I.T.O.-2(1), Gwalior V. M/s Aakriti Construction, Gwalior

ITA 362/AGR/2013

• Counselvise Citation: [2016] 134 COUNSELVISE.COM (IT) 0011 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 04-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Tangible material; Assessment record; Reason to believe
• Section: 143(3); 147; 148; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBE R AND MRS. ANNAPURNA MEHROTRA, ACCOUNT ANT MEMBER ITA NO. 362/AGRA/2013 ASSTT. YEAR : 2006-07 INCOME-TAX OFFICER, VS. M/S. AAKRITI CONSTRUCTI ON, 2(1), GWALIOR. DAL BAZAR, GWALIOR. [PAN : AAKFA 4645 F] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. WASEEM ARSHAD, SR. DR RESPONDENT BY : SHRI RAJENDRA SHARMA, ADVOCATE DATE OF HEARING : 28.01.2016 DATE OF PRONOUNCEMENT : 01.02.2016 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER: THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AG AINST THE ORDER OF LD. CIT(A), GWALIOR DATED 03.09.2013 FOR THE ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUND : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN OPINING THAT THE CASE OF THE ASSESSEE WAS COVERED BY THE 1 ST PROVISO TO SECTION 147 OF THE INCOME-TAX ACT, 1961 AND CONSEQUENTLY HOLDING THE REOPENING OF ASSESSMENT U/S. 147 OF THE INCOME-TAX ACT, 1961 AS BAD IN LAW AND CANCELLING THE REASSESSMENT MADE BY THE ASSESSING OFFICER IN P URSUANCE OF NOTICE U/S. 148 OF THE INCOME-TAX ACT, 1961 FOR THE A.Y. 2006-07, ISSUED ON 21.03.2012. ITA NO.362/AGRA/2013 2 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSE E IS A FIRM DERIVING INCOME FROM PURCHASE AND SALE OF LAND AND CONSTRUCT ION OF FLATS AND SELLING THEM. ORIGINAL RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 WAS FILED ON 26.10.2006 DECLARING TOTAL INCOME AT RS.37,012/- AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) ON 14.08.2008 ASSESSING THE T OTAL INCOME AT RS.86,390/-. SUBSEQUENTLY, NOTICE U/S. 148 WAS ISSU ED ON 21.03.2012 AND THE ASSESSMENT WAS REOPENED U/S. 147 ON THE FOLLOWING G ROUND : ON VERIFICATION OF THE CASE RECORDS, IT IS OBSERVE D THAT THE ASSESSEE FIRM HAS CLAIMED EXPENSES S COMPROMISE FEE RS.32,57 ,600/- AND IT IS OBSERVED THAT THE COMPROMISE FEE I.E. SORT OF PE NALTY [KNOWN] SAMJHOTA HETU AVAIDH NIRMAN CARNA AVAM SAMJHOTA SH ULK PRAPARTRA WAS RAISED ON 04.07.2006 AND PAID BY THE ASSESSEE ON 29.09.2006 I.E., AFTER THE END OF FINANCIAL YEAR 20 05-06 BOTH PERTAINS TO F.Y. 2006-07 RELEVANT TO A.Y. 2007-08) CANNOT BE ALLOWABLE FOR THE ASSESSMENT YEAR 2006-07. (A) COMPROMISING FEE A SORT OF PENALTY LEVIED BY THE NA GAR NIGAM FOR ILLEGAL CONSTRUCTION MADE BY THE CONTRACT IS NOT ALLOWABLE EXPENSES U/S. 36 & 37 OF THE I.T. ACT. (B) THE COMPROMISING FEE RAISED BY THE NAGAR NIGAM DURIN G THE F.Y. 2006-07 RELEVANT TO A.Y. 2007-08, NO EXPEN SES ALLOWABLE FOR THE A.Y. 2006-07. ON FURTHER VERIFICATION, THE ASSESSEE HAS PURCHASED LAND ON 9.10.2003 FOR RS.41 LAKH AND SECOND LAND WAS PURCHA SED ON 17.11.2004 FOR RS.7,96,000/- PERTAINS TO A.Y. 2004- 05 AND 2005-06. THE ASSESSEE HAS CLAIMED LOSS FOR A.Y. 2004 -05 AT RS.2,41,500/- AND FOR A.Y. 2005-06 RS.3,83,193/-. TH E AO HAS SET-OFF LOSS AGAINST THE ASSESSED INCOME I.E., RS.7 ,11,165/-. THERE IS NO MATERIAL ON RECORD FROM WHICH THIS LOSS CAN BE VERIFIED WHETHER THIS LOSS WAS ALLOWABLE OR NOT WIT HOUT FACTS THE LOSS IS NOT ALLOWABLE UNDER ASSESSED TO THE TUN E OF RS.6,24,693/-. ITA NO.362/AGRA/2013 3 KEEPING IN VIEW OF THE FACTS DISCUSSED ABOVE I HAV E THE REASON TO BELIEVE THAT THE INCOME AMOUNTING TO RS.32,57,600/- CHARGEABLE TO TAX HAS ESCAPED ASSESS MENT FOR THE A.Y. 2006-07. 3. THE AO AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE COMPLETED THE ASSESSMENT U/S. 143(3)/147 VIDE ORDER DATED 13. 03.2013 ASSESSING TOTAL INCOME AT RS.37,27,180/-. THE ASSESSEE CHALLENGED A DDITION AS WELL AS RE- ASSESSMENT PROCEEDINGS BEFORE THE LD. CIT(A) AND DE TAILED SUBMISSIONS WERE MADE WHICH ARE INCORPORATED IN THE APPELLATE ORDER. THE REMAND REPORT FROM THE AO WAS ALSO CALLED FOR. THE LD. CIT(A), CO NSIDERING THE SUBMISSIONS ON RECORD, REMAND REPORT AND REJOINDER OF THE ASSES SEE, SET ASIDE THE REOPENING OF SECTION 148 OF THE ACT AND CANCELLED T HE NOTICE U/S. 148 DATED 21.03.2012. THE ADDITIONS ON MERITS WERE NOT DECIDE D BECAUSE THE RE- ASSESSMENT WAS CANCELLED. THE FINDINGS OF THE LD. C IT(A) IN PARA 9 & 10 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 9. A PERUSAL OF ABOVE PROVISIONS MAKES IT CLEAR THA T NO ACTION U/S. 147 CAN BE TAKEN AFTER EXPIRY OF 4 YEARS FROM THE E ND OF RELEVANT ASSESSMENT YEAR, IF THE ORIGINAL ASSESSMENT WAS MAD E U/S. 143(3), UNLESS ANY INCOME CHARGEABLE TO TAX AS ESCAPED ASSE SSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSE SSMENT. AFTER GOING THROUGH THE ASSESSMENT ORDER, WRITTEN SUBMISS IONS, REMAND REPORT AND REJOINDER I AM OF THE CONSIDERED OPINION THAT THE ISSUE TO BE DECIDED IN THIS CASE IS WHETHER THE APPELLANT HAD DISCLOSED FULLY AND TRULY ALL MATERIAL ACTS NECESSARY FOR THE ASSESSMENT. THE FACT WHETHER THE APPELLANT HAD DISCLOSED FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT CAN BE ASCERTAINED ITA NO.362/AGRA/2013 4 ONLY BY GOING THROUGH THE CASE RECORDS OF THE RELEV ANT ASSESSMENT YEAR. THEREFORE, THE CASE RECORDS OF THE ASSESSMENT YEAR UNDER APPEAL WERE CALLED FOR. I HAVE GONE THROUGH THE CAS E RECORDS CAREFULLY AND OBSERVED AS UNDER :- 9.1. VIDE ORDER SHEET ENTRY DATED 18.06.2008, THE A SSESSING OFFICER RAISED THE QUERY ABOUT THE COMPROMISE FEE P AD TO MUNICIPAL CORPORATION AND ASKED THE APPELLANT TO FU RNISH DETAILS OF COMPROMISE FEE GIVEN TO MUNICIPAL CORPORATION. I N THE ORDER SHEET ENTRY DATED 3.7.2008, THE ASSESSING OFFICER R EQUESTED THE APPELLANT TO PRODUCE EVIDENCE OF PAYMENT OF RS.32,5 7,600/- TO NAGAR NIGAM. THE APPELLANT VIDE LETTER DATED 9.7.200 8 FILED COPY OF RECEIPT ISSUED BY NAGAR NIGAM, GWALIOR BEING THE PROOF OF PAYMENT OF PARASHMAN SHULK OF RS.32,57,600/- AND CO PY OF CHEQUE NO. 269787 FOR RS.32,57,600/- ISSUED IN FAVOUR OF A YUKT NAGAR PALIKA NIGAM, GWALIOR. THE COPY OF ORDER AND OTHER P APERS REGARDING FIXING OF LIABILITY OF PARASHMAN SHULK BY THE NAGAR NIGAM, GWALIOR WAS ALSO FILED. COPY OF RETURN OF IN COME FILED FOR THE A.Y. 2005-06 WAS ALSO ENCLOSED ALONG WITH THE L ETTER DATED 9.7.2008 FILED BY THE APPELLANT. THE ASSESSING OFFIC ER IN ORDER SHEET ENTRY DATED 9.7.2008 HAS RECORDED THAT SHRI RAKESH JAIN, C.A. ATTENDED AND SUBMITTED THE DOCUMENTS AS REQUIRED BY ORDERSHEET ENTRY DATED 3.7.2008. THE SAME WERE EXAMINED AND PLA CED ON RECORD. IN THE TAX AUDIT REPORT ALSO IT HAS BEEN ME NTIONED THAT COMPROMISE FEE OF RS.32,57,600/- WAS PAID ON 29.9.2 006 TO MUNICIPAL CORPORATION, GWALIOR WHICH WAS INCURRED I N THE PREVIOUS YEAR. 10. AFTER GOING THROUGH THE CASE RECORDS AND WRITTE N SUBMISSIONS/REJOINDER, I AM CONVINCED THAT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLE D FOR AND EXAMINED THE DETAILS OF PARASHMAN SHULK OF RS.32,57 ,600/-. THE APPELLANT ALSO FURNISHED DETAILS / DOCUMENTS RELATE D TO THE PARASHMAN SHULK OF RS.32,57,600/-. AS FAR AS RETURN OF INCOME FOR THE A.Y. 2005-06 IS CONCERNED, COPY OF THE SAME WAS ALSO FURNISHED BY THE APPELLANT DURING THE COURSE OF ORIGINAL ASSE SSMENT PROCEEDINGS ITSELF. EVEN OTHERWISE RETURN OF INCOME FILED FOR EARLIER ASSESSMENT YEARS ARE AVAILABLE WITH THE ASSESSING O FFICER. THERE IS NO DISPUTE ABOUT THE ACT THAT APPELLANT HAD FILED R ETURNS OF INCOME FOR THE A.Y. 2004-05 & 2005-06. IN VIEW OF THESE FA CTS I AM OF THE ITA NO.362/AGRA/2013 5 CONSIDERED OPINION THAT DURING THE COURSE OF ORIGIN AL ASSESSMENT PROCEEDINGS, THE APPELLANT HAD DISCLOSED FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE ORIGINA L ASSESSMENT IN THE CASE WAS COMPLETED U/S. 143(3). THEREFORE, T HE CASE OF THE APPELLANT IS COVERED BY THE FIRST PROVISO TO SECTIO N 147. AS PER THE FIRST PROVISO TO SECTION 147, NO ACTION 147 COULD H AVE BEEN TAKEN BY THE AO AFTER 31.3.2011 AS THE PERIOD OF 4 YEARS FROM THE RELEVANT ASSESSMENT ORDER (A.Y. 2006-07) EXPIRES ON 31.03.2011. AS THE NOTICE U/S. 148 FOR THE A.Y. 2006-07 WAS ISS UED ON 21.3.2012, THEREFORE, THE REOPENING OF ASSESSMENT U /S. 147 IS HELD TO BE BAD IN LAW AND ACCORDINGLY, THE REASSESSMENT MADE IN PURSUANCE OF NOTICES U/S. 148 ISSUED ON 21.03.2012 IS HEREBY CANCELLED. 4. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. 5. THE LD. DR RELIED ON THE ORDER OF THE AO. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND RELIED UPON THE JUDGMENT OF A LLAHABAD HIGH COURT IN THE CASE OF CIT VS. JUBILANT ORGANOSYS LTD., 94 CCH 21 IN WHICH IT WAS HELD AS UNDER : WHERE REASONS TO BELIEVE AS RECORDED BY THE AO D OES NOT STATE THAT THE ASSESSEE HAD FAILED TO FULLY AND TRULY DIS CLOSE ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT, WHICH WAS A CON DITION PRECEDENT FOR REOPENING THE ASSESSMENT AFTER FOUR Y EARS, THEN NOTICES ISSUED FOR REOPENING THE ASSESSMENT WAS CON TRARY TO LAW. ITA NO.362/AGRA/2013 6 5.1 HE HAS ALSO RELIED UPON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF COPERION IDEAL PRIVATE LIMITED VS. CIT, 94 CCH 50, IN WHICH IT WAS HELD - FOR REOPENING AN ASSESSMENT BEYOND PERIOD OF 4 YEA RS, THE THRESHOLD REQUIREMENT IS THAT THE AO SHOULD ON THE BASIS OF SOME TANGIBLE MATERIAL, CONCLUDE THAT THERE WAS ESCAPEMENT OF INCOME ON ACCOUNT OF THE ASSESSEES F AILING TO DISCLOSE MATERIAL PARTICULARS. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE DO N OT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. IT IS ADMITTE D FACT THAT ORIGINAL ASSESSMENT U/S. 143(3) WAS COMPLETED ON 14.08.2008. THE AO ONLY ON THE BASIS OF ASSESSMENT RECORD, RECORDED THE REASONS FO R RE-OPENING OF ASSESSMENT. THUS, THERE WAS NO TANGIBLE OR NEW MATE RIAL WITH THE AO TO RECORD THE REASONS FOR REOPENING OF ASSESSMENT. IT IS ALSO ADMITTED FACT THAT THE NOTICE U/S. 148 FOR REOPENING OF ASSESSMENT WAS ISSUED ON 21.03.2012. ACCORDING TO FIRST PROVISO TO SECTION 147 OF THE IT ACT, NO ACTION U/S. 147 COULD HAVE BEEN TAKEN BY THE AO AFTER 31.03.2011, A S THE PERIOD OF FOUR YEARS FOR THE RELEVANT ASSESSMENT, I.E., 2006-07 EX PIRED ON 31.03.2011. THE PROVISO PROVIDES THAT WHERE THE ASSESSMENT UNDER SU B-SECTION (3) OF SECTION 143 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEAB LE TO TAX HAS ESCAPED ITA NO.362/AGRA/2013 7 ASSESSMENT FOR SAID ASSESSMENT YEAR BY REASON OF FA ILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT FOR THAT ASSESSMENT YEAR. THE AO IN THE REASONS RECORDED, DID NOT RECORD ANYWHERE IF THERE WAS ANY FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT. THEREFORE, THE DECISIONS RELIED UPON BY THE LD. COU NSEL FOR THE ASSESSEE SQUARELY APPLY TO THE CASE OF ASSESSEE AND SUPPORT THE FINDINGS OF THE LD. CIT(A). HONBLE MADRAS HIGH COURT IN THE CASE OF S HREE SHAKTI TEXTILES LTD., 340 ITR 144 HELD THAT REASONS FOR NOTICE MUST SPECI FY THAT THERE WAS FAILURE TO DISCLOSE MATERIAL FACTS NECESSARY FOR ASSESSMENT . THE LD. CIT(A) ALSO AFTER EXAMINING THE RECORD FOUND THAT ON THE MATTER IN IS SUE ON WHICH ASSESSMENT WAS REOPENED, THE AO RAISED QUERY WHICH WAS RESPOND ED TO BY THE ASSESSEE AND THE AO AFTER EXAMINING THE ISSUE ACCEPTED THE C LAIM OF ASSESSEE. THEREFORE, SINCE THE ISSUE HAS BEEN EXAMINED BY THE AO AT THE ASSESSMENT STAGE AND THE ASSESSEE HAS DISCLOSED FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, THEREFORE, THERE WAS NO R EASON FOR THE AO TO REOPEN THE ASSESSMENT AFTER EXPIRY OF FOUR YEARS FR OM THE RELEVANT ASSESSMENT YEAR. THE LD. CIT(A) ON PROPER APPRECIAT ION OF FACTS AND MATERIAL ON RECORD RIGHTLY CANCELLED THE REOPENING OF ASSESS MENT IN THE MATTER. NO ERROR HAS BEEN POINTED OUT IN THE ORDER OF THE LD. CIT(A) IN CANCELLING THE ITA NO.362/AGRA/2013 8 ASSESSMENT ORDER. THEREFORE, WE DO NOT FIND ANY MER IT IN THE DEPARTMENTAL APPEAL. THE SAME IS ACCORDINGLY DISMISSED. 7. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST FEB. 2016. SD/- SD/- (ANNAPURNA MEHROTRA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :01.02.2016 *AKS/- COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR