Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI LALIET KUMAR, JM
PER D. KARUNAKARA RAO, AM:
This appeal is filed by the assessee against the order of CIT(A)-1, Kolhapur, dated 30-11-2016 for the Assessment Year 2008-09. 2. Briefly stated, relevant facts include that the assessee is an individual deriving income from salary, capital gains and interest income. The assessee filed his return of income on 12.01.2009 declaring total income at Rs.11,14,890/-. The case of the assessee was reopened by issuance of notice u/s 148 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) after recording the reasons (page 9 of the Paper Book). In response thereto, the 2 assessee filed reply stating that the original return of income may be treated as return filed in response to notice u/s 148 of the Act and also made several submissions. After considering various submissions of the assessee, the Assessing Officer (AO) completed the assessment by making various additions in para 7 of in its order.
The CIT(A) upheld the order of AO.
Aggrieved with the said decision of CIT(A) in the year under consideration, the assessee is in appeal before the Tribunal.
Before us, at the very outset the ld. Counsel submitted the case under consideration is covered on the legal aspects of the litigation. Relying on the Hon’ble juri ictional High Court judgment in the case of CIT Vs. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom) and Co-ordinate Bench of Pune Tribunal in the case of Mr. Kailash Kanhaiyalal Gidwani & Ors. Vs. ACIT (group case) in ITA No.769/PUN/2014 for A.Y. 2009-10, order dated 11.09.2019, the ld. Counsel submitted that this is a case where the AO had not made any addition for which reasons were recorded for reopening of the assessment. In this regard, the ld. Counsel brought our attention to page 8 of the Paper Book (copy of the order sheet) and submitted the AO desired to tax as concealed income amounting to Rs.45,86,354/- and the same was never added by the AO as concealed income in the reassessment. Our attention was brought to the contents of para 7 of the assessment order. The said para is extracted as under:-
3 “7. The case is heard. Subject to the above remarks, the total income of the assessee is assessed as under: Total Income as per Return of Income: ₹ 11,14,890 Substantive addition on account of loan taken ₹ 14,00,000 Addition u/s. 2(22)(e) – AIPL : ₹ 16,60,625 Addition u/s. 2(22)(e) – JMCPL: ₹ 88,30,000 Deemed dividend o/a of loan from AIPL to JMCPL: ₹ 36,50,000 Addition o/a of low withdrawals: ₹ 1,00,000 Total Assessed Income: ₹ 1,67,55,515 Rounded off u/s. 288A: ₹ 1,67,55,520
None of the above referred additions emanates from the reasons recorded vide page 9 of the Paper Book. Further, he submitted in such factual situation i.e. where the AO has not made any addition on account of reasons recorded, other additions made by the AO are not sustainable in law, in view of the language of section 147 of the Act. The relevant lines of section 147 of the Act are extracted as under:- “147. If the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153 assess or re-assess such income and also any other income chargeable to tax which has escaped the assessment........”
Referring to the above said provisions of the Act, ld. Counsel mentioned this is a case where “such income” was never brought to tax and therefore, adding of “any other income chargeable to tax” should not arise. Referring to the Hon’ble juri ictional High Court judgment, ld. Counsel demonstrated unsustainability of such other additions. Further, referring to the group cases of Kailash Kanhaiyalal Gidwani & Ors. Vs. ACIT (supra), ld. Counsel mentioned about the relief granted by the Tribunal to the assessee on similar reasoning. In this regard, assessee brought our attention to the contents of para 7 and 8 of the said order.
4
We heard both the parties and perused the material on record and find that similar issue was adjudicated in favour of the assessee by the Tribunal in the case of Kailash Kanhaiyalal Gidwani & Ors. Vs. ACIT (supra). For the sake of completeness, we proceed to extract the relevant paras of the order of the Tribunal here as under :
“7. From the above narration of facts, it is amply clear that firstly the assessee did not advance any loan to Kanhaiyalal Vishandas Gidwani amounting to Rs.2.00 lakh as has been alleged in the reasons. On the contrary, it is a case of repayment of loan of Rs.2.00 lakh as against the opening balance of loan of Rs.20.00 lakh. The reasons noted by the AO that it was a case of advancing loan by the assessee to Kanhaiyalal Vishandas Gidwani, is therefore, not correct to that extent. Be that as it may, the substance of the reasons is that “the sources of the loans advanced by Sou. Devi Gidwani are not substantiated”. This is the main reason which led to the initiation of re-assessment proceedings in the hands of the assessee. We are unable to find any justification for initiation of re-assessment on such ground as it is a case where the assessee had made repayment of loan out of regular books of account maintained by her. As against the opening balance of Rs.20.00 lakh, the assessee paid Rs.2.00 lakh vide cheque dated 25-11-2008. This transaction was properly recorded in the assessee’s books of account. The assessee is payer and not the recipient of loan. Once the assessee paid Rs.2.00 lakh to Kanhaiyalal Vishandas Gidwani out of her regular books of account, there cannot be any question of the assessee not substantiating the source of loan, which is overtly from the regular books of account maintained by her. This sort of enquiry, if warranted, ought to have been conducted in the hands of the recipient to justify the source of the loans received and not the payer of the loan, who has given loan out of her regular books of account. In view of the foregoing discussion, it is clear that the reasons recorded by the AO for initiating re- assessment proceedings are invalid and do not justify initiation of re-assessment.
Even though the original summary assessment was made u/s 143(1) of the Act and the period of four years from the end of the assessment year had not expired before issuing notice u/s 148 of the Act, still, the AO, having missed the opportunity of making assessment u/s 143(3) after issuing notice u/s 143(2) of the Act within the stipulated period, could have made assessment or reassessment u/s 147 only on the basis of the some reasons to believe about the escapement of income. Existence of reasons for escapement of income are sine qua non to embark upon the assessment or reassessment u/s 147 of the Act. Change or no change of opinion, as argued by the ld. DR, are the factors to be considered after fulfilling the juri ictional condition of there being an escapement of income, in the absence of which no assessment or reassessment can be made u/s 147. As it is apparent from the above discussion that no valid reasons exist about the escapement of the assessee’s income, we hold that the AO was not justified in taking recourse to the provisions of section 147 of the Act. We, therefore, strike down the initiation of assessment proceedings and the consequential assessment order passed u/s 147 of the Act and also the impugned order.”
From the above, it is evident that the Tribunal granted relief to the assessee on the similar facts and law. Considering the settled nature of the issue, we are of the opinion that the AO was not justified in taking recourse to the provisions of section 147 of the Act. We, therefore, strike down the 5 initiation of assessment proceedings and the consequential assessment order passed u/s 147 of the Act and also the impugned order. Since the legal issue has been adjudicated, hence the issue on merits becomes infructuous. Accordingly, the legal grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed
Order pronounced on this 12th day of February, 2020. (LALIET KUMAR) (D. KARUNAKARA RAO) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER
पुणे / Pune; ददनांक / Dated : 12th February, 2020. GCVSR आदेश की प्रधतधलधप अग्रेधषत/Copy of the Order is forwarded to: 1. अपीलाथी / The Appellant; प्रत्यथी / The Respondent; 2. 3. आयकर आयुक्त(अपील) / The CIT (Appeals)-1, Kolhapur
The Pr.CIT-1, Kolhapur 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, पुणे “बी” / DR „B‟, ITAT, Pune; 6. गार्ड फाईल / Guard file. ////
आदेशानुसार / BY ORDER,
//// Senior Private Secretary आयकर अपीलीय अधधकरण, पुणे / ITAT, Pune.