Gujarat State Financial Corporation, Gandhinagar V. Dy. Commissioner of Income Tax,Circle-4, Ahmedabad

ITA 2637/AHD/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1211 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 26-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PF JAIN
• Keywords: Reopening of assessment; Capital receipt
• Section: 143(3); 142(1); 143(1); 147; 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER GUJARAT STATE FINANCIAL CORPORATION, BLOCK NO. 10, SECTOR 11, UDHYOG BHAVAN, GANDHINAGAR - 382017 PAN: AABCG2924M (APPELLANT) VS THE ACIT, CIRCLE - 4 , AHMEDABAD (RESPONDENT) REVENUE BY : S H RI ANSHU PRAKASH , CI T - D . R. ASSESSEE BY: SHRI P.F. JAIN, A.R. DATE OF HEARING : 0 4 - 06 - 2 019 DATE OF PRONOUNCEMENT : 04 - 06 - 2 019 / ORDER P ER : RAJPAL YADAV, JUDICIAL MEMBER : - THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF ASSESSEE AGAINST THE ORDER OF LD. CIT(A) DATED 1 ST JULY, 2014 PASSED FOR ASSESSMENT YEAR 2006 - 07. THOUGH THE ASSESSEE HAS TAKEN FIVE GROUNDS OF APPEAL BUT ITS GRIEVANCE REVOLVES AROUND TWO ISSUES NAMEL Y; (A) LD. CIT(A) HAS ERRED IN UPHOLDING I T A NO . 2637 / A HD/20 14 A SSESSMENT YEAR 200 6 - 07 I.T.A NO. 2637 /AHD/20 14 A.Y. 2006 - 07 PAGE NO GUJARAT STATE FINANCIAL CORPORATION VS. ACIT 2 REOPENING OF ASSESSMENT AND (B) LD. CIT(A) HAS ERRED IN UPHOLDING THE ADDITION OF RS. 159 , 46 , 05 , 27 1 / - . 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HAS FILED ITS RETURN OF INCOME ON 27 TH DEC, 200 6 DECLARING LO SS OF RS. 137 , 02 , 37 ,40 6/ - . THIS RETURN WAS PROCESSED U/S. 143(1) AND AN INTIMATION WAS ISSUED ON 9 TH APRIL , 2007 WITHOUT ANY CHANGES IN RETURN ED INCOME . AN ASSESSMENT ORDER WAS PASSED U/S. 143(3) ON 16 - 1 2 - 2008 AT RS. ( - ) 12 , 00 , 85 , 426 / - . THE LD. ASS ESSING OFFICER THEREAFTER RECORDED REASONS AND REOPENED THE ASSESSMENT. THE ASSESSEE OBJECTED TO REOPENING OF THE ASSESSMENT BUT T HE LD. ASSESSING OFFICER REJECTED ITS CONTENTION. 3. APPEAL TO LD. CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. THE LD. COUNSEL FOR THE ASSESSEE WHILE IMPUGNING THE ORDER OF THE CIT(A) CONTENDED THAT NOTICE U/S. 148 WAS ISSUED AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE ORIGINAL ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE WAS PASSED U/S. 143( 3) ON 16 - 12 - 2008. THE PROVISO ATTACHED TO SECTION 147 CONTEMPLATES THAT AN ASSESSMENT ORDER CANNOT BE REOPENED IN A C ASE WHERE SCRUTINY ASSESSMENT ORDER U/S. 143(3) WAS PASSED AND FO UR YEAR HAV E EXPIRED FROM T H E END OF THE RELEVANT ASSESSMENT YEAR. IN SU CH CASES, THE ASSESSING OFFICER CANNOT REOPEN THE ASSESSMENT UNLESS IT IS ESTABLISHED THAT TAXABLE INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY AND TRULY. HE POINTED OUT THAT ASSESSEE HAS DISCLOS ED ALL MATERIAL FACTS FULLY AND TRULY AND AN INQUIRY WAS CONDUCTED ON THE ISSUE FOR WHICH I.T.A NO. 2637 /AHD/20 14 A.Y. 2006 - 07 PAGE NO GUJARAT STATE FINANCIAL CORPORATION VS. ACIT 3 ASSESSMENT IS BEING REOPENED. HE DREW OUR ATTENTION TOWARDS PAGE NO. 4 TO 6 OF PAPER BOOK WHERE QUESTIONNAIRE ISSUED U/S. 142 (1) IS PLACED ON RECORD. HE DREW OUR AT TENTION TOWARDS QUESTION NO S . 4 AND 11 RAISED BY THE ASSESSING OFFICER IN THE NOTICE U/S. 142 (1) . ON THE STRENGTH OF THESE DETAILS , HE CONTEMPLATED THAT REOPENING OF THE ASSESSMENT IS BAD IN THE EYES OF LAW AND SAME BE QUASHED. 5. LD. CIT - D.R. ON THE O THER HAND CONTENDED THAT BASICALLY L O A N LIABILITY OF THE ASSESSEE HAS BEEN CEASE D AND THIS REMISSION IN THE LOAN LIABI LITY OUGHT NOT TO BE TREATED A CAPITAL RECEIPT RATHER IT IS TAXABLE U/S. 41(1). THE ASSESSING OFFICER HAS RIGHTLY REOPENED THE ASSESSMENT FOR ESCAPEMENT OF INCOME. HE FURTHER RELIED UPON THE ORDERS OF REVENUE AUTHORITIES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE RECORDS CAREFULLY. IN ORDER TO APPRECIATE THE CONTROVERSY , WE DEEM IT PERTINENT TO NOTE THE REASONS FOR RE OPENING WHICH READ AS UNDER: - IN THIS CASE, INCOME TAX. E - RETURN WAS FILED ON 27. 12.2006 DECLARING TO TAL LOSS RS. L,37,02,37,406/ - FOR A.Y.2006 - 07. THE ASSESSES IS DOING THE BUSINESS OF PROVIDING FINANCIAL ASSISTANCE, TO INDUSTR IAL UNITS. THE ASSESSM ENT FOR A. Y.2006 - 07 WAS FINALIZED U/S. 143(3) ON 16.12.2008 DETERMINING TOTAL INCOME AT. RS. 12,00,85,4 26/ - . 2. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, FOR A.Y.2009 - 10, IT WAS NOTICED THAT THE ASSESSEE IS HAVING CAPITAL RESERVE OF RS. L82,8 7,27,18 4/ - . ON VERIFICATION IT WAS NOTICED THAT T HE ASSESSEE HAD ENTERED ONE T IME, SETTLEMENT AGR EEMENT WITH FOLLOWING BANKS 1. BANK OF INDIA 2. DENA BANK 3. SIDBIREFI 4. SIDBI RTDM 5. SIDBI LOC 6. PSB (NG ) - III 7. PSB (N G ) - IV 8. PSB (NG) - V 9. INDIAN BANK 10. IDBI LOC BECAUSE OF THE SETTLEMENT, THE AMOUNT OF RS.159,46,05,271/ - PA YABLE BY THE ASSESSEE IS CEASED TO BE PAYABLE TO THOSE, INSTITUTIONS IN F.Y.2005 - 06 RELEVANT TO A.Y.2006 - 07. THE AMOUNT OF RS. 159,46,05,271 / - WAS CREDITED TO CAPITAL RESERVE BY THE ASSESSEE IN F.Y. 2005 - 06 RELEVANT TO ; A.Y.2006 - 07. THE AMOUNT IS WRITTEN OFF BY THESE INSTITUT IONS IN THEIR BOOKS OF ACCOUNTS. I.T.A NO. 2637 /AHD/20 14 A.Y. 2006 - 07 PAGE NO GUJARAT STATE FINANCIAL CORPORATION VS. ACIT 4 THEREFORE, THIS AMOUNT CANNOT BE SAID AS CAPITAL RECEIPT OF THE ASSESS EE. THE AMOUNT IS TO BE TAXED U/S 4 1(1) O F THE INCOME TAX ACT, 1961. THIS AMOUNT IS NOT OFFERED, TO TAX NOR THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. HENCE INCOME OF THE ASSESSEE WAS UNDER ASSESSED BY AMOUNT OF RS. 159,46,05,271 / - IN VIEW OF ABOVE FACTS, I HAVE REA SON TO BELIEVE THAT THE INCOME OF THE ASSESSEE IS UNDER ASSESSED BY AMOUNT OF RS. 159,46,05,271/ - T HEREFORE, PERMISSION MAY BE ACCORD ED TO RE - OPEN THE CASE U/S 147 OF THE INCOME - TAX ACT 1961. ISSUED NOTICE U/S. 148 OF THE I. T. ACT, 1961. BEF ORE ADVERTING THE OTHER DETAILS, IT IS IMPERATIVE UPON US TO TAKE NOTE OF QUESTION NOS. 4 AND 11 ASKED BY THE ASSESSING OFFICER IN THE QUESTIONNAIRE ISSUED U/S. 142(1) VIDE LETTER DATED 25 TH NOV, 2008. SUCH QUESTIONS READ AS UNDER: - (4) YOU HAVE REPORT ED CAPITAL RESERVE -- GAIN ON RESTRUCTURING OF PRINCIPAL DEBTS OF RS. 1,59,46,05,271/ - SUBMIT COMPETE DETAIL THEREOF WITH ITS IMPACT ON TOTAL INCOME. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (11) SUBMIT COMPLETE DETAILS OF FOLLOWING INCOME CREDITED TO YOUR P & L A/C: A) INTEREST ON LOAN AND ADVANCES B) INT. SACRIFICE ON RESTRUCTURING C) INTEREST ON TERM LOAN D) LEASE INCOME E) LEASE RENTAL INCOME THE INTERDICTION PROVIDED IN THE PROVISO APPENDED TO SECTION 147 CREATES AN EMBAR GO ON THE POWERS OF ASSESSING OFFICER T O REOPEN AN ASSESSMENT WHERE SCRUTINY ASSESSMENT HAS BEEN PASSED AND FOUR YEARS HAVE EXPIRED FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE ASSESSING OFFICER CANNOT REOPEN ASSESSMENT UNLESS IT IS ESTABLISHED THAT ON ACCOUNT OF FA ILURE OF ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY AND TRULY INCOME HAS ESCAPED ASSESSMENT. A PERUSAL OF THE REASONS WOULD REVEAL THAT ASSESSING OFFICER HAS NOWHERE RECORDED THAT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FUL LY AND TRULY , INCOME HAS ESCAPED ASSESSMENT. HE WAS UNABLE TO LAY HIS HANDS ON ANY NEW INFORMATION , HE HAS ONLY RE - APPRECIATED THE INFORMATION ALREADY POSSESSED BY HIM AND CONSIDERED IN THE SCRUTINY I.T.A NO. 2637 /AHD/20 14 A.Y. 2006 - 07 PAGE NO GUJARAT STATE FINANCIAL CORPORATION VS. ACIT 5 ASSESSMENT. THERE IS NO ALLEGATION AGAINST THE ASSESSE E FOR WI THHOLDING OF ANY INFORMATION. I N SUCH SITUATION, THE REOPENING OF ASSESSMENT IS NOT JUSTIFIABLE. THEREFORE, WE ALLOW THE APPEAL AND QUASHED THE RE - ASSESSMENT ORDER. ORDER PR ONOUNCED IN THE OPEN C OURT ON 04 - 06 - 201 9 SD/ - SD/ - ( AMARJIT SINGH ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 04 /06 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,