ASSISTANT COMMISSIONER OF INCOME TAX-1 Vs. PANKAJ AGARWAL, HUF
LAWS(IT)-2014-7-34
INCOME TAX APPELLATE TRIBUNAL
Decided on July 10,2014

Assistant Commissioner Of Income Tax -1 Appellant
VERSUS
Pankaj Agarwal, Huf Respondents

JUDGEMENT

Sunil Kumar Yadav, Member (J) - (1.) THIS appeal is preferred by the Revenue against the order of the ld. CIT(A) on a solitary ground that the ld. CIT(A) has erred in law and on facts in annulling assessment under section 144 read with 147 of the Income -tax Act, 1961 (hereinafter called in short "the Act") without appreciating the facts brought on record by the Assessing Officer before initiating proceedings under section 147 of the Act. Therefore, the order of the ld. CIT(A) needs to be quashed and the order passed by the Assessing Officer be restored. The facts in brief culled out from the orders of the lower authorities are that during the course of assessment proceedings in the assessee's own case for assessment year 2005 -06, the Assessing Officer had issued a letter to the assessee asking it to furnish details/explanations for as many as 26 queries. Some of these queries were in respect of purchase and sale of shares pertained to the period covered in assessment year 2002 -03. The assessee has filed a reply before the Assessing Officer on 30.11.2007 wherein assessee had submitted most of the details. With regard to the details for purchase and sale of shares pertaining to assessment year 2002 -03, the assessee in response to point No. 19 stated that some of the information regarding purchase and sale of shares have already been enclosed in the return for assessment year 2002 -03 and for other details atleast 15 to 20 days time sought for compilation. The Assessing Officer completed the assessment under section 143(3) of the Act for assessment year 2005 -06 on 30.11.2007. The Assessing Officer has also initiated proceedings under section 147 of the Act against the assessee for assessment year 2002 -03 as early as on 30.12.2007 after recording the reasons. In response to notice under section 148 of the Act, assessee vide letter dated 14.2.2008 has stated that the return filed in original on 9.8.2002 may be treated as return filed in response to notice under section 148 of the Act. Assessee also sought copy of the reasons recorded by the Assessing Officer which were supplied to the assessee. Assessee filed objection to the reasons recorded, which were rejected by the Assessing Officer and the assessee was duly informed. The Assessing Officer sought certain information, but it was not complied with by the assessee despite various opportunities afforded to it. Having narrated various opportunities afforded to the assessee, the Assessing Officer proceeded with the matter and has framed the assessment under section 147/144 of the Act at an income of Rs. 43,07,530/ -.
(2.) BEFORE the ld. CIT(A), assessee has mainly challenged the validity of reopening of assessment, besides assailing the assessment order on merit. The ld. CIT(A) annulled the assessment having observed that the Assessing Officer did not have any material in his possession which could justify the formation of belief for initiating proceedings under section 147 of the Act for assessment year 2002 -03. The ld. CIT(A) has not adjudicated the issue raised before him on merit. The Revenue has preferred an appeal before the Tribunal assailing the order of the ld. CIT(A) on the ground that he has recorded certain incorrect facts in his order before concluding that the Assessing Officer did not have any material in his possession which could justify formation of belief for initiating proceedings under section 147/148 of the Act. The ld. CIT(A) in para 6.5 of his order has observed that the return for assessment year 2002 -03 was not on record when notice under section 148 of the Act was issued, whereas the Assessing Officer, while forming a belief that income chargeable to tax has escaped assessment, has recorded in the reasons that return of income for assessment year 2002 -03 was filed on 29.8.2002 declaring total income at Rs. 1,25,880/ -, which was processed under section 143(1) of the Act. The Assessing Officer has also noted in the reasons recorded the computation of capital gains as declared by the assessee in its return of income. The ld. D.R. has further invited our attention to para 6.6 of the order of the ld. CIT(A) with the submission that the ld. CIT(A) has recorded that Assessing Officer has issued a notice under section 148 of the Act even without looking to the return of income of the assessee, whereas in the reasons recorded, the Assessing Officer has specifically mentioned the figures found in the return of income of the assessee. The ld. D.R. has further contended that the original return was processed under section 143(1) of the Act, therefore, the Assessing Officer has no occasion to apply his mind to the claims raised by the assessee in its return of income.
(3.) DURING the course of assessment proceedings for assessment year 2005 -06, certain information were surfaced with regard to the transaction of shares pertaining to assessment year 2002 -03. The Assessing Officer has examined the evidence or the information collected during the course of assessment for assessment year 2005 -06 and applied his mind to the information surfaced in the course of assessment proceedings for assessment year 2005 -06 and returns filed by the assessee and thereafter formed a belief that income chargeable to tax has escaped assessment, before issuing notice under section 148 of the Act. During the course of assessment proceedings, the assessee was asked to furnish certain information, but he did not comply with it and all the time he sought adjournment for one reason or the other. Ultimately, the Assessing Officer had no option but to frame the assessment under section 147 read with 144 of the Act, but the ld. CIT(A) without appreciating the facts, has annulled the assessment after holding that the Assessing Officer did not have any material in possession to justify the formation of belief in initiating proceedings under section 147/148 of the Act. The ld. D.R. has also distinguished the case laws referred to by the ld. CIT(A), with the submission that in those cases, the original assessment was framed under section 143(3) of the Act.;


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.