Smt. Purnima Ghosh, Kolkata V. ITO, Ward - 40(4), Kolkata, Kolkata

ITA 541/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54594 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 06-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: S M SURANA
• Keywords: Unexplained investment
• Section: 143(3); 142(1); 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE . . , !' # # # # /AND $# , !' ) [BEFORE SHRI S. V. MEHROTRA, AM & SRI MAHAVIR SINGH , JM] #% #% #% #% / I.T.A NO. 541/KOL/2011 $&' () $&' () $&' () $&' ()/ // / ASSESSMENT YEAR: 2006-07 SMT. PURNIMA GHOSH VS. INCOME-TAX OFFICER, WD-40 (4), KOLKATA (PAN-AFEPG 1777 R) (+, /APPELLANT ) (-.+,/ RESPONDENT ) DATE OF HEARING: 15.09.2011 DATE OF PRONOUNCEMENT: 21.10.2011 FOR THE APPELLANT: SHRI S. M. SURANA FOR THE RESPONDENT: SHRI NIRAJ KUMAR !/ / ORDER PER MAHAVIR SINGH, JM ( $# $# $# $#, , , , !' !' !' !' ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF REVISION PASSED U/S. 263 OF THE INCOME- TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) BY CIT-XIV, KOLKATA IN APPEAL M NO CIT- XIV/KOL/263/PG/2010-11/6450-53 DATED 18/22.03.2011. ASSESSMENT WAS FRAMED BY ITO, WARD-40(4), KOLKATA U/S.143(3) OF THE ACT FOR ASSES SMENT YEAR 2006-07 VIDE HIS ORDER DATED 31.12.2008. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE REVISION ORDER PASSED BY CIT U/S. 263 OF THE ACT EVEN THOUGH THE SWITCH OVER INVESTME NT WAS DULY EXAMINED BY ASSESSING OFFICER AFTER MAKING REFERENCE U/S. 144 OF THE ACT TO ADDL. CIT, WHO ALSO CONSENTED FOR THE SAME. FOR THIS, ASSESSEE HAS RAISED FOLLOWING EFFE CTIVE GROUNDS: 2. FOR THAT THE LD. C.I.T. ERRED IN INVOKING THE P ROVISIONS OF SECTION 263 WHEN SWITCH OVER INVESTMENT WERE DULY EXAMINED AND CONSIDERED B Y THE A.O. AS WELL AS BY THE LD. ADDL. C.I.T. AND THE ASSESSMENT WAS COMPLETED AFTER DUE APPLICATION OF MIND. 3. FOR THAT THE LD. CIT ERRED IN APPLYING THE PROVI SIONS OF SECTION 263 WITHOUT BRINGING ON RECORD ANY EVIDENCE TO SHOW THAT THE DECISION AR RIVED AT BY THE AUTHORITIES BELOW IN THE COURSE OF ASSESSMENT PROCEEDINGS WAS ERRONEOUS. 4. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ORDER OF THE CIT BE CANCELLED AND THE ASSESSEE BE GIVEN THE RELIEF PRAYED FOR. 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEF FACTS ARE THAT ASSESSEE FILED ITS RETURN OF I NCOME FOR RELEVANT ASSESSMENT YEAR 2006-07 ON 28.3.2007 AND CASE WAS SELECTED FOR SCRUTINY ON THE BASIS OF AIR (ANNUAL INFORMATION REPORT) 2 ITA 541/K/2011 SMT. PURNIMA GHOSH, A.Y.06-07 AND NOTICES U/S. 143(2) AND 142(1) OF THE ACT WERE ISSUED. THE ASSESSING OFFICER VERIFIED INVESTMENTS MADE IN MUTUAL FUNDS AT RS.1,49,08,073/ -. ASSESSEE CLAIMED THAT FRESH INVESTMENTS TO THE TUNE OF RS.56,28,073/- IS IN THE FORM OF SWI TCH OVER FROM MUTUAL FUND OF EARLIER PERIODS. ASSESSEE FILED COMPLETE DETAILS BEFORE THE ASSESSIN G OFFICER. HOWEVER, THE MATTER WAS REFERRED TO ADDL. CIT, RANGE-40, KOLKATA U/S. 144A OF THE AC T, WHO IN RESPECT TO FRESH INVESTMENTS OF RS.92.80 LACS AND THIS INVESTMENT I.E. SWITCH OVER INVESTMENTS IN MUTUAL FUND TO THE EXTENT OF RS.56,28,073/-, DIRECTED THE ASSESSING OFFICER AS U NDER: IN THE INSTANT CASE, THE A.O. VIDE PARA-3 OF THE L ETTER, ON VERIFICATION OF DETAILS FILED, ASCERTAINED AS TOTAL INVESTMENT IN MUTUAL FUND IS ( RS.1,49,08,073/- OUT OF WHICH RS.92,80,000/- IS FRESH INVESTMENT AND BALANCE RS.5 6,28,073/- IS IN THE FORM OF SWITCH IN TOWARDS MUTUAL FUND DURING THE PERIOD 2005-06. NEITHER BEFORE THE ASSESSING OFFICER NOR IN THE COU RSE OF THIS PROCEEDINGS, THE A/R OF THE ASSESSEE COULD EXPLAIN THE SOURCE OF SUCH INVESTMEN TS TOWARDS MUTUAL FUND. AS THE FRESH INVESTMENT OF RS. 92,80,000/- TOWARDS MUTUAL FUND R EMAINS UNEXPLAINED, THE A.O. IS DIRECTED TO TREAT THIS AMOUNT AS UNDISCLOSED INVEST MENT AND SHOULD BE ADDED U/S. 69. REGARDING BALANCE AMOUNT, IT APPEARS FROM THE REPOR T AND ON VERIFICATION OF RECORD THAT THE SAME WAS SALE PROCEEDS/SWITCH IN THE MUTUAL FUN D INVESTMENT ALREADY TAKEN INTO CONSIDERATION IN COMPUTING THE SAID AMOUNT OF RS. 9 2,80,000/-. THE AMOUNT IS NOT LIABLE TO BE ADDED. BUT AT THE SAME TIME, THE A.O. SHOULD TAKE CARE THAT THE EXCESS AMOUNT RECEIVED ON REDEMPTION OF RS. 2,96,904/- IS BROUGHT TO TAX. IN THE EVENT, THE AMOUNT REPRESENTS DIVIDEND PAYMENT, THE SAME SHOULD BE EXC LUDED FROM THE INCOME U/S. 10(34). 0THERWIE, THE PROFIT RESULTING FROM SUCH TRANSFER I S LIABLE TO BE TAXED EITHER AS A SHORT- TERM CAPITAL GAIN IF SECURITY TRANSACTION TAX HAVE BEEN PAID OR BUSINESS PROFIT OTHERWISE. 4. ACCORDINGLY, ASSESSING OFFICER TREATED THE MUTUA L FUND INVESTMENTS TO THE EXTENT OF RS.56,28,073/- AS SWITCH OVER/INVESTED OUT OF SALE PROCEEDS AND TREATED BALANCE AMOUNT OF RS.92.80 LACS AS UNEXPLAINED BY GIVING FOLLOWING FI NDINGS: IT IS, THUS, EVIDENT THAT THE ASSESSEE HAS NO GROU ND TO OFFER IN SUPPORT OF THE INVESTMENTS TOWARDS MUTUAL FUNDS AS STATED ABOVE, OUT OF WHICH RS.92,80,000/- FRESH AND NEW INVESTMENT IS TREATED AS UNEXPLAINED INVESTMENT U/S . 69 OF THE I. T. ACT. AS REGARDS BALANCE OF RS.56,28,073/- IN THE FORM OF SALE PROCE EDS/SWITCH IN TOWARDS MUTUAL FUND INVESTMENT DURING THE PERIOD 2005-06 ALREADY TAKEN INTO CONSIDERATION IN COMPUTING THE SAID AMOUNT OF RS.92,80,000/-. BUT THE EXCESS AMOU NT RECEIVED ON REDEMPTION AMOUNTING TO RS.2,96,904/- IS TREATED AS SHORT TERM CAPITAL G AINS ON SALE OF SHARES AFTER EXCLUDING DIVIDEND INCOME ALLOWABLE U/S. 10(34). WE FIND THAT ASSESSING OFFICER HAS GONE INTO DETAIL S OF INVESTMENTS AND AFTER THAT RECORDED HIS FINDINGS. 5. SUBSEQUENTLY, CIT-XIV, KOLKATA ISSUED SHOW CAUSE NOTICE NO CIT-XIV/KOL/263 /PG / 2010-11/5146 DATED 27.01.2011 FOR REVISING ASSESSME NT FRAMED U/S. 143(3) AND HE IN THIS SHOW CAUSE NOTICE VIDE PARAS 4 AND 5, OBSERVED AS UNDER: 4. IT IS SEEN THAT THERE WAS AN AIR INFORMATION CO PY ENCLOSED) REGARDING INVESTMENT OF RS.1,49,088,073/- MADE BY YOU IN VARIOUS MUTUAL FUN DS DURING THE RELEVANT YEAR. YOUR INVESTMENT IN THE CURRENT YEAR WAS NOT DISCLOSED IN YOUR BALANCE SHEETS OF M/S. BAPI ENTERPRISES AND M/S. GHOSH GUINEA HOUSE YOUR TWO PR OPRIETARY CONCERNS SUBMITTED ALONG WITH THE RETURN OF INCOME OF THE CURRENT YEAR . THE A.O. HAS MADE AN ADDITION OF 3 ITA 541/K/2011 SMT. PURNIMA GHOSH, A.Y.06-07 RS.92,80,000/- BEING FRESH INVESTMENT DURING THE YE AR. REGARDING THE BALANCE INVESTMENT OF RS.56,28,073/-, THE A.O. HAS MENTIONED ON PAGE 2 OF THE ASSESSMENT ORDER THAT THIS AMOUNT IN THE FORM OF SALE PROCEEDS/SWITCH IN TOWA RDS MUTUAL FUND INVESTMENT DURING THE PERIOD 2005-06 IS ALREADY TAKEN INTO CONSIDERATION IN COMPUTING THE SAID AMOUNT OF RS.92,80,000/-. 5. THE A,OS ACCEPTANCE OF RS.56,28,073/- AS ALREA DY TAKEN INTO CONSIDERATION IN COMPUTING THE SAID AMOUNT OF RS.92,80,000/- IS MISC ONCEIVED. EVEN IF YOUR INVESTMENT TO THE EXTENT OF RS.56,28,073/- IN THE CURRENT YEAR IS BY WAY OF SWITCH OVER OF YOUR INVESTMENTS MADE IN EARLIER YEARS, YOUR ORIGINAL IN VESTMENT AND ANY ADDITION THEREON ALSO REMAINS UNDISCLOSED AS YOUR TOTAL INVESTMENT OF RS. 1,49,08,073/- IN THE CURRENT YEAR IS OUTSIDE YOUR DISCLOSED BALANCE SHEET FOR THE RELEVA NT YEAR. AND, FINALLY REVISE ASSESSMENT BY GIVING FOLLOWING FINDING IN PARA 7 AND 8 OF HIS ORDER: 7. YOU MAY ALSO SUBMIT ANY WRITTEN SUBMISSION AND ANY EVIDENCE IN SUPPORT OF YOUR CONTENTION ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED WHILE PASSING THE ORDER U/S. 263 OF THE I. T. ACT. 8. PLEASE NOTE THAT IN CASE OF YOUR NON-COMPLIANCE, IT SHALL BE PRESUMED THAT YOU HAVE NO OBJECTION WHATSOEVER TO THE PROPOSED REVISION AND T HE MATTER SHALL BE DECIDED EX PARTE WITHOUT ANY FURTHER REFERENCE TO YOU. 6. WE FIND THAT ASSESSEE HAS MADE TOTAL INVESTMENT IN MUTUAL FUNDS TO THE TUNE OF RS1,49,08,073/- AND ON THE BASIS OF THE SAME, THE ASSESSING OFFICER SELECTED THIS CASE FOR SCRUTINY BY ISSUING NOTICES U/S. 143(2) AND 142(1) OF THE ACT. THE ASSESSING OFFICER NOTED THE FACT, AFTER GETTING INFORMATION FROM THE ASSESSEE, THAT THE ASSESSEE HAS EXPLAINED THE INVESTMENT TO THE TUNE OF RS.56,28,073/-, WHICH ARE IN THE WAY OF SWITCH OVER/SALE PROCEEDS FROM EARLIER INVESTMENT (PROOFS HAVE ALREADY BEEN SUPPLIED AT TH E TIME OF ASSESSMENT BEFORE ASSESSING OFFICER AND EVEN TO THE CIT) AND THE BALANCE AMOUNT OF RS.92.80 LACS WAS UNEXPLAINED AND THE ASSESSING OFFICER ACCORDINGLY TREATED THE INVESTMEN T TO THE TUNE OF RS.56,28,073/- AS EXPLAINED AND BALANCE RS.92.80 LACS AS UNEXPLAINED. WE FIND T HAT THE ORDER OF AO, WHICH IS SUBJECT MATTER OF REVISION BY CIT U/S 263 OF THE ACT, IS NE ITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. ON MERITS, THE ASSESSEE HAS EXPLAINED THE INVESTMENTS TO THE EXTENT OF RS.56,28,073/- TO BE OUT OF SWITCH OVER/SALE PROCEE DS FROM EARLIER INVESTMENTS AND THE AO AFTER GETTING HIMSELF SATISFIED WITH THE EXPLANATION AND ALSO FORWARDING THE SAME TO ADDL. CIT FOR HIS OPINION U/S. 144A OF THE ACT, ACCEPTED THE INVESTME NT AS EXPLAINED. NOW THE CIT WANTS TO EXAMINE THE SOURCE AT THE TIME OF ORIGINAL INVESTME NT, THAT CANNOT BE DONE IN THIS ASSESSMENT YEAR FOR THAT HE HAS TO TAKE RECOURSE IN THE YEAR O F INVESTMENT ORIGINALLY MADE BY ASSESSEE AND HE CANNOT REVISE THE ASSESSMENT UNDER CONSIDERATION . 7. WE, AFTER GOING THROUGH PROVISIONS OF SECTION 26 3 OF THE ACT, FIND THAT COMMISSIONER CAN REVISE ASSESSMENT ORDER PASSED BY ASSESSING OFF ICER ONLY IF (I) IT IS ERRONEOUS, AND 4 ITA 541/K/2011 SMT. PURNIMA GHOSH, A.Y.06-07 (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVE NUE. IF THE ORDER SOUGHT TO BE REVISED IS NOT PREJUDICIA L TO THE INTERESTS OF THE REVENUE, COMMISSIONER HAS NO JURISDICTION TO REVISE IT. FOR INSTANCE, AN ORDER OF ASSESSMENT PASSED BY AN ASSESSING OFFICER WITHOUT COMPLYING WITH THE PROCEDURE LAID D OWN IN THE PRE 1989 SECTION 144B OF THE ACT IS ERRONEOUS, BUT CANNOT BE SAID TO BE PREJUDIC IAL TO THE INTERESTS THE REVENUE. SIMILARLY, FAILURE OF THE ASSESSING OFFICER TO DEAL WITH THE C LAIM OF THE ASSESSEE IN THE ASSESSMENT ORDER MAY BE AN ERROR, BUT AN ERRONEOUS ORDER BY ITSELF I S NOT ENOUGH TO GIVE JURISDICTION TO COMMISSIONER TO REVISE IT UNDER SECTION 263 OF THE ACT. IT MUST FURTHER BE SHOWN THAT THE ORDER WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND IT IS NOT EACH AND EVERY ORDER PASSED BY THE ASSESSING OFFICER WHICH CAN BE REVISED UNDER SECTIO N 263 OF THE ACT. A BARE READING OF SECTION 263(1) MAKES IT CLEAR THAT THE PRE-REQUISITE TO EXE RCISE OF JURISDICTION BY THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE AO IS ERRON EOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO B E SATISFIED WITH TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE AO SOUGHT TO BE REVISED IS ERR ONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENTIF THE ORD ER OF THE AO IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOU S BUT IS PREJUDICIAL TO THE REVENUERECOURSE CANNOT BE HAD TO SECTION 263(1). THIS VIEW IS TAKEN BY HONBLE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT (2000) 243 ITR 8 3, 87 (SC). 8. ACCORDINGLY, IN THE PRESENT CASE BEFORE US, THE ASSESSMENT FRAMED BY AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENU E AND THIS IS CLEARLY DEMONSTRATED BY FACTS DISCUSSED BY AO IN HIS ORDER AND DOCUMENTS PRODUCED BEFORE US BY ASSESSEE. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT PASSED U/S. 263 OF THE A CT BEING NOT AS PER LAW. 9. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 10. ORDER IS PRONOUNCED IN OPEN COURT ON 21.10.2011 . SD/- SD/- . . !' $# $# $# $# , !' (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0 ) )) ) DATED: 21ST OCTOBER, 2011 12 $&34 $5 JD.(SR.P.S.) 5 ITA 541/K/2011 SMT. PURNIMA GHOSH, A.Y.06-07 !/ 6 -$$ 7(8- COPY OF THE ORDER FORWARDED TO: 1 . +, / APPELLANT SMT. PURNIMA GHOSH, 302, BAGMARI ROAD, KOLKATA- 700 054 2 -.+, / RESPONDENT, ITO, WARD-40(4), MALDA 3 . $/& ( )/ THE CIT(A), KOLKATA 4. $/& / CIT, KOLKATA 5 . $> -$& / DR, KOLKATA BENCHES, KOLKATA . -$/ TRUE COPY, !/&?/ BY ORDER, #4 /ASSTT. REGISTRAR .