M/s Priya Enterprises, Visakhapatnam V. The ITO, Ward-1(4), Visakhapatnam

ITA 43/VIZ/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7300 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-12-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 29-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Assessee Lawyers: C KAMESWARA RAO
• Keywords: Revised return; Reason to believe; Set aside
• Section: 143(3); 147

Judgement Text

ITA NO.43/VIZ/2010 PRIYA ENTERPRISES, VSKP IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 43 /VIZAG/ 20 10 ASSESSMENT YEAR : 2001 - 02 M/S. PRIYA ENTERPRI SES VISAKHAPATNAM ITO WARD - 1(4) VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) PAN NO.AABFP 4921C APPELLANT BY: SHRI C. KAMESWARA RAO, CA RESPONDENT BY: SHRI D.S. SUNDER SINGH, DR ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER : - THIS APPEAL IS PREFERR ED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER: 1. THE LD. CIT(A) ERRED BOTH ON FACTS AND LAW IN NOT ADJUDICATING THE ISSUE OF VALIDITY OF THE PROCEEDINGS INITIATED U/S 147 AND COMPLETION OF THE ASSESSMENT U/S 147 R.W .S. 143(3) OF THE INCOME TAX ACT, 1961. 2. THE LD. CIT(A) ERRED BOTH ON FACTS AND LAW IN CONFIRMING THE ADDITION OF RS.4,58,955/ - . 3. THE LD. CIT(A) WAS NOT JUSTIFIED IN REJECTING EXPLANATION OF THE ASSESSEE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. IN VIEW OF THE ABOVE GROUNDS AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT HUMBLY PRAYS FOR SETTING ASIDE THE PROCEEDINGS AND/OR DELETING OF THE ADDITION AND ACCORD JUSTICE. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/OR DELETE ANY OF THE ABOVE GROUNDS AT THE TIME OF HEARING THE APPEAL. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE ORDER OF THE AUTHORITIES BELOW AND DOCUMENTS PLACED ON RECORD. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF TH E RE - OPENING OF THE ASSESSMENT ON THE GROUND THAT IT WAS RE - OPENED AFTER THE PERIOD OF 4 YEARS, THEREFORE, THE REVENUE IS REQUIRED TO MAKE OUT A CASE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. SINCE THE REVENUE HAS NOT BROUGHT OUT ANYTHING ON RECORD WHILE REOPENING THE ASSESSMENT, THE REOPENING IS NOT VALID. ITA NO.43/VIZ/2010 PRIYA ENTERPRISES, VSKP 2 3. THE BRIEF FACTS BORNE OUT FROM THE RECORD ARE THAT ASSESSEE IS A PARTNERSHIP FIRM CARRYING ON BUSINESS OF TRADING OF ELECTRONIC GOODS AND FILED ITS RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.8,310/ - . A SURVEY WAS CONDUCTED AND CONSEQUENTLY REVISED RETURN WAS FILED FOR THE YEAR UNDER CON SIDERATION ADMITTING FURTHER INCOME OF RS.5,27,811/ - . THE ASSESSMENT WAS COMPLETED BY ACCEPTING THE INCOME DECLARED IN THE REVISED RETURN ON AGREED BASIS. THERE AFTER THE ASSESSMENT WAS RE - OPENED ADMITTEDLY AFTER 4 YEARS AND TOTAL INCOME WAS DETERMINED A T RS.9,91,805/ - BY MAKING A FURTHER ADDITION OF RS.4,58,955/ - . THE REASONS FOR REOPENING OF THE ASSESSMENT SUPPLIED TO THE ASSESSEES ARE EXTRACTED HEREUNDER: SINCE THE ASSESSEE HAS NOT ADMITTED THE AMOUNT OF RS.4,58,955/ - WHICH WAS ACCEPTED IN THE COURS E OF SURVEY OPERATION. THE UN - EXPLAINED INVESTMENT IN PURCHASES IN THE REVISED RETURN OF INCOME WAS ACCEPTED. IN MY OPINION, I HAVE REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX FOR THE ASST. YEAR 2001 - 02 HAS ESCAPED INCOME WITHIN THE MEANING SECTI ON 147 OF THE I.T. ACT. 4. THE ASSESSEE CHALLENGED THE VALIDITY OF THE RE - OPENING OF THE ASSESSMENT BEFORE THE CIT(A) BUT DID NOT FIND FAVOUR. NOW THE ASSESSEE IS BEFORE US AND CONTENDED THAT THE ASSESSEE HAS FURNISHED ALL RELEVANT MATERIALS BEFORE THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS CONSEQUENT TO THE SURVEY CONDUCTED UPON THE ASSESSEE . IN THE REASONS RECORDED FOR THE RE - OPENING OF THE ASSESSMENT, THE ASSESSING OFFICER HAS BROUGHT OUT NOTHING ON RECORD TO STATE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEES FROM DISCLOSING FULLY AND TRULY MATERIALS NECESSARY FOR THE ASSESSMENT YEAR. SINCE THE REVENUE HAS NOT FULFILLED THE REQUISITE CONDITIONS FOR RE - OPENING THE ASSESSMENT AFTER 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THE RE - OPENING IS NOT VALID. 5. THE LD. D.R. ON THE OTHER HAND HAS PLACED A RELIANCE UPON THE ORDER OF THE CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED TH E ORDER S OF THE LOWER AU THORITIES AND WE FIND THAT ASSESSMENT WAS COMPLETED AFTE R THE ITA NO.43/VIZ/2010 PRIYA ENTERPRISES, VSKP 3 SURVEY OPERATIONS AND AT THAT TIME ALL RELEVANT MATERIALS WERE PLACED BEFORE THE ASSESSING OFFICER. NOW ON THE BASIS OF THE SAME MATERIAL, THE ASSESSING OFFICER INTEND TO RE - OPEN THE ASSESSMENT U/S 147 OF THE ACT AFTER THE 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. AS PER PROVISIONS OF SECTION 147 OF THE ACT THE ASSESSMENT CAN ONLY BE RE - OPENED AFTER 4 YEARS IF THE ASSESSING OFFICER HAS MADE OUT A CASE THAT INCOME CHARGEABLE TO TAX H AS ESCAPED ASSESSMENT BY THE REASONS OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIALS ON FACTS NECESSARY FOR THE ASSESSMENT FOR THAT ASSESSMENT YEAR. SINCE THE CONDITION WHICH IS SINE - QUA - NON FOR RE - OPENING THE ASSESSMENT A FTER 4 YEARS IS NOT FULFILLED , THE IMPUGNED RE - OPENING IS NOT VALID IN LAW. WE THEREFORE DECLARE THE RE - OPENING OF THE ASSESSMENT T O BE INVALID AND VOID - AB - INITIO. ACCORDINGLY, THE ASSESSMENT FRAMED CONSEQUENT TO THE INVALID RE - OPENING IS NOT SUSTAINABLE UNDER THE LAW AND WE ANNUL THE SAME. WE T HEREFORE, SET ASIDE THE ORDER OF THE CIT(A). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 3.1. 20 1 1 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOU NTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 3 RD JANUARY, 2011 COPY TO 1 M/S. PRIYA ENTERPRISES, 46 - 12 - 32, KANDARPA COMPLEX, DIAMOND PARK ROAD, DONDAPARTHI, VISAKHAPATNAM - 16. 2 ITO WARD - 1(4), VI SAKHAPATNAM 3 THE CI T, VISAKHAPATNAM 4 THE CIT (A) , VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM