THE BOMBAY PRESIDENCY GOLF CLUB LTD, MUMBAI V. ITO (E) 1(1), MUMBAI

ITA 4841/MUM/2012

• Counselvise Citation: 484119914 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-02-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 24-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Keywords: Tangible material; Assessment record; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI B.R.MITTAL, JM AND SHRI RAJENDRA, AM ./ I.T.A. NOS. 4841&4842/MUM/2012 ( / ASSESSMENT YEARS : 2004-05&2005-06) THE BOMBAY PRESIDENCY GOLF CLUB LTD, DR. CHOITARAM GIDWANI ROAD, CHEMBUR, MUMBAI-400074 / VS. ITO (E) 1(1), 5 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL MUMBAI-400012 ./ PAN : AAATT5024B ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SHEKHAR GUPTA / RESPONDENT BY : SHRI M.L. PERUMAL # / DATE OF HEARING : 06-02-2014 # / DATE OF PRONOUNCEMENT : 12 -02-2014 / O R D E R PER B.R.MITTAL, J.M . THE ASSESSEE HAS FILED THESE TWO APPEALS FOR ASSES SMENT YEARS 2004- 05& 2005-06 AGAINST SEPARATE ORDERS OF CIT(A), BOT H DATED 29.06.2012. IN BOTH APPEALS, THE ASSESSEE HAS DISPUTED THE ORDERS OF LD. CIT(A) IN SUSTAINING THE ORDER OF THE ASSESSING OFFICER TO REOPEN THE AS SESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961(THE ACT). 2. FIRST WE TAKE UP THE APPEAL FOR ASSESSMENT YEAR 2004-05. 3. WE HAVE HEARD LD. REPRESENTATIVE OF THE PARTIES AND HAVE PERUSED ORDER OF THE AUTHORITIES BELOW. 2 ITA NOS.4841&4842/MUM/2012 M/S.THE BOMBAY PRESIDENCY. 4. WE OBSERVE THAT THE ORIGINAL ASSESSMENT WAS MADE U/S 143(3) OF THE ACT ON 03.11.2006. SUBSEQUENTLY, THE ASSESSING OFFICER AFTER RECORDING THE REASONS ON 16.03.2011, COPY PLACED AT PAGE 6 OF THE PAPER BOOK, ISSUED NOTICE U/S.148 OF THE INCOME TAX ACT, ON 28 TH MARCH 2011. IN THE REASONS RECORDED, WE OBSERVE THAT THE ASSESSING OFFICER HAS STATED TH AT ON PERUSAL OF THE ASSESSMENT RECORDS, IT IS NOTICED THAT A). THE ASSESSEE TRUST HAS CREDITED THE ENTRANCE F EE RS.2,54,37,000/-, DIRECTLY TO THE RESERVES IN THE BALANCE SHEET WITHO UT ROUTING IT THROUGH THE INCOME AND EXPENDITURE ACCOUNT. B). AS PER SCHEDULE 12 OF THE INCOME EXPENDITURE AC COUNT, DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE EARNED INTEREST AMOUNTING TO RS.50,35,040/ - FROM ITS BANKERS AND ALSO RECEIVED INTEREST U/S.244A AMOUNTING TO RS .14,904/-. BOTH THESE INTERESTS HAVE NOT BEEN RECEIVED FROM THE MEMBERS O F THE TRUST AND THEREFORE, DOES NOT QUALIFY FOR CONCESSION ALLOWABL E ON THE PRINCIPLE OF MUTUALITY. 5. THE ASSESSING OFFICER HAS STATED THAT AS A RESUL T OF ABOVE THE INCOME OF THE ASSESSEE HAS BEEN UNDER STATED ON BOTH THE ABOV E ACCOUNTS. HE HAS FURTHER STATED THAT THE ASSESSEE TRUST HAS FAILED TO DISCL OSE FULLY AND TRULY THESE MATERIALS FACTS FOR THE ASSESSMENT AS FAR AS THE AF ORESAID ISSUES ARE CONCERNED, WHICH HAS ENTAILED INTO ESCAPEMENT OF INCOME TO THA T EXTENT. THEREFORE, THE ASSESSING OFFICER INITIATED REASSESSMENT PROCEEDING S. 6. AT THE TIME OF HEARING LD. AR CONTENDED THAT THE ASSESSING OFFICER HAS INITIATED REASSESSMENT PROCEEDINGS ON THE BASIS OF MATERIAL ALREADY AVAILABLE AT THE TIME OF ASSESSMENT MADE U/S.143(3) OF THE ACT. NO NEW FACTS HAVE COME TO HIS NOTICE, WHICH WERE NOT ON RECORD AT THE TIME OF ASSESSMENT. HE SUBMITTED THAT THE NOTICE HAS BEEN ISSUED AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND THEREFORE THE ACTION O F THE ASSESSING OFFICER IS 3 ITA NOS.4841&4842/MUM/2012 M/S.THE BOMBAY PRESIDENCY. BARRED BY LIMITATION AS PER PROVISO TO SECTION 147 OF THE ACT. LD. DR HAS NOT DISPUTED THE ABOVE FACTS. 7. WE AGREE WITH ABOVE CONTENTION OF THE ASSESSEE. FURTHER WE ARE OF THE CONSIDERED VIEW THAT THE ABOVE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF HINDUSTAN LEVER VS. ASSISTANT COMMISSIONER OF INCOME TAX 268 ITR 232. T HEIR LORDSHIPS HAVE HELD THAT ASSESSING OFFICER MUST DISCLOSE IN THE REASONS AS TO WHICH MATERIAL FACTS WERE NOT DISCLOSED BY THE ASSESSEE FULLY AND TRULY, WHICH WAS NECESSARY FOR ASSESSMENT OF THAT ASSESSMENT YEAR TO ESTABLISH VI TAL LINK BETWEEN THE REASONS AND EVIDENCE. THEIR LORDSHIPS HAVE HELD THAT SAID V ITAL LINK IS TO SAFEGUARD AGAINST ARBITRARY REOPENING OF THE CONCLUDED ASSES SMENT. IT WAS ALSO HELD THAT REASONS RECORDED BY THE ASSESSING OFFICER CANNOT BE SUPPLEMENTED BY FALLING AN AFFIDAVIT OR MAKING AN ORAL SUBMISSION. 8. ON PERUSAL OF REASONS RECORDED BY THE ASSESSMENT OFFICER AND THE FACTS OF THE CASE, WE OBSERVE THAT THE ASSESSING OFFICER HAS NOT RECEIVED ANY FURTHER EVIDENCE OR INFORMATION SO AS TO SAY THAT THE ASSES SEE AT THE TIME OF MAKING ORIGINAL ASSESSMENT DID NOT DISCLOSE TRULY AND WHOL LY THE MATERIAL FACTS WHICH HAS COME TO THE NOTICE TO THE AO LATER ON AND DUE TO WHICH THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. ON THE OT HER HAND, THE ASSESSING OFFICER HAS INITIATED REASSESSMENT PROCEEDINGS ON T HE BASIS OF THE SAME EVIDENCES AND MATERIAL WHICH WAS AVAILABLE AT TH E TIME OF MAKING ORIGINAL ASSESSMENT U/S 143(3). HENCE WE HOLD THAT THE INITI ATION OF REASSESSMENT PROCEEDINGS BY ISSUING NOTICE U/S.148 OF THE ACT, D ATED 28 TH MARCH 2011, FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I.E ASSESSMENT YEAR 2004-05 IS BARRED BY LIMITATION AS THE ORIGINAL ASSESSMENT WAS MADE U/S. 143(3) OF THE ACT, AND THERE IS NO EVIDENCE TO ESTABLISH THAT THE ASSESSEE FAILE D TO DISCLOSE FULLY AND TRULY THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. IN VI EW OF ABOVE, WE QUASH THE ASSESSMENT ORDER FOR A.Y.2004-05 BY ALLOWING GROUND OF APPEAL TAKEN BY THE ASSESSEE. 4 ITA NOS.4841&4842/MUM/2012 M/S.THE BOMBAY PRESIDENCY. 9. NOW, WE TAKE UP APPEAL FOR THE ASSESSMENT YEAR 2 005-06. 10. IN RESPECT OF THIS ASSESSMENT YEAR I.E.2005-06 THE RETURN FILED BY THE ASSESSEE WAS ACCEPTED U/S.143(1) OF THE INCOME TAX ACT. THE ASSESSING OFFICER HAS INITIATED REASSESSMENT PROCEEDINGS STATING THE SAME REASONS AS STATED, IN RESPECT OF THE ASSESSMENT YEAR 2004-05 MENTIONED HE REINABOVE. 11. THE NOTICE U/S. 148 OF THE ACT WAS ISSUED ON 28 TH MARCH 2011 ADMITTEDLY AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. AT THE TIME OF HEARING, IT WAS CONTENDED BY LD. DR THA T THE ORIGINAL ASSESSMENT WAS MADE U/S.143(1) OF THE ACT AND THEREFORE, THE A CTION OF THE ASSESSING OFFICER TO INITIATE REASSESSMENT PROCEEDINGS BY ASS ESSEE NOTICE U/S.148 OF THE ACT IS JUSTIFIED. HOWEVER, LD. AR SUBMITTED THAT AB OVE ISSUE IS ALSO COVERED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN TH E CASE OF PRASHAN S. JOSHI VS. ITO 230 CTR (BOM)232 AND ALSO HONBLE GUJARAT H IGH COURT IN THE CASE OF RATNA TRAYI REALITY SERVICE, PVT. LIMITED VS. INCOM E TAX 356 ITR 493. 12. ON CONSIDERATION OF THE FACTS OF THE CASE, IT I S A FACT THAT NO NEW MATERIAL HAS COME TO THE NOTICE OF THE ASSESSING OFFICER FOR INITIATING THE REASSESSMENT PROCEEDINGS AND THE REASSESSMENT HAS BEEN INITIATED AFTER EXPIRY OF MORE THAN 4 YEARS ON THE SAME MATERIALS WHICH WAS FURNISHED B Y THE ASSESSEE, AT THE TIME OF FALLING THE RETURN. THE RETURN WAS PROCESSED U /S.143(1) OF THE ACT. 13. WE OBSERVE THAT THE REASSESSMENT PROCEEDINGS HA S BEEN INITIATED ONLY AFTER OBSERVING BY ASSESSING OFFICER THAT THE INCOM E OF THE ASSESSEE HAS BEEN UNDER ASSESSED. SUCH NOTICE TO FIND THAT INCOME CH ARGEABLE TO TAX HAS ESCAPED ASSESSMENT IS FROM THE MATERIAL ALREADY ON RECORD A ND NOT FROM ANY NEW MATERIAL WHICH HAS COME INTO EXISTENCE ON THE BA SIS OF VIZ-A-VIZ ASSESSING OFFICER ENTERTAIN A BELIEF THAT THERE IS AN ESCAPEM ENT OF INCOME TO ENABLE HIM TO TAKE RECOURSE TO THE PROVISIONS OF REASSESSMENT. WE OBSERVE FROM THE 5 ITA NOS.4841&4842/MUM/2012 M/S.THE BOMBAY PRESIDENCY. REASONS RECORDED BY THE ASSESSING OFFICER, THERE IS NOTHING TO SHOW THAT ALLEGED ESCAPE OF INCOME WAS OWING TO THE FAILURE ON THE PA RT OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS TRULY AND FULLY. THE ITAT ( 3 RD MEMBER IN THE CASE OF TELCO DADAJEE DHACKJEE LIMITED IN ITA NO.4613/M/2005 HAS HELD THAT THE NOTICE OF REOPENING CAN BE CHALLENGED EVEN IN A CASE, WHERE T HE RETURN OF INCOME WAS PROCESSED U/S.143(1) OF THE ACT, ON ALL GROUNDS AV AILABLE TO THE ASSESSEE THAT THERE WAS NO REASON TO BELIEF THAT INCOME ESCAPED TO TAX OR THAT THERE WAS NO TANGIBLE MATERIAL BEFORE, THE ASSESSING OFFICER TO HAVE LIVE LINK OR NEXUS WITH THE FORMATION OF THAT OR THAT THE REASONS ARE BASED ON GOSSIP OR RUMOR. THE ONLY OTHER GROUND ON WHICH IT IS NOT POSSIBLE TO CHALLENGE THE ACTION OF THE ASSESSING OFFICER IS THAT THERE IS CHANGE OF OPINI ON. 14. SINCE IN THE CASE BEFORE US, NO TANGIBLE MATERI AL HAS BEEN BROUGHT ON RECORD WHICH HAS COME TO THE NOTICE OF THE ASSESSIN G OFFICER AFTER THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT, WE HOLD THAT THE ACTION OF THE ASSESSING OFFICER TO INITIATE REASSESSMENT PROCEEDINGS IS NOT IN ACCORDANCE WITH LAW. HENCE, WE ACCEPT THE CONTENTION OF THE ASSESSEE TH AT THE INITIATION OF REASSESSMENT PROCEEDINGS IS NOT VALID. THEREFORE, W E QUASH THE REASSESSMENT ORDER BY ALLOWING THE GROUND OF APPEAL TAKEN BY TH E ASSESSEE FOR ASSESSMENT YEAR 2005-06 AS WELL. 15. IN THE RESULT, BOTH THE ASSESSEES APPEALS FOR ASSESSMENT YEARS 2004-05 AND 2005-06 ARE ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 12TH FEBRUARY, 2014. ) * 12TH FEBRUARY, 2014 SD SD ( / RAJENDRA) ( . . /B.R.MITTAL) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI: ON THIS 12TH DAY OF FEBRUARY, 2014 . . ./ SRL , SR. PS . ./ A.K.PATEL 6 ITA NOS.4841&4842/MUM/2012 M/S.THE BOMBAY PRESIDENCY. # $&' (' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. . ( ) / THE CIT(A)-17, MUMBAI 4. . / CIT CONCERNED, MUMBAI 5. / 1 , # 1 , / DR, ITAT, MUMBAI BENCH 6. 4 / GUARD FILE. / BY ORDER, / //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI