MAANRAJ TRADING PRIVATE LIMITED Vs. DEPUTY COMMISSIONER OF INCOME TAX
INCOME TAX APPELLATE TRIBUNAL
Maanraj Trading Private Limited
DEPUTY COMMISSIONER OF INCOME TAX
Click here to view full judgement.
D.KARUNAKARA RAO,AM. -
(1.) THIS is an appeal by the assessee against the order of the CIT(A) -XXVI, Mumbai dated 17.02.2009. The assessee raised various grounds on an additional ground in the appeal. One of the grounds raised by the
assessee relates to the validity of the reassessment passed u/s.143(3) r.w.s. 147 of the Income Tax Act,
1961. It is the legal contention of the assessee that the reassessment, which is made beyond the period of four years when there is no defect of disclosure from the assessee's side, is not valid.
(2.) IN the regard, at the very outset, the Ld. Counsel for the assessee mentioned before us that the assessment made u/s.143(3) of the Act on 29.03.2001 was reopened on 31.03.2005 for three reasons
and the said reasons are placed at page 12 of the paper book. The Ld. Counsel brought out each of the
three reasons and mentioned that the said reasons are not sustainable legally for the following reasons.
The assessment is reopened either on the basis of the information already furnished by the assessee along
with the return of income or during the regular assessment proceedings, or there is no escapement of
income considering the similarity of tax rates (reason 2). Further, it is the submission of the Ld. Counsel
that the Assessing Officer (A.O.) attended to this issue during the regular assessment proceedings and
completed assessment u/s. 143(3) without making any additions. Referring to each of the issues recorded
in the reasons, the Ld. Counsel brought our attention to the first issue relating to the application of the
provision of section 2(22)(e) of the Act to the sum of Rs.22.63 crores. In this regard, referring to the said
reason, the Ld. Counsel mentioned that the A.O. relied/referred to the Form 3CD report, which was filed
by the assessee along with the return of income. It was available to the A.O. at the time of regular
assessment. The Ld. Counsel mentioned that necessary opinion was found by the A.O. on the applicability
of the provision of section 2(22)(e) of the Act to the said sum and opined against making addition. In this
regard, the Ld. Counsel brought our attention to the entries about the shareholding of the Director's on
the sister concerns and the details on substantial interest therein. The Ld. Counsel brought our attention
to pages 52 and 54 of the paper book (point no. 1 and point no. 9) to support the same. A.O. did not
make addition only after examining the applicability of the said provision relating to the deemed dividend
to the said sum. Further, taking us through the orders of the A.O., the Ld. Counsel mentioned that there is
no extraneous or tangible material gathered by the A.O. which worked as a "live wire" for facilitating
reopening of the assessment validly. Considering the above, the Ld. Counsel mentioned that it is the case
of "change of opinion" and there is no failure on part of the assessee to disclose any material/or facts
necessary for making assessment in the return of income or in the regular assessment. Therefore on this
reasoning, the first issue relating to section 2(22)(e) of the Act is misconceived. Therefore, it is the prayer
of the assessee's counsel that the reassessment made on this issue should be dismissed.
(3.) ON the other hand, Smt. S. Padmaja, the ld. CIT -DR for the Revenue relied heavily on the reassessment order of the A.O. and the ld. CIT(A) and mentioned that the reassessment should be
upheld. She relied on the Allahabad High Court judgment in the case of EMA India Ltd. vs. ACIT (2009)
226 CTR 659 (All) for the preposition that valid reassessment made by the A.O. is valid when there is no application of mind by the A.O. during the making of the regular assessment.
We have heard both the parties on this issue and perused the orders of the Revenue Authorities and the material placed before us. After assimilating the above referred facts and arguments, we find that the
arguments made out by the Ld. Counsel deserve merit on this issue. It is undisputed fact that the
material/or documents filed by the assessee is the source of information for reopening by the A.O. on this
issue relating to the provisions of section 2(22)(e) of the Act. There is no tangible material gathered by
the A.O. which worked as a live wire for the A.O. to assume jurisdiction validly. We also find that the A.O.
already enquired into this issue during the making of the regular assessment. Therefore, in our opinion,
the reassessment made by the A.O. on the reasons recorded invoking the provisions of section 2(22)(e) of
the Act cannot be upheld. This part of the ground is allowed.;
Copyright © Regent Computronics Pvt.Ltd.