Shri Kanwar Lal Gupta, Rohtak V. ITO, Rohtak

ITA 2771/DEL/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2624 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-03-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 27-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: R P BASIA
• Keywords: Principle of natural justice; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER & SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO. 2771/DEL/2011 ASSESSMENT YEAR: 2008-09 KANWAR LAL GUPTA, 342/34, JANTA COLONY, ROHTAK. PAN NO. AAVPG8672M VS. ITO, WARD-2, ROHTAK. (APPELLANT) (RESPONDENT) APPELLANT BY : R.P. BASIA, CA RESPONDENT BY : SATPAL SINGH, DR O R D E R PER S.V. MEHROTRA, A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY THE LD. CIT(A) DATED 28.02.2011 FOR A.Y. 2008-09. 2. THE ASSESSEE, A STATE BANK OF INDIA, ROHTAK EMPL OYEE FILED HIS RETURN OF INCOME FOR AY 2007-08 DECLARING INCOME OF RS. 3,01,630/-. THE CASE WAS REOPENED U/S 148 IN VIEW OF CBDT LETTER DA TED 06/10/2009 AS PER WHICH THE CLAIM U/S 10(10C) WAS NOT ADMISSIBLE. 3. THE ASSESSING OFFICER DENIED THE DEDUCTION U/S 1 0(10C) OF RS. 5 LAKHS AND DETERMINED THE TOTAL INCOME AT RS. 8,01,6 30/-. ITA NO. 2771/D/2011 2 4. BEFORE LD. CIT(A) THE ASSESEE HAD, INTER-ALIA, C ONTESTED THE INITIATION OF PROCEEDINGS U/S 147/148 ON FOLLOWING GROUNDS: 1. THE AO DID NOT SUPPLY THE FULL FACTS OF THE REAS ONS RECORDED U/S 147; 2. THE AO WRONGLY BASED HIS REASONS ON THE INTERNAL CORRESPONDENCE BETWEEN CBDT AND THE INCOME TAX DEPARTMENT; 3. THE AO ERRED IN TREATING THE ASSESSEE AS HAVING NOT DISCLOSED THE TRUE FACTS NECESSARY FOR ASSESSMENT. 5. LD. CIT(A), AFTER CONSIDERING THE REASONS RECORD ED, DISMISSED THE ASSESSEES GROUNDS, INTER-ALIA, OBSERVING AS UNDER: THE AO HAS DULY FURNISHED THE REASONS RECORDED BY HIM TO THE ASSESSEE AND HAS ALSO DISPOSED OFF TH E OBJECTIONS BY A SPEAKING ORDER. IF THE ASSESSEE WANTED A COPY OF THE CBDT LETTER DATED 6.10.2009, HE COULD HAVE ASKED THE SAME FROM THE AO AND FILED THE OBJECTIONS, IF ANY, FOR REOPENING THE ASSESSMEN T. HOWEVER, THE ASSESSEE DID NOT AVAIL THIS OPPORTUNITY. 6. ON MERITS ALSO, LD. CIT(A) DISMISSED THE ASSESSE ES APPEAL. 7. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A), TH E ASSESSEE IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. AO, ERRED IN PASSING THE ORDER U/S 147/148 OF THE INCOME TAX ACT, 1961. ITA NO. 2771/D/2011 3 2. THAT THE LD. ITO DID NOT HAVE ANY NEW FACTS/INFORMATION BEFORE HIM WHILE RECORDING REASONS U/S 147 AND HAD WRONGLY BASED HIS REASONS FROM THE INTERNAL CORRESPONDENCE BETWEEN THE CENTRAL BOARD OF DIRECT TAXES AND THE INCOME TAX DEPARTMENT AND NOT ON THE PROVISIONS OF INCOME TAX ACT, 1961. THE CONTENTS OF IMPUGNED BOARD LETTER WERE NOT DISCUSSED/MENTIONED/CONSIDERED WHILE RECORDING REASONS. 3. THAT THE ITO HAS ERRED IN DISALLOWING THE DEDUCTION OF CLAIM U/S 10(10C) BY THE APPELLANT OF RS. 5,00,000/- AGAINST DECLARED INCOME. 4. THAT THE LD. AO HAD WRONGLY ISSUED PENALTY U/S 274 ERRED WITH SECTION 271 OF THE INCOME TAX ACT, 1961. 5. THAT THE ORDER OF THE LD. ITO IS AGAINST FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 8. LD. COUNSEL REFERRED TO PAGE 23 OF PAPER BOOK, W HEREIN THE REASONS RECORDED BY AO ON 23/11/2009 ARE CONTAINED, WHICH R EADS AS UNDER: THE ASSESSEE FILED RETURN DECLARING INCOME OF RS. 3,01,630/- VIDE RECEIPT NO. 531 DATED 15.5.2006 CLAIMING REFUND OF RS. 1,67,330/-. THE ASSESSEE CLAIMED EXEMPTION OF RS. 5,00,000/- U/S 10(10C) OF THE INCOME TAX ACT WHICH WAS NOT ADMISSIBLE IN VIEW OF BOARDS LETTER DATED 6.10.2009. I HAVE THEREFORE, REASON TO BELIEVE THAT DUE TO FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY A ND ITA NO. 2771/D/2011 4 TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT, THE INCOME OF RS. 5,00,000/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC. 147 OF THE INCOME TAX ACT. 9. LD. COUNSEL FOR THE ASSESSEE AFTER NARRATING THE FACTS SUBMITTED THAT THE AO DID NOT PROVIDE THE IMPUGNED BOARD LETTER DA TED 6 TH OCTOBER, 2009 WHICH IS THE PRIME BASE FOR REOPENING THE ASSESSMEN T. HE FURTHER SUBMITTED THAT AO DISPOSED OF THE OBJECTIONS VIDE O RDER DATED 24/12/2009 WITHOUT PROVIDING THE COPY OF LETTER DATED 06/10/20 09. HE SUBMITTED THAT AO HAD NO REASON TO BELIEVE REGARDING ESCAPEMENT OF INCOME AND IT IS A CASE OF CHANGE OF OPINION. HE RELIED ON THE DECISI ON OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SFIL STOCK BROKING LTD . (2010) 325 ITR 285 (DEL.), WHEREIN IT HAS BEEN HELD THAT REOPENING ON THE DIRECTIONS OF SUPERIOR OFFICERS CANNOT BE HELD AS MATERIAL GROUND UNLESS T HE AO APPLIES HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIVE AT A BE LIEF ON THE BASIS OF MATERIAL BEFORE HIM, THAT INCOME HAS ESCAPED ASSESS MENT. HE ALSO RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF JINDAL PHOTO FILMS LTD. VS. DCIT (1998) 234 ITR 170 (DEL.), WHER EIN IT HAS BEEN HELD THAT MERELY ON THE GROUND THAT A DEDUCTION HAS WRON GLY BEEN ALLOWED AND NOTHING NEW HAS HAPPENED AND NO CHANGE OF LAW AND N O NEW INFORMATION HAS BEEN RECEIVED AND IT IS MERELY A FRESH APPLICAT ION OF MIND BY THE AO TO THE SAME SET OF FACTS WOULD AMOUNT TO MERE CHANGE O F OPINION AND THUS, ITA NO. 2771/D/2011 5 REOPENING NOT VALID. HE, THEREFORE, SUBMITTED THAT THE REASSESSMENT PROCEEDINGS BE QUASHED, AS NOT BEING IN ACCORDANCE WITH LAW. 10. LD. DR RELIED ON THE ORDER OF LD. CIT(A). 11. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORD OF THE CASE. 12. FROM THE REASONS RECORDED, AS REPRODUCED ABOVE, IT IS EVIDENT THAT THE ENTIRE REASSESSMENT PROCEEDINGS HAVE BEEN INITI ATED ON THE BASIS OF BOARDS LETTER DATED 06/10/2009. THE AO AFTER REFE RRING TO THIS BOARD LETTER OBSERVED I HAVE THEREFORE. WHICH IMPLIES THAT TH E SAID BOARD LETTER WAS THE SOLE BASIS ON WHICH THE AO REOPENED THE PROCEED INGS. HE DID NOT APPLY HIS MIND TO THE SAID BOARD LETTER BEFORE COMI NG TO THE CONCLUSION THAT WHETHER ASSESSEE WAS ENTITLED FOR DEDUCTION U/S 10( 10C) OR NOT. MOREOVER, THE COPY OF BOARD LETTER WAS NOT PROVIDED TO ASSESS EE WHICH WAS THE VERY BASIS FOR REOPENING. IN THE ABSENCE OF THIS BOARD LETTER, ASSESSEE WAS PREVENTED FROM FILING INFORMED OBJECTIONS ABOUT THE BASIS FOR REOPENING. THE AOS RELIANCE SOLELY ON THE BASIS OF BOARD LETT ER IS CLEARLY A CASE OF CHANGE OF OPINION WHICH IS NOT PERMISSIBLE IN LAW F OR REOPENING THE ASSESSMENT. THE AO ON HIS OWN SHOULD HAVE ARRIVED AT A CONCLUSION REGARDING ESCAPEMENT OF INCOME AND COULD NOT BE GUI DED IN THIS REGARD BY HIGHER AUTHORITIES. WE ARE OF THE OPINION THAT THE CASE LAWS RELIED UPON BY ITA NO. 2771/D/2011 6 ASSESSEE, NOTED ABOVE, FULLY SUPPORTS THE ASSESSEE S CONTENTIONS. AS ALREADY POINTED OUT, THIS BEING PURELY A CASE OF CH ANGE OF OPINION ON THE BASIS OF WHICH REASSESSMENT PROCEEDINGS HAVE BEEN I NITIATED, WE QUASH THE SAME. 13. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 09/04/2013 SD/- SD/- (A.D. JAIN) JUDICIAL MEMBER (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED: 09/04/2013 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER ASSISTANT REGISTRAR