SHRI. V.S. GADIGACHALAM, NEMILI V. ACIT CIR 1 , VELLORE

ITA 413/CHNY/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6915 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 05-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M SRINIVASA RAO
• Assessee Lawyers: R KUMAR
• Keywords: Reopening of assessment; Set aside
• Section: 143(3); 147; 148; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !', $ '% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.413/CHNY/2018 ' (' / ASSESSMENT YEAR : 2009-10 SHRI V.S. GADIGACHALAM, C/O SHRI T.N. SEETHARAMAN, ADVOCATE, # 384 (OLD NO.196), LLOYDS ROAD, CHENNAI - 600 086. PAN : AGAPG 1654 N V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, VELLORE. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI R. KUMAR, ADVOCATE ,-*+ . / / RESPONDENT BY : DR. M. SRINIVASA RAO, CIT 0 . 1$ / DATE OF HEARING : 05.02.2019 23( . 1$ / DATE OF PRONOUNCEMENT : 01.03.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -13, CHENNAI, DATED 19.09.2017 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS REOPE NING OF ASSESSMENT AFTER EXPIRY OF FOUR YEARS. 2 I.T.A. NO.413/CHNY/18 3. SHRI R. KUMAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 15.09.20 09 AND THE ASSESSMENT ORDER WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') ON 20.12.2011. SUBS EQUENTLY, ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER ISSUED NOTIC E UNDER SECTION 148 OF THE ACT ON 15.03.2016. ACCORDING TO THE LD. COUNSE L, THE NOTICE WAS ISSUED AFTER EXPIRY OF FOUR YEARS PERIOD FROM THE E ND OF THE RELEVANT ASSESSMENT YEAR. REFERRING TO PAGE 9 OF THE PAPER- BOOK, THE LD.COUNSEL SUBMITTED THAT THIS IS THE REASON RECORDED BY THE A SSESSING OFFICER FOR REOPENING THE ASSESSMENT. ACCORDING TO THE LD. COU NSEL, THERE IS NOT EVEN A WHISPER IN THE REASONS RECORDED FOR REOPENIN G OF ASSESSMENT THAT THERE WAS NEGLIGENCE ON THE PART OF THE ASSESSEE IN FURNISHING REQUIRED PARTICULARS TO COMPLETE THE ASSESSMENT. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER AFTER REOPENING THE ASSESSMEN T ON THE BASIS OF THE MATERIAL ALREADY AVAILABLE ON RECORD, FOUND THAT TH E ASSESSEE HAS UNDERVALUED THE CLOSING STOCK. THEREFORE, ACCORDIN G TO THE LD. COUNSEL, IN VIEW OF PROVISO TO SECTION 147 OF THE ACT, THE A SSESSING OFFICER CANNOT REOPEN THE ASSESSMENT AFTER EXPIRY OF FOUR YEARS. 4. WE HEARD DR. M. SRINIVASA RAO, THE LD. DEPARTMEN TAL REPRESENTATIVE ALSO. ACCORDING TO THE LD. D.R., SE CTION 149 OF THE ACT PROVIDES FOR REOPENING EVEN AFTER EXPIRY OF FOUR YE ARS. THE LD. D.R. VERY 3 I.T.A. NO.413/CHNY/18 FAIRLY SUBMITTED THAT THE ASSESSING OFFICER COMPLET ED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT. ON A QUERY FROM T HE BENCH HOW THE ASSESSING OFFICER CAME TO KNOW THAT THERE IS UNDERV ALUATION OF CLOSING STOCK? THE LD. D.R. VERY FAIRLY SUBMITTED THAT ONL Y ON THE BASIS OF MATERIAL AVAILABLE ON RECORD, THE ASSESSING OFFICER CAME TO KNOW THAT THERE IS UNDERVALUATION OF CLOSING STOCK. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 14 7 OF THE ACT WHICH READS AS FOLLOWS:- INCOME ESCAPING ASSESSMENT. 147. .. .. .. .. .. .. .. .. . .. .. .. .. .. .. .. .. . PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE REL EVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVAN T ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE O N THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS N ECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRS T PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING 4 I.T.A. NO.413/CHNY/18 FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE I NDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YE AR : PROVIDED FURTHER THAT THE ASSESSING OFFICER MAY ASS ESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVI NG MATTERS WHICH ARE THE SUBJECT-MATTERS OF ANY APPEAL, REFERE NCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMEN T. 6. PROVISO TO SECTION 147 OF THE ACT CLEARLY SAYS T HAT WHEN THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT, THE COMPLETED ASSESSMENT CANNOT BE REOPENED UNLESS THER E WAS A NEGLIGENCE ON THE PART OF THE ASSESSEE IN FURNISHIN G FULL PARTICULARS REQUIRED FOR COMPLETING ASSESSMENT. IN THIS CASE, IT IS NOT THE CASE OF THE REVENUE THAT THERE IS A NEGLIGENCE ON THE PART OF T HE ASSESSEE IN FURNISHING FULL PARTICULARS. ADMITTEDLY, THE ASSES SING OFFICER AFTER REOPENING THE ASSESSMENT ON THE BASIS OF THE MATERI AL AVAILABLE ON RECORD, FOUND THAT THERE WAS UNDERVALUATION OF CLOS ING STOCK. THEREFORE, IT IS OBVIOUS THAT THE ASSESSEE HAS FURNISHED ALL T HE PARTICULARS REQUIRED FOR COMPLETING THE ASSESSMENT. HENCE, THERE IS NO NEGLIGENCE ON THE PART OF THE ASSESSEE IN FURNISHING THE PARTICULARS WHICH IS REQUIRED FOR COMPLETING THE ASSESSMENT. IN THOSE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN VIEW OF THE PROVISO TO SECTION 147, THE ASSESSMENT CANNOT BE REOPENED AFTER EXPIRY OF FOUR YEARS. 7. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THERE WAS NO ALLEGATION THAT THE ASSESSEE HAS NOT FILED THE PART ICULARS REQUIRED FOR 5 I.T.A. NO.413/CHNY/18 COMPLETING THE ASSESSMENT, THE PROVISIONS OF SECTIO N 149 OF THE ACT MAY NOT COME TO THE RESCUE OF REVENUE. THEREFORE, WE A RE UNABLE TO UPHOLD THE ORDER OF THE CIT(APPEALS). ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE CONSEQUENTIAL ORDER PAS SED BY THE ASSESSING OFFICER AFTER REOPENING OF ASSESSMENT CAN NOT STAND IN THE EYE OF LAW AND IT STANDS QUASHED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 1 ST MARCH, 2019 AT CHENNAI. SD/- SD/- (. !') ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 1 ST MARCH, 2019. KRI. . ,167 87(1 /COPY TO: 1. *+/ APPELLANT 2. ,-*+/ RESPONDENT 3. 0 91 () /CIT(A)-13, CHENNAI-34 4. PRINCIPAL CIT- 8, CHENNAI-34 5. 7: ,1 /DR 6. ' ; /GF.