Sh. Chandra Prakash Goel, New Delhi V. ITO, Hapur

ITA 6064/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3800 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 09-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMPURNAND
• Keywords: Question of law; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 40A(3); 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER & SHRI K.N. CHARY, JUDICIAL MEMBER ITA NO.-6064/DEL/2015 ( ASSESSMENT YEAR: 2010-11) CHANDRA PRAKASH GOEL C/O M/S RRA TAXINDIA D-28, SOUTH EXTENSION, PART-1, NEW DELHI. AATPG4288R VS ITO WARD-1 HAPUR ASSESSEE BY SH. SOMIL AGRAWAL, ADV. SH. LAKSHAY GOEL, ADV. REVENUE BY SH. SAMPURNAND, SR. DR ORDER PER SHRI K.N. CHARY, JUDICIAL MEMBER THIS IS AN APPEAL BY THE ASSESSEE CHALLENGING THE O RDER DATED 31.08.2015 IN APPEAL NO. 184/2014-15/GZB PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-GHAZIABAD (HER EINAFTER FOR SHORT CALLED AS THE LD. CIT (A)). DATE OF HEARING 27.09.2017 DATE OF PRONOUNCEMENT 20.10.2017 2 ITA NO. 6064/DEL/2015 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM THE MANUFACTURING AND SALE OF BRICKS. FOR THE AY 2010-11 ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 ( FOR SHORT CALLED AS THE ACT) WAS COMPLETED ON 26.03.2013 DETERMINING THE INCOME OF THE ASSESSEE AT RS. 69,16,140/-. SUBSEQUENTLY ASSESSME NT WAS REOPENED U/S 147 OF THE ACT BY ISSUANCE OF NOTICE U/S 148 AN D THE AO MADE AN ADDITION OF RS. 1,24,500/- ON ACCOUNT OF COMMISSION ON SALES TO THREE PERSONS. APPEAL PREFERRED BY THE ASSESSEE WAS DISM ISSED BY THE LD. CIT (A) VIDE IMPUGNED ORDER. 3. ASSESSEE CHALLENGES THE ORDERS OF THE AUTHORITIE S BELOW BOTH ON THE BASIS OF JURISDICTION AND ON MERITS. IN SO FAR AS THE JURISDICTION IS CONCERNED, IT IS SUBMITTED BY THE LD. AR THAT THE R EASONS RECORDED BY THE AO READ THAT IT IS ONLY LATER ON OBSERVED THAT THE ASSESSEE HAS MADE CASH PAYMENTS OF RS. 1,24,500/- ON ACCOUNT OF COMMISSION ON SALES TO THREE PERSONS AND THE REASONS CLEARLY SHOW THAT NO NEW MA TERIAL HAS COME INTO THE POSITION OF THE AO. IT IS SUBMITTED THAT WHEN THERE IS NO FRESH MATERIAL IN THE POSITION OF THE LD. AO TO INITIATE PROCEEDIN GS U/S 147 OF THE ACT THE PROCEEDINGS WERE WITHOUT JURISDICTION. FOR THIS PR INCIPLE HE PLACED RELIANCE ON THE DECISION OF THE HONBLE APEX COURT IN CIT VS . KELVINATOR OF INDIA LTD. 320 ITR 561, CIT VS. USHA INTERNATIONAL LTD. 3 48 ITR 485, ORIENT 3 ITA NO. 6064/DEL/2015 CRAFT LTD. (2013) 354 ITR 536 (DEL) AND DONALDSON I NDIA FILTERS SYSTEMS PRIVATE LIMITED (2015) 54 TAXMANN.COM 253 (DEL). P ER CONTRA, LD. DR HEAVILY RELIED UPON THE ORDERS OF THE AUTHORITIES B ELOW. 4. WE HAVE PERUSED THE MATERIAL PAPERS ON RECORD IN THE LIGHT OF THE ARGUMENTS ON EITHER SIDE. WE FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ORIENT CRAFT LTD. (SUPRA) HAS HELD AS UNDER: 15. IN THE PRESENT CASE THE REASONS DISCLOSE THAT THE ASSESSING OFFICER REACHED THE BELIEF THAT THERE WAS ESCAPEMEN T OF INCOME ON GOING THROUGH THE RETURN OF INCOME FILED BY THE AS SESSEE AFTER HE ACCEPTED THE RETURN U/S 143(1) WITHOUT SCRUTINY, AN D NOTHING MORE. THIS IS NOTHING BUT A REVIEW OF THE EARLIER PROCEED INGS AND AN ABUSE OF POWER BY THE ASSESSING OFFICER, BOTH STRONGLY DE PRECATED BY THE SUPREME COURT IN CIT VS. KELVINATOR (SUPRA). THE R EASONS RECORDED BY THE ASSESSING OFFICER IN THE PRESENT CASE DO CON FIRM OUR APPREHENSION ABOUT THE HARM THAT A LESS STRICT INTE RPRETATION OF THE WORDS REASON TO BELIEVE VIS--VIS AN INTIMATION I SSUED U/S 143(1) CAN CAUSE TO THE TAX REGIME. THERE IS NO WHISPER IN TH E REASONS RECORDED, OF ANY TANGIBLE MATERIAL WHICH CAME TO THE POSSESSI ON OF THE ASSESSING OFFICER SUBSEQUENT TO THE ISSUE OF THE IN TIMATION. IT REFLECTS AN ARBITRARY EXERCISE OF THE POWER CONFERRED U/S 14 7. 5. SIMILARLY IN THE JUDGMENT IN THE CASE OF DONALDS ON INDIA FILTERS SYSTEMS PRIVATE LIMITED (SUPRA), THE HONBLE JURISD ICTIONAL HIGH COURT HAS HELD AS UNDER: 28. THE REOPENING OF THE ASSESSMENT IN THE CASE AT HAND THROUGH NOTICE U/S 148 OF THE INCOME TAX ACT ISSUED ON 22.03.2010 FAILS TO PASS THE MUSTER ON BOTH THE TES TS. THE SATISFACTION NOTE DOES NOT DISCLOSE THE FOUNDATION OF REASONS TO BELIEVE AS IT VAGUELY REFERS TO THE PERUSAL OF TH E RECORDS WITHOUT SPECIFYING THE FRESH TANGIBLE MATERIAL THAT HAD C OME TO LIGHT GIVING RISE TO A NEED FOR SUCH ACTION. SINCE THE A SSESSMENT HAD EARLIER BEEN CONCLUDED U/S 143(3) BY ORDER DATED 21 .09.2007, THE 4 ITA NO. 6064/DEL/2015 RESTRICTIONS ON THE EXERCISE OF THE POWER OF REASSE SSMENT AS CONTAINED IN THE FIRST PROVISO TO SECTION 147 WOULD INHIBIT FURTHER ACTION IN ABSENCE OF MATERIAL SHOWING DEFAULT BY TH E ASSESSEE TO FULLY OR TRULY DISCLOSE. 29. IN THE ABOVE FACTS AND CIRCUMSTANCES, WE CONCU R WITH THE VIEW TAKEN BY THE CIT (A) THAT IT IS A CASE OF IMPERMISS IBLE CHANGE OF OPINION. THE ORDER WHEREBY THE PROCEEDINGS HAVE BE EN REOPENED FOR ASSESSMENT U/S 147/148 OF INCOME TAX ACT, THUS, IS FOUND TO SUFFER FROM JURISDICTIONAL ERROR. CONSEQUENTLY, TH E PROCEEDINGS TAKEN OUT IN ITS WAKE CANNOT SUSTAIN. 6. IN THIS CASE ALSO THE HONBLE HIGH COURT HAS OBS ERVED THAT THE REQUIREMENT OF SECTION 147 ARE NOT SATISFIED WHERE REASONS REFERENCE TO MERELY PERUSAL OF THE RECORDS WITHOUT SPECIFYING AN Y FRESH TANGIBLE MATERIAL THAT HAD COME TO LIGHT FOR INITIATING THE REASSESSMENT. IT IS, THEREFORE, CLEAR THAT IN ABSENCE OF ANY TANGIBLE MA TERIAL, THE REASSESSMENT PROCEEDINGS HAVE BEEN HELD TO BE WITHOUT JURISDICTI ON BY THE HONBLE HIGH COURT. 7. COMING TO THE FACTS INVOLVED IN THIS MATTER THE REASONS RECORDED BY THE AO ON 10.02.2004 DO NOT SPEAK OF ANY FRESH MATE RIAL COMING INTO THE POSSESSION OF THE AO. AS A MATTER OF FACT THE SAID REASONS READ AS FOLLOWS: REASONS FOR ISSUANCE OF NOTICE U/S 148 OF THE INCOM E TAX ACT, 1961 FOR THE AY 2010-11 IN THIS CASE, THE ASSESSMENT WAS COMPLETED U/S 143( 3) ON 26.03.2013 AT THE INCOME OF RS. 69,16,140/-. IT WAS LATER OBSERV ED THAT THE ASSESSEE HAS MADE CASH PAYMENTS OF RS. 1,24,500/- ON ACCOUNT OF COMMISSION ON SALES TO THREE PERSONS VIZ. SHRI VISAL KUMAR, CULAO THI; SHRIV VINOD KUMAR, 5 ITA NO. 6064/DEL/2015 HAPUR AND SHRI ASHOK CHOPRA, HAPUR, IN VIOLATION TO SECTION 40A(3) OF THE INCOME TAX ACT, 1961. I HAVE, THEREFORE, REASONS T O BELIEVE THAT THE SAID SUM OF RS. 1,24,500/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC. 147 OF THE INCOME TAX ACT, 1961. 8. WE, THEREFORE, FIND THAT THE COMPLETE ASSESSMENT WAS REOPENED ONLY ON THE BASIS OF THE RECORD THAT WAS ALREADY AV AILABLE WITH THE ASSESSING OFFICER AND NO FRESH TANGIBLE MATERIAL HA S COME INTO THE POSSESSION THE AO, AS SUCH, THE EXERCISE OF JURISDI CTION BY THE ASSESSING OFFICER TO REOPEN THE MATTER IS IMPERMISSIBLE IN TH E LIGHT OF THE DECISIONS OF THE HONBLE APEX COURT AND JURISDICTIONAL HIGH COUR T. WE, THEREFORE, HOLD THAT THE ASSESSMENT ORDER DATED 27.06.2014 U/S 147/ 143(3) OF THE ACT CANNOT BE SUSTAINED. SINCE WE QUASH THE ASSESSMENT ORDER ON THE QUESTION OF LAW, WE DO NOT DEEM IT NECESSARY TO DEA L WITH THE MERITS OF THE CASE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.10.2017 SD/- SD/- (N.K. SAINI) (K.N. CHARY) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED: 20.10.2017 *KAVITA ARORA 6 ITA NO. 6064/DEL/2015 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI