M/s. Charan & J.K. finance Co, Jalandhar V. The Income tax Officer, Jalandhar

CO 24/ASR/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7333 (ITAT-AMRITSAR)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-06-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 13-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: BHAGAT
• Keywords: Assessment record
• Section: 142(1); 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO. 367(ASR)/2011 ASSESSMENT YEAR:2005-06 PAN:AAEFC4254E INCOME TAX OFFICER, VS. M/S. CHARAN & J.K. FINANCE COMPANY, NAKODAR. NURMAHAL ROAD, NAKODARL. (APPELLANT) (RESPONDENT) C.O. NO.24(ASR)/2011 (ARISING OUT OF ITA NO.367(ASR)/2011) ASSESSMENT YEAR : 2005-06 M/S. CHARAN & J.K. FINANCE COMPANY VS. THE INCOME TAX OFFICER, NAKODAR, DISTT. JALANDHAR. NAKODAR. (APPELLANT) (RESPONDENT) DEPARTMENT BY:SH. TARSEM LAL, DR ASSESSEE BY:SH. M.R. BHAGAT, DR DATE OF HEARING :04/06/2012 DATE OF PRONOUNCEMENT:06/06/2012 ORDER PER BENCH: THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTE D AGAINST THE ORDER OF THE CIT(A), JALANDHAR, DATED 24.03.2011 FOR THE ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUNDS: ITA NO.367(ASR)/2011 C.O. NO.24(ASR)/2011 2 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN CANCELING THE ASSESSMENT PASSED U/S 14 4 OF THE INCOME TAX ACT, 1961 WITHOUT ADJUDICATING THE CASE ON ITS MERITS. 2. WHILE CANCELING THE ASSESSMENT, THE LD. CIT(A) H AS FAILED TO APPRECIATE THAT IN THE ABSENCE OF ANY NEW ADDRESS O F THE ASSESSEE, SERVICE WAS RIGHTLY EFFECTED THROUGH AFFI XTURE ON THE LAST GIVEN ADDRESS AND HAS FURTHER FAILED TO APPREC IATE THAT THE DEMAND NOTICE AND CHALLAN ALONGWITH COPY OF ASSESSM ENT ORDER ETC. WERE ALSO SERVED THROUGH AFFIXTURE AND THE SAM E WERE DULY ACKNOWLEDGED BY THE ASSESSEE. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. IN THE C.O. THE ASSESSEE HAS RAISED FOLLOWING G ROUNDS OF APPEAL: 1. THE LD. AO ERRED IN MAKING ADDITION OF INITIAL CAPITAL OF THE PARTNERS OF RS.15,50,000/- WITHOUT APPRECIATING THE FACT THAT BUSINESS OF THE FIRM HAD JUST STARTED AND THE PARTNERS HAD T HE CAPACITY TO INTRODUCE THAT CAPITAL AND FURTHER ERRED IN DISALLO WING INTEREST OF RS.62,416/- PAID TO THE PARTNER AS PER THE TERMS AN D CONDITIONS OF THE PARTNERSHIP DEED. 2. THE LD. AO ERRED IN MAKING ADDITION OF RS.2,65,0 00/- OF LOAN RAISED FROM 18 PERSONS WITHOUT MAKING ANY ENQUIRY A BOUT THEIR CREDITWORTHINESS AND FURTHER ERRED BY DISALLOWING I NTEREST OF RS.11,940/- PAID ON THOSE CREDITS. IT IS PRAYED THA T THE ADDITION MAY BE CANCELLED. 3. THE LD. AO ERRED IN MAKING ADDITION OUT OF SALAR Y ACCOUNT OF RS.60,000/- BUSINESS PROMOTION OF RS.5,000, CONVEYA NCE EXPENSES OF RS.6,000/-, DIESEL EXPENSES OF RS.2,000/- AND OPENI NG CEREMONY EXPENSES OF RS.2,000/- WITHOUT MAKING ANY ENQUIRY A ND IGNORING THE NEED OF THE BUSINESS FOR INCURRING THOSE EXPENSES. IT IS PRAYED THAT ADDITION OF RS.75,000/- MAY BE DELETED. 2. THE FACTS NARRATED BY THE REVENUE ARE NOT DISPUT ED BY BOTH THE PARTIES. THEREFORE, THERE IS NO NEED TO REPEAT THE SAME FOR THE SAKE OF CONVENIENCE. ITA NO.367(ASR)/2011 C.O. NO.24(ASR)/2011 3 3. AT THE TIME OF HEARING, THE LD. DR RELIED UPON T HE ORDER PASSED BY THE AO AND STATED THAT THE AO HAS RIGHTLY COMPLETED ASS ESSMENT U/S 144 OF THE ACT. HE FURTHER STATED THAT BEFORE COMPLETION OF TH E ASSESSMENT IN DISPUTE, THE AO ISSUED NOTICE UNDER SECTION 142(1) BY REGIST ERED POST ON 12.12.2007 AND AGAIN ON 13.12.2007 AND ANOTHER NOTICE U/S 142( 1) OF THE ACT WAS ISSUED AND IT WAS ALSO SERVED BY AFFIXTURE ON 13.12.2007 B Y INSPECTOR OF THE AOS OFFICE AND WITNESSED BY SR. TA OF HIS OFFICE. INSPI TE OF THE SAME, NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE ATTENDE D THE PROCEEDINGS NOR FILED ADJOURNMENT AND THE AO COMPLETED THE ASSESSMENT EX- PARTE UNDER SECTION 144 OF THE ACT. 4. THE LD. CIT(A) HAS WRONGLY PASSED THE IMPUGNED ON THE GROUND THAT NEITHER THE NOTICE SERVER NOR THE INSPECTOR WHO HAS SIGNED AFFIXTURE ORDER DATED 20.10.2006 HAD MENTIONED THAT THEY HAD IDENTI FIED THE HOUSE IN WHICH THE ASSESSEE FIRM CARRIED ON THE BUSINESS. THERE IS NO ENDORSEMENT OF ANY OTHER PERSON HAVING IDENTIFIED THE KNOWN BUSINESS/O FFICE PREMISES OF THE ASSESSEE WHERE THE NOTICE WAS AFFIXED. HE STATED TH AT THE LD. CIT(A) HAS WRONGLY FOLLOWED ORDER OF THIS BENCH AND CANCELLED THE ASSESSMENT IN DISPUTE. ITA NO.367(ASR)/2011 C.O. NO.24(ASR)/2011 4 5. THE LD. DR RELIED UPON THE ORDER PASSED BY THE H ONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF V.R.A. COTTON MI LLS (P) LTD. VS. UNION OF INDIA AND OTHERS IN CWP NO.18193 OF 2011 DATED 27.09.2011 6. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESSE E RELIED UPON THE ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY HAD STA TED THAT IDENTICAL GROUNDS RAISED BY THE REVENUE HAS ALREADY BEEN ADJUDICATED BY THIS BENCH IN FAVOUR OF THE ASSESSEE AND HELD THAT THE AFFIXTURE MADE IN THE PRESENCE OF ONLY ONE WITNESS WAS NOT COMPLETE AND WAS INVALID SINCE THE AFFIXTURE WAS TO BE MADE IN THE PRESENCE OF TWO WITNESSES BY WHOM THE HOUSE WAS IDENTIFIED AND IN WHOSE PRESENCE THE COPY OF NOTICE U/S 148 WAS AFF IXED. HE STATED THAT IN THE PRESENT CASE NEITHER THE NOTICE SERVER NOR THE INSP ECTOR WHO HAS SIGNED THE AFFIXTURE, MENTIONED THAT THEY HAD IDENTIFIED THE H OUSE IN WHICH THE ASSESSEE FIRM CARRIED OUT THE BUSINESS. THEREFORE, THE NOTIC E U/S 143(2) DATED 20.10.2006 WAS NOT SERVED VALIDLY ON THE ASSESSEE. THE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY APPRECIATED AND DECIDED THE ISSUED IN FAVOUR OF THE ASSESSEE BY RESPECTFULLY FOLLOWING THE ORDER OF THI S BENCH IN THE CASE OF ITO VS. SH. SATNAM SINGH, IN ITA NO.436(ASR)/2008 DATED 07.05.2010. HE REQUESTED THAT THE APPEAL FILED BY THE REVENUE BE DISMISSED. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT MATERIALS AVAILABLE WITH US. WE ARE OF THE CONSIDERED OPINION THAT IDENTICAL ISSUE ITA NO.367(ASR)/2011 C.O. NO.24(ASR)/2011 5 WHICH THE REVENUE HAS RAISED IN THE AFORESAID GROUN DS OF APPEAL HAS ALREADY BEEN ADJUDICATED BY THIS BENCH IN THE CASE OF ITO V S. SH. SATNAM SINGH, IN ITA NO.436(ASR)/2008 (SUPRA) AND C.O. NO.58(ASR)/20 08 (ARISING OUT OF ITA NO.436(ASR)/2008) DATED 7 TH MAY, 2010. THIS BENCH HAS HELD THAT THE AO HAS NOT SERVED PROPER NOTICE ON THE ASSESSEE AS REQUIRED UNDER ORDER V RULE 9 OF THE CODE OF CIVIL PROCEDURE 1908. WE ALSO HOLD THAT THE AFFIXTURE IN DISPUTE IS NOT COMPLETE UNLESS THE AFFIXTURE IS MADE IN THE PRESENCE OF TWO PERSONS BY WHOM THE HOUSE WAS IDENTIFIED AND UNDE R WHOSE PRESENCE COPY WAS AFFIXED. WE HAVE SEEN THE ASSESSMENT RECORD ESP ECIALLY ORDER PASSED U/S 143(2) DATED 20.10.2006 WHEREBY SH. GHANSHAM SHARMA , ITO, NAKODAR, HAS ORDERED FOR AFFIXTURE UPON M/S. CHARAN & J.K. FINA NCE COMPANY, NURMAHAL ROAD, NAKODAR, ADVISING SH. V.K. JOSHI INSPECTOR TO AFFIX A COPY OF THIS NOTICE ON THE LAST KNOWN BUSINESS/OFFICE PREMISES O F THE ASSESSEE. WE HAVE PERUSED THE SAME AND FOUND THAT THIS NOTICE DATED 2 0.10.2006 HAS BEEN AFFIXED BY THE INSPECTOR UNDER HIS SIGNATURE ON20.1 0.2006. A COPY OF NOTICE/ORDER DATED 20.10.2006 IS REPRODUCED AS UNDE R: ORDER DATED NAKODAR 20/10/2006 WHEREAS I AM SATISFIED THAT THE SERVICE OF NOTICE U /S 143(2) OF THE ACT FOR THE ASSESSMENT YEAR 2005-06 IS NOT POSSIBLE THR OUGH ORDINARY MEANS UPON M/S. CHARAN & J.K. FINANCE COMPANY, NUR MAHAL ROAD, NAKODAR. ACCORDINGLY, I ORDER SH. V.K. JOSHI, INSPE CTOR TO AFFIX A COPY OF THIS NOTICE UPON THE LAST KNOWN BUSINESS/OF FICE PREMISES OF THE ASSESSEE. ITA NO.367(ASR)/2011 C.O. NO.24(ASR)/2011 6 SD/- (GHANSHAM SHARMA) INCOME TAX OFFICER, NAKODAR. A COPY OF ABOVE NOTICE IS PASTED AT THE NOTICE BOAR D OF THIS OFFICE. SD/- (GHANSHAM SHARMA) INCOME TAX OFFICER, NAKODAR. AFFIXED V.K. JOSHI, INSPECTOR 20.10.2010 SR. TA SD/ 20.10.2006 7.1. KEEPING IN VIEW THE AFORESAID NOTICE U/S 143(2 ) DATED 20.10.2006, WE ARE OF THE VIEW THAT THE AO DID NOT PROPERLY ASSUME D JURISDICTION UNDER SECTION 143(2) OF THE ACT. EVEN WE ALSO FIND THAT N EITHER THE NOTICE SERVER NOR INSPECTOR, WHO HAS SIGNED AFFIXTURE ORDER DATED 20.10.2006 HAS MENTIONED THAT THEY HAD IDENTIFIED THE HOUSE IN WHI CH THE ASSESSEE-FIRM CARRIED ON THE BUSINESS. WE ALSO FOUND THAT THERE I S NO ENDORSEMENT OF ANY OTHER PERSON HAVING IDENTIFIED THE LAST KNOWN BUSIN ESS/OFFICE PREMISES OF THE ASSESSEE, WHERE NOTICE WAS AFFIXED. AS PER RECO RD, THE ADDRESS OF THE ASSESSEE-FIRM ON THE RETURN IS M/S. CHARAN & J.K. FINANCE COMPANY, NURMAHAL ROAD, NAKODAR. WE FIND THAT THE SERVING OF FICER DID NOT MENTION THE NAMES AND ADDRESSES OF THE PERSONS WHO IDENTIFI ED THE PLACE OF BUSINESS OF THE ASSESSEE NOR HE MENTIONED THAT HE PERSONALLY KNEW THE PLACE OF THE BUSINESS OF THE ASSESSEE. THUS, THE SERVICE OF NOTI CE MUST BE HELD TO BE NOT IN ACCORDANCE WITH LAW. WE ARE OF THE CONSIDERED OP INION THAT NOTICE U/S ITA NO.367(ASR)/2011 C.O. NO.24(ASR)/2011 7 143(2) OF THE ACT, HAS NOT BEEN VALIDLY SERVED UPON THE ASSESSEE, AS DISCUSSED ABOVE AND THE LD. FIRST APPELLATE AUTHORI TY HAS PASSED THE IMPUGNED ORDER ON THE BASIS OF THE ORDER OF THIS BENCH IN TH E CASE OF ITO VS. SH. SATNAM SINGH, IN ITA NO.436(ASR)/2008 (SUPRA) AND C .O. NO.58(ASR)/2008 (ARISING OUT OF ITA NO.436(ASR)/2008) DATED 7 TH MAY, 2010 (SUPRA) AS WELL AS THE DECISION RENDERED BY THE HONBLE SUPREME COU RT IN THE CASE OF CIT VS. RAMENDRA NATH GHOSH 82 ITR 888 (SC), IN WHICH T HE HONBLE SUPREME COURT, HAS HELD THAT WHERE THE ASSESSEE CONTENDED THAT HE HAD NO PLACE OF BUSINESS AT THE RELEVANT TIME AND THE SERVING OFFIC ER DID NOT MENTION THE NAMES AND ADDRESSES OF THE PERSONS WHO IDENTIFIED THE PLACE OF BUSINESS OF THE ASSESSEE NOR DID E MENTION THAT HE PERSONALLY K NEW THE PLACE OF THE BUSINESS OF THE ASSESSEE, THE SERVICE OF NOTICE MUS T BE HELD TO BE NOT IN ACCORDANCE WITH LAW. THE LD. FIRST APPELLATE AUTHOR ITY HAS PASSED A WELL REASONED ORDER AND BY RESPECTFULLY FOLLOWING THE OR DER OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RAMENDRA NATH GHOSH 82 ITR 888 (SUPRA) AS WELL AS THE ORDER PASSED BY THIS BENCH I N THE CASE OF ITO VS. SH. SATNAM SINGH, IN ITA NO.436(ASR)/2008 (SUPRA) AND C .O. NO.58(ASR)/2008 (ARISING OUT OF ITA NO.436(ASR)/2008) DATED 7 TH MAY, 2010 (SUPRA) ON THE SIMILAR ISSUE, HAS RIGHTLY DECLARED THAT THE AO DID NOT PROPERLY ASSUME JURISDICTION U/S 143(2) OF THE ACT AND HE RIGHTLY C ANCELLED THE ASSESSMENT ITA NO.367(ASR)/2011 C.O. NO.24(ASR)/2011 8 FRAMED BY THE A.O. WE ARE OF THE CONSIDERED VIEW T HAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY. THEREFORE, PRESENT APPEAL FILED BY THE R EVENUE IS DISMISSED. 7.2. AS REGARDS THE DECISION RELIED UPON BY THE L D. DR OF THE HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF V.R.A. COTTON MILLS (P) LTD. VS. UNION OF INDIA AND OTHERS IN CWP NO.18193 OF 2 011 DATED 27.09.2011 (SUPRA), WE HAVE THOROUGHLY GONE THROUGH THE SAID D ECISION AND WE ARE OF THE VIEW THAT THE FACTS OF THE PRESENT CASE AND T HE CASE RELIED UPON BY THE LD. DR ARE TOTALLY DIFFERENT BECAUSE THE ISSUE BEFO RE US IN THE PRESENT APPEAL IS TO DECIDE WHETHER SERVICE MADE BY AFFIXTURE IN A BSENCE OF TWO WITNESSES IS AS PER ORDER V RULE 9 OF THE CPC. BUT IN THE CASE O F V.R.A. COTTON MILLS (P) LTD. VS UNION OF INDIA (SUPRA), THE SAID ISSUE WAS NOT THERE BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT. THEREFORE, THE DECISION IN THE CASE OF V.R.A. COTTON MILLS (P) LTD. VS. UNION OF INDIA AND OTHERS (SUPRA), CANNOT BE MADE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 8. NOW, WE TAKE UP C.O.NO.24(ASR)/2011 FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06. THE LD. DR STATED THAT TH E GROUNDS RAISED BY THE ASSESSEE IN THE C.O. DO NOT ARISE FROM THE IMPUGNED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY AND THEREFORE, THE C.O. O F THE ASSESSEE MAY BE ITA NO.367(ASR)/2011 C.O. NO.24(ASR)/2011 9 DISMISSED. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, CONCEDED THE SAME. 8. HAVING HEARD BOTH THE PARTIES, WE ARE OF THE VIE W THAT THE GROUNDS RAISED BY THE ASSESSEE IN THE C.O. DO NOT ARISE FRO M THE IMPUGNED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY, WHICH DESERVES TO BE DISMISSED. ACCORDINGLY, THE C.O. OF THE ASSESSEE IS DISMISSED. 9. IN THE RESULT, BOTH HE APPEAL OF THE REVENUE AS WELL AS C.O. OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6TH JUNE, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 6TH JUNE, 2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE:M/S. CHARAN & J.K., FINANCE COMPANY, N AKODAR. 2. THE INCOME TAX OFFICER, NAKODAR. 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, ITAT, AMRITSAR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.