Chitra Earth Movers, Kolkata V. ITO, Ward 46(3), Kolkata, Kolkata

ITA 820/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1042 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 21-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOUTAM PATRA
• Assessee Lawyers: P K AGARWALLA
• Keywords: Reopening of assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, KOLKATA BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER I.T.A. NO. 820/KOL/2017 ASSESSMENT YEAR: 2004-05 CHITRA EARTH MOVERS............................APPELLANT [PAN : AAEFC 1855 F] ITO, WARD-46(3), KOLKATA.......RESPONDENT APPEARANCES BY: SHRI P. K. AGARWALLA, FCA, APPEARED ON BEHALF OF THE APPELLANT. SHRI GOUTAM PATRA, ADDL. CIT, APPEARED ON BEHALF OF THE RESPONDENT. DATE OF CONCLUDING THE HEARING : OCTOBER 18, 2017 DATE OF PRONOUNCING THE ORDER : NOVEMBER 10, 2017 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-14, (HEREINAFTER THE LD. CIT(A)), DATED 31.03.2016 PASSED U/S 147/143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) FOR THE ASSESSMENT YEAR 2004-05 ON THE FOLLOWING GROUNDS: 1. THAT REOPENING OF ASSESSMENT FOR ASST. YEAR 2004-05 ON 23.12.2013 U/S 147/148 BASED ON TRIBUNAL'S FINDING ON 10.07.12 IN ASST. YEAR 2005-06 U/S 153(3) IS BAD IN LAW, VOID AND TIME BARRED. 2. THAT THE LEARNED CIT (APPEALS) ERRED IN LAW AS WELL AS FACTS IN HOLDING THAT IT CANNOT BE CONCLUSIVELY ESTABLISHED AS TO WHICH ARE THE PARTIES THAT THE A O HAS BEEN REFERRING TO IN RESPECT OF WHOM THE SAID VERIFICATIONS HAS BEEN MADE. AN INFERENCE THAT HE IS TALKING ABOUT THE SAME TWO PARTIES AS IN THE INSTANT APPEAL CANNOT IMMEDIATELY BE DRAWN FROM THE RECORDS OR ANY OF THE APPELLANT'S SUBMISSIONS OR AVERMENTS. WHEN THERE ARE ONLY 2 PARTIES AND NO OTHER PARTIES. 3. THAT THE LEARNED CIT (APPEALS) ERRED IN LAW AS WELL AS FACTS IN HOLDING RS. 6,49,860/- OUT OF TOTAL OF RS. 6,94,905/- OF SHIVAM ASSOCIATES AS BOGUS EXPENDITURE AND CONFIRMING THE DISALLOWANCE. 4. THAT THE LEARNED CIT (APPEALS) ERRED IN LAW AS WELL AS FACTS IN HOLDING FTS.2,08,762/- OUT OF RS. 3,23,625/- OF SIDHI VINAYAK CONSTRUCTION AS BOGUS EXPENDITURE AND CONFIRMING THE DISALLOWANCE 5) THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR SUBSTITUTE FURTHER GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. AFTER HEARING RIVAL CONTENTIONS, I FIND THAT THE REASONS FOR REOPENING HAVE BEEN RECORDED AS FOLLOWS: 2 CHITRA EARTH MOVERS I.T.A. NO. 820/KOL/2017 ASSESSMENT YEAR: 2004-05 LD. ITAT VIDE ORDER DATED 10/07/2012 IN ITA NO.406/KOL/2011 HAVE DIRECTED THAT THE OPENING BALANCE OF SHIVAM ASSOCIATES FOR RS.6,49,860/-, SIDDHIVINAYAK CONSTUCTION FOR RS.2,08,752/- AND SURAJ TRANSPORT COMPANY FOR RS.5,99,552/- WOULD BE THE INCOME OF THE ASSESSMENT YEAR 2004-05 AS THE SAID THREE CREDITORS WERE BOGUS AND TRANSACTIONS WERE ALSO BOGUS. 4. THE ITAT, KOLKATA A BENCH IN ITA NO.406/KOL./2011 FOR A.Y 2005- 06 ORDER DATED 10 TH JULY, 2012 HELD AS FOLLOWS: HOWEVER, AS REGARDS THE PAYMENTS FOR OPENING BALANCES IN THE RESPECTIVE ACCOUNTS, THE DISALLOWANCE CAN ONLY BE MADE IN THE ASSESSMENT YEAR IN WHICH DEDUCTION FOR EXPENSES IS CLAIMED. IT IS OPEN TO THE REVENUE AUTHORITIES TO TAKE SUCH ACTION AS THEY DEEM FIT FOR APPROPRIATE REMEDIAL MEASURES; WE DO NOT WISH TO DEAL WITH THAT ASPECT OF THE MATTER. SINCE IT IS A JUDICIAL FINDING THAT IMPUGNED DISALLOWANCE CANNOT BE MADE IN THE PRESENT YEAR, BECAUSE IT CAN ONLY BE MADE IN THE YEAR IN WHICH DEDUCTION IS CLAIMED, THE EXCEPTIONS TO TIME BARRING PROVISIONS, AS SET OUT IN SECTION 153(3), WILL COME INTO PLAY. 5. IN FACT, THE AO HAS EXTRACTED THIS PASSAGE AT PARA 2 OF HIS ORDER. 6. A PERUSAL OF THE ORDER OF THE ITAT DEMONSTRATES THAT THERE IS NO DIRECTION THAT THE AMOUNTS IN QUESTION WOULD BE THE INCOME FOR THE A.Y 2004-05. THE ITAT HAS NOT HELD THAT THE SAID THREE CREDITORS WERE BOGUS AND THAT THE TRANSACTIONS WERE ALSO BOGUS. AT BEST, THIS IS AN INFORMATION. HENCE, THE REASONS RECORDED ARE WITHOUT PROPER APPLICATION OF MIND AND ON A MISUNDERSTANDING AND WRONG READING OF THE ORDER OF THE TRIBUNAL. IT IS WELL-SETTLED THAT THE REASONS TO BELIEVE INCOME HAS ESCAPED ASSESSMENT SHOULD BE OF THE AO ONLY. HENCE, I HOLD THAT THE REOPENING OF ASSESSMENT IS BAD IN LAW. THUS, THIS ASSESSMENT IS QUASHED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. KOLKATA, THE 10 TH NOVEMBER, 2017. SD/- [J. SUDHAKAR REDDY] ACCOUNTANT MEMBER DATED : 10.11.2017 RS, SPS 3 CHITRA EARTH MOVERS I.T.A. NO. 820/KOL/2017 ASSESSMENT YEAR: 2004-05 COPY OF THE ORDER FORWARDED TO: 1 . CHITRA EARTH MOVERS, C/O. SUNIL KUMAR SHAH, BLOCK AC 148, GROUND FLOOR, SECTOR-1, SALT LAKE CITY, KOLKATA 700 064. 2 . ITO WARD 46(3), KOLKATA, 3, GOVT. PLACE WEST, 2 ND FLOOR, KOLKATA 1. 3. CIT(A)- 4. CIT- , 5. CIT(DR), TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT, KOLKATA BENCHES