The ACIT, Circle-6, Ahmedabad V. Shri Krunal P.Thakkar, Ahmedabad

ITA 2599/AHD/2010

• Counselvise Citation: 259920514 RSA 2010
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 01-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DK MISHR A
• Assessee Lawyers: GAURAV NAHTA
• Keywords: Reopening of assessment; Revenue expenditure
• Section: 147; 148; 143(3)

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . . . . , , , , ! ! ! ! ' #$ ' #$ ' #$ ' #$ , , , , % % % % BEFORE S/SHRI N.S. SAINI, ACCOUNTANT MEMBER AND KUL BHARAT, JUDICIAL MEMBER) ITA NO.2599/AHD/2010 WITH CO NO.316/AHD/2010 [ASSTT.YEAR : 2004-2005] ACIT, CIR.6 AHMEDABAD. /VS. SHRI KRUNAL P. THAKKAR 7, TULIP BUNGLOWS, VIBHAG-II THALTEJ, AHMEDABAD. PAN : ABUPT 4104 H ( (( ('( '( '( '( / APPELLANT) ( (( ()*'( )*'( )*'( )*'( / RESPONDENT) + , - / REVENUE BY : SHRI D.K. MISHRA, SR.DR /$ , - / ASSESSEE BY : SHRI GAURAV NAHTA '0 , $1/ DATE OF HEARING : 25 TH OCTOBER, 2013 234 , $1/ DATE OF PRONOUNCEMENT : 31.10.2013 5 / O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE AND CROSS APPEAL BY THE ASSESS EE AGAINST THE ORDER OF THE CIT(A)-XXI, AHMEDABAD DATED 14.6.2010. 2. IN THE CO THE ASSESSEE HAS CHALLENGED THE REOPEN ING OF THE ASSESSMENT BY TAKING THE FOLLOWING GROUNDS OF CO: ITA NO.2599/AHD/2010 -2- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LA AND ON FACT IN DISMISSING THE GROUND TH AT 'THE ASSESSING OFFICER HAS ERRED IN LAW AND ON FACT IN R EOPENING THE ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT. THE ASSESSMENT PROCEEDINGS FINALIZED ON SUCH REOPENING IS AL BAD IN LAW IT IS PRAYED THAT THE ORDER OF THE ID CI T. (A) MAY BE SET-A- DE TO THE ABOVE EXTENT AND THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER MAY BE QUASHED 2. THE ID. CIT (A) HAS ERRED IN LAW AND ON FACT IN DIS MISSING THE GROUND OF APPEAL THAT THE ID. ASSESSING OFFICER HAS ERRED IN LAW AND ON CT IN FINALIZING THE REOPENED ASSESSMENT PROCEEDINGS WITHOUT COMMUNICATION THE REASONS FOR REOPENING OF ASSESSMENT PROCEEDINGS AND WITHOUT GIVING OPPORTUNITY TO FILE THE OBJECTION AG AINST THE REOPENING OF ASSESSMENT PROCEEDING' THE ORDER OF TH E ID. C.I.T.(APPEALS) MAY BE SET-A-SIDE O THE ABOVE EXTEN T AND THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICE R MAY BE QUASHED 3. YOUR APPELLANT CRAVES LIBERTY TO ADD, TO ALTER, TO MODIFY, TO AMEND OR DELETE ANY OF THE GROUNDS OF CROSS OBJECTI ON APPEAL AT THE TIME OF ON OR BEFORE THE HEARING OF A PPEAL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 8.12.2006. THEREAFTER, FOR AS STT.YEAR 2004- 2005, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUE D ON 8.11.2007. THE ASSESSEE CHALLENGED THE VALIDITY OF THE ISSUANCE OF SAID NOTICE UNDER SECTION 148 ON THE GROUND THAT REASONS RECORDED, IF ANY, FOR ISSUANCE OF NOTICE UNDER SECT ION 148 WERE NOT PROVIDED TO THE ASSESSEE BEFORE THE COMPLETION OF ASSESSMENT INSPITE OF SPECIFIC REQUEST OF THE ASSESSEE, AND TH E RE-ASSESSMENT ITA NO.2599/AHD/2010 -3- WAS MADE MERELY ON THE BASIS OF THE CHANGE OF OPINI ON. THE ASSESSEE POINTED OUT FROM THE LETTER DATED 27.11.20 07 PLACED AT PAGE NO.39 TO 40 OF THE PAPER BOOK THAT THE ASSESSE E HAS COMPLIED WITH THE NOTICE UNDER SECTION 148 OF THE ACT, AND A LSO REQUESTED THE AO TO PROVIDE REASONS RECORDED AS THE SAME WAS NOT COMMUNICATED TO THE ASSESSEE ALONG WITH THE NOTICE. 4. ON THE OTHER HAND, THE LEARNED DR DID NOT DISPUT E THE FACT THAT THE ASSESSEE AFTER COMPLYING WITH THE NOTICE I SSUED UNDER SECTION 148 OF THE ACT SOUGHT REASONS RECORDED BY T HE AO, AND THE AO DID NOT RESPOND TO THE SAID REQUEST OF THE A SSESSEE. HOWEVER, HE PLACED RELIANCE ON THE ORDER OF THE LEA RNED CIT(A) ON THIS ISSUE. 5. WE FIND THAT THE LEARNED CIT(A) HAS HELD THAT TH E AO HAS NOT PROVIDED THE REASONS AS RECORDED IN PURSUANCE T O REQUEST MADE BY THE ASSESSEE. HOWEVER, ACCORDING TO THE LE ARNED CIT(A), AS THE SHOW CAUSE NOTICE DATED 21.11.2008 I SSUED BY THE AO AND THE RE-ASSESSMENT ORDER CONTAINED THE REASON FOR REOPENING, AND THEREFORE, THE REASONS WERE BEFORE T HE ASSESSEE, AND ACCORDINGLY, REJECTED THE GROUNDS OF THE APPEAL S OF THE ASSESSEE IN THIS REGARD. WE FIND THAT THE REASONS RECORDED IN THE ASSESSMEN T ORDER CANNOT BE HELD BY ANY STRETCH OF IMAGINATION, AS TH E REASONS PROVIDED TO THE ASSESSEE, BEFORE THE COMPLETION OF THE ASSESSMENT, FOR THE REASONS THAT THE ASSESSMENT ORD ER IS INTIMATED ITA NO.2599/AHD/2010 -4- TO THE ASSESSEE, AFTER COMPLETION OF THE ASSESSMENT . FURTHER, SHOW CAUSE NOTICE REFERRED TO BY THE LEARNED CIT(A) READS AS UNDER: 2. IN CONNECTION WITH THE ASSESSMENT PROCEEDING FO R THE A.Y. 2004-05, YOU ARE HEREBY GIVEN A FINAL OPPORTUN ITY TO SHOW CAUSE AS TO WHY THE FOLLOWING AMOUNTS SHOULD N OT BE ADDED TO TOTAL INCOME/ VIEWS SHOULD NOT BE TAKEN, F OR THE REASONS MENTIONED THEREIN: 1. AS PER THE PROFIT AND LOSS ACCOUNT, IT IS OBSERVED THAT THE INTEREST ACCOUNT WAS DEBITED RS.8.01 AS ICIC HP ACCOUNT THIS BEING REPAYMENT OF LOAN TAKEN FROM ICICI BANK SHOULD NOT HAVE BEEN DEBITED TO INTEREST ACCOUNT AS REVENUE EXPENDITURE INTEREST PAID ON LOAN OBTAINED FROM THE BANK HAS BEEN SEPARATELY DEBITED AS ICICI HP INTEREST ACCOUNT THEREFORE, THE INTEREST INCOME REQUIRED TO BE ADDED TO YOUR TOTAL INCOME 2. AS PER THE AUDIT REPORT YOU HAVE SHOWN EXCESS SALES OF 10690 BAGS OF CASTER SEEDS. HOWEVER NO CLARIFICATION REGARDING THE EXCESS SALE OF BAGS ARE AVAILABLE ON RECORD. THEREFORE, THE INVESTMENT IN PURCHASE OF THESE BAGAS AMOUNTING TO RS.164.76 IS REQUIRED TO BE ADDED TO YOUR TOTAL INCOME. 3 YOU ARE REQUIRED TO FURNISH SUBSTANTIAL EVIDENCES/EXPLANATIONS IF ANY IN SUPPORT OF YOUR CL AIM PERTAINING TO THE ABOVE ISSUES ON 01.12.2008 AT 11. 30 A.M. FAILING WHICH IT WILL BE CONSTRUED THAT YOU HAVE NO THING TO STALE IN THESE MATTERS AND THE AMOUNTS IN QUESTION WILL BE ADDED TO YOUR TOTAL INCOME. A PERUSAL OF THE AFORESAID SHOW CAUSE NOTICE SHOW T HAT IT IS NOWHERE STATED BY THE AO THAT WHATEVER MENTIONED IN THE SHOW ITA NO.2599/AHD/2010 -5- CAUSE NOTICE WERE REASONS WHICH WERE ACTUALLY RECOR DED BY THE AO BEFORE THE ISSUANCE OF THE NOTICE UNDER SECTION 148 OF THE ACT. THEREFORE, IN OUR CONSIDERED VIEW, THE LEARN ED CIT(A) ERRED IN OBSERVING THAT THE RECORDED REASONS WERE W ITH THE ASSESSEE BEFORE THE COMPLETION OF THE RE-ASSESSMENT . FURTHER, WE FIND THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. VIDESH SANCHAR NIGAR LTD., (2012) 340 ITR 66 (BOM) HELD AS UNDER: THE FINDING OF FACT RECORDED BY THE INCOME-TAX AP PELLATE TRIBUNAL IS THAT IN THE PRESENT CASE THE REASONS RE CORDED FOR REOPENING OF THE ASSESSMENT THOUGH REPEATEDLY A SKED BY THE ASSESSEE WERE FURNISHED ONLY AFTER COMPLETION O F THE ASSESSMENT. THE TRIBUNAL FOLLOWING THE JUDGMENT OF THIS COURT IN THE CASE OF CIT V. FOMENTO RESORTS AND HOT ELS LTD., INCOME-TAX APPEAL NO. 71 OF 2006 DECIDED ON NOVEMBER 27, 2006, HAS HELD THAT THOUGH THE REOPENI NG OF THE ASSESSMENT IS WITHIN THREE YEARS FROM THE END O F THE RELEVANT ASSESSMENT YEAR, SINCE THE REASONS RECORDE D FOR REOPENING OF THE ASSESSMENT WERE NOT FURNISHED TO T HE ASSESSEE TILL THE COMPLETION OF ASSESSMENT, THE REA SSESSMENT ORDER CANNOT BE UPHELD. MOREOVER, SPECIAL LEAVE PET ITION FILED BY THE REVENUE AGAINST THE DECISION OF THIS C OURT IN THE OF CIT V. FOMENTO RESORTS AND HOTELS LTD. HAS BEEN DISMISSED BY THE APEX COURT, VIDE ORDER DATED JULY 16, 2007. IN THIS VIEW OF THE MATTER, THE PRESENT APPEAL IS A LSO DISMISSED WITH NO ORDER AS TO COSTS. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE HONBLE BOMBAY HIGH COURT, WE HOLD THAT IN THE INSTANT CASE , REASSESSMENT WAS MADE WITHOUT COMMUNICATING THE REA SONS AS RECORDED FOR ISSUE NOTICE OF UNDER SECTION 148 OF T HE ACT, WAS BAD ITA NO.2599/AHD/2010 -6- IN LAW AND CONSEQUENTLY, WE QUASH THE REASSESSMENT ORDER DATED 26.12.2008. IN VIEW OF OUR ABOVE DECISION IN THE CROSS-OBJECTIO N OF THE ASSESSEE, THE ISSUES RAISED IN THE GROUNDS OF THE R EVENUE BECOME IN FRUCTOUS , AND WE REFRAIN FROM ADJUDICATING THE SAME. 6. IN THE RESULT CO OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( ' #$ ' #$ ' #$ ' #$ /KUL BHARAT /JUDICIAL MEMBER . .. . . . . . /N.S. SAINI /ACCOUNTANT MEMBER