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Income Tax Appellate Tribunal, KOLKATA BENCH ‘C’, KOLKATA
Before: Shri N.V.Vasudevan, J.M. &Dr.A.L.Saini, A.M.)
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH ‘C’, KOLKATA (Before Shri N.V.Vasudevan, J.M. &Dr.A.L.Saini, A.M.)
ITA Nos. 275 & 276 /Kol/2016 : A.Ys : 2005-06 & 2006-07
Surja Sekhar Ganguly Vs Income Tax Officer, Ward C/o Shri S.N Ghosh & 17(3), Central Revenue Associates,Advocates, Seven Building, 169 AJC Bose Road, Brothers’Lodge, P.O Kolkata-700014. Buroshibtala, P.S Chinsurah, Dist:Hooghly, Pin 712105.
PAN: AGDPG0524E
(APPELLANT) (RESPONDENT)
Assessee by : Shri: Somnath Ghosh, Advocate, ld.AR Department by: Shri Rajat Kumar Kureel, JCIT, ld.DR
Date of Hearing : 20-09-2016 Date of Pronouncement :-19/10/ 2016
ORDER Per Dr. A.L.Saini, A.M.:
The above mentioned captioned two appeals filed by the same assessee pertaining to assessment years 2005-06 and 2006-07, are directed against the separate orders passed by the Commissioner of Income-tax (Appeals)-16, Kolkata in Appeal Nos. 31/CIT(A)-16/Kol/2014-15/W-53(4) and 32/CIT(A)-16/Kol/2014- 15/W-53(4), both dated 14-01-2016, which in turn arise out of the orders passed by the Assessing Officer u/s. 144/147 of the Income-Tax Act, 1961 (in short, ‘the Act’),dated 17-12-2008.
1 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly
The above mentioned two appeals (ITA Nos. 275 & 276 /Kol/2016 A.Ys 2005-06 & 2006-07 ) relate to same assessee for different assessment years, involve common issues, therefore, these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity.
The facts of the case are stated in brief. The assessee`s appeal in ITA No. 275 /Kol/2016 A.Ys, 2005-06 is taken as a lead case. The assessee filed his return of income for the assessment year 2005-06 on 31-03-2006 declaring total income at Rs.4,44,342/-. The return was processed by the department U/s 143(1) of the Act. Later on, the Assessing Officer found that the assessee has claimed to have been received the following awards: (A) In Indian Currency Rs. 3,82,300/- (B) In Foreign currency Rs. 2,76,438/-
Assessing officer noted that out of the above, the assessee has claimed exemption U/s 10 (17A) the whole of Rs. 3,82,300/- as per “(A)” above and Rs. 1,38,219/- as expenses out of “(B)” above. The AO further noted that the assessee neither filed any supporting evidences for exemption U/s 10 (17A) nor any details of expenses out of the award in foreign currency. Consequently, there was a reason to believe that income has escaped assessment. Accordingly, notice u/s. 148 of the Act dated 18-07- 2007 was issued and duly served upon the assessee on 24-07-2007 in reference to which neither any return nor any written submission was filed. The reasons recorded by the AO u/s. 147 of the Act reads as under:-
2 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly
Surya Sekhar Ganguly PAN : AGDPG0S24E Asst Year: 2005-06
18.07.2007 It appears from the record that the assessee has submitted return of income for the above Asst. Year on 31-03-2006 disclosing a total income of Rs.4,44,340/-which was processed u/s.143(1) on 11-07-2006.
On perusal of the assessment records, it is seen that the assessee has received the following Awards:
(A) In Indian Currency Rs. 3,82,300/- (B) In Foreign Currency Rs. 2,76,438/-
Out of the above the assessee has claimed exemption u/s. 10(17A) the whole of Rs, 3,82,300/- as per" A" above and Rs. 1,38,219/- as expenses out of "B" above. The records further reflects that no supporting evidences have been filed in this regard neither for the exemption u/s.10(17 A) nor any details of expenses out out of award in foreign currency as mentioned above. Since no materials are available in the records, the assessee's claim of exemption and expenses as aforesaid are not substantiated, I have reason to believe that income chargeable to tax has escaped assessment for the Asst. Year in terms of explanation 2, Clause C below Sec. 147. Issue Notice u/s.148.”
Based on the reasons recorded, the AO has completed the assessment U/s 144/147 of the Act making additions in respect of income escaped assessment, as explained above, on dated 17/12/2008.
3 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly
Aggrieved from the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income-tax (Appeals)-16, Kolkata, who also confirmed the action of the Assessing Officer observing the following:- “3. The appeal is instituted against order u/s. 144/147 passed by the AO. The AO passed the order as no documents were filed during the course of the assessment proceedings. The assessee filed written submission, and remand report was sent to the AO. The AO has mentioned in the remand report dt. 12.03.2014, that no documents were filed despite opportunities given time and again. Hence, the appeal of the assessee is dismissed and the addition of the AO is confirmed.”
Not being satisfied with the order of the Commissioner of Income-tax (Appeals) the assessee is in further appeal before us and has taken the following grounds of appeal:- 1. FOR THAT THE Ld.Commissioner of Income Tax (Appeals)-16. Kolkata failed to appreciate that none of the conditions precedent existed and/or have been complied with and/or fulfilled by the Ld. Income Tax Officer. Ward 17(3), Kolkata for his alleged assumption of jurisdiction u/s. 147 of the Income Tax Act, 1961 and the specious order dated 17-12-2008 passed u/s. 144/147 of the Act in pursuance to the impugned notice dated 18-07-2007 issued u/s. 148 of the Act is therefore ab initio void, ultra vires and ex-facie null in law.
FOR THAT the Ld. Commissioner of Income Tax (Appeals)-16.Kolkata fell in error in upholding the purported addition of Rs. 3.82.300/- resorted to by the Ld. Income Tax Officer. Ward 17(3). Kolkata by disallowing the claim of exemption made u/s. 10(17 A) of the Act on extraneous parameters not germane to the issue and the impugned finding on that account is wholly illegal, invalid and infirm in law.
FOR THAT the Ld. Commissioner of Income Tax (Appeals)-16. Kolkata was remiss in upholding the impugned addition in the amount of Rs.1.38.219/- made by the Ld. Income Tax Officer. Ward 17(3). Kolkata without considering the factual matrix of the instant case and the specious 4 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly
finding on the basis of such illegitimate assumption is wholly arbitrary. unreasonable and perverse.
FOR THAT the Ld. Commissioner of Income Tax (Appeals)-16.Kolkata acted unlawfully in upholding the impugned addition of Rs. 1.38.219/- speciously made by the Ld. Income Tax Officer. Ward 17(3). Kolkata on a tenuous pretext and the purported conclusion reached on that behalf is therefore completely unfounded, unjustified and untenable in law.
In the first ground of appeal the assessee has challenged the validity of notice issued u/s. 147/148 of the Act. The ld.AR for the assessee submitted that the notice issued u/s. 147/148 of the Act is not a valid notice. It is merely a change of opinion. The AO did not find any tangible material to establish/show that the income has escaped from assessment. The assessee has already submitted the details of income from his sports activity by way of filing return of income and disclosing them in the return of income. There is no any new material found by the AO, to re-open the assessment u/s. 148 of the Act. In support of the contentions, the ld.AR of the assessee has relied on the following judgments:- a. CIT Vs.TCP Ltd 323 ITR 346(Mad) b. CIT Vs. Qatalys Software Technologies Ltd 308 ITR 249 c. CESC Ltd Vs. DCIT 263 ITR 402(Cal) d. Trustees of HEH, the Nizam’s Supplementary Trust Vs.CIT 242 ITR 381(SC), and
e. ITA No. 756/Kol/2013 A.Y 2003-04 the order dated 15-01-2016, the findings of this judgment are identical to the assessee`s case under consideration, which is narrated below:
" Whether on the facts and circumstances of the proceedings initiated by the AO u/s. 147 is liable to be confirmed or quashed when there was no 5 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly
fresh material available with the AO and the assessment had been completed originally u/s 143( I )."
The Third Member agreed with the view taken by the learned Judicial Member relying mainly on the decision of Hon 'ble Supreme Court in the case of Kelvinator India Ltd. (supra) and Eicher Ltd. 320 ITR 561. It was held by the Third Member that section 147 applies both to section 143(1) as well as section 143(3) and, therefore, except to the extent that a reassessment notice issued u/s 148 in a case where the-original assessment was' made u/s 143(1) cannot be challenged on the ground of a mere change of opinion, still it is open to an assessee to challenge the notice on the' ground that there is no reason to believe that income chargeable to tax has escaped assessment. As regards the decision of Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) cited by the Revenue and relied upon by the Accountant Member, the Third Member held that the same was applicable in cases where the return was processed u/s. 143(1) but later on notice was issued u/s.148 and the assessee challenges the notice on the ground that it is prompted by a mere change of opinion. The Third Member then referred to the decision of Hon 'ble Supreme Court in the case of CIT vs. Kelvinator of India (supra) wherein it was held that there should be "tangible material" to come to the conclusion that income had escaped assessment. Relying on the said decision, it was held by the Third Member that while resorting to section 147 even in a case where only an intimation had been issued u/s 143(1 )( a),it is essential that the AO should have before him tangible material justifying his reason to believe that income had escaped assessment. Since there was no such tangible material before the AO from which he could entertain the belief that income of the assessee chargeable to tax had escaped assessment, the Third Member held that reassessment proceedings initiated by the AO were liable to be quashed on the ground that there was no tangible material before the AO even though the assessment was completed originally u/s 143(1). In our opinion, the Third Member decision of the Tribunal in the case of Telco Dadaji Dhackjee Ltd. (supra) is squarely applicable in the present case and respectfully following the same, we hold that the initiation of reassessment proceedings by the AO itself was bad in law and the reassessment completed in pursuance thereof is liable to be quashed being invalid. We order accordingly and allow ground No.1 of the assessee’s appeal. 6 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly
We are of the view that the ratio laid down is equally applicable to the facts of the present case. We, therefore hold that proceedings u/s. 147 of the Act is not validly initiated in the present case. Therefore the reassessment completed in pursuance thereof is quashed and held to be invalid. In view of the above conclusion on the preliminary issue the other grounds challenging additions made on merits are not taken into consideration. 9. In the result, the appeal of the assessee is allowed. “
The ld.DR for the revenue primarily has reiterated the stand as taken by the Commissioner of Income-tax (Appeals), which we have already noted in our earlier para of this order, and is not being repeated for the sake of brevity.
Having heard the rival submissions and perused the material available on record, we are of the view that there is merit in the submissions of the assessee, as the propositions canvassed by the ld.AR for the assessee are supported by the precedent case law cited and facts narrated above. It is very much clear that there is no tangible material in this case to reopen the assessment u/s.147. It is merely a change of opinion. We find that the information relating to award was mentioned in the computation of income and income-tax return as filed by the assessee. We, therefore, hold that the proceeding u/s.147 of the Act is not valid. Therefore, the re- opening of assessment for both the assessment years under consideration are hereby quashed and held to be invalid.
7 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly
In the result, both the appeals( ITA Nos. 275 & 276 /Kol/2016) filed by the assessee for the AYs. 2005-06 and 2006-07 are allowed.
Order Pronounced in the Open Court on 19-10-2016
Sd/- Sd/- (N.V.Vasudevan) (Dr. A.L.Saini) Judicial Member Accountant Member Dated:19/10/2016 *PRADIP (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