Asstt. Commissioner of Income Tax, Lucknow V. M/s F.I Builders Pvt. Ltd., Lucknow

ITA 235/LKW/2013

• Counselvise Citation: 23523714 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-05-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 08-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK MISHRA
• Assessee Lawyers: B P YADAV
• Keywords: Valuation report; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS. 235 TO 241/LKW/2013 A. YRS. :200 0 - 0 1 TO 2006 - 07 A.C.I.T., CENTRAL CIRCLE - 1, LUCKNOW. VS. M/S F.I. BUILDERS PVT. LTD., 118/86 KHA, CANTT ROAD, LUCKNOW. PAN:AAACF6583G (APPELLANT) (RESPONDENT) APPELLANT BY SHRI VIVEK MISHRA, CIT, D.R. RESPONDENT BY SHRI B. P. YADAV, ADVOCATE DATE OF HEARING 12/05/2014 DATE OF PRONOUNCEMENT 1 3 /06/2014 O R D E R PER A. K. GARODIA, A.M. ALL THESE APPEALS ARE FILED BY THE REVENUE WHICH ARE DIRECTED AGAINST THE COMBINED ORDER OF CIT(A) - III, LUCKNOW DATED 31/12/2012 FOR THE ASSESSMENT YEARS 2000 - 2001 TO 2006 - 2007. SINCE THE ISSUE INVOLVED IS COMMON IN ALL THE APPEALS, ALL THESE APPEALS ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED BY THE REVENUE IN ALL THESE APPEALS ARE IDENTICAL AND HENCE THE SAME ARE REPRODUCED FROM THE APPEAL OF TH E REVENUE I.E. I.T.A. NO.235/LKW/2013 FOR ASSESSMENT YEAR 2000 - 2001, WHICH ARE AS UNDER: 1. THAT THE CIT (A) ERRED IN LAW AND ON FACTS IN ANNULLING THE ASSESSMENT ORDER PASSED UNDER SECTION 147 OF THE I.T. ACT WITHOUT APPRECIATING THE FACT THAT THE INFOR MATION GATHERED FROM INCRIMINATING MATERIAL AND DOCUMENT FOUND CAN BE VALIDLY UTILIZED FOR THE PURPOSE 2 OF ASCERTAINING THE ASSESSEE'S ESCAPED INCOME AND CONSEQUENT REASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE I.T. ACT, FOLLOWING THE DECISION OF HON'BL E HIGH COURT, ALLAHABAD IN THE CASE OF SHARAD B. SAHAI VS. CIT(CENTRAL), KANPUR, WHICH WAS DULY REFERRED TO BY THE A.O. IN THE ASSESSMENT ORDER (COPY OF ORDER ATTACHED WITH THE GROUNDS OF APPEAL). 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ANNULLING THE ASSESSMENT ORDER PASSED UNDER SECTION 147/143(3) OF I.T. ACT, WITHOUT APPRECIATING THE FACT THAT THE ASSESSING OFFICER HAD UNDERTAKEN THE VALID AND LAWFUL PROCEEDINGS UNDER SECTION 147 OF I.T. ACT AFTER OBTAINING APPROVAL OF COMMISSIONER OF I NCOME TAX (STATEMENT OF FACT ENCLOSED). 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY QUASHING THE ASSESSMENT ORDER MERELY ON TECHNICAL GROUNDS EVEN THOUGH THE NOTICE U/S 148 WAS ISSUED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 150(1) OF THE I.T. ACT TO GIVE EFFECT TO THE ORDER OF CIT(A) WHEREIN THE PROCEEDINGS U/S 153C WERE QUASHED BUT THE INCOME FOUND DURING THE COURSE OF SEARCH WAS NOT HELD TO BE NOT TAXABLE FOR THESE YEARS. 4. THAT THE LD. CIT(A) HAS ERRED IN INTERPRETING AND THUS MISAPPL IED BOARDS CIRCULAR NO. 1/2009 DATED 27/03/2009 . THE CIRCULAR PROHIBITS ACTION U/S 147 ONLY ON ISSUES WHICH HAVE BEEN DECIDED IN APPEAL. IN THE PRESENT CASE NO ISSUE REGARDING ESCAPED INCOME WAS DECIDED BY CIT(A). 5. THAT THE LD. CIT(A) HAS ERRED IN LAW I N HOLDING THAT PROCEEDINGS U/S 153C/143(3) COULD NOT BE ONCE AGAIN REOPENED U/S 147 OF THE I.T. ACT IGNORING THE FACT THAT PROCEEDINGS U/S 153C/143(3) WERE ANNULLED AND NOTICE U/S 148 WERE ISSUED IN RESPECT OF ORIGINAL ORDER U/S 143(3) OF THE ACT. 6. THAT THE ORDER OF THE LD. CIT(A) BEING ERRONEOUS IN LAW AND ON FACTS WHICH NEEDS TO BE VACATED AND THE ORDER OF THE A.O. BE RESTORED. 3 7. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY ONE OR MORE OF THE GROUND OF THE APPEAL AS STATED ABOVE AS AND WHEN NE ED FOR DOING SO MAY ARISE . 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. HE ALSO SUBMITTED THAT THE ARGUMENTS AND FACTS ARE AVAILABLE ON RECORD IN THE STATEMENTS OF FACTS FILED ALONG WITH THE APPEALS AND HENCE, THE SAME SHOULD BE CONSIDERED FOR DECIDING THESE APPEALS. HE ALSO SUBMITTED THAT THE THIRD PROVISO TO SECTION 147 HAS BEEN INTRODUCED WITH EFFECT FROM 01/04/2008 AND THE ASSESSMENT YEARS INVOLVED IN THESE APPEALS ARE PRIOR TO THAT I.E. ASSESSMENT YEAR 2000 - 2001 TO 2006 - 2007 AND THEREFORE, THIS PROVISO IS NOT APPLICABLE IN THE PRESENT CASE. 4. AS AGAINST THIS, LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). HE ALSO SUBMITTED THAT THE NOTICE U/S 148 OF THE ACT WAS ISSUED BY THE ASSESSING OFFICER ON 30/03/2011, WHICH IS AFTER THE INTRODUCTION OF THIRD PROVISO WITH EFFECT FROM 01/04/20 08 AND HENCE THIS PROVISO IS APPLICABLE IN THE PRESENT APPEALS. REGARDING THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT RENDERED IN THE CASE OF R. KAKKAR GLASS AND CROCKERY HOUSE VS. COMMISSIONER OF INCOME - TAX AS REPORTED IN [2002] 25 4 ITR 273 (SC ) , IT WAS SUBMITTED THAT THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. HE SUBMITTED THAT THE RELIANCE ON THIS JUDGMENT HAS BEEN PLACED BY THE REVENUE IN THE STATEMENTS OF FACTS FILED ALONG WITH THE APPEALS. 5. WE HA VE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THIS ISSUE WAS DECIDED BY CIT(A) AS PER PARA 3.12 TO 3.12.1. FOR THE SAKE OF READY REFERENCE, THESE PARAS FRO M THE ORDER OF CIT(A) ARE REPRODUCED HEREIN BELOW: 3.12 THE CIRCULAR NO. 1/2009, DATED 27 - 3 - 2000 STATES THAT WHILE THE THIRD PROVISO TO SECTION 147 PROHIBITS REOPENING OF 4 CASES WHERE THE ORDER IS THE SUBJECT MATTER OF ANY APPEAL, REFERENCE OR REVISION, T HE AMENDMENT TO SECTION 153C ALSO SPECIFIES THAT IN CASE THE PROCEEDINGS ARE QUASHED, THE EARLIER PENDING PROCEEDINGS FOR ASSESSMENT / REASSESSMENT WHICH HAS ABATED IN VIEW OF THE PROCEEDINGS INITIATED UNDER SECTION 153C, SHALL REVIVE. THERE IS NO PROVISI ON FOR INITIALING ACTION UNDER SECTION 148 EVEN IN THE CASES WHERE THE PROCEEDINGS UNDER SECTION 153A/153C HAVE BEEN QUASHED. THE APPELLANT STATES THAT THE APPEALS FOR ASSESSMENT YEARS 2000 - 01 TO 2006 - 07 ARE PENDING BEFORE THE HON'BLE ALLAHABAD HIGH COURT . THUS, IN VIEW OF THE PENDENCY OF APPEAL AND THE INCOME BEING SUBJECT MATTER OF THE APPEAL, THE ASSESSING OFFICER WAS PRECLUDED FROM TAKING ANY ACTION UNDER SECTION 147. THE ASSESSING OFFICER HAS ASSESSED THE SAME INCOME WHICH WAS ASSESSED IN THE ORIGINAL ORDER UNDER SECTION 153C/143(3). THUS, FOR THE ASSESSMENT YEARS 2000 - 01 TO 2003 - 04, THE NOTICES WERE BARRED BY LIMITATION AS THE NOTICE UNDER SECTION 148 COULD BE ISSUED ONLY WITHIN THE PERIOD OF SIX YEARS FROM THE END OF ASSESSMENT YEAR AND THE LIMITAT ION HAD EXPIRED ON THE DATE OF ISSUE OF T HE NOTICE UNDER SECTI ON 148 ON 30/03/201 1 AND NO FINDING/DIRECTION HAIL BEEN ISSUED BY AN Y APPELLATE AUTHORITY OR THE IT AT SO AS TO ENABLE THE REOPENING OF THE ASSESSMENT TO ASSESS THE INCOME INCLUDED IN THE ORDER UNDER SECTION 153C / 143(3) AND THE CIT (A) HAD ALSO GIVEN HIS FINDINGS ON T HE MERITS OF THE CASE AS REGARDS THE VALUATION REPORT OF THE DVO, THEREFORE, THE PROCEEDINGS FOR TH E ASSESSMENT YEARS 2000 - 01 TO 2003 - 04 ARE HELD TO BE INVALID AND THESE GROUNDS OF APPEAL ARE ALLOWED AND THE CONSEQUENTIAL ASSESSMENT MADE UNDER SECTION 147/143(3 ) ARE ANNULLED/QUASHED. 3.12.1 FURTHER, AS REGARDS THE ASSESSMENTS FOR THE ASSESSMENT YEARS 2004 - 05 TO 2006 - 07, IN VIEW OF T H E AMENDMENT AND T HE INSERTION OF THE 3 RD P ROVISO TO SECTION 147 WITH EFFECT FROM 01.04.2008, AS THE INCOME INVOLVED MATTERS WHICH IS STILL SUBJECT MATTER OF APPEAL BEFORE THE HON'BLE HIGH COURT, NO NOTICE UNDER SECTION 14 8 COULD HAVE BEE N LEGALLY ISSUED IN RESPECT OF THESE YEARS AS WELL. MOREOVER, THE SEIZED/IMPOUNDED DOCUMENTS W ERE AVAILABLE BEFORE THE ASSESSING OFFICER AND FOR THE ASSESSMENT YEARS 2004 - 05 AND 2005 - 06, IT HAS NOT BEEN ESTABLISHED T HAT THE INCOME HAD ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE O N THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT FOR THAT ASSESSMENT YEAR AND THE PROCEEDINGS WE RE ALSO SUBJECT TO THE 1 ST PROVISO U/S 147 BESIDES THE 3 RD PROVI SO THEREOF. 5 THEREFORE, FOR THE ASSESSMENT YEARS 2004 - 05, 2 0 05 - 06 AND 2006 - 07 ALSO, THE GROUNDS OF APPEAL RELATING TO THE INITIATION OF REASSESSMENT PROCEEDINGS AR E ALLOWED . T HE REASSESSMENT PROCEEDINGS ARE HELD TO BE INVALID AND THE ASSESSMENT ORDERS ARE HER EBY ANNULLED/QUASHED. 5.1 FROM THE ABOVE PARAS FROM THE ORDER OF CIT(A), WE FIND THAT IT IS HELD BY CIT(A) THAT FOR ASSESSMENT YEAR 200 0 - 2001 TO 2003 - 2004, THE NOTICES ISSUED BY THE ASSESSING OFFICER U/S 148 WERE TIME BARRED BECAUSE THE NOTICE S U/S 148 COULD BE ISSUED ONLY WITHIN THE PERIOD OF SIX YEARS FROM THE END OF THE ASSESSMENT YEAR. IN THE LIGHT OF THIS FINDING OF CIT(A), WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) FOR ASSESSMENT YEAR 2000 - 2001 TO 2003 - 2004 BECAUSE FOR THESE YEARS, THE NOTICES ISSUED BY THE ASSESSING OFFICER U/S 148 ON 30/03/2011 WERE TIME BARRED BEING BEYOND SIX YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEARS. 5.2 FOR THE REMAINING ASSESSMENT YEARS I.E. ASSESSMENT YEAR 2004 - 05 TO 2006 - 2007, WE FIND THAT CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY RESORTING TO THE PROVISION S OF THIRD PROVISO TO SECTION 147, WHICH WAS INTRODUCED IN THE STATUTE BOOK WITH EFFECT FROM 01/04/2008. ON THIS ASPECT, IN OUR CONSIDERED OPINION, THE ORDER OF CIT( A) IS NOT SUSTAINABLE BECAUSE F OR ASSESSMENT YEAR 2004 - 05 AND 2006 - 07 , THIRD PROVISO TO SECTION 147 IS NOT APPLICABLE BECAUSE THE SAME WAS NOT ON STATUTE BOOK DURING THESE ASSESSMENT YEARS BECAUSE THIRD PROVISO WAS INTRODUCED WITH EFFECT FROM 01/04/2008. BUT STILL, WE FIND THAT FOR ASSESSMENT YEAR 2004 - 05 AND 2005 - 06 , THIS FINDING IS ALSO GIVEN BY CIT ( A) THAT IN THESE TWO YEARS , EVEN FIRST PROVISO TO SECTION 147 IS ALSO APPLICABLE AS PER WHICH THE ASSESSING OFFICER CANNOT REOPEN THE ASSESSMENT IF THE INCO ME HAS NOT ESCAPED THE ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THAT ASSESSMENT YEAR. LEARNED D.R. OF THE REVENUE COULD NOT SHOW THAT THE FIRST PROVISO TO SECT ION 147 IS NOT 6 APPLICABLE IN THESE TWO YEARS. HENCE, FOR THESE TWO YEARS ALSO, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 6. NOW ONLY ONE YEAR IS REMAINING I.E. ASSESSMENT YEAR 2006 - 2007. IN THIS YEAR , THE NOTICE WAS ISSUED WITHIN 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR AND THEREFORE, THE FIRST PROVISO TO SECTION 147 IS NOT APPLICABLE. SINCE NEITHER THE FIRST PROVISO TO SECTION 147 NOR THE THIRD PROVISO TO SECTION 147 IS APPLICABLE IN THIS YEAR, WE ARE OF THE CONSIDERED OPI NION THAT THE ORDER OF CIT(A) FOR ASSESSMENT YEAR 2006 - 07 IS NOT SUSTAINABLE. HENCE WE SET ASIDE THE ORDER OF CIT(A) FOR THIS YEAR AND RESTORE THE MATTER BACK TO HIS FILE FOR DECISION ON MERIT. 7. IN THE RESULT, SIX APPEALS OF THE REVENUE FOR ASSESSMEN T YEARS 2000 - 2001 TO 2005 - 06 ARE DISMISSED WHEREAS THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2006 - 07 IS ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 3 /0 6 /2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR