Surja Sekhar Ganguly v. Income Tax Officer, Ward 17(3), Kolkata
[Citation -2016-LL-1019-110]

Citation 2016-LL-1019-110
Appellant Name Surja Sekhar Ganguly
Respondent Name Income Tax Officer, Ward 17(3), Kolkata
Court ITAT-Kolkata
Relevant Act Income-tax
Date of Order 19/10/2016
Assessment Year 2005-06
Judgment View Judgment
Keyword Tags reassessment proceedings • computation of income • validity of notice • change of opinion • foreign currency • indian currency
Bot Summary: The assessee filed his return of income for the assessment year 2005-06 on 31-03-2006 declaring total income at Rs.4,44,342/-. Later on, the Assessing Officer found that the assessee has claimed to have been received the following awards: In Indian Currency Rs. 3,82,300/- In Foreign currency Rs. 2,76,438/- Assessing officer noted that out of the above, the assessee has claimed exemption U/s 10 the whole of Rs. 3,82,300/- as per above and Rs. 1,38,219/- as expenses out of above. 147 of the Act reads as under:- 2 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly Surya Sekhar Ganguly PAN : AGDPG0S24E Asst Year: 2005-06 18.07.2007 It appears from the record that the assessee has submitted return of income for the above Asst. On perusal of the assessment records, it is seen that the assessee has received the following Awards: In Indian Currency Rs. 3,82,300/- In Foreign Currency Rs. 2,76,438/- Out of the above the assessee has claimed exemption u/s. Since no materials are available in the records, the assessee's claim of exemption and expenses as aforesaid are not substantiated, I have reason to believe that income chargeable to tax has escaped assessment for the Asst. The assessee has already submitted the details of income from his sports activity by way of filing return of income and disclosing them in the return of income. AR of the assessee has relied on the following judgments:- a. CIT Vs.TCP Ltd 323 ITR 346(Mad) b. CIT Vs. Qatalys Software Technologies Ltd 308 ITR 249 c. CESC Ltd Vs. DCIT 263 ITR 402(Cal) d. Trustees of HEH, the Nizam s Supplementary Trust Vs.CIT 242 ITR 381(SC), and e. ITA No. 756/Kol/2013 A.Y 2003-04 the order dated 15-01-2016, the findings of this judgment are identical to the assessees case under consideration, which is narrated below: Whether on the facts and circumstances of the proceedings initiated by the AO u/s.


IN INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C , KOLKATA (Before Shri N.V.Vasudevan, J.M. &Dr.A.L.Saini, A.M.) ITA Nos. 275 & 276 /Kol/2016 : A.Ys : 2005-06 & 2006-07 Surja Sekhar Ganguly Vs Income Tax Officer, Ward C/o Shri S.N Ghosh & 17(3), Central Revenue Associates,Advocates, Seven Building, 169 AJC Bose Road, Brothers Lodge, P.O Kolkata-700014. Buroshibtala, P.S Chinsurah, Dist:Hooghly, Pin 712105. PAN: AGDPG0524E (APPELLANT) (RESPONDENT) Assessee by : Shri: Somnath Ghosh, Advocate, ld.AR Department by: Shri Rajat Kumar Kureel, JCIT, ld.DR Date of Hearing : 20-09-2016 Date of Pronouncement :-19/10/ 2016 ORDER Per Dr. A.L.Saini, A.M.: above mentioned captioned two appeals filed by same assessee pertaining to assessment years 2005-06 and 2006-07, are directed against separate orders passed by Commissioner of Income-tax (Appeals)-16, Kolkata in Appeal Nos. 31/CIT(A)-16/Kol/2014-15/W-53(4) and 32/CIT(A)-16/Kol/2014- 15/W-53(4), both dated 14-01-2016, which in turn arise out of orders passed by Assessing Officer u/s. 144/147 of Income-Tax Act, 1961 (in short, Act ),dated 17-12-2008. 1 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly 2. above mentioned two appeals (ITA Nos. 275 & 276 /Kol/2016 A.Ys 2005-06 & 2006-07 ) relate to same assessee for different assessment years, involve common issues, therefore, these have been clubbed and heard together and consolidated order is being passed for sake of convenience and brevity. 3. facts of case are stated in brief. assessee`s appeal in ITA No. 275 /Kol/2016 A.Ys, 2005-06 is taken as lead case. assessee filed his return of income for assessment year 2005-06 on 31-03-2006 declaring total income at Rs.4,44,342/-. return was processed by department U/s 143(1) of Act. Later on, Assessing Officer found that assessee has claimed to have been received following awards: (A) In Indian Currency Rs. 3,82,300/- (B) In Foreign currency Rs. 2,76,438/- Assessing officer noted that out of above, assessee has claimed exemption U/s 10 (17A) whole of Rs. 3,82,300/- as per (A) above and Rs. 1,38,219/- as expenses out of (B) above. AO further noted that assessee neither filed any supporting evidences for exemption U/s 10 (17A) nor any details of expenses out of award in foreign currency. Consequently, there was reason to believe that income has escaped assessment. Accordingly, notice u/s. 148 of Act dated 18-07- 2007 was issued and duly served upon assessee on 24-07-2007 in reference to which neither any return nor any written submission was filed. reasons recorded by AO u/s. 147 of Act reads as under:- 2 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly Surya Sekhar Ganguly PAN : AGDPG0S24E Asst Year: 2005-06 18.07.2007 It appears from record that assessee has submitted return of income for above Asst. Year on 31-03-2006 disclosing total income of Rs.4,44,340/-which was processed u/s.143(1) on 11-07-2006. On perusal of assessment records, it is seen that assessee has received following Awards: (A) In Indian Currency Rs. 3,82,300/- (B) In Foreign Currency Rs. 2,76,438/- Out of above assessee has claimed exemption u/s. 10(17A) whole of Rs, 3,82,300/- as per" A" above and Rs. 1,38,219/- as expenses out of "B" above. records further reflects that no supporting evidences have been filed in this regard neither for exemption u/s.10(17 A) nor any details of expenses out out of award in foreign currency as mentioned above. Since no materials are available in records, assessee's claim of exemption and expenses as aforesaid are not substantiated, I have reason to believe that income chargeable to tax has escaped assessment for Asst. Year in terms of explanation 2, Clause C below Sec. 147. Issue Notice u/s.148. Based on reasons recorded, AO has completed assessment U/s 144/147 of Act making additions in respect of income escaped assessment, as explained above, on dated 17/12/2008. 3 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly 4. Aggrieved from order of Assessing Officer, assessee filed appeal before Commissioner of Income-tax (Appeals)-16, Kolkata, who also confirmed action of Assessing Officer observing following:- 3. appeal is instituted against order u/s. 144/147 passed by AO. AO passed order as no documents were filed during course of assessment proceedings. assessee filed written submission, and remand report was sent to AO. AO has mentioned in remand report dt. 12.03.2014, that no documents were filed despite opportunities given time and again. Hence, appeal of assessee is dismissed and addition of AO is confirmed. 5. Not being satisfied with order of Commissioner of Income-tax (Appeals) assessee is in further appeal before us and has taken following grounds of appeal:- 1. FOR THAT Ld.Commissioner of Income Tax (Appeals)-16. Kolkata failed to appreciate that none of conditions precedent existed and/or have been complied with and/or fulfilled by Ld. Income Tax Officer. Ward 17(3), Kolkata for his alleged assumption of jurisdiction u/s. 147 of Income Tax Act, 1961 and specious order dated 17-12-2008 passed u/s. 144/147 of Act in pursuance to impugned notice dated 18-07-2007 issued u/s. 148 of Act is therefore ab initio void, ultra vires and ex-facie null in law. 2. FOR THAT Ld. Commissioner of Income Tax (Appeals)-16.Kolkata fell in error in upholding purported addition of Rs. 3.82.300/- resorted to by Ld. Income Tax Officer. Ward 17(3). Kolkata by disallowing claim of exemption made u/s. 10(17 A) of Act on extraneous parameters not germane to issue and impugned finding on that account is wholly illegal, invalid and infirm in law. 3. FOR THAT Ld. Commissioner of Income Tax (Appeals)-16. Kolkata was remiss in upholding impugned addition in amount of Rs.1.38.219/- made by Ld. Income Tax Officer. Ward 17(3). Kolkata without considering factual matrix of instant case and specious 4 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly finding on basis of such illegitimate assumption is wholly arbitrary. unreasonable and perverse. 4. FOR THAT Ld. Commissioner of Income Tax (Appeals)-16.Kolkata acted unlawfully in upholding impugned addition of Rs. 1.38.219/- speciously made by Ld. Income Tax Officer. Ward 17(3). Kolkata on tenuous pretext and purported conclusion reached on that behalf is therefore completely unfounded, unjustified and untenable in law. 6. In first ground of appeal assessee has challenged validity of notice issued u/s. 147/148 of Act. ld.AR for assessee submitted that notice issued u/s. 147/148 of Act is not valid notice. It is merely change of opinion. AO did not find any tangible material to establish/show that income has escaped from assessment. assessee has already submitted details of income from his sports activity by way of filing return of income and disclosing them in return of income. There is no any new material found by AO, to re-open assessment u/s. 148 of Act. In support of contentions, ld.AR of assessee has relied on following judgments:- a. CIT Vs.TCP Ltd 323 ITR 346(Mad) b. CIT Vs. Qatalys Software Technologies Ltd 308 ITR 249 c. CESC Ltd Vs. DCIT 263 ITR 402(Cal) d. Trustees of HEH, Nizam s Supplementary Trust Vs.CIT 242 ITR 381(SC), and e. ITA No. 756/Kol/2013 A.Y 2003-04 order dated 15-01-2016, findings of this judgment are identical to assessee`s case under consideration, which is narrated below: " Whether on facts and circumstances of proceedings initiated by AO u/s. 147 is liable to be confirmed or quashed when there was no 5 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly fresh material available with AO and assessment had been completed originally u/s 143( I )." Third Member agreed with view taken by learned Judicial Member relying mainly on decision of Hon 'ble Supreme Court in case of Kelvinator India Ltd. (supra) and Eicher Ltd. 320 ITR 561. It was held by Third Member that section 147 applies both to section 143(1) as well as section 143(3) and, therefore, except to extent that reassessment notice issued u/s 148 in case where the-original assessment was' made u/s 143(1) cannot be challenged on ground of mere change of opinion, still it is open to assessee to challenge notice on the' ground that there is no reason to believe that income chargeable to tax has escaped assessment. As regards decision of Hon'ble Supreme Court in case of Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) cited by Revenue and relied upon by Accountant Member, Third Member held that same was applicable in cases where return was processed u/s. 143(1) but later on notice was issued u/s.148 and assessee challenges notice on ground that it is prompted by mere change of opinion. Third Member then referred to decision of Hon 'ble Supreme Court in case of CIT vs. Kelvinator of India (supra) wherein it was held that there should be "tangible material" to come to conclusion that income had escaped assessment. Relying on said decision, it was held by Third Member that while resorting to section 147 even in case where only intimation had been issued u/s 143(1 )( a),it is essential that AO should have before him tangible material justifying his reason to believe that income had escaped assessment. Since there was no such tangible material before AO from which he could entertain belief that income of assessee chargeable to tax had escaped assessment, Third Member held that reassessment proceedings initiated by AO were liable to be quashed on ground that there was no tangible material before AO even though assessment was completed originally u/s 143(1). In our opinion, Third Member decision of Tribunal in case of Telco Dadaji Dhackjee Ltd. (supra) is squarely applicable in present case and respectfully following same, we hold that initiation of reassessment proceedings by AO itself was bad in law and reassessment completed in pursuance thereof is liable to be quashed being invalid. We order accordingly and allow ground No.1 of assessee s appeal. 6 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly 8. We are of view that ratio laid down is equally applicable to facts of present case. We, therefore hold that proceedings u/s. 147 of Act is not validly initiated in present case. Therefore reassessment completed in pursuance thereof is quashed and held to be invalid. In view of above conclusion on preliminary issue other grounds challenging additions made on merits are not taken into consideration. 9. In result, appeal of assessee is allowed. 7. ld.DR for revenue primarily has reiterated stand as taken by Commissioner of Income-tax (Appeals), which we have already noted in our earlier para of this order, and is not being repeated for sake of brevity. 8. Having heard rival submissions and perused material available on record, we are of view that there is merit in submissions of assessee, as propositions canvassed by ld.AR for assessee are supported by precedent case law cited and facts narrated above. It is very much clear that there is no tangible material in this case to reopen assessment u/s.147. It is merely change of opinion. We find that information relating to award was mentioned in computation of income and income-tax return as filed by assessee. We, therefore, hold that proceeding u/s.147 of Act is not valid. Therefore, re- opening of assessment for both assessment years under consideration are hereby quashed and held to be invalid. 7 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly 9. In result, both appeals( ITA Nos. 275 & 276 /Kol/2016) filed by assessee for AYs. 2005-06 and 2006-07 are allowed. Order Pronounced in Open Court on 19-10-2016 Sd/- Sd/- (N.V.Vasudevan) (Dr. A.L.Saini) Judicial Member Accountant Member Dated:19/10/2016 *PRADIP (Sr.PS) Copy of order forwarded to: 1. Revenue 2 Assessee 3. CIT-I, 4. CIT(A)-I, 5. DR, Kolkata Benches, Kolkata True Copy, By order, sAsst. Registrar, ITAT, Kolkata Benches 8 ITA Nos.275,276/Kol/2016 Surja Sekhar Ganguly Surja Sekhar Ganguly v. Income Tax Officer, Ward 17(3), Kolkata
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