Income Tax Appellate Tribunal - Ahmedabad
Anant Incense Ltd.,, Ahmedabad vs Assessee on 7 December, 2015
आयकर अपील
य अ धकरण, अहमदाबाद यायपीठ 'सी', अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
" C " BENCH, AHMEDABAD
ी अ नल चतुव द , लेखा सद य एवं ी कुल भारत, या यक सद य के सम ।
BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER And
SHRI KUL BHARAT, JUDICIAL MEMBER
आयकर अपील सं./I.T.A. No.138/Ahd/2011
( नधा रण वष / Assessment Year : 2002-03)
M/s.Anant Incense Ltd. बनाम/ The ITO
3, Prasad Park Society Vs. Ward-1(2)
Opp.Jain Temple Ahmedabad
Satellite Road
Ahmedabad
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AADCA 0012 A
(अपीलाथ% /Appellant) .. (&'यथ% / Respondent)
अपीलाथ% ओर से / Appellant by : Shri S.N. Divatia, AR
&'यथ% क) ओर से/Respondent by : Shri B.L. Sharma, Sr.DR
ु वाई क) तार ख /
सन Date of Hearing 03/12/2015
घोषणा क) तार ख /Date of Pronounce ment 07/12/2015
आदे श / O R D E R
PER SHRI KUL BHARAT, JUDICIAL MEMBER :
This appeal by the Assessee is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-VI, Ahmedabad ['CIT(A)' in short] dated 01/11/2010 pertaining to Assessment Year (AY) 2002-03. The Assessee has raised the following grounds of appeal:-
1.1. The order passed u/s.250 on 1.11.2010 for A.Y. 2002-03 by CIT(A)-VI, Abad upholding the reopening of asstt.as well as addition of Rs.10,0,766 towards the excess stock made by AO is ITA No.138 /Ahd/2011 M/s. Anant Incense Ltd. vs. ITO Asst.Year - 2002-03 -2- wholly illegal, unlawful and against the principles of natural justice.
1.2. The Ld.CIT(A) has grievously erred in upholding the reopening of asstt.as well as addition of Rs.10,03,766 made by AO without considering fully and properly the submissions made and evidence produced before him.
2.1. The Ld.CIT(A) has grievously erred in law and or on facts in upholding the validity of notice issued u/s.148 on 26.3.2007.
2.2. That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought not to have upheld that the notice of reopening asstt. u/s.147 was valid and within the jurisdiction. 3.1. The Ld.CIT(A) has grievously erred in law and or on facts in confirming the addition of Rs.10,03,766 towards alleged excess stock.
3.2 That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought not to have confirmed the addition of Rs.10,03,766 towards alleged excess stock.
4.1 The Ld.CIT(A) has grievously erred in holding that the AO had found lot of discrepancies in appellant's claim of sale of stock at loss and it was an attempt to indirectly retract the declaration of additional income.
4.2 The Ld.CIT(A) has grievously erred in holding that the business loss could not be adjusted against deemed income on account of unexplained stock taxable under Section 69/69A in view of the decision of Hon.Gujarat High Court in the case of Fakir Mohd.Haji Hassan (247 ITR 290).
4.3 That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought to have appreciated that the aforesaid decision was not applicable to the facts of the appellant's case and as such the income declared towards excess stock was business income and could be set off against other income.
2. Briefly stated facts are that the case of the assessee was reopened for assessment and the assessment u/s.147 r.w.s. section 143(3) of the ITA No.138 /Ahd/2011 M/s. Anant Incense Ltd. vs. ITO Asst.Year - 2002-03 -3- Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 31/12/2007, thereby the Assessing Officer (AO in short) made addition on account of excess stock found during survey of Rs.10,03,766/-. The assessee being aggrieved by the assessment order, preferred an appeal before the ld.CIT(A), who after considering the submissions of the assessee dismissed the appeal. Aggrieved by the order of the ld.CIT(A), now the assessee is further in appeal before us.
3. Ground Nos.1.1 & 1.2 of the assessee's appeal are general in nature which require no independent adjudication.
4. Ground Nos.2.1 & 2.2 in this appeal are related to validity of the notice issued u/s.148 of the Act. The ld.counsel for the assessee submitted that reopening of the assessment is not valid and is contrary to law. He submitted that when the assessee requested for the refund of Rs.81,081/-, the A.O. asked for the set of return of income-tax filed for AYs 2001-02 & 2002-03 along with relevant enclosures vide letter dated 17/11/2005. He submitted that the action of the re-opening was taken by the Revenue only on the basis of the copy of the return supplied by the assessee in pursuance to the grievance application for refund for AY 2002-03. The ld.counsel for the assessee submitted that the AO ought not to have reopened the assessment under the facts of the present case. In support of this contention, he relied on the judgment of the Hon'ble ITA No.138 /Ahd/2011 M/s. Anant Incense Ltd. vs. ITO Asst.Year - 2002-03 -4- Supreme Court rendered in the case of Trustees of H.E.H. the Nizam's Supplemental Family Trust vs. CIT reported at (2000) 109 Taxman 193 (SC). He submitted that in the light of the aforesaid judgement, when the return filed along with the refund application being a valid return and no assessment order was communicated to the assessee, no action u/s.147/148 could have been taken. He submitted that since no assessment u/s.143(3) of the Act was made and the order was not communicated to the assessee, therefore the AO was not justified and empowered to initiate the proceeding u/s.147 of the Act. The ld.counsel for the assessee submitted that once the assessment was not made, then how can the AO has reason to believe that any income chargeable to tax has escaped assessment which is the precondition for issuing the notice u/s.148 of the Act.
4.1. On the contrary, ld.Sr.DR supported the orders of the authorities below and submitted that there is no illegality in the order of the AO for reopening the assessment.
5. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The fact that the reassessment proceedings were initiated subsequent to filing of the application for refund, the Revenue has not placed any material on record that the earlier return filed by the assessee was acted ITA No.138 /Ahd/2011 M/s. Anant Incense Ltd. vs. ITO Asst.Year - 2002-03 -5- upon by the AO. It was only when the assessee filed an application for refund along with copy of return, then the proceedings u/s.147 of the Act was initiated. The Revenue has not placed any material on record suggesting that the return of income, filed on 30/10/2002 which was processed by the Revenue. Further, it is not disputed that the copy of return was filed in response to letter dated 17.11.2005. The AO has not made the assessment on this return, however proceeded to reopen the assessment. The Hon'ble Apex Court in the case of Trustees of H.E.H. the Nizam's Supplemental Family Trust vs. CIT(supra) has held that during the pendency of the return filed u/s.139 of the Act along with refund application u/s.237 of the Act, action could not have been taken u/s.147/148 of the Act. In the present case also, there is no evidence that the AO has concluded the assessment proceedings on the basis of the return filed by the assessee. Therefore, in the light of the judgement of the Hon'ble Apex Court in the case of Trustees of H.E.H. the Nizam's Supplemental Family Trust vs. CIT(supra), the AO ought not to have been reopened the assessment. Therefore we hold that the reopening of the assessment is not in accordance with law. We find no merit on the reason for reopening as stated by the AO is that the auditor had made a note in Schedule-T to balance-sheet that "There was a survey proceedings by Income-tax Department at the Factory/Office premises of the Company on 30.01.2002. As per the physical verification stock found to be Rs.32,10,489/- and as per books it was Rs.22,06,723/-. The ITA No.138 /Ahd/2011 M/s. Anant Incense Ltd. vs. ITO Asst.Year - 2002-03 -6- discrepancies in stock of Rs.10,03,766/-. The same is included in the amount of stock in the books. The valuation of closing stock as at 31.03.2002 is based on the physical stock taken which includes the excess stock of Rs.10,03,766/-." The AO had no new material suggesting that the income has escaped income. Accordingly, we hereby quash the impugned assessment being illegal and contrary to settled principles of law. Thus, ground Nos.2.1 & 2.2 of the assessee's appeal are allowed.
6. Since we have held that the reopening of the assessment itself is invalid and quashed the assessment order, therefore remaining grounds do not require any separate adjudication and, therefore, the same are dismissed as such.
7. In the result, Assessee's appeal is allowed.
Order pronounced in the Court on Monday, the 7th day of December, 2015 at Ahmedabad.
Sd/- Sd/-
(अ नल चतव
ु द ) (कुल भारत)
लेखा सद य या यक सद य
( ANIL CHATURVEDI ) ( KUL BHARAT )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 07/ 12 /2015
ट .सी.नायर, व. न.स./T.C. NAIR, Sr. PS
ITA No.138 /Ahd/2011
M/s. Anant Incense Ltd. vs. ITO
Asst.Year - 2002-03
-7-
आदे श क" # त%ल&प अ'े&षत/Copy of the Order forwarded to :
1. अपीलाथ% / The Appellant
2. &'यथ% / The Respondent.
3. संबं4धत आयकर आयु6त / Concerned CIT
4. आयकर आयु6त(अपील) / The CIT(A)-VI, Ahmedabad
5. 7वभागीय & त न4ध, आयकर अपील य अ4धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड; फाईल / Guard file.
आदे शानुसार/ BY ORDER, स'या7पत & त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation .. 3.12.15 (dictation-pad 11- pages attached at the end of this File)
2. Date on which the typed draft is placed before the Dictating Member ...3.12.15
3. Other Member...
4. Date on which the approved draft comes to the Sr.P.S./P.S.................
5. Date on which the fair order is placed before the Dictating Member for pronouncement......
6. Date on which the fair order comes back to the Sr.P.S./P.S....... 7.12.15
7. Date on which the file goes to the Bench Clerk.....................7.12.15
8. Date on which the file goes to the Head Clerk..........................................
9. The date on which the file goes to the Assistant Registrar for signature on the order..........................
10. Date of Despatch of the Order..................