Golden Theaters, Ahmedabad v. The Income tax Officer,Ward-6(4),, Ahmedabad

ITA 1351/AHD/2007 | 1997-1998
Pronouncement Date: 30-12-2011 | Result: Allowed

Appeal Details

RSA Number 135120514 RSA 2007
Assessee PAN AAAFG5677M
Bench Ahmedabad
Appeal Number ITA 1351/AHD/2007
Duration Of Justice 4 year(s) 8 month(s) 25 day(s)
Appellant Golden Theaters, Ahmedabad
Respondent The Income tax Officer,Ward-6(4),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-12-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 11-03-2010
Date Of Final Hearing 26-12-2011
Next Hearing Date 26-12-2011
Assessment Year 1997-1998
Appeal Filed On 04-04-2007
Judgment Text
-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI G C GUPTA VICE-PRESIDENT & SHRI B P JAIN ACCOUNTANT MEMBER ITA NOS.1351 & 1352/AHD/2007 (ASSESSMENT YEARS:-1997-98 & 1998-99) GOLDEN THEATRES NR. VATVA POLICE STATION VATVA AHMEDABAD V/S THE INCOME-TAX OFFICER WARD-6(4) AHMEDABAD PAN: AAAFG 5677 M [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI N C AMIN AR REVENUE BY:- SHRI S S PARIDA CIT DR DATE OF HEARING:- 26-12-2011 DATE OF PRONOUNCEMENT:- 30-12-2011 O R D E R PER B P JAIN (AM) :- THESE TWO APPEALS OF THE ASSESSEE ARISE FROM TWO DIFFERENT ORDERS OF LEARNED CIT(A)-XII AH MEDABAD EACH DATED 19-01-2007 FOR THE ASSESSMENT YEARS 1997 -98 AND 1998-99. THE ASSESSEE HAS RAISED AS MANY AS 16 GROU NDS OF APPEAL I.E. GROUND NOS.1 AND 2 BEING THE LEGAL GROU NDS AND GROUND NOS.3 TO 16 ARE GROUNDS ON MERIT. 2 FIRST OF ALL WE TAKE UP THE LEGAL GROUNDS I.E. G ROUND NOS.1 AND 2 IN ITA NO.1351/AHD/2007 FOR THE ASSESSMENT YE AR 1997- 98. THE SAID GROUNDS ARE AS UNDER:- [1] THAT THE LEARNED CIT(A) HAS ERRED BOTH IN LAW A ND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING 2 OFFICER IN REOPENING THE ASSESSMENT HOLDING IT AS L EGAL AND VALID IN LAW. [2] THAT THE REOPENING OF ASSESSMENT ON FACTS AND I N LAW IS NOT LEGAL AND VALID HOWEVER THE LEARNED CIT(A) HAS UPHELD T HE ACTION OF THE LEARNED ASSESSING OFFICE WHICH IS NOT IN ACCORD ANCE WITH LAW AND PROVISIONS OF THE ACT AND THEREFORE THE PRO CEEDINGS BE HELD AS BAD IN LAW ILLEGAL AND VOID. 3 THE BRIEF FACTS ARE THAT THE ASSESSEE IS CARRYING ON THE BUSINESS OF RUNNING CINEMA HALL AND EXHIBITION OF F ILMS. DURING THE YEAR THE ASSESSEE HAS DISCLOSED REVENUE OF RS. 19 61 240/-. THE AO HAS ISSUED A NOTICE U/S 148 OF THE ACT ON 22 -03-2004 WHICH WAS SERVED ON 23-03-2004. THE REASONS RECORDE D BY THE AO FOR THE SAKE OF CLARITY ARE REPRODUCED AS UNDER: - REASONS FOR REOPENING : IN THIS CASE THE DDIT (INV.) UNIT-1 (1) AHMEDABAD VIDE HIS LETTER DID. DDIT(LNV)-1(1)/TEP/99-QO DID 7-9-99 RECEIVED U NDER THE COVERING LETTER OF ADDL. DDIT(INV) UNIT-1(1) AHD HAD COMMUNICATED THAT FOR THE SAID AY'S THE ASSESSEE'S GROSS RECEIPTS EXCEEDED RS.40 LACS. AS PER THE DETAILS FURNISHED B Y THE ASSESSEE BEFORE THE DDIT THE RECEIPTS HAVE BEEN SHOWN FOR TH E F.Y. 96-97 IS LESS THAN RS.40 LACS. THE ASSESSEE HAS NOT ACCOUNTE D FOR THE QUANTUM OF ENTERTAINMENT TAX AS ITS GROSS RECEIPTS IN THE A CCOUNTS. IN ORDER TO BRING THE TOTAL RECEIPT OF THE ASSESSEE INCLUDING E NTERTAINMENT (AX THE ASST. FOR A.Y. 97-98 HAS BEEN REOPENED AS THE INCOM E HAS ESCAPED ASSESSMENT FOR A.Y. 97-98. THE DETAILS OF RECEIPTS ARE AS UNDER: AY INCOME SHOWN IN P&LA/C. ENTERTAINMENT TAX GROSS TOTAL RECEIPTS 1997-98 1961241 3423908 5385149 2. FURTHER THE ASSESSEE HAD INTRODUCED FUNDS OF AR OUND RS.2 00 OOO/- THROUGH PARTNERS FOR WHICH THERE WERE NO KNOW N SOURCES OF 3 INCOME. THEREFORE THE ASSESSEE TO THAT EXTENT HAD ESCAPED ASSESSMENT. 4 THE ASSESSEE AGITATED THE REOPENING OF THE ASSESS MENT BEFORE THE LEARNED CIT(A) WHICH WAS REJECTED BY THE LEARNED CIT(A) VIDE PARA 2 OF HIS ORDER. 5 THE LEARNED COUNSEL FOR THE ASSESSEE SHRI N C AM IN INVITED OUR ATTENTION TO PAGE 12 WHICH IS P&L ACCOUNT FOR T HE YEAR ENDING 31-03-1997 IN WHICH THE ASSESSEE HAS DECLARE D THE REVENUE RECEIPTS OF RS.19 61 241/-. MR. N C AMIN FU RTHER INVITED OUR ATTENTION AT PB=15 BEING THE ENTERTAINMENT TAX ACCOUNT HAVING OPENING BALANCE OF RS.3 90 360/- AND CLOSING BALANCE OF RS.2 25 317/-. IN THE SAID ACCOUNT THE ASSESSEE HA D PAID RS.35 88 951/- OUT OF ENTERTAINMENT TAX ACCOUNT TO THE OFFICE OF THE ENTERTAINMENT TAX DEPARTMENT. THE SAID AMOUNT H AD BEEN COLLECTED BY THE ASSESSEE FROM TIME TO TIME AND CRE DITED TO THE SAID SEPARATE ACCOUNT OF ENTERTAINMENT TAX AND PAID TO THE SAID DEPARTMENT. IT WAS ARGUED THAT THE SAID ENTERTAINME NT TAX IS NOT GROSS RECEIPTS AND IS NOT THE REVENUE OF THE ASSESS EE. THEREFORE THE AO UNDER THE MIS-CONCEPTION OF THE FACTS OF THE CASE WAS UNDER A WRONG BELIEF THAT THE INCOME OF THE ASSESSE E CHARGEABLE TO TAX DURING THE IMPUGNED YEAR HAS ESCAPED ASSESS MENT. THE AO COULD NOT HAVE INITIATED RE-ASSESSMENT PROCEEDIN GS BY ISSUING A NOTICE U/S 148 OF THE ACT. THE RE-ASSESSMENT PROC EEDINGS WERE NOT VALID AND THE SAME WERE LIABLE TO BE QUASHED. T HE LEARNED COUNSEL FOR THE ASSESSEE MR. N C AMIN RELIED UPON THE DECISIONS OF VARIOUS COURTS OF LAW IN SUPPORT OF HIS ARGUMENT S WHICH ARE AS UNDER:- 4 [1] SIGNATURE HOTELS P. LTD. VS. ITO AND ANOTHER [2 011] 338 ITR 51 (DELHI) [2] CIT VS. SMT. VINITA JAIN [2007] 163 TAXMAN 0325 (DELHI) [3] CIT VS. SFIL STOCK BROKING LTD. [2010] 325 ITR 285 (DELHI) [4] SATISH GUPTA VS. ITO [2005] 145 TAXMAN 37 (DELH I) [5] CIT VS. BATRA BHATT COMPANY [2008] 220 CTR (DEL ) 531 [6] CIT VS. SHREE RAJASTHAN SYNTEX LTD. [2009] 313 ITR 231 (RAJ) [7] UNREPORTED DECISION OF HONBLE GUJARAT HIGH COU RT IN THE CASE OF CIT VS. PANKAJ DYESTUFF INDUSTRIES ITA NO.2 41 OF 1993 DATED 06-07-2005 6 AS REGARDS THE SECOND REASON RECORDED WITH RESPEC T TO INTRODUCTION OF FUNDS OF AROUND RS.2 LACS THROUGH T HE PARTNERS THE LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT TH E SAID FUNDS HAVE BEEN CONTRIBUTED BY THE PARTNERS IN THEIR INDI VIDUAL CAPACITY WITH THE ASSESSEE FIRM. THE PARTNERS ARE INDIVIDUAL LY ASSESSED TO TAX. THEREFORE THE AO UNDER THE MISCONCEPTION OF THE FACTS AND WRONG BELIEF HAS INITIATED THE RE-ASSESSMENT PROCE EDINGS. REPEATING THE SIMILAR ARGUMENTS HEREINABOVE HE PRA YED TO QUASH THE RE-ASSESSMENT PROCEEDINGS MADE U/S 147 / 143(3) OF THE ACT. 7 ON THE OTHER HAND THE LEARNED DR MR. S S PARIDA CIT DR ARGUED THAT THERE IS NO ERROR IN THE REOPENING O F THE ASSESSMENT AND THE ISSUANCE OF NOTICE U/S 148 OF TH E ACT. THE AO HAS MADE THE PRIMA FACIE BELIEF AND THEREFORE SUPPO RTED THE ORDER OF THE AO. 8 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE FACTS OF THE CASE. THE ARGUMENTS MADE BY THE LEARNED CIT DR ARE NOT FOUND CONVINCING. SINCE THE ENTERTAINMENT TAX COLLE CTED BY THE 5 ASSESSEE IS NOT A REVENUE / INCOME OR TURNOVER / GR OSS RECEIPTS OF THE ASSESSEE. THIS IS A TAX WHICH IS COLLECTED BY T HE ASSESSEE ON BEHALF OF THE ENTERTAINMENT TAX DEPARTMENT AND HAS BEEN PAID TO THE SAID DEPARTMENT AFTER THE COLLECTION. THE ASSES SEE DOES NOT EARN ANY INCOME OUT OF THE SAID ENTERTAINMENT TAX C OLLECTED. THERE IS NO MATERIAL ON RECORD BROUGHT BY THE AO SO THAT A BELIEF CAN BE MADE THAT THE SAID ENTERTAINMENT TAX IS THE REVENUE / INCOME OF THE ASSESSEE. SIMILARLY THE CAPITAL BROU GHT BY THE PARTNERS OUT OF THEIR INDIVIDUAL SOURCES AND CREDIT ED TO THE CAPITAL ACCOUNT BY THE ASSESSEE FIRM CANNOT BE INCOME IN T HE HANDS OF THE ASSESSEE FIRM. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO THAT THE SAID CAPITAL IS THE INCOME OF THE ASSES SEE BEFORE FORMING THE BELIEF THAT THE ASSESSEES INCOME HAS E SCAPED THE ASSESSMENT. 9 THE AO IN THE PRESENT CASE HAS INITIATED THE RE-A SSESSMENT PROCEEDINGS ON THE BASIS OF INFORMATION RECEIVED FR OM DDIT (INV.) AHMEDABAD AND HAS NOT MADE ANY VERIFICATION TO THE CORRECTNESS OF THE INFORMATION SO RECEIVED. THIS SU BMISSION OF THE REPORT / COMMUNICATION OF THE INFORMATION WITHO UT VERIFYING THE CORRECTNESS OF THE SAID INFORMATION CANNOT BE TREATED THE SAME AS RECORDING OF REASONS TO BELIEVE FOR ISSUING A NOTICE. THESE VIEWS FIND SUPPORT FROM THE DECISION OF THE H ON'BLE SUPREME COURT IN THE CASE OF CHHUGAMAL RAJPAL. S.P. CHALIHA (1971) 79 ITR 603 (SC). IN THAT CASE THE RE-ASSESS MENT PROCEEDINGS WERE STRUCK DOWN BY THE HON'BLE SUPREME COURT ON THE GROUND THAT IN THE REASONS RECORDED BY THE ITO WHO HAD VAGUELY REFERRED TO CERTAIN COMMUNICATION THAT HE H AD RECEIVED 6 HE DID NOT COME TO ANY PRIMA FACIE CONCLUSION THAT THE REFERRED TRANSACTIONS ARE NOT GENUINE. THE HON'BLE SUPREME C OURT IN THAT CASE OBSERVED THAT THE ALLEGED TRANSACTIONS ARE NOT THE SAME THING AS REASONS FOR ISSUING A NOTICE U/S 148 OF THE ACT AND THEREFORE IT WAS NOT A FIT CASE FOR ISSUING A NOTICE U/S 148 OF THE ACT. FROM THE ABOVE SAID DECISION OF THE HON'BLE SUPREME COUR T OF INDIA IT IS CLEAR THAT A MERE STATEMENT OF FACTS IN THE FORM OF A REPORT OR ANY COMMUNICATION IS NOT A SUBSTITUTE FOR REASONS T HAT ARE REQUIRED TO BE RECORDED BEFORE ISSUING A NOTICE U/S 148 OF THE ACT. THE SUBSTANCE CANNOT BE SUBSTITUTED BY FORM AN D IT IS IN THAT CONTEXT THAT THE HON'BLE SUPREME COURT OF INDIA HAS EXPRESSED THE VIEW MENTIONED HEREINABOVE. THEREFORE IN THE C IRCUMSTANCES AND FACTS OF THE CASE RELYING UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CHHUGAMAL RAJPAL. S.P. CHALIHA (SUPRA) AND THE DECISIONS OF VARIOUS COURTS OF LAW RELIED UPON BY THE LEARNED COUNSEL THE BELIEF OF THE AO IS BASED ON VAGUE AND IRRELEVANT INFORMATION. THERE IS NO LINK BETWEEN TH E REASONS AND MATERIAL AVAILABLE WITH THE AO. WE FIND NO JUSTIFIC ATION WITH THE AO TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS E SCAPED THE ASSESSMENT. THEREFORE THE RE-ASSESSMENT PROCEEDING S CANNOT BE HELD TO BE VALID. THUS GROUND NOS.1 AND 2 OF THE A SSESSEES APPEAL ARE ALLOWED. 10 SINCE THE RE-ASSESSMENT PROCEEDINGS HAVE TO BE H ELD TO BE INVALID AND ARE BAD IN LAW THEREFORE GROUND NOS.3 TO 16 DO NOT REQUIRE ANY ADJUDICATION ON MERIT. THUS THE APPEA L OF THE ASSESSEE IN ITA NO.1351/AHD/2007 IS ALLOWED. 7 11 NOW WE TAKE UP THE APPEAL OF THE ASSESSEE IN IT A NO.1352/AHD/2007. THE GROUNDS OF THE ASSESSEE ARE I DENTICAL AS IN THE ASSESSMENT YEAR 1997-98 IN ITA NO.1351/AHD/2 007. 12 THE FACTS IN THE PRESENT CASE ARE ALSO IDENTICAL AS IN THE ASSESSEES OWN CASE FOR AY 1997-98 IN ITA NO.1351/A HD/2007 DECIDED BY US HEREINABOVE EXCEPT IN THE REASONS RE CORDED THE CAPITAL INTRODUCED IS RS.3 55 000/- IN PLACE OF RS. 2 LACS AS IN THE AY 1997-98. 13 SINCE THE FACTS IN THE PRESENT CASE ARE IDENTICA L TO THE FACTS IN ASSESSEES OWN CASE FOR AY 1997-98 WHICH HAS BEE N DECIDED BY US HEREINABOVE THEREFORE FOLLOWING THE SAME W E ALLOW THE LEGAL GROUNDS I.E. GROUND NOS.1 AND 2 RAISED BY THE ASSESSEE. THE OTHER GROUNDS ON MERIT DO NOT REQUIRE ADJUDICATION IN VIEW OF OUR DECISION ON LEGAL GROUNDS HEREINABOVE. THEREFORE THE APPEAL OF THE ASSESSEE IN ITA NO.1352/AHD/2007 IS ALLOWED. 14 IN THE RESULT BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 30-12-2011 SD/- SD/- (G C GUPTA) VICE-PRESIDENT (B P JAIN) ACCOUNTANT MEMBER DATE : 30-12-2011 8 COPY OF THE ORDER FORWARDED TO: 1. GOLDEN THEATRES NR. VATVA POLICE STATION VATVA AHMEDABAD 2. THE INCOME-TAX OFFICER WARD-6(4) AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XII AHMEDABAD 5. DR ITAT AHMEDABAD BENCH-D AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD