Biography Investments Pvt. Ltd., Ahmedabad V. The Income Tax Officer, Ward-1(2), Ahmedabad

ITA 1847/AHD/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5695 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 12-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GYAN PIPARA
• Keywords: Reopening of assessment; Unexplained investment; Principle of natural justice; Additional evidence; Tangible material; Difference of opinion; Change of opinion
• Section: 143(3); 133(6); 143(1); 69

Judgement Text

ITA NO.1847/AHD/2016 ASSESSMENT YEAR: 2005-06 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO.1847/AHD/2016 ASSESSMENT YEAR: 2005-06 BIOGRAPHY INVESTMENTS PVT. LTD., VS. INCOME TAX OFF ICER, 9 TH FLOOR, B.D. PATEL HOUSE, WARD 1(2) (NOW WARD 1 (1)(2), NARANPURA, AHMEDABAD. AHMEDABAD 380 013. [PAN AABCB 6854 F] (APPELLANT) (RESPONDENT) APPELLANT BY : GYAN PIPARA, A.R. RESPONDENT BY : S.K. DEV, SR. D.R. DATE OF HEARING : 15.11.2018 DATE OF PRONOUNCEMENT : 30.11.2018 O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE APPE LLANT AGAINST ORDER OF LD. CIT(A) DATED 29.03.2016 FOR THE ASSESSMENT YEAR 200 5-06. 2. THE APPELLANT HAS TAKEN FOLLOWING GROUNDS OF APP EAL :- 1. THE ID. CIT(A) HAS ERRED IN LAW IN CONFIRMING T HE VALIDITY OF NOTICE U/S.148 OF THE ACT AND THE PURSUANT REASSESSMENT PROCEEDING S WITHOUT PROPER CONSIDERATION AND APPRECIATION OF THE FACTS OF THE CASE VIS-A-VIS LEGAL POSITION. SINCE THE NOTICE U/S.148 OF THE ACT, PRIMA FACIE, A PPEARS TO HAVE BEEN ISSUED ON MERE CHANGE OF OPINION AND VERIFICATION OF DETAI LS ALREADY AVAILABLE ON RECORD AS ADMITTED BY THE AO HIMSELF IN THE REASONS RECORDED, THE IMPUGNED REASSESSMENT ORDER REQUIRES TO BE QUASHED AS VOID-A B-INITIO AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. 320 ITR 561 (SC) AND HON'BLE GUJARAT HIGH COURT IN THE CASE OF MIHIR TEXTILES LTD. VS. JT. CIT (2010) TAX LR 417 (GUI.) APART FRO M HOST OF OTHER DECISIONS. 1. THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS WHI LE FAILING TO APPRECIATE THAT THE ASSESSMENTS, BOTH U/S. 143(1) OR 143(3) CA NNOT BE REOPENED WITHOUT THERE BEING ANY 'TANGIBLE MATERIAL' AVAILABLE OR BR OUGHT ON RECORD TO JUSTIFY REOPENING. IN THE INSTANT CASE AS EVIDENT FROM THE REASONS RECORDED, SINCE NO TANGIBLE MATERIAL HAVING BEEN BROUGHT ON RECORD EXC EPT MERE REVIEW OR VERIFICATION OF THE SAME MATERIAL AVAILABLE ON RECO RD, THE REOPENING OF ASSESSMENT IS BAD IN LAW AND THUS REQUIRES TO BE QU ASHED AS VOID-AB-INITIO. ITA NO.1847/AHD/2016 ASSESSMENT YEAR: 2005-06 PAGE 2 OF 4 2. THE ID. CIT(A) HAS FURTHER ERRED IN NOT ADJUDICA TING THE GROUND OF APPEAL CONTENDING THAT THE ID. AO HAD ERRED IN NOT PASSING A SPEAKING ORDER AGAINST THE OBJECTIONS RAISED BEFORE HIM BY THE APPELLANT C HALLENGING THE VALIDITY OF NOTICE U/S.148 OF THE ACT BEFORE PROCEEDING WITH TH E REASSESSMENT AS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFT INDIA LTD. VS. ITO 259 ITR 19 (SC) FAILING WHICH THE ASSESSMENT COULD NOT BE SUSTAINED AS HELD BY THE JURISDICTIONAL HIGH COURT I.E. HON'BLE GUJARAT HIGH COURT IN THE CASE OF MGM EXPORTS VS. DY. CIT (2010) 323 ITR 331 (GUI.L 3. THE ID. CIT(A) HAS ERRED IN NOT ADJUDICATING AND /OR GIVING FINDINGS ON THE GROUND OF APPEAL CONTENDING THAT THE AO HAD ERRED I N NOT FURNISHING THE COPY OF ENTIRE MATERIAL GATHERED AS A RESULT OF ENQUIRIES C ONDUCTED U/S. 133(6) OF THE ACT AND IN NOT GRANTING AN OPPORTUNITY OF CROSS-EXA MINATION OF THE PERSONS/ENTITIES FROM WHOM THE ENQUIRIES WERE GATHE RED AND USED FOR DRAWING ADVERSE INFERENCE IN CASE OF THE APPELLANT. THE ASS ESSMENT ORDER THUS HAVING BEEN PASSED IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND EQUITY OUGHT TO HAVE BEEN QUASHED AS INVALID AND VOID-AB-I NITIO. 4. THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.50,00,000/- MADE BY THE AO U/S.69 OF THE ACT ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN SHARES OF INFOCITY CLUB & RESORTS PVT. LTD. WITHOUT APPRECIATING THE FACT THAT THE AO HAD CATEGORICALLY ACCEPTED THE FACTUM OF INVESTMENT IN THE SAID SHARES. IN VIEW OF ELABORAT E FACTS, SUBMISSIONS AND EVIDENCES FILED COUPLED WITH LEGAL POSITION, THE IM PUGNED ADDITION OF RS. 50,00,000/- REQUIRES TO BE DELETED. 3. FACTS OF THE CASE ARE THAT THE APPELLANTS CASE WAS REOPENED ON THE INFORMATION OF THE ACIT, CIRCLE GANDHINAGAR FOR AN UNACCOUNTED INVESTMENT OF RS.50 LAKHS IN THE SHARE OF COMPANY INFOCITY CLUB AND RESORTS PVT. LTD . HOWEVER, ON VERIFICATION OF AUDITED ACCOUNT FOR ASSESSMENT YEAR 2004-05, THE AS SESSEE COMPANY HAS NOT SHOWN THE SAID INVESTMENT OF R.50 LAKHS IN THE BALANCE SH EET. THEREFORE, ASSESSEE WAS ISSUED A SHOW CAUSE NOTICE TO THIS EFFECT. THE ASS ESSEE REPLIED BUT THE SAME WAS NOT SATISFACTORY TO THE ASSESSING OFFICER AND COPIES OF STATEMENT RECEIVED FROM THE ACIT GANDHINAGAR WAS SOUGHT BY THE ASSESSEE FROM THE ASS ESSING OFFICER BUT THE SAME WAS NOT GIVEN TO THE ASSESSEE AND ADDITION OF RS.50 LAKHS WAS MADE UNDER SECTION 69 OF THE INCOME TAX ACT, 1961. THEREAFTER, ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A) ASSES SEE FILED ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES AND IN THE REMAND REPORT COPY OF THE STATEMENT WAS SUPPLIED BY THE ASSESSING OFFICER TO THE LEARNE D CIT(A) AND THEREAFTER THE CIT(A) SUPPLIED THE COPY OF THE REASON FOR REOPENING TO TH E ASSESSEE. BEFORE THE LD. CIT(A) IN SUPPORT OF ITS CONTENTION ASSESSEE SUBMITTED DET AILS OF THE CHEQUE PAYMENT FOR PURCHASING OF SHARES WORTH RS.50 LAKHS AND IN ORDER TO PURCHASE SHARES THE ASSESSEE ITA NO.1847/AHD/2016 ASSESSMENT YEAR: 2005-06 PAGE 3 OF 4 COMPANY TOOK LOANS FROM ONE SHYAM BUILDCON PVT. LTD . AND ANOTHER BALDEVBHAI DOSABHAI COTTON COMPANY. IN SUPPORT OF HIS CONTENT ION THE APPELLANT FILED COPIES OF CONFIRMATION BY THE ABOVE SAID PARTIES AND THEREAFT ER SHARES WERE SOLD TO M/S R. NATWARLAL & CO. FOR A.Y. 2004-05 AND COPY OF THE B ANK STATEMENT AND OTHER DOCUMENTS WERE ALSO SUBMITTED BEFORE THE LOWER AUTH ORITIES. COPY OF THE SHARE TRANSFER CERTIFICATE AS WELL AS COPY OF THE CONFIRM ATION AND COPY OF THE PANS OF M/S. R. NATWRLAL & CO. ALONG WITH BANK DETAILS WERE ALSO SU BMITTED WITH THE LOWER AUTHORITIES. BUT THE LOWER AUTHORITIES WERE NOT SATISFIED WITH T HE CONTENTION OF THE ASSESSEE. 4. WE HAVE GONE THROUGH THE RELEVANT RECORDS AND TH E IMPUGNED ORDER. AS WE CAN SEE WITH REGARD TO GROUND NO.1 & 2, THE ASSESSI NG OFFICER REOPENED THE ASSESSMENT WHICH WAS DONE UNDER SECTION 143(1) OF T HE ACT ON THE BASIS OF THE INFORMATION RECEIVED FROM THE ACIT, GANDHINAGAR FOR UNACCOUNTED DEALING OF SHARES WORTH RS.50 LAKHS. THEREFORE, IN OUR CONSIDERED OP INION, THE ASSESSING OFFICER WAS RIGHT IN REOPENING THE CASE. SO FAR AS THE REOPENI NG IS CONCERNED, DURING THE APPELLATE PROCEEDINGS, THE LEARNED CIT(A) SUPPLIED COPY OF THE SAME TO THE ASSESSEE THUS THE SAME BECOMES INFRUCTUOUS. SO FAR AS THE I NVESTMENT OF RS.50 LAKHS IS CONCERNED IN SUPPORT OF ITS CONTENTION THE ASSESSEE HAS GIVEN SOURCE OF THE LOAN OF RS.50 LAKHS INCLUDING COPIES OF BANK STATEMENT, CON FIRMATION OF THE PARTIES FROM WHOM THE SAID FUND WAS RECEIVED INCLUDING PAN, COPY OF T HE RETURN OF SUCH PARTIES AS PLACED ON PAGE NOS.31 TO 37 OF THE PAPER BOOK WHICH HAS DU LY EXPLAINED THE SOURCE OF IMPUGNED INVESTMENT AND SAME CANNOT BE CONSIDERED A S UNEXPLAINED. THE ASSESSEE HAS ALSO SUBMITTED COPIES OF THE SHARE DETAILS PURC HASED BY IT AND THEREAFTER ASSESSEE HAD ALSO GIVEN ALL DETAILS PERTAINING TO T RANSFER OF SHARES OF RS.50 LAKHS TO M/S. R. NATWRLAL & CO. AND FILED ALL THE RELEVANT D ETAILS SUCH AS BANK STATEMENT COPY OF PAN, SHARE TRANSFER CERTIFICATE AND THE SAME WAS DO NE WITHIN FINANCIAL YEAR 2004-05 AND WE ACCEPT THE CONTENTION OF THE ASSESSEE THAT S HARES WERE PURCHASED AND SOLD DURING THE FINANCIAL YEAR 2004-05. THEREFORE, THE SAME COULD NOT BE SHOWN IN THE BALANCE SHEET OF THE COMPANY. THUS, WE FIND MERIT I N THE GROUND RAISED BY THE APPELLANT AND DELETE THE ADDITION OF RS.50 LAKHS MA DE BY THE ASSESSING OFFICER UNDER SECTION 69 AND CONFIRMED BY THE LD. CIT(A) ON ACCOU NT OF ALLEGED UNEXPLAINED INVESTMENT IN SHARE OF INFOCITY CLUB AND RESORTS PV T. LTD. ITA NO.1847/AHD/2016 ASSESSMENT YEAR: 2005-06 PAGE 4 OF 4 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF NOVEMBER, 2018. SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, THE 30 TH DAY OF NOVEMBER, 2018 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER UE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD