Amit Kanhayalal Gidwani, Sangli V. Assistant Commissioner of Income tax, Sangli

ITA 329/PUN/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6148 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 08-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Keywords: Salary income; Difference of opinion; Deemed dividend; Reason to believe; Change of opinion; Capital Gains
• Section: 143(3); 2(22)(e); 143(1); 143(2); 153; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI LALIET KUMAR , JM . / ITA NO. 329 /PUN/201 7 / ASSESSMENT YEAR : 2008 - 09 AMIT KANHAYALAL GIDWANI, C.S.NO.34, LAXMI BUNGLOW, REVENUE COLONY, SOUTH SHIVAJI NAGAR, SANGLI 416416 PAN : A EFPG7955P ....... / APPELLANT / V/S. A CIT, CIRCLE 1, SANGLI / RESPONDENT A SSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SHRI PANKAJ GAR G / DATE OF HEARING : 1 2 .02.2020 / DATE OF PRONOUNCEMENT : 12 .02.2020 / ORDER PER D. KARUNAKARA RAO , AM: THIS APPEA L IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 1 , KOLHAPUR, DATED 30 - 11 - 2016 FOR THE ASSESSMENT YEAR 20 08 - 09 . 2. BRIEFLY STATED, RELEVANT FACTS INCLUDE THAT THE ASSESSEE I S AN INDIVIDUAL DERIVING INCOME FROM SALARY, CAPITAL GAINS AND INTEREST INC OME. THE ASSESSEE FILED HIS RETURN OF INCOME ON 12.01.2009 DECLARING TOTAL INCOME AT RS.11,14,890/ - . THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUANCE OF NOTICE U/S 148 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AFTER RECORDING TH E REASONS (PAGE 9 OF THE PAPER BOOK). IN RESPONSE THERETO, THE 2 ITA NO. 329 /PUN/201 7 ASSESSEE FILED REPLY STATING THAT THE ORIGINAL RETURN OF INCOME MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT AND ALSO MADE SEVERAL SUBMISSIONS . AFTER CONSIDERING VA RIOUS SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT BY MAKING VARIOUS ADDITIONS IN PARA 7 OF IN ITS ORDER. 3. THE CIT(A) UPHELD THE ORDER OF AO. 4. AGGRIEVED WITH THE SAID DECISION OF CIT(A) IN THE YEAR UNDER CONSIDER ATION, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . 5. BEFORE US, AT THE VERY OUTSET THE LD. COUNSEL SUBMITTED THE CASE UNDER CONSIDERATION IS COVERED ON THE LEGAL ASPECTS OF THE LITIGATION. RELYING ON THE HONBLE JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD. (2011) 331 ITR 236 (BOM) AND CO - ORDINATE BENCH OF PUNE TRIBUNAL IN THE CASE OF MR. KAILASH KANHAIYALAL GIDWANI & ORS. VS. ACIT (GROUP CASE) IN ITA NO.769/PUN/2014 FOR A.Y. 2009 - 10, ORDER DATED 11.09.2019 , THE LD. CO UNSEL SUBMITTED THAT THIS IS A CASE WHERE THE AO HAD NOT MADE ANY ADDITION FOR WHICH REASONS WERE RECORDED FOR REOPENING OF THE ASSESSMENT. IN THIS REGARD, THE LD. COUNSEL BROUGHT OUR ATTENTION TO PAGE 8 OF THE PAPER BOOK (COPY OF THE ORDER SHEET) AND SUB MITTED THE AO DESIRED TO TAX AS CONCEALED INCOME AMOUNTING TO RS.45,86,354/ - AND THE SAME WAS NEVER ADDED BY THE AO AS CONCEALED INCOME IN THE REASSESSMENT . OUR ATTENTION WAS BROUGHT TO THE CONTENTS OF PARA 7 OF THE ASSESSMENT ORDER. THE SAID PARA IS EXT RACTED AS UNDER: - 3 ITA NO. 329 /PUN/201 7 7. THE CASE IS HEARD. SUBJECT TO THE ABOVE REMARKS, THE TOTAL INCOME OF THE ASSESSEE IS ASSESSED AS UNDER: TOTAL INCOME AS PER RETURN OF INCOME: 11,14,890 SUBSTANTIVE ADDITION ON ACCOUNT OF LOAN TAKEN 14,00,000 ADDITION U/S. 2(2 2)(E) AIPL : 16,60,625 ADDITION U/S. 2(22)(E) JMCPL: 88,30,000 DEEMED DIVIDEND O/A OF LOAN FROM AIPL TO JMCPL: 36,50,000 ADDITION O/A OF LOW WITHDRAWALS: 1,00,000 TOTAL ASSESSED INCOME: 1,67,55,515 ROUNDED OFF U/S. 288A: 1,67,55,520 6. NONE OF THE ABOVE REFERRED ADDITIONS EMANATE S FROM THE REASONS RECORDED VIDE PAGE 9 OF THE PAPER BOOK. FURTHER, HE SUBMITTED IN SUCH FACTUAL SITUATION I.E. WHERE THE AO HAS NOT MADE ANY ADDITION ON ACCOUNT OF REASONS RECORDED, OTHER ADDITIONS MADE BY THE AO ARE NOT SUSTAINABLE IN LAW, IN VIEW OF THE LANGUAGE OF SECTION 147 OF THE ACT. THE RELEVANT LINES OF SECTION 147 OF THE ACT ARE EXTRACTED AS UNDER: - 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSE SSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 ASSESS OR RE - ASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED THE ASSESSMENT ....... . 7. REFERRING TO THE ABOVE SAID PROVISIONS OF THE ACT, LD. COUNSEL MENTIONED THIS IS A CASE WHERE SUCH INCOME WAS NEVER BROUGHT TO TAX AND THEREFORE, ADDING OF ANY OTHER INCOME CHARGEABLE TO TAX SHOULD NOT ARISE. REFERRING TO THE HONBLE JURISDICTIONAL HIGH COURT JUDGMENT, LD. COUNSEL DEMONSTRATED U NSUSTAINABILITY OF SUCH OTHER ADDITIONS. FURTHER, REFERRING TO THE GROUP CASES OF KAILASH KANHAIYALAL GIDWANI & ORS. VS. ACIT (SUPRA), LD. COUNSEL MENTIONED ABOUT THE RELIEF GRANTED BY THE TRIBUNAL TO THE ASSESSEE ON SIMILAR REASONING. IN THIS REGARD, AS SESSEE BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 7 AND 8 OF THE SAID ORDER. 4 ITA NO. 329 /PUN/201 7 8 . WE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD AND FIND THAT SIMILAR ISSUE WAS ADJUDICATED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN THE CASE OF KAILASH KA NHAIYALAL GIDWANI & ORS. VS. ACIT (SUPRA) . FOR THE SAKE OF COMPLETENESS, WE PROCEED TO EXTRACT THE RELEVANT PARA S OF THE ORDER OF THE TRIBUNAL HERE AS UNDER : 7. FROM THE ABOVE NARRATION OF FACTS, IT IS AMPLY CLEAR THAT FIRSTLY THE ASSESSEE DID NOT ADVAN CE ANY LOAN TO KANHAIYALAL VISHANDAS GIDWANI AMOUNTING TO RS.2.00 LAKH AS HAS BEEN ALLEGED IN THE REASONS. ON THE CONTRARY, IT IS A CASE OF REPAYMENT OF LOAN OF RS.2.00 LAKH AS AGAINST THE OPENING BALANCE OF LOAN OF RS.20.00 LAKH. THE REASONS NOTED BY TH E AO THAT IT WAS A CASE OF ADVANCING LOAN BY THE ASSESSEE TO KANHAIYALAL VISHANDAS GIDWANI, IS THEREFORE, NOT CORRECT TO THAT EXTENT. BE THAT AS IT MAY, THE SUBSTANCE OF THE REASONS IS THAT THE SOURCES OF THE LOANS ADVANCED BY SOU. DEVI GIDWANI ARE NOT S UBSTANTIATED. THIS IS THE MAIN REASON WHICH LED TO THE INITIATION OF RE - ASSESSMENT PROCEEDINGS IN THE HANDS OF THE ASSESSEE. WE ARE UNABLE TO FIND ANY JUSTIFICATION FOR INITIATION OF RE - ASSESSMENT ON SUCH GROUND AS IT IS A CASE WHERE THE ASSESSEE HAD MA DE REPAYMENT OF LOAN OUT OF REGULAR BOOKS OF ACCOUNT MAINTAINED BY HER. AS AGAINST THE OPENING BALANCE OF RS.20.00 LAKH, THE ASSESSEE PAID RS.2.00 LAKH VIDE CHEQUE DATED 25 - 11 - 2008. THIS TRANSACTION WAS PROPERLY RECORDED IN THE ASSESSEES BOOKS OF ACCOUN T. THE ASSESSEE IS PAYER AND NOT THE RECIPIENT OF LOAN. ONCE THE ASSESSEE PAID RS.2.00 LAKH TO KANHAIYALAL VISHANDAS GIDWANI OUT OF HER REGULAR BOOKS OF ACCOUNT, THERE CANNOT BE ANY QUESTION OF THE ASSESSEE NOT SUBSTANTIATING THE SOURCE OF LOAN, WHICH IS OVERTLY FROM THE REGULAR BOOKS OF ACCOUNT MAINTAINED BY HER. THIS SORT OF ENQUIRY, IF WARRANTED, OUGHT TO HAVE BEEN CONDUCTED IN THE HANDS OF THE RECIPIENT TO JUSTIFY THE SOURCE OF THE LOANS RECEIVED AND NOT THE PAYER OF THE LOAN, WHO HAS GIVEN LOAN OUT O F HER REGULAR BOOKS OF ACCOUNT. IN VIEW OF THE FOREGOING DISCUSSION, IT IS CLEAR THAT THE REASONS RECORDED BY THE AO FOR INITIATING RE - ASSESSMENT PROCEEDINGS ARE INVALID AND DO NOT JUSTIFY INITIATION OF RE - ASSESSMENT. 8. EVEN THOUGH THE ORIGINAL SUMM ARY ASSESSMENT WAS MADE U/S 143(1) OF THE ACT AND THE PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR HAD NOT EXPIRED BEFORE ISSUING NOTICE U/S 148 OF THE ACT, STILL, THE AO, HAVING MISSED THE OPPORTUNITY OF MAKING ASSESSMENT U/S 143(3) AFTER ISSU ING NOTICE U/S 143(2) OF THE ACT WITHIN THE STIPULATED PERIOD, COULD HAVE MADE ASSESSMENT OR REASSESSMENT U/S 147 ONLY ON THE BASIS OF THE SOME REASONS TO BELIEVE ABOUT THE ESCAPEMENT OF INCOME. EXISTENCE OF REASONS FOR ESCAPEMENT OF INCOME ARE SINE QUA NO N TO EMBARK UPON THE ASSESSMENT OR REASSESSMENT U/S 147 OF THE ACT. CHANGE OR NO CHANGE OF OPINION, AS ARGUED BY THE LD. DR, ARE THE FACTORS TO BE CONSIDERED AFTER FULFILLING THE JURISDICTIONAL CONDITION OF THERE BEING AN ESCAPEMENT OF INCOME, IN THE ABSE NCE OF WHICH NO ASSESSMENT OR REASSESSMENT CAN BE MADE U/S 147. AS IT IS APPARENT FROM THE ABOVE DISCUSSION THAT NO VALID REASONS EXIST ABOUT THE ESCAPEMENT OF THE ASSESSEES INCOME, WE HOLD THAT THE AO WAS NOT JUSTIFIED IN TAKING RECOURSE TO THE PROVISION S OF SECTION 147 OF THE ACT. WE, THEREFORE, STRIKE DOWN THE INITIATION OF ASSESSMENT PROCEEDINGS AND THE CONSEQUENTIAL ASSESSMENT ORDER PASSED U/S 147 OF THE ACT AND ALSO THE IMPUGNED ORDER. 9. FROM THE ABOVE, IT IS EVIDENT THAT THE TRIBUNAL GRANTED REL IEF TO THE ASSESSEE ON THE SIMILAR FACTS AND LAW. CONSIDERING THE SETTLED NATURE OF THE ISSUE, WE ARE OF THE OPINION THAT THE AO WAS NOT JUSTIFIED IN TAKING RECOURSE TO THE PROVISIONS OF SECTION 147 OF THE ACT. WE, THEREFORE, STRIKE DOWN THE 5 ITA NO. 329 /PUN/201 7 INITIATION OF ASSESSMENT PROCEEDINGS AND THE CONSEQUENTIAL ASSESSMENT ORDER PASSED U/S 147 OF THE ACT AND ALSO THE IMPUGNED ORDER . SINCE THE LEGAL ISSUE HAS BEEN ADJUDICATED, HENCE THE ISSUE ON MERITS BECOMES INF R UCTUOUS. A CCORDINGLY, THE LEGAL GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED . 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED ORDER PRONOUNCED ON THIS 12 TH DAY OF FEBRUARY , 20 20 . SD/ - SD/ - ( LALIET KUMAR ) ( D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 12 TH FEBRUARY , 20 20 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS) - 1 , KOLHAPUR 4. 5. THE PR.CIT - 1, KOLHAPUR , , / DR B, ITAT, PUNE; 6. / GUARD FILE . // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.