Chirag Bharambhai Masani, Ahmedabad V. DCIT, Gandhinagar Circle, Gandhinagar

ITA 2260/AHD/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5864 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 15-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Keywords: Reason to believe; Set aside
• Section: 143(3); 148

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 2260/AHD/2018 ( ASSESSMENT YEAR : 2012-13) CHIRAG BHARAMBHAI MASANI 204, GOLDEN SIGNATURE COMPLEX, NEAR NATIONAL HANDLOOM, C.G. ROAD, AHMEDABAD - 380009 / VS. DEPUTY COMMISSIONER OF INCOME TAX, GANDHINAGAR CIRCLE, GANDHINAGAR ./ ./ PAN/GIR NO. : AHCPM7191F ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI CHETAN AGARWAL, A.R. / RESPONDENT BY : SHRI L. P. JAIN, SR. DR DATE OF HEARING 04/04/2019 !'# / DATE OF PRONOUNCEMENT 30/04/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS), GANDHINAGAR (CIT(A) IN SHORT), DATED 1 0.09.2018 ARISING IN THE ASSESSMENT ORDER DATED 26.02.2016 PASSED BY THE ASSESSING OFFICER (AO) UNDER S. 143(3) R.W.S. 147 OF THE INCO ME TAX ACT, 1961 (THE ACT) CONCERNING AY 2012-13. ITA NO. 2260/AHD/18 [CHIRAG B. MASANI VS. DCIT] A.Y. 2012-13 - 2 - 2. THE GROUND OF APPEAL RAISED BY THE ASSESSEE READ S AS UNDER: 1. LD. CIT(A) ERRED IN LAW AS WELL AS ON FACT IN C ONFIRMING ADDITION OF RS.27,61,307 MADE BY A.O. ON ACCOUNT OF DISALLOWANC E OF COST OF IMPROVEMENT INCURRED BY APPELLANT. 3. THE ASSESSEE HAS ALSO CHALLENGED THE ASSUMPTION OF JURISDICTION UNDER S.147 OF THE ACT AS PER ITS ADDITIONAL GROUND OF APPEAL WHICH READS AS UNDER: 2. LD. CIT(A) ERRED IN LAW AS WELL AS ON FACT IN U PHOLDING ASSESSMENT MADE U/S. 143(3) R.W.S. 147, WHICH WAS REOPENED BY A.O. ON THE BASIS OF SUSPICION AND FOR FISHING INQUIRY. 4. SINCE THE ASSESSEE HAS RAISED LEGAL QUESTION ON THE USURPATION OF JURISDICTION BY THE AO TO REOPEN THE COMPLETED ASSE SSMENT UNDER S.143(1) OF THE ACT IN THE INSTANCE CASE, IT WOULD BE PERTINENT TO DEAL WITH THE AFORESAID QUESTION AT THE OUTSET AS IT GOE S TO THE ROOT OF THE MATTER. THE LEARNED AR FOR THE ASSESSEE AT THE OUT SET SUBMITTED THAT THE AO HAS WRONGLY ASSUMED JURISDICTION FOR MAKING RE-ASSESSMENT BY ISSUING NOTICE UNDER S.148 OF THE ACT WITHOUT AUTHO RITY OF LAW. THE LEARNED AR SUBMITTED THAT THE INGREDIENTS OF SECTIO N 147/148 OF THE ACT ARE NOT FULFILLED IN THE INSTANCE CASE TO ENABL E THE AO TO EXERCISE JURISDICTION AND TO PROCEED WITH RE-ASSESSMENT PROC EEDINGS. THE LEARNED AR FURTHER SUBMITTED THAT THE ASSESSMENT HA S BEEN REOPENED WITHOUT MEETING THE REQUIREMENT OF MAIN PROVISION T O SECTION 147 OF THE ACT. THE LEARNED AR SUBMITTED THAT THE AO WAS ENTITLED TO EXERCISE JURISDICTION UNDER S.147 OF THE ACT ONLY U PON FULFILLMENT OF THE INDISPENSIBLE REQUIREMENT OF FORMATION OF REAS ON TO BELIEVE THAT CHARGEABLE INCOME HAS ESCAPED ASSESSMENT. IT WAS A LLEGED THAT THE AO HAS ISSUED NOTICE UNDER S.148 OF THE ACT WITHOUT ME ETING THIS BASIC REQUIREMENT AND THEREFORE, THE ENTIRE ACTION OF INI TIATION OF REOPENING PROCEEDINGS AND FRAMING OF RE-ASSESSMENT ORDER IS A COMPLETE NON- STARTER NULLITY. ADVERTING TO THE REASONS RECORDED BY THE AO (AS REPRODUCED IN PARA 3.1 OF THE ASSESSMENT ORDER) UND ER S.148(2) OF THE ITA NO. 2260/AHD/18 [CHIRAG B. MASANI VS. DCIT] A.Y. 2012-13 - 3 - ACT, THE LEARNED AR SUBMITTED THAT AO HAS MERELY DO UBTED THE CLAIM OF COSTS OF IMPROVEMENT INCURRED BY THE ASSESSEE AS DOUBTFUL WHICH IS QUITE DISTINCT FROM THE EXPRESSION REASONS TO B ELIEVE. THE LEARNED AR SUBMITTED THAT THE DOUBT HOWSOEVER STRONG WOULD NOT REPLACE THE EXPRESSION BELIEVE AS HELD IN LONG LINE OF JUDICI AL PRECEDENTS. THE LEARNED AR SUBMITTED THAT IN VIEW OF MERE DOUBT, TH E AO HAS SOUGHT TO REOPEN THE TIME BARRED ASSESSMENT FOR MAKING ROV ING AND FISHING INQUIRY OR INVESTMENT WHICH IS NOT PERMISSIBLE IN L AW IN VIEW OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CASE OF KRUPESH GHANSHYAMBHAI THAKKAR VS. DCIT [2017] 17 TAXMANN.CO M 293 (GUJARAT), MANZIL DINESHKUMAR SHAH VS. PRINCIPAL CI T [2018] 95 TAXMANN.COM 46 (GUJARAT) AND ITO VS. AMIT K. SHAH [ 2016] 71 TAXMANN.COM 256 (AHMEDABAD TRIB.). 5. THE LEARNED DR FOR THE REVENUE, ON THE OTHER HAN D, RELIED UPON THE ORDER OF THE AO. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE ASSESSEE IN THE INSTANT CASE HAS INTER ALIA RAISED ITS GRIEVANCE OF JURISDICTIONAL DEFECT I.E. VALIDITY OF ASSUMPTION O F JURISDICTION UNDER S.147/148 OF THE ACT. 6.1 THE REASONS RECORDED UNDER S.148(2) OF THE ACT GIVING CAUSE FOR ISSUANCE OF NOTICE UNDER S.148 OF THE ACT IS PERTIN ENT TO DETERMINE THE ISSUE. ACCORDINGLY, THE REASONS SO RECORDED BY THE AO IS REPRODUCED HEREUNDER: 'THE. INFORMATION AVAILABLE ON THE RECORDS OF THIS OFFICE THAT ONE PERSON SHRI M.I.K. TINMIZI HAS SOLD THE PROPERTY BEING AGR ICULTURE LAND SITUATED AT SURVEY NO. 70, KOTESHWAR, TA- GANDHINAGAR. THE A SSESSEE IS THE CONFIRMING PARTY IN AGRICULTURE LAND SITUATED AT SU RVEY NO. 70, KOTESHWAR, TA- GANDHINAGAR. OUT OF TOTAL CONSIDERAT ION OF RS. 3,00,00,000/-, AN AMOUNT OF RS.2,50,00,000/- HAVE B EEN PAID TO THE ASSESSEE ON VARIOUS DATES BEING THE CONFIRMING PART Y. SHRI CHIRAG B. MASANI (ASSESSEE PAN:- AHCPM7191F) HAS CLAIMED COST OF IMPROVEMENT ITA NO. 2260/AHD/18 [CHIRAG B. MASANI VS. DCIT] A.Y. 2012-13 - 4 - OF RS.27,61,307/- IN THE COMPUTATION OF LONG TERM C APITAL GAIN. THE CLAIM OF COST OF IMPROVEMENT OF ASSESSEE IS DOUBTFUL FURT HER, THE ASSESSEE HAS ALSO CLAIMED EXEMPTION OF RS.50,00,000/ -FROM THE L TCG. THEREFORE, I HAVE REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT TO THAT EXTENT, FOR A.Y. 2012-13 , WITHIN THE MEANING OF SECTION 147 OF THE ACT. HENCE, IN MY OPINION, THIS IS A FIT CASE FOR RE- OPENING OF ASSESSMENT U/S. 147 OF THE INCOME TAX AC T, 1961. 6.2 A BARE PERUSAL OF THE REASONS RECORDED SUGGESTS THAT THE AO HAS PROPELLED HIMSELF TO REOPEN THE TIME BARRED ASSESSM ENT ON THE GROUND OF DOUBTS ON THE CORRECTNESS OF CLAIM OF COST OF IM PROVEMENT BY THE ASSESSEE. ALTHOUGH, THE AO HAS REITERATED THE STAT UTORY LANGUAGE IMPLIED IN SECTION 147 OF THE ACT THAT HE HOLDS RE ASONS TO BELIEVE THAT CHARGEABLE INCOME HAS ESCAPED ASSESSMENT, WE D O NOT FIND ANY PROCESS OF REASONING FOR HOLDING SUCH BELIEF. ON T HE CONTRARY, IT IS CLEARLY DISCERNABLE FROM THE REASONS RECORDED THAT THE AO HAS MERELY EXPRESSED HIS DOUBT ON THE CLAIMS TOWARDS COST OF IMPROVEMENT. IT IS WELL SETTLED THAT REOPENING ON REASON TO DOUBT ON THE EXISTING FACTS IS WHOLLY UNSUSTAINABLE IN LAW. THE REOPENING OF A COMPLETED ASSESSMENT/TIME BARRED ASSESSMENT IS NOT PERMISSIBL E UNLESS ESSENTIAL PRE-REQUISITES OF SECTION 147 OF THE ACT ARE STRONG LY OBSERVED. NOTICEABLY, THE SECTION 147 OF THE ACT USES THE EXP RESSION REASONS TO BELIEVE WHICH IS THE BEDROCK FOR ASSUMPTION OF JUR ISDICTION. THE SIGNIFICANT WORD IN THE MAIN PROVISIONS TO SECTION 147 OF THE ACT IS BELIEF AND NOT SUSPICION. IT IS WELL SETTLED T HAT REASON TO BELIEVE IS NOT THE SAME AS REASON TO DOUBT OR REASON TO SUSPECT. DIFFERENCE BETWEEN TWO STEPS ARE VITAL AND SUBSTANTIAL AS HELD IN JAMNADAS MADHAVJI AND CO. (1986) 162 ITR 331 (BOM.). THUS REASON TO BELIEVE IS OF HIGHER PEDESTAL AND REQUIRES FULFILL MENT OF STRICTIER TEST. THE BELIEF CANNOT BE A MERE PRETENSE NOR CAN IT B E A MERE DOUBT OR SUSPICION. THE HONBLE SUPREME COURT IN LAKHMANI M EWAL DAS (1976) 103 ITR 437 (SC) ALSO UNDERSCORED THE FACT T HAT THE WORDS OF THE STATUTE ARE REASONS TO BELIEVE AND NOT REASO N TO SUSPECT. THE VAGUE FEELING OR SUSPICION OF THE AO TOWARDS POSSIB LE ESCAPEMENT ITA NO. 2260/AHD/18 [CHIRAG B. MASANI VS. DCIT] A.Y. 2012-13 - 5 - WOULD NOT PERMIT HIM TO REOPEN A COMPLETED/ TIME BA RRED ASSESSMENT IN DEFIANCE OF THE STATUTORY REQUIREMENT OF SUBSTAN TIAL NATURE. THEREFORE, WE SEE CONSIDERABLE FORCE IN THE PLEA OF THE ASSESSEE FOR NON-MAINTAINABILITY OF RE-ASSESSMENT ORDER PASSED I N PURSUANCE OF A NOTICE UNDER S. 148 OF THE ACT WHICH IS VITIATED IN LAW. ACCORDINGLY, THE RE-ASSESSMENT NOTICE UNDER S.148 OF THE ACT IS QUASHED AND CONSEQUENTLY THE RE-ASSESSMENT ORDER APPEALED AGAIN ST IS ALSO QUASHED AND SET ASIDE. 6.3 THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 6.4 HAVING HELD THAT THE RE-ASSESSMENT ORDER PASSED IS BAD-IN-LAW, WE DO NOT CONSIDERED IT NECESSARY TO LOOK INTO OTHE R GROUNDS OF APPEAL. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 30/04/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 30/04/201 9