Appeal Details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 8416 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 month(s) 19 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
29-02-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Assessment Year
2007-2008
Appeal Filed On
09-11-2015
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT ITA NO. 826/CHD/2015 ASSESSMENT YEAR: 2007-08 SH. SUKHWANT SINGH, VS. THE DCIT R/O# 638/-, SARVHITKARI SOCIETY, INTERNATIONAL T AXATION SECTOR-48A CHANDIGARH CHANDIGARH- 160047 , PAN NO. AHLPS5640N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. TEJ MOHAN RESPONDENT BY : SHRI S.K. MITTAL DATE OF HEARING : 24/02/2016 DATE OF PRONOUNCEMENT: 29/02/2016 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-43, NEW DELHI DT. 09/09/2015 RELATING TO ASSESSMENT YEA R 2007-08. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW IN UPHOLDING THE REOPENING OF ASSESSMENT RESORTING TO THE PROVISIONS OF SECTION 148 OF THE ACT WHICH IS ARBITRARY AND UNJUSTIFIED. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LD. COMMISSI ONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN U PHOLDING THAT THE ADDITION OF RS. 6,83,148/- TREATING EXEMPT SALARY TO BE TAXABLE WHI CH IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS FURTHER ERRED IN NOT APPRECIATING THE SUBMISSIONS IN THE CORRECT PERSPEC TIVE IN AS MUCH AS THE ASSESSEE WAS A NON-RESIDENT DURING THE YEAR AND AS SUCH THE ADDITION MADE WHICH IS ILLEGAL, ARBITRARY AND HENCE UNJUSTIFIED. 4. THAT THE PROVISIONS OF THE ACT AS APPLIED BY THE ASSESSING OFFICER AND UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS) ARE NOT APPLICABLE IN THE INSTANT CASE AND AS SUCH THE ADDITION UPHELD IS ILL EGAL, ARBITRARY AND HENCE UNJUSTIFIED. 5. THAT THE LD. COMMISSIONER HAS SIMPLY RELIED UPON THE FINDINGS OF THE ASSESSING OFFICER REPRODUCED IN THE APPELLATE ORDER WITHOUT APPRECIATING THE VARIOUS CONTENTIONS RAISED BEFORE HIM DURING APPELL ATE PROCEEDINGS. 2 6. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS FAILED TO ADJUDICATE THE GROUND IN RESPECT OF DENIAL OF CLAIM OF SECTION 80-C WHICH IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 3. FIRSTLY, I WILL DECIDE GROUND NO. 1 OF THE APPE AL. THE ASSESSEE WAS AN EMPLOYEE OF M/S. ESSAR SHIPPING LTD., MUMBAI, AN IN DIAN SHIPPING COMPANY AND M/S EXECUTIVE SHIP MANAGEMENT PTE- SINGAPORE FO REIGN COMPANY DURING THE FY 2006-07 RELATING TO ASSESSMENT YEAR 2007-08 . THE ASSESSEE HAD RECEIVED RS. 68,31,48/- FROM M/S ESSAR SHIPPING LTD., MUMBAI , AND RS. 40,21,60/- FROM M/S EXECUTIVE SHIP MANAGEMENT PTE- SINGAPORE . THERE IS NO DISPUTE ABOUT SALARY RECEIVED BY THE ASSESSEE FROM FOREIGN COMPANY. THE ASSESSEE HAVE NOT PAID ANY TAX ON THESE SALARY INCOME ON THE GROUND THAT T HE ASSESSEE IS AN NRI AND WAS WORKING OUTSIDE THE TERRITORIAL WATER OF INDIA FOR MORE THAN 182 DAYS. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE SUBMITTED HIS RETURN OF INCOME ON 21/08/2007 DECLARING INCOME AT RS. 2613/- UNDER THE HEAD INCOME FROM OTHER SOURCES AND CLAIMED REFUND OF RS. 1,58,0 43/- ON ACCOUNT OF TDS WHICH HAD BEEN DEDUCTED BY M/S. ESSAR SHIPPING LTD. , MUMBAI ON THE SALARY PAID TO THE ASSESSEE. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 05/01/2009, AND THE INTIMATION IN THIS REGARD WAS SENT TO THE ASSESSEE BY THE REVENUE AUTHORITIES CONCERNED. SUBSEQUENTLY, THE AO ISSUED NOTICE UNDER SECTION 148 OF THE ACT 1 961, TO THE ASSESSEE ON 30/03/2014, AFTER RECORDING THE FOLLOWING REASONS: THE ASSESSEE HAS FILED HIS RETURN OF INCOME ON 21/ 08/2007 DECLARING INCOME OF RS. 2613 UNDER THE HEAD INCOME FROM OTHER SOURCES ONLY AND CLAIMED REFUND OF RS. 158043 ON ACCOUNT OF TDS WHICH HAD BEEN DEDUCTED BY M/S ESSAR SHIPPING LTD., MUMBAI ON THE SALARY PAID TO THE ASSESSEE. THE ASSE SSEE IS AN EMPLOYEE OF M/S ESSAR SHIPPING LTD. MUMBAI, ESSAR HOUSE, NO-11, K .K. MARG, MAHA LUXMI MUMBAI & WAS ALSO WORKING FOR EXECUTIVE SHIP MANAGEMENT PT E- SINGAPORE DURING THE F.Y. 2006-07 AND RECEIVED SALARY AMOUNTING TO RS. 683148 /- & RS. 402160/- RESPECTIVELY AND CLAIMED BOTH THE RECEIPTS AS EXEMPT BEING NRI. AS PER FORM NO. 16, ISSUED ON 15/05/2007 BY M/S ESSAR SHIPPING LTD., MUMBAI- H E HAS RENDERED SERVICES FOR THE COMPANY FOR 107 DAYS. THE PERIOD MENTIONED IN F ORM NO.16 IS FROM 15 JUNE 2006 TO 08/10/2006. THE SERVICE CONTRACT HAS BEEN S IGNED BY THE ASSESSEE IN INDIA. THE SERVICE HAS BEEN RENDERED BY THE ASSESSE E IN ACCORDANCE WITH TERMS OF EMPLOYMENT AGREED TO WITH THE INDIAN COMPANY. TH E SERVICE HAS BEEN RENDERED ON INDIAN SHIP AND THE SALARY HAS BEEN REC EIVED BY THE ASSESSEE IN HIS NRE ACCOUNT IN INDIA. M/S ESSAR SHIPPING LTD., MUMB AI IS AN INDIAN SHIPPING COMPANY. THEREFORE, AS PER SECTION 5(2)(A) OF THE I NCOME TAX ACT, 1961 ALL INCOME FROM WHATEVER SOURCES DERIVED WHICH IS RECEI VED OR IS DEEMED TO BE RECEIVED IN INDIA IS TAXABLE IN INDIA. THE ASSESSEE HAS RECEIVED SALARY FROM M/S ESSAR SHIPPING BUT NEITHER HE HAS PAID TAX IN INDIA NOR IN SINGAPORE OR ANYWHERE ELSE IN THE WORLD ON THIS SALARY. THERE IS NO SECTI ON IN THE INCOME TAX ACT, 1961 3 WHICH EXEMPTS ANY CLASS OF ASSESSEES / NON-RESIDEN TS FROM PAYING TAXES ON A PARTICULAR INCOME ANYWHERE IN THE WORLD. SINCE IN T HIS CASE, SALARY WAS PAID BY AN INDIAN COMPANY, THE TAXPAYER WAS WORKING ON THE SHI P OF THE INDIAN COMPANY (WHETHER OWNED OR LEASED), THE SALARY WAS BEING REC EIVED BY THE TAXPAYER IN HIS NRE ACCOUNT IN INDIA, THEREFORE, THE INCOME IS ARIS ING TO HIM IN INDIA. IT WILL BE PERTINENT TO MENTION HERE THAT THE DUE TAXES AT THE APPLICABLE RATES WERE DEDUCTED BY THE COMPANY M/S ESSAR SHIPPING AND TOTA L TDS WAS CLAIMED AS REFUND BY THE TAXPAYER CLAIMING HIS INCOME TO EXEMP T. INFACT THE TAXPAYER HAS SIMPLY STATED THAT SINCE HE WAS OUTSIDE THE TERRITO RIAL WATERS OF INDIA FOR MORE THAN 182 DAYS, THEREFORE, HIS INCOME IS NOT TAXABLE IN I NDIA. WHEREAS AS PER PROVISION OF SECTION 5(2)(A) AND 5(2)(B) ANY INCOME RECEIVED OR ACCRUING OR ARISING TO A NON RESIDENT IN INDIA OR AS RECEIVED IN SUCH YEAR IN IN DIA ON HIS BEHALF BY SOMEBODY WILL BE TAXABLE IN INDIA. THE INCOME HAS BEEN CLAIMED AS EXEMPT U/S 10(6) OF THE I.T. ACT 1961 WHICH IS NOT RELEVANT IN THIS CASE AS THE ASSESSEE HAS RECEIVED SALARY FROM INDIAN COMPANY ON WHICH TAX HAS BEEN DEDUCTED AT SOURCE. IN VIEW OF THE ABOVE, I HAVE, THEREFORE REASONS TO BELIEVE THAT AN AMOUNT OF RS. 6,83,148/- RECEIVED AS SALARY FROM M/S ESSAR SHIPPI NG LTD. DURING THE F.Y. 2006-07 HAS ESCAPED AMOUNT. THEREFORE, THE CASE OF THE TAXP AYER NEEDS TO BE REOPENED U/S 147 OF THE INCOME TAX ACT, 1961. IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT, THE ASSESSEE FILED THE RETURN ON 28/04/2014, DECLARING NIL INCOME. STATUTO RY NOTICE WERE ALSO ISSUED TO THE ASSESSEE. THE ASSESSEE OBJECTED TO THE REOPENIN G OF THE CASE. THE ASSESSING OFFICER REJECTED THE OBJECTION OF THE ASSESSEE BY P ASSING A SPEAKING ORDER VIDE LETTER DT. 08/05/2014. AFTER AFFORDING AN OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE, THE AO MADE THE ADDITION OF RS. 6,83,148/ - RECEIVED IN ACCOUNT OF SALARY WHICH WAS CLAIMED AS EXEMPT BY THE ASSESSEE CONCLUDING AS UNDER: A) THE TAXPAYER HAS RECEIVED SALARY FROM AN INDIAN COMPANY. B) THE TAXPAYER WAS WORKING ON THE SHIPS OWNED BY I NDIAN COMPANY. C) AS PER INDIAN INCOME TAX ACT, THE STATUS OF THE TAXPAYER DURING THE F.Y. 2006-07 IS THAT OF A NON-RESIDENT AS HE WAS OUTSIDE THE T ERRITORY OF INDIA FOR MORE THAN 182 DAYS I.E. 107 DAYS ON INDIAN SHIPPING CO. & 75 OR M ORE DAYS ON FOREING COMPANY. D) TAXPAYER HAS CLAIMED THAT SALARY RECEIVED FROM T HE INDIAN COMPANY IS EXEMPT FROM TAXATION. E) TAXPAYER HAS NOT PAID TAXES ON THIS SALARY INCOM E ANYWHERE IN THE WORLD (AS HE KEEPS FLOATING IN INTERNATIONAL WATERS & DOES NOT S TAY IN ANY COUNTRY FOR MORE THAN 182 DAYS.) F) TAXPAYER HAS NOT FILED RETURN OF INCOME ANYWHERE IN THE WORLD EXCEPT IN INDIA WHERE HE IS CLAIMING THE SALARIES TO BE EXEMPT. G) AS PER THE TAXPAYER NO TAXES ARE TO BE PAID ON SALARIES EARNED BY HIM WHILE WORKING ON SHIPS ANYWHERE IN THE WORLD. THUS IF T HE VERSION OF THE TAXPAYER IS TO BELIEVED HIS SALARY INCOME BECOMES HOMELESS INCO ME. H) THIS WAS NEVER THE INTENTION OF THE LEGISLATURE TO EXEMPT A PARTICULAR CLASS OF PERSONS WORKING ON SHIPS FROM TAXATION IN INDIA & W ORLDWIDE. I) THE SALARY PAID BY INDIAN SHIPPING COMPANY DEFIN ITELY ARISES AND ACCRUES TO THE TAXPAYER IN INDIA AND IS TAXABLE IN INDIA AS PER SE CTION 5(2)(B) OF THE INCOME TAX ACT, 1961. J) THE SALARY PAID BY THE INDIAN SHIPPING COMPANY I S RECEIVED BY THE TAXPAYER IN INDIA AND IS ALSO TAXABLE U/S 5(2)(A) OF THE INCOME TAX ACT, 1961. 4 K) EVEN AS PER ARTICLE 16(3) OF THE INDO-US DTAA AN Y SALARY PAID BY AN INDIAN SHIPPING COMPANY TO ITS EMPLOYEES ABOARD SHIPS OPER ATING IN INTERNATIONAL TRAFFIC WILL BE TAXABLE IN INDIA. SIMILAR IS THE PROVISIONS WITH REGARD TO UK, CANADA & OTHER DTAAS. THE EXACT ARTICLE 16(3) OF THE INDO-US, DTAA IS REP RODUCED BELOW: NOTWITHSTANDING THE PRECEDING PROVISIONS OF THIS ARTICLE, REMUNERATION DERIVED IN RESPECT OF AN EMPLOYMENT EXERCISED ABOARD A SHIP OR AIRCRAFT OPERATING IN INTERNATIONAL TRAFFIC BY AN ENTERPRISE OF A CONTRAC TING STATE MAY BE TAXED IN THAT STATE. THE AO TREATED THE SALARY INCOME RECEIVED FROM ESSA R SHIPPING LTD. FOR WORKING IN INTERNATIONAL WATERS AS INCOME ARISEN AND ACCRUE D IN INDIA AS PER SECTION 5(2)(B), AND INCOM RECEIVED IN INDIA AS PER SECTION 5(2)(A), AND THE SAME WAS HELD TAXABLE. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ORDER OF THE AO PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT, AN D HENCE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. VIDE GROUND NO. 1 OF THE APPEAL THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE REOPENING OF THE ASSESSMENT FRAMED UNDER SEC TION 143(3) READ WITH SECTION 147 OF THE ACT. IT APPEARS THAT NO SUCH GRO UND WAS RAISED BY THE ASSESSEE BEFORE THE CIT(A). BEING LEGAL GROUND, THE ASSESSEE HAS A LEGITIMATE RIGHT TO RAISE SUCH GROUND FOR THE FIRST TIME BEFOR E THE TRIBUNAL. IT IS APPARENT FROM THE RECORD THAT PROCEEDING UNDER SECTION 147 OF THE ACT READ WITH SECTION 148 OF THE ACT WERE INITIATED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR, BUT BEFORE THE EXPIRY OF SIX YEAR S FROM THE END OF THE ASSESSMENT YEAR. AT THE VERY OUTSET LD. LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE REOPENING IS INVALID ON THE GROUND THAT TH ERE WAS NO FRESH TANGIBLE MATERIAL COMING TO THE NOTICE OF THE ASSESSING OFFI CER AT THE TIME OF RECORDING OF REASON, AND THEREFORE, IN ABSENCE OF THE SAME THE R EASONS RECORDED FOR REOPENING OF THE ASSESSMENT ARE NOT LEGALLY TENABLE . HE FURTHER SUBMITTED THAT THE REOPENING IS NOT PERMITTED UNDER THE LAW UNLESS THE SAME IS BASED ON FRESH TANGIBLE MATERIAL AND IF REASONS FOR BELIEF ARE N OT BASED ON NEW TANGIBLE MATERIAL, THE REOPENING CAN BE HELD TO BE INVALID. LD. COUNSEL FOR THE ASSESSEE 5 ALSO VEHEMENTLY ARGUED THAT IF THERE ARE NO REASONS TO BELIEVE BASED ON NEW TANGIBLE MATERIAL THEN THE REOPENING AMOUNTS TO AN IMPERMISSIBLE REVIEW. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE IN TH E INSTANT CASE THE AO HAS NOT SPECIFICALLY POINTED OUT ANY MATERIAL TO SHOW W HAT TRIGGERED THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT FOR INITIATING THE PROCEEDINGS UNDER SECTION 147 OF THE ACT. HE, THEREFORE SUBMITTED THAT THE RE OPENING WAS BAD AND THEREFORE THE PROCEEDINGS INITIATED UNDER SECTION 1 47 OF THE ACT MAY BE QUASHED. 6. ON THE OTHER HAND LD. DR STOUTLY DEFENDED THE AC TION OF THE REVENUE AUTHORITIES. 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. 8. LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECIS ION OF HONBLE DELHI HIGH COURT IN THE CASE OF PR. COMMISSIONER OF INCOME-TAX VS. TUPPERWARE INDIA (P.) LTD. [2016] 236 TAXMANN 494(DELHI), ORDER DT. 10/08 /2015 IN ITA NO. 415 OF 2015, WHEREIN ON IDENTICAL FACTS THE HONBLE HIGH COURT H ELD THAT THE RE-ASSESSMENT PROCEEDINGS UNDER SECTION 147 / 148 OF THE ACT WERE NOT VALIDLY INITIATED. IN THE SAID CASE THE ASSESSEE FILED A RETURN OF INCOME ON 02/12/2003, SHOWING A LOSS OF RS. 96,19,890/-. THE RETURN WAS PROCESSED UNDER SEC TION 143(1) OF THE ACT AT THE RETURNED AMOUNT. AN ORDER FOR REFUND WAS ALSO ISSUE D. SUBSEQUENTLY, THE ASSESSING OFFICER PASSED AN ORDER RECORDING REASON S FOR BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. AO NOTED THAT MANAGEMENT SERVIC E FEE TO THE EXTENT OF RS. 1,36,89,075/- PAYABLE TO TUPPERWARE INTERNATION AL HOLDINGS EV LTD. WAS PAID WITHOUT DEDUCTING TAX AT SOURCE. ACCORDING TO AO SA ID DEDUCTION WAS INADMISSIBLE UNDER SECTION 40A(I) OF THE ACT . ACCO RDINGLY THE AO HELD THAT HE HAD REASONS TO BELIEVE THAT AFOREMENTIONED AMOUNT H AD ESCAPED ASSESSMENT AND ISSUED NOTICE TO THE ASSESSEE UNDER SECTION 148 OF THE ACT. WHEN THE MATTER CAME UP BEFORE THE TRIBUNAL, THE TRIBUNAL HELD THAT THE REASSESSMENT 6 PROCEEDINGS UNDER SECTION 147/148 OF THE ACT WERE N OT VALIDLY INITIATED AND HENCE THE ORDER WAS NOT SUSTAINABLE. THE REVENUE C HALLENGED THE ORDER OF THE TRIBUNAL BEFORE THE HONBLE DELHI HIGH COURT AND TH E HONBLE HIGH COURT HELD AS UNDER : 14. THE QUESTION EXAMINED BY THE COURT IN ORIENT CR AFT LTD. (SUPRA) IS IDENTICAL TO THE ONE SOUGHT TO BE PROJECTED BY THE REVENUE IN THIS APPEAL VIZ., WHETHER THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT IN THE AB SENCE OF ANY TANGIBLE MATERIAL AVAILABLE WITH THE AO TO FORM THE REQUISITE BELIEF REGARDING ESCAPEMENT OF INCOME, THE REOPENING (UNDER SECTION 147 / 148 ) OF THE ASSESSMENT MADE UNDER SECTION 143(1) WAS BAD IN LAW ? 15. IN ORIENT CRAFT LTD. (SUPRA) THE REVENUE SOUGHT TO ARGUE, PLACING RELIANCE ON RAJESH JHAVERI STOCK BROKERS (P.) LTD. (SUPRA) T HAT INTIMATION COULD NOT BE EQUATED WITH ASSESSMENT . THE COURT OBSERVED THA T THE DECISION IN RAJESH JHAVERI STOCK BROKERS (P.) LTD. (SUPRA) CONTRARY TO WHAT THE REVENUE WOULD HAVE US BELIEVE, DOES NOT GIVE A CARTE BLANCHE TO THE AS SESSING OFFICER TO DISTURB THE FINALITY OF THE INTIMATION UNDER SECTION 143(1) AT HIS WHIMS AND CAPRICE; HE MUST HAVE REASON TO BELIEVE WITHIN THE MEANING OF THE SE CTION. THE COURT IN ORIENT CRAFT LTD. (SUPRA) RECORDED THAT THE DECISION IN RA JESH JHAVERI STOCK BROKERS (P.) LTD. (SUPRA) UNDERSCORED THAT THE INTIMATION UNDER SECTION 143(1) OF THE ACT COULD BE DISTURBED BY INITIATING REASSESSMENT PROCEEDINGS ONLY: SO LONG AS THE INGREDIENTS OF SECTION 147 ARE FULF ILLED AND WITH REFERENCE TO SECTION 143|(1) VIS--VIS SECTION 147, THE ONLY ING REDIENT IS THAT THERE SHOULD BE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND IT DOES NOT MATTER THAT THERE HAS BEEN NO FAILURE OR O MISSION ON THE PART OF THE ASSESSEE TO DISCLOSE FULL AND TRUE PARTICULARS AT T HE TIME OF THE ORIGINAL ASSESSMENT. THERE IS NOTHING IN THE LANGUAGE OF SECTION 147 TO UNSHACKLE THE ASSESSING OFFICER FROM THE NEED TO SHOW REASON TO BELIEVE. THE FACT THAT THE INTIMATION ISSUED UNDER SECTION 143(1) CANNOT BE EQUATED TO AN ASSES SMENT, A POSITION WHICH HAS BEEN ELABORATED BY THE SUPREME COURT IN THE JUD GMENT CITED ABOVE, CANNOT IN OUR OPINION LEAD TO THE CONCLUSION THAT T HE REQUIREMENTS OF SECTION 147 CAN BE DISPENSED WITH WHEN THE FINALITY OF AN INTIM ATION UNDER SECTION 143(1) IS SOUGHT TO BE DISTURBED. 17. THE COURT IN ORIENT CRAFT LTD. (SUPRA) FURTHER COMPREHENSIVELY REJECTED THE ARGUMENT OF THE REVENUE, WHICH IT SEEKS TO URGE IN THE PRESENT CASE AS WELL, THAT AN INTIMATION UNDER SECTION 143(1) CANNOT BE EQUA TED TO AN ASSESSMENT. THE COURT HELD: THE ARGUMENT OF THE REVENUE THAT AN INTIMATION CA NNOT BE EQUATED TO AN ASSESSMENT, RELYING UPON CERTAIN OBSERVATIONS OF TH E SUPREME COURT IN RAJESH JHAVERI (SUPRA) WOULD ALSO APPEAR TO BE SELF-DEFEAT ING, BECAUSE IF AN INTIMATION IS NOT AN ASSESSMENT THEN IT CAN NEV ER BE SUBJECTED TO SECTION 147 PROCEEDINGS, FOR, THAT SECTION COVERS ONLY AN ASSE SSMENT AND WE WONDER IF THE REVENUE WOULD BE PREPARED TO CONCEDE THAT POSITION. IT IS NOBODYS CASE THAT AN INTIMATION CANNOT BE SUBJECTED TO SECTION 147 PRO CEEDINGS; ALL THAT IS CONTENDED BY THE ASSESSEE, AND QUITE RIGHTLY, IS TH AT IF THE REVENUE WANTS TO INVOKE SECTION 147 IT SHOULD PLAY BY THE RULES OF T HAT SECTION AND CANNOT BOG DOWN. IN OTHER WORDS, THE EXPRESSION REASON TO BEL IEVE CANNOT HAVE TWO DIFFERENT STANDARDS OR SETS OF MEANING, ONE APPLICA BLE WHERE THE ASSESSMENT WAS EARLIER MADE UNDER SECTION 143(3) AND ANOTHER APPLI CABLE WHERE AN INTIMATION WAS EARLIER ISSUED UNDER SECTION 143(1). IT FOLLOWS THAT IT IS OPEN TO THE ASSESSEE TO CONTEND THAT NOTWITHSTANDING THAT THE ARGUMENT OF CHANGE OF OPINION IS NOT AVAILABLE TO HIM, IT WOULD STILL BE OPEN TO HIM TO CONTEST THE REOPENING ON THE GROUND THAT THERE WAS EITHER NO REASON TO BELIEVE O R THAT THE ALLEGED REASON TO BELIEVE IS NOT RELEVANT FOR THE INFORMATION OF THE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN DOING SO, IT IS FURT HER OPEN TO THE ASSESSEE TO CHALLENGE THE REASONS RECORDED UNDER SECTION 148(2) ON THE GROUND THAT THEY DO NOT MEET THE STANDARDS SET IN THE VARIOUS JUDICIAL PRONOUNCEMENTS. 7 IN MY CONSIDERED OPINION, THE DECISION OF THE HONB LE DELHI HIGH COURT REFERRED TO ABOVE IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. HONBLE DELHI HIGH COURT HAS CATEGORICALLY HELD THAT IN THE ABSEN CE OF ANY TANGIBLE MATERIAL AVAILABLE WITH THE AO TO FORM THE REQUISITE BELIEF REGARDING ESCAPEMENT OF INCOME THE REOPENING OF THE ASSESSMENT UNDER SECTIO N 147 OF THE ACT WAS BAD IN LAW. THE HONBLE HIGH COURT HAS ALSO REJECTED TH E CONTENTION OF THE REVENUE THAT INTIMATION UNDER SECTION 143(1) CANNOT BE EQ UATED TO AN ASSESSMENT. THE HONBLE HIGH COURT RELYING ON ITS EARLIER DECISION RENDERED IN THE CASE OF ORIENT CRAFT LTD.[2013] 354 ITR 536 (DELHI) HELD THAT IF A N INTIMATION IS NOT THE ASSESSMENT, THEN IT CAN NEVER BE SUBJECTED TO SECT ION 147 PROCEEDINGS FOR THAT SECTION COVERS ONLY AN ASSESSMENT. THE HONBLE D ELHI HIGH COURT FURTHER CLARIFIED THAT THE EXPRESSION REASON TO BELIEVE CANNOT HAVE TWO DIFFERENT STANDARD OR SETS OF MEANING, ONE APPLICABLE WHERE T HE ASSESSMENT EARLIER MADE U/S 143(3) AND ANOTHER APPLICABLE WHERE AN INTIMATI ON WAS EARLIER ISSUED UNDER SECTION 143(1) I AM ALSO ADD HERE THAT THE HONBLE MADRAS HIGH COU RT IN THE CASE OF BAPALAL & CO. EXPORTS VS. JT. CIT(OSD)[2007] [MAD] 289 ITR 37 , HELD THAT IN THE ABSENCE OF ANY MATERIAL, THE AO IS NOT EMPOWER TO REOPEN AN AS SESSMENT IRRESPECTIVE OF THE FACT THAT WHETHER IT WAS MADE UNDER SECTION 143 (1) OR 143(3) OF THE ACT. RELEVANT OBSERVATIONS MADE BY THE HONBLE HIGH COUR T READS AS UNDER : FURTHER, FROM THE SETTLED LEGAL PROPOSITION AS FOU ND FROM ONE OF THE RULINGS OF THE SUPREME COURT (SUPRA), ONCE AN OPINION IS GIVEN IN AN ASSESSMENT, IT CANNOT BE REOPENED BY ANY OTHER AUTHORITY EXCEPT ON FRESH MAT ERIAL. THAT APART, A NOTICE ISSUED UNDER S. 148 OF THE ACT SHOULD BE A REASONED ONE WHEREAS IN THE CASE BEFORE ME, THE IMPUGNED ORDER HAS BEEN ISSUED WITHO UT ASSIGNING ANY REASON JUSTIFYING ITS ISSUANCE. ALSO, IN THE ABSENCE OF AN Y NEW MATERIAL, THE AO IS NOT EMPOWERED TO REOPEN AN ASSESSMENT IRRESPECTIVE OF T HE FACT WHETHER IT IS MADE UNDER S. 143(1) OR S. 143(3) OF THE ACT. AS PER THE RULINGS OF THE APEX COURT IN THIS REGARD, THERE MUST ALWAYS BE A SPEAKING ORDER WHERE AS THE RESPONDENT HAS NEITHER CHOSEN TO ADDUCE ANY REASON NOR FOUND ANY F RESH MATERIAL TO REOPEN THE ASSESSMENT. IN THE LIGHT OF THE DISCUSSION MADE ABOVE AND IN VI EW OF THE SUPREME COURT RULINGS (SUPRA) AND ALSO THE RELEVANT PROVISIONS OF THE IT ACT ALREADY DEALT WITH, I AM OF THE CONSIDERED VIEW THAT THE IMPUGNED ORDER I S LIABLE TO BE SET ASIDE AND ACCORDINGLY, IT IS SET ASIDE AND THE WRIT PETITION IS ALLOWED WITH NO ORDER AS TO COSTS. 8 IN VIEW OF THE ABOVE DISCUSSION I HOLD THAT IN THE INSTANT CASE, IN THE ABSENCE OF ANY NEW MATERIAL OR TANGIBLE MATERIAL, THE AO IS NO T EMPOWER TO REOPEN THE CASE OF ASSESSEE, IRRESPECTIVE OF THE FACT WHETHER IT WAS MADE UNDER SECTION 143(1) OR SECTION 143 OF THE ACT. AFTER PERUSING T HE REASONS RECORDED BY THE ASSESSING OFFICER IN THIS CASE IT WOULD BE CLEAR TH AT A.O. HAD EXAMINED THE ASSESSMENT RECORDS OR THE MATERIALS ALREADY BEFORE HIM AND NO FRESH MATERIAL OR TANGIBLE MATERIAL HAD COME IN THE NOTICE OF THE ASS ESSING OFFICER. THIS FACT HAS NOT BEEN CONTROVERTED BY SHRI S.K.MITTAL, LD. DR. THE DECISION OF THE HONBLE DELHI HIGH COURT AND HONBLE MADRAS HIGH COURT REFE RRED TO ABOVE ARE SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THA T VIEW OF THE MATTER, I THINK IT APPROPRIATE TO QUASH THE ORDERS PASSED UNDER SECTIO N 143(3) READ WITH SECTION 147 OF THE ACT. 9. SINCE I HAVE QUASHED THE IMPUGNED ORDERS, THEREF ORE I DO NOT THINK IT NECESSARY TO DECIDE THE GROUND RAISED BY THE ASSESS EE ON MERITS AND THE FINDINGS GIVEN IN RESPECT OF THESE ISSUES WILL BE O F ACADEMIC NATURE. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 29/02/2016. (H.L.KARWA) VICE PRESIDENT DATED : 29/02/2016 AG COPY TO:1. THE APPELLANT,2. THE RESPONDENT,3.THE CI T, 4.THE CIT(A),5. THE LD. DR
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