Sri Vetrivel Sundaresan, CHENNAI V. ACIT, CHENNAI

ITA 2333/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6465 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-07-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 12-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN JICIT D R
• Assessee Lawyers: D ANAND
• Keywords: Reopening of assessment; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 147; 148; 139

Judgement Text

, B/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL B/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A.NO.2333 /MDS./2016 ( ASSESSMENT YEARS : 2005-06) MR.VETRIVEL SUNDARESAN , PLOT NO.118,PALKALAI NAGAR, PALAVAKKAM,CHENNAI 600 041. VS. THE ACIT, SALARY CIRCLE-VI, NEW JURISDICTION , NON-CORPORATE CIRCLE-18, CHENNAI. PAN ACFPV 1848 N ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR.D.ANAND,ADVOCATE / RESPONDENT BY : MR.B.SAGADEVAN, JICIT, D.R ! ' / DATE OF HEARING : 12.07.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 31.08.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-15, CHENN AI DATED 19.02.2016 PERTAINING TO ASSESSMENT YEAR 2005-06. ITA NO.2333/MDS/2016 2 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS FOR A DJUDICATION. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME (APPEALS)- 15, CHENNAI IS WRONG, ILLEGAL AND IS OPPOSED TO LAW AND FACTS O F THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -15 ERRED IN LAW IN UPHOLDING THE VALIDITY OF RE-OPENING OF THE ASSESSM ENT. THE LEARNED CIT (A) OUGHT TO HAVE SEEN THAT IT IS A SETTLED PROPOSI TION OF LAW THAT THE ASSESSMENTS CANNOT BE RE-OPENED MERELY BASED ON CHA NGE OF OPINION AND THAT NOTICE UNDER SECTION 148 OF THE ACT CANNOT BE ISSUED FOR THE PURPOSE OF VERIFICATION OF THE MATERIAL ALREADY AVA ILABLE WITH THE AUTHORITIES. 3. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT DESPI TE THE FACT THAT THE APPELLANT HAD RAISED SPECIFIC OBJECTION REGARDING R E-OPENING OF ASSESSMENT, THE LEARNED ASSESSING OFFICER PROCEEDED WITH THE RE- ASSESSMENT PROCEEDINGS WITHOUT PASSING A PRELIMINAR Y ORDER DISPOSING OFF THE APPELLANTS OBJECTION. 4. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE A SSESSEE HAS FURNISHED FULL AND TRUE PARTICULARS OF ITS INCOME AT THE TIME OF ORIGINAL ASSESSMENT WITH REFERENCE TO INCOME ALLEGED TO HAVE ESCAPED AS SESSMENT AND THAT THE ASSESSMENT CANNOT BE VALIDLY REOPENED UNDER SEC TION 147 OF THE ACT, EVEN WITHIN FOUR YEAR, MERELY ON THE BASIS OF CHANG E OF OPINION. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE ENTIRE MATERIAL HAD BEEN PLACED BY THE APP ELLANT BEFORE THE ASSESSING OFFICER AT THE TIME OF FILING ITS ORIGINA L RETURNS WHICH WAS SUBJECTED TO PROCEEDINGS UNDER SECTION 143(1) OF TH E INCOME TAX ACT AND ITA NO.2333/MDS/2016 3 THAT THE RE-OPENING OF ASSESSMENT IS NOT ON THE BAS IS OF ANY FRESH AND ADDITIONAL MATERIAL BUT ONLY ON CHANGE OF OPINION W HICH IS NOT VALID IN LAW. 6. TE LEARNED COMMISSIONER OF INCOME TAX OUGHT TO H AVE SEEN THAT THERE IS NO TANGIBLE MATERIAL THAT THE AO CAME ACROSS TO JUS TIFY FORMING REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. THE ONLY MATERIAL REFERRED TO WERE THE STATEMENT OF ACCOUNTS FILED BY THE APPELLANT, WHICH IN ANY WAY WERE AVAILABLE WITH THE ASSESSING OFFICER A T THE TIME OF ISSUANCE OF THE ORDER/ INTIMATION UNDER SECTION 143 (1) OF T HE ACT. THE REASONS RECORDED WERE THEREFORE AT BEST A CHANGE OF OPINION BASED ON SUSPICION AND SURMISES. 7. THE LEARNED COMMISSIONER OF INCOME TAX OUGHT TO HAVE SEEN THE RATIO LAID DOWN IN TRUSTEES OF H.E.H. THE NIZAMS SUPPLEM ENTAL FAMILY TRUSTS SQUARELY APPLIES TO THE INSTANT CASE IN FAVOUR OF T HE ASSESSEE. THE RATIO OF THE SAID JUDGMENT IS THAT IN THOSE SITUATIONS WH ERE THERE IS NO ASSESSMENT ORDER PASSED, THERE CANNOT BE A NOTICE F OR RE-ASSESSMENT INASMUCH AS THE QUESTION OF RE-ASSESSMENT ARISES ON LY WHEN THERE IS AN ASSESSMENT IN THE FIRST INSTANCE. THE AFORESAID JUD GMENT IS FURTHER AFFIRMED BY THE HONBLE APEX COURT IN M/S.STANDARD CHARTERED FINANCE VS CIT IN SLP NO.13512/2012. 8. THE LEARNED CIT (A) ERRED IN LAW IN DISALLOWING THE APPELLANTS CLAIM OF INTEREST ON HOUSING LOAN UNDER THE PRETEXT THAT THE APPELLANT HAS NOT PRODUCED THE CERTIFICATE. 9. THE LEARNED CIT (A) ERRED IN LAW IN DISALLOWING A SUM OF RS.1,40,000/- U/S.10(13A) OF THE INCOME TAX ACT. ITA NO.2333/MDS/2016 4 3. THERE WAS A DELAY OF 45 DAYS IN FILING THIS APPEAL BY THE ASSESSEE. THE ASSESSEE HAS FILED A CONDONATION PE TITION STATING THAT:- 1. I AM THE APPELLANT/PETITIONER IN THE ABOVE APPEA L AND I AM FULLY ACQUAINTED WITH THE FACTS OF THE CASE LEADING TO AND RELATING TO THE PRESENT PETITION. 2. I HAVE FILED THE ABOVE APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME (APPEALS)-15, CHENNAI DATED 19.2.2016. THE S AID APPELLATE ORDER WAS RECEIVED BY ME ON 28.04.2016. IN NORMAL COURSE THE APPEAL SHOULD HAVE BEEN FILED BY 27.06.2016 BUT HOWEVER THE APPEA L WAS FILED ON 12.08.2016 WITH A DELAY OF 46 DAYS. 3. I SUBMIT THAT ORDER OF THE LEARNED COMMISSIONER OF INCOME (APPEALS)-15, CHENNAI WAS PASSED ON 19.02.2016 AND THE SAME WAS R ECEIVED BY ME ON 28.04.2016 BUT HOWEVER THE SAME WAS MISPLACED BY ME AND COULD BE TRACED SUBSEQUENTLY ONLY ON 5.08.2016. THEREAFTER I CONTACTED THE COUNSEL IMMEDIATELY AND GOT THE APPEAL PAPERS READY AND FILED THE SAME BEFORE THE HONBLE TRIBUNAL ON 12.08.2016 WITH A DE LAY OF 46 DAYS. I WAS UNABLE TO FILE THE APPEAL PAPERS IN DUE TIME DESPIT E BEST OF MY EFFORTS BUT HOWEVER FILED THE SAME WITH A DELAY OF 46DAY. THE D ELAY IS NEITHER WILLFUL NOR WANTON BUT DUE TO THE AFORESAID CIRCUMSTANCE. 4. IT IS THEREFORE PRAYED THAT THE HONBLE TRIBUNAL MAY BE PLEASED TO CONDONE THE DELAY OF 46 DAYS IN FILING THE APPEAL BEFORE TH E INCOME TAX APPELLATE TRIBUNAL AND RENDER JUSTICE. ITA NO.2333/MDS/2016 5 4. I HAVE GONE THROUGH THE REASONS ADVANCED BY THE ASSESSEE IN THE CONDONATION PETITION. I FIND THAT THERE WAS SUFFICIENT CAUSE FOR NOT FILING THE APPEAL WITHIN THE STIPULATED TIME. THEREFORE, I CONDONE THE DELAY AND ADMIT THE APPEAL FOR ADJUDICATION. 5. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, FILED HIS RETURN ON 01.08.2005 FOR ASSESSMENT YEAR 2005-06 DECLARING TOTAL INCOME OF ` 5,50,206/-. SUBSEQUENTLY, THE LD. ASSESSING OFFICER INITIATED THE RE-ASSESSMENT PROCEEDINGS BY ISSUING NOTICE U/S.148 OF THE ACT DATED 29.03.2012 ON THE REASON TO BELIEVE T HAT INCOME HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC.147 O F THE ACT. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED HIS RETU RN OF INCOME ON 30.04.2012. NOTICE U/S.143(2) WAS ISSUED. THEREAFT ER, THE ASSESSMENT WAS COMPLETED U/S.143(3) R.W.S.147 OF TH E ACT ON 28.03.2013 ASSESSING THE TOTAL INCOME OF ` 8,57,338/-. AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICER, THE ASSESSEE CA RRIED THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL, LD.CIT(A) OBSERVE D THAT THE LD. ASSESSING OFFICER HAS CORRECTLY REOPENED THE ASSESS MENT BY RECORDING HIS SATISFACTION THAT INCOME HAS ESCAPED ASSESSMENT AND ITA NO.2333/MDS/2016 6 THE ASSESSEE ALSO ADMITTED THAT THE REASONS RECORDE D WERE PROVIDED AFTER A GAP OF EIGHT MONTHS. ACCORDING TO LD.CIT(A) , THE ASSESSMENT ORDER WAS PASSED AFTER GIVING DUE OPPORTUNITY TO TH E ASSESSEE. THEREFORE, LD.CIT(A) CONFIRMED THE ACTION OF THE LD . ASSESSING OFFICER REGARDING REOPENING OF ASSESSMENT . AGAINST THE ORD ER OF LD.CIT(A), NOW THE ASSESSEE IS IN APPEAL BEFORE US. 6. NOW, COMING TO THE ISSUE RELATING TO RE-OPENIN G OF ASSESSMENT , LD.A.R SUBMITTED THAT THERE IS NO TANGIBLE FRESH MA TERIAL TO RE-OPEN THE ASSESSMENT . IT WAS SUBMITTED THAT IF THE AO, AFTER ISSUANCE OF INTIMATION U/S.143(1) OF THE ACT, DOES NOT ISSUE A NOTICE U/S.143(2) OF THE ACT TO INITIATE THE PROCEEDINGS FOR SCRUTINY OF RETURN OF INCOME, THE OBVIOUS CONCLUSION IS THAT HE DOES NOT CONSIDER IT NECESSARY OR EXPEDIENT TO DO SO, THE INFERENCE IS THAT THE RETU RN OF INCOME FILED IS IN ORDER. IT IS THIS OPINION THAT CANNOT BE ARBITR ARILY CHANGED BY THE AO, TO RE-ASSESS INCOME ON THE BASIS OF STALE MATER IAL, ALREADY ON RECORD. ACCORDING TO HIM, THE FUNDAMENTAL REQUIREME NT OF INVOKING THE SEC.147 OF THE ACT, IT WOULD BE APPARENT THAT T HE EXERCISE UNDERTAKEN BY THE AO IN THIS CASE IS NOT ONE OF RE- ASSESSMENT, BUT OF REVIEW. THE REASONS MAKE IT ABUNDANTLY CLEAR THAT T HE RE-ASSESSMENT ITA NO.2333/MDS/2016 7 IS SOUGHT TO BE INITIATED ON THE BASIS OF THE RETUR N OF INCOME AND THE ENCLOSURES WHICH WERE AVAILABLE WITH THE AO. AT THE TIME OF PROCESSING U/S.143(1) OF THE ACT, THE SAME MATERIAL OUGHT TO HAVE PROMPTED HIM TO ISSUE A NOTICE U/S.143(2) OF THE AC T SO AS TO COMPLETE THE SCRUTINY ASSESSMENT U/S.143(3) OF THE ACT. WHAT IS SOUGHT TO BE DONE BY THE RE-ASSESSMENT OUGHT TO HAV E BEEN ACHIEVED BY SCRUTINY ASSESSMENT PROCEEDINGS. ACCO RDING TO HIM, HAVING MISSED THE BUS EARLIER, THE LD. ASSESSING OF FICER CANNOT BE PERMITTED TO AVAIL OF THE EXTENDED TIME LIMIT IN TH E ABSENCE OF ANYNEW OR TANGIBLE MATERIAL, WHEN THE TIME OF SCRUTINY ASS ESSMENT HAS ELAPSED BEFORE ISSUE OF NOTICE U/S.148 OF THE ACT. FOR THIS PURPOSE HE RELIED ON THE JUDGEMENT OF JURISDICTIONAL HIGH COUR T IN THE CASE OF M/S.TANMAC INDIA VS. DCIT IN TAX CASE (APPEAL) NO.1 426 OF 2007 VIDE ORDER DATED 19.12.2016 AND HE ALSO RELIED ON T HE JUDGEMENT OF SUPREME COURT IN THE CASE OF M/S.STANDARD CHARTERE D FINANCE LTD., VS. CIT IN SLP(C) NO.13512/2012 VIDE ORDER DATED 09 .02.2016. 7. ON THE OTHER HAND, LD.D.R RELIED ON THE ORDERS OF THE LD. ASSESSING OFFICER AND LD.CIT(A). ITA NO.2333/MDS/2016 8 8. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE MAIN CONTENTION OF LD.A.R IS THAT IN T HIS CASE THERE WAS NO ASSESSMENT U/S.143(3) OF THE ACT. THE ASSESSEE HAS FURNISHED ALL DETAILS TO THE AO AT THE TIME OF FILING OF RETURN O F INCOME AND ACCORDING TO THE A.R, THERE WAS NO FAILURE ON THE P ART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS NECESSARY FOR THE PU RPOSE OF ASSESSMENT. HE SUBMITTED THAT NOTICE U/S.148 OF TH E ACT FOR RE- OPENING WAS ISSUED ON 29.03.2012. HE SUBMITTED THA T THE AO GOING THROUGH THE SAME DOCUMENTS, WHICH WERE ALREADY ON R ECORD, WANTED TO RE-OPEN THE ASSESSMENT, WHICH IS NOTHING BUT REV IEW OF THE EARLIER OPINION, WHICH IS NOT POSSIBLE U/S.147 OF THE ACT. IN THIS CASE, THE ASSESSMENT WAS REOPENED AFTER RECORDING THE REASONS THAT THERE WAS AN ESCAPEMENT OF INCOME WITH REFERENCE TO ALLOWABIL ITY OF DEDUCTION U/S.80C OF THE ACT. 8.1 ADMITTEDLY, THERE WAS NO ORIGINAL ASSESSMENT U/S.143(3) OF THE ACT AND THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT VIDE INTIMATION DATED 31.08.2006. THEREAFTER THE LD. ASSESSING OFF ICER RECORDED THE REASONS FOR RE-OPENING OF ASSESSMENT BY ISSUING OF NOTICE U/S.148 DATED 15.03.2013 AS BELOW:- ITA NO.2333/MDS/2016 9 1. IT IS MANIFEST FROM THE RECORDS THAT YOU HAVE O CCUPIED THE HOUSE ONLY IN THE MONTH OF DECEMBER,2004. IN THAT PREMISE IT I S PROPOSED TO DISALLOW THE INTEREST CLAIM AS WELL AS CLAIM U/S.80 C. IN VIEW OF THE DECISION OF SPECIAL BENCH OF ITAT,CHENNAI IN THE CA SE OF M.RAGUNANDAM VS. I.T.O (1985) 11 ITD 298 (MAD.TRI.) (SB). 2.IT IS SEEN FROM THE RECORD THAT HAVE CLAIMED AN E XEMPTION OF RS.1,40,000/- U/S.10(13A) OF THE I.T.ACT. HOWEVER, YOU HAVE NOT SUBSTANTIATED THE CLAIM U/S.10(13A) BY FURNISHING A NY COLLABORATIVE DOCUMENTARY EVIDENCE. IN THAT PREMISE, IT IS PROPO SED TO THE DISALLOW YOUR CLAIM OF RS.1,40,000/- U/S.10(13A) OF THE I.T. ACT. YOU ARE REQUIRED TO EXPLAIN AS TO WHY THE CLAIM U/S.10(13A) SHOULD N OT BE DISALLOWED. ADMITTEDLY, IN THE PRESENT CASE, THE PROCEEDINGS U/ S.148 OF THE ACT WAS INITIATED AFTER THE FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IT IS NOT THE CASE OF THE DEPARTMENT THAT THE ASSESSEE HAS FAILED TO FILE A RETURN UNDER SECTION 139 OF THE ACT OR FAILED TO RESPOND TO THE NOTICE ISSUED UNDER SECTIO N 142 OR SECTION 148 OF THE ACT. THE ONLY OTHER ISSUE IS WHETHER TH ERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THIS ASSESSMENT YEAR. IF THE ASSESSEE FURNISHES ALL THE DETAILS FOR THE PURPOSE OF ASSESS MENT, THE AO WOULD HAVE ISSUED NOTICE U/S.143(2) OF THE ACT FOR THE P URPOSE OF COMPLETING THE ASSESSMENT U/S.143(3) OF THE ACT OR IGINALLY. FURTHER, ITA NO.2333/MDS/2016 10 THERE WAS NO ALLEGATION FROM THE AO THAT THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR ASSESSMENT . THE AO CANNOT PROCEEDS FURTHER TO REOPEN THE ASSESSMENT ON THE GROUND THAT THE INCOM E ESCAPING ASSESSMENT WITHOUT ANY FRESH TANGIBLE MATERIAL AND ONLY BY RELYING ON THE DECISION OF SPECIAL BENCH OF ITAT,CHENNAI IN THE CASE OF M.RAGUNANDAM VS. I.T.O (1985) 11 ITD 298 (MAD.TRI.) (SB). FOR THE PURPOSE OF ASSUMPTION OF JURISDICTION U/S.147 OF TH E ACT, THE AO MUST HAVE REASON BASED ON THE MATERIALS THAT THERE HAS B EEN AN INCOME ESCAPING ASSESSMENT , WHICH WARRANTED ASSUMING OF J URISDICTION U/S.147 OF THE ACT. AN PERUSAL OF THE ASSESSMENT O RDER SHOWS THAT THE AO HAD NOT MENTIONED THAT THERE ARE MATERIALS F OR ESCAPEMENT OF INCOME. THE AO ALSO DID NOT RECORD ANY REASON THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT FOR THA T ASSESSMENT YEAR. THE LD. ASSESSING OFFICER HAD FAILED TO RECO RD ANYWHERE HIS SATISFACTION OR BELIEF THAT INCOME ESCAPED CHARGEAB LE TO TAX HAD ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE OF ASSES SEE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS NECESSARY FOR ASSES SMENT AND THE ITA NO.2333/MDS/2016 11 ISSUANCE OF NOTICE U/S.147 OF THE ACT BEYOND THE PE RIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WAS WH OLLY WITHOUT JURISDICTION AND CANNOT BE SUSTAINED. MORE SO, THER E WAS NO TANGIBLE MATERIAL TO SHOW THE INCOME ESCAPED FROM THE ASSESS MENT. BEING SO, I AM INCLINED TO QUASH THE ASSESSMENT ORDER ITSELF. SINCE I HAVE QUASHED THE ASSESSMENT ORDER ITSELF, I REFRAIN FROM GOING INTO OTHER GROUNDS RAISED BY THE ASSESSEE ON MERIT. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST , 2017. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 31 ST AUGUST, 2017 . K S SUNDARAM. ' ( )!*+ ,+%! / COPY TO: 1 . / APPELLANT 3. ' ' -! () / CIT(A) 5. +0 1 )!)23 / DR 2. / RESPONDENT 4. ' ' -! / CIT 6. 1 45 6 / GF