ACIT, New Delhi V. Sh. Lalit Bagai, New Delhi

ITA 5833/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3384 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2006-2007
• Appeal Filed On: 27-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Keywords: Reopening of assessment; Assessment record; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148; 139

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.:- 5833/DEL /2015 ASSESSMENT YEAR: 2006-07 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-62 (1), NEW DELHI. VS. SHRI LALIT BAGAI PROP. BAGAI CONSTRUCTION, 94, GOLF LINK, NEW DELHI 110 003. (APPELLANT) (RESPONDENT) O R D E R PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE DE PARTMENT AGAINST ORDER DATED 7.8.2015 PASSED BY THE LD. CIT (A) - 20, NEW DELHI WHEREIN, VIDE THE IMPUGNED ORDER, THE LD. CIT (A) HAS HELD THAT T HE REOPENING OF ASSESSMENT U/S 147 OF THE INCOME TAX ACT, 1961 (HER EINAFTER CALLED THE ACT) WAS INVALID IN THE CASE OF ASSESSEE FOR ASSES SMENT YEAR 2006-07. DEPARTMENT BY: SHRI AMIT JAIN , SR. DR ASSESSEE BY : NONE DATE OF HEARING 22/11 /2017 DATE OF PRONOUNCEMENT 19/02/2018 ITA NO. 5833/DEL/2015 ACIT VS. SHRI LALIT BAGAI PROP. 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RET URN OF INCOME WAS FILED ON 31.10.2006 DECLARING INCOME OF RS. 1,02,35,913/- WHICH WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSMENT WAS COMPLETED AT RS. 1,09,52,472/-. LATER ON, THE CASE WAS REOPENED U/S 147 OF THE ACT ON 28.03.2008 AFTER RECORDING THE FO LLOWING REASONS:- THE ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143( 3) ON 28.2.2008 AT AN INCOME OF RS. 1,09,52,472/-. ON EXA MINATION THE ASSESSEE HAS NOT SHOWN RECEIPTS IN PROFIT & LOS S ACCOUNT OF RS. 2,61,84,628/- WHICH APPEAR IN THE FORM 16 OF THE RELEVANT PREVIOUS YEAR, THEREBY SHOWING LESS INCOME . FURTHER ON PERUSAL OF RECORDS IT IS ALSO SEEN THAT THE ASSESSEE HAS NOT DEDUCTED ANY TAX ON PAYMENT OF RS. 5,27,52,272/- PAYMENT. THEREFORE THE PROVISIONS OF SECTION U/S 40(A)(IA) ATTRACT ON THE ABOVE MENTION AMOUNT. THE ASSESSEE NEITHER AT TIME OF ASSESSMENT PROCEEDI NGS NOR AT THE TIME OF FILING OF RETURNS OF INCOME DISCLOSE D THE ABOVE MENTIONED FACTS. IN VIEW OF THESE FACTS AND AFTER DUE APPLICATION OF MIND, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT OF THE A.Y. 2006-07 FOR THE REAS ON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MENTIONED FACTS NECESSARY FOR HIS ASSESSMENT. T HEREFORE, CASE IS FIT FOR REOPENING THE ASSESSMENT U/S 147/14 8 OF I.T. ACT. THE PRIOR SANCTION OF CIT IS REQUIRED BEFORE I SSUE OF NOTICE U/S 148 OF IT ACT AS PER PROVISION OF SECTIO N 151(1) INCOME TAX ACT. 2.1 THE REASSESSMENT WAS COMPLETED AT A TOTAL I NCOME OF RS. 8,60,52,120/- AFTER MAKING AN ADDITION OF RS. 2,61, 84,628/- ON ACCOUNT OF DIFFERENCE IN GROSS RECEIPTS AND RS. 4,89,15,024 /- ON ACCOUNT OF ITA NO. 5833/DEL/2015 ACIT VS. SHRI LALIT BAGAI PROP. 3 DISALLOWANCE U/S 40(A) (IA) OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A) AND CHALLENGED THE INITIATION OF REASSESSMENT PROCEEDINGS. THE ASSESSEE ALSO CHALLEN GED THE ADDITION ON MERITS. THE LD. CIT (A) NOTED THAT THE VERY SAME IS SUE OF DIFFERENCE IN GROSS RECEIPTS, FOR WHICH THE REASSESSMENT PROCEEDI NGS WERE INITIATED, WERE ENQUIRED INTO BY THE AO AT THE TIME OF ORIGINA L ASSESSMENT PROCEEDINGS ALSO AND REPLY HAD BEEN GIVEN BY THE AS SESSEE BEFORE THE AO IN THIS REGARD. THE LD. CIT (A) ALSO NOTED THAT THE AO DID NOT MAKE ANY ADDITION IN THIS RESPECT AND, THEREFORE, IT WAS REOPENING OF ASSESSMENT BY CHANGING AN EARLIER OPINION WHICH WAS NOT PERMISSIBLE IN LAW. THE LD. CIT (A) ALSO TOOK NOTE OF THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE ASSESSEES OWN CASE FOR ASSESSMEN T YEAR 2007-08 WHEREIN A SIMILAR REOPENING HAD BEEN SET ASIDE. NOW , AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEFORE THE ITAT AND HAS CHA LLENGED THE ACTION OF THE LD. CIT (A) IN HOLDING THE REASSESSMENT AS VOID AB INITIO. 3. AN ADJOURNMENT APPLICATION WAS RECEIVED ON B EHALF OF THE AUTHORISED REPRESENTATIVE WHEN THE APPEAL WAS CALLE D OUT FOR HEARING WHICH WE REJECT AND WE PROCEED TO HEAR THE APPEAL EX PARTE QUA THE ASSESSEE. ITA NO. 5833/DEL/2015 ACIT VS. SHRI LALIT BAGAI PROP. 4 4. LD. SR. DR PLACED EXTENSIVE RELIANCE ON TH E FINDINGS OF THE AO AS CONTAINED IN THE REASSESSMENT ORDER DATED 28.3.2014 . IT WAS SUBMITTED THAT THERE WAS A DIFFERENCE IN THE GROSS RECEIPTS O F THE ASSESSEE AND THE ASSESSEE HAD ALSO FAILED TO DEDUCT TAX AT SOURCE ON VARIOUS PAYMENTS AND THAT THIS INFORMATION WAS A VALID REASON FOR RE OPENING THE ASSESSMENT AND, THEREFORE, THE LD. CIT(A) HAD ERRED IN HOLDING THE REASSESSMENT PROCEEDINGS AS VOID AB INITIO. 5. WE HAVE HEARD THE LD. SR. DR AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. A PERUSAL OF THE IMPUGNED ORDER SHOWS TH AT LD. CIT(A) HAS NOTED THAT SINCE THE ORIGINAL ASSESSMENT U/S 143(3) WAS PASSED ON 28.3.2008 AND THE NOTICE U/S 147 WAS ISSUED ON 28.3 .2013, THE SAME WAS ISSUED AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND, THEREFORE, IN TERMS OF PROVISI ON OF SECTION 147, THE NOTICE COULD BE ISSUED ONLY UNDER TWO CIRCUMSTANCES I.E. (I) UNLESS ANY INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S 13 9 OR IN RESPONSE TO A NOTICE U/S 142 (1) OR SECTION 148, OR (II) WHERE TH ERE HAS BEEN A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. THE LD. CIT (A) HAS F URTHER NOTED THAT THE AO HAD OPENED THE ASSESSEE STATING FAILURE ON THE P ART OF THE ASSESSEE ITA NO. 5833/DEL/2015 ACIT VS. SHRI LALIT BAGAI PROP. 5 TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR THE ASSESSMENT BY GIVING THE REASON THAT THE ASSESSEE HAD NOT SHOW N RECEIPTS OF RS. 2,61,84,628/- WHICH APPEARED IN FORM 16A AND FURTHE R THAT THE ASSESSEE HAD NOT DEDUCTED ANY TAX ON PAYMENT OF RS. 52,75,27 ,272/-. THEREAFTER, THE LD. CIT(A) HAS NOTED THAT HE HAS PERUSED THE AS SESSMENT RECORDS FOR THE RELEVANT ASSESSMENT YEAR FROM WHICH IT HAS EMER GED THAT THE ASSESSEE HAD DULY FILED THE RECONCILIATION STATEMEN T WITH REGARD TO THE GROSS RECEIPTS IN PROFIT AND LOSS ACCOUNT WITH RS. 2,61,84,628/- APPEARING IN FORM 16A. THE LD. CIT (A) ALSO REFERRED TO NOTE- SHEET ENTRIES DATED 4.3.2008, 12.3.2008 AND 26.3.2008 IN THE ASSESSMENT RECORDS WHEREIN THE ASSESSEE APPEARED BEFORE THE AO AND RECONCILED THE DIFFERENCE. WITH RESPECT TO THE ISSUE PERTAINING TO NON DEDUCTION OF TDS ON PAYMENT OF RS. 5,27,52,272/-, THE LD. CIT(A) HAS NOTED THAT HE HAS GONE THROUGH THE ASSESSMENT AND FOUND THAT DURING THE ORIGINAL A SSESSMENT PROCEEDINGS THE AO HAS GONE IN DETAIL IN THE WAGES PAYMENT AND ALL MATERIAL FACTS WERE AVAILABLE ON RECORD DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. THE LD. CIT(A) HAS ALSO REFERRED TO TH E NOTE-SHEET ENTRY DATED 26.3.2008 IN THE ASSESSMENT RECORDS AND NOTED THAT THE AO HAD DISALLOWED RS. 4,71,867/- BEING 1% OF THE TOTAL WAG ES TO COVER UP FOR ANY DISCREPANCY. THUS, ON FACTS, THE LD. CIT (A) HA S REACHED THE ITA NO. 5833/DEL/2015 ACIT VS. SHRI LALIT BAGAI PROP. 6 CONCLUSION THAT THE AOS CONTENTION THAT RELEVANT D ETAILS WERE NOT PRODUCED BEFORE THE AO DURING THE ORIGINAL ASSESSME NT PROCEEDINGS WAS NOT BORNE OUT FROM THE ASSESSMENT RECORDS IN THE OR IGINAL ASSESSMENT PROCEEDINGS. THE LD. CIT (A) HAS FURTHER NOTED THAT NOT ONLY THE FACTS/DETAILS WERE PRESENTED DURING THE ORIGINAL AS SESSMENT PROCEEDINGS, BUT THEY WERE ALSO CONSIDERED BY THE AO, AS WAS EVI DENT FROM THE NOTE- SHEET ENTRIES. THE LD. CIT (A) WENT ON TO HOLD THAT REOPENING ON THIS GROUND WAS NOTHING BUT AN ATTEMPT IN CHANGING THE E ARLIER OPINION. THE LD. CIT (A) HAS ALSO TAKEN NOTE OF THE FACT THAT FO R ASSESSEES OWN CASE FOR ASSTT. YEAR 2007-08, ON IDENTICAL GROUNDS, THE AO HAD REOPENED THE ASSESSMENT AND THE ASSESSEE HAD PREFERRED A WRIT BE FORE THE HONBLE DELHI HIGH COURT AND THE HONBLE DELHI HIGH COURT V IDE, JUDGMENT DELIVERED ON 5.12.2014 IN WP(C) NO. 5054/2014 AND C M NO. 100078/2014, HAD SET ASIDE THE NOTICE DATED 26.3.20 14 AND ORDER DATED 9.5.2014. THE LD. CIT(A) HAS ALSO NOTED THAT THE RE ASONS RECORDED FOR ASSESSMENT YEARS 2006-07 AND 2007-08 WERE IDENTICA L AND, THEREFORE, THE NOTICE ISSUED U/S 147 OF THE ACT FOR REASSESSME NT PROCEEDINGS WAS VOID AB INITIO AND HENCE THE SUBSEQUENT PROCEEDINGS U/S 143(3) / 148 OF THE ACT WERE LIABLE TO BE ANNULLED. ITA NO. 5833/DEL/2015 ACIT VS. SHRI LALIT BAGAI PROP. 7 5.1 AFTER HAVING GONE THROUGH THE IMPUGNED ORD ER WE DO NOT FIND ANY REASON TO DIFFER FROM THE FINDINGS OF THE LD. C IT(A) AS HE AS EXAMINED THE ISSUE IN DETAIL AFTER GOING THROUGH TH E ASSESSMENT RECORDS. LD. SR. DR ALSO COULD NOT POINT OUT ANY FACTUAL AND LEGAL INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (A). WE ALSO NOTE THAT, ON IDENTICAL FACTS, THE HONBLE DELHI HIGH COURT, IN ASSESSEES OWN CAS E, FOR ASSTT. YEAR 2007-08, HAS SET ASIDE THE REASSESSMENT NOTICE AS W ELL AS THE ASSESSMENT ORDER. THEREFORE, RESPECTFULLY FOLLOWING THE SAME WE DISMISS THE GROUNDS RAISED BY THE DEPARTMENT,. 6. IN THE RESULT THE APPEAL OF THE DEPARTMENT STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH FEBRUARY, 2018. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVAS TAVA) HON'BLE PRESIDENT JUDICIAL MEMBER DATED: 19.2.2018 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ITA NO. 5833/DEL/2015 ACIT VS. SHRI LALIT BAGAI PROP. 8 ASSISTANT REGISTRAR ITAT, NEW DELHI