Vishal Gupta, V. ITO, Ward-2,

ITA 4238/DEL/2005

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2097 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 16-11-2009
• Assessment Year: 1997-1998
• Appeal Filed On: 02-11-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Assessee Lawyers: MANU GIRI ADVS; SSH ANOOP SHARMA
• Keywords: Reopening of assessment; Depreciation; Additional evidence; Difference of opinion; Reason to believe; Change of opinion; Set aside
• Section: 143(3); 143(2); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL I.T.A. NO. 4236 TO 4238/DEL/200- ASSESSMENT YEAR: 1995-96 TO 1997-98 SHRI VISHAL GUPTA, VS. INCOME-TAX OFFICER, 821/13, URBAN ESTATE, WARD-2, KARNAL KARNAL (APPELLANT) (RESPONDENT) APPELLANT BY: S/SH. ANOOP SHARMA & MANU GI RI, ADVS. RESPONDENT BY: MS. ANUSHA KHURANA, D R ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE APPEALS IN ASSESSMENT YEARS 1995-96 AND 1996-97 ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST THE SEPARATE O RDERS OF EVEN DATE I.E. 18.8.2005 PASSED BY THE LEARNED CIT(APPEALS). WHERE AS IN ASSESSMENT YEAR 1997-98 THE APPEAL IS DIRECTED AT THE INSTANCE OF A SSESSEE AGAINST THE ORDER OF LEARNED CIT(APPEALS) DATED 9.8.2005. SINCE THE COMM ON ISSUES ARE INVOLVED IN ALL THE APPEALS, THEREFORE, WE HEARD THEM TOGETH ER AND DEEM IT APPROPRIATE TO DISPOSE OF THEM BY THIS COMMON ORDER. 2. THE ASSESSEE IN ALL THE APPEALS IS CHALLENGING T HE REOPENING OF ASSESSMENT BY ISSUANCE OF NOTICES UNDER SEC. 148 OF THE INCOME-TAX ACT, 1961. THE FACTS IN ASSESSMENT YEARS 1995-96 AND 199 6-97 ARE COMMON, 2 THEREFORE, FIRST WE TAKE THESE TWO APPEALS ON THIS ISSUE. THE BRIEF FACTS OF THE CASE AS NOTICED BY THE LEARNED CIT(APPEALS) READ AS UNDER: THE ADIT(INV.) AMBALA HAD CONDUCTED SURVEY U/S.133 A ON 17.10.1996 ON THE BUSINESS PREMISES OF M/S. HINDUST AN AGRO TECH, HSIDC, 106, SECTOR-3, KARNAL. DURING THE COURSE OF SURVEY BOOKS OF ACCOUNT PERTAINING TO M/S. GUPTA & GUPTA AGRO TECH PROP. SH. VISHAL GUPTA WERE ALSO FOUND THERE. THE ADIT IMPOUNDED THE SAID BOOKS OF ACCOUNT AND PASSED ON TO THE ITO, WARD-2, KARNAL FO R TAKING NECESSARY ACTION TO ASSESSEE THE INCOME OF THE ASSE SSEE FOR THE SAID ASST. THE THEN ITO, WARD-2, KARNAL ON THE BASIS OF SURVEY REPORT AND STATEMENT OF SH. VISHAL GUPTA RECORDED BY ADIT(INV. ), AMBALA ON 19.11.1996 AND 26.11.1996 AND 26.11.1996 ISSUED NOT ICE U/S. 148 AND DULY SERVED UPON THE ASSESSEE ON 21.01.1997 ON THE ADDRESS GUPTA & GUTPA AGRO TECH THROUGH SH. VISHAL GUTPA, HSIDC 106 , SECTOR-3, KARNAL. IN RESPONSE TO THE NOTICE, SHRI VISHAL GUPT A HAD FILED HIS RETURN OF INCOME ON 30.06.1997 DECLARING AN INCOME OF RS.42500/- ON 30.06.1997 IN THE OFFICE OF DCIT, SPECIAL RANGE, KA RNAL, SH. V.K. BATRA THEN JCIT, SPECIAL RAGNE, KARNAL HAD COMPLETE D THE ASSESSMENT U/S. 144 OF INCOME-TAX ACT, 1961 ON 29.01.1999. NOT SATISFIED WITH THE ORDER OF A.O. THEREAFTER THE ASSESSEE FILED 2 ND APPEAL BEFORE THE WORTHY ITAT, NEW DELHI. THE HONBLE ITAT (BENCH C ) NEW DELHI VIDE THEIR ORDER IN APPEAL ITA NO.3252 TO 3260/DEL/ 2000 CANCELLED THE ASSESSMENT ON THE GROUND THAT STATUTORY NOTICE U/S.143(2) WHICH IS REQUIRED TO BE SERVED WITHIN 12 MONTHS IN WHICH RET URN WAS FILED WAS 3 NOT COMPLIED WITH HENCE THE PROCEEDINGS COMPLETED B Y THE A.O. CANNOT BE HELD AS VALID. 3. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE IMPUG NING THE ORDERS OF THE LEARNED CIT(APPEALS) CONTENDED THAT THEREAFTER THE DEPARTMENT HAS FILED MISCELLANEOUS APPLICATION NO.261/DEL/03 FOR RECALL OF THE ITATS ORDER DATED 23.10.2001. THIS MISCELLANEOUS APPLICATION HAS ALSO BEEN DISMISSED ON IST OF OCTOBER, 2004. HE FURTHER CONTENDED THAT THE ASSESS ING OFFICER IN THE MEANWHILE HAD ISSUED A NOTICE UNDER SEC. 148 UPON T HE ASSESSEE ON 23.2.2002. IN RESPONSE TO THIS NOTICE, ASSESSEE HAS FILED RETURN OF INCOME ON 20.5.2002. THE ASSESSING OFFICER HAS FRAMED THE ASS ESSMENT UNDER SEC. 143(3) READ WITH SEC. 147 ON 20.3.2003 IN ASSESSMEN T YEAR 1995-96 AND ON 16.3.2003 IN ASSESSMENT YEAR 1996-97. THE LEARNED C OUNSEL FOR THE ASSESSEE WHILE TAKING US THROUGH THE REASONS RECORDED FOR IS SUANCE OF SECOND NOTICE CONTENDED THAT THERE WAS NO FRESH MATERIAL WITH THE ASSESSING OFFICER. HE HAS SIMPLY REAPPRECIATED THE MATERIAL AVAILABLE WIT H HIM WHICH WAS SUPPLIED TO HIM BY THE ADIT, AMBALA WHO COLLECTED THE SAME D URING THE COURSE OF SURVEY. THIS MATERIAL WAS CONSIDERED BY THE ASSESSI NG OFFICER WHILE ISSUING FIRST NOTICE UNDER SEC.148 ON 21.1.1997 IN ASSESSME NT YEAR 1995-96. THERE IS NO FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULL Y AND TRULY ALL MATERIAL FACTS. 4 ASSESSING OFFICER HAS ISSUED THE SECOND NOTICE ONLY ON THE BASIS OF CHANGE OF OPINION. REFERRING TO THE REASONS RECORDED BY TH E ASSESSING OFFICER IN ASSESSMENT YEAR 1995-96, HE SUBMITTED THAT ASSESSIN G OFFICER HAS OBSERVED THAT HE HAS GONE THROUGH THE LEDGER OF ASSESSEE AND FOUND THAT DEBIT BALANCE OF RS.37,46,603 AS ON 31.3.1996 WHICH SUGGESTS THE SALES MADE BY THE ASSESSEE FROM OUTSIDE THE BOOKS OF ACCOUNT. THIS LE DGER WAS AVAILABLE WITH THE ASSESSING OFFICER WHEN HE ORIGINALLY ISSUED THE NOTICE. SIMILARLY, THE SECOND REASON HAS ALSO BEEN TAKEN OUT FROM THE INFO RMATION AVAILABLE WITH THE ASSESSING OFFICER IN THE RE-ASSESSMENT PROCEEDI NGS. HE SUBMITTED THAT THE PROCEEDINGS AS A RESULT OF NOTICE ISSUED UNDER SEC. 148 ON 21.1.1997 HAD BEEN REACHED TO A LOGICAL CONCLUSION. THE ASSESSING OFFICER CANNOT RE- AGITATE THOSE VERY ISSUES UNDER THE GARB OF RE-ASSE SSMENT PROCEEDINGS ON THE GROUND THAT INCOME HAS ESCAPED ASSESSMENT. 4. LEARNED DR ON THE OTHER HAND RELIED UPON THE ORD ER OF THE LEARNED CIT(APPEALS). SHE CONTENDED THAT IN THE ORIGINAL PR OCEEDINGS, THE ASSESSMENT WAS CANCELLED BECAUSE ASSESSING OFFICER FAILED TO GIVE NOTICE UNDER SEC. 143(2) IN THE 12 MONTHS FROM THE DATE OF THE MONTH IN WHICH RETURN HAS BEEN FILED BY THE ASSESSEE. THERE IS NO ADJUDICATION OF THE ISSUES ON MERIT. 5 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. SECTION 147 OF THE ACT PROVIDES THAT IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROV ISIONS OF SEC. 148 TO 153 OF THE ACT, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE ASSESSMENT PROCEEDING UNDER THIS SECTION OR RECOMPUTED THE LOSS OR THE DEPRECIATION ETC. AS THE CASE MAY BE FOR THE YEAR CONCERNED. THUS, THE ASSESSING OFFICER SHO ULD HAVE SOME INFORMATION WHICH ENABLE HIM TO BELIEVE THAT ANY IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN THE PRESENT CASE, WHATEV ER INFORMATION WAS AVAILABLE WITH THE ASSESSING OFFICER WAS CONSIDERED BY HIM BEFORE ISSUING NOTICE UNDER SEC. 148 ON 21.1.1997 IN BOTH THESE AS SESSMENT YEARS. THESE ASSESSMENTS HAVE BEEN QUASHED BY THE ITAT ON THE GR OUND THAT NOTICE UNDER SEC. 143(2) OF THE ACT WAS NOT ISSUED UPON THE ASSE SSEE WITHIN 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN WAS FILED AND, THEREFORE, THE ASSESSING OFFICER CANNOT SCRUTINIZE THE RETURN FILE D BY THE ASSESSEE IN RESPONSE TO THE NOTICE ISSUED UNDER SEC. 148 OF THE ACT. THUS, THE ASSESSMENT REACHED AT A FINALITY. ASSESSING OFFICER MAY BE WIT HIN HIS REALM OF POWER TO 6 ISSUE FRESH NOTICE UNDER SEC. 148 IF HE IS ABLE TO LAY HIS HANDS ON ANY FRESH MATERIAL INDICATING THE ESCAPEMENT OF INCOME. WE HA VE GONE THROUGH THE REASONS RECORDED BY THE ASSESSING OFFICER WHICH HAV E BEEN PLACED ON RECORD BY THE LEARNED COUNSEL FOR THE ASSESSEE. IN THESE R EASONS, THERE IS NO REFERENCE TO ANY FRESH INFORMATION. THE ASSESSING O FFICER AGAIN REITERATED THE STAND WHICH WAS TAKEN BY HIM WHILE ISSUING THE FIRST NOTICE FOR REOPENING OF ASSESSMENT. THE SECOND NOTICES ISSUED UNDER SEC. 148 OF THE ACT FOR REOPENING OF BOTH THESE ASSESSMENTS WERE ISSUED ADM ITTEDLY AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE ASSESSMENT IN THE FIRST INSTANCE WAS MADE UNDER SEC. 147 READ WIT H SEC.143(3) OF THE ACT. THE INTERDICTION PROVIDED IN THE PROVISO APPENDED T O SEC. 147 PUTTING AN EMBARGO UPON THE POWERS OF THE ASSESSING OFFICER FO R ISSUING NOTICE UNDER SEC. 148 IN THE CASES, WHERE FOUR YEARS HAVE EXPIRE D FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND WHERE ASSESSMENT WAS M ADE UNDER SEC.143(3) OR UNDER SEC. 147 WOULD COME IN THE WAY OF ASSESSIN G OFFICER. HE HAS BEEN DENUDED FROM HIS POWERS TO ISSUE NOTICES FOR REOPEN ING OF ASSESSMENT AFTER EXPIRY OF FOUR YEARS IF AN ASSESSMENT HAS BEEN MADE UNDER SEC. 143(3) OR UNDER SEC. 147 OF THE ACT. THE ASSESSING OFFICER CA N ONLY ISSUE THE NOTICE UNDER SEC. 148 IN SUCH CASES IF IT IS ESTABLISHED T HAT FULL AND TRUE PARTICULARS 7 WERE NOT DISCLOSED BY THE ASSESSEE FOR HIS ASSESSME NT IN THE FIRST ROUND. THERE IS NO ALLEGATION OR CHARGE AGAINST THE ASSESS EE IN THE PRESENT PROCEEDINGS. NOWHERE ASSESSING OFFICER HAS OBSERVE D IN THE REASONS THAT ASSESSEE FAILED TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACT NECESSARY FOR HIS ASSESSMENT WHEN HE FILED THE RETURN IN RESPONSE TO THE NOTICE UNDER SEC. 148 OF THE ACT. THE EARLIER ASSESSMENTS MADE BY THE ASS ESSING OFFICER ARE ON THE BASIS OF FULL PARTICULARS. THESE WERE QUASHED BECAU SE OF SOME INHERENT LEGAL LACUNA OF THE JURISDICTION AT THE END OF ASSESSING OFFICER. THERE IS NO FAILURE ON THE PART OF ASSESSEE IN DISCLOSING THE MATERIAL FACT FULLY AND TRULY WHICH CAN AUTHORIZE THE ASSESSING OFFICER AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEARS TO REAPPRECIATE THE IN FORMATION ALREADY AVAILABLE TO HIM FOR FORMING AN OPINION THAT INCOME HAS ESCAPED ASSESSMENT. THUS, WE ARE OF THE OPINION THAT ASSESSMENT IN THES E TWO ASSESSMENT YEARS HAVE BEEN REOPENED ONLY ON THE BASIS OF CHANGE OF T HE OPINION. THEREFORE, WE ALLOW THE GROUND OF APPEALS RAISED BY THE ASSESS EE WHEREBY HE HAS CHALLENGED THE REOPENING OF ASSESSMENT IN ASSESSMEN T YEARS 1995-96 AND 1996-97. 6. AS FAR AS ASSESSMENT YEAR 1997-98 IS CONCERNED, THE NOTICE ISSUED UNDER SEC. 148 IS FOR THE FIRST TIME. IT HAS BEEN I SSUED ON THE BASIS OF THE 8 INFORMATION GATHERED BY THE ASSESSING OFFICER AS A RESULT OF SURVEY CONDUCTED ON THE PREMISES OF M/S. HINDUSTAN AGRO TE CH. THE INFORMATION SUPPLIED BY THE ADIT IS SUFFICIENT TO INDICATE THAT INCOME HAS ESCAPED ASSESSMENT. THEREFORE, THE GROUND OF REOPENING IN A SSESSMENT YEAR 1997-98 IS REJECTED. 7. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE IMPUG NING THE ADDITIONS ON MERIT CONTENDED THAT THE ASSESSING OFFICER HAS NOT PROVIDED SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. HE POINTED OUT THAT THE SURVEY AT THE PREMISES OF HINDUSTAN AGRO TECH WAS CONDUCTED ON 17 .10.1996 WHEREIN BOOKS OF ASSESSEE WERE FOUND. THE STATEMENT OF ASSE SSEE WAS RECORDED ON 19.11.1996 AND A NOTICE UNDER SEC. 148 FOR REOPENIN G OF ASSESSMENT WAS ISSUED TO THE ASSESSEE ON 5.4.2000. THE ASSESSING O FFICER THEREAFTER ISSUED A NOTICE UNDER SEC.143(2) ON 20.2.2002. IT MEANS THAT INVESTIGATION IN THE ISSUES WERE STARTED AFTER ISSUANCE OF NOTICE UNDER SEC. 143(2) ON 20.2.2002. THE ASSESSING OFFICER WITHIN ONE MONTH COMPLETED TH E ASSESSMENT AND PASSED THE ORDER ON 22.3.2002. IN THIS SHORT SPAN O F TIME HE CALLED A NUMBER OF INFORMATION. THUS THE SUFFICIENT TIME WAS NOT GR ANTED TO THE ASSESSEE TO COLLECT EVIDENCE AND EXPLAIN HIS POSITION BEFORE TH E ASSESSING OFFICER. LEARNED DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE ASSESSING 9 OFFICER. SHE POINTED OUT THAT ASSESSEE COULD PRODUC E ADDITIONAL EVIDENCE BEFORE THE LEARNED CIT(APPEALS). IF IT IS ESTABLISH ED THAT HE WAS RESTRAINED BY SUFFICIENT REASON FROM PRODUCING SUCH EVIDENCE. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. THE INVESTIGATION ON DIFFERENT ISSUES WA S COMPLETED BY THE ASSESSING OFFICER WITHIN ONE MONTH. IN OUR OPINION, IT WAS NOT A SUFFICIENT TIME FOR THE ASSESSEE TO EXPLAIN HIS POSITION WITH REGARD TO VARIOUS ISSUES BEING SCRUTINIZED BY THE ASSESSING OFFICER. IT IS N OT EFFECTIVE OPPORTUNITY OF HEARING TO THE ASSESSEE AT THE END OF THE ASSESSING OFFICER. WHEN A NOTICE WAS ISSUED IN 2000 UNDER SEC. 148, THE ASSESSING OF FICER OUGHT TO HAVE TAKEN UP THE PROCEEDINGS FOR SCRUTINIZING THE RETURN WELL IN ADVANCE AND HE SHOULD HAVE NOT PICKED UP THE ISSUES AT THE END WHEN PROCE EDINGS WERE GOING TO BE TIME BARRED. THEREFORE, WE SET ASIDE THE ORDERS OF REVENUE AUTHORITIES BELOW AND RESTORE ALL THE ISSUES IN ASSESSMENT YEAR 1997- 98 BEFORE THE ASSESSING OFFICER FOR READJUDICATION. IT IS NEEDLESS TO SAY T HAT THE OBSERVATIONS MADE BY US IN THIS ASSESSMENT YEAR WILL NOT IMPAIR OR INJUR E THE CASE OF ASSESSING OFFICER OR WOULD CAUSE ANY PREJUDICE TO THE DEFENCE /EXPLANATION OF THE ASSESSEE ON THE MERITS OF THE ISSUES. THE ASSESSING OFFICER SHALL GRANT DUE 10 OPPORTUNITY OF HEARING TO THE ASSESSEE AND ASSESSEE WILL BE AT LIBERTY TO PRODUCE ANY EVIDENCE IN SUPPORT OF HIS EXPLANATION. 9. IN THE RESULT, ITA NOS.4236 AND 4237/DEL/05 ARE ALLOWED WHEREAS ITA NO.4238/DEL/05 IS PARTLY ALLOWED FOR STATISTICA L PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON .12 .2009 ( K.G. BANSAL ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: /12/2009 MOHAN LAL COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR:ITAT ASSISTANT REGISTRAR