Shri.Suresh Solanki, Bangalore V. Income Tax Officer, Bangalore

ITA 380/BANG/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5365 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 20-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R V SREENIVA SAN J
• Assessee Lawyers: SUDHEENDRA B R
• Keywords: Reassessment proceedings
• Section: 143(3); 147; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 380/BANG/2017 ASSESSMENT YEAR : 2008-09 SHRI SURESH SOLANKI, PROP: NAGESHWAR MADHUKAR, #37, M.M. LANE, GANIGARPET, BANGALORE 560 002. PAN: APNPS 2107L VS. THE INCOME TAX OFFICER, WARD 5(2)(2), BANGALORE. APPELLANT RESPONDENTS APPELLANT BY : SHRI SUDHEENDRA B.R., CA RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT(DR) DATE OF HEARING : 21.03.2017 DATE OF PRONOUNCEMENT : 19.05.2017 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 30.11.2016 OF CIT(A) FOR THE ASSESSMENT YEAR 2008-09. THE ASS ESSEE HAS RAISED THE FOLLOWING GROUNDS: ITA NO. 380/BANG/2017 PAGE 2 OF 8 ITA NO. 380/BANG/2017 PAGE 3 OF 8 ITA NO. 380/BANG/2017 PAGE 4 OF 8 2. GROUND NOS. 1 AND 2 ARE REGARDING THE VALIDITY OF R EOPENING U/S. 147 AND 148 OF THE ACT. THE LD. AR OF THE ASSESSEE HAS SUB MITTED THAT THE ORIGINAL ASSESSMENT WAS COMPLETED U/S. 143(3) ON 25.11.2010. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS THE ASSESSEE EXP LAINED THE TRANSACTION OF PURCHASE AND SALE OF SHARES AND SHORT TERM CAPIT AL GAIN ON SALE OF SHARES WHICH WAS OFFERED TO TAX. THE ASSESSING OFF ICER AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE ACCEPTED THE SHORT TERM CAPITAL GAIN OFFERED BY THE ASSESSEE WHILE COMPLETING THE ASSESS MENT U/S. 143(3). THUS THE LD. AR HAS SUBMITTED THAT WHEN THE AO HAS TAKEN A VIEW AND ACCEPTED THE TRANSACTION OF SALE AND PURCHASE OF SH ARES AND SHORT TERM CAPITAL GAIN ARISING FROM SALE OF SHARES THEN THE R EOPENING OF ASSESSMENT AFTER FOUR YEARS IS NOT SUSTAINABLE IN LAW AS THERE IS NOTHING TO SHOW THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO D ISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. T HE LD. AR HAS REFERRED TO THE NOTICE ISSUED U/S. 148 DATED 18.11.2013 AS W ELL AS REPLY OF THE ASSESSEE TO THE SAID NOTICE. HE HAS THUS SUBMITTED THAT THE AO ISSUED A SIMILAR NOTICE U/S. 148 WHICH WAS DROPPED AFTER THE ASSESSEE FILED HIS REPLY ON 17.01.2014. THE AO HAS THEN ISSUED A SECO ND NOTICE U/S. 148 ON 02.03.2015 WHICH IS NOT SUSTAINABLE IN LAW BEING BA RRED BY LIMITATION OF FOUR YEARS PROVIDED UNDER PROVISO TO SECTION 147. HE HAS RELIED UPON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF CIT VS RAM KISHAN LEELA [2007] (295 ITR 525) AS WELL AS THE DECISION OF HONBLE MADRAS ITA NO. 380/BANG/2017 PAGE 5 OF 8 HIGH COURT IN CASE OF ASSP & CO VS CIT[1988] (172 I TR 274) AND SUBMITTED THAT THE REASSESSMENT PROCEEDINGS AND REA SSESSMENT ORDER IS BAD IN LAW AS THE NOTICE U/S. 148 WAS ISSUED TWICE AND THE REASSESSMENT PROCEEDINGS CONSEQUENT TO FIRST NOTICE U/S. 148 WAS PENDING WHEN SECOND NOTICE U/S. 148 WAS ISSUED. THUS THE LD. AR HAS CO NTENTED THAT THE REASSESSMENT IS NOT SUSTAINABLE IN LAW AND LIABLE T O BE QUEST. 3. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT TH E EARLIER ALLEGED NOTICE U/S. 148 WAS NOT PENDING AT THE TIME WHEN THE PRESE NT NOTICE U/S. 148 DATED 02.03.2015 WAS ISSUED BY THE AO THEREFORE THE DECISIONS RELIED UPON BY THE LD. AR ARE NOT APPLICABLE IN THE CASE O F THE ASSESSEE. HE HAS FURTHER CONTENTED THAT THE ASSESSEE HAS NOT RAISED THESE ISSUES BEFORE THE CIT(A) OR BEFORE THE AO AND THEREFORE IT IS ALSO NO T CLEAR WHETHER THERE WAS ANY NOTICE U/S. 148 ISSUED BY THE AO ON 18.11.2 013 AS ALLEGED BY THE ASSESSEE. IF THE EARLIER NOTICE U/S. 148 WAS DROPP ED THEN THERE IS NO BAR IN ISSUING THE FRESH NOTICE U/S. 148 WHEN THE ASSESSIN G OFFICER HAS THE REASONS TO BELIEVE THAT THE INCOME ASSESSABLE TO TA X HAS ESCAPED ASSESSMENT. HE HAS FURTHER SUBMITTED THAT THERE WA S A SEARCH U/S. 132 ON 25.11.2009 IN CASE OF M/S. MAHASAGAR SECURITIES P L TD ONE OF THE GROUP CONCERN OF SHRI MUKESH CHOKSI WHO HAS ADMITTED IN H IS STATEMENT THAT HIS GROUP COMPANIES INCLUDING M/S. MAHASAGAR SECURI TIES P LTD WAS ENGAGED IN FRAUDULENT BILLING ACTIVITY AND IN GIVIN G ACCOMMODATION ITA NO. 380/BANG/2017 PAGE 6 OF 8 ENTRIES IN ORDER TO ENABLE THE CLIENTS TO DECLARE S PECULATIVE PROFIT, SHORT TERM CAPITAL GAIN, LONG TERM CAPITAL GAIN ETC. ACC ORDINGLY, THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT HAS GIVEN INFORMATION TO THE AO THAT DURING THE FINANCIAL YEAR 2006-07 THE A SSESSEE HAD PURCHASED TALENT INFOWAY SHARES THROUGH THE BROKER M/S. ALL IANCE INTERMEDIARIES AND NETWORK PVT. LTD., MUMBAI. THEREFORE THE FACTS CAME TO THE KNOWLEDGE OF THE AO AS A RESULT OF SEARCH U/S. 132. IT CONSTITUTES A TANGIBLE AND SUFFICIENT MATERIAL TO FORM A BELIEF T HAT THE INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT. HE HAS R ELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE ORIGINAL ASS ESSMENT WAS FRAMED U/S. 143(3) ON 25.11.2010. HOWEVER, IT IS NOT CLEAR WHE THER THE INFORMATION GIVEN BY THE INVESTIGATION WING DURING THE SEARCH U /S. 132 ON 25.11.2009 IN CASE OF MAHASAGAR GROUP CASES WAS PASSED ON TO T HE ASSESSING OFFICER PRIOR TO THE COMPLETION OF THE ORIGINAL ASSESSMENT DATED 25.11.2010. IN CASE THE SAID INFORMATION WAS AVAILABLE WITH THE AO AT THE TIME OF COMPLETING THE ORIGINAL ASSESSMENT U/S. 143(3) ON 2 5.11.2010 THEN REOPENING OF THE ASSESSMENT AFTER FOUR YEARS BY ISS UING THE NOTICE U/S. 148 ON 02.03.2015 IS NOT PERMITTED AS NOTHING NEW CAME TO THE KNOWLEDGE OF THE AO TO BRING THE CASE OF THE ASSESSEE IN THE CAT EGORY THAT THERE IS A ITA NO. 380/BANG/2017 PAGE 7 OF 8 FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL NECESSARY FOR THE ASSESSMENT OF THE ASSESSEE. FURT HER THE ASSESSEE HAS ALLEGED THAT PRIOR TO THE NOTICE ISSUED U/S. 148 ON 02.03.2015 THE ASSESSING OFFICER ISSUED A NOTICE U/S. 148 ON 18.11 .2013. A COPY OF THE SAID NOTICE HAS BEEN PLACED AT PAGE NO. 96 OF THE P APER BOOK. THE ASSESSEE HAS ALSO STATED TO HAVE FILED A REPLY ON 1 7.01.2014 PLACED AT PAGE NO. 97 AND 98 OF THE PAPER BOOK. HOWEVER, THE FACT OF THE SAID NOTICE ISSUED U/S. 148 IS NOT KNOWN. THEREFORE WITHOUT AS CERTAINING THE FACTS WHETHER THIS EARLIER NOTICE ISSUED U/S. 148 WAS DRO PPED BY THE AO OR IT WAS STILL PENDING THE ISSUE OF VALIDITY OF NOTICE I SSUED U/S. 148 CANNOT BE DECIDED CONCLUSIVELY. THERE IS ANOTHER QUESTION IN VOLVED IN THIS ISSUE REGARDING THE REASONS RECORDED FOR ISSUING THE NOTI CE U/S. 148 ON 18.11.2013 AND 02.03.2015. IN CASE THE REASONS REC ORDED BY THE AO WHILE ISSUING THESE NOTICES ARE IDENTICAL THEN ONCE THE EARLIER NOTICE WAS NOT ACTED UPON THEN THE SECOND NOTICE U/S. 148 CANN OT BE ISSUED ON SAME REASONS. ACCORDINGLY, IN VIEW OF THE ABOVE FACTS A ND CIRCUMSTANCES OF THE CASE WHEN ALL THE RELEVANT FACTS ARE NOT PLACED ON RECORD, AND EVEN NOT EMERGING OUT FROM THE ORDERS OF THE AUTHORITIES BEL OW THEN THIS ISSUE OF VALIDITY OF REOPENING IS SET ASIDE TO THE RECORD OF THE CIT(A) FOR FRESH ADJUDICATION AFTER CONSIDERING ALL THE RELEVANT FAC TS AS WELL AS ASPECTS AS DISCUSSED ABOVE. NEEDLESS TO SAY THE ASSESSEE MAY BE GIVEN AN APPROPRIATE OPPORTUNITY OF HEARING. ITA NO. 380/BANG/2017 PAGE 8 OF 8 5. SINCE THE VALIDITY OF REOPENING HAS BEEN SET ASIDE TO THE RECORD OF THE CIT(A) WHICH GOES TO THE ROOT OF THE MATTER THEREFO RE, THE OTHER ISSUES ARE NOT TAKEN UP FOR ADJUDICATION AND ARE KEPT OPEN. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF MAY, 2017 SD/- (VIJAY PAL RAO) JUDICIAL MEMBER BANGALORE, DATED, THE 19 TH MAY, 2017. / MS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.