Haryana Warehousing Corporation, Panchkula V. ITO, Panchkula

ITA 798/CHANDI/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0129 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-04-2016
• Assessment Year: 1990-1991
• Appeal Filed On: 11-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B K NOHRIA
• Keywords: Source of fund; Assessment record
• Section: 147; 10

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO. 798/CHD/2014 ASSESSMENT YEAR: 1990-91 M/S HARYANA WAREHOUSING CORPORATION, VS. THE ITO, PANCHKULA WARD-3, PANCHKULA PAN NO. AAATH7482H (APPELLANT) (RESPONDENT) APPELLANT BY : SH. B.K. NOHRIA RESPONDENT BY : SH. SUSHIL KUMAR DATE OF HEARING : 11.04.2016 DATE OF PRONOUNCEMENT : 11.04.2016 ORDER PER SANJAY GARG, JM THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF CIT(A), PANCHKULA DATED 22.7.2014. 2. THE ASSESSEE HAS AGITATED THE ACTION OF THE CIT( A) IN CONFIRMING REOPENING OF THE ASSESSMENT MADE BY THE ASSESSING O FFICER U/S 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). THIS IS THE SECOND ROUND OF LITIGATION BEFORE US. AT THE OUTSET, THE LD. AR OF THE ASSES SEE HAS BROUGHT OUR ATTENTION TO THE ORDER DATED 9.3.2005 OF THE ITAT, DELHI BENC H PASSED DURING THE FIRST 2 ROUND OF LITIGATION / APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE HAD TAKEN THE GROUND BEFORE THE TRIBUNAL THAT SINCE THE ASSESSMEN T IN THIS CASE HAD BEEN REOPENED U/S 147 OF THE ACT AFTER EXPIRY OF FOUR YE ARS FROM THE END OF THE ASSESSMENT YEAR AND THEREFORE, AS PER THE PROVISO T O SECTION 147(1), NO ACTION COULD BE TAKEN U/S 147(1) UNLESS THE INCOME CHARGEA BLE TO TAX HAD ESCAPED ASSESSMENT BY THE REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT. THE TRIBUNAL IN FIRST ROUND OF LITIGATION OBSERVED THAT THE CIT(A) HAD NOT EXAMINED AND ADJUDICATED ON THIS ASPECT. THE TRIBUNAL, THEREFOR E, HAD RESTORED THE ISSUE TO THE FILE OF LD. CIT(A) FOR DECISION AFRESH ON THE QUEST ION AS TO WHETHER THERE WAS ANY FAILURE OR OMISSION ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. THE L D. CIT(A) IN COMPLYING WITH THE ABOVE DIRECTIONS OF THE TRIBUNAL PASSED A FRES H ORDER WHEREBY HE HAS CONFIRMED THE REOPENING OF THE ASSESSMENT. THE ASSE SSEE, THUS, HAS COME IN APPEAL BEFORE US AGAINST THE SAID ORDER OF THE CIT( A) PASSED IN THE SET ASIDE / RESTORED APPELLATE PROCEEDINGS. 3. WE FIND THAT IN THE FIRST ROUND OF LITIGATION, T HE APPEAL WAS HEARD AND DECIDED BY THE ITAT DELHI BENCH OF THE TRIBUNAL, WH EREAS, IN THE SECOND ROUND OF LITIGATION, THE APPEAL IS BEFORE US I.E CHANDIGA RH BENCH OF THE TRIBUNAL. A QUERY WAS PUT TO THE LD. AR IN THIS RESPECT. THE LD . AR EXPLAINED THAT THE PRESENT APPEAL HAS BEEN FILED AGAINST THE ORDERS OF ORDER OF CIT(A) , PANCHKULA. THE JURISDICTION FOR FILING APPEALS AGAINST THE SAI D CIT(A) AT PANCKULA VESTS WITH THIS TRIBUNAL AT CHANDIGARH. EARLIER, COMMENT S WERE CALLED UPON FROM THE CIT(A) PANCHKULA FOR TRANSFER OF THE ABOVE APPEAL FROM ITAT CHANDIGARH TO ITAT DELHI. THE DEPARTMENT HAD REPLIED THAT SINCE T HE ASSESSMENT RECORD WAS LYING WITH ASST. CIT, CIRCLE, PANCHKULA AND, THERE FORE, THE APPEAL MAY BE HEARD AT ITAT CHANDIGARH. AFTER OBTAINING THE COMM ENTS FROM THE DEPARTMENT, 3 THE HON'BLE VICE PRESIDENT OF THE TRIBUNAL VIDE OR DER DATED 6.11.2015 HAD REJECTED THE TRANSFERRED APPLICATION AND IT WAS DEC IDED THAT THE APPEAL WILL BE HEARD AT CHANDIGARH BENCH. NOW, WE PROCEED TO ADJUD ICATE THE APPEAL ON MERITS. 4. WE HAVE GONE THROUGH THE IMPUGNED ORDER AS WELL AS THE ORDER OF THE ASSESSING OFFICER. WE HAVE ALSO GONE THROUGH THE RE ASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING OF THE ASSESSMENT. WE FIND THAT ASSESSMENT WAS REOPENED BY THE ASSESSING OFFICER IN THIS CASE IN V IEW OF THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT DATED 1.12.1993 REPORT ED AS (1994) 210 ITR 906 (RAJ.), WHEREIN, THE HON'BLE HIGH COURT HELD THAT I N CASE OF WAREHOUSING CORPORATIONS, ONLY RENTAL INCOME FROM LETTING OF WA REHOUSING WAS EXEMPT FROM TAX. THE ASSESSING OFFICER OBSERVED THAT THE VIEW E XPRESSED BY THE HON'BLE RAJASTHAN HIGH COURT HAS ALSO BEEN CONFIRMED BY THE HON'BLE SUPREME COURT, VIDE ITS DECISION DATED 1.4.1999 REPORTED IN (1999 ) 237 ITR 589 (SC) IN THE CASE OF ORISSA STATE WAREHOUSING CORPORATION. HE T HEREFORE, WAS OF THE VIEW THAT SINCE IN THIS CASE OF THE ASSESSEE, THE ASSESS EE HAD ALSO DECLARED INCOME FROM TRADING IN WHEAT, SUPERVISION CHARGES, INTERE ST, AND OTHER INCOME, THEREFORE, AS PER THE ABOVE STATED DECISIONS, THE I NCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. WE FIND THAT ASSESSING OFFICER, IN HIS WISDOM AND AS PER THE PROPOSITION / INTERPRETATION OF LAW AS WAS AVAILABLE TO THE ASSES SING OFFICER AT THE TIME OF PASSING OF THE ORIGINAL ASSESSMENT ORDER ON 24.9.19 91, HAS ASSESSED THE INCOME OF THE ASSESSEE AT NIL ALLOWING EXEMPTION U/S 10 (29) OF THE INCOME TAX ACT. THE ASSESSMENT WAS REOPENED BY THE ASSESSING OFFICE R WHILE RELYING UPON THE SUBSEQUENT DECISION OF THE HON'BLE RAJASTHAN HIGH C OURT (SUPRA) AND OF THE HON'BLE SUPREME COURT (SUPRA). THERE IS NO AVERMENT OR ALLEGATION EITHER IN THE 4 REASONS RECORDED OR IN THE ASSESSMENT PROCEEDINGS T HAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT BECAUSE OF THE REAS ONS OF ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. WE FIND FROM THE RECORD THAT THE AS SESSEE HAD FULLY AND TRULY DISCLOSED ALL THE SOURCES OF INCOME. THE ASSESSEE U NDER BONA FIDE BELIEF HAD CLAIMED EXEMPTION OF THE SAID INCOME WHICH WAS ALLO WED BY THE ASSESSING OFFICER. UNDER SUCH CIRCUMSTANCES, THE REOPENING O F THE ASSESSMENT IS HIT BY THE PROVISO TO SECTION 147(1) OF THE INCOME TAX ACT. SI NCE THERE IS NO ALLEGATION THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSES SEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS RELATING TO THE ASSESSMENT, HENCE, THE REOPENING OF THE ASSESSMENT BEYOND FOUR YEARS IN THIS CASE IS BAD I N THE EYES OF LAW AND, AS SUCH, THE SAME IS NOT SUSTAINABLE. THE REOPENING OF THE A SSESSMENT IN THIS CASE IS, THEREFORE, SET ASIDE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.04.2016 SD/- SD/- (RANO JAIN) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11 TH APRIL, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 5