PRAKASH R.OSWAL,PUNE vs. INCOME-TAX OFFICER, WARD - 5(3), PUNE

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ITA 2658/PUN/2017Status: DisposedITAT Pune28 December 2018AY 2010-114 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that if the primary reason for reopening the assessment is deleted, any subsequent addition made during the reassessment proceedings cannot be sustained. Therefore, the addition on account of rent-free accommodation perquisites was deleted.

What were the facts?

The Assessing Officer reopened the assessment based on deemed dividend under Section 2(22)(e) and also made an addition for rent-free accommodation perquisites. The CIT(A) deleted the deemed dividend addition but upheld the perquisite addition.

What were the issues?

Whether an addition made on account of perquisites can be sustained when the primary reason for reopening the assessment under Section 147 was deleted and the Revenue did not appeal against that deletion.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 2(22)(e)

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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

For Appellant: Shri Rajiv Thakkar &, Shri Rishab Gujrathi, Shri Rajesh Gawali
Hearing: 17.12.2018Pronounced: 28.12.2018

आयकर अपीलीय अिधकरण पुणे �यायपीठ एक-सद�य मामला पुणे म� IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “SMC”, PUNE सु�ी सुषमा चावला, �याियक सद�य के सम� BEFORE MS. SUSHMA CHOWLA, JM आयकर अपील सं. / ITA No.2658/PUN/2017 िनधा�रण वष� / Assessment Year : 2010-11 Prakash R. Oswal, C/o. Shah Khandelwal Jain & Associates, Chartered Accountants, Level 3, Riverside Business Bay, Plot No.84, Wellesley Road, Near RTO, Pune-411001. अपीलाथ�/Appellant PAN: AAAPO6465D …. Vs. The Income Tax Officer, …. ��यथ� / Respondent Ward- 5(3), Pune. अपीलाथ� क� ओर से / Appellant by : Shri Rajiv Thakkar & Shri Rishab Gujrathi : Shri Rajesh Gawali ��यथ� क� ओर से / Respondent by घोषणा क� तारीख / सुनवाई क� तारीख / Date of Pronouncement: 28.12.2018 Date of Hearing : 17.12.2018 आदेश / ORDER PER SUSHMA CHOWLA, JM: The appeal filed by the assessee is against the order of CIT(A)-4, Pune dated 12.06.2017 relating to assessment year 2010-11 against order passed under section 143(3) read with section 147 of the Income-tax Act, 1961 (in short ‘the Act’).

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2.

The only issue arising in the present appeal is in relation to exercise of jurisdiction under section 147 of the Act and consequent addition to be made in the hands of the assessee. 3. Briefly, in the facts of the case, the Assessing Officer had reopened the assessment in the case of the assessee by recording reasons for reopening the same under section 147 of the Act and issued notice under section 148 of the Act. The reasons were recorded in respect of the issue of deemed dividend under section 2(22)(e) of the Act and the Assessing Officer made addition of Rs.5,45,000/- in the hands of the assessee. During the course of assessment proceedings, the Assessing Officer made another addition of Rs.1,04,310/- in the hands of the assessee on account of perquisites value of rent free accommodation provided by M/s Vijayshree Alloys Pvt. Ltd. to the assessee. The CIT(A) deleted the addition on account of deemed dividend, for which the reasons were recorded for reopening the assessment, i.e. under section 2(22)(e) of the Act. However, the CIT(A) upheld the addition on account of perquisites value of rent free accommodation. 4. The plea of the assessee before me is that once the addition which has been made in the hands of the assessee on account of reopening the assessment under section 147 of the Act and the same has been further deleted; then the second addition cannot stand in the hands of the assessee. The learned Authorized Representative for the assessee, in this regard, placed reliance on the ratio laid down by the Hon’ble Bombay High Court in CIT vs. Jet Airways (I) Ltd., (2010) 331 ITR 236 (Bombay) and also the decision of the Hon’ble Delhi High Court in CIT vs. Adhunik Niryat Ispat Ltd., (2011) 63 DTR

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0212 (Delhi). He further placed reliance on the decision of the Delhi Bench of the Tribunal in M/s. Pragati Finsec Ltd. vs. ITO in ITA No.634/Del/2018 relating to assessment year 2002-03, order dated 20.06.2018. 5. The learned Departmental Representative for the Revenue placed reliance on the orders of the authorities below. 6. On perusal of the record and after hearing both the representatives, I find the assessment in the case of the assessee was reopened under section 147 of the Act on the ground of deemed dividend under section 2(22)(e) of the Act and the Assessing Officer made the addition on this account and also made further addition on account of perquisites value of rent free accommodation provided to the assessee. The first issue, on which reassessment proceedings were initiated, has been decided in favour of the assessee by the CIT(A), against which the Revenue is not in appeal. The question arises from the second issue; can the addition made on account of perquisites value of rent free accommodation be sustained in the hands of the assessee, in absence of any addition being made which was the basis for reopening the assessment under section 147 of the Act. The answer to the same is “No”. In this regard, I find support from the judgement of the Hon’ble Bombay High Court in Jet Airways (I) Ltd. (supra) which is the Jurisdictional High court. Further, the Delhi Bench of the Tribunal in M/s. Pragati Finsec Ltd. (supra) has also held the same, in turn, relying on the ratio laid down by the Hon’ble Delhi High Court in Adhunik Niryat Ispat Ltd. (supra). Applying the said ratio laid down by the Jurisdictional High Court and following the parity of reasoning of the Delhi Bench of the Tribunal, I hold that there is no merit in the aforesaid addition

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made in the hands of the assessee on account of perquisites value of rent free accommodation. Hence, the same is deleted. 7. In the result, the appeal of the assessee is allowed. Order pronounced on this 28th day of December, 2018.

Sd/- (SUSHMA CHOWLA) �याियक सद�य / JUDICIAL MEMBER पुणे / Pune; �दनांक Dated : 28th December, 2018. Sujeet आदेश क� �ितिलिप अ�ेिषत/Copy of the Order is forwarded to : 1. अपीलाथ� / The Appellant; 2. ��यथ� / The Respondent; The CIT(A)-4, Pune; 3. 4. The Pr. CCIT, Pune; िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे, एक-सद�य 5. मामला / DR ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, स�यािपत �ित //True Copy// व�र� िनजी सिचव / Sr. Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

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