Saranathan Academy of Higher Education, Trichy v. ACIT, Trichy

ITA 1211/CHNY/2013 | 2005-2006
Pronouncement Date: 30-04-2014

Appeal Details

RSA Number 121121714 RSA 2013
Assessee PAN AAETS6115N
Bench Chennai
Appeal Number ITA 1211/CHNY/2013
Duration Of Justice 10 month(s) 27 day(s)
Appellant Saranathan Academy of Higher Education, Trichy
Respondent ACIT, Trichy
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2014
Appeal Filed By Assessee
Bench Allotted C
Tribunal Order Date 30-04-2014
Date Of Final Hearing 17-03-2014
Next Hearing Date 17-03-2014
Assessment Year 2005-2006
Appeal Filed On 03-06-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNALC BENCH CHEN NAI . ! ' BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY JUDICIAL MEMBER I.T.A. NOS. 1211 1212 & 1213/MDS/2013 ASSESSMENT YEARS : 2005-06 2006-07 & 2008-09 SARANATHAN ACADEMY OF HIGHER EDUCATION VENKATESWARA NAGAR PANJAPPUR TIRUCHIRAPALLII 620 012 [PAN: AAETS 6115 N] ( # /APPELLANT) VS THE DEPUTY /ASST. COMMISSIONER OF INCOME TAX NO.44 WILLIAMS ROAD CANTONMENT TIRUCHIRAPALLI-620 001 ( $% # /RESPONDENT) / APPELLANT BY : SHRI S.SRIDHAR ADVOCATE / RESPONDENT BY : SHRI T.N.BETGERI JCIT / DATE OF HEARING : 17-03-2014 / DATE OF PRONOUNCEMENT : 30-04-2014 & / O R D E R PER VIKAS AWASTHY J.M: THE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) T IRUCHIRAPALLI DATED 22-02-2013. THE CIT(APPEALS) HAS DECIDED THE APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEARS (AYS) 2005-06 2006-07 AND 2008-09 VIDE SINGLE ORDER. THE ASSESSEE HAS FI LED ALL THE THREE APPEALS WITH THE DELAY OF FIVE DAYS. A PETIT ION FOR ITA. NOS. 1211 1212 & 1213/MDS/2013 2 CONDONATION OF DELAY IN FILING OF THE APPEALS CITIN G REASONS FOR DELAY HAVE BEEN FILED. AFTER PERUSAL OF THE SAME WE ARE SATISFIED THAT THE DELAY IN FILING OF THE APPEALS WAS NOT INT ENTIONAL OR WILLFUL. THE DELAY OF FIVE DAYS IN FILING OF THE APPEALS IS CONDONED. THE APPEALS ARE ADMITTED TO BE HEARD ON MERITS. 2. IN ALL THE THREE APPEALS THE ASSESSEE HAS IMPUG NED THE ORDER OF CIT(APPEALS) ON THE ISSUE OF RE-OPENING. SHRI S.SRIDHAR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT FOR THE AY.2005-06 NOTICE U/S.148 OF THE INCOME TAX ACT 1 961 (HEREIN AFTER REFERRED TO AS THE ACT) HAS BEEN ISSUED BEY OND THE PERIOD OF FOUR YEARS. THE ASSESSMENT FOR THE AY.2005-06 WAS COMPLETED U/S.143(3) VIDE ORDER DT.20-06-2007. THE ASSESSING OFFICER HAD ACCEPTED THE RETURN FILED BY THE ASSESSEE WITHOUT A NY ADDITION. THEREAFTER NOTICE U/S.148 WAS ISSUED TO THE ASSESS EE ON 12-06-2009. THE LD.COUNSEL FOR THE ASSESSEE PLACED ON RECORD THE COPY OF REASONS FOR ISSUANCE OF NOTICE U/S.148 FOR THE AY.2005- 06. THE LD.COUNSEL SUBMITTED THAT THE CIT(APPEALS) HAS ERRED IN COMING TO THE CONCLUSION THAT THE ASSESSING OFFICER HAS ISSUED NOTICE U/S.148 TO EXAMINE THE ISSUE OF RENTAL INCOM E AS BUSINESS INCOME. ITA. NOS. 1211 1212 & 1213/MDS/2013 3 THE LD.COUNSEL SUBMITTED THAT FOR THE AY.2006-07 ALTHOUGH THE RE-OPENING PROCEEDINGS WERE INITIATED WITHIN A PERIOD OF FOUR YEARS HOWEVER THE REASONS FOR INITIATING RE-ASSES SMENT PROCEEDINGS WERE SAME AS THAT WERE FOR AY.2005-06. THE ASSESSMENT FOR AY.2006-07 WAS COMPLETED U/S.143(3) OF THE ACT. SIMILARLY FOR THE AY.2008-09 THE ASSESSING OFFICE R INITIATED RE- ASSESSMENT PROCEEDINGS. FOR AY.2008-09 THE ASSESS MENT ORDER WAS PASSED U/S.143(1). THE LD.COUNSEL CONTENDED TH AT THERE WAS NO FRESH MATERIAL BEFORE THE ASSESSING OFFICER TO R E-OPEN THE ASSESSMENT. THE ASSESSEE HAD FURNISHED ALL THE REL EVANT DOCUMENTS AND HAD PRODUCED ALL BOOKS OF ACCOUNTS FO R THE RELEVANT AYS BEFORE THE ASSESSING OFFICER. THEREFO RE IT CANNOT BE ALLEGED THAT THE ASSESSEE HAD NOT DISCLOSED FULLY A ND TRULY ALL MATERIAL FACTS. IT WAS ON MERE CHANGE OF OPINION T HAT RE- ASSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE A SSESSEE. IN ORDER TO SUPPORT HIS CONTENTIONS THE LD.COUNSEL RE LIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT OF INDIA IN T HE CASE OF CIT VS. KELVINATOR (INDIA) LTD. REPORTED AS 320 ITR 561 AND THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ORIENT CRAFT LTD. REPORTED AS 354 ITR 536 (DEL). THE LD.COUNSEL FURTHER SUBMITTED THAT THE REVENUE HAD FILED APPEAL FOR THE AYS. 2005-06 TO 2009-10 I.E. ITA NO.1111 TO 1115/MDS/2013 TITLE D DCIT VS. ITA. NOS. 1211 1212 & 1213/MDS/2013 4 M/S.SARANATHAN ACADEMY OF HIGHER EDUCATION BEFORE THE TRIBUNAL . IN THE SAID APPEALS THE REVENUE HAD IMPUGNED THE F INDINGS OF THE CIT(APPEALS) ON THE ISSUE OF DEPRECIATION. THE CO- ORDINATE BENCH OF THE TRIBUNAL VIDE ORDER DT.07-11-2013 DISMISSED THE APPEALS OF THE REVENUE. 3. ON THE OTHER HAND SHRI T.N.BETGERI APPEARING O N BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF THE C IT(APPEALS) ON THE ISSUE OF RE-OPENING AND PRAYED FOR THE DISMI SSAL OF APPEALS OF THE ASSESSEE. 4. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. WE HAVE ALSO PE RUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDG MENTS RELIED UPON BY THE LD.COUNSEL FOR THE ASSESSEE. THE ASSES SEE HAD IMPUGNED THE RE-OPENING PROCEEDINGS BEFORE THE CIT( APPEALS). THE CIT(APPEALS) IN HIS ORDER HAS RECORDED THAT AS SESSING OFFICER HAD ISSUED NOTICE U/S.148 TO EXAMINE THE ISSUE OF R ENTAL INCOME AS BUSINESS INCOME ON THE GROUND THAT THE APPELLANT HAS NOT INCLUDED IN THE TOTAL INCOME AS APPELLANT FILED NIL RETURNS FOR BOTH THE AYS UNDER CONSIDERATION. ITA. NOS. 1211 1212 & 1213/MDS/2013 5 THE ASSESSEE HAS PLACED ON RECORD THE REASONS FOR I SSUANCE OF NOTICE U/S.148 FOR THE AY.2005-06 AND 2006-07. A P ERUSAL OF COMMUNICATION DT.12-08-2010 FROM THE ASSESSING OFFI CER VIDE WHICH REASONS FOR ISSUANCE OF NOTICE WERE COMMUNICA TED TO THE ASSESSEE SHOWS THAT THE REASONS FOR RE-ASSESSMENT P ROCEEDINGS ARE ENTIRELY DIFFERENT FROM THE ONE MENTIONED IN TH E ORDER OF CIT(APPEALS). FOR BOTH THE AYS.2005-06 & 2006-07 THE REASONS ARE SIMILAR. THE SAME READS AS UNDER: IN THE RETURN OF INCOME FILED ON 31-10-2005 FOR T HE ASSESSMENT YEAR 2005-06 IT IS NOTICED THAT THE ASS ESSEE HAS CLAIMED DEPRECIATION. THIS WAS MISTAKENLY ALLOWED IN THE ASSESSMENT ORDER U/S.143(3) DATED 20-06-2007. THIS IS AGAINST THE PROVISION OF SEC.13. HENCE NOTICE U/S.1 48 WAS ISSUED TO REOPEN THE ASSESSMENT. THE ORDER OF THE CIT(APPEALS) ON THE ISSUE OF RE-OP ENING IS CRYPTIC AND WITHOUT PROPER APPRECIATION OF FACTS OF THE CASE MATERIAL ON RECORD AND THE WELL SETTLED LAW. 5. IN THE RE-ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS MADE ADDITION AFTER DIS-ALLOWING THE CLAIM OF DEPRE CIATION. IT IS AN UN-DISPUTED FACT THAT FOR THE AY.2005-06 RE-OPENING HAS BEEN DONE AFTER A PERIOD OF FOUR YEARS. PROVISO TO SEC TION 147 CLEARLY STATES THAT WHERE ASSESSMENT U/S.143(3) HAS BEEN M ADE NO ACTION SHALL BE TAKEN UNDER THE SECTION AFTER THE E XPIRY OF FOUR ITA. NOS. 1211 1212 & 1213/MDS/2013 6 YEARS FROM THE END OF THE RELEVANT AY UNLESS ANY I NCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A Y BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S.139 OR IN RESPONSE TO A NOTICE U/S.142(1) OR SECTION148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR AS SESSMENT FOR THAT AY. IT IS NOT THE CASE OF THE REVENUE THAT THE ASS ESSEE HAS NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS. THER E WAS NO FRESH MATERIAL BEFORE THE ASSESSING OFFICER EITHER TO RE- OPEN THE ASSESSMENT. THEREFORE THE RE-ASSESSMENT PROCEEDING S FOR THE AY.2005-06 ARE BAD IN LAW. 6. AS FAR AS AY.2006-07 & 2008-09 ARE CONCERNED AL THOUGH THE AY. IS WITHIN THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT AYS HOWEVER THE REASONS FOR RE-OPENING A SSESSMENT DOES NOT SHOW THAT THE ASSESSING OFFICER HAS REASO NS TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. IT IS NOT THE CASE OF THE REVENUE THAT THE RE-ASSESSMENT PROCEEDINGS WERE INI TIATED ON THE BASIS OF ANY FRESH MATERIAL. FOR THE AY.2006-07 T HE ASSESSING OFFICER HAD COMPLETED ASSESSMENT U/S.143(3). THE S AID ORDER WAS PASSED AFTER THE SCRUTINY OF THE BOOKS OF THE ASSES SEE. THE ASSESSING OFFICER IN THE GRAB OF RE-ASSESSMENT HAS REVIEWED ITS EARLIER ORDER WHICH IS NOT PERMISSIBLE IN LAW. TH E ASSESSING ITA. NOS. 1211 1212 & 1213/MDS/2013 7 OFFICER HAS NOT BEEN ABLE TO ESTABLISH LINK BETWEEN THE ALLEGED ESCAPEMENT OF INCOME FROM ASSESSMENT AND HIS REASON S TO BELIEVE SO. THE BOOKS OF ACCOUNT AND VOUCHERS ETC. ON THE BASIS OF WHICH THE ASSESSING OFFICER HAS PASSED ORDER U/S .143(3) R.W.S.147 OF THE ACT WERE ALL AVAILABLE BEFORE HIM IN SCRUTINY ASSESSMENT PROCEEDINGS. THERE WAS NO TANGIBLE MATE RIAL BEFORE ASSESSING OFFICER TO INITIATE PROCEEDINGS U/S.147 O F THE ACT. WE ARE OF THE CONSIDERED OPINION THAT IT WAS NOTHING B UT MERE CHANGE OF OPINION WHICH PROMPTED THE ASSESSING OFFICER TO INITIATE RE- ASSESSMENT PROCEEDINGS. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. KELVINATOR (INDIA) LTD. (SUPRA) HAS HELD THAT MERE CHANGE OF OPINION CANNOT BE PER SE REASON TO REOPEN. IN VIEW OF THE ABOVE RE-ASSESSMENT PROCEEDINGS FOR TH E AY.2006-07 ARE NOT SUSTAINABLE. 7. IN AY.2008-09 THE ASSESSMENT WAS MADE U/S.143(1 ) HOWEVER THE REASONS FOR RE-OPENING WERE SAME AS IN THE EARLIER AYS. AND THERE IS NO MATERIAL CHANGE IN THE FACTS IN THE PRESENT AY. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ORIENT CRAFT LTD. (SUPRA) HAS HELD: THE ASSUMPTION OF THE REVENUE THAT SOMEHOW THE WOR DS 'REASON TO BELIEVE' HAVE TO BE UNDERSTOOD IN A LIBE RAL MANNER WHERE THE FINALITY OF AN INTIMATION UNDER SECTION 1 43(1) IS ITA. NOS. 1211 1212 & 1213/MDS/2013 8 SOUGHT TO BE DISTURBED IS ERRONEOUS AND MISCONCEIVE D. AS POINTED OUT EARLIER THERE IS NO WARRANT FOR SUCH A N ASSUMPTION BECAUSE OF THE LANGUAGE EMPLOYED IN SECTION 147; IT MAKES NO DISTINCTION BETWEEN AN ORDER PASSED UNDER SECTION 1 43(3) AND THE INTIMATION ISSUED UNDER SECTION 143(1). THEREFO RE IT IS NOT PERMISSIBLE TO ADOPT DIFFERENT STANDARDS WHILE INTE RPRETING THE WORDS 'REASON TO BELIEVE' VIS-A-VIS SECTION 143(1) AND SECTION 143(3). WE ARE UNABLE TO APPRECIATE WHAT PERMITS TH E REVENUE TO ASSUME THAT SOMEHOW THE SAME RIGOROUS STANDARDS WHICH ARE APPLICABLE IN THE INTERPRETATIO N OF THE EXPRESSION WHEN IT IS APPLIED TO THE REOPENING OF A N ASSESSMENT EARLIER MADE UNDER SECTION 143(3) CANNOT APPLY WHERE ONLY AN INTIMATION WAS ISSUED EARLIER UNDER S ECTION 143(1). IT WOULD IN EFFECT PLACE AN ASSESSEE IN WHO SE CASE THE RETURN WAS PROCESSED UNDER SECTION 143(1) IN A MORE VULNERABLE POSITION THAN AN ASSESSEE IN WHOSE CASE THERE WAS A FULL-FLEDGED SCRUTINY ASSESSMENT MADE UNDER SECTI ON 143(3). WHETHER THE RETURN IS PUT TO SCRUTINY OR IS ACCEPTE D WITHOUT DEMUR IS NOT A MATTER WHICH IS WITHIN THE CONTROL O F THE ASSESSEE ; HE HAS NO CHOICE IN THE MATTER. THE OTHE R CONSEQUENCE WHICH IS SOMEWHAT GRAVER WOULD BE THA T THE ENTIRE RIGOROUS PROCEDURE INVOLVED IN REOPENING AN ASSESSMENT AND THE BURDEN OF PROVING VALID REASONS TO BELIEVE COULD BE CIRCUMVENTED BY FIRST ACCEPTING TH E RETURN UNDER SECTION 143(1) AND THERE-AFTER ISSUE NOTICE S TO REOPEN THE ASSESSMENT. AN INTERPRETATION WHICH MAKES A DIS TINCTION BETWEEN THE MEANING AND CONTENT OF THE EXPRESSION ' REASON TO BELIEVE' IN CASES WHERE ASSESSMENTS WERE FRAMED EARLIER UNDER SECTION 143(3) AND CASES WHERE MERE INTIMATIO NS WERE ISSUED EARLIER UNDER SECTION 143(1) MAY WELL LEAD T O SUCH AN UNINTENDED MISCHIEF. IT WOULD BE DISCRIMINATORY TOO . AN ITA. NOS. 1211 1212 & 1213/MDS/2013 9 INTERPRETATION THAT LEADS TO ABSURD RESULTS OR MIS- CHIEF IS TO BE ESCHEWED. IN VIEW OF THE ABOVE WE CANNOT TAKE A DIFFERENT VI EW IN CASE WHERE ASSESSMENT IS COMPLETED U/S.143(1). THEREFORE RE- ASSESSMENT PROCEEDINGS FOR THE AY.2008-09 ARE HELD TO BE BAD I N LAW. 8. ACCORDINGLY THE IMPUGNED ORDER IS SET ASIDE AND THE APPEALS OF THE ASSESSEE FOR THE AYS.2005-06 2006-07 & 2008 -09 ARE ALLOWED. ORDER PRONOUNCED ON WEDNESDAY THE 30 TH APRIL 2014 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) ( . ) / ACCOUNTANT MEMBER (VIKAS AWASTHY) ( ) ! / JUDICIAL MEMBER /CHENNAI ! /DATED: 30 TH APRIL 2014 TNMM ' #$%&'& /COPY TO: 1. APPELLANT 2. /RESPONDENT 3. ' ' ()* /CIT(A) 4. ' ' ( /CIT 5. &+ $$-. /DR 6. /01 /GF