ACIT, New Delhi v. M/s. Khurana & Company, New Delhi

ITA 3995/DEL/2009 | 2000-2001
Pronouncement Date: 21-01-2010 | Result: Allowed

Appeal Details

RSA Number 399520114 RSA 2009
Bench Delhi
Appeal Number ITA 3995/DEL/2009
Duration Of Justice 3 month(s) 22 day(s)
Appellant ACIT, New Delhi
Respondent M/s. Khurana & Company, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 21-01-2010
Date Of Final Hearing 21-01-2010
Next Hearing Date 21-01-2010
Assessment Year 2000-2001
Appeal Filed On 29-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI D.R.SINGH JM AND SHRI R.C.SHARMA AM ITA NO.3995/DEL/2009 ASSESSMENT YEAR : 2000-01 ASSTT.COMMISSIONER OF INCOME TAX CIRCLE-23(1) NEW DELHI. VS. M/S KHURANA & COMPANY 27 COMMUNITY CENTRE ZAMRUDPUR NEW DELHI. PAN NO.AAAFK6699M. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.K.GUPTA SR.DR. RESPONDENT BY : SHRI A.K.KHURANA CA. ORDER PER R.C.SHARMA AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 7.7.2009 FOR THE AY 2000-01 WHEREIN FOLLOWING GROU NDS HAVE BEEN TAKEN BY THE REVENUE :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN QUASHING THE REASSESSMENT PROCEEDINGS BY HOLDING THAT THE PROCEEDINGS INITIAT ED U/S 147 R.W.S. 148 IS BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPR ECIATING THE FACT THAT THE RETURN IN THIS CASE WAS PROCESSED U/S 143( 1) OF THE ACT AND NO REGULAR ASSESSMENT WAS COMPLETED IN THIS CASE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD.CIT(A) FAILED TO APPRECIATE THE FACT THAT THE AS SESSEE HAS NOT TAKEN THE INVESTMENTS IN SHARES IN STOCK IN TRADE THEREF ORE THE INVESTMENTS ARE IN THE NATURE OF CAPITAL INVESTMENT. ITA-3995/DEL/2009 2 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD.CIT(A) HAS FAILED TO INVOKE THE PROVISIONS OF SE CTION 71(3) OF THE IT ACT THAT LOSSES ARISEN ON ACCOUNT OF CAPITAL ARE NOT TO BE ADJUSTED WITH ANY OTHER HEAD OF INCOME. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. IN THIS CASE RETURN OF INCOME WAS ORIGINALLY FILED ON 31.10.2000. THE ASSESSEE DECLARED INCOME OF RS.3 14 03 225/-. THE RETURN WAS PROCESSED U/S 143 (1) ON 14.3.2003. HOWEVER LATER THE AO ON PERUSAL OF RETURN FILED BY THE ASSE SSEE ON 31.10.2000 DISCOVERED THAT CAPITAL LOSS ON SALE OF SHARES AMOUNTING TO RS .40 82 936/- HAD BEEN WRONGLY ADJUSTED BY THE ASSESSEE AGAINST OTHER INCOME. HE THEREAFTER PROCEEDED TO ISSUE A NOTICE U/S 148 OF THE ACT AFTER RECORDING A SATISFA CTION ON 26.3.2007. IN THE ORDER FRAMED U/S 147/143(3) THE AO DISALLOWED THE CAPITA L LOSS OF RS.40.82 LAKHS INCURRED ON PURCHASE AND SALE OF SHARES BY OBSERVIN G THAT CAPITAL LOSS CANNOT BE ALLOWED TO BE SET OFF AGAINST THE BUSINESS PROFITS. 3. IN AN APPEAL FILED BEFORE THE CIT(A) THE CIT(A) HELD THE REASSESSMENT TO BE VOID AB-INITIO ON THE PLEA THAT ALL THE MATERIA L FACTS WERE BEFORE THE AO WHILE FRAMING THE ASSESSMENT AND NO NEW FACTS WERE BEFORE THE AO WHILE INITIATING THE REASSESSMENT PROCEEDINGS AND THE REOPENING WAS JUS T BASED ON THE CHANGE OF OPINION. ACCORDINGLY THE CIT(A) ANNULLED THE ASSE SSMENT ON THE GROUND OF REOPENING HOWEVER HE DID NOT DEAL WITH THE MERIT O F THE ADDITION MADE BY THE AO. AGGRIEVED BY THIS ORDER OF CIT(A) THE REVENUE IS I N FURTHER APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD WE FOUND T HAT THE RETURN OF INCOME FILED BY THE ASSESSEE ON 31.10.2000 WAS MERELY PROCESSED BY THE AO U/S 143(1) ON 14.3.2002. THEREAFTER IT WAS FOUND THAT ASSESSEE HAS SUFFERED LOSS ON PURCHASE AND SALE OF SHARES AND WHICH HAS BEEN CLAIMED AS SE T OFF AGAINST BUSINESS PROFITS. AFTER RECORDING THE REASONS FOR REOPENING THE AO I SSUED NOTICE U/S 148 AND THEREAFTER COMPLETED ASSESSMENT BY DISALLOWING THE SAID LOSS. WITH REGARD TO ITA-3995/DEL/2009 3 INITIATION OF PROCEEDINGS U/S 147 WHERE RETURN HAS ONLY BEEN PROCESSED U/S 143(1) HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS (P) LTD. 291 ITR 500 HAS CLEARLY LAID DOWN THE PROPOSITION TO TH E EFFECT THAT AFTER AMENDMENT OF SECTION 147 W.E.F. 1.4.1989 IF THE AO BELIEVES THAT INCOME HAS ESCAPED ASSESSMENT IT CONFERS JURISDICTION TO REOPEN THE A SSESSMENT WHERE THE CASE IS NOT COVERED BY THE PROVISO TO SECTION 147. IT WAS HELD THAT INTIMATION U/S 143(1)(A) CANNOT BE TREATED TO BE AN ORDER OF ASSESSMENT AND THERE BEING NO ASSESSMENT U/S 143(1)(A) THE QUESTION OF CHANGE OF OPINION DOES N OT ARISE. IT WAS ALSO OBSERVED BY THE HON'BLE SUPREME COURT THAT THE EXPRESSIONS INTIMATION AND ASSESSMENT ORDER HAVE BEEN USED AT DIFFERENT PLACES. THE CON TEXTUAL DIFFERENCE BETWEEN THE TWO EXPRESSIONS HAS TO BE UNDERSTOOD IN THE CONTEXT THE EXPRESSIONS ARE USED. ASSESSMENT IS USED AS MEANING SOMETIMES THE COMPUT ATION OF INCOME SOMETIMES THE DETERMINATION OF THE AMOUNT OF TAX P AYABLE AND SOMETIMES THE WHOLE PROCEDURE LAID DOWN IN THE ACT FOR IMPOSING L IABILITY UPON THE TAXPAYER. IN THE SCHEME OF THINGS THE INTIMATION UNDER S. 143 (1)(A) CANNOT BE TREATED TO BE AN ORDER OF ASSESSMENT. THE DISTINCTION IS ALSO WELL BROUGHT OUT BY THE STATUTORY PROVISIONS AS THEY STOOD AT DIFFERENT POINTS OF TIM E. UNDER S. 143(1)(A) AS IT STOOD PRIOR TO 1 ST APRIL 1989 THE AO HAD TO PASS AN ASSESSMENT ORDE R IF HE DECIDED TO ACCEPT THE RETURN BUT UNDER THE AMENDED PROVISION THE REQUIREMENT OF PASSING OF AN ASSESSMENT ORDER HAS BEEN DISPENSED WITH AND INS TEAD AN INTIMATION IS REQUIRED TO BE SENT. VARIOUS CIRCULARS SENT BY THE CBDT SPE LL OUT THE INTENT OF THE LEGISLATURE I.E. TO MINIMIZE THE DEPARTMENTAL WOR K TO SCRUTINIZE EACH AND EVERY RETURN AND TO CONCENTRATE ON SELECTIVE SCRUTINY OF RETURNS. IT MAY BE NOTED ABOVE THAT UNDER THE FIRST PROVISO TO THE NEWLY SUBSTITUT ED S. 143(1) W.E.F. 1 ST JUNE 1999 EXCEPT AS PROVIDED IN THE PROVISION ITSELF THE ACK NOWLEDGEMENT OF THE RETURN SHALL BE DEEMED TO BE AN INTIMATION UNDER S. 143(1) WHERE (A) EITHER NO SUM IS PAYABLE BY THE ASSESSEE OR (B) NO REFUND IS DUE TO HIM. I T IS SIGNIFICANT THAT THE ACKNOWLEDGEMENT IS NOT DONE BY ANY AO BUT MOSTLY B Y MINISTERIAL STAFF. CAN IT BE SAID THAT ANY ASSESSMENT IS DONE BY THEM? THE REPLY IS AN EMPHATIC NO. THE INTIMATION UNDER S. 143(1)(A) WAS DEEMED TO BE A NOTICE OF DEMAND UNDER S. ITA-3995/DEL/2009 4 156 FOR THE APPARENT PURPOSE OF MAKING MACHINERY P ROVISIONS RELATING TO RECOVERY OF TAX APPLICABLE. BY SUCH APPLICATION ONLY RECOVE RY INDICATED TO BE PAYABLE IN THE INTIMATION BECAME PERMISSIBLE. AND NOTHING MORE CA N BE INFERRED FROM THE DEEMING PROVISION. THEREFORE THERE BEING NO ASSES SMENT UNDER S. 143(1)(A) THE QUESTION OF CHANGE OF OPINION DOES NOT ARISE. 5. LEARNED AR RELIED ON FULL BENCH DECISION OF HON' BLE DELHI HIGH COURT IN CASE OF KELVINATOR OF INDIA LTD. 123 TAXMAN 433 AGAINST WHICH SLP FILED BY REVENUE WAS DISMISSED BY HON'BLE SUPREME COURT VIDE ITS ORDER DATED 18.1.2010. HOWEVER THE FACTS OF THIS CASE ARE DISTINGUISHABLE INSOFAR AS IT DEALS WITH ASSESSMENT FRAMED U/S 143(3) AND CHANGE OF OPINION THEREAFTER. FACTS OF THE INSTANT CASE ARE PARI-MATERIA WITH THE CASE OF RAJE SH JHAVERI STOCK BROKERS (P) LTD. (SUPRA). IN VIEW OF THE DECISION OF HON'BLE SUPREM E COURT DIRECTLY ON THE ISSUE WE DO NOT FIND ANY MERIT IN THE ACTION OF CIT(A) FO R HOLDING THE INITIATION OF PROCEEDINGS U/S 147 TO BE INVALID ON THE PLEA THAT THERE WAS CHANGE OF OPINION. SINCE NO ASSESSMENT ORDER U/S 143(3) OR 144 WAS PAS SED NO OPINION WAS FRAMED BY THE AO ACCORDINGLY THERE IS NO MERIT IN SAYING THAT AO HAS CHANGED THE OPINION. SINCE THE CIT(A) HAS NOT DECIDED THE ISSU E ON MERITS WE RESTORE THE APPEAL BACK TO THE FILE OF THE CIT(A) FOR DECIDING THE SAME ON MERITS. WE DIRECT ACCORDINGLY. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 21 ST JANUARY 2010. SD/- SD/- (D.R.SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 09.02.2010. VK. ITA-3995/DEL/2009 5 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR