The Jalore Central Co-operative Bank Ltd., JODHPUR V. ACIT, BARMER

ITA 45/JODH/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5208 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 19-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MADHUK
• Keywords: Reopening of assessment; Speculation loss; Difference of opinion; Validity of assessment; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 45 / JODH /201 5 (ASST. YEAR : 200 7 - 0 8 ) THE JALORE CENTRAL CO - OP BANK LTD., JALORE. VS. ACIT, CIRCLE, BARMER. PAN NO. AAABT 2537 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJENDRA JAIN ADV. DEPARTMENT BY : S HRI S. K . MADHUK - DR DATE OF HEARING : 1 4 / 0 3 /201 6 . DATE OF PRONOUNCEMENT : 1 4 / 03 /201 6 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2 , JODHPUR , DATED 29 / 12 /201 4 . 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING G ROUNDS: - 1] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ID CIT (A) - II, JODHPUR ERRED IN: - A] UPHOLDING THE VALIDITY OF NOTICE ISSUED U/S 148. B] UPHOLDING THE VALIDITY OF ASSESSMENT ORDER PASSED U/S 143(3)/ 147 IN PURSUANCE TO SUCH NOTICE WHICH WAS BASED ON CHANGE OF OPINION. 2] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, ID. CIT(A) ERRED IN UPHOLDING THE VALIDITY ISSUANCE OF NOTICE U/S 148 ON THE BASIS OF CHANGE OF OPINION AND UPHOLDING OF THE CONSEQUENTIAL ASSESSMENT FRAMED. 3] THAT THE P ETITIONER MAY KINDLY BE PERMITTED TO RAISE ANY ADDITIONAL OR ALTERNATIVE GROUND AT OR BEFORE THE TIME OF 2 ITA NO. 45 / JODH /201 5 HEARING. 4] THE PETITIONER PRAYS FOR JUSTICE & RELIEF. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SEC. 143(3) OF THE ACT ON 24/12/2009 . THEREAFTER, THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUE OF NOTICE UNDER SEC. 148 OF THE ACT ON 27/03/2012 ON THE GR O UND THAT THE ASSESSEE CLAIMED AND WAS ALLOWED DEDUCTION FOR PROVISION OF LOSS IN EMBEZZLEMENT OF RS. 4,70,000/ - AND PROVISION FOR INCOME TAX OF RS.24,74,000/ - AND DONATION OF RS. 1,30,000/ - . SINCE, THE PROVISION IS NOT ALLOWABLE EXPENDITURE AND DONATION IS NOT ALLOWED BEYO N D THE PROVISION OF SEC. 80G, THE SAME SHOULD HAVE BEEN DIS A LLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 4 . THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AGAINST REOPENING OF THE ASSESSMENT , WHO CONFIRMED T HE REOPENING OF THE ASSESSMENT ON THE GROUND THAT THE ISSUE REGARDING THE PROVISION FOR LOSS IN EMBEZZLEMENT, PROVISION FOR INCOME TAX AND DONATION WERE OMITTED TO BE EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT UNDER SEC. 143(3) OF THE ACT. THE REASONS ON THE BASIS OF WHICH , REOPENING WAS DONE WERE NOT CONSIDERED DURING THE ORIGINAL ASSESSMENT, HENCE, THE ASSESSING OFFICER DID NOT FORM ANY OPINION ON THIS ISSUE . WHEN NO OPINION IS FORMED, THERE IS NO QUESTION OF CHANGE OF OPINION. 5. BEFORE US, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSMENT YEAR INVOLVED IS THE ASSESSMENT YEAR 2007 - 08 . T HE REOPENING OF THE ASSESSMENT WAS MADE ON 27/03/2012 AFTER THE MAKING OF THE ORIGINAL ASSESSMENT ON 24/12/2009. NO NEW MATERIAL CAME IN THE POSSESSION OF THE ASSESSING OFFICER WHICH WOULD SHOW TH A T INCOME AS ESCAPED INCOME. IT WAS THE SUBMISSION THAT ON THE VERY SAME SET OF FACTS , WHICH WERE BEFORE THE ASSESSING OFFICER 3 ITA NO. 45 / JODH /201 5 DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING S , THE REOPENING OF ASSESSMENT UNDER SEC. 148 OF THE ACT CANNOT BE MADE. 6 . ON THE OTHER HAND, DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE LOWER AUTHORIT I ES. 7. WE FIND THAT THE REOPENING OF THE ASSESSMENT IN THE PRESENT CASE HAS BEEN MADE BY THE ASSESSING OFFICER BY RECORD ING THE FOLLOWING REA S ONS: - TO JALORE C ENTRAL CO - OPERATIVE BANK LTD. JALORE. SUB - REQUEST TO PROVIDE REASONS FOR INITIATION OF THE PROCEEDING U/S 147 FOR A.Y. 2007 - 08 REG. - KINDL Y REFER TO ABOVE YOUR LETTER DATED 25/10/2012 REQUESTING TO PROVIDE THE REASONS FOR RE - OPENING OF ASSESSMENT U/S 147 OF THE ACT FOR A.Y. 2007 - 08. THE CASE FOR THE YEAR UNDER CONSIDERATION WAS FINALIZED AFTER DETERMINING THE TOTAL INCOME OF RS. 30474440/ - . ON VERIFICATION OF THE CASE RECORDS IT IS OBSERVED THAT THE FOLLOWING PROVISIONS WERE MADE : (I) PROVISION FOR LOSS DUE TO EMBEZZLEME NT RS.470000/ - (II) PROVISION FOR INCOME TAX RS.2474000/ - (III) PROVISION FOR PENALTY RS. 130000/ - AS PER THE PROVISIONS OF ACT, PROVISIONS ARE NOT ALLOWABLE EXPENDITURES. HENCE, THE SAME IS REQUIRED TO BE DISALLOWED AND ADDED BACK TO THE TOTAL INCOME. IN VIEW OF THE ABOVE MENTIONED REASONS THE CASE FOR THE YEAR UNDER CONSIDERATION HAS BEEN RE - OPENED AS PER PROVISION OF SECTION 147 OF THE ACT AFTER TAKING THE REQUIRED PERMISSION. (P.M. KARVE) ASST. COMMISSI O NER OF INCOME - TAX, CIRCLE - BARMER. 8. WE FIND TH A T THE FULL BENCH OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. USHA INTERNATIONAL LTD . (253 CTR 113) HAS HELD AS UNDER: - 4 ITA NO. 45 / JODH /201 5 THE ASSE SSMENT PROCEEDINGS CANNOT BE VALIDLY REOPEN ED UNDER S .147 EVEN WITHIN FOUR YEARS, I F AN ASSESSEE H A S FURNISHED FULL AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT WITH REFERE NCE TO T HE INCOME ALLEGED TO HAVE ESCAPED AS SESS MENT, IF THE ORIGINAL ASSESSMENT WAS MADE U NDER S.143(3). SO LONG AS THE ASSESSEE HAS FURNISHED F ULL AND TRU E PARTICULARS AT THE TIME OF ORIGIN AL ASSESSMENT W IT H REFERENCE TO THE INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT, IF THE ORIGINAL A SSESSMENT WAS MADE UNDER S. 143( 3) . SO LONG AS THE ASSESSEE HAS FURNISHED FULL AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT AND SO LONG AS THE ASSESSMENT ORDER IS FRAMED UNDER S. 143(3), IT MATTERS LITTLE THAT THE AO DID NOT ASK ANY QUESTION OR QUERY WITH RESPECT TO ONE ENTRY OR NOTE BUT HAD RAISED QUERIES AND QUESTIONS ON OTHER ASPECTS. SEC. 114(E) OF THE EVIDENCE ACT CAN BE APPLIED TO AN ASSESSMENT ORDER FRAMED UNDER S. 143(3) PROVIDED THAT THERE HAS BEEN A FULL AND TRUE DISCLOSURE OF ALL MATERIAL AND PRIMARY FACTS AT THE TIME OF ORIGINAL ASSESSMENT. IN SUCH A CASE IF THE ASSESSMENT IS REOPENED IN RESPECT OF A MATTER COVERED BY THE DISCLOSURE, IT WOULD AMOUNT TO CHANGE OF OPINION. IN A RECENT JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. ICICI SECURITIES PRI MARY DEALERSHIP LIMITED REPORTED IN 253 CTR 305. THE HON'BLE SUPREME COURT UPHELD THE ORDER OF BOMBAY HIGH COURT IN WRIT PETITION NO.1919 OF 2006 AND HELD THAT THE ASSESSEE HAD DISCLOSED FULL DETAILS IN THE RETURN OF INCOME IN THE MATTER OF ITS DEALING IN STOCKS AND SHARES. ACCORDING TO THE ASSESSEE, THE LOSS INCURRED WAS A BUSINESS LOSS, WHEREAS ACCORDING TO THE REVENUE, THE LOSS INCURRED WAS A SPECULATIVE LOSS. REJECTION OF THE OBJECTIONS OF THE ASSESSEE TO THE REOPENING OF THE ASSESSMENT BY THE AO VIDE H IS ORDER DATED 23RD JUNE, 2006 IS CLEARLY A CHANGE OF OPINION. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ORDER REOPENING THE ASSESSMENT WAS NOT MAINTAINABLE. FROM THE ABOVE IT IS VERY CLEAR THAT ON ACCOUNT OF CHANGE OF OPINION THE BOMBAY HIGH COURT (UPHELD BY SC) ALLOWED THE WRIT PETITION OF THE ASSESSEE ON ACCOUNT OF CHANGE OF OPINION AT THE STAGE OF DISPOSAL OF OBJECTIONS SUBMITTED BY THE ASSESSEE TO THE REASONS RECORDED. IN THE INSTANT CASE , FROM THE RECORDED REASONS, WE FIND TH A T THE ASSESSING OFFICER FAILED TO DISALLOW THE PROVISION FOR LOSS DUE TO EMBEZZLEMENT OF RS. 4,70,000/ - , PROVISION FOR INCOME TAX OF RS.24,74,000/ - AND DONATION OF RS. 1,30,000/ - WHILE MAKING THE ORIGINAL ASSESSMENT UNDER SEC. 143(3) OF THE ACT ON 24/12/2009, FOR THIS REASON HE HAS REOPENED THE ASSESSMENT. THE HON'BLE DELHI HIGH COURT IN THE ABOVE QUOTED DECISION HAS HELD TH A T S O LONG AS THE ASSESSEE HAS FURNISHED FULL AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT WITH REFERENCE TO THE INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT, IF THE ORIGINAL ASSESSMENT WAS MADE UNDER S. 143(3) , I N SUCH A CASE , IF THE ASSESSMENT IS REOPENED IN RESPECT OF A MATTER 5 ITA NO. 45 / JODH /201 5 COVERED BY THE DISCLOSURE, IT WOULD AMOUNT TO CHANGE OF OPINION. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THE REOPENING OF THE ORIGINAL ASSESSMENT IS BAD IN LAW AND THE REASSESSMENT ORDER DATED 05/12/2012 IS HEREBY QUASHED AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON MONDAY , THE 1 4 TH DAY OF MARCH , 201 6 AT JODHPUR . S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER D ATED : 1 4 TH MARCH , 201 6 . VR/ - COPY TO: 1. THE ASSESS E E. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R . 6. GUARD FILE. BY ORDER