Smt. VINITA DEVI BAGRODIA, Nagda V. The DCIT Circle-2(1), Ujjain

ITA 716/IND/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2576 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-01-2019
• Assessment Year: 2006-2007
• Appeal Filed On: 12-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Keywords: Reopening of assessment; Audit objection; Difference of opinion; Change of opinion
• Section: 143(3); 142(1); 14A; 147; 148

Judgement Text

[ITA 716/IND/2014] [SMT. VINITA DEVI BAGRODIA, NAGDA] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.716/IND/2014 ASSESSMENT YEAR: 2006-07 SMT. VINITA DEVI BAGR ODIA BLOCK NO.1, GRASIM CHEMICAL DIVISION BIRLAGRAM, NAGDA / VS. DCIT CIRCLE-2(1) UJJAIN ( APPELLANT ) ( REVENUE ) P.A. NO. ACQPB5660H APPELLANT BY SHRI PAVAN VED, A.R. RESPONDENT BY SHRI K.G. GOYAL, SR.D.R. DATE OF HEARING: 17.01.2019 DATE OF PRONOUNCEMENT: 07.03.2019 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER O F THE CIT(A)-2, UJJAIN DATED 20.8.2014 PERTAINING TO THE [ITA 716/IND/2014] [SMT. VINITA DEVI BAGRODIA, NAGDA] 2 ASSESSMENT YEAR 2006-07. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN INVOKING THE PROVISIONS OF SECTION 147 AND 148 OF T HE ACT IN REOPENING THE ALREADY CONCLUDED ASSESSMENT PROCEEDI NGS U/S 143(3) ON 11.12.2008 WITHOUT APPRECIATING THAT ALL THE RELEVANT FACTS AND MATERIAL WERE ALREADY AVAILABLE WITH THE A.O. W HO PASSED THE ORIGINAL ASSESSMENT ORDER U/S 143(3) ON 11.12.2008. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.40,46 ,763/- (OUT OF THE TOTAL ADDITIONS MADE BY THE A.O. AT RS.60,85,373/-) ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE INCOME TAX ACT READ WIT H RULE 8D AND HE FAILED TO CONSIDER AND APPRECIATE THE DETAILED S UBMISSIONS MADE BEFORE HIM IN A SUMMARY AND MECHANICAL MANNER. 3. IN THE ALTERNATIVE, WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ADDITION CONFIRM BY THE LD. CIT(A) AT RS.40,46,763/- ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE INCOME TAX A CT READ WITH RULE 8D IS HIGHLY EXCESSIVE AND THE DIVIDEND INCOME OF RS.78,39,813/- IS ONLY INCIDENTAL/BY PRODUCT/UNINTE NTIONAL RECEIPT OF THE MAIN TRADING ACTIVITY. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR VARY ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEAR ING. 2. THE ASSESSEE HAS ALSO RAISED FOLLOWING ADDITIONAL GROUNDS:- 5. THE REOPENING OF ASSESSMENT U/S 147 IS NULL AND VOID AUTHORITIES BELOW INITIO AS IN THE REASONS RECORDED FOR REOPENI NG, THE LD. A.O. HAS NOT GIVEN A FINDING THAT REOPENING WAS BECAUSE OF OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO MAKE TRUE AN D FULL DISCLOSURE. 6. THE REOPENING OF ASSESSMENT IS NULL AND VOID AUT HORITIES BELOW INITIO ALSO ON THE GROUND THAT THE APPROVAL GIVEN BY LD. J CIT WAS WITHOUT APPLICATION OF MIND AND WAS BASED ON FACTUAL MISTAK ES. THERE WAS NO APPROVAL OF LD. CIT AS MANDATED BY SECTION 151 O F THE ACT AND EVEN IF THERE WAS APPROVAL (THOUGH IT WAS REGARDING REMEDIAL ACTION OF AUDIT OBJECTION) THE SAME WAS CLEARLY WITHOUT AP PLICATION OF MIND [ITA 716/IND/2014] [SMT. VINITA DEVI BAGRODIA, NAGDA] 3 AND WAS UNDER COMPULSION AS IS CLEAR FROM THE LANGU AGE OF THE LETTER OF LD. CIT. 7. THE REOPENING OF ASSESSMENT IS NULL AND VOID ALS O BECAUSE THE REOPENING WAS DONE AS A RESULT OF AUDIT OBJECTION R EGARDING ALLOWABILITY OF INTEREST AND THE ALLOWANCE OF INTER EST WAS IN ACCORDANCE WITH HIGH COURT DECISION; AS INTEREST ON SHARE TRADING IS FULLY ALLOWABLE U/S 36(1)(III); EVEN IF THERE IS IN CIDENTAL DIVIDEND INCOME. 8. THE REOPENING OF ASSESSMENT IS NULL AND VOID AUT HORITIES BELOW INITIO ALSO BECAUSE THE REOPENING WAS ON THE BASIS OF AUDI T OBJECTION AND THE LD. CIT SOMEHOW WANTED TO TAKE SOME REMEDIAL AC TION TO SETTLE THE AUDIT OBJECTION. 3. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT RETURN OF INCOME DECLARING TOTAL INCOME AT RS.58,96,96 6/- WAS FILED ON 30.10.2006. THE ASSESSMENT WAS FINALISED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLE D AS THE ACT) ON 11.12.2008 DETERMINING TOTAL INCOME AT RS.59,34,440/-. THEREAFTER, THE CASE OF THE ASSESSEE WAS REOPENED FOR ASSESSMENT AND THE ASSESSMENT U/S 147 OF THE ACT WAS FRAMED VIDE ORDER DATED 28.3.2013. WHILE FRAMING THE ASSESSMENT, THE A.O. MADE DISALLOWANCE U/S 14A OF THE ACT OF RS.60,85,373/-. AGAINST THIS, TH E ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A), WHO AFTE R CONSIDERING THE SUBMISSIONS PARTLY ALLOWED THE APPEAL. LD. [ITA 716/IND/2014] [SMT. VINITA DEVI BAGRODIA, NAGDA] 4 CIT(A) CONFIRMED THE ADDITION OUT OF RS.60,85,373/- TO THE EXTENT OF RS.40,46,763/-, THEREBY HE GAVE A RELIEF O F RS.20,38,610/-. THE LD. CIT(A) ALSO DIRECTED THE A. O. TO ALLOW REBATE U/S 88E OF THE ACT AFTER VERIFICATION FROM THE REPORTS. THE ASSESSEE HAS NOW FILED THE PRESENT APPEA L AGAINST REOPENING OF THE ASSESSMENT AND ALSO SUSTAINING THE ADDITION OF RS.40,46,763/-. 4. GROUND NOS.1, 5 & 6 ARE AGAINST REOPENING OF THE ASSESSMENT. LD. COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REOPENING THE ASSESSMENT. HE SUBMITTED THAT ASSESSEE IS ENGAGED IN T HE BUSINESS OF SHARE TRADING DERIVED DIVIDEND OF RS.78,39,813/-, WHICH IS EXEMPT U/S 10(34) OF THE A CT. SCRUTINY OF THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 11.12.2008. DURING THE ASSESSMENT PROCEEDINGS, ALL THE RELEVANT FACTS WERE DISCLOSED FUL LY AND TRULY DURING THE ASSESSMENT PROCEEDINGS. ALL THE RE LEVANT [ITA 716/IND/2014] [SMT. VINITA DEVI BAGRODIA, NAGDA] 5 MATERIAL BROUGHT BEFORE THE A.O. RELATING TO THE SHARE TRADING, ETC. SPECIFIC QUERIES WERE RAISED U/S 142(1) OF THE ACT RELATING TO INTEREST EXPENDITURE AND THEREAFTER S AME WAS ALLOWED AFTER DUE APPLICATION. HE SUBMITTED THAT NO FAILURE ON THE PART OF THE ASSESSEE TO MAKE TRUE AND FUL L DISCLOSURE. HE SUBMITTED THAT NOTICE U/S 148 OF THE ACT WAS ISSUED AFTER 4 YEARS EVEN THOUGH THERE WAS NO FAILUR E ON THE PART OF THE ASSESSEE TO MAKE TRUE AND FULL DISCL OSURE OF INCOME. HE CONTENDED THAT NOTICE U/S 148 OF THE ACT WAS ISSUED ON 29.12.2011, AFTER EXPIRY OF 4 YEARS FRO M THE END OF THE RELEVANT ASSESSMENT YEAR. THE MANDATORY CONDITION FOR ISSUE OF NOTICE AFTER 4 YEARS IS THAT TH E ASSESSING OFFICER MUST BE SATISFIED THAT INCOME HAS ESC APED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE TRUE AND FULL DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. HOWEVER, THERE IS NO SUCH ALLEGATION IN THE SATISFACTION NOTE RECORDED BY TH E [ITA 716/IND/2014] [SMT. VINITA DEVI BAGRODIA, NAGDA] 6 A.O. THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO MAKE TRUE AND FULL DISCLOSURE OF ALL THE MATERIAL FACTS. IN THE ABSENCE OF SUCH SATISFACTION, REOPENING IS NOT VALI D. IN SUPPORT OF THIS CONTENTION, RELIANCE IS PLACED ON THE JUDGEMENT OF THE HON'BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF SESA GOA LIMITED VS. CIT 294 ITR 10 AND TH E JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F CALCUTTA DISCOUNT COMPANY VS. ITO 42 ITR 191 (SC). FURTHER SUBMISSION IS MADE THAT ASSESSING OFFICER HAS N OT MENTIONED ANYWHERE IN THE REASONS RECORDED THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE, WHICH IS PRE- REQUISITE CONDITION FOR REOPENING AFTER 4 YEARS. THE RE ARE VARIOUS CASE LAWS IN FAVOUR OF THE ASSESSEE. THE LD. COUNSEL HAS PLACED RELIANCE ON THE JUDGEMENT OF BOMBAY HIGH COURT IN THE CASE OF HINDUSTAN LEVER LIMITED VS. R.B. WADEKAR 268 ITR 332, JUDGEMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS PVT. LTD. VS . DCIT [ITA 716/IND/2014] [SMT. VINITA DEVI BAGRODIA, NAGDA] 7 360 ITR 527. HE FURTHER CONTENDED THAT THE REOPENIN G IS ON THE BASIS OF CHANGE OF OPINION AS THE ASSESSMENT WAS ALREADY FRAMED U/S 143(3) OF THE ACT. HE SUBMITTED TH AT THE ASSESSING OFFICER REOPENED THE ASSESSMENT ON THE BASIS OF INFORMATION WITHOUT HIS RECORDS THAT MEANS ALL INFORMATION WAS ALREADY AVAILABLE WITH HIM IN HIS OWN RECORDS AT THE TIME OF ORIGINAL ASSESSMENT ITSELF. TH ERE WAS NO INFORMATION FROM ANY OUTSIDE SOURCE. THEREFORE, H E SUBMITTED THAT IT IS A CLEAR CASE OF CHANGE OF OPINION AN D SUCH REOPENING IS BAD IN LAW. IN SUPPORT OF THIS, LD. COUNSEL RELIED UPON JUDGEMENT OF THE HON'BLE SUPREM E COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (2010) 187 TAXMAN.COM 312. FURTHER, HE CONTENDED THAT MANDATORY APPROVAL BY CIT IS SINE-QUA-NON AND IF IT IS N OT OBTAINED WOULD VITIATE THE PROCEEDINGS. HE CONTENDED THAT CIT HAS NOT APPLIED HIS OWN MIND AND MERELY APPROVED T HE PROPOSAL OF THE ASSESSING OFFICER. HE FURTHER CONTEN DED [ITA 716/IND/2014] [SMT. VINITA DEVI BAGRODIA, NAGDA] 8 THAT THE A.O. FAILED TO APPLY THE MIND WHICH IS APPAREN T FROM THE FACT THAT IN THE REASONS RECORDED BY THE A.O. , HE HAS STATED MISTAKE, SUCH MISTAKES PROPOSE NON-APPLICATIO N OF MIND BY THE A.O. AND ALSO BY APPROVING AUTHORITIES. 5. LD. D.R. OPPOSED THESE SUBMISSIONS OF THE ASSESSE E AND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT BEFORE LD. CI T(A), THE ASSESSEE HAD TAKEN A SPECIFIC GROUND NO.5 CHALLENGING TH E LEGALITY OF REOPENING OF ASSESSMENT AND THE LD. CIT(A) HAS DECIDED THE GROUND SO RAISED IN PARA-4.2 OF HIS ORDER AS UNDER: GROUND NO.5: THROUGH THIS GROUND THE APPELLANT HAS CHALLENGED THE ISSUING OF NOTICE U/S 148 OF THE I.T. ACT. THE ORI GINAL ASSESSMENT HAS BEEN PASSED ON 11.12.2008. IT CAME TO THE NOTI CE OF THE A.O. THAT INCOME MORE THAN 1 LAKHS HAS BEEN ESCAPED FROM THE ASSESSMENT. THEREFORE, NOTICE U/S 148 WAS ISSUED T O THE APPELLANT ON 29.12.2011. THE REASONS RECORDED FOR ISSUING TH E NOTICE HAS BEEN FURNISHED TO THE APPELLANT. SUBSEQUENTLY NOTI CES U/S 143(2) AND 142(1) WERE ISSUED. THE APPELLANT COMPLIED WIT H THE ABOVE [ITA 716/IND/2014] [SMT. VINITA DEVI BAGRODIA, NAGDA] 9 NOTICES. THE A.O. HAS FOLLOWED THE PROCEDURE FOR I SSUING THE NOTICE U/S 148 OF I.T. ACT THEREFORE, THE ACTION OF THE A. O. JUSTIFIABLE. THEREFORE, APPEAL ON THIS GROUND IS DISMISSED. 7. FROM THE ABOVE FINDING OF THE LD. CIT(A), IT IS E VIDENT THAT THE ORDER IS EX-FACIE NON-SPEAKING. THE LD. CIT( A) HAS NOT CONSIDERED THE OBJECTION OF THE ASSESSEE. DURIN G THE COURSE OF HEARING, LD. COUNSEL FOR THE ASSESSEE HAS T AKEN ADDITIONAL GROUND AGAINST THE REOPENING OF THE ASSESSMEN T. AFTER CONSIDERING THE TOTALITY OF THE FACTS, WE SET AS IDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE GROUND NO.1 AND ADDITIONAL GROUNDS 5, 6, 7 & 8 TO THE FILE OF THE LD. CIT(A) TO DECIDE THESE ISSUES AFRESH BY WAY OF SPEAKING ORDER. NEEDLESS TO SAY, THE LD. CIT(A) WOULD GIVE REASONABLE OPPORTUNITY TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 07. 03.2019. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 07/03/2019 VG/SPS [ITA 716/IND/2014] [SMT. VINITA DEVI BAGRODIA, NAGDA] 10 COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE