M/S. Rabi Ranjan Das & Sons (HUF), Bargarh V. ITO, Bargarh Ward, Bargarh

ITA 333/CTK/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6682 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 18-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B N AGARWALBINOD AGARWAL AR S
• Keywords: Reopening of assessment; Search and seizure; Audit objection; Tangible material; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 147

Judgement Text

P A G E 1 | 6 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK SMC BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER ITA NO . 333 /CTK/201 9 ASSESSMENT YEAR : 20 09 - 2010 M/S. RABI RANJAN DAS & SONS (HUF), GANDHI CHOWK, BARGARH. VS. ITO, BARGARH WARD, BARGARH PAN/GIR NO. AAIHR 7258 F (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI B.N.AGARWAL/BINOD AGARWAL , AR S REVENUE BY : SHRI SUBHENDU DUTTA, DR DATE OF HEARING : 5 / 0 2 / 20 20 DATE OF PRONOUNCEMENT : 5 / 0 2 / 2020 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), SAMBALPUR DATED 29.8.2010 FOR THE ASSESSMENT YEAR 2009 - 2010 . 2. IN GROUND NO.1 OF APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE ASSESSMENT ORDERS AS WELL AS THE LD CIT(A) ARE BAD IN LAW ON THE FACTS OF THE CASE. 3. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE REFERRING TO GROUND NO.1 OF APPEAL SUBMITTED THAT THE ASSE SSMENT WAS REOPENED ON THE BASIS OF CHANGE OF OPINION WITHOUT ANY NEW TANGIBLE MATERIAL IN THE HANDS OF THE AO, HENCE, IT SHOULD BE QUASHED. LD A.R. SUBMITTED THAT FIRSTLY GROUND NO.1 OF APPEAL MAY BE ADJUDICATED . 4. LD D.R. FAIRLY AGREES TO THE CONTENTI ON OF LD A.R. OF THE ASSESSEE TO ADJUDICATE GROUND NO.1 OF APPEAL. 5. LD A.R. SUBMITTED THAT NO ASSESSMENT WAS MADE U/S.143(3) OF THE ACT. HOWEVER, A NOTICE U/S.148 ON 14.3.2014 WAS ISSUED TO THE ASSESSEE TO REOPEN THE ASSESSMENT STATING THE REASONS AS UN DER: SUB: REASON FOR REOPENING U/S.147 OF THE I.T.ACT, 1961 FOR THE A.Y. 2009 - 2010 - REG I AM FURNISHING HEREWITH THE REASON FOR REOPENING U/S.147 OF THE IT. ACT, 1961. DURING THE COURSE OF VERIFICATION OF RETURN OF INCOME FOR THE ASST. YEAR 2009 - 10, FOLLOWING DISCREPANCIES WERE FOUND: 1 IN THE STATEMENT RECORDED ON 10 - 02 - 2009 DURING THE COURSE OF SURVEY OPERATION CONDUCTED U/S.L33AOF THE IT. ACT, 1961, YOU HAVE ADMITTED EXCESS INVESTMENT OF RS.700,000/ - IN THE CONSTRUCTION OF BUILDING SIT UATED AT PAHARAPAT, BARAHAGUDA, BARGARH. THEREFORE, PLEASE EXPLAIN WHY THE SAME I.E., RS.700,000/ - SHALL NOT BE ADDED TO THE TOTAL INCOME. 2 AGAIN, YOU HAVE PURCHASED A LAND OF 09.00 DECIMALS AT INDUSTRIAL ESTATE, BARGARH FOR A SUM OF RS.53,400/ - AND ALSO ADMITTED IN THE STATEMENT DT. 10 - 02 - 2009. PLEASE EXPLAIN AS TO WHY THE SAME SHALL NOT BE ADDED TO YOUR TOTAL INCOME. 3 AS PER SECTI ON 24(B)' OF THE IT. ACT, 1961 INTEREST ON BORROWED CAPITAL [OF THE CURRENT YEAR & PRE - CONSTRUCTION PERIOD] IS DEDUCTIBLE SUBJECT TO A MAXIMUM CEILING OF RS.15000/ - . ON GOING THROUGH THE 'COMPUTATION OF TOTAL INCOME' ANNEXED WITH THE RETURN OF INCOME, IT I S SEEN THAT YOU HAVE CLAIMED INTEREST ON BORROWED CAPITAL OF RS.250,109/ - . THEREFORE, PLEASE EXPLAIN AS TO WHY THE DIFFERENTIAL AMOUNT OF RS.100,109/ - (150,109 ( - ) 2 5 0,0 00) SHALL NOT BE ADDED TO THE TOTAL INCOME . 6 . THE ASSESSEE OBJECTED TO THE REASSES SMENT AND SUBMITTED THAT THE ASSESSEE HAD FULLY AND TRULY DISCLOSED ALL THE MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, AND THAT, ON THE FACTS OF HIS CASE, REASSESSMENT PROCEEDINGS CANNOT BE INITIATED. IT IS SUBMITTED THAT THE ASSESSEE HAD NOT MADE ANY EX CESS INVESTMENT OF RS.7,00,000/ - IN THE ASSESSMENT YEAR 2009 - 10; A PIECE OF LAND WAS PURCHASED AT A CONSIDERATION OF RS.53,400/ - FROM THE PAST SAVINGS AND THE ASSESSEE HAD PAID RS.2,50,109/ - AS AN INTEREST ON BORROWED CAPITAL (HBL). THE ASSESSING OFFICER , HOWEVER, WAS NOT IMPRESSED. HE REJECTED THE SUBMISSIONS OF THE ASSESSEE AND PASSED REASSESSMENT ORDER UNDER SECTION 147 /143(3) OF THE ACT ON 25.8.2014 , INTER ALIA, DISALLOWING VARIOUS DISALLOWANCES. 7 . AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) AND MADE ELABORATE SUBMISSIONS, ON LEGAL AND FACTUAL ASPECTS, AGAINST VALIDITY OF VALIDITY OF NOTICE U/S.148 AND REASSESSMENT PROCEEDINGS U/S.147 , BUT WITHOUT ANY SUCCESS. THE CIT(A) ALSO REJECTED THESE SUBMISSIONS AND UPHELD THE VALIDITY OF THE NOTICE AND ASSESSMENT. 8 . HENCE, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 9 . THE MAIN THRUST OF LEARNED COUNSELS SUBMISSION IS THAT THERE IS NOTHING ON RECORD TO SUGGEST THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL THE MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THAT ASSESSMENT YEAR. IT IS SUBMITTED THAT THE ASSESSEE HAD FULLY COMPLIED WITH ALL THE STATUTORY OBLIGATIONS WITH REGARD TO DISCLOSURE OF MATERIAL FACTS AND THAT REOPENING OF ASSESSMENT IS ONLY ON THE BASIS OF CHANGE OF OPINION. LD COUNSEL SUBMITTED THAT IN RESPONSE TO NOTICE U/S.148 OF THE ACT , THE ASSESSEE HAS STATED THAT THE ASSESSEE HAS NOT MADE ANY EXCESS INVESTMENT OF RS.7,00,000/ - IN THE ASSESSMENT YEAR 2009 - 2010. HE SUBMITTED THAT THE ADMISSION DURING THE COURSE OF SURVEY U/S.133 OF THE ACT DOES NOT HAVE ANY EVIDENTIARY VALUE AS HAS BEEN HELD BY CIT VS S KHADAR KHAN SON, 352 ITR 480 (SC). HE SUBMITTED THAT ON THE BASIS OF THE ADMI SSION BY THE ASSESSEE, AS ALLEGED BY THE AO, THE REOPENING OF ASSESSMENT WAS DONE. LD COUNSEL FURTHER SUBMISSION THAT THE AMRITSAR TRIBUNAL OF ITAT IN THE CASE OF DIDAR SINGH VS DCIT, 2018 TAXPUB (DT) 3038 HAS HELD THAT MERELY ON THE BASIS OF ADMISSION/C ONFESSION DURING SURVEY UNDER SECTION 133 ASSESSEE COULD NOT THEREFORE HAVE BEEN SUBJECTED TO ADDITIONS UNLESS AND UNTIL SOME CORROBORATIVE EVIDENCE FOUND IN SUPPORT OF SUCH ADMISSION. HE SUBMITTED THAT T HE REASONS RECORDED BY THE ASSESSING OFFICER DO NOT EVEN INDICATE OR ALLEGE THAT ANY FRESH INFORMATION CAME TO THE KNOWLEDGE OF THE ASSESSING OFFICER WARRANTING EXERCISE OF JURISDICTION UNDER SECTION 147/148 OF THE ACT. ON THE BASIS OF, INTER ALIA, THESE SUBMISSIONS, HE URGED THE BENCH TO QUASH THE REASSESS MENT PROCEEDINGS. LD COUNSEL ALSO RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT V. KELVINATOR OF INDIA LTD.: 320 ITR 561(SC). 10 . REPLYING TO ABOVE, LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT WHEN THE ASSESSING OFFICER DID N OT APPLY HIS MIND AT ALL ON THE INFORMATION BEFORE HIM IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THERE IS NO QUESTION OF FRESH APPLICATION OF MIND. HE SUBMITTED THAT THERE WAS AUDIT OBJECTION AND ON THAT BASIS, REASSESSMENT PROCEEDINGS U/S.147 OF THE ACT W AS INITIATED. 1 1 . I HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RECORD OF THE CASE. THE LAW IS FAIRLY WELL SETTLED THAT EVEN IN THE CASES OF REOPENING OF ASSESSMENT WITHIN FOUR YEARS, THERE HAS TO BE SOME TANGIBLE MATERIAL COMING TO LIGHT TO INDICATE THAT AN INCOME HAS E SCAPED ASSESSMENT. THE FULL BENCH OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD (256 ITR5 1) HAD OBSERVED THAT, IF IT BE HELD THAT AN ORDER, WHICH HAS BEEN PASSED PURPORTEDLY WITHOUT APPLICATION OF MIND, WOULD ITSELF CONFER JU RISDICTION UPON THE ASSESSING OFFICER TO REOPEN THE PROCEEDINGS WITHOUT ANYTHING FURTHER, THE SAME WOULD AMOUNT TO GIVING A PREMIUM TO AN AUTHORITY EXERCISING QUASI JUDICIAL FUNCTION TO TAKE BENEFIT FROM ITS OWN WRONG. THE DECISION OF THE HONBLE DELHI HIGH COURT IS APPROVED BY HONBLE SUPREME COURT IN THE CASE REPORTED AS CIT VS. KELVINATOR OF INDIA LTD (320 ITR 561) WHEREIN, IT IS HELD AS UNDER: 'ON GOING THROUGH THE CHANGES, QUOTED ABOVE, MADE TO SECTION 147 OF THE ACT, WE FIND THAT, PRIOR TO DIRECT TAX LAWS (AMENDMENT) ACT, 1987, RE - OPENING COULD BE DONE UNDER ABOVE TWO CONDITIONS AND FULFILLMENT OF THE SAID CONDITIONS ALONE CONFERRED JURISDICTION ON THE ASSESSING OFFICER TO MAKE A BACK ASSESSMENT, BUT IN SECTION 147 OF THE - ACT [WITH EFFECT FROM 1 ST APRIL, 1989], THEY ARE GIVEN A GO - BY AND ONLY ONE CONDITION HAS REMAINED, VIZ., THAT WHERE THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, CONFERS JURISDICTION TO RE - OPEN THE ASSESSMENT. THEREFORE, POST - 1 ST APRIL, 1989, POW ER TO RE - OPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO RE - OPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO RE - OPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO RE - ASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS THE POWER TO RE ASSESS. BUT RE - ASSESSMENT HAS TO BE BASED ON FULFILLMENT OF CERTAIN PRE CONDITION AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF RE - OPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN - BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1 ST APRIL, 1989, ASSESSING OFFICER HAS POWER TO RE - OPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCO ME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF.' 1 2 . I ALSO FIND THAT THE ISSUES ON WHICH THE REASONS RECORDED BY THE ASSESSING OFFICER ARE REPLIED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S.148 OF THE AC T AND REBUTTED THAT THE ADMISSION OF RS.7,00,000/ - DURING THE COURSE OF SURVEY AND SUBMITTED THAT HE HAS NOT MADE ANY EXCESS INVESTMENT OF RS.7,00,000/ - AND OTHER QUERIES ARE ALSO REPLIED. FROM THE ABOVE SUBMISSIONS, I DO NOT FIND ANY TANGIBLE MATERIALS BEFORE THE AO F OR REOPENING THE ASSESSMENT U/S.147 OF THE ACT. AS REGARDS TO THE CONTENTION OF LD D.R. THAT THERE WAS AUDIT OBJECTION, I PERUSED THE ASSESSMENT RECORDS AND FIND THAT THERE IS NO SUCH MENTION OF AUDIT OBJECTION IN THE SATISFACTION NOTE. THEREFORE, IN THE ABSENCE OF ANY FRESH MATERIAL, THE REAPPRAISAL OF SAME MATERIAL TO INITIATE REASSESSMENT PROCEEDINGS TANTAMOUNTS TO CHANGE OF OPINION AND HENCE BAD IN LAW. HENCE, I QUASH THE SAME. CONSEQUENTLY, THE REASSESSMENT PROCEEDINGS AND FIRST APPELLATE ORDER ARE DISMISSED. 1 3 . SINCE, I HAVE QUASHED THE REASSESSMENT PROCEEDINGS ON LEGAL GROUND, OTHER GROUNDS ON MERITS OF THE CASE HAVE BECOME INFRUCTUOUS. 1 4 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 5 / 0 2 /20 20 . SD/ - ( CHANDRA MOHAN GARG) JUDICIAL MEMBER CUTTACK; DATED 5 / 0 2 /20 20 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : M/S. RABI RANJAN DAS & SONS (HUF), GANDHI CHOWK, BARGARH. 2. THE RESPONDENT. ITO, BARGARH WARD, BARGARH 3. THE CIT(A) - , SAMBALPUR 4. PR.CIT - , SAMBALPUR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//