Sh. Ishwar Singh, Bhiwani V. ACIT, Bhiwani

ITA 2948/DEL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6667 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 04-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 24-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tangible material; Difference of opinion; Commercial expediency; Change of opinion
• Section: 143(3); 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-II NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NOS.-2947 TO 2949/DEL/2016 (ASSESSMENT YEARS-2008-09 TO 2010-11) ISHWAR SINGH, CONTRACTOR, VIDYA NAGAR, ZOO ROAD, BHIWANI. PAN-AEZPS7598Q ( APPELLANT) VS ACIT, C.R.BUILDING, BHIWANI. (RESPONDENT) ASSESSEE BY SH.R.S.SINGHVI, CA & SH.SATYAJIT GOEL, CA REVENUE BY SH.ANIL KUMAR SHARMA, SR.DR DATE OF HEARING 04 . 10 .2016 DATE OF PRONOUNCEMENT 18 .11.2016 ORDER THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE ASSAI LING THE CORRECTNESS OF THE SEPARATE ORDERS DATED 31.03.2016 OF THE CIT(A), FAR IDABAD PERTAINING TO 2008-09 TO 2010- 11 AYS. ALL THESE APPEALS ARE BEING DECIDED BY A CO MMON ORDER AS FACTS AND CIRCUMSTANCES ARE IDENTICAL. FOR READY-REFERENCE, GROUNDS FROM ITA NO.2947/DEL/2016 ARE REPRODUCED HEREUNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF T HE CASE, THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING REOPENING U/S 148 EVEN THOU GH THE SAME WAS NOT BASED ON ANY TANGIBLE MATERIAL AND RECORDING OF REQUISIT E SATISFACTION AND EVEN APPROVAL FROM COMMISSIONER OF INCOME TAX IN TERMS O F PROVISIONS OF SEC. 251 OF THE I.T. ACT, 1961. 2. THAT REASSESSMENT IS MERELY BASED ON CHAN GE OF OPINION ON THE BASIS OF VERY SAME FACTS AS EXISTED DURING THE COURSE OF ORI GINAL ASSESSMENT PROCEEDINGS U/S. 143(3) AND AS SUCH WHOLE BASIS OF REASSESSMENT IS ILLEGAL, ARBITRARY AND WITHOUT JURISDICTION. 3. THAT HAVING CONSIDERED THE ISSUE UNDER AU DIT OBJECTION AND DROPPED THE PROCEEDINGS U/S, 154, IT IS NOT OPEN TO ASSUME JURI SDICTION U/S. 148 OF THE INCOME TAX ACT, 1961. 4. THAT EVEN ON MERITS, THERE IS NO GROUND O R BASIS FOR CONFIRMING DISALLOWANCE OF INTEREST AMOUNTING TO RS. 3,55,000/ - IN 2008-09 AY; RS.2,54,500/- IN 2009-10 AY; AND RS.1,33,200/- IN 2 010-11 AY RESPECTIVELY U/S. 36(L)(III) OF THE INCOME TAX ACT, 1961 WITHOUT PROP ER APPRECIATION OF FACTS AND LEGAL PRINCIPLES. 5. THAT ORDERS OF THE LOWER AUTHORITIES ARE NOT JUSTIFIED ON FACTS AND SAME ARE BAD IN LAW. 2. IT WAS A COMMON STAND OF THE PARTIES THAT THE FA CTS AND CIRCUMSTANCES ADDRESSED IN 2008-09 AY WOULD COVER THE ISSUES IN THE REMAINING TWO YEARS ONLY AS IT IS THE VERY SAME LOANS GIVE TO THE SON AND THE NEPHEW IN 2008-09 AY. PAGE 2 OF 5 ITA NO.2947 TO 2949/DEL/2016 ISHWAR SINGH VS ACIT 3. THE LD.AR INVITING ATTENTION TO THE IMPUGNED OR DER IN 2008-09 AY SUBMITTED THAT THE ASSESSEE IN THE YEAR UNDER CONSIDERATION DECLARED A TOTAL INCOME OF RS.6,03,630/- VIDE HIS RETURN DATED 30.09.2008. THIS FACT IT WAS SUBMITT ED HAS BEEN TAKEN NOTE OF BY THE AO IN HIS ORDER DATED 31.01.2014 U/S 143(3) R.W.S 147. INVITING ATTENTION TO THE COPY OF THE REASONS RECORDED WHICH ARE PLACED AT PAPER BOOK PAG E 7 AND COPY OF THE ORIGINAL ASSESSMENT ORDER DATED 08.12.2010 WHICH IS PLACED A T PAPER BOOK PAGE 9 TO 12, IT WAS SUBMITTED THAT ISSUES WHICH HAVE FORMED THE BASIS F OR RE-OPENING HAVE ALREADY BEEN CONSIDERED BY THE AO IN THE AFORESAID ORDER. REFER RING TO THE REASONS RECORDED, IT WAS SUBMITTED ACIT, BHIWANI NOTES THAT ASSESSEE HAS TAK EN SECURED AND UNSECURED LOANS AND ADVANCED LOAN OF RS.39.25 LACS TO SH. SANJAY KUMAR, SON OF THE ASSESSEE AND RS.40 LAKHS AS A LOAN TO SH. SURESH KUMAR HIS NEPHEW. THESE VE RY FACTS HAVE BEEN NOTED IN THE AFORESAID ASSESSMENT ORDER U/S 143(3). INVITING AT TENTION TO THE COPY OF THE SHOW CAUSE NOTICE U/S 154 DATED 24.05.2012 COPY OF WHICH IS PL ACED AT PAPER BOOK PAGE 12 IT WAS SUBMITTED THE AO REFERRING TO THE AMOUNTS AND THE R ELATIONSHIP REQUIRES THE ASSESSEE TO JUSTIFY THE CLAIM THAT THE LOAN WAS ADVANCED TO THE SON FOR DOING THE BUSINESS. THE ASSESSEE IT WAS SUBMITTED IS A CIVIL CONTRACTOR. T HE AO VIDE THE SAID NOTICE U/S 154 ALSO REQUIRED THE ASSESSEE TO JUSTIFY THE ADVANCE TO NEP HEW FOR PURCHASING PLOT IN HUDA. CONSIDERING THE DETAILED REPLY OF THE ASSESSEE COPY PLACED AT PAGES 13 & 14 OF THE PAPER BOOK IT WAS SUBMITTED THE PROCEEDINGS U/S 154 WERE DROPPED BY THE AO BY HIS ORDER DATED 04.02.2013. ACCORDINGLY INVITING ATTENTION AGAIN T O THE REASONS RECORD AT PAPER BOOK PAGE 7, IT WAS SUBMITTED THAT IT IS A CASE OF CHANGE OF OPINION ON THE VERY SAME FACTS. THIS CONCLUSION IS EVIDENT FROM THE RECORDING OF THE REA SONS OF THE AO WHO STATES THAT ON A PERUSAL OF THE VERY SAME BALANCE SHEET AS CONSIDERA TION BY THE AO AT THE ASSESSMENT STAGE IN THE ORDER U/S 143(3) AND WITHOUT REFERRIN G TO ANY NEW MATERIAL OR TANGIBLE MATERIAL HAS PROCEEDED TO RE-OPEN A CONCLUDED ASSESSMENT. R E-OPENING A CONCLUDED ASSESSMENT ON THE VERY SAME FACTS BASED ON MERE CHANGE OF OPIN ION IT WAS SUBMITTED IS CONTRARY TO THE SETTLED LEGAL POSITION. ACCORDINGLY RELYING UPON T HE DECISION OF THE HIGH COURT IN THE CASE OF PAGE 3 OF 5 ITA NO.2947 TO 2949/DEL/2016 ISHWAR SINGH VS ACIT TUSHAR TURNER BROADCASTING SYSTEMS ASIA PACIFIC INC . VS DY.DIT [2016] 380 ITR 412 (DEL.) AMONGST OTHERS IT WAS SUBMITTED THAT THE ASSESSMENT ORDER DESERVES TO BE QUASHED. INVITING ATTENTION TO THE FACT THAT THE REASSESSMEN T IS BASED ON THE VERY SAME FACTS AS WERE CONSIDERED IN THE RECTIFICATION PROCEEDINGS WHICH WERE DROPPED AND WHERE THERE IS NO NEW MATERIAL IT WAS RE-ITERATED THE RE-ASSESSMENT DESER VES TO BE QUASHED. RELIANCE WAS PLACED UPON THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF BERGER PAINTS INDIA LIMITED VS ASSTT. CIT [2010] 322 ITR 369 (CAL.). IT WAS FURTHER SUBMITTED THAT IN THE ABSENCE OF ANY NEW MATERIAL, THE RE-ASSESSMENT CANN OT STAND IN THE EYES OF LAW. RELIANCE WAS PLACED ON CIT VS LUKAS T.V.S.LTD. [2001] 249 ITR 306 (SC). 3.1. EVEN ON MERIT, IT WAS SUBMITTED THAT THE RE-OP ENING IS NOT JUSTIFIABLE AS THE ASSESSEE GAVE THE INTEREST FREE ADVANCES TO HIS SON AND NEPH EW OF RS.39,25,000/- AND RS.40,00,000/- RESPECTIVELY OUT OF HIS OWN CAPITAL ACCOUNT OF RS.22,67,876/-; UNSECURED INTEREST FREE LOANS OF RS.26,22,585/- AND SUNDRY CR EDITORS OF RS.1,10,05,262/-. THUS THE ASSESSEE HAD MORE THAN ADEQUATE INTEREST FREE ADVAN CE AVAILABLE. THESE ARGUMENTS ON MERIT ARE NOTWITHSTANDING THE ARGUMENTS ADVANCED TH AT THESE TWO RELATIVES EXTENSIVELY HELPED THE ASSESSEE IN DOING ITS BUSINESS AS BEING ALMOST 60 YEARS HE COULD NOT ALWAYS STAND AT SITE AND OVERSEE THE WORK. THESE ARGUMENT S ARE BEFORE THE COMMISSIONER AT PAGE 4 OF THE PAPER BOOK. THUS COMMERCIAL EXPEDIEN CY TO HAVE TRUSTED PEOPLE AT WORK SITE TO ENSURE WORK IS COMPLETED ADHERING TO STANDA RD AND TIMES WERE THE FACTS ON RECORD. 4. IN 2009-10 AY, THE CAPITAL AVAILABLE TO THE ASSE SSEE WAS RS.39,32,703.96/- AND THE UNSECURED INTEREST FREE LOANS AVAILABLE AS PER THE BALANCE SHEET WERE RS.31,98,900/- AND THE SUNDRY CREDITORS WERE RS.1,39,95,844. THE RETU RNED INCOME WAS RS.18,19,800/- WHICH WAS ASSESSED AT RS.19,44,800/- APART FROM AGRICULTU RAL INCOME OF RS.2,54,420/-. IN THE SAID YEAR ALSO A SHOW CAUSE NOTICE U/S 154 HAD BEEN ISSU ED WHICH ON CONSIDERING THE REPLY OF THE ASSESSEE HAD BEEN DROPPED. PAGE 4 OF 5 ITA NO.2947 TO 2949/DEL/2016 ISHWAR SINGH VS ACIT 5. THE FACTS FOR 2010-11 AY, IT WAS SUBMITTED WERE ALSO IDENTICAL AS THE ASSESSEE DECLARED INCOME OF RS.20,09,550/- AND AGRICULTURAL INCOME OF RS.3,49,420/- HAD BEEN SHOWN. THE ASSESSMENT WAS COMPLETED BY AN ORDER U/S 143(3) AT AN INCOME OF RS.25,09,350/- AND THE AGRICULTURAL INCOME OF RS.3, 49,420/- VIDE ORDER DATED 08.12.2010. IN THE FACTS OF THE SAID YEAR ALSO, THE AO ISSUED A SHOW-CAUSE NOTICE DATED 08.08.2012 U./S 154 TO CONSIDER THE VERY SAME FACTS (COPY PLACED AT PAGES 18 TO 20) AND AFTER CONSIDERING THE REPLY THE PROCEEDINGS WERE DROPPED ON 04.02.201 3 (COPY PLACED AT PAGE 23 OF THE PAPER BOOK). THE CAPITAL OF THE ASSESSEE IN THE YE AR UNDER CONSIDERATION WAS RS.63,86,937.16 UNSECURED LOANS WERE RS.16,98,900/- WITH SUNDRY CREDITORS OF MORE THAN RS.15 LACS.. 6. THE LD. SR. DR RELIED UPON THE ORDERS OF THE AU THORITIES BELOW. NO CONTRARY FACT OR ARGUMENT IN REBUTTAL TO THE ARGUMENTS ADVANCED WER E ADVANCED. 7. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. I FIND ON FACTS THAT THE LD.AR HAS SUCCESSFULLY ARGUE D THE CASE NOT ONLY ON THE LEGAL ISSUE BUT ALSO ON MERITS. IT HAS NOT BEEN DISPUTED BY THE RE VENUE THAT THE SUBJECT MATTER FOR CONSIDERATION IN THE REASONS RECORDED ARE DULY NOTE D BY THE AO IN THE ASSESSMENT ORDERS U/S 143(3). FURTHER THE AO IN THESE THREE YEARS AG AIN AS PER RECORD HAS ISSUED SHOW CAUSE NOTICE U/S 154 TO THE ASSESSEE REQUIRING AN EXPLANA TION WHY ADDITIONS SHOULD NOT BE MADE IN THE RESPECTIVE YEARS. IT IS A MATTER OF RECORD AND NOT IN DISPUTE THAT IN ALL THESE THREE YEARS AFTER CONSIDERING THE REPLY OF THE ASSESSEE THE 154 PROCEEDINGS WERE DROPPED BY THE AO. CONSIDERING THE COPY OF THE REASONS RECORDED, IT IS SEEN THAT THE AO DOES NOT REFER TO ANY NEW MATERIAL NOTICED BY HIM FOR RE-OPENING THE ASSESSMENT AS THE AO RECORDS THAT ON A PERUSAL OF THE BALANCE SHEETS THE OPINION IS FORM ED. THE CONSISTENT CLAIM OF THE ASSESSEE THAT THE RE-OPENING IS BASED ON A MERE CHANGE OF OP INION HAS NOT BEEN REBUTTED BY THE REVENUE BY REFERRING TO ANY FACT, ARGUMENT OR EVIDE NCE WHICH CAME UP FOR CONSIDERATION. IN THE ABSENCE OF ANY NEW MATERIAL IN THE PECULIAR FAC TS OF THE PRESENT CASE JUSTIFYING CHANGE OF OPINION INCOME CANNOT BE SAID TO HAVE ESCAPED AS SESSMENT. RE-APPRECIATING THE VERY PAGE 5 OF 5 ITA NO.2947 TO 2949/DEL/2016 ISHWAR SINGH VS ACIT SAME MATERIAL ON FACTS AD-INFINTUM LAYS THE REVENUE OPEN TO THE CHARGE OF ARBITRARINE SS AND ABUSE OF A POWER VESTED IN THE A.O. EVEN ON ME RITS, I FIND THE CONSISTENT CLAIM OF THE ASSESSEE BEFORE THE TAX AUTHORITIES ON FACTS HAS WR ONGLY BEEN IGNORED. IT IS SEEN THAT THE ASSESSEE IN EACH OF THESE THREE YEARS THOUGH HAS PL EADED COMMERCIAL EXPEDIENCY FOR ADVANCING LOANS TO HIS SON AND NEPHEW WHERE BEING A SENIOR CITIZEN I.E. 60 YEARS THE PRESENCE OF HIS RELATIVES WAS CONSIDERED NECESSARY ON SITE TO ENSURE QUALITY AND TIME RELATED COMPLIANCES IN ORDER TO AVOID PENALTIES AND BEING BLACK LISTED FROM GOVERNMENT CONTRACT WORK THE SON AND THE NEPHEW ARE STATED TO HAVE HELPED BY BEING PRESENT ON SITE AND OVER-SEEING THE QUALITY AND THE WORK. HOWEVER, IF EVEN OTHERWISE THE AVAILABILITY OF SUFFICIENT FUNDS IN HIS OWN CAPITAL ACCOUNT AND INT EREST FREE LOANS AND SUNDRY CREDITORS HAVE NOT BEEN DISPUTED BY THE REVENUE THE OCCASION TO MA KE ADDITION IN THE PECULIAR FACTS OF THE PRESENT CASE DOES NOT ARISE. THE ADVANCES HAVE BEE N RETURNED AND HAVE NOT BEEN ADVANCED OUT OF BORROWED FUNDS FOR BUSINESS PURPOSE S. CONSIDERING THE OVERALL FACTUAL ASPECT AND THE POSITION OF LAW THEREON, I AM OF THE VIEW THAT IN THE ABSENCE OF ANY REBUTTAL ON THESE SALIENT FACTS AS REFERRED TO HEREINABOVE T HE ASSESSEE SUCCEEDS BOTH ON THE LEGAL ISSUE AS WELL AS ON MERITS. THE IMPUGNED ORDER IS SET ASIDE AND THE ASSESSMENT ORDER ACCORDINGLY IN THE RESPECTIVE YEARS ARE QUASHED. 8. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE A LLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 18 TH OF NOVEMBER, 2016. SD/- (DIVA SINGH) JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI