DCIT, MEHSANA CIRCLE, MEHSANA vs. THE MEHSANA DIST. CENTRAL CO.OP. BANK LTD., MEHSANA

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ITA 2272/AHD/2017Status: DisposedITAT Ahmedabad12 July 2019AY 2007-083 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer acted under the compulsion of the audit party and not based on his own independent belief that income had escaped assessment. Therefore, the reopening notice was invalid.

What were the facts?

The revenue filed an appeal against the CIT(A)'s decision to set aside the notice for reopening the assessment. The issue revolved around whether the Assessing Officer had valid reasons to reopen the assessment.

What were the issues?

Whether the reopening of assessment was valid when the Assessing Officer acted on the insistence of the audit party rather than forming his own belief of escaped income.

Which sections of the Income-tax Act were involved?

Section 147,Section 246A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH

Before: Shri Mahavir Prasad & Shri Amarjit Singh

For Appellant: Smt. Arti Shah, A.R
For Respondent: Shri L.P. Jain, Sr. D.R, Smt. Arti Shah, A.R

Revenue by: Shri L.P. Jain, Sr. D.R. Assessee by: Smt. Arti Shah, A.R. Date of hearing : 11-07-2019 Date of pronouncement : 12-07-2019 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-

This assessee’s appeal for A.Y. 2007-08, arises from order of the CIT(A)-7, Ahmedabad dated 26-07-2017, in proceedings under section 246A of the Income Tax Act, 1961; in short “the Act”.

2.

The solitary ground of appeal

of the revenue is filed against the decision of ld. CIT(A) in set aside the notice for reopening the assessment u/s. 147 of the act. During the course of appellate proceedings before us, the ld. counsel has brought to our notice that this issue has been adjudicated by Page No 2. DCIT vs. The Mehsana Dist. Central Co-op. Bank Ltd. the Hon’ble High Court of Gujarat vide Special Civil Application No. 8343 of 2013 in favour of the assessee. With the assistance of Ld. representatives, we have gone through the decision of Hon’ble Gujarat High Court on the instant issue which is in the appeal filed by the revenue. Relevant part of the decision of the Hon’ble Gujarat High Court is reproduced as under:- “11.In our opinion, the very action of the AssessingOfficer to deal with the objections of the petiti oner in the final order of reassessment, runs contrary to the judgment of the Supreme Court in case of GKN Driveshafts (India) Ltd. v. ITO and Ors. reported in [2003] 259 ITR 90 (SC). However, there is yet another weighty reason why we cannot permit the process of reopening of assessment to stand. Such reason is that apparently, the Assessing Officer was acting under the compulsion of the audit party. As noted, the audit party raised its objections on 16.01.2012. While issuing notice for reopening on 26.03.2012, the Assessing Officer had cited these three very reasons. Subsequently on 24.05.2012, he sent a detailed note to the audit party, justifying why the audit objections should be dropped.Itistrue that in the present case such resistance from theAssessing Officer came after the notice for reopening. Nevertheless, if we see entire sequence, it becomes clear that the Assessing Officer was clearly acting under the dictates of the audit party. Even after issuing the notice, he still maintained an opinion that no income chargeable to tax had escaped assessment. If that be so, he ought to have dropped the assessment proceedings, at least at that stage when the petitioner raised the objections which even without such objections, the Assessing Officer was convinced, were valid.

12.

In case of Jagat Jayantilal Parikh v. Deputy Commissioner of Income- Tax reported in [2013] 355 ITR 400 (Guj), Division Bench of this Court had observedas under: “Under the circumstances, it clearly emerges from the record that the Assessing Officer was of the opinion that no part of the income of the assessee has escaped assessment. In fact, after the audit party brought the relevant aspects to the notice of the AO, she held correspondence with the assessee. Taking into account the assessee's explanation regarding nonrequirement of TDS collection and ultimately accepted the explanation concluding that in view of the Board's circular, tax was not required to be deducted at source. No income had therefore escaped assessment. Despite such opinion of the Assessing Officer, when ultimately the impugned notice came to be issued the only conclusion we can reach is that the AssessingOfficer had acted at the behest of and on the insistence of the audit party. It is well settled that it is only the Assessing Officer whose opinion with respect to the income escaping assessment would be relevant for thepurpose of reopening of closed assessment. It is, of course true, as held by the decisions of the Apex Court in the case of P.V.S.Beedies Pvt. Ltd. (supra) and Indian & Eastern Newspaper Society (supra), if the audit party brings certain aspects to the notice of the Assessing Officer and thereupon, the Assessing Officer forms his own belief, it may still be a valid basis for reopening assessment. However, in the other line of judgment noted by us, it has clearly been held that mere opinion of the Audit Party cannot form the basis for the AssessingOfficer to reopen the closed assessment that too beyond four years from the end of relevant assessment year.”

13.

In the result, petition is allowed. Impugned notice for reopening dated 26.03.2012 is set aside. Petition is disposed of.”

Page No 3 DCIT vs. The Mehsana Dist. Central Co-op. Bank Ltd. Respectfully following the decision of Hon’ble Gujarat High Court on the issue which is raised in the appeal of the revenue, we do not find any merit in the appeal of the Revenue. Accordingly, the appeal of the revenue is dismissed.

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