M/s. Jaya Mangala Construction, Koraput V. ITO, Ward-1, Jeypore

ITA 54/CTK/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3770 (ITAT-CUTTACK)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 09-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: P K MISHRA
• Keywords: Reopening of assessment; Depreciation; Audit objection; Question of law; Reason to believe
• Section: 143(3); 147; 148

Judgement Text

1 ITA NO.54/CTK/2017 ASSESSMENT YEAR :2006 - 07 IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO. 54/CTK/2017 ASSESSMENT YEAR : 2006 - 07 M/S. JAYA MANGALA CONSTRUCTION, AT BHEJAPUT, PO: DAMONJODI, DIST: KORAPUT. VS. ITO, WARD - 1, JEYPORE PAN/GIR NO. AAEFJ 8318 C (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.K. MISHRA, AR REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 14 /06 / 2017 DATE OF PRONOUNCEMENT : 15 /06 / 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE ASSESSEE AGAINST THE ORDER OF CIT(A) - 1, BHUBANESWAR, DATED 16.9.2016 FOR THE ASSESSMENT YEAR 2006 - 07. 2. IN GROUND NO.2 OF THE APPEAL, THE ASSESSEE HAS CHALLENGED THE REOPENING OF ASSESSMENT BY THE ASSESSING OFFICER U/S.148 OF THE ACT. 3. AT THE OUTSET, DURING THE COURSE OF HEARING, LD A.R. OF THE ASSESSEE SUBMITTED THAT THE REOPENING OF ASSESSMENT WAS MADE ON AUDIT OBJECTION AND, THEREFORE, WAS BAD IN LAW. FOR THIS PROPOSITION, HE REFERRED TO PARA 1 OF THE ASSESSMENT ORDER AND POINTED OUT THEREFROM THAT THE ASSESSING 2 ITA NO.54/CTK/2017 ASSESSMENT YEAR :2006 - 07 OFFICER HAS OBSERVED THAT THE ASSESSEE HAS FILED RETURN OF INCOME ON 31.01.2007 DISCLOSING TOTAL INCOME OF RS.20,010/ - . THE SAME WAS PROCESSED U/S 143(L)(A) OF THE I.T.ACT,1961 ON 31.01.2007 RAISING REFUND OF RS.71,620/ - . S UBSEQUENTLY, THE REVENUE AUDIT PARTY, HAS GIVEN AUDIT OBJECTION VIDE IR - NO.18/2008 - 09/ PARA 3, DATED 05.11.2008 RAISING THE POI N T THAT THE ASSESSEE - FIRM HAD CLAIMED EXCESS DEPRECIATION AT RS.1,82,965/ - (RS.7,31,865/ - MINUS RS.5,48,900/ - ALLOWABLE AS PER IT RULES) IS REQUIRED TO ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE AND DETERMINED TH E SHORT LEVY OF RS.69,133/ - . ACCORDINGLY, THE CASE WAS REOPENED U/S 147 OF THE I.T.ACT,1961 WITH THE PRIOR APPROVAL OF ADDL.CIT,B/R,BERHAMPUR VIDE APPROVAL LETTER NO. ADDL.CIT/BAM/J - 30/2009 - 10/1734, DT.18.05.2009 AND ISSUED NOTICE U/S 148 OF THE I.T.ACT,1961 BY RPAD VIDE THIS OFFI CE LETTER NO - 17, DT.03.04.2009. HENCE, HE SUBMITTED THAT THE ISSUE WAS COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF INDIA N AND EASTERN NEWSPAPER SOCIETY VS CIT, 119 ITR 996 (SC),WHEREIN, IT WAS HELD THAT INFORMATION OF AN INTERNAL AUDIT PARTY OF THE INCOME TAX DEPARTMENT ON A POINT OF LAW CANNOT BE REGARDED AS INFORMATION WITHIN THE MEANING OF SECTION 147(B) OF THE I.T.ACT , 1961. HE SUBMITTED THAT THE ISSUE OF DEPRECIATION ON VEHICLES WAS ALLOWABLE TO THE ASSESSEE @ 40% OR 30% WAS A QUESTION OF LAW. THEREFORE, IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF INDIAN AND EASTERN NEWSPAPER SOCIETY(SUPRA), THE ASSESSMENT ORDER PASSED SHOULD BE CANCELLED. 4. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 3 ITA NO.54/CTK/2017 ASSESSMENT YEAR :2006 - 07 5. I HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. I FIND THAT THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT AS NARRATED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER READS AS UNDER: THE ASSESSEE HAS FILED RETURN OF INCOME 31.01.2007 DISCLOSING TOTAL INCOME OF RS.20,010/ - . THE SAME WAS PROCESSED U/S 143(L)(A) OF THE I.T.ACT,1961 ON 31.01.2007 RAISING REFUND OF RS.71,620/ - . SUBSEQUENTLY, THE REVENUE AUDIT PARTY, HAS GIVEN AUDIT OBJECTION V IDE IR - NO.18/2008 - 09/ PARA 3, DATED 05.11.2008 RAISING THE POINT THAT THE ASSESSEE - FIRM HAD CLAIMED EXCESS DEPRECIATION AT RS.1,82,965/ - (RS.7,31,865/ - MINUS RS.5,48,900/ - ALLOWABLE AS PER IT RULES) IS REQUIRED TO ADDED BACK TO THE TOTAL INCOME OF THE ASS ESSEE AND DETERMINED THE SHORT LEVY OF RS.69,133/ - . ACCORDINGLY, THE CASE WAS REOPENED U/S 147 OF THE I.T.ACT,1961 WITH THE PRIOR APPROVAL OF ADDL.CIT,B/R,BERHAMPUR VIDE APPROVAL LETTER NO. ADDL.CIT/BAM/J - 30/2009 - 10/1734, DT.18.05.2009 AND ISSUED NOTICE U/ S 148 OF THE I.T.ACT,1961 BY RPAD VIDE THIS OFFICE LETTER NO - 17, DT.03.04.2009. 6. A BARE READING OF THE ABOVE RECORDING CATEGORICALLY PROVES THAT REOPENING OF ASSESSMENT WAS DONE BY THE ASSESSING OFFICER MERELY ON THE AUDIT OBJECTION AND NOT ON HIS OW N OPINION THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. AS PER THE PROVISIONS OF SECTION 147 OF THE ACT, IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJE CT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME. THUS, IT IS CLEAR THAT THERE HAS TO BE OWN BELIEVE ONLY OF THE ASSESSING OFFICER THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. AFTER RECEIPT OF THE INFORMATION, THE ASS ESSING OFFICER HAS TO APPLY HIS OWN MIND AND AFTER SUCH APPLICATION OF MIND, IF HE FORMS OWN BELIEVE THAT ANY INCOME 4 ITA NO.54/CTK/2017 ASSESSMENT YEAR :2006 - 07 WHICH WAS CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT THEN ONLY HE CAN INVOKE THE PROVISIONS OF SECTION 148 OF THE ACT. IN THE INSTANT CASE, THE ABOVE QUOTED RECORDINGS REVEAL THAT THE REOPENING OF ASSESSMENT WAS MADE ON THE BASIS OF BELIEVE OR INFORMATION OF THE AUDIT PARTY. I, THEREFORE, HOLD THAT THE IMPUGNED ORDER OF REASSESSMENT IS UNTENABLE. THEREFORE, I CANCEL THE SAID REASSESSMENT OR DER PASSED U/S. 147 R.W.S 143(3) OF THE ACT DATED 11.11.2010 AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 7. SINCE, I HAVE CANCELLED THE REASSESSMENT ORDER DAT ED 11.11.2010 UNDER SECTION 143( 3)/147 OF THE ACT, OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE ON MERITS OF THE ADDITION HAVE BECOME INFRUCTUOUS AND HENCE NOT ADJUDICATED UPON. 8 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 /06 /2017 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 15 /0 6 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : M/S. JAYA MANGALA CONSTRUCTION, AT BHEJAPUT, PO: DAMONJODI, DIST: KORAPUT. 2. THE RESPONDENT :ITO, WARD - 1, JEYPORE 3. THE CIT(A) - 1, BHUBANESWAR 4. PR.CIT - 1, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//