Charushula Suresh Borole, Jalgaon V. Income-tax Officer, Ward - 2 (4), Jalgaon

ITA 633/PUN/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7590 (ITAT-PUNE)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 25-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Keywords: Reopening of assessment; Search and seizure; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings; Set aside
• Section: 143(3); 201; 148; 2

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER . / ITA NO.633/PUN/2019 / ASSESSMENT YEAR : 2011-12 CHARUSHILA SURESH BOROLE, PLOT NO.37, PANKAJ NAGAR, YAWAL ROAD, CHOPDA, DIST. JALGAON 425107. PAN : AHOPB7367A. . / APPELLANT V/S THE INCOME TAX OFFICER , WARD 2(4), JALGAON. . / RESPONDENT ASSESSEE BY : SHRI VINAY KAWDIA REVENUE BY : SHRI VISHWAS MUNDHE. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY ASSESSEE IS EMANATING OUT OF THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS) 2, NASHIK DATED 05.0 3.2019 FOR A.Y. 2011-12. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN THE BU SINESS OF LAND DEVELOPMENT AND CONSTRUCTION OF BUILDINGS. ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2011-12 ON 29.09.2011 DECLARING TOTAL INCOME AT RS.NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THERE AFTER ASSESSMENT / DATE OF HEARING : 29.08.2019 / DATE OF PRONOUNCEMENT: 18.10.2019 2 WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.17.01.2014 DETERMINING THE TOTAL INCOME AT RS.81,861/-. SUBSEQUENTLY, THE CASE W AS RE-OPENED BY ISSUING NOTICE U/S 148 OF THE ACT DATED 28.03.2016 WHIC H WAS SERVED ON THE ASSESSEE ON 30.03.2016. THEREAFTER, THE CASE WAS TAKEN UP FOR SCRUTINY AND CONSEQUENTLY ASSESSMENT WAS FRAMED U/S 1 43(3) R.W.S. 148 OF THE ACT DATED 06.12.2016 WHEREBY THE TOTAL INCOME WAS DETERMINED AT RS.24,56,700/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.05.03.2019 (IN AP PEAL NO.NSK/CIT(A)-2/445/2016-17) DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL AND HAS RAISED THE FOLLOWING GROUNDS : 1. IN THE ABSENCE OF CONDITIONS PRECEDENT FOR ISSU ANCE OF NOTICE U/S 148 OF THE I.T. ACT 1961, THE IMPUGNED REASSESSMENT PRO CEEDINGS ARE BAD IN LAW, NULL AND VOID-AB-INITIO AND WITHOUT JURISDICTI ON AND HENCE THE IMPUGNED REASSESSMENT ORDER BE VACATED / QUASHED / ANNULLED. 2. I N THE ABSENCE OF PROPER SANCTION TO THE ISSUE OF NO TICE U/S 148 BY THE JT. CIT, THE REASSESSMENT PROCEEDINGS ARE BAD IN LA W. 3. WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT(A) E RRED IN FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF EXPENDITURE O F RS. 23,74,841/- INCURRED WHOLLY & EXCLUSIVELY IN CONNECTION WITH TR ANSFER OF PROPERTY UNDER QUESTION IN THE NORMAL COURSE OF BUSINESS AND SUPPORTED BY CORROBORATIVE EVIDENCE. 3. BEFORE ME, AT THE OUTSET, LD.A.R. SUBMITTED THAT HE DOE S NOT WISH TO PRESS GROUND NO.2. IN VIEW OF LD.A.R.S AFORESAID SUBM ISSION, GROUND NO.2 IS DISMISSED AS NOT PRESSED AND THE OTHER GROUNDS BEING INTER- CONNECTED ARE CONSIDERED TOGETHER. 4. DURING THE COURSE OF ASSESSMENT AO NOTICED THAT ASS ESSEE HAD SOLD HIS PROPERTY FOR RS.71,00,000/- TO BULDHANA URBAN CO -OPERATIVE CREDIT SOCIETY, CHOPDA TO ADJUST THE LOAN AVAILED. ON THE VERIFICATION OF THE ACCOUNTS OF ASSESSEE, IT WAS NOTICED THAT ASSESSEE HAD CREDITED THE 3 SALE OF PROPERTY IN THE BOOKS OF ACCOUNTS AND HAD CLAIMED DIRECT EXPENSES OF RS.23,74,841/-. HE NOTICED THAT ASSESSEE HAD WORKED OUT THE BOOK VALUE OF THE PROPERTY AT RS.8,13,286/- AND T HUS ACCORDING TO THE AO, THE DIFFERENCE OF RS.62,86,714/- (RS.71,00,000/- - RS.8,13,286/-) WAS THE PROFITS EARNED BY THE ASSESSEE ON SALE O F PLOTS. IT WAS NOTICED THAT IN THE TRADING ACCOUNT, GROSS PROFIT WAS SHOWN AS RS.39,11,873/-. THE AO WAS THEREFORE OF THE VIEW THAT THE DIFFERENCE OF RS.23,74,841/- HAD ESCAPED FROM ASSESSMENT AND ACCORD INGLY NOTICE U/S 148 OF THE ACT WAS ISSUED. DURING THE COURSE OF RE -ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN THE DETA ILS WHICH WERE FURNISHED BY THE ASSESSEE BUT THE SAME WAS NOT FOUND A CCEPTABLE TO THE AO. ACCORDINGLY, AO TREATED RS.23,74,841/- AS INCOME FRO M SALE OF LAND AND MADE ITS ADDITION. AGGRIEVED BY THE ORDER OF AO, ASSE SSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO UPHELD THE ORDER OF AO. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL. 5. BEFORE ME, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT IT IS AN UNDISPUTED FA CT THAT THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE WAS TAKEN U P FOR SCRUTINY AND ASSESSMENT WAS PASSED U/S 143(3) OF THE ACT AND T HE ISSUANCE OF NOTICE U/S 148 OF THE ACT IS WITHIN A PERIOD OF 4 YEARS FRO M THE END OF RELEVANT ASSESSMENT YEAR. LD.A.R. SUBMITTED THAT THE VER Y MATERIAL ON WHICH THE RE-OPENING OF ASSESSMENT HAS INITIATED WAS CONS IDERED BY THE AO DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND THAT THERE WAS NO NEW MATERIAL WHICH DID NOT FIND PART OF THE ORIGINA L RECORD. IT WAS THEREFORE SUBMITTED THAT THE RE-OPENING WAS BASED ONLY ON CHANGE OF 4 OPINION AND WAS IMPERMISSIBLE. IN SUPPORT OF HIS CONTENTION THAT THE ISSUE WAS EXAMINED BY THE AO DURING THE COURSE OF ASSES SMENT, HE POINTED TO THE COPY OF THE ORDER SHEET WHICH IS PLACED A T PAGE 4 OF THE PAPER BOOK AND FROM THEREIN HE POINTED TO THE RELEVANT QUERY OF THE AO AND ALSO THE REPLY OF THE ASSESSEE ON THE SAME WHICH IS NOTED BY THE AO IN THE ORDER SHEET. HE THEREFORE SUBMITTED THAT SINCE T HE ISSUE HAS ALREADY BEEN EXAMINED BY THE AO DURING THE COURSE OF O RIGINAL ASSESSMENT PROCEEDINGS, THE AO COULD NOT HAVE RESORTED TO RE-OPENING OF ASSESSMENT U/S 148 OF THE ACT AS IT WOULD AMOUNT TO CH ANGE OF OPINION, WHICH IS NOT PERMISSIBLE. LD.A.R. FURTHER RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR INDIA LIMITED REPORTED IN 320 ITR 561 WHEREIN THE HONBLE APEX COURT HELD THAT THE CHANGE OF OPINION CANNOT CONSTITUTE A REASON FOR RE-OPEN ING OF THE COMPLETED ASSESSMENT. HE THEREFORE SUBMITTED THAT THE ORDER OF AO BE SET ASIDE. LD. D.R. ON THE OTHER HAND, SUPPORTED THE OR DER OF LOWER AUTHORITIES. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. ASSESSEE IN THE PRESENT GROUND IS CHALLENGING T HE RE-OPENING OF THE ASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT. IT IS AN UNDISPUTED FACT THAT ASSESSEE HAD FILED ORIGINAL RETURN OF INCOME FOR A.Y. 201 1-12 ON 29.09.2011 AND THE ORIGINAL ASSESSMENT WAS FRAMED U/S 14 3(3) OF THE ACT VIDE ORDER DT.17.01.2014. THEREAFTER, NOTICE U/S 148 OF THE ACT WAS ISSUED ON 28.03.2016 I.E., WITHIN FOUR YEARS FROM THE END OF TH E ASSESSMENT YEAR A.Y. 2011-12. THE LAW ON RE-OPENING OF A N ASSESSMENT UNDER THE ACT, IS FAIRLY SETTLED. THE ASSESSING OFFICER CAN RE-OPEN AN ASSESSMENT ONLY IN ACCORDANCE WITH THE EXPRESS PROVISIO NS PROVIDED IN 5 SECTION 147/148 OF THE ACT. IT IS ONLY ON THE ASSESSING OFFICER STRICTLY SATISFYING THE PROVISIONS OF SECTION 147 OF THE ACT THAT HE ACQUIRES JURISDICTION TO RE-OPEN AN ASSESSMENT. SECTION 147 OF THE ACT, CLOTHES THE ASSESSING OFFICER WITH JURISDICTION TO REOPEN AN ASSESSMENT ON SATISFACTION OF THE FOLLOWING: (A) THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT (B) INCOME CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT AND (C) IN CASES WHERE THE ASSESSMENT SOUGHT TO BE RE OPENED IS BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASS ESSMENT YEAR, THEN AN ADDITIONAL CONDITION IS TO BE SATISFIED VIZ: THERE MUS T BE FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. 7. IN THE PRESENT CASE, NOTICE UNDER SECTION 148 OF THE ACT HAS BEEN ISSUED ON 28.03.2016 IN RELATION TO ASSESSMENT YEAR 2011- 12. HENCE, THE REOPENING OF ASSESSMENT IS WITHIN A PERIOD OF FOUR YEAR S FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IN SUCH CASES, THE ASS ESSING OFFICER WOULD BE CLOTHED WITH JURISDICTION TO ISSUE A NOTICE FOR REO PENING OF AN ASSESSMENT IF HE HAS REASON TO BELIEVE THAT INCOME CHARG EABLE TO TAX HAS ESCAPED THE ASSESSMENT. THE REQUIREMENT OF FAILURE TO MAK E TRUE AND FULL DISCLOSURE AS PROVIDED IN THE PROVISO TO SECTION 147 OF TH E ACT IS NOT TO BE SATISFIED FOR ISSUING OF RE-OPENING NOTICE WITHIN THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THU S, IN THE ABSENCE OF CUMULATIVE SATISFACTION OF REASON TO BELIEVE AND IN THE AB SENCE OF ANY INCOME CHARGEABLE TO TAX ESCAPING ASSESSMENT, THE ASSES SING OFFICER IS NOT EMPOWERED WITH JURISDICTION TO REOPEN AN ASSESSMENT. 8. IN THE PRESENT CASE, IT IS ALSO A FACT THAT ORIGINAL AS SESSMENT FOR THE YEAR UNDER CONSIDERATION WAS FRAMED UNDER SECTION 143(3) OF THE 6 ACT. IN SUCH A SITUATION, ANOTHER ASPECT THAT HAS TO BE KEPT IN MIND IS AS TO WHETHER THE REOPENING IS BASED UPON ANY TANGIBLE MAT ERIAL WHICH HAS COME TO THE KNOWLEDGE OF THE ASSESSING OFFICER SUBSEQUEN T TO THE FRAMING OF THE EARLIER ASSESSMENT OR WHETHER THE SAME IS MERELY A CHANGE OF OPINION ON THE PART OF THE ASSESSING OFFICER. IN THE PRESENT CASE, I FIND FORCE IN THE CONTENTION OF THE LD AR THAT T HE IMPUGNED NOTICE HAVE BEEN OCCASIONED BY A CHANGE OF OPINION. IT IS TRITE LAW THAT A MERE CHANGE OF OPINION CANNOT CONSTITUTE A REASON FOR R E-OPENING THE ASSESSMENT. ON THE ISSUE THAT CHANGE OF OPINION CANNOT C ONSTITUTE A REASON FOR REOPENING, LD.A.R. RELIED ON THE DECISION OF HONB LE APEX COURT IN THE CASE OF CIT VS. KELVINATOR INDIA (2010) 320 ITR 561 (SC) WHICH HAS HELD AS UNDER: '6. ON GOING THROUGH THE CHANGES, QUOTED ABOVE, MAD E TO SECTION 147 OF THE ACT, WE FIND THAT, PRIOR TO THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, REOPENING COULD BE DONE UNDER THE ABOVE TWO CONDITI ONS AND FULFILLMENT OF THE SAID CONDITIONS ALONE CONFERRED JURISDICTION ON THE ASSESSING OFFICER TO MAKE A BACK ASSESSMENT, BUT IN SECTION 147 OF THE A CT (WITH EFFECT FROM 1ST APRIL, 1989), THEY ARE GIVEN A GO-BY AND ONLY ONE C ONDITION HAS REMAINED, VIZ., THAT WHERE THE ASSESSING OFFICER HAS REASON T O BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, CONFERS JURISDICTION TO REO PEN THE ASSESSMENT. THEREFORE, POST-1ST APRIL, 1989, POWER TO REOPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSMEN TS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE RE ASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BE TWEEN POWER TO REVIEW AND POWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW ; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILLMENT OF CERTAIN PRECONDITIONS AND IF THE CON CEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMEN T, THEN, IN THE GARB OF REOPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN INBUILT TEST T O CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1ST APRIL, 1989 , THE ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MA TERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BEL IEF. OUR VIEW GETS SUPPORT FROM THE CHANGES MADE TO SECTION 147 OF THE ACT, AS QUOTED HEREINABOVE. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, PARLIAMENT NOT ONLY DELETED THE WORDS 'REASON TO BE LIEVE' BUT ALSO INSERTED THE WORD 'OPINION' IN SECTION 147 OF THE ACT. HOWEV ER, ON RECEIPT OF REPRESENTATIONS FROM THE COMPANIES AGAINST OMISSION OF THE WORDS 'REASON TO BELIEVE', PARLIAMENT REINTRODUCED THE SAID EXPRE SSION AND DELETED THE WORD 'OPINION' ON THE GROUND THAT IT WOULD VEST ARB ITRARY POWERS IN THE ASSESSING OFFICER.' 7 9. THE AFORESAID VIEW HAS BEEN REITERATED IN SEVERAL DECISIO NS THEREAFTER. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS A ND IN VIEW OF THE DECISION CITED HEREINABOVE, I AM OF THE VIEW THAT IN TH E PRESENT CASE, THE NOTICE OF REOPENING THE ASSESSMENT U/S 148 OF THE A CT IS ON ACCOUNT OF CHANGE OF OPINION BY THE AO, WHICH IS NOT PERMISSIBLE AS PER LAW. I AM THEREFORE OF THE VIEW THAT THE IMPUGNED NOTICE CANNOT BE SUSTAINED AND THE SAME DESERVES TO BE QUASHED AND SET ASIDE. I THER EFORE QUASH THE IMPUGNED REASSESSMENT PROCEEDINGS FOR A.Y. 2011-12 ARE T HUS SET ASIDE THE SAME. SINCE I HAVE HEREINABOVE SET ASIDE THE ASSES SMENT FRAMED U/S 143(3) R.W.S 147 OF THE ACT AND HELD IT TO BE VOID THEREFORE THE ISSUE ON MERITS HAVE BEEN RENDERED ACADEMIC AND REQUIRES NO ADJ UDICATION. THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED. 10. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 18 TH DAY OF OCTOBER, 2019. SD/- ( ANIL CHATURVEDI ) ' / ACCOUNTANT MEMBER PUNE; DATED : 18 TH OCTOBER, 2019. YAMINI 8 #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-2, NASHIK. THE PCIT 2, NASHIK. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY / 012%3&4 / SR. PRIVATE SECRETARY ) &' , / ITAT, PUNE.