The ITO, Ward-1(2),, Visakhapatnam v. Smt S Indira,, Visakhapatnam

ITA 405/VIZ/2006 | 1999-2000
Pronouncement Date: 27-09-2010 | Result: Allowed

Appeal Details

RSA Number 40525314 RSA 2006
Assessee PAN AAEPI1494A
Bench Visakhapatnam
Appeal Number ITA 405/VIZ/2006
Duration Of Justice 4 year(s)
Appellant The ITO, Ward-1(2),, Visakhapatnam
Respondent Smt S Indira,, Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 27-09-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 27-09-2010
Date Of Final Hearing 08-09-2010
Next Hearing Date 08-09-2010
Assessment Year 1999-2000
Appeal Filed On 27-09-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO. 405 /VIZAG/ 20 06 ASSESSMENT YEAR : 1999 - 2000 ITO WARD - 1(2) V ISAKHAPATNAM SUDIA INDIRA VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) PAN NO.AAEPI 1494A APPELLANT BY: SHRI G.V.N. HARI CA RESPONDENT BY: SHRI J. SIRI KUMAR DR ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER : - THIS APPEAL IS PREFERRED BY THE REVEN UE AGAINST THE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER: - 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS BOTH IN LAW AND ON FACTS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 2. THE CIT(A) OUGHT TO HAVE UPHELD THE ASSESSMENT PRO CEEDINGS AS THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT. 3. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ADDITIONS MADE IN THE REOPENED ASSESSMENT TOWARDS UNEXPLAINED INVESTMENT IN CONSTRUCTION OF FLAT S AND THE UNEXPLAINED DEPOSIT OF CASH IN BANK HAVE BEEN MADE ON VALID GROUNDS WHICH HAVE ESCAPED ASSESSMENT AND WHICH WOULD COME WITHIN THE AMBIT OF THE PROVISIONS OF SEC. 147 FOR MAKING SUCH ADDITIONS. 4. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ASSESS EE FAILED TO PROVE THE CLOSING STOCK AS CONSIGNMENT SALES AND AO AFTER DUE INQUIRY PROVED THAT THERE IS NO CONSIGNMENT SALES BUT ONLY CLOSING STOCK AS ON 31.3.1998 AND ACCORDINGLY UPHELD THE SECTION OF THE AO IN TREATING THE SAME AS SALES IN THE ACCOUNTI NG YEAR 1998 - 99 RELEVANT TO THE ASSESSMENT YEAR 1999 - 2000 AND ESTIMATING PROFIT @ 10% ON THE SAME. 5. THE CIT(A) OUGHT TO HAVE CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN TREATING THE CREDIT BALANCE IN THE NAME OF M/S. P.J. ENTERPRISES AS CESSATION OF L IABILITY ESPECIALLY WHEN THE IMPUGNED CREDITOR DENIED HAVING ANY TRANSACTION WITH THE APPELLANT. 6. THE CIT(A) HAVING FOLLOWED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGINEERING WORKS PVT. LTD. 198 ITR 297 OUGHT TO HAVE UPHELD THAT IN PROCEEDINGS U/S 147 OF THE 2 ACT THE INCOME TAX OFFICER MAY BRING TO CHARGE ITEMS OF INCOME WHICH HAD ESCAPED ASSESSMENT ORDER THAN OR IN ADDITION TO THAT ITEM OR ITEMS WHICH HAD LEAD TO THE ISSUANCE OF NOTICE U/S 148. 7. THE CIT(A) OUGHT TO HAVE APPR ECIATED THAT THE FACTS OF THE CASE DECIDED BY THE HONBLE APEX COURT (SUPRA) AS ALSO THE FACTS OF THE CASE DECIDED BY HONBLE PUNJAB AND HARYANA HIGH COURT (255 ITR 220) ARE DISTINGUISHABLE FROM THE FACTS OF THE ASSESSEES CASE. 8. ANY OTHER GROUND(S) THAT M AY BE URGED AT THE TIME OF HEARING. 2. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUT ATTENTION TO THE FACT THAT THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT ON PARTICULAR ISSUES BUT HAS FRAMED THE ASSESSMENT ON OTHER I SSUES ALSO ON WHICH IT WAS NOT REOPENED. THE ASSESSEE RAISED THE PLEA BEFORE THE CIT(A) THAT IN THE REASSESSMENT PROCEEDINGS ASSESSMENT CAN ONLY BE FRAMED ONLY ON THOSE ISSUES ON WHICH IT WAS REOPENED. OTHER ISSUES WHICH WERE NOT SUBJECT MATTER OF REOPE NING OF THE ASSESSMENT CANNOT BE ADJUDICATED OR EXAMINED BY THE ASSESSING OFFICER THEREFORE THE ADDITIONS MADE ON TH O SE ISSUES ARE DESERVE TO BE DELETED. 3. BEING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE THE CIT(A) HAS GIVEN A FINDING IN HIS O RDER THAT THE ASSESSING OFFICER HAS NO JURISDICTION TO EXAMINE THOSE ISSUES ON WHICH ASSESSMENT WAS NOT REOPENED AND HE ACCORDINGLY DELETED THE ADDITIONS . NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE HAS CANDIDLY ADMITTED THAT THIS ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF SWATHI EXPORTS BHIMAVARAM VS. ITO IN ITA NO.207/VIZAG/2007 IN WHICH THE TRIBUNAL HAS CATEGORICALLY HELD THAT ONCE THE ASSESSMENT IS REOPENED ON O NE ISSUE THE ASSESSING OFFICER HAS JURISDICTION TO MAKE ASSESSMENT ON OTHER ISSUES ALSO. THEREFORE THE IMPUGNED ISSUE IS SQUARELY COVERED BY THIS ORDER OF THE TRIBUNAL AND THEREFORE THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE CIT(A) TO ADJUDICAT E THE IMPUGNED ISSUES ON MERIT. THESE CONTENTIONS OF THE ASSESSEES WERE NOT OBJECTED TO BY THE REVENUE. 3 5. WE HAVE CAREFULLY EXAMINED THE ORDER OF THE TRIBUNAL IN THE CASE OF SWATHI EXPORTS COPY OF WHICH IS PLACED ON RECORD AND WE FIND THAT TRIBUNAL HAS CATEGORICALLY EXAMINED THIS ISSUE AND HAS GIVEN A FINDING THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUES WHICH HAS ESCAPED ASSESSMENT AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF ASSESSMENT PROCEE DINGS. RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE EXTRACTED HEREUNDER: HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF ORDERS OF AUTHORITIES BELOW AND JUDGEMENTS REFERRED TO AND THE EXPLANATION (3) OF SECTION 147 OF THE ACT WE FIND THA T NOTICE U/S 148 FOR RE - OPENING OF THE ASSESSMENT WAS ISSUED WITH REGARD TO THE MODE OF COMPUTATION OF DEDUCTION U/S 80HHC OF THE ACT. BUT WHILE FRAMING THE ASSESSMENT THE A.O. HAS NOTICED THAT INCOME HAS ESCAPED ASSESSMENT WITH REGARD TO THE UNSECURED L OANS PAYMENTS MADE IN VIOLATION OF SECTION 40 (A)(3) AND INTEREST ON DEPOSITS IN THE UNION BANK OF INDIA. NO DOUBT ALL THESE ISSUES ARE NOT DIRECTLY CONNECTED. THE ASSESSMENT WAS RE - OPENED ON AN ISSUE OF COMPUTATION OF DEDUCTION U/S 80HHC OF THE ACT. B UT THE ASSESSEE HAS NOT RAISED ANY GROUND WITH REGARD TO THE ASSESSMENT FRAMED ON OTHER ISSUES ON WHICH ASSESSMENT WAS RE - OPENED. AS SUCH THE CIT(A) HAD NO OCCASION TO ADJUDICATE OR DWELL UPON THE ARGUMENT RAISED BEFORE US IN THIS REGARD. SINCE THERE IS NO FINDING IN THE ORDER OF THE CIT(A) THE IMPUGNED GROUND DOES NOT ARISE OUT OF THE ORDER OF THE CIT(A). WE HOWEVER EXAMINED THE ARGUMENTS OF THE ASSESSEES RAISED ON THIS ISSUE AND ALSO PERUSED THE JUDGEMENTS OF KERALA HIGH COURT AND DELHI HIGH COURT AN D ALSO THE EXPLANATION (3) TO SECTION 147 OF THE ACT. THE JUDGEMENTS WERE RENDERED BEFORE THE INTRODUCTION OF THE EXPLANATION (3) THROUGH WHICH IT HAS BEEN MADE CLEAR THAT THE ASSESSING OFFICER MAY ASSESS OR RE - ASSESS THE INCOME IN RESPECT OF ANY ISSUE W HICH HAS ESCAPED ASSESSMENT AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION NOTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB - SECTION 2 OF SECTION 14 8 OF THE ACT. BEFORE INTRODUCTION OF THIS EXPLANATIONS THERE WERE DIVERGENT VIEWS OF DIFFERENT HIGH COURTS ON THE SUBJECT. IN SOME OF THE CASES IT WAS HELD THAT ONCE THE ASSESSMENT IS RE - OPENED THE ASSESSING OFFICER IS FREE TO MAKE THE ASSESSMENT ON OT HER ISSUES WHICH COMES TO HIS NOTICE DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS ON WHICH THE INCOME HAS ESCAPED ASSESSMENT. BUT BY INTRODUCTION OF THIS EXPLANATION (3) THE CONTROVERSY RAISED IN THIS REGARD IS SET AT REST AND THE ASSESSING OFFICER MAY ASSESS OR RE - ASSESS THE INCOME IN RESPECT OF ANY ISSUE WHICH HAS ESCAPED ASSESSMENT AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF ASSESSMENT PROCEEDINGS. THIS EXPLANATION WAS INSERTED WITH RETROSPECTIVE EFFECT FROM 1.4.1989. MOREOVER THIS EXPLANATION IS OF CLARIFICATORY 4 IN NATURE AND AS SUCH THERE CANNOT BE ANY DISPUTE ABOUT ITS APPLICATION. IN THE LIGHT OF THIS LEGAL PROVISIONS WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER HAS RIGHTLY FRAMED THE ASSESSMENT ON ALL ISSUES. WE ACCORDINGLY FIND NO MERIT IN THE PRELIMINARY OBJECTIONS OF THE A SSESSEE AND WE REJECT THE SAME. 6. WE THEREFORE FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER TO HIS FILE WITH A DIRECTION TO ADJUDIC ATE THE IMPUGNED ISSUES ON MERIT BY PASSING A SPEAKING ORDER. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 27 - 09 - 20 10 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R VG/SPS VISAKHAPATNAM DATED 27 TH SEPTEMBER 20 10 COPY TO 1 ITO WARD - 1(2) VISAKHAPATNAM 2 SMT. SUDIA INDIRA W/O RAMA RAO D.NO.30 - 11 - 11 - 1D DABAGARDENS VISAKHAPATNAM 3 THE CI T VISAKHAPATNAM 4 THE C IT (A) VISAKHAPATNAM 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM