Narendra Manpuria, Kolkata V. The DCIT, CIR-49, KOLKATA, Kolkata

ITA 625/KOL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6335 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 14-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S JHAJHARIA
• Keywords: Reopening of assessment; Question of law; Cost of acquisition; Tangible material; Difference of opinion; Assessment record; Revised return; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 40A(3); 143(3); 142(1); 14A; 133(6); 131; 148; 154; 2

Judgement Text

ITA NO.625/KOL/2015 NARENDRA MANPURIA A.Y.2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A KOL KATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM & SMT. MADHUMITA ROY, JM ] ITA NO.625/KOL/2015 ASSESSMENT YEAR : 2008-09 NARENDRA MANPURIA -VERSUS- D.C.I.T., CIRCLE -49, KOLKATA KOLKATA (PAN: AMRPM 8788 J) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.JHAJHARIA, FCA & SHRI SUJOY SEN, AR FOR THE RESPONDENT: SHRI SALLONG YADEN, ADDL. CIT DATE OF HEARING : 30.05.2018. DATE OF PRONOUNCEMENT : 01.06.2018. ORDER PER BENCH THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX-15, KOLKATA PASSED U/S 2 50 OF THE INCOME TAX ACT, 1961 (THE ACT) RELATING TO A.Y. 2008-09. 2. THE ASSESSEE IS AN INDIVIDUAL AND HAS FILED HIS RETURN OF INCOME FOR A.Y.2008- 09 ON 30.09.2008 DECLARING TOTAL INCOME OF RS.24,82 ,984/-. THE APPEAL BEFORE US IS AGAINST THE REASSESSMENT ORDER PASSED BY THE AO U/S 143(3) R.W.S. 147 OF ACT ON 19.06.2013, WHICH WAS CONFIRMED BY THE LD. CIT(A) I N THE IMPUGNED ORDER. THE ASSESSEE HAS RAISED TOTAL ELEVEN GROUNDS OF APPEAL. GROUNDS NO.1 TO 6 ARE ON THE ISSUE OF REOPENING OF ASSESSMENT . GROUNDS NO.7 AND 8 ARE ON MERITS OF THE ADDITION, GROUND NO.9 IS AGAINST LEVY OF INTEREST U/S 234 B OF THE A CT AND GROUNDS NO.10 AND 11 ARE GENERAL IN NATURE. 3. THE LD. COUNSEL FOR THE ASSESEE REITERATED THE C ONTENTIONS RAISED BY THE ASSESEE BEFORE THE LD. CIT(A) THAT THE REOPENING OF ASSESSM ENTS ARE BAD IN LAW. HE SUBMITTED THAT, A PLAIN READING OF THE REASONS RECORDED FOR RE-OPENING THE ASSESSMENT DISCLOSED THAT NO NEW TANGIBLE MATERIAL HAS COME INTO THE POS SESSION OF THE ASSESEE AND THAT ITA NO.625/KOL/2015 NARENDRA MANPURIA A.Y.2008-09 2 REOPENING WAS MADE ON GOING THROUGH THE ASSESSMENT RECORD. HE POINTED OUT TO THE SENTENCE PERUSAL OF THE ASSESSMENT RECORDS SHOWS NO SUCH DISALLOWANCE AND SUBMITTED THAT THE REASONS DEMONSTRATE THAT THE REO PENING IS BAD IN LAW AS NO NEW OR TANGIBLE MATERIAL HAS COME INTO THE POSSESSION OF T HE ASSESSEE. RELYING ON A NUMBER OF DECISIONS AND SPECIALLY ON THE ORDER OF THE HON BLE MUMBAI BENCH OF THE ITAT IN THE CASE OF MOTILAL R.TODI VS ACIT IN ITA NO.2910/M UM/2013 ORDER DATED 22.09.2015 HE FURTHER SUBMITS THAT, WHEN A SPECIFIC DIRECTION HAS BEEN GIVEN BY THE ADDITIONAL COMMISSIONER U/S 144A OF THE ACT FOR PAS SING AN ORDER U/S 143(3) OF THE ACT ON A SPECIFIC ISSUE, ASSESSMENT CANNOT BE REOPE NED ON THE SAME ISSUE. FOR THIS PROPOSITION HE RELIED ON THE JUDGEMENT OF HONBLE C ALCUTTA HIGH COURT IN THE CASE OF AMRIT SALES PROMOTION VS UNION OF INDIA 35 TAXMANN. COM 53 (CALCUTTA).. 4. THE LD. DR ON THE OTHER HAND, SUBMITTED THAT, TH E ISSUE OF DISALLOWANCE U/S 40A(3) HAS NOT BEEN EXAMINED BY THE AO, THOUGH THE EXPENDITURE IN QUESTION WAS EXAMINED. HE AGREED THAT THE CASH PAYMENTS HAVE BEE N EXAMINED DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, BUT RELIED ON THE ORDER OF THE LD. CIT(A) AT PAGES 53 ONWARDS AND SUBMITTED THAT ON THE FACTS OF THIS CAS E, THE LAW HAS BEEN EXPLAINED BY THE LD. CIT(A) AND SUBMITTED THAT IF THE AO HAS NOT CONDUCTED ENQUIRY IN THE MANNER IT WAS REQUIRED TO BE DONE THEN IT IS A CASE OF NON APPLICATION OF MIND TO THE ISSUE IN THE MANNER IT SHOULD HAVE BEEN AND HENCE THE ORDER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. HE RELIED ON THE SAME. 5. IN REPLY THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF 349 ITR 14 7 (CAL) SPECIFICALLY ON PARA-16. WE WOULD REFER TO THE CASE LAW RELIED UPON BY BOTH PAR TIES AS AND WHEN NECESSARY. 6. WE HAVE HEARD THE RIVAL CONTENTIONS. ON A CAREFU L CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL OF THE ORDE RS ON RECORD AND THE CASE LAWS CITED WE HOLD AS FOLLOWS :- ITA NO.625/KOL/2015 NARENDRA MANPURIA A.Y.2008-09 3 THE LD. CIT(A) HAS BROUGHT OUT THE FACTS OF THE CAS E AT PAGES 30 TO 32 OF HIS ORDER WHICH IS EXTRACTED BELOW :- THE ASSESSEE ENTERED INTO AGREEMENTS WITH THE SELL ERS OF LAND AND SUBSEQUENTLY GOT THE SELLERS TO TRANSFER THE LANDS TO EVENTUAL BUYER S DIRECTLY IN A SORT OF TRIPARTITE AGREEMENT WHEREIN HE WAS ONLY A CONFIRMING PARTY. IN THIS PURCHASE COST DETAIL THE ASSESSEE CL EARLY MENTIONED THAT HE IS CLAIMING STAMP DUTY, BANK CHARGES, REGISTRATION AND MUTATION EXPENSES ETC. IN HIS COST. THE ASSESSEE ALSO FILED COPIES OF THE INDENTURE OF CONV EYANCE OF THE LAND WHERE HE IS DECLARED TO BE THE CONFIRMING THE PARTY. THE ASSESS EE ALSO FILED THE AGREEMENTS FOR SALE ENTERED INTO BY HIM WITH THE SELLERS OF LAND. THE AO MADE ENQUIRIES FROM SOME OF THE EVENTUAL BUYERS OF LAND U/S 133(6) OF THE AC T ALSO. IT IS A MATTER OF RECORD THAT THE THEN SUPE RVISORY OFFICE OF THE A.O., THE ADDL. CIT RANGE-49 & 50 GAVE A DIRECTION U/S 144A OF THE ACT, ON 11/12.11.2010 TO THE AO VIDE HIS LETTER F. NO.ADDL. CIT/RANGE-49 & 50/KOL/1 0-11/234-36 AS UNDER:- 'THE ASSESSEE IS A TRADER IN LAND AND INVESTOR IN S HARES. THE P&L A/C FOR THE A. Y. UNDER CONSIDERATION REVEALS GROSS LOSS AMOUNTING RS. 95,837/- ON THE SALE OF LAND. THE AO IS REQUESTED TO EXAMINE SUCH LOSS ON S ALE OF LAND AND FURTHER, DIRECTED TO EXAMINE WHETHER SUCH LOSS CAN BE ADJUST ED FROM INCOME SHOWN IN THE CREDIT SIDE OF THE P&L A/C. THE INSTRUCTIONS WERE GENERAL AND WERE NOT PRE JUDICIAL TO THE ASSESSEE AND WERE ONLY CONFINED TO THE GENERAL LINES OF INVESTIGATION . THE INCOME TAX INSPECTOR (ITI) ATTACHED TO TH E OFFICE OF THE AO ALSO MADE FIELD ENQUIRIES AND SUBMITTED THE REPORT ON 11.11.2010. T HE ITI REPORTED THAT HE HAS VISITED THE RESIDENCE OF SMT. SUSAMA NASKAR & ASHOK NASKAR BUT COULD NOT MEET THEM AS THEY WERE NOT PRESENT. HE HOWEVER, MET ONE SHRI SOU RJYA SEKHAR NASKAR, THE CONSTITUTED ATTORNEY OF THE VENDORS WHO CONFIRMED T HAT THE PROPERTY HAS BEEN SOLD BY ITA NO.625/KOL/2015 NARENDRA MANPURIA A.Y.2008-09 4 THE VENDORS AND THE CONSIDERATION WAS MADE IN CASH AND BANKERS CHEQUE & A/C PAYEE CHEQUE AS MENTIONED IN THE SALE DEED. THE AO VIDE ORDER SHEET DATED 01.11.2010 HA D ALSO NOTED AS UNDER:- '1.11.10 SHRI H P. AGARWAL, A/R APPEAR AND FURNISH THE DETAILS ON AS ASKED FOR IN THE EARLIER HEARING. THE DOCUMENTS RELATING TO P URCHASE & SALE OF LANDS ARE CHECKED AND VERIFIED W.R.T. BANK STATEMENT AND CASH BOOK. THE DOCUMENTS FOR DEVELOPMENT EXPENSES ARE PARTLY CHECKED. ALL THE DO CUMENT RELATING TO P&L A/CS ARE ALSO CHECKED. THE AIR IS FURTHER ASKED TO PRODU CE THE RELEVANT CONTRACT NOTES FOR SHARE TRANSACTIONS. THE AR IS FURTHER ASKED TO EXPLAIN AND SHOW THE INV ESTMENTS IN THE BANK STATEMENT AND EXPLAIN AS TO WHY THERE IS NO SIGNATU RE OF THE PURCHASERS IN THE DEEDS. THE HEARING IS ADJ. TO 15.10.10. THE AO ALSO RECORDED THE STATEMENT OF PERSONS ASSOC IATED WITH SOME OF THE EVENTUAL BUYER OF LAND U/S 131 OF THE ACT AND ALSO TEST CHEC KED THE DEVELOPMENT EXPENSES. THE AO EVENTUALLY PASSED THE ORDER OF ASSESSMENT U/ S 143(3) OF THE ACT ON 29.12.2010 MAKING A DISALLOWANCE OF RS.3,36,732/- U /S 14A OF THE ACT AND A DISALLOWANCE OF RS.1,33,457/- OUT OF LABOUR CHARGES . THE AO SUBSEQUENTLY PASSED AN ORDER U/S 154 OF THE ACT REDUCING THE DISALLOWANCE U/S 14A TO RS.1,66,848/- ONLY ON 24.04.2012. SUBSEQUENTLY ON 25.09.2012, THE AO (A DIFFERENT OFF ICER) RECORDED THE FOLLOWING REASON FOR ISSUING A NOTICE U/S 148 OF THE ACT:- 'REASONS FOR ISSUE OF NOTICE U/S. 148 IN THIS INSTANT CASE, THE RETURN FOR THE A. Y 2008- 09 WAS ASSESSED U/S. 143(3) ON TOTAL INCOME OF RS. 30,95,720/- ON 29/12/2010. ITA NO.625/KOL/2015 NARENDRA MANPURIA A.Y.2008-09 5 1.0. THE ASSESSEE SRI. NARENDRA MANPURIA, HAVE BEEN ENGAGED IN TRADING OF LAND AS CLAIMED IN THE RETURN AND AT THE TIME OF ASSESSM ENT PROCEEDING U/S. 143(3). THE ASSESSEE CLAIMED THAT HE HAD PURCHASED LAND FROM CE RTAIN PARTIES AND SOLD THE SAME TO CERTAIN COMPANIES/ORGANIZATIONS, AFTER INCU RRING CERTAIN EXPENDITURE IN CONNECTION WITH DEVELOPMENT OF THE SAID LAND. THE T RANSACTIONS IN LAND WAS CLAIMED AS BUSINESS ACTIVITIES AND ASSESSED AS SUCH . ON GOING THROUGH THE ASSESSMENT RECORDS IT IS NOTED THAT THE ASSESSEE SUBMITTED CONVEYANCE DEEDS REGARDING SALE OF LAND IN WHICH HE APPEARS AS CONFIRMING PARTY IN HIS OWN CAPACITY. THE CONVEYANCE DEEDS MENTIONED CERTAIN PAYMENTS IN CASH BY THE ASSESSEE IN HIS OWN CAPACITY TO THE SELLERS TOWARDS PURCHASE OF LAND FROM THEM WHICH SUBSEQUENTLY SOLD TO OTHER PARTIES. THE DETAILS OF SUCH PAYMENTS ARE AS UNDER, SL.NO. NAME OF THE SELLER DATE OF DEED OF CONVEYANCE PAYMENTS IN CASH 1. ASHOK SENGUPTA 28/12/2007 RS.15, 00, 000/- 2. SUSHAMA NASKAR & ASHOK NASKAR 30/04/2007 RS. 7, 07,530/- 3. SUSHAMA NASKAR & ASHOK NASKAR 26/04/2007 RS.7,35,670/- 4. SUSHAMA NASKAR & ASHOK NASKAR 26/04/2007 RS.7,21,600/- 5. SUSHAMA NASKAR & ASHOK NASKAR 24/04/2007 RS.7,34,950/- TOTAL RS.43,99,750/- IN VIEW OF ASSESSEE'S CLAIM THAT THE TRANSACTIONS I N LAND HAD BEEN ENTERED INTO AS BUSINESS TRANSACTIONS, THE PAYMENTS IN CASH TO THE SELLERS, COMES WITHIN THE PURVIEW OF SEC. 40A(3) OF THE INCOME TAX ACT '1961, AS APPLICABLE IN THE A.Y 2008-09. THE PROVISIONS OF SEC. 40A(3) AS APPLICABL E IN THE A. Y. 2008-09 IS AS UNDER, ITA NO.625/KOL/2015 NARENDRA MANPURIA A.Y.2008-09 6 'WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPE CT OF WHICH PAYMENT IS MADE IN A SUM EXCEEDING TWENTY THOUSAND RUPEES OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPENDITURE.' THUS THE CLAIM OR EXPENDITURE IN CASH AMOUNTING RS. 43,99,7501- CANNOT BE ALLOWED, GOING BY THE PROVISIONS OF SEC. 40A(3) OF THE I.T ACT'1961. THE PERUSAL OF THE ASSTT. ORDER, SHOWS ON SUCH DISALLOWANCE. IN VIEW OF THE ABOVE DISCUSSION, THE UNDERSIGNED HA S REASON TO BELIEVE THAT THE INCOME OF RS.43,99,750/- HAS BEEN ESCAPED FROM TAXA TION. 2.0. FURTHER IT IS NOTED FROM THE RECORDS THAT THE ASSESSEE HAD CLAIMED ADVANCE AGAINST TRADING LAND OF RS.3,76,06,125/- AS PER BAL ANCE SHEET FOR THE A. Y. 2008- 09. HOWEVER, NO LAND ON TRADING ACCOUNT HAS BEEN DI SCLOSED IN THE SAID BALANCE SHEET. UNDER THESE CIRCUMSTANCES, IT APPEARS THAT H E ABOVE LAND AGAINST WHICH ADVANCE WAS CLAIMED TO HAVE BEEN RECEIVED HAS BEEN SOLD. HOWEVER NO INCOME FROM SUCH SALE WAS DISCLOSED AND THE ISSUE HAS BEEN ESCAPED FROM EXAMINATION AND ASSESSMENT IN THE ASSTT. ORDER U/S. 143(3) DTD. 29112/2010. IN VIEW OF THE ABOVE DISCUSSION, THE UNDERSIGNED HA S REASON TO BELIEVE THAT THE INCOME N ACCOUNT OF SUCH SALE OF LAND HAS BEEN ESCA PED FROM TAXATION. 3. 0. IN VIEW OF DISCUSSION AS STATED ABOVE, ON THE BASIS OF BELIEVE FORMED REGARDING ESCAPEMENT OF INCOME FOR THE A. Y. 2008-0 9, NOTICE U/S. 148 IS ISSUED, INITIATING RE- ASSESSMENT PROCEEDING U/S. 147 OF TH E INCOME TAX ACT' 1961, IN THIS INSTANT CASE FOR THE ASSTT. YEAR 2008-09.' ITA NO.625/KOL/2015 NARENDRA MANPURIA A.Y.2008-09 7 THE AR OF THE ASSESSEE FILED A REPLY DATED 16.1 0.1 2 THAT THE ORIGINAL/REVISED RETURN FILED EARLIER ON 30.09.2008 & 21.08.2009 MAY BE TRE ATED 00 HAVE BEEN FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. THE AO S UBSEQUENTLY ISSUED NOTICE U/S 143(2) & 142(1) OF THE ACT, ON 01.11.2012. ON 12.11 .2012 THE AR MADE A REQUEST FOR SUPPLY OF THE REASON RECORDED FOR ISSUANCE OF NOTIC E U/S 148 OF THE ACT. THESE WERE COMMUNICATED TO THE ASSESSEE BY A LETTER DT. 20.11. 2012 BY THE AO. 7. A PERUSAL OF THE SEQUENCE OF FACTS BROUGHT OUT B Y THE LD. CIT(A) AS WELL AS THE REASONS RECORDED BY THE AO FOR RE-OPENING THE CASE DEMONSTRATE THAT, THE AO ON GOING THROUGH THE ASSESSMENT RECORD, HAS COME TO A DIFFERENT CONCLUSION, THAN WHAT WAS ARRIVED AT DURING THE COURSE OF ORIGINAL ASSESS MENT. ADMITTEDLY THERE IS NO NEW MATERIAL THAT HAS COME INTO THE POSSESSION OF THE A .O. AFTER THE COMPLETION OF ASSESSMENT U/S 143(3) OF THE ACT. THE REASONS ARE R ECORDED BASED ON THE ASSESSMENT RECORD ONLY. 8. THE LAW ON THE SUBJECT HAS BEEN BROUGHT OUT IN T HE CASE OF MOTILAL R.TODI (SUPRA) WHERE AT PARA 6.6. ONWARDS IT IS HELD AS FO LLOWS :- 6.6 . IN THE PRESENT CASE, IT WAS-NOTICED BY US TH AT THE CASE OF THE ASSESSE IS THAT THERE WAS NO FRESH TANGIBLE MATERIAL IN THE POSSESS ION OF AO AT THE TIME OF RECORDING OF IMPUGNED REASONS. A PERUSAL OF THE 'RE ASONS' RECORDED BY THE AO IN THIS CASE REVEALS THAT AT THE TIME OF RECORDING OF THESE 'REASONS' THE AO HAD EXAMINED ORIGINAL ASSESSMENT RECORDS ONLY AND NO FR ESH MATERIAL HAD COME IN THE POSSESSION OF THE AO. IN RESPONSE TO OUR SPECIF IC QUERY ALSO, LD DR COULD NOT POINT OUT ANY FRESH MATERIAL AVAILABLE WITH THE AO AT THE TIME OF REOPENING OF THE CASE OF THE ASSESSEE. THUS, ASSERTION OF THE ASSESS EE THAT THERE WAS NO FRESH MATERIAL WITH AO FOR REOPENING OF THIS CASE, REMAIN ED UNCONTROVERTED. 6.7. UNDER THESE FACTS AND CIRCUMSTANCES, LET US NO W EXAMINE SETTLED POSITION OF LAW ON THIS ISSUE. IT HAS BEEN HELD IN VARIOUS JUDG MENTS COMING FROM VARIOUS COURTS THAT AVAILABILITY OF FRESH TANGIBLE MATERIAL IN THE POSSESSION OF AO AT THE TIME OF RECORDING OF IMPUGNED REASONS IS A SINE QUA NONE, BEFORE THE AO CAN RECORD REASONS FOR REOPENING OF THE CASE. WE BEGIN WITH THE JUDGMENT OF HON 'BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR IND IA LTD. 320 ITR 561 (SC), LAYING DOWN THAT FOR REOPENING OF THE ASSESSMENT, T HE AO SHOULD HAVE IN ITS POSSESSION 'TANGIBLE MATERIAL'. THE TERM 'TANGIBLE MATERIAL' HAS BEEN UNDERSTOOD ITA NO.625/KOL/2015 NARENDRA MANPURIA A.Y.2008-09 8 AND EXPLAINED BY VARIOUS COURTS SUBSEQUENTLY. THERE HAS BEEN UNANIMITY OF THE COURTS ON THIS ISSUE THAT IN ABSENCE OF FRESH MATER IAL INDICATING ESCAPED INCOME, THE AO CANNOT ASSUME JURISDICTION TO REOPEN ALREADY CONCLUDED ASSESSMENT. 6.8. RECENTLY, HON'BLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS TUPPERWARE INDIA PVT. LTD., IN ITS ORDER DT 10-8-15 (ITA NO 415 / 2015 ) GOT A N OCCASION TO ANALYSE LATEST POSITION OF LAW ON THIS ISSUE. AFTER DISCUSSING MANY JUDGMENTS ON THIS ISSUE, IT WAS HELD THAT EVEN IN THE CASE OF OR IGINAL ASSESSMENT ORDER HAVING BEEN PASSED U/S 143( 1), IT IS MANDATORY FOR THE AO TO HAVE IN ITS POSSESSION , FRESH TANGIBLE MATERIAL BEFORE REOPENING OF THE CAS E. 6.9 IN THE CASE OF BOMBAY STOCK EXCHANGE LTD. (WRIT PETITION NO.2468 DT. 12.06.2014) (89 CCH 118), HONBLE BOMBAY HIGH COURT OBSERVED AS UNDER: '5. IT IS PERTINENT TO NOTE THAT RESPONDENT NO. 1 H AS NOT SET OUT IN THE REASONS WHICH FACT OR OTHER MATERIAL WAS NOT DISCLO SED BY THE PETITIONER THAT LED TO INCOME ESCAPING ASSESSMENT. IN FACT, ON GOING THROUGH THE REASONS, WE FIND THAT RESPONDENT NO.1 HAS COME TO T HE CONCLUSION/BELIEF THAT INCOME HAD ESCAPED ASSESSMENT ON THE BASIS OF THE MATERIAL ALREADY BEFORE HIM AND NO NEW TANGIBLE MATERIAL HAS BEEN RELIED UPON BY RESPONDENT NO.1 TO COME THE SAID CONCLUSION/BELIEF THIS IS CLEAR F ROM THE USE OF THE WORDS 'ON PERUSAL OF THE RECORDS IT IS NOTICED..........', 'FURTHER PERUSAL OF STATEMENT 2 ENCLOSED WITH THE C OMPUTATION OF INCOME SHOWS ......... AND 'IT IS FURTHER NOTICED. ..... ' IN THE IMPUGNED NOTICE. ' 6.10. IN THE CASE OF CIT VS. ORIENT CRAFT LTD. 354 ITR 536 , IT WAS OBSERVED BY HON 'BLE DELHI HIGH COURT THAT IN THE SAID CASE, RE ASONS FOR REASSESSMENT DISCLOSED THAT AO REACHED BELIEF THAT THERE WAS ESC APEMENT OF INCOME 'ON GOING THROUGH THE RETURN OF INCOME' FILED BY ASSESSEE AFT ER HE ACCEPTED RETURN U/S 143(1) WITHOUT SCRUTINY, AND NOTHING MORE. IN THESE FACTS, IT WAS HELD BY THE HON 'BLE HIGH COURT THAT IT WAS NOTHING BUT REVIEW OF E ARLIER PROCEEDINGS AND ABUSE OF POWER BY AO. IT WAS FURTHER HELD THAT SINCE THER E WAS NO WHISPER IN REASONS RECORDED, OF ANY TANGIBLE MATERIAL WHICH CAME TO PO SSESSION OF AO SUBSEQUENT TO ISSUE OF INTIMATION, THEREFORE, IT WAS AN ARBITRARY EXERCISE OF POWER CONFERRED U/S 147. THUS, REOPENING WAS HELD TO BE INVALID ON THIS GROUND ITSELF. 6.11. IN THE CASE OF MOHAN GUPTA (HUF) VS. CIT 366 ITR 115 , SAME VIEW HAS BEEN FOLLOWED BY HON 'BLE DELHI HIGH COURT. 6.12. FURTHER, IN THE CASE OF CIT VS. K. L. ARORA IN ITA 118/2014 DATED 21-04- 2014, HON'BLE DELHI HIGH COURT OBSERVED AS UNDER: THIS COURT IS OF THE OPINION THAT NO FAULT CAN BE F OUND WITH THE TRIBUNAL'S ORDER. IT IS WELL SETTLED THAT IN ORDER TO ISSUE A VALID R EASSESSMENT NOTICE, THE AO HAS TO ITA NO.625/KOL/2015 NARENDRA MANPURIA A.Y.2008-09 9 BE SATISFIED ON THE BASIS OF TANGIBLE MATERIAL OR INFORMATION SUBSEQUENTLY AVAILABLE TO HIM THAT THE ASSESSEE HAD NOT MADE FULL AND TRU E DISCLOSURE WHICH LED TO INCOME ESCAPING ASSESSMENT AT THE STAGE WHEN THE ORIGINAL ASSESSMENT WAS COMPLETED. SHORT OF THAT A RE-APPRECIATION OF THE EXISTING MATERIALS WHICH REALLY AMOUNTS TO REVIEW IS IMPERMISSIBLE. THE TRIBUNAL, I N THE CIRCUMSTANCES OF THIS CASE WAS JUSTIFIED IN CONCLUDING THAT RE-ASSESSMENT PROCEEDINGS THEMSELVES WERE NOT IN ACCORDANCE WITH LAW AND CONSEQUENTLY DISMISS ING THE REVENUE'S APPEAL. NO QUESTION OF LAW ARISES FOR CONSIDERATION. ' 6.13. IN THE CASE OF CIT VS. SHRI ATUL KUMAR SWAMI IN ITA NO. 112/2014 DATED 18-03-2014 REPORTED AT 52 TAXMANN.COM 47, HONBLE D ELHI HIGH COURT OBSERVED AS UNDER: ..REOPENING OF ASSESSMENT IS VALID IF IT IS BASED ON TANGIBLE MATERIAL TO JUSTIFY CONCLUSION THAT THERE WAS ESCAPEMENT OF INC OMEIN INSTANT CASE NOTE FORMING PART OF RETURN CLEARLY MENTIONED AND DESCRI BED NATURE OF THE RECEIPT UNDER A NON-COMPETE AGREEMENTREASONS FOR ISSUANCE OF NOTICE U/S 147 NOWHERE MENTIONED THAT REVENUE CAME UP WITH ANY OTH ER FRESH MATERIAL WARRANTING REOPENING OF ASSESSMENTMERE CONCLUSION OF PROCEEDINGS U/S 143(1) IPSO FACTO DOES NOT BRING INVOCATION OF POWE RS FOR REOPENING ASSESSMENTREOPENING OF ASSESSMENT WAS UNJUSTIFIED REVENUES APPEAL DISMISSED. 6.14. FURTHER RELIANCE CAN BE PLACED ON THE DETAILE D JUDGMENT IN THE CASE OF MADHUKAR KHOSLA VS. ACIT 367 ITR 165 (DELHI), WHEREIN IT HAS BEEN HELD THAT THE REOPENING IS NOT PERMITTED UNDER THE LAW UNLESS IT IS BASED ON FRESH TANGIBLE MATERIAL AND THAT IF THE REASONS TO BELIEVE ARE NOT BASED ON NEW, TANGIBLE MATERIALS, THE REOPENING AMOUNTS TO AN IMPERMISSIBLE REVIEW. IT HAS BEEN FURTHER OBSERVED THAT : THE FOUNDATION OF THE AOS JURISDICTION AND THE RA ISON DETRE OF A REASSESSMENT NOTICE ARE THE REASONS TO BELIEVE. N OW THIS SHOULD HAVE A RELATION OR A LINK WITH AN OBJECTIVE FACT, IN THE FORM OF INFORMATION OR FACTS EXTERNAL TO THE MATERIALS ON THE RECORD. SUCH EXTERNAL FACTS OR MATERIAL CONSTITUTE THE DRIVER, OR THE KEY WHICH EN ABLES THE AUTHORITY TO LEGITIMATELY RE-OPEN THE COMPLETED ASSESSMENT. IN A BSENCE OF THIS OBJECTIVE TRIGGER, THE AO DOES NOT POSSESS JURISD ICTION TO REOPEN THE ASSESSMENT. IT IS AT THE NEXT STAGE THAT THE QUESTI ON, WHETHER THE REOPENING OF ASSESSMENT AMOUNTS TO REVIEW OR CHA NGE OF OPINION ARISES. IN OTHER WORDS, IF THERE ARE NO REASONS TO BELIEVE BASED ON NEW, TANGIBLE MATERIALS, THEN THE REOPENING AMOUN TS TO AN IMPERMISSIBLE REVIEW. HERE, THERE IS NOTHING TO SHO W WHAT TRIGGERED THE ISSUANCE OF NOTICE OF REASSESSMENT NO INFORMATION OR NEW FACTS WHICH LED THE AO TO BELIEVE THAT FULL DISCLOSURE HAD NOT BEEN MADE ( KELVINATOR OF INDIA LTD [(2010)320 ITR 561 (SC)] AND ORIENT CRAFT LTD ITA NO.625/KOL/2015 NARENDRA MANPURIA A.Y.2008-09 10 [(2003 )354 ITR 536 (DELHI)] FOLLOWED, USHA INTERNATIONAL [(2012)348 ITR 485 (DEL) (FB)] REFERRED) 6.15. IN THE CASE OF CIT VS JYOTI DEVI 218 CTR 264 , HONBLE RAJASTHAN HIGH COURT HELD THAT SINCE REVENUE COULD NOT POINT OUT A NY INFORMATION OR MATERIAL WHICH HAD SUBSEQUENTLY COME TO THE NOTICE OF THE AO TO ENABLE HIM TO FORM THE REQUISITE BELIEF THAT ANY INCOME LIABLE TO BE ASSES SED HAD ESCAPED ASSESSMENT, THEREFORE, THE INITIATION OF REASSESSMENT PROCEEDIN GS WAS NOT VALID. 6.16. HONBLE MADRAS HIGH COURT IN THE CASE OF BAPALAL & CO. EXPORTS 289 ITR 37, HELD THAT IN THE ABSENCE OF ANY NEW MATERIAL, THE AO IS NOT EMPOWERED TO REOPEN AN ASSESSMENT IRRESPECTIVE OF THE FACT WHETH ER IT WAS MADE UNDER S. 143(1) OR S. 143(3). 6.17. RECENTLY, MUMBAI BENCH OF ITAT IN THE CASE HV TRANSMISSIONS LTD. IN I.T.A NO. 2230/MUM/2010 HELD THAT EVEN THOUGH ORIGI NAL ASSESSMENT WAS MADE UNDER S. 143(1) AND NOT UNDER S. 143(3), ASSESSEE H AVING MADE FULL DISCLOSURE OF ITS INCOME, AO WAS NOT JUSTIFIED IN REOPENING THE A SSESSMENT IN THE ABSENCE OF ANY NEW MATERIAL. HONBLE BENCH HAS RELIED UPON THI RD MEMBER JUDGMENT FROM MUMBAI BENCH OF ITAT IN THE CASE TELCO DADAJEE DHACKJEE LTD VS DCIT ( ITA NO 4613/MUMBAI/2013 DT 12-5-2010), IN SUPPORT OF TH IS VIEW. 6.18. SIMILAR VIEW HAS BEEN EXPRESSED BY HONBLE DE LHI BENCH OF ITAT IN THE CASE OF M/S NEXGEN SCHOOL OF BUSINESS VS. DEPUTY COMMISSION ER OF INCOME TAX, [ITA NO. 5609/DEL/2010] HOLDING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED TO INITIATE THE REOPENING PROCEEDINGS IN ABSENCE OF ANY NEW INFORMATION OR MATERIAL ON RECORD SINCE THE DATE OF FILLING AND PROCESSING OF THE RETURN OF INCOME. 6.19. IN THE PRESENT CASE, IT HAS ALREADY BEEN DISC USSED THAT ADMITTED FACTS ARE THAT THERE WAS NO FRESH MATERIAL COMING INTO THE PO SSESSION OF THE AO, AT THE TIME OF RECORDING OF THE REASONS. THESE FACTS HAVE NOT BEEN REBUTTED BY LD DR ALSO. THE CASE LAW RELIED UPON BY LD DR IN THE CASE OF DR . AMINS PATHOLOGY, SUPRA IS NOT APPLICABLE ON THE ISSUE BEING DECIDED HERE. THE ISSUE THAT IN ABSENCE OF ANY FRESH MATERIAL, WHETHER AO CAN PROCEED TO RECORD RE ASONS, WAS NOT BEFORE HONBLE HIGH COURT, THEREFORE HONBLE HIGH COURT HA D DECIDED THE ISSUE OF CHANGE OF OPINION IN THAT CASE. IN THE CASE BEFORE US, AS DISCUSSED ABOVE, WE ARE NOT GOING INTO THAT ISSUE. IN OUR CONSIDERED OPINIO N, AT THIS STAGE, WE NEED NOT GO INTO THE OTHER ASPECT I.E. WHETHER THERE WAS CHANGE OF OPINION OR NOT. THIS ISSUE HAS BEEN APTLY CLARIFIED BY HONBLE HIGH COURT IN T HE CASE OF MADHUKAR KHOSLA, (SUPRA), WHEREIN IT HAS BEEN HELD BY THEIR LORDSHIP S THAT EXTERNAL FACTS OR MATERIAL CONSTITUTE THE DRIVER, OR THE KEY WHICH EN ABLES THE AO TO HTTP://WWW.ITATONLINE.ORG 18 MOTILAL R. TODI LEGITI MATELY REOPEN THE COMPLETED ASSESSMENT AND IN ABSENCE OF THIS OBJECTIVE TRIGGE R, THE AO DOES NOT POSSESS JURISDICTION TO REOPEN THE ASSESSMENT. FURTHER, MOS T IMPORTANTLY, IT WAS HELD BY ITA NO.625/KOL/2015 NARENDRA MANPURIA A.Y.2008-09 11 THE HONBLE HIGH COURT THAT IT IS AT THE NEXT STAGE WHEN THE QUESTION, WHETHER THE REOPENING OF ASSESSMENT AMOUNTS TO REVIEW OR CHA NGE OF OPINION ARISES. IN OTHER WORDS, IF THERE ARE NO NEW TANGIBLE MATERIAL S, THEN THERE WOULD BE NO REASONS TO BELIEVE, AND CONSEQUENTLY REOPENING WO ULD BE AN IMPERMISSIBLE REVIEW. UNDER THESE CIRCUMSTANCES THERE WOULD NOT A RISE ANY NEED TO GO THE NEXT STAGE TO EXAMINE THE NEXT QUESTION, I.E., WHETHER T HERE WAS REVIEW OR CHANGE OF OPINION. THE CONDITION WITH RESPECT TO AVAILABI LITY OF NEW TANGIBLE MATERIAL IS STEP ANTERIOR TO THE CONDITION OF NO CHANGE OF OPINION OR REVIEW. 6.20 THUS, IN VIEW OF JUDGMENTS DIRECTLY ON THE ISSUE UNDER CONSIDERATION, AS DISCUSSED IN PARAS 6.7 TO 6.18, ABOVE, REOPENING DO NE BY LD. AO IN THE ABSENCE OF FRESH TANGIBLE MATERIAL, IS INVALID AND BAD IN L AW. THEREFORE, THE INITIATION OF REASSESSMENT PROCEEDINGS WAS NOT VALID. THUS, RE-AS SESSMENT ORDER FRAMED IN PURSUANCE TO INVALID REOPENING IS ILLEGAL; THE SAME IS HEREBY QUASHED. SINCE ASSESSMENT ORDER HAS BEEN QUASHED ON JURISDICTIONAL GROUND ITSELF, OTHER GROUNDS ARE NOT BEING ADJUDICATED. 9. APPLYING THE PROPOSITION IN LAW TO THE FACTS OF THIS CASE WE HOLD THAT THE REOPENING OF ASSESSMENT IS BAD IN LAW. THE AO HAS N O POWER OF REVIEW. HE CANNOT ON THE BASIS OF THE SAME MATERIAL AVAILABLE IN THE ASS ESSMENT RECORD COME TO DIFFERENT CONCLUSION. HENCE THIS REOPENING IS BAD IN LAW. 10. WE ALSO FIND THAT THE ADDITIONAL COMMISSIONER O F INCOME TAX HAD ISSUED DIRECTIONS TO THE AO U/S 144A OF THE ACT ON 12.11.2 010, DIRECTING HIM TO EXAMINE THE ISSUE OF LOSS ON SALE OF LAND. THE INCOME TAX INSPE CTOR HAS BEEN DEPUTED BY THE AO, AND IN HIS REPORT, THE INSPECTOR HAS STATED THAT TH E CASH PAYMENTS WERE EXAMINED. THE AO ON 16.08.2010 AND OTHERS DATES AS RECORDED IN TH E ORDER SHEET ENTRY THAT THESE ASPECTS HAVE BEEN EXAMINED. ON THIS FACTUAL SITUATI ON WE APPLY THE PROVISION OF LAW DISCUSSED IN THE CASE OF MOTILAL R.TODI TO THE FACT S OF THE CASE AND HOLD THAT THE REOPENING IS BAD IN LAW FOR THE REASONS THAT THERE IS NO TANGIBLE MATERIAL WHICH HAS COME TO THE POSSESSION OF THE AO, SUBSEQUENT TO PAS SING OF AN ORDER U/S 143(3) ORIGINALLY ON 19.06.2013 AND ALSO BECAUSE THERE IS A SPECIFIC DIRECTION FROM THE ADDITIONAL COMMISSIONER TO THE AO TO EXAMINE THIS I SSUE AND AO HAS IN COMPLIANCE EXAMINED THE ISSUE AND PASSED THIS ORDER U/S 143(3) OF THE ACT. A REOPENING OF ASSESSMENT CANNOT BE DONE TO CORRECT EACH AND EVERY MISTAKE IF ANY COMMITTED IN THE ITA NO.625/KOL/2015 NARENDRA MANPURIA A.Y.2008-09 12 ASSESSMENT ORDER. IN THE RESULT WE QUASH THE ASSESS MENT ORDER ON THE JURISDICTIONAL ISSUE. 11. IN VIEW OF THE ABOVE, WE DO NOT ADJUDICATE THE ISSUE ON MERITS AS IT WOULD BE AN ACADEMIC IN EXERCISE. THE OTHER GROUNDS ARE CONSEQU ENTIAL AND GENERAL IN NATURE AND DISPOSED OF AS SUCH. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. O RDER PRONOUNCED IN THE COURT ON 01.06.2018. SD/- SD/- [MADHUMITA ROY] [ J.SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 01.06.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.NARENDRA MANPURIA, AVANI OXFORD COMPLEX, BLOCK-5, FLAT NO.6E & F, 136, JESSORE ROAD, LAKE TOWN, KOLKATA-700055. 2. D.C.I.T., CIRCLE-49, KOLKATA. 3. CIT(A) KOLKATA 4. C.I.T.(TPO), KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, ITAT KOLKATA BENCHES ITA NO.625/KOL/2015 NARENDRA MANPURIA A.Y.2008-09 13