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Income Tax Appellate Tribunal, KOLKATA ‘A(SMC
Before: Shri P.M. Jagtap
This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)-21, Kolkata dated 09.05.2016.
In Ground No. 1 raised in this appeal, the assessee has raised a preliminary issue relating to the validity of the assessment made by the Assessing Officer under section 143(3)/147.
The assessee in the present case is a Trust created under a Will by Shri Rammohan Mullick for the benefit of nine idols/deities, all are artificial juridical persons as per the Income Tax Act. The return of income for the year under consideration was filed by it on 30.03.2006
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declaring total income at NIL. Initially the said return was processed by the Assessing Officer under section 143(1). Subsequently the assessment, however, was reopened by him under section 147 and a notice under section 148 was issued to the assessee after recording the reasons. In response to the said notice, a letter dated 30.02.2008 was filed by the assessee requesting the Assessing Officer to treat the return filed on 30.03.2006 as the return filed in response to the notice under section 148. Thereafter the Assessing officer proceeded to complete the assessment under section 143(3)/147 vide an order dated 30.12.2008, wherein he held that the assessee was not entitled for exemption under section 11 of the Act as the same was not registered under section 12A. He also held that the status of the assessee was that of an AOP and the appropriation of income of AOP to nine deities, who were beneficiaries, was not possible. Accordingly, the income received by the assessee in the form of rent, interest and dividend aggregating to Rs.5,23,400/- was brought to tax by the Assessing Officer in the assessment completed under section 143(3)/147.
Against the order passed by the Assessing Officer under section 143(3)/147, an appeal was preferred by the assessee before the ld. CIT(Appeals) challenging the validity of the said assessment as well as disputing the addition made therein on merit. The ld. CIT(Appeals), however, did not find merit in the appeal filed by the assessee and dismissed the same. Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.
I have heard the arguments of both the sides on the preliminary issue raised by the assessee in this appeal challenging the validity of assessment made by the Assessing Officer under section 143(3)/147. As submitted by the ld. counsel for the assessee in this regard, a similar issue challenging the validity of assessment made by the Assessing Officer under section 143(3)/147 on the basis of identical reasons recorded was raised by the assessee in its appeals filed before the
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Tribunal for A.Ys. 2001-02 to 2004-05 and the same was decided by the Tribunal in favour of the assessee vide its common appellate order dated 11.01.2017 passed in ITA Nos. 215 to 218/KOL/2016. A copy of the said order is also placed on record before me and perusal of the same shows that a similar issue has been decided by the Tribunal in favour of the assessee for the following reasons given in paragraph no. 7 to 7.2 of its order as under:- “7. Now let us look into the facts pertaining to the assessee company for AY 2001-02 to examine the legal grounds raised by the assessee in the light of reasons to believe recorded by the AO in his assessment order which reads as under:- “It is seen that the assessee has claimed exemption u/s 11 of the I.T. Act, 1961 but the trust is not registered u/s 12A of the I.T. Act, 1961, the income derived from the trust is used for private religious purpose which does not ensure for the benefit of the public. It is also seen that the assessee derives income from rent and interest from FD from banks but the expense claimed are purely personal in nature and deduction are not as per section 57 of the I.T. Act in the case of income from other sources”.
On perusal of the reasons to believe we find that the case was reopened under section 147 of the Act on account of two reasons. Firstly the assessee claimed exemption under section 11 of the Act without having registration u/s 12A of the Act. Secondly assessee has claimed personal expenses against the income of other sources which are not allowable under section 57 of the Act. However, on perusal of income tax return we find the fact is that the assessee is not registered u/s 12A of the Act and no exemption u/s 11 of the Act was claimed. Similarly, we find that no expense against the income of other sources was claimed by the assessee and consequently no question of claiming personal expense arises, The fact as emerged from the records is that assessee has just shown the TDS deducted in the name of the assessee in its return which is placed on page 60 of the paper book with sole purpose of claiming the refund of the TDS. The assessee has not even shown income corresponding to TDS in the income tax return. In this regard we find that the income corresponding to TDS was duly shown in the hands
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of 9 deities/idols return which are placed on pages 51 to 69 of the paper book.
7.1. Thus it clear that in the reasons recorded, there is no live link between the reasons to believe and income escapement assessment. We are aware that the reason recorded to reopen has to be seen on a standalone basis which triggered to reopen the case under section 147 of the Act. In the light of the above we are of the opinion that it cannot be concluded that AO was not having sufficient information at the time of initiating action u/s 147 for forming reason for escapement of income. In the light of the above, we hold that there was no fresh tangible material available for the foundation on which the AO has made up his mind to reopen the case under section 147 of the Act. Accordingly we find force in the contention of the Id. AR that there was no shred of evidence in the hands of the AO while reopening the case which can be termed as a new tangible material and link to base a reason to believe escapement of income. Therefore, the entire reopening is vitiated on this count. In the absence of the said jurisdictional fact renders the reopening 'coram non judice' and the assessment 'null' in the eyes of law,
7.2 We also find that the AO is under obligation to dispose of the objection raised by the assessee for the reopening of the case under section 147 of the Act by way of speaking order in terms of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd v. Income Tax Officer (2003) 259 ITR 19 (SC). But we find that the AO failed to pass a speaking order on the objections raised by the assessee to the reopening of the assessment. The AO assumed jurisdiction in the instant case on wrong assumption of facts. In view of above, we are of the view that AO has erroneously usurped jurisdiction which law does not permit him to do on the reasons given above, so the entire action of AO is ab-initio void and is quashed”.
As the issue involved in the year under consideration, i.e. A.Y. 2005-06 as well as all the material facts relevant thereof are similar to A.Ys. 2001-02 to 2004-05, we respectfully follow the decision of the Division Bench of this Tribunal rendered for A.Ys. 2001-02 to 2004-05 and cancel the assessment made by the Assessing Officer under section
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143(3)/147 treating the same as bad in law. Ground No. 1 of the assessee’s appeal is accordingly allowed.
Keeping in view the decision rendered on Ground No. 1, the issues raised in other grounds of this appeal of the assessee have become infructuous and we do not consider it necessary to adjudicate upon the same.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on March 15, 2017.
Sd/- (P.M. Jagtap) Accountant Member Kolkata, the 15th day of March, 2017 Copies to : (1) Debottor Trust Estate of Rammohan Mullick, 39, Jatindra Mohan Avenue, Kolkata-700 005
(2) Income Tax Officer, Ward-43(4), Kolkata, 3, Government Place (West), Ground Floor, Kolkata-700 001
(3) Commissioner of Income Tax(Appeals)-21, Kolkata; (4) Commissioner of Income Tax- , (5) The Departmental Representative (6) Guard File By order
Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.