M/s S.P enterprises, Jamshedpur V. DCIT, Jamshedpur

ITA 32/RAN/2016

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9996 (ITAT-RANCHI)
• Duration Of Justice: 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 18-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJAY PAL
• Assessee Lawyers: S S.K.PODARDEVESH PODAR
• Keywords: Reopening of assessment; Reason to believe
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 72

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI SMC BENCH, RANCHI BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.32/RAN/2016 ASSESSMENT YEAR : 2006 - 07 M/S. S.P.ENTERPRISES, 55, MAHTO PARA ROAD, JUGSALAI, JAMSHEDPUR. VS. DCIT, RANGE - 3, JAMSHEDPUR PAN/GIR NO. AATFS 9150 L (APPELLANT ) .. ( RESPONDENT ) ITA NO.46 /RAN/2016 ASSESSMENT YEAR :2006 - 07 DCIT, RANGE - 3, JAMSHEDPUR VS. M/S. S.P.ENTERPRISES, 55, MAHTO PARA ROAD, JUGSALAI, JAMSHEDPUR PAN/GIR NO. AATFS 9150 L (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : S/ SHRI S.K.PODAR /DEVESH PODAR , AR REVENUE BY : SHRI SANJAY PAL , DR DATE OF HEARING : 6 /12/ 2016 DATE OF PRONOUNCEMENT : 6 /12/ 2016 O R D E R THESE ARE CROSS APPEAL S FILED BY THE ASSESSEE AND THE REVENUE AGA INST THE ORDER OF CIT(A) - JAMSHEDPUR DATED 27.11.2015 , FOR THE ASSESSMENT YEAR 2006 - 07 . 2 ITA NO.32/RAN/2016 ITA NO.46/RAN/2016 ASSESSMENT YEAR :2006 - 07 FIRST, WE TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO.32/RAN/2016 : 2. IN GROUND NOS.1,2 & 3 OF THE APPEAL , THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) WAS NOT JUSTIFIED IN HOLDI NG THAT NOTICE OF REASSESSMENT ISSUED U/S.148 OF THE ACT WAS VALID SINCE THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION ON THE GROUNDS FOR WHICH THE REASSESSMENT NOTICE WAS ISSUED BY HIM BUT MADE ADDITION BY ESTIMATI NG THE INCOME OF THE ASSESSEE @ 4% IN PLACE OF 2.2% SHOWN BY THE ASSESSEE . 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR ASSES SMENT YEAR 2006 - 07 ON 31.10 .2006 AT AN INCOME OF RS.15,85,520/ - , WHICH WAS PROCESSED ON 12.7.2007. THEREAFTER NOTICE U/S.148 OF THE ACT WAS ISSUED ON 28.3.2012 ON THE GROUND THAT DURING SURVEY OPERATION CONDUCTED ON 6.8.2009 IN THE BUSINESS PREMISES OF SHRI ABHISHEK AGARWAL GRO UP OF CASES INCLUDING THE ASSESSEE, CERTAIN LOOSE SHEETS, HUNDIES, CONFIRMATION OF ACCOUNTS, ETC IN PR - 69, PR - 71 AND PRR - 72 AND CASH TRANSACTION WHICH ARE NOT EXPLAINED BY THE ASSESSEE DURING THE COURSE OF SURVEY OPERATION WERE FOUND. THEREFORE, HE HA D REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. AFTER RECORDING THE SAID REASONS, THE ASSESSING OFFICER ISSUED NOTICE U/S.148(2) OF THE ACT ON 28.3.2012. THAT WHILE MAKING THE REASSESSMENT ORDER U/S.147 ON 22.3.2013, NO ADDITION IN RESPECT OF LOO SE 3 ITA NO.32/RAN/2016 ITA NO.46/RAN/2016 ASSESSMENT YEAR :2006 - 07 SHEET, HUNDIES, CONFIRMATION OF ACCOUNTS, ETC., ETC IN PR - 69, PR - 71 A ND PRR - 72 AND CASH TRANSACTION FOUND DURING THE COURSE OF SURVEY ON 6.8.2009 IN THE BUSINESS PREMISES OF SHRI ABHISHEK AGARWAL GROUP OF CASES INCLUDING THE ASSESSEE WAS MADE BY HIM. THE ONLY ADDITION MADE WAS ESTIMATING THE INCOME OF THE ASSESSEE @ 4% IN PLACE OF 2.2% SHOWN BY THE ASSESSEE. THE ASSESSEE HAS CHALLENGED THE REOPENING OF ASSESSMENT AND SUBMITTED THAT WHEN ON GROUND ON WHICH THE REOPENING OF ASSESSMENT WAS BASED, NO AD DITIONS WERE MADE BY THE ASSESSING OFFICER IN THE ORDER OF REASSESSMENT; HE CANNOT MAKE ADDITION ON SOME OTHER GROUNDS WHICH DID NOT FORM PART OF THE REASONS RECORDED BY HIM. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS MOHD JUNED DADANI (2013) 355 ITR 172 (GUJ) AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD ., (2011) 331 ITR 236 (BOM). 4. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 5. I FIND THAT IN THE INSTANT CASE, NOTICE U/S.148 OF THE ACT WAS ISSUED BY THE ASSESSING OFFICER FOR THE REASONS WHICH READ AS UNDER: A SURVEY OPERATION WAS CONDUCTED ON 6.8.2009 IN THE BUSINESS PREMISES OF SHRI ABHISHEK AGARWAL GROUP OF CASES INCLUDING M/S.S.P. ENTERPRISES. DURING THE COURSE OF SURVEY OPERATION, BOOKS OF ACCOUNTS HAVE BEEN IMPOUNDED FOR THE ASSESSMENT YEAR 2006 - 07 TO A.YS 2010 - 2011. THERE ARE CERTAIN LOOSE SHEETS, HUNDIES, CONFIRMATION OF ACCOUNTS, ETC IN PR - 69, PR - 71 AND PRR - 72 AND CASH TRANSACTION WHICH ARE NOT 4 ITA NO.32/RAN/2016 ITA NO.46/RAN/2016 ASSESSMENT YEAR :2006 - 07 EXPLAINED BY THE ASSESSEE DURING THE COURSE OF SURVEY OPERATIONS. THEREFORE, I HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. ISSUE NOTICE U/S.148 OF THE I.T.ACT. 6. I FIND FROM THE REASSESSMENT ORDER DATED 22. 3.2013, FRAMED BY THE ASSESSING OFFICER THAT NO ADDITION WAS MADE BY HIM ON THE GROUND OF THE ABOVE REASONS RECORDED BUT THE ADDITION WAS MADE BY THE ASSESSING OFFICER BY ESTIMATING THE INCOME OF THE ASSESSEE @ 4% IN PLACE OF 2.2% SHOWN BY THE ASSESSEE. T HEREFORE, THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF MOHD JUNED DADANI & THE DECISION OF HONBLE BOM B AY HIGH COURT IN THE CASE OF JET AIRWAYS (I) LTD., (SUPRA), CLEARLY APPLY TO THE FACTS OF THE ASSESSEES CASE. I FIND THAT THE HONBLE BOMB AY HIGH COURT IN THE CASE OF JET AIRWAYS (I) LTD (SUPRA) HELD AS UNDER: EXPLANATION 3 TO SECTION 147 OF THE INCOME - TAX ACT, 1961, WAS INSERTED BY THE FINANCE (NO. 2) ACT OF 2009, WITH EFFECT FROM APRIL 1, 1989. THE EFFECT OF THE EXPLANATION IS THAT EVEN THOUGH THE NOTICE THAT HAS BEEN ISSUED UNDER SECTION 148 CONTAINING THE REASONS FOR REOPENING THE ASSESSMENT DOES NOT CONTAIN A REFERENCE TO A PARTICULAR ISSUE WITH REFERENCE TO WHICH INCOME HAS ESCAPED ASSESSMENT, THE ASSESSING OFFICER MAY ASSESS OR REASS ESS THE INCOME IN RESPECT OF ANY ISSUE WHICH HAS ESCAPED ASSESSMENT, WHEN SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS. PARLIAMENT HAVING USED THE WORDS ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT, THE WORDS AND ALSO CANNOT BE READ AS BEING IN THE ALTERNATIVE. ON THE CONTRARY, THE CORRECT INTERPRETATION WOULD BE TO REGARD THOSE WORDS AS BEING CONJUNCTIVE AND CUMULATIVE. IT IS OF SOME SIGNIFICANCE THAT PARLIAMENT HAS NOT USED THE WORD OR. THE LEGISLATURE DID NOT REST CONTENT BY MERELY USING THE WORD AND. THE WORDS AND AS WELL AS ALSO HAVE BEEN USED T OGETHER AND IN CONJUNCTION. EVI DENTLY, WHAT PARLIAMENT INTENDS BY USE OF THE WORDS AND ALSO IS THAT THE ASS ESSING OFFICER, UPON THE FORMATION OF A REASON TO BELIEVE UNDER SECTION 147 AND THE ISSUANCE OF A NOTICE UNDER SECTION 148(2) MUST ASSESS OR REASSESS : (I)SUCH INCOME ; AND ALSO (II) ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE 5 ITA NO.32/RAN/2016 ITA NO.46/RAN/2016 ASSESSMENT YEAR :2006 - 07 SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. EXPLANATION 3 DOES NOT AND CANNOT OVERRIDE THE NECESSITY OF FULFILLING THE CONDITIONS SET OUT IN THE SUBSTANTIVE PART OF SECTION 147 . AN EXPLANATION TO A STATUTORY PROVIS ION IS INTENDED TO EXPLAIN ITS CONTENTS AND CANNOT BE CONSTRUED TO OVERRIDE IT OR RENDER THE SUBSTANCE AND CORE NUGATORY. SECTION 147 HAS THIS EFFECT THAT THE ASSESSING OFFICER HAS TO ASSESS OR REASSESS THE INCOME (SUCH INCOME) WHICH ESCAPED ASSESSMENT A ND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS. HOWEVER, IF AFTER ISSUING A NOTICE UNDER S ECTION 148 , HE ACCEPTS THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REASON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM INDEPENDENTLY TO ASSESS SOME OT HER INCOME. IF HE INTENDS TO DO SO, A NOTICE UNDER SECTION 148 WOULD BE NECESSARY IN THE EVENT OF CHALLENGE BY THE ASSESSEE. THE EFFECT OF SECTION 147 AS IT NOW STANDS AFTER THE AMENDMENT OF 2009 CAN THEREFORE, BE SUMMARISED AS FOLLOWS : (I) THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR ; (II) UPON THE FORMATION OF THAT BELIEF AND BEFORE HE PROCEEDS TO MAKE AN ASSESSMENT, REASSESSMENT OR RECOMPUTATION, THE ASSESSING OFFICER HAS TO SERVE ON THE ASSESSEE A NOTICE UNDER SUB - SECTION (1) OF SECTION 148 ; (III) THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, WHICH HE HAS REASON TO BELIEVE, HAS ESCAPED ASSESSMENT AND ALSO ANY OTHER INCOME, CHARGEABLE TO TAX WHICH HAS ESCA PED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION ; AND (IV) THOUGH THE NOTICE UNDER SECTION 148(2) DOES NOT INCLUDE A PARTICULAR ISSUE WITH RESPECT TO WHICH INCOME HAS ESCAPED ASSESSMENT, HE MAY N ONE THE LESS, ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. 7 . RESPECTFULLY FOLLOWING THE DECISION IN THE CASE OF JET AIRWA YS (I) LTD (SUPRA), I HOLD THAT FOR ASSUMING JURISDICTION TO FRAME AN ASSESSMENT U/S.147 OF THE ACT, WHAT IS ESSENTIAL IS A VALID REOPENING OF A PREVIOUS LY CLOSED ASSESSMENT. IF THE VERY FO UNDATION OF THE REOPENING IS KNOCKED OUT, ANY FURTHER PROCEEDINGS I N RESPECT TO SUCH ASSESSMENT NATURALLY WOULD NOT SURVIVE. EXPLANATION 3 TO SECTION 147 DOES NOT IN ANY MANNER, EVEN PURP ORT TO EX PAND THE POWERS OF THE ASSESSING OFFICER U/S.147 OF THE 6 ITA NO.32/RAN/2016 ITA NO.46/RAN/2016 ASSESSMENT YEAR :2006 - 07 ACT. HENCE, I CANCEL THE REASSESSMENT ORDER DATED 22.3.2012 PASSED U/S.147 OF THE ACT. 8. AS I HAVE CANCELLED TH E REASSESSMENT ORDER DATED 22.3 . 2013 , THE OTHER GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ON MERITS HAVE BECOME ONLY ACADEMIC IN NATURE AND HE NCE, INFRUCTUOUS AND DISMISSED . 9. SIMILARLY, THE APPEAL FILED BY THE REVENUE IN ITA NO.46/RAN/2016 HAS BECOME INFRUCTUOUS AND HENCE DISMISSED. 10. IN THE RESULT, THE APPEAL F ILED BY THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 6 /12/2016 IN THE PRESENCE OF PARTIES. SD/ - (N.S SAINI) A CCOUNTANT MEMBER RANCHI ; DATED 6 /12 /2016 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PS, ITAT, CAMP AT RANCHI 1. THE APPELLANT /ASSESSEE : M/S. S.P.ENTERPRISES, 55, MAHTO PARA ROAD, JUGSALAI, JAMSHEDPUR. 2. THE RESPONDENT /REVENUE: DCIT, RANGE - 3, JAMSHEDPUR 3. THE CIT(A) , JAMSHEDPUR 4. CIT , JAMSHEDPUR 5. DR, ITAT, RANCHI 6. GUARD FILE. //TRUE COPY//