ITO, Ward - 2, Suri, Birbhum V. M/s. Hotel Tara, Birbhum

ITA 316/KOL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70487 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2013
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2001-2002
• Appeal Filed On: 27-02-2012
• Court: TRIBUNAL
• Department Lawyers: A P ROY
• Keywords: Rejection of books of accounts; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND . . . . ' '' ''# '#'# '#, $% ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI ABRAHAM P. GEORGE, AM] & & & & / I.T.A NOS. 316 TO 318/KOL/201 2 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEARS: 2001-02 TO 2003-04 INCOME-TAX OFFICER, WD-2, SURI, BIRBHUM VS. M/S. HOTEL TARA (PAN: AACFH8557K) (,- /APPELLANT ) (./,-/ RESPONDENT ) DATE OF HEARING: 10.12.2013 DATE OF PRONOUNCEMENT: 19.12.2013 FOR THE APPELLANT: SHRI A. P. ROY, SR. D.R FOR THE RESPONDENT: SHRI RAVI TULSIYAN FCA $0 / ORDER PER SHRI MAHAVIR SINGH, JM: THESE THREE APPEALS BY REVENUE ARE ARISING OUT OF S EPARATE ORDERS OF CIT(A), ASANSOL IN APPEAL NOS. 503/CIT(A)/ASL/WARD-2/SURI/10-11, 103/C IT(A)/ASL/WARD-2/SURI/09-10 AND 105/ CIT(A)/ASL/WARD-2/SURI/09-10 ALL DATED 19.12.2011. ASSESSMENTS WERE FRAMED SEPARATELY BY ITO, WARD-2, SURI, BIRBHUM U/S. 148/143(3) OF THE I NCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2001-02, 2002 -03 AND 2003-04 VIDE HIS ORDERS DATED 29.12.2008 FOR AY 2001-02 AND 15.12.2009 FOR AY 200 2-03 AND 2003-04. 2. THE ONLY ISSUE IN THESE THREE APPEALS OF REVENUE IS AGAINST THE ORDER OF CIT(A) IN QUASHING THE REASSESSMENT PROCEEDINGS U/S. 147 R.W. S. 148 OF THE ACT. FOR THIS, REVENUE HAS RAISED THREE COMMON GROUNDS, WHICH ARE IDENTICALLY WORDED IN ALL THE THREE YEARS AND THE RELEVANT GROUNDS READS AS UNDER: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, LD. CIT(A) WAS NOT JUSTIFIED BY DECLARING THE REOPENING OF THE CASE U/S. 147 AS INVALID BY RELYING ON THE DECISIONS IN THE CASE OF SARGAM CINEMA V. CIT (2010) 328 ITR 513 (SC) AND DHARIYA CONSTRUCTION CO. V. CIT 328 ITR 515. 2.THAT LD. CIT(A) ERRED TO HOLD THAT REFERENCE TO D VO WAS NOT JUSTIFIED WITHOUT REJECTING BOOKS OF ACCOUNTS WHEN SECTION 142A DOES NOT PROVIDE FOR SUCH REJECTION OF BOOKS OF ACCOUNTS AS A PRECONDITION TO REFER THE CA SE TO DVO. 3.THAT LD. CIT(A) OUGHT TO HAVE CONFIRMED THE PROCE EDINGS U/S. 147 OF THE ACT AS VALID IN THE EYE OF LAW SINCE THE ASSESSING OFFICER MADE THE ADDITION BY RELYING ON THE 2 ITA NOS. 316 TO 318/K/2012 HOTEL TARA, AY:2001-02 TO 2003-04 TECHNICAL ADVICE OF DVO IN VIEW OF THE DECISION IN THE CASE OF CIT V. MEDICAL MEMORIAL TRUST (2010) 325 ITR 191 (KER). 3. BRIEFLY STATED FACTS LEADING TO THE ABOVE ISSUE ARE THAT ASSESSEE FIRM IS IN THE BUSINESS OF HOTEL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR AY 2005-06 U/S. 143(2) OF THE ACT, THE AO NOTICED THAT THE ASSESSEE HAS INVESTED HIGHER AM OUNT THAN DECLARED IN ASSESSMENT YEARS 2001-02 TO 2003-04 AT RS.7,26,443/-, RS.4,89,125/- AND RS.3,26,835/- IN THE RESPECTIVE ASSESSMENT YEARS. HENCE, THE AO WITHOUT REJECTING T HE BOOKS OF ACCOUNTS REFERRED THE MATTER TO DVO AND DVO ESTIMATED THE COST OF CONSTRUCTION FOR AY 2001-02 AT RS.37,52,855/-, IN AY 2002-3 AT RS.23,95,506/- AND IN AY 2003-04 AT RS.16 ,00,685/-. THE AO REOPENED THE ASSESSMENT PROCEEDINGS FOR THE RELEVANT ASSESSMENT YEARS 2001-02 TO 2003-04 BY ISSUING NOTICES U/S. 148 R.W.S. 147 OF THE ACT. AO HAS ALS O RECORDED THE REASONS AND THE RELEVANT REASONS RECORDED IN AY 2001-02 READ AS UNDER: THE ASSESSEE DECLARED A RETURN INCOME OF RS.1,31,3 83/- ON 30.07.2001. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2005-06 T HE ASSESSEE FURNISHED DETAILS OF COST OF CONSTRUCTION DURING F.Y. 2000-01 AT RS.7,26,443/ -. THE CASE WAS REFERRED TO THE VALUATION CELL U/S. 142A FOR VALUATION. THE VALUAT ION OFFICER ASCERTAINED IN HIS REPORT THAT THE ESTIMATED AMOUNT OF CONSTRUCTION DONE BY H IM IS MUCH HIGHER THAN INVESTMENT SHOWN BY THE ASSESSEE. THE DIFFERENCE AMOUNTS TO R S.30,26,412/-. IN VIEW OF THE ABOVE, I HAVE SUFFICIENT REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE SAME ARE THE REASONS FOR OTHER TO ASSESSMENT YE ARS I.E. AY 2002-03 AND 2003-04 EXCEPT VARIANCE IN AMOUNT. THE AO FRAMED RE-ASSESSMENTS U /S. 143(3) R.W.S. 147 R.W.S. 148 OF THE ACT. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT( A) IN THE THREE YEARS AND CIT(A) QUASHED THE REASSESSMENT PROCEEDINGS BY OBSERVING I N PARA 3 AS UNDER: 3. GROUND NOS. 1 TO 6: THOUGH SEVERAL GROUNDS HAV E BEEN PREFERRED, THE APPELLANTS MAIN CONTENTION IS AGAINST THE REOPENIN G OF ITS CASE U/S. 148 AND SUBSEQUENT RE-ASSESSMENT. IN ITS SUBMISSIONS, AMONG OTHERS, I T HAS REFERRED TO THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA (328 ITR 513) AND IN THE CASE OF DHARIYA CONSTRUCTION CO. (328 ITR 515). IN THE 1 ST CASE, THE HONBLE APEX COURT HAS OBSERVED THAT IN THE PRESENT CASE, WE FIND THAT THE TRIBUNAL DECIDED THE MATTER RIGHTL Y N FAVOUR OF THE ASSESSEE INASMUCH AS THE TRIBUNAL CAME TO THE CONCLUSON THAT THE ASSESS ING AUTHORITY COULD NOT HAVE REFERRED THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER (D VO) WITHOUT THE BOOKS OF ACCOUNT BEING REJECTED. IN THE PRESENT CASE, A CATEGORICAL FINDING IS RECORDED BY THE TRIBUNAL THAT THE BOOKS WERE NEVER REJECTED. THIS ASPECT HAS NOT BEEN CONSIDERED BY THE HIGH COURT. IN THE CIRCUMSTANCES, RELIANCE PLACED ON THE REPORT OF THE DVO WAS MISCONCEIVED. IN THE 2ND CASE, THAT OF DHARIYA CONSTRUCTION CO, T HE DECISION OF HONBLE APEX COURT WAS HAVING EXAMINED THE RECORD, WE FIND THAT IN THIS CASE, THE DEPARTMENT SOUGHT REOPENING OF THE ASSESSMENT BASED ON THE OPINION GI VEN BY THE DISTRICT VALUATION OFFICER 3 ITA NOS. 316 TO 318/K/2012 HOTEL TARA, AY:2001-02 TO 2003-04 (DVO). THE OPINION OF THE DVO PER SE IS NOT AN INFO RMATION FOR THE PURPOSE OF REOPENING ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER HAS TO APPLY HIS MIND TO THE INFORMATION, IF ANY, COLLECTE D AND MUST FORM A BELIEF THEREON. IN THE CIRCUMSTANCES, THERE IS NO MERIT IN THE CIVIL APPEA L. THE DEPARTMENT WAS NOT ENTITLED TO REOPEN THE ASSESSMENT. PERUSAL OF THE ORDER U/S 143(3) FOR A.Y. 2005-06 OR IGINALLY PASSED ON 31.12.2007 SHOWS THAT THE ASSESSMENT WAS COMPLETED WITHOUT REJ ECTING THE BOOKS OF ACCOUNTS OF THE APPELLANT. HOWEVER, THE CASE WAS REFERRED FOR VALUA TION TO THE VALUATION CELL. FURTHERMORE, PERUSAL OF THE ORDER PASSED U/S 148/14 3(3), IN THE INSTANT CASE DATED 29.12.2008 SHOWS THAT THE A.O. HAS ADDED BACK THE D IFFERENCE BETWEEN THE COST OF CONSTRUCTION AS ESTMATED BY THE DVO AND AS REPORTE D BY THE APPELLANT. NO INDEPENDENT APPLICATION OF THE A.O.S MIND BASED ON THE INFORMA TION COLLECTED IS OBSERVED HERE. FURTHERMORE, EVEN THE REASONS FOR REOPENING THE CAS E, AS OBSERVED IN THE CERTIFIED COPY OF THE ORDER SHEET FILED BY THE APPELLANT VALIDATE THIS IMPRESSION. THE A.O. HAS BY WAY OF RECORDING THE REASONS FOR REOPENING THE CASE, NOTED ON 25.03.2008. THE ASSESSEE DECLARED A RETURN INCOME OF RS.1,31,383/- ON 30.7.2 001. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y.2005-06 THE ASSESSEE FURNISHED DETAILS OF COST OF CONSTRUCTION DURING F.Y. 2000-01 AT RS.7,26,443/-. THE CASE WAS REFERRE D TO THE VALUATION CELL U/S 142A FOR VALUATION. THE VALUATION OFFICER ASCERTAINED IN HIS REPORT THAT THE ESTIMATED AMOUNT OF CONSTRUCTION DONE BY HIM IS MUCH HIGHER THAN INVEST MENT SHOWN BY THE ASSESSEE. THE DIFFERENCE AMOUNTS TO RS.30,26,412/-. IN VIEW OF THE ABOVE, I HAVE SUFFICIENT REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. FROM THE ORDER U/S 143 PASSED ON 31.12.2007 FOR A.Y. 2005-06 IT APPEARS THAT THE CASE WAS FORWARDED TO T HE DVO WTHOUT REJECTION OF BOOKS OF ACCOUNTS AND NOTICE OF REOPENING WAS ISSUED WITHOUT THE A.O. APPLYING HIS MIND TO THE DVOS REPORT AND FORMING HIS OWN BELEF THEREON. THE SE TWO ASPECTS MAKE THE INSTANT CASE CONFORM TO THE FACTS OF THE CASES DECIDED BY T HE HONBLE SUPREME COURT. RESPECTFULLY FOLLOWING THE SAID DECISIONS, IT IS HE LD THAT, REFERENCE TO THE VALUATION CELL IN THE FIRST PLACE WITHOUT REJECTION OF THE APPELLANT S BOOKS WAS NOT CORRECT AND REOPENNG OF THE ASSESSMENT ON THE BASIS OF ONLY THE DVOS REPOR T WITHOUT ANY APPLICATION OF MIND BY THE A.O. ON SUCH REPORT TO FORM HIS OWN BELIEF WAS ALSO NOT CORRECT. UNDER THE CIRCUMSTANCES, THE APPELLANTS PLEA AGAINST THE REO PENING IS ACCEPTED. THESE GROUNDS OF APPEAL ARE ALLOWED. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. 5. WE FIND THAT THE REFERENCE TO VALUATION CELL WAS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT FOR AY 2005-06 O N 31.12.2007 WITHOUT REJECTING THE BOOKS OF ACCOUNT. EVEN OTHERWISE, THE ISSUE IS FULLY COV ERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA VS. CIT (2010) 3 28 ITR 513 (SC) AND IN THE CASE OF ACIT VS. DHARIYA CONSTRUCTION CO. (2010) 328 ITR 515 (SC ). THE RELEVANT OBSERVATIONS OF HONBLE SUPREME COURT READ AS UNDER: IN THE CASE OF SARGAM CINEMA : IN THE PRESENT CASE, WE FIND THAT THE TRIBUNAL DE CIDED THE MATTER RIGHTLY N FAVOUR OF THE ASSESSEE INASMUCH AS THE TRIBUNAL CAME TO THE CONCL USON THAT THE ASSESSING AUTHORITY COULD NOT HAVE REFERRED THE MATTER TO THE DEPARTMEN TAL VALUATION OFFICER (DVO) WITHOUT THE BOOKS OF ACCOUNT BEING REJECTED. IN THE PRESENT CASE, A CATEGORICAL FINDING IS RECORDED 4 ITA NOS. 316 TO 318/K/2012 HOTEL TARA, AY:2001-02 TO 2003-04 BY THE TRIBUNAL THAT THE BOOKS WERE NEVER REJECTED. THIS ASPECT HAS NOT BEEN CONSIDERED BY THE HIGH COURT. IN THE CIRCUMSTANCES, RELIANCE P LACED ON THE REPORT OF THE DVO WAS MISCONCEIVED. IN THE CASE OF DHARIYA CONSTRUCTION CO. HAVING EXAMINED THE RECORD, WE FIND THAT IN THIS CA SE, THE DEPARTMENT SOUGHT REOPENING OF THE ASSESSMENT BASED ON THE OPINION GI VEN BY THE DISTRICT VALUATION OFFICER (DVO). THE OPINION OF THE DVO PER SE IS NOT AN INFORMATION FOR THE PURPOSE OF REOPENING ASSESSMENT UNDER SECTION 147 O F THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER HAS TO APPLY HIS MIND TO THE INFORMATION, IF ANY, COLLECTED AND MUST FORM A BELIEF THEREON. IN THE CIRCUMSTANCE S, THERE IS NO MERIT IN THE CIVIL APPEAL. THE DEPARTMENT WAS NOT ENTITLED TO REOPEN T HE ASSESSMENT. AS THE ISSUE IS SQUARELY COVERED BY THE AFORESAID D ECISIONS OF HONBLE SUPREME COURT, WE HAVE NO HESITATION IN CONFIRMING THE ORDER OF CIT(A) QUA SHING THE REASSESSMENT PROCEEDINGS IN ALL THE THREE ASSESSMENT YEARS. APPEALS OF REVENUE ARE DISMISSED. 6. IN THE RESULT, APPEALS OF REVENUE ARE DISMISSED. 7. ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 TH DEC., 2013. SD/- SD/- . . . . ' '' ''# '#'# '# , $% , (ABRAHAM P. GEORGE) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19TH DECEMBER, 2013 12 '3' 4 JD.(SR.P.S.) $0 5 . 6$ )7- COPY OF THE ORDER FORWARDED TO: 1 . ,- / APPELLANT ITO, WARD-2, SURI, BIRBHUM 2 ./,- / RESPONDENT M/S. HOTEL TARA, AT.&P.O. TARAPITH, BIRBHUM, W.B. PIN -731233. 3 . 0' ( )/ THE CIT(A), ASANSOL 4. 5. 0' / CIT ASANSOL <= .' / DR, KOLKATA BENCHES, KOLKATA / ./ TRUE COPY, $0'>/ BY ORDER, ' /ASSTT. REGISTRAR .