Jay Maharashtra Consumer Pvt Ltd, Sangli V. Assistant Commissioner of Income tax, Sangli

ITA 323/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6170 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 08-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Unexplained cash credit; Deemed dividend; Reason to believe
• Section: 143(3); 2(22)(e); 143(1); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JM . / ITA NOS.322 & 323/PUN/2017 / ASSESSMENT YEARS : 2006-07 & 2009-10 JAY MAHARASHTRA CONSUMER PVT. LTD., C. S. NO.34, LAXMI BUNGLOW, REVENUE COLONY, SOUTH SHIVAJI NAGAR, SANGLI-416416. PAN : AAACJ4575G ....... / APPELLANT / V/S. ACIT, CIRCLE-1, SANGLI. / RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SHRI S. P. WALIMBE / DATE OF HEARING : 17.09.2020 / DATE OF PRONOUNCEMENT : 21.09.2020 / ORDER PER P.M. JAGTAP, VP : THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS PASSED BY THE LD. CIT(A)-1, KOLHAPUR BOTH DATED 28.11.2016 FOR A.Y. 2006-07 AND A.Y. 2009-10 AND SINCE THE ISSUES INVOLVED THEREIN ARE COMMON, THE SAME HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED BY A SINGLE CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WHICH FILED ITS RETURNS OF INCOME FOR THE YEARS UNDER CONSIDERATION I.E. A.Y. 2006-07 AND A.Y. 2009-10 ON 28.03.2007 AND 25.09.2009 DECLARING TOTAL INCOME OF RS.5,83,497/- AND RS.12,12,760/- RESPECTIVELY. THE SAID RETURNS WERE INITIALLY PROCESSED BY THE ASSESSING OFFICER U/S 143(1) OF THE INCOME TAX ACT, 1961. SUBSEQUENTLY, HE 2 ITA NOS.322 & 323/PUN/2017 REOPENED THE ASSESSMENTS AND ISSUED NOTICES U/S 148 OF THE ACT TO THE ASSESSEE AFTER RECORDING THE REASONS. PURSUANCE TO THE SAID NOTICES, THE ASSESSMENTS WERE COMPLETED BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 147 OF THE ACT FOR BOTH THE YEARS UNDER CONSIDERATION MAKING THE ADDITIONS OF RS.20,99,122/- AND RS.56,25,000/- TO THE TOTAL INCOME OF THE ASSESSEE U/S 68 OF THE ACT VIDE ORDERS DATED 20.03.2013. 3. AGAINST THE ORDERS PASSED BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 147 FOR BOTH THE YEARS UNDER CONSIDERATION, APPEALS WERE PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) CHALLENGING THE VALIDITY OF THE SAID ASSESSMENTS AS WELL AS DISPUTING THE ADDITIONS MADE THEREIN U/S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED CASH CREDITS. THE LD. CIT(A) DID NOT FIND MERIT IN THE PRELIMINARY ISSUE RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF THE ASSESSMENTS U/S 143(3) R.W.S. 147 OF THE ACT FOR BOTH THE YEARS UNDER CONSIDERATION AND UPHOLDING THE VALIDITY OF BOTH THESE ASSESSMENTS, HE DECIDED THIS PRELIMINARY LEGAL ISSUE AGAINST THE ASSESSEE. HE, HOWEVER, ALLOWED PART RELIEF TO THE ASSESSEE ON THE ISSUE RELATING TO THE ADDITIONS MADE U/S 68 BY THE ASSESSING OFFICER FOR BOTH THE YEARS UNDER CONSIDERATION AND RESTRICTED THE SAID ADDITIONS ACCORDINGLY. STILL AGGRIEVED BY THE ORDERS OF THE LD. CIT(A) FOR BOTH THE YEARS UNDER CONSIDERATION, THE ASSESSEE HAS PREFERRED THESE APPEALS BEFORE THE TRIBUNAL. 4. IN GROUND NO.1 AS ORIGINALLY RAISED IN BOTH THESE APPEALS, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE ASSESSMENTS MADE BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 147 OF THE ACT FOR BOTH THE YEARS UNDER CONSIDERATION. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL, THE ASSESSEE HAS 3 ITA NOS.322 & 323/PUN/2017 RAISED THE FOLLOWING ADDITIONAL GROUND CHALLENGING THE VALIDITY OF THE ASSESSMENTS MADE BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 147 OF THE ACT :- SINCE THE LEARNED ASSESSING OFFICER HAS FAILED TO MAKE ANY ADDITION ON THE GROUND ON WHICH THE ASSESSMENT WAS REOPENED, THE IMPUGNED REASSESSMENT MADE BY THE LEARNED ASSESSING OFFICER ON OTHER GROUNDS WHICH WERE NOT THE SUBJECT MATTER OF THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT, THE IMPUGNED REASSESSMENT ORDER IS BAD IN LAW AND VOID AB INITIO AND BEING WITHOUT JURISDICTION THE SAME MAY PLEASE BE ANNULLED. 5. THE ASSESSEE HAS ALSO MOVED AN APPLICATION FOR ADMISSION OF THE ADDITIONAL GROUND STATING THEREIN THAT THE ISSUE RAISED IN THE ADDITIONAL GROUND IS PURELY LEGAL IN NATURE AND ADJUDICATION OF THE SAME DOES NOT REQUIRE INVESTIGATION OF FRESH FACTS. SINCE THE LD. DR HAS NOT DISPUTED THIS POSITION AND HAS NOT RAISED ANY OBJECTION FOR ADMISSION OF THE ADDITIONAL GROUND RAISED BY THE ASSESSEE, THE SAME IS ADMITTED AND IT IS BEING DECIDED ON MERIT AFTER CONSIDERING THE SUBMISSIONS MADE BY THE LD. REPRESENTATIVES OF BOTH THE SIDES AND PERUSING THE RELEVANT MATERIAL AVAILABLE ON RECORD. 6. THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING OF THE ASSESSMENTS FOR BOTH THE YEARS UNDER CONSIDERATION AS GIVEN AT PAGE NO.17 OF THE PAPER BOOK (FOR A.Y. 2006-07) AND AT PAGE NO.16 OF THE PAPER BOOK (FOR A.Y. 2009-10) AND POINTED OUT THAT AS PER THE IDENTICAL REASONS RECORDED BY THE ASSESSING OFFICER FOR BOTH THE YEARS UNDER CONSIDERATION, THE ASSESSMENTS WERE REOPENED BY HIM ON THE GROUND THAT THE GENUINENESS OF THE LOANS ADVANCED BY THE ASSESSEE TO ITS DIRECTORS WAS NOT PROVED AND HE, THEREFORE, HAD REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE CHARGEABLE TO TAX WITHIN THE MEANING OF SECTION 2(22)(E) OF THE ACT FOR BOTH THE YEARS HAD ESCAPED ASSESSMENT. HE THEN HAS INVITED OUR ATTENTION TO THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER FOR BOTH THE YEARS UNDER CONSIDERATION U/S 143(3) R.W.S. 147 TO POINT OUT THAT NO ADDITION 4 ITA NOS.322 & 323/PUN/2017 WAS MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE U/S 2(22)(E) OF THE ACT AND THE ONLY ADDITION MADE BY HIM IN BOTH THE YEARS UNDER CONSIDERATION WAS U/S 68 ON ACCOUNT OF UNEXPLAINED CASH CREDIT. HE HAS CONTENDED THAT SINCE NO ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE ISSUE, ON THE BASIS OF WHICH ASSESSMENT WAS REOPENED, IT WAS NOT OPEN TO HIM INDEPENDENTLY TO MAKE ADDITION U/S 68 WHICH WAS NOT THE BASIS FOR REOPENING AND THE ASSESSMENTS MADE BY HIM FOR BOTH THE YEARS UNDER CONSIDERATION MAKING ADDITIONS U/S 68 ARE BAD IN LAW. IN SUPPORT OF THIS CONTENTION, HE INTER ALIA HAS RELIED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD., 331 ITR 236 WHEREIN IT WAS HELD, AFTER TAKING INTO CONSIDERATION EXPLANATION 3 TO SECTION 147 INSERTED BY THE FINANCE (NO.2) ACT, 2009 W.E.F. 01.04.1989, THAT SECTION 147 HAS THIS EFFECT THAT THE ASSESSING OFFICER HAS TO ASSESS OR REASSESS THE INCOME WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO, HE COULD ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS. EXPLAINING FURTHER, THE HONBLE BOMBAY HIGH COURT OBSERVED THAT IF AFTER ISSUING A NOTICE UNDER U/S 148, THE ASSESSING OFFICER, HOWEVER, 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 OTHER INCOME. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THIS DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD. (SUPRA) HAS BEEN FOLLOWED BY THIS TRIBUNAL IN THE CONNECTED CASES OF KAILASH KANYAIYALAL GIDWANI AND SUNIL KANYAIYALAL GIDWANI (ITA NOS.320 & 324/PUN/2017 DATED 08.01.2020) BELONGING TO THE SAME GROUP TO QUASH THE SIMILAR ASSESSMENTS MADE BY THE 5 ITA NOS.322 & 323/PUN/2017 ASSESSING OFFICER WHEREIN NO ADDITION WAS MADE ON THE ISSUE WHICH FORMED THE BASIS OF REASON TO BELIEVE TO REOPEN THE ASSESSMENTS AND THE ADDITION WAS MADE ON SOME OTHER ISSUE WHICH DID NOT FORM THE BASIS OF REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT. 7. IT IS OBSERVED THAT THE ASSESSMENTS FOR BOTH THE YEARS UNDER CONSIDERATION IN THE PRESENT CASE WERE REOPENED BY THE ASSESSING OFFICER FOR BRINGING TO TAX THE INCOME ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT THAT HAD ALLEGEDLY ESCAPED ASSESSMENT AS IS EVIDENT FROM THE REASONS RECORDED BY THE ASSESSING OFFICER, BUT NO ADDITION WAS FINALLY MADE BY THE ASSESSING OFFICER IN THE ASSESSMENTS U/S 143(3) R.W.S. 147 FOR BOTH THE YEARS UNDER CONSIDERATION U/S 2(22)(E) AND THE ADDITION WAS MADE ONLY ON THE ISSUE OF UNEXPLAINED CASH CREDIT U/S 68 WHICH DID NOT FORM THE BASIS OF REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING OF THE ASSESSMENTS FOR BOTH THE YEARS UNDER CONSIDERATION. IF THESE FACTS OF THE CASE, WHICH HAVE REMAINED UNDISPUTED OR UNCONTROVERTED BY THE LD. DR, ARE CONSIDERED IN THE LIGHT OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD. (SUPRA), WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IT WAS NOT OPEN TO THE ASSESSING OFFICER INDEPENDENTLY TO MAKE ADDITION U/S 68 IN THE ASSESSMENTS COMPLETED U/S 143(3) R.W.S. 147 FOR BOTH THE YEARS UNDER CONSIDERATION AND THE ASSESSMENTS SO MADE BY HIM WITHOUT SATISFYING THE REQUISITE CONDITION ARE LIABLE TO BE CANCELLED BEING BAD IN LAW. WE ORDER ACCORDINGLY AND ALLOW THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IN BOTH THESE APPEALS. 8. KEEPING IN VIEW OUR DECISION RENDERED ABOVE ON THE PRELIMINARY ISSUE RAISED IN ADDITIONAL GROUND CANCELLING THE ASSESSMENTS MADE BY THE ASSESSING 6 ITA NOS.322 & 323/PUN/2017 OFFICER FOR BOTH THE YEARS UNDER CONSIDERATION U/S 143(3) R.W.S. 147, OTHER GROUNDS RAISED BY THE ASSESSEE IN THESE APPEALS HAVE BECOME INFRUCTUOUS OR ACADEMIC AND WE DO NOT CONSIDER IT NECESSARY OR EXPEDIENT TO ADJUDICATE UPON THE SAME. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 21 ST DAY OF SEPTEMBER, 2020. SD/- SD/- ( PARTHA SARATHI CHAUDHURY ) ( P.M. JAGTAP ) JUDICIAL MEMBER VICE PRESIDENT / PUNE; / DATED : 21 ST SEPTEMBER, 2020. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-1, KOLHAPUR. 4. THE PR. CIT-1, KOLHAPUR. 5 . , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.