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Income Tax Appellate Tribunal, CUTTACK
Before: SHRI N.S SAINI
This is an appeal filed by the assessee assessee against the order of
CIT(A)-1, Bhubaneswar, dated 16.9.2016 for the assessment year 2006-
07.
In Ground No.2 of the appeal, the assessee has challenged the
reopening of assessment by the Assessing Officer u/s.148 of the Act.
At the outset, during the course of hearing, ld A.R. of the assessee
submitted that the reopening of assessment was made on audit objection
and, therefore, was bad in law. For this proposition, he referred to para 1
of the assessment order and pointed out therefrom that the Assessing
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Officer has observed that “ the assessee has filed return of income on
31.01.2007 disclosing total income of Rs.20,010/-. The same was
processed u/s 143(l)(a) of the I.T.Act,1961 on 31.01.2007 raising refund
of Rs.71,620/-. Subsequently, the Revenue Audit Party, has given Audit
objection vide IR -No.18/2008-09/ Para 3, dated 05.11.2008 raising the
point that the assessee -firm had claimed excess depreciation at
Rs.1,82,965/-(Rs.7,31,865/- minus Rs.5,48,900/- allowable as per IT
rules) is required to added back to the total income of the assessee
and determined the short levy of Rs.69,133/-. Accordingly, the case
was reopened u/s 147 of the I.T.Act,1961 with the prior approval of
Addl.CIT,B/R,Berhampur vide approval letter no. Addl.CIT/BAM/J-30/2009-
10/1734, dt.18.05.2009 and issued notice u/s 148 of the I.T.Act,1961 by
RPAD vide this office letter No-17, dt.03.04.2009. Hence, he submitted
that the issue was covered by the decision of Hon’ble Supreme Court in the
case of Indian And Eastern Newspaper Society vs CIT, 119 ITR 996
(SC),wherein, it was held that information of an internal audit party of the
Income Tax Department on a point of law cannot be regarded as
“information” within the meaning of Section 147(b) of the I.T.Act, 1961.
He submitted that the issue of depreciation on vehicles was allowable to
the assessee @ 40% or 30% was a question of law. Therefore, in view of
the decision of Hon’ble Supreme Court in the case of Indian And Eastern
Newspaper Society(supra), the assessment order passed should be
cancelled.
On the other hand, ld D.R. supported the orders of lower authorities.
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I have heard the rival submissions, perused the orders of lower
authorities and materials available on record. I find that the reasons
recorded for reopening of the assessment as narrated by the Assessing
Officer in the assessment order reads as under:
“the assessee has filed return of income 31.01.2007 disclosing total income of Rs.20,010/-. The same was processed u/s 143(l)(a) of the I.T.Act,1961 on 31.01.2007 raising refund of Rs.71,620/-. Subsequently, the Revenue Audit Party, has given Audit objection vide IR -No.18/2008-09/ Para 3, dated 05.11.2008 raising the point that the assessee -firm had claimed excess depreciation at Rs.1,82,965/-(Rs.7,31,865/- minus Rs.5,48,900/- allowable as per IT rules) is required to added back to the total income of the assessee and determined the short levy of Rs.69,133/-. Accordingly, the case was reopened u/s 147 of the I.T.Act,1961 with the prior approval of Addl.CIT,B/R,Berhampur vide approval letter no. Addl.CIT/BAM/J-30/2009-10/1734, dt.18.05.2009 and issued notice u/s 148 of the I.T.Act,1961 by RPAD vide this office letter No-17, dt.03.04.2009.
A bare reading of the above recording categorically proves that
reopening of assessment was done by the Assessing Officer merely on the
audit objection and not on his own opinion that income chargeable to tax
has escaped assessment. As per the provisions of Section 147 of the Act,
if the Assessing Officer has reason to believe that any income chargeable
to tax has escaped assessment for any assessment year, he may, subject
to the provisions of sections 148 to 153, assess or reassess such income.
Thus, it is clear that there has to be own believe only of the Assessing
Officer that income chargeable to tax has escaped assessment. After
receipt of the information, the Assessing Officer has to apply his own mind
and after such application of mind, if he forms own believe that any income
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which was chargeable to tax has escaped assessment then only he can
invoke the provisions of section 148 of the Act. In the instant case, the
above quoted recordings reveal that the reopening of assessment was
made on the basis of believe or information of the audit party. I, therefore,
hold that the impugned order of reassessment is untenable. Therefore, I
cancel the said reassessment order passed u/s. 147 r.w.s 143(3) of the
Act dated 11.11.2010 and allow the ground of appeal of the assessee.
Since, I have cancelled the reassessment order dated 11.11.2010
under section 143(3)/147 of the Act, other grounds of appeal raised by the
assessee on merits of the addition have become infructuous and hence not
adjudicated upon.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 15 /06/2017 in the presence of parties. Sd/- (N.S Saini) ACCOUNTANT MEMBER Cuttack; Dated 15 /06/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The appellant : M/s. Jaya Mangala Construction, At” Bhejaput, PO: Damonjodi, Dist: Koraput. 2. The Respondent :ITO, Ward-1, Jeypore 3. The CIT(A) -1, Bhubaneswar 4. Pr.CIT-1, Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//
BY ORDER, SR.PRIVATE SECRETARY ITAT, Cuttack