I.T.A. 4486/D/2013
ASSESSMENT YEAR: 2005-06
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `E' NEW DELHI
BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER,
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
I.T.A.No.4486/Del/2013
Asstt.Year: 2005-06
ACIT, vs Mussoorie Dehradun Development Authority,
Circle-2, Transport Nagar, Dehradun.
13-A, Subhash Road, (PAN: AAAAM4651Q)
Dehradun.
(Appellant) (Respondent)
(PAN: AAAAM4651Q)
(Appellant) (Respondent)
Assessee by: Shri K. Sampath, CA
Shri Rajkumar Adv.
Department by : Shri P. Damkanunjna Sr. DR
Date of Hearing: 04.11.2015
Date of pronouncement: 23.11.2015
ORDER
PER CHANDRA MOHAN GARG, JUDICIAL MEMBER
This appeal by the Revenue has been filed against the order of CIT(A)-
Dehradun dated 18.2.2013 in Appeal No. 254/CIT(A)/DDN/2012-13 for
assessment year 2005-06.
2. The grounds raised by the revenue read as follows:-
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ASSESSMENT YEAR: 2005-06
"1. The Ld. CIT(A) has erred in law and on facts in not
appreciating that the assessee submitted revised return on
31.03.2007 revising the balance sheet also in which Schedule B
on `Infrastructure Fund' was reflected for the first time.
2. The Ld. CIT(A) has erred in law and on facts in not
appreciating the fact that the reassessment proceedings were
initiated within the meaning of sub-clause (c) of Explanation 2 of
section 147 of the Income Tax Act, 1961.
3. The Ld.CIT(A) has erred in law and on facts by treating the
proceedings u/s 147 invalid and annulling the assessment. He
failed to appreciate the fact that the assessee had itself
contradicted its assertion that income was diverted to
infrastructure fund by an overriding title, therefore, proceedings
u/s 147 of I.T. Act, 1961, were rightly initiated."
3. We have heard the rival submissions and carefully perused the relevant
material placed on record. The Ld. DR submitted that before the Assessing
Officer, there was reason to believe that income has escaped assessment
pertaining to assessee's claim regarding diversion by overriding title in respect
of "Infrastructure Fund". Ld. DR supported the action of the Assessing Officer
in initiating proceedings and issuing notice u/s 147/148 of the Act and
contended that the ld. CIT(A) granted relief to the assessee without any basis.
Hence, appeal of the revenue may kindly be allowed and the CIT(A) should be
directed to decide the appeal on merits.
4. On the other hand, learned counsel of the assessee strongly supported the
first appellate order and submitted that the assessee's claim that the net accrual
to infrastructure fund represented capital receipt has been rejected by the
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ASSESSMENT YEAR: 2005-06
CIT(A) as well as ITAT in the subsequent assessment year. Ld. Counsel further
pointed out that the provision of section 147 of the Act is having a rider under
sub-section (3), wherein it has been provided that the proceedings under this
provision can be initiated after expiry of four years only if the income escaping
assessment exceeds Rs. one lakh and the same has escaped assessment for such
period by reason of failure on the part of the assessee to "disclose fully and truly
all material facts necessary for his assessment, for that assessment year."
Learned counsel of the assessee further pointed out that in this case in the
original assessment proceedings u/s 143(3) of the Act if the receipts had
originally been shown as capital receiptS and the issue had not been examined
by the Assessing Officer in original assessment, the Assessing Officer's case for
reassessment could be supported by Explanation 1 of section 147 of the Act but
that is not the facts of the present case. Learned counsel of the assessee
vehemently pointed out that the impugned surplus amount, which was shown as
capital receipt in the revised return had originally been shown as revenue receipt
and this change was consciously brought to the notice of the Assessing Officer
during assessment proceedings by way of validly filed revised return, which
was noted by the Assessing Officer and she also raised a query in this regard
which was properly explained by the assessee, thus there was no failure on the
part of the assessee to disclose fully and truly all material facts necessary for his
assessment. Learned counsel of the assessee submitted that in this situation, the
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ASSESSMENT YEAR: 2005-06
ld. CIT(A) rightly quashed the notice and order u/s 1476/148 r/w section 143(3)
of the Act.
5. On careful consideration of above rival submissions, we noted that the
first appellate authority granted relief to the assessee with following
conclusion:-
"1.3 The provision of section 147 shows that re-assessment
proceeding under that section may be initiated before expiry of 6
years from the end of the assessment year if the income escaping
assessment exceeds Rs.1 lakh. In cases where original
assessment u/s 143(3) or section 147 of the I.T. Act was made,
there is, however, a rider. According to this, reassessment
proceeding can be initiated after the expiry of 4 years only if any
income chargeable to tax has escaped assessment for such
assessment year by reason of the failure on the part of the
assessee to "disclose fully and truly all material facts necessary
for his assessment, for that assessment year". In this case, the
original assessment was made u/s 143(3) of the I.T. Act. If the
receipt had originally been shown as capital receipt and the
issue had not been examined by the AO in original assessment,
the AO's case for reassessment could be supported by
Explanation-1 to section 147 of the I.T. Act. But that is not the
case here. The surplus of Rs.2,90,4.2,440/, which was shown as
capital receipt in the revised return had originally been shown as
revenue receipt. This changed claim was consciously brought to
the AO's notice in course of the assessment proceeding by way of
valid revised return. The AO also took note of this. In fact, she
raised a pointed query on this issue and the assessee furnished its
explanation. Thus, there was no failure on the part of the
assessee to disclose fully and truly all material facts necessary
for his assessment and there was conscious application of mind
by the AO while accepting the revised claim. That being the
factual background, the maximum period available for initiating
reassessment 4proceedings u/s 147 of the I.T. Act in this case was
4 years from the end of the assessment year, i.e. upto 31.03.2010.
Consequently, the re-assessment proceeding initiated on
28.06.2011 was beyond the permissible time-limit and the re-
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ASSESSMENT YEAR: 2005-06
assessment made u/s 147 was also invalid."
6. In view of above, we are inclined to hold that when the assessee
continuously submitted his claim during assessment proceedings by way of
revised return, the Assessing Officer raised a query which was relied by the
assessee, the assessee cannot be held guilty of failure on its part in disclosing
fully and truly all material facts necessary for his assessment and there was
proper application of mind by the Assessing Officer during assessment
proceedings and thus we decline to hold the action of Assessing Officer as valid
in initiating impugned proceedings u/s 147/148 of the Act. The CIT(A) was
quite correct in holding that the reassessment proceeding initiated on
26.06.2011 beyond four years' permissible limit and reassessment made u/s 147
of the Act was invalid. We are unable to see any valid and cogent reason to
interfere with the order of the CIT(A) (supra) and we uphold the same.
7. Accordingly, all four grounds of the revenue are dismissed and
resultantly appeal of the department fails.
8. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 23.11.2015.
Sd/- Sd/-
(PRASHANT MAHARISHI) (CHANDRAMOHAN GARG)
ACCOUNTANT MEMBER JUDICIAL MEMBER
DT. 23rd NOVEMBER 2015
`GS'
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Copy forwarded to:-
1. Appellant
2. Respondent
3. C.I.T.(A)
4. C.I.T.
5. DR
By Order
Asstt.Registrar
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