Shri Mahendrakumar K.Patel, Dist.Baroda V. The Income tax Officer,Ward-2(2), Baroda

ITA 1954/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0278 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-08-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 09-05-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIR K DHANESTA
• Assessee Lawyers: ANIL R SHAH
• Keywords: Reopening of assessment; Business income; Reason to believe
• Section: 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH A AA A BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI BHAVNESH BHAVNESH BHAVNESH BHAVNESH SAINI SAINI SAINI SAINI, , , , JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER AND AND AND AND SHRI SHRI SHRI SHRI N.S.SAINI N.S.SAINI N.S.SAINI N.S.SAINI, , , , ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER DATE OF HEARING :12-8-2010 DRAFTED ON:12-8-201 0 ITA NO. 1954 /AHD/ 2007 ASSESSMENT YEAR :2002-03 SHRI M AHENDRAKUMAR K. PATEL, PROP. ARIHANT OFFSET, B/H THAKKAR SHOPPING CENTRE,AT & P.O.BAJWA, DIST. BARODA. VS. INCOME TAX OFFICER, WARD 2(2), AAYAKAR BHAVAN, NEAR RACE COURSE CIRCLE, BARODA. PAN/GIR NO. : ACQPP 9072 K (A PPELLANT ) .. ( RESPONDENT ) APP ELLANT BY : SHRI ANIL R.SHAH. RESPONDENT BY: SHRIR.K.DHANESTA, D.R. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II , BARODA DATED 2-7-2007. 2. GROUND NO. I OF THE APPEAL READ AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND IN FACT UPHOLDING THE ASSESSME NT REOPENED UNDER SECTION 147 OF THE ACT. 2. ION ABSENCE OF RECORDING REASONS FOR REOPENING INITIATING ASSESSMENT PROCEEDINGS UNDER SECTION148 DESPITE FILING RETURN OF INCOME AND ASSESSMENT NOT BEING CO MPLETED THEREON IS BAD IN LAW AND VOID. 3. YOUR APPELLANT SUBMITS THAT SINCE THERE IS NO ESCAPEMENT OF INCOME AND NO ASSESSMENT ORDER IS PAS SED IN RESPONSE TO FILING RETURN OF INCOME UNDER SECTION 1 39 OF THE - 2 - ACT, THE REOPENING OF THE ASSESSMENT UNDER SECTION 147 IS BAD IN LAW AND VOID. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE IMPUGNED ORDER WAS PASSED UNDER SECTION 147 ON 28-02 2005. THE ASS ESSEE HAS CHALLENGED THE VALIDITY OF ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. WE FIND FROM PAGE 3 OF THE PAPER BOOK FILE D BY THE ASSESSEE THAT THE LEARNED ASSESSING OFFICER HAS REC ORDED THE FOLLOWING REASONS FOR REOPENING OF ASSESSMENT ON 21 -10-2003 :- IN THIS CASE, THE RETURN OF INCOME IS FILED ON 9- 8-2002 DECLARING TOTAL INCOME AT `.2, 17,074/-. ON VERIFIC ATION OF THE RETURN OF INCOME, IT IS SEEN THAT THE ASSESSEE HAS CLAIMED NET LOSS UNDER THE HEAD BUSINESS INCOME OF `.4, 39,30 0/- BY SHOWING SALES OF `.32, 000/- ONLY. THE ASSESSEE HAS ALSO SHOWN GROSS LOSS OF `.81, 945/- IN THE PROFIT AND L OSS ACCOUNT, WHICH IS VERY UNLIKELY. AT THE SAME TIME, THE ASSES SEE HAS PAID ADVANCE TAX OF `.1, 76,000/- AND HAS CLAIMED T HE WHOLE ADVANCE TAX AS REFUND. THE ASSESSEE HAS ALSO SHOWN SHORT- TERM CAPITAL GAIN OF `.5, 51,000/- ON ACCOUNT OF SE TTLEMENT OF ACCOUNTS. IT IS NOT CLEAR AS TO WHAT THE ASSESSEE M EANS BY THE WORD SETTLEMENT ACCOUNTS. THERE IS NO SUCH AS SET DEFINED IN THE CAPITAL ACCOUNT CHAPTER. HOW THE COS T OF ACQUISITION HAS BEEN TAKEN AND HOW IT HAS BEEN REAL IZED, IS ALSO NOT CLEAR. INDIRECT AND DIRECT EXPENSES CLAIMED BY THE ASSESSE E, APPEARS TO BE NOT GENUINE, AS THE SALES OF `.32, 00 0/- ITSELF APPEARS TO BE DOUBTFUL. THEREFORE, I HAVE REASON TO BELIEVE THE INCOME HAS ESCAPED ASSESSMENT. ISSUE NOTICE UNDER SECTION 148 OF THE I.T. ACT. 4. THE ABOVE WAS THE REASON RECORDED BY THE LEARNE D ASSESSING OFFICER FOR REOPENING OF THE ASSESSMENT I S NOT CHALLENGED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. A BEAR PERUSAL OF THE ABOVE RECORDING MADE UNDER SECTION 148(2) SHOWS THA T THE LEARNED ASSESSING OFFICER ENTERTAINED A DOUBT ABOUT THE AUTHENTICITY OF VARIOUS PARTICULARS OF INCOME FURNI SHED BY THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME. - 3 - 5. THUS THE ASSESSMENT WAS REOPENED TO VERIFY THE P ARTICULARS WHICH WERE FURNISHED BY THE ASSESSEE IN THE ORIGINA L RETURN OF INCOME. IN THE RECORDED REASONS NO MATERIAL OR INF ORMATION WHICH CAME IN THE POSSESSION OF THE LEARNED ASSESSING OFF ICER AND ON THE BASIS OF WHICH A PERSON CAN HAVE A REASONABLE BELIE F THAT ANY INCOME HAS ESCAPED ASSESSMENT HAVE BEEN BROUGHT ON RECORD. 6. IT IS AN ESTABLISHED POSITION OF LAW THAT SECTIO N 147 IS NOT A SUBSTITUTE FOR SECTION 143(2) OF THE ACT. OUR ABOV E VIEW FINDS SUPPORT FROM THE DECISION OF THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF VIPAN KHANNA VS. C.I.T. (2002) 255 ITR 220 (P & H). 7. FURTHER, IT IS ALSO AN ESTABLISHED POSITION OF L AW THAT PROVISIONS OF SECTION 147 CAN BE INVOKED ONLY WHEN THE LEARNED ASSESSING OFFICER HAS REASONS TO BELIEVE AND THAT R EASON TO BELIEVE IS STRONGER THAN REASON TO SUSPECT. THE APEX COURT IN ITO & ORS. VS. LAKHMANI MEWAL DAS (1976) 103 ITR 437 (SC) HAS HELD THAT THE POWERS OF THE INCOME TAX OFFICER TO REOPEN ASSESSME NT, THOUGH WIDE, ARE NOT PLENARY. THE WORDS OF THE STATUTE ARE REASON TO BELIEVE AND NOT REASON TO SUSPECT. BELIEF IND ICATES SOMETHING CONCRETE OR RELIABLE. THE BELIEF SHOULD NOT BE A PR ODUCT OF IMAGINATION OR SPECULATION. THE REOPENING SHOULD NO T BE FOR MERE INVESTIGATION OR FINDING OUT PROBABILITY OF ESCAPED INCOME. IN VIEW OF THE ABOVE, IN OUR CONSIDERED OPINION IN THE INST ANT CASE ASSESSMENT WAS REOPENED TO FIND OUT PROBABILITY OF ESCAPED INCOME WHICH IS NOT PERMISSIBLE IN LAW. THEREFORE T HE REOPENING OF ASSESSMENT WAS BAD IN LAW. WE THEREFORE, CANCEL THE IMPUGNED ORDER OF RE-ASSESSMENT. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN VIEW OUR ABOVE DECISION THE OTHER GROUNDS OF APPEAL TAKEN BY THE ASSESSEE HAVE BECOME INFRUCTUOUS AND MERE AC ADEMIC IN NATURE. WE THEREFORE, REFRAIN FROM ADJUDICATING TH E SAME. - 4 - 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 13 TH DAY OF AUGUST, 2010. SD/- SD/- (BHAVNESH SAINI) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; ON THIS 13 TH DAY OF AUGUST, 2010 PATKI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-II, BARODA. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 12-8-2010 ----------- -------- 2. DRAFT PLACED BEFORE AUTHORITY 12-8-2010 -- ----------------- 3. DRAFT PROPOSED & PLACED 12-8-2010 -------- ----------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 12-8-2010 ----- -------------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 13-8-2010 -- ------------------ 6. KEPT FOR PRONOUNCEMENT ON 13-8-2010 --- ----------------- 7. FILE SENT TO THE BENCH CLERK 13-8-2010 -------------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- ---------------------