M/s. S.R.Pharma, Bhubaneswar V. Income Tax Officer, Ward-2(3), Bhubaneswar

ITA 415/CTK/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5328 (ITAT-CUTTACK)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-04-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 25-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: P R MOHANTY
• Keywords: Reopening of assessment; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148; 139

Judgement Text

1 ITA NO.415/CTK/2017 ASSESSMENT YEAR : 2008 - 2009 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 415 /CTK/201 7 ASSESSMENT YEAR : 20 08 - 2009 M/S. S.R.PHARMA, PLOT NO.20/A, BJB NAGAR, BHUBANESWAR. VS. ITO, WARD 2(3), BHUBANESWAR PAN/GIR NO. AAQFS 2875 K (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.R.MOHANTY, AR REVENUE BY : SHRI D.K.PRADHAN, DR DATE OF HEARING : 03 / 0 5 / 201 8 DATE OF PRONOUNCEMENT : 8 / 0 5 / 201 8 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - 1, BHUBANESWAR DATED 14.7.2017 FOR THE ASSESSMENT YEAR 2008 - 09. 2. GROUND NO.4 OF APPEAL READS AS UNDER: THE ASSESSING OFFICER ERRED IN INITIATING REASSESSMENT PROCEEDINGS U/S.147 WHEN THE SAME WAS EARLIER REOPENED ONCE U/S.147AND REPEATED REOPENING THE SAME IS ILLEGAL AND BAD IN LAW AND THE ASSESSMENT U/S.147/143(3) SHOULD BE QUASHED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. AT THE OUTSET, LD A.R. OF THE ASSESSEE SUBMITTED THAT NOTICE U/S.148(2) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 6.1.2015. HE 2 ITA NO.415/CTK/2017 ASSESSMENT YEAR : 2008 - 2009 SUBMITTED THAT THE REOPENING OF ASSESSMENT WAS MADE FOR THE FOLLOWING REASONS : IN THIS CASE AS PER P.L. ACCOUNT AS ON 31.3.2008, GROSS RECEIPT BY WAY OF COMMISSION WAS RS.17,87,987/ - AND NET PROFIT WAS RS.1,46,566.97. ON CHECK OF FORM NO.26AS, IT WAS NOTICED THAT GROSS RECEIPT WAS RS.20,57,077/ - AND TDS MADE WAS RS.2,03,100/ - . GROSS RECEIPT CONSISTED OF COMMISSION (194H) OF RS.18,69,077 / - AND INTEREST (194A) OF RS.1,88,000/ - . SINCE THE ASSESSEE HAD CREDITED ONLY RS.17,87,987/ - IN THE PL ACCOUNT INSTEAD OF RS.20,57,077/ - , THE INCOME WAS UNDERSTATED TO THE EXTENT OF RS.2,69,099/ - . I HAVE THEREFORE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX AMOUNTING TO RS.2,69,099/ - HAS ESCAPED ASSESSMENT FOR WHICH PROCEEDING U/S.147 IS REQUIRED TO BE INITIATED BY ISSUE OF A NOTICE U/S.148. 4. HE ARGUED THAT THE ASSESSMENT YEAR INVOLVED IS ASSESSMENT YEAR 2008 - 09 AND NOTICE U/S.148 (2) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 6.1.2015, WHICH IS BEYOND FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR. THE ORIGINAL ASSESSMENT ORDER WAS PASSED U/S.14 3(3) OF THE ACT ON 30.12.2010. THEREFORE, IN VIEW OF FIRST PROVISO TO SECTION 147 OF THE ACT, WHERE AN ASSESSMENT UNDER SUB - SECTION(3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECT ION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON 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 NECESSARY FOR 3 ITA NO.415/CTK/2017 ASSESSMENT YEAR : 2008 - 2009 HIS ASSESSMENT FOR THAT ASSESSMENT YEAR AND HENCE, THE REASSESSMENT IS BAD IN LAW. 5. LD D.R. RELIED ON THE ORDERS OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HO N'BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR INDIA LTD. (2010) 310 ITR 561 (SC), WHEREIN NEWLY SUBSTITUTED PROVISION OF SECTION 147 OF THE ACT WITH EFFECT FROM 01.04.1989 IS INTERPRETED BY OBSERVING, THAT SECTION 147 OF THE ACT, AS SUBSTITUTED W.E.F. 01.04.1989 DOES NOT POSTULATES CONFERMENT OF POWER UPON THE A SSESSING OFFICER TO INITIATE REASSESSMENT PROCEEDING UPON HIS MERE CHANGE OF OP INION. FURTHER, IF 'REASON TO BELIEVE' OF THE A SSESSING OFFICER IS FOUNDED ON AN INFORMATION WHICH MIGHT HAVE BEEN RECEIVED BY THE A SSESSING OFFICER AFTER THE COMPLETION OF ASSESSMENT, IT MAY BE A SOUND FOUNDATION FOR EXERCISING THE POWER UNDER SECTION 147 R.W.S. 148 OF THE ACT. IT CANNOT BE ACCEPTED THAT ONLY BECAUSE IN THE ASSESSMENT ORDER, DETAILED REASONS HAVE NOT BEEN RECORDED, AN ANALYSIS OF THE MATERIALS ON THE RECORD BY ITSELF MAY BE JUSTIFYING T HE A SSESSING OFFICER TO INITIATE A PROCEEDING U/S. 147 OF THE ACT. WHEN A REGULAR ORDER OF ASSESSMENT IS PASSED U/S 143(3) OF THE ACT, THE PRESU MPTION CAN BE RAISED THAT SUCH AN ORDER HAS BEEN PASSED ON APPLICATION OF MIND. 4 ITA NO.415/CTK/2017 ASSESSMENT YEAR : 2008 - 2009 7 . SIMILARLY, HON'BLE SUPREME COURT IN THE CASE OF CIT VS. FORAMER FRANCE (2003) 264 ITR 566 (SC) AFFIRMED THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF FORAMER VS. CIT (2001) 247 ITR 436 (ALL), WHEREIN HON'BLE ALLAHABAD HIGH COURT HELD AS UNDER: THERE BEING NO FAILURE ON THE PART OF ASSESSEE TO MAKE A RETURN OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, PROVISO TO S. 147 WAS APPLICABLE; THE NOTICE BEING ISSUED AFTER 1ST APRIL, 1989, AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSES SMENT YEARS WERE BARRED BY LIMITATION. 8 . IN THE CASE OF HYNOUP FOOD AND OIL INDUSTRIES LTD V. ACIT 307 ITR 115(GUJ.), HONBLE GUJRAT HIGH COURT HELD THAT REOPENING AFTER 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IS NOT VALID. 9 . SIMILARLY, I N RAKESH AGGARWAL V. ASST . CIT [1997] 225 ITR 496, THE DELHI HIGH COURT HELD THAT IN VIEW OF THE PROVISO TO SECTION 147 NOTICE FOR REASSESSMENT UNDER SECTION 147 / 148 SHOULD ONLY BE ISSUED IN ACCORDANCE WITH THE NEW SECTION 147 , AND WHERE THE ORIGINAL ASSESSMENT HAD BEEN MADE UNDER SECTION 143(3) THEN IN VIEW OF THE PROVISO TO SECTION 147 , THE NOTICE UNDER SECTION 148 WOULD BE ILLEGAL IF ISSUED MORE THAN FOUR YEARS AFTER THE END OF THE RELEVANT ASSESSMENT YEAR. 1 0 . IN THE PRESENT CASE, THE DATE OF ISSUE OF THE NOTICE UNDE R SECTION 148 WAS ON 6.1.2015 AND THE ORIGINAL ASSESSMENT U/S.143(3) WAS PASSED ON 30.12.2010, WHICH IS ADMITTEDLY BEYOND THE PERIOD OF FOUR YEARS. WE ALSO FIND THAT I N THE PRESENT CASE, THERE WAS ADMITTEDLY NO FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN OR TO DI SCLOSE FULLY AND TRULY ALL 5 ITA NO.415/CTK/2017 ASSESSMENT YEAR : 2008 - 2009 MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. FROM THE ABOVE FACTS OF THE CASE AND FOLLOWING THE DECISIONS QUOTED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE RE ASSESSMENT ORDER U/S. 147 R.W.S. 14 3(3) OF THE ACT IS BAD IN LAW A HENCE, SAME IS QUASHED AND THE GROUND NO.4 OF APPEAL OF THE ASSESSEE IS ALLOWED. 11. SINCE WE HAVE QUASHED THE RE ASSESSMENT ORDER U/S.147/143(3) OF THE ACT DATED 19.11.2015 , OTHER GROUNDS RAISED BY THE ASSESSEE ON MERITS OF THE ADDITIONS HAVE BECOME INFRUC TUOUS AND HENCE, NOT ADJUDICATED. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 8 / 0 5 /201 8 . S D/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 8 / 0 5 /201 8 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : M/S. S.R.PHARMA, PLOT NO.20/A, BJB NAGAR, BHUBANESWAR. 2. THE RESPONDENT. ITO, WARD 2(3), BHUBANESWAR 3. THE CIT(A) - 1, BHUBANESWAR 4. PR.CIT - 1, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//