D.b. Income Tax Appeal v. Shri Manish Ajmera

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANBENCH AT JAIPUR 1.D.B. Income Tax Appeal No.522/08CIT, Jaipur-II, Jaipur vs. Shri Manish Ajmera 2. D.B. Income Tax Appeal No.430/2008CIT, Jaipur-II, Jaipur vs. Shri Manish Ajmera Date of order :: 20.11.2010. HON'BLE THE ACTING CHIEF JUSTICE MR. ARUN MISHRAHON'BLE MR. JUSTICE MOHAMMAD RAFIQMr. R.B. Mathur for appellant. *** (PER HON'BLE MOHAMMAD RAFIQ, J.) The appeals are barred by limitation havingbeen filed with delay of 1138 days. The reasonthat is given in application seeking condonationof delay is that the ITAT, Chandigarh decided theappeal on 14.3.2005, but no intimation was givenby the Departmental Representative to Jaipuroffice of ITAT, Jaipur or concerned CIT,Chandigarh. As per the ITAT Rules, copy of theorder is required to be sent to D.R., ITAT andconcerned CIT(A). No such copy was dispatched toeither of them at Jaipur. But it appears to havebeen sent to their counter parts at Chandigarh,whereas the matter was transferred to Chandigarhbench for certain other reasons, though itactually did not have any jurisdiction over thedispute. We are satisfied that appellant was prevented by sufficient cause in not filingappeal within limitation. Delay in filing the appeals are condoned. Theapplication u/s.5 of the Limitation Act isallowed. The appeals are heard on merits. These two income-tax appeals have been filedu/s.260A of the Income Tax Act, 1961 (for short-the Act) against the common judgement passed bythe learned Income Tax Appellate Tribunal (forshort-ITAT) dated 14.3.2005. Though these appealspertain to two different assessment years i.e.1995-96, 96-97 and 97-98, by this commonjudgement, three appeals filed by the assessee andtwo appeals filed by revenue before the ITAT havebeen decided together; while the appeals of theassessees were allowed, the appeals filed by therevenue were dismissed. It was held that thereopening of the assessment for the assessmentyear 1995-96 and 1997-98 was not valid. Both thematters are therefore heard together and are beingdecided by this common judgement. For the purposeof deciding both the matters, we have taken thefacts of the appeal no.522/08 as basis. The assessee is engaged in lottery businessthrough its proprietary concern M/s. ManishLottery Agencies, Jaipur. He filed returndeclaring income of Rs.2,44,85,735, which wasrevised at Rs.2,44,65,460. Initially income of theassessee was assessed by Assessing Officer u/s.143 (3) at Rs.2,46,12,260 on 23.3.1998. However,subsequently notice u/s.148 was issued on22.3.2002 stating that (i) prize winning ticketamount reflected in the balance sheet on thecurrent asset side not taken to the profit andloss a/c by the assessee, (ii) valuation ofclosing stock at the end of the year was notclaimed in the books of accounts, (iii) advancepurchases and advance sales have not been taken tothe profit and loss a/c. The order u/s.143(3) and148 was passed on 31.3.2003 at Rs.15,12,97,910. The Assessing Officer rejected the books ofaccounts u/s.145(3) of the Income Tax Act andapplied the net profit rate of 3% on the turnoverof Jaipur Branch and Delhi Branch. Appealpreferred by assessee thereagainst before the CIT(A) was dismissed on 27.10.2003, which upheld thereopening of assessment with some reliefs onmerits. The assessee and revenue both filedappeals before the ITAT and ultimately the mattercame to be transferred to ITAT, Chandigarh, whichdecided the appeals by the common order which isimpugned in the present appeals. Mr. R.B. Mathur, learned counsel for theappellant has argued that the Assessing Officercategorically mentioned prize winning tickets thatthe assessee had shown on 31.3.1994 atRs.19.01,533/-andason31.3.1995atRs.15,32,276/- in the balance sheet of “Manish Mr. R.B. Mathur, learned counsel for theappellant has argued that the Assessing Officercategorically mentioned prize winning tickets thatthe assessee had shown on 31.3.1994 atRs.19.01,533/-andason31.3.1995atRs.15,32,276/- in the balance sheet of “Manish Lottery Agency” under `current assets' head,therefore, the assessee received Rs.3,69,257/-against the prize winning ticket which was notdisclosed by him. This income has escapedassessment. The learned ITAT has also committedillegality in not relying the binding judgement ofSupreme Court in Raymond Woolen Mills vs. ITO-236ITR 34 (SC). It failed to appreciate that therewas no discloser of this fact to the AssessingOfficer. It was a clear case of evasion. Theassessment was therefore rightly reopened byrecourse to Section 143(3) read with Section 148of the Act. We have analysed the arguments so made in thelight of the findings recorded by the ITAT. The ITAT in para 17 of its order has held thatthe assessment in the present case was reopenedessentially not because of escapement of income,but because of change of opinion, which was notpermissible even in the amended provisions underSection 147. Moreover, when the assessment wasreopened after the expiry of four years from theend of the assessment year, escapement of incomehas got to be by reason of failure of the assesseeto file return or failure of the assessee todisclose fully and truly all material facts forassessment. In this case, even the AssessingOfficer has not alleged that there was any non-disclosure of material facts by the assessee at the time of original assessment. The sole basis onwhich the assessment has been reopened is thatwhile framing the original assessment order, theAssessing Officer has accepted the system ofaccounting adopted by the assessee as valid,whereas in the re-assessment made u/s.147, thesystem of accounting adopted by the assessee hasnot been considered to be appropriate. It istherefore change of opinion on the basis of whichre-assessment is made. The learned ITAT has reliedon the law laid down by the Supreme Court in CIT &Anr. vs. Foramer France-264 ITR 566 to hold thatreopening of assessment on mere change of opinionespecially when there is no non-disclosure ofmaterial fact by assessee, is not permissible. In our view, the order passed by the ITAT doesnot suffer from any legal infirmity and thereforethe appeals do not raise any question of law. Both the appeals are therefore dismissed. (MOHAMMAD RAFIQ), J. (ARUN MISHRA),ACTING CJ. RS/-