ACIT, Coimbatore V. N.Purushothaman, Coimbatore

ITA 750/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8749 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 01-06-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 28-03-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: N V BALAJI
• Keywords: Reopening of assessment; Search and seizure
• Section: 143(3); 142(1); 133A; 148

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 750 /MDS/201 6 / ASSESSMENT YEAR :20 11 - 1 2 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1 , OOTY . VS. SHRI N. PURUSOTHAMAN, 9 - A, GANDHI NAGAR, KARAMADAI, COIMBATORE 104. [PAN: A HAPP2626G ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI A. V. SREEKANTH , J CIT / RESPONDENT BY : SHRI N.V. BALAJI, ADVOCATE / DATE OF HEARING : 0 1 . 0 6 .201 6 / DATE OF P RONOUNCEMENT : 11 . 0 8 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 3 , COIMBATORE DATED 31 . 12 .201 5 RELEVANT TO THE A SSESSMENT YEAR 20 11 - 1 2 . THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSMENT PASSED UNDER SECTION 143( 3 ) R.W.S. 147 OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] IS NOT VALID . 2. BRIEF FACTS OF T HE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND I.T.A. NO . 750 /M/ 1 6 2 ENGAGED IN THE BUSINESS OF REAL ESTATE AND HAS FILED HIS RETURN OF INCOME ON 28.05.2012 DECLARING AN INCOME OF .2,13,02,550/ - . A SURVEY WAS CONDUCTED IN THE CASE OF THE ASSESSEE UNDER SECTION 133A OF THE ACT ON 12.04.2011 . DURING THE COURSE OF SURVEY PROCEEDINGS, THE ASSESSEE HAS ADMITTED AN UNDISCLOSED INCOME OF .2.91 CRORES FOR THE ASSESSMENT YEAR 2011 - 12. HOWE VER, IN THE RETURN OF INCOME FILED, THE ASSESSEE S RETURNED INCOME WAS ONLY .2.14 CRORES. THEREFORE, THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 147 OF THE ACT AND NOTICE UNDER SECTION 148 OF THE ACT WAS SERVED ON THE ASSESSEE ON 22.072013. THEREA FTER, NOTICE UNDER SECTION 143(2) READ WITH SECTION 142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 07.10.2013 TO SUBMIT THE DETAILS OF COPY OF RETURN OF INCOME, COPY OF FORM 16A, DETAILS OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT ALONG WITH SCHEDULES, C OPY OF FORM 3CD/3CB REPORT AND BANK ACCOUNT STATEMENTS. IN RESPONSE THERETO, THE ASSESSEE SUBMITTED THE DETAILS AS CALLED FOR. ON VERIFYING THE DETAILS, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT DETERMINING THE TOTAL INCOME AT .11,90,48,907/ - AFTER MAKING VARIOUS ADDITIONS . 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND PRIMARILY CHALLENGED WITH REGARD TO REOPENING OF ASSESSMENT BESIDES CHALLENGING OTHER DISALLOWANCES. AFTER CONSIDERING THE PROVISIONS OF ACT AND ALSO BY CONSIDERING VARIOUS DECISIONS, THE LD. CIT(A) QUASHED THE I.T.A. NO . 750 /M/ 1 6 3 ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT. 4. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. DR HAS SUBMITTED THAT WHEN THE ASSESSING OFFICER WAS OF THE VIEW THAT THE MATERIALS AVAILABLE WITH HIM TO JUSTIFY THAT THERE IS INCOME ESCAPED ASSESSMENT UNDER SECTION 147 OF THE ACT, THEN, HE IS FREE TO RECORD REASONS FOR THE BELIEF AND PROCEED TO MAKE REASSESSMENT WITHOUT PROCEEDING TO MAKE A REGULAR ASSESSMENT UNDER SECTION 143(3) OF THE ACT. THEREFORE, THE LD. CIT(A) HAS NOT PROPERLY APPRECIATED THE FACT THAT AN ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT CANNOT BE TREATED AS BAD IN LAW JUST BECAUSE IT COULD H AVE PASSED UNDER SECTION 143(3) OF THE ACT ITSELF. THUS, HE PLEADED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE REVERTED AND THAT OF THE ASSESSING OFFICER IS RESTORED. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE SCRUTINY ASSESSMENT UNDER SECTION 143(1) OF THE ACT HAS NOT BEEN DONE IN THE PRESENT CASE. NO NOTICE UNDER SECTION 143(2) OF THE ACT HAS BEEN ISSUED PRIOR TO ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. THE NOTICE UNDER SECTION 143(2) OF THE ACT SHOULD HAVE BE EN ISSUED AND SERVED ON THE ASSESSEE WITHIN SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED. IN THIS CASE, THE FINANCIAL YEAR IN WHICH RETURN OF INCOME WAS FURNISHED IS 2012 - 13 AND NOTICE UNDER SECTION 143(2) OF THE ACT SHOUL D HAVE BEEN ISSUED ON OR BEFORE 30.09.2013. HOWEVER, IN THE PRESENT I.T.A. NO . 750 /M/ 1 6 4 CASE, THE NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 07.10.2013 MUCH LATER THAN SERVICE OF NOTICE UNDER SECTION 148 OF THE ACT ON 22.07.2013. THEREFORE, WHEN THE SCRUTINY ASSESSM ENT WAS NOT DONE, THEN, THE QUESTION OF REASSESSMENT UNDER SECTION 147 OF THE ACT DOES NOT ARISE. HE STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A) AND PLEADED THAT THE GROUND RAISED BY THE REVENUE SHOULD BE DISMISSED. 6. WE HAVE HEARD BOTH SIDES , PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. ADMITTEDLY, THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011 - 12 WAS FILED BY THE ASSESSEE ON 28.05.2012. IF THE ASSESSEE HAS FILED HIS RETURN OF INCOME UNDER NORMAL SITUAT ION, THEN THE ASSESSING OFFICER IS REQUIRED TO PROCESS THE RETURNED FILED BY THE ASSESSEE UNDER SECTION 143(1) OF THE ACT AND SUBSEQUENTLY NOTICE UNDER SECTION 143(2) OF THE ACT , WHICH IS MANDATORY, IS REQUIRED TO BE ISSUED FOR THE PURPOSE OF REASONS TO BE LIEVE THAT ANY CLAIM OF LOSS, EXEMPTION, DEDUCTION, ALLOWANCE OR RELIEF MADE IN THE RETURN IS INADMISSIBLE. THEREAFTER, IF THE ASSESSING OFFICER HAS REASONS TO BELIEVE THAT IF ANY INCOME HAS ESCAPED ASSESSMENT, THEN, HE IS REQUIRED TO SERVE NOTICE ON THE A SSESSEE UNDER SECTION 148 OF THE ACT. THIS IS WHAT THE ASSESSING OFFICER IS SUPPOSED TO DO IN NORMAL CASE. HOWEVER, IN THE PRESENT CASE IN HAND, A SURVEY OPERATION UNDER SECTION 133A OF THE ACT WAS UNDER TAKEN ON 12.04.2011 AND DURING THE COURSE OF SURVEY PROCEEDINGS, THE ASSESSEE HAS ADMITTED AN I.T.A. NO . 750 /M/ 1 6 5 UNDISCLOSED INCOME OF .2.91 CRORES FOR THE ASSESSMENT YEAR 2011 - 12. HOWEVER, IN THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAS DECLARED INCOME OF .2,13,02 ,550/ - ONLY . SINCE THERE IS HUGE DIFFERENCE BETWEEN THE INCOME DECLARED IN THE RETURN OF INCOME AND UNDISCLOSED INCOME ADMITTED BY THE ASSESSEE DURING THE COURSE OF SURVEY PROCEEDINGS, THE ASSESSING OFFICER CLEARLY FELT THAT THERE IS ESCAPEMENT OF INCOME F OR ASSESSMENT AND HE STRAIGHTAWAY PROCEEDED TO SERVE NOTICE UNDER SECTION 148 OF THE ACT. HAD THE ASSESSEE BEEN DECLARED THE INCOME AS ADMITTED DURING THE COURSE OF SURVEY PRO CEEDINGS, THE ASSESSING OFFICER IS NOT AT ALL REQUIRED TO DO ASSESSMENT UNDER SECTION 147 OF THE ACT. 7. THE CASE LAW MAINLY RELIED ON BY THE LD. CIT(A) IN THE CASE OF SUPER SPINNING MILLS LTD. V. ADDL. CIT [2010] 129 TTJ (CHENNAI)[TM] 305 HAS NO APPLIC ATION TO THE FACTS OF THE PRESENT CASE. IN THAT CASE, ADMITTEDLY, THERE WAS NO SEARCH AND SEIZURE OR SURVEY CONDUCTED BY THE DEPARTMENT AND THEREFORE, THE COORDINATE BENCH OF THE TRIBUNAL HAS GIVEN A SOLITARY FINDINGS THAT UNLESS THE RETURN FILED BY THE AS SESSEE IS SCRUTINISED BY THE ASSESSING OFFICER, HE CANNOT COME TO THE CONCLUSION OF ANY ESCAPEMENT OF INCOME AND MOREOVER, THE ASSESSING OFFICER CANNOT INITIATE PROCEEDINGS UNDER SECTION 147 WHEN THE TIME FOR ISSUANCE OF NOTICE UNDER SECTION 143(2) HAS NOT EXPIRED. BUT IN THE PRESENT CASE, THE ASSESSING OFFICER IS NOT REQUIRED TO I.T.A. NO . 750 /M/ 1 6 6 PROCEED TO SCRUTINIZE THE RETURN FILED BY THE ASSESSEE TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME SINCE THE ASSESSEE HAS ADMITTED LESS INCOME IN THE RETURN THAN W HAT WAS ADMITTED DURING THE COURSE OF SURVEY PROCEEDINGS UNDER SECTION 133A OF THE ACT. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, QUASHING THE ASSESSMENT PASSED UNDER SECTION 143(3) R.W.S.147 OF THE ACT BY THE LD. CIT(A) CANNOT BE SUSTAINED UNDER LAW. ACCOR DINGLY, WE RESTORE THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 147 OF THE ACT AND DIRECT THE LD. CIT(A) TO DECIDE THE GROUNDS RAISED BY THE ASSESSEE ON MERITS. 8 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALL OWED . ORDER PRONOUNCED ON THE 11 TH AUGUST , 20 16 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 11 . 0 8 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.