Housing Board Haryana, Panchkula V. DCIT, Panchkula

ITA 769/CHANDI/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8983 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 05-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 23-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Assessee Lawyers: B K NOHRIA
• Keywords: Audit objection; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Capital expenditure
• Section: 143(3); 147; 148; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 769/CHD/2015 ASSESSMENT YEAR : 2009-10 HOUSING BOARD HARYANA, VS THE DCIT, PLOT NO. C-15, PANCHKULA CIRCLE, AWAS BHAWAN, PANCHKULA. SECTOR 6, PANCHKULA. PAN: AAALH0022P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.K.NOHRIA RESPONDENT BY : SHRI RAVI SARANGAL DATE OF HEARING : 10.11.2016 DATE OF PRONOUNCEMENT : 11.11.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) PANCHKULA DATED 29.07.2015 FOR ASSESSMENT YEAR 2009-10. 2. THE FACTS OF THE CASE ARE THAT ASSESSEE FILED IT S RETURN OF INCOME ON 24.09.2009 DECLARING INCOME OF RS. 50,25,99,240/-. THE ASSESSING OFFICER PASSED THE ORIGINAL ASSESSMENT ORDER UNDER SECTION 143(3) OF T HE ACT VIDE ORDER DATED 30.11.2011 AT AN INCOME OF RS . 50,39,74,240/-. LATER ON, ASSESSING OFFICER FOUND THAT INCOME HAS ESCAPED ASSESSMENT, SO AFTER RECORDING 2 REASONS TO BELIEVE AS NOTED IN THE ASSESSMENT ORDER , THE ASSESSING OFFICER ISSUED NOTICE ON 26.07.2013. IN RESPONSE TO NOTICE UNDER SECTION 148, THE ASSESSEE FILED RETURN OF INCOME AT RS. 50,25,99,240/-. THE ASSESSE E ALSO FILED OBJECTIONS TO THE ISSUE OF NOTICE UNDER SECTION 148 WHICH HAVE BEEN DISPOSED OFF BY THE ASSESSING OFFICER. THE ASSESSING OFFICER RECORDED REASONS TO BELIEVE THAT ASSESSEE COMPANY HAD CLAIMED EXPENSES OF RS. 1,27,15,724/- ON ACCOUNT OF MAINTENANCE OF COLO NIES WHICH WAS ALLOWED BY HIS OFFICE, WHEREAS OUT OF THI S EXPENDITURE, AN AMOUNT OF RS. 1,25,84,381/- WAS INCURRED FOR CONSTRUCTION OF UNDERGROUND WATER STOR AGE TANK AND UP-GRADATION OF ROAD AND WATER DRAINAGE IN H.B.C. VIHAR, GURGAON. THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT EXPENDITURE WAS CAPITAL IN N ATURE AND INCOME HAS ESCAPED ASSESSMENT WITHIN THE MEANIN G OF SECTION 147 OF THE ACT. THE ASSESSING OFFICER A FTER ISSUING STATUTORY NOTICES AND CONSIDERING EXPLANATI ON OF THE ASSESSEE, COMPLETED THE ASSESSMENT UNDER SECTIO N 143(3) READ WITH SECTION 147 OF THE ACT ON 29.08.20 14 AT AN INCOME OF RS. 51,65,58,620/- AFTER MAKING DISALLOWANCE OF RS. 1,25,84,381/- UNDER SECTION 37 OF THE INCOME TAX ACT. 3. THE LD. CIT(APPEALS) CONFIRMED THE RE-OPENING OF THE ASSESSMENT AS WELL AS CONFIRMED THE ADDITION ON MERIT FOLLOWING THE ORDER IN THE CASE OF THE ASSESS EE FOR ASSESSMENT YEAR 2010-11 PASSED BY THE TRIBUNAL. 3 4. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE LD . COUNSEL FOR THE ASSESSEE CHALLENGED ONLY RE-OPENING OF THE ASSESSMENT UNDER SECTION 148 OF THE ACT ON THE REASON THAT THERE IS A CHANGE OF OPINION AND THAT R E- OPENING HAVE BEEN INITIATED MERELY ON AUDIT OBJECTI ON ON INTERPRETATION OF LAW WHETHER IT IS CAPITAL EXPENDI TURE OR REVENUE EXPENSES. ON THE OTHER HAND, LD. DR RELIED UPON ORDER OF THE AUTHORITIES BELOW AND SUBMITTED T HAT AUDIT PARTY HAS POINTED OUT FACTUAL ERROR, THEREFOR E, RE- OPENING OF ASSESSMENT IS JUSTIFIED. HE HAS FURTHER SUBMITTED THAT ASSESSING OFFICER HAS NOT EXAMINED T HIS ISSUE AT ASSESSMENT STAGE, THEREFORE, RE-OPENING IS JUSTIFIED IN THE MATTER. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS. THE COPY OF THE REASONS RECORDED FOR RE-OPENING OF THE ASSES SMENT HAVE BEEN FILED AT PAGE 2 OF THE PAPER BOOK AND IS ALSO REPRODUCED IN THE ASSESSMENT ORDER WHICH READS AS UNDER : 26.07.2013 THIS CASE WAS ASSESSED U/S 143(3) ON 30.11.2011 AT AN INCOME OF RS. 50,35,75,750/- AGAINST RETURNED INCOME OF RS. 50,25,99,240/- BY THE ASSESSEE. SUBSEQUENTLY IT WAS NOTICED THAT THE ASSESSEE HAS CLAIMED EXPENSES OF RS. 1,27, 15,724/ - ON ACCOUNT OF MAINTENANCE OF COLONIES AND THE SAME ALLOWED BY THIS OFFICE WHEREAS OUT OF THIS EXPENDIT URE AN AMOUNT OF RS. 1,25,84,381/- WAS INCURRED FOR CONSTRUCTION OF UNDER - GROUND WATER STORAGE TANK A ND UP- 4 GRADATION OF ROAD & WATER DRAINAGE IN HBC VIHAR, GURG AON. THIS EXPENDITURE IS OF CAPITAL NATURE AND NEEDS TO BE CAPATILIZED. FROM THE FACTS, NARRATED ABOVE, I AM SA TISFIED THAT INCOME TO THE TUNE OF RS. 1,25, 84,3 18/- HAS ESCAPED ASSESSMENT. ISSUE NOTICE U/S 148 OF THE INCOME-TAX A CT, 1961 FOR THE ASSESSMENT YEAR 2009-10. 6. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PB- 35 WHICH IS REPLY FILED BEFORE ASSESSING OFFICER AT OR IGINAL ASSESSMENT PROCEEDINGS IN WHICH IN REFERENCE TO THE LETTER OF THE ASSESSING OFFICER, FOR SCRUTINY ASSES SMENT, ASSESSEE HAS SUBMITTED DETAILS OF EXPENSES INCURRED ON MAINTENANCE OF COLONIES WHICH IS SUPPORTED BY COPIE S OF LEDGER ACCOUNT ETC., COPIES OF THE SAME ARE FILED A T PAGES 37 TO 41 OF THE PAPER BOOK. IT IS, THEREFORE, PROV ED ON RECORD THAT ASSESSING OFFICER HAD TAKEN UP THIS ISS UE WHETHER EXPENDITURES WERE REVENUE OR CAPITAL, AT ORIGINAL ASSESSMENT STAGE AND HAS ACCEPTED THE EXPLANATION OF THE ASSESSEE AFTER MAKING NECESSARY INQUIRIES. THE ASSESSING OFFICER ALSO RECORDED IN THE ORIGINAL ASSESSMENT ORDER THAT ASSESSEE'S REPRESENTATIVES ATTENDED THE PROCEEDINGS AND FILED SUBMISSIONS WHICH HAVE BEEN EXAMINED AND PLACED ON RECORD AND HE HAS ALSO EXAMINED BOOKS OF ACCOUNT PRODUCED BY THE ASSESSEE. MAY BE, ASSESSING OFFICE R HAS NOT DISCUSSED THIS ISSUE IN DETAIL IN THE ASSES SMENT ORDER, WOULD BE OF NO CONSEQUENCE. THE LD. COUNSEL FOR THE ASSESSEE ALSO REFERRED TO COPIES OF THE AUDIT OBJECTIONS FILED AT PAGES 12 TO 20 OF THE PAPER BOO K IN 5 WHICH ALSO THE GIST OF OBJECTIONS HAVE BEEN NOTED I N WHICH IT WAS NOTED THAT ASSESSEE HAS CLAIMED EXPENS ES OF RS. 1,27,15,724/- ON ACCOUNT OF MAINTENANCE OF COLONIES AND THE SAME ALLOWED BY THIS OFFICE WHEREA S RS. 1,25,84,381/- WAS CAPITAL EXPENDITURE. EVEN IN THE REASONS RECORDED FOR RE-OPENING OF THE ASSESSMENT, ASSESSING OFFICER HAS RECORDED THAT IMPUGNED EXPENS ES HAVE BEEN ALLOWED BY THIS OFFICE, MEANING THEREBY, THE ASSESSING OFFICER INQUIRED INTO THIS ISSUE AT ASSES SMENT STAGE. IT IS, THEREFORE, CLEAR THAT ASSESSING OFFI CER EXAMINED THE IMPUGNED ISSUE AT ORIGINAL ASSESSMENT PROCEEDINGS AND ALLOWED THE CLAIM OF THE ASSESSEE A FTER CONSIDERING THE MATERIAL ON RECORD. THEREFORE, CONTENTION OF LD. DR IS REJECTED THAT ASSESSING OFF ICER HAS NOT EXAMINED THIS ISSUE AT THE ORIGINAL ASSESSM ENT STAGE. 7. HON'BLE SUPREME COURT IN THE CASE OF CIT VS KELVINATOR OF INDIA LTD. 320 ITR 561 HELD AS UNDER : AFTER 1ST APRIL, 1989, AO HAS POWER TO REOPEN THE AS SESSMENT UNDER S. 147 PROVIDED AO HAS REASON, TO BELIEVE THA T INCOME HAS ESCAPED ASSESSMENT AND THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF I NCOME; MERE 'CHANGE OF OPINION' CANNOT PER SE BE REASON TO REOPEN . 8. HON'BLE SUPREME COURT IN THE CASE OF INDIAN OIL CORPORATION 159 ITR 956 HELD THAT, NO CASE UNDER SECTION 148 IS MADE OUT WHEN THE FACTS WERE KNOWN A LL ALONG WITH TO THE REVENUE WHILE MAKING THE ORIGINAL 6 ASSESSMENT. HON'BLE SUPREME COURT IN THE CASE OF ASSOCIATED STONE INDUSTRIES LTD. 224 ITR 560 HELD T HAT, THE ASSESSEE SHALL HAVE TO DISCLOSE ONLY PRIMARY FA CTS. HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF VARDHMA N INDUSTRIES 363 ITR 625 HELD THAT, REASONS MUST BE BASED ON NEW AND TANGIBLE MATERIAL. NOTICE UNDER SECTION 148 BASED ON DOCUMENTS ALREADY ON RECORD NO T VALID. HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SOHANA WOOLLEN MILLS 296 ITR 238 HEL D THAT, A MERE AUDIT OBJECTION AND THE FACT THAT A DIFFER ENT VIEW COULD BE TAKEN, ARE NOT ENOUGH TO SAY THAT THE ORDER OF THE ASSESSING OFFICER WAS ERRONEOUS OR PREJUDICI AL TO THE INTEREST OF REVENUE. HON'BLE GUJRAT HIGH COURT IN CASE OF SHREE RAM BUILDERS 377 ITR 631, HELD THAT, NOTICE UNDER SECTION 147 ON AUDIT OBJECTION NOT VA LID. 9. CONSIDERING THE ABOVE DISCUSSION, IT IS CLEAR TH AT ASSESSING OFFICER HAS EXAMINED THE IMPUGNED ISSUE A T ORIGINAL ASSESSMENT STAGE AND ALLOWED THE CLAIM OF THE ASSESSEE. NO NEW OR TANGIBLE MATERIAL HAS BEEN BRO UGHT ON RECORD TO PROVE THAT IT IS A CASE OF ESCAPEMENT OF INCOME. THE ASSESSING OFFICER, MERELY ON THE BASIS OF DOCUMENTS ALREADY ON RECORD, SUBSEQUENTLY INITIATED THE RE-ASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE ON S AME FACTS DESPITE ALL THE FACTS WERE WITHIN THE KNOWLED GE OF THE ASSESSING OFFICER AT ORIGINAL ASSESSMENT STAGE. IT IS, THEREFORE, CLEAR THAT ASSESSING OFFICER ON MERE CHANGE OF OPINION AND WITHOUT BRINGING ANY NEW OR 7 TANGIBLE MATERIAL ON RECORD INITIATED THE RE-ASSESS MENT PROCEEDINGS UNDER SECTION 148 OF THE INCOME TAX ACT WHICH IS WHOLLY UNWARRANTED AND UNJUSTIFIED. THE AU DIT OBJECTION IN THIS CASE WAS DONE ON INTERPRETATION O F LAW WHETHER EXPENDITURE WAS CAPITAL OR REVENUE IN NATUR E, HENCE, 148 PROCEEDINGS NOT VALIDLY INITIATED. THE R E- OPENING OF THE ASSESSMENT IS NOT VALID AND THUS, ASSESSING OFFICER HAS NOT ASSUMED JURISDICTION UNDE R SECTION 148 IN ACCORDANCE WITH LAW. IN THIS VIEW O F THE MATTER, WE SET ASIDE THE ORDERS OF AUTHORITIES BELO W AND QUASH THE RE-OPENING OF THE ASSESSMENT UNDER SECTIO N 148 OF THE ACT. RESULTANTLY, ENTIRE ADDITION WOULD STAND DELETED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA) (BHAVNESH SAINI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH OCTOBER, 2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD