ACIT, New Delhi V. M/s. Deesons Traders, New Delhi

ITA 4924/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4448 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-06-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 08-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Difference of opinion; Tax effect; Change of opinion
• Section: 143(3); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES C : DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA.NO.4924/DEL./2014 (ASSESSMENT YEAR 2005-2006) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-26(1), NEW DELHI. VS. M/S. DEE SONS TRADERS, J-3, NEW MAHABIR NAGAR, MAIN NAJAFGARH ROAD, NEW DELHI 110 018. PAN AAAFD2439G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ARUN KUMAR YADAV, SR.DR REVENUE BY : SHRI VED JAIN, CA & SHRI ASHISH GOYAL, CA DATE OF HEARING: 24.08.2017 DATE OF ORDER : 18.09.2017 ORDER PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, ASSISTANT COMMISSIONER OF INCOME-TAX, C IRCLE 26(1), NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE ), BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORD ER DATED 30.6.2014 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS), 2 ITA.NO.4924/DEL./2017 ACIT VS. M/S. DEESONS TRADERS XXIV, NEW DELHI FOR THE ASSTT. YEAR 2005-06 ON THE GROUNDS INTERALIA THAT :- 1. HOLDING THAT THE CASE IS REOPENED ON THE BASIS OF CHANGE OF OPINION. WHEN IT WAS OPENED ON BASIS OF MATERIAL CA ME BY SUBSEQUENTLY FROM THE RECORD. 2. DELETING THE ADDITION ON EXCESSIVE ALLOWANCE UNDER THE HEAD REPAIR AND MAINTENANCE AMOUNTING TO RS. 55,12,474/- WHICH ESCAPED ASSESSMENT . 3. THE APPELLANT CRAVES THE RIGHT TO ADD, ALTER OR AME ND ANY GROUND OF APPEAL 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ORIGINALLY ASSESSMENT WAS COMPLETED ON 27.9.2007 AT THE DECLARED INCOME OF RS. 57,84,820/- . THEREAFTER A.O. AFTER NOTICING THE EXPENDITURE OF RS. 1,00,62,632/- DEBITED UNDER THE HEAD REPAIR AND MAINTENANCE BEING CAPITAL IN NAT URE OBSERVED THAT THE SAME SHOULD HAVE BEEN DISALLOWED. A.O. ULTIMATE LY PROCEEDED TO CONCLUDE THAT AN INCOME OF RS. 57,84,820/- HAS ESCA PED ASSESSMENT AND REOPENED THE ASSESSMENT U/S 147 OF THE ACT. ASS ESSEE RAISED COMPREHENSIVE OBJECTION TO THE SHOW CAUSE NOTICE IS SUED U/S 148 OF THE ACT. A.O. PROCEEDED TO HOLD THAT AMENDED PROVIS ION U/S 147/148 ARE WIDE ENOUGH AND CAN BE EXERCISED EVEN WHEN T HE ASSESSEE HAD DECLARED FULLY AND TRULY ALL MATERIAL FACTS AND AFTER RELYING UPON 3 ITA.NO.4924/DEL./2017 ACIT VS. M/S. DEESONS TRADERS DECISION CITED AS RAKESH AGGARWAL VS. ACIT (1996) 87 TAXMANN 306/225 ITR, 496 (DELHI) TREATED AN AMOUNT OF RS. 73,49,965/- OUT OF TOTAL EXPENDITURE OF RS. 1,00,62,632/- CLAIMED B Y THE ASSESSEE ON ACCOUNT OF REPAIR AND MAINTENANCE , AS CAPITAL E XPENDITURE BEING ENDURING IN NATURE AND THEREBY ASSESSED THE TOTAL I NCOME AT RS. 1,12,97,290/- . 3. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE DISALLOWANCE OF RS. 55,12,474/- BY ALLOWING THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF CHALLENGING THE IMPUG NED ORDER PASSED BY LD. CIT(A). 4. LD. DR FOR THE REVENUE CHALLENGING THE IMPUGNED ORDER CONTENDED THAT THIS IS NOT A CASE OF CHANGE OF OPIN ION AND A.O. HAS RIGHTLY REOPENED THE ASSESSMENT AND RELIED UPON CAS ES CITED AS UNDER :- 1. RAYMOND WOOLEN MILLS LTD. VS. ITO AND OTHERS (236 I TR 34) 4 ITA.NO.4924/DEL./2017 ACIT VS. M/S. DEESONS TRADERS 2. ACIT VS. RAJESH JHAVERI STOCK BROKERS (P.) LTD. (2 007) 161 TAXMAN 316 (SUPREME COURT)/(2007) ITR 500 (SUPREME COURT)/(2007) 210 CTR 30 (SUPREME COURT) 3. ADANI EXPORTS VS. DCIT (1999) 240 ITR 224 (GUJ) 4. YUVRAJ V. UNION OF INDIA (315 ITR 84) (SUPREME COUR T) 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE S OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO. 1 AND 2 6. TO PROCEED FURTHER IT IS NECESSARY TO REPRODUCE THE REASONS RECORDED BY THE A.O. FOR REOPENING OF THE ASSESSMEN T AVAILABLE AT PAGE 35 OF THE PAPER BOOK, FOR READY PERUSAL AS UND ER :- REASON FOR BELIEF THAT INCOME HAS ESCAPED TAX :- THE ASSESSEE FILED RETURN OF INCOME TAX FOR A.Y. 20 05-06 ON 25.10.2005 DECLARING INCOME OF RS. 57,84,820/- WHIC H PROCEED U/S 143(1).SUBSEQUENTLY, THE CASE WAS PICKED UP FOR SCR UTINY AND NOTICE U/S 142(2) OF THE I.T. ACT WAS ISSUED ON 27.10.2006. TH E ASSESSMENT U/S 143(3) OF THE I.T. ACT WAS MADE ON 27.09.2007 AT THE INCOM E OF RS. 57,84,820/-. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SHUTTERI NG. THE ASSESSEE SUPPLIES SHUTTERING ON HIRE TO CONTRACTORS BUILDER S ETC. 5 ITA.NO.4924/DEL./2017 ACIT VS. M/S. DEESONS TRADERS IN THIS CASE IT IS NOTED THAT THE EXPENDITURE OF RS . 1,00,62,632/- DEBITED UNDER THE HEAD REPAIR AND MAINTENANCE AS OF CAPITAL NATURE IN THE 3CD REPORT WHICH SHOULD HAVE BEEN DISALLOWED HAS BE EN ALLOWED. THIS EXCESSIVE ALLOWANCE OF RS. 1,00,62,632/- INVOLVES P OTENTIAL TAX EFFECT OF RS. 35.90 LACS (APPROX) HENCE, I THEREFORE, HAVE THE REASONS TO BELIEF THAT INCOME OF RS. 1,00,62,632/- HAS ESCAPED ASSESSMENT AND THE ASSESS MENT COMPLETED U/S 143(3) IS REQUIRED TO BE RE-OPENED U/S 147 OF THE I .T. ACT TO BE RE- ASSESSED. 7. UNDISPUTEDLY ORIGINALLY ASSESSMENT WAS COMPLETE D U/S 143(3) AT THE DECLARED INCOME OF RS. 57,84,820/-. IT IS A LSO NOT IN DISPUTE THAT COMPLETED ASSESSMENT DATED 27.9.2007 U/S 143(3 ) HAS BEEN REOPENED BY THE A.O. AFTER A PERIOD OF FOUR YEARS. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS DISCLOSED FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT ALONGWITH COMPLETE D ETAILS OF REPAIR AND MAINTENANCE EXPENSES. IT IS ALSO NOT IN DISPUTE THAT TAX AUDIT REPORT OF THE ASSESSMENT NOW RELIED UPON BY A.O. FO R REOPENING WAS ALREADY AVAILABLE WITH THE A.O. DURING ORIGINAL ASS ESSMENT PROCEEDINGS U/S 143(3). 8. IN THE BACKDROP OF THE AFORESAID DISPUTED FACTS AND CIRCUMSTANCES OF THIS CASE AND THE ASSESSMENT ADDRE SSED BY THE LD. REPRESENTATIVES OF THE PARTY TO THE APPEAL, THE FIR ST LEGAL QUESTION ARISES THAT 6 ITA.NO.4924/DEL./2017 ACIT VS. M/S. DEESONS TRADERS AS TO WHETHER A.O. WAS EMPOWERED TO REOPEN THE ASSESSMENT AFTER A PERIOD OF FOUR YEARS FROM THE EN D OF THE RELEVANT ASSESSMENT YEARS ASSTT. YEAR 2005-06. 9. WHEN WE NOTE THAT THE ASSESSMENT WAS COMPLETED I N THIS CASE U/S 143(3) ON 27.9.2007 AND THERE WAS NO FAILURE O N THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL RELEVANT FACTS NECESSARY FOR ASSESSMENT, THE A.O. WAS EMPOWERED TO REOPEN THE AS SESSMENT WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE R ELEVANT ASSESSMENT YEAR, BUT IN THE INSTANT CASE NOTICE U/S 148 OF THE ACT FOR REOPENING OF ASSESSMENT WAS ISSUED ON 29.3.2012, COPY OF WHIC H IS AVAILABLE AT PAGE 32 OF THE PAPER BOOK. SO IT IS AMPLY CLEAR THA T THE ASSESSMENT REOPENED BY THE A.O. U/S 147/148 AFTER A PERIOD OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, PARTICULARLY W HEN THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS FOR ASSESSMENT IS NOT SUSTAINABLE IN THE EYES OF LAW. 10. EVEN OTHERWISE PERUSAL OF THE REASONS RECORDED FOR REOPENING ITSELF SHOWS THAT ASSESSMENT HAS BEEN REOPENED JUST BECAUSE OF THE FACT THAT REPAIR AND MAINTENANCE EXPENSES HAVE BEEN WRONGLY 7 ITA.NO.4924/DEL./2017 ACIT VS. M/S. DEESONS TRADERS DISALLOWED. WHEN WE PERUSE PROVISO TO SECTION 147 O F THE ACT IT HAS AMPLY MADE THE PROPOSITION AT HAND, CLEAR THAT NO A CTION SHALL BE TAKEN U/S 147 AFTER THE EXPIRY OF FOUR YEARS FROM T HE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEAB LE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE RETURN U/S 139 OR THERE IS FAILURE ON THE P ART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR ASSESSMENT. 11. IN THE INSTANT CASE THERE IS NO FAILURE WHATSOE VER ON THE PART OF THE ASSESSEE, WHO HAS RATHER BROUGHT ON RECORD TAX AUDIT REPORT, COMPLETE DETAILS PERTAINING TO THE REPAIR AND MAINT ENANCE EXPENSES QUA THE EXPENDITURE OF RS.1,00,62,632/- NOW DISPUTE D BY THE REVENUE. EVEN PERUSAL OF REASONS RECORDED BY THE A. O. TO REOPEN THE ASSESSMENT ARE ALSO SILENT IF THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS. THIS PROPOSITION OF LAW HAS BEEN SETTLED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF WEL INTERTRADE PVT. LTD. VS. ITO (2009) 308 ITR 22 AND IN THE CASE CITED AS HARYANA ACRYLIC MANUFACTURING COMPANY VS. CIT 308 ITR 38. 8 ITA.NO.4924/DEL./2017 ACIT VS. M/S. DEESONS TRADERS 12. RATIO OF BOTH THE AFORESAID JUDGMENTS IS THAT A.O . IS NOT EMPOWERED TO ISSUE NOTICE U/S 148 OF THE ACT AFTER A PERIOD OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR PART ICULARLY WHEN THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. PROVISO TO SECTION 147 ITSELF IS CATEGORICAL ENOUGH TO BAR THE A.O. FR OM INITIATING REOPENING. 13. IN THE INSTANT CASE AT THE TIME OF ORIGINAL ASS ESSMENT PROCEEDINGS, THE A.O. HAS MADE DETAILED SCRUTINY OF THE TAX AUDIT REPORT FILED BY THE ASSESSEE BY RELYING UPON THE B ILLS AND VOUCHERS BROUGHT ON RECORD BY THE ASSESSEE TO CARRY OUT REPA IR AND MAINTENANCE AND THEREAFTER THE A.O. HAD COMPLETED T HE ASSESSMENT U/S 143(3). EVEN OTHERWISE IN ALL ASSESSMENT YEARS 2007-08, 2009- 10, 2010-11, 2011-12 IDENTICAL EXPENSES CLAIMED BY THE ASSESSEE HAVE BEEN ALLOWED BY THE REVENUE WHILE PASSING ORDE R U/S 143(3) AS IS APPARENT FROM THE RETURN OF INCOME FOR THE AFORE SAID ASSESSMENT YEARS AVAILABLE AT PAGE 161 TO 169 OF THE PAPER BOO K. 9 ITA.NO.4924/DEL./2017 ACIT VS. M/S. DEESONS TRADERS 14. FURTHERMORE HON'BLE DELHI HIGH COURT IN THE CAS E CITED AS ORACLE SYSTEM CORPORATION V. DDIT IN W.P. NO. 1873/ 2013 DATED 8.10.2015 HAS ALSO EXAMINED THE IDENTICAL ISSUE AND HAS HELD AS UNDER :- REOPENING OF ASSESSMENT HELD THAT :- THERE IS NO WHISPER OF THE PETITIONER HAVING FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. THEREF ORE, THE NECESSARY INGREDIENT FOR INVITING THE PROVISIONS OF SECTION 147 IS MISSING. AS SUCH, THE INITIATION OF THE RE-ASSESSME NT PROCEEDINGS PERTAINING TO ASSESSMENT YEAR 2004-05 D OES NOT HAVE THE BACKING OF LAW. CONSEQUENTLY, THE IMPUGNED NOTICE UNDER SECTION 148 AND ALL PROCEEDINGS PURSUANT THER ETO INCLUDING THE ORDER DISPOSING OF THE OBJECTIONS ARE SET ASIDE DECIDED IN FAVOUR OF ASSESSEE. 15. SO THE CONTENTIONS RAISED BY LD. SR. DR FOR THE REVENUE ARE NOT TENABLE NOR THE CASE LAW RELIED UPON BY HIM IS APPL ICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE FACE OF PROVIS O TO SECTION 147 OF THE ACT WHICH CLEARLY BARS THE JURISDICTION OF THE A.O. TO REOPEN THE ASSESSMENT AFTER A PERIOD OF FOUR YEARS WHEN THERE IS NO FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR ASSESSEE. 15. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE AND IN VIEW OF THE JUDGMENT RENDERED BY HON'BLE DELHI HIGH COURT IN T HE CASE CITED AS 10 ITA.NO.4924/DEL./2017 ACIT VS. M/S. DEESONS TRADERS WEL INTERTRADE PVT. LTD. VS. ITO (2009) 308 ITR 22 AND IN THE CASE CITED AS HARYANA ACRYLIC MANUFACTURING COMPANY VS. CIT 308 ITR 38, ORACLE SYSTEM CORPORATION V. DDIT IN W. P. NO. 1873/2013 DATED 8.10.2015, WE ARE OF THE CONSIDERED VIEW THAT A.O. HAS EXCEEDED HIS JURISDICTION TO REOPEN THE AS SESSMENT WHICH IS NOT SUSTAINABLE IN THE EYES OF LAW. SO WITHOUT ENTE RING INTO THE MERITS OF THIS CASE WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) HAS VALIDLY AND LEGALLY QUASHED THE REOPENING BY DELETI NG THE ADDITION MADE BY THE A.O. HENCE PRESENT APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (B.P. JAIN) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 18 TH SEPTEMBER, 2017 VEENA COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT G BENCH, DELHI 6. GUARD FILE.