Marvel Indenting Pvt.Ltd., Baroda V. The Income tax Officer,Ward-4(1), Baroda

ITA 212/AHD/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1146 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 24-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Reopening of assessment; Depreciation; Tangible material; Bad and doubtful debts; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 14A; 148; 90; 139

Judgement Text

ITA NO .212 /AHD/ 20 1 2 ASSESSMENT YEAR: 2 0 0 6 - 07 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH , AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S.S. GODARA JM ] ITA NO. 212 / AHD / 2 0 1 2 ASSESSMENT YEAR: 200 6 - 07 MARVEL INDENTING PVT. LTD., ....... .. . ..... APPELLANT UNIVERSAL HOUSE , 50, KUNJ S OC, ALKPURI, BARODA. [PAN A ABCM 2824 N ] VS. INCOME TAX OFFICER , .... ........ .... .. .. .. .... .. RESPONDENT WARD 4(1), BARODA . APPEARANCES BY: S .N. SOPARKAR WITH URVASHI SHODHAN , FOR THE APPELLANT SONIA KUMAR , FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JULY 03 , 201 5 DATE OF PRONOUNCING THE ORDER : AUGUST 31 ST , 2015 O R D E R PER PRAMOD KUMAR AM : 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED THE ORDER DATED 20 TH DECEMBER, 2011 PASSED BY THE LD. CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR 2006 - 07. 2. ONE OF THE GROUNDS RAISED BEFORE US, I.E. SECOND GROUND OF APPEAL, IS DIRECTED AGAINST LEARNED CIT ( A ) S UPHOLDING THE INITIA TION OF REASSESSMENT PROCEEDINGS. WE WILL TAKE UP THIS ISSUE FIRST. ITA NO .212 /AHD/ 20 1 2 ASSESSMENT YEAR: 2 0 0 6 - 07 PAGE 2 OF 9 3. SO FAR AS THIS GRIEVANCE OF THE ASSESSEE IS CONCERNED, RELEVANT MATERIAL FACTS ARE LIKE THIS. IN THIS CASE, ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 19.12.2008. SU BSEQUENTLY, HOWEVER, THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY RECORDING FOLLOWING REASONS ON 04.03.2010 : - IN THIS CASE THE ASSESSMENT U/S 143(3) OF THE I.T. ACT - 1961 WAS PASSED ON 19.12.2008. ON VERIFICATION OF THE CASE RECORDS, IT IS SEEN THAT THE ASSESSEE HAS ALREADY CLAIMED 30% STANDARD DEDUCTION OUT OF THE RENTAL INCOME SHOWN DURING THE FOUR YEARS ON RS.32,63,499/ - . IT HAS ALSO SEEN THAT THE ASSESSEE HAS SIMILAR AMOUNT SHOWN OF RS.12,75,783/ - IN SCHEDULE OF SUNDRY DEBTORS IN THE NAME OF M/S PANCHJANYA INSTITUTE OF COMMERCE AND MANAGEMENT STUDIES AS ON 31.03.2006. THOUGH THE AMOUNT IS SAME, NAME OF PARTY I.E. SUNDRY DEBTOR IS DIFFERENT IN A S MUCH AS THAT AS PER RENT LEASE AGREEMENT, THE LESSEE IS PANCHAJANYA EDUCATION AND RESEARCH TRUST. THE RE IS ALSO QUESTION UNDER WHICH ACCOUNTING SYSTEM, THE SAID CLAIM OF DEDUCTION ON ACCOUNT OF UNREALISED RENT IS BEING MADE. THE ASSESSEE HAS NOT EITHER MADE ANY PROVISION FOR BAD DEBTS OR IT HAS NOT WRITTEN IT OFF FROM THE BOOKS OF ACCOUNTS BECAUSE, THE S AID MOUNT OF RS.12,75,783/ - IS VERY MUCH APPEARING IN THE ACCOUNT OF THE SUNDRY DEBTOR AS PER SCHEDULE 6 OF THE BALANCE SHEET S ON 31.03.2006. 4. AGGRIEVED, INTER ALIA, BY REOPENING OF THE ASSESSMENT ITSELF, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. WHILE REJECTING THE GRIEVANCE OF THE ASSESSEE, LEARNED CIT(A) OBSERVED AS FOLLOWS : - 4.3.1 SO FAR AS THE APPELLANT S CHALLENGE TO REOPENING OF ASSESSMENT IS CONCERNED, THE SAME IS ALSO NOT ACCEPTABLE. A PERUSAL OF THE ORIGINAL ASSESSMENT ORDER SHOWN THAT THE A . O . HAS NOT MADE ANY DISCUSSION REGARDING THE CLAIM OF UNREALISED RENT INN COMPUTATION OF INCOME FROM HOUSE PROPERTY. IN FACT, HE HAS NOT COMPUTED THE INCOME FROM HOUSE PROPERTY IN THE ASSESSMENT ORDER. HE H AS STARTED THE COMPUTATION OF THE TOTAL INCOME OF THE APPELLANT WITH THE FIGURE OF TOTAL INCOME AS PER COMPUTATION OF INCOME FILED BY APPELLANT AND THEN HAS ADDED DISALLOWANCE U/S. 14A AND SECTION 40A(9) . THUS, HE HAS NOT FORMED ANY OPINION IN THIS REGARD . MOREOVER, AS ALREADY DISCUSSED THE CLAIM OF UNREALISED RENT MADE BY THE APPELLANT WAS TOTALLY AGAINST LAW AND WHOLLY UNJUSTIFIED. FROM THE FACTS ON RECORD, IT APPEARS THAT THE A . O . HAD REASON TO BELIEVE THAT THE APPELLANT S INCOME HAD ESCAPED ASSESSMEN T. SO FAR AS THE RELIANCE UPON THE DECISION OF HONOURABLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA IS CONCERNED, THIS DECISION WAS INTERP RETED RECENTLY BY HONOURABLE MADRAS HIGH COURT IN THE CASE OF SRI SAKTHAI TEXTILES LTD., [2010] 193 TAXMAN 216 (MAD.). I N THI S DECISION THE COURT HA S HELD AS FOLLOWS : 29. A READING OF THE ABOVE JUDGMENT WOULD GO TO REALLY SHOW THAT AN ASSESSMENT ALREADY COMPLETED CANNOT BE REOPENED FOR THE PURPOSE OF REASSESSMENT MERELY ON THE BASIS OF THE CHANGE OF OPINION BY THE SUBSEQUENT ASSESSING OFFICER. SUCH REOPENING IS POSSIBLE ONLY ON TANGIBLE MATERIALS IN THE EVENT OF THE OFFICER FINDING REASONS TO BELIEVE THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. IN ITA NO .212 /AHD/ 20 1 2 ASSESSMENT YEAR: 2 0 0 6 - 07 PAGE 3 OF 9 MY CONSIDERED OPINION, AS I HAVE UNDERSTOOD FROM THE JU DGEMENTS CITED SUPRA, MORE PARTICULARLY, THE RECENT JUDGEMENT OF THE HON BLE SUPREME COURT CITED SUPRA, THERE IS NO LEGAL NECESSITY THAT THE MATERIALS REFERRED TO IN SECTION 147 OF THE ACT SHOULD BE FRESH MATERIALS COLLECTED SUBSEQUENT TO THE ORIGINAL ASSE SSMENT ORDERS . EVEN FROM OUT OF MATERIALS WHICH ARE ALREADY AVAILABLE ON RECORD, IF THE SUBSEQUENT OFFICER FINDS REASON TO BELIEVE THAT THERE HAS BEEN ESCAPEMENT OF ASSESSMENT, SURELY HE CAN ISSUE NOTICE UNDER SECTION 148 OF THE ACT. SUCH COURSE, WILL NO T, IN MY CONSIDERED OPINION, AMOUNT TO REVIEWING THE EARLIER ASSESSMENT . 4.3.2 THUS AS PER THE OPINION OF THIS COURT THE TANGI BLE MATERIAL FOR OPENING A COMP LETED ASSESSMENT CAN COME FROM THE MATERIAL ALREADY ON RECORD IF THE REOPENING IS WITHIN FOUR YEA R OF THE END OF THE ASSESSMENT YEAR. THIS IS PARTICULARLY TRUE IF THE ASSESSING OFFICER HAS NOT MADE ANY OPINION OR HAS NOT CONSIDERED A PARTICULAR ITEM AT THE TIME OF PASSING OF ORIGINAL ASSESSMENT ORDER . THIS IS EVIDENT FROM THE FOLLOWING PARTS OF THE JUDGEMENT OF HONOURABLE GUJARAT HIGH COURT IN THE CASE OF PRAFUL CHUNILL PATEL, [1999] 236 ITR 832 (GUJ.) : IN CASES WHERE THE ASSESSING OFFICER HAS NOT MADE AN ASSESSMENT OF ANY ITEM OF INCOME CHARGEABLE TO TAX WHILE PASSING THE ASSESSMENT ORDER IN THE R ELEVANT ASSESSMENT YEAR, IT CANNOT BE SAID THAT SUCH INCOME WAS SUBJECTED TO A N ASSESSMENT. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER WOULD ASCERTAIN ON CONSIDERATION OF ALL RELEVANT CIRCUMSTANCES THE AMOUNT OF T A X CHARGEABLE TO A GIVEN TAXPAYE R. THE WORD ASSESSMENT WOULD MEAN THE ASCERTAINMENT OF THE AMOUNT OF TAXABLE INCOME AND OF THE TAX PAYABLE THEREON. IN OTHER WORD , WHERE THERE IS NO ASCERTAINING OF THE AMOUNT OF TAXABLE INCOME AND THE TAX PAYABLE THEREON, IT CAN NEVER BE SAID THAT SUC H INCOME WAS ASSESSED. MERELY BECAUSE DURING THE ASSESSMENT PROCEEDINGS THE RELEVANT MATERIAL WAS ON RECORD OR COULD HAVE BEEN WITH DUE DILIGENCE DISCERNED BY THE ASSESSING OFFICER FOR THE PURPOSE OF ASSESSING A PARTICULAR ITEM OF INCOME CHARGEABLE TO TAX , IT CANNOT BE INFERRED THAT THE ASSESSING OFFICER MUST NECESSARILY HAVE DELIBERATED OVER IT AND T AKEN IT OUT WHILE ASCERTAINING THE TAXABLE INCOME OR THAT HE HAD FORMED ANY OPINION IN RESPECT THEREOF. IF LOOKING BACK IT APPEARS TO THE ASSESSING OFFICER ( ALBEIT WITHIN FOUR YEARS OF THE END OF THE RELEVANT ASSESSMENT YEAR ) HAT A PARTICULAR ITEM EVEN THOUGH REFLECTED ON THE RECORD WAS NOT SUBJECTED TO ASSESSMENT AND WAS LEFT OUT WHILE WORKING OUT THE TAXABLE INCOME AND THE TAX PAYABLE THEREON , I.E., WHILE MA KING THE FINAL ASSESSMENT ORDER, THAT WOULD ENABLE HIM TO INITIATE THE PROCEEDINGS IRRESPECTIVE OF THE QUESTION OF NON - DISCLOSURE OF MATERIAL FACTS BY THE ASSESSEE. IN FACT, IF THERE IS MATERIAL PLACED ON RECORD WHICH WOULD SHOW EXISTENCE OF INCOME CHARGE ABLE TO TAX AND WHICH ORDINARILY OUGHT TO HAVE INCLUDED IN THE ASCERTAINMENT OF TAXABLE INCOME MADE IN THE ASSESSMENT ORDER BUT WAS NOT SO INCLUDED, THAT WOULD ITSELF PROVIDE A CAUSE OR JUSTIFICATION FOR A BELIEF TO THE ASSESSING OFFICER THAT SUCH INCOME H AD ESCAPED ASSESSMENT AND THE ASSESSING OFFICER IN SUCH C A SES WOULD BE EX FACIE JUSTIFIED IN INITIATING THE PROCEEDINGS ON SUCH BASIS. THE CASES OF NON - ASSESSMENT OF AN ITEM OF INCOME CHARGEABLE TO TA X WOULD WARRANT FORMATION OF REQUISITE BELIEF TO INITIA TE THE PROCEEDING WITHIN FOUR YEARS OF THE END OF THE RELEVANT ASSESSMENT YEAR, EVEN WHERE FULL DISCLOSURES WERE MADE AND YET A INCOME CHARGEABLE TO TAX H A D ESCAPED FROM BEING INCLUDED IN THE FINAL ASSESSMENT ORDER IN WHICH TAXABLE INCOME WAS WORKED OUT. IN SUCH CASES THE ASSESSING OFFICER HAS IN FACT A DUTY TO EXERCISE HIS JURISDICTION. THE ASSESSING OFFICER H A S NOT TO CONCLUSIVELY COME TO ANY FINDING ON THE FACTS WHICH PROMPTED HIS RE A SON TO BELIEVE, AT THE STAGE OF THE ISSUANCE OF NOTICE UNDER SECTION 148 PURSU A NT TO WHICH THE ASSESSEE IS TO BE HEARD; AND TH E ORDER IF ADVERSE, CAN BE QUESTIONED UNDER THE PROVISIONS OF THE ACT. ITA NO .212 /AHD/ 20 1 2 ASSESSMENT YEAR: 2 0 0 6 - 07 PAGE 4 OF 9 THE CASES OF UNDERASSESSMENT OR EXCESSIVE RELIEF WHICH ARE DEEMED CASE OF ESCAPEMENT OF INCOME LE A VE NO SCOPE FOR AN ARGUMENT THAT THEY ARE NOT CASES OF INCOME HAVING ESCAPED ASSESSMENT. IF TH E ASSESSING OFFICER PRIMA FACIE FINDS OR DISCOVERS T HAT THE CASE FALLS IN ANY OF THE CLAUSES OF EXPLANATION 2 , THEN THOSE CASES WILL BE DEEMED CASES OF INCOME THAT HAS ESCAPED ASSESSMENT A ND WITHOUT ANYTHING MORE BEYOND SUCH FINDING OR DISCOVERY, HE CAN INITIATE THE PROCEEDINGS UNDER SECTION 147 OF THE ACT. ON A PROPER INTERPRETATION OF SECTION 147 OF THE ACT, IT WOULD APPEAR THAT T HE POWER TO MAKE ASSESSMENT OR REASSESSMENT WITHIN FOUR Y EARS OF THE END OF THE RELEVANT ASSESSMENT YEAR WOULD BE ATTRACTED EVEN IN CASE S WHERE THERE H A S BEEN A COMPLETE DISCLOSURE OF ALL RELEVANT FACTS UPON WHICH A CORRECT ASSESSMENT MIGHT HAVE B E EN BASED IN THE FIRST INSTANCE, AND WHETHER IT IS AN ERROR OF F A C T OR LAW THAT HAS BEEN DISCOVERED OR FOUND OUT JUSTIFYING THE BELIEF REQUIRED TO INITIATE THE PROCEEDINGS. IN OUR VIEW, THE WORD ESCAPED ASSESSMENT WHERE THE RETURN IS FILED, ARE APT TO COVER THE CASE OF DISCOVERY OF A MISTAKE IN THE ASSESSMENT CAUSED B Y EITHER AN ERRONEOUS CONSTRUCTION OF THE TRANSACTION OR DUE TO ITS NON - CONSIDERATION, OR, CAUSED BY A MISTAKE OF LAW APPLICABLE TO SUCH TRANSFER OR TRANSACTION EVEN WHERE THERE HAS BEEN A COMPLETE DISCLOSURE OF ALL RELEVANT FACT UPON WHICH A CORRECT ASSES SMENT COULD HAV E BEEN BASED. IN CASES WHERE THE ASSESSING OFFICER HAD OVERLOOKED SOMETHING AT THE FIRST ASSESSMENT, THERE CAN, IN OUR OPINION, BE NO QU ESTION OF ANY CHANGE OF OPINION WHEN THE INCOME WHICH WAS CHARGEABLE TO TAX IS ACTUALLY TAXED AS IT O UGHT TO HAVE BEEN UNDER THE LAW BUT WAS NOT, DUE TO AN ERROR COMMITTED AT TH E FIRST ASSESSMENT. WHEN AT THE FIRST ASSESSMENT ALL THE RELEVANT ASPECTS ARE CONSIDERED AND THERE IS PROPER APPLICABILITY OF MIND FOR ASCERTAINMENT OF THE MOUNT OF TAXABLE INCOME A ND OF THE TAX PAYABLE THEREON , THEN IN THE ABSENCE OF ANY ERROR OR MISTAKE BEING DISCOVERED OR FOUND, THE ASSESSING OFFICER LATER ON CANNOT MERELY FOR THE SAKE OF GIVING A DIFFERENT OPINION, CHANGE THE EARLIER OPINION. HOWEVER, IN CASES WHERE AN ERROR OR MISTAKE IS DETECTED, IT CAN NEVER BE SAID T HAT THERE IS ONLY A MERE CHANGE OF OPINION. THE MISTAKE OR ERROR WHICH IS DETECTED AND WHICH CONSTITUTED A VALID DECISION OR CAUSE TO FORM A BELIEF IN THE FIRST A SSESSMENT A S RESULT OF WHICH THE INCOME HA S ESCAP ED ASSESSMENT, WOULD CONSTITU TE A REASON TO BELIEVE THAT T HE INCOME HAD ESCAPED ASSESSMENT, AND SUCH CASES WHERE MISTAKES AND ERRORS ARE DETECTED AND WHICH CONSTITUTE A VALID JUSTIFICATION OR C AUSE TO FORM A BELIEF SOUGHT TO BE CORRECTED , CANNOT BE SAID TO BE CASES OF MERE CHANGE OF OPINION. 4.3.3 SIMILAR VIEW HAS A LSO BEEN TAKEN BY THE SPECIAL BENCH OF CHENNAI ITAT IN THE CASE OF MAHINDRA HOLIDAYS & RESORTS (INDIA) LTD. [2010] 39 SOT 438 (CHENNAI) (SB), DECISION OF HON BLE DELHI COURT IN THE CASE O F DALMI A (P) LTD. V/S. CIT DELHI, TAXMANN.COM 106 (DELHI) AND DECISION OF HON BLE KERALA HIGH COURT I N CIT COCHIN V/S. NATIONAL TYRES & RUBBER CO. O F INDIA LTD. TAXMANN.COM 3 (KER). IAN THE PRESENT CASE, THE ASSESSMENT H A S BEEN REOPENED BY ISSUING THE NOTICE U/S 148 WITHIN 4 YEARS FROM THE END OF THE ASSESSMENT YEAR. HENCE ON THE BASIS OF DISCUSSIONS MADE ABOVE, IT IS HELD THAT THE ASSESSMENT HAS BEEN RIGHTLY REOPENED BY THE A. O. ACCORDINGLY , THIS GROUND OF APPEAL IS DISMISSED . 5. THE ASSESSEE IS NOT SATISFIE D WITH THE ORDER OF THE LD. CIT(A) AND IS IN FURTHER APPEAL BEFORE US. ITA NO .212 /AHD/ 20 1 2 ASSESSMENT YEAR: 2 0 0 6 - 07 PAGE 5 OF 9 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 7. WE FIND THAT, HON BLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF PRAFUL CHUNNILAL PATEL VS. ACIT (236 ITR 832) AS EXTRACTED ABOVE BY THE LD . CIT(A), HAD OBSERVED THAT WHEN AT THE FIRST ASSESSMENT ALL THE RELEVANT ASPECTS ARE CONSIDERED AND THERE IS PROPER APPLICATION OF MIND FOR A SCERTAINMENT OF THE AMOUNT OF TA X ABLE INCOME AND OF THE TAX PAYABLE THEREON, THEN IN THE ABSENCE OF ANY ERROR OR MISTAKE BEING DISCOVERED OR FOUND, THE ASSESSING OFFICER LATER ON CANNOT, MERELY FOR THE SAKE OF GIVING A DIFFERENT OPINION, CHANGE THE EARLIER OPINION. IT IS ON THE BASIS THAT REOPENING IS JUSTIFIED. HOWEVER, EVEN AFTER REFERRING TO THIS DECISION, HON BLE JURISDICTIONAL HIGH COURT HAS, IN THE CASE OF RAYMON GLUES AND CHEMICALS VS. DCIT [(2015) 55 TAXMAN.COM 421 (GUJ)] HAS HELD THAT THE ASSESSI NG OFFICER CANNOT SIT IN JUDGEMENT OVER DECISION OF THE EARLIER ASSESSING O FFICER WHO PASSED ORDER UNDER SECTION 143(3) OF THE ACT WITH RESPECT TO THE ISSUES WHICH ARE SOUGHT TO BE COVERED BY THE REOPENING UNDER SECTION 147 OF THE ACT. WHILE HOLDING SO, T HEIR LORDSHIPS HAVE, INT E R ALIA, OBSERVED AS FOLLOWS : - 9. WE HAVE HEARD LEARNED COUNSEL FOR BOTH THE SIDES AND PERUSED THE RECORD OF THE CASE. WHILE DISPOSING OF THE APPEAL FILED BY THE REVENUE, THE TRIBUNAL OBSERVED IN PARA - 4.4 AS UNDER; '4.4 THE GIST O F REASONS RECORDED WERE FURNISHED BY ASSESSING OFFICER TO THE ASSESSEE VIDE HIS LETTER DATED 22.12.1995. THE REASONS FOR REOPENING WERE DULY RECORDED BY A.O. THE ORIGINAL ASSESSMENT WAS MADE ON 26.03.1992. THIS WAS REOPENED WITHIN 4 YEARS AND FRESH ASSESSM ENT U/S.143(3) R.W.S. 147 WAS MADE ON 28.02.1995. THE ACTION UNDER THE MAIN SECTION 147 IS POSSIBLE IN SPITE OF THE FACT THAT COMPLETE DISCLOSURE OF MATERIAL FACTS WAS MADE AS HELD BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF PRAFUL CHUNILAL PATEL (SUPRA). IN THIS DECISION, JURISDICTIONAL HIGH COURT HELD THAT THE POWER TO MAKE ASSESSMENT OR REASSESSMENT WHERE THE INITIATION HAS BEEN MADE WITHIN FOUR YEARS OF THE RELEVANT ASSESSMENT YEAR WOULD BE ATTRACTED EVEN IN CASES WHERE THERE HAS BEEN A COMPLETE DISCLO SURE OF ALL RELEVANT FACTS UPON WHICH A CORRECT ASSESSMENT MIGHT HAVE BEEN BASED IN THE FIRST INSTANCE. EXPLANATION 2 SUBSTITUTED BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 W.E.F. 01.04.1989, SECTION 147 CLARIFIED THAT FOR THE PURPOSE OF THIS SECTION, TH ERE CAN BE DEEMED ESCAPEMENT OF INCOME AND A.O CAN INITIATE THE ITA NO .212 /AHD/ 20 1 2 ASSESSMENT YEAR: 2 0 0 6 - 07 PAGE 6 OF 9 PROCEEDINGS ON FINDING OR DISCOVERING SUCH CASES AND NO DOUBT WHETHER THEY CONSTITUTE CASES OF ESCAPEMENT OF INCOME, WOULD BE PERMISSIBLE. THIS IS ALSO HELD IN THE CASE OF PRAFUL CHUNILAL PATE L REPORTED IN 240 ITR 240 (GUJ) RELATES TO A.Y. INVOLVED WAS 1986 - 97. THEREFORE, BOTH THE DECISIONS RELIED BY LEARNED COUNSEL OF THE ASSESSEE ARE NOT RELEVANT FOR DECIDING THIS APPEAL WHICH HAS TO BE DECIDED. KEEPING IN VIEW THE PROVISIONS OF SECTION 147 T O 151 AS SUBSTITUTED / AMENDED WITH EFFECT FROM 01.04.1989.' 10. THE MAIN ARGUMENT OF THE ASSESSEE BEFORE THE TRIBUNAL WAS THAT THE INCOME SOUGHT TO BE BROUGHT TO TAX BY INVOKING THE PROVISIONS OF SECTION 147 OF THE ACT IS NOT SUCH AS CAN BE SAID TO HAVE ' ESCAPED ASSESSMENT' WITHIN THE MEANING OF THAT SECTION. IT IS WELL SETTLED THAT THE PROVISIONS OF SECTION 147 OF THE ACT ARE NOT INTENDED TO BE EMPLOYED IN A C A SE OF MERE CHANGE OF OPINION ON A GIVEN SET OF FACTS IN CONTEXT OF A SPECIFIC PROVISION OF THE A CT. 11. IT APPEARS FROM THE RECORD THAT THE FORMATION OF BELIEF BY THE ASSESSING OFFICER THAT CERTAIN INCOME HAS ESCAPED ASSESSMENT FOR THE YEAR UNDER APPEAL HAS BEEN BORNE ONLY BECAUSE OF THE PRIMARY FACTS FURNISHED BY THE ASSESSEE FOR THE PURPOSE OF ASSE SSMENT OF ITS INCOME AND OTHER MATERIAL INFORMATION AVAILABLE ON RECORD. THE DETAILS OF PAYMENTS MADE BY THE ASSESSEE TO THE PERSONS SPECIFIED IN SECTION 40 - A, AUDIT REPORT U/S.44 - AB AND THE CONTROVERSY IN RELATION THERETO WERE WELL WITHIN THE KNOWLEDGE OF THE ASSESSING OFFICER WHO HAD PASSED THE ORIGINAL ORDER U/S.143(3) OF THE ACT. THE INFORMATION REGARDING THE ASSESSEE'S CLAIM U/S.80 - HHC WAS ALSO FILED ALONG WITH THE RETURN OF INCOME IN THE FORM OF CHARTERED ACCOUNTANT'S CERTIFICATE, WHICH WAS ALSO REFER RED TO BY THE A.O IN HIS ORDER U/S.143(3) R.W.S. 147 OF THE ACT. 12. AT THIS STAGE, IT WOULD BE RELEVANT TO REFER THE PROVISIONS OF SECTIONS 143(1), 143(3) AND 147 OF THE ACT, WHICH READ THUS; (1) '143. ASSESSMENT WHERE A RETURN HAS BEEN MADE UNDER SEC TION 139, OR IN RESPONSE TO A NOTICE UNDER SUB - SECTION (1) OF SECTION 142, SUCH RETURN SHALL BE PROCESSED IN THE FOLLOWING MANNER, NAMELY: - ( A ) THE TOTAL INCOME OR LOSS SHALL BE COMPUTED AFTER MAKING THE FOLLOWING ADJUSTMENTS, NAMELY: - ( I ) ANY ARIT HMETICAL ERROR IN THE RETURN; OR ( II ) AN INCORRECT CLAIM, IF SUCH INCORRECT CLAIM IS APPARENT FROM ANY INFORMATION IN THE RETURN; ( B ) THE TAX AND INTEREST, IF ANY, SHALL BE COMPUTED ON THE BASIS OF THE TOTAL INCOME COMPUTED UNDER CLAUSE (A); ( C ) THE SUM PAYABLE BY, OR THE AMOUNT OF REFUND DUE TO, THE ASSESSEE SHALL BE DETERMINED AFTER ADJUSTMENT OF THE TAX AND INTEREST, IF ANY, COMPUTED UNDER CLAUSE(B) BY ANY TAX DEDUCTED AT SOURCE, ANY TAX COLLECTED AT SOURCE, ANY ADVANCE TAX PAID, ANY RELIEF ALL OWABLE UNDER AN AGREEMENT UNDER SECTION 90 OR SECTION 90A, OR ANY RELIEF ALLOWABLE UNDER SECTION 91, ANY REBATE ALLOWABLE UNDER PART A OF CHAPTER VIII, ANY TAX PAID ON SELF - ITA NO .212 /AHD/ 20 1 2 ASSESSMENT YEAR: 2 0 0 6 - 07 PAGE 7 OF 9 ASSESSMENT AND ANY AMOUNT PAID OTHERWISE BY WAY OF TAX OR INTEREST. ( D ) AN INTIM ATION SHALL BE PREPARED OR GENERATED AND SENT TO THE ASSESSEE SPECIFYING THE SUM DETERMINED TO BE PAYABLE BY, OR THE AMOUNT OF REFUND DUE TO, THE ASSESSEE UNDER CLAUSE (C); AND (E) THE AMOUNT OF REFUND DUE TO THE ASSESSEE IN PURSUANCE OF THE DETERMINATION UNDER CLAUSE SHALL BE GRANTED TO THE ASSESSEE: PROVIDED THAT AN INTIMATION SHALL ALSO BE SENT TO THE ASSESSEE IN A CASE WHERE THE LOSS DECLARED IN THE RETURN BY THE ASSESSEE IS ADJUSTED BUT NO TAX OR INTEREST IS PAYABLE BY, OR NO REFUND IS DUE TO, HIM: PROVIDED FURTHER THAT NO INTIMATION UNDER THIS SUB - SECTION SHALL BE SENT AFTER THE EXPIRY OF ONE YEAR FROM THE END OF THE FINANCIAL IN WHICH THE RETURN IS MADE. EXPLANATION . FOR THE PURPOSE OF THIS SUBSECTION, ( A ) 'AN INCORRECT CLAIM APPARENT FROM ANY INFORMATION IN THE RETURN' SHALL MEAN A CLAIM, ON THE BASIS OF AN ENTRY, IN THE RETURN, - ( I ) OF AN ITEM, WHICH IS INCONSISTENT WITH ANOTHER ENTRY OF THE SAME OR SOME OTHER ITEM IN SUCH RETURN; ( II ) IN RESPECT OF WHICH THE INFORMATION REQUIRED TO BE FURNISHED UNDER THIS ACT TO SUBSTANTIATE SUCH ENTRY HAS NOT BEEN SO FURNISHED; OR ( III ) IN RESPECT OF A DEDUCTION, WHERE SUCH DEDUCTION EXCEEDS SPECIFIED STATUTORY LIMIT WHICH MAY HAVE BEEN EXPRESSED AS MONETARY AMOUNT OR PERCENTAGE OR RATIO OR FRACTION ; ( B ) THE ACKNOWLEDGEMENT OF THE RETURN SHALL BE DEEMED TO BE THE INTIMATION IN A CASE WHERE NO SUM IS PAYABLE BY, OR REFUNDABLE TO, THE ASSESSEE UNDER CLAUSE (C), AND WHERE NO ADJUSTMENT HAS BEEN MADE UNDER CLAUSE (A).' '143(3) : ON THE DAY SPECIFIED IN THE NOTICE, - ( I ) ISSUED UNDER CLAUSE (I) OF SUBSECTION (2), OR AS SOON AFTERWARDS AS MAY BE, AFTER HEARING SUCH EVIDENCE AND AFTER TAKING INTO ACCOUNT SUCH PARTICULARS AS THE ASSESSEE MAY PRODUCE, THE ASSESSING OFFICER SHALL, BY AN ORDER IN WRITING, ALLOW OR REJECT THE CLAIM OR CLAIMS SPECIFIED IN SUCH NOTICE AND MAKE AN ASSESSMENT DETERMINING THE TOTAL INCOME OR LOSS ACCORDINGLY, AND DETERMINE THE SUM PAYABLE BY THE ASSESSEE ON THE BASIS OF SUCH ASSESSMENT; ( II ) ISSUED UNDER CLAUSE(II) OF SUB SECT ION (2), OR AS SOON AFTERWARDS AS MAY BE, AFTER HEARING SUCH EVIDENCE AS THE ASSESSEE MAY PRODUCE AND SUCH OTHER EVIDENCE AS THE ASSESSING OFFICER MAY REQUIRED ON SPECIFIED POINTS, AND AFTER TAKING INTO ACCOUNT ALL RELEVANT MATERIAL WHICH HE HAS GATHERED, THE ASSESSING OFFICER SHALL, BY AN ORDER IN WRITING, MAKE AN ASSESSMENT OF THE TOTAL INCOME OR LOSS OF THE ASSESSEE, AND DETERMINE THE SUM PAYABLE BY HIM OR REFUND OF ANY AMOUNT DUE TO HIM ON THE BASIS OF SUCH ASSESSMENT: ' 147. INCOME ESCAPING ASSESSMEN T. ITA NO .212 /AHD/ 20 1 2 ASSESSMENT YEAR: 2 0 0 6 - 07 PAGE 8 OF 9 IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABL E TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CO NCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB - SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SH ALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUBSECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFF ICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT.' 13. THE AFORESAID PROVISIONS ARE CLEAR AND UNAMBIGU OUS. WE FIND THAT BY INVOKING THE PROVISION OF SECTION 147 OF THE ACT, THE SUCCESSOR ASSESSING OFFICER HAS SIMPLY SAT OVER THE DECISION OF THE EARLIER ASSESSING OFFICER PASSED U/S.143(3) WITH RESPECT TO THE ISSUES SOUGHT TO BE COVERED U/S.147 OF THE ACT. H ENCE, THE CIT(A) WAS COMPLETELY JUSTIFIED IN ANULLING THE ORDER OF THE SUCCESSOR ASSESSING OFFICER. ACCORDINGLY, WE ANSWER THE QUESTION RAISED IN THIS APPEAL IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 8. IN THE PRESENT CASE , THIS IS PRECISELY WHAT SUCCESSOR ASSESSING O FFICER HAS DONE. 9. IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, NOT ONLY ALL THE NECESSARY DETAILS WERE ON RECORD, A SPECIFIC QUESTION WITH RESPECT TO UNREALIZED RENT WAS RAISED DURING THE ASSESSMENT PROCEEDINGS, THIS FACT WAS D ULY RECORDED IN THE PROCEEDINGS SHEET BEFORE THE ASSESSING OFFICER. WE HAVE PERUSED THE ASSESSMENT RECORDS AND WE ARE SATISFIED ABOUT THIS FACT. IN THIS VIEW OF THE MATTER, AS LEARNED COUNSEL FOR THE ASSESSEE, RIGHTLY SUBMITS THAT THE REOPENING OF THE AS SESSMENT IS NOTHING BUT REVIEW OF THE DECISION OF THE PREDECESSOR ASSESSING OFFICER ON THE ITA NO .212 /AHD/ 20 1 2 ASSESSMENT YEAR: 2 0 0 6 - 07 PAGE 9 OF 9 SAME SET OF FACTS AND WITHOUT ANY FRESH EVIDENCE OR MATERIAL COMING TO THE RECORD. THIS, AS IS THE SETTLED LEGAL POSITION, IS NOT PERMISSIBLE UNDER THE SCHEME OF TH E ACT. 10. FOR THE REASONS SET OUT ABOVE, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE AGAINST REOPENING OF THE ASSESSMENT. AS THE REASSESSMENT ITSELF IS QUASHED, ALL OTHER ISSUES RAISED IN THIS APPEAL ARE RENDERED ACADEMIC AND INFRUCTUOUS. WE SEE NO NEED T O DEAL WITH THOSE PERIPHERAL ISSUES AT THIS STAGE. 11. IN THE RESULT, THE APPEAL IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 31 ST DAY OF AUGUST, 2015. SD/ - SD/ - S.S. GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD , THE 31 ST DAY OF AUGUST, 201 5 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE B Y ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD