DDIT (E)-1(1), MUMBAI V. MATUNGA GYMKHANA, MUMBAI

ITA 7375/MUM/2011

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2562 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 30-04-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 03-11-2011
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Tangible material; Difference of opinion; Change of opinion; Capital expenditure
• Section: 143(3); 147; 148; 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI RAJENDRA , ACCOUNTAN T MEMBER AND SHRI SAKTIJIT DEY , JUDICIAL MEMBER . / ITA NO. 7375 /MUM./ 2011 ( / ASSESSMENT YEAR : 20 0 4 05 ) ASSTT. DIRECTOR OF INCOME TAX I(1) ROOM NO.504, PIRAMAL CHAMBERS 5 TH FLOOR, PAREL, MUMBAI .. / APPELLANT V/S MATUNGA GYMKHANA LAKHAMSEY NAPOO ROAD MATUNGA, MUMBAI 400 018 PAN AAATM1035F .... / RESPONDENT / REVENUE BY : MAURYA PRATAP / ASSESSEE BY : SHRI PARESH SHAPARIA / DATE OF HEARING 07 . 10 .2015 / DATE OF ORDER 30.10.2015 / ORDER , / PER SAKTIJIT DEY, J.M. THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 12 TH AUGUST 2011, PASSED BY THE LEARNED COMMISSIONER (APPEALS ) I, MUMBAI, FOR THE ASSESSMENT YEAR 2004 05. THE DEPARTMENT IS MATUNGA GYMKHANA 2 BASICALLY AGGRIEVED WITH THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) IN HOLDING THE RE OPENING OF ASSESSMENT TO BE INVALID AND AS A CONSEQUENCE ANNULLING THE ASSESSMENT. 2. BRIEFLY THE FA CTS ARE, THE ASSESSEE, FOR THE IMPUGNED ASSESSMENT YEAR, FILED ITS RETURN OF INCOME ON 30 TH OCTOBER 2004, DECLARING NIL INCOME. AS IT APPEARS, ASSESSMENT IN THE CASE OF THE ASSESSEE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 28TH DECEMBER 2006, DETER MINING THE TOTAL INCOME OF ` 46,57,130, BY DISALLOWING ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT. SUBSEQUENTLY, THE ASSESSMENT IN THE CASE OF ASSESSEE WAS RE OPENED AFTER EXPIR Y OF A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSM ENT YEAR, ON THE REASON THAT ASSESSEE HAS CONTRAVENED THE PROVISIONS OF SECTION 13(1)(C), 13(3) AND SECTION 11(4), AS A RESULT OF WHICH CAPITAL EXPENDITURE OF ` 29,51,353, HAS TO BE DISALLOWED. RE ASSESSMENT IN THE CASE OF ASSESSEE WAS ULTIMATELY COMPLETED VIDE ORDER DATED 24 TH DECEMBER 2010, BY MAKING ADDITION OF AN AMOUNT OF ` 11,48,170, BEING THE SURPLUS FROM THE SPORT DEPARTMENT. A SSESSEE CHALLENG ED THE ASSESSMENT ORDER SO PASSED IN AN APPEAL PREFERRED BEFORE THE LEARNED COMMISSIONER (APPEALS) BOTH ON T HE VALIDITY OF RE OPENING AS WELL AS ON THE MERITS OF THE ADDITIONS MADE. MATUNGA GYMKHANA 3 3. BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS SUBMITTED , NOT ONLY THE ASSESSEE HAS FURNISHED ALL MATERIAL INFORMATION IN THE RETURN OF INCOME BUT IN THE COURSE OF THE ORIGINAL ASSESS MENT PROCEEDINGS ALSO THEREFORE, THE RE OPENING OF ASSESSMENT ON THE VERY SAME SET OF FACTS AND MATERIALS WHICH WERE CONSIDERED AT THE TIME OF ORIGINAL ASSESSMENT AND THAT TOO AFTER EXPIR Y OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, WHEN THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS RELATING TO HIS ASSESSMENT , IS BAD IN LAW. HE FURTHER SUBMITTED , THE ORIGINAL ASSESSMENT ORDER PASSED DENYING ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 WAS SUBJECT ED TO APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AND LEARNED COMMISSIONER (APPEALS) HAS ALLOWED ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT BY DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. HE SUBMITTED , THE AFORESAID FACT WAS CONVENIE NTLY OV E R LOOKED BY THE ASSESSING OFFICER WHILE FRAMING THE RE ASSESSMENT. THE LEARNED COMMISSIONER (APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD, ANNULLED THE ASSESSMENT BY HOLDING THE INITIATIO N OF PROCEEDINGS UNDER SECTION 147 TO BE INVALID OBSERVING AS UNDER: I HAVE DULY CONSIDERED THE SUBMISSION OF THE APPELLANT'S AR AND I FIND THAT THE A O IS NOT JUSTIFIED IN REOPENING THE ASSESSMENT WITHOUT CONSIDERING THE CIT(A)'S ORDER DTD. 23. 01.2008 , WHEREIN THE CIT(A) HAS ALLOWED EXEMPTION U/S.11 AND DELETED THE ADDITIONS MADE BY THE A O . THE MATUNGA GYMKHANA 4 DEPARTMENT HAS NOT FILED 2 ND APPEAL BEFORE THE I.T.A.T. AS SUCH THE DECISION OF C IT(A) HAS BECOME FINAL. THE AO IS NOT EMPOWERED TO REOPEN THE SAME ASSESSMENT AFT ER EXPIRY OF FOUR YEARS WITHOUT POINTING OUT ANY FAILURE ON THE PART OF THE APPELLANT TO SHOW THAT ANY INFORMATION WHICH IS ESSENTIAL FOR COMPUTING THE TOTAL INCOME OF THE ASSESSEE HAS NOT BEEN FURNISHED. IN FACT, THE AO HAS SIMPLY DISALLOWED A SUM OF RS.1 1,48,170/ - WHICH ACCORDING TO HIM IS THE SURPLUS OF THE SPORTS DEPARTMENT OF THE APPELLANT. EVEN IF SOME SURPLUS HAS ARISEN FROM ANY OF THE ACTIVITIES OF THE ASSESSEE, THE SAME IS NOT TAXABLE AS THAT SURPLUS IS UTILIZED FOR THE OVER ALL OBJECT OF TRUST AND NOT FOR THE BENEFIT OF A PARTICULAR INDIVIDUAL. HENCE, THE AU IS NOT USTI LISED IN REOPENING THE ASSESSMENT AND DENYING EXEMPTION U/S. 11, STATING THAT THE TRUST'S ACTIVITIES ARE SUCH THAT THEY CONTRAVENE THE PROVISIONS OF SECTION 13(1)(C), 13(3) AND 11(4A ). NO SUCH EVIDENCE HAS BEEN MENTIONED IN THE REASSESSMENT ORDER DATED 24.12.2010. THE CASE LA' RELIED UPON B Y THE AU ARE MISPLACED AS THEY ARE NOT ON THE ISSUE INVOLVED. THE FACTS REMAINS THAT THERE IS NO FAILURE ON THE PART OF THE ASS TO DISCLOSE ALL THE FACTS NECESSARY FOR COMPUTING OF INCOME. THE A.O. IS NOT JUSTIFIED IN REOPENING THE ASSESSMENT U/S 147 AND REASSESSING THE INCOME AT ` 58,05,300. \ IN THE FACTS AND CIRCUMSTANCES OF THE CASE, I HAVE NO HESITATION THAT REOPENING OF ASSESSMENT U/S 148 IS BAD IN LAW. RELIANCE IS PLACED ON THE DECISION OF CIT V/S KELVINATOR OF INDIA (256 ITR 1) (DEL.) AND BOMBAY HIGH COURT DECISION IN THE CASE OF GERMAN REMEDIES LTD. V/S DCIT, 287 ITR 494) (BOM.). HENCE, THE ASSESSMENT ORDER U/S 143(3) R.W.S. 147 DATED 24.12.20 10 IS ANNULLED. THIS GROUND OF APPEAL IS ALLOWED. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE TO THE FACT THAT IN THE P RESENT CASE, THE ASSESSMENT IN CASE OF ASSESSEE WAS ORIGINALLY COMPLETED UNDER SECTION 143(3) OF THE ACT. THEREFORE, THE PROVISO TO SECTION 147 APPLIES. THERE IS ALSO NO DISPUTE TO THE FACT THAT RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT WAS DONE AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMEN T YEAR. MATUNGA GYMKHANA 5 THEREFORE, THE CONDITION PRECEDENT FOR RE OPENING OF ASSESSMENT AS PER PROVISO TO SECTION 147 IS, THERE MUST BE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS RELATING TO HIS ASSESSMENT. ON A PERUSAL OF THE REASO NS RECORDED FOR RE OPENING, WE DO NOT FIND ANY SUCH ALLEGATION MADE BY THE ASSESSING OFFICER WHICH SATISFIES THE CONDITION OF PROVISO TO SECTION 147. ON THE CONTRARY, AS IT APPEARS, THE RE OPENING OF ASSESSMENT IS ON THE BASIS OF FACTS AND MATERIAL WHICH A RE ALREADY DISCLOSED BY THE ASSESSEE EITHER IN THE RETURN OF INCOME OR DURING THE ORIGINAL ASSESSMENT AND ON THE BASIS OF WHICH THE ORIGINAL ASSESSMENT WAS MADE. NO NEW TANGIBLE MATERIAL HAS COME TO THE POSSESSION OF ASSESSING OFFICER TO FORM A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. IT IS ALSO PERTINENT TO MENTION HERE , IN THE APPEAL PREFERRED AGAINST THE ORIGINAL ASSESSMENT ORDER, THE LEARNED COMMISSIONER (APPEALS) HAS ACCEPTED ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT. IN THE AFORESAID FACTS AND CIRCUMSTANCES, THERE BEING NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT, THE RE OPENING OF ASSESSMENT ON A CHANGE OF OPINION, THAT TOO, AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR IS INVALID. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) IN ANNULLING THE ASSESSMENT. MATUNGA GYMKHANA 6 5. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N 30.10. 2015 S D/ - RAJENDRA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED : 30.10.2015 / COPY OF THE ORDER FORWARDED TO : (1) / THE ASSESSEE; (2) / TH E REVENUE; (3) ( ) / THE CIT(A); (4) / THE CIT, MUMBAI CITY CONCERNED; (5) , , / THE DR, ITAT, MUMBAI; (6) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI