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Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: Shri P.M. Jagtap & Shri S.S. Viswanethra Ravi
Per Shri P.M. Jagtap:- These four appeals filed by the assessee are directed against a common order of ld. Commissioner of Income Tax (Appeals)-XXXVI, Kolkata dated 01.06.2011 passed for the assessment years 1998-99, 2000-01, 2001-02 & 2002-03.
At the outset, it is noted that there is a delay of 34 days on the part of the assessee in filing these appeals before the Tribunal. In this regard, an application is filed by the assessee seeking condonation of the delay , 1204, 1205 & 1206/KOL./2011 Assessment years: 1998-99, 2000-01 to 2002-2003 Page 2 of 7 and keeping in view the reasons given therein, which are duly supported by an affidavit filed by the assessee, we are satisfied that there is a sufficient cause for the delay in filing these appeals before the Tribunal by the assessee. We, therefore, condone the said delay and proceed to dispose of these appeals of the assessee on merit.
First we take up the appeal of the assessee for A.Y. 1998-99 being .
Grounds No. 1 & 2 of this appeal involve a preliminary issue relating to the validity of assessment made by the Assessing Officer under section 143(3) read with section 147 of the Act.
The assessee in the present case is an individual, who is engaged in the legal profession. The return of income for the year under consideration, i.e. A.Y. 1998-99 was filed by him on 16.10.1998 declaring total income of Rs.6,80,660/-. In the assessment originally completed under section 143(3) vide an order dated 26.03.2001, the total income of the assessee was determined by the Assessing Officer at Rs.7,12,400/-. The said assessment was subsequently reopened by the Assessing Officer after recording the reasons and in the assessment completed under section 143(3) read with section 147, addition of Rs.5,52,954/- was made by the Assessing Officer to the total income of the assessee on account of professional receipts allegedly suppressed by the assessee.
Against the order passed by the Assessing Officer under section 143(3) read with section 147, an appeal was preferred by the assessee before the ld. CIT(Appeals) challenging the validity of the said assessment as well as disputing the addition made by the Assessing Officer therein on account of professional receipts allegedly suppressed. After considering the submissions made by the assessee as well as the material available on record, the ld. CIT(Appeals) did not find merit in the preliminary issue raised by the assessee challenging the validity of , 1204, 1205 & 1206/KOL./2011 Assessment years: 1998-99, 2000-01 to 2002-2003 Page 3 of 7 the assessment made by the Assessing Officer under section 143(3) read with section 147 and rejecting the same, he upheld the validity of the said assessment. He, however, found merit in the stand of the assessee that the alleged suppressed professional receipts having been declared as income in the relevant subsequent years when the corresponding services were rendered, the addition made by the Assessing Officer of the same receipts in the year under consideration, i.e. A.Y. 1998-99 was not sustainable. Accordingly, he deleted the said addition made by the Assessing Officer. Still aggrieved by the order of ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.
As regards the preliminary issue raised in Grounds No. 1 & 2 relating to the validity of the assessment made by the Assessing Officer under section 143(3) read with section 147, ld. Counsel for the assessee raised two-fold contentions. Firstly, he contended that the reasons given by the Assessing Officer for reopening of the assessment being the excess credit of tax given to the assessee cannot be regarded as the case of escapement of income and, therefore, the reopening itself was bad in law. Secondly, he contended that the original assessment for the year under consideration was completed by the Assessing Officer under section 143(3) after verifying all the relevant records including the books of account of the assessee as well the TDS certificates filed along with the return and in the absence of any new information or material coming to the possession of the Assessing Officer, the reopening of assessment on the basis of the same record was based on a mere change of opinion, which is not permissible in law. In support of this contention, he relied on the decision of the Hon’ble Supreme Court in the case of Kelvinator India Limited reported in 320 ITR 561 as well as the decision of the Hon’ble Calcutta High Court in the case of Man Mohan Kedia –vs.- ITO reported in 344 ITR 187 (Cal.).
Ld. D.R., on the other hand, strongly relied on the impugned order of the ld. CIT(Appeals) in support of the revenue’s case on this issue and , 1204, 1205 & 1206/KOL./2011 Assessment years: 1998-99, 2000-01 to 2002-2003 Page 4 of 7 contended that the assessment having been reopened by the Assessing Officer for the reason of assessee’s failure to disclose truly and fully his professional receipts, the reopening was in accordance with law.
We have considered the rival submissions and also perused the relevant material available on record. In order to appreciate the contention of the ld. Counsel for the assessee on the preliminary issue raised in this appeal challenging the validity of reopening of assessment, it is relevant to refer to the reasons recorded by the Assessing Officer for reopening, which are extracted below:-
“Now, on verification of record and the TDS certificates filed with the return, it is seen that the total amount of assessee’s professional receipts amounts to Rs.21,29,396.00 (gross) instead of Rs.17,13,602.06 (gross) shown by the assessee. Therefore, there is a difference of Rs.4,15,794.06 between the actual amount of receipts and the amount of receipts shown by the assessee. The assessee has not shown any profit out of this amount of Rs.4,15,794.06 and since the assessee has already claimed all his expenses towards his profession the entire amount of Rs.4,15,794.00 represents income for the relevant assessment year. The assessee has, therefore, understated his income from profession to the tune of Rs.4,15,794.00 by way of suppression of his receipts. I, have, therefore, reason to belief that an amount of Rs.4,15,794.00 escaped assessment within the meaning of section 147 of the Income Tax Act, 1961”.
A perusal of the aforesaid reasons recorded by the Assessing Officer makes it abundantly clear that the reason for reopening the assessment as given by the Assessing Officer was that the professional receipts were understated by the Assessing Officer and not that any extra credit for tax was allowed to the assessee as sought to be contended by the ld. Counsel for the assessee. We, therefore, find no merit in the first contention raised by the ld. Counsel for the assessee on this issue.
As regards the other contention raised by the ld. Counsel for the asseessee that the reopening is based on a mere change of opinion, it is , 1204, 1205 & 1206/KOL./2011 Assessment years: 1998-99, 2000-01 to 2002-2003 Page 5 of 7 manifest from the reasons recorded by the Assessing Officer that there was no new material or information that had come to the Assessing Officer after completing the assessment originally under section 143(3), on the basis of which the assessment was reopened. As demonstrated by the ld. Counsel for the assessee, the relevant details and documents were verified by the Assessing Officer during the course of original assessment proceedings under section 143(3) including the relevant TDS certificates, balance-sheets showing the receipt of advances, etc. and in the absence of any new information or material coming to the possession of the Assessing Officer, the reopening by him of the assessment originally completed under section 143(3) on the basis of the same set of facts and the same records was purely based on mere change of opinion, which is not permissible in law as held, inter alia, by the Hon’ble Supreme Court in the case of Kelvinator India Limited (supra). We, therefore, find merit in the contention of the ld. Counsel for the assessee and hold that the reopening based merely on a change of opinion itself being bad in law, the assessment made by the Assessing Officer in pursuance thereof under section 143(3) read with section 147 for the year under consideration, i.e. A.Y. 1998-99 is invalid. The same, therefore, is cancelled and this appeal of the assessee is allowed.
As regards the remaining three appeals of the assessee for A.Ys. 2000-01, 2001-02 and 2002-03, it is observed that the common issue involved in Grounds No. 1 & 2 thereof challenging the validity of the reopening of assessment is similar to the one raised by the assessee in A.Y. 1998-99 except that there was no assessment under section 143(3) for any of these three years and the returns filed by the assessee were processed under section 143(1). The contention raised by the ld. Counsel for the assessee in A.Y. 1998-99 and accepted by us that the reopening was based on a mere change of opinion, thus is not applicable in all these three years. , 1204, 1205 & 1206/KOL./2011 Assessment years: 1998-99, 2000-01 to 2002-2003 Page 6 of 7
As regards the other contention raised by the ld. Counsel for the assessee that the excess credit for tax allowed to the assessee cannot be regarded as escapement of income for validly reopening assessment, we have already held, while disposing of the appeal of the assessee for assessment year 1998-99, on perusal of the reasons recorded by the Assessing Officer, which are identical for all the four years under consideration, that the assessments were not reopened by the Assessing Officer for excess credit of tax allowed to the assessee, but the same having been reopened for the reason that the professional receipts were not fully disclosed by the assessee, there was a case of escapement of income which justified the reopening of assessment by the Assessing Officer. We, therefore, find no merit in the preliminary issue raised by the assessee in his appeals for A.Ys. 2000-01, 2001-02 & 2002-03 and dismiss the relevant Grounds No. 1 & 2 of the appeals of the assessee for the said years.
As regards the common issue involved in Ground No. 3 of the appeals of the assessee for A.Ys. 2000-01, 2001-02 & 2002-03 relating to the assessee’s claim for credit on account of tax deducted at source, ld. Counsel for the assessee has sought a limited relief by contending that the corresponding professional income having been offered by the assessee in the relevant years, when the services were actually rendered and the same having reached its finality as a result of the decision rendered by the ld. CIT(Appeals) vide his impugned order, the credit for tax deducted at source from the said income should be granted in the said years. After having considered the submissions of both the sides, we are of the view that this limited relief sought by the ld. Counsel for the assessee is in accordance with the relevant provisions of the law and the same, therefore, has to be allowed. Accordingly, we direct the Assessing Officer to verify the amount of TDS relating to the income from legal profession finally assessed in the hands of the assessee for the years under consideration, i.e. A.Ys. 2000-01, 2001-02 & 2002-03 and grant credit to the assessee for the said years after due verification. Ground No. , 1204, 1205 & 1206/KOL./2011 Assessment years: 1998-99, 2000-01 to 2002-2003 Page 7 of 7 3 of the assessee’s appeals for A.Ys. 2000-01, 2001-02 & 2002-03 is accordingly allowed.
In the result, the appeal of the assessee for assessment year 1998-99 is allowed, while the appeals of the assessee for A.Ys. 2000- 01, 2001-02 & 2002-03 are partly allowed.
Order pronounced in the open Court on November 6th, 2015.