Shri Vineet Sethi, New Delhi V. ITO, New Delhi

ITA 6359/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6542 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 13-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEDOBANI CHOUDHARI
• Keywords: Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC , NEW DELHI BEFORE SH. N. K. SAINI, A CCOUNTANT M EMBER ITA NO. 6359 /DEL/2016 : ASSTT. YEAR : 2009 - 10 VINEET SETHI, 1105, SBI, CGHS SOCIET Y, VIKAS PURI, NEW DELHI - 110015 VS INCOME TAX OFFICER, WARD - 71(1 ), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A HCPS8765K ASSESSEE BY : SH. GAUTAM JAIN, ADV. REVENUE BY : MS. BEDOBANI CHOUDHARI , SR. DR DATE O F HEARING : 14.03 .201 7 DATE OF PRONOUNCEMENT : 16 .03 .201 7 ORDER THIS IS AN APPEAL BY THE ASSE SSEE AGAINST THE ORDER DATED 07.09 .2016 OF LD. CIT(A) - 2 1 , NEW DELHI . 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1 THAT THE L EARNED COMMISSIONER OF INCOME TAX (APPEALS) 21, NEW DELHI HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT AND, COMPLETION OF ASSESSMENT UNDER SECTION 147/143(3) OF THE ACT WITHOUT APPRECIAT ING THAT, STATUTORY PRE - CONDITIONS FOR NEITHER THE INITIATION OF PROCEEDINGS AND, NOR THE COMPLETION OF ASSESSMENT UNDER THE ACT HAD BEEN FULFILLED AND, THEREFORE, THE SAME WERE WITHOUT JURISDICTION AND HENCE DESERVE TO BE QUASHED AS SUCH. ITA NO . 6359 /DEL /201 6 VINEET SETHI 2 1.1 THAT THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT, THERE WAS NO MATERIAL ON RECORD ON THE BASIS OF WHICH, IT COULD BE HELD THAT, THERE WAS ANY REASON TO BELIEVE WITH THE LEARNED INCOME TAX OFFICER THAT, INCOME OF THE APPELLANT HAD ES CAPED ASSESSMENT AND, IN VIEW THEREOF, THE PROCEEDINGS INITIATED WERE ILLEGAL, UNTENABLE AND THEREFORE, UNSUSTAINABLE. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING A DISALLOWANCE OF RS. 1,35,986 / - REPRESENTING INTEREST CLAIMED AS DEDUCTION UNDER SECTION 24(B) OF THE ACT. 3. THAT FURTHERMORE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHILE UPHOLDING THE DISALLOWANCE HAS FAILED TO APPRECIATE THAT SINCE DEDUCTION OF RS. 1,35, 986/ - HAS NOT BE EN CLAIMED IN THE HANDS OF WIFE OF THE APPELLANT AND THEREFORE, EVEN OTHERWISE THE DISALLOWANCE IS NOT CALLED FOR AND HENCE UNTENABLE. IT IS THEREFORE, PRAYED THAT, IT BE HELD THAT ASSESSMENT MADE BY THE LEARNED INCOME TAX OFFICER AND SUSTAINED BY THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS) BE QUASHED AND, FURTHER ADDITION SO UPHELD BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ALONGWITH INTEREST LEVIED BE DELETED AND APPEAL OF THE APPELLANT BE ALLOWED. 3. THE MAIN GRIEVANCE OF THE ASSESSEE VI DE GROUND NOS. 1 & 1.1 RELATES TO THE JURISDICTION OF THE AO IN INITIATING THE ITA NO . 6359 /DEL /201 6 VINEET SETHI 3 PROCEEDINGS U/S 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 4 . FACTS OF THE CASE I N BRIEF ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 27.07.20 09 DECLARING AN INCOME OF RS.19,39,439/ - WHICH WAS PROCESSED U/S 143(1) OF THE ACT ON 24.02.2011 AT THE SAME INCOME. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 08.12.2011 BY MAKING AN ADDITION OF RS.29,638/ - ON ACCOUNT OF INTEREST NOT DECLARED IN ITR, EXCESS CLAIM OF MEDICAL INSURANCE AND HOUSING LOAN ETC. THE TOTAL INCOME WAS ASSESSED AT AN INCOME OF RS.19,69,080. SUBSEQUENTLY, THE AO ISSUED THE NOTICE U/S 148 OF THE ACT AND REOPENED THE ASSESSMEN T BY RECORDING THE FOLLOWING REASONS: REASONS FOR THE BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT IN THE CASE OF SHRI VINEET SETHI (PAN AHCPS8765K) FOR THE ASSESSMENT YEAR 2009 - 10 THE ASSESSEE HAS FILED RETURN DECLARING AN INCOME OF RS. 19,39,439/ - ON 27/07/2009. ASSESSMEN T UNDER SECTION 143(3) OF THE I. T ACT HAS BEEN COMPLETED ON 08 - 12 - 2011 A T TOTAL INCOME OF RS, 19,69,080/ - . THE ASSESSEE HAD CLAIMED LOSS UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' AT RS. 2,47,543/ - DUE TO INTERES T OF RS. 2,71,973/ - ON HOUSING L OAN. AS PER THE INFORMATION AVAILABLE ON RECORD, IT IS SEEN THAT THE HOUSING LOAN WAS TAKEN BY THE ASSESSEE FROM IDBI BANK IN JOINT NAME WITH MRS. SHAMA SETHI. IT IS ALSO EVIDENT THAT THE PROPERTY I.E. 1105, 10 TH FLOOR, SBI CGHS LTD. PLOT NO.19, BODELLA, VIKAS PURI, NEW DELHI, ON WHICH SAID LOAN WAS TA KEN WAS ALSO IN THE JOINT NAMES. ITA NO . 6359 /DEL /201 6 VINEET SETHI 4 HENCE, IT IS A CASE OF JOINT - OWNERSHIP OF THE PROPERTY AND THE INTEREST ON HOUSING LOAN SHOULD ALSO BE CLAIMED BY THE INDIVIDUAL CO - OWNERS IN RESPECT OF THEIR INDIVI DUAL SHARE AND IF THE SAME IS NOT SPECIFIED, IN EQUAL PROPORTION. IN THE CASE OF THE ASSESSEE, SHARE OF THE ASSESSEE AND OTHER JOINT OWNER IS NOT SPECIFIED. HENCE, THE ASSESSEE WAS ENTITLED TO CLAIM ONLY 1 / 2 OF THE INTEREST OF RS. 2,71,973/ - WHICH COMES TO RS. 1,35,986/ - . HENCE, THE ASSESSEE HAS BEEN ALLOWED EXCESS DEDUCTION U/S 24(B) OF THE I.T. ACT BY RS. 1,35,986/ - BEING 1 / 2 OF THE INTEREST ON HOUSING LOAN ATTRIBUTABLE TO THE OTHER CO - OWNER. I HAVE EXAMINED THE ABOVE AND HAVE REASON TO BELIEVE THAT THE I NCOME OF RS. 1,35,986/ - HAS ESCAPED ASSESSMENT DUE TO EXCESS CLAIM UNDER SECTION 24(B) OF THE I T ACT AS DEFINED BY SECTION 147 OF THE INCOME TAX ACT, 1961. THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THIS ASSESSMENT YEAR BY REASON OF THE FAILU RE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. THEREFORE, IT IS A FIT CASE FOR THE ISSUANCE OF NOTICE U/S 148 OF THE INCOME TAX ACT, 1961. DATED: 13 - 01 - 2014 SD/ - (VINOD KUMAR CHOPRA) INCOME TAX OFFICER WARD 47(1), NEW DELHI 5. SUBSEQUENTLY, T HE AO ASSESSED THE INCOME AT RS.20,92,852/ - AND MADE THE ADDITION OF RS. 1,23,771/ - IN THE EARLIER INCOME ASSESSED U/S 143(3) OF THE ACT ON 08.12.2011. 6. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND CHALLENGED THE INITIATION OF THE REOPENING. THE LD. CIT(A) DID NOT ITA NO . 6359 /DEL /201 6 VINEET SETHI 5 FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND SUSTAINED THE ADDITION MADE BY THE AO. 7. NOW THE ASSESSEE IS IN APPEAL. THE LD. COU NSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE DISCLOSED ALL THE FACTS BEFORE THE AO WHO FRAMED THE ASSESSMENT U/S 143(3) OF THE ACT BY CONSIDERING THE CLAIM OF THE ASSESSEE ON ACCOUNT OF LOSS UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND NO NEW TANGI BLE MATERIAL WAS BROUGHT ON THE RECORD WHILE REOPENING THE ASSESSMENT. THEREFORE, THE REOPENING OF THE ASSESSMENT IN THE ABSENCE OF ANY NEW TANGIBLE MATERIAL WAS NOT JUSTIFIED. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: DONALDSON INDIA FILTERS SYS TEMS (P) LTD. VS DCIT 371 ITR 87 (DEL.) MADHUKAR KHOSLA VS ACIT 367 ITR 165 (DEL.) INDU LATA RANGWALA VS DCIT 384 ITR 337 (DEL.) 8. IN HER RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE I NCOME OF THE ASSESSEE ESCAPED THE ASSESSMENT SINCE THE CLAIM OF LOSS FROM HOUSE PROPERTY WAS NOT CORRECTLY MADE AS THE PROPERTY WAS IN JOINT NAME AND THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 24(B) OF THE ACT TO THE EXTENT OF HIS SHARE IN THE PROPERTY. T HEREFORE, THE ASSESSMENT WAS RIGHTLY REOPENED BY THE AO U/S 147 R.W.S. 148 OF THE ACT. 9. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, ON ITA NO . 6359 /DEL /201 6 VINEET SETHI 6 PERUSAL OF THE REASON S RECORDED BY THE AO FOR REOPENING THE ASSESSMENT , IT IS CLEAR THAT THE CLAIM FOR LOSS UNDER THE HEAD INCOME FROM PROPERTY WAS MADE BY THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME WHICH WAS PROPERLY SCRUTINIZED AND THE CLAIM WAS ACCEPTED BY THE AO WILE F RAMING THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT AND NO NEW TANGIBLE MATERIAL IS BROUGHT ON RECORD WHILE REOPENING THE ASSESSMENT U/S 147 R.W.S 148 OF THE ACT. 10. ON A SIMILAR ISSUE THEIR LORDSHIPS IN THE CASE OF INDU LATA RANGWALA VS DCIT (SUPRA) O BSERVED AS UNDER: 35.6 WHEREAS IN A CASE WHERE THE INITIAL ASSESSMENT ORDER IS UNDER SECTION 143(3), AND IT IS SOUGHT TO BE REOPENED WITHIN FOUR YEARS FROM THE EXPIRY OF THE RELEVANT ASSESSMENT YEAR, THE AO HAS TO BASE HIS REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT ON SOME FRESH TANGIBLE MATERIAL THAT PROVIDES THE NEXUS OR LINK TO THE FORMATION OF SUCH BELIEF. 11. SIMILARLY, THE HON BLE DELHI HIGH COURT IN THE CASE OF DONALDSON INDIA FILTERS SYSTEMS PVT. LTD. VS DCIT (2015) 371 ITR 87 (SUPRA ) HELD AS UNDER: THAT THE REOPENING OF THE ASSESSMENT FAILED TO PASS MUSTER ON BOTH THE TESTS. THE SATISFACTION NOTE DID NOT DISCLOSE THE FOUN - DATION OF 'REASONS TO BELIEVE' AS IT VAGUELY REFERRED TO THE PERUSAL OF 'THE RECORDS' WITHOUT SPECIFYING THE FRE SH 'TANGIBLE MATERIAL' THAT HAD COME TO LIGHT GIVING RISE TO A NEED FOR SUCH ACTION. SINCE THE ASSESSMENT HAD EARLIER BEEN CONCLUDED UNDER SECTION 143(3), THE RESTRICTIONS ON THE EXERCISE OF THE POWER OF REASSESSMENT AS CONTAINED IN THE FIRST PROVISO TO SE CTION 147 WOULD INHIBIT FURTHER ACTION IN THE ABSENCE OF MATERIAL ITA NO . 6359 /DEL /201 6 VINEET SETHI 7 SHOWING DEFAULT BY THE ASSES SEE TO FULLY OR TRULY DISCLOSE. HENCE, THE VIEW TAKEN BY THE COMMISSIONER (APPEALS) THAT IT WAS A CASE OF IMPERMISSIBLE CHANGE OF OPINION WAS CORRECT. THE ORDER W HEREBY THE PROCEEDINGS HAD BEEN REOPENED FOR ASSESSMENT UNDER SECTION 147/148 THUS, SUFFERED FROM THE JURISDICTIONAL ERROR. CONSEQUENTLY, THE PROCEEDINGS TAKEN PURSUANT THERETO COULD NOT BE SUSTAINED. 12. IN THE PRESENT CASE ALSO THE ORIGINAL ASSESSMENT WAS FRAMED BY THE AO U/S 143(3) OF THE ACT AND THE AO WHILE REOPENING THE ASSESSMENT DID NOT BRING ON RECORD ANY FRESH TANGIBLE MATERIAL WHICH PROVIDES THE NEXUS OR LINK TO THE FORMATION OF BELIEF THAT TH E INCOME HAD ESCAPED ASSESSMENT. T HEREFORE, THE REOP ENING WAS NOT VALID. IN THAT VIEW OF THE MATTER THE IMPUGNED ORDER IS SET ASIDE AND THE REASSESSMENT FRAMED AFTER REOPENING THE ORIGINAL ASSESSMENT U/S 147 R.W.S. 148 OF THE ACT IS QUASHED. 13 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . (O RDE R PRONOUNCED IN THE COURT ON 16 /03 /2017 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DAT ED: 16 /03 /2017 *SUBO DH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR