Sh. Amit Jain, Rishikesh V. ITO, Rishikesh

ITA 6650/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7197 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 23-08-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 15-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Assessee Lawyers: SURIYA KISHAN JUNEJA
• Keywords: Principle of natural justice
• Section: 142(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC-3 : NEW DELHI) BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 6650/DEL/2015 (ASSESSMENT YEAR : 2005-06) SHRI AMIT JAIN, VS. ITO, WARD-1 ANANDI MAI BHAWAN, RISHIKESH 12, LAJPAT RAI ROAD, RISHIKESH (PAN: ADRPJ3989P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SURIYA KISHAN JUNEJA CA DEPARTMENT BY: SH. FR MEENA, SR. DR DATE OF HEARING : 23-08-2016 DATE OF ORDER : 02-09-2016 ORDER PER H.S. SIDHU, JM THE ASSESSEE HAS FILED THE APPEAL AGAINST THE IMP UGNED ORDER DATED 12.10.2015 PASSED BY THE LD. CIT(A), DEHRADU N RELEVANT TO ASSESSMENT YEAR 2005-06. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER :- 1. THAT IN FACTS AND CIRCUMSTANCE OF THE CASE, THE LEARNED CIT HAS ERRED WRONGLY THAT THE PROVISIONS OF SECTION 29 2BB IS COVERED FOR THE A.Y. 2005-06 WHEREIN REASONS OF REC ORDING FOR REOPENING THE ASSESSMENT HAS NOT BEEN FURNISHED TO THE ITA NO.6650/DEL/2015 2 APPELLANT EVEN ON WRITTEN DEMAND TILL THE COMPLETIO N OF THE ASSESSMENT IS BAD AT LAW. 2. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, CI T(A) HAS FAILED TO APPRECIATE THAT THE PROVISIONS OF SECTION 292BB IS NOT RETROSPECTIVE BUT APPLICABLE FROM A.Y. 2008 - 0 9 AS PER ITAT, DELHI SPECIAL BENCH JUDGMENT IN THE CASE OF K UBER TOBACCO PRODUCTS. 3. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, FRA MING OF THE ASSESSMENT BY THE ITO WITHOUT FURNISHING THE RE ASONS FOR REOPENING THE ASSESSMENT IS NOT SUSTAINABLE IN LAW WHEN THE APPELLANT HAS DULY ASKED TO FURNISH THE REASONS, IG NORING THE SAME IS ARBITRARY AND ILLEGAL. 4. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE RECEIVE THE AMOUNTS FROM CLOSE FRIENDS AFT ER WITHDRAWING FROM THE BANK ACCOUNTS DURING THE A.Y. 2004 - 05 FOR THE CONSTRUCTION OF THE BUILDING, ADDING BAC K THE SAME IN THE A.Y. 2005 - 06 IS AGAINST PRINCIPAL OF ACCO UNTING AND LAW. 5. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, THE CREDIT OF THE AMOUNT WHICH HAS BEEN SPENT DURING THE A.Y. 2004 - 05 ON THE BUILDING AS ADMITTED BY AO IN THE ASSESSMENT ORDER MAY PLEASE BE GIVEN AND THE ADDITION TO THAT EXTENT MAY PLEASE BE REDUCED. 6. THAT THE ADDITION TO THE RETURNED INCOME AS SUST AINED BY THE LD. CIT (A) MAY PLEASE BE DELETED. 7. THAT IN FACT AND CIRCUMSTANCE OF THE CASE, APPEL LANT BE PERMITTED TO ADD OR DELETE ANY GROUNDS OF APPEAL. ITA NO.6650/DEL/2015 3 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS DERIVING INCOME FROM BUSINESS OF CIVIL CONSTRUCTION WORK. THE RETUR N OF INCOME FOR A.Y. 2005-06 WAS FILED ON 16.03.2006 DECLARING TAXABLE I NCOME OF RS. 1,34,120/- AND THE SAME WAS PROCESSED U/S 143(1) OF I.T. ACT, 1961 ON 21.03.2006 RESULTING A REFUND RS. 240/-. DURING THE COURSE OF ASSESSMENT PROCEEDING FOR A.Y.2004-05 WHICH WAS COMPLETED ON 0 2.12.2011, THE ASSESSEE HAS FILED AN AFFIDAVIT DATED 20.10.2011 AL ONGWITH WRITTEN REPLY THAT HE HAD PURCHASED A PIECE-OF LAND JOINTLY WITH HIS BROTHER SHRI SACHIN JAIN AT VILLAGE- FALASU, PARGANA-PARWADOON, TEH. RI SHIKESH,DISTT- DEHRADUNON 05.07.2002 ON AN INVESTMENT OF RS. 1,80 ,500/- AND THE COVERED AREA OF SAID LAND IS 0.436 HECTARE. THE CON STRUCTION OF BUILDING WAS MADE JOINTLY WITH HIS BROTHER DURING THE F.Y.20 04-05 AND THE BUILDING WAS GIVEN ON LEASE TO MOKSH ANAND ASHARAMT (MAA SOC IETY) @RS. 2,000/- PER ANNUM. AO OBSERVED THAT ON PERUSAL OF ITR OF THE ASSESSEE FOR A.Y.2005-06 SHOWS THAT THE ASSESSEE DID NOT DECLAR ED ANY INVESTMENT IN CONSTRUCTION OF BUILDING, THAN THE PR OCEEDINGS ULS 147 OF THE I.T.ACT HAVE BEEN INITIATED WITH THE PRIOR APPROVA L OF JOINT COMMISSIONER OF INCOME TAX, HARDWAR RANGE, HARDWAR, AND NOTICE U/S 148 DATED 19.03.2012 WAS ISSUED AND SERVED UPON THE ASSESSEE. THE INCUMBENCY HAS CHANGED AND NOTICE ULS 142(1) ALONG WITH A LETTER DATED 14.08.2012 ISSUED TO THE ASSESSEE WHICH WAS DULY SE RVED TO THE ASSESSEE ON 17.08.2012. ASSESSEE FILED WRITTEN REPLY DATED 27. 08.2012, SUBMITTED THAT ITA NO.6650/DEL/2015 4 THE RETURN ALREADY FILED ON 16.03.2006 VIDE RECEIPT NO. 8346 MAY BE TREATED AS RETURN OF INCOME IN RESPONSE OF NOTICE ULS 148. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2), 142(1) ALONG WI TH QUESTIONNAIRE DATED 28.08.2012 WAS ISSUED FOR 11.09.2012. IN RESPONSE O F THESE NOTICES ASSESSEES COUNSEL ATTENDED THE PROCEEDINGS FROM TI ME TO TIME AND FILED WRITTEN REPLY AND REQUISITE DETAILS. AFTER CONSIDE RING THE SAME, THE AO ASSESSED THE INCOME OF THE ASSESSEE AT RS. 16,74,12 0/- BY MAKING VARIOUS ADDITION TOTALING TO RS. 15,40,000/- VIDE HIS ORDE R DATED 20.3.2013 AND PASSED THE ASSESSMENT ORDER U/S. 147/143(3) OF THE I.T. ACT, 1961. 4. AGAINST THE ORDER OF THE LD. AO, ASSESSEE APPEA LED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 12.10.2015 HA S PARTLY ALLOWED THE THE APPEAL OF THE ASSESSEEE. 5. AGGRIEVED WITH THE AFORESAID ORDER OF THE LD . CIT(A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING, LD. COUNSEL OF THE AS SESSEE HAS ARGUED THE LEGAL GROUND CHALLENGING THE ASSUMPTION OF JURI SDICTION U/S. 148 OF THE ACT. HE STATED THAT AO INITIATED NOTICE U/S. 148 OF THE I.T. ACT, 1961 ON 19.3.2012 AND IN REPLY TO THE SAME ASSESSEE REPLIE D VIDE HIS LETTER DATED 27.8.2012 STATING THEREIN THAT INCOME TAX RETURN DA TED 16.3.2006 FOR THE ASSESSMENT YEAR 2005-06 FILED VIDE RECEIPT NO. 8337 IN INCOME TAX WARD- 1, RISHIKESH MAY BE TREATED AS THE RETURN IN REPLY TO NOTICE U/S. 148. HE SUBMITTED THAT IT WAS ALSO STATED IN THE REPLY THAT THE COPY OF RECORD AND ITA NO.6650/DEL/2015 5 DOCUMENT AND REASON FOR OPENING OF THE CASE U/S. 14 8 BE SUPPLIED. HE STATED THAT ITO CONCERNED CONTINUED WITH THE ASSES SMENT PROCEEDINGS WITHOUT SUPPLY ANY RECORD FOR REOPENING THE CASE A ND / OR REASON FOR REOPENING THE CASE. HE STATED THAT SINCE THE AO HA D NOT COMPLIED WITH THE MANDATORY PROVISIONS, THEREFORE, ASSESSMENT ORDER P ASSED U/S. 147/143(3) DATED 20.3.2013 WAS VOID ABINITIO AS LAID DOWN BY T HE HONBLE COURT OF INDIA AND THE TRIBUNAL. THIS POINT WAS ALSO SPEC IFICALLY RAISED BEFORE THE CIT(A) AND THE LD. CIT(A) VIDE PARA NO. 20 OF HIS I MPUGNED ORDER CATEGORICALLY ADMITS THAT AO HAS NOT SUPPLIED THE COPY OF THE REASONS RECORDED TO THE ASSESSEE. LD. COUNSEL FOR THE ASS ESSEE STATED THAT NON- SUPPLY OF COPY OF REASONS RECORDED IS CONTRARY TO T HE PROVISIONS OF LAW AS LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF GNK DRIVESHAFTS (INDIA) LTD. VS. ITO REPORTED IN 259 ITR 19 (SC). THEREFORE, HE REQUESTED THAT BY FOLLOWING THE DECISION OF THE HONBLE APE X COURT, AS AFORESAID, THE REASSESSMENT MAY BE QUASHED BEING BAD IN LAW. 6.1 LD. COUNSEL OF THE ASSESSEE FURTHER STATED LEAR NED CIT(A) HAS ERRED WRONGLY IN APPLYING THE PROVISIONS OF 292BB IN THE A.Y. 2005-06 THOUGH AS PER THE ITAT, DELHI SPECIAL BENCH JUDGMENT IN TH E CASE OF KUBER TOBACCO PRODUCTS THE PROVISIONS OF SECTION 292BB I S NOT RETROSPECTIVE BUT ARE APPLICABLE ONLY FROM THE A.Y. 2008-09. HENCE, ON THIS ACCOUNT ALSO BOTH THE AUTHORITIES ARE ERRED AND ACCORDINGLY, THE IR ORDERS DESERVE TO BE QUASHED. ITA NO.6650/DEL/2015 6 7. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER PA SSED BY THE CIT(A) AND STATED THAT HE HAS PASSED A WELL REASONED ORDER , WHICH NEEDS TO BE UPHELD. 8. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE REV ENUE AUTHORITIES AND THE CASE LAW CITED BY THE ASSESSEES COUNSEL ON THE ISS UE IN DISPUTE. IN MY VIEW, IT IS VERY MUCH NECESSARY TO REPRODUCE THE CO NTENTS OF THE REPLY DATED 27.8.2012 OF THE ASSESSEE IN RESPONSE TO THE NOTICE ISSUED U/S. 148 OF THE I .T. ACT, 1961 DATED 19.3.2012 SUBMITTED BEFORE T HE ASSESSING OFFICER. 8.1 IN RESPONSE TO THE NOTICE DATED 19.3.2012, ASSE SSEE FILED HIS REPLY DATED 27.8.2012 IN HINDI LANGUAGE, THE ENGLISH VER SION THEREOF IS AS UNDER:- SEWA MAI THE INCOME TAX OFFICER, WARD-1, RISHIKESH. SUBJECT: LETTER AAYAKAR ADHIKARI/WARD 1/RSK/148/201 2-13/14.08.2012 DEAR SIR, IN REFERENCE TO THE LETTER REGARDING INCOME TAX RET URN DATED 16.03.2006 FOR THE ASSESSMENT YEAR 2005-06 RECEIPTS NO. 8337 I NCOME TAX WARD-1 RISHIKESH WAS DEPOSITED AND THE XEROX COPY IS ENCLO SED HEREWITH WHEREIN ITA NO.6650/DEL/2015 7 INCOME OF RS. 1,34,120/- IS DECLARED THE SAME MAY B E TREATED IN REPLY TO NOTICE U/S. 148. IT IS ALSO REQUESTED THE ASSESSMENT OF THE TAX PAYE R WHICH HAS BEEN OPENED, THE COPY OF RECORD & DOCUMENT BE SUPPLIED AND REASO N FOR OPEN OF THE CASE U/ S 148. PLEASE REPLY THE SAME. SD/- AMIT JAIN PAN NO. ADRPJ3989P 8.2 FOR THE SAKE OF CLARITY, WE ARE FURTHER REPROD UCING THE RELEVANT PORTION OF PARA 20 OF THE IMPUGNED ORDER PASSED B Y THE LD. CIT(A) WHEREIN THE LD. CIT(A) HAS CATEGORICALLY MENTIONED THAT THE REASONS RECORDED FOR REOPENING OF THE CASE WERE NOT SUPPLIE D TO THE ASSESSEE. .THUS, IT IS QUITE CLEAR THAT THE ASSESSING OFF ICER DID NOT SUPPLY THE ASSESSEE WITH THE COPY OF THE REASO NS ON THE BASIS OF WHICH THE CASE WAS REOPENED. ON THE FACE O F IT, THE CASE OF THE ASSESSEE WOULD SEEM TO BE COVERED BY TH E JUDGMENTS CITED BY THE COUNSEL . 8.3 AFTER CAREFULLY GOING THROUGH ALL THE DOCUMENT S AVAILABLE WITH ME, ESPECIALLY THE REPLY TO THE NOTICE U/S. 148 OF THE I.T. ACT AND THE ORDER OF THE HONBLE APEX COURT IN THE CASE OF GNK DRIVESH AFTS (INDIA) LTD. VS. ITO REPORTED IN 259 ITR 19 (SC) AS CITED BY THE LD. COUNSEL OF THE ASSESSEE, I FIND THAT THE HONBLE APEX COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. ITO 259 ITR 19 (2003) HAS HELD THAT IT IS ITA NO.6650/DEL/2015 8 CLEAR THAT THE COMPLETION OF ASSESSMENT/RE-ASSESSME NT WITHOUT FURNISHING THE REASONS RECORDED BY THE AO FOR INITIATION OF PR OCEEDINGS UNDER SECTION 147/148 OF THE ACT IS NOT SUSTAINABLE IN LAW AS IT IS INCUMBENT ON THE AO TO SUPPLY THEM WITHIN REASONABLE TIME. I NOTE THAT ON THE ANVIL OF THIS JUDGMENT, ON THE REQUEST OF THE ASSESSEE, THE AO IS BOUND TO FURNISH THE REASONS RECORDED FOR INITIATION OF PROCEEDINGS UNDE R SECTION 147 OF THE ACT WITHIN A REASONABLE PERIOD OF TIME SO THAT THE ASSE SSEE COULD FILE ITS OBJECTIONS THERETO AND THE AO WAS TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER THEREON, WHICH THE AO HAS NOT DONE. I ALSO NOTE THAT EVEN AS PER THE RULES OF NATURAL JUSTICE, THE ASSESSEE I S ENTITLED TO KNOW THE REASONS ON THE BASIS OF WHICH THE AO HAS FORMED AN OPINION THAT INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT. THE FUR NISHING OF REASONS TO THE ASSESSEE IS TO ENABLE/FACILITATE IT TO PRESENT ITS DEFENCE AND OBJECTIONS TO THE INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT. THEREFORE, I AM OF THE CONSIDERED OPINION THAT THERE WAS NO JUSTIFI ABLE REASONS FOR THE AO TO DEPRIVE THE ASSESSEE OF THE RECORDED REASONS BY HIM FOR INITIATING PROCEEDINGS UNDER SECTION 147/148 OF THE ACT. THER EFORE, IN MY CONSIDERED OPINION, THE REOPENING IN QUESTION IS NO T SUSTAINABLE IN THE EYES OF LAW, HENCE, THE SAME IS QUASHED. 8.4 EVEN OTHERWISE, I NOTE THAT LD. CIT(A) HAS ERRE D IN APPLYING THE PROVISIONS OF 292BB IN THE INSTANT A.Y. 2005-06, HOWEVER, IN VIEW OF THE ITAT, DELHI SPECIAL BENCH JUDGMENT IN THE CASE OF KUBER TOBACCO ITA NO.6650/DEL/2015 9 PRODUCTS (P) LTD. REPORTED IN (2009) 120 TTJ 0577 ( SB), THE PROVISIONS OF SECTION 292BB IS NOT RETROSPECTIVE AND THE SAME ARE APPLICABLE ONLY FROM THE A.Y. 2008-09. 8.5 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND THE PRECEDENTS RELIED UPON, AS AFORESAID, I ALLOW THE ASSESSEES APPEAL ON LEGALITY ASPECT WITHOUT PROCEEDING TO ADJUDICATE ON MERITS BY QUAS HING THE ORDERS OF THE AUTHORITIES BELOW. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 02-09-2016. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED : 02-09-2016 SR BHATANGAR COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI. ITA NO.6650/DEL/2015 10