Abhishek Agarwal, Jamshedpur V. DCIT, Jamshedpur

ITA 4/RAN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0008 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 03-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHURY ORAM
• Assessee Lawyers: S K PODAR DEVESH PODAR
• Keywords: Reopening of assessment; Reason to believe
• Section: 147; 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI SMC BENCH, RANCHI BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO. 04 /RAN/2016 ASSESSMENT YEAR : 2008 - 09 ABHISHEK AGARWAL, 55, MAHTO PARA ROAD, JUGSALAI, JAMSHEDPUR VS. DCIT, CIRCLE - 3, JAMSHEDPUR PAN/GIR NO. ACWPA 1722 B (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : S/ SHRI S.K.PODAR /DEVESH PODAR , AR REVENUE BY : SHRI CHAUDHURY ORAM , DR DATE OF HEARING : 8 /12/ 2016 DATE OF PRONOUNCEMENT : 8 /12/ 2016 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF CIT(A) - JAMSHEDPUR , DATED 28.10.2015 , FOR THE ASSESSMENT YEAR 2008 - 09 . 2 IN GROUND NOS.1,2 & 3 OF THE APPEAL, THE ASSESSEE HAS CHALLENGED THE REOPENING OF ASSESSMENT U/S.147 OF THE ACT ON THE GROUND THAT NO ADDITION WAS MADE O N THE BASIS OF RECORDED REASONS BY THE ASSESSING OFFICER. 3. I HAVE HEARD THE RIVAL SUBMISSIONS , PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE 2 ITA NO. 04/RAN/2016 ASSESSMENT YEAR :2008 - 09 ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR ASSESSMENT YEAR UNDER APPEAL ON 31.3.2009 AT AN INCOME OF RS.6,06,230/ - . THEREAFTER NOTICE U/S.148 OF THE ACT WAS ISSUED ON 28.3.2012 ON THE GROUND THAT DURING SURVEY OPERATI ON CONDUCTED ON 6.8.2009 IN THE BUSINESS PREMISES OF THE ASSESSEE , CERTAIN DOCUMENTS WERE IMPOUNDED. DOCUMENTS PR - 2 PAGE NO.5 SHOWS THAT THE AMOUNT OF RS.26,50,000/ - HAS BEEN PAID TO SHRI ABHISHEK AGAR WAL ON 18.4.2007. THE SAME WAS WITHDRAWN FROM UTI BAN K ACCOUNT NO.012010200015808 OF M/S. S.P.ENTERPRISES AND THE ASSESSEE COULD NOT EXPLAIN THE SAME. AS PER DOCUMENT PR - 5 AND ANSWER TO Q. NO.14, OF SHRI RAM AWTAR AGARWAL, AN AMOUNT OF RS.2.5 LAKH WAS WITHDRAWN FROM M/S. S.P.ENTERPRISES AND DEPOSITED INTO A CCOUNT OF MR. PRAKASH SHARDA AND THEN SAME WAS GIVEN TO ABHISHEK AGARWAL, WHICH REQUIRES VERIFICATION. THEREFORE, HE HAD REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT . 4. AFTER RECORDING THE SAID REASONS, THE ASSESSING OFFICER ISSUED NOTICE U/S. 148 O F THE ACT ON 28.3.2012. W HILE MAKING THE REASSESSMENT ORDER U/S.147 ON 2 6 .3.2013, NO ADDITION IN RESPEC T OF DOCUMENT PR - 2 AND PR - 5 FOUND DURING THE COURSE OF SURVEY ON 6.8.2009 IN THE BUSINESS PREMISES OF THE ASSESSEE WAS MADE BY HIM. THE ONLY ADDITION MADE BY THE ASSESSING OFFICER WAS THE CASH DEPOSIT OF RS.22,85,000/ - IN UNION BANK A /C NO.301101010555748 OF THE PROPRIETARY BUSINESS CONCERNS OF THE ASSESSEE I.E. MAA DURGA STEEL COMPANY. 3 ITA NO. 04/RAN/2016 ASSESSMENT YEAR :2008 - 09 5. THE ASSESSEE HAS CHALLE NGED THE REOPENING OF ASSESSMENT AND SUBMITTED THAT WHEN ON GROUND ON WHICH THE REOPENING OF ASSESSMENT WAS BASED, NO ADDITIONS WERE MADE BY THE ASSESSING OFFICER IN THE ORDER OF REASSESSMENT; HE CANNOT MAKE ADDITION ON SOME OTHER GROUNDS WHICH DID NOT FOR M PART OF THE REASONS RECORDED BY HIM. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS MOHD JUNED DADANI (2013) 355 ITR 172 (GUJ) AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD., (2011) 331 ITR 236 (BOM). 6 . ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 7 . I FIND THAT IN THE INSTANT CASE, NOTICE U/S.148 OF THE ACT WAS ISSUED BY THE ASSESSING OFFICER FOR THE REASONS WHICH READ AS UNDER: SHR I ABHISEK AGARWAL IS THE PARTNER OF M/S. S.P. ENTERPRISES & M/S. CONNECTIONS. AS PER IMPOUNDED DOCUMENTS PR - 2, PAGE NO.5 SHOWS THAT THE AMOUNT OF RS.26,50,000/ - HAS BEEN PAID TO SHRI ABHISHEK AGARWAL ON 18.4.2007. THE SAME WAS WITHDRAWN FROM UTI BANK ACCO UNT NO.012010200015808 OF M/S. S.P. ENTERPR ISES. SINCE THE ASSESSEE DID N O T EXPLAIN THIS DURING THE COURSE OF SURVEY, THE SAME NEEDS TO BE VERIFIED. AS PER IMPOU NDED DOCUMENT PR - 5 AND ANSWER TO Q .NO.14 OF SHRI RA, AWATAR AGARWAL, AN AMOUNT OF RS.2.5 LAKH WAS WITHDRAWN FROM M/S. S.P.ENTERPRISES AND DEPOSITED INTO ACCOUNT OF MR PRAKASH SHARDA. THE SAME WAS THEN GIVEN TO ABHISEKH AGARWAL. THIS NEEDS VERIFICATION WHETHER THE SAME WILL BE TREATED AS INCOME OF SHRI ABHISHEK AGARWAL OR BOGUS EXPENSES OF M/S. S. P. ENTERPRISES. ALSO THERE ARE OTHER INCRIMINATING DOCUMENTS IMPOUNDED DURING THE COURSE OF SURVEY IN THE BUSI NESS CONCERN OF SHRI ABHISHEK AG ARWAL. 4 ITA NO. 04/RAN/2016 ASSESSMENT YEAR :2008 - 09 THEREFORE, THE UNDERSIGNED IS OF THE OPINION THAT THE INCOME HAS ESCAPED ASSESSMENT . ISSUED NOTICE UNDER SECTION 148 OF THE I.T.ACT. 8 . I FIND FROM THE REASSESSMENT ORDER DATED 26 .3.2013, FRAMED BY THE ASSESSING OFFICER THAT NO ADDITION WAS MADE BY HIM ON THE GROUND OF THE ABOVE REASONS RECORDED BUT THE ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE GROUN D THAT AN AMOUNT OF RS.22,85,000/ - WAS DEPOSITED IN THE PROPRIETARY CONCERN OF THE ASSESSEE M/S. MAA DURGA STEEL COMPANY. THEREFORE, THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF MOHD JUNED DADANI & THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS (I) LTD., (SUPRA), CLEARLY APPLY TO THE FACTS OF THE ASSESSEES CASE. I FIND THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS (I) LTD (SUPRA) HELD AS UNDER: EXPLANATION 3 TO SECTION 147 OF THE INCOME - TAX ACT, 1961, WAS INSERTED BY THE FINANCE (NO. 2) ACT OF 2009, WITH EFFECT FROM APRIL 1, 1989. THE EFFECT OF THE EXPLANATION IS THAT EVEN THOUGH THE NOTICE THAT HAS BEEN ISSUED UNDER SECTION 148 CONTAINING THE REASONS FOR REOPENING THE ASSESSMENT DOES NOT CONTAIN A REFERENCE TO A PARTICULAR ISSUE WITH REFERENCE TO WHICH INCOME HAS ESCAPED ASSESSMENT, THE ASSESSING OFFICER MAY AS SESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE WHICH HAS ESCAPED ASSESSMENT, WHEN SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS. PARLIAMENT HAVING USED THE WORDS ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT, THE WORDS AND ALSO CANNOT BE READ AS BEING IN THE ALTERNATIVE. ON THE CONTRARY, THE CORRECT INTERPRETATION WOULD BE TO REGARD THOSE WORDS AS BEING CONJUNCTIVE AND CUMULATIVE. IT IS OF SOME SIGNIFICANCE THA T PARLIAMENT HAS NOT USED THE WORD OR. THE LEGISLATURE DID NOT REST CONTENT BY MERELY USING THE WORD AND. THE WORDS AND AS WELL AS ALSO HAVE BEEN USED TOGETHER AND IN CONJUNCTION. EVIDENTLY, WHAT PARLIAMENT INTENDS BY USE OF THE WORDS AND ALSO IS THAT THE ASSESSING OFFICER, UPON THE FORMATION OF A REASON TO BELIEVE UNDER SECTION 147 AND THE ISSUANCE OF A NOTICE UNDER SECTION 148(2) MUST ASSESS OR REASSESS : (I)SUCH INCOME ; AND ALSO (II) ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSM ENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. 5 ITA NO. 04/RAN/2016 ASSESSMENT YEAR :2008 - 09 EXPLANATION 3 DOES NOT AND CANNOT OVERRIDE THE NECESSITY OF FULFILLING THE CONDITIONS SET OUT IN THE SUBSTANTIVE PART OF SECTION 147. AN EXPLANATION TO A STA TUTORY PROVISION IS INTENDED TO EXPLAIN ITS CONTENTS AND CANNOT BE CONSTRUED TO OVERRIDE IT OR RENDER THE SUBSTANCE AND CORE NUGATORY. SECTION 147 HAS THIS EFFECT THAT THE ASSESSING OFFICER HAS TO ASSESS OR REASSESS THE INCOME (SUCH INCOME) WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS. HOWEVER, IF AFTER ISSUING A N OTICE UNDER SECTION 148 , HE ACCEPTS THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REASON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM INDEPENDENTLY TO A SSESS SOME OTHER INCOME. IF HE INTENDS TO DO SO, A NOTICE UNDER SECTION 148 WOULD BE NECESSARY IN THE EVENT OF CHALLENGE BY THE ASSESSEE. THE EFFECT OF SECTION 147 AS IT NOW STANDS AFTER THE AMENDMENT OF 2009 CAN THEREFORE, BE SUMMARISED AS FOLLOWS : (I) T HE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR ; (II) UPON THE FORMATION OF THAT BELIEF AND BEFORE HE PROCEEDS TO MAKE AN ASSESSMENT, REASSESSMENT OR RECOMPUTATION, THE ASSE SSING OFFICER HAS TO SERVE ON THE ASSESSEE A NOTICE UNDER SUB - SECTION (1) OF SECTION 148 ; (III) THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, WHICH HE HAS REASON TO BELIEVE, HAS ESCAPED ASSESSMENT AND ALSO ANY OTHER INCOME, CHARGEABLE TO TAX W HICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION ; AND (IV) THOUGH THE NOTICE UNDER SECTION 148(2) DOES NOT INCLUDE A PARTICULAR ISSUE WITH RESPECT TO WHICH INCOME HAS ESCAPED ASSESSM ENT, HE MAY NONE THE LESS, ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. 9 . RESPECTFULLY FOLLOWING THE DECISION IN THE CASE OF JET AIRWAYS (I) LTD (SUPRA), I HOLD THAT FOR ASSUMING JURISDICTION TO FRAME AN ASSESSMENT U/S.147OF THE ACT, WHAT IS ESSENTIAL IS A VALID REOPENING OF A PREVIOUSLY CLOSED ASSESSMENT. IF THE VERY FOUNDATION OF THE REOPENING IS KNOCKED OUT, ANY FURTHER PROCEEDINGS IN RESPECT TO SUCH ASSESSMENT NATURALLY WOULD NOT SURVIVE. EXPLANATION 3 TO SECTION 147 DOES NOT IN ANY MANNER, EVEN PURPORT TO EXPAND THE POWERS OF THE ASSESSING OFFICER U/S.147 OF THE 6 ITA NO. 04/RAN/2016 ASSESSMENT YEAR :2008 - 09 ACT. HENCE, I CANCEL THE REASSESSMENT ORDER DATED 26 .3.2 012 PASSED U/S.147 OF THE ACT. 10 . AS I HAVE CANCELLED THE REASSESSMENT ORDER DATED 26 .3.2013, THE OTHER GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ON MERITS HAVE BECOME ONLY ACADEMIC IN NATURE AND HENCE, INFRUCTUOUS AND DISMISSED. 11 . IN THE RESULT, THE A PPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRO NOUNCED IN THE OPEN COURT ON 8 /12/2016 IN THE PRESENCE OF PARTIES. SD/ - (N.S SAINI) A CCOUNTANT MEMBER RANCHI ; DATED 8 /12 /2016 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PS, ITAT, CAMP AT RANCHI 1. THE APPELLANT : ABHISHEK AGARWAL, 55, MAHTO PARA ROAD, JUGSALAI, JAMSHEDPUR 2. THE RESPONDENT: DCIT, CIRCLE - 3, JAMSHEDPUR 3. THE CIT(A) JAMSHEDPUR 4. CIT , JAMSHEDPUR 5. DR, ITAT, RANCHI 6. GUARD FILE. //TRUE COPY//