573/PN/2016 M/S. JAIN BROTHERS 2 (2) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THE FACT THAT THE PAYMENTS MADE TO THE VARIOUS DRIVERS WERE NOT IN THE NATURE OF CONTRACTUAL PAYMENT U/S. 194C AND THEREFO RE THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE. (3) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE/ADDITION U/S. 40A(3) AMOUNTING TO RS.7 ,93,559/-. (4) THE LD. CIT(A) HAS FAILED TO APPRECIATE THE COR E ARGUMENT ADVANCED AND WRITTEN SUBMISSIONS FILED DURING APPEAL PROCEED INGS AND SIMPLY BRUSHED ASIDE BOTH, WITHOUT ADJUDICATING UPON THE S AME. (5) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN MAKING UNWARRANTED OBSERVATION THAT THE AO HAS ESTABLISHED THAT THE AP PELLANT FIRM HAS FAILED TO MAKE TDS PAYMENTS PARTICULARLY WHEN THE A O HAS PASSED A NON SPEAKING ORDER AND BOTH THE ADDITIONS HAVE BEEN MAD E WITHOUT SUBSTANTIATING THE POINTS OF ADDITIONS BY PASSING V ERY BRIEF ASSESSMENT ORDER. (6) THE LD. CIT(A) HAS NOT AT ALL ADJUDICATED OR AP PLIED HIS OWN MIND ON THE ISSUES ON WHICH THE AO HAS ARBITRARILY MADE BOT H THE ADDITIONS IN THE LIGHT OF WRITTEN SUBMISSIONS AND ARGUMENTS OF THE A PPELLANT . (7) THE LD. CIT(A) HAS WRONGLY CONCLUDED THAT THE A PPELLANT HAS NOT RAISED ANY OBJECTION WITH REGARD TO VALIDITY OF PRO CEEDINGS U/S. 148. THE ISSUE WAS ORALLY RAISED DURING THE COURSE OF ASSESS MENT PROCEEDINGS SOALSO AT THE APPELLATE STAGE. HOWEVER, THE AO HAD TURNED DOWN WITHOUT INCORPORATING IN THE BODY OF THE ASSESSMENT ORDER. (8) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE REASSESSMENT PROCEEDINGS WERE INITIATED AND FIN ALISED BY THE SAME AO WHO HAD FRAMED THE ORIGINAL ASSESSMENT ORDER AND HE HAD MADE AN ADDITION OF RS.50,000/- U/S. 40A(3) AT THE ORIGINAL STAGE AND THEREAFTER IN REASSESSMENT, FURTHER ADDITION OF RS.7,93,556/- WAS MADE. IT IS NOTHING BUT A REVIEW OF ORIGINAL ASSESSMENT ORDER . (9) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN GIVING IRRELEVANT FINDINGS IN PARA 6.2 OF THE APPELLATE ORDER THAT LI THE APPELLANT FIRM IS IN THE BUSINESS OF TRANSPORTATION AND IT WAS EXPECTED OF THE APPELLANT TO BE MORE VIGILANT AND APPELLANT HAS FAILED TO DISCHARGE ITS ONUS WITH REGARD TO RELEVANT PROVISIONS'. ACTUALLY, BUSINESS OF THE ASSESSEE IS TO DEAL IN KEROSENE AND FERTILIZERS. (10) . THE LD CIT(A) HAS FAILED TO CONSIDER AND APPRECIATE THE BINDING JUDICIAL PRECEDENT RELIED UPON BY THE APPELLANT . THESE DECISIONS WERE MERELY REJECTED WITHOUT ANY SPECIFIC REASON ON WHOL ESALE BASIS BY SIMPLY OBSERVING THAT 'SAME ARE NOT SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE '. THE COPIES OF FULL TEXT OF THESE DECISIONS WERE FURNISHED DURING THE COURSE OF APPEAL HEARING. THIS INCLUDES THE COVERED CASE OF THIS HON'BLE ITAT, PUNE BENCH, PUNE ALSO. THE APPELLANT PRAYS THAT THE ORDERS OF THE LOWER AU THORITIES MAY PLEASE BE SET ASIDE. ITA NO.1573/PN/2016 M/S. JAIN BROTHERS 3 (11) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODI FY, DELETE AMEND ANY OF THE GROUNDS WITH PRIOR PERMISSION OF THE HON'BLE ITAT, AS PER THE CIRCUMSTANCES OF THE CASE. (12) THE APPELLANT PRAYS LEAVE TO ADDUCE SUCH FURTH ER EVIDENCE TO SUBSTANTIATE HIS CASE AS THE OCCASION MAY DEMAND WI TH PRIOR PERMISSION OF THE HON'BLE ITAT. 3. THE ASSESSEE HAS FURTHER FILED AN APPLICATION FO R RAISING ADDITIONAL GROUNDS OF APPEAL. HOWEVER, DURING THE COURSE OF HE ARING, THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ADDITIONAL GROUNDS OF APPEAL NO.1 BEING THE JURISDICTIONAL ISS UE BE ADMITTED FOR ADJUDICATION AS THE ADDITIONAL GROUNDS OF APPEAL NO S. 2 TO 5 RELATED TO THE SAID ISSUE RAISED VIDE ADDITIONAL GROUNDS OF APPEAL NO.1. THE ADDITIONAL GROUNDS OF APPEAL NO.1 READS AS UNDER : 1. ON FACTS AND IN LAW, THE LD.CIT(A) ERRED IN NOT ADMITTING AND DECIDING THE LEGAL VALIDITY OF NOTICE U/S.148. 4. THE ISSUE RAISED BY WAY OF ADDITIONAL GROUNDS OF APPEAL NO.1 BEING JURISDICTIONAL IN NATURE AND NOT INVOLVING INVESTIG ATION IN FACTS IS ADMITTED FOR ADJUDICATION. SINCE THE SAID ADDITIONAL GROUND OF APPEAL AFFECTS THE JURISDICTION TO MAKE THE ASSESSMENT IN THE HANDS OF THE ASSESSEE, WE PROCEED TO DECIDE THE FIRST ISSUE RAISED BY THE ASS ESSEE WHEREIN THE ASSESSEE HAS CHALLENGED THE LEGAL VALIDITY OF NOTIC E ISSUED UNDER SECTION 148 OF THE ACT. 5. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE A SSESSEE WAS A PARTNERSHIP FIRM WHICH WAS DEALING IN OIL, PETROL, DIESEL, KEROSENE, FERTILISERS, FILTERS, BATTERY WATER ETC. FOR THE Y EAR UNDER CONSIDERATION, THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING T OTAL INCOME OF RS.1,43,660/-. THE ASSESSMENT IN THE HANDS OF THE ASSESSEE WAS COMPLETED U/S.143(3) OF THE ACT AT RS.2,85,950/-. SUBSEQUENTLY, ON THE BASIS OF AUDIT OBJECTION RAISED BY THE INTERNAL AUD IT PARTY, THE ASSESSING ITA NO.1573/PN/2016 M/S. JAIN BROTHERS 4 OFFICER RECORDED THE REASONS FOR REOPENING THE ASSE SSMENT AND ISSUED NOTICED U/S.148 OF THE ACT. THEREAFTER ASSESSMENT WAS COMPLETED U/S.143(3) R.W.S. 147 OF THE ACT ON TOTAL INCOME OF RS.13,56,327/-. THE ASSESSEE IS AGGRIEVED BY THE REASSESSMENT PROCEEDIN GS INITIATED IN THE CASE. THE ASSESSING OFFICER WHILE PASSING THE ASSE SSMENT ORDER ALSO REFERS TO THE AUDIT QUERIES AND THE INFORMATION/BOO KS PRODUCED BY THE ASSESSEE THEREAFTER AND WORKED OUT THE DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT AT RS.7,93,559/- AND UNDER SECTION 40(A) (IA) OF RS.5,72,768/-. 6. BEFORE THE CIT(A) ASSESSEE RAISED THE ISSUE ONLY ON MERITS AND NO ISSUE WAS RAISED AGAINST REOPENING OF ASSESSMENT UN DER SECTION 147/148 OF THE ACT. HOWEVER, IN THE WRITTEN SUBMISSIONS AS SESSEE QUESTIONED THE VALIDITY OF REOPENING OF THE ASSESSMENT ON THE BASI S OF OBJECTION RAISED BY THE INTERNAL AUDIT PARTY. THE CIT(A) DISMISSED THE CONTENTION OF THE ASSESSEE AS NO SUCH STAND WAS TAKEN BEFORE THE ASSE SSING OFFICER DURING THE REASSESSMENT PROCEEDINGS. THE CIT(A) HELD THAT THE OBJECTION OF THE ASSESSEE ON THE VALIDITY OF REASSESSMENT PROCEEDIN GS WAS NOT TENABLE AT THE APPELLATE STAGE. 7. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESS EE POINTED OUT THAT THERE IS ERROR IN THE ORDER OF CIT(A) AS THE JURISD ICTION ISSUE OF REOPENING OF THE ASSESSMENT IN THE CASE OF ASSESSEE COULD BE RAI SED AT ANY STAGE. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT ADMITTEDLY THE ASSESSING OFFICER HAD RECEIVED AUDIT OBJECTION FROM THE AUDIT PARTY, AGAINST WHICH IT FORMED THE OPINION AN D RECORDED REASONS FOR REOPENING ON 04-09-2004. UNDOUBTEDLY, AN APPROVAL WAS SOUGHT FOR FROM THE ADMINISTRATIVE COMMISSIONER FOR REOPENING THE A SSESSMENT AND ALSO NOTICE UNDER SECTION 154 OF THE ACT WAS ISSUED TO T HE ASSESSEE, COPY OF WHICH IS PLACED AT PAGE 9 OF THE PAPER BOOK. THE A SSESSEE STATED THAT ITA NO.1573/PN/2016 M/S. JAIN BROTHERS 5 ADMITTEDLY NO REPLY WAS FILED TO THE SAID RECTIFICA TION NOTICE ISSUED UNDER SECTION 154 OF THE ACT. IN THIS REGARD THE LD. AUT HORISED REPRESENTATIVE FOR THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN IN WHEREIN SIMILAR ISSUE AROSE AND IT WAS HELD THAT THE REASSESSMENT P ROCEEDINGS INITIATED ON THE BASIS OF SAME REASON AS IN RECTIFICATION PROCEE DINGS CANNOT BE UPHELD : 1. INDIAN & EASTERN NEWSPAPER SOCIETY VS. CIT (SC) 119 ITR 0996 2. CIT VS. LUCAS T.V.S. LTD. (SC) 249 ITR 0306 3. BERGER PAINTS INDIA LTD. VS. ACIT (CAL.) 322 ITR 0 369 8. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE ON THE OTHER HAND POINTED OUT THAT WHERE THE ASSESSING OFFICER H AD FORMED AN OPINION AND HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED A SSESSMENT, THEN HE CAN PROCEED UNDER SECTION 147/148 OF THE ACT. IN T HIS REGARD, HE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 9. ON PERUSAL OF THE RECORD, THE ISSUE THAT AROSE I N THE PRESENT APPEAL IS IN RELATION TO EXERCISE OF JURISDICTION UNDER SE CTION 147/148 OF THE ACT. THE STATUTE LAYS DOWN UNDER SECTION 147 THAT WHERE THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, THEN, HE MAY, S UBJECT TO THE PROVISIONS OF SECTION 148 TO 153, ASSESS OR RE-ASSE SS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS E SCAPED THE ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUEN TLY IN THE COURSE OF THE PROCEEDINGS IN THIS SECTION. THE REQUIREMENT O F SECTION 147 OF THE ACT IS THE SATISFACTION OF THE ASSESSING OFFICER THAT A NY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE REASON TO BELIEVE THAT ESCAPEMENT OF ASSESSMENT SHOULD BE OF THE ASSESSING OFFICER. THE RE SHOULD BE A LIVE LINK BETWEEN THE REASON TO BELIEVE AND ESCAPEMENT OF INC OME. IN THE ABSENCE ITA NO.1573/PN/2016 M/S. JAIN BROTHERS 6 OF THE SAME, THE ASSESSING OFFICER HAS NO JURISDICT ION TO PROCEED UNDER SECTION 147 OF THE ACT. 10. IN THE PRESENT CASE THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,43,660/- WHICH WAS P ROCESSED UNDER SECTION 143(1) OF THE ACT AND ALSO ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 17-11-2011 ON ASSESSED INCOME OF RS.2,85,950/-. THEREAFTER ON 04-09-2014 THE ASSESSING OFFICER RECO RDS THE REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE A CT, COPY OF WHICH IS PLACED AT PAGES 426 OF THE PAPER BOOK, IN WHICH HE LISTS OUT THE DETAILS OF PAYMENT MADE EXCEEDING RS.20,000/- IN CASH TOTALLIN G RS.8,75,990/-. THE ASSESSING OFFICER ALSO RECORDS THAT THE ASSESSEE HA D MADE PAYMENT OF TRANSPORTATION CHARGES EXCEEDING RS.50,000/- TO VAR IOUS PERSONS TOTALLING RS.13,66,327/-. IN VIEW OF THE DEFAULT UNDER SECTI ON 40(A)(IA) AND 40A(3) OF THE ACT, THE ASSESSING OFFICER RECORDS REASON TO BE LIEVE THAT AGGREGATE INCOME TO THE TUNE OF RS.14,48,758/- HAD ESCAPED AS SESSMENT AND HENCE THE PROCEEDINGS UNDER SECTION 147 OF THE ACT. IN T HE REASONS RECORDED FOR REOPENING THE ASSESSMENT WHICH ARE PLACED ON RECORD , HE FURTHER RECORDS THAT SANCTION OF CIT-2, NASHIK FOR ISSUE OF NOTICE U/S.148 HAD BEEN OBTAINED VIDE LETTER DATED 11-08-2014 AND IN VIEW OF THE ABOVE, I AM SATISFIED THAT THIS IS A FIT CASE FOR ISSUING NOTIC E UNDER SECTION 148. THEREAFTER THE ASSESSING OFFICER ISSUED NOTICE UNDE R SECTION 148 OF THE ACT ON 04-09-2014 TO THE ASSESSEE ASKING THE ASSESSEE T O FURNISH THE RETURN OF INCOME. THE ASSESSEE IN REPLY FURNISHED ON 21-01-2 015 ASKED THE ASSESSING OFFICER TO TREAT THE RETURN OF INCOME ORI GINALLY FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. 11. ANOTHER POINT WHICH NEEDS TO BE TAKEN NOTE OF W AS THAT ON 09-07-2012 THE ASSESSING OFFICER HAD ISSUED A NOTIC E UNDER SECTION 154 OF ITA NO.1573/PN/2016 M/S. JAIN BROTHERS 7 THE ACT TO THE ASSESSEE UNDER WHICH THE DEFAULT WAS POINTED OUT THAT THERE WAS DIFFERENCE IN THE EXPENSES DEBITED TO THE TUNE OF RS. 11,27,755/-. FURTHER CASH HAS BEEN PAID TO VAR IOUS PARTIES TOTALLING RS.3,12,504/- WHICH WAS IN VIOLATION OF SECTION 40A (3) OF THE ACT. FURTHER THERE WAS DEFAULT IN DEDUCTION OF TAX AT SOURCE OUT OF TRANSPORTATION CHARGES PAID TO 4 PERSONS TOTALLING RS.7,52,184/-. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS IN RESPECT OF THE SAME ALONG WITH OTHER INFORMATION SOUGHT FOR. ADMITTEDLY, THE ASSESSEE H AD NOT FURNISHED ANY REPLY TO THE SAID NOTICE ISSUED UNDER SECTION 154 O F THE ACT AND THE PROCEEDINGS UNDER SECTION 154 OF THE ACT ARE NOT CO MPLETED TILL DATE. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS NOT BROUGHT ON RECORD AS TO THE EFFECT OF THE PROCEEDINGS INITIATE D UNDER SECTION 154 OF THE ACT. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASS ESSEE ON THE OTHER HAND STATES THAT NO FURTHER PROCEEDINGS TOOK PLACE UNDER SECTION 154 OF THE ACT AND THEREAFTER REASONS WERE RECORDED FOR REOPEN ING THE ASSESSMENT UNDER SECTION 147 OF THE ACT. HE POINTED THAT BEFO RE THE ASSESSING OFFICER NO OBJECTIONS WERE RAISED AGAINST THE INITIATION OF REASSESSMENT PROCEEDINGS, HOWEVER, BEFORE THE CIT(A) THE ASSESSE E HAD FILED OBJECTIONS WHICH WERE REJECTED ON THE GROUND THAT NO STAND AGA INST REASSESSMENT PROCEEDINGS WAS TAKEN BEFORE THE ASSESSING OFFICER. THE CIT(A) HAS DISMISSED THE CLAIM OF THE ASSESSEE ON THAT BASIS. 12. WE FIND NO MERIT IN THE ORDER OF THE CIT(A) IN DISMISSING THE PLEA OF THE ASSESSEE ON PRELIMINARY BASIS WHEREIN THE ISSUE BEING PURELY LEGAL ISSUE CAN BE RAISED AT ANY POINT OF TIME. 13. NOW COMING TO THE ISSUE RAISED WHEREIN THE ASSE SSING OFFICER WHILE PASSING THE ORDER UNDER SECTION 143(3) R.W.S. 147 O F THE ACT ADMITS THAT CONSEQUENT TO THE ASSESSMENT ORDER PASSED U/S.143(3 ) OF THE ACT, AUDIT ITA NO.1573/PN/2016 M/S. JAIN BROTHERS 8 OBJECTIONS BY INTERNAL AUDIT PARTY VIDE THEIR AUDIT QUERY NO.ITO(AUDIT)- II/NASHIK/2011-12/1085/61 DATED 02-02-2012 WAS RECE IVED AND THE CASE WAS REOPENED UNDER SECTION 148 OF THE ACT AFTER OBT AINING PRIOR APPROVAL OF THE COMMISSIONER OF INCOME TAX-2, NASHIK. THE ASSE SSEE HAD FURNISHED A LETTER REQUESTING THE ASSESSING OFFICER TO TREAT THE ORIGINAL RETURN OF INCOME FILED AS FILED UNDER SECTION 148 OF THE ACT. ONCE THE ASSESSEE HAD COMPLIED TO THE PROVISIONS OF SECTION 148 OF THE AC T, I.E. BY FILING THE RETURN OF INCOME, THE ASSESSEE IS ENTITLED TO QUESTION THE REASONS TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. THOUGH THE REAS ONS TO BELIEVE AS NOTED BY THE ASSESSING OFFICER DO NOT REFLECT ANY M ENTION OF AUDIT OBJECTION RAISED IN THE CASE BUT THE SEQUENCE OF EVENTS OF TH E PROCEEDINGS BEFORE THE ASSESSING OFFICER, AFTER COMPLETION OF THE ASSE SSMENT UNDER SECTION 143(3) OF THE ACT, SUBSEQUENT NOTICE ISSUED UNDER S ECTION 154 OF THE ACT AND THE PRELIMINARY OBSERVATIONS OF THE ASSESSING O FFICER IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 23-03-2015, ESTABLISH THE SEQUENCE OF E VENTS, I.E. AFTER THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT CERTAIN AUDIT OBJECTIONS WERE RECEIVED BY THE ASSESSING OFFICER, WHO IN TURN ISSUED NOTICE DATED 09-07-2012 UNDER SECTION 154 OF THE AC T, COPY OF WHICH IS PLACED AT PAGES 9 TO 11 OF THE PAPER BOOK. HOWEVER, PROCEEDINGS INITIATED UNDER SECTION 154 OF THE ACT WERE NOT COMPLETED BY THE ASSESSING OFFICER. THEREAFTER THE ASSESSING OFFICER RECORDS REASONS FO R REOPENING THE ASSESSMENT ON 04-09-2014 IN WHICH HE SAYS THAT THE SANCTION OF CIT-2, NASHIK WAS RECEIVED ON 11-08-2014 AND THEREAFTER IS SUE NOTICE UNDER SECTION 148 OF THE ACT WHICH IS DATED 04-09-2014 IT SELF. 14. THE FIRST ASPECT IS THE DATE ON WHICH THE REASO NS WERE RECORDED, WHICH IS GIVEN IN THE COPY OF REASONS FILED ON RECO RD, WHICH IS DATED 04-09-2014, FOR WHICH THE SANCTION WAS RECEIVED FRO M THE ADMINISTRATIVE ITA NO.1573/PN/2016 M/S. JAIN BROTHERS 9 COMMISSIONER ON 11-08-2014. AS IS THE REQUIREMENT UNDER SECTION 151 OF THE ACT, THE REASONS OUGHT TO BE RECORDED FIRST FOR REOPENING THE ASSESSMENT AND THEREAFTER THE SANCTION IS TO BE REC EIVED FROM THE COMMISSIONER AND ON RECEIPT OF SUCH SANCTION THE NO TICE IS TO BE ISSUED UNDER SECTION 148 OF THE ACT. THE SAME HAS NOT BEEN FOLLOWED IN THIS CASE. THE SAID INITIATION OF REASSESSMENT PROCEEDINGS IS INCORRECT AS THE SAME IS WITHOUT THE SANCTION OF ADMINISTRATIVE COMMISSIONER AND HENCE CANNOT BE UPHELD. 15. THE SECOND ASPECT IS FOR ISSUING THE SAID NOTIC E UNDER SECTION 148 OF THE ACT. THE SATISFACTION OF THE ASSESSING OFFI CER THAT THERE IS ESCAPEMENT OF INCOME IN THE HANDS OF THE ASSESSEE I S OF THE ASSESSING OFFICER HIMSELF AND NOT OF ANY OTHER PARTY AS POINT ED OUT IN THE PARAS HEREINABOVE. THE BASIS FOR RECORDING THE REASONS F OR REOPENING THE ASSESSMENT IS THE AUDIT OBJECTION RAISED IN THE CAS E OF ASSESSEE. THE ASSESSING OFFICER WHILE PASSING ASSESSMENT ORDER DA TED 23-03-2015 CATEGORICALLY ADMITS THAT HOWEVER CONSEQUENT UPON AUDIT OBJECTIONS BY THE INTERNAL AUDIT PARTY VIDE THEIR AUDIT QUERY DATED 0 2-02-2012, THE CASE WAS REOPENED UNDER SECTION 148 OF THE ACT, 1961, AFTER OBTAINING PRIOR APPROVAL OF THE COMMISSIONER OF INCOME-TAX-II, NASHIK. WHERE THE INITIATION OF REASSESSMENT PROCEEDINGS ARE ON THE BASIS OF AUDIT OBJECTION AND NOT ON THE BASIS OF INDEPENDENT SATISFACTION OF ASSESSING OFFICER AND HENCE NOT VALID, IS THE ISSUE BEFORE US. 16. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF INDIAN & EASTERN NEWSPAPER SOC IETY VS. CIT REPORTED IN 119 ITR 0996 WHEREIN THE HONBLE SUPREME COURT H ELD THAT THE INFORMATION REFERRED TO IN SECTION 147 OF THE ACT C ONTEMPLATES INFORMATION ITA NO.1573/PN/2016 M/S. JAIN BROTHERS 10 AS TO THE LAW CREATED BY FORMAL SOURCE. THE HONBL E SUPREME COURT FURTHER HELD THAT OPINION OF THE INTERNAL PARTY ON A POINT OF LAW DOES NOT CONSTITUTE INFORMATION FOR THE PURPOSE OF SECTION 1 47(B) OF THE ACT. APPLYING SAID PRINCIPLE TO THE FACTS OF THE CASE, I HOLD THAT THE REASSESSMENT PROCEEDINGS INITIATED IN THE CASE ARE WITHOUT ANY JURISDICTION AS THE ASSESSING OFFICER HAD NO OCCASION TO BELIEVE THAT THERE WAS ESCAPEMENT OF INCOME IN THE HANDS OF THE ASSESSEE A ND HENCE NO MERIT IN RECORDING OF REASONS FOR REOPENING THE ASSESSMENT U NDER SECTION 147 AND ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT AND TH EREAFTER COMPLETION OF ASSESSMENT UNDER SECTION 143(3) R.W.S.147 OF THE AC T. 17. ANOTHER ASPECT OF THE ISSUE IS THE BASIS ON WHI CH NOTICE UNDER SECTION 154 OF THE ACT WAS ISSUED TO THE ASSESSEE A ND THEREAFTER ON THE SAME BASIS THE ASSESSING OFFICER INITIATED PROCEEDI NGS UNDER SECTION 147 OF THE ACT. THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF BERGER PAINTS INDIA LTD. VS. ACIT AND OTHERS REPORTED IN 322 ITR 0369 ON SUCH ISSUE HELD THAT WHERE THE REASONS QUOTED FOR REOPENING TH E ASSESSMENT WERE PRACTICALLY THE SAME AS THE REASONS FOR THE NOTICE UNDER SECTION 154 OF THE ACT FOR RECTIFICATION OF THE ALLEGED MISTAKES AND W HERE RECTIFICATION NOTICE HAD BEEN DROPPED BY THE SAME ASSESSING OFFICER, HE COULD NOT AGAIN START REASSESSMENT PROCEEDINGS ON THE BASIS OF SAME REASO NS. THE HONBLE HIGH COURT FURTHER HELD THAT THE CONDITION PRECEDEN T FOR INITIATION OF REASSESSMENT PROCEEDINGS IN ANY CASE WAS THE FORMAT ION OF BELIEF, BASED ON NEW MATERIAL THAT ANY INCOME HAD ESCAPED ASSESSM ENT. APPLYING THE SAID PRINCIPLE TO THE FACTS OF THE PRESENT CASE, SI NCE ON SAME BASIS, THE RECTIFICATION PROCEEDINGS WERE INITIATED AGAINST TH E ASSESSEE UNDER SECTION 154 OF THE ACT, THOUGH NOT COMPLETED BUT THE SAME R EASONS FOR RECTIFICATION ARE THE REASONS FOR COMING TO OPINION THAT THERE WA S ESCAPEMENT OF INCOME, THE INITIATION OF PROCEEDING BY ASSESSING O FFICER IS INVALID. THE ITA NO.1573/PN/2016 M/S. JAIN BROTHERS 11 SATISFACTION OF ASSESSING OFFICER IS MISSING. IN V IEW OF THE RATIO LAID DOWN BY THE HONBLE CALCUTTA HIGH COURT THE NOTICE ISSUE D UNDER SECTION 148 OF THE ACT IS LIABLE TO BE QUASHED AND THE SAME IS QUA SHED. CONSEQUENTLY, THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R. W.S. 147 DO NOT STAND AND THE SAME IS ALSO QUASHED. 18. SINCE I QUASHED THE ASSESSMENT PROCEEDINGS, GRO UNDS OF APPEAL RAISED ON MERIT ON THE ADDITION ARE DISMISSED. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON THIS 15 TH DAY OF FEBRUARY 2017. SD/- (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 15 TH FEBRUARY, 2017 SATISH $ %'( )( / COPY OF THE ORDER IS FORWARDED TO : THE APPELLANT; THE RESPONDENT; ' () THE CIT(A)-2, NASHIK ' THE CIT-2, NASHIK % ((), ), , - / DR SMC, ITAT, PUNE; 0 / GUARD FILE. BY ORDER //TRUE COPY// -5 /ASSISTANT REGISTRAR ) , / ITAT, PUNE