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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM
IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकरअपीलसं./ITA No.291/SRT/2019 (�नधा�रणवष� / Assessment Years: (2008-09) (Virtual Court Hearing) The ITO, Ward-2(3)(7), Vs. Jitendra Pukhraj Ranka, Surat. Prop of M/s P Jitendra & Co., 304/A, Sumangal Appt., Jadda Khadi, Mahidharpura, Surat. �थायीलेखासं./जीआइआरसं./PAN/GIR No.: ABHPJ0571F (Assessee) (Respondent) Assessee by : Shri Prakash Jhunjhunwala, CA Revenue by : Shri H. P. Meena, CIT(DR) सुनवाईक�तार�ख/ Date of Hearing : 16/02/2022 घोषणाक�तार�ख/Date of Pronouncement : 10/05/2022 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the Revenue, pertaining to Assessment Year (AY) 2008-09, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-1, Surat [in short “the ld. CIT(A)”] in Appeal No. CIT(A)-I/11694/2018-19 dated 27.03.2019, which in turn arises out of an assessment order passed by the Assessing Officer under section 143 r.w.s. 147 of the Income Tax Act, 1961 [hereinafter referred to as the “Act”] dated 23.03.2016.
Grounds of appeal raised by the Revenue are as follows: “(i) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in quashing reopened assessment proceedings for AY 2008-09. (ii) On the facts and circumstances of the case and in Law, the ld. CIT(A) has failed to appreciate decision of larger bench of Hon'ble Gujarat High Court in the case of A.L.A Firm vs CIT, 189 (1991) ITR 285, whereas the Hon'ble High Court has held that the jurisdiction of the ITO to reassess income arises if he has reassessed based on specific and relevant information coming into his
ITA.291/SRT/2019/AY.2008-09 Jitendra Kumar Pukhraj possession subsequent to the previous concluded assessment, reason to believe that income chargeable to tax had escaped assessment. (iii) On the facts and circumstances of the case and in Law, the Ld. CIT(A) has failed to appreciate the fact that the entire purchase from alleged concerns were bogus and was only to suppress the profit of the beneficiaries which is substantiate by the statement on oath given by the entry provider. (iv) On the facts and circumstances of the case and in Law, the Ld. CIT(A), Surat ought to have upheld the order of the Assessing Officer. It is, therefore, prayed that the order of the Ld. CIT(A)-1 Surat may be set-aside and that of the Assessing Officer’s order may be restored.”
The relevant material facts, as culled out from the material on record, are as follows. Assessee before us is an individual (prop: P. Jitendra & Co.) engaged in trading of diamonds and precious stones. The assessee filed Income Tax Return for instant Assessment Year on 25.09.2008, disclosing income of at Rs. 4.63 lacs. A search action under section 132 of the Act, was conducted in the case of assessee on 31.03.2018. Subsequent to the search, the assessments was completed on 30.12.2010. The assessing officer gave a finding that the assessee is engaged in providing accommodation bills and was receiving commission income for the same. Therefore, assessing officer estimated income at 1% of the total turnover of assessee. 4. On appeal by assessee, the ld CIT(A), vide order dated 10.03.2011 held that no specific defect was pointed out and held that it is reasonable to estimate income at 0.50%(net of expenses) of total turnover.
Aggrieved by the order of ld. CIT(A), the assessee preferred appeal to Hon'ble ITAT, whereas, the Revenue did not prefer further appeal. The Hon'ble Tribunal, in ITA No. 5788 to 5794/Mum/2011, dated 16.01.2014, vide its order dated 16.01.2014, has , after detailed discussion in paras 12 to 17, directed the deletion of addition and to accept the books of accounts of assessee. The Revenue has not preferred further appeal to High Court.
ITA.291/SRT/2019/AY.2008-09 Jitendra Kumar Pukhraj 6. Subsequent to this, the assessing officer reopened the assessment vide notice u/s 148 dated 12.03.2015. The reason recorded; information received from DDIT (Inv) Mumbai, that in search conducted in case of Pravin Kumar Jain and Group, it was found that assessee is a beneficiary of accommodation entries for purchase of Rs.17,33,21,162/-. The reasons recorded do not mention any thing about return of income filed by assessee or the assessments already completed in the case.
The assessee after duly complying to the notice u/s 148, filed objections for re-opening, vide letter dated 18.03.2016. The assessing officer has disposed of the objections in para no. 10 of the impugned assessment order itself. There is no mention or record of a separate speaking order passed for disposing of the objections. This is a major lapse on part of assessing officer.
In the assessment order u/s 147 r.w.s 143(3) dated 23.03.2016, the assessing officer discussed only about alleged bogus purchase,. The details viz invoices, bank statement, stock statements etc. were filed by assessee were rejected summarily and addition u/s 69C of the Act, for purchase amounting to Rs. 17,33,21,162/- was made.
Aggrieved by the order of assessing officer, the assessee carried the matter in appeal before ld CIT(A), who has allowed the appeal of the assessee. The ld CIT(A) observed that Coordinate Bench of ITAT in assessee's own case in ITAT No. 790/Ahd/2017/SRT for A.Y. 2007-08 has passed the order on identical facts and circumstances. The ld CIT(A) noted that assessing officer has made reopening of assessment and completed assessment proceedings u/s 147 r.w.s 143(3) in identical facts and circumstances for A.Y. 2007-08. The grounds of appeal and the contentions raised by assessee were also identical therefore, ld CIT(A) held that decision of Hon'ble ITAT for A.Y. 2007-08 applies mutatis mutandis to the instant appeal of the assessee for A.Y. 2008-09 and therefore, ld CIT(A) allowed the appeal of the assessee. Aggrieved, the Revenue is in further appeal before us.
ITA.291/SRT/2019/AY.2008-09 Jitendra Kumar Pukhraj 10. Before us, Learned DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.
On the other hand, Learned Counsel for the assessee, defended the order passed by the ld CIT(A).
We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that in reassessment proceedings, the assessing officer did not discuss the findings of original assessment and also did not record his findings that why order of Hon'ble ITAT dated 16.01.2014 is not acceptable to him. We note that ld CIT(A) by following the order of Hon'ble ITAT Surat Bench in assessee's own case in ITA No. 790/Ahd/2017/SRT for A.Y. 2007-08, has deleted the addition. The relevant portion of the order is reproduced below.
"On careful consideration of above rival submission first of all we find it appropriate to reproduce reasons recorded by the AO on 29/03/2014 for reopening or initiating reassessment proceedings, which reads as follows- A Search/Survey operation u/s 132(1) and 133A of the IT act conducted in the case of Shri Praveen Kumar Jain Group. The assessee and his concerns are also connected with the business activity of Shri Praveen Kumar Jain and his associates and as such his case was also covered by the said search action. Assessment order u/s 143(3) r.w.s 153A was passed on 30.12.2010 determining total income at Rs.59,64,820/- Intimation has been received from the DGIT(Inv.) Mumbai, vide letter dated 07.03.2014 in respect accommodation entries of bogus bills of purchases taken by the assessee. It has come to light that the assessee has received bogus bills of purchased to the tune of Rs.50,65,725/- from Kailash International, Rs.8,30,69,979/- from Kunal Gems, Rs.53,56,310/- from Mahalaxmi Trading Co. and Rs.5,98,91,949/- from Mohit International Rs.9,24,64,566/- from Natasha Enterprise, Rs.6,54,22,822/- from Planet Trading Co. Pvt. Ltd, Rs.40,99,987/- from Ostwal Trading(l) Pvt. Ltd and Rs.34,99,997/- from J.P.K. Trading (I) Pvt. Ltd. Hence, information is received that the assessee has booked aggregate bogus purchase of Rs.31,88,71,837/-. This information was not available at the time of passing the original assessment order. As per the information provided by the DGIT(lnv.) Mumbai, the assessee
ITA.291/SRT/2019/AY.2008-09 Jitendra Kumar Pukhraj has managed bogus purchase bills as above meaning thereby the purchases of Rs.31,88,71,837/- are bogus which cannot be allowed. Evidently, in the case of assessee, income to the tune of Rs. 31,88,71,8377- has escaped assessment on account of accommodation entry received by the assessee on account of bogus purchases. In view of the above, I have reason to believe that an amount of Rs. 31,88,71,837/- has escaped assessment in the hands of the assessee for the year and consideration, within the meaning of section 147 of the I.T. Act and issue of notice u/s 148 of the IT. Act for A.Y.2007-08. 8.The present assessment year is A.Y. 2007-08 which was ended on 31/0372008 and reasons have been recorded on 29/03/2014 at the faice end of sixth year from the end of the relevant assessment year. As per first proviso to section 147 of the Act no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee, to disclose fully and truly all material facts assessment year. When reasons recorded by the AO for reopening it is vivid that there no allegation by the AO against the assessee as per requirement of said proviso to section 147 of the Act in the reasons recorded. Therefore, as per ratio of the decision of Hon'ble Jurisdictional High Court of Gujarat in the case of Shree Chalthan Vibhag Khand (Supra) when a perusal of the reasons recorded show that there is not even a whisper to the effect that income has escaped assessment on account of any failure on the part of the petitioner assessee to disclose fully and truly all material facts necessary for its assessment. In view of above, when we analyze the reasons recorded by the AO in the present case, as reproduce above, and in the notice u/s 148 of the Act (paper book page 1 & 2) then we find that there is no whisper as required by the first proviso of section 147 of the Act therein. In this situation, in absence, of any allegation in the notice under section "148 of the Act that there was any failure on the part of the. assesses to disclose truly and fully all material facts necessary for assessment, considering first proviso to section 147 of the Act, the assumption of jurisdiction is absolutely wholly without jurisdiction and illegal. Under the circumstances, impugned notices under section 148 of the Act beyond the period of 4 years cannot be sustained on the aforesaid ground alone and. the same deserve to be quashed and set aside. Thus, contentions of the Ld. AR in this regard are found to be correct and acceptable. When we further consider the second contention of the Ld. AR as noted above then we find that as per para 1 assessment order dated 30/12/2010 passed u/s 143(3) r.w.s. 153A of the Act we find that the AO noted that a search/survey operation u/s 132(1) and 133A of the I T. Act, 1961 was conducted in the case of Shri Pravin Kumar Jain group and persons/entities connected with him on 31/03/2008. The assessee Shri Jitendra Kumar Jain and his concerns are also connected with the business activities of Shri Pravin Kumar Jain and his associates and as such his case was also covered by the said search action. The residence and locker of the assessee was covered in this search action. In para 5 of the said order the AO further gave finding on the same issue i.e. the assessee is engaged in giving accommodation bills to various concern and after rejecting
ITA.291/SRT/2019/AY.2008-09 Jitendra Kumar Pukhraj books of accounts of assessee u/s 145(3) of the Act, the AO estimated the commission earned by the assessee @ 1 % (net of expenses) on the total turnover less sales corresponding to import and has made addition of Rs.51,84,2121-. As we have already noted above undisputedly this rejection of books of accounts and estimated addition has been dismissed by the Tribunal by order dated 16/01/2014 (assessee's paper book pages 8 to 15) and thereafter the AO again initiated reassessment proceedings by recording reasons on 29/03/2014 on the same material. So far as allegations and documents in respect of accommodation entries of bogus bills of purchases and connection with the business activity of Shri Pravin Kumar Jain and his associates is concern, which have been noted by the AO in the reasons i.e. report of Investigation wing is concern the same information was also before the AO during the original assessment proceeding u/s 143(3) r.w.s. | 153A of the Act. In this scenario we are inclined to hold that there was no new tangible material or evidence with the AO, which was not before him during the original assessment proceedings, therefore, it is a clear case of change of opinion on the same material. As per ratio of the decision of Hon'ble- Supreme Court in the case of CIT vs Kelvinator of India 320 ITR 561 (Supreme Court) after 1st April 1989, AO has power to reopen the assessment under section 147 provided AO-has reason to believe that income has escaped assessment and there is tangible material to come to the conclusion that there is escapement of income; mere "change of opinion" cannot per se he reason to reopen. As per ratio of the recent decision of Hon'ble Jurisdictional High Court of Gujarat in the case of Kunal Organics P. Ltd vs DCIT 361 ITR 530 (Guj-High Court), initiation of reassessment proceeding on the same material is not permissible. In view of foregoing discussion we are inclined to hold that it is a clear case of change of opinion on the same material hence, initiation of reassessment and all consequent proceedings and order are bad in law. Regarding third & fourth contentions of the assessee we are of the view that admittedly and undisputedly in the present case original assessment order was passed u/s 143(3) r.w.s. 153A of the Act on 30/12/2010 and rejection of books u/s 145(3) of the Act and estimated addition was dismissed by the Tribunal order dated 16/01/2014. In view of these facts the decision of Hon'ble High Court of Kerala in the case C. Sevanandan (Supra) supports the contention of the assessee; in this judgment the Hon'ble High Court held that once the AO proceeds to make block assessment under section 158BC based on materials gathered during search under section 132, be cannot proceed to make reassessment under section 147 on the basis of the same material, after block assessment is cancelled by the first appellate authority; AO has no jurisdiction to assess the very same amount, which was considered and given up while making block assessment. The Ld. DR has also placed reliance on the above decision of Hon'ble High Court of Kerala to say that even though block assessment u/s 158BC or section 153A of the Act and reassessment u/s 147 of the Act can probably be made for the same period on different basis, but as we have found that the initiation of reassessment has been done on the basis of same material which was before the AO during the block assessment. Hence, contention of the AO in the present case is not sustainable as Hon'ble High Court of Kerala in this decision also held that the assessment cannot be successively made one after another for the same period under these provisions based on the same material. Their Lordship held that once materials are gathered during search u/s 132 or survey u/s 133A of the Act, it is
ITA.291/SRT/2019/AY.2008-09 Jitendra Kumar Pukhraj up to the AO to make block assessment u/s 158BC which is materia to section 153A of the Act or assessment u/s 147 of the Act, which he finds appropriate but once the AO ' proceeds to make block' assessment based on the material gathered during the search he cannot proceed to make assessment u/s 147 of the Act on the basis of same material, after block assessment is cancelled' by the first appellate' authority. Therefore, contention of the, revenue is dismissed and that of the assessee are accepted as-the facts of the present case are identical with the situation. Regarding 5th contention of the assessee we are of the view that undisputedly the AO disposed off objection of the assessee to initiation of reopening of assessment on 18/02/2015 and theater before expiry of 4 weeks the AO passed reassessment order on 08/03/2015. As per ratio of decision of Hon'ble Bombay High Court to the case of Asian Paints Ltd (Supra) if, the AO does not accept the objections filed by the assessee against reopening of assessment he is not to proceed further in the matter for a period of four weeks from the date of service of order rejecting the objections on the assessee - Above procedure is to be followed strictly in all such cases of reopening of assessment. Therefore, this contention of the assessee is also sustainable and respectfully following the ratio of Hon'ble Bombay. High Court we hold that reassessment order has been framed in violation of procedure laid down by Hon'ble High Court thus, the same is bad in law. On the basis of foregoing discussion we hold that the initiation of reassessment proceedings and reopening u/s 147 of the Act, notice u/s 148 of the Act and all consequent proceedings in pursuant thereto including impugned reassessment order being not sustainable and bad in law are quashed. Accordingly, legal grounds of the assessee are allowed. 8.1.4 As evident above, in assessee own case for A.Y.2007-08 the Hon'ble ITAT, Surat Bench, has upheld all the 3 contentions raised by appellant and quashed the re-opening & reassessment order. Respectfully following the same, the re-opening and subsequent re-assessment order for instant assessment year 2008-09 is hereby held invalid and quashed. 8.1.5 Since re-assessment order is quashed on legal ground further grounds on merit become infructuous and hence not adjudicated.”
We note that ld CIT(A) observed that grounds of appeal and the contentions raised by assessee in A.Y. 2007-08 were identical with A.Y. 2008-09, therefore, ld CIT(A) by following the decision of Hon'ble ITAT for A.Y. 2007-08, in assessee`s own case, allowed the appeal of the assessee. We have gone through the order of ld CIT(A) and conclusion reached by him. We note that there is no any infirmity in the order passed by ld CIT(A). The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A).
ITA.291/SRT/2019/AY.2008-09 Jitendra Kumar Pukhraj 14. In the result, appeal filed by the Revenue is dismissed.
Order is pronounced in the open court on 10/05/2022 by placing the result on the Notice Board as per Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963.
Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat / �दनांक/ Date: 10/05/2022 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File
By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat