M/s. JMD Realtors Pvt. Ltd., New Delhi V. ACIT, Faridabad

ITA 2535/DEL/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3309 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-05-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 30-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KALRA CA MS BEDOBNI
• Keywords: Reopening of assessment; Opportunity of being heard; Rule of consistency; Difference of opinion; Scheme of amalgamation; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH - SMC NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO.2535/DEL/201 5 ASSESSMENT YEAR : 2005-06 M/S. JMD REALTORS PVT. LTD. 6, UPPER GROUND FLOOR, DEVIKA TOWERS, NEHRU PLACE NEW DELHI 110 019 PAN AAACJ2071K VS. ACIT CENTRAL CIRCLE-II FARIDABAD (APPELLANT) (RESPONDENT) PER BHAVNESH SAINI, JUDICIAL MEMBER ORDER THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(A) GURGAON DATED 4 TH FEBRUARY, 2015 FOR ASSESSMENT. YEAR 2005- 06. 2. THE ASSESSEE IN THE PRESENT APPEAL CHALLENGED TH E INITIATION OF REASSESSEMENT PROCEEDINGS U/S 147/148 OF THE ACT ON THE GROUND THAT SINCE ASSESSEE COMPANY WAS NOT IN EXISTENCE,THEREFO RE NOTICE U/S 147/148 CANNOT BE SERVED UPON A PERSON WHICH IS NOT IN EXISTENCE. ASSESSEE BY : SHRI S.S. KALRA, CA DEPARTMENT BY: MS.BEDOBNI, SR. DR DATE OF HEARING 02/05/2017 DATE OF PRONOUNCEMENT 05/05/2017 ITA NO. 2535/DEL/2015 JMD REALTORS PVT. LTD. VS. ACIT PAGE 2 OF 5 THEREFORE REASSESSMET IS BAD IN LAW. THE ADDITION O F RS. 22,75,053/- ON MERIT IS ALSO CHALLENGED. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT RETURN DE CLARING INCOME OF RS. 764810/- WAS FILED ON 28 TH OCTOBER, 2005. ASSESSMENT U/S 143(3) WAS COMPLETED ON 28 TH FEBRUARY, 2007 AT AN INCOME OF RS. 8,78,970/-. THE ASSESSING OFFICER INITIATED THE REASSESSMENT PR OCEEDINGS AND ISSUED THE NOTICE U/S 148 OF THE ACT ON 29 TH MARCH, 2012. THE ASSESSING OFFICER MADE ADDITION OF RS. 22,75,053/- BY DISALLOWING THE CLAIM OF STANDARD DEDUCTION U/S 24(1) HOLDING THE INCOME OF THE ASSES SEE LIABLE TO BE TAXED UNDER THE HEAD PROFIT OR GAINS OF BUSINESS IN STEAD OF INCOME FROM HOUSE PROPERTY. ASSESSMENT U/S 147 / 143(3) WAS COM PLETED VIDE ORDER DATED 28 TH FEBRUARY, 2013. 4. THE ASSESSEE CHALLENGED THE REOPENING OF TH E ASSESSMENT AND ADDITION ON MERIT BEFORE LD. CIT(A).IT WAS BRIEFLY EXPLAINED THAT NOTICE U/S 148 COULD NOT BE SERVED UPON ASSESSEE COMPANY W HICH WERE NOT IN EXISTENCE, WHICH HAS ALREADY BEEN WOUND UP. THE ASS ESSEE RELIED UPON THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF I.K. AGENCIES PVT. LTD. V CWT REPORTED 347 ITR 664. IT WAS ALSO SUBMIT TED THAT REASSESSMENT ORDER IS PASSED ON MERE CHANGE OF OPIN ION ON THE SAME FACTS. IN ASSESSMENT YEAR 2004-05 THE SAME DEDUCTIO N HAS BEEN ALLOWED. 5. LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO WHICH WAS HOWEVER NOT FILED. ITA NO. 2535/DEL/2015 JMD REALTORS PVT. LTD. VS. ACIT PAGE 3 OF 5 6. LD. CIT(A) NOTED THAT IT IS NOWHERE MENTIO NED IN THE IMPUGNED ORDER THAT ASSESSEE COMPANY CEASED TO BE IN EXISTE NCE HAVING WOUND UP BUSINESS ON 1 ST APRIL, 2005. EVEN IN THE ORIGINAL ASSESSMENT ORDER DATED 28 TH FEBRUARY, 2007 U/S 143(3) FOR SAME ASSESSMENT YEAR , THERE IS NO MENTION OF WINDING UP OF THE OPERATION OF THE A SSESSEE. LD. CIT(A) THEREFORE REJECTED LEGAL GROUND OF THE ASSESSEE REG ARDING REASSESSMENT OF THE ASSESSEE. EVEN ON MERIT THE CLAIM OF THE ASS ESSEE OF DEDUCTION U/S 24(1) WAS NOT ALLOWED AND APPEAL OF ASSESSEE H AS BEEN DISMISSED. 7. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF TH E ASSESSING OFFICER. LD. COUNSEL FOR ASSESSEE FILED COPY OF THE JUDGMENT OF HON'BLE DELHI HIGH COURT DATED 15 TH SEPTEMBER, 2006 IN COMPANY PETITION NO. 85 WHEREBY TRANSFEROR COMPANY I.E THE ASSESSEE AND THE OTHERS HAS BEEN DISSOLVED WITHOUT BEING WOUND UP AND THE SAME WILL BE EFFECTI VE FROM THE APPOINTED DATE I.E 1 ST APRIL, 2005. LD. COUNSEL FOR THE ASSESSEE RELIED UPON DECISION OF THE DELHI HIGH COURT IN THE CASE O F RUSTAGI ENGINEERING UDYOG P. LTD. VS. DCIT (2016) 382 ITR 443 (DEL) IN WHICH IT WAS HELD THAT NOTICE ISSUED U/S 148 OF THE ACT WERE INVALID AS HAVING BEEN ISSUED TO AN ASSESSEE THAT HAD CEASED TO EXIST, AND DECISI ON OF CALCUTTA HIGH COURT IN THE CASE OF I.K. AGENCIES P. LTD,. VS. CWT (SUPRA) IN WHICH IT WAS HELD THAT NOTICE ISSUED UPON AP WHICH WAS NOT I N EXISTENCE AT THAT TIME WAS INSUFFICIENT TO INITIATE PROCEEDINGS AGAIN ST THE ASSESSEE WHICH HAS TAKEN OVER THE LIABILITY OF AP PRIOR TO THE ISS UE OF SUCH NOTICE, THE REASSESSMENT PROCEEDINGS WERE NOT VALID AND WERE L IABLE TO BE QUASHED ITA NO. 2535/DEL/2015 JMD REALTORS PVT. LTD. VS. ACIT PAGE 4 OF 5 AND DECISION OF HON'BLE DELHI HIGH COURT IN THE CAS E OF RITU INVESTMENTS PVT. LTD. VS. DCIT (2012) 345 ITR 214 IN WHICH IT W AS HELD THAT A CHANGE OF OPINION COULD NOT CLOTHE THE ASSESSING OFFICER W ITH THE JURISDICTION TO INITIATE THE PROCEEDINGS U/S 147 OF THE ACT. 7.1 CONSIDERING THE FACTS OF THE CASE IN THE L IGHT OF THE ABOVE DECISIONS, IT IS CLEAR THAT EITHER THE ASSESSEE DID NOT FILE THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT AND RELEVANT DETAILS B EFORE THE AUTHORITIES BELOW OR THE SAME HAVE NOT BEEN DISCUSSED IN THE IM PUGNED ORDERS. EVEN NO DETAILS WERE FILED BEFORE LD. CIT(A) AS PER FINDINGS OF LD. CIT(A). THE ASSESSING OFFICER EVEN DID NOT FILE THE REMAND REPORT AS ASKED FOR BY THE LD. CIT(A). HOWEVER THE MATERIAL O N RECORD CLEARLY SUGGEST THAT ASSESSEE COMPANY HAS BEEN DISSOLVED FR OM THE APPOINTED DATE AS PER SCHEME OF AMALGAMATION W.E.F. 1 ST APRIL, 2005. THE ASSESSING OFFICER HOWEVER ISSUED NOTICE U/S 148 ON 29 TH MARCH 2012. THEREFORE THE MATTER REQUIRES RECONSIDERATION AT TH E LEVEL OF ASSESSING OFFICER BECAUSE THIS ISSUE WAS NOT CONSIDERED AND D ECIDED BY THE AUTHORITIES BELOW. THE ADDITION WOULD BE INDEPENDEN T UPON THE FINDINGS GIVEN WITH RESPECT TO INITIATION OF REASSESSMENT P ROCEEDINGS. FURTHER IT IS CLAIMED THAT ON THE SAME FACTS SIMILAR CLAIM OF STANDARD DEDUCTION U/S 24(1) HAVE BEEN ALLOWED IN PRECEDING ASSESSMENT YEA R AS WELL AS IN THE ORIGINAL ASSESSMENT ORDER IN THE CASE OF ASSESSEE. THEREFORE THE AUTHORITIES BELOW SHALL HAVE TO DECIDE THE ISSUE RE GARDING REOPENING OF ASSESSMENT ON MERE CHANGE OF OPINION AS WELL AS TO DECIDE THE ISSUE BY FOLLOWING THE RULE OF CONSISTENCY. ITA NO. 2535/DEL/2015 JMD REALTORS PVT. LTD. VS. ACIT PAGE 5 OF 5 8. IN THIS VIEW OF THE MATTER, I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE BOTH THE ISSUES TO THE FILE OF AS SESSING OFFICER WITH DIRECTION TO REDECIDE THE ISSUE OF REOPENING OF ASS ESSMENT AND ADDITION OF MERIT STRICTLY IN ACCORDANCE WITH LAW BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASS ESSEE IS DIRECTED TO PRODUCE ALL ABOVE RELEVANT MATERIAL BEFORE ASSESSIN G OFFICER FOR HIS PERUSAL AND CONSIDERATION. IN THE RESULT APPEAL OF ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT. SD/- ( BHAVNESH SAINI ) JUDICIAL MEMBER DATED: 5/5/2017 *VEENA* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. PRINCIPAL CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR