Smt. JAYSHREE H. GADOYA, MUMBAI V. ITO - 16(2)(2), MUMBAI

ITA 5270/MUM/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2748 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 02-12-2009
• Assessment Year: 1998-1999
• Appeal Filed On: 06-10-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L K AGRAWAL
• Assessee Lawyers: D J SHUKLA
• Keywords: Audit objection; Difference of opinion; Revised return; Change of opinion
• Section: 143(1); 195; 264; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI R.K. GUPTA (JM) & SHRI B. RAMAKOTAIAH ( AM) I.T.A. NO.5270/MUM/2006 (ASSESSMENT YEAR: 1998-1999) MRS. JAYSHREE H. GADOYA 5/92, KAILASH NAGAR, TARDEO ROAD, MUMBAI 400 007 PAN NO.: - AAMPG 2564 P VS. I.T.O. 16(2)(2) MUMBAI APPELLANT RESPONDENT APPELLANT BY: SHRI. D.J. SHUKLA RESPONDENT BY: SHRI. L.K. AGRAWAL O R D E R DATE OF HEARING: 02.12.2009 DATE OF ORDER: 15.12.2009 PER B. RAMAKOTAIAH, A.M. THIS IS AN APPEAL BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF THE CIT (A)-XVI, MUMBAI, ORDER DATED 18.07.2006 FOR THE ASSESSMENT YEAR 1998-1999. 2. THE ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 1 AND 2 IS REGARDING THE RE-OPENING OF THE ASSESSMENT ORDER U/ S.143(3) R.W.S.147 AFTER 4 YEARS WITHOUT ANY INFORMATION BEFORE THE AS SESSING OFFICER. 3. GROUND NO.3 AND 4 PERTAINS TO ADDITIONS SUSTAINE D BY THE CIT(A) ON MERITS. ITA NO.5270/MUM/06 MRS.JAYSHREE H.GADOYA. (ASSESSMENT YEAR: 1998-99) 2 4. GROUND NO.5 IS GENERAL IN NATURE. 5. BRIEFLY STATED, THE ASSESSEE HAS FILED HER RETUR N OF INCOME DISCLOSING THE TOTAL INCOME OF RS.1,73,950/- ON 30/ 03/1999 AND REVISED RETURN OF INCOME OF RS.2,21,950/- ON 30/09/1999. 6. THE ASSESSMENT U/S.143(3) HAS COMPLETED ON 29/03 /2000 ASSESSING TOTAL INCOME AT RS.2,27,950/-. SUBSEQUENT LY, A NOTICE U/S.154 DATED 28/02/2001 WAS ISSUED CONSEQUENT TO AN AUDIT OBJECTION RAISED WITH REFERENCE TO INTEREST EXPENSES OF RS.88,932/-, SALES TAX OF RS.35,314/- AND LONG TERM CAPITAL GAIN OF RS.16,46 0/- ON SALE OF SILVER UTENSILS. THE NOTICE ALSO ASKED FOR RENTAL A GREEMENT WHICH WAS NOT FILED AT THE TIME OF THE ORIGINAL ASSESSMENT. THE A SSESSEE FILED REPLY TO NOTICE U/S.154 DATED 03.05.2001 BUT NO ORDER HAS BE EN PASSED. SUBSEQUENTLY AFTER 4 YEARS, PROCEEDINGS U/S. 147 WE RE INITIATED BY RECORDING THE REASONS AS RAISED IN THE AUDIT OBJECT ION. A NOTICE U/S.148 WAS ISSUED ACCORDINGLY ON 24/03/2005 AND RE-ASSESSM ENT WAS COMPLETED ON 31/12/2005. 7. IN THE RE-ASSESSMENT, THE ASSESSING OFFICER HAS DISALLOWED THE INTEREST CLAIMED, THE SALES-TAX CLAIMED AND ADDITIO N OF UNACCOUNTED SALES OF RS.1,89,000/- AND ALSO BROUGHT TO TAX LON G TERM CAPITAL GAIN ON SALE OF SILVER UTENSILS AND TREATED RENTAL INCOME D ISCLOSED UNDER THE HEAD INCOME FROM OTHER SOURCES. 8. BEFORE THE CIT(A), THE ASSESSEE CHALLENGED THE R E-OPENING OF THE ASSESSMENT U/S.147 AND ALSO ON MERITS. THE CIT(A), WHILE HOLDING THAT EXCEPT GROUND NO. 2 AND 5 ON WHICH REASONS WERE REC ORDED, THE OTHER GROUND DOES NOT CALL FOR ANY DISCLOSURE OF DETAILS. WITH REFERENCE TO GROUND NO. 2 AND 5, THE CIT(A) HELD THAT ASSESSEE H AS NOT DISCLOSED FULL INFORMATION AND PROCEEDINGS U/S.147 WERE CORRECT . ACCORDINGLY, HE ITA NO.5270/MUM/06 MRS.JAYSHREE H.GADOYA. (ASSESSMENT YEAR: 1998-99) 3 REJECTED THE GROUND CHALLENGED BY THE ASSESSEE ON R E-OPENING. HOWEVER ON MERITS, HE HAS CONFIRMED THE ISSUE OF UNACCOUNTE D SALES IN RESPECT OF CONSIGNMENT SALES AND TREATMENT OF RENTAL INCOME AS INCOME FROM OTHER SOURCES. THUS, OUT OF THE FIVE ISSUES CONSIDERED F OR RE-OPENING BY THE ASSESSING OFFICER, THE CIT(A) HAS CONFIRMED ONLY TW O ISSUES AND BALANCE THREE ISSUES WERE ALLOWED. 9. ASSESSEE IS AGGRIEVED, NOT ONLY OF RE-OPENING OF ASSESSMENTS BUT ALSO OF SUSTAINED ADDITIONS. 10. LEARNED COUNSEL SUBMITTED THAT THE ASSESSEES O RIGINAL RETURN WAS FILED WITHOUT CONSIDERING RENTAL INCOME AND A REVIS ED RETURN WAS FILED ADMITTING RENTAL INCOME AND THE AO HAS ACCEPTED THE SAME AFTER DUE DISCUSSION IN THE ASSESSMENT ORDER PASSED U/S.143(3 ) ORIGINALLY. 11. WITH REFERENCE TO THE UNACCOUNTED SALES, HE SUB MITTED THAT THE ASSESSEE WAS A CONSIGNMENT SALES/ COMMISSION AGENT, THE FACT OF WHICH WAS ALSO RECORDED IN THE ORIGINAL ASSESSMENT ORDER AND THE SALES TAX ORDER WAS DULY FILED BEFORE THE AO. IT WAS SUBMITTE D UNDER THE MAHARASHTRA SALES TAX ACT EVEN THE AGENTS HAVE TO F ILE DETAILS OF SALES DONE ON CONSIGNMENT BASIS AND ACCORDINGLY THE ASSES SEE HAS SHOWN THE TURNOVER OF RS.1,89,610/- IN THE SALES-TAX ORDER AN D THIS IS NOT ASSESSEES OWN TRANSACTION BUT CONSIGNMENT TRANSACT ION UNDER TAKEN BY THE ASSESSEE IN THE BUSINESS. THIS FACTS WERE ALREA DY MADE AVAILABLE TO THE AO AND THE LD. COUNSEL REFERRED TO THE SHOW CAU SE NOTICE ISSUED BY THE AO AND DETAILS PLACED ON RECORD BY THE ASSESSEE , AT THE TIME OF ORIGINAL ASSESSMENT. 12. APART FROM THE MERITS, THE LD. COUNSEL ALSO SUB MITTED THAT THE AO LACKS JURISDICTION TO RE-OPEN THE ASSESSMENT AFTER 4 YEAR AS PROVISO TO SEC.147 IS APPLICABLE TO THE FACTS OF THE CASE. IT WAS ALSO SUBMITTED THAT ITA NO.5270/MUM/06 MRS.JAYSHREE H.GADOYA. (ASSESSMENT YEAR: 1998-99) 4 THE AUDIT OBJECTION WAS RAISED IN THE YEAR 2002 AND THE AO ISSUED A NOTICE U/S.154 DATED 28/02/2001 AND THOSE PROCEEDIN GS WERE CLOSED AFTER THE ASSESSEE HAD CLARIFIED THE LETTER DATED 0 3.05.2001. IT WAS SUBMISSIONS OF THE ASSESSEES COUNSEL THAT THERE WA S NO MATERIAL BEFORE THE AO TO RE-OPEN THE ASSESSMENT AND THERE WAS NO F AILURE ON PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR THE ASSESSMENT. HE RELIED ON THE FOLLOWING CASE LAWS: - (A) CIT VS. FORAMER FRANCE (2003) 264 ITR 566 (SC) (B) HINDUSTAN LEVER VS. R. WADKAR ACIT (2004) 268 ITR 332 (BOM) (C) GERMAN REMEDIES VS. DCIT (2006) 287 ITR 494 (BOM) (D) CAPRIHANS (I) LTD. VS. TARUN SEEM 266 ITR 566 (BOM) (E) IDEA CELLULAR LTD. VS. DCIT (1998) 301 ITR 407 (BOM) (F) FENNER (I) LTD. VS. ACIT (2000) 241 ITR 672 (MAD) (G) CIT VS. TARAJAN TEA CO. LTD. (1999) 236 ITR 477 (SC). 13. HE ALSO SUBMITTED THAT THE AO HAS CONSIDERED AN D ACCEPTED THE RENTAL INCOME AS THE ASSESSEE HAS FILED REVISED RET URN OF INCOME AND THERE WAS DISCUSSION IN THE ASSESSMENT ORDER ABOUT ADMISSION OF RENTAL INCOME AND ACCEPTANCE OF REVISED INCOME U/S.143(3). MOREOVER THE ASSESSEE ALSO FILED THE DETAILS OF CONSIGNMENT SALE S AND PURCHASE SALES AND ALSO SALES TAX ORDER AND; THE AO GAVE A FINDING THAT THE ASSESSEE IS CONSIGNMENT AGENT. ACCORDINGLY, IT IS ONLY A CHANGE OF OPINION BY THE AO, WHICH CANNOT CONFER JURISDICTION U/S.147. THE LD. COUNSEL RELIED ON FOLLOWING CASE LAWS: - (A) ASTEROID TRADING AND INVESTMENTS PVT. LTD. VS . DCIT ITA NO.5270/MUM/06 MRS.JAYSHREE H.GADOYA. (ASSESSMENT YEAR: 1998-99) 5 (2009) 308 ITR 190 (BOM) (B) ASIAN PAINTS LTD. VS. DCIT (2009) 308 ITR 195 (BOM) (C) GARDEN SILK MILLS VS. DCIT, 222 ITR 68 (1999) 237 ITR 668 (GUJ). (D) CIT VS. KELVINATOR INDIA LTD. (2002) 256 ITR 1 (DEL) (FB). 14. THE LD. COUNSEL FURTHER SUBMITTED THAT THE RE-A SSESSMENT AFTER 4 YEARS THAT TOO ON THE BASIS OF AUDIT OBJECTION IS N OT PERMITTED AS DECIDED BY THE FOLLOWING CASE LAWS: - (A) INDIAN & EASTERN NEWSPAPER SOCIETY: CASE (1979) 119 ITR 996 (SC) (B) ADANI EXPORT VS. DCIT (1998) 240 ITR 224 (GUJ) (C) AIR INDIA VS. V.K. SRIVASTAVA CIT (1995) 213 ITR 739 (BOM). 15. IT WAS SUBMITTED BY THE LD. COUNSEL THAT THE RE -OPENING IS BAD IN LAW. 16. THE LD. DR HOWEVER DEFENDED ORDER OF THE AO AND THE CIT(A) TO SUBMIT THAT THE ASSESSEE HAD NOT FURNISHED DETAILS COMPLETELY AND REFERRED TO FINDINGS OF THE CIT(A). SINCE THERE IS FAILURE ON THE PART OF THE ASSESSEE, RE-OPENING AFTER 4 YEARS IS PERMITTED. 17. WE HAVE CONSIDERED THE ISSUE. AS CAN BE SEEN FR OM THE FACTS EXTRACTED ABOVE, THE REASON FOR RE-OPENING IS ON FI VE ISSUES WHICH ARE SUBJECT MATTER OF ADDITION IN THE RE-ASSESSMENT. ITA NO.5270/MUM/06 MRS.JAYSHREE H.GADOYA. (ASSESSMENT YEAR: 1998-99) 6 18. THE LD. CIT(A) HAS GIVEN FINDING THAT THERE IS NO NEED TO FURNISH ANY EVIDENCE AS FAR AS THREE ISSUES ARE CONSIDERED AND HE INFACT HAS DELETED THE ADDITIONS SO MADE. AS FAR AS THE OTHER TWO ISSUES ARE CONCERNED ONE IS ON ACCOUNT OF UNACCOUNTED SALES. AS FAR AS THIS ISSUE IS CONCERNED THE ASSESSEE IS A CONSIGNMENT AGENT AN D HAD TO FILE THE RETURNS OF THE CONSIGNMENT SALES WITH THE SALES TAX AUTHORITIES. PAGE 2 OF THE ASSESSMENT ORDER DATED 29.03.2000 GIVES A FINDI NG BY THE AO THAT THE NATURE OF THE BUSINESS OF THE ASSESSEE IS THAT OF COMMISSION AGENT, TRADING IN JUTE COMPANY FOR THE LAST SO MANY YEARS. HE HAS EXAMINED THE DETAILS OF THE SALES, ETC. AT THE TIME OF THE ORIGI NAL ASSESSMENT. IN VIEW OF THIS, NOW CONSIDERING THE SALES REPORTED IN THE SAL ES TAX ORDER AS UNACCOUNTED SALES CAN ONLY BE CONSIDERED AS CHANGE OF OPINION AS THE ASSESSEE HAS EXPLAINED NATURE OF THE BUSINESS AT TH E TIME OF THE ORIGINAL ASSESSMENT. 19. THE SECOND ISSUE WHICH IS CONSIDERED FOR CONFIR MING THE JURISDICTION U/S.147 BY THE CIT(A) IS WITH REFERENC E TO RECEIPT OF RENTAL INCOME. THE ASSESSEE HAS EXPLAINED THAT SHE HAS REC EIVED A RENT OF RS.60,000/- FROM M/S. BHARAT JUTE CORPORATION FOR T HE USE OF BUSINESS PREMISES AND THAT RENT WAS DIRECTLY CREDITED TO HER CAPITAL ACCOUNT OF M/S. JAYSHREE ENTERPRISES. IT WAS ALSO THE SUBMISSI ON THAT BY MISTAKE THE OFFICE STAFF OF THE CA HAS FORGOTTEN TO INCLUDE RENTAL INCOME OF RS.60,000/- WHILE COMPUTING THE INCOME. AS SOON AS THE ASSESSEE REALIZED, THEY PAID ADDITIONAL INCOME TAX OF RS.15, 123/- ON 18/09/1999 I.E. BEFORE SENDING NOTICES U/S.143(2) & 143(1) AND REVISED RETURN WAS FILED. 20. THE AO AFTER RECORDING THE REASONS HAS ACCEPTED THE REVISED RETURN AND COMPUTED THE INCOME ACCORDINGLY. AS CAN BE SEEN FROM THE ORIGINAL ASSESSMENT ORDER AND THE REASONS RECORDED FOR RE-OPENING. IT CAN BE CONCLUDED THAT THERE IS NO FRESH MATERIAL WI TH THE AO WHICH CAN ITA NO.5270/MUM/06 MRS.JAYSHREE H.GADOYA. (ASSESSMENT YEAR: 1998-99) 7 BE THE BASIS FOR RE-OPENING OF ASSESSMENT. SINCE TH E ASSESSMENT WAS RE- OPENED AFTER 4 YEARS, THE PROVISO TO SEC.147 WOULD COME IN TO PLAY AND THE AO HAS TO ESTABLISH THAT THERE IS FAILURE TO DI SCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT BY THE ASSESSEE. 21. SINCE, THERE NO FAILURE ON THE PART OF THE ASSE SSEE IN FURNISHING THE DETAILS AS DISCUSSED ABOVE, THE RE-OPENING AS THE B ASIS OF AUDIT OBJECTION CANNOT BE CONSIDERED AS A VALID ONE FOR ASSUMPTION OF JURISDICTION. MOREOVER, AS SUBMITTED BY THE LD. COUNSEL, THE AUDI T OBJECTION WAS RAISED IMMEDIATELY AFTER COMPUTING THE ASSESSMENT U /S.143(3) ORIGINALLY BUT THE RE-OPENING WAS DONE AS LATE AS 24/03/2005 A ND IN BETWEEN PROCEEDINGS U/S.154 WERE ALSO INITIATED. NOT ONLY O N THE BASIS OF THE PRINCIPLES ESTABLISHED IN VARIOUS CASE LAW RELIED O N IN THE COURSE OF THE ARGUMENTS, BUT ALSO ON THE FACTS ON THE CASE RE-OPE NING OF THE FACTS AFTER COMPLETION OF THE ASSESSMENT U/S.143(3) WITHOUT ANY MATERIAL CANNOT BE SUSTAINED. ACCORDINGLY, ASSESSEES GROUND NO. 1 & 2 CHALLENGING THE RE- OPENING OF THE ASSESSMENT U/S.147 ARE UPHELD. THE P ROCEEDINGS U/S.147 ARE HELD BAD IN LAW. 22. EVEN OTHER WISE ON MERITS ON GROUND NO.3 & 4, T HE ASSESSEE SHOULD SUCCEED AS THE ASSESSEE IS A COMMISSION AGEN T AND BEING ON CONSIGNMENT SALES, THE SALES OF THE OTHER PERSON CA NNOT BE TREATED AS UNACCOUNTED SALES ON THE BASIS OF SALES TAX ORDER. WITH REFERENCE TO THE RENTAL INCOME ALSO THE ASSESSEE HAS OFFERED THE REN TAL INCOME AT THE TIME OF THE ORIGINAL ASSESSMENT BY FILING REVISED RETURN AND THE AO ACCEPTED THE SAME. IN VIEW OF THIS TREATING THE SAME AS INC OME FROM OTHER SOURCES DOES NOT ARISE. 23. IN VIEW OF THIS ASSESSEE SUCCEEDS ON MERITS ALS O. GROUND NO.3 & 4 ARE ALLOWED. THE ORDERS OF THE CIT(A) AND THE AO CO NSEQUENT TO THE PROCEEDINGS U/S.147 ARE HEREBY CANCELLED. ITA NO.5270/MUM/06 MRS.JAYSHREE H.GADOYA. (ASSESSMENT YEAR: 1998-99) 8 24. IN RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON 15 TH DECEMBER, 2009. - SD/- ( R K GUPTA) JUDICIAL MEMBER / SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER MUMBAI, DATED 15 TH DECEMBER, 2009. NEELAM COPY TO: (1) THE APPELLANT, (2) THE RESPONDENT, (3) THE CIT (A) CONCERNED, (4) THE CIT, CONCERNED, (5) THE DR, CONCERNED BENCH - J, ITAT, MUMBAI. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ITA NO.5270/MUM/06 MRS.JAYSHREE H.GADOYA. (ASSESSMENT YEAR: 1998-99) 9 DATE INITIALS DRAFT DICTATED ON 03. 12.2009 SR. P.S. DRAFT PLACED BEFORE THE AUTHOR 07.12.2009 SR. P.S . DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER AM/JM DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM APPROVED DRAFT COMES TO THE SR. PS SR. P.S. KEPT FOR PRONOUNCEMENT ON SR. P.S. 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