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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’: NEW DELHI
Before: SH. I.C. SUDHIR & SH. O.P. KANT
ORDER PER O.P. KANT, A.M.: This appeal of the assessee is directed against order dated 20/09/2013 of learned Commissioner of Income-tax (Appeals)-X, New Delhi for assessment year 2007-08 raising following grounds :
1. That the learned Commissioner of IncomeTax (Appeals) X, New Delhi has erred both in law and on facts in confirming the initiation of proceedings under section 147 of the Act and, completion of assessment under section 143(3)/147 of the Act without appreciating that they were without jurisdiction and, therefore deserves to be quashed as such. 1.1 It is submitted that learned Commissioner of Income Tax (Appeals) has failed to appreciate that there was neither no fresh material in the possession of the learned Assessing Officer to initiate proceedings under section 147 of the Act and in absence thereof the proceedings were without jurisdiction. 1.2 That further more the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that notice u/s 147 is invalid on mere change of opinion formed on the same set of facts which were on record during the original assessment proceedings u/s 143(3) of the Act as has been held by Apex Court in the case of CIT vs. Kelvinator of India Ltd. reported in 320 ITR 561 and Full Bench of Hon’ble High Court of Delhi in the case of CIT vs. Usha International Ltd. reported in 348 ITR 485.
2. That the learned Commissioner of IncomeTax (Appeals) has further erred both in law and on facts in upholding an addition of Rs. 2,50,000/- by enhancing the closing stock (WIP) on misconception of facts and, statutory provision of law.
It is therefore, prayed that the impugned assessment may kindly be quashed and furthermore addition sustained by learned Commissioner of Income Tax (Appeals) alongwith interest levied may kindly be deleted and appeal of the appellant be allowed.
The facts in brief are that the original assessment in the case was completed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) after accepting the returned income of the assessee at Rs. 16,35,030/-. Subsequently, the assessment was reopened under section 147 of the Act and notice under section 148 of the Act was issued on 23/03/2012, i.e., within four years from the end of the relevant assessment year, after recording reasons to believe that income escaped assessment. In response, the assessee requested to treat the return originally filed as return in response to notice under section 148 of the Act. The reasons recorded were also provided to the assessee on 09/05/2012. In the re-assessment completed, the Assessing Officer made addition of Rs. 2,50,000/- as the difference between closing stock (work-in- progress) as per the profit and loss account and as details furnished by the assessee in assessment proceedings. Before the learned Commissioner of Income-tax (Appeals), the assessee challenged the reassessment proceedings as well as the addition of Rs. 2,50,000/- on merit. The assessee could not succeed before the learned Commissioner of Income-tax (Appeals) and being aggrieved, is in appeal before the Tribunal raising the grounds of appeal
as reproduced above.
3. In grounds No. 1 to 1.2, the assessee has challenged the jurisdiction in reopening the assessment under section 147 of the Act on the ground that there was no fresh material in possession of the ld. Assessing Officer, as also it was mere change of opinion on the same set of facts on record in original assessment proceedings. 3.1 Before us, learned Authorized Representative of the assessee addressing the grounds submitted that there was no fresh tangible material before the Assessing Officer for reopening of the assessment and it was reopened merely on the change of opinion on the material already before the Assessing Officer in 143(3) of the Act and in absence of fresh tangible material, the reassessment proceedings are without jurisdiction as held by the Hon’ble Delhi High Court in the case of Orient Craft Ltd. (2013) 354 ITR 536 (Del) and in the case of the Donaldson India Filters Systems Private Limited (2015) 54 taxmann.com 253 (Delhi). 3.2 On the other hand, learned Sr. Departmental Representative relying on the orders of the authorities below, submitted that no full and true disclosure of facts was made on the part of the assessee and it was a glaring mistake of the claim, the reassessment proceedings were in accordance to law. 3.3 We have heard the rival submissions and perused the material on record. We find that the Hon’ble Jurisdictional High Court in the case of Orient Craft Ltd (supra) has held as under :
“15. In the present case the reasons disclose that the Assessing Officer reached the belief that there was escapement of income "on going through the return of income" filed by the assessee after he accepted the return under Section 143(1) without scrutiny, and nothing more. This is nothing but a review of the earlier proceedings and an abuse of power by the Assessing Officer, both strongly deprecated by the Supreme Court in CIT vs. Kelvinator (supra). The reasons recorded by the AssessingOfficer in the present case do confirm our apprehension about the harm that a less strict interpretation of the words "reason to believe" vis-a-vis an intimation issued under section 143(1) can cause to the tax regime. There is no whisper in the reasons recorded, of any tangible material which came to the possession of the assessing officer subsequent to the issue of the intimation. It reflects an arbitrary exercise of the power conferred under section 147.” 3.4 Thus in absence of any tangible material, the reassessment proceedings have been held to be without jurisdiction by the Hon’ble High Court. 3.5 Similarly in the judgment in the case of Donaldson India Filters Systems Private Limited(supra), the Hon’ble jurisdictional High Court has held as under: