M/s. Odyssey Share Broking Services, Kolkata V. ITO, Ward 35(1), Kolkata, Kolkata

ITA 847/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1380 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 25-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S BISWAS
• Keywords: Retrospective amendment; Reason to believe; Reassessment proceedings
• Section: 147; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH (SMC), KOLKATA [BEFORE HONBLE SHRI P.M. JAGTAP] I.T.A. NO. 847/KOL/2017 ASSESSMENT YEAR 2010-11 M/S. ODYSSEY SHARE BROKING SERVICES.............................APPELLANT 8, LYONS RANGE, 1 ST FLOOR, DALHOUSIE SQUARE, KOLKATA - 700001 [PAN : AABFO7020K] ITO WARD NO. 35(1)................................RESPONDENT AAYAKAR BHAWAN, 110 SHANTI PALLY, PURVA, 8 TH FLOOR KOLKATA - 700107 APPEARANCES BY: SHRI RAVI TULSIYAN, FCA APPEARING ON BEHALF OF THE ASSESSEE. SHRI S. BISWAS, ADDL CIT APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : OCTOBER 04, 2017 DATE OF PRONOUNCING THE ORDER : OCTOBER 06, 2017 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT (APPEALS) 10, KOLKATA DATED 04.02.2017. 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO THIS APPEAL ARE AS FOLLOWS. THE ASSESSEE IS A PARTNERSHIP FIRM WHICH IS CARRYING ON THE BUSINESS OF SHARE BROKING. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 30.08.2010 DECLARING A TOTAL INCOME OF RS. 1,548/-. THE SAID RETURN WAS INITIALLY PROCESSED BY THE AO UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY THE ASSESSMENT HOWEVER WAS REOPENED BY THE AO ON THE BASIS OF THE INFORMATION RECEIVED FROM THE DIRECTOR OF INCOME TAX (INTELL & CR. INV.), MUMBAI. IN THIS REGARD, A NOTICE UNDER SECTION 148 WAS ISSUED BY HIM TO THE 2 I.T.A. NO. 847/KOL/2017 M/S. ODYSSEY SHARE BROKING SERVICES ASSESSEE ON 20.03.2015 AND IN THE ASSESSMENT MADE UNDER SECTION 143(3)/147 VIDE AN ORDER DATED 29.07.2016, TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE AO AT RS. 24,36,692/- AFTER MAKING AN ADDITION OF RS. 24,34,872/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF DISALLOWANCE OF EXPENSES. 3. AGAINST THE ORDER PASSED BY THE AO UNDER SECTION 143(3)/147, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT (A) CHALLENGING THE VALIDITY OF THE SAID ASSESSMENT AS WELL AS DISPUTING THE ADDITION MADE THEREIN ON ACCOUNT OF DISALLOWANCE OF EXPENSES. THE LD. CIT (A) HOWEVER DID NOT FIND MERIT IN THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE IN SUPPORT OF ITS CASE AND REJECTING THE SAME, HE UPHELD THE ORDER OF THE AO PASSED UNDER SECTION 143(3)/147 THEREBY DISMISSING THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD. CIT (A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. ALTHOUGH AS MANY AS SEVEN GROUNDS ARE RAISED BY THE ASSESSEE IN THIS APPEAL, THE ONLY CONTENTION RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE THE TRIBUNAL IS THAT THERE BEING NO ADDITION MADE ON ACCOUNT OF THE ISSUE RAISED IN THE REASONS RECORDED THE ADDITION MADE ON THE DIFFERENT ISSUE, WHICH WAS NOT THERE IN THE REASONS RECORDED, IS NOT SUSTAINABLE IN LAW. IN THIS REGARD, HE HAS INVITED OUT ATTENTION TO THE REASONS RECORDED BY THE AO WHICH READ AS UNDER: INFORMATION HAS BEEN RECEIVED FROM THE DEPARTMENTAL SOURCES THAT YOU HAVE EARNED COMMISSION INCOME DURING THE F.Y. 2009-10 BY INDULGING / MISUSING THE 3 I.T.A. NO. 847/KOL/2017 M/S. ODYSSEY SHARE BROKING SERVICES CLIENT CODE MODIFICATION FACILITY AND SUPPRESSED THE INCOME FOR TAX PURPOSES. ON RECEIVING THE INFORMATION, THE RETURN FOR A.Y. 2010-11 FILED BY YOU ON 30.08.2010 HAS BEEN SCRUTINISED AND FOUND THAT THE INCOME HAS BEEN ESCAPED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO INVITED OUR ATTENTION TO THE ORDER PASSED BY THE AO UNDER SECTION 143(3)/147 OF THE ACT TO SHOW THAT NO ADDITION ON ACCOUNT OF COMMISSION INCOME AS MENTIONED IN THE REASONS RECORDED WAS MADE BY THE AO TO THE TOTAL INCOME OF THE ASSESSEE AND THE ONLY ADDITION MADE BY HIM WAS ON ACCOUNT OF ENTIRELY DIFFERENT ISSUE RELATING TO THE DISALLOWANCE OF EXPENSES. RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS JET AIRWAYS (I) LTD. 331 ITR 236 AND HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS SOFTWARE CONSULTANTS 341 ITR 340, HE HAS CONTENDED THAT THE ADDITION MADE BY THE AO ON THE ISSUE WHICH WAS NOT THERE IN THE REASONS RECORDED WITHOUT MAKING ANY ADDITION ON THE ISSUE INVOLVED IN THE REASONS RECORDED IS NOT SUSTAINING. HE HAS SUBMITTED THAT THIS ARGUMENT WAS SPECIFICALLY RAISED BY THE ASSESSEE BEFORE THE LD. CIT (A) TO KNOW THE DECISION WHATSOEVER HAS BEEN GIVEN BY THE LD. CIT (A) VIDE HIS IMPUGNED ORDER ON THIS ISSUE. 6. THE LEARNED DR, ON THE OTHER HAND, HAS RELIED ON EXPLANATION 3 TO SECTION 147 TO CONTEND THAT THE ADDITION ON THE ISSUE WHICH WAS NOT THERE IN THE REASONS RECORDED IS STILL PERMISSIBLE IN THE REASSESSMENT AS PER THE SAID EXPLANATION INSERTED BY 2009 ACT WITH RETROSPECTIVE EFFECT FROM APRIL 1, 1989. HOWEVER AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE EFFECT OF EXPLANATION 3 TO SECTION 147 HAS ALREADY BEEN CONSIDERED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS JET AIRWAYS (I) LTD. 331 ITR 236 WHEREIN IT WAS 4 I.T.A. NO. 847/KOL/2017 M/S. ODYSSEY SHARE BROKING SERVICES HELD THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME, WHICH HE HAS REASON TO BELIEVE HAD ESCAPED ASSESSMENT AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF REASSESSMENT PROCEEDINGS. EXPLAINING FURTHER, IT WAS HELD THAT IT IS ONLY WHEN, IN PROCEEDINGS UNDER SECTION 147, THE ASSESSING OFFICER ASSESSES OR REASSESSES ANY INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT OR IN ASSESSMENT YEAR, WITH RESPECT TO WHICH HE HAD RAISING TO BELIEVE TO BE SO, THEN ONLY, IN ADDITION, HE CAN ALSO PUT TO TAX, THE OTHER INCOME, CHARGEABLE TO TAX, WHICH HAS ESCAPED ASSESSMENT, AND WHICH HAS COME TO HIS NOTICE SUBSEQUENTLY, IN THE COURSE OF PROCEEDINGS UNDER SECTION 147. 7. IN THE CASE OF CIT VS SOFTWARE CONSULTANTS 341 ITR 240 (DELHI), THE ASSESSMENT FOR THE RELEVANT YEAR WAS REOPENED BY THE AO ON THE BASIS OF INFORMATION RECEIVED BY HIM REGARDING THE INVESTMENT OF RS. 20,00,000/- MADE BY THE ASSESSEE IN FIXED DEPOSIT RECEIPTS. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3)/147, THE AO HOWEVER DID NOT MAKE ANY ADDITION ON ACCOUNT OF INVESTMENT MADE BY THE ASSESSEE IN THE FIXED DEPOSITS. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, ENQUIRY WAS ALSO MADE BY THE AO ON THE ISSUE OF SHARE APPLICATION MONEY WHICH WAS INCREASED BY RS. 47,00,000/- DURING THE RELEVANT YEAR. NO ADDITION HOWEVER WAS FINALLY MADE BY THE AO ON THE ISSUE OF SHARE APPLICATION MONEY IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3)/147. THE CONCERNED CIT EXERCISING HIS POWERS UNDER SECTION 263 DIRECTED THE AO TO CONDUCT FURTHER ENQUIRY IN RESPECT OF THE SHARE APPLICATION MONEY OF RS. 47,00,000/-. WHEN THE ORDER PASSED BY THE LD. CIT (A) UNDER SECTION 263 WAS CHALLENGED BY THE 5 I.T.A. NO. 847/KOL/2017 M/S. ODYSSEY SHARE BROKING SERVICES ASSESSEE IN AN APPEAL FILED BEFORE THE TRIBUNAL, THE ORDER UNDER SECTION 263 WAS QUASHED BY THE TRIBUNAL BY HOLDING THAT NO ADDITION HAVING BEEN MADE ON ACCOUNT OF THE REASONS FOR REOPENING, WHICH WAS RECORDED BEFORE THE ISSUE NOTICE U/S 148, THE ASSESSING OFFICER COULD NOT HAVE MADE AN ADDITION ON ACCOUNT OF THE SHARE APPLICATION MONEY AS NO ADDITION HAD BEEN MADE ON ACCOUNT OF FIXED DEPOSIT OF RS. 20,00,000/-. ON FURTHER APPEAL BY THE REVENUE, HONBLE DELHI HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL BY RELYING INTER ALIA ON THE DECISION OF HONBLE BOMBAY IN THE CASE OF JET AIRWAYS (I) LTD. (SUPRA). HAVING REGARD TO THE FACTS OF THE CASE AND KEEPING IN VIEW THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS (I) LTD. AS WELL AS HONBLE DELHI HIGH COURT IN THE CASE OF SOFTWARE CONSULTANTS (SUPRA), WE DELETE THE ADDITION OF RS. 24,34,782/- MADE BY THE AO AND CONFIRMED BY THE LD. CIT (A) ON ACCOUNT OF DISALLOWANCE OF EXPENSES AND ALLOW THIS APPEAL OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH OCTOBER, 2017. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER DATED: 06/10/2017 BISWAJIT, SR. P.S. COPY OF ORDER FORWARDED TO: 1. M/S. ODYSSEY SHARE BROKING SERVICES, 8, LYONS RANGE, 1 ST FLOOR, DALHOUSIE SQUARE, KOLKATA 700001. 2. ITO WARD NO. 35(1), KOLKATA. 6 I.T.A. NO. 847/KOL/2017 M/S. ODYSSEY SHARE BROKING SERVICES 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA