ASHIQ HUSSAIN KEEN AND ORS. V. COMMISSIONER OF INCOME TAX AND ANR.

ITA/8/2006

AI Insights

The case involves Ashiq Hussain Keen, a forest contractor, who appealed against the order of the Income Tax Appellate Tribunal concerning the assessment year 1984-85. The primary issue was the addition of Rs.12,25,000 to the assessee's income, which the Assessing Officer claimed was escaped assessment income. The assessee had initially filed a return under an Amnesty Scheme, which was accepted, but later years' returns included a substantial loan amount that raised doubts about its genuineness. The CIT(A) annulled the assessment order due to improper service of notice under Section 148, a decision later contested by the Income Tax Department before the Tribunal. The Tribunal upheld the CIT(A)'s decision but remanded the matter for a fresh assessment on merits, which led to the High Court's dismissal of the assessee's appeal.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 747412 (HC-JAMMU_AND_KASHMIR)
• Appeal Type: Others
• Pronouncement Date: 17-05-2016
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: ARUNA THAKUR
• Assessee Lawyers: SUBASH DUTT; SURAJ SINGH WAZIR
• Keywords: Amnesty Scheme; Assessment Order; Income escaped assessment; Notice under section 148; Unsecured loans
• Section: 148; 144; 142(1); 143(1)

Judgement Text

"HIGH COURT OF JAMMU AND KASHMIR AT JAMMU ITA No. 8/2006, MP Nos. 3/2006 & 8/2006 Date of Order: 17.05.2016 Ashiq Hussain Keen and ors. Vs. Commissioner of Income Tax & ors. Coram: Hon’ble Mr. Justice Hon’ble Mr. Justice Hon’ble Mr. Justice Hon’ble Mr. Justice Ramalingam Sudhakar Ramalingam Sudhakar Ramalingam Sudhakar Ramalingam Sudhakar, Judge. , Judge. , Judge. , Judge. Hon’ble Mr. Justice B.S.Walia, Judge Hon’ble Mr. Justice B.S.Walia, Judge Hon’ble Mr. Justice B.S.Walia, Judge Hon’ble Mr. Justice B.S.Walia, Judge Appearing Counsel: For the Appellant (s): Mr. Subash Dutt, Advocate with Mr. Suraj Singh Wazir, Advocate. For the Respondent(s): Ms. Aruna Thakur, Advocate. 1. This appeal is filed by the assessee challenging the order of the Tribunal. The assessment year is 1984-85. The appellant- assessee in this case is a Forest Contractor and filed his return of income at an income of Rs.17,040/- on 29.09.1986. The return was mentioned to have been filed under Amnesty Scheme and was accepted under Section 143(1) on 31.03.1987. In the subsequent year, the assessee has filed balance sheet, In that profit and loss account and other details like sundry debtors, creditors, loan advances and list of unsecured loans were shown for the assessment year 1987-88. In it was reflected a loan of Rs.12,25,000/-. The details of the unsecured loans filed in Annexure(c) to the balance sheet reproduced in the assessment order showed that the loans and advances were taken in March, 1984 relevant to the assessment year 1984-85. It is this assessment year, i.e., 1984-85 that is in the issue under appeal. The Assessing Officer questioned the genuiness of creditors. The Assessing Officer called upon the assesses to produce proof of those creditors for examination primarily on the ground that the genuiness of those creditors were doubted. According to the Assessing Officer, the assesse failed to disclose all material facts for the assessment year 1984-85 and the income of Rs.12,25,000/- had escaped assessment. On this premise, notice under Section 148 of the Income Tax Act was issued to the assessee which came to be recorded as “Refused” and therefore the Assessing Officer proceeded on the notice dated 03.03.1994 issued under Section 148 as one that was properly served on the assessee and passed the assessment order. Thereafter, the statutory notices were issued under Section 142(1) / 144 of the Income tax Act. 2. On 08.03.1996, the counsel for the Assessee Mr. Rajinder Kumar, Advocate appeared before the Assessing Officer and filed a reply stating that the returns earlier filed may be treated as the one filed in response to the Notice under Section 148 of the Income Tax Act. In effect there was no explanation for the said amount. 3. Thereafter it is recorded that the Assessee did not cooperate with the Assessing Officer and Assessment order came to be passed and an addition of Rs.12,25,000/- towards income was made on the assessee’s failure to prove genuineness of cash credits as mentioned above. 4. The assessee challenged the order before the CIT(A) primarily on the ground that the assessee had filed a return under Amnesty Scheme, therefore, there is no question of reopening the assessment. Further plea is that the refusal endorsement on the notice tapal is no proper service on the assessee. An explanation is also given contending that he was not available at that point of time. CIT(A) showed indulgence and accepted the plea of the appellant and set aside the assessment order holding that there is no proper and valid service of notice under Section 148 of the Income Tax Act. Consequently, there is no escape of income due to failure on the part of assessee to disclose material facts. CIT(A) annulled the assessment order. 5. The Income Tax Department challenged the same before the Tribunal. Before the Tribunal, the present appellant-assessee and the department contested the issue. The stand of the department is that the Amnesty Scheme at best would apply to the sum of Rs.17040/-. The loan amounting to Rs. 12,25,000/- not disclosed relates to the assessment year 1984-85. Therefore, the department is justified in treating the said amount as income of the assessee which is escaped assessment and the Assessing Officer was justified in issuing notice under Section 148 of the Income Tax Act and the assessment is in order. 6. On the plea of non-service of notice, it was contended that the mode adopted by the Department to serve notice is the prescribed mode. The endorsement of “Refusal” and report of the postal authorities is proof enough to show that proper service was effected on the assessee. Nothing more needs to be done. This found favour with the Tribunal. The plea of the appellant that he was not available and he could not be served, was rejected by Tribunal and right so, because we find that one of the modes of service required by law was effected by the Department. Refusal on the part of the assessee is a clear indication that service of notice was effected. Going further, the Tribunal came to the conclusion that there is no real impact insofar the plea of no service because Advocate Rajinder Kumar appeared before the authority in response to the notice. He has filed a return stating that the return of the year 1984-85 is reiterated. There ends the matter on the technical plea. 7. Insofar as service of notice under Section 148 is concerned, the Tribunal is correct in holding that subsequent participation of the assessee before the assessment order is passed reiterating the return of the year 1984-85 puts the issue to rest. 8. The Tribunal thereafter proceeded to hold that CIT(A) having not considered the matter on merits, has remanded the matter back to the files of CIT(A) with a direction to decide on the addition of Rs.12,25,000/- for the assessment year 1984-85 on its own merits. That remand order, we find no infirmity. 9. In view of the above, we find no reason to interfere with the order passed by the Appellate Tribunal. 10. Appeal is dismissed. (B.S.Walia) ( Ramalingam Sudhakar) Judge Judge Jammu: Sunita. Sunita. Sunita. Sunita. 17.05.2016 "