ITO, Kanpur V. M/s. Vee Aar Leasing & Finance Co. Ltd., Kanpur

ITA 99/LKW/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3341 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-06-2013
• Assessment Year: 1998-1999
• Appeal Filed On: 25-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Keywords: Reopening of assessment; Unexplained cash credit; Assessment record; Reason to believe; Reassessment proceedings
• Section: 143(3); 147

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A: LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A. NO. 99 /LKW/201 1 ASSESSMENT YEAR: 1 9 98 - 99 I.T.O VS. M/S VEE AAR LEASING & WARD - 6(2) FINANCE CO. LTD. KANPUR. 13/386 - D, PRABHU RACHNA, CIVIL LINES, KANPUR - 208001. (APPELLANT) (RESPONDENT) C.O. NO. 30/LKW/2011 (IN I.T.A. NO.99/LKW/2011) ASSESSMENT YEAR:1998 - 99 M/S VEE AAR LEASING & VS. I.T.O FINANCE CO. LTD. WARD - 6(2) 13/386 - D, PRABHU RACHNA, KANPUR. CIVIL LINES, KANPUR - 208001. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAKESH GARG, ADV. REVENUE BY : SMT.RANU BISWAS, DR. . DATE OF HEARING : 03 /0 6 /2013 DATE OF PRONOUNCEMENT : 07 /06/ 2013 ORDER PER PRAMOD KUMAR, A.M.: THIS APPEAL, AND THE RELATED CROSS OBJECTION WHICH WE ARE TAKING UP TOGETHER WITH THE APPEAL, CHALLENGED CORRECTNESS OF LEARNED CIT (A)S ORDER DATED 2 28 TH DECEMBER 2010, IN THE MATTER OF ASSESSMENT U/S 143(3) R.W.S. 148 OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 1998 - 99. 2. LEARNED COUNSEL SUBMITS THAT WE SHOULD TAKE UP THE CROSS OBJECTION FIRST, AS IT INVOLVES CHALLENGE TO THE VALIDITY OF REASSESSMENT PROC EEDINGS ITSELF, AND, THAT IN THE EVENT OF THIS CHALLENGE BEING UPHELD, ALL THE ISSUES IN APPEAL WILL BE RENDERED ACADEMIC AND INFRUCTUOUS. LEARNED DEPARTMENTAL REPRESENTATIVE DOES NOT OPPOSE THIS PRAYER. ACCORDINGLY, WE TAKE UP THE CROSS OBJECTION FIRST. 3. GRIEVANCE RAISED IN THE CROSS - OBJECTION IS AS FOLLOWS: 1. BECAUSE THE INITIAL ASSESSMENT BEING FRAMED U/S143(3) ON 28.03.2000, A PERIOD OF FOUR YEARS HAS EXPIRED AND THERE BEING NO FAILURE ON THE PART OF THE ASSESSEE APPELLANT TO DISCLOSE FULLY AND TRU LY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, THE NOTICE U/S 148 AND THE REASSESSMENT FRAMED THEREAFTER ARE BAD IN LAW AND BE QUASHED. 4. LEARNED COUNSEL POINTS OUT THAT IN THE PRESENT CASE THE ASSESSMENT WAS REOPENED AFTER FOUR YEARS FROM THE END OF T HE RELEVANT ASSESSMENT YEAR, AND THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) BUT THERE WAS NO ALLEGATION OF ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE, FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE SHORT LEGAL OBJECTION THA T LEARNED COUNSEL HAS CANVASSED BEFORE US IS THAT IN A SITUATION IN WHICH THERE IS NOT EVEN AN ALLEGATION OF SUCH A FAILURE ON THE PART OF THE ASSESSEE, THE ASSESSMENT COMPLETED U/S 143(3) CANNOT BE REOPENED AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE R ELEVANT 3 ASSESSMENT YEARS. IT IS SO PROVIDED , ACCORDING TO THE LEARNED COUNSEL, BY PLAIN WORDS OF FIRST PROVISO TO SECTION 147 OF THE INCOME TAX ACT. IT IS ALSO SUBMITTED THAT FOR THE PURPOSE OF EXAMINING VALIDITY OF THE REASSESSMENT PROCEEDINGS, IT IS NOT OPEN TO REFER TO ANYTHING OTHER THAN THE REASONS RECORDED FOR REOPENING THE ASSESSMENT, AND THAT REASONS ARE SILENT ON THIS ASPECT OF THE MATTER. 5. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUPPORTS THE STAND OF THE AUTHORITIES BELOW IT IS S UBMITTED THAT, IS EVIDENT FROM THE REASONS RECORDED BY THE ASSESSING OFFICER , HE HAD COGENT AND SUFFICIENT REASONS TO CONCLUDE THAT INCOME HAS ESCAPED ASSESSMENT WHICH, OBVIOUSLY, WOULD NOT HAVE ESCAPED IF AL L THE RELEVANT MATERIAL FACTS W ERE TRULY AND FUL LY DISCLOSE D BY THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD I N THE LIGHT OF APPLICABLE LEGAL POSITION AND FACTUAL MATRIX OF THIS CASE. 7. T HE PLEA OF THE ASSESSEE IS INDEED WELL TAKEN. THE LAW IS CLEAR AND UNAMBIGUOUS, AND THIS PLEA BEING A PURELY LEGAL PLEA ON UNDISPUTED FACTS OF THE CASE, CAN BE TAKEN UP BEFORE US EVEN THOUGH IT MAY NOT HAVE BEEN TAKEN UP EARLIER. A P LAIN READING OF FIRST PROVISO TO SECTION 147 RESTRICTS REOPENING OF ASSESSMENTS COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, BEYOND FOUR YEARS FROM THE END OF THE RELEVANT PREVIOUS YEAR ANY INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY THE REASON OF FAILURE ON THE PART OF THE ASSESSEE TO .DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THIS 4 ASSESSMENT. HOWEVER, THE REASONS RECORDED FOR REOPENING THE ASSESSMENT, WHICH ARE REPRODUCED BELOW FOR READY REFERENCE, DO NOT INDICATE THAT THIS CONDITION IS FULFILLED : - ANNEXURE.' A M/S. VEE AAR LEASING & FI NANCE CO. LTD., 13/386 - D, PRABHU RACHNA, CIVIL LINES, KANPUR A.Y. 1998 - 99 21.03.2005 THE ASSESSEE IS A LIMITED COMPANY AND IS ENGAGED IN THE BUSINESS OF HIRE PURCHASE & PURCHASE. & SALE OF SHARES. THE ASSESSMENT IN THIS CASE WAS COMPLETED ON AN INCOME OF R 55,880/ - ON 28.03.2000 U/S 143(3) OF THE I.T. ACT, 1961 AS AGAINST THE RETURNED INCOME OF RS. 41,280/ - . FROM THE PERUSAL OF INFORMATION RECEIVED FROM DY. DIRECTOR OF I NCOME TAX (INV.) - IL, KANPUR, IT IS FOUND THAT THE ASSESSEE HAD RECEIVED DEMAND DRAFTS FROM M/S. KISHAN LAL MONGA & CO., NEW DELHI AND M/S. CAPITAL INVESTMENT LTD., N EW DELHI AGGREGATING TO RS. 17,21,445 / - . THE INVESTIGATION MADE BYDI WING REVEALS THAT THESE TRANSACTIONS ARE FICTITIOUS ONE AS THE ABOVE MENTIONED TWO PARTIES ARE NOT TRACEABLE AT THE GIVEN ADDRESSES. IT WAS ALSO FOUND FROM THE PERUSAL OF INFORMATION RECEIVED FROM DL WING THAT THE ASSESSEE WAS ENGAGED IN OBTAINING FICTIT IOUS LONG TERM CAPITAL GAINS DURING F.Y. 1997 - 98 RELEVANT TO A.Y. 1998 - 99. IN VIEW OF THE ABOVE FACTS AND THE INFORMATION IN POSSESSION OF THE UNDER - SIGNED, I AM OF THE OPINION THAT THE ASSESSEE HAS CONCEALED INCOME OF RS. 17,21,450/ - BEING UNEXPLAINED CASH CREDIT. I, THEREFORE, 5 HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX AMOUNTING TO RS. 17,21,45O/ - HAS ESCAPED ASSESSMENT FOR A. Y. 1998 - 99. I, THEREFORE, IN LIGHT OF FACTS NARRATE D ABOVE, HAVE REASONS TO BELIEVE THAT INCOME EXCEEDING RS. 1,00,000/ - HAS ESCAPED ASSESSMENT. ACCORDINGLY, IT IS REQUESTED TO KINDLY ACCORD APPROVAL FOR ISSUING NOTICE U/S 148 OF THE I.T. ACT, 1961 IN THIS CASE FOR A.Y. 1998 - 99. ASSESSMENT RECORD IN ONE VO LUME IS ENCLOSED HEREWITH FOR KIND PERUSAL. (S. YADAV) INCOME TAX OFFICER - 6 (2) KANPUR 8. IT IS ALSO WELL SETTLED LEGAL POSITION, AS WAS ALSO HELD BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTAN LEVER LTD. VS. R.B. WADKAR (268 ITR 332), THAT,..THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE ASSESSING OFFICER. NO SUBSTI TUTION OR DELETION IS PERMISSIBLE. NO ADDITIONS CAN BE MADE TO THOSE REASONS. NO INFERENCE CAN BE DRAWN ON THE BASIS OF REASONS NOT RECORDED. IT IS FOR THE AO TO DISCLOSE AND OPEN HIS MIND THROUGH THE REASONS RECORDED BY HIM . WHAT IS NOT, T HEREFORE, STATE D IN THE REASONS CANNOT BE USED FOR JUSTIFYING THE REOPENING OF THE ASSESSMENT. 9. IN THE LIGHT OF THE ABOVE LEGAL POSITION, AND IN VIEW, OF UNDISPUTED FACT, AS EVIDENT FROM A PLAIN READING OF THE REASONS RECORDED AS REPRODUCED ABOVE, THAT NO CASE HAS BEE N EVEN MADE OUT FOR DEMONSTRATING ANY FAILURE OF DISCLOSURE BY THE ASSESSEE, THE REOPENING OF ASSESSMENT WAS INDEED VITIATED IN LAW. WE QUASH THE REASSESSMENT PROCEEDINGS. 6 10. AS REASSESSMENT PROCEEDING ITSELF IS QUASHED, THE ISSUES REGARDING CORRECTNESS O F ADDITIONS MADE DURING THE COURSE OF REASSESSMENT PROCEEDINGS , WHICH ARE IN CHALLENGE BEFORE US IN REVENUES APPEAL ARE WHOLLY ACADEMIC AND INFRUCTUOUS. THESE ISSUES DO NOT CALL FOR OUR ADJUDICATION. 11. IN THE RESULT, THE C.O. FILED BY THE ASSESSEE IS ALLOWED AND APPEAL FILED BY THE ASSESSING OFFICER IS DISMISSED AN INFRUCTUOUS. (ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH JUNE 2013) SD/ - SD/ - (SUNIL KUMAR YADAV) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07 /06/ 2013 *A.K. VERMA COPY FORWARDED TO THE: 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR LUCKNOW BENCHES, LUCKNOW