The ACIT, Indore V. Smt. Geeta Sanghi, Indore

ITA 416/IND/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2862 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2000-2001
• Appeal Filed On: 07-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: M C MEHTA; HITESH CHIMNANI CAS
• Keywords: Reopening of assessment; Reassessment proceedings
• Section: 143(3); 14A; 147

Judgement Text

PAGE 1 OF 4 -. I.T.A.NO. 416/IND/2009 SMT. GEETA SANGHI, INDORE. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : AMJPS-9008D I.T.A.NO. 416/IND/2009 A.Y. : 2000-01 ACIT, SMT.GEETA SANGHI, 3(1), VS 25, PALASIA MAIN ROAD, INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : SMT.APARNA KARAN, SR. DR RESPONDENT BY : S/SHRI M. C. MEHTA AND SHRI HITESH CHIMNANI, CAS DATE OF HEARING : 17/05/2010 O R D E R PER V.K. GUPTA, A.M. THIS APPEAL FILED BY THE REVENUE ARISES OUT OF ORDE R OF THE LD. CIT(A)-I, INDORE, DATED 14.05.2009, FOR THE ASSESSM ENT YEAR 2000 01. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. THE GROUND RAISED BY THE REVENUE READS AS UNDER :- THE LD. CIT(A) ERRED ON THE FACTS AND IN LAW IN QU ASHING THE ASSESSMENT U/S 147 MERELY ON THE GROUND THAT THESE PAGE 2 OF 4 -. I.T.A.NO. 416/IND/2009 SMT. GEETA SANGHI, INDORE. PROCEEDING CANNOT BE INITIATED PRIOR TO ASSESSMENT YEAR 2001-02 IN VIEW OF THE PROVISO TO SECTION 14A, FOR THE PURPOSE OF DISALLOWING EXPENDITURE INCURRED FOR EAR NING EXEMPTED INCOME, WITHOUT APPRECIATING THAT THE PROC EEDINGS U/S 147 HAD BEEN ALSO INITIATED ON THE ISSUE OF PAY MENT OF INTEREST BY THE ASSESSEE AND THE INTEREST CHARGED B Y HER. 4. THE FACTS, IN BRIEF, ARE THAT THE AO ON THE BASIS O F ASSESSMENT PROCEEDINGS IN ASSESSMENT YEAR 2004-05 REOPENED THE ASSESSMENT OF THE IMPUGNED ASSESSMENT YEAR FOR THE REASON THAT INSPIT E OF DIVERSION OF INTEREST BEARING FUNDS FOR NON-BUSINESS PURPOSES, T HE ASSESSEE HAD BEEN ALLOWED INTEREST EXPENDITURE, WHICH WAS NOT ALLOWAB LE, HENCE, THE CASE OF ESCAPEMENT OF INCOME. HOWEVER, IN THE COURSE OF RE- ASSESSMENT PROCEEDINGS, THE AO INVOKED THE PROVISIONS OF SECTI ON 14A AS THE SAID FUNDS HAD BEEN INVESTED IN QUOTED/UNQUOTED SHARES, MUTUAL FUND AND PARTNERSHIP FIRM AND NO INTEREST HAD BEEN ALLOCATED TO SUCH ACTIVITY. THE ASSESSEE CHALLENGED THIS ACTION OF THE AO BEFORE TH E LD. CIT(A), WHEREIN THE ASSESSEE REFERRED TO THE PROVISO TO SECTION 14A AND CONTENDED THAT THOUGH THE PROVISIONS OF SECTION 14A HAD BEEN MADE EFFECTIVE RETROSPECTIVELY FROM 1.4.1962. HOWEVER, ANY ASSESSM ENT FOR ASSESSMENT YEAR BEGINNING ON OR BEFORE FROM THE FIRST DAY OF A PRIL AS IT COULD NOT BE REOPENED U/S 147 OR U/S 154, AS PER THIS PROVISO, T HE LD. CIT(A) TOOK IN PAGE 3 OF 4 -. I.T.A.NO. 416/IND/2009 SMT. GEETA SANGHI, INDORE. NOTE OF THIS PROVISION AND THE CIRCULAR NO.11/2001 DATED 23.7.2001, QUASHED THE REASSESSMENT PROCEEDINGS AS THE YEAR UN DER CONSIDERATION WAS 2000-01. THE REVENUE, BEING AGGRIEVED, IS IN AP PEAL BEFORE US. 5. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE SUPP ORTED THE ORDER OF THE AO BY STATING THAT THE REOPENING HAD B EEN DONE ON VARIOUS ISSUES. HENCE, THE DECISION OF THE LD. CIT(A) IN QU ASHING THE PROCEEDINGS ON THE BASIS OF SUCH PROVISO WAS NOT CORRECT. 6. THE LEARNED COUNSEL, ON THE OTHER HAND, CONTENDED T HAT IT WAS A CASE OF REOPENING OF AN ASSESSMENT BEYOND FOUR YEAR S OF AN ASSESSMENT ORIGINALLY MADE U/S 143(3) AND THERE BEING NO DEFAU LT ON THE PART OF THE ASSESSEE, HENCE, SUCH REOPENING WAS INVALID ON THIS PRELIMINARY GROUND ONLY. THE LEARNED COUNSEL FURTHER SUBMITTED THAT T HOUGH REOPENING WAS DONE ON MORE THAN ONE ISSUE, BUT NO ADDITION WAS MA DE ON THIS ASPECTS AND THE ONLY ADDITION MADE BY THE ASSESSING OFFICER WAS ON ACCOUNT OF INVOCATION OF PROVISIONS OF SECTION 14A. HENCE, THE LD. CIT(A) RIGHTLY QUASHED THE ORDER PASSED BY THE ASSESSING OFFICER. 7. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 8. IT IS NOTED THAT THE IMPUGNED ASSESSMENT YEAR IS 20 00-01. HENCE, THE PROVISO TO SEC14A IS SQUARELY APPLICABLE , WHICH PROHIBITS THE REOPENING OF ASSESSMENT IN RESPECT OF ASSESSMENT YE ARS PRIOR TO PAGE 4 OF 4 -. I.T.A.NO. 416/IND/2009 SMT. GEETA SANGHI, INDORE. ASSESSMENT YEAR 2001-02. WE ARE FURTHER OF THE VIEW THAT WHAT CANNOT BE DONE DIRECTLY CANNOT BE DONE INDIRECTLY AND THE AO S ACTION IS OF THE SAME CATEGORY. HENCE, SUCH ACTION OF THE AO IS CLEA RLY BARRED BY SUCH PROVISO. ACCORDINGLY, WE CONFIRM THE FINDINGS OF TH E LD. CIT(A). 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 25 TH MAY, 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25 TH MAY, 2010. CPU* 17245