M/s Maharashtra Pulse Mill, Jalgaon V. ITO, Jalgaon

ITA 2403/PUN/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9492 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-10-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 03-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR CHAWARE
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Assessment record; Reason to believe
• Section: 143(3); 50C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 2403 /P U N/201 2 / ASSESSMENT YEAR : 20 0 7 - 0 8 M/S. MAHARASHTRA PULSE MILL, 68/A, KALASH, OPP. INDIAN OIL BHAVAN, SHIVRAM NAGAR, JALGAON 425001 . / APPELLANT PAN: AACFM1869K VS. THE INCOME TAX OFFICER, WAR D 2(3), JALGAON . / RESPONDENT / APPELLANT BY : S HRI PRAMOD SHINGTE / RESPONDENT BY : S HRI ANIL KUMAR CHAWARE / DATE OF HEARING : 1 8 .0 5 . 2017 / DATE OF PRON OUNCEMENT: 24 . 0 5 .201 7 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - II, NASHIK , DATED 09.10.2012 RELATING TO ASSESSMENT YEAR 20 0 7 - 0 8 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 2403 /P U N/20 1 2 MAHARASHTRA PULSE MILL 2 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: - 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES ERRED IN INVOKING THE PROVISIONS OF SEC. 147 OF THE INCOME TAX ACT. WITHOUT CONSIDERING THE FACT THAT ALL THE MATERIAL FACTS WERE DISCLOSED IN THE RETURN OF INCOME.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER A UTHORITIES ERRED IN NOT GRANTING SUFFICIENT TIME AFTER PASSING SPEAKING O RDER, THERE BY VIOLATING THE PRINCIPAL LAID DOWN BY HONORABLE BOMBAY HIGH COURT, IN THE CASE OF ASIAN PAINTS LTD VS. DY. CIT, 296 ITR 90(BOM). THEREFORE ENTIRE PROCEEDINGS U/S 147 IS BAD IN LAW.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES ERRED IN ISSUING NOTICE U/S 147 WITHOUT TAKING NECESSARY SANCTION OF HIGHER AUTHORITIES THEREFORE ENTIRE PROCEEDINGS ARE BAD IN LAW.' WITHOUT PREJUDICE TO ABOVE GROUNDS OF APPEAL FOLLOWING SPECIFIC GROUNDS ARE TAKEN ON MERIT O F THE CASE. 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES ERRED IN INVOKING THE PROVISION OF SEC. 50C BY REJECTING THE ASSESSES CONTENTION THAT ASSESSEE FIRM HAS SOLD ITS ENTIRE BUSINESS INCLUDING LAND, BUILDING, MACHINERY ETC., AND HAS RECEIVED LUMSUM CONSIDERATION FOR THE SAME.' 5. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES ERRED IN DIRECTLY ADOPTING THE VALUATION OF STAMP DUTY AS CONSIDERATION WITHOUT MAKING THE REFER ENCE TO THE VALUATION OFFICER SUCH ACTION OF LEARNED ASSESSING OFFICER IS BAD IN LAW AND APPELLANT SUBMITS THAT VALUE ACTUALLY RECEIVED AND CLAIMED BY THE ASSESSEE SHALL BE ADOPTED.' 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LO WER AUTHORITIES ERRED IN MAKING THE ADDITION OF RS.3,50,656/ - WITHOUT CONSIDERING THE FACT THAT ASSESSEE ENTITLED TO CLAIM THE SET OFF OF CURRENT YEAR BUSINESS LOSSES. 3. FURTHER, THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND OF APPEAL, WHICH READS AS UN DER: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER HAS ERRED IN NOT RECORDING THE SATISFACTION FOR REOPENING THE MATTER U/S 147 OF THE INCOME TAX ACT, 1961 WHICH BEING AN IMPORTANT PRE REQUISITE FOR SUCH ACTI ON. THEREFORE, THE ENTIRE ACTION OF THE LEARNED ASSESSING OFFICER IS BAD IN LAW AND NEEDS TO BE QUASHED. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTS OUT THAT THE ADDITIONAL GROUND OF APPEAL DOES NOT REQUIRE ANY INVESTIGATION INTO F ACTS AND HENCE, MAY BE ADMITTED. WE FIND MERIT IN THE PLEA OF ASSESSEE WHERE THE ITA NO. 2403 /P U N/20 1 2 MAHARASHTRA PULSE MILL 3 ADDITIONAL GROUND OF APPEAL IS AGAINST NON - RECORDING OF SATISFACTION FOR REOPENING THE MATTER UNDER SECTION 147 OF THE ACT, WHICH DOES NOT REQUIRE ANY INVESTIGATION INTO FACT S AND HENCE, THE SAME IS ADMITTED. 5. THE PRELIMINARY ISSUE RAISED BY WAY OF GROUNDS OF APPEAL NO.1 TO 3 IS AGAINST REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. THE ASSESSEE BY WAY OF GROUNDS OF APPEAL NO.4 TO 6 HAS RAISED THE ISSUE ON MERITS. THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALSO AGAINST THE PRELIMINARY ISSUE OF REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT. 6. THE ASSESSEE BY WAY OF ADDITIONAL GROUND OF APPEAL IS AGGRIEVED BY NON - RECORDING OF SATISFACTION FOR REOPENING THE ASSESSMENT IN THE CASE OF ASSESSEE UNDER SECTION 147 OF THE ACT. IN ORDER TO ADJUDICATE THIS ISSUE, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE WAS ASKED TO PRODUCE THE ASSESSMENT RECORDS WHICH HAVE BEEN PERUSED BY US DURING THE COURSE OF HEARING. THE PERUSAL OF ASSESSMENT RECORDS REFLECTS THAT THE FIRST ORDER SHEET ENTRY IN THE CASE VIS - - VIS RECORDING OF SATISFACTION BY THE ASSESSING OFFICER TO THE EFFECT THAT HE HAD REASON TO BELIEVE THAT INCOME FROM CAPITAL GAINS TO THE TUNE OF RS.16,39,000/ - AND RS.3,62,000/ - ON THE BASIS OF INFORMATION RECEIVED REGARDING TRANSACTION OF IMMOVABLE PROPERTIES, HAD ESCAPED ASSESSMENT WITHIN MEANING OF SECTION 147 OF THE ACT. THE PHOTOCOPY OF THE SAID ORDER SHEET IS PLACED IN THE APPEAL FOLDER . THE ASSESSEE AFTER FILING THE RETURN OF INCOME IN RESPONSE TO NOTICE ISSUED UNDER SECTION 148 OF THE ACT, HAD SOUGHT COPY OF REASONS RECORDED FOR ISSUANCE OF AFORESAID NOTICE. IN REPLY, THE ASSESSING OFFICER ISSUED A LETTER TO THE ASSESSEE DATED 04.06.20 10 . IN THE LETTER ITSELF, THE ASSESSING OFFICER POINTS OUT THAT HE WAS FORWARDING THE COPY OF ORDER SHEET, ITA NO. 2403 /P U N/20 1 2 MAHARASHTRA PULSE MILL 4 THROUGH WHICH ASSESSEES CASE WAS REOPENED FOR ASSESSMENT YEAR 2007 - 08. THEREAFTER, REASONS ARE MENTIONED IN THE SAID LETTER AND COPY OF THE ORDER SHEET ENTRIES ARE ALSO AVAILABLE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS CONFRONTED WITH THE SAID ORDER SHEET ENTRIES AVAILABLE ON RECORD AND HE FAIRLY ADMITTED THAT THE SAID ORDER SHEET ENTRIES WERE MADE BY THE ASSESSING OFFICER. ACC ORDINGLY, ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE IS THUS, DISMISSED. 7. NOW, COMING TO THE ISSUE RAISED BY WAY OF GROUND OF APPEAL NO.3, WHEREIN THE ASSESSEE HAS CHALLENGED THE ISSUE OF NOTICE UNDER SECTION 147 OF THE ACT BY THE ASSESSING OFFI CER WITHOUT TAKING NECESSARY SANCTION OF HIGHER AUTHORITIES AND HENCE, THE PROCEEDINGS ARE BAD IN LAW. 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IT WAS MANDATORY UPON THE ASSESSING OFFICER TO TAKE NECESSARY SANCTION OF HIG HER AUTHORITY AFTER RECORDING REASONS FOR REOPENING ASSESSMENT UNDER SECTION 147 OF THE ACT BUT BEFORE ISSUING THE NOTICE UNDER SECTION 148 OF THE ACT. IN THE PRESENT SET OF FACTS, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT NO SUCH SANCTION WAS TAKEN FROM THE HIGHER AUTHORITY BY THE ASSESSING OFFICER. 9. IN REPLY TO THE SAID PLEA, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE SOUGHT TIME TO FURNISH THE REPLY. THE CASE OF ASSESSEE WAS ADJOURNED. HOWEVER, THE LEARN ED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE APPOINTED DATE OF HEARING, FAILED TO FURNISH REPLY IN THIS REGARD. THE ASSESSMENT FOLDER WAS AGAIN PERUSED AND NO SANCTION OF HIGHER AUTHORITY ITA NO. 2403 /P U N/20 1 2 MAHARASHTRA PULSE MILL 5 BEFORE ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT IS AVA ILABLE ON RECORD. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ALSO COULD NOT PRODUCE THE SAID SANCTION FROM THE ASSESSMENT RECORDS. 10. UNDER THE PROVISIONS OF SECTION 147 OF THE ACT, WHERE THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT THE RE IS ESCAPEMENT OF INCOME, THEN HE HAS TO RECORD THE REASONS FOR REOPENING THE ASSESSMENT. THEREAFTER, UNDER SECTION 148 OF THE ACT, IT IS INCUMBENT UPON THE ASSESSING OFFICER TO SERVE NOTICE REQUIRING THE ASSESSEE TO FURNISH THE RETURN OF INCOME WITHIN SUCH PERIOD AS MAY BE SPECIFIED THEREIN. UNDER SECTION 151 OF THE ACT, SANCTION FOR ISSUE OF NOTICE IS LAID DOWN. SUB - SECTION (1) CLEARLY PROVIDES THAT NO NOTICE SHALL BE ISSUED UNDER SECTION 148 OF THE ACT BY THE ASSESSING OFFICER AFTER EXPIRY OF PERIOD OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, UNLESS THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER, THAT IT IS A FIT CASE FOR ISSUE OF SUCH NOTICE. UNDER SUB - SECTION (2), IN A CASE OTHER THAN ONE FALLING UNDER SUB - SECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 OF THE ACT BY THE ASSESSING OFFICER, WHO IS BELOW THE RANK OF JOINT COMMISSIONER, UNLESS THE JOINT COMMISSIONER IS SATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER, THAT IT IS A FIT CASE FOR ISSUE OF SUCH NOTICE. THE SAID NOTICE IS TO BE ISSUED BY THE ASSESSING OFFICER AND NOT BY OTHER AUTHORITY AS PROVIDED UNDER SUB - SECTION (3). 11. COMING TO THE FACTS O F THE PRESENT CASE, WHERE THE PROVISIONS OF SECTION 151(2) OF THE ACT ARE APPLICABLE, THE ASSESSING OFFICER WHO WAS PROPOSING TO ISSUE THE NOTICE UNDER SECTION 148 OF THE ACT AFTER RECORDING THE REASONS FOR ITA NO. 2403 /P U N/20 1 2 MAHARASHTRA PULSE MILL 6 REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT WAS THE INCOME TAX OFFICER, WARD 2(3), JALGAON. AS PER THE MANDATE OF SECTION 151(2) OF THE ACT, THE ASSESSING OFFICER HAD TO TAKE PERMISSION OF JOINT COMMISSIONER OF INCOME TAX ON THE REASONS RECORDED BY HIM, THAT IT WAS FIT CASE FOR ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. NO SUCH SANCTION HAS BEEN TAKEN BY THE ASSESSING OFFICER FROM THE JOINT COMMISSIONER OF INCOME TAX . IN THE ABSENCE OF SAME, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE WAS GIVEN AN OPPORTUNITY TO FILE ANY SANCTI ON BEING TAKEN BY THE ASSESSING OFFICER FROM THE JOINT COMMISSIONER BUT NO SUCH EVIDENCE HAS BEEN FILED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. THE ASSESSMENT RECORDS OF ASSESSEE HAVE BEEN PERUSED AND NO SUCH SANCTION HAS BEEN ASKED FO R BY THE ASSESSING OFFICER . W HILE MAKING ENTRIES IN THE ORDER SHEET AFTER RECORDING REASONS FOR REOPENING, HE STATES THAT I HAVE, THEREFORE, REASON TO BELIEVE INCOME FROM CAPITAL GAINS TO THE TUNE OF RS.16,39,000/ - (37,72,000/ - - 21,33,000/ - ) AND RS.3,62 ,000/ - (10,29,000/ - - 6,67,000/ - ) HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT, 1961. WHERE THE NOTICE FOR REOPENING THE ASSESSMENT UNDER SECTION 148 HAS BEEN ISSUED BY THE ASSESSING OFFICER WITHOUT TAKING SANCTION OF JOINT COM MISSIONER OF INCOME TAX WHICH IS MANDATORY AS PER PROVISIONS OF THE ACT, THEN SUCH ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT IS BAD IN LAW. CONSEQUENTLY, THE ENTIRE PROCEEDINGS THEREAFTER I.E. ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT BECOME S BAD IN LAW. ACCORDINGLY, WE HOLD SO. THUS, THE PRELIMINARY ISSUE RAISED BY WAY OF GROUND OF APPEAL NO.3 IS THUS, ALLOWED IN FAVOUR OF THE ASSESSEE AND INITIATION OF ASSESSMENT PROCEEDINGS BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT IS HELD TO BE BAD IN LAW. CONSEQUENTLY, THE ITA NO. 2403 /P U N/20 1 2 MAHARASHTRA PULSE MILL 7 ASSESSMENT ORDER PASSED IN THE CASE IS INVALID. IN VIEW THEREOF, THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE BECOME ACADEMIC. 12 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THI S 24 TH DAY OF MAY , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 24 TH MAY , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - II , NASHIK ; 4. / THE CIT - II , NASHIK ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE