M/s Paras Nath Traders, Shivpuri V. I.T.O., Shivpuri

ITA 271/AGR/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6333 (ITAT-AGRA)
• Duration Of Justice: 3 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 26-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NAVEEN GARGH
• Keywords: Question of law; Reason to believe
• Section: 37(1); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA (SMC) BENCH: AGRA BEFORE S HRI A. D. JAIN, JUDICIAL MEMBER I.T.A NO . 271 /AGRA/201 3 (ASSESSMENT YEAR - 2006 - 07 ) A SSESSEE BY SHRI NAVEEN GARGH, AR. REVENUE BY SHRI WASEEM ARSHAD, SR. DR. ORDER THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2006 - 07, TAKING THE FOLLOWING GROUNDS: 1. THAT, IN ANY VIEW OF THE MATTER AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AUTHORITIES BELOW HAVE EARED IN INITIATING AND UPHOLDING THE PROCEEDING U/S 147 OF THE INCOME TAX: ACT, 1961. 2. THAT, IN ANY VIEW OF THE MATTER AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. M/S PARAS NATH TRADERS, A.B. ROAD, SHIVPURI (M.P.) PAN NO. AAIFP9030D (ASSESSEE) V S .. ITO, SHIVPURI (M.P.) (R EVENUE ) DATE OF HEARING 08 . 0 5 .201 7 DATE OF PRONOUNCEMENT 31 .0 5 .201 7 I.T.A NO. 271 /AGRA/201 3 2 AUTHORITIES BELOW HAVE EARED IN COMPLETING AND UPHOLDING THE ASSESSMENT U/S 144 OF THE INCOME TAX ACT, 1961. 3. THAT, IN ANY VIEW OF THE MATTER AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AUTHORITIES BELOW HAVE EARED IN DETERMINING AND UPHOLDING THE TOTAL INCOME AT RS. 17,96,931/ - AS AGAINST INCOME DECLARED RS. 34,166/ - . 4. THAT, IN ANY VIEW OF THE MATTER AND ON THE F ACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AUTHORITIES BELOW HAVE EARED IN NOT ALLOWING REASONABLE AND PROPER OPPORTUNITY OF HEARING. 2. AS PER THE R EGISTRY, THERE IS A DELAY OF FIVE DAYS IN FILING THE APPEAL. ACCORDING TO THE APPLICATION FIL ED BY THE ASSESSEE SEEKING CONDONATION OF DELAY, THE LAST DAY FOR FILING THE APPEAL WAS 21.07.2013. IT HAS BEEN STATED THAT THE PARTNER OF THE ASSESSEE FIRM, NAMELY, SHRI AJIT KUMAR JAIN, WHO HAS VERIFIED AND SIGNED THE APPEAL, WAS S ICK FOR THE PERIOD FROM 11.07.2013 TO 23.07.2013. A MEDICAL CERTIFICATE ISSUED BY A GOVERNMENT MEDICAL ATTENDANT/DOCTOR HAS BEEN ATTACHED. 3. IN VIEW OF THE CONTENTS OF THE APPLICATION ACCOMPA NIED BY THE MEDICAL CERTIFICATE, I FIND THAT THE ASSESSEE WAS VISI T ED WITH SUFFICIENT CAUSE FOR THE DELAY OF I.T.A NO. 271 /AGRA/201 3 3 FIVE DAYS WHICH OCCURRED IN THE FILING OF THE APPEAL. THE SAME IS ACCORDINGLY, CONDONED. 4. APROPOS GROUND NO. 1, THE AO RECORDED THE FOLLOWING REASONS TO BELIEVE ESCAPEMENT OF INCOME, SO AS TO ENABLE HIM TO REOP EN THE COMPLETED ASSESSMENT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION : IMPUGNED ORDER PAGE 3 PARA 5 (II): IN THIS CASE THE REPORT ON TAX EVASION PETITION AGAINST THE ABOVE NAMED ASSESSEE HAVE BEEN SUBMITTED BY THE ITO (INVESTIGATION) GWALIOR TO JCIT RANGE - 3, GWALIOR VIDE HIS LETTER F.NO. ITO (INV.)/GWL./TEP/09 - 10/452 DATED 07.06.2010. THE SAID REPORT HAS BEEN FORWARDED BY THE JCIT TO THIS OFFICE VIDE HIS LETTER F.NO. JT. CIT/R - 3/GWL/36/2010 - 11 DATED 16.06.2010. ON GOING THROUGH THE REPORT IT IS SEEN THAT DURING THE FINANCIAL YEAR 2005 - 06 RELEVANT TO ASSESSMENT YEAR 2006 - 07 ASSESSEE HAVE MADE A TRANSACTION OF RS.27,93,807/ - WITH PUNJAB NATIONAL BANK BRANCH SHIVPURI. THE SAID FIRM AS PER RECORD OF THIS OFFICE HAS NOT FILED ITS RETURN OF INCOME FOR THE A .Y. 2006 - 07. I HAVE THEREFORE, REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX AMOUNTING TO RS.2,79,380/ - (EING 10% NET PROFIT OF TOTAL BANK TRANSACTION) IS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1961 FOR THE A.Y. 2 006 - 07. I.T.A NO. 271 /AGRA/201 3 4 NOTICE U/S 148 OF THE I.T. ACT, 1961 IS THEREFORE ISSUED TO THE ASSESSEE FOR THE A.Y. 2006 - 07. 5. IT REMAINS UNDISPUTED AND PATENT ON RECORD THAT NO ADDITION WAS MADE BY THE AO TOWARDS THE ALLEGED INCOME ESCAPING ASSESSMENT, AS NOTED IN THE AFORE SAID REASONS TO BELIEVE ESCAPEMENT OF INCOME. 6. THE LD. CIT(A) CONFIRMED THE REOPENING OF THE COMPLETED ASSESSMENT, HOLDING AS FOLLOWS: 5.(VI) THE ASSESSING OFFICER HAS ACTED UPON THE REPORT ON TEP FORWARDED TO HIM BUT AFTER RECORDING THE REASONS TO BE LIEVE AT HIS OWN. SO FAR, THE FILING OF ORIGINAL RETURN ON 23.06.2006 IS CONCERNED, THIS FACT HAS BEEN LOOKED INTO AND MENTIONED IN THE ASSESSMENT ORDER AS WELL AS REMAND REPORT THAT NO SUCH RETURN WAS FOUND ENTERED IN THE OFFICIAL RECORD. SO FAR, THE SERV ICE OF NOTICE U/S 148 IS CONCERNED, IT IS ALSO MENTIONED IN THE ASSESSMENT ORDER AS WELL AS REMAND REPORT THAT SUCH NOTICE WAS SERVED UPON THE ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER INITIATED PROCEEDING U/S 147 OF THE ACT AS PER LAW AND IS HEREBY CON FIRMED. 7. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE REOPENING OF THE COMPLETED ASSESSMENT OF THE ASSESSEE, ILLEGALLY DISREGARDING THE FACT THAT AS PATENT FROM THE RECORD, NO ADDITION WAS MADE WITH REGARD TO THE ALLEGED ESCAPED INCOME OF RS.2,79,380/ - , BEING 10% NET PROFIT OF TOTAL I.T.A NO. 271 /AGRA/201 3 5 BANK TRANSACTION OF RS.27,93,807/ - WITH PUNJAB NATIONAL BANK SHIVPUR BRANCH, WHICH ALLEGED ESCAPED INCOME FORMED THE VERY BASIS OF THE REASONS RECORDED BY THE AO FOR REOPENING THE COMPLETED ASSESSMENT OF THE ASSESSEE. 8. PER CONTRA, THE LD. DR HAS CONTENDED THAT THIS ISSUE WAS NEVER RAISED BEFORE THE AUTHORITIES BELOW AND THAT AS SUCH, THE SAME CANNOT BE ALLOWED TO BE RAISED NOW. IN SUPPORT, HE HAS RELIED ON M/S EAST INDIA PHARMACEUTICALS LTD. VS. CIT WEST BENGAL, (COPY SUPPLIED), RENDERED BY THE HONBLE SUPREME COURT OF INDIA , VIDE JUDGMENT DATED 11.03.1997. 9. I HAVE HEARD THE PARTIES ON THIS ISSUE. THIS ISSUE IS A LEGAL , ONE , FOR WHICH , N O FRESH EVIDENCE IS REQUIRED TO BE LED. ALL FACTS WITH REGARD THERETO ARE ALREADY ON RECORD. ACCORDINGLY, THE SAME IS ADMITTED , IN KEEPING WITH NATIONAL THERMAL POWER CORPORATION LTD. VS. CIT, 229 ITR 383 (SC). SO FAR AS REGA RDS EAST INDIA PHARMACEUTICALS WORKS LTD. (SUPRA), THAT IS A DECISION HANDED DOWN BY THE HONBLE SUPREME COURT OF INDIA. IT PERTAINS TO A MATTER WHERE THE HONBLE HIGH COURT PASSED ITS DECISION ON QUESTIONS REFERRED TO IT BY THE TRIBUNAL U/S 256(1) OF TH E IT ACT. B EFORE THE HONBLE SUPREME COURT, AS IS EVIDENT FROM THE JUDGMENT, THE LD. COUNSEL APPEARING FOR THE R EVENUE CONTENDED THAT THE ASSESSEE HAD , IN FACT , NOT RAISED THE ISSUE EITHER BEFORE THE HONBLE HIGH COURT , OR BEFORE THE TRIBUNAL AND THAT AS S UCH, THE QUESTION NEVER AROSE OUT OF THE ORDER IMPUGNED AND THE I.T.A NO. 271 /AGRA/201 3 6 QUESTION REFERRED BY THE TRIBUNAL TO THE HONBLE HIGH COURT U/S 256(1) OF THE ACT., WAS MERELY RELATABLE TO INTERPRETATION OF 37(1) OF THE ACT AND WHETHER THE INTEREST PAID ON THE MONEY BORROW ED FOR PAYMENT OF INCOME TAX COULD BE SAID TO BE EXPENDITURE ALLOWABLE IN COMPUTING THE INCOME TAX U/S 37(1) OF THE ACT. THE HONBLE SUPREME COURT OBSERVED, THAT WHEN THE ASSESSEE NEVER ADVANCED THE CONTENTION EITHER BEFORE THE TRIBUNAL , OR BEFORE THE HIGH COURT, IT DID NOT BRING WIT HIN ITS SWEEP, THAT CONTENTION AS RAISED BEFORE THE HONBLE SUPREME COURT, AND THAT IT WOULD NOT BE APPROPRIATE FOR THE HONBLE SUPREME COURT TO LOOK INTO THE ADDITIONAL PAPERS PRODUCED BY THE ASSESSEE FOR ENTERTAI NING THE CONTENTION RAISED AND ANSWERING THE SAME. THE POSITION IN THE CASE BEFORE US, HOWEVER, IS ENTIRELY AT VARIANCE WITH THAT BEFORE THEIR L ORDSHIPS IN M/S EAST INDIA PHARMACEUTICALS WORKS LTD. (SUPRA). FIRSTLY, AS NOTED , THAT THE MATTER WAS CONCERNING QUESTI ONS REFERRED U/S 256(1) OF THE I.T. ACT BY THE TRIBUNAL TO THE HONBLE HIGH COURT, WHICH IS NOT THE CASE HER EIN. MOREOVER, IN THAT CASE, ADDITIONAL PAPERS WERE FILED BEFORE THE HONBLE SUPREME COURT, FOR ENTERTAINING THE CONTENTION RAISED, WHICH IS NOT SO IN THE PRESENT CASE. BE THAT AS IT MAY, EVEN IF THIS ASPECT WERE TO BE CONSIDERED, IT WOULD BE INCONSEQUENTIAL TO THE RESOLVING OF THIS MATTER . I T REMAINS UNDISPUTED THAT THE ISSUE RAISED BY THE ASSESSEE BEFORE US AT THIS STAGE IS OUT AND OUT A LEGAL ISSUE , FOR WHICH, NO FRESH EVIDENCE IS REQUIRED TO BE LED AND ALL THE I.T.A NO. 271 /AGRA/201 3 7 NECESSARY FACTS AND EVIDENCE ARE ALREADY EXISTING ON RECORD. IT IS IN SUCH A SCENARIO THAT THE HONBLE SUPREME COURT ITSELF , IN NATIONAL THERMAL POWER CORPORATION LTD. VS. CIT (SUPRA) , HAS HEL D A QUESTION OF LAW AS ALLOWABLE TO BE RAISED FOR THE FIRST TIME AT ANY STAGE , EVEN UP TO THE HONBLE SUPREME COURT. IT MAY BE NOTED THAT THIS HAS ALWAYS BEEN TH E LAW . IT CANNOT BE GAINSAID THAT A PRONOUNCEMENT BY THE HONBLE SUPREME COURT IS A DECLARAT ION OF THE LAW AS IT ALWAYS WAS. T HEREFORE, FINDING NO MERIT IN THE OBJ ECTION RAISED BY THE DEPARTMENT, T HE SAME IS REJECTED BY OBSERVING THAT M/S EAST INDIA PHARMACEUTICALS WORKS LTD. (SUPRA) IS NOT APPLICABLE. 10. T HE ASSESSMENT WAS FRAMED BY MAKING THE FOLLOWING ADDITIONS: [ASSESSMENT ORDER PG. 3] TOTAL TAXABLE INCOME HAS BEEN CALCULATED AS FOLLOWS: - TOTAL INCOME AT 5% N.P. OF ESTIMATED TURNOVER OF RS.350 LAKHS RS.17,50,000/ - ADD: ABOVE DIFFERENCE IN STOCK RS. 46,931/ - TOTAL TAXABLE INCOME RS. 17,96,931/ - 11. THUS, WHILE MAKING THE ABOVE ADDITION OF RS.17,50,000/ - + RS.46,931/ - NO ADDITION HAS BEEN MADE BY THE AO FOR THE ALLEGED INCOME ESCAPED ASSESSMENT AS I.T.A NO. 271 /AGRA/201 3 8 PER REASONS TO BELIEVE, OF RS.2,79,380/ - (10% NET PROFIT OF TOTAL BANK TRANSAC TION OF RS.27,93,807/ - WITH PUNJAB NATIONAL BANK, SHIVPURI. 1 2. IN ITA NO. 134/AG/2014 FOR ASSTT. YEAR 2003 - 04 , VIDE ORDER DATED 04.04.2016 , SH. ANU G RAH VARSHNEY VS. ITO , IT HAS BEEN HELD BY THE AGRA ITAT THAT: WE HOLD THAT IN THE ABSENCE OF ANY ADDITION HAVING BEEN MADE ON INCOMES WHICH THE AO HAD REASON TO BELIEVE HAD ESCAPED ASSESSMENT, NO ADDITION OF ANY OTHER INCOME COULD HAVE BEEN MADE AND THAT THE AO HAD EXCEEDED HIS JURISDICTION IN PASSING THE IMPUGNED ORDER U/S 147. THE SAME IS LIABLE TO BE QUASHED. WE QUASHED. WE QUASH ACCORDINGLY. 1 3. IN ITA NO. 160/AGRA/1999 FOR ASSTT. YEAR 1989 - 90 , VIDE ORDER DATED 29.12.2004 SHRI KANHAIYA LAL AGARWAL VS. ACIT , IT HAS BEEN HELD THAT: HOWEVER IN THE ASSESSMENT/REASSESSMENT PROCEEDING NO ADDITION IN RESPECT OF THE SAID INVESTMENT/INCOME WAS MADE BUT THE ADDITIONS WERE MADE IN RESPECT OF THE AMOUNT OTHER THAN MOTIONED IN THE REASONS RECORDED FOR INITIATING THE PROCEEDING UNDER SECTION 14 7/148. THEREFORE, THE STATUTORY CONDITIONS FOR INITIATION OF PROCEEDING UNDER SECTION 147(1)/148 HAVE NOT BEEN FULFILLED. THEREFORE THE INITIATION OF REASSESSMENT PROCEEDING DOES NOT STAND LEGAL SECURITY. WE, THEREFORE HOLD THAT THE A.O. WAS NOT LEGALLY JU STIFIED TO INITIATE THE PROCEEDING UNDER SECTION I.T.A NO. 271 /AGRA/201 3 9 147(A)/148 FOR THE A.Y. 1986 - 87. SINCE THE INITIATION OF REASSESSMENT PROCEEDING HAS BEEN HELD AS UNJUSTIFIED, THE ADDITION MADE DURING THE SAID PROCEEDING ARE ALSO UNJUSTIFIED. HENCE, WE QUASH THE ORDER PAS SED BY CIT(A). 1 4 . THUS, IN THE ABSENCE OF ANY ADDITION HAVING BEEN MADE ON INCOMES WHICH THE AO HAD REASON TO BELIEVE HAD ESCAPED ASSESSMENT, NO ADDITION OF ANY OTHER INCOME COULD HAVE BEEN MADE . T HE AO HAD CLEARLY EXCEEDED HIS JURISDICTION IN PASSING T HE IMPUGNED ORDER U/S 147 OF THE ACT AND THE SAME IS QUASHED. 1 5 . IN THE RESULT, THE APPEAL IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON 31 / 0 5 / 2017 . SD/ - (A.D. JAIN) JUDICIAL MEMBER DATED 31 / 05 /201 7 *AKV* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR I.T.A NO. 271 /AGRA/201 3 10 DATE 1. DRAFT DICTATED (DNS) 25 .0 5 .2017 PS 2. DRAFT PLACED BEFORE AUTHOR 29 .0 5 .2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 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.