Dnyaneshwar Jagannath Dhamne, Nashik V. Income-tax Officer,

ITA 202/PUN/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1597 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 29-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Reopening of assessment; Business expenditure; Audit objection; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 40A(3); 143(3); 148; 154

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 202 /PN/201 6 / ASSESSM ENT YEAR : 20 0 9 - 1 0 DNYANESHWAR JAGANNATH DHAMNE, FLAT NO.3 & 4, BLUE HILL SOCIETY, PIPELINE ROAD, ANANDWALLI, SATPUR, NASHIK 422007 . / APPELLANT PAN: A A MPD8571H VS. THE INCOME TAX OFFICER, WARD 1 ( 5 ), NASHIK . / RE SPONDENT / APPELLANT BY : WRITTEN SUBMISSION / RESPONDENT BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 2 9 . 0 6 .201 6 / DATE OF PRONOUNCEMENT: 08 . 0 7 .201 6 / ORDER PER SU SHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 1 , NASHIK , DATED 14 . 12 .20 1 5 RELATING TO ASSESSMENT YEAR 20 0 9 - 1 0 AGAINST ORDER PASSED UNDER SECTION 14 3(3) R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 202 /PN/20 1 6 DNYANESHWAR JAGANNATH DHAMNE 2 2 . TH E LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS WITH A REQUEST TO CONSIDER THE SAME FOR DECIDING THE ISSUE IN THE PRESENT APPEAL. I PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATI VE FOR THE REVENUE AND ALSO AFTER CONSIDERING WRITTEN SUBMISSIONS FILED BY THE ASSESSEE. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE ASSESSMENT MADE U/S.148 BY THE AO PLEASE BE QUASHED BEING WITHOUT JURISDICTION. 2. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE ASSESSMENT MADE U/S.148 BY THE AO PLEASE BE QUASHED AS THE PROCEEDINGS U/S.148 WERE INITIATED BY HIM MERELY DUE TO C HANGE IN OPINION. 3. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE AO IS NOT JUSTIFIED IN INITIATING THE PROCEEDINGS U/S.147 OF THE ACT ON THE BASIS OF AUDIT OBJECTION. 4. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE COMMISSIONER OF INCOME TAX, (APPEAL) - 1, NASHIK IS NOT JUSTIFIED IN COMMISSIONER OF INCOME TAX, (APPEAL) - 1, NASHIK IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF CASH PAYMENT OF RS.3,00,000/ - LEVIED BY THE AO BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE PRESEN T CASE, THE ASSESSEE WAS CARRYING ON THE BUSINESS OF REAL ESTATE. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 1,22,905/ - . THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY AND THE ORIGINAL ORDER OF ASSESSMENT WAS PASSED UNDER SECTION 143(3) OF THE ACT ON 19.12.2011 WITH ASSESSED INCOME AT RS.2,19,860/ - . THE ASSESSING OFFICER ON VERIFICATION OF RECORDS NOTED THAT THE ASSESSEE HAD PURCHASED THE LAND BEARING S.NO.47/1 ADMEASURING 74R OF MAUJE IGATPUR TAL. IGATPURI, DIST. NASHIK FROM SMT. MEENABEN BHARAT MEHTA, MUMBAI ON 12.09.2008 FOR TOTAL CONSIDERATION OF RS.48,50,000/ - . THE DETAILS OF PAYMENT ARE TABULATED UNDER PARA 3 OF THE ASSESSMENT ORDER, WHEREIN PAYMENTS TO THE EXTENT OF RS.45,50,000/ - HA D BEEN ITA NO. 202 /PN/20 1 6 DNYANESHWAR JAGANNATH DHAMNE 3 MADE BY WAY OF DEMAND DRAFT AND RS.3 LAKHS WAS PAID IN CASH ON 12.09.2008. AS PER THE ASSESSING OFFICER, THE ASSESSEE HAD CONTRAVENED THE PROVISIONS OF SECTION 40A(3) OF THE ACT, SINCE THE AGGREGATE CASH PAYMENTS MADE TO A PERSON IN A DAY EXCEE DED RS.20,000/ - . CONSEQUENTLY, THE ASSESSING OFFICER RECORDED REASONS FOR REOPENING THE ASSESSMENT AND ISSUED NOTICE UNDER SECTION 148 OF THE ACT. IN RESPONSE THERETO, THE ASSESSEE FILED REVIS ED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 1,55 ,927/ - . THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN AS TO WHY THE PAYMENTS INCURRED OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE SHOULD NOT BE DISALLOWED, IN VIEW OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE ASSESSEE EXPLAINED THAT THE SAID AMOUNT OF RS.3 LAKHS W AS MADE IN CASH ON THE DATE OF REGISTRATION OF SALE DEED BEFORE SUB - REGISTRAR OF IGATPURI AT THE REQUEST OF SELLER. THE CONFIRMATION OF SELLER IN THIS RESPECT WAS ALSO FILED. SINCE THE ASSESSEE WAS ENGAGED IN CARRYING ON THE BUSINESS OF TRADING IN PLOTS, THE ASSESSING OFFICER WAS OF THE VIEW THAT THIS CASH PAYMENT WAS NOT TO BE ALLOWED AS BUSINESS EXPENDITURE AND SUM OF RS.3 LAKHS PAYMENT WAS NOT TO BE ALLOWED AS BUSINESS EXPENDITURE AND SUM OF RS.3 LAKHS WAS ADDED AS INCOME OF THE ASSESSEE. 5. THE CIT(A) UPHELD THE REOPENING OF ASSESSMENT AND ALSO UPHELD THE ADDITION OF RS.3 LA KHS. 6. THE ASSESSEE IS IN APPEAL AGAINST BOTH THE ISSUES BEFORE THE TRIBUNAL. 7. THE PLEA OF THE ASSESSEE BY WAY OF WRITTEN SUBMISSIONS IS THAT THE PROCEEDINGS UNDER SECTION 147/ 148 OF THE ACT WERE INITIATED ON THE BASIS OF AUDIT OBJECTIONS AND AUDIT PA RTY HAD RAISED THE OBJECTIONS ON THE BASIS OF DETAILS FURNISHED BY THE ASSESSEE DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS. THE ASSESSEE FURTHER CONTENDS THAT THE CIT(A) HAD DISMISSED THE ITA NO. 202 /PN/20 1 6 DNYANESHWAR JAGANNATH DHAMNE 4 GROUND OF APPEAL NO.2 AGAINST QUASHING OF PROCEEDINGS UNDE R SECTION 148 OF THE ACT DUE TO CHANGE IN OPINION OF ASSESSING OFFICER, WAS DISMISSED AS WITHDRAWN. IT WAS FURTHER POINTED OUT BY THE ASSESSEE IN THE WRITTEN SUBMISSIONS THAT THIS FACT WAS BROUGHT TO THE NOTICE OF CIT(A) VIDE APPLICATION FILED UNDER SECTI ON 154 OF THE ACT THAT THE IMPUGNED GROUND OF APPEAL NO.2 WAS NEVER WITHDRAWN. THEREAFTER, AN ORDER UNDER SECTION 154 OF THE ACT WAS PASSED BY THE CIT(A) ON 05.04.2016 ACCEPTING THE MISTAKE APPARENT FROM THE RECORD THAT THE SAID GROUND OF APPEAL WAS NOT W ITHDRAWN BY THE ASSESSEE AND THEN DECIDED THE SAID GROUND AND DISMISSED THE PLEA OF THE ASSESSEE. THE ASSESSEE CLAIMS THAT WHERE BOTH THE ASSESSING OFFICER OR CIT(A) HAD NOT BROUGHT ON RECORD ANY NEW MATERIAL OR FACTS IN RESPECT OF IMPUGNED CASH PAYMENTS, THE INITIATION OF PROCEEDINGS UNDER SECTION 148 OF THE ACT WERE NOT JUSTIFIED. HE STRESSED THAT THE AUDIT OBJECTIONS IN THE CASE WAS RAISED ON THE BASIS OF SUBMISSIONS OF ASSESSEE MADE DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS, IN WHICH THE CAS H PAYMENT OF RS.3 LAKHS WAS ASSESSMENT PROCEEDINGS, IN WHICH THE CAS H PAYMENT OF RS.3 LAKHS WAS DECLARED. ANOTHER CONTENTION RAISED BY THE ASSESSEE WAS THAT THE IMPUGNED PROCEEDINGS WERE INITIATED BECAUSE OF CHANGE IN OPINION ON THE PART OF ASSESSING OFFICER WITHOUT THERE BEING ANY EXTRA MATERIAL ON RECORD. AGAINST THE M ERITS OF CASH PAYMENT OF RS.3 LAKHS, THE ASSESSEE EXPLAINED THAT THE SAME WAS PAID BECAUSE OF THE REQUEST OF SELLER AS SHE WAS NOT RESIDING AT IGATPURI, BUT WAS RESIDING AT MUMBAI AND HAD TO INCUR CERTAIN EXPENDITURE AT IGATPURI, WHERE SHE DID NOT HAVE ANY BANK ACCOUNT. FURTHER, THE SAID CASH WAS PAID TO THE VENDOR ON THE DATE OF REGISTRATION AND ON THE SAME DAY, THE REMAINING PAYMENT WAS ALSO MADE BY WAY OF DEMAND DRAFT S . ITA NO. 202 /PN/20 1 6 DNYANESHWAR JAGANNATH DHAMNE 5 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE O RDER OF CIT(A). 9. ON PERUSAL OF RECORD AND WRITTEN SUBMISSIONS FILED BY THE ASSESSEE ALONG WITH PAPER BOOK, THE FACTUAL ASPECTS OF THE CASE ARE THAT THE ASSESSEE HAD DECLARED TOTAL INCOME OF RS. 1,22,905/ - . THE ORIGINAL ASSESSMENT ORDER WAS PASSED IN THE CASE OF ASSESSEE UNDER SECTION 143(3) OF THE ACT ON 19.12.2011 . THE PERUSAL OF ASSESSMENT ORDER PLACED AT PAGES 5 AND 6 OF THE PAPER BOOK REFLECTS THAT THE ASSESSEE HAD SUBMITTED THE AUDIT REPORT ALONG WITH AUDITED STATEMENTS OF ACCOUNT DURING THE PROCEE DINGS AND HAD ALSO PRODUCED THE BOOKS OF ACCOUNT FOR VERIFICATION. THE ASSESSING OFFICER COMPLETED ASSESSMENT AFTER MAKING DISALLOWANCE ON ACCOUNT OF PERSONAL USAGE OUT OF PETROL, TELEPHONE AND TRAVELLING EXPENSES. THE ASSESSEE DURING THE YEAR UNDER CONS IDERATION HAD PURCHASED LAND AS PER AGREEMENT DATED 12.09.2008 , TRANSLATED COPY OF WHICH IS PLACED AT PAGES 52 TO 57 OF THE PAPER BOOK. THE TRANSLATED COPY OF WHICH IS PLACED AT PAGES 52 TO 57 OF THE PAPER BOOK. THE ASSESSEE HAD PURCHASED AGRICULTURAL LAND AT VILLAGE IGATPURI FOR TOTAL CONSIDERATION OF RS.48,50,000/ - . I N THE AGR EEMENT ITSELF , T HE BREAK - UP OF RS.48,50,000/ - IS PROVIDED, UNDER WHICH RS.45,50,000/ - WAS PAID BY WAY OF DIFFERENT DEMAND DRAFTS DATED 11/12.09.2008 AND CASH OF RS.3 LAKHS WAS PAID WHILE REGISTERING DOCUMENTS BEFORE THE SUB - REGISTRAR AT IGATPURI. THE SAID CASH OF RS.3 LAKHS WAS PAID ON THE REQUEST OF SELLER FOR TAKING CARE OF CERTAIN EXPENDITURE AT IGATPUR I , WHERE THE VENDOR WAS STAYING AT MUMBAI AND HAD NO BANK ACCOUNT AT IGATPUR I . THE CONFIRMATION FROM THE SAID PERSON MRS. MEENABEN B. MEHTA I S FILED AT PAGE 51 OF THE PAPER BOOK. SHE ACKNOWLEDGES TO HAVE RECEIVED RS.48,50,000/ - VIDE SALE DEED DATED 12.09.2008 FROM THE ASSESSEE, OUT OF WHICH RS.3 LAKHS WAS PAID BY THE ASSESSEE IN CASH ON THE ITA NO. 202 /PN/20 1 6 DNYANESHWAR JAGANNATH DHAMNE 6 DATE OF REGISTRATION OF SALE DEED BEFORE THE SUB - REGISTRAR ON 12 .09.2008. THE ENTIRE CONSIDERATION WAS PAID DURING THE COURSE OF REGISTRATION OF SALE DEED. THE ASSESSING OFFICER FURTHER ON VERIFICATION OF RECORD NOTED THE DETAILS OF PAYMENT MADE FOR PURCHASE OF SAID LAND, WHICH INCLUDED RS.3 LAKHS AS BEING PAID IN CA SH ON 12.09.2008 ITSELF. AS PER THE ASSESSING OFFICER, SINCE THE ASSESSEE HAD CONTRAVENED THE PROVISIONS OF SECTION 40A(3) OF THE ACT, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED AFTER RECORDING REASONS FOR REOPENING THE ASSESSMENT. THE CIT(A) HAS UPH ELD THE REOPENING OF ASSESSMENT UNDER SECTION 147/148 OF THE ACT. THE ASSESSING OFFICER THUS, FURTHER MADE AN ADDITION OF RS.3 LAKHS ON ACCOUNT OF DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT, WHICH HAS ALSO BEEN UPHELD BY THE CIT(A). 10. THE GRIEVANCE O F ASSESSEE BEFORE THE TRIBUNAL IS THAT THE REASSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE ON THE BASIS OF AUDIT OBJECTIONS. ALL THIS INFORMATION OF PAYMENT FOR PURCHASE OF AGRICULTURAL LAND WAS OBJECTIONS. ALL THIS INFORMATION OF PAYMENT FOR PURCHASE OF AGRICULTURAL LAND WAS AVAILABLE ON ASSESSMENT RECORDS. THE SECOND PL EA OF THE ASSESSEE IN THIS REGARD IS THAT THE ACTION OF ASSESSING OFFICER IN REOPENING THE ASSESSMENT IS MERE CHANGE OF OPINION ON IDENTICAL FACTS AS WAS AVAILABLE BEFORE HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HENCE, NOT MERITED. 11. UNDER T HE PROVISIONS OF SECTION 147 OF THE ACT , THE REQUIREMENT IS THAT WHERE THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, THEN HE MAY ASSESS OR RE - ASSESS SUCH INCOME , SUBJECT TO THE PROVISIONS OF SAI D SECTION. THE BASIC REQUIREMENT OF SECTION IS THE BELIEF OF ASSESSING OFFICER THAT ANY INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR . T HE ITA NO. 202 /PN/20 1 6 DNYANESHWAR JAGANNATH DHAMNE 7 COURTS HAVE TIME AND AGAIN HELD THAT THE REASON TO BELIEVE SHOULD HAVE A DIRECT LINK WITH THE ESCAPEMENT OF ASSESSMENT AND THE SAME SHOULD BE ON THE BASIS OF SOME INFORMATION . HOWEVER, IN THE FACTS OF THE PRESENT CASE, THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT ON VERIFICATION OF RECORDS ITSELF. THE CASE OF THE ASSESSEE IN THIS REGARD WAS THAT THE SAID FACT OF CASH PAYMENT FOR PURCHASE OF AGRICULTURAL LAND IN PART HAS BEEN POINTED OUT BY THE AUDIT OBJECTIONS AND THE REOPENING OF ASSESSMENT ON THE BASIS OF AUDIT OBJECTIONS IS INCORRECT. I FIND MERIT IN THE PLEA OF THE ASSESSEE IN THIS REGARD, WHERE THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT, THE ASSESSEE HAD MADE THE INVESTMENT IN PURCHASE OF AGRICULTURAL LAND DURING THE YEAR AND THE NECESSARY DETAILS ONCE HAVING BEEN LOOKED INTO BY THE ASSESSING OFFICER CANNO T BE RE - LOOKED AS THE SAME TANTAMOUNT TO CHANGE OF OPINION. THE ASSESSING OFFICER HAS FAILED TO POINT OUT WHETHER ANY FRESH FACTS CAME TO HIS KNOWLEDGE IN ORDER TO ESTABLISH THE REASON OF BELIEF AGAINST ESCAPEMENT OF INCOME BY THE ASSESSEE. IN ANY CASE, WHERE THE CASH OF RS.3 LAKHS HAS BEEN INCOME BY THE ASSESSEE. IN ANY CASE, WHERE THE CASH OF RS.3 LAKHS HAS BEEN PAID FOR PURCHASE OF AGRICULTURAL LAND BEFORE SUB - REGISTRAR I.E. IN STATE GOVERNMENT OFFICE, THE PROVISIONS OF SECTION 40A(3) OF THE ACT ARE NOT ATTRA CTED AS THE SAID CASH OF PAYMENT OF RS.3 LAKHS IS PART AND PARCEL OF TOTAL PAYMENT OF RS.48,50,000/ - . THE ASSESSEE ADMITTEDLY, HAD PAID TOTAL SALE CONSIDERATION ON THE DATE OF REGISTRATION OF SALE DEED ITSELF I.E. ON 12.09.2008 EXCEPT DEMAND DRAFT OF RS.10 LAKHS, WHICH WAS PAID ON 11.09.2008 . FURTHER, NO ACTION UNDER SEC TION 147 OF THE ACT CAN BE TAKEN ON ACCOUNT OF AUDIT OBJECTIONS RAISED BY THE AUDIT PARTY. IN THIS REGARD, I FIND SUPPORT FROM THE RATIO S LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN IL AND FS INVESTMENT MANAGERS LTD. VS. ITO & ORS. (2008) 298 ITR 32 (BO M) AND THE HONBLE DELHI HIGH COURT IN CARLTON OVERSEAS PVT. LTD. VS. ITO & ORS. (2009) 318 ITR 295 (DEL) . ACCORDINGLY, THE ITA NO. 202 /PN/20 1 6 DNYANESHWAR JAGANNATH DHAMNE 8 PLEA OF THE ASSESSEE BOTH ON JURISDICTIONAL ISSUE AND ALSO ON MERITS IS ALLOWED AND RE - ASSESSMENT ORDER PASSED BY THE ASSESSING OFF ICER IS HELD TO BE INVALID WITHOUT JURISDICTION. FURTHER, THERE IS NO MERIT IN THE ADDITION OF RS.3 LAKHS ON ACCOUNT OF CASH PAYMENT MADE FOR PURCHASE OF AGRICULTURAL LAND BEFORE THE REGISTERING AUTHORITY. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 12 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 8 TH DAY OF JU LY , 201 6 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 8 TH JU LY , 201 6 . GCVSR GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 1 , NASHIK ; 4. / THE PR. CIT - 1 , NASHIK ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE