Mahishadal Co-Operative Marketing & Society Ltd., Purba Medinipur V. I.T.O., Wd-1, Haldia, Purba Medinipur

ITA 1682/KOL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54614 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-03-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 24-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M BHATTACHARYA
• Assessee Lawyers: S M SURANAN M BHANSALI
• Keywords: Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(1); 80P; 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , . ! . , '# ) [BEFORE SRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM] $ $ $ $ / I.T.A NO. 1682/KOL/2009 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2003-04 MAHISHADAL CO-OPERATIVE MARKETING VS. INCOME-TAX OFFICER, WD-1, HALDIA & SOCIETY LTD. (PAN: AAAAM 1256 F) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) DATE OF HEARING: 25.10.2011 DATE OF PRONOUNCEMENT: 31.10.2011 FOR THE APPELLANT: S/SHRI S. M. SURANA/N. M. BHANSALI FOR THE RESPONDENT: SHRI M. BHATTACHARYA '. / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXIII, KOLKATA IN APPEAL NO.74/CIT(A)-XXXIII/WD-1HAL/07-08 DATED 29.05.2009. ASSESSMENT WAS FRAMED BY ITO, WARD-1, HALDIA U/S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2003-04 VIDE HIS ORDER DATED 31.08. 2007. 2. THE FIRST LEGAL ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF ASSESSING OFFICER IN INITI ATING THE PROCEEDINGS U/S. 147 OF THE ACT. THIS ISSUE THE ASSESSEE HAS RAISED BY WAY OF ADDITI ONAL GROUND FOR WHICH THE REVENUE HAS NOT AGITATED AND WE ADMIT THIS GROUND, WHICH READS AS U NDER: FOR THAT THE INITIATION OF THE PROCEEDINGS U/S. 14 7 AND COMPLETION OF THE ASSESSMENT U/S. 147 WAS WRONG AND ILLEGAL, AND THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION U/S. 147 ON IRRELEVANT CONSIDERATIONS. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A COO PERATIVE SOCIETY ENGAGED IN THE TRADING OF AGRICULTURAL PRODUCE, FERTILIZERS AND CONSUMER GOOD S. IT FILED ITS RETURN OF INCOME ON 28.11.2003 SHOWING NIL INCOME. SAME WAS PROCESSED U/S. 143(1) ON 06.01.2004. LATER ON, THE CASE WAS REOPENED FOR ASSESSMENT AS THE ASSESSING OFFICER OB SERVED THAT THERE WAS SUFFICIENT REASON TO 2 ITA 1682/K/2009 MAHISHADAL COOP. MARKETING & SOCIETY LTD. A.Y.05-06 BELIEVE THAT THE INCOME OF THE ASSESSEE FOR THE REL EVANT ASSESSMENT YEAR HAD ESCAPED ASSESSMENT. HE RECORDED THE REASONS AND NOTICE U/S . 148 WAS SERVED ON THE ASSESSEE. AFTER HEARING THE A.R AND PERUSING THE BOOKS OF ACCOUNT A ND DOCUMENTS PRODUCED BEFORE AO, HE COMPUTED THE TOTAL INCOME OF ASSESSEE AT RS.3,35,74 6/- AND COMPUTED THE TAX ACCORDINGLY. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AGAINST THE SAID ORDER PASSED U/S. 147 OF THE ACT. THE CIT(A) REJECTED THE ASSESSEES GROUND OF APPEAL BY OBSERVING AS UNDER: THE ASSESSEE OBJECTS TO THE PROCEEDINGS U/S. 147 O N THE GROUND THAT REASONS WAS NOT PROVIDED AND IT IS NOT KNOWN ON WHOM NOTICES WERE S ERVED. THE A.O. HAS MENTIONED IN THE ORDER ITSELF THAT REASONS WERE RECORDED AND NOT ICES DULY SERVED. NO RETURN WAS FILED IN RESPONSE. THE ASSESSEE HAS NOT PROVIDED A NY EVIDENCE THAT THEY HAD REQUESTED FOR REASONS FOR REOPENING. THE REASONS ARE TO BE P ROVIDED IF SPECIFIC REQUEST IS MADE BY THE ASSESSEE AND AFTER FILING OF RETURN. NEITHE R THE RETURN WAS FILED NOR DOES IT APPEAR REQUEST WAS MADE. UNDER THESE CIRCUMSTANCES , THE OBJECTION OF THE ASSESSEE WITH REGARD TO REOPENING BEING BAD CANNOT BE UPHELD . THIS GROUND OF THE ASSESSEE FAILS. FURTHER AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEF ORE US. 4. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE ASSESSEE IS A COOPERATIVE SOCIETY AND IS ENGAGED IN PROCURING FER TILIZERS, PESTICIDES, CLOTHES AND OTHER CONSUMER GOODS FOR SUPPLYING TO ITS MEMBERS. HE AL SO CONTENDED THAT RETURN FOR THE YEAR WAS FILED ON 28.11.2003 WHICH WAS PROCESSED U/S. 143(1) ON 06.01.2004. LATER ON ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE U/S. 148 OF THE ACT. H E STATES THAT THE INITIATION OF THE PROCEEDINGS U/S. 148 OF THE ACT AND THE ASSESSMENT MADE THEREUN DER IS PRIMA FACIE WRONG, UNJUSTIFIED, BAD IN LAW AND WITHOUT JURISDICTION AS THE REASONS RECO RDED COULD NOT SHOW ANYTHING THAT THE AO MIGHT HAVE FORMED A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT AND THERE IS NO SUCH MATERIAL OR THE BASIS, AS IS COMING OUT OF THE ORDER, WHICH COU LD PROVIDE THAT THERE IS SOME BASIS FOR FORMING SUCH A BELIEF THAT INCOME HAS ESCAPED ASSES SMENT. HE, THEREFORE, URGED THAT THE ASSESSMENT FRAMED BY ASSESSING OFFICER AND CONFIRME D BY CIT(A) IS LIABLE TO BE ANNULLED IN LIMINI. ON THE OTHER HAND, LD. DR HEAVILY PLACED R ELIANCE ON THE ORDERS OF LOWER AUTHORITIES AND MADE HIS SUBMISSION TO CONFIRM THE SAME. 5. AFTER HEARING BOTH THE PARTIES AND HAVING GONE T HROUGH RECORDS, WE FIND THAT THE FOLLOWING REASONS WERE RECORDED ON 30.07.2006: 30.7.06 THE A FILED ITS RETURN FOR A.Y. 03-04 AND THE RET URN WAS SUBSEQUENTLY PROCESSED U/S. 143(1) OF THE I. T. ACT 61 ON 6.1.04. THE A CO-O PERATIVE CLAIMED ENTIRE EXCESS AS DEDUCTION U/S. 80P(2). THE A CONSUMER CO-OPERATIVE DERIVED ITS INCOME F ROM SALE OF CLOTH, LPG, FERTILIZER & PESTICIDES. THE A CONSUMER CO-OPERATIVE SALES PE STICIDES, FERTILIZER TO BDO MAHISADAL 3 ITA 1682/K/2009 MAHISHADAL COOP. MARKETING & SOCIETY LTD. A.Y.05-06 & OTHER DEALERS WHICH IS APPARENT FROM COPIES OF AC COUNT SUBMITTED ALONG WITH I. T. RETURN AND CANNOT BE THE MEMBER OF THE CO-OPERATIVE SOCIETY. AS PER SEC. 80P(2)(A)(IV) A COOP. CAN CLAIM 100% DEDUCTION IF IT SALES FERTILIZ ER, PESTICIDES TO ITS MEMBER ONLY. THE A CONSUMER COOPERATIVE HAS SOLD ITEMS WHO ARE NON MEMBERS & WRONGLY CLAIMED THE DEDUCTION. IN VIEW OF THE ABOVE I HAVE REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR A.Y. 03-04. ISSUE NOTICE U/S. 148 OF THE I. T. ACT 61. AFTER GOING THROUGH ABOVE REASONS AND THE PROVISION S OF SECTION 148 R.W.S. 147 OF THE ACT, WE ARE OF THE VIEW THAT THE ESSENTIAL REQUIREMENT FOR INITIATING REASSESSMENT PROCEEDINGS UNDER THESE PROVISIONS IS THAT THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR. ANOTHER REQUIREMENT WHICH IS NECESSARY FOR ASSUMING JURISDICTION UNDER SECTIO N 147 OF THE ACT IS THAT THE ASSESSING OFFICER SHALL RECORD HIS REASONS FOR ISSUING NOTICE AS MAND ATED BY SECTION 148(2) OF THE ACT. THIS REQUIREMENT NECESSARILY POSTULATES THAT BEFORE THE ASSESSING OFFICER IS SATISFIED TO ACT UNDER SECTION 147 READ WITH SECTION 148 OF THE ACT, HE MU ST PUT IN WRITING AS TO WHY IN HIS OPINION OR WHY HE HOLDS THE BELIEF THAT INCOME HAS ESCAPED ASS ESSMENT. WHY FOR HOLDING SUCH BELIEF MUST BE REFLECTED FROM THE RECORD OF REASONS MADE B Y THE ASSESSING OFFICER AND IN CASE WHERE THE ASSESSING OFFICER HOLDS THE OPINION THAT BECAUS E OF EXCESSIVE DEDUCTION OR ALLOWANCE THE INCOME HAS ESCAPED ASSESSMENT, THE REASONS RECORDED BY THE ASSESSING OFFICER MUST DISCLOSE BY WHAT PROCESS OF REASONING HE HOLDS SUCH BELIEF T HAT EXCESSIVE DEDUCTION OR ALLOWANCE HAS BEEN COMPUTED IN THE ORIGINAL ASSESSMENT. MERELY SA YING THAT EXCESSIVE DEDUCTION OR ALLOWANCE HAS BEEN COMPUTED WITHOUT DISCLOSING THE REASONS WH ICH LAID THE ASSESSING OFFICER TO HOLD SUCH BELIEF DOES NOT CONFER JURISDICTION ON THE ASS ESSING OFFICER TO TAKE ACTION UNDER SECTIONS 147 R.W.S. 148 OF THE ACT. HOWSOEVER WIDE THE SCOPE FOR TAKING ACTION UNDER SECTION 147 READ WITH SECTION 148 OF THE ACT, IT DOES NOT CONFER JUR ISDICTION ON CHANGE OF OPINION ON THE INTERPRETATION OF A PARTICULAR PROVISION EARLIER AD OPTED BY THE ASSESSING OFFICER. THE SCOPE OF SECTION 147 OF THE ACT IS NOT FOR REVIEWING ITS EAR LIER ORDER SUO MOTU IRRESPECTIVE OF THERE BEING ANY MATERIAL TO COME TO A DIFFERENT CONCLUSION APAR T FROM JUST HAVING SECOND THOUGHTS ABOUT THE INFERENCES DRAWN EARLIER. EVEN OTHERWISE, VALIDITY OR OTHERWISE OF THE REASONS FOR INITIATION OF REASSESSMENT PROCEEDINGS SHOULD BE GONE INTO ON THE BASIS OF THE FACTS MENTIONED AND THE REASONS RECORDED PRIOR TO SUCH INITIATION. IT IS N OT OPEN TO THE REVENUE TO JUSTIFY SUCH INITIATION ON THE BASIS OF FURTHER REASONS TO BE SUPPLIED IN T HE FORM OF AFFIDAVITS OR SUBMISSIONS, WHATSOEVER. THUS, WHERE THE REASONS RECORDED DO NO T BRING OUT ANY GROUND, MAKING OUT AN OBJECTIVE SATISFACTION ARRIVED AT BY THE OFFICER, N O REASON OTHER THAN THOSE RECORDED BY THE OFFICER CAN POSSIBLY BE URGED TO SUSTAIN SUCH INITI ATION. IT IS SETTLED LAW THAT REASON TO BELIEVE 4 ITA 1682/K/2009 MAHISHADAL COOP. MARKETING & SOCIETY LTD. A.Y.05-06 CAN NEVER BE THE OUTCOME OF A CHANGE OF OPINION AND IT IS ESSENTIAL THAT BEFORE ANY ACTION IS TAKEN BY THE OFFICER, THE OFFICER SHOULD SUBSTANTIA TE HIS SATISFACTION. THIS VIEW OF OURS IS SUPPORTED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF SARADBHAI M. LAKHANI V. ITO (1998) 213 ITR 779, 783, 785 (GUJ). FURTHER, IT IS ALSO A CONDITION POSTULATED IN THE PROVISIONS THAT DISCOVERY OF NEW AND IMPORTANT MATTER OR KNOWLEDGE OF FRESH FACTS WHICH WERE NOT PRESENT AT THE TIME OF ORIGINAL ASSESSMENT WOULD CONSTITUTE A REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN TH E MEANING OF EVEN SECTION 147 OF THE ACT (OPERATIVE FROM 1-4-1989). HERE ALSO SUCH FACTS WH ICH COULD HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER BUT WERE NOT SO DISCOVERED AT THE TIME OF ORIGINAL ASSESSMENT MAY NOT CONSTITUTE A NEW INFORMATION. IN THAT VIEW OF THE MATTER, WHERE THE ASSESSING OFFICER HAS FORMED THE OPINION THAT THE INCOME HAS ESCAPED ASSE SSMENT BECAUSE HE HAS ALLOWED THE DEDUCTION UNDER SECTION 80-I OF THE ACT WRONGLY AND EVEN THOUGH IN RECORDING THE REASONS THE ASSESSING OFFICER HAS USED THE PHRASE REASON TO BE LIEVE, BETWEEN THE DATE OF THE ORIGINAL ORDER OF ASSESSMENT SOUGHT TO BE REOPENED AND THE DATE OF FORMING OF OPINION BY THE ASSESSING OFFICER, NOTHING NEW HAS HAPPENED. THERE IS NO CHAN GE OF LAW. NO NEW MATERIAL HAS COME ON RECORD. NO INFORMATION HAS BEEN RECEIVED. IN SUCH CIRCUMSTANCES, IT CAN BE SAID THAT IT IS MERELY A FRESH APPLICATION OF MIND BY THE SAME ASSE SSING OFFICER TO THE SAME SET OF FACTS. WHAT THE ASSESSING OFFICER HAS SAID ABOUT THE ORDER OF T HE FIRST APPELLATE AUTHORITY WHILE RECORDING REASONS UNDER SECTION 147 OF THE ACT HE COULD HAVE SAID EVEN IN THE ORIGINAL ORDER OF ASSESSMENT BECAUSE SUCH APPELLATE ORDER WAS BEFORE HIM AT THAT TIME. THUS, IT IS A CASE OF MERE CHANGE OF OPINION WHICH DOES NOT PROVIDE JURISDICTI ON TO THE ASSESSING OFFICER TO INITIATE PROCEEDINGS UNDER SECTION 147 OF THE ACT. IN THE P RESENT CASE BEFORE US ALSO, THE CASE OF CLAIM OF DEDUCTION U/S. 80P OF THE ACT FALLS SQUARELY UND ER THE ABOVE DISCUSSION AND WE ARE OF THE VIEW THAT THE REASONS RECORDED DOES NOT BRING OUT A NY INCOME ESCAPED, HENCE, ISSUANCE OF NOTICE U/S. 148 R.W.S. 147 OF THE ACT IS BAD AND QU ASHED. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. 7. ORDER PRONOUNCED IN OPEN COURT ON 31.10.2011. SD/- SD/- . ! ! ! ! . '# , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( !# !# !# !#) )) ) DATED 31 ST DAY OF OCTOBER, 2011 5 ITA 1682/K/2009 MAHISHADAL COOP. MARKETING & SOCIETY LTD. A.Y.05-06 /0 %12 3 JD.(SR.P.S.) '. 4 ,5 6'5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT MAHISHADAL COOPERATIVE MARKETING & SOCI ETY LTD., PO MAHISHADAL, DIST PURBA MEDINIPUR, W.B. . 2 ,-*+ / RESPONDENT, ITO, WARD-1, HALDIA 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . >? ,% / DR, KOLKATA BENCHES, KOLKATA -5 ,/ TRUE COPY, '.%@/ BY ORDER, 2 /ASSTT. REGISTRAR .