Zeenat Carpet Industries, Allahabad V. ITO, Allahabad

ITA 307/ALLD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2135 (ITAT-ALLAHABAD)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 16-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P SRIVASTAVA JCITD R
• Assessee Lawyers: R K AGARWAL
• Keywords: Difference of opinion; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 307/A/ 2012 ASSESSMENT YEAR 2006-07 ZEENAT CARPET INDUSTRIES VS. I.T.O. RANGE 1(4 ), KOTWALI ROAD, (NEAR LIC OFFICE) ALLAHABAD, SHEKHPUR, PHULPUR, ALLAHABAD (PAN AAAFZ2937R) (APPELLANT) (RESPONDENT) APPELLANT BY : SRI R.K. AGARWAL, FCA RESPONDENT BY : SRI Y.P. SRIVASTAVA, JCIT(D.R) DATE OF HEARING : 18.04.2013 DATE OF PRONOUNCEMENT : 01.05.2013 ORDER PER A.L. GEHLOT,ACCOUNTANT MEMBER: THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A) ALLAHABAD DATED 24.05.2012. 2. THE ASSESSEE HAS RAISED AS MANY AS SIX GROUNDS OF A PPEAL WHICH ARE REPRODUCED AS BELOW:- ITA NO.307/ALL/2012 A.Y. 2006-07 2 1.THAT THE ORDER DATED 31.12.2009 PASSED U/S 143/1 47 BY THE LEARNED ASSESSING OFFICER IS NOT SUSTAINABLE IN LAW BECAUSE BEFORE PROCEEDING TO RE-ASSESS THE INCOME OBJECTIONS FILED BY THE ASSESS EE HAVE NOT BEEN DISPOSED OFF BY PASSING AN SPEAKING ORDER. THE LEAN ED CIT (APPEALS), IS NOT JUSTIFIED IN HOLDING THAT BY ONE PROCEDURAL MI STAKE, THE REASSMENT PROCEEDING CAN NOT BE HELD NULL AND VOID. 2. THAT THE LEARNED A.O. HAS FAILED TO APPRECIATE T HAT THE REASON RECORDED, DOES NOT INDICATE THAT ANY INCOME HAS ESC APED ASSESSMENT BUT THE RE-ASSESSMENT WAS PROPOSED ONLY TO ASSESSES THE ALREADY DISCLOSED INCOME UNDER A HEAD DIFFERENT FROM THE HEAD UNDER W HICH THE SAME WAS DECLARED BY THE ASSESSEE. THE LEARNED CIT (APPEALS) , IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE LEARNED A.O. BECAUSE I N VARIOUS JUDGMENTS, HIGHER COURTS HAVE HELD THAT THE GROUND THAT THE IN COME HAD NOT BEEN OFFERED UNDER THE CORRECT HEAD, DOES NOT ENTITLE TH E A.O. TO INITIATE PROCEEDINGS FOR RE-OPENING THE ASSESSMENT. 3. THAT WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED A.O., HAS ERRED IN TREATING THE AMOUNT RECEIVED BY WAY OF RENT OF THE BUILDING, AS INCOME FROM HOUSE PROPERTY IN PLACE OF INCOME FROM BUSIN ESS WITHOUT APPRECIATING THAT THE ASSESSEE WAS EXPLOITING ITS B USINESS ASSETS SO AS TO REDUCE THE LOSSES. THE LEARNED CIT (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE LEARNED A.O. WHICH WAS NOT IN CONFORMITY WITH THE JUDGMENT OF HONBLE ITAT, ALLAHABAD IN THE CASE OF UNIVERSAL TYRES LTD. (ITA NO.27 (ALLD) OF 2008). 4. THAT THE LEARNED A.O. HAS FAILED TO APPRECIATE T HAT THE ASSESSEE WAS NOT OWNER OF THE LAND ON WHICH THE STRUCTURE WAS CO NSTRUCTED, THEREFORE, INCOME GENERATED FROM LETTING OUT THE SAID STRUCTUR E CANNOT BE ASSESSED AS INCOME FROM HOUSE PROPERTY 5.THAT THE LEARNED A.O. IS ALSO NOT JUSTIFIED IN TR EATING THE GENERATOR CHARGES AS INCOME FROM OTHER SOURCES IN AS MUCH A S HE FAILED TO APPRECIATE THAT THE GENERATOR CHARGES WERE RECEIVED FROM THE PERSON OTHER THAN THE PERSON TO WHOM THE BUILDING WAS LET OUT AND THE GENERATOR WAS NOT GIVEN ON RENT BUT CHARGES WERE RECEIVED FOR PROVIDING GENERATOR CONNECTION WHICH AMOUNTED TO EXPLOITING OF BUSINE SS ASSETS, HENCE, WAS ASSESSABLE AS INCOME FROM BUSINESS AND THE LE ARNED CIT (APPEALS), IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE LE ARNED A.O. ITA NO.307/ALL/2012 A.Y. 2006-07 3 6. THAT THE LEARNED A.O. IS NOT JUSTIFIED IN INITIA TING PENALTY PROCEEDINGS U/S 271(1)(C) IN AS MUCH AS HE FAILED TO APPRECIATE THAT THE ASSESSEE HAD NEITHER CONCEALED ANY INCOME NOR HAD FURNISHED IN A CCURATE PARTICULAR OF HIS INCOME. 3. THE LEARNED AUTHORIZED REPRESENTATIVE HAS NOT PR ESSED THE GROUNDS NO. 4 TO 6, THEREFORE, THE SAME ARE DISMISSED AS NO T PRESSED. GROUND NOS. 1 TO 3 ARE EFFECTIVELY IN RESPECT OF SECTION 147 OF T HE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE A.O. IS SUED NOTICE UNDER SECTION 148 DATED 13.05.2008 AFTER RECORDING FOLLOW ING REASONS DATED 13.05.2005. THE REASONS RECORDED, WHICH ARE IN HIND I, READ AS UNDER :- ES0 THUR DKJISV B.MLVHT. KS[KIQJ] QWYIWJ] BYKGKCKN PAN AAAFZ2937R A.Y. 2006-07 /KKJK 148 DS V/KHU DK;ZOKGH IZKJEHK DJUS DK DKJ.K DJNKRK }KJK QEZ DH IZKFLFKFR ESA VK;DJ FOOJ.KH NKF [KY DH X;H GS A IKVZUJ FKI MHM DS VUQLKJ DJNKRK DK O;OLK; DKJISV DK FUEKZ.K] F CDZH ,OA VKIWFRZ ,OA MLDS DPPS EKY DH LIYKBZ RFKK VU; DKAAAV~SDV ODZ DK GS A DJNKRK US QWYIQJ] BYKGKCKN FLFKR ,D HKOU HKKJRH; T HOU CHEK FUXE DKS FDJK;S IJ FN;K GS FTLLS : 1]80]768@&- FDJK;K IZKIR GQVK GS ,O A TUJSVJ DKS FDJK;S IJ FN;K GS FTLLS : 26]400@&- DH IZKFIR GQBZ GSA PWWAFD HKOU LS IZKIR FD;K EDKU LEIFRRK LS VK; DS VARXZR DJ ;KSX; GS ,OA IKVZUJFKI MHM DS VUQLKJ DJN KRK DK O;OLK; TUJSVJ FDJK;S IJ NSUK UGHA GS VR ;G IZKIR VU; LKZKSRKS LS VK; DS V/K HU IJ ;KSX; GS FTLDS QYLO:I DJNKRK QEZ DS HKKXHNKJKSA DKS MUDH IWWATH IJ C;KT ,OA MUGS OSRU /KKJK 40 ( B) DS V/KHU LOHDK;Z UGHA GS IJURQ DJNKRK ESA VIUS YKHK GKFU [KKRS ESA : 42]467@ -C;KT ,OA : 24]000@& HKKXHNJKSA DKS OSRU DH DVKSRH DK NKOK FD;K GS A VR% ESJS IKL FOOK L DJUS DK DKJ.K GS FD DJNKRK }KJK XYR FOOJ.K IZZLRQR DJUS DS DKJ.K DJ ;KSX; VK; VOFU/ KKZFJR (UNDER ASSESSED) DH X;H GS FTLLS MLDH DJ ;KSX; VK; FU/KKZJ.K LS NWV X;H GS FTLDS FY, /KKJK 148 DS V/KHU UKSFVL TKJH DH TK JGH GSA ITA NO.307/ALL/2012 A.Y. 2006-07 4 5. THE ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT SUBMITTED THAT THE RETURN FILED ON 24.05.2006 MAY B E TREATED IN COMPLIANCE TO THE NOTICE UNDER SECTION 148 OF THE ACT. THE ASS ESSEE HAS CHALLENGED THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT VIDE ORD ER DATED 14.07.2008 BEFORE THE A.O. THE ASSESSEE IN THE LETTER IT HAS B EEN STATED THAT THE REASONS RECORDED DOES NOT INDICATE THAT ANY FRESH MATERIAL OR INFORMATION HAS BEEN RECEIVED BY THE DEPARTMENT. THE A.O. WITHOUT DISPOS ING THE OBJECTION OF THE ASSESSEE MADE THE ASSESSMENT UNDER SECTION 143(3) R EAD WITH SECTION 147 OF THE ACT CHANGING THE HEADS OF INCOME. THE RENT RECE IPT FROM LIC WAS TREATED AS INCOME FROM HOUSE PROPERTY AND INCOME FROM GENER ATOR TREATED AS INCOME FROM OTHER SOURCES. THE A.O. ACCORDINGLY RECALCULAT ED THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE HAS SHOWN THE ABOVE INCO ME AS INCOME FROM BUSINESS. 6. WE HAVE HEARD LEARNED REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. IN THE CASE UNDER CONSIDERATION THE ADMITT ED FACTS ARE THAT THE A.O. DID NOT DISPOSE THE OBJECTION RAISED BY THE ASSESSE E IN RESPECT OF REOPENING OF COMPLETED ASSESSMENT UNDER SECTION 147 OF THE AC T. THE ACTION OF THE A.O. IS NOT IN ACCORDANCE WITH THE JUDGMENT OF HON BLE BOMBAY HIGH COURT IN THE CASE OF ALLENA COLD STORAGE LTD. VS. ITO & O RS. (2006) 206 CTR (BOM.) 401 AND JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF SMT. ITA NO.307/ALL/2012 A.Y. 2006-07 5 KAMLESH SHARMA VS. B.L. MEENA, INCOME TAX OFFICER & ORS. (2006) 206 CTR (DEL.) 569. IN ANOTHER JUDGMENT OF HONBLE BOMB AY HIGH COURT IN THE CASE OF WYETH (INDIA) PVT. LTD. VS. N.D. BHATT, I. A.C. & ANR. (1982) 26 CTR (BOM) 269 WHEREIN IT HAS BEEN HELD THAT THE INC OME HAD NOT BEEN OFFERED UNDER THE CORRECT HEAD IS A MERE CHANGE OF OPINION AND IN CASE OF CHANGE OF OPINION, THE A.O. IS NOT EMPOWERED TO TAK E ACTION UNDER SECTION 147 OF THE ACT. THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE O F SIRPUR PAPER MILLS LTD. VS. ITO A WARD, COMPANIES CIRCLE, HYDERABAD AND ANOTHER 114 ITR 404 WHEREIN IT HAS BEEN HELD THAT INCOME-TAX DEPART MENT CANNOT BE PERMITTED TO BEGIN FRESH LITIGATIONS BECAUSE OF NEW VIEWS THEY ENTERTAIN ON FACTS OR NEW VERSIONS WHICH THEY PRESENT AS TO WHAT SHOULD BE THE INFERENCE OR PROPER INFERENCE EITHER OF THE FACTS DISCLOSED O R THE WEIGHT OF THE CIRCUMSTANCES. THE COURT HELD THAT REASSESSMENT BAS ED ON NEW VIEW ON SAME FACT IS NOT PERMISSIBLE. 7. IN THE CASE UNDER CONSIDERATION, THE ADMITTED FA CTS ARE THAT LETTING OUT PROPERTY WITH GENERATOR ETC. CAN BE A BUSINESS INCO ME OR INCOME FROM HOUSE PROPERTY OR INCOME FROM OTHER SOURCES BASED ON FACT S OF EACH CASE. THE ITA NO.307/ALL/2012 A.Y. 2006-07 6 ASSESSEE FURNISHED THE COMPLETE DETAILS ALONG WITH RETURN OF INCOME. THE A.O. HAS INVOKED SECTION 147 OF THE ACT WITH SOME F ACTS WHICH WERE EXISTING AT THE TIME OF FILING OF RETURN. THUS, IT IS APPARENTLY A CASE OF CHANGE OF OPINION AND IT IS A SETTLED LAW AS HELD BY THE H ONBLE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. KELVINATOR O F INDIA LTD. [2010] 320 ITR 561 (SC) AND IN THE CASE OF COMMISSIONER OF INCOME TAX VS. BHANJI LAVJI [1971] 79 ITR 582 (SC) WHEREIN IT HAS BEEN HELD THAT MERE CHANGE OF OPINION CANNOT FORM THE BASIS ON WHICH NO TICE COULD BE ISSUED UNDER SECTION 148 OF THE ACT. IF WE EXAMINE THE CAS E UNDER CONSIDERATION IN A DIFFERENT ANGLE, WE FIND THAT AT THE MOST THIS CA N BE A CASE OF ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT IN ACCORDANCE WITH LAW AND NOT A CASE OF REOPENING UNDER SECTION 147 OF THE ACT. IF THE A.O. HAS FAILED TO ISSUE NOTICE UNDER SECTION 143(2) HE CANNOT REPLACE HIS FAULT TO RECOVER FROM HIS FAULT OR TO IMPROVE CASE BY ISSUING NOTICE UNDER SECTION 147 OF THE ACT. IN THE LIGHT OF THE FACTS, WE FIND THAT THE ORDER OF THE A.O. IS NOT IN ACCORDANCE WITH LAW, THEREFORE, THE SAME IS QUASHED. 7. IN THE RESULT OF APPEAL OF THE ASSESSEE IS ALLOW ED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNT ANT MEMBER AMIT/ ITA NO.307/ALL/2012 A.Y. 2006-07 7 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY