M/s Mahadev Rice & General Mills, Ahmedgarh. V. ACIT, Ludhiana

ITA 579/CHANDI/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6133 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-04-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 21-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Reopening of assessment; Unexplained investment; Reason to believe
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND SHRI. SANJAY GARG, JUDICIAL MEMBER ITA NO. 579/CHD/2012 ASSESSMENT YEAR : 2003-04 M/S MAHADEV RICE & GENERAL MILLS VS. THE ACI T, CIRCLE IV H.NO. 62, JAWAHAR NAGAR LUDHIANA AHMEDGARH PAN NO.AAJFM2848K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI J.S. NAGAR DATE OF HEARING : 23/04/2014 DATE OF PRONOUNCEMENT : 28/04/2014 ORDER PER SANJAY GARG, JUDICIAL MEMBER THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST ORDER DATED 30.03.2012 OF CIT(A)-II, LUDHIANA RELEVANT TO ASSE SSMENT YEAR 2003-04 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN UPHOLDING THAT THE ASSESSING OFFICER WAS J USTIFIED IN INVOKING THE PROVISIONS OF SECTION 148. 2. THAT THE WORTHY CIT(A) HAS ALSO ERRED IN HOLDING TH AT ON ACCOUNT OF SURVEY OPERATION AND CLOSE INSPECTION OF THE BUILDING, THE INVESTMENT SHOWN IN THE CONSTRUCTION WAS NO PROPER. THAT THE FINDING OF THE CIT(A) IN THIS REGA RD IS TOTALLY VOID ABINITIO SINCE THERE WAS NEITHER ANY INSPECTIO N OF THE BUILDING NOR ANY MEASUREMENT OF BUILDING NOR ANY MEASUREMENT OF BUILDING AND, THEREFORE, REFERENCE T O THE DVO BY THE ASSESSING OFFICER WAS NOT CALLED, FOR SPECIA LLY WHEN 2 NOTHING HAD BEEN CONFRONTED ABOUT THE ALLEGED PHYSI CAL INSPECTION / MEASUREMENT DURING THE SURVEY. 3. THAT THE CIT(A) HAS ALSO ERRED IN HOLDING THAT THE CASE COULD BE REOPENED ON THE BASIS OF REPORT OF THE DVO, SPEC IALLY WHEN NOTHING HAS BEEN CONFRONTED DURING SURVEY AND NO MATERIAL HAS BEEN BROUGHT ON RECORD THAT THERE WAS ANY UNACCOUNTED INVESTMENT ON THE BUILDING. 4. THAT THE CIT(A) HAS ALSO ERRED IN HOLDING THAT THER E WAS PENDENCY OF PROCEEDINGS WHEN THE REFERENCE TO THE D VO WAS MADE, WHICH IS ALSO NOT A CORRECT FINDING AND THE B INDING JUDGMENT OF HONBLE SUPREME COURT HAS BEEN TOTALLY IGNORED THAT NO CASE COULD BE REOPENED ON THE BASIS OF DVO S REPORT AS HELD BY THE SUPREME COURT IN THE CASE OF ACIT VS DHARIYA CONSTRUCTION COMPANY AS REPORTED IN 236 CTR 226. 5. NOTWITHSTANDING THE ABOVE SAID GROUND OF APPEAL, TH E CIT(A)S ORDER IN UPHOLDING THAT ADDITION OF RS. 5, 28,353/- WAS NOT CALLED FOR ON THE BASIS OF DIFFERENCE IN TH E ESTIMATED INVESTMENT AS POINTED OUT BY THE DVO TO THE TUNE OF RS. 5,28,353/- 6. THAT THE CIT(A) HAS ALSO ERRED IN IGNORING THE BIND ING JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF SA RGAM CINEMA VS. CIT AS REPORTED IN 241 CTR 179 AS CITED BEFORE HIM THAT SINCE NO DEFECTS HAVE BEEN POINTED OUT IN THE BOOKS OF ACCOUNTS AND THE RELIANCE BY THE CIT(A) ON THE P HYSICAL INSPECTION OF THE OLD BUILDING WAS WITHOUT ANY EVID ENCE ON RECORD AND IS TOTALLY MISCONCEIVED AND LIABLE TO BE BRUSHED ASIDE SINCE, HOW, CAN ALLEGED PHYSICAL INSPECTION L ED TO UNDISCLOSED INVESTMENT IN THE PROPERTY SINCE THE AO IS NOT A TECHNICAL PERSON, AT ALL. 3. A PERUSAL OF THE ABOVE GROUNDS TAKEN BY THE ASSE SSEE REVEALS THAT THE ONLY EFFECTIVE ISSUE WHICH EMERGES OF THE ABOVE GROUNDS IS REGARDING REOPENING OF 3 THE ASSESSMENT U/S 147 OF THE INCOME TAX ACT BY THE ASSESSING OFFICER ON THE BASIS OF REPORT OF THE DEPARTMENT VALUATION OFFICER (DVO) 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IN ITS RETURN OF INCOME DISCLOSED INVESTMENT OF RS.21,88,315/- TOWARDS LAND AND BUILDING. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. HOWEVER, LATE R ON THE ASSESSING OFFICER REFERRED THE CASE OF THE DVO WHO ESTIMATED THE TOTA L AMOUNT OF INVESTMENT IN LAND AND BUILDING AT RS. 27,16,628/- VIDE HIS REPOR T DATED 10.01.2007. THE ASSESSING OFFICER THEREAFTER REOPENED THE CASE U/S 147 AND MADE THE ADDITION OF THE DIFFERENCE OF AMOUNT BETWEEN THAT WAS DISCLOSED BY THE ASSESSEE AND THE AMOUNT ESTIMATED BY THE DVO WHICH CAME OUT AT RS. 5 ,28,353/- AND ADDED BACK THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED AGAINST THE ORDER OF THE ASSESSING OFF ICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHICH WAS DIS MISSED BY THE CIT(A) VIDE IMPUGNED ORDER. THUS, THE ASSESSEE IS IN APPEAL BEF ORE US. 6. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E SIDES AND HAVE ALSO GONE THROUGH THE RECORDS. FROM THE PERUSAL OF THE R ECORD, IT REVEALS THAT THE ASSESSING OFFICER HAD NOT ANY OTHER INFORMATION OR REASON TO BELIEVE THAT THE INCOME DISCLOSED BY THE ASSESSEE HAD ESCAPED ASSESS MENT EXCEPT THE REPORT OF THE DVO. THE REOPENING WAS MADE MERELY ON THE BASI S OF ESTIMATION OF INVESTMENT MADE BY THE DVO. THE HON'BLE SUPREME CO URT IN THE CASE OF ACIT VS. DHARIYA CONSTRUCTION COMPANY (2010) 328 ITR 51 5 (SC) HAS HELD THAT THE OPINION OF THE DVO PER SE IS NOT AN INFORMATION FOR THE PURPOSE OF REOPENING OF ASSESSMENT U/S 147 OF THE INCOME TAX ACT. SUCH A RE OPENING WHICH IS BASED ON MERELY UPON THE OPINION OF THE DVO WAS HELD TO BE BAD IN LAW. SIMILARLY, IN THE CASE OF SARGAM CINEMA VS. CIT (2010) 328 ITR 51 3 (SC), THE HON'BLE 4 SUPREME COURT HAS HELD THAT ASSESSING OFFICER COUL D NOT REFER THE MATTER TO THE DVO WITHOUT THE BOOKS OF ACCOUNT OF THE ASSESSEE BE ING REJECTED. IN THE CASE IN HAND ALSO, NEITHER ANY INFORMATION N OR ANY SUCH MATERIAL WAS IN POSSESSION OF THE ASSESSING OFFICER FROM WHICH IT COULD HAVE BEEN GATHERED THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSM ENT NOR THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT OF THE ASSESS EE. THE ADDITION WAS MADE ONLY ON THE BASIS OF INFORMATION / ESTIMATION OF TH E DVO, WHICH PER SE, IS NOT AN INFORMATION FOR THE PURPOSE OF REOPENING OF ASSESSM ENT U/S 147 AS HAS BEEN HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS . DHARIA CONSTRUCTION COMPANY (SUPRA). IN VIEW OF THE ABOVE SETTLED LEGA L POSITION, THE REOPENING IN THIS CASE IS HELD TO BE BAD IN LAW. THEREFORE, THE ADDITIONS SO MADE BY THE LOWER AUTHORITIES ARE ORDERED TO BE DELETED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28/04/20 14 SD/- SD/- (T.R. SOOD) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH APRIL, 2014 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR