Biography Investments Pvt. Ltd., Ahmedabad V. The Income Tax Officer, Ward-1(2), Ahmedabad

ITA 42/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9698 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 06-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G C PIPARA
• Keywords: Reopening of assessment; Unexplained cash credit; Unexplained investment; Principle of natural justice; Question of law; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 68; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO.42/AHD/2015 (ASSESSMENT YEAR : 2006-07) BIOGRAPHY INVESTMENT PVT. LTD., 9 TH FLOOR, B. D. PATEL HOUSE, NARANPURA, AHMEDABAD 380 013. VS. THE ITO, WARD 1(2), AHMEDABAD 380 015. [PAN NO. AABCB 6854 F] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI G. C. PIPARA, A.R. RESPONDENT BY : SHRI UMA SHANKAR PRASAD, SR.D.R. DATE OF HEARING 04/09/2018 DATE OF PRONOUNCEMENT 29/11/2018 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL HAS BEEN PREFERRED BEFORE US BY THE ASSESSEE AGAINST THE ORDER DATED 14.10.2014 PASSED BY THE COMMISSIONER OF INCO ME TAX(APPEALS)-XVI, AHMEDABAD UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 ARISING OUT OF THE ORDER DATED 21.03.2013 PASSED BY THE INCOME TAX OFFICER, WARD - 1(2), AHMEDABAD FOR THE ASSESSMENT YEAR 2006-07 WITH THE FOLLOWING GROUNDS : 1. THE LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING THE VALIDITY OF NOTICE U/S.148 OF THE ACT AND THE PURSUANT REASSESSMENT PR OCEEDINGS WITHOUT PROPER CONSIDERATION AND APPRECIATION OF THE FACTS OF THE CASE VIS-A-VIS LEGAL POSITION. THE SINCE THE NOTICE U/S.148 OF THE ACT PRIMA FACIE APPEARS TO HAVE BEEN ISSUED ON MERE CHANGE OF OPINION AND V ERIFICATION OF DETAILS - 2 - ITA NO.42/AHD/2015 BIOGRAPHY INVESTMENT PVT. LTD. VS. ITO ASST.YEAR 2006-07 ALREADY AVAILABLE ON RECORD AS ADMITTED BY THE AO H IMSELF IN THE REASONS RECORDED, THE IMPUGNED REASSESSMENT ORDER REQUIRES TO BE QUASHED AS VOID- AB-INITIO AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. 32O ITR 561 (SO AND HON'BL E GUJARAT HIGH COURT IN THE CASE OF MIHIR TEXTILES LTD. VS. JT. CI T (2010) TAX LR 417 (GUI.) APART FROM HOST OF OTHER DECISIONS. 2. THE LD. CIT(A) FURTHER ERRED IN RELYING UPON THE DE CISION OF RAJESH JHAVERI STOCK BROKERS PVT. LTD. [291 KR 500] AND USHA INTE RNATIONAL LTD. TO CONCLUDE THAT REASSESSMENT PROCEEDINGS CAN BE VALID LY INITIATED IN CASE WHERE RETURN IS PROCESSED U/S.143(1) OF THE ACT WIT HOUT PROPERLY APPRECIATING THE RATIO LAID DOWN IN THE SAID DECISI ONS. THE APPELLANT STATES THAT IT IS NOT ITS CASE AT ALL THAT AN 'INTIMATION' CANNOT BE SUBJECTED TO SECTION 147 PROCEEDINGS; ALL THAT IS CONTENDED IS T HAT IF THE REVENUE WANTS TO INVOKE SECTION 147 IT SHOULD PLAY BY THE RULES O F THAT SECTION AND THE EXPRESSION 'REASON TO BELIEVE' CANNOT HAVE TWO DIFF ERENT STANDARDS OR SETS OF MEANING AS CATEGORICALLY HELD BY THE HON'BLE APE X COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS. 3. THE APPELLANT STATES THAT THE ID. CIT(A) HAS TH US FAILED TO APPRECIATE THAT THE ASSESSMENTS, BOTH U/S.143(1) OR 143(3) CANNOT B E REOPENED WITHOUT THERE BEING ANY TANGIBLE MATERIAL AVAILABLE OR BROU GHT ON RECORD TO JUSTIFY REOPENING. IN THE INSTANT CASE AS EVIDENT FROM THE REASONS RECORDED, SINCE NO TANGIBLE MATERIAL HAVING BEEN BROUGHT ON RECORD EXCEPT MERE REVIEW OR VERIFICATION OF THE SAME MATERIAL AVAILABLE ON RECO RD, THE REOPENING OF ASSESSMENT IS BAD IN LAW AND THUS REQUIRES TO BE QU ASHED AS VOID-AB-INITIO. 4. THE LD. CIT(A) HAS FURTHER ERRED IN NOT ADJ UDICATING THE GROUND OF APPEAL CONTENDING THAT THE LD. AO HAD ERRED IN NOT PASSING A SPEAKING ORDER AGAINST THE OBJECTIONS RAISED BEFORE HIM BY THE APP ELLANT CHALLENGING THE VALIDITY OF NOTICE U/S.148 OF THE ACT BEFORE PROCEE DING WITH THE REASSESSMENT AS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFT INDIA LTD. VS. ITO 259 ITR 19 (SC) FAILING WHICH THE ASSESSMENT COULD NOT BE SUSTAINED AS HELD BY THE JURISDICTIONAL HIGH COURT I.E. HON'BLE GUJARAT HIGH COURT IN THE CASE OF MGM EXPORTS VS. DY. CIT(2010)323 ITR 331 (GUJ.) 5. THE ID. CIT(A) HAS ERRED IN NOT ADJUDICATI NG AND/OR GIVING FINDINGS ON THE GROUND OF APPEAL CONTENDING THAT THE AO HAD ERRED I N NOT FURNISHING THE COPY OF ENTIRE MATERIAL GATHERED AS A RESULT OF ENQ UIRIES CONDUCTED U/S.133(6) OF THE ACT AND IN NOT GRANTING AN OPPORT UNITY OF CROSS- EXAMINATION OF THE PERSONS/ENTITIES FROM WHOM THE E NQUIRIES WERE GATHERED AND USED FOR DRAWING ADVERSE INFERENCE IN CASE OF T HE APPELLANT. THE - 3 - ITA NO.42/AHD/2015 BIOGRAPHY INVESTMENT PVT. LTD. VS. ITO ASST.YEAR 2006-07 ASSESSMENT ORDER THUS HAVING BEEN PASSED IN GROSS V IOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND EQUITY OUGHT TO H AVE BEEN QUASHED AS INVALID AND VOID-AB-INITIO. 6. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ADDITION OF RS.10,00,000/- MADE BY THE AO U/S.69 OF THE ACT ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN SHARES OF INFOCITY CLUB & RESORTS PVT. LTD. WITHOUT APPRECIATING THE FACT THE AO HAVING CATEGOR ICALLY ACCEPTED THE FACTUM OF INVESTMENT IN THE SAID SHARES. IN VIEW OF ELABORATE FACTS, SUBMISSIONS AND EVIDENCES FILED COUPLED WITH LEGAL POSITION, THE IMPUGNED ADDITION OF RS.10,00,000/- REQUIRES TO BE DELETED. 7. THE LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.10,00,000/- MADE BY THE AO U/S.68 OF THE ACT ON ACCOUNT OF ALLEGED UNEXPLAINED CASH CREDIT BEING SALE PROCEEDS RECEIVED FROM M/S. ANMOL ENTERPRISE AND M/S. AHMEDI TRADERS ON SALE OF SHARES OF INFOCITY CLUB & RESORTS PVT. LTD. ON THE GROUND THAT NO DOCU MENTARY EVIDENCES OR CONFIRMATION OF THE PARTIES WERE FURNISHED. IN VIEW OF FACTS, SUBMISSIONS AND EVIDENCES FILED, MORE PARTICULARLY THE COMPLETE ADDRESS AND PAN OF THE PARTIES CONCERNED, THE IMPUGNED ADDITION OF RS.10,0 0,000/-REQUIRES TO BE DELETED. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, MO DIFY OR DELETE ANY OF THE ABOVE GROUNDS AS WELL AS TO SUBMIT ADDITIONAL GROUNDS AT THE TIME OF HEARING OF THE APPEAL. 3. THE ASSESSEE HEREIN HAS MAINLY CHALLENGED THE OR DER PASSED BY THE LEARNED ASSESSING OFFICER IN NOT DISPOSING OFF BY A SPEAKIN G ORDER AGAINST THE OBJECTION RAISED BEFORE HIM CHALLENGING THE VALIDITY OF THE NOTICE U /S 148 OF THE ACT BEFORE THE REASSESSMENT PROCEEDING HAS BEEN FINALIZED. 4. THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASST YEAR 2006-07 ON 30.12.2006 IT WAS PROCESSED U/S 143(1) OF THE ACT ON 23.08.2007 SUBSE QUENTLY. ON THE BASIS OF INFORMATION FROM ACIT, CIRCLE GANDHINAGAR, THE MATTER WAS CONSI DERED FOR REASSESSMENT FOR THE REASONS RECORDED BY THE LEARNED ASSESSING OFFICER. A NOTICE U/S 148 OF THE ACT THEREUPON WAS ISSUED ON 21.03.2012 AND SERVED UPON THE ASSESS EE ON 29.03.2012 FOLLOWED BY A - 4 - ITA NO.42/AHD/2015 BIOGRAPHY INVESTMENT PVT. LTD. VS. ITO ASST.YEAR 2006-07 FRESH NOTICE DATED 18.05.2012 DUE TO CHANGE OF INCU MBENCY IN THE OFFICE. A NOTICE U/S 142(1) WAS ALSO SERVED ON 12.06.2012 IN RESPONSE WH EREOF REPLY DATED 18.06.2012 WAS MADE BY THE ASSESSEE ASKING FOR PROVIDING IT THE RE ASONS RECORDED BY THE LEARNED ASSESSING OFFICER FOR SUCH REASSESSMENT. THE REASON S RECORDED FOR REOPENING OF THE CASE WAS THEREAFTER PROVIDED TO THE ASSESSEE ON 07.09.20 12 FOLLOWED BY A SHOW-CAUSE NOTICE. THE ASSESSEE VIDE LETTER DATED 28.02.2013 IN ADDITI ON TO THE SUBMISSIONS MADE DENYING THE ALLEGATION MADE AGAINST HIM RAISED OBJECTION TO THE INITIATION OF REASSESSMENT PROCEEDINGS. IT APPEARS FROM THE RECORD, PARTICULAR LY THE ORDER PASSED BY THE AO THAT THE SAID OBJECTION WAS NOT DISPOSED OF BY HIM BEFORE FR AMING THE REASSESSMENT ORDER DATED 21.03.2013 CULMINATING INTO THE ORDER OF ADDITION O F RS.10,00,000/- TREATING THE SAME AS UNACCOUNTED CASH CREDIT U/S 68 OF THE ACT WHICH WAS CLAIMED BY THE ASSESSEE COMPANY TO HAVE BEEN RECEIVED IN THE NAME OF SALE OF SHARES. T HE SAID LEGAL INFIRMITY THOUGH PLACED BEFORE THE FIRST APPELLATE AUTHORITY BY THE ASSESSE E IN APPEAL THE SAME WAS NOT CONSIDERED IN ITS PROPER PROSPECTIVE. IN FACT, THERE IS NO SUC H DELIBERATION MADE BY THE LEARNED CIT(A) ON THIS PARTICULAR ASPECT OF THE MATTER. THE APPEAL, HOWEVER, WAS DISMISSED AGAINST THE ASSESSEE. HENCE, THE INSTANT APPEAL BEF ORE US. 5. AT THE TIME OF HEARING OF THE INSTANT APPEAL THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE JUDGMENT PASSED BY THE CO-ORDINATE BENCH DEALING THE IDENTICAL QUESTION OF LAW IN FAVOUR OF THE ASSESSEE. HOWEVER, THE LEAR NED REPRESENTATIVE OF THE DEPARTMENT RELIES UPON THE ORDER PASSED BY THE AUTHORITIES BEL OW AND FAILED TO REBUT THE ARGUMENT ADVANCED BY THE ASSESSEES REPRESENTATIVE ON THE PO INT OF NON DISPOSAL OF OBJECTION RAISED BY THE ASSESSEE AGAINST SUCH REASSESSMENT. 6. WE HAVE HEARD THE LEARNED COUNSEL APPEARING FOR THE PARTIES, WE HAVE PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. IT REVEALS FROM RECORDS PARTICULARLY THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER THAT THE OB JECTION RAISED BY THE ASSESSEE AGAINST - 5 - ITA NO.42/AHD/2015 BIOGRAPHY INVESTMENT PVT. LTD. VS. ITO ASST.YEAR 2006-07 INITIATION OF REASSESSMENT PROCEEDINGS WAS DISPOSED OFF IN THE ORDER OF ASSESSMENT ITSELF AND NOT BEFORE THE FINALIZATION OF SUCH REASSESSMEN T. FURTHER THAT THOUGH THIS PARTICULAR POINT WAS ARGUED EVEN BY WAY OF WRITTEN SUBMISSION BEFORE THE LEARNED CIT(A), NO DELIBERATION, WHATSOEVER, HAS BEEN MADE BY THE FIRS T APPELLATE AUTHORITY WHILE PASSING THE ORDER IMPUGNED BEFORE US. WE HAVE ALSO PERUSED THE JUDGMENT PASSED BY THE LEARNED CO-ORDINATE BENCH IN DECIDING THE IDENTICAL ISSUE. THE RELEVANT PORTION WHEREOF IS AS FOLLOWS: 3. WE NOTICE AT THE OUTSET THAT THE ASSESSEE'S CAS E BEFORE THE CIT(A) QUA ITS LEGAL GROUND CHALLENGING VALIDITY OF REOPENING WAS THAT THE ASSESSING OFFICER HAD NOT DISPOSED OF ITS OBJECTIONS BEFORE FRAMING THE R E-ASSESSMENT IN QUESTION DATED 21.03.2013 CULMINATING IN THE REMAINING TWO ADDITIO NS OF SECTION 69 & 68 OF THE ACT IN THE NATURE OF UNAPPROVED INVESTMENTS AND CAS H CREDIT RESPECTIVELY TO THE TUNE OF RS. 35 LACS EACH. THE CIT(A)S ORDER UNDER CHALLENGE DOES NOT SPECIFICALLY REBUT THIS FACTUAL POSITION. SAME IS THE POSITION D URING THE COURSE OF INSTANT SECOND APPELLATE PROCEEDINGS BEFORE US. WE NOTICE IN THIS BACKDROP THAT HON'BLE JURISDICTIONAL HIGH COURT'S DECISION IN BANASKANTHA DISTRICT OILSEEDS GROWERS CO- OP. UNION LTD. VS. ACIT (2015) 59 TAXMANN.COM 328 ( GUJ) HOLDS THAT IN CASE AN ASSESSING OFFICER DOES NOT DECIDE A TAX PAYER'S OBJ ECTIONS AGAINST REOPENING REASONS BEFORE FRAMING FINAL RE-ASSESSMENT, THE ISS UE HAS LO HE REMITTED BACK FOR NECESSARY COMPLIANCE AS PER HONBLE APEX COURT'S JU DGMENT IN GKN DRIVESHAFT (INDIA) LTD. ITO 259 ITR 19 (SC). WE THEREFORE DRAW SUPPORT FROM HONBLE JURISDICTIONAL HIGH COURT'S ABOVE STATED JUDGMENT I N REMIT THE INSTANT APPEAL BACK TO THE ASSESSING OFFICER FOR HIS APT ADJUDICATION Q UA THE ASSESSEE'S OBJECTIONS FILED DURING THE COURSE OF RE-ASSESSMENT. THE ASSESSEE'S INSTANT APPEAL IS THEREFORE ACCEPTED FOR STATISTICAL PURPOSES. 3. THIS ASSESSEE'S APPEAL IS ALLOWED FOR STATISTICAL P URPOSES. 7. HAVING HEARD THE LEARNED COUNSEL APPEARING FOR T HE RESPECTIVE PARTIES, HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE A ND PARTICULARLY THE RATIO LAID DOWN BY THE ORDER PASSED BY THE CO-ORDINATE BENCH, WE ARE O F THE CONSIDERED OPINION THAT THE ASSESSEES OBJECTION RELATING TO THE INITIATION OF PROCEEDING SINCE NOT DISPOSED OFF PRIOR TO THE FINAL REASSESSMENT, THE ISSUE IS REQUIRED TO BE REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION OF THE SAME FILED DU RING THE COURSE OF REASSESSMENT. HENCE, - 6 - ITA NO.42/AHD/2015 BIOGRAPHY INVESTMENT PVT. LTD. VS. ITO ASST.YEAR 2006-07 THE ORDER OF REASSESSMENT IS QUASHED AND THE LEARNE D ASSESSING OFFICER IS DIRECTED TO ACT IN TERMS OF THE OBSERVATION MADE HEREINABOVE. THE A SSESSEES APPEAL IS THUS DISPOSED OFF FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 29 / 1 1 /201 8 SD/- SD/- ( AMARJIT SINGH ) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 29/11/2018 PRITI YADAV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-XVI, AHMEDABAD 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION15/11/2018 (DICTATION PAGE 5) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27/11/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 28/11/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER