Smt. Sunitaben Bhadresh Mehta, Ahmedabad V. The Income Tax Officer, Ward-10(1), Ahmedabad

ITA 214/AHD/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1449 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 29-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Tangible material; Difference of opinion; Competent authority; Reason to believe; Change of opinion
• Section: 143(3); 147; 148; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.214/AHD/2016 / ASSTT. YEAR: 2008-2009 SMT.SUNITABEN BHADRESH MEHTA 11, ASHIRWAD BUNGALOWS PART-IV NR.PRAHLAD NAGAR GARDEN 100 FT. ROAD, SATELLITE AHMEDABAD 380 051. PAN : AEDPM 1289 A VS ITO, WARD - 10(1) AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI JAIMIN SHAH, AR REVENUE BY : SHRI SANJAY KUMAR, SR.DR / DATE OF HEARING : 09/06/2016 / DATE OF PRONOUNCEMENT: 10/06/2016 $%/ O R D E R THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAIN ST THE ORDER OF THE LD.CIT(A)-5, AHMEDABAD DATED 6.11.2015 PASSED FOR T HE ASSTT.YEAR 2008-09. 2. THE ASSESSEE HAS TAKEN SIX GROUNDS OF APPEAL, BU T HER GRIEVANCE REVOLVES AROUND TWO ISSUES VIZ., (A) LD.AO HAS ERRE D IN ASSUMING JURISDICTION UNDER SECTION 147 OF THE INCOME TAX, AND THEREBY IS SUED NOTICE UPON THE ASSESSEE, AND (B) THE LD.REVENUE AUTHORITIES HAVE E RRED IN REJECTING THE CLAIM MADE UNDER SECTION 54 OF THE INCOME TAX ACT. 3. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OUT SET, SUBMITTED THAT THE ASSESSEE HAS FILED HER RETURN OF INCOME ON 19.8.200 8 DECLARING INCOME OF RS.1,46,230/-. THE ASSESSEE HAD CHANGED HER RESIDE NTIAL, AND THIS CHANGE OF ITA NO.214/AHD/2016 2 ADDRESS WAS DULY INTIMATED TO THE AO VIDE LETTER DA TED 2.2.2009. COPY OF THE LETTER HAS BEEN PLACED ON PAGE NO.11 OF THE PAPER B OOK. IT READS AS UNDER: TO, THE INCOME-TAX OFFICER WARD-10(1) AHMEDABAD. APPLICANT: SUNITA BHADRESH MEHTA 93, ARIHANT SOCIETY, VASNA AHMEDABAD 380 07. PAN : AEDPM 1289 A SUBJECT: CHANGTE IN ADDRESS REQUIRES FOR DEAR SIR, PLEASE REFER TO THE ABOVE CITED SUBJECT, KINDLY NO TE MY NEW ADDRESS IS AS UNDER: 11, ASHIRWARD BUNGALOW PART-4, OPP: PRAHALADNAGAR GARDEN PRAHLADNAGAR, AHMEDABAD. PLEASE DO THE NEEDFUL & OBLIGE. KINDLY TRANSFER THE FILE TO ASSESSING OFFICER HAVIN G ARE JURISDICTION. THANKING YOU, YOURS FAITHFULLY, SD/- 4. HE FURTHER CONTENDED THAT FOR THE ASSTT.YEAR 200 9-10, THE ASSESSEE HAS FILED THE RETURN BY MENTIONING NEW ADDRESS. COGNIZ ANCE OF THE RETURN WAS DULY TAKEN BY THE DEPARTMENT, AND THE ASSESSMENT OR DER WAS PASSED UNDER SECTION 143(3) ON 2.9.2011. COPY OF THIS ORDER IS AVAILABLE AT PAGE NO.18 OF THE PAPER BOOK. THE INCOME OF THE ASSESSEE HAS BEEN ASSESSED BY THE ITO, WARD-7(2), AHMEDABAD. THE TITLE OF THE ASSESSMENT ORDER READS AS UNDER: ITA NO.214/AHD/2016 3 OFFICE OF THE INCOME TAX OFFICER WARD-7(2) B/502, 5 TH FLOOR, PRATYAKSH KAR BHAWAN, B/H. PANJRAPOLE, AMBA WADI AHMEDABAD. PHONE NO: 2630 4790. I.T.N.S.-65 1. NAME OF THE ASSESSEE SMT. SUNITABEN BHADRESH MEH TA 2. ADDRESS 11, ASHIRWAD BUNGALOWS NEAR PRAHLAD NAGAR GARDEN 100 FT. RING ROAD SATELLITE AHMEDABAD. 3. PAN AEDPM1289A 4. DISTRICT/WARD/CIRCLE ITO, WEARD-7(2), AHMEDABAD. 5. STATUS INDIVIDUAL 6. ASSESSMENT YEAR 2009-10 7. WHETHER RESIDENT R&OR 8. METHOD OF ACCOUNTING MERCANTILE 9. PREVIOUS YEAR 2008-09 10. NATURE OF BUSINESS INCOME FROM OTHER SOURCES 11. DATE(S) HEARING AS PER ORDER SHEET 12. DATE OF ORDER 09/09/2011 13. SECTION AND SUB-SECTION UNDER WHICH THE ASSESSMENT IS MADE 143(3) OF THE I.T.ACT, 1961. 5. ON THE STRENGTH OF THIS DETAIL, HE CONTENDED THA T NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT HAS BEEN ISSUED UPON THE ASSESSEE BY THE ITO, WARD-10(1), AHMEDABAD. ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE, AFTER THE CHANGE OF ADDRESS IT WAS DULY INTIMATED TO THE DEPARTMENT, AND COGNIZANCE OF THE CHANGE HAS BEEN TAKEN. THE ITO, W ARD-10(1), AHMEDABAD HAS NO TERRITORIAL JURISDICTION OVER THE ASSESSEE. EARLIER, ITO, WARD-10(1), AHMEDABAD HAS TERRITORIAL JURISDICTIONAL OVER THE A SSESSEE. WHEN THE ASSESSEE HAS RAISED THE OBJECTION IN APPEAL BEFORE THE LD.CIT(A), THE LD.CIT(A) HAS REJECTED THE CONTENTION OF THE ASSESS EE FOR TWO REASONS VIZ., ITA NO.214/AHD/2016 4 ORIGINAL ORDER UNDER SECTION 143(3) FOR THE ASSTT.Y EAR 2008-09 WAS PASSED BY THE ITO, WARD-10(1), AHMEDABAD AS PER THE REPORT SU BMITTED BY THE AO. COPY OF THE LETTER REQUESTING FOR CHANGE ADDRESS IS NOT AVAILABLE IN THE RECORD. BEFORE ME, THE LD.COUNSEL FOR THE ASSESSEE HAS REIT ERATED HIS CONTENTION, AS WERE RAISED BEFORE THE REVENUE AUTHORITIES BELOW. 6. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORD ER OF THE LD.CIT(A). HE CONTENDED THAT THE ASSESSEE MIGHT HAVE NOT GOT A DDRESS CHANGED IN HER PAN. REASSESSMENT NOTICE IS BEING GENERATED FROM T HE ADDRESS AVAILABLE WITH THE DEPARTMENT AS PER THE PAN. ON THE STRENGTH OF THE CIT(A)S ORDER, HE CONTENDED THAT THIS ISSUE HAS BEEN CONSIDERED, AND THEREAFTER, DULY REJECTED BY THE LD.CIT(A). 7. I HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. NO DOUBT ORIGINAL ORDER UNDER SECTION 1 43(3) OF THE INCOME TAX ACT IN THE ASSTT.YEAR 2008-09 WAS PASSED BY THE ITO , WARD-10(1), AHMEDABAD, BUT IN THIS ORDER, THE LD.AO HAS ACCEPTE D THE INCOME DECLARED BY THE ASSESSEE, AND THERE WERE NO CHANGES. THUS, THE ASSESSEE WAS NOT AGGRIEVED WITH THE ORDER AND DID NOT FILE ANY APPEA L. IT IS ALSO TRUE THAT WHEN THE RETURN FOR THE ASSTT.YEAR 2008-09 WAS FILED BY THE ASSESSEE, SHE WAS RESIDING AT 93, ARIHANT SOCIETY, NR. VASANA BUS STO P, VASNA, AHMEDABAD. TERRITORIAL JURISDICTION OF THIS AREA FALLS WITH IT O, WARD-10(1), AHMEDABAD. HOWEVER, IN 2009, SHE HAS CHANGED HER ADDRESS AND I NTIMATED THE CHANGE TO THE DEPARTMENT. COGNIZANCE OF HER CHANGE OF ADDRESS HAS BEEN TAKEN BY THE DEPARTMENT, AND ASSESSMENT ORDER IN THE ASSTT.YEAR 2009-10 WAS PASSED UNDER SECTION 143(3) BY THE ITO, WARD-7(2), AHMEDABAD. C OPY OF THIS ORDER IS AVAILABLE AT PAGE NO.18 OF THE PAPER BOOK. THIS FA CT WAS BROUGHT TO THE NOTICE OF THE LD.CIT(A) IN THE WRITTEN SUBMISSION FILED BY THE ASSESSEE. THE ITA NO.214/AHD/2016 5 LD.CIT(A) HAS REPRODUCED THE WRITTEN SUBMISSION ON PAGE NO.3 OF THE IMPUGNED ORDER. IT IS SETTLED PROPOSTION OF LAW TH AT TWO ASSESSING OFFICERS COULD NOT HAVE CONCURRENT TERRITORIAL JURISDICTION OVER AN ASSESSEE UNLESS SPECIFICALLY GIVEN BY THE COMPETENT AUTHORITY. THE ORDER UNDER SECTION 143(3) FOR THE ASSTT.YEAR 2009-10 WAS PASSED ON 2.9.2011. NOTICE UNDER SECTION 148 IN THE ASSTT.YEAR 2008-09 HAS BEEN ISSUED SUBSEQUEN T TO THIS DATE I.E. 5.2.2013. THEREFORE, I AM OF THE VIEW THAT ITO, WA RD-10(1), AHMEDABAD HAS NO TERRITORIAL JURISDICTION OVER THE ASSESSEE. 8. APART FROM THE ABOVE, THE LD.AO HAS SOUGHT TO RE OPEN THE ASSESSMENT ON THE GROUND THAT THE ASSESSEE HAS SOLD SHIVALIK B UNGALOWS ON 14.12.2007. SHE HAS LONG TERM CAPITAL GAIN OF RS.10,15,552/. S HE HAD PURCHASED ASHIRVAD BUNGALOW ON 8.2.2006. SHE CLAIMED DEDUCTION UNDER SECTION 54 OF THE INCOME TAX ACT. THE AO WAS OF THE VIEW THAT AS PER SUB-SECTION (2) OF SECTION 54, THIS DEDUCTION IS AVAILABLE, IF THE ASS ESSEE UTILIZED LONG TERM CAPITAL GAIN FOR PURCHASE OF A NEW ASSET WITHIN THR EE YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSETS. HE OBSERVED THAT THE ASSESSEE HAD ALREADY MADE INVESTMENT IN ASHIRVAD BUNGALOWS BEFORE THE TRANSFE R OF ORIGINAL ASSET, THEREFORE, SHE IS NOT ENTITLED TO EXEMPTION UNDER S ECTION 54. THIS PLEA HAS BEEN HARBOURED BY THE AO ON THE BASIS OF AUDIT OBJE CTION. IT IS BROUGHT TO MY NOTICE THAT IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THE LD.AO HAS RAISED A QUERY WHEREBY HE CALLED FOR ALL THE DETAILS OF INVE STMENT MADE BY THE ASSESSEE. THE REPLY OF THE ASSESSEE DATED 18.1.201 0 IS AVAILABLE AT PAGE NO.7 OF THE PAPER BOOK. THE REPLY AT SR.3 AND 4 IS RELE VANT FOR THIS PURPOSE. IT READS UNDER: 3. THE QUESTION NO.(I) IS IRRELEVANT AS I AM HAVIN G INCOME FROM HOUSE PROPERTY, LONG TERM CAPITAL GAIN & INCOME FRO M OTHER SOURCES. ITA NO.214/AHD/2016 6 4. DURING THE YEAR, I HAVE PURCHASED RESIDENTIAL PR OPERTY AT 11, ASHIRVAD BUNGALOW PART 4 OF RS.27,20,476/- & I HAVE SOLD MY RESIDENTIAL PROPERTY AT SHIVALIK BUNGLOWS FOR 26 LA CS. THE COPY OF A/C. OF ASHIRVAD BUNGALOWS, AGREEMENT & COPY OF SALE DEE D OF OLD BUNGALOW ANNEXED HEREWITH MARKED AS ANNEXURE C. 9. HONBLE DELHI HIGH COURT RECENTLY HAS CONSIDERED AN ISSUE ABOUT THE CONDITION WHICH MAY AUTHORIZE AN AO TO REOPEN THE A SSESSMENT, IN CASES WHERE SCRUTINY ASSESSMENT UNDER SECTION 143(3) WAS MADE. THE FINDING OF THE HONBLE DELHI HIGH COURT IN THE CASE INDU LATA RANG WLA VS. DCIT IN WRIT PETITION NO.1393 OF 2002 DECIDED ON 18.5.2016 ARE W ORTH TO NOTE. THE RELEVANT PART OF THE JUDGMENT READS AS UNDER: SUMMARY OF THE LEGAL POSITION 35.1 THE UPSHOT OF THE ABOVE DISCUSSION IS THAT WHE RE THE RETURN INITIALLY FILED IS PROCESSED UNDER SECTION 143 (1) OF THE ACT, AND AN INTIMATION IS SENT TO AN ASSESSEE, IT IS NOT AN 'AS SESSMENT' IN THE STRICT SENSE OF THE TERM FOR THE PURPOSES OF SECTIO N 147 OF THE ACT. IN OTHER WORDS, IN SUCH EVENT, THERE IS NO OCCASION FOR THE AO TO FORM AN OPINION AFTER EXAMINING THE DOCUMENTS ENCLO SED WITH THE RETURN WHETHER IN THE FORM OF BALANCE SHEET, AUDITE D ACCOUNTS, TAX AUDIT REPORT ETC. 35.2 THE FIRST PROVISO TO SECTION 147 OF THE ACT AP PLIES ONLY (I) WHERE THE INITIAL ASSESSMENT IS UNDER SECTION 143 ( 3) OF THE ACT AND (II) WHERE SUCH REOPENING IS SOUGHT TO BE DONE AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR. IN OTHER WORDS, THE REQUIREMENT IN THE FIRST PROVISO TO SECTION 147 OF THERE HAVING TO BE A FAILURE ON THE PART OF THE ASSESSEE 'TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS' DOES NOT AT ALL APPLY WHERE THE INITIAL RETURN HAS BEEN PROCESS ED UNDER SECTION 143 (1) OF THE ACT. 35.3 AS EXPLAINED IN RAJESH JHAVERI STOCK BROKERS ( P) LTD. (SUPRA) 'AN INTIMATION ISSUED UNDER SECTION 143 (1) CAN BE SUBJECTED TO PROCEEDINGS FOR REOPENING', SO LONG AS THE INGREDI ENTS OF SECTION 147 ARE FULFILLED'. 35.4 EXPLANATION 2 (B) BELOW SECTION 147 STATES THA T FOR THE PURPOSES OF SECTION 147, WHERE A RETURN OF INCOME H AS BEEN ITA NO.214/AHD/2016 7 FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEE N MADE AND IT IS NOTICED BY THE AO THAT THE ASSESSEE HAS UNDER STATED THE INCOME AND CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOW ANCE AND RELIEF IN THE RETURN THEN THAT 'SHALL ALSO BE DEEME D TO BE A CASE WHERE THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSE SSMENT'. 35.5 AS EXPLAINED BY THE SUPREME COURT IN RAJESH JH AVERI STOCK BROKERS P. LTD. (SUPRA) AND REITERATED BY IT IN ZUA RI ESTATE DEVELOPMENT AND INVESTMENT CO. LTD. (SUPRA) AN INTI MATION UNDER SECTION 143 (1) (A) CANNOT BE TREATED TO BE AN ORDE R OF ASSESSMENT. THERE BEING NO ASSESSMENT UNDER SECTION 143 (1) (A), THE QUESTION OF CHANGE OF OPINION DOES NOT ARI SE. 35.6 WHEREAS IN A CASE WHERE THE INITIAL ASSESSMENT ORDER IS UNDER SECTION 143 (3), AND IT IS SOUGHT TO BE REOPE NED WITHIN FOUR YEARS FROM THE EXPIRY OF THE RELEVANT ASSESSMENT YE AR, THE AO HAS TO BASE HIS 'REASONS TO BELIEVE' THAT INCOME HA S ESCAPED ASSESSMENT ON SOME FRESH TANGIBLE MATERIAL THAT PRO VIDES THE NEXUS OR LINK TO THE FORMATION OF SUCH BELIEF. IN A CASE WHERE THE INITIAL RETURN IS PROCESSED UNDER SECTION 143 (1) O F THE ACT AND AN INTIMATION IS SENT TO THE ASSESSEE, THE REOPENING O F SUCH ASSESSMENT NO DOUBT REQUIRES THE AO TO FORM REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, BUT SUCH REASON S DO NOT REQUIRE ANY FRESH TANGIBLE MATERIAL. 35.7 IN OTHER WORDS, WHERE REOPENING IS SOUGHT OF A N ASSESSMENT IN A SITUATION WHERE THE INITIAL RETURN IS PROCESSE D UNDER SECTION 143 (1) OF THE ACT, THE AO CAN FORM REASONS TO BELI EVE THAT INCOME HAS ESCAPED ASSESSMENT BY EXAMINING THE VERY RETURN AND/OR THE DOCUMENTS ACCOMPANYING THE RETURN. IT IS NOT NECESSARY IN SUCH A CASE FOR THE AO TO COME ACROSS SOME FRESH TANGIBLE MATERIAL TO FORM 'REASONS TO BELIEVE' THAT INCOME HAS ESCAPED ASSESSMENT. 35.8 IN THE ASSESSMENT PROCEEDINGS PURSUANT TO SUCH REOPENING, IT WILL BE OPEN TO THE ASSESSEE TO CONTEST THE REOP ENING ON THE GROUND THAT THERE WAS EITHER NO REASON TO BELIEVE O R THAT THE ALLEGED REASON TO BELIEVE IS NOT RELEVANT FOR THE F ORMATION OF THE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED AS SESSMENT. 35.9 THE DECISIONS OF THIS COURT AND OTHER COURTS T O THE EXTENT INCONSISTENT WITH THE ABOVE DECISIONS OF THE SUPREM E COURT CANNOT BE SAID TO REFLECT THE CORRECT LEGAL POSITIO N. ITA NO.214/AHD/2016 8 I FIND THAT THIS PLEA OF THE ASSESSEE WAS REJECTED BY THE LD.CIT(A) BY MAKING REFERENCE TO THE DECISION OF THE HONBLE DEL HI HIGH COURT IN THE CASE OF CONSOLIDATED PHOTO & FINVEST LTD. I AM OF THE VI EW THAT AFTER THIS DECISION OF THE HONBLE DELHI HIGH COURT WAS CONSIDERED BY T HE FULL BENCH OF THE DELHI HIGH COURT IN THE CASE OF KELVINATOR OF INDIA LTD., WHICH HAS BEEN UPHELD BY THE HONBLE SUPREME COURT AND THE JUDGMEN T OF THE HONBLE SUPREME COURT HAS BEEN REPORTED IN 320 ITR 561 (SC) . THUS, EVEN IF I EXAMINE THE REASON RECORDED BY THE AO, IN THE LIGHT OF THE ABOVE, THEN, IT WOULD REVEAL THAT THE AO WAS NOT JUSTIFIED IN REOPE NING OF THE ASSESSMENT ALSO. IN VIEW OF THE ABOVE, I ALLOW FIRST FOLD GRI EVANCE OF THE ASSESSEE AND QUASH THE RE-ASSESSMENT ORDER. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE COURT ON 10 TH JUNE, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER