Shri Shabbir Rafiqbhai Depariya, Surat V. The Income Tax Officer, Ward-2(1), Surat

ITA 275/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8394 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-03-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 28-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Reopening of assessment; Gift
• Section: 68; 148

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE SHRI RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH , ACCOUNTANT MEMBER ./ ITA NO. 275/ AHD/20 1 4 / ASSTT. YEAR: 200 3 - 200 4 SHRI SHABBIR RAFIQBHAI DEPARIYA 13, AMAN SOCIETY - 1 B/H. JIVAN JYOT CINEMA, UDHNA. PAN : AHVPD 9579 R VS. ITO, WARD - 2(1) SURAT. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI RASESH SHAH REVENUE BY : SHRI ALOK KUMAR, SR.DR / DATE OF HEARING : 0 7 / 03 /201 7 / DATE OF PRONOUNCEMENT: 08 / 03 /201 7 / O R D E R PER RAJPAL YADAV , JUDICIAL MEMBER : ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE LD.CIT(A) - II, SURAT DATED 22.11.2013 PASSED FOR THE ASSTT.YEAR 2003 - 04. 2. THE ASSESSEE HAS TAKEN FOUR GROUNDS OF APPEAL, OUT OF WHICH, GROUND NOS.3 AND 4 ARE GENERAL GROUNDS WHICH D O NOT ITA NO . 275 /AHD/20 14 2 CALL FOR RECORDING OF ANY SPECIFIC FI N DNG S, THEREFORE, THEY ARE REJECTED. 3. IN GROUND NO.1 AND 2, THE ASSESSEE HAS CHALLENGED REOPENING OF THE ASSESSMENT BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 AND CONFIRMATION O F ADDITION OF RS.11,12,552/ - WHICH WAS ADDED BY THE AO WITH THE AID OF SECTION 68 OF THE ACT. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED H I S RETURN OF INCOME ON 14.3.2005 DECLARING TOTAL INCOME AT RS.43,705/ - . ACCORDING TO THE AO, THE ASSESSEE HAS GIVEN A GIFT TO S.M. TUMBI WHICH WAS TREATED AS UNEXPLAINED CASH IN HIS CASE. HE TOOK THE MATTER TO THE TRIBUNAL AND THE TRIBUNAL HAS OBSERVED THAT IN THE CASE OF DONE E , ADDITION CANNOT BE MADE, BUT IT CAN BE INQUIRED INTO IN THE CASE OF DONOR. ARMED WITH THAT INFORMATION, THE LD.AO RECORDED REASON S FOR REOPENING OF ASSESSMENT. HE OBSERVED THAT THE ASSESSEE HAS SHOWN A N OPENING CAPITAL BALANCE AS ON 1.4.2002 AT RS.11,12,552/ - . THE ASSESSEE HAS FILED RETURN OF INCOME FOR THE FIRST TIME IN ASSTT.YEAR 2003 - 04, AND THEREFORE, SOURCE OF OPENING OF BALA NCE WAS DESERVED TO BE INQUIRED. ACCORDINGLY , HE RECORDED REASONS AND REOPENED THE ASSESSMENT. ACCOR DING TO THE AO, THE ASSESSEE DID NOT COMPLY WITH THE NOTICE, AND HENCE HE MADE ADDITION OF RS.11,12,552/ - , WHICH IS OPENING CAPITAL BALANCE IN HIS ACCOUNT . APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. ITA NO . 275 /AHD/20 14 3 5. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE RAISED TWO FOLD SUBMISSIONS. HE CONTENDED THAT THE AO HAS NOT RECORDED ANY REASONS FOR THE ASSTT.YEAR 2003 - 04. HE HAS RECORDED REASONS FOR THE ASSTT.YEAR 2004 - 05, AND THEREFORE, HE CANNOT PASS AN ASSESSMENT ORDER FOR THE ASSTT.YEAR 2003 - 04. HE FURTHER SUBMITTED THAT EVEN IN THE REASONS WHICH WERE RECORDED FOR THE ASSTT.YEAR 2004 - 05, THE AO HAS NOT TAKEN ANY PRIOR APPROVAL CONTEMPLATED UNDER SEC TION 151 OF THE ACT, AND HE CANNOT ISSUE ANY NOTICE UPON THE ASSESSEE. IN HIS SECOND FOLD OF SUBMISSION, HE SUBMITTED THAT OPENING CAPITAL BALANCE DISCLOSED BY THE ASSESSEE IN THE RETURN COULD BE INQUIRED IN ASSTT.YEAR 2002 - 03 AND NOT IN ASSTT.YEAR 2003 - 0 4, BECAUSE, IT IS A BROUGHT FORWARD OF CAPITAL BALANCE OF EARLIER YEAR. THUS, THE LD.COUN S EL FOR THE ASSESSEE SUBMITTED THAT REASSESSMENT EITHER COULD BE PASSED IN THE ASSTT.YEAR 2002 - 03 OR IN ASSTT.YEAR 2004 - 05 IN WHICH REASONS HAVE BEEN RECORDED. IN TH E ASSTT.YEAR 2003 - 04, NO REASONS HAVE BEEN RECORDED, AND THEREFORE, THERE COULD NOT BE ANY RE - ASSESSMENT ORDER. 6 . THE LD.DR, ON THE OTHER HAND, SUBMITTED THAT AS FAR AS OBJECTION OF THE ASSESSEE WITH REGARD TO ASSESSMENT OF RS.11,12,552/ - IN THE ASSTT. YEAR 2003 - 04 IS CONCERNED , THE AO CAN ALWAYS INQUIRE OPENING CAPITAL BALANCE INTRODUCED FOR THE FIRST TIME. IN THE ASSTT.YEAR 2002 - 03, THE ASSESSEE HAS ITA NO . 275 /AHD/20 14 4 NOT FILED RETURN. THEREFORE, IT IS NOT ASCERTAINABLE WHETHER THE ASSESSEE HAS ANY CLOSING BALANCE. WITH REGARD TO REASONS NOT RECORDED FOR THE ASSTT.YEAR 2003 - 04 IS CONCERNED, THE LD.DR SUBMITTED THAT IT MIGHT BE A TYPOGRAPHICAL ERROR ON THE TOP OF THE REASONS. 7 . WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. FORWAR DING LETTER WRITTEN BY THE AO WHILE COMMUNI CA TING REASONS TO THE ASSESSEE ALONG WITH COPY OF THE REASONS ARE AVAILABLE IN PAPER BOOK. IT IS PERTINENT TO TAKE NOTE OF BOTH THESE DOCUMENTS. THEY READ AS UNDER: OFFICE OF THE INCOME TAX OFFICER, WARD 2(1) ROOM NO.116, AAYAKAR BHAVAN, MAJURAGATE, SURAT NO.SRT/ITO WD 2(1)/225/09 - 120 DATE : 076.07.2009 TO SHRI SABBIR RAFIQK DEPARIYA 13, AMAN SOC., BEHIND JIVAN JYOTHI CINEMAM, UDHNA, SURAT. SIR, ITA NO . 275 /AHD/20 14 5 SUB: SUPPLY OF COPY OF REASON RECORDED FOR ISSUE OF NOTICE U/S .148 OF THE I.T.ACT, 1961 A - Y 2004 - 05 REF: YOUR LETTER AT 19.03.09 PLEASE REFER TO THE ABOVE. ********* 2. A COPY OF REASON RECORDED U/S.147(A) OF THE I.T.ACT, 1961 FOR ISSUE OF NOTICE U/S.148 OF THE SAID ACT IS SUPPLIED HERE WITH AS DESIRED. 3. YOU ARE REQUESTED TO COMPLY WITH THE TERMS OF NOTICE ISSUED U/S.148 OF THE ACT IMMEDIATELY. ENCL: AS ABOVE. SD/ - (N.M. VANSIA) INCOME TAX OFFICER WD - 2(1) SURAT. REF: SHRI SABBIR RAFIK DEPARIYA A.Y.2004 - 05 REASONS RECORDED U/S.147(A) OF THE I.T.ACT 1961 THE ASSESSEE FIRST TIME FILED RETURN OF INCOME FOR A.Y.2004 - 05 ON 125.3.2005, DECLARING TOTAL INCOME AT RS.54,662/ - . THE CAPITAL ACCOUNT APPENDED TO THE RETURN OF INCOME SHOWED OPENING BALANCE AT RS.10,95,433/ - . NET PROFIT BEFORE HOUSEHOLD WITHDR AWALS SHOWN AT RS.54,662/ - . IT IS THUS CLEAR THAT THE ASSESSEE IS A MAN OF SMALL MEANS. UNDER THE CIRCUMSTANCES OPENING CAPITAL SHOWN AT RS.10,95,433/ - ITA NO . 275 /AHD/20 14 6 WITHOUT ANY PROOF, SEEMS TO BE UNJUSTIFIED. THE SAME REPRESENTED UNEXPLAINED INCOME OF THE ASSESSEE. IT WAS DUE TO FAILURE ON THE PART OF THE ASSESSEE TO EXPLAIN THE SOURCE OF OPENING BALANCE IN CAPITAL ACCOUNT, HIS INCOME TO THE EXTENT INDICATED ABOVE HAS ESCAPED ASSESSMENT PROCEEDINGS U/S.147(A) ARE THEREFORE INITIATED. ISSUE NOTICE U/S.148 OF THE IT ACT, 1961. SD/ - INCOME - TAX OFFICER WARD 2(1), SURAT. 8 . IT APPEARS THAT GENUINENESS OF THE GIFT WAS INQUIRED IN THE CASE OF SHRI M.B. TUMBI IN ASSTT.YEAR 2004 - 05, AND THE AO SOUGHT TO REOPEN THE ASSESSMENT OF THE ASSESSEE IN THE ASSTT.YEAR 2004 - 05. WE COULD APPRECIATE THE CONTENTION OF THE LD.DR THAT BY VIRTUE OF INADVERTENT MISTAKE, THE AO HAS MENTIONED THE ASSTT.YEAR 2004 - 05 ON THE TOP OF THE REASONS. BUT IN TH E SECOND LINE ALSO, THE LD.AO HAS OBSERVED THAT THE ASSESSEE FOR THE FIRST TIME FILED RETU RN OF INCOME FOR TH E ASSTT.YEAR 2004 - 05. A PERUSAL OF THE REASONS AS WELL AS COPY OF THE LETTER SPECIFICALLY EXHIBIT THAT BY VIRTUE OF THIS LETTER, ASSTT.YEAR 2004 - 05 WAS SOUGHT TO BE REOPENED. THE ADDITION HAS BEEN MADE IN ASSTT.YEAR 2003 - 04, AND THEREF ORE, SUCH ADDITION I S NOT SUSTAINABLE, BECAUSE, FOR THE ASSTT.YEAR 2003 - 04 NO REASONS WERE RECORDED. IT IS ALSO PERTINENT TO MENTION THAT AS PER SECTION 151 OF THE INCOME TAX ACT, 1961, THE AO ITA NO . 275 /AHD/20 14 7 WAS REQUIRED TO OBTAIN APPROVAL FROM JT. COMMISSIONER OF INCO ME - TAX OR ADDL. COMMISSIONER OF INCOME TAX. NO SUCH APPROVAL IS DISCERNIBLE EITHER FROM THE COMMUNICATION OR FROM THE REASONS. THEREFORE, THE AO FAILED TO FOLLOW CORRECT PROCEDURE FOR REOPENING OF THE ASSESSMENT IN THE ASSTT.YEAR 2003 - 04. WE ALLOW THE A PPEAL OF THE ASSESSEE AND QUASH RE - ASSESSMENT ORDER. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 8 T H MARCH, 2017 AT SURAT CAMP . S D / - S D / - ( AMARJIT SINGH ) ACCOUNTANT MEMBER ( RAJPAL YADAV) JUDICIAL MEMBER SURAT CAMP ; DATED 0 8 / 03 /201 7