Income Tax Appellate Tribunal - Kolkata
Topsel Pvt. Ltd., Kolkata vs Assessee on 25 June, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL,
KOLKATA ' C' BENCH, KOLKATA
Coram : Shri Pramod Kumar, Accountant Member
and Shri Mahavir Singh Judicial Member
W.T.A. Nos. 34/KOL/ 2011
Assessment year : 2004-05
M/s. Topsel Pvt. Ltd...................................Appellant
C/o. M/s. Salarpuria Jajodia & Co.,
7, C.R. Avenue,
Kolkata-700 072
[PAN : AABCT 2439 G]
-Vs.-
Deputy Commissioner of Wealth Tax,.............Respondent
Circle-2, Kolkata,
Aayakar Bhawan,
P-7, Chowringhee Square,
Kolkata-700 069
Appearances by:
Shri S. Jhajharia, for the Appellant
Shri Dilip Kr. Rakshit, JCIT, Sr. D.R., for the Respondent
Date of concluding the hearing : June 25, 2013
Date of pronouncing the order : June 25, 2013
ORDER
Per Pramod Kumar :
By way of this appeal, the assessee-appellant has challenged correctness of learned Commissioner of Income Tax (Appeals)'s order dated 5th September, 2011, in the matter of assessment under section 16(3) read with section 17 of the Wealth Tax Act, 1957, for the assessment year 2004-05.
2. The grievances raised by the assessee are as follows :-
(1) For that in view of the facts and circumstances of the case, the CIT(A) was wholly wrong and unjustified in upholding the legality and validity of the initiation of the proceeding u/s. 17 of the Wealth Tax Act by the AO and the subsequent order of assessment passed by him u/s. 16(3)/17 of the W.T. Act without considering the facts that the proceeding u/s. 17 was vitiated owing to the AO's failure to communicate to the assessee the recorded reasons for initiating such proceeding which is mandatory and further that the assessment u/s. 16(3)/17 was made without any application of mind. The action of the ld. CIT(A) was wholly unreasonable uncalled for and bad in law.
(2) For that in view of the facts and circumstances of the case, the ld. CIT(A) was wholly wrong and unjustified in confirming the net wealth assessed at Rs.73,34,395/- u/s. 16(3)/17 as against the returned net wealth of Rs.7,18,029/- without considering the facts that the Test Drive vehicles valued Rs.60,20,791/-, wrongly added /included in the assessment, were exclusively used for the purpose of business and utilised for giving demonstrations and rendering various other services to the customers as per the binding agreements of the car manufacturers and hence are exempt from wealth tax u/s. 2(ea)(ii) of the W. Tax Act. The actions of both the AO and the ld. CIT(A) were wholly unreasonable uncalled for and bad in law.
(3) For that in view of the facts and circumstances of the case, the ld CIT(A) was wholly wrong and unjustified in directing the AO to verify and then allow the claim of deduction of the outstanding loan liability of Rs.5,95,575/- as on 31.03.2004 owed to the Bank instead of straightway allowing the deduction when it was an undisputed and established fact on record that the bank loan, fully utilized in acquiring during the year a Motor Car worth Rs.7,13,972/- and included in its return as an asset chargeable to wealth-tax, is an admissible deduction u/s 2(m) of the W. Tax Act. The actions of both the A.O. and the ld. CIT(A) were wholly unreasonable, uncalled for and bad in law.
3. During the course of hearing, it was pointed out by the ld. counsel that the reasons of reopening the assessment were never furnished to the assessee. It was also pointed out that, as noted by the ld. CIT(Appeals), the assessee had made oral request for furnishing of reasons to the Assessing Officer for reopening of assessment. This request was also reiterated at the first appellate stage. While the Assessing Officer did not take any cognizance of the oral request, the ld. CIT(Appeals) rejected the same on the ground that "once the appellant has attended the proceedings and complied with, the claim of oral request for furnishing reasons recorded to the A.O. at the appellate stage has no basis". It was the submission that the compliance to the notices and requisitions made by the Assessing Officer cannot be treated as acquisition to the jurisdiction. It is a legal right and in respect of assessee's cooperation in the assessment proceedings, the challenge to jurisdiction is to be considered on merits. Ld. counsel for the assessee thus urged us to direct the Assessing Officer to furnish the reasons for reopening the assessment proceedings in accordance with law and by way of a speaking order, before any addition can be made in the reassessment proceedings on merits.
4. Ld. D.R., on the other hand, vehemently opposed these submissions by the assessee. He pointed out that the assessee was made aware of the reasons and thus no useful purpose will be served by furnishing reasons of reopening the assessment. Ld. D.R. further pointed out that unless a formal request for furnishing of reasons is made by the asserssee, it is not for the Assessing Officer to furnish copy of the reasons for reopening the assessment to the assessee at his own. Ld. D.R. also submitted that though the assessee has been made fully aware of the reasons, no specific jurisdictional issues have been raised by the assessee. He, therefore, urged to reject the preliminary grievances raised by the ld. counsel for the assessee.
5. Having heard the rival submissions and perused the material available on record, we find that the scheme of the law as envisaged by the Hon'ble Apex Court is clear and unambiguous in the case of G.K. Drive Shafts -vs.- ITO reported in 259 ITR 19. In the case of reopening of assessment, the right course of action for the Assessing Officer is to furnish the reasons of reopening the assessment to the assessee and in case the assessee has any objection to such reopening, the AO will adjudicate on the same in accordance with law and by way of a speaking order before assuming jurisdiction in reopening the assessment proceedings. It is only after this exercise carried out the Assessing Officer can further proceed in the reassessment proceedings and frame the resultant order. In the present case, this exercise has not been carried out. We, therefore, deem it fit and proper to remit the matter to the file of Assessing Officer for fresh adjudication in the light of above observations. Accordingly, the Assessing Officer shall furnish a copy of the reasons recorded for reopening the assessment to the assessee in case assessee has any objection to the reasons so recorded by the Assessing Officer he shall communicate his objection and assessment Officer will adjudicate on the same by way of a speaking order. It is only after this exercise that the Assessing Officer has the jurisdiction to precede with the reassessment proceedings. Accordingly, the matter stands restored to the file of Assessing Officer with the direction as above.
6. As the matter has been restored to the file of Assessing Officer for fresh adjudication as above, we reframe for making any observation on merits of the case. Further, we may also mention that the assessee's contention to the effect that the Test Drive vehicles were part of business tools, was rejected on the ground that we could not substantiate the said contention either before the Assessing Officer or before the CIT(Appeals). We, therefore, remit the matter to the file of Assessing Officer for adjudication de novo and if necessary for framing the fresh assessment itself, direct the Assessing Officer to deal with this issue on merits in the light of such evidences as the assessee may produce and in case occasion arises for dealing with the reassessment proceedings on merits.
7. In the result, the appeal filed by the assessee is allowed for statistical purposes with the direction as above.
Order pronounced in the open Court on 25th day of June, 2013.
Sd/- Sd/-
Mahavir Singh Pramod Kumar
(Judicial Member) (Accountant Member)
Kolkata, the 25th day of June, 2013
Copies to : (1) The assessee
(2) The Department
(3) CIT
(4) CIT(A)
(5) The Departmental Representative
(6) Guard File
TRUE COPY
By order etc
Assistant Registrar
Income Tax Appellate Tribunal
Kolkata Benches, Kolkata
Laha/Sr. P.S.
.T.A. No.:34/KOL/ 2011,
Assessment year: 2004-05
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