Harish Chand Raj Kumar, V. ITO. Ward-I,

ITA 999/DEL/2003

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2084 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-12-2009
• Assessment Year: 1997-1998
• Appeal Filed On: 05-03-2003
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Keywords: Reopening of assessment
• Section: 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI C.L.SETHI AND SHRI K.D.RANJAN ITA NO.999/DEL/2003 ASSESSMENT YEAR : 1997-98 M/S HARISH CHAND RAJ KUMAR, VILLAGE ALIPUR (BAHADRABAD) DISTT. HARDWAR. VS. INCOME TAX OFFICER, HARDWAR. (APPELLANT) (RESPONDENT) APPELLANT BY : NONE (WRITTEN SUBMISSION) RESPONDENT BY : SHRI MANISH GUPTA, D.R. ORDER PER RANJAN, AM: THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 199 7-98 ARISES OUT OF ORDER OF LD. CIT(A)-II, DEHRADUN. 2. THE ONLY ISSUE CONTAINED IN GROUNDS OF APPEAL RE LATES TO REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT ORIGINAL RETURN FILED ON 29/10/1997 IN THE STATUS OF FIRM WAS PROCESSED U/S 143(1)(A) AT THE RETURNED LOSS. NOTIC E UNDER SEC. 148 WAS ISSUED. THE ASSESSING OFFICER COMPLETED ASSESSMENT VIDE ORDER DATED 26/3/2001. 3. ON APPEAL, THE ASSESSEE CHALLENGED THE REOPENING OF ASSESSMENT UNDER SEC. 148. IT WAS SUBMITTED THAT IN THE ASSESSMENT O RDER THE ASSESSING OFFICER 2 VALUED THE STOCK OF BAGGASE AND PRESS CAKES AT RS.2 ,55,410/-. HOWEVER, WHILE COMPLETING THE ASSESSMENT, HE PROCEEDED ON TH E BASIS OF G.P. RATE AND AFTER ALLOWING EXPENSES @50% THE NET PROFIT FROM TH E BUSINESS WAS ASSESSED AT RS.1,80,000/- AND FURTHER ADDITION OF RS.15,000/ - WAS MADE ON ACCOUNT OF UNEXPLAINED DEPOSIT IN THE NAME OF SHRI RAJ KUMAR. LD. CIT(A) CONSIDERED THE SUBMISSIONS OF ASSESSEE AND NOTED THAT ONCE THE ASSESSING OFFICER HAD INITIATED PROCEEDINGS U/S 148 ON ACCOUNT OF ESCAPEM ENT OF INCOME ON ONE POINT, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN M AKING AN ADDITION ON OTHER POINT WHILE IGNORING THE POINT WHICH FORMED BASIS F OR ISSUANCE OF NOTICE U/S 148. THE ASSESSING OFFICER IN HIS ORDER THOUGH ESTI MATED THE VALUATION OF BAGGASE AND PRESS CAKES AT RS.2,55,410/-, YET HE OB SERVED THAT THE SAME WAS BEING INCLUDED IN THE NET PROFIT ESTIMATED AT RS.1, 80,000/-. THE ASSESSING OFFICER HAD NOT TAKEN ANY SCIENTIFIC AND PROPER BAS IS FOR WORKING OUT THE VALUATION OF BAGGASE AND PRESS CAKES. ACCORDINGLY, IT HAD TO BE BASED ON SOME ASSUMPTION ONLY. HE, THEREFORE, DID NOT AGREE WITH THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE VALUE OF BAGGASE AND PRESS CAKE COULD BE AT THE MOST BE TAKEN AT RS.25,000/- ONLY. LOOKING INTO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ESTIMATED THE VALUE OF BAGGASE AND PRESS CAKE AT RS. 1 LAKH. HE ACCORDINGLY REDUCED TH E ADDITION FROM RS.1,80,000/- TO RS. 1 LAKH. 4. AS REGARDS THE ASSUMPTION OF JURISDICTION U/S 14 7 IN THE STATUS OF AOP IT WAS CONTENDED BY THE LD. A.R. OF THE ASSESSEE TH AT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ASSESSMENT U/S 144 AS A LL THE NECESSARY DETAILS AS REGARDS MELI AND KHOI. WERE SUBMITTED. THE LD. CIT( A) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE HELD THAT THE ASSE SSING OFFICER WAS NOT JUSTIFIED IN MAKING ASSESSMENT U/S 144 WHEN REQUISI TE DETAILS REGARDING THE 3 POINT OF BAGGASE AND MELEE WERE FURNISHED DURING TH E COURSE OF ASSESSMENT PROCEEDINGS. 5. THE REVENUE AS WELL AS THE ASSESSEE FILED CROSS APPEALS AGAINST THE ORDER OF LD. CIT(A).THE ASSESSEE ALSO FILED CROSS O BJECTION AGAINST THE APPEAL FILED BY THE REVENUE CHALLENGING THE REOPENING OF A SSESSMENT U/S 148. 6. THE APPEAL FILED BY THE REVENUE IN ITA NO.1205/D EL/2003 FOR ASSESSMENT YEAR 1997-98 AND C.O.NO.163/DEL/2005 WER E HEARD TOGETHER AND DECIDED BY THE I.T.A.T. DELHI BENCH B NEW DEL HI VIDE ORDER DATED 20/7/2009. HOWEVER, ASSESSEES APPEAL IN ITA NO.999 /DEL/2003 FOR ASSESSMENT YEAR 1997-98 WHEREIN ASSUMPTION OF JURIS DICTION WAS CHALLENGED WAS NOT TAKEN TOGETHER WITH REVENUES AP PEAL AND CROSS OBJECTION FILED. 7. WHEN THE CASE CAME UP BEFORE US IN ASSESSEES AP PEAL, THE LD. COUNSEL FOR THE ASSESSEE VIDE HIS LETTER DATED 22/11/2009 S UBMITTED THAT I.T.A.T. BENCH B NEW DELHI VIDE ORDER DATED 20/7/2009 ALLO WED THE CROSS OBJECTION WHICH DECIDED THE DISPUTE OF ASSESSEE AS WELL. THEREFORE, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.999/DEL/2003 BECAME INFRUCTUOUS. 8. WE HAVE HEARD THE LD. SR. D.R. WE FIND THAT I.T. A.T. DELHI BENCH B NEW DELHI VIDE ORDER DATED 20/7/2009 IN ITA NO.1205 /DEL/2003 ALLOWED THE CROSS OBJECTION BY OBSERVING AS UNDER: 5. WE HAVE GIVEN CAREFUL THOUGHT TO THE RIVAL SUBM ISSIONS OF THE PARTIES. WE HAVE CONSIDERED REASONS RECORDED BY THE A.O. FOR TAKING ACTION U/S 147/148 OF THE I.T.ACT. HE WAS OF THE VI EW THAT BAGASSE WHICH IS PRODUCED FROM 28 TO 35% AND PRESS CAKE (PR ODUCED AT 3.7% TO 4%) IN CRUSHING PROCESS SHOULD HAVE BEEN INCLUDE D IN THE VALUATION OF CLOSING STOCK. HE ESTIMATED VALUE OF THESE ITEMS AND HELD THAT TO THE 4 ABOVE EXTENT INCOME HAD ESCAPED ASSESSMENT. ACCORDI NGLY, NOTICE U/S 148 OF I.T.ACT WAS ISSUED. AFTER CONSIDERING FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT JURISDICTION T O REASSESS WAS ASSUMED WITHOUT ANY MATERIAL ON RECORD. ASSESSEE HA D PLACED SUFFICIENT MATERIAL ON RECORD TO SHOW THAT BAGASSE AND PRESS CAKES HAD NO COMMERCIAL VALUE AND ARE NEITHER SOLD NOR CONSID ERED IN THE CLOSING STOCK BY ANY CRUSHER. THE APPROACH IS CONFI RMED BY DECISIONS OF COURTS OF TRIBUNAL. IN THESE CIRCUMSTANCES, IT W AS NECESSARY FOR THE A.O. TO BRING ON RECORD SOME MATERIAL TO SHOW THAT MELI (BAGASSEE) AND KHOI (PRESS CAKE) IN CASE OF A CANE CRUSHER HAS VALUE AND WAS REQUIRED TO BE TAKEN IN THE CLOSING STOCK. SOME COM PARATIVE CASES WHERE SUCH WASTAGE WAS SOLD SHOULD HAVE BEEN BROUGH T ON RECORD. IT WAS TO BE SHOWN FROM RECORD THAT CONSISTENT METHOD OF NOT SHOWING ABOVE WASTE IN THE STOCK FOLLOWED BY THE ASSESSEE I N THE PAST SEVERAL YEARS SUFFERED FROM ANY ERROR. THERE IS FURTHER NO MATERIAL TO SHOW THAT AS ON THE CLOSING DAY, THE ASSESSEE HAD MELI ( BAGASSE) WITH IT WHICH HAD A CERTAIN VALUE TO BE INCLUDED IN THE CLO SING STOCK OR WAS SOLD OUTSIDE BOOKS OF ACCOUNT AND, THEREFORE, TO TH AT EXTENT INCOME HAD ESCAPED ASSESSMENT. VALUE OF WASTE BAGASSE HAS BEEN TAKEN AT IPSE DIXIT OF THE A.O. TO REOPEN THE ASSESSMENT. IT IS FURTHER NOT SHOWN THAT SIMILAR QUANTITY OF WASTE WAS NOT AVAILABLE IN THE OPENING STOCK. THERE IS NO MATERIAL, NOT EVEN A WHISPER, THAT ANY SALE OUTSIDE BOOKS OF ACCOUNT WAS MADE. REOPENING CANNOT BE ACCEPTED A S VALID, SATISFYING TERMS OF SECTION 147 OF THE I.T.ACT. NO CASE OF ESCAPEMENT OF INCOME HAS BEEN ESTABLISHED TO VEST THE ITO WITH THE JURISDICTION TO MAKE A REASSESSMENT. EVEN OTHERWISE APPEAL HAS BEEN FILED BY THE REVENUE IN CONTRAVENTION OF DIRECTIONS OF THE CBDT AS POINTED OUT BY THE ASSESSEE EVEN WHEN BETTER TRADING RESULTS HAVE BEEN SHOWN. THEREFORE, THE ASSESSMENT WOULD STAND ANNULLED AND CROSS OBJECTION OF THE ASSESSEE ON ABOVE GROUND IS ACCEPTED. THIS FIND ING WILL TAKE CARE OF THE APPEAL FILED BY THE REVENUE. 6. IN THE RESULT, ASSESSEES CROSS OBJECTION IS ACC EPTED AND APPEAL OF THE REVENUE IS DISMISSED. FROM THE ORDER OF TRIBUNAL IT IS CLEAR THAT THE TRI BUNAL AS HELD THAT REOPENING OF ASSESSMENT U/S 147 WAS NOT VALID AS NO CASE OF E SCAPEMENT OF INCOME HAS BEEN ESTABLISHED TO THE ASSESSING OFFICER WITH THE JURISDICTION TO MAKE REASSESSMENT. THE TRIBUNAL HAS ACCORDINGLY ALLOWED THE CROSS OBJECTION FILED 5 BY THE ASSESSEE. SINCE THE ASSESSEES CROSS OBJECTI ON CHALLENGING THE REOPENING OF ASSESSMENT HAS BEEN ALLOWED BY THE TRI BUNAL VIDE ORDER DATED 20/7/2009, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.999/DEL/2003 BECOMES INFRUCTUOUS AND IS DISMISSED AS SUCH. 9. IN RESULT, APPEAL FILED BY THE ASSESSEE IS DISMI SSED AS INFRCTUOUS. DECISION PRONOUNCED IN THE OPEN COURT ON 11TH DEC EMBER, 2009. SD/- SD/- (C.L.SETHI) (K.D.RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11.12.2009. PSP COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR