SHRI ATUL KUMAR JAIN, Ujjain V. THE ACIT 2(1), Ujjain

ITA 338/IND/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5890 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S DESHPANDE
• Keywords: Reopening of assessment; Opportunity of being heard
• Section: 148

Judgement Text

ATUL KUMAR JAIN ITA NOS. 338 TO 341/IND/2014 1 IN THE INCOME TAX APPELLATE TRIBUNA L SMC BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NOS.338 TO 341/IND/2014 A.YS.2005-06 TO 2008-09 ATUL KUMAR JAIN UJJAIN ::: APPELLANT VS ASSTT. COMMR. OF INCOME TAX 2(1) UJJAIN ::: RESPONDENT APPELLANT BY SHRI S.S. DESHPANDE RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 17.12.2015 DATE OF PRONOUNCEMENT 1 .1.201 6 O R D E R THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE CONSOLIDATED ORDER DATED 20.2.2014 OF THE LEARNED CIT(A), UJJAIN. ATUL KUMAR JAIN ITA NOS. 338 TO 341/IND/2014 2 2. THE SUM AND SUBSTANCE OF THE GROUNDS OF APPEALS IS THAT THAT LEARNED CIT(A) WAS NOT JUSTIFIED IN REJECTIN G THE GROUND OF THE ASSESSEE THAT NO PRIOR APPROVAL OF JURISDICTIONAL ADDITIONAL CIT WAS OBTAINED BY THE ITO W HO ISSUED THE NOTICE U/S 148 OF THE ACT ON THE GROUND THAT THIS ISSUE WAS NOT RAISED BEFORE THE ASSESSING OFFICE R. 3. BRIEF FACTS OF THE CASE ARE THAT THE RETURNS OF INCO ME WERE FILED BY THE ASSESSEE. THESE RETURNS WERE DULY PROCESSED U/S 143(1) OF THE ACT ACCEPTING THE RETURN ED INCOME. THESE CASES WERE REOPENED U/S 148 AND NOTICE S U/S 143(2) AND 143(2)(I) WERE ISSUED. SUBSEQUENTLY A QUESTIONNAIRE ALONG WITH NOTICES U/S 143(2) WAS ISSUED. THE ASSESSEE IS THE MANAGING DIRECTOR OF M/S VISHAL ELECTRONICS CO. PVT. LTD., UJJAIN AND ALSO MAJORITY SH ARE HOLDER OF THE COMPANY. AFTER THE ISSUE OF NOTICE U/ S148 OF THE ACT THE ASSESSING OFFICER PROPOSED TO REASSESS T HE INCOME WITHOUT APPROVAL OF THE JURISDICTIONAL ADDITION AL ATUL KUMAR JAIN ITA NOS. 338 TO 341/IND/2014 3 CIT WHICH IS EVIDENT FROM THE NOTICE ITSELF. AS THE ASSESSING OFFICER IS BELOW THE RANK OF ADDITIONAL CIT, UNDER TH E RULES, HE IS BOUND TO OBTAIN PRIOR APPROVAL OF THE JURISDICT IONAL ADDITIONAL CIT. THE ASSESSEE CHALLENGED THE NOTICES AN D ASKED FOR COPY OF THE NOTE SHEET AND THE REASONS RECO RDED FOR REOPENING THE ASSESSMENT ORDERS. THE ASSESSING OFFICER DID NOT SUPPLY APPROVAL LETTER OF THE JURISDICTIONAL ADDITIONAL CIT. THE LEARNED CIT(A) HAS ALSO NOT ADJUDICAT ED UPON THIS ISSUE. THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE ME. 4. BEFORE ME, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A REGULAR INCOME TAX ASSESSEE AND HAS SUBMITTED HIS CAPITAL ACCOUNT AND STATEMENT OF AFFAIRS ALONG WITH RETURN OF INCOME SINCE INCEPTION. THE ASSESSEE IS A MANAGING DIRECTOR OF M/S VISHAL ELECTRICAL CO. PVT. LTD., UJJAIN, AND IS ALSO A MA JORITY SHAREHOLDER IN THIS COMPANY. HE SUBMITTED THAT THE ATUL KUMAR JAIN ITA NOS. 338 TO 341/IND/2014 4 SCRUTINY ASSESSMENT OF M/S VISHAL ELECTRICALS CO. LTD. , UJJAIN, FOR THE ASSESSMENT YEAR 2007-08 WAS COMPLETED BY LEARNED ADDITIONAL COMMISSIONER OF INCOME TAX, UJJAIN, AND ON THE BASIS OF INFORMATION OBTAINED BY HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF M/S VISHAL ELECTR ICALS CO. PVT. LTD., UJJAIN. HE ISSUED THE INSTRUCTIONS TO THE ITO 2(1), UJJAIN FOR REOPENING OF THE CASE WHICH IS AGAINST THE VERDICT OF HON'BLE SUPREME COURT OF INDIA. THE LEARNE D COUNSEL FOR THE ASSESSEE SUBMITTED THAT AFTER GETTING INSTRUCTIONS, THE LEARNED ITO 2(1) CALLED ON ASSESSEE AND ASKED FOR COPIES OF BALANCE SHEET OF M/S VISHAL ELECTRI CALS CO. PVT. LTD., UJJAIN, FOR THE FINANCIAL YEAR 2004-05 T O 2007-08. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHE R SUBMITTED THAT AFTER THAT THE LEARNED ITO 2(1), UJJAIN, HAS ISSUED THE NOTICE U/S 148 DATED 25.3.2010 PROPOSING TO REASSESS THE INCOME WITHOUT OBTAINING THE PRIOR APPROV AL OF JURISDICTIONAL ADDITIONAL COMMISSIONER OF INCOME TAX AS IS ATUL KUMAR JAIN ITA NOS. 338 TO 341/IND/2014 5 EVIDENT FROM NOTICE ITSELF WHICH IS WRONG AND ILLEGAL AS ASSESSING OFFICER BELOW THE RANK OF ACIT HAS TO OBTAI N THE PRIOR APPROVAL OF JURISDICTIONAL ADDITIONAL COMMISSION ER OF INCOME TAX AND THUS THE NOTICE ITSELF IS INVALID. HE CITED THE DECISION IN THE CASE OF DR. SHASHIKANT GARG VS. CIT (2006) 152 TAXMAN 312 (ALL.). THE LEARNED COUNSEL F OR THE ASSESSEE FURTHER SUBMITTED THAT ON 20.4.2010 THE ASSES SEE HAS SUBMITTED WRITTEN SUBMISSION EXPLAINING THAT HE HAS ALREADY FILED RETURN OF INCOME WHICH MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE ISSUED U/S 148 AN D REQUESTED FOR SUPPLY OF REASONS RECORDED FOR REOPENIN G OF ASSESSMENT AND THE ITO 2(1), UJJAIN, HAS PROVIDED THE C OPY OF ORDER SHEET DATED 25.03.2010 AS REASONS RECORDED FO R REOPENING OF ASSESSMENT. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE REASONS RECORDED NOWHE RE MENTIONS THE AMOUNT OF INCOME WHICH HAS BEEN ESCAPED FROM TAX AND WHAT IS THE REASON FOR THE SAME. THE REASON S ATUL KUMAR JAIN ITA NOS. 338 TO 341/IND/2014 6 RECORDED SIMPLY SAYS THE ASSESSEE HOLD MORE THAN 10% OF M/S VISHAL ELECTRICALS CO. PVT. LTD., UJJAIN, AND COM PANY HAS RESERVES AND SURPLUS AND THEREAFTER QUOTING THE PROVISIONS OF SECTION 2(22)(E). THE SECTION 2(22)( E) ITSELF MENTIONS VERY CLEARLY THAT THE ADVANCE BY SUCH COMPANY HAS TO BE FOR INDIVIDUAL BENEFIT OF SUCH SHAREHOLDER AND APPARENTLY IF ADVANCE IS NOT FOR INDIVIDUAL BENEFIT OF MAJORITY SHAREHOLDER PROVISIONS OF SECTION 2(22)(E) ARE NOT APPLICABLE BUT LEARNED ITO 2(1), UJJAIN, HAS NOT RECORD ED THE FINDING THAT ADVANCES ARE FOR PERSONAL BENEFIT OF ASSESSEE DESPITE BEING IN THE POSSESSION OF ALL THE INFORMATION IN HIS HAND AND APPARENTLY THE VERY BASIC CONDITION OF ISSUANCE OF NOTICE U/S 148 IS NOT FULFI LLED. 5. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW WITH THE SUBMISSION THAT THE ASSESSEE HAS UTTERLY FAILED TO PROVE ITS CASE AND AS SUCH HE HAS NO CASE. ATUL KUMAR JAIN ITA NOS. 338 TO 341/IND/2014 7 6. HAVING HEARD BOTH THE SIDES, I DIRECT THE ASSESSIN G OFFICER TO SUPPLY TO THE COPY OF THE APPROVAL, IF ANY, OF THE ADDITIONAL/JOINT CIT, AS REQUESTED BY THE ASSESSEE. TH E ASSESSING OFFICER IS ALSO DIRECTED TO DECIDE THE MATT ER AS PER THE DECISIONS IN THE CASES OF CIT VS. TARAJAN T CO . PVT. LTD. (1999) 236 ITR 477 (SC) AND DR. SHASHIKANT GARG V. CIT (2006) 152 TAXMAN 312 (ALL) AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE STAND ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN OPEN COURT ON IST JANUARY, 2016 SD/- (D.T. GARASIA) ACCOUNTANT MEMBER IST, 2016 DN/- ATUL KUMAR JAIN ITA NOS. 338 TO 341/IND/2014 8