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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE – VIRTUAL COURT
Before: SHRI R.S. SYAL
Appellant by Shri Sunil Ganoo Respondent by Ms. Nishtha Tiwari & Shri Prathamesh J.Lawand Date of hearing 09-06-2020 Date of pronouncement 09-06-2020 आदेश / ORDER PER R.S.SYAL, VP : These six appeals by different but connected assessees arise out of separate orders passed by the CIT(A)-1, Kolhapur on different dates for the captioned years. Since all these appeals are based on similar facts and involve common issue, I am, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience. 2. is an appeal by Shri Amit K. Gidwani for the A.Y. 2007-08. The assessee has raised the following additional ground: “Since the learned Assessing Officer has failed to make any addition on the ground on which the assessment was reopened, the impugned reassessment made by the learned Assessing Officer on other grounds which were not the subject matter of the reasons recorded for reopening of the assessment, the impugned reassessment order is bad in law and void ab initio and being without jurisdiction the same may please be annulled.”
Since the additional ground involves pure question of law and does not require any fresh examination of facts, I admit it in the hue of the judgment of Hon‟ble Supreme Court in National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC) and espouse it for consideration and decision.
The factual matrix of the case is that the assessee filed his return declaring total income at 18,01,703/. On the basis of certain information, the AO noted that the assessee was also a member of Adarsha Co-op. Housing Society and had made investment in purchase of flat. The AO recorded reasons for initiating re-assessment. The reassessment order was framed by computing total income at Rs.42,54,560/-, inter-alia, making additions - u/s 68 of the Income Tax Act, 1961 (hereinafter called as „the Act‟); low household expenses; loans raised from AIL; and substantive addition on account of unsecured loans. The assessee remained unsuccessful before the ld. CIT(A), which has led to filing of the instant appeal before the Tribunal.
I have heard both the sides and gone through the relevant material on record. A copy of reasons recorded, available at page 8 of the paper book, deciphers the reasons as under: “According to information gathered from informed sources, local enquiries and media reports, it has come to be known that Shri Kanhaiyalal Gidwani, owns three flats, one in his name and two in the names of his two sons – Kailash and Amit in the Adarsha Housing Society. Again, one flat is learned to be booked in the name of Shri Gajanan S. Koli, where apparently it is believed that Shri Sunil K. Gidwani, son of Kanyiyalal Gidwani, has lent finance to purchase the same. All payments for the same were apparently made through Gidwani Family’s various bank accounts in which apparently cash amounts were deposited and the same were transferred into the accounts of Gidwani’s wife, son and daughter-in-law in HDFC Bank at Worli. Thereafter the said amounts were apparently transferred into the account of M/s Jay Maharashtra CPL, HDFC Bank, Worli, in which Gidwani’s sons are directors for making payments towards cost of the flats. Shri Amit Kanyiyalal Gidwani has been allotted flat in Adarsh CHS. He has paid an amount of Rs.56,08,787/- towards the above flat between the period Feb. 2003, to July, 2010. 2. During the year AY 2007-08 there is some mistake in carrying forward the balance of closing balance of capital account and also the figure of total assets. The closing
balance of the capital account as on 31.03.2007 is found to be at Rs.18,02,863/- and as per balance sheet the same is shown at Rs.18,49,906/- with total asset of Rs.70,44,413/-. Thus there is a difference of Rs.47,093/-. Therefore, in view of the above, I have reasons to believe that the income chargeable to tax to the extent of Rs.47,093/- [1802863-1849906] has escaped assessment within the meaning of Section 147 of the I.T. Act, 1961.”
From the first para of the reasons, it is seen that the AO is simply referring to allotment of flat to the assessee for which, he paid Rs.56.08 lakhs from Feb, 2003 to July, 2010. This para does not refer to any specific escapement of income. It is the second para with reference to the escapement of income towards difference in closing capital as on 31.03.2007 and opening balance leading to difference of Rs.47,093/-. That is how the AO concluded at the end of the reasons that : `I have reasons to believe that the income chargeable to tax to the extent of Rs.47,093/- [1802863 – 1849906] escaped assessment within the meaning of Section 147 of the I.T. Act, 1961.’ Thus, it is evident that the re-assessment was initiated on account of difference in capital to the tune of Rs.47,093/-. On scrutiny of the assessment order, it transpires that the AO did not make any addition on this score. Thus, it is apparent that the AO did not make any addition on account of reasons which led to initiation of re-assessment proceedings. The Hon‟ble Bombay High Court in CIT Vs. Jet Airways (I) Ltd. (2011) 337 ITR 236 (Bom) has held that AO cannot proceed with re-assessment if grounds mentioned in re-assessment notice are non-existent i.e. if no addition is made on the basis of the grounds which led to the initiation of re-assessment. Similar view has been taken by Hon‟ble Delhi High Court in CIT Vs. Cheil Communications India Pvt. Ltd. (2013) 354 ITR 549 (Del). It has been brought to my notice that Pune Benches of Tribunal in the assessee- group cases has also taken similar view. Copies of such orders namely, dated 11.09.2019 and ITA No.329/PUN/2017, dated 12.02.2020 have also been placed on record.
The ld. DR candidly admitted that the facts and circumstances of instant appeal are covered by such decisions in as much as the AO did not make any addition on account of reasons which led to initiation of re-assessment proceedings. In view of foregoing discussion and respectfully following the precedent, I set aside the impugned order and the assessment order in question.
All other appeals admittedly involve similar issue. The ld. DR fairly admitted that no addition was made on account of reasons which led to initiation of re-assessment. Following the view taken hereinabove, I set aside the impugned orders and quash the resultant assessment orders.
In the result, all the six appeals of the assessees are allowed on the legal issue.
Order pronounced in the Open Court on 9th June, 2020.
Sd/- (R.S.SYAL) उपधध्यक्ष/ VICE PRESIDENT पपणे Pune; ददिधंक Dated : 9th June, 2020 GCVSR आदेश की प्रनिनलनप अग्रेनषि / Copy of the Order is forwarded to : 1. अपऩलधर्थी / The Appellant; प्रत्यर्थी / The Respondent; 2. 3. आयकर आयुक्त(अपील) / The CIT (Appeals)-1, Kolhapur 4. The Pr. CIT-1, Kolhapur 5. नवभधगऩय प्रनिनिनर्, आयकर अपऩलऩय अनर्करण, पपणे “SMC” / DR „SMC‟, ITAT, Pune; 6. गधर्ा फधईल / Guard file. // True copy // आदेशधिपसधर/ BY ORDER,