Shri Ratan Lal Sarawgi, Guwahati V. Income Tax Officer, Ward-2(2), Guwahati

ITA 99/GTY/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8372 (ITAT-GUWAHATI)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 02-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Borrowed satisfaction
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, GUWAHATI E-COURT AT KOLKATA BEFORE SRI SANJAY GARG, JUDICIAL MEMBER I.T.A. NOS.99&100/GAU/2020 ASSESSMENT YEARS: 2011-12 & 2012-13 SRI RATAN LAL SARAWGI.............. ..APPELLANT MAHABIR MARKET, A BLOCK, H.B. ROAD, FANCY BAZAR, GUWAHATI-781001. [PAN :AGFPS5533B] VS. ITO, WARD-2(2), GUWAHATI.......RESPONDENT APPEARANCES BY: SHRI SANJAY MODI, FCA, APPEARED ON BEHALF OF THE APPELLANT. SHRI AMITAVA SEN, JCIT, SR. DR, APPEARED ON BEHALF OF THE RESPONDENT. DATE OF CONCLUDING THE HEARING : MARCH 17, 2021 DATE OF PRONOUNCING THE ORDER : MARCH 17, 2021 ORDER PER SANJAY GARG, JUDICIAL MEMBER:- THE CAPTIONED APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST TWO SEPARATE ORDERS DATED 24.01.20 OF THE COMMISSIONER OF INCOME TAX (APPEALS), GUWAHATI [HEREINAFTER REFERRED TO AS THE CIT(A)] 2. THE ASSESSEE IN BOTH THE APPEALS HAS CONTESTED THE CONFIRMATION OF THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE REASSESSMENT FRAMED U/S 147 R.W. SECTION 148 OF THE INCOME TAX ACT (HEREINAFTER THE ACT). 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT COMMON GROUND TAKEN IN BOTH THE APPEALS IS RELATING TO THE VALIDITY OF REOPENING OF THE ASSESSMENT U/S 148 OF THE ACT. THE LD. COUNSEL HAS FURTHER SUBMITTED THAT SINCE THIS LEGAL GROUND TAKEN BY THE ASSESSEE IS RELEVANT IN BOTH THE CASES AND IF THE SAME IS DECIDED IN FAVOUR OF THE ASSESSEE THEN THE VALIDITY OF THE ADDITIONS MADE ON MERITS WILL BE RENDERED ACADEMIC IN NATURE. HE, THEREFORE, HAS SUBMITTED THAT THE COMMON ISSUE RELATING TO THE VALIDITY OF THE REOPENING OF THE ASSESSMENT MAY BE HEARD FIRST. 2 I.T.A. NOS.99&100/GAU/2020 ASSESSMENT YEARS: 2011-12 & 2012-13 SRI RATAN LAL SARAWGI 4. THE LD. DR HAS NOT OBJECTED TO THE SAME. 5. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET HAS BROUGHT MY ATTENTION TO THE FACT THAT IN THIS CASE THE NOTICE U/S 148 OF THE ACT FOR REOPENING OF THE ASSESSEE WAS ISSUED BY ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, GUWAHATI [IN SHORT ACIT, CIRCLE-2]. HE HAS FURTHER BROUGHT MY ATTENTION TO THE ASSESSMENT ORDER FRAMED U/S 147 OF THE ACT TO SHOW THAT THE ASSESSMENT ORDER HAS BEEN PASSED BY INCOME TAX OFFICER, WARD-2(2), GUWAHATI [IN SHORT ITO, WARD-2(2)]. THE LD. COUNSEL HAS FURTHER INVITED MY ATTENTION TO PAGE 23 OF THE PAPER-BOOK WHICH IS A COPY OF THE LETTER DATED 16.08.2018 ISSUED BY THE ACIT, CIRCLE-2 VIDE WHICH HE HAS TRANSFERRED A TOTAL OF 11 CASES TO ITO, WARD-2(2) STATING THAT THE AFORESAID CASES WERE BEING TRANSFERRED TO ITO, WARD-2(2) SINCE THE JURISDICTION OF THESE CASES LIES WITH HIS OFFICE. THE LD. COUNSEL HAS FURTHER SUBMITTED THAT IN THIS CASE, FIRST THE JURISDICTION TO ISSUE NOTICE U/S 148 DID NOT LIE WITH THE ACIT, CIRCLE-2, HE WRONGLY EXERCISED HIS JURISDICTION AND ISSUED NOTICE U/S 148 OF THE ACT TO THE ASSESSEE. HE HAS FURTHER SUBMITTED THAT EVEN OTHERWISE THE ACIT, CIRCLE-2 DID NOT HAVE ANY POWERS TO TRANSFER THE CASES TO ITO, WARD-2(2) AT HIS OWN. HE HAS SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 127 OF THE ACT, THE JURISDICTION TO TRANSFER THE CASES FROM ONE ASSESSING OFFICER TO ANOTHER ASSESSING OFFICER LIES WITH THE COMMISSIONER OF INCOME TAX. THE LD. COUNSEL HAS SUBMITTED THAT THE NOTICES FOR REOPENING OF THE ASSESSMENT WERE ISSUED BY THE OFFICER WHO DID NOT HAVE JURISDICTION TO DO THE SAME AND FURTHER THE ASSESSING OFFICER WHO HAS FRAMED THE ASSESSMENT HAS NOT ISSUED ANY NOTICE U/S 148 OF THE ACT TO THE ASSESSEE. THE ASSESSING OFFICER, IN THIS CASE, HAS FRAMED THE REASSESSMENT ORDER ON THE BASIS OF BORROWED SATISFACTION OF AN OFFICER WHO DID NOT HAVE THE JURISDICTION EVEN TO ISSUE NOTICE. THE ASSESSING OFFICER HAVING JURISDICTION OVER THE ASSESSEE HAS NOT HIMSELF FORMED BELIEF THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THE LD. COUNSEL HAS FURTHER INVITED MY ATTENTION TO THE REASONS RECORDED FOR FORMING BELIEF OF ESCAPEMENT OF ASSESSMENT BY ACIT, CIRCLE-2, RELEVANT WHICH PART FOR THE SAKE OF READY REFERENCE, IS REPRODUCED HEREUNDER: 3 I.T.A. NOS.99&100/GAU/2020 ASSESSMENT YEARS: 2011-12 & 2012-13 SRI RATAN LAL SARAWGI AS PER THE INFORMATION AVAILABLE ON RECORD, DURING THE FINANCIAL YEAR 2010-11 RELEVANT TO THE A.Y UNDER CONSIDERATION, THE ASSESSEE HAD MADE TRANSACTIONS ON TWO COUNTS IN COMMODITY MARKET THROUGH THE FOLLOWING BROKERS: 1. SLA COMMODITIES AND DERIVATIVES PRIVATE LIMITED (CLIENT CODE-CL0383) AMOUNTING TO RS.85,90,750/- AND THEREBY EARNED PROFIT OF RS. 2,13,500/- 2. REVIVE TRADERS PRIVATE LIMITED (CLIENT CODE-CL0230) AMOUNTING TO RS.74,19,000/- AND THEREBY EARNED PROFIT RS.2,11,450/-. THE TOTAL AMOUNT OF PROFIT EARNED THROUGH THE ABOVE TRANSACTIONS IN COMMODITY MARKET WAS RS.4,24,950/-. ON PERUSAL OF YOUR RETURN IN ITR-4 FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, IT IS SEEN THAT 'INCOME FROM BUSINESS' HAS BEEN DISCLOSED AT A LOSS OF (-) RS.15,18,530/- ONLY. THUS, IT APPEARS THAT THE PROFIT EARNED FROM THE COMMODITY MARKET AS STATED ABOVE WAS NOT CORRECTLY DISCLOSED. 6. THE LD. COUNSEL HAS SUBMITTED THAT THE ONLY REASON ON THE BASIS OF WHICH THE ACIT, CIRCLE-2 HAD FORMED BELIEF THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT WAS THAT THE ASSESSEE HAD NOT DISCLOSED THE PROFIT EARNED FROM COMMODITY/DERIVATIVE TRANSACTIONS. THE LD. COUNSEL INVITING MY ATTENTION TO THE COPY OF LETTER DATED 02.07.2018 ADDRESSED TO ACIT, CIRCLE-2 HAS SUBMITTED THAT THE NOTICE WAS DULY REPLIED VIDE AFORESAID LETTER DATED 02.07.2018 WHEREIN IT WAS STATED THAT THE AFORESAID PROFIT FROM DERIVATIVE TRANSACTIONS WAS DULY INCLUDED IN THE RETURN OF INCOME, THEREFORE, THERE WAS NO BASIS TO FORM THE BELIEF THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT ON THIS COUNT. THE LD. COUNSEL HAS SUBMITTED DESPITE THE ABOVE FACT BROUGHT INTO THE KNOWLEDGE OF THE ACIT, CIRCLE-2, HE DID NOT CLOSE THE MATTER RATHER TRANSFERRED THE SAME FOR FRAMING OF REASSESSMENT ORDER TO ITO, WARD-2(2). 7. THE LD. DR, ON THE OTHER HAND, HAS SUBMITTED THAT THE ACIT, CIRCLE-2 OTHERWISE HAD JURISDICTION OVER THE AREA WHERE THE ASSESSEE RESIDED, HOWEVER, THE MATTER WAS TRANSFERRED TO THE ITO, WARD-2(2) BECAUSE OF PECUNIARY JURISDICTION OVER THE MATTER. THE ACIT EXERCISES HIS JURISDICTION WHEN THE INCOME RETURNED/ASSESSED IS MORE THAN THE PRESCRIBED LIMIT FOR CERTAIN AREA OTHERWISE FOR WHICH THE JURISDICTION AS EXERCISED BY ITO. THE SECOND CONTENTION RAISED BY THE LD. DR IS THAT EVEN THE ASSESSEE DID NOT 4 I.T.A. NOS.99&100/GAU/2020 ASSESSMENT YEARS: 2011-12 & 2012-13 SRI RATAN LAL SARAWGI RAISE OBJECTION WITHIN 30 DAYS REGARDING THE JURISDICTION OF THE ASSESSING OFFICER AS PROVIDED U/S 124(3) OF THE ACT AND THEREFORE, AT THIS STAGE, THE ASSESSEE WAS ESTOPPED FROM RAISING THIS OBJECTION. 8. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE RECORD. SO FAR AS THE FIRST POINT IS CONCERNED, THOUGH THE ACIT, CIRCLE-2 AND ITO, WARD-2(2) MAY HAVE CONCURRENT JURISDICTION BUT AS PER THE PROVISIONS OF SECTION 127 OF THE ACT, THE CASES COULD HAVE BEEN TRANSFERRED BY THE COMMISSIONER OF INCOME TAX ONLY. THE ACIT, CIRCLE-2 HIMSELF DID NOT HAVE ANY JURISDICTION TO TRANSFER THE CASE TO THE ITO, WARD- 2(2). SECONDLY, IN THIS CASE, THE ITO, WARD-2(2) HIMSELF DID NOT FORM THE BELIEF THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. EVEN TO REOPEN ASSESSMENT, THE APPLICATION OF MIND IS NECESSARY AND AN HONEST AND CONSCIOUS BELIEF IS REQUIRED TO BE FORMED THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. IN THE REASONS RECORDED, THE ONLY REASON MENTIONED WAS THAT IT APPEARS THAT THE ASSESSEE MAY NOT HAVE ACCOUNTED FOR THE INCOME EARNED FROM DERIVATIVE TRANSACTIONS WHEREAS THE ASSESSEE REPLIED THAT THE SAID INCOME WAS DULY ACCOUNTED FOR IN THE RETURN OF INCOME. BUT WITHOUT APPLICATION OF MIND AND WITHOUT CONSIDERING THIS REPLY, THE ACIT, CIRCLE-2 TRANSFERRED THE CASE TO THE ITO, WARD-2(2) FOR FRAMING OF REASSESSMENT. IN THIS CASE, NEITHER THE OFFICER FRAMING THE ASSESSMENT HIMSELF HAS FORMED THE VIEW THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT NOR THE OFFICER WHO HAD RECORDED REASONS APPLIED HIS MIND TO THE SUBMISSIONS OF THE ASSESSEE THAT THERE WAS NO ESCAPEMENT OF INCOME ON THE ISSUE RAISED BY THE ACIT, CIRCLE-2. MOREOVER, THE CASE HAS BEEN TRANSFERRED BY THE ACIT, CIRCLE-2 HIMSELF FOR WHICH HE DID NOT HAVE THE JURISDICTION UNDER THE PROVISIONS OF SECTION 127 OF THE ACT. SO, IN THIS CASE, THE ITO, WARD-2(2) HAD NO JURISDICTION TO CONTINUE WITH THE ASSESSMENT WHICH WAS TRANSFERRED BY THE ACIT, CIRCLE-2, RATHER, AS PER THE PROVISIONS OF THE ACT, THE ITO, WARD-2(2) IF WANTED TO MAKE REASSESSMENT OF THE ASSESSMENT, HE HIMSELF SHOULD HAVE FORMED THE BELIEF OF THE ESCAPEMENT OF INCOME OR IN THE ALTERNATIVE, THE CASE MIGHT HAVE BEEN TRANSFERRED TO HIM BY THE ORDER OF THE COMMISSIONER AS PER THE PROVISIONS OF THE ACT. THEREFORE, THE REASSESSMENT FRAMED IN THIS CASE IS BAD IN LAW AND THE SAME IS HEREBY 5 I.T.A. NOS.99&100/GAU/2020 ASSESSMENT YEARS: 2011-12 & 2012-13 SRI RATAN LAL SARAWGI QUASHED. SINCE THIS COMMON ISSUE IS INVOLVED IN BOTH THE APPEALS, HENCE, THE REASSESSMENT ORDERS FRAMED IN BOTH THE APPEALS ARE QUASHED. THE APPEALS OF THE ASSESSEE IN BOTH THE CASES ARE HEREBY ALLOWED. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. KOLKATA, THE 17 TH MARCH, 2021. SD/- [ SANJAY GARG ] JUDICIAL MEMBER DATED : 17.03.2021 RS COPY OF THE ORDER FORWARDED TO: 1. SRI RATAN LAL SARAWGI 2. ITO, WARD-2(2), GUWAHATI 3. CIT(A)- 4. CIT- , 5. CIT(DR), //TRUE COPY// BY ORDER SR. PS, H.O/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA .