Swati Agarwal, Kolkata V. I.T.O.Ward-34(2), Kolkata

ITA 448/KOL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2790 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-08-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 08-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SA TYAJIT MANDAL CIT LD
• Assessee Lawyers: A K TIBREWAL FCA LD
• Keywords: Unexplained cash credit; Unexplained investment; Transactions in derivatives; Reason to believe; Reassessment proceedings
• Section: 69C; 143(3); 201; 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A - SMC BENCH : KOLKATA [BEFORE HONBLE SHRI S.S. GODARA, JM ] I .T.A . NO. 448 /KOL/201 9 ASSESSMENT YEAR : 20 1 0 - 11 SWATI AGARWAL V/S. I.T.O., WARD 34(2), KOLKATA PAN: AHXPA 2751Q (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI A.K. TIBREWAL, FCA, LD.AR FOR THE RESPONDENT : SHRI SATYAJIT MANDAL, ADDL.CIT, LD.DR DATE OF HEARING : 14 .8.2 01 9 DATE OF PRONOUNCEMENT : 30 .08.2019 ORDER SHRI S.S. GODARA, JM : 1. THIS ASESSEES APPEAL FOR ASSESSMENT YEAR 20 1 0 - 11 ARISES AGAINST THE CIT(A), 1 0 , KOLKATAS ORDER DATED 21 - 12 - 2018 PASSED IN CASE NO. 942 /CIT(A) - 1 0 / W - 34(2)/2010 - 11/2017 - 18/KOL. INVOLVING PENALTY PROCEEDINGS U/S 143(3) OF THE INCOME - TAX ACT, 1961 ( IN SHORT ACT). HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2 . THE ASSESSEES PLEADINGS SUGGEST THAT APART FROM LATTER SUBSTANTIVE GRIEVANCE CHALLENGING BOTH THE LOWER AUTHORITIES ACTION MAKIN G SECTION 68 AND SECTION 69C OF THE ACT ADDITIONS OF RS. 1,23,916/ - AND RS. 17,92,000/ - ON ACCOUNT OF UNEXPLAINED CASH CREDITS AND UNEXPLAINED INVESTMENTS ; RESPECTIVELY, THE A SSESSEE ALSO QUESTION S THE VALIDITY OF THE IMPUGNED RE - OPENING/RE - ASSESSMENT. 2 I.T.A. NO. 448 /KOL/2019 A.Y 201 0 - 11 SWATI AGARWAL 2 3. THE REVENUES CASE I S THAT THE ASSESSEES INSTANT LEGAL GROUND OUGHT NOT BE ADMITTED AT THIS STAGE. I FIND NO REASON TO ACCEPT THE R EVENUES OBJECTION IN VIEW OF HONBLE APEX COURTS LAND MARK DECISION IN NATIONAL THERMAL POWER CORPORATION LTD (NTPC) V/S. CIT (1998) 229 ITR 383 (SC) AS CONSIDERED BY THIS TRIBUNALS SPECIAL BENCH ORDER IN M/S. ALL CARGO GLOBAL LOGISTICS LTD V/S. DCIT (12) 137 ITD 26 (MUM.) THAT WE CAN VERY WELL ENTERTAIN SUCH A LEGAL QUESTION IN ORDER TO DETERMINE THE CORRECT TAX LIABILITY ON ASSESSEE WHEN ALL THE RELEVANT FACTS FORM PART OF RECORD . I THEREFORE ADMIT ASSESSEES INSTANT ADDITIONAL GROUND CHALLENGING VALIDITY OF T H E IMPUGNED RE - OPENING/RE - ASSESSMENT. 4. I FURTHER PROCEED TO NOTICE THAT THE ASSESSING OFFICER HAD RECORDED THE FOLLOWING RE - OPENING REASONS IN ASSSESSEES CASE AS UNDER: - THE DIRECTORATE OF INVESTIGATION HAS CONDUCTED SURVEY IN THE CASE OF ENTRY OPERATORS/MIDDLEMEN, BROKERS ETC. AND ALSO RECORDED THEIR STATEMENT ON OATH U/S. 133A/131 OF THE I.T ACT, 1961. IN VIEW OF ANAL YSIS OF SEVERAL INCRIMINATING DOCUMENTS/EVIDENCE FOUND DURING SURVEY AND THE STATEMENT OF THE KEY PERSONS, IT HAS BEEN FINALLY FOUND THAT THESE PERSONS HAVE COLLUDED EITHER PERSONALLY OR THROUGH THEIR JAMA - KHARCHI ENTITIES IN ORDER TO PROVIDE BOGUS ENTITI ES TOWARDS PURCHASE/SALES AND PROFIT/LOSS TOWARDS BOGUS COMMODITY TRANSACTIONS TO SEVERAL PERSONS ACROSS THE COUNTRY BY MISUSING THE NMCX PLATFORM. THE DETAILS OF BENEFICIARIES FOR SUCH BOGUS ENTRIES INFORMATION HAS BEEN DRAWN AND PASSED ON THE DETAILED I NFORMATION IN REGARD TO THE BENEFICIARIES AS WELL AS THE STATEMENT OF THE ENTRY OPERATORS/KEY PERSON TO THE JURISDICTIONAL PRINCIPAL CSIT AND THE SAME WAS FORWARDED TO THE JURISDICTIONAL AO FOR EXAMINATION AND NECESSARY ACTION. IN THIS CASE, INFORMATION FROM DDIT (INV), UNIT 3(1), KOLKATA HAS BEEN RECEIVED ON THE ISSUE OF ASSESSEES INVOLVEMENT IN PURCHASE OF COMMODITY TO THE EXTENT OF RS.5,48,000/ - BY ARTIFICIAL TRADING IN NATIONAL MULTI COMMODITY EXCHANGE (NMCE) DURING THE F.Y 2009 - 10 RELEVANT TO THE A . Y 2010 - 11. THE ASSESSEE FILED RETURN OF INCOME FOR THE A.Y 2010 - 11 BUT FROM THE SAID RETURN IT IS NOT ESTABLISHED THAT THE ASSESSEE HAS DISCLOSED THIS PURCHASE IN HIS BOOKS OF ACCOUNTS. AS SUCH IT IS A FIT CASE FOR RE - OPENING THE ASSESSMENT U/S. 147 OF T HE I.T ACT, 1961. 3 I.T.A. NO. 448 /KOL/2019 A.Y 201 0 - 11 SWATI AGARWAL 3 I THEREFORE HAVE REASON TO BELIEVE THAT INCOME OF RS.5,48,000/ - HAS ESCAPED ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR IN ASSESSEES CASE. 5. THERE IS FURTHER NO DISPUTE THAT THE ASSESSING OFFICERS CONSEQUENTIAL RE - ASSESSMENT DATED 22 - 12 - 2017 HAS NOT MADE ANY DISALLOWANCE / ADDITION OF ASSESSEES COMMODITY EXCHANGE INCOME OF RS. 5,48,000/ - . THIS TRIBUNALS DECISION IN SANJU JALAN V/S. ITO, ITA NO. 634/KOL/2017 DATED 10 - 01 - 2018 HOLDS THAT THE IMPUGNED RE - OPENING IN SUCH A CASE IS NOT SUSTAINABLE AS UNDER: - 18. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ON THE OTHER GROUNDS OF APPEAL VI., GR.NO.6 TO 8, IT IS THE PLEA OF THE ASSESSEE BEFORE US THAT WHEN AN ASSESSMENT IS REOPENED FOR ONE REASON BUT NO ADDITION IS MADE IN THE REASSE SSMENT PROCEEDINGS IN RESPECT OF THAT REASON OR WHEN THE SAID ADDITION IS DELETED, THEN, NO FURTHER ADDITION CAN BE MADE IN THE REASSESSMENT PROCEEDINGS. IN THIS REGARD LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS INDIA LTD ., 331 ITR 326 (BOM), WHEREIN THE HON'BLE BOMBAY HIGH COURT HELD THAT IF AO DOES NOT ASSESS INCOME FOR WHICH REASONS WERE RECORDED U/S 147 OF THE ACT, HE CANNOT ASSESS OTHER INCOME U/S 147 OF THE ACT. THE HON'BLE COURT OBSERVED THAT (I) S. 147 PROVIDES THAT THE AO MAY ASSESS THE INCOME WHICH HAS ESCAPED ASSESSMENT 'AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION'. EXPLANATION 3 TO S. 147 INSERTED BY F (NO. 2) ACT, 2009 W.R.E.F 1.4. 1989 PROVIDES THAT THE AO 'MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE ... NOTWITHSTANDING THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RECORDED ...' ITA NO.634/KOL/2017 SANJU JALAN A.YR.2012 - 13 (II) THE WORDS 'AND ALSO' I NDICATE THAT REASSESSMENT MUST BE WITH RESPECT TO THE INCOME FOR WHICH THE AO HAS FORMED AN OPINION AND ALSO IN RESPECT OF ANY OTHER INCOME WHICH COMES TO HIS NOTICE SUBSEQUENTLY. HOWEVER, IF THE AO ACCEPTS THE OBJECTION OF THE ASSESSEE AND DOES NOT ASSESS THE INCOME WHICH WAS THE BASIS OF THE NOTICE, IT IS NOT OPEN TO HIM TO ASSESSEE INCOME UNDER SOME OTHER ISSUE INDEPENDENTLY; (III) EXPLANATION 3 TO S. 147 WAS INSERTED TO SUPERSEDE THE JUDGMENTS IN VIP IN KHANNA 255 ITR 220 (P&H) & TRAVANCORE CEMENTS 305 ITR 170 (KER) WHERE IT WAS HELD THAT THE AO COULD NOT ASSESS INCOME IN RESPECT OF ISSUES 4 I.T.A. NO. 448 /KOL/2019 A.Y 201 0 - 11 SWATI AGARWAL 4 UNCONNECTED WITH THE ISSUE FOR WHICH THE NOTICE WAS ISSUED. HOWEVER, EXPLANATION 3 DOES NOT AFFECT THE JUDGMENTS I N SHRI. RAM SINGH 306 ITR 343 (RAJ) & ATLAS CYCLE INDUSTRIES 180 ITR 319 (P&H) WHERE IT WAS HELD THAT IF THE AO ACCEPTED THAT THE REASONS FOR WHICH THE NOTICE WAS ISSUED WERE NOT CORRECT, HE WOULD CEASE TO HAVE JURISDICTION TO PROCEED WITH THE REASSESSMENT ; (IV) EXPLANATION 3 LIFTS THE EMBARGO INSERTED BY JUDICIAL INTERPRETATION ON THE MAKING OF A S. 147 ASSESSMENT IN RESPECT OF ITEMS NOT REFERRED TO IN THE RECORDED REASONS. HOWEVER, IT DOES NOT AND CANNO T OVERRIDE THE SUBSTANTIVE PART OF S. 147 THAT THE INCOME FOR WHICH THE NOTICE WAS ISSUED MUST BE ASSESSABLE. THE LEARNED DR RELIED ON THE ORDER OF THE CIT(A). 19. WE HAVE CONSIDERED THE SUBMISSION OF T HE LEARNED COUNSEL FOR THE ASSESSEE IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE BOMBAY IN THE CASE OF JET AIRWAYS (I) LTD. (SUPRA). WE ARE OF THE VIEW THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE PRESENT CASE THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS INDIA LTD. (SUPRA)IS SQUARELY APPLICABLE. AS WE HAVE ALREADY SEEN THAT THE ASSESSMENT WAS REOPENED FOR THE REASON THAT THE JEWELLERY PURCHASED BY THE ASSESSEE WAS FROM UNDISCLOSED SOURCES AND THE PURCHASES WERE BOGUS. THAT ADDITION HAS NOT BEEN SUSTAINED NOW. THE ASSESSING OFFICER HOWEVER, PROCEEDED TO MAKE AN ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN (LTCG) ON SALE OF SHARES. THIS WAS CLEARLY BEYOND ITA NO.634/KOL/2017 SANJU JALAN A.YR.2012 - 13 THE SCOPE OF THE PROC EEDINGS UNDER SECTION 148 OF THE ACT. THE ASSESSING OFFICER, THEREFORE, COULD NOT HAVE PROCEEDED TO MAKE THE IMPUGNED ADDITION OF BOGUS LTCG. SIMILAR VIEW HAS BEEN EXPRESSED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES VS. CIT, ITA 148 OF 2008 DATED 3/6/2011. THE HON'BLE DELHI HIGH COURT FOLLOWED THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS (SUPRA). IN THAT VIEW OF THE MATTER WE HOLD THAT THE ADDITION BY TREATING THE LTCG AS BOGUS CANNOT BE SUSTAINED AS IT WAS BEYOND THE SCOPE OF THE PROCEEDINGS UNDER SECTION 147 OF THE ACT. WE THEREFORE DELETE THE SAID ADDITION ALSO AND ALLOW GROUND NO..6 TO 8. . 6 . I ADOPT THE ABOVE EXTRACTED DETAILED DISCUSSION MUTATIS MUTANDIS TO DECLINE THE REVENUES ARGUMENTS SUPPORTING THE IMPUGNED RE - OPENING/RE - ASSESSMENT. THE SAME STANDS QUASHED. ASSESSEES LATTER TWO SUBS TANTIVE GROUNDS ARE RENDERED INFRUCTUOUS. 5 I.T.A. NO. 448 /KOL/2019 A.Y 201 0 - 11 SWATI AGARWAL 5 7 . THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 30 - 08 - 2019 SD/ - [ S.S.GODARA ] JUDICIAL MEMBER DATED : 30 - 08 - 2019 **PRADIP, SR. PS C OPY OF THE ORDER FORWARDED TO: 1 . APPELLANT/ ASSESSEE: SWATI AGARWAL,FE - 129,SEC - III, SALT LAKE, KOLKATA 2. RESPONDENT/ ASSESSEE: I.T.O., WARD 34 ( 2 ) , AAYKAR BHAWAN POORVA, 110 SHANTIPALLY, KOLKATA - 107,W.B. 3..C.I.T (A) . - 4. C.I.T. - KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY O RDER ASSISTANT REGISTRAR H.O.O/D.D.O KOLKATA