Bhagirath Chandak, Kolkata V. ACIT-Cir-23, Kolkata, Kolkata

ITA 545/KOL/2012

• Counselvise Citation: [2013] 119 COUNSELVISE.COM (IT) 2956 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2002-2003
• Appeal Filed On: 10-04-2012
• Court: TRIBUNAL
• Department Lawyers: K N JANA
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Reopening of assessment; Salary income
• Section: 143(3); 14A; 147; 148

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE . . . . . . . . , ! /AND ' #!' , ) [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM] !$ !$ !$ !$ / I.T.A NO. 545/KOL/2012 #% &' #% &' #% &' #% &'/ // / ASSESSMENT YEAR: 2002-03 BHAGIRATH CHANDAK VS. ASSISTANT COMMISSIONER O F INCOME-TAX, (PAN: ABVPC6379C) CIRCLE-23, KOLKATA ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 13.02.2013 DATE OF PRONOUNCEMENT: 15.03.2013 FOR THE APPELLANT: SHRI MIRAJ D. SHAH, FCA FOR THE RESPONDENT: SHRI K. N. JANA, JCIT, SR. DR - / ORDER PER BENCH: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XIV, KOLKATA IN APPEAL NO. 536/CIT(A)-XIV/KOL/07-08 DATED 18.01.2012. ASSESSME NT WAS FRAMED BY ACIT, CIRCLE-23, KOLKATA U/S. 147/143(3)/252 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2002-03 VIDE HIS ORDER DATED 31 .12.2007. 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESSED THE FIRST LEGAL ISSUE THAT THE ASSESSMENT ORDER IS BARRED BY LIMITATION. ON QUERY FROM BENCH, THE LD. SR. DR STATED THAT HE HAS NO OBJECTION OF THE ASSESSEE NOT PRESSING THIS ISSUE. HENCE, THE SAME IS DISMISSED BEING NOT PRESSED. 3. THE SECOND JURISDICTIONAL ISSUE RAISED BY THE AS SESSEE BY WAY OF GROUND NOS. 1 AND 3 IS THAT THE REOPENING OF ASSESSMENT U/S. 147 OF THE AC T IS BAD IN LAW AS THE ASSESSEE HAS JURISDICTION TO REASSESS OTHER THAN THE ISSUES IN R ESPECT OF WHICH PROCEEDINGS WERE INITIATED BUT HERE HE WAS NOT JUSTIFIED WITH THE REASONS FOR INIT IATION OF THOSE PROCEEDINGS CEASED TO SURVIVE. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NOS. 1 AND 3: 1.FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE REASONS FOR REOPENING OF ASSESSMENT U/S. 147 OF THE I. T. ACT 1961 WERE RECO RDED AFTER ISSUE OF NOTICE U/S. 148 OF THE I. T. ACT 1961 HENCE THE REOPENING IS BAD IN LA W AND HENCE THE REOPENING AND THE ASSESSMENT ORDER BE QUASHED. 2 ITA NO.545/K/2012 BHAGIRATH CHANDAK 2002-03 3. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. CIT(A ERRED IN UPHOLDING THE REOPENING OF ASSESSMENT U/S. 147 OF THE I. T. A CT 1961. THE REOPENING IS OTHERWISE BAD IN LAW AND HENCE THE REOPENING AND THE ASSESSME NT ORDER BE QUASHED. 4. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE DREW OUR ATTENTION TO REASONS RECORDED FOR ISSUANCE OF NOTICE U/S. 148 OF THE ACT FOR AY 2002-03, WHICH READS AS UNDER: SEEN RETURN OF INCOME FILED BY THE ASSESSEE ON 30.0 7.02 CLAIMING REFUND OF RS.60,567/-. THE RETURN HAS BEEN PROCESSED ON 6.3.03. IT APPEARS THAT THE ASSESSEE HAS BORROWED CAPITAL O F RS.19.04 LACS TO MAKE INVESTMENT IN SHARES OF RS.25.04 LACS AND DEDUCTED INTEREST ON LO AN OF RS.2,00,426/- FROM SALARY INCOME. DIVIDEND INCOME HAS GOT EXEMPTED. I BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED A SSESSMENT. ISSUE NOTICE U/S.148. LD. COUNSEL FOR THE ASSESSEE IN VIEW OF THE ABOVE R EASONS HAS TAKEN US TO THE ASSESSMENT FRAMED U/S. 147 R.W.S. 143(3) R.W.S. 252 OF THE ACT DATED 13.12.2007. HE STATED THAT AO MADE DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT AS NOTED IN THE ASSESSMENT ORDER BUT IN THE REASONS RECORDED BY THE AO, THERE IS MENTIONED THAT THE ASSESSEE HAS BORROWED CAPITAL AND INVESTED IN SHARES AND DEDUCTED INTERES T ON LOAN FROM SALARY INCOME. HENCE, ACCORDING TO HIM, THE REASSESSMENT IS BAD IN LAW. F OR THIS, HE RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIE S LTD. VS. CIT (2011) 336 ITR 136 (DEL) AND ALSO RELIED ON THE DECISION OF HONBLE BOMBAY H IGH COURT IN THE CASE OF CIT VS. JET AIRWAYS INDIA LTD. 331 ITR 236 (BOM). ON THE OTHER HAND, LD. SR. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 5. WE FIND THAT THIS IS A PURELY JURISDICTIONAL ISS UE AND BEING A LEGAL ISSUE BUT FACTUALLY THE AO HAS MADE DISALLOWANCE WHILE INVOKING THE PROVISI ONS OF SECTION 14A OF THE ACT BUT REASONS RECORDED FOR ISSUANCE OF NOTICE U/S. 148 OF THE ACT BY THE AO ARE ENTIRELY DIFFERENT THAT THE ASSESSEE HAS DEDUCTED INTEREST ON LOAN FROM SALARY INCOME. WE FIND FROM SECTION 148 OF THE ACT, WHICH IS SUPPLEMENTARY AND COMPLEMENTARY TO SE CTION 147 OF THE ACT THAT SUBSECTION (2) OF SECTION 148 OF THE ACT MANDATES REASONS FOR ISSU ANCE OF NOTICE BY THE AO AND SUB-SECTION (1) MANDATES SERVICE OF NOTICE TO THE ASSESSEE BEFORE A O PROCEEDS TO ASSESS REASSESS OR RECOMPUTE ESCAPED INCOME. SECTION 147 OF THE ACT MANDATES RE CORDING OF REASONS TO BELIEVE FOR THE REASON THAT INCOME CHARGEABLE TO TAX HAS ESCAPED AS SESSMENT. ALL THESE CONDITIONS ARE REQUIRED TO BE FULFILLED TO ASSESS OR REASSESS THE ESCAPED I NCOME CHARGEABLE TO TAX. WE ARE OF THE VIEW THAT THE AO HAS THE JURISDICTION TO REASSESS THE IS SUES OTHER THAN THE ISSUES IN RESPECT OF WHICH PROCEEDINGS WERE INITIATED BUT HE WAS NOT JUSTIFIED WITH THE REASONS FOR THE INITIATION OF THE 3 ITA NO.545/K/2012 BHAGIRATH CHANDAK 2002-03 PROCEEDINGS CEASED TO SURVIVE. EVEN IN EXPLANATION (3) IF DURING THE COURSE OF PROCEEDINGS, THE AO COMES TO A CONCLUSION THAT SOME ITEMS HAVE ESCAP ED ASSESSMENT THAN NOTWITHSTANDING THAT THOSE ITEMS WERE NOT INCLUDED IN THE REASONS TO BEL IEVE AS RECORDED FOR INITIATION OF PROCEEDINGS AND THE NOTICE, HE WOULD BE COMPETENT TO MAKE ASSES SMENT OF THOSE ITEMS. BUT ONCE THE REASONS FOR INITIATION OF THOSE PROCEEDINGS CEASED TO SURVIVE, THE AO HAS NO JURISDICTION TO REASSESS THE ISSUES OTHER THAN THE ISSUES IN RESPEC T OF WHICH PROCEEDINGS WERE INITIATED AND THOSE CEASED TO SURVIVE. HERE IN THE PRESENT CASE ALSO, AO RECORDED THE REASON FOR DISALLOWANCE OF EXPENSES BY INVOKING THE PROVISIONS OF SECTION 1 4A OF THE ACT BUT MADE ADDITION ENTIRELY ON NEW ISSUE I.E. DISALLOWANCE OF INTEREST ON BORROWED FUNDS. AS CITED BY LD. COUNSEL FOR THE ASSESSEE THE ISSUE IS SQUARELY COVERED BY THE DECIS ION OF HONBLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORY LTD. (SUPRA) AS WELL AS THE C ASE LAW OF HONBLE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS INDIA LTD. (SUPRA). RESPEC TFULLY FOLLOWING THE SAME, WE ALLOW THE APPEAL OF ASSESSEE ON JURISDICTIONAL ISSUE. ONCE W E HAVE ALLOWED THE JURISDICTIONAL ISSUE IN FAVOUR OF THE ASSESSEE, THERE IS NO NEED TO ADJUDIC ATE THE REMAINING ISSUES ON MERITS. APPEAL OF ASSESSEE IS ALLOWED. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 15.03.2013 . SD/- SD/- . . . . . . . . , ' ' ' ' #!' #!' #!' #!' , (P. K. BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( . . . .) )) ) DATED : 15 TH MARCH, 2013 /0 #12 #3 JD.(SR.P.S.) 4 ITA NO.545/K/2012 BHAGIRATH CHANDAK 2002-03 - 4 +##5 65&7- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT SHRI BHAGIRATH CHANDAK, 135G, S. P. MUK HERJE ROAD, KOLKATA-700 026. 2 +,)* / RESPONDENT ACIT, CIRCLE-23, KOLKATA . 3 . #- ( )/ THE CIT(A), KOLKATA 4. 5. #- / CIT KOLKATA 5 <#= +# / DR, KOLKATA BENCHES, KOLKATA ,5 +#/ TRUE COPY, ->/ BY ORDER, ' !2 /ASSTT. REGISTRAR .