Shri Lalit Kumar Khatri, JODHPUR V. ACIT, BARMER

ITA 174/JODH/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4922 (ITAT-JODHPUR)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 19-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Loose papers; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 133A; 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 174/JODH/2013 (A.Y. 2006-07) SHRI LALIT KUMAR KHATRI VS. ACIT, CIRCLE, BARMER BARMER PAN NO. AENPK7315K ASSESSEE BY : SHRI RAJENDRA JAIN DEPARTMENT BY : SHRI N.A. JOSHI- D.R. DATE OF HEARING : 20/08/2013. DATE OF PRONOUNCEMENT : 21/08/2013. O R D E R PER N.K.SAINI, A.M THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R OF LD. CIT (A), JODHPUR DATED 28/02/2013. THE FOLLOWING GROUNDS HA VE BEEN RAISED IN THIS APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) ERRED IN UPHOLDING VALIDITY OF NOTICE U/S 14 7 OF THE ACT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) ERRED IN SUSTAINING ADDITION OF RS.4,67,765/- MADE BY AO U/S 68 OF THE I.T. ACT 1961. 3. THAT THE PETITIONER MAY KINDLY BE PERMITTED TO R AISE ANY ADDITIONAL OR ALTERNATIVE GROUND AT OR BEFORE THE T IME OF HEARING. 2 2 VIDE GROUND NO.1 THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REOPENING OF THE ASSESSMENT U/S 147 OF THE ACT, 1961 (HEREINA FTER REFERRED TO AS ACT, SHORT). 3 FACTS OF THE CASE, IN BRIEF ARE THAT ASSESSEE FIL ED THE RETURN OF INCOME ON 31/10/2006 DECLARING INCOME OF RS. 4,96,820/-. IN THIS CASE SURVEY WAS CONDUCTED U/S 133A OF THE ACT IN MARCH, 2009 AND SO ME DIARIES ALONG WITH LOOSE PAPERS WERE FOUND IN THE BUSINESS PREMISES OF THE ASSESSEE. ONE DIARY, ANNEXURE-A-5 WAS PERTAINING TO THE ASSESSMEN T YEAR UNDER CONSIDERATION AND IN THE SAID DIARY, VARIOUS ENTRIE S WRITTEN WERE NOT FOUND TO BE RECORDED IN THE BALANCE SHEET OF THE ASSESSEE S RETURN. THE AO WAS OF THE VIEW THAT THE ASSESSEE HAD NOT DECLARED ACTUAL INCOME IN THE RETURN, THUS, INCOME WAS ESCAPED TO TAX. HE THEREFORE, ISS UED NOTICE U/S 148 OF THE ACT ON 07/01/2010. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE STATED THAT THE RETURN ORIGINALLY FILED MAY BE TREATED AS FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. THE ASSESSEE DURING THE ASSES SMENT PROCEEDINGS, RAISED AN OBJECTION AGAINST THE ISSUANCE OF NOTICE U/S 148 OF THE ACT, WHICH WAS REJECTED BY THE AO. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O LD. CIT(A) AND CONTENDED THAT AO WAS NOT JUSTIFIED IN ISSUING NOTI CE U/S 148 OF THE ACT AND ALSO OBJECTED THE VALIDITY OF NOTICE. LD. CIT(A) R EJECTED THE CONTENTION OF 3 THE ASSESSEE BY OBSERVING IN PARA 3.3 TO 3.3.2 OF T HE IMPUGNED ORDER, WHICH READS AS UNDER:- 3.3 I HAVE GONE THROUGH THE FACTS AND CIRCUMSTANCE S OF THE CASE AND IT IS OBSERVED THAT THE PROVISION OF SECTI ON 147 PROVIDES THAT IF THE ASSESSING OFFICER HAS REASON T O BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAD ESCAP ED ASSESSMENT, HE MAY SUBJECT TO THE PROVISION OF SECT ION 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS. THE PROVISION OF SECTION 148(2) PROVIDES THAT THE ASSESSING OFFICER SHALL BEFORE ISSUING ANY NOTICE U/S 148(1), RECORD HIS RE ASONS. 3.3.1 IN VIEW OF THE ABOVE PROVISIONS AND AS FACTS DISCUSSED BY THE ASSESSING OFFICER FOR ISSUE OF NOTICE, IT IS OBSERVED THAT THE ASSESSING OFFICER BEFORE ISSUING NOTICE U/S 148 HAS RECORDED THE REASONS AS PROVIDED IN SECTION 148(2) AND THE REASONS RECORDED ARE PRIMA F ACIE FOUND TO BE TRUE AND CORRECT. PRIMA FACIE THE REAS ONS RECORDED BY THE ASSESSING OFFICER ARE CORRECT AND T RUE AND ARE AVAILABLE ON RECORD TO FORM A REASONABLE BE LIEF THAT THE INCOME HAS ESCAPED TO ASSESSMENT. IN THE PRESENT CASE, THERE WAS A DIARY ANNEXURE A-5 IMPOUNDING DURING THE COURSE OF THE SURVEY PROCEEDI NG IN WHICH VARIOUS CREDITS ENTRIES WERE FOUND WHICH W ERE NOT RECORDED IN THE BOOKS OF ACCOUNT. HE DULY DISP OSED OFF THE OBJECTION. DURING THE ASSESSMENT PROCEEDIN G ASSESSING OFFICER ALSO PROVIDED SUFFICIENT AND REASONABLE TIME TO THE ASSESSEE. 3.3.2 IN A RECENT DECISION OF THE HON'BLE DELHI HIG H COURT IN THE CASE OF USHA INTERNATIONAL LTD. (348 ITR 485 DE L.) OBSERVED THAT WHERE FRESH OR NEW FACTUAL INFORMATI ON COMES TO THE KNOWLEDGE OF THE ASSESSING OFFICER SUBSEQUENT TO THE PASSING OF THE ASSESSMENT ORDER, IF NEW FACTS, MATERIAL OR INFORMATION COMES TO THE KNOWLEDGE OF THE ASSESSING OFFICER, WHICH WAS NOT O N RECORD AND AVAILABLE AT THE TIME OF THE ASSESSMENT ORDER, THE PRINCIPLE OF CHANGE OF OPINION WILL NOT APPLY. FURTHER IT WAS OBSERVED THAT FACTUAL 4 INFORMATION OR MATERIAL WHICH WAS INCORRECT OR WAS NOT AVAILABLE WITH THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT WOULD JUSTIFY INITIATION OF REASSESSMENT PROCEEDINGS. SO IN VIEW OF THE ABOVE, I HOLD THAT THE ASSESSIN G OFFICER WAS JUSTIFIED TO ISSUE NOTICE U/S 148. THE GROUNDS 1 TO 4 ARE DISMISSED. NOW, THE ASSESSEE IS IN APPEAL. 4. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT REOP ENING BY ISSUING NOTICE U/S 148 OF THE ACT WAS NOT VALID SINCE AO DI D NOT MENTION IN THE REASONS RECORDED HOW AND IN WHAT MANNER THE INCOME ESCAPED TO TAX. HE FURTHER SUBMITTED THAT FROM THE REASONS RECORDED (A COPY OF WHICH IS PLACED AT PAGE 18 OF THE ASSESSEES PAPER BOOK), IT WAS CL EAR THAT AO HAD NOT BROUGHT ANY MATERIAL ON RECORD TO SUBSTANTIATE THAT INCOME OF THE ASSESSEE ESCAPED THE ASSESSMENT. IT WAS ALSO STATED THAT EVE N THE ADDITION MADE BY THE AO HAD BEEN DELETED BY LD. CIT(A), THEREFORE IT CANNOT BE SAID THAT ANY INCOME ESCAPED ASSESSMENT. IN HIS RIVAL SUBMISSIONS, LD. D.R. SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT AO WHILE ISSUING NOTICE U/S 148 OF THE ACT RECORDED THE FOLLOWING REASONS:- 5 IN THIS CASE SURVEY U/S 133A WAS CARRIED OUT BY A CIT, CIRCLE-BARMER IN MARCH, 2009. DURING THE SURVEY PR OCEEDING SOME INCRIMINATING DOCUMENTS WERE FOUND WHICH ARE N OT TALLIED WITH THE BALANCE SHEET/TRADING ACCOUNT OF THE ASSES SEES RETURN. THE ASSESSEE HAS NOT DECLARED TRUE INCOME IN THE R ETURN OF INCOME; HE HAS ESCAPED INCOME TO TAX. IN THE A.Y. 2007-08 ON THE BASIS OF IMPOUNDED RECO RD UNDISCLOSED INCOME WAS INVESTIGATED AND IT IS ADDED AROUND OF RS. 12,15,000/-. IN THIS CASE SERVICE TAX DEPARTMENT HAS ALSO GET I NSPECTION IN MARCH, 2009. I HAVE REASON TO BELIEVE THAT ASSESSEE HAS ESCAPED TO TAX, ISSUE NOTICE U/S 148 OF THE I.T.ACT, 1961. 6. FROM A BARE READING OF THE ABOVE SAID REASONS RE CORDED BY THE AO, IT WOULD BE CLEAR THAT HE WAS NOT SURE HOW MUCH INCOME OF THE ASSESSEE ESCAPED THE ASSESSMENT BECAUSE HE SIMPLY MENTIONED THAT DURING THE SURVEY PROCEEDINGS SOME INCRIMINATING DOCUMENTS WERE FOUND , WHICH WERE NOT TALLIED WITH THE BALANCE SHEET/TRADING ACCOUNT OF T HE ASSESSEES RETURN. IT IS NOT POINTED OUT THAT WHAT WERE THE ENTRIES WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNT AND HOW MUCH INCOME ESCAPED FR OM THE ASSESSMENT. IN THE REASONS RECORDED, THE AO ALSO MENTIONED THAT IN THE A.Y. 2007-08 I.E. THE SUCCEEDING ASSESSMENT YEAR, ON THE BASIS OF IMP OUNDED RECORD UNDISCLOSED INCOME WAS INVESTIGATED AND IT WAS ADDE D AROUND OF RS. 12,50,000/-. FROM THE ABOVE RECORDING OF THE AO AL SO, IT IS CLEAR THAT HE WAS NOT SURE HOW MUCH UNDISCLOSED INCOME RELEVANT T O THE YEAR UNDER CONSIDERATION WAS FOUND FROM IMPOUNDED RECORD. IN OTHER WORDS, THE AO 6 STATED THAT UNDISCLOSED INCOME WAS PERTAINING TO TH E SUCCEEDING ASSESSMENT YEAR I.E. ASSESSMENT 2007-08, HOWEVER, NOTHING IS S TATED AS REGARDS TO THE ESCAPEMENT OF THE INCOME FOR THE ASSESSMENT YEAR UN DER CONSIDERATION. 7. WE, THEREFORE, ARE OF THE CONSIDERED VIEW THAT A BOVE SAID REASONS RECORDED BY THE AO WERE NOT SUFFICIENT TO INITIATE THE PROCEEDINGS U/S 148 OF THE ACT. THEREFORE, REASSESSMENT FRAMED BY THE AO U/S 147 OF THE ACT WAS NOT VALID AND THE SAME IS QUASHED. 8. SINCE, WHILE DECIDING THE ISSUE RELATING TO THE VALIDITY OF REOPENING, WE HAVE QUASHED THE REASSESSMENT ORDER, THEREFORE, NO FINDING IS GIVEN ON THE OTHER ISSUES RAISED BY THE ASSESSEE ON THE QUAN TUM ADDITION. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . (ORDER PRONOUNCED IN THE COURT ON 21 ST AUGUST, 2013) (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21 ST AUGUST, 2013. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR ITAT, JODHPUR