Income-tax Officer, V. Keshavsmurti Nagari Sahakari Patpedhi Ltd., Raigad

ITA 758/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7471 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 21-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Difference of opinion; Validity of assessment; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.758/PUN/2015 / ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD - 5, PANVEL, INCOME TAX OFFICE, 2 ND FLOOR, TRIFED TOWER, SECTOR 17, OPP. KHANDRA COLONY, NEW PANVEL 410206, DIST. RAIGAD. . APPELLANT V/S KESHAVMURTI NAGARI SAHAKARI PATPEDHI LTD., SHOP NO.1G/F, ANPURNA NIWAS, SHIVAJI ROAD, TALUKA PANVEL, DIST. RAIGAD 41026. PAN : AAEHK2033B. RESPONDENT !. / CO NO.29/PUN/2017 / ASSESSMENT YEAR : 2006-07 KESHAVMURTI NAGARI SAHAKARI PATPEDHI LTD., SHOP NO.1G/F, ANPURNA NIWAS, SHIVAJI ROAD, TALUKA PANVEL, DIST. RAIGAD 41026. PAN : AAEHK2033B. . RESPONDENT V/S INCOME TAX OFFICER, WARD - 5, PANVEL, INCOME TAX OFFICE, 2 ND FLOOR, TRIFED TOWER, SECTOR 17, OPP. KHANDRA COLONY, NEW PANVEL 410206, DIST. RAIGAD. . APPELLANT ASSESSEE BY : SHRI NIKHIL PATHAK. REVENUE BY : SHRI MUKESH JHA. / DATE OF HEARING : 13.06.2017 / DATE OF PRONOUNCEMENT: 11.09.2017 2 / ORDER PER ANIL CHATURVEDI, AM : 1. THE PRESENT APPEAL FILED BY THE REVENUE AND THE C.O. FILE D BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSIO NER OF INCOME TAX (A)-2, THANE DT.13.02.2015 FOR THE ASSESSMENT YEAR 2006-07. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER:- 2.1 ASSESSEE IS A CO-OPERATIVE SOCIETY STATED TO BE ENG AGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2006-07 ON 31.10.2006 DECLARING TOTAL INCOME AT RS.NIL. THE ASSESSMENT WAS INITIALLY FRAMED U/S 143(3) OF THE ACT ON 31.12.2008 AND THE TOTAL INCOME WAS ASSESSED AT RS.1,00,000/-. THEREAFTER, IT WAS NOTICED BY AO THAT ASSES SEE HAD RECEIVED INTEREST INCOME OF RS.32,12,949/- FROM INVESTMENTS ON WHICH DEDUCTION U/S 80P(2) WAS CLAIMED AND ALLOWED TO ASSE SSEE. ACCORDING TO AO, THE DEDUCTION U/S 80P WAS NOT ALLOWABLE ON INTEREST INCOME IN VIEW OF THE DECISION OF HONBLE APEX CO URT IN THE CASE OF TOTAGARS CO-OPERATIVE SOCIETY (2010) 322 ITR 383 (SC). AO THEREFORE HELD THAT THERE WAS ESCAPEMENT OF INCOME. HE A CCORDINGLY ISSUED NOTICE U/S 148 OF THE ACT ON 28.03.2013 AND SERVE D IT ON THE ASSESSEE. THEREAFTER RE-ASSESSMENT ORDER WAS FRAMED U /S 143(3) R.W.S 147 OF THE ACT VIDE ORDER DT.31.01.2014 AND THE TOT AL INCOME WAS DETERMINED AT RS.71,37,390/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORD ER DATED 3 13.2.2015 (IN APPEAL NO.291-THN/2013-2014) GRANTED SUBSTAN TIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A ), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE C I RCUMSTANCES OF THE CASE , THE C I T(A) HAS ERRED IN ALLOWING DEDUCTION U/S. 80P(2)(A) OF THE I . T . ACT , 1961 EVEN THOUGH THE INTEREST INCOME EARNED BY THE ASSESSEE I S BY WAY OF INTEREST OR DIVIDENDS DERIVED FROM ITS INVESTMENTS WITH OTHER CO- OPERATIVE BANK AND IS NOT DERIVED FROM CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO I TS MEMBERS AS PROV I DED U/S . 80P(2)(A)(I) OF THE I . T. ACT , 1961. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE DECISION OF CIT(A) TO ALLOW DEDUCTION U/S . 80P(2)(A) OF THE I . T . ACT , 1961 IS CONTRARY TO THE DECISION OF THE HON ' BLE SUPREME COURT IN THE CASE OF TOTGAR ' S CO- OPERATIVE SALES SOCIETY LTD. WHEREIN IT WAS HELD TH AT INTEREST ON FUNDS WHICH ARE NOT REQUIRED FOR BUSINESS PURPOSES AT THE GIVEN POINT OF TIME FALLS IN THE CATEGORY OF 'OTHER INCOM E '. 3. ASSESSEE HAS ALSO FILED CROSS-OBJECTION. 4. ON THE DATE OF HEARING, LD.A.R SUBMITTED THAT HE WISH TO WITHDRAW THE CROSS-OBJECTION BUT HOWEVER SUBMITTED THA T ASSESSEE WOULD LIKE TO TAKE ALTERNATE PLEA UNDER RULE 27 OF THE INC OME TAX (APPELLATE TRIBUNAL) RULES, AND THE ALTERNATE PLEA READS AS UNDER : - 1. THE RESPONDENT SUBMITS THAT THE REOPENING U/S 1 48 IS INVALID IN LAW SINCE THE NOTICE U/S 148 WAS ISSUED AFTER 4 YEA RS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND SINCE THE ORIGI NAL ASSESSMENT WAS COMPLETED U/S 143(3) AND THERE BEING NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY THE MATERI AL FACTS, THE REOPENING IS BAD IN LAW AND CONSEQUENTLY, THE REASS ESSMENT ORDER PASSED U/S 147 BE DECLARED NULL AND VOID. 2. THE RESPONDENT FURTHER SUBMITS THAT THE INTEREST OF INCOME OF RS.69,19,248/- WHICH IS RECEIVED FROM COOPERATIVE B ANKS / COOPERATIVE SOCIETIES IS ALSO ELIGIBLE FOR DEDUCTIO N U/S 80P(2)(D). 5. WITH RESPECT TO THE ALTERNATE PLEA, HE SUBMITTED UNDE R RULE 27 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES 1963 (ITAT R ULES) ASSESSEE AS A RESPONDENT CAN SUPPORT THE ORDER OF CI T(A) ON ANY OTHER GROUND. HE SUBMITTED THAT RULE 27 OF THE ITAT RULE S PERMITS 4 THE ASSESSEE TO SUPPORT THE ORDER OF LD.CIT(A) ON ANY GROUNDS THAT HAVE BEEN DECIDED AGAINST THE ASSESSEE EVEN THOUGH TH E ASSESSEE HAS NOT APPEALED AGAINST IT. HE FURTHER SUBMITTED THAT A SSESSEE IS ENTITLED TO RAISE A NEW GROUND OF LAW AS IT DOES NOT NECE SSITATE ANY OTHER EVIDENCE TO BE RECORDED IN THE NATURE OF WHICH WO ULD NOT ONLY BE A DEFENCE TO THE APPEAL ITSELF BUT MAY ALSO AFFECT THE VALIDITY OF THE ENTIRE ASSESSMENT AND FOR THIS PROPOSITION RELIANCE WA S PLACED ON THE DECISION IN THE CASE OF B.R. BAMASI VS. CIT REPORTED IN (1973) 83 ITR 223 (BOM). 6. ON THE ISSUE OF RE-OPENING OF ASSESSMENT HE SUBMITTE D THAT THE ORIGINAL ASSESSMENT FOR A.Y. 2006-07 WAS FRAMED U/S 14 3(3) OF THE ACT BY AO VIDE ORDER DT.31.12.2008. NOTICE U/S 148 O F THE ACT WAS ISSUED AND SERVED ON THE ASSESSEE ON 28.03.2013, TH US NOTICE WAS ISSUED BEYOND A PERIOD OF 4 YEARS FROM THE END OF RE LEVANT ASSESSMENT YEAR. HE SUBMITTED THAT TO ASSUME JURISDICTIO N U/S 147 OF THE ACT AND TO REOPEN THE ASSESSMENT BEYOND THE P ERIOD OF 4 YEARS AS PER PROVISO TO SEC.148 OF THE ACT, THE AO ACQ UIRES JURISDICTION TO ISSUE NOTICE FOR RE-OPENING ONLY ON THE SA TISFACTION OF THE FOLLOWING TWO CONDITIONS : A). FAILURE ON THE PART OF ASSESSEE TO MAKE A FULL AND TRU E DISCLOSURE NECESSARY FOR ITS ASSESSMENT; AND B) SUCH FAILURE TO MAKE A FULL AND TRUE DISCLOSURE LEADS TO A REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED. 5 BOTH THE ABOVE CONDITIONS ARE CONDITIONS PRECEDENT AND MUST BE SATISFIED SIMULTANEOUSLY BEFORE THE AO CAN ASSUME JURISDICT ION TO REOPEN ASSESSMENT BEYOND 4 YEARS FROM THE END OF THE ASSESSMENT YEAR. HE FURTHER SUBMITTED THAT DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, ASSESSEE HAD FURNISHED THE COPY OF THE PROFIT AND LOSS ACCOUNT WHICH HAD THE DETAILS OF VARIOUS INCOME RECEIVED BY THE ASSESSEE. HE POINTED TO THE COPY OF THE PROFIT AND LOSS ACCOUNT (INCLUDING THE TRANSLATED ENGLISH COPY OF PROFIT AND LOSS ACC OUNT) AND FROM IT POINTED TO THE BREAKUP OF VARIOUS TYPES OF I NTEREST RECEIVED BY THE ASSESSEE. HE SUBMITTED THAT THE COPY OF THE PROFIT AND LOSS ACCOUNT PLACED IN THE PAPER BOOK REVEALS THAT THE ASSESSEE HAD FURNISHED DETAILS OF INTEREST RECEIVED ON VAR IOUS TYPES OF LOANS, INTEREST RECEIVED ON INVESTMENTS FROM VARIOUS SOU RCES, DETAILS OF OTHER INCOME AND INTEREST ON INCOME RECEIVABLE B Y IT. LD.A.R. ALSO POINTED TO PAGE 35 OF THE PAPER BOOK, WHICH CO NTAINED THE DETAILS OF INTEREST RECEIVED FROM VARIOUS BANKS AND WH ICH WAS FURNISHED BEFORE THE AO. HE THEREFORE SUBMITTED THAT THE REOPENING IS ONLY ON ACCOUNT OF CHANGE OF OPINION WHICH IS NOT PERMIS SIBLE IN LAW. HE FURTHER SUBMITTED THAT WHILE DECIDING THE ISSUE ON M ERITS, LD.CIT(A) HAS NOTED THAT ASSESSEE DID NOT PRESS THE GR OUND OF CHALLENGING THE RE-OPENING. HE SUBMITTED THAT THE RECORDIN G OF SUCH FACT BY LD CIT(A) IS INCORRECT AS NO SUCH CONCESSION WAS GIVEN ON BEHALF OF ASSESSEE AND TO SUPPORT HIS AFORESAID CONTENTIO N HE FILED THE SWORN AFFIDAVIT OF THE C.A. WHO APPEARED BEFORE LD.CIT(A ) WHEREIN IT IS STATED THAT HE HAD NEITHER MADE A WRITTEN SUBMISSION OR AVERMENT STATING THAT THE DEDUCTION U/S 80P IF ALLOWED ON MERITS , THE GROUND CHALLENGING VALIDITY OF REASSESSMENT WOULD NOT B E 6 PRESSED. HE THEREFORE SUBMITTED THAT IN THE PRESENT C ASE, THE REQUIREMENT FOR REOPENING WAS NOT FULFILLED AND THEREFORE TH E REOPENING IS BAD AND NEEDS TO BE SET ASIDE. LD.D.R. ON TH E OTHER HAND, SUPPORTED THE ORDER OF AO AND LD.CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS WITH RESPECT TO TH E ALTERNATE PLEA OF ASSESSEE. BEFORE US, IN THE ALTERNATE P LEA UNDER RULE 27 OF ITAT RULES, ASSESSEE HAS CHALLENGED THE ASSES SMENT ORDER FRAMED U/S 143(3) R.W.S. 147 OF THE ACT ON THE GROU ND THAT THE NOTICE U/S 148 OF THE ACT WAS ISSUED AFTER 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. IT IS LD.A.R.S SUBMISSION THA T THE NEW GROUND RAISED DOES NOT NECESSITATE ANY OTHER EVIDENCE TO BE RECORDED, AND IT AFFECTS THE VALIDITY OF ASSESSMENT. WE FIRST PROCEED TO DECIDE ON THE ISSUE OF RAISING OF GROUND UNDER RULE 27 OF THE ITAT RULES. READING OF RULE 27 SHOWS THAT A RESPONDENT IS ENTITLED TO SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GR OUNDS DECIDED AGAINST THE RESPONDENT, EVEN THOUGH THE RESPON DENT MAY NOT HAVE APPEALED AGAINST SUCH AN ORDER. IT WOULD TH EREFORE MEAN THAT A PERSON MAY NOT BE AGGRIEVED BY AN ORDER OF LD.C IT(A) AND THEREFORE MAY NOT HAVE FILED AN APPEAL AGAINST SUCH ORDE R BUT AS PER THE PROVISIONS OF RULE 27 OF INCOME TAX (APPELLATE TRIBU NAL) RULES, HE IS FREE TO DEFEND THE ORDER BEFORE THE TRIBUNAL ON ALL GROUNDS INCLUDING THE GROUND WHICH MAY HAVE BEEN HELD AG AINST HIM BY LD.CIT(A) WHOSE ORDER IS OTHERWISE IN HIS FAVOUR. WE FURTHER FIND THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF B.R. BAM ASI (SUPRA) ON THE ISSUE OF ASSESSEE RAISING A NEW GROUND HA S HELD AS UNDER: 7 (II) THAT THE ASSESSEE WOULD BE ENTITLED TO RAISE A NEW GROUND, PROVIDED IT IS A GROUND OF LAW AND DOES NOT NECESSI TATE ANY OTHER EVIDENCE TO BE RECORDED, THE NATURE OF WHICH WOULD NOT ONLY BE A DEFENCE TO THE APPEAL ITSELF, BUT MAY ALSO AFFECT T HE VALIDITY OF THE ENTIRE ASSESSMENT PROCEEDINGS. IF THE GROUND SUCCE EDS, THE ONLY RESULT WOULD BE THAT THE APPEAL WOULD FAIL. THE AC CEPTANCE OF THE GROUND WOULD SHOW THAT THE ENTIRE ASSESSMENT PROCEE DINGS WERE INVALID, BUT YET THE TRIBUNAL WHICH HEARS THE APPEA L WOULD HAVE NO POWER TO DISTURB OR TO SET ASIDE THE ORDER IN FAVOU R OF THE APPELLANT. THE ORDER WOULD STAND AND WOULD HAVE FULL EFFECT IN SO FAR AS IT IS AGAINST THE RESPONDENT. THE GROUND WOULD SERVE ONL Y AS A WEAPON OF DEFENCE AGAINST THE APPEAL. HENCE, THE REFUSAL OF THE TRIBUNAL TO ALLOW THE ASSESSEE TO CHALLENGE FOR THE FIRST TIME BEFORE IT THE VALIDITY OF THE NOTICE AND ASSESSMENT UNDER SECTION 34 WHILE CONSIDERING THE APPEAL FILED BY THE DEPARTMENT AGAINST THE ORDER OF THE APPELLATE ASSISTANT COMMISSIONER WAS NOT IN ACCORDANCE WITH L AW. 8. BEFORE US, REVENUE HAS NOT PLACED ANY CONTRARY BINDING DECISION IN ITS SUPPORT. IN VIEW OF THE FOREGOING AND RELYIN G ON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF BAMASI (SUPRA ) WE ADMIT THE GROUND AND WE FIRST PROCEED TO ADJUDICATE TH E ISSUE OF RE- OPENING OF ASSESSMENT AS THE ISSUE BEING A LEGAL ISSUE. 9. IT IS AN UNDISPUTED FACT THAT IN THE PRESENT CASE ORIG INALLY THE ASSESSMENT FOR AY 2006-07 WAS FRAMED U/S 143(3) OF THE A CT. THE NOTICE FOR REOPENING HAS BEEN ISSUED AND SERVED ON THE ASSESSEE ON 28.3.2013 MEANING THEREBY THAT THE NOTICE WAS ISSUED BEY OND A PERIOD OF 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YE AR. FOR ASSUMING JURISDICTION U/S 147 OF THE ACT AND TO REOPEN T HE ASSESSMENT BEYOND A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, AS PER THE PROVISO TO S. 148 OF THE AC T, THE AO ACQUIRES JURISDICTION ONLY ON THE SATISFACTION OF TWO CONDIT IONS NAMELY FIRSTLY FAILURE OF THE PART OF THE ASSESSEE TO MAKE A FULL AND TRUE DISCLOSURE NECESSARY FOR THE ASSESSMENT AND SECON DLY SUCH FAILURE TO MAKE A FULL AND TRUE DISCLOSURE LEADS TO A REASO N TO 8 BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT. BOTH THE AFORESAID CONDITIONS ARE CONDITIONS PRECEDENT A ND HAVE TO BE SATISFIED SIMULTANEOUSLY TO CONFER JURISDICTION TO AO TO REOPEN THE ASSESSMENT. FROM THE REASONS FOR REOPENING THE ASS ESSMENT DT.20.12.2013, PLACED AT PAGE 1 OF THE PAPER BOOK, IT IS S EEN THAT THE CASE OF REVENUE IS THAT INTEREST ON INVESTMENT AMOU NTING TO RS.12,76,938/- WAS CLAIMED AS DEDUCTION U/S 80P AND WAS A LSO ALLOWED THOUGH IT WAS NOT ALLOWABLE AND THAT COMPLETE DETA ILS AS WELL AS BREAKUP WITH REGARD TO INCOME WERE NOT FURNISHED BY THE ASSESSEE AND THUS THERE WAS FAILURE ON THE PART OF ASS ESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS RELEVANT FOR THE ASSESSMENT. ON THE BASIS OF DOCUMENTS PLACED BY THE AS SESSEE IN THE PAPER BOOK IT IS SEEN THAT DURING THE COURSE OF TH E ORIGINAL ASSESSMENT PROCEEDINGS BEFORE AO ASSESSEE HAD FURNISHED THE DETAILS OF INCOME WITH THEIR BREAKUP AND THE SAME WERE ALS O CONSIDERED BY HIM BEFORE ALLOWING THE DEDUCTION U/S 80P TO THE ASSESSEE. IT CAN THUS BE CONCLUDED THAT AO HAD FRAMED AN OPINION DURING THE COURSE OF PROCEEDINGS U/S 143(3) OF THE ACT AN D BY INITIATION OF THE REASSESSMENT PROCEEDINGS, THE AO PROPOSE S TO TAKE A DIFFERENT VIEW THAN THAT ALREADY TAKEN EARLIER WHILE FRAMING THE ORIGINAL ASSESSMENT. IT IS A SETTLED LAW THAT ASSESSMENT CANNOT BE RE-OPENED ON ACCOUNT OF CHANGE OF OPINION. CONSIDERING TH E TOTALITY OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT REASSESSME NT PROCEEDINGS INITIATED BY THE AO WAS ON ACCOUNT OF CHANG E OF OPINION AND IS THEREFORE WITHOUT JURISDICTION. WE THEREFOR E SET ASIDE THE REASSESSMENT FRAMED BY THE AO. SINCE THE GROU NDS OF ASSESSEE RAISED VIDE APPLICATION U/S RULE 27 OF THE INCOME TAX 9 (APPELLATE TRIBUNAL) RULES HEREIN ABOVE HAS BEEN DECIDED IN FA VOUR OF ASSESSEE BY HOLDING THE REASSESSMENT PROCEEDING TO BE INVALID, GROUNDS RAISED BY THE REVENUE ON MERITS ARE RENDERE D AS ACADEMIC AND THEREFORE REQUIRES NO ADJUDICATION AND THEREFORE DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED AND THE CROSS-OBJECTION FILED BY THE ASSESSEE IS DISMIS SED AS WITHDRAWN. ORDER PRONOUNCED ON 11 TH DAY OF SEPTEMBER, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) $ / JUDICIAL MEMBER %$ / ACCOUNTANT MEMBER PUNE; DATED : 11 TH SEPTEMBER, 2017. YAMINI &'()*)' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT 3. 4. 5. 6. CIT(A), PUNE-10. CIT(EXEMPTIONS), PUNE RANGE. '#$!% %&',)! !&' , / DR, ITAT, A PUNE; $,-./ GUARD FILE. / BY ORDER , ! // / TRUE COPY / / // // TRUE COPY // / 01%2&3 / SR. PRIVATE SECRETARY )! !&' , / ITAT, PUNE.