M/s. Pradeep Agencies Joint Venture, Delhi v. Addl. CIT, New Delhi

ITA 4057/DEL/2009 | 2005-2006
Pronouncement Date: 30-04-2010 | Result: Dismissed

Appeal Details

RSA Number 405720114 RSA 2009
Assessee PAN AAAAP2552M
Bench Delhi
Appeal Number ITA 4057/DEL/2009
Duration Of Justice 6 month(s) 24 day(s)
Appellant M/s. Pradeep Agencies Joint Venture, Delhi
Respondent Addl. CIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 30-04-2010
Date Of Final Hearing 29-04-2010
Next Hearing Date 29-04-2010
Assessment Year 2005-2006
Appeal Filed On 06-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO. 4057/DEL/2009 ASSESSMENT YEAR: 2005-06 PRADEEP AGENCIES JOINT VENTURE 3796 CHAWRI BAZAR DELHI. AAAAP2552M VS. ADDL. CIT RANGE 28 NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. T.R. TALWAR ADV. RESPONDENT BY: SMT. BANITA DEVI SR. DR O R D E R PER I.P. BANSAL J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS D IRECTED AGAINST THE ORDER OF CIT(A) DATED 31 ST JULY 2009 FOR A.Y. 2005-06. GROUNDS OF APPEAL READ AS UNDER: - 1. IN CONFIRMING THE ACTION OF THE AO IN REOPENING THE ASSESSMENT U/S 147 IGNORING THE ASSESSEES SUBMISSIONS. 2. IN CONFIRMING THE ACTION OF THE AO IN FACT AND I N LAW THAT THE COMMISSION AND INTEREST INCOME OF RS. 85 59 473/- W AS TAXABLE IN THE HANDS OF THE APPELLANT IN THE STATUS OF AOP AND NOT IN THE HANDS OF THE RESPECTIVE MEMBERS OF THE JOINT VENTUR E. 3. IN CONFIRMING THE ACTION OF THE AO THAT THE TAX IS TO BE LEVIED AT THE MAXIMUM MARGINAL RATE. 4. IN CONFIRMING THE FINDINGS OF THE AO IN FACT AND IN LAW EVEN THOUGH THE AO ACTED IN CONTRAVENTION OF THE BOARDS INSTRU CTIONS WHICH ARE BINDING ON HIM. 2 ITA NO. 4057/DEL/2009 5. IN CHARGING OF INTEREST U/S 234B & 234D AND WITH DRAWAL OF INTEREST U/S 244A OF THE I.T. ACT. 6. THE APPELLANT CRAVES LEAVE TO ADD SUBSTITUTE AMEND ALTER ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEAR ING. 2. ADDRESSING GRIEVANCE OF ASSESSEE ON GROUND NO. 1 IT WAS SUBMITTED BY LD. AR THAT INITIATION OF REASSESSMENT PROCEEDING IS BAD IN LAW AS NO NEW INFORMATION CAME TO THE NOTICE OF AO AND EARLIER ASSESSMENT WAS FRAMED U/S 143(1) ACCORDING TO WHICH RETURN WAS FILED SHOWING THEREIN THE ASSESSABILITY OF SHARE INCOME I N THE HANDS OF MEMBER OF THE AOP. THE REASONS RECORDED BY THE AO WERE ONLY THAT IN THE PRECEDING ASSESSMENT YEARS I.E. A.Y. 2003-04 AN D 2004-05 THE CASES WERE PICKED UP FOR SCRUTINY AND ADDITION MADE BY THE AO FOR ASSESSING THE ENTIRE INCOME IN THE HANDS OF AOP WAS CONFIRMED BY CIT(A). THEREFORE THE INCOME OF RS. 85 59 473/- H AD ESCAPED FROM ASSESSMENT. HE CONTENDED THAT REASONS ARE REPRODUC ED IN PARA 7 OF THE IMPUGNED ORDER OF CIT(A). HE SUBMITTED THAT BARE P ERUSAL OF REASONS RECORDED PRIOR TO ISSUANCE OF NOTICE U/S 148 WILL R EVEAL THAT THERE WAS NO MATERIAL OTHER THAN THE RETURN OF INCOME AND SUPPOR TIVE DOCUMENT FILED THEREWITH AND THUS NO NEW MATERIAL HAD COME TO THE LIGHT ON THE BASIS OF WHICH AO COULD FORM AN OPINION THAT THERE HAS BEEN AN ESCAPEMENT OF INCOME. THE AO WAS NOT PRECLUDED TO FRAME ASSESSME NT U/S 143(3) AND THUS HE SUBMITTED THAT INITIATION OF REASSESSMENT PROCEEDINGS IS BAD IN LAW. 3. HE SUBMITTED THAT LD. CIT(A) WAS WRONG IN REJECT ING THE CONTENTION OF THE ASSESSEE THAT IT WAS NOT NECESSARY TO FRAME ASSESSMENT U/S 3 ITA NO. 4057/DEL/2009 143(3) TO INVOKE SEC. 148. HE SUBMITTED THAT BY FR AMING ASSESSMENT U/S 143(1) THE AO HAS FORMED AN OPINION AND THUS THE I NITIATION OF REASSESSMENT PROCEEDING WAS BASED MERELY ON CHANGE OF OPINION. THUS IT WAS SUBMITTED BY LD. AR THAT INITIATION OF REASSESSMENT PROCEEDING SHOULD BE HELD INVALID. 4. ON MERITS WHICH ARE RAISED IN GROUND NO. 2 3 & 4 HE SUBMITTED THAT THESE ISSUES ARE COVERED AGAINST ASSESSEE BY T HE SPL. BENCH DECISION IN THE CASE OF ASSESSEE FOR A.Y. 2003-04 I N WHICH IT WAS HELD THAT THE ENTIRE INCOME EARNED BY THE ASSESSEE WAS A SSESSABLE IN THE STATUS OF AOP IRRESPECTIVE OF THE FACT THAT THE SAM E HAS BEEN ASSESSED IN THE HANDS OF RESPECTIVE MEMBERS OF JOINT VENTURE S. IT WAS ALSO HELD THAT THE RATE OF TAX WAS LEVIABLE WAS MAXIMUM MARGI NAL RATE AND THE BOARDS INSTRUCTIONS WERE NOT BINDING ON AO IN VIEW OF SUBSEQUENT CHANGE IN LAW AS WELL AS IN VIEW OF DECISION OF HON BLE SUPREME COURT IN ATCHTAIAHS CASE 218 ITR 239. 5. SO AS IT RELATES TO LEVY OF INTEREST U/S 234B A ND 234D AND WITHDRAWAL OF INTEREST U/S 244A THE CONTENTION OF L D. AR IS THAT THE ASSESSEE ACCORDING TO ITS BONAFIDE BELIEF WAS NOT LIABLE TO PAY ADVANCE TAX AS ACCORDING TO THE BELIEF OF THE ASSESSEE THE INCOME WAS NOT ASSESSABLE IN THE HANDS OF AOP AND IT WAS ASSESSABL E IN THE HANDS OF RESPECTIVE MEMBERS OF THE AOP. THUS IT WAS SUBMIT TED THAT LEVY OF THESE INTERESTS IS CONTRARY TO LAW. 4 ITA NO. 4057/DEL/2009 6. ON THE OTHER HAND RELYING ON THE ORDER OF CIT(A ) IT WAS SUBMITTED BY LD. DR THAT ACCORDING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAWERI STOCK BROKERS PVT. LTD. 291 ITR 500 IF THE INGREDIENTS OF SEC. 147 ARE FULFILLED THEN THE AO IS FREE TO INITIATE PROCEEDINGS U/S 147 AND FAILURE TO TAKE STEPS US/ 1 43(3) WILL NOT RENDER THE AO POWERLESS TO INITIATE REASSESSMENT PROCEEDIN GS EVEN WHEN INTIMATION U/S 143(1) WAS ISSUED. SHE IN THIS REGA RD REFERRED TO THE ORDER OF LD. CIT(A) AND HIS OBSERVATIONS IN PARA 12.3. S HE FURTHER SUBMITTED THAT THE REJECTION OF THE CLAIM OF THE ASSESSEE IN EARLIER YEAR CONSTITUTED AN INFORMATION ON THE BASIS OF WHICH LD. AO HAD FOR MED A BELIEF THAT INCOME OF THE ASSESSEE HAS ESCAPED FROM ASSESSMENT AND ON THAT BASIS IT CANNOT BE SAID THAT NO NEW INFORMATION HAS COME TO THE NOTICE OF AO TO ENABLE HIM TO INITIATE REASSESSMENT PROCEEDINGS. T HUS IT WAS SUBMITTED BY LD. DR THAT INITIATION OF REASSESSMENT PROCEEDIN GS HAS RIGHTLY BEEN HELD TO BE VALID BY LD. CIT(A) AND HIS ORDER SHOULD BE UPHELD. 7. ON MERITS SHE CONTENDED THAT THE ISSUES RAISED BY ASSESSEE IN GROUND NO. 2 3 & 4 ARE COVERED BY THE DECISION OF SPL. BENCH IN THE CASE OF ASSESSEE FOR A.Y. 2003-04. 8. ON THE ISSUE OF CHARGEABILITY OF INTEREST LD. D R CONTENDED THAT BONAFIDE BELIEF OF THE ASSESSEE HAS NOTHING TO DO W ITH THE CHARGEABILITY OF INTEREST WHICH IS MANDATORY IN NATURE. SHE INV ITED OUR ATTENTION TOWARDS RECENT DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. INSILCO LTD. (2010) 37 DTR (DEL.) 342 WHEREIN IT HAS BEEN HELD THAT LEVY OF INTEREST U/S 234B IS COMPENSATORY AND CHARG EABLE 5 ITA NO. 4057/DEL/2009 NOTWITHSTANDING THE FACT THAT DEFAULT IS BONAFIDE. THUS SHE PLEADED THAT APPEAL FILED BY THE ASSESSEE DESERVES TO BE DISMISS ED AND THE SAME SHOULD BE DISMISSED. 9. WE HAVE CAREFULLY GONE THROUGH THE RIVAL SUBMISS ION. AS PER DECISIONS OF HONBLE SUPREME COURT IN THE CASE OF R AJESH JHAWERIS CASE (SUPRA) NON-FRAMING OF ASSESSMENT U/S 143(3) CANNOT IN ITSELF BE A GROUND TO INTERFERE WITH THE INITIATION OF REASSESSMENT PR OCEEDINGS IF THE OTHER INGREDIENTS OF SEC. 147 ARE FOUND TO HAVE BEEN EXIS TED. IN THE FACTS OF THE PRESENT CASE ON THE BASIS OF EARLIER ASSESSMENTS THE AO HAS COME TO THE CONCLUSION THAT THE CLAIM OF THE ASSESSEE REGAR DING CHARGEABILITY OF ITS INCOME IN THE HANDS OF RESPECTIVE MEMBERS WAS NOT A CCEPTED AND CIT(A) HAS DECIDED THE ISSUE AGAINST THE ASSESSEE. ON THE BASIS OF THOSE PROCEEDINGS THE AO HAD FORMED A BELIEF THAT INCOME OF THE ASSESSEE HAD ESCAPED FROM ASSESSMENT IN ITS HAND. THUS THERE I S NO FORCE IN THE CONTENTION OF LD. AR OF THE ASSESSEE THAT THERE WAS NO FRESH MATERIAL CAME TO THE NOTICE OF AO ACCORDING TO WHICH HE COUL D FORM A BELIEF THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. LAT ER ON VIEW TAKEN BY CIT(A) WAS ALSO UPHELD BY SPL. BENCH IN THE CASE OF ASSESSEE WHEREIN IT WAS HELD THAT ENTIRE INCOME WAS ASSESSABLE IN THE H ANDS OF THE ASSESSEE IRRESPECTIVE OF THE FACT THAT RESPECTIVE MEMBERS OF THE AOP WERE ALREADY ASSESSED ON THE SHARE INCOME. IT WAS HELD THAT THE ASSESSMENT HAS TO BE MADE IN THE RIGHT HAND AS PER PROVISIONS OF THE ACT . THUS THE VIEW TAKEN BY DEPARTMENT IN THE PRECEDING ASSESSMENT YEARS GIV E RISE TO A BELIEF TO THE AO TO FORM AN OPINION THAT INCOME OF THE ASSESS EE FOR THE YEAR UNDER CONSIDERATION HAD ESCAPED ASSESSMENT AND THUS IT IS NOT A CASE WHERE 6 ITA NO. 4057/DEL/2009 THERE IS ABSENCE OF NEW MATERIAL AS ALLEGED BY LD. AR. THEREFORE WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) VIDE WHICH IT H AS BEEN HELD THAT REASSESSMENT PROCEEDINGS WERE VALIDLY INITIATED. W E REJECT GROUND NO. 1. 10. SO AS IT RELATES TO GROUND NO. 2 3 & 4 LD. AR WAS FAIR ENOUGH TO ADMIT THAT THE ISSUES RAISED IN THESE GROUNDS ARE C OVERED AGAINST THE ASSESSEE BY THE SPL. BENCH DECISION WHICH IS SINCE REPORTED AS 111 TTJ (DEL.) 346 WHEREIN IT HAS BEEN HELD THAT AO IS NOT PRECLUDED FROM TAXING RIGHT PERSON MERELY BECAUSE A WRONG PERSON HAS BEEN ASSESSED. IT WAS HELD THAT IN LAW INCOME WAS TO BE ASSESSED IN T HE HANDS OF AOP. IT WAS ALSO HELD THAT THE CIRCULAR DATED 24 TH AUGUST 1966 COULD NOT BE APPLIED BECAUSE AFTER THE DATE OF ISSUANCE OF CIRCU LAR TO IMPORTANT EVENTS HAD HAPPENED. FIRSTLY THE DECISION OF HONBLE SUP REME COURT IN THE CASE OF C.H. ATCHTAIAH (SUPRA) CAME TO BE DELIVERED ON 11.12.1995 IN WHICH IT WAS HELD THAT AOP WAS LIABLE FOR TAXATION. SECONDLY SEC. 167B REGULATING CHARGE OF TAX WHERE SHARES OF MEMBERS IN THE AOP OR BOI UNKNOWN ETC. WAS INTRODUCED IN THE STATUTE BY DI RECT TAX LAWS (AMENDMENT ACT 1989) W.E.F. 1.4.1989 AND SUCH SEC TION HAS GIVEN A CLEAR MANDATE THAT THE TAX IS CHARGEABLE IN THE HAN DS OF AOP ALONE AND THUS IT WAS HELD THAT CIRCULAR COULD NOT BE APPLIE D. 11. IN THIS VIEW OF THE SITUATION GROUND NO. 2 3 & 4 OF ASSESSEES APPEAL ARE DISMISSED. 12. SO AS IT RELATES TO GROUND NO. 5 IT IS HELD TH AT CHARGING OF INTEREST IS MANDATORY AND CHARGEABILITY OF INTEREST IS NOT D EPENDENT ON BONAFIDE 7 ITA NO. 4057/DEL/2009 BELIEF. IT IS SO HELD BY HONBLE JURISDICTIONAL HI GH COURT IN THE AFOREMENTIONED DECISION IN THE CASE OF CIT VS. INSI LCO LTD. (SUPRA). THEREFORE THIS GROUND OF ASSESSEE IS ALSO DISMISSE D. 13. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30.4.2010 (SHAMIM YAHYA) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR