Ulhas Shantaram Ghosalkar, Ratnagiri V. Income-tax Officer, Panvel

ITA 232/PUN/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5716 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-04-2019
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV GHEI
• Assessee Lawyers: SANJAY VHANBATTE
• Keywords: Unexplained cash credit; Unexplained investment; Question of law; Assessment record; Tax effect; Revised return; Reason to believe
• Section: 143(3); 68; 148; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / ITA NO. 232 /P U N/20 1 5 / ASSESSMENT YEAR : 20 07 - 08 ULHAS SHANTARAM GHOSALKAR, H NO.1777, TIMES BHAVAN, MARUTI LANE, RATNAGIRI - 415612 . / APPELLANT PAN: AA VPG6572A VS. THE INCOME TAX OFFICER, WARD 1, RATNAGIR I . / RESPONDENT . / ITA NO. 5 43 /P U N/20 1 5 / ASSESSMENT YEAR : 20 07 - 08 THE INCOME TAX OFFICER, WARD 1, RATNAGIRI . / APPELLANT VS. ULHAS SHANTARAM GHOSALKAR, H NO.1777, TIMES BHAVAN, MARUTI LA NE, RATNAGIRI - 415612 . / RESPONDENT PAN: AAVPG6572A . / ITA NO S . 2854 & 2855 /P U N/20 17 / ASSESSMENT YEAR S : 20 10 - 11 & 2011 - 12 ULHAS SHANTARAM GHOSALKAR, H NO.1777, BR. NATH PAI ROAD, MARUTI LANE, RATNAGIRI - 415612 . / APPELLANT PAN: AAVPG6572A VS. THE INCOME TAX OFFICER, WARD 2, RATNAGIRI . / RESPONDENT ITA NO S . 232 & 543 /P U N/20 1 5 ITA NO S . 2854 & 2855 /PUN/2017 2 ASSESSEE BY : SHRI SANJAY VHANBATTE REVENUE BY : SHRI SANJEEV GHEI / DATE OF HEARING : 1 0 . 04 .201 9 / DATE OF PRONOUNCEMENT: 14 . 0 5 .201 9 / ORDER PER SUSHMA CHOWLA, J M : OUT OF THIS BUNCH OF APPEALS, CROSS APPEAL S FILED BY ASSESSEE AND REVENUE ARE AGAINST THE ORDER OF CIT (A) - 1 &2 , KOLHAPUR , DATED 27 . 0 1 .20 1 5 RELATING TO ASSESSMENT YEAR 20 07 - 08 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . THE ASSESSEE HAS ALSO FILED APPEALS AGAINST CONSOLIDATED ORDER OF CIT(A) - 2, KOLHAPUR, DATED 01.11.2017 RELATING TO ASSESSMENT Y EARS 2010 - 11 AND 2011 - 12 AGAINST RESPECTIVE ORDERS PASSED UNDER SECTION 143(3) OF THE ACT. 2. THIS BUNCH OF APPEALS RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CO NVENIENCE. FIRST, WE SHALL TAKE UP APPEAL IN ITA NO.232/PUN/2015, RELATING TO ASSESSMENT YEAR 2007 - 08. 3. THE ASSESSEE IN ITA NO. 232 /PUN/201 5 , RELATING TO ASSESSMENT YEAR 2007 - 08 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS), KOLHAPUR [CIT(A) IN BRIEF] ERRED IN CONFIRMING THE ADDITION OF RS.4,00,000/ - BEING THE AMOUNT OF SALE PROCEEDS OF MACHINERY AS UNEXPLAINED MONEY U/S 69A MADE BY THE INCOME TAX OFF ICER, WARD - 1, RATNAGIRI, (HEREINAFTER REFERRED TO AS THE I TO'). THE APPELLANT SUBMITS AS UNDER, WITHOUT PREJUDICE TO EACH OTHER: ITA NO S . 232 & 543 /P U N/20 1 5 ITA NO S . 2854 & 2855 /PUN/2017 3 A . THE AMOUNT BEING A CREDIT TO THE CAPITAL ACCOUNT NO ADDITION CAN BE MADE OF SUCH A CREDIT TRANSACTION UNDER SECTION 69A IT B EING NOT IN THE NATURE OF AN UNEXPLAINED INVESTMENT. B . THE AMOUNT CREDITED TO THE CAPITAL ACCOUNT BEING THE ADVANCE AGAINST SALE OF MACHINERY, THUS THE SOURCE OF THE CREDIT HAVING BEEN FULLY EXPLAINED BY THE APPELLANT THE AMOUNT IS NOT TAXABLE EVEN UNDER SE CTION 68 AS UNEXPLAINED CREDIT. THE APPELLANT PRAYS THAT THE ITO BE DIRECTED TO DELETE THE ADDITION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF THE ITO TO THE EXTENT OF RS.6,50,933/ - RE PRESENTING THE CASH DEPOSITS IN THE BANK ACCOUNTS WITH JANATA SAHAKRI BANK LTD DURING THE YEAR UNDER APPEAL U/S 69. THE APPELLANT SUBMITS AS UNDER, WITHOUT PREJUDICE TO EACH OTHER: A . THE APPELLANT HAVING EXPLAINED THE SOURCES OF CASH DEPOSITS IN THE BAN K ACCOUNT, THE CIT(A) OUGHT NOT TO HAVE CONFIRMED THE ADDITION OF THIS ASSET. B . THE CASH DEPOSITS HAVING BEEN DULY REFLECTED IN THE REVISED BOOKS OF ACCOUNTS (ON THE BASIS OF WHICH THE APPELLANT HAS FILED HIS REVISED RETURN DECLARING ADDITIONAL INCOME) THE SOURCE OF THE DEPOSITS THUS STANDS FULLY EXPLAINED, NOT CALLING FOR FURTHER ADDITION BY THE ITO TREATING IT AS UNEXPLAINED INVESTMENT U/S 69. THE APPELLANT PRAYS THAT THE ITO BE DIRECTED TO DELETE THE ADDITION. 4. THE ASSESSEE HAS ALSO RAISED AN ADDITION AL GROUND OF APPEAL WHICH READS AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ASSESSMENT COMPLETED U/S 147 R.W.S. 143(3) BY THE A.O. AND CONFIRMED BY LD. CIT(A) IS BAD IN LAW AND WITHOUT JURISDICTION FOLLOWING THE JURISDICTIONAL H IGH COURT - BOMBAY HIGH COURT JUDGMENT IN CIT V. JET AIRWAYS (I) LTD. (2011) 52 DTR 71 DT. 12 TH APRIL, 2010. AS A MATTER OF FACT AND LAW IT WAS NOT AN ESCAPED ASSESSMENT. THE REOPENING OF THE ASSESSMENT BE QUASHED. 5. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ADDITIONAL GROUND OF APPEAL IS LEGAL ISSUE, WHICH MAY BE ADMITTED AND ONCE THE SAME IS DECIDED, THEN NO OTHER GROUNDS OF APPEAL NEED TO BE ADJUDICATED. 6. FIRST, WE SHALL TAKE UP ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE, WHEREIN THE ASSESSEE IS AGGRIEVED BY RE - ASSESSMENT ORDER PASSED UNDER SECTION 147 R.W.S. 143(3) OF THE ACT. THE PLEA OF ASSESSEE BEFORE US IS ITA NO S . 232 & 543 /P U N/20 1 5 ITA NO S . 2854 & 2855 /PUN/2017 4 THAT ASSESSMENT WAS REOPENED IN THE HANDS OF ASSESSEE ON ACCOUNT OF INSURANCE PREMIUM PAID TO TATA AIG LIFE INSURANCE. OUR ATTENTION WAS DRAWN TO REASONS RECORDED UNDER SECTION 147 OF THE ACT BY THE ASSESSING OFFICER, WHICH ARE PLACED AT PAGE 1 OF PAPER BOOK. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSING OFFICE R HAD MADE VARIOUS ADDITIONS IN THE HANDS OF ASSESSEE, BUT NO ADDITION WAS MADE ON ACCOUNT OF REASONS RECORDED FOR REOPENING THE ASSESSMENT. HE THUS, POINTED OUT THAT ASSESSMENT FRAMED IN THE CASE CANNOT STAND AS LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. JET AIRWAYS (I) LTD. (2011) 331 ITR 236 (BOM) AND PUNE BENCH OF TRIBUNAL IN SHRI ANIL C. MHASKE VS. ADDL.CIT IN ITA NO.2587/PUN/2017, RELATING TO ASSESSMENT YEAR 2009 - 10, ORDER DATED 10.09.2018 . 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR T HE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE FIRST ISSUE WHICH IS RAISED BY WAY OF ADDITIONAL GROUND OF APPEAL IS PURELY LEGAL IN NATURE AND THE SAME IS ADMITTED FOR ADJ UDICATION. THE ASSESSEE IS AGGRIEVED BY THE ORDER PASSED UNDER SECTION 147 R.W.S. 143(3) OF THE ACT. THE REASON FOR REOPENING THE ASSESSMENT WAS INFORMATION RECEIVED IN RESPECT OF INVESTMENT MADE IN LIFE INSURANCE POLICIES OF TATA AIG LIFE INSURANCE COMP ANY LIMITED IN THE CASE OF ASSESSEE AND IN THE NAME OF HIS WIFE. IN PARA 2 OF REASONS RECORDED FOR REOPENING THE ASSESSMENT, THE ASSESSING OFFICER TALKS OF INVESTMENT MADE PERTAINING TO FINANCIAL YEAR 2006 - 07 IN THE AFORESAID LIFE INSURANCE POLICIES ON 16 .02.2007 OF 15 LAKHS. THE ASSESSING OFFICER NOTES THAT ON VERIFICATION OF INCOME TAX RETURN, IT WAS SEEN THAT THE SAID INVESTMENT WAS NOT REFLECTED IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2007 - 08. ITA NO S . 232 & 543 /P U N/20 1 5 ITA NO S . 2854 & 2855 /PUN/2017 5 THEREFORE, HE HAD REASON TO BELIEVE THAT THER E WAS ESCAPEMENT OF INCOME TO THE TUNE OF 15 LAKHS FROM ASSESSMENT WITHIN MEANING OF SECTION 147 OF THE ACT. CONSEQUENTLY, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED FOR ASSESSMENT YEAR 2007 - 08. HENCE, REASONS WHICH WERE RECORDED FOR REOPENING THE ASSESSMENT WERE LIMITED TO THE INVESTMENT OF 15 LAKHS IN LIFE INSURANCE OF TATA AIG. THE PERUSAL OF ASSESSMENT RECORDS PASSED UNDER SECTION 147 R.W.S. 143(3) OF THE ACT REVEALS THAT NO SUCH ADDITION WAS MADE IN THE HANDS OF ASSESSEE ON THIS COUNT. HOWE VER, VARIOUS OTHER ADDITIONS HAVE BEEN MADE. 9. THE QUESTION WHICH ARISES IS THAT IN THE RE - ASSESSMENT PROCEEDINGS, WHEREIN NO ADDITION WAS MADE ON ACCOUNT OF REASONS RECORDED FOR REOPENING THE ASSESSMENT, IS THE ASSESSMENT ORDER PASSED THEREAFTER IS VITI ATED IN LAW? THE LANGUAGE OF SECTION 147 OF THE ACT ITSELF IS CLEAR, WHEREIN IT IS CATEGORICALLY MENTIONED THAT WHERE THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME HAD ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, THEN HE MAY ASSESS OR RE - ASSE SS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX. IN OTHER WORDS, IT IS INCUMBENT UPON THE ASSESSING OFFICER FIRST, TO RECORD REASONS FOR REOPENING THE ASSESSMENT ON ACCOUNT OF ESCAPEMENT OF INCOME OF PARTICULAR SOURCE OF INCOME DURING PARTICULA R ASSESSMENT YEAR, WHICH COMES TO HIS NOTICE AND THEN THE ASSESSING OFFICER IS TO PASS AN ORDER OF ASSESSMENT BY ASSESSING OR RE - ASSESSING SUCH INCOME AND ALSO ANY OTHER INCOME IN THE HANDS OF ASSESSEE. HOWEVER, WHERE THE ASSESSING OFFICER MAKES NO ADDITI ON ON ACCOUNT OF REASONS RECORDED FOR REOPENING THE ASSESSMENT, THEN HE IS PRECLUDED FROM MAKING ANY OTHER ADDITION ON ACCOUNT OF ANY OTHER SOURCES FOR WHICH NO REASONS WERE RECORDED FOR REOPENING THE ASSESSMENT. ITA NO S . 232 & 543 /P U N/20 1 5 ITA NO S . 2854 & 2855 /PUN/2017 6 10. THE HONBLE BOMBAY HIGH COURT IN CIT V S. JET AIRWAYS (I) LTD. (SUPRA) HAS LAID DOWN THE AFORESAID PROPOSITION, WHEREIN THEY HAVE ELABORATELY DISCUSSED THE SIGNIFICANCE OF EXPRESSION ALSO AND HELD AS UNDER: - 23. IN THAT VIEW OF THE MATTER AND FOR THE REASONS THAT WE HAVE INDICATED, WE DO NOT REGARD THE DECISION OF THE TRIBUNAL IN THE PRESENT CASE AS BEING IN ERROR. THE QUESTION OF LAW SHALL, ACCORDINGLY, STAND ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. THE APPEAL IS, ACCORDINGLY, DISMISSED. THERE SHALL BE NO ORDER AS TO COSTS . 11. APPLYING THE SAID PROPOSITION TO THE FACTS OF PRESENT CASE, WHEREIN NO ADDITION HAS BEEN MADE IN THE HANDS OF ASSESSEE ON ACCOUNT OF REASONS RECORDED FOR REOPENING THE ASSESSMENT, THE ASSESSMENT ORDER ASSESSING ANY OTHER INCOME IN THE HANDS OF ASSE SSEE IS NOT SUSTAINABLE. WE THUS, HOLD THAT RE - ASSESSMENT PROCEEDINGS COMPLETED IN THE CASE OF ASSESSEE, WHEREIN NO ADDITION HAS BEEN MADE ON ACCOUNT OF REASONS RECORDED FOR REOPENING THE ASSESSMENT CANNOT STAND AND IS BAD IN LAW. THE ADDITIONAL GROUND O F APPEAL RAISED BY ASSESSEE IS THUS, ALLOWED. 12. NOW, COMING TO THE REVENUES APPEAL IN ITA NO.543/PUN/2015, RELATING TO ASSESSMENT YEAR 2007 - 08, IT WAS THE CASE OF BOTH THE LEARNED AUTHORIZED REPRESENTATIVES THAT TAX EFFECT IN THE SAID APPEALS WAS LESS THAN THE MONETARY LIMITS PRESCRIBED BY CBDT VIDE CIRCULAR NO.3/2018 , DATED 11 . 07 . 2018 . HENCE, THE APPEAL OF REVENUE IS DISMISSED. 13. NOW , COMING TO APPEALS RELATING TO ASSESSMENT YEARS 2010 - 11 AND 2011 - 12, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT BECAUSE OF SMALLNESS OF ADDITION, GROUND OF APPEAL NO.1 MAY BE DISMISSED. HOWEVER, WE FIND THAT ASSESSEE HAD AGRE ED TO THE AFORESAID ADDITION DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. HENCE, GROUND OF ITA NO S . 232 & 543 /P U N/20 1 5 ITA NO S . 2854 & 2855 /PUN/2017 7 APPEAL NO.1 IS DISMISSED IN ASSESSMENT YEARS 2010 - 11 AND 2011 - 12. THE ASSESSEE HAS NOT PR ESSED GROUND OF APPEAL NO.2 IN ASSESSMENT YEAR 2010 - 11, HENCE THE SAME IS DISMISSED. 14 . IN THE RESULT, THE APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 IS ALLOWED, APPEALS OF ASSESSEE FOR ASSESSMENT YEARS 2010 - 11 AND 2011 - 12 ARE DISMISSED AND THE APPEA L OF REVENUE FOR ASSESSMENT YEAR 2007 - 08 IS ALSO DISMISSED. ORDER PRONOUNCED ON THIS 14 TH DAY OF MAY , 201 9 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA ) / ACCOUN TANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 14 TH MAY , 201 9 . G G C C V V S S R R / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 1 &2 , KOLHAPUR ; 4. THE CIT - I/II, KOLHAPUR / CIT (CENTRAL) , PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE