ACIT 8(3), MUMBAI V. RAMESH DUNGARMAL TAINWALA, MUMBAI

ITA 7195/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87924 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-01-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 04-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Assessee Lawyers: AJAY R SINGH
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

, , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI , , ! ' BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO.7195/MUM/2012 #$ #$ #$ #$ %$ %$ %$ %$ / ASSESSMENT YEAR: 2004-05 ASST. COMMISSIONER OF INCOME TAX-8(3), ROOM NO.217, AAYKAR BHAVAN, M.K. MARG, MUMBAI-400020 VS. M/S RAMESH D UNGARMAL TAINWALA, 402, ACKRUTI STAR CENTRAL ROAD, MIDC, ANDHERI-EAST, MUMBAI-400093 ( ! / REVENUE) ( &'() /RESPONDENT) P.A. NUMBER : AAAPT9296K ! * ** * + + + + /REVENUE BY : SHRI AKHILENDRA YADAV &'() * ** * + + + + /RESPONDENT BY SHRI AJAY R. SINGH # * , / DATE OF HEARING : 01/01/2015 -.% * , / DATE OF PRONOUNCEMENT : 07/01/2015 O R D E R PER JOGINDER SINGH, JM: THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 06/09/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, ON THE GROUND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN QUASHING THE REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT MERELY STATING THAT THERE WAS CHANGE OF OP INION WITHOUT APPRECIATING THAT THE ASSESSMENT FOR ASSESS MENT YEAR 2004-05, UNDER CONSIDERATION WAS REOPENED ON THE BA SIS OF ESCAPEMENT OF INCOME TAXABLE AS PER SECTION 2(22)(E ) AND 2 M/S RAMESH D. TAINWALA . SECTION 23(1)(A) OF THE ACT WHICH WAS DETECTED DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS OF ASSESSMENT YEAR 2008- 09. 2. AT THE TIME OF HEARING, SHRI AKHILENDRA YADAV, L D. DR FOR THE REVENUE DEFENDED THE CONCLUSION ARRIVED AT IN T HE ASSESSMENT ORDER BY SUBMITTING THAT THE REASSESSMEN T PROCEEDINGS U/S 147 OF THE ACT WERE JUSTIFIABLY INI TIATED BY THE ASSESSING OFFICER AND THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) WRONGLY QUASHED THE SAME MERELY BY SAYING THAT THERE WAS CHANGE OF OPINION. IT WAS ALSO CONTENDE D THAT REOPENING WAS MADE AS IT WAS FOUND THAT THERE WAS ESCAPEMENT OF INCOME TAXABLE AS PER SECTION 2(22)(E ) AND SECTION 23(1)(A) OF THE ACT, WHICH WAS DETECTED DUR ING ASSESSMENT OF ASSESSMENT YEAR 2008-09. 2.1. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASS ESSEE, SHRI AJAY R. SINGH, DEFENDED THE CONCLUSION ARRIVED AT B Y THE LD. COMMISSIONER OF INCOME TAX (APPEALS). OUR ATTENTIO N WAS INVITED TO PAGE 16 OF THE PAPER BOOK CONTAINING REA SONS SO RECORDED FOR REOPENING AND ALSO PAGE 14 OF THE PAPE R BOOK WHICH IS THE COPY OF THE NOTICE DATED 02/03/2011 IS SUED U/S 148 OF THE ACT. THE CRUX OF THE ARGUMENT IS THAT T HE NOTICE WAS ISSUED BEYOND THE PRESCRIBED LIMIT OF FOUR YEAR S AND THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BR IEF, ARE THAT THE ASSESSEE, AN INDIVIDUAL, DECLARED TOTAL INCOME OF RS.1,51,28,790/- IN HIS RETURN FILED ON 06/08/2014. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND COMPR EHENSIVE 3 M/S RAMESH D. TAINWALA . DETAILS/DOCUMENTS INCLUDING COPY OF AGREEMENTS WERE CALLED FOR BY THE LD. ASSESSING OFFICER IN SUPPORT OF THE CLAIMED RETURNED INCOME. THE ASSESSEE PROVIDED THE NECESSA RY DETAILS/INFORMATION CALLED FOR BY THE ASSESSING OFF ICER AND THEREAFTER ASSESSMENT ORDER DATED 27/07/2006 WAS PA SSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT), ACCEPTING THE RETURNED INCOME. NOTICE U/S 148 OF T HE ACT DATED 02 ND MARCH 2011 WAS ISSUED TO THE ASSESSEE AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. ON 08 TH MARCH, 2011, THE ASSESSEE REQUESTED FOR REASONS RECORDED. AFTER A GAP OF OVER 10 WEEKS, THE REASON S RECORDED (DATED 12/01/2011) WERE PROVIDED TO THE ASSESSEE ON 26/05/2011, I.E. AFTER SIX YEARS FROM THE END OF TH E RELEVANT ASSESSMENT YEAR. THE ASSESSEE OBJECTED VIDE COMMUN ICATION DATED 29/06/2011. ON 8 TH JULY, 2011, THE ASSESSEE CHALLENGED THE VALIDITY OF NOTICE ISSUED U/S 148 OF THE ACT ON THE GROUND OF LIMITATIONS. THE ASSESSING OFFICER D ISMISSED THE OBJECTIONS OF THE ASSESSEE ON 15/07/2011. ON 09 TH AUGUST, 2011, THE ASSESSEE AGAIN INTIMATED THE ASSESSING OF FICER THAT THE OBJECTIONS RAISED FOR REOPENING HAVE NOT BEEN C ONSIDERED. THE ASSESSING OFFICER WAS REQUESTED TO LOOK INTO TH E MATTER AND FURTHER REQUESTED TO CONSIDER THE OBJECTIONS RA ISED BY THE ASSESSEE ON 08/07/2011. 2.3. NOW QUESTION ARISES WHETHER REOPENING OF ASSES SMENT BEYOND PRESCRIBED LIMIT IS VALID IN THE EYES OF LAW . UNDER THE UNDISPUTED FACT, NARRATED HEREINABOVE, WE FIND THAT NOTICE U/S 148 OF THE ACT, FOR, REOPENING OF ASSESSMENT WAS IS SUED ON 02/03/2011AGAINST THE ASSESSMENT ORDER FRAMED U/S 1 43 OF THE ACT, DATED 27/07/2006. ISSUANCE OF NOTICE, WIT HIN PERIOD 4 M/S RAMESH D. TAINWALA . OF LIMITATION, GIVES JURISDICTION TO THE ASSESSING OFFICER TO PROCEED TO MAKE REASSESSMENT. FOR THIS PROPOSITION, OUR VIEW FIND SUPPORT FROM HONBLE APEX COURT AS WAS HELD IN CIT VS MAJOR TIKKA KUSHWANT SINGH (1995) 212 ITR 650 (SC). RECORDING OF REASONS IS NOT IDLE FORMALITY BUT IT I S MANDATORY REQUIREMENT OF THE STATUTE CASTING A DUTY AND AN OB LIGATION ON THE ASSESSING OFFICER TO RECORD HIS REASONS FOR ISS UING A NOTICE FOR REOPENING THE ASSESSMENT AS WAS HELD IN EAST CO ST COMMERCIAL COMPANY LTD. VS ITO 128 ITR 326 (CAL.), CIT VS T.R. RAJAKUMARI 96 ITR 78 (MAD.), CIT VS THAKURLAL 132 ITR 398 (MP). 2.4. ON THE PLAIN READING OF SECTION 147 AND SECTIO N 149, IN VIEW OF PROVISO TO SECTION 147 OF THE ACT, NO ACTIO N CAN BE TAKEN U/S 147 BEYOND THE PERIOD OF FOUR YEARS, IF T HE CASE DOES NOT FALL WITHIN THE EXCEPTION OF THE PROVISO MENTIO NED IN THE PROVISO ITSELF, NAMELY, IF THERE IS NO CASE OF FAIL URE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS WHICH ARE NECESSARY FOR THE YEAR OF ASSESSMENT. IT IS PERTINENT TO MENTION HERE THAT WHERE THE CASE FALLS UNDER THE EXCEPTION TO PROVISO TO SECTION 147 AND ESCAPED INCOME EXCEED S THE PRESCRIBED LIMIT, NOTICE U/S 148 CAN BE ISSUED BEYO ND THE PERIOD OF FOUR YEARS BUT WITHIN SIX YEARS U/S 149(1 )(B) OF THE ACT. IN A CASE, WHERE THE ESCAPED INCOME IS LESS T HAN THE PRESCRIBED LIMIT, THE LIMITATION TO ISSUE THE NOTIC E U/S 148 OF THE ACT IS ONLY FOUR YEARS, EVEN IF THE CASE FALLS UNDER THE EXCEPTION OF PROVISO TO SECTION 147 OF THE ACT. T OTALITY OF FACTS CLEARLY INDICATES THAT THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT, ACCEPTING THE RETURNED INCOME, WAS PASSED ON 27/07/2006. IT IS NOT THE CASE OF THE REVENUE THAT THERE WAS 5 M/S RAMESH D. TAINWALA . ANY FAILURE ON THE PART OF THE ASSESSEE TO FURNISH TRUE FACTS/DETAILS RATHER THE ORIGINAL ASSESSMENT WAS FR AMED ON SCRUTINY OF COMPREHENSIVE DETAILS/DOCUMENTS INCLUDI NG COPY OF AGREEMENTS AS THE CASE OF THE ASSESSEE WAS SELEC TED FOR SCRUTINY. THE ASSESSEE PROVIDED ALL INFORMATION CA LLED FOR BY THE ASSESSING OFFICER AND THEREAFTER ASSESSMENT ORD ER WAS FRAMED U/S 143(3) OF THE ACT. IN VIEW OF THESE FAC TS, IN THE ABSENCE OF ANY ADVERSE MATERIAL BROUGHT ON RECORD B Y THE REVENUE, WE FIND THAT ISSUANCE OF NOTICE U/S 148 OF THE ACT DATED 02/03/2011 IS UNDISPUTEDLY BEYOND THE PRESCRI BED PERIOD, THEREFORE, THE REOPENING OF WELL REASONED A SSESSMENT DOES NOT STAND ON THE TOUCH SCALE OF PROVISIONS OF THE ACT ITSELF. IT IS NOT WORTHY THAT THE ASSESSEE EVEN VI DE COMMUNICATION DATED 08/07/2011 CHALLENGED THE VALID ITY OF THE NOTICE WHICH WAS ALSO REJECTED VIDE COMMUNICATI ON DATED 15/07/2011 CONSIDERING THE OBJECTIONS RAISED BY THE ASSESSEE. EVEN, THE ASSESSEE, VIDE COMMUNICATION DATED 09/08/ 2011 REQUESTED THE ASSESSING OFFICER THAT OBJECTIONS RAI SED BY THE ASSESSEE FOR REOPENING HAVE NOT BEEN CONSIDERED, TH E ASSESSING OFFICER SUMMARILY DISPOSED OF THE OBJECTI ONS WITHOUT ASSIGNING ANY VALID REASON VIDE ORDER DATED 15/07/2011. IN VIEW OF THESE FACTS AND THE PROVISI ONS OF THE ACT, WE FIND NO MERIT IN THE APPEAL OF THE REVENUE. THE RATIO LAID DOWN IN VIKRAM KOTHARI (HUF) VS STATE OF UP (20 11) 200 TAXMAN 152 (MAG.), R.K. UPADHYAY VS SHANABHAI P. PA TEL 166 ITR 163 (SC), CIT VS SHEO KUMARI DEVI (1986) 157 IT R 13 (PAT.)(FB), JAI HANUMAN TRADING COMPANY (P.) LTD. V S CIT 110 ITR 36 (P & H)(FB), CIT VS K.G. SINGHANIA 209 TAXMA N 45 (P & H), AND C.B. RICHARDS ELLIS MAURITUS LTD. VS ASST. DIT (2012) 21 TAXMAN.COM /208 TAXMAN 322(DEL.) SUPPORTS OUR VI EW. AS 6 M/S RAMESH D. TAINWALA . MENTIONED EARLIER, THE NOTICE U/S 148 OF THE ACT DA TED 02/03/2011 WAS RECEIVED BY THE ASSESSEE AFTER EXPIR Y OF FOUR YEARS, WHICH WAS ALSO NOT ACCOMPANIED WITH REASONS RECORDED FOR REOPENING THE ASSESSMENT. THE ASSESSEE REQUEST ED, VIDE LETTER DATED 08/03/2011 TO PROVIDE THE REASONS SO R ECORDED FOR REOPENING THE ASSESSMENT. THE ASSESSEE RECEIVED TH E REASONS RECORDED BY THE ASSESSING OFFICER MERELY ON 26/05/2 011 (I.E. AFTER THE EXPIRY OF SIX YEARS) FROM THE END OF THE ASSESSMENT YEAR UNDER CONSIDERATION, CONSEQUENTLY, AS PER THE PROVISIONS OF SECTION 149 (1) OF THE ACT, THE NOTICE ISSUED U/ S 148 OF THE ACT FOR REOPENING THE ASSESSMENT OF THE YEAR UNDER CONSIDERATION IS NOT VALID. WE MENTION HERE THAT TH E LD. COMMISSIONER OF INCOME TAX (APPEALS) GRANTED RELIEF TO THE ASSESSEE ON THE BASIS OF MERE CHANGE OF OPINION BY THE ASSESSING OFFICER. HOWEVER, SINCE THE NOTICE OF RE OPENING ISSUED U/S 148 OF THE ACT ITSELF IS BEYOND THE PRES CRIBED LIMIT, THEREFORE, WE ARE NOT GOING INTO THE ISSUE OF CHANG E OF OPINION. THE APPEAL OF THE REVENUE IS DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 01/01/2015. SD/- SD/- (RAJENDRA) ( JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED - 07/01/2015 F{X~{T? P.S/. # . . 7 M/S RAMESH D. TAINWALA . / / / / * ** * &,0 &,0 &,0 &,0 10%, 10%, 10%, 10%, / COPY OF THE ORDER FORWARDED TO : 1. () / THE APPELLANT 2. &'() / THE RESPONDENT. 3. 2 ( ) / THE CIT(A)- 4. 2 / CIT 5. 034 &,# , , / DR, ITAT, MUMBAI 6. 4$ 5 / GUARD FILE. /# /# /# /# / BY ORDER, '0, &, //TRUE COPY// 6 66 6 / 7 7 7 7 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI