All India Motor Transport Congress, New Delhi V. ITO, (Exemption), Ward-1(2), New Delhi

ITA 6299/DEL/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6962 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 03-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Audit objection; Tangible material; Difference of opinion; Capital receipt; Change of opinion; Reassessment proceedings
• Section: 143(3); 234B; 12A; 201; 147; 148; 11

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F+SMC: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 6299/DEL/2018 (ASSESSMENT YEAR: 2012 - 13 ) ALL INDIA MOTOR TRANSPORT CONGRESS, C/O. M/S RRA TAXINDIA, D - 28, SOUTH EXTENTION, PART - 1, NEW DELHI PAN: AAATA7003M VS. ITO (EXEMPTION), WARD - 1(2), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SOMIL AGARWAL , ADV REVENUE BY: SHRI S.L. ANURAGI, SR. DR DATE OF HEARING 23/07 / 201 9 DATE OF PRONOUNCEMENT 2 2 / 10 / 2019 O R D E R PER PRASHANT MAHARISHI, A. M. 1 . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - 40, NEW DELHI DATED 05/07/2018 FOR THE ASSESSMENT YEAR 2012 - 13. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. (A)THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT QUASHING THE IMPUGNED REASSESSMENT ORDER PASSED BY LD. AO U/S 147 AND THAT TOO WITHOUT ASSUMING JURISDICTION AS PER LAW AND WITHOUT COMPLYING WITH MA NDATORY CONDITIONS U/S 147 TO 151 AS ENVISAGED UNDER THE INCOME TAX ACT, 1961. 1(B) THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. C1T(A) HAS ERRED IN LAW AND ON FACTS IN NOT QUASHING THE IMPUGNED REASSESSMENT ORDER PASSED BY LD. AO AN D THAT TOO WITHOUT PROVIDING THE COPY OF REASON RECORDED AND NOT SEEKING & DISPOSING OBJECTIONS OF THE ASSESSEE WITH RESPECT TO REOPENING OF THE ASSESSMENT AND FURTHER ERRED IN NOT COMPLYING WITH THE PROCEDURE LAID DOWN BY HONBLE SUPREME COURT IN THE CA SE OF GKN DRIVESHAFTS (INDIA) LTD. VS. ITO, (2003) 259 ITR 19. 1(C) THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN NOT QUASHING THE IMPUGNED REASSESSMENT ORDER PASSED BY LD. AO U/S 147, IS BAD IN LAW AND AGAINST THE FACTS AND CIRC UMSTANCES OF THE CASE AND THE SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. ALL INDIA MOTOR TRANSPORT CONGRESS VS. ITO (EXEMPTION), ITA NO. 6299/DEL/2018 (ASSESSMENT YEAR: 2012 - 13) PAGE | 2 2. (A)THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.28,56,000/ - ON ACCOUNT OF LIFE MEMBERSHIP FEES BY TREATING IT AS REVENUE RECEIPT, MORE SO WHEN IT WAS IN THE NATURE OF CAPITAL RECEIPT AND IMPUGNED ADDITION HAS BEEN MADE BY RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT OBSERVING THE PRINCIPLES OF 2(B) THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.28,56,000/ - ON ACCOUNT OF LIFE MEMBERSHIP FEES, IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE, M ORE SO WHEN THIS ISSUE HAS ALREADY BEEN EXAMINED AND ACCEPTED IN EARLIER ASSESSMENT YEARS AS WELL AS IN THE YEAR UNDER CONSIDERATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3). 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE ACTION OF LD. AO IN CHARGING INTEREST U/S 234B AND 234D OF INCOME TAX ACT, 1961. 3 . THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS A COMPANY HAVING AIM AND OBJECTIVES OF PROMOTION OF INTEREST OF THE PERSONS ENGAGED IN THE BUSINESS OF MOTOR TRANSPORT BY ELIMINATING UNFAIR COMPETITION. IT IS REGISTERED U/S 12A OF THE ACT. IT FILED ITS RETURN OF INCOME ON 26.09.2012 DECLARING NIL IN COME. THE ASSESSMENT WAS COMPLETED AT THE SAME INCOME U/S 143(3) OF THE ACT ON 18.03.2015. THE CASE OF THE ASSESSEE WAS REOPENED U/S 148 OF THE ACT BY ISSUE OF NOTICE DATED 19.07.2016. ON THE PERUSAL OF THE BALANCESHEET THE LD AO NOTED THAT THE ASSESSEE HA S RECEIVED LIFE MEMBERSHIP FEES OF RS. 28 , 56 , 000/ - WHICH WAS NOT INCLUDED IN THE INCOME OF THE ASSESSEE AS IT IS DIRECTLY CREDITED TO THE BALANCESHEET AS CAPITAL RECEIPT. 4 . THE LD AR SUBMITTED THAT LIFE MEMBERSHIP FEES IS PAID BY THE MEMBERS ONCE IN THE L IFE TIME AND THEREFORE, IT IS NOT VOLUNTARILY DONATION. THUS, IT WAS CONTESTED THAT IT IS A CAPITAL RECEIPT. THE LD AO CONSIDERED THE EXPLANATION OF THE ASSESSEE AND HELD THAT LIFE MEMBERSHIP FEES IS NOT VOLUNTARY CONTRIBUTION AND THEREFORE, IT IS NOT ALSO COME WITH ANY SPECIFIC DIRECTION AND THEREFORE, IT IS CHARGEABLE TO TAX. HE HELD THAT IT IS NOT A CAPITAL RECEIPT AND ALSO NOT A CORPUS DONATION. THUS, HE MADE THE ADDITION OF RS. 2856000/ - TO THE INCOME OF THE ASSESSEE AND ASSESSED THE ASSESSEE U/S 143( 3) OF THE ACT READ WITH SECTION 147 OF THE ACT. THE ASSESSEE ALL INDIA MOTOR TRANSPORT CONGRESS VS. ITO (EXEMPTION), ITA NO. 6299/DEL/2018 (ASSESSMENT YEAR: 2012 - 13) PAGE | 3 CHALLENGED THE SAME BEFORE THE LD CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE AND THEREFORE THE ASSESSEE IS IN APPEAL BEFORE US. 5 . THE LD AR FIRSTLY SUBMITTED THAT THE LD AO PROCEEDED TO REA SSESS THE INCOME OF THE ASSESSEE WITHOUT PROVIDING COPY OF THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT. THEREFORE, THE ASSESSMENT IS BAD IN LAW. HE FURTHER, STATED THAT THE ASSUMPTION OF JURISDICTION U/S 147 BY THE LD AO IS DEVOID OF ANY MERIT AS THERE IS NO FRESH TANGIBLE MATERIAL COM E INTO THE POSSESSION OF THE LD AO FOR REOPENING OF THE ASSESSMENT. HE SUBMITTED THAT IT IS ON THE PERUSAL OF THE S A ME MATERIAL REOPENING IS CARRIED OUT . HE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE SERIES OF DECISIONS. HE FURTHER SUBMITTED THAT THE REASSESSMENT PROCEEDING S ARE INITIATED ON THE BASIS OF MERE CHANGE OF OPINION . HE STATED THAT ASSESSMENT HAS BEEN FRAMED U/S 143(3) OF THE ACT . THEREFORE , THE LD AO HAS APPLIED HIS MIND TO THE ABOVE FACTS. HE FURTHER SUBMITTED THAT REOPENING IS MADE ON THE BASIS OF AUDIT OBJECTION WHICH IS NOT PERMISSIBLE. ON THE MERITS HE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY 32 ITR (T) 152 WHEREIN, LIFE MEMBERS HIP FEES IS CONSIDERED AS CORPUS DONATION. IN VIEW OF THIS , HE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE ON MERITS TOO. 6 . THE LD DR RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 7 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ONS AS WELL AS PERUSED THE ORDERS OF THE LOWER AUTHORITIES. ADMITTEDLY IN THIS CASE THE ORIGINAL ASSESSMENT WAS PASSED U/S 143(3) OF THE ACT ON 18.03.2015. AT THE TIME OF ORIGINAL ASSESSMENT , ASSESSEE SUBMITTED DETAILS AS REQUIRED BY THE LD AO. THE COMPLET E BOOKS OF ACCOUNTS WERE PRODUCED WHICH WAS EXAMINED ON TEST CHECK BASIS. ON THAT BASIS THE LD AO HELD THAT ASSESSEE HAS FULFILLED THE CONDITIONS LAID DOWN IN SECTION 11 TO 13 OF THE ACT. HE ALSO COMPUTED THE INCOME OF THE ASSESSEE. SUBSEQUENTLY, THE NOTIC E U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 19.07.2016 WHEREIN, NOTICE ITSELF IS STATED THAT THE INCOME OF RS. 2856000/ - IS ASSESSABLE FOR THE ABOVE YEAR . THE ORIGINAL ASSESSMENT WAS PASSED ON 18.03.2015 WHEREAS, THE REOPENING WAS MADE ON 19.07.2016 . AS PER THE REASONS RECORDED , THERE IS NO REFERENCE OF ANY TANGIBLE MATERIAL COMING INTO THE POSSESSION OF THE LD AO FOR REOPENING. THE ALL INDIA MOTOR TRANSPORT CONGRESS VS. ITO (EXEMPTION), ITA NO. 6299/DEL/2018 (ASSESSMENT YEAR: 2012 - 13) PAGE | 4 ABOVE FACTS CLEARLY SHOWN THAT REOPENING HAS BEEN MADE IN ABSENCE OF ANY TANGIBLE MATERIAL. SUCH IS THE MANDATE OF HON BLE DELHI HIGH COURT IN SEVERAL JUDICIAL PRECEDENTS AS WELL AS DECISIONS OF THE HONBLE SUPREME COURT IN CASE OF KELVINATOR OF INDIA WHEREIN CONCLUDED ASSESSMENT CANNOT BE REOPENED IN ABSENCE OF ANY TANGIBLE MATERIAL WHICH SHOW THAT THERE IS ESCAPEMENT OF INCOME FROM THE ASSESSMENT. IN THE PRESENT CASE IT IS ALSO THE CASE OF CHANGE OF OPINION AS THE ORIGINAL ASSESSMENT ORDER HAS BEEN PASSED U/S 143(3) OF THE ACT. ACCORDINGLY, GROUND NO. 1 OF THE APPEAL WITH RESPECT TO THE REOPENING OF THE ASSESSMENT IS ALLO WED THEREBY, QUASHING THE ASSESSMENT ORDER PASSED BY THE LD AO U/S 143(3) READ WITH SECTION 147 OF THE ACT. 8 . AS WE HAVE ALREADY QUASHED THE REASSESSMENT PROCEEDINGS WE DO NOT ADJUDICATE OTHERS GROUNDS OF APPEAL. 9 . ACCOR DINGLY, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 2 / 10 / 2019 . - SD/ - - SD/ - ( AMIT SHUKLA ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 2 / 10 / 2019 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI