DCIT, CHENNAI V. Pradeep Stainless Steel India Pvt. Ltd., CHENNAI

ITA 1750/CHNY/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96475 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 11-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Reopening of assessment; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1750/MDS/2013 ' (' / ASSESSMENT YEAR : 2005-06 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE V(2), CHENNAI - 600 034. V. M/S PRADEEP STAINLESS STEEL INDIA PVT. LTD., C-3, PHASE II, MAIN ROAD, MEPZ, TAMBARAM, CHENNAI - 600 045. PAN : AADCP 2554 Q (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI A.V. SREEKANTH, JCIT ,-*+ . / / RESPONDENT BY : SH. A.S. SRIRAMAN, ADVOCATE 0 . 1$ / DATE OF HEARING : 29.10.2015 2!( . 1$ / DATE OF PRONOUNCEMENT : 20.11.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, CHENNAI , DATED 13.06.2013 AND PERTAINS TO ASSESSMENT YEAR 2005-06. 2 I.T.A. NO.1750/MDS/13 2. SHRI A.V. SREEKANTH, THE LD. DEPARTMENTAL REPRES ENTATIVE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS WITH REGARD TO REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE L D. D.R., FOR THE ASSESSMENT YEAR 2005-06, THE ASSESSEE FILED RETURN OF INCOME ON 05.10.2005 ADMITTING A TOTAL INCOME OF ` 44,982/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT BY OR DER DATED 26.12.2007. IN THE ORIGINAL ASSESSMENT ORDER, THE ASSESSING OFFICER HAD NOT CONSIDERED THE SHAREHOLDING PATTERN OF THE PARTNERS WHILE CONVERTING THE PARTNERSHIP INTO A COMPANY. ACCORDI NG TO THE LD. D.R., ALL THE PARTNERS OF THE FIRM ADMITTEDLY, BEFO RE SUCCESSION, BECAME SHAREHOLDERS OF THE COMPANY. HOWEVER, THERE WAS DIFFERENCE IN ALLOTMENT OF SHARES TO THE PARTNERS C ONTRARY TO THE PROVISO TO SECTION 47(XIII) OF THE ACT. THEREFORE, THE EXEMPTION OF CAPITAL GAIN HAS TO BE WITHDRAWN UNDER SECTION 47A( 3) OF THE ACT. SINCE THE ASSESSING OFFICER HAD NOT CONSIDERED THIS AT THE TIME OF ORIGINAL ASSESSMENT, THE ASSESSMENT PROCEEDING WAS REOPENED BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT WITHIN A PERIOD OF FOUR YEARS. HOWEVER, THE CIT(APPEALS) FOUND THAT THERE WAS A CHANGE OF OPINION. THEREFORE, HE FOUND THAT THE ASSESSING OF FICER HAS NO JURISDICTION TO REOPEN THE ASSESSMENT. ACCORDING T O THE LD. D.R., 3 I.T.A. NO.1750/MDS/13 THE CIT(APPEALS) PROCEEDED ON THE PRESUMPTION THAT THERE WAS NO NEGLIGENCE ON THE PART OF THE ASSESSEE. THE NEGLIG ENCE ON THE PART OF THE ASSESSEE WOULD COME INTO PLAY WHEN THE ASSES SING OFFICER PROPOSED TO REOPEN ASSESSMENT AFTER FOUR YEARS. IN THIS CASE, THE ASSESSMENT WAS REOPENED WITHIN FOUR YEARS. THEREFO RE, THERE IS NO QUESTION OF CONSIDERING THE NEGLIGENCE OF THE ASSES SEE. SINCE THE SHAREHOLDING PATTERN WAS NOT EXAMINED BY THE ASSESS ING OFFICER, THE ASSESSING OFFICER HAD NOT EXPRESSED ANY OPINION ON THE ISSUE, THEREFORE, THERE IS NO QUESTION OF ANY CHANGE OF OP INION. FURTHER, THE CIT(APPEALS) HAS NOT DISPOSED OF THE APPEAL ON MERIT AFTER CONSIDERING THE SHAREHOLDING PATTERN OF THE RESPECT IVE PARTNERS. 3. ON THE CONTRARY, SH. A.S. SRIRAMAN, THE LD.COUNS EL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL THE MATERIALS BEFORE THE ASSESSING OFFICER. IN FACT, N OTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AT THE TIME OF ORIGINA L ASSESSMENT CALLING FOR THE NAMES AND ADDRESS OF SHAREHOLDERS W HO SUBSCRIBED THE NUMBERS OF SHARES APPLIED AND THE AMOUNT PAID, ETC. THE ASSESSEE HAS FURNISHED ALL THE DETAILS DURING THE C OURSE OF ORIGINAL ASSESSMENT. MERELY BECAUSE THERE WAS NO DISCUSSION IN THE ASSESSMENT ORDER, IT DOES NOT MEAN THAT THE ASSESSI NG OFFICER HAS 4 I.T.A. NO.1750/MDS/13 NOT CONSIDERED THE SAME. IN FACT, AFTER CALLING FO R ALL THE MATERIALS FROM THE ASSESSEE, THE ASSESSING OFFICER ALLOWED TH E CLAIM OF THE ASSESSEE UNDER SECTION 47(XIII) OF THE ACT. THEREF ORE, THERE IS NO QUESTION OF ANY WITHDRAWAL OF EXEMPTION UNDER SECTI ON 47A(3) OF THE ACT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. NO DOUBT A QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE CALLING CE RTAIN DETAILS. FROM THE QUESTIONNAIRE IT IS SEEN APPARENTLY THAT T HE DETAILS OF SHARE ALLOTTED TO EACH PARTNER ARE NOT CALLED FOR. THERE FORE, THE SHARE ALLOTTED TO EACH PARTNER OF THE ERSTWHILE FIRM, AFT ER SUCCESSION, IS NOT CONSIDERED BY THE ASSESSING OFFICER AT ANY POINT OF TIME IN THE ORIGINAL ASSESSMENT PROCEEDING. THEREFORE, THE ASS ESSING OFFICER FOUND THAT THERE WAS A DIFFERENCE IN THE ALLOTMENT OF SHARES. HENCE, HE ISSUED NOTICE UNDER SECTION 148 WITHIN FOUR YEAR S. AS RIGHTLY SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE, THERE IS NO NEGLIGENCE ON THE PART OF THE ASSESSEE. FOR REOPEN ING ASSESSMENT WITHIN FOUR YEARS, IT MAY NOT BE NECESSARY THAT THE RE IS NEGLIGENCE ON THE PART OF THE ASSESSEE. WHAT IS NECESSARY IS TO SEE WHETHER ANY INCOME OF THE ASSESSEE CHARGEABLE TO TAX ESCAPE D INCOME. IN 5 I.T.A. NO.1750/MDS/13 THIS CASE, THE ASSESSING OFFICER CAME TO A CONCLUSI ON THAT THERE WAS REASON TO BELIEVE THAT THE INCOME OTHERWISE CHARGEA BLE TO TAX HAS ESCAPED INCOME SINCE THERE WAS DIFFERENCE IN THE AL LOTMENT OF SHARES TO THE PARTNERS. THEREFORE, THIS TRIBUNAL I S OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS RIGHTLY REOP ENED THE ASSESSMENT. SINCE NO OPINION WAS EXPRESSED IN THE ORIGINAL ASSESSMENT, IT IS NOT THE QUESTION OF CHANGE OF OPI NION. THEREFORE, THE CIT(APPEALS) MAY NOT BE CORRECT IN SAYING THAT THE ASSESSING OFFICER HAS NO JURISDICTION TO REOPEN THE ASSESSMEN T. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT AS THE ASSESSING OFFICER HAS RIGHTLY REOPENED THE ASSESSMENT, THE CIT(APPEALS) HAS TO DI SPOSE THE APPEAL ON MERIT ON THE BASIS OF THE GROUNDS RAISED BEFORE HIM. ACCORDINGLY, THE ORDER OF THE CIT(APPEALS) IS SET A SIDE. THE APPEAL IS REMITTED BACK TO THE FILE OF THE CIT(APPEALS). THE CIT(APPEALS) SHALL DISPOSE THE APPEAL ON THE BASIS OF THE GROUND S RAISED BY THE ASSESSEE BEFORE HIM. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. 6 I.T.A. NO.1750/MDS/13 ORDER PRONOUNCED ON 20 TH NOVEMBER, 2015 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 20 TH NOVEMBER, 2015. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-V, CHENNAI 4. 0 81 /CIT-V, CHENNAI-34 5. 69 ,1 /DR 6. :' ; /GF.