UDAY SALVI,MUMBAI vs. ITO 18(1)(3), MUMBAI

The facts, in brief, are that the assessee was operating in the name and style of “Shreeram Video Channel” providing cable connections in the vicinity of Worli Mumbai. The Income Tax Officer (investigation) Unit-1 received a Tax Evasion petition against the assessee. An Income tax Inspector was deputed for field inquiry. The inspector reported that the assessee was actually receiving a sum of Rs.250/- per month from each subscriber, against which the 2 1296, 1297, 1298 & 1299/M/2011 Shri Uday A Salvi assessee was found to be showing only Rs. 210/-. Similarly some discrepancies were found in the number of connections distributed. This entire exercise was related to financial year 2005-06.In the meanwhile, on the basis of information received from the investigation wing to verify the income declared by the assessee for Financial Year 2005–06 relevant to AY 2006-07, the Assessing Officer (hereinafter referred to as the AO) reopened the assessment from AY 2000 – 01 on words. On the basis of report of inspector, the AO observed that the assessee had concealed income to the extent of Rs. 28.32 lakhs in the financial year 2005-06. For the year under consideration i.e. AY 2001–02, the AO made addition of Rs.3 8,58,460/- on account of difference in cable subscription charges and further disallowed Rs.4,12,601 being 50% of the expenses claimed of Rs. 825202/-. Similar type of additions were also made for the subsequent years up to AY 2005-06. The learned CIT(A) confirmed the additions so made by the AO observing that the AO had reasons to believe that the income of the assessee for the year under consideration had escaped assessment.

Before us, the Ld. AR of the assessee, at the outset, has submitted that for A.Y. 2000–01 also, the assessment was reopened on similar grounds. The assessee challenged the very reopening of the assessment by filing appeal before the CIT(A). The learned CIT(A) vide his order dated 20.2.2008 quashed the reopening of the assessment for A.Y. 2000– 01. Against the order of the CIT(A), the Department filed appeal before the Tribunal. The Tribunal vide its order dated 1.6.2009 passed in upheld the order of the CIT(A) in quashing the reopening of the assessment for A.Y.2000–01. The learner AR of the assessee has further stated that the above stated order of the tribunal has been further upheld by the Hon’ble Bombay High Court in ITA No. 824 of 2010 vide order dated 6.6.2011. He, therefore, has submitted that since the reopening in all the above stated assessment years was made for identical reasons, therefore, the same is required to be quashed in the light of

We have heard the rival contentions of the learned representatives of the parties. The Tribunal in the case of the assessee for A.Y. 2000– 01 has observed that there was no information available to the AO regarding suppression of income and offering lesser rate as against actual subscription received by the assessee for the assessment year 2000-01. That the reliance of the AO on the report of the inspector was misplaced as the report of the inspector was posterior to the date of issuance of notice under section 148 of the Act. That the AO had no basis with him before issuing notices under section 148 and was rather acting on presumptions only. The above findings of the tribunal has been further upheld by the Hon’ble High Court vide order dated 6/6/2011(supra). The relevant part of the order of the Hon’ble High Court passed in of 2010, for the sake of ready reference, is reproduced as under: “2. The Tribunal in paragraph 3 of its judgment has reported that the information about the escapement of income collected by the Income Tax Inspector related to the assessment year 2006–07 and that information had no relation to the assessment year in question namely assessment year 2000–01. Thus, the reopening of the assessment is held to be bad in law on the ground that there was no material for reopening of the assessment. Thus, the decision of the Tribunal is based on finding of fact and no substantial question of law arises from the order of the tribunal. Hence the appeal is dismissed with no order as to costs.”

The learned DR of the Department has fairly admitted that the reopening in the above captioned appeals for A. Y. 2001-02 to A. Y. 2005– 06 has been made by the AO on identical facts and on the basis of identical reasoning as given in the case for A.Y. 2000 – 01. The facts of the cases before us being identical to that of the A. Y. 2000–01, hence, in the light of the decision dated 6.6.2011 (supra) of the Hon’ble jurisdictional High Court, which is otherwise binding on this Tribunal, we hold that the reopening of the assessments in relation to the assessment years under consideration was bad in law and the same is therefore quashed.