PROBIR CHANDRA SEN,NOIDA vs. ACIT, NEW DELHI

Facts in brief are that, the assessee is retired IAS Officer whose main source of income is, income from salary (pension), income from house property and income from other sources. During the year under consideration, the assessee was a director of India International Centre, New Delhi. He was also offered independent directorship at Rockland Hospitals Ltd.

During the year under consideration, Rockland hospitals Ltd issued sweat equity to 34 personal which included doctors and other personnel, subject to certain terms and conditions .The assessee was one of the beneficiary. The director of Income Tax (investigation), New Delhi carried out a search and seizure operation under section 132 of the Income Tax Act, 1961 (the Act) on Rockland group of cases, whereupon the above information pertaining to sweat equity was found and this material was transferred to the office of the Asst Commissioner of Income Tax, Circle 37 (1), New Delhi. The assessing officer (A.O.) recorded reasons that income subject to tax has escaped assessment and reopened the assessment by issuing notice under section 147 of the Act.

The issue before me is whether such reopening of assessment is valid in law.

After hearing rival contentions, I find that this issue is no more res integra, in view of the order of the Delhi” D” bench of the Tribunal in order dated 20/05/2016 in the case of Rajat Subra Chatterjee versus ACIT. 5.1. The Tribunal at paragraph 7 page 7 of its order held as follows: “7. On having gone through the decision cited above specially the decision of Amritsar bench in the case of IT O vs Arun Kumar Kapoor (supra), we find in that case as in the present case before us, reassessment was initiated on the basis of incriminating material found in search of third party and the validity of the same was challenged by the assessee before the Ld. CIT (appeals) and the Ld. CIT (appeals) vitiated (SIC) the proceedings. The same question by the revenue (SIC) before the ITAT and the ITAT after discussing the cases of the parties and the relevant provisions in detail has come to the conclusion that in the above situation, provisions of section 153C were applicable which excludes the application of sections 147 and 148 of the act. The ITAT held that the notice issued under section 148 and proceedings under section 147 as illegal and void ab initio. It was held that assessing officer having not followed procedure under section 153C, reassessment order was rightly quashed by the Ld. CIT (appeals). In the present case before thus, it is an admitted fact, that (SIC) also evident from the reasons recorded and the assessment order that the initiation of reopening proceedings was made by the assessing officer on the basis of information received from the Director of Income tax (Inv.) On the basis of search and seizure operations conducted at the premises of Rock land group of cases and the documents related to the assessee found during the course of search were made available to the assessing officer of the present assessee. We thus respectfully following the decision of coordinate bench of the ITAT in the case of ACIT versus Arun Kapoor-140 TTJ 249(AMRITSAR) hold that provisions of section 153C of the act were applicable in the present case for framing the assessment, if any, which excludes the application of section 147 of the act, hence, notice issued under section 148 of the act and assessment framed in furtherance thereto under section 147 read with section 143 (3) of the act are void ab initio. The reassessment’s in question is accordingly quashed.” 5.2. Respectfully following the decision of the coordinate bench of the tribunal cited above, on the very same issue in the case of another beneficiary and as the facts are undisputedly same in this case I uphold the contentions of the assessee and hold that reopening of assessment is bad in law. 5.3. As I have adjudicated this issue on the preliminary point of reopening, I do not go into the merits of the case, as it would be an academic exercise. In the result the appeal of the assessee is allowed.

In the result the appeal of the assessee is allowed.