JEEVANLAL RIKHABCHAND JAIN, MUMBAI V. ASST CIT RG 14(3), MUMBAI

ITA 910/MUM/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3543 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 24-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 10-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAVI RAM CHANDRAN
• Assessee Lawyers: AJAY R SINGH
• Keywords: Difference of opinion; Change of opinion
• Section: 143(3); 147; 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI BEFORE SHRI JASON P. BOAZ ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO. 910/MUM/2014 (ASSESSMENT YEAR : 2006-07) JEEVANLAL RIKHABCHAND JAIN, 287, DHARAMRAJ GULLY, M.J.MARKET, MUMBAI 400 002 PAN: ADEPJ 5845K ... APPELLANT VS. ASSTT. COMMISSIONER OF INCOME TAX, RANGE 14(3), EARNEST HOUSE, MUMBAI 400 020 .... RESPONDENT APPELLANT BY : SHRI A JAY R. SINGH RESPONDENT BY : SHRI K. RA VI RAMCHANDRAN DATE OF HEARING : 07/01/2016 DATE OF PRONOUNCEMENT : 13/01/2016 ORDER PER JASON P. BOAZ, A.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS)-25, MUMBAI DATED 12/12/2013 FOR ASSESS MENT YEAR 2006- 07. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER:- 2.1 THE ASSESSEE, IN BUSINESS AS MANUFACTURER AND T RADER IN CLOTH, FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2006 -07 ON 31/10/2006 DECLARING INCOME OF RS.10,29,070/-. THE CASE WAS T AKEN UP FOR SCRUTINY 2 ITA NO. 910/MUM/2014 (ASSESSMENT YEAR : 2006-07) AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT), WHEREIN THE INCOME OF T HE ASSESSEE WAS DETERMINED AT RS.36,60,120/- VIDE ORDER DATED 18/12 /2008 AFTER ALLOWING THE ASSESSEE EXEMPTION U/S. 54 OF THE ACT TO THE EXTENT OF RS.71 LAKHS AS AGAINST RS.95 LAKHS CLAIMED. NO APP EAL WAS FILED BY THE ASSESSEE AGAINST THE AFORESAID ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2006-07. 2.2 THE ASSESSMENT FOR ASSESSMENT YEAR 2006-07 WAS SUBSEQUENTLY REOPENED BY THE ASSESSING OFFICER BY INITIATING PR OCEEDINGS U/S. 147 OF THE ACT ON THE ISSUE OF GRANT OF EXEMPTION OF CAPIT AL GAIN U/S. 54 OF THE ACT ON THE SALE OF PROPERTY. NOTICE U/S. 148 OF TH E ACT WAS ISSUED TO THE ASSESSEE ON 30/9/2009. THIS ASSESSMENT WAS COMPLET ED U/S. 143(3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 22/12/2010 B Y WITHDRAWING THE EXEMPTION EARLIER GRANTED UNDER SECTION 54 OF THE A CT AND THEREBY DETERMINING THE ASSESSEES TOTAL INCOME AT RS.1,08, 60,120/-. ON APPEAL BY THE ASSESSEE, THE LD. CIT(A) VIDE ORDER DATED 28 /7/2011 ALLOWED THE ASSESSEE EXEMPTION UNDER SECTION 54 OF THE ACT TO THE EXTENT OF RS.71 LAKHS AS WAS ALLOWED IN THE ORIGINAL ORDER ASSESSME NT FOR ASSESSMENT YEAR 2006-07. 2.3 IT IS MENTIONED THAT WHILE GIVING EFFECT TO THE AFORESAID ORDER OF THE CIT(A), NEW FACTS EMERGED FROM THE DETAILS ON RECORD AND CONSEQUENTLY, A SHOW CAUSE NOTICE WAS ISSUED TO T HE ASSESSEE (AS REPRODUCED AT PARA-5 OF THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2006-07 PASSED UNDER SECTION 143(3) R.W.S. 147 OF T HE ACT VIDE ORDER DATED 31/01/2013) AS TO WHY PROCEEDINGS UNDER SECTI ON 147 OF THE ACT BE NOT INITIATED IN THE CASE FOR ASSESSMENT YEAR 20 06-07. THE ASSESSEE 3 ITA NO. 910/MUM/2014 (ASSESSMENT YEAR : 2006-07) FILED ITS OBJECTIONS THERETO VIDE LETTERS DATED 4/1 0/2011 AND 7/10/2011, WHICH WERE REJECTED BY THE ASSESSING OFFICER. IN RESPONSE TO NOTICE U/S. 148 DATED 9/3/2012, THE ASSESSEE FILED A RETUR N OF INCOME ON 10/04/2012 DECLARING TOTAL INCOME OF RS.10,29,070/- , AFTER CLAIMING EXEMPTION OF RS.95,00,000/- U/S.54 OF THE ACT. THE ASSESSMENT WAS COMPLETED U/S. 143(3) R.W.S. 147 OF THE ACT VIDE OR DER DATED 31/1/2013, WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED A T RS.1,08,60,120/- IN VIEW OF THE ASSESSING OFFICER DISALLOWING THE AS SESSEES CLAIM FOR EXEMPTION OF RS.95,00,000/- U/S. 54 OF THE ACT. 2.4 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESS MENT YEAR 2006- 07 DATED 31/1/2013 FOR ASSESSMENT YEAR 2006-07, TH E ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS)-25, MUM BAI RAISING VARIOUS GROUNDS OF THE VALIDITY OF ASSUMPTION OF JURISDICTI ON U/S. 147, THE VALIDITY OF THE ASSESSMENT ORDER, ETC., AND ON M ERITS OF THE CLAIM OF EXEMPTION U/S. 54 OF THE ACT. THE LD. CIT(A) DISPO SED OF THE APPEAL VIDE THE IMPUGNED ORDER DATED 12/12/2013 PARTLY ALLOWING THE ASSESSEES APPEAL FOR STATISTICAL PURPOSES. 3. AGGRIEVED BY THE CIT(APPEALS)-25, MUMBAI DATED 1 2/12/2013 FOR ASSESSMENT YEAR 2006-07, THE ASSESSEE HAS PREFERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX APPEALS)-25; 1. ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OF FICER FOR INITIATING PROCEEDINGS UNDER S. 147 OF THE ACT WHICH ARE ILLEGAL, BAD IN L AW AND VOID AB INITIO; 1.1. ERRED IN NOT APPRECIATING THAT NO INCOME CHAR GEABLE TO TAX HAS ESCAPE ASSESSMENT; 1.2 ERRED IN CONFIRMING THAT THE APPELLANT HAS NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. 4 ITA NO. 910/MUM/2014 (ASSESSMENT YEAR : 2006-07) 1.3 OUGHT TO HAVE APPRECIATED THAT THE REOPENING I S ON ACCOUNT OF CHANGE OF OPINION; 2. WITHOUT PREJUDICE TO ABOVE ERRED IN CONFIRMING THE ACTION OF LEARNED A.O I N NOT ALLOWING DEDUCTION UNDER SECTION54; 2.1 OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HA S NOT VIOLATED THE PROVISIONS OF SUB-SECTION 54 OF THE INCOME TAX ACT, 1961; 2.2 OUGHT TO HAVE APPRECIATED THAT APPELLANT WAS PR EVENTED BY SUFFICIENT CAUSE FOR NOT DEPOSITING THE AMOUNT IN CAPITAL GAIN ACCOUNT S CHEME. 3. WITHOUT PREJUDICE TO ABOVE FAILED TO APPRECIATED THAT SEC.54 OF THE ACT I S A BENEFICIAL PROVISION AND SHOULD BE CONSTRUCTED LIBERABLLY. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, MO DIFY OR DELETE ANY OF THE ABOVE GROUND OR GROUNDS OF APPEAL. 4.1.1 IN THE GROUNDS RAISED AT S.NO.1 TO 1.3, THE ASSESSEE CONTENDS THAT THE ACTION OF THE ASSESSING OFFICER IN INITIATING PROCEEDINGS U/S. 147 OF THE ACT AND ISSUE OF NOTICE UNDER SECTION 148 OF TH E ACT ARE ILLEGAL, BAD IN LAW AND VOID-AB-INITIO AS THERE WAS NO INCOME OF THE ASSESSEE CHARGEABLE TO TAX THAT HAD ESCAPED ASSESSMENT. IT IS CONTENDED THAT THE ASSESSEE HAD DISCLOSED FULLY AND TRULY ALL MATE RIAL FACTS NECESSARY FOR THE ASSESSMENT AND THE INITIATION OF THE ASSESSMENT PROCEEDINGS ON THE SAME SET OF FACTS AMOUNTED ONLY TO A CHANGE IN OPIN ION BY THE ASSESSING OFFICER . 4.1.2 IN SUPPORT OF THE AFORESAID CONTENTIONS OF T HE ASSESSEE THAT THE ORDER OF ASSESSMENTS DATED 31/1/2013 FOR THE AS SESSMENT YEAR 2006-07 IS BAD IN LAW, THE LD. AR SUBMITTED THAT T HE RE-ASSESSMENT PROCEEDINGS INITIATED UNDER SECTION 147 OF THE ACT AND PURSUANT TO THE ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT WERE C ARRIED OUT IN VIOLATION OF THE PROCEDURE LAID DOWN BY LAW AND JUDICIAL PRE CEDENTS ON THE