SH. MANGAT TREHAN ,HOSHIARPUR vs. ASSISTANT COMMISSIONER OF INCOME -TAX, HOSHIARPUR

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER

I.T.A. No. 223/Asr/2019 Assessment Year: 2007-08

Sh. Mangat Trehan , C/o Sachin Vs. Asstt. Commissioner of K Malhotra Advocate, Income Tax, Hoshiarpur. Malhotras office, Phagwara Road, Hoshiarpur. [PAN:- ACAPT2109H] (Respondent) (Appellant)

Appellant by Sh. Sachin Malhotra, Adv. Respondent by Sh.S. M. Surendranath, Sr. DR.

Date of Hearing 24.08.2022 Date of Pronouncement 15.09.2022

ORDER Per:Anikesh Banerjee, JM:

The instant appeal of the assessee is directed against the order of the ld.

Commissioner of Income Tax(Appeals)-1,Jalandhar, [in brevity the CIT(A)] bearing appeal no.65/16-17/CIT(A)-1/JAL, date of order 28.01.2019, the order passed u/s 250(6) of the Income Tax Act 1961, [in brevity the Act] for A.Y.2007-

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Commissioner of Income Tax ,Hoshiarpur (in brevity the AO), order passed u/s

144/148 of the Act, date of order 28.03.2014.

“1. That the assessment framed is illegal unjustified and uncalled for, notice issued u/s 148/147 of Income Tax Act is bad in law, especially when the matter of assessment is still alive owing to departmental appeal with Hon’able Punjab & Haryana High Court. 2. That the notice issued u/s 147/148 of Income Tax Act is bad in law especially when A.O. failed to record the proper reason and merely relying on the order of CIT (A) reopen the case. The order was not even is existence at that time, because the same was quashed by Hon’able ITAT Bench, and borrowed satisfaction can’t be ground for reopening. C.I.T (A) also failed to take the cognizance of the same & ignored the case laws brought to her knowledge. 3. That the C.I.T(A) failed to consider the Past History of the assessee and case laws brought to her knowledge via Telelink v/sCIT(P& H), specially when previous year were decided by the CIT(A,) as well as Hon’able Tribunal in which 8% profit rate has been applied instead of 12% applied by A.O. So the addition made to

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the time of Rs. 1 131004/-totally against the provisions of law, so the addition made on this score may be deleted. 4. That the C1T (A) as well A.O. merely on surmises and conjectures made the addition of Rs. 1597347/-without providing any reason which is totally against the provision of law and the addition made on this score may be deleted. 5. That the CIT (A) failed to consider the submission and case laws brought to her knowledge that once the addition is made on the presumptive basis no other addition can be made, so the addition of Rs. 1597347/-may be deleted. 6. That A.O. as well as CIT (A) failed to give us the credit of Rs. 515000/- which the assessee get from the sale of car specially when the same been supplied has the receipt from the person who sold the car, the addition made on this score may be deleted. 7. That the assessee seeks the permissions to after, add amount any of the grounds of appeal. ”

2.1. The assessee filed an additional ground which is reproduced as under: “1. That the notice issued u/s 147/148 of bad in law as it has been beyond 4 years after the completion of relevant assessment years.”

on dated 13.03.2008 and return was processed u/s 143(1) on dated 23.05.2008 for

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the relevant assessment year. The reassessment notice was issued u/s 148 of the

Act on dated 04.02.2009 reassessment was completed. The appeal was filed before

the ld. CIT(A). The ld. CIT(A) was allowed reliefpartly.

Hon’ble High Court of Punjab & Haryana. The matter is pending before the Apex

Court. On basis of the confirmed addition of CIT(A), the ld. AO reopened the

hearing second time u/s 148 for escapement of income amount of Rs.27,28,351/-.

The addition was made on that basis. The assessee filed appeal before the ld.

CIT(A), challenging both in technical ground and in quantum addition. The ld.

CIT(A) upheld the order of the AO.

which is kept in the record. The ld. Counsel vehemently argued and first pointed

out the recorded reasons of the assessing officer which is extracted as below: “Reasons for issue of notice u/s 148 of the I.T. Act, 1961 :

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The assessee Filed his return of income for the Asstt. Year 2007-08 on 13.03.2008 declaring an income of Rs. 14,23,000/-. It was observed by the then Assessing Officer that the assessee has filed his return of income at presumptive basis u/s 44AD by reflecting net profit from Contract work at Rs. 14,23,000/- i.e. 8% of Rs. 1,74,87,525/-meaning thereby that assessee himself admitted to be a no account case. After recording reasons, proceedings u/s 147 of the Income Tax Act, 1961 were initiated on 03.02.2009 and notice u/s 148 was issued to the assessee on 04.02.2009.

(he Ld. CIT(A), Jalandhar vide order dated 28.10.2010 passed in appeal No. 447/09-10/CIT(A)/Jal, allowed

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relief of Rs.26,19.862'- to the assessee and confirmed the addition of Rs. 27,28,351/- made by the AO. The department as well as the assessee filed appeal against the order of Ld.CIT(A) before the Hon’ble ITAT. The Hon’ble ITAT vide its order dated 26.04.2012 allowed the assessee’s appeal in ITA No.25(Asr)/2011 and dismissed the appeal of the Department in ITA No. 08(Asr)/2011. The Hon’ble ITAT quashed the assessment made by the AO by holding that the notice issued u/s 148 is bad in law as it was issued on 04.02.2009 whereas there was sufficient time to issue notice u/s 143(2) of the I.T.Act, 1961 for the A.Y. 2007-08. The Hon’ble ITAT observed that the jurisdiction u/s 147 can be acquired only after the limitation to issue notice u/s 143(2) had expired. Thus, the Departmental appeal has been dismissed by the Hon’ble ITAT only on technical ground. However, the Department has filed an appeal u/s 260A before the Hon’ble P&H High Court, Chandigarh against the order of the ITAT, Amritsar.

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Ld.CIT(A), 1 have, therefore, reasons to believe that income chargeable to tax amounting to Rs. 27,28,351/- has escaped assessment within the meaning of section 147 read with section 148 of the Income-tax Act, 1961 by reasons of the failure on the part of the assessee to disclose fully and truly all material facts necessary' for his assessment for the assessment year 2007-08. Therefore, notice u/s 148 is issued to bring to tax the income of Rs.27,28,351/- and any other income, which subsequently comes to I he notice of the Assessing Officer, during the course of assessment proceeding.”

6.1 The ld. Counsel further argued that the same issue cannot be agitated twice

which was already in alive and sub-judice before the higher authority. He relied on the judgment of Hon’ble High Court of Punjab & Haryana in the case of “Duli

Chand Singhania Vs. Asstt. CIT” [2004] 136 Taxman 725 (P & H). 6.2. Considered the order of Coordinate Bench in the case of “Apeejay

Education Society vs. Assistant Commissioner of Income Tax, Circle-III,

Jalandhar [2016] 73 taxmann.com54 (Amritsar-Trib.)/[2016] 47 ITR (T) 33

(Amritsar-Trib.) [25.02.2016]:

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“IT: Where Assessing Officer completed assessment in case of assessee under section 143(3), in absence of any failure on part of assessee to disclose all material facts necessary for assessment reassessment proceedings could not be initiated after expiry of four years from end of relevant assessment year merely on basis of allegation that assessee had obtained accommodation entries from another company regarding bogus purchase of software.”

6.3 The ld. Counsel further argued that the AO failed to record his satisfaction

before issuing the notice u/s 147/148 of the Act. The notice has been issued on

borrowed satisfaction which is bad in law. And there is no new material has come

to knowledge of AO on basis of which the AO issued the notice u/s 147/148 of the

Act. The AO did not mention anything related to the same in his reasons recorded.

The ld. Counsel had respectfully relied of the orders of apex court which are as

below: -

“a. “CIT vs. Kelvinator of India Ltd.” 320 ITR 561 (S.C.)

b. “M/s Mobis India Ltd. vs. Dy. CIT” WMP No.9819 of 2016

dated of order 24.01.2018, Madras High Court.” 7. The ld. DR relied on the order of revenue authorities and mentioned the

relevant part of order of ld. CIT(A) in para no.10.2 which is reproduced as under: -

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“10.2 During appeal proceedings, the ld. Counsel has argued that addition on account of contract receipts by applying net profit rate of 12% instead of rate 8% deserves to be dated based on the past history of the case. During assessment year 2005-06 and 2006-07, the ld. CIT(A) vide order dated 01.03.2011 has detailed addition made in the case of assessee @ 12% of contract receipts against 8% declared by the assessee. However, in the case of the assessee, ld. CIT(A) has upheld addition @ 12% on contract receipts.”

submission by bringing new facts. The ground of the assessee was adjudicated

during passing of order.

records and respectfully considered the judgments of the different apex courts. The

assessee was assessed twice in same assessment year in same issue. In first phase,

the appeal was completed on basis of the part relief. The ITAT allowed the

assessee’s appeal on basis of the technical ground. The same issue which the

CIT(A) had disallowed in first phase was taken as subject matter of reopening as

recorded reasons by the assessing authority. In second phase the notice u/s 148 was

issued by the ld AO. The same issue cannot be agitated twice. There is no such

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any fresh material, Kelvinator of India (supra). The assessing authority had

reopened the issue which was already taken in the assessment order u/s 143(3) of

the Act. The same issue cannot be taken second round on the ground that the ld.

CIT(A) had disallowed. The ITAT had quashed the revenue appeal on technical

ground and the issues were untouched by the ITAT.Therefore, the Assessing

Officer was indeed in error in adopting such a hyper-pedantic approach and in

holding that there was valid reopening U/s 148 on the issue which were already

delt in first phase of assessment U/s 143(3) of the Act in same assessment year.

Recorded reason is itself bad in law and the assessment order is liable to be

quashed. The assessee, during appeal has taken the addition ground which was

consequently in nature and need not be adjudicated further as the entire assessment

order is erroneous. Accordingly, the ground of the assessee is allowed. In the result, the appeal of the assessee bearing ITA 223/Asr/2019 is 10.

allowed.

Order pronounced in the open court on 15.09.2022

Sd/- Sd/-

(Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member

AKV

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Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T.