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Income Tax Appellate Tribunal, KOLKATA BENCH ‘A’, KOLKATA
Before: Shri N.V.Vasudevan, J.M. &Dr.A.L.Saini, A.M.)
ORDER Per Dr. A.L.Saini, A.M.: The captioned appeal filed by the Revenue pertaining to assessment year 2006-07, is directed against the order passed by the Ld. Commissioner of Income- Tax (A) -XIX, Kolkata in appeal No.325/CIT(A)-XIX/Cir-42/Kol/12-13 dated 19/08/2013, which in turn arises out of an order passed by the Assessing Officer under section 147/144 of the Income Tax Act, 1961 (in short, ‘the Act’), dated 29/11/ 2011.
The facts of the case are stated in brief. The assessee had filed its return of income for the assessment year 2006-07on 31.10.2006 showing total income of Rs.69,56,510/-. The case was selected for scrutiny and order under section 143(3) was passed by the AO on 26th December, 2008. The assessment was reopened under section 147 of 1 /Kol/2013 M/s. Swati International the Income Tax Act, 1961 and completed under section 144 on 29th November, 2011. Due to non-compliance on the part of the assessee, the AO completed the assessment under section 144 by making the addition on account of suppression of sales and excess railway freight claim.
The main grievance of the Revenue in this appeal is annulment of the order of the reassessment made by the AO under section 147/144 of the Act. The ld. CIT(A) held that reopening of assessment under section 147 by the AO was ultra vires and bad in law. Therefore, the Revenue is in appeal to defend the order made by the AO.
None appeared on behalf of the assessee in spite of several notices sent to it by post. Therefore, we proceed to dispose of this appeal ex parte without the presence of the assessee.
The ld. DR for the Revenue submitted that it was found from the details submitted by the assessee during the course of scrutiny assessment that the total domestic sales figure is Rs.1,85,86,910.87. Against the domestic sales figure disclosed by the assessee during the scrutiny assessment at Rs.1,77,94,104/- and the figure of total railway freight was at Rs.4,63,69,907/-, against the figure submitted by the assessee during the scrutiny assessment at Rs.5,03,80,739/-. Consequently, the domestic sales were suppressed by Rs.7,92,507/- and railway freights were shown in excess by the assessee at Rs.40,10,832/-. As a result, there was revenue loss because of mistake in taking the correct sales figure and the expenditure, excess railway 2 /Kol/2013 M/s. Swati International freight was allowed. Based on this, the AO was right in reopening the assessment under section 147 of the Income Tax Act, 1961. It is a case where the income has escaped assessment. Hence, the reopening done by the AO under section 147 is valid.
We have gone through the reply submitted by the assessee before the ld. CIT(A). The ld. CIT(A) held that there was a lapse on the part of the AO in reopening the assessment which was completed under section 143(3). The order passed by him now under section 147 cannot be sustained and is liable to be held ultra vires. The ld. CIT(A) has allowed the appeal of the assessee by observing as under: “5. In the assessment order dated 29.11.2011, the AO has mentioned that - at the time of the scrutiny assessment, assessee's claim of domestic sales was taken as Rs. 1,77,94,104/- and railway freight was taken as 5,03,80,739/-. After that it was found from the details submitted by the assessee during the course of scrutiny assessment that the total domestic sales figure is Rs.1,85,86,910.87/- and the figure of total railway freight is Rs.4,63,69,907/- Consequently domestic sales were suppressed by Rs.7,92,507/- and railway freights were shown in excess. On the basis of the fact as mentioned, the case was reopened u/s 147 of the Act.’ 5.1. The issue of reopening of an assessment completed u/s 143(3) of the Act on the basis of available information at the time of the original scrutiny proceeding was a subject matter of numerous litigations. There are rulings of High courts as well as the Apex Court which have held that primary information which was available with the AO during the course of a scrutiny assessment proceeding cannot be usedto reopen the assessment . • The matter is covered by the decision of the Apex Court in the case of CIT vs. Tarajan Tea Co. (P) Ltd. reported in 236 ITR 447 (SC) wherein it was held that - 'Information which was with the A.O. at the time of original assessment cannot be used for reopening the assessment u/s 147.' /Kol/2013 M/s. Swati International • In the case of ITO vs. Nawab Mir Barkat Ali Khan Bahadur [1974] reported in 97 ITR 239 (SC), it was held that - 'second thoughts on the same material, and omission to draw the correct legal presumption during original assessment do not warrant the initiation of a proceeding u/s 147.' • In the case of Sirpur Paper Mills Ltd. vs. ITO [1978] reported in 114 ITR 404 (AP) , it was held that - 'Income tax department cannot be permitted to bring fresh litigations because of new views to entertain the facts or new version which they present as to what should be the inference or proper inference either of the facts disclosed or the weight of the circumstances.” • It was held in the case of CIT vs. George Williamson (Assam) Ltd. [2002] reported in 258 ITR 126 (Gau) that - 'the duty of the assessee does not extend 'beyond making' a full and true disclosure of primary facts. Once he has done so, his duty ends. It is for the assessing authority to draw the correct inference from the primary facts. It is not the responsibility of the assessee to advise the Assessing authority. If the assessing authority draws an interference which appears to him subsequently to be erroneous, then in such a case, mere change of opinion with regard to that inference would not justify initiation of action for reopening the assessment. When at the time of the original assessment primary facts were already before the ITO and after some routine enquiry the ITO could have assessed the income on the basis of such information, it is not open to him to invoke the provisions of section 147 and reopen the assessment even though he may have omitted to notice the facts mentioned in the return by oversight - Lokendra Singh vs. ITO [1981] 128 ITR 450 (MP). It is a settled law that an assessing officer has no power to review his order and he could not do so in the purported exercise of the authority u/s 147 of the Act.’ 6. Based on the various court rulings as narrated above, the action of the AO in reopening the assessment does not fall within the legal framework of the scheme of reassessment proceedings. Since there is a lapse on the part of the AO in reopening the assessment which was completed u/s 143(3), the order passed by him now cannot be sustained and is liable to be held ultra vires. Without a strong foundation, the edifice collapses. As a result, the assessment order u/s 147/144 is hereby annulled.” /Kol/2013 M/s. Swati International 7. We have gone through the facts and circumstances of the case and perused the material available on record and we noticed that there is a merit in the submission of the assessee before the ld. CIT(A) as cited above. There are rulings of Hon’ble High Court as well as the Apex Court which have held that primary information which were available with the AO during the course of the scrutiny assessment proceedings cannot be used to reopen the assessment. As explained above that in the case of CIT-vs- Tarajan Tea Co. (P) Ltd. reported (supra), wherein it was held that ‘information which was with the A.O. at the time of original assessment cannot be used for reopening the assessment under section 147.’ Therefore, considering the above cited facts and circumstances and rulings of the Hon’ble Apex Court, we do not hesitate to confirm the order passed by the ld. CIT(A).
In the result, the appeal filed by the Revenue is dismissed. Order Pronounced in the Open Court on 21.09.2016 Sd/- Sd/- (N.V.Vasudevan) (Dr. A.L.Saini) JudicialMember Accountant Member Dated: 21/09/2016 Talukdar (Sr.PS) Copy of the order forwarded to: 1. Revenue 2 Assessee 3. The CIT-I, 4. The CIT(A)-I, 5. DR, Kolkata Benches, Kolkata True Copy, By order,