Shri Arvindbhai D.Mistry,HUF, Surat V. The Income tax Officer, Ward-3(3), Surat

ITA 471/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6478 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-04-2010
• Assessment Year: 1998-1999
• Appeal Filed On: 01-02-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: J P SHAH
• Keywords: Reopening of assessment; Unexplained cash credit; Invalid notice; Reason to believe
• Section: 133A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND MAHAVIR SINGH, JUDICIAL MEMBER) ITA.NO.471/AHD/2007 ASSTT.YEAR : 1998-1999 ARVINDBHAI D. MISTRY HUF A/2, CORONET APARTMENT OPP: HARAMYUG SOCIETY-2 GHOD DOD ROAD SURAT 395 007. VS. ITO, WARD-3(3) SURAT. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI J.P. SHAH REVENUE BY : SMT.NEETA SHAH O R D E R PER G.D. AGARWAL, VICE-PRESIDENT: THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE CIT(A)-II DATED 22-11-2006 FOR A.Y.1998-1999 ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER PASSED UN DER SECTION 144 R.W.S. 147 OF THE INCOME TAX ACT, 1961. 2. THE FIRST GROUND RAISED BY THE ASSESSEE IS AS UN DER: 1. THD LD.CIT(A) ERRED IN LAW AND ON FACTS IN CONFO RMING THE INITIATION AND COMPLETION OF REASSESSMENT PROCEEDIN GS U/S.147 OF THE ACT. IT IS THEREFORE PRAYED THAT THE IMPUGNED ASSESSING ORDER OF THE AO UPHELD BY THE CIT(A) BE QUASHED AS INVALID AND VOID AB-INITIO AS PASSED ON THE BASIS OF INVALID NOTICE U/S.147 OF THE ACT. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT THE AO REOPENED THE ASSESSMENT ON THE BELIEF THAT T HE ASSESSEE FAILED TO FURNISH THE RETURN OF INCOME, WHILE IN FACT THE ASSESSEE HA D ALREADY FURNISHED THE RETURN MUCH PRIOR TO THE NOTICE UNDER SECTION 147. HE THE REFORE STATED THAT THE REOPENING OF THE ASSESSMENT IS INVALID. IN SUPPORT OF ITS CONTENTION, HE RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF SAGAR ENTERPRISES VS. ASSTT.COMMISSIONER, 257 ITR 335. ITA.NO.471/AHD/2007 -2- 4. THE LEARNED DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE CONTENTION OF THE LEARNED CO UNSEL HAS BEEN EXTENSIVELY DEALT BY THE CIT(A). SHE STATED THAT DURING THE SU RVEY UNDER SECTION 133A AT THE PREMISES OF SHRI PANKAJ DANAWALA, CHARTERED ACC OUNTANT IT WAS NOTICED THAT SHRI DANAWALA WAS INDULGING IN THE ACTIVITY OF PROVIDING HAWALA ENTRIES THROUGH SEVERAL PERSONS. THE ASSESSEES CASE IS ON E OF SUCH PERSONS. THEREFORE, THE CASE WAS REOPENED ON THE BASIS OF FA CTS FOUND DURING THE COURSE OF SURVEY AT THE PREMISES OF SHRI DANAWALA. THESE FACTS ARE ALSO MENTIONED IN THE FIRST PART OF THE ASSESSMENT ORDER. SHE ALSO S UBMITTED THAT EVEN IF THESE FACTS ARE NOT MENTIONED IN THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT, IT IS ONLY AN UNINTENTIONAL OMISSION AN D THE ENTIRE FACTS SHOULD BE CONSIDERED WHILE ADJUDICATING THE VALIDITY OF REOPE NING OF THE ASSESSMENT. SHE ALSO RELIED UPON THE PROVISION OF SECTION 292B AND CLAIMED THAT THE OMISSION OF CERTAIN FACTS IN THE RECORDED REASONS IS CURABLE DE FECT. SHE THEREFORE SUBMITTED THAT THE ORDER OF THE CIT(A) SHOULD BE SUSTAINED. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED MATERIAL AVAILABLE PLACED ON RECORD. THE A O HAS RECORDED THE FOLLOWING REASONS FOR REOPENING OF ASSESSMENT. THE UNDERSIGNED HAS REASON TO BELIEVE THAT THE INC OME CHARGEABLE T TAX HAS ESCAPED ASSESSMENT, WHICH AMOUNT TO OR IS LIKEL Y TO AMOUNT TO RS.1 LACS OR MORE, FOR AY 98-99. NOTICE U/S.148 OF THE IT ACT, 1961 REQUIRES TO BE ISSUED IN THIS CASE, REQUIRING THE ASSESSEE T O FURNISH RETURN OF INCOME FOR THE PERIOD WITHIN 30 DAYS IN THE PRESCRI BED FORM AND VERIFIED IN PRESCRIBED MANNER. IN VIEW OF THE PROVISIONS OF EXPLANATION TO SECTION 147 OF THE IT ACT, 1961 WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THE IT ACT, 1961, SHALL BE DEEMED TO BE A CASE WHERE IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. NOTICE U/S.148 OF THE IT ACT 1961 IS TO BE ISSUED, AFTER OBSERVING ALL THE PROCEDURAL AND STAT UTORY REQUIREMENT AS PER THE IT ACT, 1961. 6. FROM THE ABOVE, IT IS EVIDENT THAT IN THE RECORD ED REASONS, THE AO HAS NOT MENTIONED ANYTHING RELATING TO SURVEY AT THE PR EMISES OF SHRI DANAWALA OR ITA.NO.471/AHD/2007 -3- ANY MATERIAL RELATING TO THE ASSESSEE GATHERED DURI NG SUCH SURVEY. THE ONLY REASON GIVEN BY THE AO IS THAT THE ASSESSEE FAILED TO FURNISH THE RETURN OF INCOME AND AS PER THE EXPLANATION TO SECTION 147 NON-FURNISHING OF RETURN OF INCOME SHALL BE DEEMED TO BE A CASE WHERE THE INCOM E CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN THE ASSESSMENT ORDER, THE A O HIMSELF HAS MENTIONED THAT THE ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 25-3-1999 DECLARING TOTAL INCOME AT RS.41,480/-. THUS, THE F ACTS MENTIONED IN THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT THAT THE A SSESSEE FAILED TO FURNISH THE RETURN OF INCOME IS FACTUALLY INCORRECT. IN THE CA SE OF SAGAR ENTERPRISES (SUPRA), THE HONBLE JURISDICTIONAL HIGH COURT HELD AS UNDER : THAT IT WAS APPARENT THAT THE FACT OF NON-FILING OF THE RETURN FOR THE ASSESSMENT YEAR 1991-92 AD WEIGHED WITH THE RESPOND ENT FOR ARRIVING AT THE SATISFACTION ABOUT THE FAILURE ON THE PART OF T HE ASSESSEE AND ESCAPEMENT OF ASSESSMENT OF INCOME. HOWEVER, THE M ATERIAL ON RECORDED SHOWED THAT THE RETURN HAD BEEN FILED. IN SUCH CIRCUMSTANCES, IT COULD NOT BE SAID WITH CERTAIN AS TO WHICH FACT WOULD HAVE WEIGHED WITH THE OFFICER CONCERNED AND ONCE IT WAS SHOWN TH AT AN IRRELEVANT FACT HAD BEEN TAKEN INTO CONSIDERATION, TO WHAT EXTENT T HE DECISION WAS VITIATED WOULD BE DIFFICULT TO SAY. MOREOVER THE I NCOME-TAX OFFICER HAD STATED THAT THE PAYMENT WHICH WAS STATED TO BE UNDI SCLOSED INCOME RELEVANT FOR THE ASSESSMENT YEAR 1991-92 COULD HAVE BEEN MADE DURING THE FINANCIAL YEAR 1990-91 RELEVANT TO THE ASSESSME NT YEAR 1991-92 AND HENCE, TO COVER UP THAT PROBABILITY, PROTECTIVE AD DITION WAS MADE IN THE ASSESSMENT YEAR 1992-93. THE FIRST APPELLATE AUTHORITY DECIDED THE APPEAL FOR THE ASSESSMENT YEAR 1992-93 ON JANUARY, 1996, AND THE REASONS HAD BEEN RECORDED THEREAFTER ON AUGUST 18, 1997. THE NOTICE OF REASSESSMENT WAS NOT VALID AND WAS LIABLE TO BE QUA SHED. THE RATIO OF THE ABOVE DECISION WOULD BE SQUARELY A PPLICABLE TO THE CASE UNDER APPEAL BEFORE US. IN THIS CASE, THE ONLY REASON GI VEN BY THE AO IN THE REASONS RECORDED FOR REASSESSMENT WAS THE FAILURE OF THE AS SESSEE TO FURNISH RETURN OF INCOME, WHICH IS FACTUALLY INCORRECT. THE OTHER RE ASONS GIVEN BY THE LEARNED DR ARE NOT PART OF THE REASON RECORDED BY THE AO. WHILE CONSIDERING THE VALIDITY OF REOPENING OF THE ASSESSMENT, THE REASON S RECORDED BY THE AO ARE TO BE CONSIDERED AND NOT THE OTHER REASONS AS SUBMITTE D BY THE LEARNED DR. WE ARE ALSO OF THE OPINION THAT THE OMISSION OF CERTAI N FACTS IN THE REASONS RECORDED ITA.NO.471/AHD/2007 -4- FOR REOPENING OF THE ASSESSMENT IS NOT CURABLE DEFE CT UNDER SECTION 292B AS CONTENDED BY THE LEARNED DR. IN VIEW OF THE ABOVE , WE RESPECTFULLY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF SAGAR ENTERPRISES (SUPRA), HOLD THAT THE AO WAS NOT JUSTI FIED IN REOPENING OF THE ASSESSMENT. THE SAME IS QUASHED. CONSEQUENTLY, TH E ASSESSMENT ORDER PASSED BY THE AO IN PURSUANCE TO THE REOPENING OF THE ASSE SSMENT UNDER SECTION 147 IS ALSO QUASHED. THE OTHER GROUNDS OF APPEAL WHICH AR E AGAINST THE EXPARTE ORDER UNDER SECTION 144 AS WELL AS THE ADDITION MADE BY T HE AO FOR UNEXPLAINED CASH CREDIT DOES NOT SURVIVE FOR ADJUDICATION, AS THE AS SESSMENT ORDER ITSELF HAS BEEN QUASHED. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 23 RD APRIL, 2010. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 23-04-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER AR, ITAT, AHMEDABAD