M/s. The Jagdishpur Co-op L/C Society Ltd., Sonepat V. ACIT, Sonepat

ITA 3912/DEL/2014

• Counselvise Citation: 391220114 RSA 2014
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 30-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 07-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YATENDRA SINGH
• Keywords: Tangible material; Difference of opinion; Change of opinion
• Section: 44AD; 143(3); 142(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC-2 NEW DELHI) BEFORE SHRI I.C. SUDHIR: HONBLE JUDICIAL MEMBER ITA NO. 3912/DEL/2014 ASSESSMENT YEAR: 2007-08 THE JAGDISHPUR CO-OP L/C SOCIETY LTD., VS. ASSISTAN T CIT, VPO: AKBARPUR BAROTA, SONEPAT CIRCLE, SONEPAT. SONEPAT. (PAN: AAATJ7761M) (APPELLANT) (RESPONDENT) ITA NO. 3913/DEL/2014 ASSESSMENT YEAR: 2007-08 THE MALIK CO-OP L/C SOCIETY LTD., VS. ASSISTAN T CIT, HOUSE NO. 1877/31, MAYUR VIHAR, SONEPAT CIRCLE, SONEPAT. SONEPAT. (PAN: AAAJT2083M) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI GAUTAM J AIN, CA RESPONDENT BY: SHRI YATENDRA SI NGH, SR. DR DATE OF HEARING : 30.07.2015 DATE OF PRONOUNCEMENT: 31 :07.2015 ORDER IN THESE APPEALS, THE ASSESSEES HAVE QUESTIONED VA LIDITY OF FIRST APPELLATE ORDER ON SEVERAL GROUNDS. IN THE COMMON G ROUND NOS. 1 TO 1.5, THE ASSESSEES HAVE QUESTIONED THE VALIDITY OF JURIS DICTION OF THE ASSESSING OFFICER TO FRAME ASSESSMENT UNDER SECTIONS 147/143( 3) OF THE INCOME-TAX ACT, 1961. IN OTHER GROUNDS, THE VALIDITY OF ADDITI ONS INVOKING THE PROVISIONS 2 OF 44AD OF THE ACT AND DISALLOWANCE OF DEDUCTIONS U NDER SEC. 80P OF THE ACT HAVE BEEN QUESTIONED. 2. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY T HE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILA BLE ON RECORD AND THE DECISIONS RELIED UPON. 3. ON THE VALIDITY OF ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER UNDER SEC. 147 OF THE ACT, THE LEARNED AR SUBMITTED THAT DURING THE ORIGINAL ASSESSMENT FRAMED UNDER SEC. 143(3) OF THE ACT ON 3 0.1.2009, THE COUNSEL OF THE ASSESSEE SOCIETY HAD APPEARED BEFORE THE ASSESS ING OFFICER FROM TIME TO TIME AND FILED THE REQUISITE DETAILS AND DOCUMENTS AND THE BOOKS OF ACCOUNT PRODUCED WERE TEST CHECKED BY THE ASSESSING OFFICER BEFORE FRAMING THE ASSESSMENTS. HE SUBMITTED THAT THE ASSESSEES HAVE M AINTAINED BOOKS OF ACCOUNT AND GOT AUDITED FROM A CA. THE ASSESSEES HA D FILED A COPY OF AUDIT REPORT AND ON PERUSAL OF LEDGER THE ASSESSING OFFIC ER HAD NOTED THAT THE ASSESSEES HAD ADOPTED PERCENTAGE OF COMPLETION METH OD. THUS, THE ASSESSING OFFICER HAS INITIATED THE REOPENING PROCE EDINGS AFTER RECORDING WRONG REASONS FOR FORMING HIS BELIEF THAT ASSESSEES FAILED TO PRODUCE COMPLETE BOOKS OF ACCOUNT ALONG WITH BILLS AND VOUC HERS, THEREFORE, PROFIT RATE AT 8% UNDER SEC. 44AD OF THE ACT IS APPLICABLE IN THE CASE OF THE ASSESSEES, WHO ARE DOING CONTRACT BUSINESS. THE LEA RNED AR SUBMITTED THAT 3 THE REOPENING PROCEEDINGS HAVE BEEN INITIATED BY TH E ASSESSING OFFICER ON THE BASIS OF CHANGE OF OPINION WHICH IS NOT PERMITT ED. THE OBJECTIONS RAISED AGAINST THE VALIDITY OF INITIATION OF REOPENING PRO CEEDINGS BEFORE THE AUTHORITIES BELOW HAVE BEEN REJECTED IGNORING THE M ATERIAL FACTS OF THE CASE, DISCUSSED ABOVE. HE SUBMITTED THAT AFTER COMPLETION OF ASSESSMENT UNDER SEC. 143(3) OF THE ACT, THERE WAS NO FRESH MATERIAL TO INITIATE THE REOPENING PROCEEDINGS. THE ASSESSING OFFICER WAS ALSO NOT JUS TIFIED IN REJECTING THE OBJECTION RAISED BY THE ASSESSEE AGAINST THE INITIA TION OF REOPENING PROCEEDINGS WITHOUT PASSING A SPEAKING ORDER. THE R EASONS RECORDED ARE FACTUALLY AND LEGALLY MISCONCEIVED AS THERE WAS NO TANGIBLE AND RELEVANT MATERIAL TO ASSUME JURISDICTION UNDER SEC. 147 OF T HE ACT. IN SUPPORT, THE LEARNED AR PLACED RELIANCE ON THE FOLLOWING DECISIO NS: I) CIT VS. ORIENT CRAFT LTD. 354 ITR 536 (DEL.) SLP DISMISSED IN CC 15859/2013; II) ACIT VS. O.P. CHAWLA 306 ITR 328 (DEL.) (AT) ; III) MADHUKAR KHOSLA VS. ACIT 367 ITR 165 (DEL.) ; IV ) CIT VS. KELVINATOR OF INDIA LTD. 320 ITR 56 1 (S.C); V ) CIT VS. USHA INTERNATIONAL LTD. 348 ITR 485 (DEL.); VI) VLS FINANCE VS. CIT 289 ITR 286 (DEL.); VII) CIT VS. BATRA BHATTA & CO. 321 ITR 526 (DEL .); VIII) PARSURAM POTTERY WORKS CO. LTD. VS. ITO 10 6 ITR 1 (S.C); IX) RITU INVESTMENT (P) LTD. VS. DCIT 345 ITR 21 4 (DEL.); 4 4. THE LEARNED DR ON THE OTHER HAND OPPOSED THE APP EALS AND PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THERE WAS SUFFICIENT REASONS TO FORM BELIEF AS RECORDED BY THE LEARNED A.O. TO INITIATE REOPENING PROCEEDINGS, FOR THE ASSESSMENT OF THE ES CAPED INCOME. 5. CONSIDERING THE ABOVE SUBMISSION, I FIND THAT TH ERE IS SUBSTANCE IN THE CONTENTIONS OF THE LEARNED AR AGAINST THE VALIDITY OF ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER UNDER SEC. 14 7 OF THE ACT. IT IS A MATTER ON RECORD THAT DURING THE ORIGINAL ASSESSMENT FRAME D UNDER SEC. 143(3) OF THE ACT THE ASSESSING OFFICER IN PARA NO.1 AT PAGE NO. 1 HAD SPECIFICALLY RECORDED AS IN RESPONSE TO ABOVE NOTICE, SH. N.K. GUPTA, ADV. OF THE ASSESSEE SOCIETY ATTENDED THE PROCEEDINGS FROM TIME TO TIME AND FILED THE REQUISITE DETAILS AND DOCUMENTS. BOOKS OF ACCOUNT P RODUCED AND TEST- CHECKED ON RANDOM BASIS. THE CASE IS DISCUSSED WITH HIM. IN PARA NO.2 OF THE ASSESSMENT, THE ASSESSING OFFICER HAS RECORDED FURTHER AS IT HAS MAINTAINED BOOKS OF ACCOUNT AND GOT AUDITED FROM A CHARTERED ACCOUNTANT. THE ASSESSEE FILED A COPY OF AUDIT REPORT WHICH IS PLACED ON ITS RECORD. ON PERUSAL OF RECEIPTS, LEDGER ACCOUNT IT IS FOUND THA T THE ASSESSEE HAS ADOPTED PERCENTAGE OF COMPLETION METHOD. THE ASSESSEE WAS A SKED TO FILE DETAILS OF ALL EXPENDITURE WITH JUSTIFICATION VIDE THIS OFFICE NOTICE UNDER SEC. 142(1) DATED 13.1.2009. THE ASSESSEE FURNISHED THE REQUISI TE DETAIL AND JUSTIFICATION VIDE ITS LETTER DATED 10.2.2009, WHICH WAS EXAMINED AND VERIFIED I THUS FIND THAT IT WAS NOT CORRECT TO SAY ON THE PART OF THE ASSESSING OFFICER IN THE REASONS OF BELIEF RECORDED FOR INITIATION OF REOPEN ING PROCEEDINGS, THAT THE ASSESSEE HAD FAILED TO PRODUCE COMPLETE BOOKS OF AC COUNT ALONG WITH BILLS 5 AND VOUCHERS, THEREFORE, PROFIT RATE @ 8% UNDER SEC . 44AD OF THE INCOME- TAX ACT, 1961 IS APPLICABLE IN THE CASE OF THE ASSE SSEE WHO IS DOING CONTRACT BUSINESS. IT IS THUS APPARENTLY A CASE OF CHANGE OF OPINION ON THE BASIS OF WHICH REOPENING PROCEEDINGS UNDER SEC. 147 CANNOT B E INITIATED. AS PER THE WELL ESTABLISHED PROPOSITION OF LAW, THE ASSESSING OFFICER WHILE PROCEEDINGS FOR REASSESSMENT IS DUTY BOUND TO FIRST DISPOSE OF THE OBJECTIONS RAISED BY THE ASSESSEES AGAINST THE VALIDITY OF INITIATION OF REO PENING PROCEEDINGS BY PASSING A SPEAKING ORDER. I THUS CONCUR WITH THE CO NTENTIONS OF THE LEARNED AR THAT THE REOPENING OF PROCEEDINGS INITIATED IN T HE PRESENT CASES IN ABSENCE OF FRESH AND TANGIBLE MATERIAL WAS JUST CHA NGE OF OPINION AND HENCE WITHOUT JURISDICTION AND THUS INVALID. THE ASSESSME NTS FRAMED IN FURTHERANCE THERETO ARE THUS ALSO EQUALLY INVALID AND ARE QUASH ED AS SUCH. GROUND NOS. 1 TO 1.5 ARE THUS ALLOWED. IN VIEW OF THE ABOVE FINDI NGS, OTHER GROUNDS OF APPEAL DO NOT SURVIVE, HENCE DO NOT NEED ADJUDICATI ON. 6. IN RESULT, THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.07.2015 SD/- ( I.C. SU DHIR ) JUDICIAL MEMBER DATED: 31/07/2015 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR 6 DATE DRAFT DICTATED ON COMPUTER 31.07.2015 DRAFT PLACED BEFORE AUTHOR 31.07.2015 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 31.07.201 5 KEPT FOR PRONOUNCEMENT ON 31.07.2015 FILE SENT TO THE BENCH CLERK 31.07.2015 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.