Shri Ajay Kumar Prop A.K.International, Aligarh v. ITO, Aligarh

ITA 234/AGR/2007 | 1998-1999
Pronouncement Date: 05-02-2010 | Result: Allowed

Appeal Details

RSA Number 23420314 RSA 2007
Assessee PAN ABVPK6930F
Bench Agra
Appeal Number ITA 234/AGR/2007
Duration Of Justice 2 year(s) 8 month(s) 10 day(s)
Appellant Shri Ajay Kumar Prop A.K.International, Aligarh
Respondent ITO, Aligarh
Appeal Type Income Tax Appeal
Pronouncement Date 05-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 05-02-2010
Assessment Year 1998-1999
Appeal Filed On 25-05-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH SMC AGRA BEFORE SHRI P.K. BANSAL ACCOUNTANT MEMBER ITA NO.234/AGR/2007 ASST. YEAR: 1998-99 SHRI AJAY KUMAR VS. INCOME-TAX OFFICER WARD II PROP. A.K. INTERNATIONAL ALIGARH. VISHNUPURI ALIGARH. (PAN : ABVPK 6930 F) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PANKAJ GARGH ADVOCATE RESPONDENT BY : SHRI S.R. SAHU JR. D.R. ORDER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) DATED 02.02.2007 BY TAKING THE FOLLOWING EFFECTIVE GROUND S OF APPEAL :- 1) THAT THE IMPUGNED ASSESSMENT ORDER AS PASSED U/ S 147/143(3) OF THE I.T. ACT WAS ILLEGAL AND VOID ABINITIO ON VARIOUS FACTUA L AND LEGAL GROUNDS INCLUDING THE FOLLOWING: A) PROVISIONS OF SECTION 147 IN TERMS HAD NO APPLIC ATION TO THE FACTS OF THIS CASE. B) THERE WAS NO LEGAL AND VALID SERVICE OF NOTICE U /S 147 OF I.T. ACT C) THE REASONS RECORDED BY THE AO BEFORE ISSUING NO TICE U/S 148 WERE VAGUE. D) THERE WAS NO DIRECT NEXUS BETWEEN THE ALLEGED ES CAPEMENT OF INCOME AND THE REASONS RECORDED BEFORE THE ISSUE OF NOTICE. E) THE ASSESSMENT HAD BEEN REOPENED DUE TO MERE CHA NGE OF OPINION. 2). THAT THE AUTHORITIES BELOW WERE WRONG ON FACTS AND UNDER THE LAW IN CLUBBING THE ACCOUNTS OF THE TWO DIVISIONS VIZ. EXP ORT DIVISION AND DOMESTIC DIVISION WHEN THE APPELLANT HAD MAINTAINED SEPARATE ACCOUNT BOOKS FOR BOTH THE DIVISIONS. 2 3). THAT THE DEDUCTION U/S 80HHC OF THE I.T. ACT AS CLAIMED OUGHT TO HAVE BEEN ALLOWED AND THE DEDUCTION ALLOWED U/S 80 HHC W AS INADEQUATE. THE APPELLANT WAS ENTITLED TO DEDUCTION U/S 80HHC ON TH E PROFITS DERIVED FROM THE EXPORT DIVISION INDEPENDENTLY. VARIOUS OBSERVATIONS MADE BY THE AUTHORITIES BELOW IN THEIR RESPECTIVE ORDERS INCLUDING ELECTRICITY METERS GENERATORS AND THE ALLEGED COMMON MACHINERIES ETC. ARE EITHER INCORRECT OR ARE UNTENA BLE. STATEMENT OF SHRI HARI OM VARSHNEY AS RECORDED BEHIND THE BACK OF THE APPE LLANT WITHOUT ALLOWING HIS CROSS EXAMINATION WAS INADMISSIBLE IN EVIDENCE. RE LIANCE ON HIS STATEMENT BY THE AUTHORITIES BELOW WAS ILLEGAL AND AT ANY RATE NOT AT ALL JUSTIFIED ON THE FACTS OF THE CASE. THE FACTS STATED AND THE EVIDENCE PRODUCED H AD EITHER BEEN IGNORED OR HAD NOT BEEN APPRECIATED PROPERLY. 4). THAT THE FOLLOWING DISALLOWANCES AS MADE ARE AR BITRARY UNJUST AND AT ANY RATE WITHOUT PREJUDICE VERY EXCESSIVE : A) 1/6 TH OUT OF TELEPHONE EXPENSES B) RS.8 000/- OUT OF VARIOUS EXPENSES. 5). THAT THE TAX CHARGED AND INTEREST THEREON U/S 2 34A 234B AND 234C ILLEGAL AND VERY VERY EXCESSIVE. 2. THE FIRST GROUND TAKEN BY THE ASSESSEE RELATES T O THE VALIDITY OF THE PROCEEDINGS INITIATED UNDER SECTION 147 OF THE INCOME-TAX ACT 1961 (THE ACT HEREINAFTER). IT WAS CONTENDED BY THE LD. A.R. THAT THERE IS NO REASONS RECORDED IN THE ASSESSMENT YEAR (A.Y.) 1998-99. THE REASONS RECORDED ARE NOT BONAFIDE. OUR ATTENTION WAS DRAWN TOWARDS THE REASONS RECORDED BY THE A.O. ON 30.03.2005 AND IT WAS POINTED OUT THAT IN THE REASO NS RECORDED THE A.O. HAS REFERRED TO THE CLAIM OF THE ASSESSEE/DEDUCTION BY THE ASSESSEE MADE DURI NG THE A.Y. 2002-03. THE REASONS DO NOT TALK OF THE ESCAPEMENT OF INCOME FOR THE A.Y. UNDER CONSIDERATION. THE REASONS MUST CLEARLY SPELL OUT THAT THERE IS AN ESCAPEMENT OF INCOME DUR ING THE YEAR UNDER CONSIDERATION. ONLY THEN THE A.O. CAN REOPEN THE ASSESSMENT UNDER SECTION 14 7 OF THE ACT. 3. LD. D.R. ON THE OTHER HAND RELIED ON THE ORDER OF THE CIT(A). 3 4. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S AND PERUSED THE MATERIAL ON RECORD ALONGWITH THE ORDERS OF THE TAX AUTHORITIES BELOW. I NOTED THAT THE A.O. ISSUED THE NOTICE TO THE ASSESSEE UNDER SECTIO N 148 FOR TAKING ACTION UNDER SECTION 147 BY RECORDING THE FOLLOWING REASONS :- 30-03-2005 THE ASSESSEE IS MANUFACTURER OF BRASS ARTWARE ITEMS . DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2 002-03 IT HAS BEEN OBSERVED THAT THE ASSESSEE HAS WRONGLY CLAIMED EXCESSIVE DED UCTION U/S 80HHC WITH THE DETAILED REASONS GIVEN IN THE ASSESSMENT ORDER FOR THE A.Y. 2002-03. HE HAS ALSO CLAIMING EXCESSIVE EXPENDITURE. IN VIEW OF THESE F ACTS I HAVE REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX FOR THE A.Y. HAS ESCAPED ASSESSMENT. THIS INCOME SHALL BE ASSESSED U/S 147. THESE REASONS AR E RECORDED FOR ISSUE OF NOTICE U/S 148 OF THE INCOME-TAX ACT 1961. SD/- (ARAVIND TRIVEDI) ASSESSING OFFICER & INCOME TAX OFFICER WARD-4 ALIGARH. BASED ON PHYSICAL VERIFICATION IN MARCH 2005 (FOR A Y 2002-03) THAT THERE IS JUST ONE UNIT FOR DOMESTIC AND EXPORT SALES THE ASSESSEE HAS CLAIMED EXCESSIVE DEDUCTION U/S 80HHC TO THE EXTENT OF RS.1 79 000/- LEADING TO WILLFULLY CAUSING ESCAPEMENT OF INCOME. ISSUE OF NOTICE IS APPROVED. SD/- (VIJAY KUMAR) ADDL. COMMISSIONER OF INCOME-TAX RANGE-I ALIGARH. 5. SECTION 147 OF THE ACT LAYS DOWN THAT IF THE A.O . HAS REASON TO BELIEVE THAT AN INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR HE MAY SUBJECT TO THE PROVISIONS OF SECTION 148 TO 153 ASSESS OR REASSES S SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS KNOWLEDGE SUBSEQUENTLY IN THE COURSE OF PROCEEDING UNDER SECTION 147 OR RE COMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE AS THE CASE MAY BE FOR THE A.Y. UNDER CONSIDERATION.. PROVISO TO SECTION 147 IS APPLICABLE IN CASE THE ASSESSMENT HAS BEEN MADE UNDER SECTION 143(3). IN THE 4 CASE BEFORE ME THE LD. A.R. WAS FAIR ENOUGH TO CON CEDE THAT NO ASSESSMENT UNDER SECTION 143(3) HAS BEEN COMPLETED PRIOR TO THE ISSUE OF NOTICE UND ER SECTION 148. EVEN THOUGH THE ASSESSEE HAS DULY SUBMITTED THE RETURN WITHIN THE DUE DATE FOR T HE A.Y. 1998-99. IN VIEW OF THIS FACT THE PROVISO TO SECTION 147 IS NOT APPLICABLE IN THE CAS E OF THE ASSESSEE. SECTION 148(2) REQUIRES THAT THE A.O. SHALL BEFORE ISSUING ANY NOTICE UNDER SEC TION 148(1) RECORD HIS REASONS. SECTION 148(1) REQUIRES THE A.O. TO SERVE A NOTICE ON THE ASSESSEE BEFORE MAKING AN ASSESSMENT REASSESSMENT OR RE-COMPUTATION UNDER SECTION 147 REQUIRING HIM TO F URNISH WITHIN SUCH PERIOD AS MAY BE SPECIFIED IN THE NOTICE OF RETURN OF HIS INCOME. T HE WORD USED UNDER SECTION 147 ARE REASON TO BELIEVE. REASON TO BELIEVE MUST BE BASED ON THE B ASIS OF THE MATERIAL BEFORE THE A.O. FOR THE A.Y. IN RESPECT OF WHICH THE PROCEEDINGS UNDER SECT ION 147 HAS BEEN INITIATED. THE MATERIAL MUST BE RELEVANT TO THE A.Y. IT SHOULD NOT BE REMO TE OR IRRELEVANT. NO DOUBT THE COURT CANNOT LOOK INTO THE SUFFICIENCY OF THE REASONS BUT THE CO URT CAN ALWAYS LOOK FOR WHETHER THE REASONS ARE BONAFIDE AND ARE BASED ON THE RELEVANT MATERIAL. F ROM THE REASONS AS RECORDED BY THE A.O. AS HAS BEEN REPRODUCED HEREINABOVE I AM OF THE OPINIO N THAT THE A.O. IS REFERRING TO THE A.Y. 2002- 03 AND ALSO TO THE EXCESS DEDUCTION CLAIMED BY THE ASSESSEE IN THE A.Y. 2002-03. THE REASON DOES NOT SPEAK EXCESS CLAIM MADE BY THE ASSESSEE DU RING THE A.Y. 1998-99. THEREFORE IN MY OPINION THE REASONS RECORDED BY THE A.O. ARE NOT B ONAFIDE. SECTION REQUIRES THE A.O. TO HAVE THE REASONS TO BELIEVE. THE WORDS USED IN THE SECTION ARE NOT REASONS TO SUSPECT. THEREFORE I AM OF THE OPINION THAT THE A.O. WAS NOT CORRECT IN LAW IN REOPENING THE ASSESSMENT OF THE ASSESSEE FOR THE A.Y. 1998-99 ON THE BASIS OF THE MATERIAL F OR A.Y. 2002-03. THEREFORE I AM OF THE VIEW THAT THE INITIATION OF THE PROCEEDINGS UNDER SECTIO N 147 IS NOT VALID AND VOID ABINITIO. I ACCORDINGLY ANNUL THE ASSESSMENT MADE IN CONSEQUEN CE OF THESE REASONS TO BELIEVE. THUS GROUND NO.1 OF THE ASSESSEE IS ALLOWED. 5 6. SINCE I HAVE ALREADY ANNULLED THE ASSESSMENT FRA MED BY THE A.O. THEREFORE IN MY OPINION THE OTHER GROUNDS TAKEN BY THE ASSESSEE DO ES NOT REQUIRE ANY ADJUDICATION. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . (ORDER PRONOUNCED IN THE OPEN COURT ON 05.02.2010). SD/- (P.K. BANSAL) ACCOUNTANT MEMBER PLACE: AGRA DATE: 5 TH FEBRUARY 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE T RIBUNAL AGRA TRUE COPY