Meenaben Dilipkumar Soni, Ahmedbabad V. The ITO, Ward-5(2)(5), Ahmedabad

ITA 814/AHD/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7487 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment
• Section: 147; 148; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD (through web-based video conferencing platform) ] ] BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No. 814/Ahd/2019 Assessment Years : 2009-10 Smt. Meenaben Dilipkumar Soni, B-3, Centroid Residency, Nr. Swati Society, Navrangpura, Ahmedabad-9 PAN : ADKPS 6611 C Vs Income Tax Officer, Ward-5(2)(5), Ahmedabad अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸/ (Appellant) 灹त् 灹त् 灹त् 灹त् यथ牸 यथ牸यथ牸 यथ牸/ (Respondent) Assessee by : Shri Prakash D. Shah, AR Revenue by : Shri Purushottam Kumar, Sr DR सुनवाई क琉 तारीख/Date of Hearing : 24/09/2021 घोषणा क琉 तारीख /Date of Pronouncement: 29/11/2021 आदेश आदेशआदेश आदेश/O R D E R PER RAJPAL YADAV, VICE PRESIDENT : The assessee is in appeal before the Tribunal against the order of learned Commissioner of Income-tax (Appeals)-5, Ahmedabad [“CIT(A) in short] dated 20.03.2019 passed for Assessment Year 2009-10. 2. The assessee has raised four grounds of appeal; however, her grievances revolve around two issues viz. (a) the reopening of the assessment is bad in the eyes of law and (b) the learned CIT(A) has erred in disallowing the loss of Rs.12,05,353/-. 3. We take the first fold of grievances. The brief facts of the case are that the assessee has filed her return of income electronically on 27.09.2009 declaring total income at Rs.2,21,560/-. According to the Assessing Officer, he has received information from ADI (Inv.), Unit-1(3), Ahmedabad exhibiting the fact that the assessee has entered into transactions in different ITA No. 814/Ahd/2019 Meenaben Dilipkumar Soni Vs. ITO AY : 2009-10 2 segments through Amrapali Capital and Finance Service Ltd where she indulged in Client Code Modifications and, therefore, her share/demat transactions and any other such financial transactions/activities are needed to be examined and verified. He reopened the assessment by recording reasons and issued notice under Section 148 of the Act on 29.03.2016. The learned Assessing Officer thereafter passed an assessment order on 28 th December 2016. He made an addition of Rs.12,05,353/-. This addition was made by disallowing the loss claimed by the assessee. 4. The assessee challenged the reopening of assessment before the learned First Appellate Authority but the appeal to the learned CIT(A) did not bring any relief to the assessee. 5. Before us, learned Counsel for the assessee, while impugning the orders of Revenue Authorities, contended that there is no application of mind at the end of Assessing Officer. He reopened the assessment for verification which is not called for in an assessment required to be reopened. He took us through the reasons recorded on 21.03.2016 and the copy of the same is available on page No.1 of the written submissions filed by the learned Counsel for the assessee. For buttressing his contention, he relied upon the decision of Hon’ble Gujarat High Court in the case of Pri. CIT vs. Manzil Dineshkumar Shah, reported in (2018) 406 ITR 326 (Guj). He further relied upon the order of ITAT in the case of Shri Sanjay Pankajbhai Shah Vs. ACIT (OSD) in ITA No.1138/Ahd/2016, decided on 04.01.2021. He also relied upon the judgment of Hon’ble jurisdictional High Court in the case of Bakulbhai Ramanbhai Patel Vs. ITO, reported in (2011) 56 DTR 212 (Guj.). ITA No. 814/Ahd/2019 Meenaben Dilipkumar Soni Vs. ITO AY : 2009-10 3 6. In response to the contentions of the learned Counsel for the assessee, the learned Sr. DR has filed written submissions. He annexed the material which has been transmitted by the ADIT (Inv) to the Assessing Officer for strengthening the case of the Assessing Officer. He relied upon the judgment of the Hon’ble Gujarat High Court in the case of Peass Industrial Engineers (P.) Ltd. vs. DCIT, reported in 73 taxmann.com 185. On the strength of the judgment, it was contended by the learned Sr. DR that at the stage of forming a belief that an assessment is required to reopen, the Assessing Officer is supposed to form a prima-facie opinion on the basis of information available with him and he is not required to establish the fact of escapement of income. In brief, the submission raised by him in the written note is that the Assessing Officer was having sufficient information on the basis of which he formed an opinion that the transactions of the assessee are required to be verified. Thus, the Assessing Officer has a specific information supplied by the ADIT (Inv). On perusal of such information, the Assessing Officer has formed opinion that this assessment is required reopening. This belief of the Assessing Officer is supported by the judgment of Hon’ble Gujarat High Court. 7. We have duly considered the rival contentions and gone through the record carefully. The reasons recorded by the Assessing Officer for reopening of the assessment read as under:- “REASONS RECORDED FOR ISSUE OF NOTICE U/S 148 OF THE I.T. ACT, 1961. As per information received from ADIT (Inv) Unit 1(3), Ahmedbaad, vide letter No.ADIT(INV)1(3)/AHD/CCM/Dissemination/e-mail/15-16 dated 18/03/2016, the assessee has entered into transactions in different segments through “Amrapali Finance & Capital Services Limited”. It is also seen that during the FY 2008-09 Client Code Modifications had been made 127 times. The data received in respect of Client Code Modifications carried out, capital ITA No. 814/Ahd/2019 Meenaben Dilipkumar Soni Vs. ITO AY : 2009-10 4 gain out of share/demat transactions, any other such financial transactions, activities etc are needed to be examined and verified whether these gains/income is also declared fully in the return of income already filed showing only Rs.2,21,560/-. Therefore, I have reason to believe that the income chargeable to tax had escaped assessment to that extent, for AY 2009- 10, within the meaning of Section 147 of the Act. Hence, in my opinion, this is a fit case for re-opening of assessment u/s 147 of the I.T. Act, 1961. I therefore, issue notice u/s 147 of the I.T. Act, 1961. Sd/- (BABU GEORGE) Income Tax Officer, Ware-5, Gandhinagar” 8. Section 147 of the Income-Tax Act contemplates that “if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or re-assess such income..............”. A Perusal of the aforesaid reasons would reveal that there is no application of mind at the end of the Assessing Officer. The assessee has filed her return of income. The Assessing Officer has not made any analysis on what the assessee has claimed, how prima-facie the claim of the assessee could be bogus on the basis of the information supplied by the Investigation Wing and therefore an income appears to have been escaped! Section 147 of the Act nowhere authorizes the Assessing Officer to reopen an assessment for verification of the claim made by the assessee. The Assessing Officer is required to analyze the information possessed by him within the light of information supplied by the assessee in the return of income, and thereafter he has to form a prima facie opinion that such and such income appears to have escaped from assessment. In the reasons he has nowhere even mentioned what is the loss or gain claimed by the assessee in such transactions. In a sweeping manner, he has simply observed that “since the information has come, I wish to reverify whether the assessee has declared gains/loss, whether such gains/loss has been fully declared by her or not. Everything ITA No. 814/Ahd/2019 Meenaben Dilipkumar Soni Vs. ITO AY : 2009-10 5 is in a speculative manner. Section 147 of the Act nowhere authorizes him to be so speculative. The reasons cannot be supplemented with the information transmitted to the Assessing Officer for justifying that information was available to form the belief. The reasons are to be evaluated by the higher appellate authority as standalone; because it is the exposition of the mind of the Assessing Officer on such information. That exposition cannot be amplified by inducting fresh information before the appellate authority to justify the formation of belief even if no such live nexus is available between the formation of belief vis-à-vis information. The learned Sr. DR relied upon the judgment of Hon’ble Gujarat High Court in the case of Peass Industrial Engineers (P.) Ltd. Vs. DCIT (supra), but the facts are altogether different. In this judgment also the Hon’ble Court has emphasized on the point that if substantial new material is found in the form of information on the basis of which the Assessing Officer can form a belief that the income of the assessee has escaped assessment, then it is always open for the assessing authority to reopen assessment. There is no dispute with regard to this proposition. There is no bar for re-opening of the assessment, but the question is that what is the information, how it has been examined and how the opinion has been formed exhibiting the fact of escapement of income? In the judgment of Hon’ble Gujarat High Court in the case of Pri. CIT vs. Manzil Dineshkumar Shar (supra), it is propounded that for verification or for re-examination , reopening is not justified. In other words, there should be first prima-facie opinion that income has escaped assessment; only thereafter verification would come. In the present case, there is no prima-facie opinion formed by the Assessing Officer before issue of notice under Section 148 of the Act; therefore, the reopening of the assessment is bad in the eyes of law. We, therefore, allow this ground of appeal of the assessee and quash the re-assessment order. ITA No. 814/Ahd/2019 Meenaben Dilipkumar Soni Vs. ITO AY : 2009-10 6 9. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 29 th November, 2021 at Ahmedabad. Sd/- Sd/- (WASEEM AHMED) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE-PRESIDENT Ahmedabad, Dated 29/11/2021 *Bt आदेश क琉 灹ितिलिप अ灡ेिषत/Copy of the Order forwarded to : 1. अपीलाथ牸 / The Appellant 2. 灹瀄यथ牸 / The Respondent. 3. संबंिधत आयकर आयु猴 / Concerned CIT 4. आयकर आयु猴)अपील (/ The CIT(A)- 5. िवभागीय ि ि ि ,आयकर अपीलीय अि करण,/DR,ITAT, Ahmedabad, 6. गाड榁 फाईल /Guard file. आदेशानुसार/ BY ORDER, TRUE COPY सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण ITAT, Ahmedabad 1. Date of dictation- ...26.11.2021...... 2. Date on which the typed draft is placed before the Dictating Member ...29.11.2021......... Other member ...29.11.2021.................. 3. Date on which the approved draft comes to the Sr.P.S./P.S. - ......29.11.2021............ 4. Date on which the fair order is placed before the Dictating Member for Pronouncement ...29.11.2021 5. Date on which the file goes to the Bench Clerk...29.11.2021................ 6. Date on which the file goes to the Head Clerk.................................. 7. The date on which the file goes to the Assistant Registrar for signature on the order..................... 8. Date of Despatch of the Order..................