M/a Citi Plaza, Jalandhar V. The Income Tax Officer, Jalandhar

ITA 86/ASR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9558 (ITAT-AMRITSAR)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 08-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKER
• Assessee Lawyers: J S BHASIN
• Keywords: Reopening of assessment; Principle of natural justice; Difference of opinion; Change of opinion
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. (CAMP AT JALANDHAR) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.86(ASR)/2016 ASSESSMENT YEAR:2006-07 PAN: ABOPS0558G M/S. CITI PLAZA VS. THE INCOME TAX OFFICER, RAINAK BAZAR, WARD III(1), THROUGH S.JOGINDER SINGH JALANDHAR, ES 225, MAKHDOOM PURA, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. J.S. BHASIN, ADVOCATE RESPONDENT BY: SH. BHAWANI SHANKER, DR DATE OF HEARING: 29/06/2016 DATE OF PRONOUNCEMENT: 15/09/2016 ORDER PER T.S. KAPOOR, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A), DATED 23.11.2015, FOR THE ASSESSMENT YEAR 2 006-07. 2. AT THE OUTSET, THE LD. AR INVITED OUR ATTENTION TO GROUND NO.4 OF THE APPEAL AND SUBMITTED THAT THE LD. CIT(A) SHOU LD HAVE HELD THE REOPENING AS BAD IN LAW, AS THE AO HAD NOT DISPOSED OF THE ASSESSEES LEGAL OBJECTIONS. IN THIS RESPECT, OUR ATTENTION WA S INVITED TO PAPER BOOK PAGES 14 & 15, WHEREBY VIDE LETTER DATED 07.10.2014 , THE ASSESSEE HAD RAISED VARIOUS LEGAL OBJECTIONS. HIGHLIGHTING THE F ACTS OF THE CASE, THE LD. IT NO.86(ASR)/2016 A.Y. 2006-07 2 AR SUBMITTED THAT THE ASSESSEE WAS A FIRM AND HAD N OT FILED ITS RETURN OF INCOME, AS THERE WAS NIL INCOME AND THEREFORE, THE CASE OF THE ASSESSEE WAS REOPENED FOR THE ASSESSMENT YEAR 2005-06 AND TH E ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS.81,83,198/- ALONG WITH LONG TERM CAPITAL GAINS OF RS.1.53 CRORES. THE LD. CIT(A) HAD DELETED THE ADDITION BY HOLDING THAT THE ADDITION WAS NOT SUSTAINABLE IN TH AT YEAR AND THE AO WAS FREE TO TAKE ACTION AGAINST THE ASSESSEE IN TH E ASSESSMENT YEAR 2006-07 THAT IS THE PRESENT YEAR AND THEREFORE, THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 148 OF THE ACT. IT WAS S UBMITTED THAT THE DETAILED LEGAL OBJECTIONS WERE FILED AGAINST THE RE OPENING BUT THE AO DID NOT DEAL WITH THE SAME AND WITHOUT REBUTTING THE LE GAL OBJECTIONS HAS MADE THE ADDITION. IT WAS SUBMITTED THAT BEFORE THE LD. CIT(A), THE ARGUMENT WAS TAKEN VIDE GROUND NO.2, BUT THE LD. CI T(A) ALSO IGNORED THE SAME AND UPHELD THE ACTION OF THE A.O. IN VIEW OF THE ABOVE, IT WAS SUBMITTED THAT THE ASSESSMENT ORDER BE QUASHED. 3. THE LD. DR, ON THE OTHER HAND, HEAVILY PLACED R ELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE GON E THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ASSESSE E VIDE LETTER DATED 07.10.2014 HAD RAISED VARIOUS LEGAL OBJECTIONS, WHI CH FOR THE SAKE OF CONVENIENCE ARE REPRODUCED AS UNDER: SUB: FILING OF LEGAL OBJECTIONS NOTICE U/S 148 FOR AY 2006-07. IT NO.86(ASR)/2016 A.Y. 2006-07 3 THE REASONS RECORDED IN THE ABOVE NOTED CASE HAS BE EN EXAMINED AND THE SAME ARE OBJECTED TO AS UNDER: IT IS ADMITTED IN THE REASONS THAT THE ASSESSMENT I N THIS CASE WAS ALREADY MADE BY INVOKING SECTION 148 ON 29.03.2 012. THE ORDER PASSED ON 27.12.12 FOR AY 2005-06 WHEREIN THE IMPUGNED CAPITAL GAIN ON SALE OF BUILDING NAMED M/S CITI PLA ZA WAS BROUGHT TO TAX. THE REOPENING IN THAT YEAR WAS CHALLENGED B EFORE THE CIT(A), JALANDHAR AND THE SAME HAS BEEN UPHELD IN THE APPEL LATE ORDER DATED 23.01.2014. THIS MEANS THE AO WAS SATISFIED O N THE BASIS OF MATERIAL BEFORE HIM THAT THE CAPITAL GAIN WAS LIABL E TO TAX IN THAT VERY YEAR. NOW, THE CASE HAS BEEN REOPENED FOR THE AY 2006-07 AGAIN ON THE BASIS OF THE SAME MATERIAL TO ASSESS T HE CAPITAL GAIN IN THIS YEAR. THIS IS NOT ONLY CONTRADICTORY BUT AL SO A CHANGE OF OPINION AVD HENCE NOT MAINTAINABLE. THE NOTICE U/S 148 DATED 06.03.2014 NOW ISSUED TO R EASSESS THE ALLEGED UNDISCLOSED CAPITAL GAIN FOR AY 2006-07 IS APPARENTLY BARRED BY TIME. UNDER THE PROVISIONS OF SECTION 149 (L)(B), SUCH NOTICE UNDER SECTION 148 COULD AT THE MOST BE SERVE D UPTO 31.03.2013 AND NOT BEYOND THAT DATE. THEREFORE THE NOTICE BEING TIME BARRED, THE PRESENT PROCEEDINGS ARE VOID AB IN ITIO. IF THE LIMITATION TO SERVE THE NOTICE IS BEING SAVE D BY REFERRING TO DIRECTIONS OF THE ID.CIT(A), JALANDHAR IN HIS APPELLATE ORDER DATED 23.01.2 T14, IT IS POINTED OUT THAT THE RE IS NO SUCH DIRECTION GIVEN BY THE CIT(A), JALANDHAR TO REOPEN THE CASE FOR AY 2006-07. THE ID. CIT(A), JALANDHAR WHILE DELETING H E ADDITION HAD PROMPTLY MADE AN OBSERVATION THAT THE AO IS FREE TO TAKEN AN E ION AGAINST THE ASSESSEE TO TAX THE LONG TERM CAPITAL G AIN IN AY 2006- 07. THIS OBSERVATION IS NOT A ! RUCTION BY ANY MEAN S. IT IS ONLY AN OBSERVATION GIVING A CHOICE TO THE AO TO PROCEED AG AINST THE ASSESSEE AS PER LAW, IN THE CASE OF RAJINDER NATH VS CIT (1979) 120 ITR 14 (SC), IT WAS HELD THAT WHEN IT IS LEFT T O THE OPTION OR THE DISCRETION OF THE ITO, WHETHER OR NOT TO TAKE AN AC TION IT CANNOT BE DESCRIBED AS A DIRECTION. THEREFORE, IF AN ACTION U NDER THE LAW IS MAINTAINABLE, ONLY THEN THE AO CAN PROCEED AGAINST THE ASSESSEE. AS ALREADY STATED IN THE PRECEDING PARA, SINCE THE LIMITATION TO ISSUE THE NOTICE HAD ALREADY BECOME TIME BARRED, NO PROCEEDINGS COULD HE INITIATED AGAINST THE ASSESSEE ON A MERE O BSERVATION OF THE APPELLATE AUTHORITY, AS IT WAS NOT IN CONFIRMIT Y WITH THE LEGAL PROVISIONS. AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE O F HOPE TEXTILE VS. UOI (1994) 205 ITR 508 (SC) THAT A COUR T CANNOT DIRECT AN ITO TO PASS ORDER OF ASSESSMENT BEYOND THE PERIO D OF LIMITATION. IT NO.86(ASR)/2016 A.Y. 2006-07 4 IT IS ALSO ADDED THAT HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS T.A KRISHNASWAMI (2008) 2 DTR (MAD) 143 HELD THA T CIT(A), HAS NO POWER TO DIRECT REOPENING OF A CASE FOR ANOTHER YEAR. THUS, THE CUMULATIVE EFFECT OF THE ABOVE OBJECTIONS AS WELL AS THE LEGAL POSITION IS THAT THE NOTICE U/S 148 ISSUED ON 06.03.2014 IS INCOMPETENT AND WITHOUT JURISDICTION AS ALSO BARRED BY TIME. THEREFORE, THE PROCEEDINGS INITIATED U/S 148 IS REQ UESTED TO BE DROPPED. THANKING YOU, DATED: 07.10.2014 YOURS FAITHFULLY SD/- JOGINDER SINGH PARTNER 5. BEFORE THE LD. CIT(A), VIDE GROUND NO.2, THE ASS ESSEE HAD RAISED THIS GRIEVANCE. HOWEVER, THE LD. CIT(A) HAD NOT DIS POSED OF THE LEGAL OBJECTIONS. THE LD. CIT(A) HELD THAT THE OBJECTIONS RAISED BY THE ASSESSEE FIRM WITH REGARD TO REASSESSMENT ARE MEANINGLESS W HEN THE ASSESSEE IS ITSELF WAS SAYING THAT THE LONG TERM CAPITAL GAINS IF ANY, WAS ASSESSABLE IN THE ASSESSMENT YEAR 2006-07. THE LD. CIT(A) FURT HER HELD THAT THERE WERE SPECIFIC DIRECTIONS TO REOPEN THE ASSESSMENT A ND THE ASSESSEE SHOULD NOT HAVE RAISED ANY OBJECTION WITH REGARD TO REOPENING OF ASSESSMENT FOR THE ASSESSMENT YEAR 2006-07. WE FIND THAT THIS FINDING OF THE LD. CIT(A) THAT THE ASSESSEE SHOULD NOT HAVE R AISED ANY LEGAL OBJECTION IS NOT JUSTIFIED AND IS AGAINST THE PRIN CIPLES OF NATURAL JUSTICE. THE LD. CIT(A) SHOULD HAVE DEALT WITH THE LEGAL OBJ ECTIONS RAISED BY THE ASSESSEE, AS THE ASSESSEE HAD SPECIFICALLY RAISED T HIS ISSUE BEFORE HIM. WE, THEREFORE, DEEM IT APPROPRIATE TO REMIT THIS IS SUE TO THE FILE OF LD. CIT(A), WHO SHOULD DECIDE THE SAME AFRESH AFTER TAK ING INTO CONSIDERATION IT NO.86(ASR)/2016 A.Y. 2006-07 5 THE LEGAL OBJECTIONS RAISED BY THE ASSESSEE. IN VI EW OF THE ABOVE, GROUND NO.4 OF THE ASSESSEES APPEAL IS ALLOWED AND OTHER GROUNDS ARE NOT REQUIRED TO BE ADJUDICATED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15/09/ 2016. SD/- SD/- (A.D. JAIN) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER /SKR/ DATED: 15/09/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. CITI PLAZA, JALANDHAR 2. THE ITO III(1), JALANDHAR 3. THE CIT(A), JALANDHAR 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.