The DCIT, Central Circle-1(3), Ahmedabad V. The Sandesh Limited, Ahmedabad

ITA 1608/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1633 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 30-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MUKESH M PATEL
• Keywords: Reopening of assessment; Audit objection; Reason to believe
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI MANISH BORAD, ACCOUNTANT MEMBER , !' #$ , % & ITA. NO. 1608/AHD/2013 (ASSESSMENT YEAR:2006-07) DCIT, CENTRAL CIRCLE 1(3), ROOM NO.304, 3 RD FLOOR, AAYKAR BHAVAN, ASHRAM ROAD, AHMEDABAD A PPELLANT VS. THE SANDESH LIMITED SANDESH BHAVAN, LAD SOCIETY ROAD, BODAKDEV, AHMEDABAD - 380054 RESPONDENT PAN: AAACT5730D /BY APPELLANT : SHRI DILEEP KUMAR, SR. D.R. /BY RESPONDENT : SHRI MUKESH M. PATEL, A.R. /DATE OF HEARING : 09 .05.2016 /DATE OF PRONOUNCEMENT : 10.05.2016 ITA NO. 1608/AHD/13 A.Y. 06-07 (DCIT VS. THE SANDESH LIMITED) PAGE 2 ( )/ ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF CIT(A)-I, AHMEDABAD, DATED 20.03.2013 FOR THE ASSES SMENT YEAR 2006-07 ON FOLLOWING GROUND: 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N QUASHING THE ASSESSMENT FRAMED U/S.115WE(3) R.W.S. 115WG OF THE ACT WITHOUT CONSIDERING INSTRUCTION NO.11/2008 DATED 05/09/2008 ISSUED BY THE CBDT, WHICH STATES THAT ALL THE CORPORATE CASES SELECTED FOR SCRUTINY AS PER THE GUIDELINES CONTAINED IN THE ACT ION PLAN DOCUMENT WHICH HAVE RETURNED INCOME OF RS.5 CRORE OR MORE AND WHERE PROVISIONS OF FRINGE BENEFI T TAX (FBT) APPLY, ASSESSMENT SHALL ALSO PASSED UNDER SECTION 115WE OF THE ACT, AFTER SCRUTINY OF ALL SUC H CASES. 2. ASSESSING OFFICER PASSED ORDER U/S.115WE(3) OF T HE INCOME TAX ACT. IN THE SAID ASSESSMENT ORDER, ASSE SSING OFFICER HAD ACCEPTED THE VALUE OF FRINGE BENEFITS G IVEN BY THE ASSESSEE TO BE AT RS.20,20,547/- AS DISCLOSED BY TH E ASSESSEE. THE AUDIT OBJECTION WAS RAISED AGAINST THE SAID ORD ER IN WHICH IT WAS ALLEGED BY THE AUDITOR THAT FBT WAS LIABLE T O BE LEVIED ON FRINGE BENEFITS OF RS.5,89,97,208/-. THE SAID AUDI T OBJECTION WAS NOT ACCEPTED BY THE DEPARTMENT AND THE ASSESSIN G OFFICER WROTE A NOTE THE COMMISSIONER OF INCOME TAX DATED 03.03.2011 INTER ALIA STATING THAT AUDIT OBJECTION WAS NOT ACCEPTABLE. THE SAME ASSESSING OFFICER VIDE HIS RE ASONS RECORDED U/S.115WG OF THE ACT DATED 25.03.2011 RECO RDED ITA NO. 1608/AHD/13 A.Y. 06-07 (DCIT VS. THE SANDESH LIMITED) PAGE 3 SATISFACTION AND ISSUED NOTICE U/S.115WH OF THE ACT . DESPITE, THE ASSESSEE ASKING THE ASSESSING OFFICER TO FURNIS H COPY OF REASONS RECORDED, ASSESSING OFFICER DID NOT FURNISH THE SAME TO THE ASSESSEE INTER ALIA STATING THAT BECAUSE THE CA SE WAS COVERED U/S.153C OF THE ACT, THERE WAS NO REQUIREME NT OF FURNISHING THE REASONS. THE ABOVE CONTENTION OF AS SESSING OFFICER WAS NOT FOUND CORRECT. THE ASSESSMENT FOR FRINGE BENEFITS HAS NOT RELATION TO THE ASSESSMENT OF INCO ME U/S.153C OF THE ACT. AS DECIDED BY HONBLE SUPREME COURT IN CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. ITO (2003) 259 ITR 19 (SC) HELD AS UNDER: WHEN A NOTICE UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961, IS ISSUED, THE PROPER COURSE OF ACTION IS TO FILE THE RETURN AND, IF HE SO DESIRES, TO SEEK REASONS FOR I SSUING THE NOTICES. THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHIN A REASONABLE TIME. ON RECEIPT OF REASONS, T HE ASSESSEE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE AND THE ASSESSING OFFICER IS BOUND TO DISPOSE OF TH E SAME BY PASSING A SPEAKING ORDER. IN VIEW OF ABOVE, IT WAS OBSERVED BY THE CIT(A) THA T BY NOT FURNISHING THE REASONS RECORDED FOR REOPENING THE F RINGE BENEFITS ASSESSMENT THE ASSESSING OFFICER HAS NOT F OLLOWED THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF GK N DRIVESHAFTS (INDIA) LTD. VS. ITO (SUPRA). IT WAS O BSERVED THAT WHILE REPLYING TO THE AUDIT, ASSESSING OFFICER HAD NOT ACCEPTED THE AUDIT OBJECTIONS WHILE ON THE OTHER HAND, THE S AME ASSESSING OFFICER RECORDED HIS SATISFACTION FOR REO PENING THE ASSESSMENT U/S.115WG OF THE ACT. THE ONLY ASSESSIN G OFFICERS OPINION WITH RESPECT TO INCOME ESCAPING ASSESSMENT IS RELEVANT ITA NO. 1608/AHD/13 A.Y. 06-07 (DCIT VS. THE SANDESH LIMITED) PAGE 4 FOR THE PURPOSE OF REOPENING AN ASSESSMENT U/S.147 OF THE ACT. MERE OPINION OF AUDIT PARTY CANNOT FORM THE BASIS F OR ASSESSING OFFICER TO REOPEN AN ASSESSMENT WHEN ASSESSING OFFI CER HIMSELF HAD CATEGORICALLY COME TO THE CONCLUSION THAT THE O BJECTION OF AUDIT PARTY WAS NOT VALID AND ASSESSEES EXPLANATIO N WITH RESPECT TO NON-REQUIREMENT OF COLLECTION OF TDS WAS ACCEPTED BY THE ASSESSING OFFICER AT RELEVANT POINT OF TIME. ASSESSING OFFICER HAS NO REASON TO BELIEVE THAT INCOME HAD ES CAPED ASSESSMENT, NOTICE ISSUED U/S.148 OF THE ACT IS NOT JUSTIFIED. HONBLE GUJARAT HIGH COURT CONSIDERED THE SIMILAR I SSUE IN ADANI EXPORT VS. DCIT (ASSESSMENT) (1999) 240 ITR 2 24 WHEREIN NOTICE U/S.147(B) WAS ISSUED BY THE ASSESSI NG OFFICER FOR REOPENING THE ASSESSMENT PURSUANT TO CBDTS INS TRUCTION NO.828, WHEREIN REMEDIAL ACTION WAS REQUIRED TO BE TAKEN BY INITIATING PROCEEDINGS OF REASSESSMENT, NOTWITHSTAN DING THAT THE AUTHORITY VESTED WITH POWER TO EXERCISE JURISDI CTION FOR ISSUING NOTICE WAS NOT SATISFIED ABOUT EXISTENCE OF SUCH CIRCUMSTANCES WHICH MAY WARRANT EXERCISE OF SUCH PO WER. SUCH ULTRA VIRES INSTRUCTIONS CANNOT BE PRESSED INT O SERVICE TO SAVE THE INITIATION OF PROCEEDINGS U/S.147 OF THE A CT IN ABSENCE OF HOLDING OF ANY BELIEF BY ASSESSING OFFICER. IN VIEW OF ABOVE, CIT(A) WAS JUSTIFIED IN OBSERVING THAT SATISFACTION BY THE ASSESSING OFFICER IN REOPENING THIS CASE WAS NOT PR OPER, THE ISSUE OF NOTICE U/S.115WH OF THE ACT WAS NOT CORREC T. ACCORDINGLY, REOPENING OF ASSESSMENT COMPLETED U/S. 115WE(3) OF THE ACT BY THE ASSESSING OFFICER WAS NOT JUSTIFI ED AND SAME WAS RIGHTLY QUASHED BY THE CIT(A). THIS REASONED F INDING OF ITA NO. 1608/AHD/13 A.Y. 06-07 (DCIT VS. THE SANDESH LIMITED) PAGE 5 CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPH OLD THE SAME. 3. IN THE RESULT, THE APPEAL FILED BY REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 10 TH DAY OF MAY, 2016. SD/- SD/- (MANISH BORAD) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEM BER AHMEDABAD: DATED 10/05/2016 TRUE COPY S.K.SINHA ( )*+, -,'* / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE $ %&%'( ) / CONCERNED CIT 4 )- / CIT (A) , -./ 00'(1 '( 1 23& / DR, ITAT, AHMEDABAD 4 /56 78 / GUARD FILE. BY ORDER / 1 / 2 % '( 1 23&