TMI Blog2021 (7) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment. Hon'ble apex court s landmark decision in Chainrup Sampatram [ 1953 (10) TMI 2 - SUPREME COURT] held long back that while anticipated loss is thus taken into account, anticipated profit is not brought into the account, as no prudent trader would care to show increased profits before its realisation as per the conservative spectrum of accounting. We therefore hold that the Assessing Officer s re-opening reasoning itself does not hold ground in light of all these facts and circumstances. We find no substance in the Revenue s stand as per tribunal s co-ordinate bench s decision in Joginder Sing [ 2015 (6) TMI 1217 - ITAT AMRITSAR] - We adopt the foregoing detailed reasoning mutatismutandis to accept assessee s former substantive grievance challenging validity of the impugned re-opening. The same stands quashed. - I.T.A. No. 247/HYD/2019 - - - Dated:- 2-7-2021 - Shri S.S.Godara, Judicial Member And Shri Laxmi Prasad Sahu, Accountant Member For the Assessee : Shri P.Murali Mohana Rao, AR For the Revenue : Shri Sunil Kumar Pandey, DR ORDER PER S.S.GODARA, J.M. : This assessee s appeal for AY.2009-10 arises from the CIT(A)-1, Guntur s or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... increased profits before its realisation as per the conservative spectrum of accounting. We therefore hold that the Assessing Officer s re-opening reasoning itself does not hold ground in light of all these facts and circumstances. 5. The Revenue vehemently contended at this stage that the instant issue as to whether the Assessing Officer to take up other issue(s) than those specified in the re-opening is no more res judicata as per Section 147, Explanation-3 inserted by the Finance Act (2) 2009 with retrospective effect from 01-04-1989. 6. We have heard rival contentions regarding the instant latter aspect pertaining to the legality of the impugned reassessment opening. We find no substance in the Revenue s stand as per tribunal s co-ordinate bench s decision in Joginder Singh Vs. ITO, ITA No.222/Asr/2014, dt.11-06-2015: 2. We consider it appropriate to hear this appeal, under proviso to Rule 11 of the Appellate Tribunal Rules 1963, on the following ground: When addition made by the Assessing Officer, on the peculiar facts and circumstances of this case and on the basis of reasons recorded for reopening the assessment, are deleted, the CIT(A) ought also to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther, the continuing partners also settled the loan account with the Citizen Urban Co-operative Bank Limited, Jalandhar wherein repayment of loan of ₹ 40,90,630/- and interest of ₹ 40,92,568/- was made during the financial year 2004-05. It was seen that the payment made as above was much more than the income declared by the assessee. Therefore, my predecessor after recording the reasons and after obtaining necessary permission from the then Addl. CIT, Range III, Jalandhar reopened the assessment in this case by issue of Notice u/s. 148 of I.T. Act on 29.3.2012, which was served on the assessee on 29.03.2012. In response to this notice, the assessee himself attended before my predecessor on 24.4.2012 and filed a letter along with a copy of the return of his income. It was further stated by the assessee before the then AO that his return already filed on 11.1.2006 may be treated to have been filed in response to notice u/s.148. 5. In the assessment framed as a result of the reassessment proceedings, the Assessing Officer did make additions in respect of the reasons for which assessment was reopened. The matter travelled in appeal before the CIT(A) and one of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . City Plaza or by its continuing partners were made out of the sale proceeds of the commercial building known as City Plaza. Not only this, it has further been stated that the payments to the outgoing partners as well as the payment to M/s. Citizen Urban Co-operative Bank towards term loan and interest thereon has been made directly by the purchaser of property known as City Plaza Building i.e. by Sh. Prem Kumar Bhagat. The necessary evidence with regard to the payment of bank loan and interest thereon has also been brought on record. The payments to the outgoing partners were also found to be made by the purchaser of the property. The details of the payments to outgoing partners are given in the sale deed itself which in fact have been made during F.Y. 2005-06. The post dated cheques were also not encashed by the outgoing partners and they received the payment in respect of their share directly from the purchaser of the property i.e. from Shri Prem Kumar Bhagat. These facts and also submissions made by the assessee with regard to the payment to outgoing partners and bank have also not been controverted by the Assessing Officer. In these facts and in the circumstances of the case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) holds that the Assessing Officer was having plenty of reasons to issue notice under section 148 of the Act . He does so on the basis that (a) the assessee had not disclosed the facts which are now being disclosed at the time of appellate proceedings , and that (b) the cheques issued by Shri Surinder Mohan Singh (i.e. a person other than the assessee) to the outgoing partners were found to be drawn on an account which was not in his name or in the name of the partnership firm . These things were, in our considered view, wholly irrelevant inasmuch as these things have nothing to do with the reasons of reopening the assessment as noted in the reassessment order itself. 10. In any event, it was not the revenue s case that the assessee failed to disclose what he ought to have disclosed under the law. Such a non disclosure, therefore, cannot be a reason enough to uphold the validity of reassessment proceedings. Similarly, the cheques to the outgoing partner of the firm, in which assessee is a partner, having been issued by an account other than the account of the assessee or of the partnership firm cannot be a reason enough to come to the conclusion that income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which reassessment had been initiated, that the assessing officer can make additions on any other ground on the basis of which income may have escaped assessment. The SLP filed by the assessee, against the view so expressed by Their Lordships, has been dismissed by Hon ble Supreme Court on 19.08.2011. 13. The view so taken by Their Lordships is the law in the jurisdiction of Hon ble Punjab Haryana High Court even though other Hon ble High Courts have taken a contrary view. The judicial precedents from other Hon ble High Courts, as available in the public domain and even after taking note of the views so expressed by Their Lordships, have taken a contrary view of the matter, such as in the cases of CIT vs Mohmed Juned Dadani [(2013) 258 CTR 268 (Gujrat)], CIT VS Jet Airways [(2011) 331 ITR 236 (Bombay)], Ranbaxy Laboratories Limited Vs CIT [(2011)336 ITR 136 (Delhi)], ACIT Vs Major Deepak Mehta [(2012) 344 ITR 641 (Chattisgarh)]. All these decisions were dealing with the law as it stood after the insertion of Explanation 3 to Section 147 but then the views so expressed being contrary to the law laid down by Hon ble jurisdictional High Courts, these decisions cannot in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer is subject matter of legal scrutiny by the appellate authorities in the course of the same appellate proceedings as against the reassessment order. The scheme of law, as laid down by the Hon ble Supreme Court in GKN Driveshaft s case, thus provides for dual adjudication by the Assessing Officer on the correctness of the reasons recorded for reopening the assessment- one at the stage of dealing with the objections of the assessee prior to proceeding with the reassessment proceedings, and the other at the point of time when, during the reassessment proceedings, the Assessing Officer has to take a call on additions to be made in respect of these reasons. That is where there is a paradigm shift in the scheme of things post GKN Drivershaft decision. In a situation in which, during the reassessment proceedings, the Assessing Officer finds these reasons to be so incorrect that he concludes that no income has escaped the assessment and the additions on that count are unwarranted, the same should have been the position at the stage of adjudicating on the correctness of the reasons recorded in the pre-reassessment proceedings. In the latter proceedings also, the assessee has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s logical conclusions and, based on these uncontroverted findings, quash the reassessment itself. What held good for deleting the additions on the basis of the reasons recorded the assessment, on the fact of this case and in our humble understanding, was good enough to hold the reasons for reopening the assessment to be incorrect as well. We are unable to see any legally sustainable reasons to come to different conclusions. In our considered view, therefore, the CIT(A) ought to have quashed the reassessment as well. 20. In view of these discussions, and bearing in mind entirety of the case, we hold that the CIT(A) ought to have, on the peculiar facts and circumstances of the case, quashed the reassessment proceedings as well. We, therefore, quash the reassessment proceedings. As reassessment itself is quashed as above, nothing else survives for adjudication . 7. We adopt the foregoing detailed reasoning mutatismutandis to accept assessee s former substantive grievance challenging validity of the impugned re-opening. The same stands quashed. All other pleadings on merits are rendered infructuous. 8. We lastly acknowledge that although the instant lis is being decide ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
