SANJAYKUMAR B. AGRAWAL, MUMBAI V. ITO WD 17 (11), MUMBAI

ITA 1791/MUM/1999

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8823 (ITAT-MUMBAI)
• Duration Of Justice: 11 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: K
• Assessment Year: 1993-1994
• Appeal Filed On: 31-03-1999
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: V K TULSIAN
• Keywords: Revised return; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, F, MUMBAI BEFORE SHRI R V EASWAR, PRESIDENT AND SHRI P M JAGTAP, ACCOUNTANT MEMBER I T A NO: 1791/MUM/1999 (ASSESSMENT YEAR: 1993-94) SHRI SANJAYKUMAR B AGRAWAL, MUMBAI APPELLANT (PAN: AACPA0554B) VS INCOME TAX OFFICER, WARD 17(11), MUMBAI RESPONDEN T APPELLANT BY: SHRI V K TULSIAN RESPONDENT BY: SMT ASHIMA GUPTA O R D E R R V EASWAR, PRESIDENT: THIS APPEAL BY THE ASSESSEE RELATES TO THE ASSESSM ENT YEAR 1993-94. THE ASSESSEE IS AN INDIVIDUAL. THE APPEA L ARISES OUT OF THE ASSESSMENT MADE ON 28.05.1998 UNDER SECTION 143 (3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961. WE A RE NOW SEIZED OF THE APPEAL ONLY FOR THE LIMITED PURPOSE OF DECID ING THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL WHEN THE APPEAL WAS HEARD EARLIER. IT APPEARS THAT THE TRIB UNAL HAD OMITTED TO CONSIDER THE ADDITIONAL GROUNDS DATED 28.08.2006 FILED BY THE ASSESSEE RAISING THE FOLLOWING POINTS: - I) WHETHER THE LD. AO WAS JUSTIFIED TO COMPLETE THE ASSESSMENT U/S 143(3) BEYOND THE LIMITATION PROVISIONS UNDER SECTION 153? II) WHETHER THE LD. AO WAS JUSTIFIED BY INVOKING SECTION 147 / 148 ONLY FOR THE PURPOSE OF DEEP SCRUTINY BASED ONLY UPON A NON-EST RETURN DATED 31.03.1996? III) WITHOUT PREJUDICE , WHETHER THE LD. AO WAS JUSTIFIED TO REVIEW HIS OWN DECISION BY WHICH ITA NO: 1791/MUM/1999 2 THE LATE RETURN WAS TREATED NON-EST AND ON THE OTHER HAND BY TREATING THE SAME RETURN AS A VALID RETURN? IV) WITHOUT PREJUDICE , WHETHER THE LD. AO WAS JUSTIFIED THAT NO COGNIZANCE TAKEN ON 31.03.1996 I.E. ON THE DATE OF FILING THE NON-EST RETURN WHEREAS RECORD SHOWS THAT ON THE SAME DATE HE HAS VERIFIED THE NON-EST RETURN? THE AFORESAID GROUNDS WERE NOT ADJUDICATED UPON BY THE TRIBUNAL AND BY ORDER DATED 17.05.2007 IN MISCELLANEOUS APPL ICATION NO: 212/MUM/2007 THE TRIBUNAL HELD AS FOLLOWS: - 2. WE HEARD BOTH SIDES. WE FIND THAT THE ASSESSEE IS JUSTIFIED IN POINTING OUT THAT THE TRIBUNAL HAS NOT CONSIDERED THE REVISED AND ENLARGED GROUND ON THE QUESTION OF LIMITATION, WHILE PASSING THE ABOVE SAID ORDER. THE ISSUE OF LIMITATION IS ONE OF THE FUNDAMENTAL GROUNDS RAISED BY THE ASSESSEE IN HIS APPEAL. THEREFORE IT MAY BE PROPER THAT THE APPEAL MAY BE DECIDED AFRESH ON PROPER CONSIDERATION ON ENLARGED GROUNDS OF APPEAL FILED BY THE ASSESSEE VIDE ITS APPLICATION DATED 28.08.2006 . THEREAFTER THE APPEAL WAS POSTED ON A FEW OCCASIONS BUT THE ASSESSEE DID NOT APPEAR AND, THEREFORE, IT WAS DISM ISSED FOR NON- PROSECUTION. HOWEVER, THE ASSESSEE FILED MISCELLAN EOUS APPLICATION NO: 197/MUM/2009 AND BY ORDER DATED 23. 09.2009 THE ORDERS PASSED BY THE TRIBUNAL DISMISSING THE ASSESS EE FOR NON- PROSECUTION WERE VACATED. THAT IS HOW THE MATTER I S BEFORE US. 2. THE BRIEF FACTS GIVING RISE TO THE ADDITIONAL GR OUNDS ARE THAT IN RESPECT OF THE YEAR UNDER APPEAL, WHICH IS THE ASSE SSMENT YEAR 1993-94, THE ASSESSEE FILED A RETURN OF INCOME ON 3 1.03.1996 DECLARING TOTAL INCOME OF ` 1,05,870/-. NO RETURNS OF INCOME HAD BEEN FILED EARLIER FOR THE YEAR AS THE ASSESSEE WAS REQUIRED TO DO UNDER SECTION 139(1) ON OR BEFORE 31.08.1993 OR UND ER SECTION ITA NO: 1791/MUM/1999 3 139(4) ON OR BEFORE 31.03.1995. IT WAS FOR THE FIR ST TIME THAT THE ASSESSEE FILED A RETURN ON 31.03.1996. ON 03.09.19 96 THE ASSESSING OFFICER MADE THE FOLLOWING ENTRY IN THE O RDER SHEET: - ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 93-94 ON 29.3.96. MAXIMUM TIME LIMIT TO FILE THE RETURN OF INCOME U/S 139(4) OF I T ACT WAS UP TO 31.3.95. THE ABOVE RETURN OF INCOME IS TREATED AS BELATED AND INVALID. COMPUTATION OF INCOME SHOWS LONG TERM CAPITAL GAINS OF ` 24,96,664.60 WHICH WAS ADJUSTED AGAINST SHORT TERM LOSS OF ` 19,06,300 AND LONG TERM LOSS OF ` 5,90,364. THIS REQUIRES DEEP SCRUTINY. NOTICE U/S 148 ISSUED . ON THE BASIS OF THE ABOVE, NOTICE UNDER SECTION 148 WAS ISSUED AND ULTIMATELY AN ASSESSMENT ORDER WAS PASSED DETERMINI NG THE TOTAL INCOME AT ` 18,63,405/-. 3. THE CONTENTION OF THE LEARNED REPRESENTATIVE FOR THE ASSESSEE BEFORE US, IN RELATION TO THE ADDITIONAL G ROUNDS, IS FIRSTLY THAT THE ORDER SHEET ENTRY DATED 03.09.1996 CANNOT BE CONSIDERED AS REASONS RECORDED FOR REOPENING THE ASSESSMENT UN DER SECTION 148(2) AND SECONDLY THAT EVEN IF THEY ARE CONSIDERE D AS REASONS RECORDED UNDER THE ABOVE STATUTORY PROVISION, THEY DO NOT COMPLY WITH THE STATUTORY PROVISIONS AND DO NOT INDICATE T HE MATERIALS ON WHICH THE ASSESSING OFFICER HELD THE REASON TO BELI EVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. ACCORDIN G TO HIM, THE ORDER SHEET ENTRY MERELY DISCLOSES THAT THE ASSESSI NG OFFICER WANTED TO EMBARK UPON A DEEP SCRUTINY OF THE RETURN AND NOTHING ELSE. HE CONTENDED THAT WHEN THE REASONS RECORDED HAVE NOT MADE OUT A CASE FOR REASON TO BELIEVE THAT INCOME H AS ESCAPED ITA NO: 1791/MUM/1999 4 ASSESSMENT BUT ONLY SHOW THAT THE RETURN NEEDS FURT HER SCRUTINY, THE REASSESSMENT PROCEEDINGS ARE WITHOUT JURISDICTION A ND INVALID. IN SUPPORT OF THESE SUBMISSIONS HE RELIED ON SEVERAL A UTHORITIES TO WHICH WE WILL REFER TO BRIEFLY LATER. 4. IN OUR OPINION, THE CONTENTION THAT THE ORDER SH EET ENTRY CANNOT BE CONSIDERED AS REASONS RECORDED FOR REOPEN ING THE ASSESSMENT IN ACCORDANCE WITH SECTION 148(2) CANNOT BE ACCEPTED. THE ABOVE SUB-SECTION REQUIRES THE ASSESSING OFFICE R TO RECORD HIS REASONS BEFORE HE ISSUES NOTICE TO REOPEN THE ASSES SMENT. THERE IS NO STATUTORY FORM IN WHICH SUCH REASONS HAVE TO BE RECORDED. THE MINIMUM REQUIREMENTS ARE THAT THE JURISDICTIONA L FACTS SHOULD BE RECORDED BRIEFLY FROM WHICH IT SHOULD BE POSSIBL E TO JUDGE WHETHER THE REQUIREMENTS OF SECTION 147 HAVE BEEN S ATISFIED OR NOT. THE ORDER SHEET ENTRY MADE ON 03.09.1996, WHICH WE HAVE REPRODUCED ABOVE, SATISFIES THESE MINIMUM REQUIREME NTS AND, THEREFORE, THEY ARE REASONS RECORDED WITHIN THE MEA NING OF SECTION 148(2) OF THE ACT. 5. THE NEXT CONTENTION IS THAT THEY DO NOT DISCLOSE THE NEXUS BETWEEN THE MATERIALS AVAILABLE BEFORE THE ASSESSIN G OFFICER AND THE CONCLUSION THAT INCOME CHARGEABLE TO TAX HAS ES CAPED ASSESSMENT. IT IS ALSO CONTENDED THAT THE ONLY DES IRE OF THE ASSESSING OFFICER WAS THAT THE RETURN FILED BY THE ASSESSEE ON 31.03.1996 NEEDED TO BE SCRUTINIZED DEEPLY. IT IS CONTENDED THAT THIS CANNOT CONSTITUTE A VALID REASON FOR REOPENING THE ASSESSMENT. 6. IN OUR OPINION, THESE CONTENTIONS ARE ALSO NOT A CCEPTABLE. THE ASSESSING OFFICER HAS CLEARLY STATED IN THE ORD ER SHEET ENTRY ITA NO: 1791/MUM/1999 5 THAT THE RETURN FILED BY THE ASSESSEE ON 31.03.1996 IS TREATED AS BELATED AND INVALID. THE LAST DAY FOR FILING THE B ELATED RETURN UNDER SECTION 139(4) IS 31.03.1995. THE ASSESSEE HAS NO RIGHT OR LOCUS STANDI TO FILE ANY RETURN OF INCOME AFTER THE SAID DATE. THIS POSITION IS NOT DISPUTED BY THE ASSESSEE, WHO HAS FAIRLY STA TED BEFORE US THAT THE RETURN FILED ON 31.03.1996 IS NON EST IN LAW. THE EXPLANATION 2 BELOW SECTION 147 OF THE ACT ENUMERATES CASES WHICH SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARGEABLE TO TAX H AS ESCAPED ASSESSMENT. CLAUSE (A) OF THE EXPLANATION SAYS THA T WHERE NO RETURN OF INCOME HAS BEEN FILED BY THE ASSESSEE ALT HOUGH HIS INCOME IS ABOVE THE MINIMUM THAT IS EXEMPT FROM TAX , IT WILL BE TREATED AS A CASE OF ESCAPEMENT OF INCOME. IN THE PRESENT CASE THIS EXPLANATION APPLIES FULLY AS HAS BEEN HELD BY THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF RAJASTHAN STATE HAND LOOM DEVELOPMENT CORPORATION VS. DCIT (1998) 64 ITD 356 (JP). THE FACTS IN THE JAIPUR CASE ARE SIMILAR. IT WAS HELD THAT WHERE AN ASSESSEE FILES THE RETURN BEYOND THE TIME PRESCRIBE D UNDER SECTION 139(4), IT IS A CASE OF NO RETURN AND THE ASSESSI NG OFFICER CAN ISSUE NOTICE UNDER SECTION 148 OF THE ACT BY INVOKI NG CLAUSE (A) OF EXPLANATION 2 TO SECTION 147 ON THE GROUND THAT INC OME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 7. THE CONTENTION OF THE ASSESSEE, HOWEVER, IS THAT THE ASSESSING OFFICERS ONLY OBJECT WAS TO MAKE A DEEP SCRUTINY OF THE RETURN AND THAT HE HAS NOT PUT IT ON THE GROUND THA T THE ASSESSEE HAS FAILED TO FILE HIS RETURN OF INCOME WHICH HAS L ED TO ESCAPEMENT OF INCOME. WE HAVE TO READ THE ENTIRE ORDER SHEET ENTRY AS A WHOLE ITA NO: 1791/MUM/1999 6 WITHOUT TOO MUCH OF HAIR SPLITTING. THERE IS CLEAR REFERENCE IN THE ORDER SHEET ENTRY TO THE FACT THAT THE RETURN OF IN COME FILED ON 31.03.1996 IS BELATED AND, THEREFORE, INVALID. THI S IS A JURISDICTIONAL FACT AND THE MERE FAILURE TO FILE THE RETURN OF INC OME CONFERS JURISDICTION ON THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT. THERE IS NO DISPUTE, EVEN BY THE ASSESSEE, THAT THE RETURN FILED ON 31.03.1996 IS NON EST IN LAW. SINCE THE NECESSARY OR ESSENTIAL JURISDICTIONAL FACT HAS BEEN ADVERTED TO BY THE ASS ESSING OFFICER IN THE REASONS RECORDED, THE NOTICE TO REOPEN THE ASSE SSMENT IS REFERABLE TO THE SAME AND IT CANNOT BE INVALIDATED MERELY BECAUSE THE ASSESSING OFFICER ALSO MADE A MENTION THAT THE RETURN REQUIRED DEEP SCRUTINY. WE ARE ACCORDINGLY OF THE OPINION T HAT THE NOTICE ISSUED UNDER SECTION 148 ON THE BASIS OF THE REASON S RECORDED ON 03.09.1996 IS A VALID NOTICE. 8. WE MAY NOW REFER TO THE AUTHORITIES CITED BY THE ASSESSEE BRIEFLY. THE JUDGMENT OF THE HONBLE BOMBAY HIGH C OURT IN THE CASE OF HARGOVINDSING NARAINSING (1973) 90 ITR 435 (BOM), IS A CASE ARISING UNDER THE 1922 ACT. HOWEVER, SECTION 147, EXPLANATION 2(A) CLEARLY STATES THAT IF NO RETURN W AS FILED BY THE ASSESSEE, IT IS A CASE OF INCOME ESCAPING ASSESSMEN T. IN VIEW OF THE STATUTORY PROVISION UNDER THE 1961 ACT, THE JUD GMENT WHICH WAS RENDERED UNDER THE DIFFERENT PROVISIONS OF THE 1922 ACT IS NOT APPLICABLE. IN THE CASE OF NIRANJAN & CO. P. LTD. VS. CIT (1986) 159 ITR 153 (SC), THE ASSESSEE FILED A RETURN ON 29.11. 1962 FOR THE ASSESSMENT YEAR 1962-63 AND THEREAFTER A REVISED RE TURN WAS FILED ON 03.12.1963 BEFORE WHICH DATE THE ORIGINAL ASSESS MENT HAD BEEN ITA NO: 1791/MUM/1999 7 MADE ON 27.11.1963. THE ASSESSING OFFICER REOPENED THE ASSESSMENT ON THE BASIS OF THE RETURN FILED BY THE ASSESSEE ON 03.12.1963. THE ASSESSEE QUESTIONED THE JURISDICTI ON OF THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT, WHICH W AS DISMISSED BY THE HIGH COURT UNDER ARTICLE 226. THE ASSESSEE S FURTHER APPEAL TO THE SUPREME COURT WAS DISMISSED. THE SUPREME CO URT HELD THAT THERE WAS INFORMATION BEFORE THE ASSESSING OFFICER UNDER SECTION 147(B) OF THE ACT, AS IT STOOD BEFORE THE AMENDMENT MADE WITH EFFECT FROM 01.04.1989, IN THE FORM OF THE REVISED RETURN EVEN THOUGH SUCH REVISED RETURN WAS FILED AFTER THE COMP LETION OF THE ASSESSMENT, ON THE BASIS OF WHICH THE ASSESSMENT CA N BE VALIDLY REOPENED. IT IS NOT CLEAR TO US AS TO HOW THIS JUD GMENT CAN BE HELD TO BE IN FAVOUR OF THE ASSESSEE. THE CASE BEFORE U S IS AFTER THE AMENDMENT OF SECTION 147 WITH EFFECT FROM 01.04.198 9. AS ALREADY NOTICED, EXPLANATION 2(A) BELOW SECTION 147 IS CLEA R. 9. THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF CHHUGAMAL RAJPAL VS. S P CHALIHA AND OTHERS (1971) 79 ITR 603 (SC) AND THE CASE OF SHEO NATH SINGH VS. APPELLATE ASSISTANT COMMISSIONER OF INCOME TAX (1971) 82 ITR 147 (SC) A RE ON DIFFERENT FACTS. THEY ARE NOT CASES OF REOPENING T HE ASSESSMENT FOR FAILURE TO FURNISH THE RETURN OF INCOME. THE JUDGM ENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. BATRA BHATTA COMP ANY (2008) 174 TAXMAN 444 (DEL) WAS A SIMPLE CASE OF NOTICE BEING ISSUED ONLY TO CONDUCT A DEEPER SCRUTINY INTO THE RETURN FILED BY THE ASSESSEE, EVEN THOUGH AN ASSESSMENT HAD BEEN COMPLETED ON THE BASIS OF THE RETURN. IT IS NOT A CASE OF A FAILURE TO FILE THE RETURN OF INCOME BY ITA NO: 1791/MUM/1999 8 THE ASSESSEE. THE SAME IS THE CASE BEFORE THE DELH I HIGH COURT IN JAY BHARAT MARUTI LTD. VS. CIT (2010) 324 ITR 289 ( DEL). SIMILARLY, THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF CI T VS. MAX INDIA LTD. (2007) 295 ITR 282 (SC) AND THE JUDGMENTS OF T HE BOMBAY HIGH COURT IN PURITY TECHTEXTILE PRIVATE LIMITED VS . ACIT (2010) 325 ITR 459 (BOM) AND GERMAN REMEDIES LTD. VS. DCIT (20 06) 285 ITR 26 (BOM) ARE CASES WHERE THE NOTICE TO REOPEN T HE ASSESSMENT WAS ISSUED ON DIFFERENT GROUNDS AND NOT ON THE GROU ND OF FAILURE TO FILE THE RETURN OF INCOME. 10. REFERENCE WAS MADE TO THE JUDGMENT OF THE SUPRE ME COURT IN THE CASE OF MOHINDER SINGH GILL [AIR 1978 (SC) 8 51], IN WHICH IT WAS HELD THAT WHERE AN ORDER HAS BEEN PASSED ON CER TAIN REASONS, FURTHER REASONS CANNOT BE ADDED AND THE REASONS FOR THE ORDER CANNOT BE SOUGHT TO BE IMPROVED IN THE AFFIDAVIT FI LED BEFORE THE COURT ON BEHALF OF THE AUTHORITY PASSING THE ORDER. THIS PRINCIPLE DOES NOT APPLY TO THE PRESENT CASE WHERE EVEN IN TH E REASONS RECORDED THERE IS REFERENCE TO THE JURISDICTIONAL F ACT, NAMELY, THAT THE ASSESSEE FAILED TO FURNISH A VALID RETURN OF IN COME. THE ORDER OF THE MUMBAI BENCH OF THE TRIBUNAL IN ACIT VS. HOMY N J DADY (2010) 41 SOT 239 (MUM) IS A CASE WHERE AN ASSESSME NT WAS MADE WITHOUT COMPLYING WITH THE MANDATORY CONDITION S. THERE IS NO OMISSION IN THE PRESENT CASE TO COMPLY WITH THE MAN DATORY CONDITIONS OF SECTIONS 147 AND 148. THUS, NONE OF THE AUTHORITIES CITED ON BEHALF OF THE ASSESSEE ASSIST HIM. 11. ANOTHER ARGUMENT ADVANCED ON BEHALF OF THE ASSE SSEE AT THE REPLY STAGE WAS THAT A DEEPER SCRUTINY INTO THE RET URN CAN ONLY BE ITA NO: 1791/MUM/1999 9 CONDUCTED BY THE INVESTIGATION WING OF THE INCOME T AX DEPARTMENT AND NOT BY THE ASSESSING OFFICER. THIS IS NOT RELE VANT TO THE CASE BEFORE US SINCE IN OUR OPINION THE NOTICE OF REASSE SSMENT HAS BEEN ISSUED IN THE PRESENT CASE ONLY BECAUSE THE ASSESSE E DID NOT FILE ANY VALID RETURN OF INCOME. AS ALREADY NOTED, THE RETURN FILED BY THE ASSESSEE ON 31.03.1996 IS NON EST IN LAW, EVEN ACCO RDING TO THE ASSESSEE. 12. FOR THE ABOVE REASONS WE SEE NO MERIT IN THE AD DITIONAL GROUNDS FILED BY THE ASSESSEE, WHICH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JANUARY 2011. SD/- SD/- (P M JAGTAP) (R V EASWAR) ACCOUNTANT MEMBER PRESIDENT MUMBAI, DATED 19 TH JANUARY 2011 SALDANHA COPY TO: 1. SHRI SANJAYKUMAR B AGRAWAL 11/83, OM DARIYA MAHAL 80, NEPEANSEA ROAD, MUMBAI 400 007 2. ITO, WARD 17(11) 3. CIT- 4. CIT(A)-XXIII 5. DR F BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI