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ACIT, Circle-2, 13-A, Subhash Road, Dehradun. vs Mussoorie Dehradun Development Authority, Transport Nagar, Dehradun.
November, 24th 2015
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:-




                                       1
I.T.A. 4486/D/2013
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

                                           2
I.T.A. 4486/D/2013
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



                                         3
I.T.A. 4486/D/2013
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-




                                        4
I.T.A. 4486/D/2013
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'

                                         5
I.T.A. 4486/D/2013
ASSESSMENT YEAR: 2005-06




Copy forwarded to:-

   1.   Appellant
   2.   Respondent
   3.   C.I.T.(A)
   4.   C.I.T.
   5.   DR
                               By Order




                               Asstt.Registrar




                           6

 
 
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