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Income Tax Appellate Tribunal, MEERUT CAMP, MEERUT
Before: SHRI N.S.SAINI & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
The appellant Jitendra Bharti, Meerut (hereinafter referred to as 'the
assessee') by filing the aforesaid appeal, sought to set aside the impugned
order dated 03/08/2018 passed by Ld. Commissioner of Income
Tax(Appeals)-Meerut qua the Assessment Year 2009-10 on the grounds
inter alia that :
“1. That the assessment made by the A.O. u/s 147/144 of I.T.Act is bad in law because in this case, the original assessment was completed u/s 147/143(3) of I.T.Act. Therefore, the A.O. cannot reopen the assessment after four years. The A.O. himself attached the copy of I.T.O. Order u/s 147/143(3) on Page No. 16 of the assessment order. The
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CIT(A) confirmed the order without going to the facts and merit of the case. 2. That without prejudice to the Ground n. 1, the A.O. has completed the assessment u/s 144 of I.T.Act, Howevr, he himself admitted that the assessee through his counsel represent and filed his reply several time. Therefore, the assessment made by the A.O. is bad in law. The A.O. also not issued notice u/s 143(2) of I.T.Act. 3. That without prejudice go the ground no. 1 and 2, the A.O. has not allowed exemption u/s 54B of I.T.Act, 1961. 4. That the addition made by the A.O. for Rs. 48,73,000/- on account of investment in purchase of agriculture land without any basis. 5. That the assessee has right to add, modify or delete any ground during the appeal proceeding.”
Briefly stated that facts necessary for adjudication of the controversy
at hand are : Assessee is an agriculturist who has sold his agricultural land for a sum of Rs. 67,76,000/-. Originally assessment of the assessee for the year under assessment was completed u/s 147/143(3) vide order dated 15.03.2013.The assessing Officer framed the assessment u/s
144/147 of the Act at Rs. 49,61,075/- + 64,68,925/- as capital gain and agricultural income of Rs. 5,85,000/-.
Assessee carried the matter before Ld. CIT(A) by way of filing the
appeal who has confirmed the addition by dismissing the appeal. Feeling aggrieved the assessee has come up before the Tribunal by way of filing
the present appeal.
We have heard the ld. Authorized Representatives of the parties to
the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of
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the case.
Undisputedly, Original assessment was framed by the assessing officer for AY 2008-09 vide order dated 15.03.2013 which is extracted for ready perusal as under :-
“INCOME TAX DEPARTMENT 1. Name & Address of Assessee Shri Jitender Bharti S/o. Sh. Ram Charan 927-Malyana PO Sabungodwn, Meerut 2. PAN No. AIPPB9134R 3. Distt. Award/Circle Ward-1(3), Meerut 4. Status Individual 5. Assessment Year 2009-10 6. Residential Status Resident 7. Method of accounting 8. Previous Year 2008-9 9. Date of hearing As per Records 10. Section and sub-section under U/s. 147/143(3) of I.T.Act,1961. Which this order is being passed
ASSESSMENT ORDER The Annual Information Return for F.Y. 2008-09 (Non-PAN) revealed following transactions – (i) Sale of property on 15/09/2008 for Rs. 4630773/- (ii) Purchase of property on 18/07/2008 for Rs. 4554000/- Since, the verification letters dated 16/09/2010 were not complied with the AO issued notice u/s 148 dated 27/07/2011 for unexplained investment for purchase of property for Rs. 4554000/- and another notice u/s 148 dated 28/07/2011 to tax the profit on sale of property on 15/09/2008 for Rs. 4630773/-. The AO has recorded separate reasons for the two transactions. 2. The other fact is that, the return was not admittedly filed u/s 139(1)
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or 139(4) in response to notice u/s 148 despite notices dated 03/09/2012, 15/10/2012 and 28/02/2013 return has not been filed. In the reply dated nil the assessee has made submissions relating to purchase of land. No reply is filed relating to sale of land. Since the evidence of service of notice u/s 148 is not available on record relating to sale of land assessment if made may not stand the test appeal. 3. In view of the above facts the proceedings u/s 147 vide notice dated 27/07/2011 & 28/07/2011 are dropped with the remarks proceedings u/s 147 may be restarted by issue of a valid notice after gathering full information and recording proper reasons. Sd/- (U.S.Chauhan) Income Tax Officer Ward-1(3), Meerut”
It is also not in dispute that after framing the original assessment u/s
147/143(3) of the act vide order dated 15.03.2013. Assessing Officer again issued notice dated 14.03.2016 and on failure of the assessee to put in appearance Assessing Officer proceeded to frame the assessment u/s 144/147 of the act.
Ld. AR for the assessee challenging the impugned order contended
that reopening of the assessment u/s 147 after completion of the assessment u/s 147/143(3) of the Act is nothing but a ‘change of opinion’ which is not permissible under law and relied upon decision rendered by Hon’ble Supreme Court in case of Commissioner of Income Tax, Delhi vs. Kelvinator of India Ltd. 320 ITR 561 (SC) and decision rendered by Hon’ble High Court of Bombay in case cited as ITA no. 102 of 2016
The Pr. CIT-1 vs. M/s. Inarco Limited.
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Bare perusal of the assessment order dated 15.12.2016 shows that
the Assessing Officer has annexed original assessment order dated
15.03.2013, extracted in the preceding para, which shows that original assessment dated 15.03.2013 was completed u/s 147/143(3) by
incorporating the fact that “the proceeding u/s 147 initiated vide notice
dated 27.07.2011 and 28.07.2011 are dropped with the remarks
proceeding u/s 147 may be restarted by way of issuance of a fresh valid notice after collecting full information and recording proper reasons”.
It appears that the Assessing Officer has been initiating and
dropping the proceeding u/s 147 at his own whims and fancies and not in
accordance with law. Neither the original assessment order dated
15.03.2013 contains the reasons for reopening the assessment nor
subsequent assessment order dated 15.12.2016 framed u/s 144/147
contains the reasons for reopening the assessment. Even Ld. CIT(A) has
not made a bare reference of reasons, if any, recorded by the AO for
reopening the assessment. Even the assessment order dated 15.03.2013
itself contains the fact that the said assessment was reopened on the basis
of “improper reasons” because it is mentioned that proceeding u/s 147
may be restarted by issuance of valid notice after recording proper reasons.
Hon’ble Supreme Court in Kalvinator of India Ltd. (supra) has held
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that the Assessing Officer has no power to review his own order by returning following finding :-
“Prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under two conditions, viz., if (a) the ITO had reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the ITO or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax had escaped assessment for that year, or (b) the ITO had in consequence of information in his possession reason to believe that income chargeable to tax had escaped assessment for any assessment year. The fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 with effect from 1.4.1989 those conditions are given a go-by and only oen condition has remained, viz., where the Assessing Officer has reason to believe that income has escaped assessment, the section confers jurisdiction to reopen the assessment. Therefore, post 1.4.1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words ‘reason to believe’, failing which section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of ‘mere change of opinion’, which cannot be per se reason to reopen. One must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing
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Officer has no power to review; he has the power to reassess, but the reassessment has to be based on fulfillment of certain pre-conditions and if the concept of ‘change of opinion’ is removed as contended on behalf of the department, then in the garb of reopening the assessment, review would take place. One must treat the concept of ‘change of opinion’ as an inbuilt test to check abuse of power by the Assessing Officer. Hence, after 1.4.1989, the Assessing Officer has power to reopen, provided there is’tangible material’ to com to conclusion that there is escapement of income from assessment. Under the Direct Tax Laws (Amendment) Act, 1987, the Parliament not only deleted the words ‘reason to believe’ but also inserted the word ‘opinion’ in section 147. However, on receipt of representations from the companies against omission of the words ‘reason to believe’, the Parliament re-introduced the said expression and deleted the word ‘opinion’ on the ground that it would vest arbitrary powers in the Assessing Officer.”
In the instant case when reasons recorded for initiating the
proceeding u/s 147 of the Act has not seen the light of the day even at the
time of framing original assessment u/s 147/143(3) of the Act nor at the
time of framing the subsequent assessment u/s 144/147 of the Act, rather
revenue authorities are initiating and then dropping the proceedings only
as per their subjective satisfaction. When once assessment has been
framed u/s 147/143(3) by dropping the proceedings for want of “proper
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reasons” the Assessing Officer has no power to review his order as Assessing Officer has only power to reassess that too in accordance with the provisions laid down by the Legislature.
In view of what has been discussed above, we are of the considered
view that assessment framed in this case vide order dated 15.12.2016 and confirmed the Ld. CIT(A) is not sustainable in the eye of law, hence, order to be quashed without going into merits of this case.
Consequently appeal filed by the assessee is allowed.
Order pronounced in open court on this 29th January, 2019.
Sd/- Sd/- (N.S.SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 29 /01/2019 BR Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A)-XXVI, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.
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Date of dictation 18.01.2019 Date on which the typed draft is placed before 28.01.2019 the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS Date on which the fair order is placed before 29.01.2019 the Dictating Member for pronouncement Date on which the fair order comes back to the Sr. PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order