M/s. Liberty Group Marketing DN, Karnal V. ACIT, Karnal

ITA 2694/DEL/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2749 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-08-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 01-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANTOSH KUMAR GOYAL
• Keywords: Audit objection; Tangible material; Reassessment proceedings
• Section: 143(3); 147; 148; 154

Judgement Text

1 ITA NO. 2694/DEL/2012 IN THE INCOME TAX APPELLA TE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT ME MBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A .NO. 2694/DEL/2 012 (A.Y 2005-06) LIBERTY GROUP MARKETING DN RAILWAY ROAD KARNAL AAAFL5273E (APPELLANT) VS ACIT KARNAL CIRCLE, AAYAKAR BHAWAN, SECTOR-12, URBAN ESTATE KARNAL (RESPONDENT) APPELLANT BY SH. SANTOSH KUMAR GOYAL, ADV RESPONDENT BY SH. AMIT JAIN, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER DATED 01/03/2012 PASSED BY CIT(A)-KARNAL FOR ASSESSMENT YEAR 2005-06 . 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE ORDER OF THE LD.CIT(A) IS AGAINST LAW AND FACTS. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT THE ORDER OF THE LD.CIT(A) IS UPHOLDING THE VALIDITY OF REASSESSMENT PROCEEDINGS INITIATED U/S 147/148 ON THE BASIS OF A UDIT OBJECTION, RECONSIDERATION OF PRIMARY FACTS AND DETAILS DISCUS SED WHILE FRAMING DATE OF HEARING 30.11.2017 DATE OF PRONOUNCEMENT 28.12.2017 2 ITA NO. 2694/DEL/2012 ORIGINAL ASSESSMENT AND ON THE ISSUES ON WHICH PROC EEDINGS U/S 154/155 STOOD DROPPED IS ALTOGETHER ARBITRARY, ILLEGAL, VOI D AND UNCALLED FOR. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT FIRM, THE ORDER OF THE LD.CIT(A) IS CONFIRMING THE ORDER OF THE LD. ACIT IN DISALLOWING EXPENSES OF RS.1003551/- OUT OF BUILDIN G REPAIRS EXPENSES ON RECONSIDERATION OF DETAILS ALREADY ON RECORD IS ALT OGETHER ARBITRARY ILLEGAL, VOID AND UNCALLED FOR. 3. THE RETURN DECLARING INCOME OF RS.6,65,14,310/- WAS FILED ON 26.10.2005. THE ORIGINAL ASSESSMENT WAS FINALIZED A T AN INCOME OF RS.6,68,52,420/- PER ASSESSMENT ORDER DATED 20.11.2 007. LATER ON, THE AO INITIATED PROCEEDINGS U/S 147 PER ISSUE OF NOTICE U /S 148 OF THE ACT ON 22.03.2010, IN RESPONSE TO WHICH, THE APPELLANT FIL ED RETURN DECLARING INCOME OF RS.6,68,52,420/-, I.E., THE INCOME ASSESSED PER ASSESSMENT ORDER DATED 20.11.2007. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE OBJECTED TO REOPENING OF THE ASSESSMENT ON THE GROUND THAT REAS SESSMENT PROCEEDINGS ON THE BASIS OF AUDIT OBJECTION IS BAD IN LAW. IT WAS FURTHER SUBMITTED THAT THE NOTICE HAD BEEN ISSUED FOR THE SAME REASON FOR WHIC H RECTIFICATION PROCEEDINGS HAD EARLIER BEEN INITIATED BUT DROPPED AND HENCE NO TICE ISSUED FOR REASSESSMENT WAS NOT VALID, AND PLACED RELIANCE ON THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF M/S BERGER PAINT S INDIA LTD, 322 ITR 369 (CAL.). THE AO CONSIDERED THE SUBMISSIONS OF THE AS SESSEE BUT THE SAME WAS NOT FOUND TENABLE. THE AO NOTED THAT THERE IS NO PR OVISION IN THE ACT, WHICH BARS THE INITIATION OF PROCEEDINGS U/S 147 OF THE A CT WHERE PROCEEDINGS INITIATED EARLIER U/S 154 HAS BEEN DROPPED. THE AO FURTHER NOTED IN HIS ORDER THAT THE ASSESSMENT WAS NOT REOPENED MERELY ON THE BASIS OF THE OBJECTION OF THE AUDIT PARTY BUT HE WAS HAVING REASONS TO BELIEV E THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT/UNDER ASSE SSED. THE AO, THEREFORE, HELD THAT PROCEEDINGS U/S 147 HAD RIGHTY BEEN INITI ATED. 3 ITA NO. 2694/DEL/2012 4. THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). TH E CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. BEING AGGRIEVED BY THIS ORDER, THE ASSESSEE IS B EFORE US. 6. THE LD. AR SUBMITTED THAT REASONS RECORDED FOR R E-OPENING U/S 148 AND REASONS U/S 154 WAS ONE AND THE SAME RELATING TO RS .10,03,551/- FOR REPAIR AND BUILDING TRANSFER OF LIBERTY SHOES LTD. ON 30/9 /2004. THE LD. AR RELIED UPON THE JUDGMENT OF THE HONBLE APEX COURT IN CASE OF ACIT VS. SHAREYAS GRAMIN BANK 2012 25 TAXMAN.COM 282 HON'BLE SUPREME COURT WHEREIN IT IS HELD THAT ONCE A REGULAR ASSESSMENT IS COMPLETED IN TERMS OF SECTION 143(3) A PRESUMPTION CAN BE RAISED THAT THIS ORDER WAS PASSE D BY THE ASSESSING OFFICER ON A PROPER APPLICATION OF MIND. IN THE SAID DECIS ION THE HONBLE APEX COURT ALSO OBSERVED THAT A BLAND STATEMENT AT THE END OF THE REASONS THAT THE ASSESSEE FAILED TO TRULY DISCLOSE THE PARTICULAR MA TERIAL AND NOT POINTED OUT SPECIFIC MATERIAL IN PARTICULAR WHEREBY DISCLOSED I N THE COURSE OF ORIGINAL ASSESSMENT BY THE ASSESSEE. THE HONBLE APEX COURT HELD THAT THE REASON FOR RE-OPENING THE ASSESSMENT IS BASED MERELY ON A CHAN GE OF OPINION AND NOT ON INTANGIBLE MATERIAL WARRANTING RE-OPENING OF THE AS SESSMENT U/S 147/148. THE LD. AR FURTHER SUBMITTED THAT IN THE EARLIER AS SESSMENT YEAR 2004-05 SIMILAR EXPENSES AND CLAUSE 6 G OF THE AGREEMENT HA S BEEN TAKEN INTO ACCOUNT AND BENEFIT OF THE SAME HAS BEEN GIVEN TO THE ASSES SEE. 7. THE LD. DR SUBMITTED THAT THE PROCEEDINGS U/S 14 7 ARE JUST AND PROPER AND PROCEEDINGS U/S 154 WAS MERELY PASSED BY MISTAK E. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT SECTION 143(3 ) ASSESSMENT WAS COMPLETED AND AT THE RELEVANT TIME THE ASSESSEE HAS GIVEN ALL THE DOCUMENTS PERTAINING TO HIS ASSESSMENT AND COMPLIED WITH THE PROVISIONS OF THE INCOME TAX ACT, 1961. ONCE AN INDIVIDUAL/ASSESSEE COMPLIES WITH THE PROVI SIONS OF ANY PARTICULAR STATUTE, IT IS THE OBLIGATION ON THE PART OF STATUT ORY AUTHORITIES I.E. REVENUE 4 ITA NO. 2694/DEL/2012 DEPARTMENT IN THIS CASE TO PASS ORDERS AS PER THE S TATUTORY PROVISIONS PROVIDED TO THEM. SIMPLY BECAUSE THERE IS A CHANGE OF OPINIO N IN THE MINDS OF ASSESSING OFFICER OR OF THE HIGHER AUTHORITIES, THE CASE CANN OT BE RE-OPENED. THERE HAS TO BE REASONS AND IN PARTICULAR THE TANGIBLE MATERIAL TO SUPPORT THOSE REASONS WHILE RE-OPENING U/S 147 AND PROCEEDINGS U/S 154 HA S TO BE COMPLIED WITH BY THE ASSESSING OFFICER. IN THIS CASE, BOTH THE AUTH ORITIES HAVE FAILED TO DO SO AND, THEREFORE, THE REVENUE CANNOT SIMPLY CHANGE IT S OPINION FROM ITS EARLIER ORDERS WHICH IS FINALIZED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DECEMBER, 2017 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 28/12/2017 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 30/11/2017 PS 5 ITA NO. 2694/DEL/2012 2. DRAFT PLACED BEFORE AUTHOR 01/12/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 29.12.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 2 9 .12.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 6 ITA NO. 2694/DEL/2012