Telecon Consultancy Services LLP, New Delhi V. The Asstt. Commissioner of Income Tax, Central Circle-1(4), Ahmedabad

ITA 225/AHD/2023

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The case involves Telecon Consultancy Services LLP, which appealed against the order of the Commissioner of Income Tax (Appeals), Ahmedabad, concerning the reassessment order passed under sections 143(3) read with section 147 of the Income Tax Act, 1961 for the Assessment Year 2015-16. The primary contention was the validity of the notice issued under section 148 and the subsequent reassessment proceedings. The Assessing Officer (AO) had initiated reassessment believing that income had escaped assessment, which was contested by the assessee on grounds of lack of fresh tangible material and merely a change of opinion. The Tribunal agreed with the assessee, leading to the quashing of the reassessment proceedings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135825 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 24-07-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 05-04-2023
• Other Referred Cases: Ball Aerosol Packaging India (P.) Ltd. v. Assistant Commissioner of Income-tax, Shanti Enterprise, Calcutta Discount Co. Ltd. v. ITO
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIASHOKKUMARSUTHAR
• Assessee Lawyers: SHRIPRAKASHDSHAH

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’C’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And SHRIT.RSENTHILKUMAR,JUDICIALMEMBER आयकरअपीलसं ./ITANo.225/AHD/2023 धििाधरणवरध/Asstt.Year:2015-2016 TeleconConsultancyServicesLLP, 101,PlotNo.6.LSC, RajdhaniPlaza, NewRajdhaniEnclave, NewDelhi-110091. PAN:AABFW8101D Vs. A.C.I.T, CentralCircle-1(4), Ahmedabad. (Applicant)(Respondent) Assesseeby:ShriPrakashDShah,A.R Revenueby:ShriAshokKumarSuthar,Sr.D.R सुिवाईकीतारीख /DateofHearing:25/07/2023 घोरणाकीतारीख /DateofPronouncement:02/08/2023 आदेश /ORDER PERWASEEMAHMEDACCOUNTANTMEMBER: ThecaptionedappealhasbeenfiledattheinstanceoftheAssesseeagainst theorderoftheLearnedCommissionerofIncomeTax(Appeals),Ahmedabad,(in short“Ld.CIT(A)”)arisinginthematterofassessmentorderpassedunders. 143(3)r.w.s147oftheIncomeTaxAct1961(here-in-afterreferredtoas"the Act")relevanttotheAssessmentYear2015-16. ITAno.225/AHD/2023 Asstt.Year2015-16 2 2.Theassesseehasraisedthefollowinggroundsofappeal: 1.Thatthenoticeissuedundersection148oftheActandsubsequentreassessment proceedingsandtheassessmentorderpassedundersection143(3)bythelearnedAOis againstthelawanddirection/instructionoftheld.Hon'bleBoardandthereforetheorder passedbythelearnedAOistobequashedandaccordinglythelearnedAObedirecttoquash theassessmentorderoracceptthereturnedincome. 2.ThatthelearnedCIT(Appeal),haserredinlawandfactsbyconfirmingtheactionofthe learnedAOoftreatingtheincomeundertheheadIncomefromothersourcesasagainst BusinessIncomeandthereforethelearnedAObedirectedtotreatthesaidinterestincomeas BusinessIncomewhilecomputingthetotalincome. 3.ThatthelearnedCIT(Appeal),haserredinlawandfactsbyconfirmingthedisallowanceof Rs.28,904/-u/s14AoftheActandaccordinglytheld.AObedirectedtonottodisallowthe saidamountwhilecomputingtheincome. 4.Thatyourappellantcravesaleavetoadd,alteroramendanygroundsatthetimeof hearing. 3.TheassesseeingroundNo.1haschallengedthevalidityofthere- assessmentorderframedundersection143(3)readwithsection147oftheActin theabsenceoffreshtangiblematerials. 4.ThefactsinbriefarethattheassesseeinthepresentcaseisLLPanditwas subjecttotheassessmentundersection143(3)oftheActwhichwasselected underCASSforlimitedscrutinyfortheundermentioneditems: i.Long-termcapitalgain ii.Incomefromheadsofincomeotherthanbusiness/professionmismatch iii.Salesturnovermismatch 4.1Finally,theassessmentwasframedundersection143(3)oftheActdated 12October2017acceptingtheincomedisclosedbytheassesseeinthereturnof incomeat₹609,55,32,180.00only.Thebreakupoftheincomedisclosedbythe assesseeintheincometaxreturnstandasunder: i.Short-termcapitalgain₹183,35,55,560.00 ii.Long-termcapitalgain₹395,72,66,557.00 iii.Interestincomeshownundertheheadbusiness: ITAno.225/AHD/2023 Asstt.Year2015-16 3 ₹30,90,55,933.00 lessbroughtforwardbusinesslosses₹43,45,870.00₹30,47,10,063.00 Totalincomeasperthereturnofincome609,55,32,180.00 5.However,theAOonverificationofthecaserecordsfoundthattherewas nobusinessincomeshownbytheassesseeintheincometaxreturnwhereasthe assesseehassetoffofthebroughtforwardbusinesslossesagainsttheinterest incomewhichwastobeclassifiedundertheheadothersources.AspertheAO, thebusinesslossbroughtforwardfromtheearlieryearcannotbesetoffagainst theincomefromothersourcesundertheprovisionsofsection72oftheAct.Thus, aspertheAO,thesetoffofthebroughtforwardbusinesslossagainsttheincome fromothersourceshasescapedassessment. 5.1TheAOlikewisefurtherfoundthatdisallowanceundertheprovisionsof section14Areadwithrule8Dwastobemadefor₹28,904.00butthesamehas notbeenmadewhichhasresultedtheescapementofincome.Accordingly,theAO formedreasonstobelievethatincomeoftheassesseehasescapedassessment andinitiatedtheproceedingsundersection147oftheActbyissuingnoticeunder section148oftheActdated31 st ofMarch2021.TheassesseebeforetheAO objectedtotheinitiationoftheproceedingsundersection147oftheActvide letterdated23August2021whichwasdisposedofbytheAOvideorderdated24 August2021bydismissingthecontentionoftheassessee. 6.AggrievedassesseecarriedthematterbeforethelearnedCIT-Awhoalso confirmedtheorderoftheAO. 7.BeingaggrievedbytheorderoflearnedCIT-A,theassesseeisinappeal beforeus. 8.ThelearnedARbeforeuscontendedthattheAOhasformedreasonsto believethattheincomeoftheassesseehasescapedassessmentmerelyon ITAno.225/AHD/2023 Asstt.Year2015-16 4 verificationofthesamesetofdocumentswhichwereavailableduringthe assessmentproceedings.Assuchtherewasnofreshtangiblematerialbroughton recordbytheAOfromtheexternalsourcessuggestingthatincomeofthe assesseehasescapedassessment.AccordingtothelearnedAR,thereopening undersection147wasmademerelybasedonchangeofopinionafterreferring thedocumentswhichwereavailableduringtheassessmentproceedingsunder section143(3)oftheAct. 8.1ItwasalsocontendedbythelearnedARthattheoriginalassessmentwas carriedoutundersection143(3)oftheActforthelimiteditemsofscrutinysuch aslong-termcapitalgain,incomefromheadsofincomeotherthanbusiness/ professionmismatchandsalesturnovermismatch.Therewasnowhisperduring theoriginalassessmentproceedingsregardingthebroughtforwardofbusiness losseswhichwassetoffagainsttheinterestincome.Similarly,therewasno occasiontoinvoketheprovisionsofsection14Areadwithrule8Dofincometax rulesduringtheoriginalassessmentproceedings.Accordingly,thelearnedAR contendedthattheimpugnedcasewasselectedforlimitedscrutinyunderthe provisionsofsection143(3)oftheAct,thereforetherewasnooccasionfortheAO totouchtheissueswhichwerenotarisingfromthelimitedscrutinysuchasset-off ofbroughtforwardbusinesslossesandthedisallowancesundertheprovisionsof section14Areadwithrule8DofIncomeTaxRules.Thus,theAOduringthere- assessmentproceedingsundersection147oftheActhasexceededthe jurisdictionbydisturbingthoseitemswhichwerenotsubjectmatterofdispute duringtheoriginalassessmentproceedings. 9.Theassesseehasshowninterestincomeundertheheadbusinessand professionwhichwasalsoacceptedbytheAOduringtheoriginalassessment proceedings.TheAOhasacceptedtheinterestincomefrombusinessand professionwhichisoneofthepossibleviewsandthereforethesamecannotbe disturbedduringtheassessmentproceedingsundersection147oftheAct.Ifitis ITAno.225/AHD/2023 Asstt.Year2015-16 5 doneso,thenitisnothingbutmereachangeofopinionwhichisnotpermitted forinitiatingtheproceedingsundersection147oftheAct. 10.Onthecontrary,thelearnedDRvehementlysupportedtheorderofthe authoritiesbelow. 11.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Atthisjuncture,wefindrelevanttoreferpartofthe reasonsrecordedbytheAOforinitiatingtheproceedingsundersection147ofthe Actwhicharereproducedasunder: 2.1Onverificationofthecaserecords,itisnoticedfromincomeand expenditureaccountfortheperiod21.05.2014to31.03.2015=========== 11.1WhatisemergingfromtheabovereasonsisthisthattheAOhasinitiated theproceedingsafterverificationofthecaserecordswhichimpliesthattherewas nofreshtangiblematerialavailableonrecorddistinctfromwhatwasavailable duringtheoriginalassessmentproceedings.Thus,intheabsenceofanyfresh materialcomingtothenoticeoftheAOgivingrisetodrawthereasonstobelieve thattheincomeoftheassesseehasescapedassessment,inourconsideredview, iswithoutanybasisandthereforetheproceedingsinitiatedundersection147of theActisliabletobequashed.Inholdingso,wedrawsupportandguidancefrom thejudgementofHon’bleGujaratHighCourtinthecaseofBallAerosol PackagingIndia(P.)Ltd.v.AssistantCommissionerofIncometaxreported in150taxmann.com189whereinitwasheldasunder: 12.Atthisstage,aswehavenoticedthattheentirereassessmentisnotonthebasisof anyfreshtangiblematerialdistinctfromwhatwasalreadyavailableduringtheassessment proceedings,andassuch,thepetitionerhasmadeoutacasetofallwithintheproposition aslaidinthecaseofShantiEnterprise(supra).Sincewehaveconsideredthesame,the observationsascontainedinPara-11,wemaydeemitpropertoquotehereinbelow; 11.ThecontentionoftheRevenuethattheimpugnedactioniswithintheperiodoffour yearsand,therefore,itisalwaysopenfortheauthoritytoreopentheassessmentcannot beaccepted.Simplybecausetheactioniswithintheperiodoffouryearswouldnotgivea leveragetotheauthoritytojustgoonrepeatingtheexerciseofexaminingtheissuewhich hasalreadybeengoneinto.Thereappearstobenotangiblematerialdistinctfromwhat wasmadeapartoftheassessmentproceedingsand,therefore,reopeningofthe assessmentisnotpermissible.Thepropositionoflawisaptlyclear,asstatedaboveand, therefore,inouropinion,permittingtheauthoritytoreopentheassessmentwouldnotbe ITAno.225/AHD/2023 Asstt.Year2015-16 6 valid.Wecannotshutoureyesovertheaforesaidcircumstancesimplybecauseitiswithin theperiodoffouryearsandhavingregardtothedecisionsofApexCourtwhich propoundedthattheCourtswouldbefailingtoperformtheirduty,ifreliefswererefused withoutadequatereasons,weseethattheactiononthepartoftherespondentauthority isimpermissibleinviewofaforesaidsetofcircumstance.Theobservationsmadebythe ApexCourtincaseofCalcuttaDiscountCo.Ltd.v.ITOreportedin[41ITR191atpage 195head-note(v)areworthtobereproducedhereafter: "Thatthoughthewritofprohibitionorcertiorariwouldnotissueagainstanexecutive authority,theHighCourtshadpowertoissueinafitcaseanorderprohibitingan executiveauthorityfromactingwithoutjurisdiction.Wheresuchactionofanexecutive authority,actingwithoutjurisdictionsubjected,orwaslikelytosubject,apersonto lengthyproceedingsandunnecessaryharassment,theHighCourtswouldissue appropriateordersordirectionstopreventsuchconsequences.Theexistenceofsuch alternativeremediesasappealsandreferencetotheHighCourtwasnot,however,always asufficientreasonforrefusingapartyquickreliefbyawritororderprohibitingan authorityactingwithoutjurisdictionfromcontinuingsuchaction.Whentheconstitution conferredontheHighCourtsthepowertogivereliefitbecomesthedutyoftheCourtsto givesuchreliefinfitcasesandthecourtswouldbefailingtoperformtheirdutyifrelief wererefusedwithoutadequatereasons." 11.2Inviewoftheabove,weareoftheopinionthatthereopeningisnotasper theprovisionsoflawbutbasedonthesamesetofdocumentswhichwere availableduringtheoriginalassessmentproceedings.Accordingly,wequashedthe proceedingsinitiatedundersection147oftheAct.Hence,thegroundofappealof theassesseeisherebyallowed. 11.3Aswehavedecidedtheissueraisedbytheassesseeontechnicalgroundin itsfavourandquashedtheassessmentorderframedundersection147oftheAct initself,wedonotfindanyreasontodecidetheissueraisedbytheassesseeon merit.Assuchtheissuesraisedbytheassesseeonmeritdonotrequireany separateadjudicationandbecomeinfructuous.Accordingly,wedismissthesame. 12.Intheresult,theappealfiledbytheassesseeispartlyallowed. OrderpronouncedintheCourton02/08/2023atAhmedabad. Sd/-Sd/- (T.RSENTHILKUMAR)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated02/08/2023 Manish