Sapna Kishor Manchanda, Nashik V. Assistant Commissioner of Income-tax,

ITA 159/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9589 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 09-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Keywords: Reopening of assessment; Unexplained investment; Reassessment proceedings
• Section: 143(3); 148; 144

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO.159/PUN/2015 [ [ / ASSESSMENT YEAR : 2006-07 SAPNA KISHOR MANCHANDA, PLOT NO.20/21, OPP. HARIVIHAR SOCIETY, SAUBHAGYA NAGAR, NASHIK ROAD, NASHIK 422101 . / APPELLANT PAN: ADIPS9886P VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, NASHIK . / RESPONDENT / APPELLANT BY : SHRI PRAMOD SHINGTE / RESPONDENT BY : SHRI ANIL CHAWARE / DATE OF HEARING : 17.04.2017 / DATE OF PRONOUNCEMENT: 19.04.2017 / ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A)-1, NASHIK, DATED 29.12.2014 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). ITA NO.159/PUN/2015 SAPNA KISHOR MANCHANDA 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED LOWER AUTHORITY ERRED IN INITIATING THE REASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE INCOME TAX ACT, 1961, BEYOND FOUR YEARS BY IGNORING THE FACT THAT ALL THE MATERIAL FACTS WERE DISCLOSED IN THE RETURN OF INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED LOWER AUTHORITY HAVE ERRED IN MAKING AN ADDITION OF RS.10,15,228/- BY TREATING GENUINE INVESTMENT TRANSACTION OF PURCHASE OF SHARE AS NON-GENUINE AND BY DISREGARDING APPELLANT SUBMISSION IN THIS REGARD. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED LOWER AUTHORITY HAVE ERRED IN MAKING AN ADDITION OF RS.5,23,783/- ON ACCOUNT OF ALLEGED PURCHASE OF SHARES OF PRANEETA INDUSTRIES AS UNEXPLAINED INVESTMENT WITHIN THE MEANING OF SECTION 69, AND BY DISREGARDING APPELLANT CONTENTION IN THIS REGARD. 3. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND OF APPEAL, WHICH READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER ERRED IN NOT PASSING SEPARATE SPEAKING ORDER IN CONSEQUENCES TO OBJECTION RAISED FOR ISSUANCE OF NOTICE U/S 148 OF I.T. ACT, THEREBY HAS VIOLATED THE DIRECTION OF HON. SUPREME COURT IN THE CASE OF GKN DRIVERSHAFTS (INDIA) LTD. VS. ITO, THEREFORE ENTIRE PROCEEDINGS U/S 147 OF I.T. ACT ARE VOID AB INITIO AND NEEDS TO BE QUASHED. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET, POINTED OUT THAT THE ISSUE RAISED BY WAY OF ADDITIONAL GROUND OF APPEAL IS COVERED BY THE FOLLOWING DECISIONS:- A) THE HONBLE BOMBAY HIGH COURT IN KSS PETRON PVT. LTD. VS. ACIT IN INCOME TAX APPEAL NO.224 OF 2014, JUDGMENT DATED 03.10.2016; B) THE HONBLE BOMBAY HIGH COURT IN BAYER MATERIAL SCIENCE PVT. LTD. VS. DCIT (2016) 382 ITR 333 (BOM); C) THE PUNE BENCH OF TRIBUNAL IN ACIT VS. M/S. J.K. PETROCHEMICAL INDUSTRIES IN ITA NOS.34 & 35/PN/2012, RELATING TO ASSESSMENT YEARS 2003-04 & 2004-05, ORDER DATED 30.11.2016; AND D) THE PUNE BENCH OF TRIBUNAL IN SHRI AJAY SHANTILAL LALWANI VS. ITO IN ITA NO.145/PN/2015, RELATING TO ASSESSMENT YEAR 2005-06, ORDER DATED 25.11.2016. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. ITA NO.159/PUN/2015 SAPNA KISHOR MANCHANDA 3 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST NON-DISPOSING OF OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE EXERCISE OF JURISDICTION BY THE ASSESSING OFFICER UNDER SECTION 147 / 148 OF THE ACT. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD ORIGINALLY FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.13,28,700/-. THE ASSESSING OFFICER THEREAFTER, RECORDED REASONS FOR REOPENING THE ASSESSMENT AND ISSUED NOTICE UNDER SECTION 148 OF THE ACT TO THE ASSESSEE ON 28.03.2013. THE ASSESSEE IN REPLY VIDE LETTER DATED 26.04.2013 STATED THAT THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE BE TREATED AS RETURN IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT. THE ASSESSEE VIDE THE SAID LETTER ITSELF HAD FILED OBJECTIONS AGAINST REASONS RECORDED FOR REOPENING THE ASSESSMENT. THE SAID OBJECTIONS WHICH WERE RAISED BY THE ASSESSEE ARE SUMMARIZED AT PAGE 3 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER THEREAFTER, TOOK UP THE ISSUE FOR ASSESSMENT IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS ALSO MET WITH THE OBJECTIONS RAISED BY THE ASSESSEE AND HAS DISMISSED THE SAME VIDE PARA 2.1 AT PAGES 3 AND 4 OF THE ASSESSMENT ORDER. THE ASSESSEE IS AGGRIEVED BY THE MODUS OPERANDI ADOPTED BY THE ASSESSING OFFICER, WHEREIN NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE, BEFORE COMPLETION OF ASSESSMENT, TO DEAL WITH THE REJECTION OF OBJECTIONS RAISED BY THE ASSESSEE. 7. SIMILAR ISSUE AROSE BEFORE THE PUNE BENCH OF TRIBUNAL IN ACIT VS. M/S. J.K. PETROCHEMICAL INDUSTRIES (SUPRA), WHEREIN THE TRIBUNAL RELIED ON THE RATIO LAID DOWN BY THE APEX COURT IN GKN DRIVESHAFTS (INDIA) LTD. VS. ITO (2003) 259 ITR 19 (SC) AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN KSS PETRON PVT. LTD. VS. ACIT (SUPRA) AND OBSERVED AS UNDER:- 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO RE-OPENING OF ASSESSMENT. IT IS AN UNDISPUTED FACT THAT THE RETURN OF INCOME FOR AY 2003-04 WAS FILED BY THE ITA NO.159/PUN/2015 SAPNA KISHOR MANCHANDA 4 ASSESSEE ON 31.10.2003 WHICH WAS INITIALLY PROCESSED U/S 143(1) OF THE ACT. LATER-ON, A NOTICE U/S 148 WAS ISSUED ON 29.03.2010 FOR RE-OPENING THE ASSESSMENT. WE FIND THAT ASSESSEE VIDE LETTER DATED 28/04/2010 INTER-ALIA HAD SUBMITTED THAT THE RETURN OF INCOME FILE BY IT ON 31/10/2003 BE TREATED AS RETURN OF INCOME IN RESPONSE TO NOTICE U/S 148 OF THE ACT & HAD FURTHER SOUGHT REASONS FOR REOPENING. WE FIND THAT LD.CIT(A) AFTER CALLING THE REMAND REPORT FROM THE AO AND THE ASSESSEES REPLY TO THE REMAND REPORT AND AFTER CONSIDERING THE ASSESSEES SUBMISSION HAS GIVEN A FINDING THAT ASSESSEE HAD FILED OBJECTION ON 08.06.2010 TO ISSUANCE OF NOTICE U/S 148 OF THE ACT. THE AO DID NOT DISPOSE OF THE OBJECTIONS AND PROCEEDED AND PASSED THE RE-ASSESSMENT ORDER. AT THIS MOMENT, ON PROCEDURE TO BE FOLLOWED IN THE CASE OF RE-ASSESSMENT PROCEEDINGS IT WOULD BE RELEVANT TO REFER TO THE DECISION OF HONBLE APEX COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD., VS., ITO (SUPRA) WHEREIN THE HONBLE APEX COURT HAS HELD AS UNDER: WE CLARIFY THAT WHEN A NOTICE U/S 148 OF THE INCOME-TAX ACT IS ISSUED, THE PROPER COURSE OF ACTION FOR THE NOTICE IS TO FILE A RETURN AND IF HE SO DESIRES, TO SEEK REASONS FOR ISSUING NOTICES. THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHIN A REASONABLE TIME. ON RECEIPT OF REASONS, THE NOTICE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE AND THE ASSESSING OFFICER IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. WE FURTHER FIND THAT IN CASE OF KSS PETRON PRIVATE LTD (SUPRA) WHERE THE FACTS WERE THAT THE AO HAD PASSED THE RE- ASSESSMENT ORDER WITHOUT DISPOSING OF ASSESSEES OBJECTION FOR RE- OPENING OF ASSESSMENT AND WHEN THE MATTER WAS CARRIED BEFORE THE TRIBUNAL, THE TRIBUNAL HAD SET ASIDE THE ORDERS AND RESTORED THE ASSESSMENT TO THE AO TO PASS FRESH ORDERS AFTER DISPOSING OF THE OBJECTIONS TO RE-OPENING, THE HONBLE HIGH COURT OBSERVED AS UNDER: 8. WE NOTE THAT ONCE THE IMPUGNED ORDER FINDS THE ASSESSMENT ORDER IS WITHOUT JURISDICTION AS THE LAW LAID DOWN BY THE APEX COURT IN GKN DRIVESHAFTS (SUPRA) HAS NOT BEEN FOLLOWED, THEN THERE IS NO REASON TO RESTORE THE ISSUE TO THE ASSESSING OFFICER TO PASS A FURTHER/FRESH ORDER. IF THIS IS PERMITTED, IT WOULD GIVE A LICENCE TO THE ASSESSING OFFICER TO PASS ORDERS ON REOPENING NOTICE, WITHOUT JURISDICTION (WITHOUT COMPLIANCE OF THE LAW IN ACCORDANCE WITH THE PROCEDURE;, YET THE ONLY CONSEQUENCE, WOULD BE THAT IN APPEAL, IT WOULD BE RESTORED TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER FOLLOWING THE DUE PROCEDURE. THIS WOULD LEAD TO UNNECESSARY HARASSMENT OF THE ASSESSEE BY REVIVING STALE / OLD MATTERS. 9. BEFORE US REVENUE HAS NOT PLACED ANY CONTRARY BINDING DECISION IN ITS SUPPORT. THE DECISIONS RELIED UPON BY THE LD.DR ARE DISTINGUISHABLE ON FACTS AND ARE THEREFORE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE PRESENT CASE, SINCE THE AO HAS NOT DISPOSED OF THE OBJECTIONS RAISED BY THE ASSESSEE ON THE RE-OPENING OF THE ASSESSMENT ORDER U/S 147 OF THE ACT, WE RELYING ON THE AFORESAID DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF KSS PETRON (SUPRA), AND FOLLOWING THE SAME REASONING WE QUASH THE REASSESSMENT ORDER PASSED U/S 144 R.W.S 148 OF THE ACT. SINCE WE HAVE UPHELD THE ORDER OF LD.CIT(A) IN QUASHING THE RE-ASSESSMENT ORDER FRAMED U/S 144 R.W.S 148 OF THE ACT, WE ARE OF THE VIEW THAT THE OTHER GROUNDS RAISED BY THE REVENUE ON MERITS, REQUIRE NO ADJUDICATION. 8. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS IDENTICAL TO THE ISSUE BEFORE THE PUNE BENCH OF TRIBUNAL IN ACIT VS. M/S. J.K. PETROCHEMICAL INDUSTRIES (SUPRA) AND APPLYING THE SAME PARITY OF REASONING, WHERE THE ITA NO.159/PUN/2015 SAPNA KISHOR MANCHANDA 5 ASSESSING OFFICER HAS FAILED TO GRANT AN OPPORTUNITY TO THE ASSESSEE TO MEET THE DISPOSAL OF OBJECTIONS RAISED BY THE ASSESSEE AGAINST REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT, THE ASSESSMENT ORDER PASSED IN THE CASE IS WITHOUT ANY JURISDICTION AND THE SAME IS INVALID, AS HELD BY THE HONBLE BOMBAY HIGH COURT IN KSS PETRON PVT. LTD. VS. ACIT (SUPRA). ACCORDINGLY, THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 IS QUASHED. SINCE THE ASSESSEE SUCCEEDS ON ADDITIONAL GROUND OF APPEAL, THE ISSUE RAISED ON MERITS BECOMES INFRUCTUOUS. THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE IS THUS, ALLOWED. 9. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 19 TH DAY OF APRIL, 2017. SD/- (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 19 TH APRIL, 2017 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. () / THE CIT(A)-1, NASHIK; 4. / THE CIT-1, NASHIK ; 5. 6. , , , - / DR SMC, ITAT, PUNE; [ / GUARD FILE. / BY ORDER , // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE