ACIT, Dehradun V. Mussoorie Dehradun Development Authority, Dehradun

ITA 4486/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97920 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 04-11-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 26-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: K SAMPATH CA SHRI RAJKUMAR
• Keywords: Capital receipt; Revised return; Reason to believe
• Section: 143(3); 147

Judgement Text

I.T.A. 4486/D/2013 ASSESSMENT YEAR: 2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E NEW DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER, AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A.NO.4486/DEL/2013 ASSTT.YEAR: 2005-06 ACIT, VS MUSSOORIE DEHRADUN DEVELOPMENT AUTHORITY, CIRCLE-2, TRANSPORT NAGAR, DEHRADUN. 13-A, SUBHASH ROAD, (PAN: AAAAM4651Q) DEHRADUN. (APPELLANT) (RESPONDENT) (PAN: AAAAM4651Q) (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI K. SAMPATH, CA SHRI RAJKUMAR ADV. DEPARTMENT BY : SHRI P. DAMKANUNJNA SR . DR DATE OF HEARING: 04.11.2015 DATE OF PRONOUNCEMENT: 23.11.2015 O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE HAS BEEN FILED AGAINST THE ORDER OF CIT(A)- DEHRADUN DATED 18.2.2013 IN APPEAL NO. 254/CIT(A)/ DDN/2012-13 FOR ASSESSMENT YEAR 2005-06. 2. THE GROUNDS RAISED BY THE REVENUE READ AS FOLLOW S:- I.T.A. 4486/D/2013 ASSESSMENT YEAR: 2005-06 2 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N NOT APPRECIATING THAT THE ASSESSEE SUBMITTED REVISED RE TURN ON 31.03.2007 REVISING THE BALANCE SHEET ALSO IN WHICH SCHEDULE B ON INFRASTRUCTURE FUND WAS REFLECTED FOR THE FIRS T TIME. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE REASSESSMENT PROCEED INGS WERE INITIATED WITHIN THE MEANING OF SUB-CLAUSE (C) OF E XPLANATION 2 OF SECTION 147 OF THE INCOME TAX ACT, 1961. 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS BY TREATING THE PROCEEDINGS U/S 147 INVALID AND ANNULLING THE ASSES SMENT. HE FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAD ITSELF CONTRADICTED ITS ASSERTION THAT INCOME WAS DIVERTED TO INFRASTRUCTURE FUND BY AN OVERRIDING TITLE, THEREFO RE, PROCEEDINGS U/S 147 OF I.T. ACT, 1961, WERE RIGHTLY INITIATED. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. THE LD. DR SUBMITTED THA T BEFORE THE ASSESSING OFFICER, THERE WAS REASON TO BELIEVE THAT INCOME HA S ESCAPED ASSESSMENT PERTAINING TO ASSESSEES CLAIM REGARDING DIVERSION BY OVERRIDING TITLE IN RESPECT OF INFRASTRUCTURE FUND. LD. DR SUPPORTED THE ACT ION OF THE ASSESSING OFFICER IN INITIATING PROCEEDINGS AND ISSUING NOTICE U/S 14 7/148 OF THE ACT AND CONTENDED THAT THE LD. CIT(A) GRANTED RELIEF TO THE ASSESSEE WITHOUT ANY BASIS. HENCE, APPEAL OF THE REVENUE MAY KINDLY BE ALLOWED AND THE CIT(A) SHOULD BE DIRECTED TO DECIDE THE APPEAL ON MERITS. 4. ON THE OTHER HAND, LEARNED COUNSEL OF THE ASSESS EE STRONGLY SUPPORTED THE FIRST APPELLATE ORDER AND SUBMITTED THAT THE ASSESS EES CLAIM THAT THE NET ACCRUAL TO INFRASTRUCTURE FUND REPRESENTED CAPITAL RECEIPT HAS BEEN REJECTED BY THE I.T.A. 4486/D/2013 ASSESSMENT YEAR: 2005-06 3 CIT(A) AS WELL AS ITAT IN THE SUBSEQUENT ASSESSMENT YEAR. LD. COUNSEL FURTHER POINTED OUT THAT THE PROVISION OF SECTION 147 OF TH E ACT IS HAVING A RIDER UNDER SUB-SECTION (3), WHEREIN IT HAS BEEN PROVIDED THAT THE PROCEEDINGS UNDER THIS PROVISION CAN BE INITIATED AFTER EXPIRY OF FOUR YEA RS ONLY IF THE INCOME ESCAPING ASSESSMENT EXCEEDS RS. ONE LAKH AND THE SAME HAS ES CAPED ASSESSMENT FOR SUCH PERIOD BY REASON OF FAILURE ON THE PART OF THE ASSE SSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FO R THAT ASSESSMENT YEAR. LEARNED COUNSEL OF THE ASSESSEE FURTHER POINTED OUT THAT IN THIS CASE IN THE ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) OF THE A CT IF THE RECEIPTS HAD ORIGINALLY BEEN SHOWN AS CAPITAL RECEIPTS AND THE I SSUE HAD NOT BEEN EXAMINED BY THE ASSESSING OFFICER IN ORIGINAL ASSESSMENT, TH E ASSESSING OFFICERS CASE FOR REASSESSMENT COULD BE SUPPORTED BY EXPLANATION 1 OF SECTION 147 OF THE ACT BUT THAT IS NOT THE FACTS OF THE PRESENT CASE. LEARNED COUNSEL OF THE ASSESSEE VEHEMENTLY POINTED OUT THAT THE IMPUGNED SURPLUS AM OUNT, WHICH WAS SHOWN AS CAPITAL RECEIPT IN THE REVISED RETURN HAD ORIGINALL Y BEEN SHOWN AS REVENUE RECEIPT AND THIS CHANGE WAS CONSCIOUSLY BROUGHT TO THE NOTI CE OF THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS BY WAY OF VALIDLY FIL ED REVISED RETURN, WHICH WAS NOTED BY THE ASSESSING OFFICER AND SHE ALSO RAI SED A QUERY IN THIS REGARD WHICH WAS PROPERLY EXPLAINED BY THE ASSESSEE, THUS THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. LEARNED COUNSEL OF THE ASSESSEE SUBMIT TED THAT IN THIS SITUATION, THE I.T.A. 4486/D/2013 ASSESSMENT YEAR: 2005-06 4 LD. CIT(A) RIGHTLY QUASHED THE NOTICE AND ORDER U/S 1476/148 R/W SECTION 143(3) OF THE ACT. 5. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, WE NOTED THAT THE FIRST APPELLATE AUTHORITY GRANTED RELIEF TO THE ASS ESSEE WITH FOLLOWING CONCLUSION:- 1.3 THE PROVISION OF SECTION 147 SHOWS THAT RE-ASS ESSMENT PROCEEDING UNDER THAT SECTION MAY BE INITIATED BEFO RE EXPIRY OF 6 YEARS FROM THE END OF THE ASSESSMENT YEAR IF THE IN COME ESCAPING ASSESSMENT EXCEEDS RS.1 LAKH. IN CASES WHERE ORIGIN AL ASSESSMENT U/S 143(3) OR SECTION 147 OF THE I.T. A CT WAS MADE, THERE IS, HOWEVER, A RIDER. ACCORDING TO THIS, REAS SESSMENT PROCEEDING CAN BE INITIATED AFTER THE EXPIRY OF 4 Y EARS ONLY IF ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR. IN T HIS CASE, THE ORIGINAL ASSESSMENT WAS MADE U/S 143(3) OF THE I.T. ACT. IF THE RECEIPT HAD ORIGINALLY BEEN SHOWN AS CAPITAL RECEIP T AND THE ISSUE HAD NOT BEEN EXAMINED BY THE AO IN ORIGINAL A SSESSMENT, THE AOS CASE FOR REASSESSMENT COULD BE SUPPORTED B Y EXPLANATION-1 TO SECTION 147 OF THE I.T. ACT. BUT T HAT IS NOT THE CASE HERE. THE SURPLUS OF RS.2,90,4.2,440/, WHICH W AS SHOWN AS CAPITAL RECEIPT IN THE REVISED RETURN HAD ORIGINALL Y BEEN SHOWN AS REVENUE RECEIPT. THIS CHANGED CLAIM WAS CONSCIOUSLY BROUGHT TO THE AOS NOTICE IN COURSE OF THE ASSESSMENT PROCEED ING BY WAY OF VALID REVISED RETURN. THE AO ALSO TOOK NOTE OF THIS . IN FACT, SHE RAISED A POINTED QUERY ON THIS ISSUE AND THE ASSESS EE FURNISHED ITS EXPLANATION. THUS, THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR HIS ASSESSMENT AND THERE WAS CONSCIOUS APPLICAT ION OF MIND BY THE AO WHILE ACCEPTING THE REVISED CLAIM. THAT BEING THE FACTUAL BACKGROUND, THE MAXIMUM PERIOD AVAILABLE FO R INITIATING REASSESSMENT 4 PROCEEDINGS U/S 147 OF THE I.T. ACT IN THIS CASE WA S 4 YEARS FROM THE END OF THE ASSESSMENT YEAR, I.E. U PTO 31.03.2010. CONSEQUENTLY, THE RE-ASSESSMENT PROCEEDING INITIATE D ON 28.06.2011 WAS BEYOND THE PERMISSIBLE TIME-LIMIT AN D THE RE- I.T.A. 4486/D/2013 ASSESSMENT YEAR: 2005-06 5 ASSESSMENT MADE U/S 147 WAS ALSO INVALID. 6. IN VIEW OF ABOVE, WE ARE INCLINED TO HOLD THAT WHEN THE ASSESSEE CONTINUOUSLY SUBMITTED HIS CLAIM DURING ASSESSMENT PROCEEDINGS BY WAY OF REVISED RETURN, THE ASSESSING OFFICER RAISED A QUER Y WHICH WAS RELIED BY THE ASSESSEE, THE ASSESSEE CANNOT BE HELD GUILTY OF FAI LURE ON ITS PART IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT AND THERE WAS PROPER APPLICATION OF MIND BY THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS AND THUS WE DECLINE TO HOLD THE ACTION OF ASSESSING OFFICER AS VALID IN INITIATING IMPUGNED PROCEEDINGS U/S 147/148 OF T HE ACT. THE CIT(A) WAS QUITE CORRECT IN HOLDING THAT THE REASSESSMENT PROC EEDING INITIATED ON 26.06.2011 BEYOND FOUR YEARS PERMISSIBLE LIMIT AND REASSESSMENT MADE U/S 147 OF THE ACT WAS INVALID. WE ARE UNABLE TO SEE ANY V ALID AND COGENT REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) (SUPRA) AND WE UPHOLD THE SAME. 7. ACCORDINGLY, ALL FOUR GROUNDS OF THE REVENUE ARE DISMISSED AND RESULTANTLY APPEAL OF THE DEPARTMENT FAILS. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.11.2015. SD/- SD/- (PRASHANT MAHARISHI) (CHANDRAMOHAN GAR G) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 23 RD NOVEMBER 2015 GS I.T.A. 4486/D/2013 ASSESSMENT YEAR: 2005-06 6 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR