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Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI
Before: SH RAJENDRA & SH PAWAN SINGH
Assessee by : Shri Mehulle V. Choksi& Ms. Rohini Wagh (AR) Revenue by : Shri Naveen Gupta (DR) Date of hearing : 20.06.2016 Date of Order : 22.06.2016
O R D E R
PER PAWAN SINGH, JM:
The present appeal filed by the assessee against the order of CIT(A)-28, Mumbai dated 30.12.2011 for Assessment Year (AY) 2001-02. The assessee has raised the following ground of appeal: I
01. On the facts and in the circumstances of the case and in law, the re- assessment under section 147 of the Act is invalid, illegal and bad in law. I
02. The Appellant submits that the learned AO has erred in issuing notice u/s 148 of the Act for reopening the case. I
03. On the facts and in the circumstances of the case and in law the learned AO has completed the reassessment in an improper, arbitrary and unreasonable manner without appreciation of facts; the Appellant submits that the reassessment order is without lawful jurisdiction and hence is liable to be annulled and quashed. II
01. On the facts in the circumstances of the case and in law, the learned CIT(A) has erred in not allowing exemption in respect of transfer fees accounted as Contribution to Repairs & Renovation Fund in entirety as allowed by Hon'ble ITAT in the Appellant's own case for Asst. Years 2002- The Panchratna Co-op. Hsg. Soc. Ltd. 03, 2004-05 and 2006-07 vide order dated August 26,2011 in to 2860/Mum/2010. II-02 The learned CIT(A) has erred in not granting full relief in respect of Contribution to Repairs & Renovation Fund (transfer fees) and directing the AO to make miscellaneous petition before ITAT disregarding the jurisdiction discipline and principles of jurisprudence. II-03 The Appellant prays that the income from Contribution to Repairs & Renovation Fund (transfer fees) may be treated as exempt on the basis of well established principles of jurisdictional High Court and ITAT. II-04 Without prejudice, if the Contribution to Repairs & Renovation Fund (transfer fees) are held taxable, the Appellant's claim for reasonable expenditure to the extent of 10% of transfer fees may be allowed. III All the grounds of appeal are mutually exclusive and without prejudice to one another. IV The Appellant craves leave to add, alter, amend or modify any or all grounds till the appeal is heard.
Brief facts of the case are that the assessee filed return of income on 31.10.2001 declaring total income at Rs. Nil. The notice of scrutiny assessment under section 142 (1) of the Act was issued on 27 August 2002. The assessee submitted reply of the said notice on 29 October 2002. Thereafter, no further action pursuant to the notice was taken by the AO. Thereafter, the assessment was re-opened u/s 147 and notice u/s 148 dated 15.03.2007 was issued and served upon the assessee. The assessee submitted that the return of income already filed on 31.10.2001 may be treated as return of income in response to the notice u/s 148 of the Act. The assessee also demanded the reasons for re- opening. The reasons for re-opening was forwarded along with letter dated 03.05.2007. The assessee objected the reassessment proceeding vide objections/letter dated 31st May 2007. The objection of the assessee was rejected, and AO proceeded to reassessment of the income of the assessee. While framing re-assessment order AO and besides making additions of transfer fees, contribution to repairs and renovation fund, car parking, non- occupancy charges, advertisement charges, lifts , miscellaneous income and further disallowed the deduction under section 80P(2)(d). The assessee challenged the notice of reopening before Hon’ble High Court by way of Writ Petition. The Writ Petition was admitted before honourable High Court of Bombay on 17th March 2008, wherein interim relief was granted to the assessee. In the Writ Petition Hon’ble High Court vide order dated 12 March The Panchratna Co-op. Hsg. Soc. Ltd.
2008, directed the revenue to consider the assessee as a Co-operative Society. Pursuant to the direction of Hon’ble High Court, the AO passed order under section 143 (3) rws 260 of the IT Act, vide order dated 29 December 2009. Aggrieved by the order of AO the assessee filed appeal before the Commissioner of Income Tax Appeals. Before Commissioner of appeal assessee challenged the validity of reopening and various additions. The Learned CIT(A) upheld the reopening and for other addition partial relief was granted to assessee by following the decision of honourable Mumbai High Court in the case of Mittal Court Co-operative Society. Aggrieved by the order of Commissioner of appeals. The assessee has filed the present appeal before us.
We have heard ld AR of the assessee and DR for revenue and perused the material available on record. AR of assessee argued that notice of reopening under section 147 of the Act was issued after the expiry of four years from the end of relevant assessment year. In the reason of reopening the AO has not made a whisper that the assessee failed to make full and true disclosure or income chargeable to tax escape assessment for such assessment year by the reasons on the failure on the part of assessee as per the proviso attach with section 147of the Act. AR for assessee further argued that assessee challenged the notice dated 15 Mach 2007 before Bombay High Court by filing Writ Petition. The Writ Petition of the assessee was registered as Writ Petition No 2216 of 2007. The Hon’ble High Court allowed the Writ Petition of the assessee vide order dated 16 July 2015,wherein the notice of reopening under section 147 of the Act, dated 15 Mach, 2007 is quashed, copy of which is placed on record. Ld AR of the assessee further argued that once the notice under section 147 is quashed, all consequential proceedings undertaken by the revenue has become invalid, illegal and improper. DR for revenue fairly accepted that notice under section 147, dated 15 March 2007 has been quashed by Hon’ble Bombay High Court.
We have considered the rival contention of the parties and gone through the order passed by revenue authority and the order of Hon’ble Bombay High The Panchratna Co-op. Hsg. Soc. Ltd.
Court in the Writ Petition of the assessee, challenging the validity of notice u/s 147 dated 15 Mach 2007. The Hon’ble High Court in the said Writ Petition held as under: “6.Not only it is not mentioned in the reasons that the petitioner failed to disclose all the necessary facts as required, but the patterns of the reasons would show that all necessary and relevant facts were in fact furnished by the petitioner.
Thus, firstly, there is no failure to make full and true disclosure for necessary facts which is the jurisdictional requirement for initiating reopening proceeding after period of 4 years as per the provision of section147. Secondly, the reasons do not show that there was any failure to disclose. Mr Malhotra, on behalf of respondent revenue contended that petitioner filed return before a wrong authority and, therefore, that earlier return was not return in the eyes of law. This is not the reason stated by the assessing officer and, therefore, it cannot be permitted to be taken at this stage. It is settled question as held by this court in Hindustan Lever Ltd versus RB Wadkar (268 ITR 322), that the reopening notice stands or falls by the reasons recorded at the time of reopening notice is issued. It is not permissible to edit further reasons to those recorded while issuing of the reopening notice. In view of this position, the petition requires to be allowed.”
Considering the order of Hon’ble High Court of Bombay(supra) holding that the reopening of the assessment is illegal and invalid, the reassessment order passed by AO under section 143 (3) rws147, dated 31 December 2007 and order under section 143(3) rws 260 dated 29 December 2009 has become void. As the reopening has been declared invalid and the notice under section147 has been quashed, thus the Ground No. I, raised in the present appeal is allowed. As Ground No. I is allowed in favour of assessee thus the discussion on other Grounds raised in the present appeal become academic. In the result, the appeal filed by the assessee is allowed.