Smt Mahinder Kaur Chhatwal, Gurgaon V. ITO, Gurgaon

ITA 1680/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3941 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 21-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KOUSHLENDRA TEWARI
• Assessee Lawyers: KUNAL AGGARWAL
• Section: 43B; 143(3); 147; 148; 154; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.1680/DEL./2017 ASSESSMENT YEAR 2009-2010 SMT. MAHINDER KAUR CHHATWAL, C/O. KUNAR AGGARWAL & ASSOCIATES, 226, JMD MWEGAPOLLS, 2 ND FLOOR, SECTOR-48, SOHNA ROAD, GURGAON, HARYANA-122001. PAN ACQPC4929A VS. THE INCOME TAX OFFICER, WARD-2(4), GURGAON HARYANA. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI KUNAL AGGARWAL, C.A. FOR REVENUE : SHRI KOUSHLENDRA TEWARI, SR. DR DATE OF HEARING : 01.11.2017 DATE OF PRONOUNCEMENT : 0 3 .11.2017 ORDER THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-I, GURGAON, DATED 21 ST OCTOBER, 2016 FOR THE A.Y. 2009-2010. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE RETU RN DECLARING AN INCOME OF RS.3,92,168 WAS FILED ON 28 TH SEPTEMBER, 2009. THE ASSESSMENT WAS COMPLETED VIDE ORDER DATED 22 ND DECEMBER, 2011 UNDER SECTION 143(3) OF THE I.T. ACT AT A TOTAL INC OME OF RS.5,09,670 2 ITA.NO.1680/DEL./2017 MAHINDER KAUR CHHATWAL, GURGAON. BY MAKING CERTAIN DISALLOWANCES OF EXPENDITURE. LAT ER ON, IT WAS NOTICED THAT ASSESSEE HAS NOT PAID PAYABLE LIABILIT Y OF RS.1,26,105 AND TDS OF RS.45,143 INTO GOVERNMENT ACCOUNT. THE A .O. INITIATED THE RE-ASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE I.T. ACT AFTER RECORDING THE REASONS ON DATED 31 ST MARCH, 2014. THE ASSESSEE SUBMITTED BEFORE A.O. THAT RETURN ORIGINALLY FILED MAY BE TREATED AS RETURN HAVING FILED IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE I.T. ACT. THE A.O. AFTER CONSIDERING THE EXPLANATIO N OF ASSESSEE MADE TWO ADDITIONS OF RS.4,19,585 ON ACCOUNT OF EXPENDIT URE AND MADE FURTHER ADDITION OF RS.6,50,000 ON ACCOUNT OF UNEXP LAINED BANK DEPOSITS. THE TOTAL INCOME WAS COMPUTED AT RS.15,79 ,255. THE ASSESSEE CHALLENGED BOTH THE ADDITIONS BEFORE LD. C IT(A). HOWEVER, THE APPEAL OF ASSESSEE HAS BEEN DISMISSED WITH THE ENHANCEMENT. 3. THE ASSESSEE IN THE PRESENT APPEAL HAS CHALLENG ED THE INITIATION OF RE-ASSESSMENT PROCEEDINGS UNDER SECTI ON 147 OF THE I.T. ACT AND ADDITIONS OF RS.6,50,000, RS.4,19,585 MADE BY THE A.O. AND ALSO FURTHER CHALLENGED THE ADDITIONS ENHANCED BY T HE LD. CIT(A). 4. I HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASS ESSEE FILED AN 3 ITA.NO.1680/DEL./2017 MAHINDER KAUR CHHATWAL, GURGAON. APPLICATION FOR ADMISSION OF THE ADDITIONAL GROUND STATING THEREIN THAT INITIATION OF RE-ASSESSMENT PROCEEDINGS VIDE N OTICE DATED 31 ST MARCH, 2014 IS BAD IN LAW AND WITHOUT JUSTIFICATION AS RECTIFICATION PROCEEDINGS INITIATED BY THE A.O. VIDE NOTICE DATED 7 TH MARCH, 2014 ON THE SAME SUBJECT MATTER WAS PENDING TILL 31 ST MARCH, 2014. SINCE THE ISSUE OF RE-ASSESSMENT PROCEEDINGS IS LEGAL IN NATURE WHICH IS TAKEN IN THE MAIN GROUND OF APPEAL AS WELL AS IN TH E ADDITIONAL GROUND OF APPEAL AND SUFFICIENT MATERIAL IS AVAILAB LE ON RECORD TO DECIDE THE SAME. THEREFORE, ADDITIONAL GROUND IS AD MITTED FOR HEARING. 4.1. IT IS WELL SETTLED LAW THAT VALIDITY OF RE-AS SESSMENT PROCEEDINGS IS TO BE DETERMINED ON THE BASIS OF THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT. COPY OF THE REASON S RECORDED FOR REOPENING OF THE ASSESSMENT IS FILED AT PAGE 93 OF THE PAPER BOOK WHICH READS AS UNDER : ANNEXURE REASONS FOR REOPENING THE CASE U/S 147 OF THE INCOM E TAX ACT, 1961 NAME & ADDRESS : SMT. MOHINDER KAUR CHHATWAL, OF THE ASSESSEE : 36/1, EAST PUNJABI BAGH, NEW DELHI. 4 ITA.NO.1680/DEL./2017 MAHINDER KAUR CHHATWAL, GURGAON. A.Y. : 2009-2010 PAN : ACQPC4929A STATUS : INDL. DATE : 31.3.2014 REASONS : THE ASSESSEE HAS NOT PAID PAYABLE LIABILITY OF RS.1 ,26,105/- U/S 43B. HENCE THE (1) THE ASSESSEE HAS NO PROOF OF PAYMENT IN RESPECT OF GOVT, DUTY U/S 438 AMOUNTING TO RS.1,26,105/- AND TDS OF RS.45,143/- WAS DEDUCTED BUT NOT DEPOSIT IN GOVT. A CCOUNT. HENCE, THE SAME HAVE BEEN OMITTED TO BE DISALLOWED U/S 43B. IN VIEW ABOVE INCOME OF ABOVE TO THE TUNE OF RS.L,2 6,105/- 1,71,248/- HAVE ESCAPED ASSESSMENT, I THEREFORE, HAVE BEEN TO BELIEVE THAT THE ASSESSEE IS IN DEFAULT FOR NON-PAYMENT OF GOVT. LIABILITIES AND HENCE INCO ME TO THE TUNE OF RS.1,71,248/- HAS ESCAPED ASSESSMENT. SD/- INCOME TAX OFFICER, WARD-1(1) GURGAON. 4.2. ORIGINALLY, THE ASSESSMENT ORDER UNDER SECTIO N 143(3) WAS PASSED VIDE ORDER DATED 22 ND DECEMBER, 2011. BUT THE A.O. DID NOT MAKE ANY ADDITION ON ACCOUNT OF DUTY UNDER SECTION 43B OF THE I.T. 5 ITA.NO.1680/DEL./2017 MAHINDER KAUR CHHATWAL, GURGAON. ACT AS CONSIDERED IN THE REASONS FOR REOPENING OF T HE ASSESSMENT. THE A.O. ISSUED NOTICE UNDER SECTION 154/155 OF THE I.T . ACT DATED 7 TH MARCH, 2014, COPY OF WHICH IS FILED AT PAGE NO.80 O F THE PAPER BOOK TO AMEND THE ORIGINAL ASSESSMENT ORDER DATED 22 ND DECEMBER, 2011 BY PROPOSING VARIOUS MISTAKES, ONE OF THE MISTAKE A S MENTIONED AT SL.NO.5 I.E., THERE ARE NO PROOF OF PAYMENT IN RESPECT OF GOVERN MENT DUTY COVERED UNDER SECTION 43B AMOUNTING TO RS.1,26 ,125. THIS AMOUNT IS PROPOSED TO BE ADDED BACK TO ASSESSEES I NCOME. THIS NOTICE WAS REPLIED BY ASSESSEE VIDE REPLY DATED 11 TH MARCH, 2014 COPY OF WHICH IS FILED AT PAGE 82 OF THE PAPER BOOK IN W HICH ASSESSEE SUBMITTED THAT HE ALREADY DEPOSITED THE TDS WHICH I S SUPPORTED BY COPIES OF THE CHALLANS WHICH ARE ALSO FILED IN THE PAPER BOOK. ACCORDING TO LEARNED COUNSEL FOR THE ASSESSEE, TILL RECORDING OF THE REASONS FOR REOPENING OF THE ASSESSMENT ON 31 ST MARCH, 2014, THE RECTIFICATION UNDER SECTION 154 WAS PENDING WHICH H AVE NOT BEEN DISPOSED BY A.O. HE HAS FURTHER SUBMITTED THAT A.O. HAS NOT MADE ANY ADDITION OF THE GOVERNMENT DUTY UNDER SECTION 4 3B OF THE I.T. ACT IN THE RE-ASSESSMENT ORDER AS WELL ON WHICH REA SONS FOR REOPENING ARE RECORDED. HE HAS THEREFORE, SUBMITTED THAT THE A.O. 6 ITA.NO.1680/DEL./2017 MAHINDER KAUR CHHATWAL, GURGAON. RECORDED INCORRECT AND NON-EXISTING REASONS. THEREF ORE, INITIATION OF RE-ASSESSMENT PROCEEDINGS IS BAD IN LAW. 5. LD. D.R. HOWEVER, RELIED UPON THE ORDER OF THE A.O. 6. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF MATERIAL ON RECORD, I AM OF THE VIEW THAT INITIATION OF RE-ASSE SSMENT PROCEEDINGS IS BAD IN LAW. THE A.O. PASSED THE ORIGINAL ASSESSM ENT ORDER UNDER SECTION 143(3) OF THE I.T. ACT AND AFTER EXAMINING THE BOOKS OF ACCOUNT AND MATERIAL ON RECORD, MADE VARIOUS DISALLOWANCES OF THE EXPENDITURE. THE A.O. HOWEVER, DID NOT MAKE ANY ADD ITION UNDER SECTION 43B OF THE I.T. ACT. LATER ON, A.O. FOUND C ERTAIN MISTAKES IN THE ORIGINAL ASSESSMENT ORDER DATED 22 ND DECEMBER, 2011 AND ONE OF THE MISTAKE WAS THAT NO PROOF OF PAYMENT IN RESPECT OF GOVERNMENT DUTY COVERED UNDER SECTION 43B, AMOUNTING TO RS.1,2 6,105 HAVE BEEN FILED WHICH WAS TO BE ADDED UNDER SECTION 154 OF I.T. ACT TO THE INCOME OF THE ASSESSEE. THE ASSESSEE FILED REPLY BE FORE A.O. IN THE RECTIFICATION PROCEEDINGS UNDER SECTION 154 OF THE ACT SUPPORTED BY COPIES OF THE CHALLAN TO SHOW THAT PAYMENT IN QUEST ION HAVE BEEN MADE TO THE DEPARTMENT. IT, THEREFORE, APPEARS THAT A.O. WAS SATISFIED WITH THE EXPLANATION OF ASSESSEE AND THAT IS WHY HE DID NOT MAKE ANY 7 ITA.NO.1680/DEL./2017 MAHINDER KAUR CHHATWAL, GURGAON. AMENDMENT IN THE ORIGINAL ASSESSMENT ORDER DATED 22 ND DECEMBER, 2011 AND PROPOSED ACTION UNDER SECTION 154 WOULD BE DEEMED TO HAVE BEEN DROPPED UNDER SECTION 154 OF THE I.T. ACT . IT, THEREFORE, SHOWS THAT A.O. ACCEPTED THE EXPLANATION OF ASSESSE E THAT ASSESSEE MADE PROPER PAYMENT UNDER SECTION 43B OF THE I.T. A CT. THERE WERE NO OTHER MATERIAL AVAILABLE ON RECORD TO SHOW THAT ASSESSEE HAS NOT MADE ANY PAYMENT COVERED UNDER SECTION 43B OF THE I .T. ACT. ON THE FACE OF THE MATERIAL AVAILABLE ON RECORD, IT WAS NO T PROPER FOR THE A.O. TO INITIATE THE RE-ASSESSMENT PROCEEDINGS WITH REGA RD TO THE SAME FACT THAT ASSESSEE HAS NOT MADE PAYMENT IN RESPECT OF GO VERNMENT DUTY COVERED UNDER SECTION 43B OF THE I.T. ACT. THUS, TH E A.O. RECORDED INCORRECT AND NON-EXISTING REASONS FOR REOPENING OF THE ASSESSMENT. THE SAME IS NOT PERMISSIBLE UNDER LAW AND REOPENING OF THE ASSESSMENT IS LIABLE TO BE QUASHED. I RELY UPON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ATLAS CY CLE INDIA 180 ITR 319. IT MAY ALSO BE NOTED HERE THAT THE A.O. DI D NOT MAKE ANY ADDITION IN THE RE-ASSESSMENT ORDER DATED 20 TH MARCH, 2015 IN RESPECT OF THE ISSUE UNDER SECTION 43B WHICH WAS SO LELY RAISED IN THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT. T HUS, THE ENTIRE 8 ITA.NO.1680/DEL./2017 MAHINDER KAUR CHHATWAL, GURGAON. EXERCISE MADE BY THE A.O. IS WITHOUT JURISDICTION A ND IS NOT SUSTAINABLE IN LAW. THE HONBLE KARNATAKA HIGH COUR T IN THE CASE OF BERGER PAINTS INDIA LIMITED VS. ACIT 322 ITR 369 HE LD THAT THE RE- ASSESSMENT NOTICE HAD BEEN ISSUED FOR VIRTUALLY THE SAME REASON FOR WHICH RECTIFICATION PROCEEDINGS HAD EARLIER BEEN IN ITIATED BUT DROPPED. THE A.O. HAD NOT DISCLOSED ANY NEW MATERIAL FOR REO PENING OF THE ASSESSMENT. THE NOTICE FOR RE-ASSESSMENT WAS NOT VA LID AND WERE LIABLE TO BE QUASHED. 7. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS CLEAR THAT WHEN THE A.O. ISSUED NOTICE FOR RECTIFICATION UNDER SECTION 154 OF THE I.T. ACT DATED 7 TH MARCH, 2014 AND ASKED FOR THE EXPLANATION OF ASSESSEE WITH REGARD TO THE AMOUNT IN QUESTION WHET HER PAID UNDER SECTION 43B OF THE I.T. ACT AND ASSESSEE FILED REPL Y AND EVIDENCES BEFORE A.O. IN RECTIFICATION PROCEEDINGS THAT PAYME NT IN QUESTION HAVE BEEN MADE TO THE GOVERNMENT ACCOUNT, THE A.O. WOULD BE SATISFIED WITH THE EXPLANATION OF ASSESSEE AND THER EFORE, DID NOT PASS ANY ORDER UNDER SECTION 154 OF THE I.T. ACT WHICH W OULD AMOUNT TO DROPPING OF THE PROCEEDING UNDER SECTION 154 OF THE I.T. ACT. THE A.O. WAS ALREADY HAVING COPIES OF THE CHALLAN OF TAX DEP OSITED BY THE 9 ITA.NO.1680/DEL./2017 MAHINDER KAUR CHHATWAL, GURGAON. ASSESSEE UNDER SECTION 43B OF THE I.T. ACT THUS A.O . WAS NOT HAVING ANY NEW MATERIAL WITH HIM FOR REOPENING OF THE ASSE SSMENT. IT WOULD SHOW THAT THE A.O. DELIBERATELY WITHOUT ANY JUSTIFI CATION HAS INITIATED RE-ASSESSMENT PROCEEDINGS PARTICULARLY WHEN MATERIA L WAS AVAILABLE ON RECORD TO PROVE THAT ASSESSEE HAS ALREADY MADE P AYMENTS UNDER SECTION 43B OF THE I.T. ACT. THE A.O. THUS RECORDED THE INCORRECT AND NON-EXISTING REASONS AND AS SUCH INITIATION OF RE-A SSESSMENT PROCEEDINGS IS WITHOUT JURISDICTION AND IS BAD IN L AW. I ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND Q UASH THE REOPENING OF THE ASSESSMENT UNDER SECTION 147/148 OF THE I.T. ACT. IN VIEW OF THE ABOVE, THERE IS NO NEED TO DECIDE THE ADDITIONS ON MERIT MADE BY THE A.O. AS WELL AS THE ENHANCEMENT MADE BY THE LD. CIT(A) BECAUSE THEY ARE LEFT WITH ACADEMIC DISCUSSION ONLY. ON QUA SHING THE RE- ASSESSMENT PROCEEDINGS ALL THE ADDITIONS WOULD STAN D DELETED. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DELHI, DATED 03 RD NOVEMBER, 2017 VBP/- 10 ITA.NO.1680/DEL./2017 MAHINDER KAUR CHHATWAL, GURGAON. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASST. REGISTRAR : ITAT DELHI BENCHES : DELHI.