Shri Bhagwandas Navalnath Rai, Valsad V. The Income Tax Officer, Ward-1, Valsad

ITA 1863/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2193 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 14-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL DHAKA
• Assessee Lawyers: RAJESH UP A DHYAY ITP
• Keywords: Reason to believe; Reassessment proceedings
• Section: 147; 69; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NO.1863/AHD/2016/SRT / ASSESSMENT YEAR: 2007-08 SHRI VISHAL DILIP RAI L/H OF LATE BHAGWANDAS NAVALNATH RAI, RAI NIWAS, 1 ST GATE, ATUL 396 0320. DIST.. VALSAD. [PAN: ADAPR 4350D] VS. INCOME TAX OFFICER, WARD-1, VALSAD. ( ' / APPELLANT) ( #$' /RESPONDENT) / ASSESSEE BY : SHRI RAJESH UPADHYAY, ITP /REVENUE BY : SHRI ANIL DHAKA, SR. D.R /DATE OF HEARING : 18-09-2018 / DATE OF PRONOUNCEMENT : 26-09-2018 / ORDER PER C.M.GARG, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), VALSAD (CIT( A) FOR SHORT) DATED 13.05.2016 FOR THE ASSESSMENT YEAR (A.Y) 2007-08. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS FOLLO WS: 1. LD. CIT(A), VALSAD HAS ERRED IN LAW AND ON FACTS TO UPHELD THE ACTION OF THE AO TO REOPEN ASSESSMENT FOR AY 2007-0 8 WITHOUT THERE BEING ANY REASON TO BELIEVE FOR ESCAPEMENT OF INCOME AS REQUIRE UNDER THE LAW. 2 ITA NO.1863/AHD/2016/SRT (A.Y: 2007-08) SHRI VISHAL DILIP RAI L/H OF LATE BHAGWANDAS NAVALN ATH RAI 2. LD. CIT(A), VALSAD HAS ERRED IN LAW AND ON FACTS TO DISMISS APPELLANTS GROUND OF SERVICE OF NOTICE U/S. 148 UP ON THE APPELLANT ON IRRELEVANT GROUND. 3. LD. CIT(A), VALSAD HAS ERRED IN LAW AND ON FACTS TO UPHELD AOS ADDITION FO RS. 7.00 LACS ON ACCOUNT OF INVESTMENT IN SBI M.F. IGNORING THE FACT THAT THE APPELLANT HAS ALREADY RE FLECTED THE SAID INVESTMENT IN HIS BOOKS OF ACCOUNTS AS SUCH PROVISI ON OF SECTION 69 HAS NO APPLICATION. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE T RIBUNAL. THE LD. ASSESSEES REPRESENTATIVE (AR) SUBMITTED THAT FROM THE COPY OF THE REASONS, IT IS CLEAR THAT THE MAIN ALLEGATION OF TH E AO IS THAT THE ASSESSEE HAS NOT FILED RETURN OF INCOME FOR FY 2006-07 PERTA INING TO AY 2007-08 AND THE INVESTMENT/TRANSACTIONS REMAIN UNEXPLAINED. THE LD. AR VEHEMENTLY POINTED OUT THAT THE ASSESSEE WAS HAVING PAN NUMBER AND HE FILED RETURN OF INCOME FOR AY 2007-08 ON 27.03.2 008 COPY OF WHICH HAS BEEN PLACED AT PAGE 32 OF THE ASSESSEES PAPER BOOK . THE LD. AR SUBMITTED THAT AS PER DECISION OF HON'BLE GUJARAT HIGH COURT DATED 19.02.2018 IN SCA NO.16726/2017 IN THE CASE OF SUNR ISE EDUCATION TRUST VS. ITO, WHEREIN IT WAS HELD THAT WHEN THE AO IN TH E REASONS RECORDED, PROCEEDED ON THE ERRONEOUS FOOTING THAT THE ASSESSE E HAS NOT FILED RETURN AT ALL AND WHEN IT IS NOT IN DISPUTE THAT THE ASSES SEE DID FILE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WHICH WAS D ULY ACKNOWLEDGED BY THE DEPT. THEN, IT HAS TO BE HELD THAT THE ENTIRE R EASONING THUS PROCEEDED ON THE WRONG PREMISE THAT THE ASSESSEE HAD NEVER FI LED THE RETURN. THIS ITSELF WOULD BE SUFFICIENT TO ANNUL THE NOTICE OF R EOPENING THE ASSESSMENT. 3 ITA NO.1863/AHD/2016/SRT (A.Y: 2007-08) SHRI VISHAL DILIP RAI L/H OF LATE BHAGWANDAS NAVALN ATH RAI 4. REPLYING TO THE ABOVE, THE LD. DEPARTMENTAL REPR ESENTATIVE (DR) SUBMITTED THAT THERE WAS AIR INFORMATION IN THE HAN DS OF AO, WHICH REVEALED THAT THE ASSESSEE MADE INVESTMENTS IN PURC HASE OF MUTUAL FUND AND ALSO MADE SALES/PURCHASE OF SHARES THEREFORE, A O WAS RIGHT IN INITIATING REASSESSMENT PROCEEDINGS U/S. 147 OF THE ACT AND ISSUING NOTICE U/S. 148 OF THE ACT. HOWEVER, THE LD. DR COULD NOT CONTROVERT THE FACT THAT THE ASSESSEE DID FILE RETURN OF INCOME FOR AY 2007- 08 ON 27.03.2008 DECLARING TAX PAYABLE AS RS. 33,770/- WHICH WAS ACK NOWLEDGED BY THE DEPT. 5. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, WE ARE OF THE VIEW THAT THE AO PROCEEDED TO INITIATE REASSESSMENT PROCEEDING ON THE MAIN PREMISE AND ALLEGATION AND THAT THE ASSESSEE H AS NOT FILED RETURN OF INCOME FOR AY 2007-08, BUT FROM THE COPY OF RETURN AND IN ABSENCE OF ANY OTHER ADVERSE MATERIAL OR EVIDENCE, WE ARE SATISFIE D THAT THE ASSESSEE FILED RETURN OF INCOME FOR AY 2007-08 AND THE AO PR OCEEDED TO INITIATE REASSESSMENT PROCEEDING ON THE WRONG PREMISE THAT T HE ASSESSEE HAD NEVER FILED RETURN OF INCOME FOR THE RELEVANT PERIO D. THUS, RESPECTFULLY FOLLOWING RATIO OF THE DECISION OF HONBLE JURISDIC TIONAL HIGH COURT IN THE CASE OF SUNRISE EDUCATION TRUST (SUPRA), WE HOLD THAT THE ENTIRE REASONING RECORDED BY THE AO FOR INITIATION OF REASSESSMENT P ROCEEDINGS AND ISSUANCE OF NOTICE U/S. 148 OF THE ACT WAS ON THE W RONG PREMISE THAT THE ASSESSEE HAD NEVER FILED THE RETURN AND IN FACT, IT WAS FILED. THEREFORE, WE 4 ITA NO.1863/AHD/2016/SRT (A.Y: 2007-08) SHRI VISHAL DILIP RAI L/H OF LATE BHAGWANDAS NAVALN ATH RAI ARE INCLINED TO HOLD THAT THE INITIATION OF REASSES SMENT PROCEEDINGS U/S. 147 OF THE ACT AND NOTICE U/S. 148 OF THE ACT AND A LL SUBSEQUENT PROCEEDINGS AND ORDERS HAVE BEEN ISSUED, CONDUCTED AND PASSED WITHOUT HAVING VALID JURISDICTION THEREFORE, THE SAME ARE B AD IN LAW AND HENCE, WE QUASH THE SAME. ACCORDINGLY, LEGAL GROUNDS NO.1 & 2 OF THE ASSESSEE ARE ALLOWED AND NOTICE U/S. 148 OF THE ACT AND ENTI RE PROCEEDINGS AND ORDERS IN PURSUANT THERETO, INCLUDING IMPUGNED REAS SESSMENT AND FIRST APPELLATE ORDER ARE QUASHED. 6. SINCE, WE HAVE QUASHED INITIATION OF REASSESSMEN T PROCEEDINGS, NOTICE AND ALL SUBSEQUENT PROCEEDINGS AND ORDERS TH EREFORE, GROUND OF ASSESSEE ON MERITS BECOMES INFRUCTUOUS AND WE ARE N OT ADJUDICATING THE SAME AS HAVING BECOME INFRUCTUOUS. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED ON LEGAL GROUND. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 6 TH SEPTEMBER, 2018. / SURAT ; DATED : 26 TH SEPTEMBER, 2018 / EDN # & / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT ; 3. $ ( ) / THE CONCERNED CIT(A); 4. THE CONCERNED PRL. CIT; 5. , , / DR, ITAT, SURAT; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // * / ASSISTANT REGISTRAR , / ITAT, SURAT SD/- SD/- ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) /JUDICIAL MEMBER