SHRI SANJAY KUMAR AGRAWAL, Indore V. THE ACIT-4, Indore

ITA 488/IND/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5911 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 02-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MOURYA
• Keywords: Reopening of assessment; Depreciation; Income from undisclosed sources; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T.GERASIA, HON'BLE JUDICIAL MEMBER AN D SHRI N.S. SAINI, HONBLE ACCOUNTANT MEMBER ITA NO. 488/IND/2015 (ASST. YEAR : 2003-04) SHRI SANJAY KUMAR AGRAWAL, 3 RD FLOOR, AGRAWAL HOUSE, INDORE. VS. ACIT-4, INDORE. PAN NO. ABHPA2475Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY TULSIYAN, CA. DEPARTMENT BY : SHRI R.P.MOURYA, DR DATE OF HEARING : 05/07/2016. DATE OF PRONOUNCEMENT : 05/07/2016. O R D E R PER N.S.SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, INDORE, D ATED 27/02/2015. 2. IN GROUND NO. 1 OF THE APPEAL, THE ASSESSEE HAS C HALLENGED THE ACTION OF THE AO OF REOPENING THE ASSESSMENT. 3. THE BRIEF FACTS OF THE CASE ARE THAT BEFORE THE CIT(A), THE ASSESSEE CHALLENGING THE REOPENING OF ASSESSMENT U/ S 148 OF THE ACT CONTENDED THAT THE REGULAR ASSESSMENT WAS COMPLETED U/S 143(3) AND THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESS EE TO DISCLOSE FULLY -: 2:- SHRI SAJAY KUMAR AGRAWAL VS. ACIT-4, INDORE I.T.A.N O. 488/IND/2015/AY - 03-04 AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE REAS SESSMENT. THE ASSESSMENT HAVING ONCE COMPLETED U/S 143(3) AND THE LONG TERM CAPITAL GAINS OFFERED BY THE ASSESSEE HAVING ONCE A LREADY ASSESSED AS SUCH, THE REOPENING ON THIS ISSUE IS NOTHING BUT CH ANGE OF OPINION. ON THE ONE HAND, THE IDENTITY OF M/S. PRIYANSH SAREES INDUSTRIES LIMITED HAS BEEN CHALLENGED AND ON THE OTHER HAND IT WAS AC CEPTED THAT THE SAID COMPANY WAS LISTED COMPANY AND STATED THAT THE ASSESSEE HAS TAKEN ADVANTAGE OF PRICE RIGGING CARRIED OUT BY A C ARTEL OF BROKERS IN THE SHARE PRICE OF THE SAID COMPANY. IT WAS STRONGLY AR GUED THAT THERE WAS NO BASIS OF THE ALLEGATION THAT THE ASSESSEE HAD TA KEN THE ADVANTAGE OF PRICE RIGGING ETC. THE ALLEGATION THAT THE ASSESSEE WAS BRINGING BACK UNACCOUNTED INCOME IN THE BOOKS OF ACCOUNTS WAS ALS O WITHOUT ANY BASIS OR SUPPORT. IT WAS SUBMITTED THAT THE REASONS ARE VAGUE AND THE CASE HAS BEEN REOPENED MERELY ON SUSPICION. ISSUANC E OF NOTICE U/S 148 ON THE SOLE BASIS OF SEBI ORDER DATED 14.10.200 8, WHERE THE ASSESSEE WAS NOT INDICTED WAS WRONG. IT WAS NOT SUF FICIENT TO DRAW INFERENCE RATHER IT WAS INCUMBENT TO BRING MATERIAL AGAINST THE ASSESSEE AND PROVE THAT THE TRANSACTION WAS NON-GENUINE. THE OBJECTION OF THE ASSESSEE WAS RAISED AGAINST THE REOPENING OF THE AS SESSMENT HAVE NOT BEEN DISCLOSED OFF. THE ASSESSMENT HAVING BEEN COMP LETED U/S 143(3), THE REOPENING PROCEEDINGS INITIATED AFTER FOUR YEAR S WITHOUT THERE BEING ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL THE MATERIAL FACTS WHOLLY AND TRULY ARE WITHOUT JUSTIFICATION AND, IT WAS, THEREFORE, PLEADED -: 3:- SHRI SAJAY KUMAR AGRAWAL VS. ACIT-4, INDORE I.T.A.N O. 488/IND/2015/AY - 03-04 THAT THE ASSESSMENT ORDER AND THE REASSESSMENT PROC EEDINGS BE QUASHED. 4. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE DISMISSED THE GROUND OF APPEAL BY OBSERVING AS UNDE R :- 3.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND A LSO THE SUBMISSIONS PUT FORTH BY THE ASSESSEE. WHEN THE DEP ARTMENT HAD DISPUTED THE IDENTITY AND THE CREDITWORTHINESS OF P RIYANSH SAREES LIMITED DURING THE ASSESSMENT PROCEEDINGS OF ASSESS MENT YEAR 2004-05 AND 2005-06, THE AO WAS WELL WITHIN HIS JURI SDICTION TO RE-OPEN THE COMPLETED ASSESSMENT AND CHECK THE VERA CITY OF THE TRANSACTION. THE OBJECTIONS RAISED BY THE APPELLAN T ARE MERELY TECHNICAL. THE REOPENING OF ASSESSMENT IS THUS JUST IFIED. THIS GROUND OF APPEAL IS THUS DISMISSED. 5. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FILED COPY OF LETTER DATED 29.04.2010 ADDRESSED TO ACIT, RANGE 5(1), INDORE AND SUBMITTED THAT THE ASSESSEE HAS RAISED OBJECTIO NS BY THE SAID LETTER BEFORE THE AO FOR REOPENING THE ASSESSMENT B Y ISSUE OF NOTICE U/S 148(2) OF THE ACT AND THE AO HAS NOT DISPOSED OF TH E SAID OBJECTION OF THE ASSESSEE BY PASSING A SEPARATE ORDER AND, THERE FORE, THE REASSESSMENT ORDER OF THE AO SHOULD BE QUASHED. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE SUPPORTED THE ORDER OF THE CIT(A). -: 4:- SHRI SAJAY KUMAR AGRAWAL VS. ACIT-4, INDORE I.T.A.N O. 488/IND/2015/AY - 03-04 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE ORDERS OF THE LOWER AUTHORITIES AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. WE FIND THAT THE AO ISSUED NOTICE U/S 148( 2) OF THE ACT ON 29.03.2010 FOR REOPENING OF THE ASSESSMENT FOR THE ASSESSMENT YEAR 2003-04. THE ASSESSEE FILED OBJECTION AGAINST REOPE NING OF THE ASSESSMENT VIDE LETTER DATED 29.0-4.2010, WHICH REA DS AS UNDER :- 29-04-2010 'UNDER PROTEST' TO, THE ASSISTANT COMMISSIONER OF INCOME TAX, RANGE 5 ( 1), INDORE REG: SANJAY KUMAR AGRAWAL 5, YESHWANT COLONY, INDORE PAN ABHPA 2475 R SUB: ISSUANCE OF NOTICE U/S 148 FOR ASSESSMENT YEAR 2003- 2004. REQUEST FOR SUPPLY OF REASONS . SIR, KINDLY REFER TO THE NOTICE ISSUED U/S 148 IN THE AB OVE CASE FOR THE ASSESSMENT YEAR 2003-2004 DATED 29.03.2010 SERV ED ON 31.03.2010 PROPOSING TO ASSESS OR REASSESS THE INCO ME FOR THIS ASSESSMENT YEAR AND REQUIRING THE ASSESSEE TO FILE HIS RETURN OF INCOME WITHIN 30 DAYS FROM THE DATE OF SERVICE. UNDER INSTRUCTIONS FROM OUR CLIENT, WE HAVE TO SUBM IT AS UNDER: 1. THAT THE RETURN OF INCOME FOR THIS ASSESSMENT YEAR WAS FILED ON A TOTAL INCOME OF RS.3551530/-. TAX PAID AMOUNTED TO RS.714884/-. THE INDIVIDUAL CAPITAL ACC OUNT, STATEMENT OF AFFAIRS ALONG WITH AUDIT REPORT OF THE THREE PROPRIETORSHIP CONCERNS AS REQUIRED UNDER SECTION 4 4AB OF THE INCOME TAX ACT 1961, ALONG WITH OTHER DOCUMENTS , -: 5:- SHRI SAJAY KUMAR AGRAWAL VS. ACIT-4, INDORE I.T.A.N O. 488/IND/2015/AY - 03-04 WAS PROPERLY FILED UNDER SECTION 139, ON 27.11.2003 WITH ADDL. CIT RANGE - 5, INDORE VIDE ACKNOWLEDGEMENT NO . 0511000153. 2. INTIMATION U/S 143(1) (A) OF THE INCOME TAX ACT, 1961 WAS PASSED ON 26.03.2004 ACCEPTING THE RETURNED INCOME OF RS.3551530/-. 3. ASSESSMENT U/S 143(3) WAS COMPLETED ON 30.03.2006 B Y ASSTT. COMMISSIONER OF INCOME TAX-5(1), INDORE ON A TOTAL INCOME OF RS. 3711010 EXCLUDING AGRICULTURAL INCOME OF RS. 94740/- BY MAKING THE FOLLOWING ADDITIONS :- 1. LOSS ON SALE OF ASSETS DISALLOWED RS. 39,878/- 2. DISALLOWANCE OF CAPITAL NATURE RS. 12,499/- 3. DISALLOWANCE OUT OF TELEPHONE EXPENSES RS. 47,591/- 4. DISALLOWANCE OUT OF TELEPHONE EXPENSES RS. 30,375/- 5. DISALLOWANCE OUT OF DEPRECIATION RS. 29,137/- RS.1,59,480/ - 4. LOOKING AT THE ABOVE FACTS THE RETURN FILED U/S 139(1) ON 27.11.03 ON A TOTAL INCOME OFRS.35,51,5301- AS ADJUSTED BY THE ADDITIONS MADE U/S 14(3) MAY KINDLY BE TREATED AS RETURN FILED IN RESPONSE TO THIS NOTICE ISSUED U/S 148 BUT UNDER PROTEST.' 5. THIS RETURN HAS BEEN FILED UNDER PROTEST, AS THE AS SESSEE HAS NOT ACCEPTED THE ACTION OF REOPENING OF THE INC OME TAX CASE. 6. THE ASSESSEE OBJECTS AGAINST OF ASSESSMENT, SINCE T HE REGULAR SCRUTINY AND ASSESSMENT ORDER U/S 143(3) WAS PASSED ON 30.03.2006 BY THE THAN AO AFTER VARIOUS HEARING AND AFTER DUE SATISFACTION AS TO THE TRANSA CTION OF THE ASSESSEE. FOR THIS REASON AND ALSO FOR THE REAS ON THAT FOUR YEARS HAVE ALREADY ELAPSED FROM THE END OF THE ASSESSMENT YEAR, THE NOTICE U/S 148 IS UNCALLED FOR. 7. IT IS ALSO PERTINENT TO MENTION HERE THAT THE CASE OF THE ASSESSEE FOR THE A Y 2001- 02, WAS ALSO RE-OPENED U /S 147 ON 27.03.2008, AND AFTER DETAILED SCRUTINY THE ASSESSMENT ORDER WAS PASSED U/S 147 143 (3) ON 24.12.2008. -: 6:- SHRI SAJAY KUMAR AGRAWAL VS. ACIT-4, INDORE I.T.A.N O. 488/IND/2015/AY - 03-04 8. WITHOUT PREJUDICE TO THE RIGHTS AND CONTENTIONS OF THE ASSESSEE, IT IS SUBMITTED THAT THE IMPUGNED NOTICE PURPORTEDLY ISSUED UNDER SECTION 148 OF THE INCOME TAX ACT, 1961, IS WHOLLY WITHOUT JURISDICTION, ILLEGAL, INVALID AND VOID AB-INITIO. 9. IT IS SUBMITTED THAT THE CONDITIONS PRECEDENT TO TH E INITIATION OF PROCEEDINGS U/S 148 ARE NOT SATISFIED IN THE INSTANT CASE AND THAT SUCH PROCEEDINGS, IT SEEMS, H AVE BEEN INITIATED ONLY ON A CHANGE OF OPINION, WITHOUT PROPER APPLICATION OF MIND. 10. IT IS FURTHER SUBMITTED THAT THERE IS NO REASON TO BELIEVE THAT ANY INCOME OF THE ASSESSEE FOR THIS YEAR HAS ESCAPED ASSESSMENT, WITHIN THE MEANING OF SECTION 1 48 OF THE SAID ACT, AS ALLEGED OR OTHERWISE OR AT ALL. THAT THE REQUISITE SANCTIONS HAVE ALSO NOT BEEN OBTAINED. 11. IT IS ALSO SUBMITTED THAT THE IMPUGNED PROCEEDINGS HAVE BEEN INITIATED ONLY TO MAKE FISHING INQUIRIES AND INVESTIGATIONS INTO THE MATTER WHICH HAVE ALREADY ATTAINED FINALITY. 12. IN CASE YOUR HONOUR HAS ANY REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, IT IS REQUESTED THAT THE CERTIFIED COPY OF THE REASONS FO R THE SAID BELIEF, AS MIGHT HAVE BEEN RECORDED BY YOUR HO NOUR MAY VERY KINDLY BE COMMUNICATED IN WRITING. THE RETURN OF INCOME HAS BEEN FILED 'UNDER PROTEST' WITHOUT PREJUDICE TO OUR OBJECTION OF ISSUING NOTICE U/S 148 AS WELL AS REOPENING OF THE ASSESSMENT. THANKING YOU. YOURS FAITHFULLY, FOR ARORA BANTHIA & TULSIYAN, SD/- -: 7:- SHRI SAJAY KUMAR AGRAWAL VS. ACIT-4, INDORE I.T.A.N O. 488/IND/2015/AY - 03-04 8. THE AO DID NOT DISPOSE OF THE OBJECTION O F THE ASSESSEE AND PROCEEDED TO PASS THE REASSESSMENT ORDER U/S 143(3) READ WITH SECTION 147 OF THE ACT ON 27.12.2010. 9. THE ASSESSEE FILED APPEAL BEFORE THE CIT( A), WHO DISMISSED THE APPEAL OF THE ASSESSEE HOLDING REASSESSMENT PROCEED INGS INITIATED BY THE AO BY ISSUE OF NOTICE U/S 148 OF THE INCOME-TAX ACT, 1961, IS VALID. 10. BEFORE US, THE LD. AUTHORIZED REPRESENTA TIVE OF THE ASSESSEE RELIED ON THE DECISION OF HON'BLE GUJARAT HIGH COUR T IN THE CASE OF GENERAL MOTORS PRIVATE LIMITED VS. DY. CIT, 354 ITR 244 (GUJ) AND SUBMITTED THAT THE HON'BLE HIGH COURT IN THE SAID O RDER HAS HELD THAT THE AO IN THE CASE OF REOPENING OF ASSESSMENT U/S 1 48 OF THE ACT WAS FIRST REQUIRED TO DECIDE THE OBJECTION OF THE ASSES SEE FILED U/S 148 AND SERVE A COPY OF THE ORDER ON THE EASE. AND AFTER GI VING REASONABLE TIME TO THE ASSESSEE FOR CHALLENGING HIS ORDER, IT WAS O PEN TO HIM TO PASS AN ASSESSMENT ORDER. THIS WAS NOT DONE BY THE AO, AND, THEREFORE, THE ORDER ON THE OBJECTION TO THE NOTICE U/S 148 AND TH E ASSESSMENT ORDER PASSED UNDER THE ACT DESERVES TO BE QUASHED. HE, TH EREFORE, PRAYED THAT THE PRESENT RE-ASSESSMENT ORDER PASSED IN THE CASE OF THE ASSESSEE U/S 147 OF THE ACT SHOULD BE QUASHED FOLLO WING THE DECISION OF THE HON'BLE GUJARAT HIGH COURT. 11. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES/ 12. WE FIND THAT THE UNDISPUTED FACTS OF TH E CASE ARE THAT THE ASSESSEE RECEIVED NOTICE U/S 148 OF THE ACT ISSUED BY THE AO ON -: 8:- SHRI SAJAY KUMAR AGRAWAL VS. ACIT-4, INDORE I.T.A.N O. 488/IND/2015/AY - 03-04 29.03.2010. THE ASSESSEE FILED LETTER IN PURSUANCE TO THE SAID NOTICE DATED 27.4.2010 AND REQUESTED TO TREAT THE RETURN F ILED ON 31.3.2010 AS TO HAVE BEEN FILED IN RESPONSE TO NOTICE U/S 148. T HEREAFTER, THE ASSESSEE FILED LETTER DATED 29.04.2010 OBJECTING TO THE REOPENING OF THE ASSESSMENT BY THE AO. THE AO DID NOT DISPOSE OF THE OBJECTIONS OF THE ASSESSEE AND PASSED THE RE-ASSESSMENT ORDER U/S 143 (3)/147 OF THE ACT ON 27.12.2010. IN THE ABOVE FACTS OF THE CASE, THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GENERAL M OTORS INDIA P. LTD. VS. DY. CIT, (2013) 354 ITR 244 (GUJ), WHEREIN THE HON'BLE HIGH COURT HAS HELD AS UNDER :- . IT WAS NOT OPEN TO THE AO TO DECIDE THE OBJECTION T O NOTICE UNDER SECTION 148 BY A COMPOSITE ASSESSMENT ORDER. THE AO WAS REQUIRED TO FIRST DECIDE THE OBJECTION OF THE ASSESSEE FILED UNDER SECTION 148 AND SERVE A COPY O F THE ORDER ON THE ASSESSEE. AND AFTER GIVING SOME REASONA BLE TIME TO THE ASSESSEE FOR CHALLENGING HIS ORDER, IT WAS OPEN TO HIM TO PASS AN ASSESSMENT ORDER. THIS WAS NOT DO NE BY THE ASSESSING OFFICER, THEREFORE, THE ORDER ON THE O BJECTION TO THE NOTICE UNDER SECTION 148 AND THE ASSESSMENT ORDER PASSED UNDER THE ACT DESERVES TO BE QUASHED. 13. RESPECTFULLY FOLLOWING THE SAME, WE QUASH TH E REASSESSMENT ORDER PASSED U/S 143(3) READ WITH SECTION 147 DATED 29.12.2010. -: 9:- SHRI SAJAY KUMAR AGRAWAL VS. ACIT-4, INDORE I.T.A.N O. 488/IND/2015/AY - 03-04 14. AS WE HAVE QUASHED THE REASSESSMENT ORDER, THE OTHER GROUNDS OF APPEAL RAISED ON MERITS OF THE ADDITION BY THE A SSESSEE HAVE BECOME INFRUCTUOUS AND HENCE ARE DISMISSED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING ON TUESDAY, THE DAY OF 5 TH JULY, 2016 AT INDORE. SD/-(D.T.GERASIA) SD/- (N.S.S AINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 5 TH JULY, 2016. CPU COPY TO: 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., INDORE -: 10:- SHRI SAJAY KUMAR AGRAWAL VS. ACIT-4, INDORE I.T.A. NO. 488/IND/2015/AY - 03-04