Shirish C.Deshmukh, Pune V. Deputy Commissioner of Income tax, Pune

ITA 551/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7047 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 08-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Search and seizure; Reassessment proceedings
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.551/PUN/2017 / ASSESSMENT YEAR : 2009-10 SHIRISH C. DESHMUKH, PADMASHREE, 4/9, SAHAKARI VASAHAT, KARVE ROAD, PUNE 411 004 PAN : AAKPD0596P VS. DCIT, CIRCLE-3, PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 30-11-2016 PASSED BY THE CIT(A)-2, PUNE, IN RELATION TO THE ASSESSMENT YEAR 2009-10. 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS A CHALLENGE LAID TO THE VALIDITY OF THE REASSESSMENT PROCEEDINGS. 3. SUCCINCTLY, THE FACTUAL PANORAMA OF THE CASE IS THAT THE ASSESSEE FILED HIS ORIGINAL RETURN DECLARING TOTAL INCOME OF RS.29,12,960/-. THE SALES-TAX DEPARTMENT OF MAHARASHTRA ASSESSEE BY SHRI KISHOR PHADKE REVENUE BY SHRI ALOK MALVIYA DATE OF HEARING 09-09-2020 DATE OF PRONOUNCEMENT 09-09-2020 ITA NO.551/PUN/2017 SHIRISH C. DESHMUKH 2 CONDUCTED RAIDS ON SALES-TAX EVADERS, WHICH TRANSPIRED THAT THEY WERE ISSUING ACCOMMODATION BILLS WITHOUT ANY ACTUAL TRANSACTION. SUCH A LIST OF HAWALA OPERATORS WAS PROVIDED BY THE SALES-TA X DEPARTMENT TO THE INCOME-TAX DEPARTMENT. UPON VERIFICATION OF THE LIST OF BENEFICIARIES, NAME OF THE ASSESSEE WAS FOUND, WHICH LED TO THE ISSUANCE OF A NOTICE U/S.148 OF THE INCOME-TAX ACT, 1 961 (HEREINAFTER ALSO CALLED ` THE ACT). THE ASSESSING OFFIC ER (AO) PASSED THE ASSESSMENT ORDER ADDING 50% OF TOTAL OF SUCH P URCHASES, RESULTING INTO AN ADDITION OF RS.34,03,658/-. DURING THE COU RSE OF THE FIRST APPEAL PROCEEDINGS, THE ASSESSEE RAISED A SPECIFIC GROUND THAT THE AO TOOK UP THE REASSESSMENT PROCEEDINGS WITHOUT FIRST DEALING WITH THE OBJECTIONS OF ASSESSEE. THIS CHALLENGE TO INITIATIO N OF REASSESSMENT WAS TAKEN WITH CERTAIN OTHER GROUNDS ON T HE VALIDITY OF THE REASSESSMENT PROCEEDINGS. THE LD. CIT(A) DISPOSED OFF SUCH GROUNDS IN A COLLECTIVE WAY BY HOLDING THAT AFTER AMENDMENT OF SECTION 147 W.E.F. 01-04-1989, THE POWER S OF THE AO HAVE BEEN WIDENED AND HE CAN REOPEN THE COMPLETED ASSESSMENT EVEN WHERE THE DETAILS WERE AVAILABLE ON RECORD ETC. THEREAFTER, THE LD. CIT(A) DEALT WITH THE MERITS AND REDUCED THE ITA NO.551/PUN/2017 SHIRISH C. DESHMUKH 3 ADDITION FROM 50% OF BOGUS PURCHASES TO 20%. AGGRIEVED THEREBY, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS THROUGH VIRTUAL COURT AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. THE F IRST ISSUE IS AGAINST THE VALIDITY OF THE REASSESSMENT PROCEEDINGS. THE LD . AR RAISED A CONTENTION TO THE EFFECT THAT THE AO FAILED TO DEAL WITH THE OBJECTIONS RAISED BY THE ASSESSEE BEFORE TAKING UP THE ASS ESSMENT PROCEEDINGS, WHICH VITIATED THE ASSESSMENT U/S 147 OF THE A CT. IN THIS REGARD, A DATE-CHART HAS BEEN PLACED BEFORE THE TRIB UNAL AS PER WHICH NOTICE U/S.148 ISSUED BY THE AO ON 12-03-2014 WAS RECEIVED BY THE ASSESSEE ON 23-03-2014. THE ASSESSEE ON 22-04- 2014 REQUESTED THE AO THAT THE ORIGINAL RETURN MAY BE TREATED AS A RETURN FILED IN RESPONSE TO NOTICE U/S.148. THEREAFTER, THE ASSESSEE REQUESTED FOR SUPPLY OF THE REASONS OF REASSESSMENT. THE ASSESSEES REQUEST WAS ACCEDED TO ON 10-09-2014 BY S UPPLYING REASONS, A COPY OF WHICH HAS BEEN PLACED ON PAGES 59- 60 OF THE PAPER BOOK. THE LD. AR SUBMITTED THAT SUCH REASONS WERE AN INCOMPLETE LETTER, RECEIVED IN A TORN MANNER. ON 14-02-2015, THE ASSESSEE WAS PROVIDED WITH ANOTHER COPY OF LEGIBLE AND REA DABLE REASONS. ON 19-02-2015, THE ASSESSEE OBJECTED TO THE INITIA TION OF ITA NO.551/PUN/2017 SHIRISH C. DESHMUKH 4 REASSESSMENT PROCEEDINGS BY MEANS OF LETTER OF THE SAME DATE WHICH HAS BEEN PLACED AT PAGE 63 ONWARDS OF THE PAPER BOOK. THE AO, WITHOUT DEALING WITH THE OBJECTIONS, PASSED THE ASSESSMENT ORDER WITHIN 7 DAYS FROM THE DATE OF FILING OF THE ASSESSEE S OBJECTION, ON 26-02-2015. ON GOING THROUGH THE CHRONOLOGY OF THE EVENTS, IT IS OVERT THAT THE AO SUPPLIED THE REASONS INITIALLY ON 1 0- 09-2014. IT CAN BE SEEN FROM A COPY OF SUCH REASONS THAT THE RELEVANT DETAILS ABOUT THE HAWALA TRANSACTIONS ARE COMPLETELY MISSING. THEREAFTER, THE ASSESSEE REQUESTED FOR LEGIBLE C OPY OF THE REASONS, WHICH WAS SUPPLIED ON 14-02-2015. THE ASSESS EE, WITHIN 5 DAYS FROM THE DATE OF RECEIPT OF REASONS, RAISED OBJECTIO NS BEFORE THE AO, WHICH WERE NOT DEALT WITH BY MEANS OF A SEPARATE OR DER AND THE ASSESSMENT ORDER CAME TO BE PASSED STRAIGHTWAY. 5. THE HONBLE SUPREME COURT IN G.K.N. DRIVESHAFTS (INDIA) LTD. VS. ITO & ANR. (2003) 259 ITR 19 (SC) HAS HELD THAT ONCE THE ASSESSEE RAISES OBJECTIONS AGAINST THE INITIATION OF REASSESSMEN T PROCEEDINGS, AFTER HAVING FILED RETURN IN RESPONSE TO NOTICE U/S.148, IT BECOMES OBLIGATORY ON THE PART OF THE AO TO FIRST DISPOSE OF THE OBJECTIONS BY MEANS OF A SEPARATE SPEAKING ORDER. THE H ONBLE BOMBAY HIGH COURT, VIDE ITS JUDGMENT DATED 3-10-2016, HAS HELD ITA NO.551/PUN/2017 SHIRISH C. DESHMUKH 5 IN KSS PETRON PVT. LTD. VS. ACIT (BOMBAY) (ITA NO.224/2014) THAT WHERE THE AO DOES NOT DISPOSE OFF THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE INITIATION OF REASSESSMENT PROCEEDINGS, TH E CONSEQUENTIAL ORDER PASSED U/S.143(3) R.W.S.147 BECOMES WITHOUT JURISDICTION AND HAS TO BE SET-ASIDE. SIMILAR VIEW HAS BEEN TA KEN BY THE HONBLE BOMBAY HIGH COURT ON 30-08-2019 IN FORMENTO RESORTS AND HOTELS LTD. VS. ACIT (ITA NO.63/2007) . THE HONBLE JURISDICTIONAL HIGH COURT IN BAYER MATERIAL SCIENCE PVT. LTD. VS DCIT (2016) 382 ITR 333 (BOM.) HAS HELD THAT PASSING OF THE ORDER WITHOUT FIRST DISPOSING OF THE OBJECTIONS RAISED BY THE ASSESSE E IS IN DEFIANCE OF THE HONBLE SUPREME COURT JUDGMENT IN G.K.N. DRIVESHAFTS (INDIA) LTD. VS. ITO AND ANOTHER (SUPRA) AND HENCE, SUCH ORDER CANNOT BE SUSTAINED. 6. WE ARE CONFRONTED WITH A SITUATION IN WHICH THE ASSESS EE, ON RECEIPT OF LEGIBLE AND COMPLETE COPY OF REASONS ON 14-02- 2015, FILED OBJECTIONS BEFORE THE AO WITHIN 5 DAYS ON 19-02-2015. THE AO, WITHOUT DISPOSING OF THE OBJECTIONS SIMPLY WENT ON TO PASS THE ORDER U/S.143(3) R.W.S.147 OF THE ACT ON 26-02-2015, W HEN THERE WAS TIME AVAILABLE WITH HIM FOR COMPLETING THE ASSESSMENT UP TO 31-03-2015. ITA NO.551/PUN/2017 SHIRISH C. DESHMUKH 6 7. THE HONBLE BOMBAY HIGH COURT IN ASIAN PAINTS LTD. DCIT (2008) 296 ITR 90 HAS HELD IF THE AO DOES NOT ACCEPT THE OBJECTIONS FILED BY THE ASSESSEE AGAINST THE REOPENING OF THE ASSESSMENT, HE IS NOT SUPPOSED TO PROCEED FURTHER IN THE M ATTER FOR A PERIOD OF 4 WEEKS FROM THE DATE OF SERVICE OF ORDER R EJECTING THE OBJECTIONS OF THE ASSESSEE SO THAT REMEDY COULD BE SOUGHT F ROM THE HIGH COURT. 8. WHEN WE CONSIDER THE ENTIRE FACTUAL SCENARIO PREVA ILING IN THE EXTANT CASE, IT CLEARLY EMERGES THAT THE ASSESSEE SPECIFICALLY RAISED OBJECTIONS BEFORE THE AO WITHIN A PERIOD OF 5 DAYS FROM THE DATE OF RECEIPT OF A LEGIBLE COPY OF REASONS. THE AO PROCEEDED TO FINALIZE THE ASSESSMENT U/S.143(3) R.W.S.147 WITHIN A WEEKS TIME O N 26-02- 2015. AS AGAINST THAT, HE WAS SUPPOSED TO FIRST PASS A SEPARATE SPEAKING ORDER DISPOSING OF THE ASSESSEES OBJECTIONS; THEN WAIT FOR A PERIOD OF 4 WEEKS FROM THE DATE OF SERVICE OF HIS ORDE R REJECTING THE OBJECTIONS, BEFORE FINALIZING THE ASSESSMENT. THE FAIRLY S ETTLED LEGAL POSITION IN THIS REGARD HAS BEEN GIVEN A COMPLETE GO BY. THE ASSESSMENT ORDER, IN SUCH CIRCUMSTANCES, HAVING BEEN PAS SED U/S.143(3) R.W.S.147, ERGO, CANNOT BE SUSTAINED. WE, TH EREFORE, SET- ITA NO.551/PUN/2017 SHIRISH C. DESHMUKH 7 ASIDE AND QUASH THE ASSESSMENT AND THE CONSEQUENTIAL IMP UGNED ORDER UNDER APPEAL. 9. IN VIEW OF OUR DECISION ON THE ABOVE LEGAL ISSUE, THERE IS NO NEED TO DISPOSE OF THE ASSESSEES GROUNDS ON MERITS. 10. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH SEPTEMBER, 2020. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SY AL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 09 TH SEPTEMBER, 2020 SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT-2, PUNE 4. 5. THE PR.CIT-2, PUNE , , / DR B, ITAT, PUNE 6. / GUARD FILE / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.551/PUN/2017 SHIRISH C. DESHMUKH 8 DATE 1. DRAFT DICTATED ON 09-09-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 09-09-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *