Sri Rabindra Nath Pradhan, Bhubaneswar V. ITO, Ward-2(1), Bhubaneswar

ITA 490/CTK/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7041 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 05-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P K MISHRA
• Keywords: Reopening of assessment; Business income; Search and seizure; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 147

Judgement Text

P A G E 1 | 7 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER ITA NO. 490 /CTK/201 7 ASSESSMENT YEA R: 2010 - 2011 RABINDRA NATH PRADHAN, M/S. JAY BHAWANI ENTERPRISES, PLOT NO.565, NEAR POONAMA GATE, BHUBANESWAR. VS. ITO, WARD 2(1), BHUBANESWAR PAN/GIR NO. AHBPP 6763 H (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.K.MISHRA, AR REVENUE BY : SHRI SUBHENDU DUTTA, DR DATE OF HEARING : 30 / 0 4 / 201 9 DATE OF PRONOUNCEMENT : 30 / 0 4 / 201 9 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) - 1, BHUBANESWAR DATED 29.3.2017 FOR THE ASSESSMENT YEAR 201 0 - 11 . 2. IN GROUNDNO.1 OF APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE IMPUGNED ORDER O F REASSESSMENT SO PASSED BY THE AO U/S.147/143(3) OF THE ACT IS WITHOUT JURISDICTION AND WITHOUT THE ITA NO.490/CTK/2017 ASSESSMENT YEAR: 2010 - 2011 P A G E 2 | 7 AUTHORITY OF LAW, AS SUCH THE SAME IS LIABLE TO BE QUASHED IN THE INTEREST OF JUSTICE. 3 . LD A.R. SUBMITTED THAT THE REOPENING OF ASSESSMENT HAS BEEN MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAS MADE DEPOSITS IN HIS BANK ACCOUNT OF RS.1,11,69,050/ - WHEREAS THE TOTAL TURNOVER IN HIS CEMENT BUSINESS WAS DISCLOSED AT RS.37,90, 324/ - ONLY. THEREFORE, THERE WAS SUPPRESSION OF TURNOVER TO THE EXTENT OF RS.83,78,726/ - . CONSIDERING THE ABOVE, THE ASSESSING OFFICER DETERMINED THAT THE ASSESSEE HAS ESCAPED INCOME OF RS.7,31,882/ - AND, THEREFORE, ISSUED NOTICE U/S.148 OF THE ACT TO FURNISH THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010 - 2011. 4. HE SUBMITTED THAT IN THE ORIGINAL ASSESSMENT MADE U/S.143(3) OF THE ACT ON 4.3.2013 , THE ASSESSING OFFICER HAD EXAMINED THE ISSUE OF BANK TRANSACTION WITH STATE BANK OF INDIA, BAPUJI NAGAR , BHUBANESWAR. THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS U/S.143(3) OF THE ACT H AS VERIFIED THE BANK TRANSACTION AND COMPUTED THE INCOME OF THE ASSESSEE AT RS.5,18,560/ - AND THEN ON THE BASIS OF VERY SAME MATERIALS , THE ASSESSING OFFIC ER CANNOT REOPEN THE ASSESSMENT BY ISSUE OF NOTICE U/S.148 OF THE ACT AS IT AMOUNTS TO CHANGE OF OPINION . TO SUPPORT HIS CONTENTION, LD A.R. FILED A COPY OF DECISION OF HONBLE SUPREME ITA NO.490/CTK/2017 ASSESSMENT YEAR: 2010 - 2011 P A G E 3 | 7 COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD.,320 ITR 561 (SC ) . THEREFORE, THE REOPENING OF ASSESSMENT IS BAD IN LAW AND IT WA S HIS PRAYER THAT THE RE - ASSESSMENT ORDER DATED 15.10.2015 SHOULD BE CANCELLED. LD A.R. ALSO RELIED ON THE DECISION OF INDORE BENCH OF HONBLE M.P.HIGH COURT IN THE CASE OF LOKENDRASINGH VS ITO, 128 ITR 450(MP). 5 . LD D.R. SUPPORTED THE ORDER S OF THE LOWER AUTHORITIES. 6 . I HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD OF THE TRIBUNAL. I FIND THE REASONS FOR REOPENING T HE ASSESSMENT AS RECORDED IN THE ORDER SHEET DATED 23.12.2014 AS UNDER: THE ASSESSEE HAS TRANSACTED A TUNE OF RS.37,90,324/ - THROUGH BANK FOR WHOLESALE TRADING IN CEMENT AND RODS WHICH ALSO INCLUDES RS.10 LAKHS RECEIVED AS ADVANCE FOR LAND WHICH IS NOT THE SOURCE OF BUSINESS INCOME RATHER INCOME FROM OTHER SOURCES . HOWEVER, AS PER THE COPY OF BANK STATEMENT, THE ASSESSEE HAD DEPOSITS/RECEIPTS OF RS.1,11,69,050/ - FROM BUSINESS OF CEMENT TRADING ONLY. HENCE, THE ASSESSEE HAS UNDER DISCLOSED HIS RECEIPTS TO THE TUNE OF RS.83,78,726/ - [RS.1,11,69,050/ - ( RS.37,90,324 10,00,000 )}. THEREFORE, IT IS REASON TO BELIEVE THAT THE ASSESSEE HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T.ACT. 1961. ACCORDINGLY, PROPOSAL FOR REOPENING THE CASE U/S.147 OF THE I.T.ACT, 1961 IS SENT TO CIT - 1, BHUBANESWAR. 7 . A READING OF THE ABOVE RECORDED REASONS SHOWS THAT THERE WAS NO NEW MATERIAL WHICH HAS COME TO THE KNOWLEDGE OF THE ASSESSING OFFICER TO SHOW AFTER PASSING OF THE ORDER U/S.143(3) OF ITA NO.490/CTK/2017 ASSESSMENT YEAR: 2010 - 2011 P A G E 4 | 7 THE ACT ON 4.3.2013 THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT SO AS TO TRIGGER THE REOPENING OF ASSESSMENT MADE U/S.147 OF THE ACT. IN THE ORIGINAL ASSESSMENT ORDER IT IS STATED THAT THE ASSESSEE HAS MADE TRANSACTION AROUND RS.46.00 LAKHS WITH SBI, BAPUJI NAGAR, BHUBANESWAR VIDE ACCOUNT NO.10032396002 DURING THE FINAN CIAL YEAR 2009 - 2010. OUT OF WHICH A SUM OF RS.10 LAKHS WAS RECEIVED FROM MR RAJA ROY ON TRANSFER MADE FROM SAME BANK ON 19.9.2009 AS ADVANCE FOR LAND BUT SAME CHEQUE WAS REFUNDED ON SAME DAY WHILE THERE WAS SOME DISPUTE REGARDING LAND. FURTHER, THE BROKE RAGE INCOME ARISING OUT OF LAND BUSINESS WERE ALSO ROUTED THROUGH THE SAME BANK. 8 . THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET SPEED AUDIO PVT LTD.,(2015) 372 ITR 762 HAS HELD THAT THE POWER TO REOPEN IS NOT A POWER TO REVIEW AN ASSESSMENT O RDER. AT THE TIME OF PASSING ASSESSMENT ORDER, IT IS EXPECTED OF THE ASSESSING OFFICER THAT HE WILL APPLY MIND AND PASS AN ORDER. IF THE ASSESSING OFFICER HAD CONSIDERED AND FORMED AN OPINION ON THE MATERIAL IN THE ORIGINAL ASSESSMENT ITSELF THEN HE WOULD BE POWERLESS TO START THE PROCEEDINGS FOR REASSESSMENT. ITA NO.490/CTK/2017 ASSESSMENT YEAR: 2010 - 2011 P A G E 5 | 7 9 . FURTHER, THE HONBLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPRA) HAS HELD THAT HE CONCEPT OF CHANGE OF OPINION MUST BE TREATED AS AN IN - BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1ST APRIL, 1989, THE ASSESSING OFFICER HAS POWER TO REOPEN AN ASSESSMENT, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. IN THIS CONTEXT, THE OBSERVATIONS OF HONBLE APEX COURT AT PAGE 564 ARE VERY RELEVANT, WHICH ARE REPRODUCED AS FOLLOWS: THEREFORE, POST - 1ST APRIL, 1989, POWER TO RE - OPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO RE - OPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO RE - OPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS THE POWER TO RE - ASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILLMENT OF CERTAIN PRE - CONDITION AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF RE - OPENING THE ASSESSMENT, REVIEW WOUL D TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN - BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1ST APRIL, 1989, ASSESSING OFFICER HAS POWER TO RE - OPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. ITA NO.490/CTK/2017 ASSESSMENT YEAR: 2010 - 2011 P A G E 6 | 7 10. IN THE CASE OF LOKENDRASINGH (SUPRA), IT WAS HELD THAT WHEN PRIMARY FACTS WERE ALREADY BEFORE THE ITO AND AFTER SOME ROUT INE ENQUIRY, THE ITO COULD ASSESS THE INCOME ON THE BASIS OF SUCH INFORMATION, IT WAS NOT OPEN TO INVOKE THE PROVISIONS OF SECTION 147(A) OF THE I.T.ACT AND REOPEN THE ASSESSMENT EVEN THOUGH HE MIGHT HAVE OMITTED TO NOTICE THE FACTS MENTIONED IN THE RETURN OVERSIGHT. 1 1 . THUS, I FIND THAT IN THE INSTANT CASE, THERE WAS NO TANGIBLE MATERIAL WITH THE ASSESSING OFFICER BEFORE REOPENING OF ASSESSMENT TO SHOW THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. FURTHER, IT IS OBSERVED THAT THE SOLE REASON REGARDING TRANSACTION WITH BANK WAS EXAMINED BY THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS AND, THEREFORE, ON THE SAME SET OF FACTS, THE REOPENING OF ASSESSMENT IS CLEARLY A CHANGE OF OPINION AND IN VIEW OF THE DECISI ON OF HONBLE BOMBAY HIGH COURT IN THE CASE OF JET SPEED AUDIO PVT LTD AND HONBLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD (SUPRA), REASSESSMENT IS NOT PERMISSIBLE IN LAW. HENCE, I HOLD THAT THE REOPENING OF ASSESSMENT IN THE INSTANT CASE BY ISSUANCE OF NOTICE U/S.148 OF THE ACT IS BAD IN LAW AND CONSEQU ENTLY, REASSESSMENT ORDER DATED 15.10.2015 PASSED U/S.143(3)/147 IS ALSO BAD IN LAW AND HENCE I CANCEL THE SAME AND ALLOW THIS GROUND OF APPEAL. ITA NO.490/CTK/2017 ASSESSMENT YEAR: 2010 - 2011 P A G E 7 | 7 1 2 . AS I HAVE CANCELLED THE REASSESSMENT ORDER DATED 15.10.2015 , OTHER GROUNDS OF APPEAL ON MERITS OF THE ADDITIONS HAVE BECOME INFRUCTUOUS AND HENCE NOT ADJUDICATED UPON. 1 3 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 30 / 0 4 /201 9 . S D/ - ( CHANDRA MOHAN GARG ) JUDICIALMEMBER CUTTACK; DATED 30 / 0 4 /20 9 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR. PVT. SECRETARY, ITAT, CUTTACK 1. THE APPELLANT : RABINDRA NATH PRADHAN, M/S. JAY BHAWANI ENTERPRISES, PLOT NO.565, NEAR POONAMA GATE, BHUBANESWAR. 2. THE RESPONDENT. ITO, WARD 2(1), BHUBANESWAR 3. THE CIT(A) - 1, BHUBANESWAR 4. PR.CIT - 1, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//