M/s Hastimal Kishore Kumar Solanki , Bangalore V. The Income Tax Officer Ward-5(2)(1), Bangalore

ITA 456/BANG/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4821 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 16-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMER SINGH MEENA
• Assessee Lawyers: B R SUDHEENDRA
• Keywords: Reason to believe
• Section: 142(1); 234B; 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO. 456/BANG/2018 ASSESSMENT YEAR : 2008 - 09 HASTIMAL KISHORE KUMAR SOLANKI, PROP: M/S. ARIHANT AGENCIES, NO.37, M.M. LANE, GANIGARPET, BENGALURU 560 002. PAN: AMZPS 7841J VS. THE INCOME TAX OFFICER, WARD 5(2)(1), BENGALURU. APP ELLANT RESPONDENT APP ELLANT BY : SHRI B R SUDHEENDRA, ADVOCATE RESPONDENT BY : SHRI SUMER SINGH MEENA, ADDL. CIT(DR), ITAT, BENGALURU . DATE OF HEARING : 28.03.2018 DATE OF PRONOUNCEMENT : 10 .04.2018 O R D E R THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE LEARNED INCOME TAX OFFICER HAD ERRED IN PA SSING THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED C OMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE IMPUGNED ORDERS BEING BAD IN LAW ARE LIABLE TO BE Q UASHED. 2. THE LEARNED INCOME TAX OFFICER HAS ERRED IN PASS ING THE ASSESSMENT ORDER U/S 147 R.W.S 144 WITHOUT PROVIDIN G COPY OF REASONS RECORDED. IF ANY, FOR THE ISSUE OF NOTICES U/S 148 AND WITHOUT PROVIDING THE DETAILS OF ADDITIONS PROPOSED IN THE NOTICE U/S 142(1). THE LEARNED COMMISSIONER OF INCOME TAX APPEALS ITA NO.456/BANG/2018 PAGE 2 OF 6 HAS ERRED IN CONFIRMING THE SAME. HENCE, THE ASSESS MENT ORDER AND THE CIT(A) ORDER IS BAD IN LAW AND REQUIRED TO BE QUASHED. 3. THE LEARNED INCOME TAX OFFICER, WARD5(2)(1). BAN GALORE HAS ERRED IN ISSUING NOTICE UNDER SECTION 148 DATED 20.03.2015, INITIATING AND CONCLUDING THE ASSESSMENT UNDER SECT ION 147 R.W.S 144 WHEN THE LEARNED ITO, WARD 5(2)(2), BANGALORE H AD ALREADY ISSUED NOTICE U/S 148 DATED 02.03.2015 AND THE APPE LLANT HAD ALREADY FILED A LETTER ON 13.03.2015 BEFORE THE LEA RNED ITO, WARD 5(2)(2). BANGALORE. THE ISSUE OF SECOND NOTICE U/S 148 DATED 20.03.2015 IS BAD IN LAW AND CONSEQUENTLY THE ASSES SMENT PROCEEDINGS AND THE ORDER PASSED BY THE LEARNED ITO , WARD 5(2)(1), BANGALORE U/S 147 R.W.S 144 DATED 28.03.20 16 IS BAD IN LAW AND LIABLE TO BE QUASHED. 4. THE LEARNED ITO, WARD 5(2)(1), BANGALORE HAS ERR ED IN PASSING THE ASSESSMENT ORDER UNDER 147 READ WITH SE CTION 144 WITHOUT ISSUING AND SERVING NOTICE UNDER SECTION 14 3(2) OF THE IT ACT, 1961. THE ORDER SO PASSED BEING HAD IN LAW IS LIABLE TO BE QUASHED. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ASSESSMENT ORDER PASSED BY THE LEARNED ITO, WARD 5(2)(1). BANGALORE U/S 147 R.W.S 144 IN T HE ABSENCE OF 'REASON TO BELIEVE' THAT INCOME HAS ESCAPED ASSESSM ENT. THE ORDER SO PASSED ON MERE CONJECTURE, SURMISE. WITHOUT ANY 'REASON TO BELIEVE' THAT INCOME HAS ESCAPED ASSESSMENT IS BAD IN LAW AND LIABLE TO BE QUASHED. 6. THE LEARNED ITO, WARD 5(2)(1), BANGALORE HAS ER RED IN PASSING THE ASSESSMENT ORDER UNDER 147 READ WITH SE CTION 144 AND ERRED IN MAKING THE ADDITION OF RS. 9.87.280 MERELY ON THE BASIS OF ADMISSION OF ONE MR. MUKESH CHOKSI AND WITHOUT DEMONSTRATING AS TO HOW THE APPELLANT WAS INVOLVED IN THE SAME AND WITHOUT PROVIDING AN OPPORTUNITY TO REBUT THE M ATERIAL RELIED ON AND WITHOUT PROVIDING AN OPPORTUNITY TO CROSS EX AMINE THE SAID PERSON. THE ORDER SO PASSED BEING BAD IN LAW I S LIABLE TO BE QUASHED. 7. IN ANY CASE AND WITHOUT PREJUDICE, THE LEARNED ITO. WARD 5(2)(1), BANGALORE HAS ERRED IN NOT REDUCING THE SH ORT TERM CAPITAL GAINS AMOUNTING TO RS. 7,54,301.55 INCLUDED IN THE INCOME RETURNED AS THE IMPUGNED TRANSACTION IS NOT TREATED AS GENUINE AND ITA NO.456/BANG/2018 PAGE 3 OF 6 AS THE ENTIRE PURCHASE AND SALE AMOUNT OF RS. 9,87. 280 IS TREATED AS INCOME FROM OTHER SOURCES'. THE ADDITION OF RS. 9.87.280 THUS HAS RESULTED IN DOUBLE TAXATION OF THE VERY SAME AM OUNT TWICE AND THUS BAD IN LAW AND LIABLE TO BE QUASHED. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING THAT THE APPELLANT HAS NOT RES PONDED TO NOTICE ISSUED U/S 142(1) DATED 04.01.2016 AND ALSO IN CONFIRMING THAT THE ASSESSING OFFICER HAS GOT JURIS DICTION IN REOPENING THE ASSESSMENT BY ISSUING THE NOTICE U/S 148 OF THE ACT. 9. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS INSTEAD OF QUASHING THE IMPUGNED ORDER, HAS JUS T CONFIRMED THE ORDER OF ASSESSING OFFICER WITHOUT PR OPERLY CONSIDERING THE FACT AND CIRCUMSTANCES OF THE CASE, ARGUMENTS OF THE APPELLANT AND THE LAW APPLICABLE. 10. THE LEARNED ASSESSING OFFICER HAS ERRED, IN HOL DING THAT THE APPELLANT HAS NOT EARNED CAPITAL GAINS ON SALE OF SHARES AMOUNTING TO RS.7,54,301.55 AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. 11. THE APPELLANT DENIES THE LIABILITY TO PAY THE ENHANCED INTEREST UNDER SECTION 234B AMOUNTING TO RS. 3,54,9 38 (RS.3,55,788-RS.850) AND UNDER SECTION 234C AMOUNTI NG TO RS. 12,471 (RS. 15,655-RS. 3,184). THE INTEREST HAV ING BEEN LEVIED ERRONEOUSLY IS TO BE DELETED. 12. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE A DDUCED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE O RDER PASSED BY THE LEARNED ASSESSING OFFICER AND COMMISSIONER OF I NCOME TAX (APPEALS) 5, BENGALURU BE QUASHED, OR IN THE ALTE RNATIVE A. ADDITION OF RS.9,87,280 HE DELETED. B. WITHOUT PREJUDICE. ADDITION, IF ANY, BE LIMITED TO RS.2,32,978 [9,87,280 LESS 7,54,301] AFTER REDUCTIO N OF SHORT TERM CAPITAL GAINS INCLUDED IN THE INCOME RETURNED. C. INTEREST UNDER SECTION 23413 BE DELETED, AND ITA NO.456/BANG/2018 PAGE 4 OF 6 D. INTEREST UNDER SECTION 234C BE DELETED. THE APPELLANT PRAYS ACCORDINGLY. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE HAS INVITED MY ATTENTION TO THE PRELIMINARY OBJECTIONS RAISED THROUGH GROUNDS ON VALIDITY OF THE ASSESSMENT FRAMED U/S. 147 OF THE A CT WITHOUT SERVING A COPY OF THE REASONS RECORDED FOR REOPENING THE ASSESSMEN T. IN SUPPORT OF THESE CONTENTIONS, THE LD. COUNSEL FOR THE ASSESSEE INVIT ED MY ATTENTION TO THE FACT THAT DURING THE ASSESSMENT PROCEEDINGS, THE AS SESSEE HAS REPEATEDLY ASKED THE AO TO SUPPLY A COPY OF THE REASONS RECORD ED FOR REOPENING THE ASSESSMENT U/S. 147 OF THE ACT, BUT DESPITE REPEATE D REQUESTS, COPY OF THE REASONS RECODED FOR REOPENING THE ASSESSMENT WAS NE VER SUPPLIED. A COPY OF LETTER DATED 10.03.15 AND 07.04.15 WRITTEN IN RESPONSE TO NOTICE ISSUED BY THE AO IS PLACED ON RECORD THROUGH WHICH THE AO WAS ASKED TO SUPPLY A COPY OF THE REASONS RECORDED IF ANY, FOR I SSUE OF NOTICE U/S. 148 OF THE ACT, BUT DESPITE THIS LETTER REASONS RECORDED F OR REOPENING THE ASSESSMENT WAS NOT SUPPLIED TO THE ASSESSEE. THE AS SESSEE HAS ALSO TAKEN A GROUND BEFORE THE CIT(APPEALS) CHALLENGING THE VALIDITY OF THE ASSESSMENT WITHOUT SUPPLYING COPY OF THE REASONS RE CORDED, BUT THE CIT(APPEALS) OPTED NOT TO ADJUDICATE THAT GROUND. 3. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTEND ED THAT ON REQUEST OF THE ASSESSEE, THE AO WAS UNDER AN OBLIGATION TO SUPPLY THE COPY OF REASONS RECORDED FOR REOPENING THE ASSESSMENT SO TH AT ASSESSEE CAN FILE ITS OBJECTIONS IF ANY, TO THE REASONS RECORDED AND THEREAFTER THE AO HAS TO DISPOSE OF THAT OBJECTIONS BEFORE PROCEEDING ON MER ITS FOR COMPLETING THE ASSESSMENT. 4. THE LD. COUNSEL FOR THE ASSESSEE FURTHER INVITED OUR ATTENTION TO THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE O F KOTHARI METALS V. ITO 377 ITR 581 (KAR) IN WHICH THE HONBLE HIGH COURT HAS CATEGORICALLY HELD THAT WHERE REASONS FOR REOPENING WERE NOT FURNISHED TO THE ASSESSEE ITA NO.456/BANG/2018 PAGE 5 OF 6 DESPITE REQUESTS, THE ASSESSMENT WAS NOT VALID. TH E RELEVANT OBSERVATIONS OF THE HONBLE HIGH COURT IS EXTRACTED HEREUNDER FO R THE SAKE OF REFERENCE:- 6. THE QUESTION OF NON-FURNISHING THE REASONS FOR RE-OPENING AN ALREADY CONCLUDED ASSESSMENT GOES TO THE VERY RO OT OF THE MATTER. AFTER FILING OF THE RETURN IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT OR ON REQUEST OF THE A SSESSEE REQUESTING THAT THE RETURN OF INCOME INITIALLY FILE D BE TREATED AS A RETURN OF INCOME FILED IN RESPONSE TO SUCH NOTICE, THE ASSESSEE IS ENTITLED TO BE FURNISHED THE REASONS FOR SUCH RE-OP ENING, WHICH CAN ALSO BE CHALLENGED INDEPENDENTLY. SINCE SUCH R EASONS HAD NOT BEEN FURNISHED TO THE APPELLANT, EVEN THOUGH A REQUEST FOR THE SAME HAD BEEN MADE, WE ARE OF THE OPINION THAT PROC EEDINGS FOR THE RE-ASSESSMENT COULD NOT HAVE BEEN TAKEN FURTHER ON THIS GROUND ALONE. 5. IN THE INSTANT CASE UNDISPUTEDLY REASONS WERE NO T SUPPLIED TO THE ASSESSEE DESPITE REPEATED REQUESTS, THEREFORE IN TH E LIGHT OF THE AFORESAID JUDGMENT OF THE JURISDICTIONAL HIGH COURT, THE ASSE SSMENT FRAMED BY THE AO U/S. 147/143(3) OF THE ACT WITHOUT OFFERING COPY OF REASONS RECORDED FOR REOPENING THE ASSESSMENT IS NOT SUSTAINABLE IN THE EYES OF LAW. I ACCORDINGLY QUASH THE ASSESSMENT FRAMED. SINCE THE ASSESSMENT IS QUASHED, I FIND NO JUSTIFICATION TO DEAL WITH THE I SSUES ON MERITS. ACCORDINGLY, THE APPEAL OF THE ASSESSEE STANDS ALLO WED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF APRIL, 2018. SD/- ( SUNIL KUMAR YADAV ) JUDICIAL MEMBER BANGALORE, DATED, THE 10 TH APRIL, 2018. / D ESAI S MURTHY / ITA NO.456/BANG/2018 PAGE 6 OF 6 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. G UARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.