Shri Kalpesh V. Shah, Valsad V. The ACIT, Valsad Range, Valsad

ITA 3446/AHD/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2201 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 23-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL DHAKA
• Assessee Lawyers: RAJESH UP A DHYAY ITP
• Keywords: Reopening of assessment; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 147; 148; 40A(3); 143(3); 40(a)(ia)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH SMC, SURAT , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER . / ITA NO.3446/AHD/2014/SRT / ASSESSMENT YEAR: 2007-08 SHRI KALPESH V. SHAH, 27, KSHITIJ APARTMENTS, TITHAL ROAD, VALSAD 396 001. [PAN: ACPPS 0798G] VS. ASST. COMMISSIONER OF INCOME TAX, VALSAD RANGE, SURAT. ( / APPELLANT) ( ! /RESPONDENT) / ASSESSEE BY : SHRI RAJESH UPADHYAY, ITP /REVENUE BY : SHRI ANIL DHAKA, SR. D.R /DATE OF HEARING : 20-09-2018 / DATE OF PRONOUNCEMENT : 25-09-2018 / ORDER PER C.M.GARG, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), VALSAD (CIT( A) FOR SHORT) DATED 14.11.2014 FOR THE ASSESSMENT YEAR (A.Y) 2007-08. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS FOLLOWS: 1. LR. CIT(A) VALSAD HAS ERRED IN LAW AND ON FACTS TO UPHOLD REOPENING OF ASSESSMENT MADE BY THE A.O; U/S. 147 O F THE ACT. 2. LR. CIT(A) VALSAD HAS ERRED IN LAW AND ON FACTS TO SUSTAIN ADDITION OF RS. 1,92,000/- MADE BY THE AO U/S. 143( 1) OF THE ACT. 2 ITA NO.3446/AHD/2014/SRT (A.Y: 2007-08) SHRI KALPESH V. SHAH GROUND NO.1 : 3. APROPOS GROUND NO.1, I HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON T HE RECORD OF THE TRIBUNAL. THE LD. ASSESSEES REPRESENTATIVE (AR) S UBMITTED THAT FROM THE COPY OF THE REASONS RECORDED AVAILABLE AT PAGE 52 O F THE ASSESSEES PAPER BOOK, IT IS DISCERNABLE THAT THERE WAS NO NEW MATERIAL WITH THE AO AT THE TIME OF INITIATING REASSESSMENT PROCEEDINGS U/S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') AND ISSUING NOTI CE U/S. 148 OF THE ACT THEREFORE, IT IS A CASE OF CHANGE OF OPINION ON THE SAME MATERIAL WHICH WAS WITH THE AO AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. 4. REPLYING TO THE ABOVE, THE LD. DEPARTMENTAL REPR ESENTATIVE (DR) SUBMITTED THAT THE ASSESSEE HAD PAID RS. 9,60,000/- IN CASH TO SHRI SURESH C. DESAI FOR PURCHASE OF LAND AND THIS AMOUN T OF AN EXPENDITURE WAS REQUIRED TO BE DISALLOWED U/S. 40A(3) OF THE AC T. THE LD. DR ALSO SUBMITTED THAT FAILURE TO DO SO RESULTED INTO SHORT LEVY OF TAX OF RS. 4,29,770/- THEREFORE, AO WAS RIGHT IN INITIATING TH E REASSESSMENT PROCEEDINGS. 5. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, FIRST OF ALL, I MAY POINT OUT THAT THE ASSESSMENT IN THIS CASE WAS FINALIZED ON 16.12.2009 U/S. 143(3) OF THE ACT DETERMINING THE T OTAL INCOME OF RS. 10,02,600/- BY MAKING A DISALLOWANCE/ADDITION OF RS . 1,00,000/- U/S. 3 ITA NO.3446/AHD/2014/SRT (A.Y: 2007-08) SHRI KALPESH V. SHAH 40(A)(IA) OF THE ACT TO THE RETURNED INCOME. FROM THE COPY OF THE REASONS RECORDED AVAILABLE AT PAGE 52 OF THE ASSESSEES PAP ER BOOK, IT IS VIVID THAT THE REASONS WERE RECORDED ON 19.08.2011, WHEREIN FI RST TWO PARAS THE AO RECORDED THE HISTORY OF EARLIER ASSESSMENT PROCEEDI NGS AND IN SUBSEQUENT PARA 3 NOTED THE ESSENCE OF THE PROVISIO N OF S. 40A(3) OF THE ACT AND THEREAFTER IN PARA 4 ALLEGED THAT FROM THE SCRUTINY OF THE RECORD AND SUBMISSIONS MADE BY THE AO, IT IS NOTICED THAT THE ASSESSEE HAD PAID RS. 9,60,000/- IN CASH TO SHRI SURESH C. DESAI, WHI CH REQUIRED TO BE DISALLOWED U/S. 40A(3) OF THE ACT. THEREAFTER, IN LAST PARA, THE AO JUMPED TO FORM A REASON TO BELIEVE THAT THE INCOME HAS ESC APED ASSESSMENT THEREFORE, NOTICE U/S. 148 OF THE ACT BEING ISSUED WITHIN THE MEANING OF S. 147 OF THE ACT. 6. ABOVE NOTED ANALYSIS OF REASONS RECORDED CLEARLY SHOWS THAT THERE WAS NO NEW TANGIBLE MATERIAL IN THE HANDS OF AO AT THE TIME OF INITIATING REASSESSMENT PROCEEDINGS U/S. 147 OF THE ACT AND AT THE TIME OF ISSUING NOTICE U/S. 148 OF THE ACT THEREFORE, IT IS A CLEAR CASE OF CHANGE OF OPINION ON THE SAME MATERIAL WHICH WAS BEFORE THE AO AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. THEREFORE, I HAVE NO HESIT ATION TO HOLD THAT THE AO DID NOT ASSUME VALID JURISDICTION TO INITIATE RE ASSESSMENT PROCEEDINGS AND TO ISSUE NOTICE U/S. 148 OF THE ACT AS THERE WA S NO NEW TANGIBLE MATERIAL WITH THE AO AT THE TIME OF INITIATING SAID PROCEEDINGS. THEREFORE, 4 ITA NO.3446/AHD/2014/SRT (A.Y: 2007-08) SHRI KALPESH V. SHAH I HOLD THAT THE INITIATION OF REASSESSMENT PROCEEDI NGS AND ISSUANCE OF NOTICES U/S. 148 OF THE ACT AND ALL SUBSEQUENT PROC EEDINGS IN PURSUANT THERETO ARE BAD IN LAW BEING INITIATED WITHOUT HAVI NG VALID JURISDICTION AND THE SAME DESERVE TO BE QUASHED AND WE HOLD SO. ACC ORDINGLY, LEGAL GROUND NO.1 OF THE ASSESSEE IS ALLOWED AND CONSEQUE NTLY, INITIATION OF REASSESSMENT PROCEEDING U/S. 147 OF THE ACT AND NOT ICE U/S. 148 OF THE ACT ALONG WITH ALL SUBSEQUENT PROCEEDINGS AND ORDER S ARE QUASHED. 7. SINCE, BY THE EARLIER PART OF THIS ORDER, I HAVE QUASHED INITIATION OF REASSESSMENT AND ALL SUBSEQUENT PROCEEDINGS & ORDER S THEREFORE, GROUND OF THE ASSESSEE ON MERITS BECOMES INFRUCTUOUS AND I AM NOT ADJUDICATING THE SAME AS HAVING BECOME INFRUCTUOUS. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 5 TH SEPTEMBER, 2018. / SURAT; DATED : 25 TH SEPTEMBER, 2018 EDN # / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT ; 3. $ ( ) / THE CONCERNED CIT(A); 4. THE CONCERNED PRL. CIT; 5. , , , / DR, ITAT, SURAT; 6. / GUARD FILE . SD/- ( ) (C.M.GARG) /JUDICIAL MEMBER