CHAMPALAL RAICHAND CHOUHAN, MUMBAI V. INCOME TAX OFFICER-16(2)(3), MUMBAI

ITA 2485/MUM/2018

AI Insights

The case involves Champalal Raichand Chouhan, the proprietor of Chouhan Diagnostic Centre, who appealed against the order of the Learned Commissioner of Income Tax (Appeals)-5, Mumbai, concerning the assessment year 2010-11. The original return of income filed by the assessee was reopened under section 148 of the Income Tax Act, 1961, based on material found during a search and seizure operation. The Assessing Officer made additions under sections 68 and 69 of the Act, which were contested by the assessee. The primary legal contention in the appeal was the improper sanction for reopening the assessment, as it was obtained from the Joint Commissioner of Income Tax instead of the required Pr.CIT/CIT.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123271 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 02-11-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 22-04-2018
• Other Referred Cases: Darshan Jitendra Jhaveri v. CIT [2022] 134 taxmann.com 43
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Assessment record
• Section: 147; 69; 148; 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C”, MUMBAI BEFORE SHRI ABY T. VARKEY, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER ITA NO.2485/MUM/2018 (A.Y: 2010-11) Champalal Raichand Chouhan {Prop. of Chouhan Diagnostic Centre} 101, 10 th Floor L.R.T. Medical & Research Centre Mumbai - 400007 PAN: AATPC7742G V. Income Tax Officer – 16(2)(3) Aayakar Bhavan, M.K. Road Mumbai - 400020 (Appellant) (Respondent) Assessee Represented by : Shri Dharan Gandhi Department Represented by : Shri K.C. Salvamani Date of Hearing : 03.11.2022 Date of Pronouncement : 30.01.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the assessee against order of the Learned Commissioner of Income Tax (Appeals)-5, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 06.03.2018 for the A.Y.2010-11. 2. Brief facts of the case are, assessee filed its original return of income on 30.09.2010 declaring total income of ₹.2,00,84,036/-. The case was 2 ITA NO.2485/MUM/2018 (A.Y: 2010-11) Champalal Raichand Chouhan reopened u/s. 148 of Income-tax Act, 1961 (in short “Act”) dated 31.03.2016 after recording the reasons with the prior approval of the Joint Commissioner of Income Tax, vide order sheet approval dated 30.03.2016. In response assessee filed its return of income on 18.04.2016 declaring total income of ₹.2,01,34,083/-. The Assessing Officer relying on the material found during the search and seizure operation carried out in the case of Shri Chandrakant Shah and his employees and associates on 09.04.2013, accordingly, he made addition u/s. 68 and commission u/s. 69 of the Act to the extent of ₹.6,14,22,668/- and ₹.12,28,453/- respectively. Aggrieved with the above order, assessee preferred an appeal before the Ld.CIT(A) and before the Ld.CIT(A) assessee has raised various grounds including reopening of assessment and on merits. After considering the submissions of the assessee Ld.CIT(A) dismissed the grounds raised by the assessee. 3. Aggrieved assessee is in appeal before us raising following grounds in its appeal: - “The following ground or grounds of appeal are without prejudice to one another. On the facts and under the circumstances of the case and in law the learned Commissioner of Income-tax (Appeals); 1.1 Erred in confirming the re-opening of the assessment u/s. 147 of the Income Tax Act, 1961; 3 ITA NO.2485/MUM/2018 (A.Y: 2010-11) Champalal Raichand Chouhan 1.2 Ought to have appreciated that the cross examination of the alleged parties is not allowed; 1.3 Ought to have appreciated that no notice under section 143(2) was issued by the learned assessing officer. 1.4 Erred in confirming the addition made under section 68 of Rs.6,14,22,668/- (correct net consideration Rs.6,12,53,617/-). 2.1 Erred in confirming the additions on the basis of assumptions, surmises and conjectures and relied on irrelevant facts. 2.2 Erred in relying on irrelevant judicial pronouncements. 2.3 Ought to have appreciated that the shares were purchased and sold through the regular broker Mehta Equities Ltd. in the recognized stock exchange and by making/receiving payment via banking channel. 3.1 Erred in confirming the addition of Rs.12,28,453/- being 2% commission of sales consideration as unexplained expenses under section 69C of the Act;. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.” 4. At the time of hearing, Ld. AR of the assessee basically argued on the issue of approval obtained for reopening of the assessment. He submitted that, Assessing Officer has obtained the sanction for reopening from Joint Commissioner of Income-tax, which Assessing Officer has mentioned the same in the Assessment Order itself. Ld. AR submitted that since the case under consideration is reopened beyond period of four (4) years and as per section 151 of the Act the Assessing Officer should have obtained the sanction from Pr.CIT/CIT. He brought to our notice sanction obtained by the Assessing Officer and in the earlier occasion 4 ITA NO.2485/MUM/2018 (A.Y: 2010-11) Champalal Raichand Chouhan Ld.DR has submitted the copy of the reasons recorded for reopening of assessment, copy of which is placed on record. He brought to our notice the above sanction form in which there is no signature of the Pr.CIT, therefore, the initiation of the proceedings u/s. 147 of the Act is bad in law and he prayed that the Assessment Order is also bad in law. 5. On the other hand, Ld. DR by referring to the various letters submitted by the DR Office and referred to the letter dated 02.11.2022 as per which Ld. DR could not submit copy of the approval of the Pr.CIT from the assessment records. However, Ld. DR heavily relied on the decision of the Hon'ble Bombay High Court in the case of Darshan Jitendra Jhaveri v. CIT [2022] 134 taxmann.com 43. 6. Considered the rival submissions and material placed on record, before us the issue raised and argued are relating to obtaining improper sanction of the re-assessment by the Assessing Officer. From the record we observe that Assessing Officer has got sanction from JCIT and as per the provisions of section 151 of the Act it is necessary and required to get the sanction from Pr.CIT/CIT. As per the records submitted before us and Ld. DR has placed on record copy of the form for recording reasons for 5 ITA NO.2485/MUM/2018 (A.Y: 2010-11) Champalal Raichand Chouhan initiating proceedings u/s. 147 of the Act and for obtaining the approval from Pr.CIT. For the sake of clarity, it is reproduced below: - 6 ITA NO.2485/MUM/2018 (A.Y: 2010-11) Champalal Raichand Chouhan 7 ITA NO.2485/MUM/2018 (A.Y: 2010-11) Champalal Raichand Chouhan 7. From the above it is clear that Assessing Officer has not followed the due process of law by obtaining the sanction from Pr.CIT. It is clear from the above “approval form” obtained by the Assessing Officer there is no signature/sanction obtained from Pr.CIT. The relevant column is left blank. Therefore, the Assessing Officer has not followed the due process of law to initiate the proceedings u/s. 147 of the Acts. Therefore, the Assessment Order passed u/s. 147 of the Act is also bad in law. Accordingly, the grounds raised by the assessee on reopening of assessment is allowed and other grounds raised by the assessee at this stage are kept open. Accordingly, appeal filed by the assessee is partly allowed. 8. In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open court on 30 th January, 2023 Sd/- Sd/- (ABY T. VARKEY) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 30/01/2023 Giridhar, Sr.PS 8 ITA NO.2485/MUM/2018 (A.Y: 2010-11) Champalal Raichand Chouhan Copy of the Order forwarded to: 1. The Assessee 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum