Shri Delzad Viraf Khambhata, Ahmedabad V. The Income Tax Officer, Ward-3(4), Ahmedabad

ITA 693/AHD/2015

• Counselvise Citation: 69320514 RSA 2015
• Duration Of Justice: 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 26-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L SHARMA
• Assessee Lawyers: ANIL BRAHMAKSHATRIYA
• Keywords: Reassessment proceedings
• Section: 148; 143(3); 194C

Judgement Text

ITA NO . 693 /AHD/ 20 1 5 ASSESSMENT YEAR: 2 0 0 7 - 08 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH , SMC , AHMEDABAD [CORAM: PRAMOD KUMAR AM ] ITA NO. 693 / AHD / 2 0 1 5 ASSESSMENT YEAR: 20 0 7 - 08 DELZAD VIRAF KHAMBHATA, ....... .. . ..... APPELLANT C/O. C.A., A.C. BRAHMAKSHATRIYA, HELLY CORPORATS , 2 ND FLOOR, A WING, NIRAV COMPLEX, NAVRANG SCHOOL SIX ROAD, NARNPURA, AHMEDABAD. [PAN A FVPK 2093 R ] VS. INCOME T AX OFFICER, .... .................. .... .. RESPONDENT WARD 3(4) , AHMEDABAD. APPEARANCES BY: ANIL BRAHMAKSHATRIYA FOR THE APPE LLANT B.L. SHARMA FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : SEPTEMBER 1 ST , 201 5 DATE OF PRONOUNCING THE ORDER : NOVEMBER 16 TH , 2015 O R D E R 1. BY WAY OF THIS APPEAL, THE A SSESS EE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 9 TH FEBRUARY, 201 5 PASSED BY THE LEARNED CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 1 43(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) , FOR THE ASSESSMENT YEAR 20 0 7 - 08 , ON THE FOLLOWING GROUND: - 1. IN LAW, ON FAC T S AND IN THE CIRCU MSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 10, AHMEDABAD HAS GROSSLY ERRED IN NOT CONSIDERING THE IMPUGNED ASSESSMENT ORDER PASSED U/S. 147 R.W.S. 143(3) AS BAD IN LAW AND DESERVES TO BE CANCELLED. THEREFORE, THE LD. ASSESSING OFFI CER MAY BE DIRECTED TO CANCEL THE ASSESSMENT ORDER PASSED U/S. 147 R.W.S. 143(3) AS IT IS PASSED AGAINST THE CRITERIA GIVEN FOR REOPENING OF THE COMPLETED ASSESSMENT. ITA NO . 693 /AHD/ 20 1 5 ASSESSMENT YEAR: 2 0 0 7 - 08 PAGE 2 OF 5 2. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. IT IS A CASE OF REOPENED ASSESSMENT AND THE ORIGINAL ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 22.02.2009. SUBSEQUENTLY, ON 10.01.2003, THE CASE WAS REOPENED ON THE BASIS OF FOLLOWING REASONS: - THE ASSESSEE HAD DECLARED TOTAL INCOME OF RS .3,33,182/ - FOR THE ABOVE ASSESSMENT YEAR. THE CASE WAS FINALISED U/S 143(3) BY DETERMINING TOTAL INCOME AT RS.3,72,440/ - . IT I S SEEN FROM THE P&L ACCOUNT AND OTHER RECORD SUBMITTED BY THE ASSESSEE THAT OUT OF LABOUR EXPENSES OF RS.85,506/ - ASSESSEE HAD PAID LABOUR CHARGES OF RS.69,935/ - TO ACCURATE ENGINEERING WORKS WITHOUT DEDUCTING TDS U/S 194C AND HENCE THE S A ME IS REQUIRED TO BE DISALLOWED U/S 40(A)(IA). THIS RESULTED IN UNDER ASSESSMENT OF INCOME OF RS. 69,935/ - . IN COL. NO.27(A) OF FORM NO.3CD OF THE AUDIT REPORT REGARDING WHETHER THE ASSESSEE H AS COMPLIED WITH THE PROVISIONS OF TDS, IT I S MENTIONED AS NIL. HENCE, THE ASSESSEE HAS NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. IT IS ALSO SEEN FROM THE P&L ACCOUNT AND OT HER RECORD SUBMITTED BY THE ASSESSEE THAT THE AMOUNT OF RS.55,155/ - HAS BEEN DEBITED TOWARD S PROFESSIONAL FEES, BUT NO DETAILS WERE AVAILABLE. THEREFORE, THE SAME IS REQUIRED TO BE DISALLOWED U/S 40(A)(IA). THIS RESULTED IN UNDER ASSESSMENT OF INCOME OF R.55 , 155/ - . IN COL. NO.27 ( A ) OF FORM NO.3CD OF THE AUDIT REPORT REGARDING WHETHER THE ASSESSEE HAS COMPLIED WITH THE PROVISIONS OF TDS, IT IS MENTIONED AS NIL. HENCE, THE ASSESSEE HAS NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESS MENT. H ENCE THERE IS AN ESCAPEMENT OF INCOME TO THE TUNE OF RS.1,25,090/ - . IN VIEW OF THE ABOVE , I HAVE REASONS TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR A.Y. 2007 - 08 WITHIN THE MEANING OF PROVISIONS U/S 147 OF THE INCOME TAX ACT , 1961 AND THE AS SES S E E HAS NOT DISCLOSED FULLY AND TRULY A LL MA TERIAL FACTS NECES SA RY FOR ASSESSMENT . THEREFORE , I AM SATISFIED THAT THIS I S A FIT CA S E FOR RE - OPENING OF ASSESSMENT U/S 147. NOTICE U/S 148 I S BEING ISSU E D SEPARATELY. 3. THE REASONS FOR REOPENING THE CASE, ALONG WITH A SHOW CAUSE NOTICE AS TO WHY THESE DISALLOWANCES SHOULD NOT BE MADE IN THE CASE OF THE ASSESSEE, WERE DULY FURNISHED. SUFFICE TO NOTE THAT IN THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FINALLY DISALLOWED ONLY R S.69,335/ - UNDER SECTION 40(A)(IA) OF THE ACT. AGGRIEVED, ITA NO . 693 /AHD/ 20 1 5 ASSESSMENT YEAR: 2 0 0 7 - 08 PAGE 3 OF 5 ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE ME. 4. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSE D THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. AS I HAVE NOTED, THE ADDITION, CONSEQUENT TO REOPENING OF THIS CASE, IS ONLY RS.69,335/ - . ON THIS FACT, PARTICULARLY IN THE LIGHT OF SCHEM E OF LAW AS VISUALIZED BY HON BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFT VS. ITO [(2003) 259 ITR 101 (SC)], IT WAS NOT A FIT CASE FOR REOPENING AS FOUR YEARS HAD EXPIRED FROM THE END OF RELEVANT PREVIOUS YEAR AND TAX ESCAPING ASSESSMENT WAS LESS THAN RS.1,00,000/ - . THE REASON IS THIS. THE REASONS FOR REOPENING THE ASSESSMENT, AS IS THE SCHEME OF LAW VISUALIZED AND SET OUT BY HON BLE SUPREME COURT IN GKN DRIVESHAFT S CASE (SUPRA), ARE TO BE CONFRONTED TO THE ASSESSEE AND THE ASSESSEE HAS AN OPPORTUNIT Y TO REBUT THESE REASONS. THIS IS A STAGE PRIOR TO THE ASSESSING OFFICER PROCEEDING WITH THE REASSESSMENT PROCEEDINGS AND AFTER HE HAS ISSUED NOTICE FOR REOPENING THE ASSESSMENT. IN A SITUATION IN WHICH THE ASSESSEE CAN CONVINCE THE ASSESSING OFFICER THA T THESE REASONS ARE NOT GOOD ENOUGH TO MAKE THE ADDITIONS, THE REASSESSMENT PROCEEDINGS ARE TO BE DROPPED ANYWAY. THERE IS NO BAR ON THE NATURE OF MATERIAL THAT THE ASSESSEE MAY SEEK TO RELY UPON, EVEN AT THE FIRST STAGE, TO DEMONSTRATE THAT THE REASONS F OR REOPENING ARE UNSUSTAINABLE IN LAW AND EVEN THIS ADJUDICATION BY THE ASSESSING OFFICER IS SUBJECT MATTER OF LEGAL SCRUTINY BY THE APPELLATE AUTHORITIES IN THE COURSE OF THE SAME APPELLATE PROCEEDINGS AS AGAINST THE REASSESSMENT ORDER. THE SCHEME OF LAW , AS LAID DOWN BY THE HON BLE SUPREME COURT IN GKN DRIVESHAFT S CASE, THUS PROVIDES FOR DUAL ADJUDICATION BY THE ASSESSING OFFICER ON THE CORRECTNESS OF THE REASONS RECORDED FOR REOPENING THE ASSESSMENT - ONE AT THE STAGE ITA NO . 693 /AHD/ 20 1 5 ASSESSMENT YEAR: 2 0 0 7 - 08 PAGE 4 OF 5 OF DEALING WITH THE OBJECTIONS OF T HE ASSESSEE PRIOR TO PROCEEDING WITH THE REASSESSMENT PROCEEDINGS AND THE OTHER AT THE PINT OF TIME WHEN, DURING THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS TO TAKE A CALL ON ADDITIONS TO BE MADE IN RESPECT OF THESE REASONS. THAT IS WHERE THER E IS A PARADIGM SHIFT IN THE SCHEME OF THINGS POST GKN DRIVESHAFT DECISION. IN A SITUATION IN WHICH, DURING THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FINDS THESE REASONS TO BE WHOLLY OR PARTLY SO INCORRECT THAT HE CONCLUDES THAT RELATED INCOME H AS ESCAPED THE ASSESSMENT AND THE ADDITIONS ON THAT COUNT ARE UNWARRANTED, THE SAME SHOULD HAVE BEEN THE POSITION AT THE STAGE OF ADJUDICATING ON THE CORRECTNESS OF THE REASONS RECORDED IN THE PRE - REASSESSMENT PROCEEDINGS. IN THE LATTER PROCEEDINGS ALSO, THE ASSESSEE HAS THE LIBERTY TO BRING THE MATERIAL, OTHER THAN THAT AVAILABLE TO THE ASSESSING OFFICER ON HIS RECORDS, THAT NO INCOME HAS ESCAPED ASSESSMENT OR INCOME ESCAPING ASSESSMENT IS LESS THAN WHAT THE ASSESSING OFFICER INITIALLY BELIEVED. THE CONC LUSIONS IN THESE TWO SETS OF SOMEWHAT PARALLEL EXERCISES CANNOT, THEREFORE, BE ORDINARILY DIFFERENT. WHEN THE REASONS FOR REOPENING ARE SEEN IN THIS LIGHT, THE INCOME ACTUALLY ESCAPING THE ASSESSMENT, EVEN AS PER THE ASSESSING OFFICER, WAS LESS THAN RS.1 ,00,000/ - . CLEARLY, THEREFORE, THE ASSESSING OFFICER WAS IN ERROR IN REOPENING THE ASSESSMENT. I, ACCORDINGLY, QUASH THE IMPUGNED REASSESSMENT PROCEEDINGS. 6. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH D AY OF NOVEMBER , 2015. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) AHMEDABAD, THE 16 TH DAY OF NOVEMBER , 2015 PBN/* ITA NO . 693 /AHD/ 20 1 5 ASSESSMENT YEAR: 2 0 0 7 - 08 PAGE 5 OF 5 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD