Mrs Sejal J Panchal Ahmedabad v. Ito Ward 10 4 Ahmedabad

In The Income Tax Appellate Tribunal Smc Bench Ahmedabad Before Shri S S Godara Judicial Member Shri Pradip Kumar Kedia Accountant Member I T A No 776 Ahd 2015 Assessment Year 2006 07 Mrs Sejal J Panchal C O Suresh R Shah Associates Ghanshyam Chember Opp Mithakhali Rly Crossing Mithakhali Ellisbridge Ahmedabad Vs The Ito Ward 10 4 Ahmedabad Pan Gir No Akepp 9021 G Appellant Respondent Appellant By Shri Sunil Talati Ar Respondent By Ms Richa Rastogi Dr Date Of Hearing 10 11 2017 0 Date Of Pronouncement 13 12 2017 O R D E R Per Pradip Kumar Kedia Am The Captioned Appeal Has Been Filed At The Instan Ce Of The Assessee Against The Order Of The Commissioner Of Income Tax Appeals 5 Ahmedabad Cit A In Short Dated 15 01 2015 Arising In The Ita No 776 Ahd 2015 Mrs Sejal J Panchal Vs Ito Asst Year 2006 07 2 Assessment Order For Assessment Year Assessment Yea R Ay 2006 07 Dated 14 02 2014 Passed Under S 143 R W S 147 Of Th E Income Tax Act 1961 Hereinafter Referred To As The Act 2 The Grounds Of Appeal Raised By The Assessee Ar E Two Fold I Challenging The Jurisdiction Under Section 147 And Ii Challenging The Action Of The Assessing Officer Ao In Making Cert Ain Disallowances In Pursuance Of The Assumption Of Jurisdiction Under S 147 Of The Act 3 When The Matter Was Called For Hearing The Ld Ar For The Assessee At The Outset Challenged The Action Of T He Ao In Usurping Jurisdiction Under S 147 Of The Act Wrongfully Th E Ld Ar Claimed That The Reasons Recorded By The Ao Does Not Meet The Pr E Requisites For Assumption Of Jurisdiction And Therefore The Notice Issued Pursuant To Such Recording Of Reasons Is Bad In Law It Was Th Us Submitted That The Consequent Reassessment Order Is Without Authority Of Law The Ldar Pointed Out That The Action Under S 147 Has Been Ta Ken Pursuant To Notice Dated 23 09 2013 Which Is After The Expiry Of Four Years From The End Of The Relevant Assessment Year Consequently The Ti Me Limit For Issuance Of Notice As Provided Under S 149 1 B Of The Act Has Expired The Ld Ar Thereafter Pointed Out That A Meager Addition Of Rs 16 320 Has Been Made Which Ostensibly Means That Income Charge Able To Tax Which Has Escaped Assessment As Per The Own Version Of Th E Ao Is Less Than Rs 1 Lakh Therefore The Notice Under S 147 Could Not Have Been Issued Ita No 776 Ahd 2015 Mrs Sejal J Panchal Vs Ito Asst Year 2006 07 3 In Terms Of Section 149 Of The Act The Ld Ar Ther Eafter Submitted That A Bare Reading Of The Reasons Recorded Would Show Tha T The Ao Based On Certain Information Received Pursuant To Search In The Case Of Mahasagar Securities Ltd Has Proposed To Reopen The Case Fo R Detailed Verification On Various Aspects The Ld Ar Submitted That Its Ostensible That The Ao Did Not Form Any Firm Reason To Believe Contemplate D Under S 147 Of The Act Towards Escapement Of Income The Plain Readin G Of The Reasons Provided Would Show That The Ao Merely Wanted To Ma Ke Enquiry To Find Out The Correctness Of The Information So Received From Other Agencies The Ld Ar Accordingly Submitted That A Bonafide B Elief Towards Escapement Of Income Is Clearly Absent In The Case The Ld Ar Accordingly Submitted That The Entire Action Of The Ao Is A Complete Non Starter And Requires To Be Struck Down 4 The Ld Dr On The Other Hand Submitted That The Time Limit Prescribed Under S 149 For Issuance Of Notice Under S 147 Of The Act Is Not Applicable Since The Likely Escapement At The Time Of Recording Of Reasons Was More Than Rs 1 Lakh Which Whittled Down At Asse Ssment Stage The Ld Ar Relied On The Order Of The Cit A For Upholdi Ng The Action Of The Ao Under S 147 Of The Act 5 We Have Carefully Considered The Rival Su Bmissions We Have Also Perused The Reasons Recorded For Issuance Of Notice Under S 147 Of The Ita No 776 Ahd 2015 Mrs Sejal J Panchal Vs Ito Asst Year 2006 07 4 Act Which Is Under Challenge It Will Be Apt To Rep Roduce The Reasons Recorded Hereunder The Search Seizure Action Carried Out By The Dep Artment On 25 11 2009 In The Case Of M S Mahasagar Securities Ltd And Also Covered Its Group Companies Which Were Controlled B Y Shri Mukesh M Choksi At Mumbai Shri Makesh M Choksi Himself Ad Mitted That My Ail Group Companies Are Providing Entry For Taking Pro Fit Or Toss By Showing Purchase Or Sale Of The Shares And Securiti Es To Various Parties Across India On Which I Charged Certain Commission From The Beneficiary Parties The Same Information Received By This Office From The Director Of Income Tax I C I New Delhi V Ide Letter Dated 07 03 2013 On Deep Scrutinized Of The Data Details Received In This Office It Is Ascertain That You Also Involved In Th E Taking Entry From The Group Companies Belongs To Shri Mukesh Choksi Durin G The F Y 2005 06 For Taking Fictitious Entries By Showing Purchas E And Sale Of Share And Securities Thus In Your Case Said Transactions Should Be Required For Detailed Verification From Various Aspects 5 1 A Bare Glance Of The Reasons Recorded Gives Un Mistakable Impression That The Action Under S 147 Of The Act W As Taken For Detailed Verification Of The Various Aspects Of The Referenc E Made To The Ao In Consequence Of Search In Case Of A Third Party Th Us It Is Evident That No Definite Formation Of Belief Towards Escapement Of Income Was Made At The Time Of Issuance Of Notice The Ao Has Not Eve N Come To A Prima Facie Conclusion Towards Escapement Of Income What T He Ao Intended Is To Make Objective Enquiry Into The Correctness O F The Information Received From Other Wing Of The Department And Find Out If There Is Any Ita No 776 Ahd 2015 Mrs Sejal J Panchal Vs Ito Asst Year 2006 07 5 Escapement Of Income The Ao Merely Seeks To Concl Ude That There Is A Case For Investigation Towards Truth Of The Allege D Transactions This Is Not The Same Thing As Saying That There Are Reason S To Belief That Some Chargeable Income Has Escaped Assessment Ostensib Ly The Ao At Best Has Made Out A Case Of Probable Escapement In Dis Tinction To A Definite Conclusion Of Escapement Of Income Thus The Requ Irement Of Section 147 Is Clearly Not Fulfilled 5 2 Needless To Say Provisions Of Section 147 W Hich Gives Power To Reopen A Completed Assessment Can Be Invoked Only W Hen The Conditions Precedent For Exercising The Jurisdiction Exists Exercise Of Power Under S 147 Of The Act Cannot Be Made On The Basis Of Mer E Ipsi Dixit Of Revenue It Is Well Settled By Plethora Of Judicia L Precedents That Reopening Is Not Permissible Merely Seeking To Inve Stigate The Facts Collected Without Holding Atleast Prima Facie Belief Based On Relevant Material Towards Escapement Of Income The Conditi Ons Have Not Been Met Hence The Notice Issued Under S 147 Of The A Ct Is Not Backed By Authority Of Law And Consequently Bad In Law The Assessment As A Sequel To Such Illegal Notice Is Therefore Null And Void And Requires To Be Quashed Ita No 776 Ahd 2015 Mrs Sejal J Panchal Vs Ito Asst Year 2006 07 6 6 In The Result Assessee Succeeds On Legal Ground Towards Validity Of Jurisdiction Under S 147 Of The Act Hence We Do Not Consider It Necessary To Dwell Upon The Merits Of The Case 7 In The Result Appeal Of The Assessee Is Allowed This Order Pronounced In Open Court On 13 12 2017 Sd Sd S S Godara Pradip Kumar Kedia Judicial Member Accountant Member Ahmedabad Dated 13 12 2017 4 T C Nair Sr Ps Copy Of The Order Forwarded To 1 The Appellant 2 The Respondent 3 567 8 Concerned Cit 4 8 The Cit A 5 Ahmedabad 5 9 67 670 5 Dr Itat Ahmedabad 6 Guard File By Order 9 True Copy Dy Asstt Registrar Itat Ahmedabad