ITO, Ward-12(1), Hyderabaad, Hyderabad V. B Venkat Rao, Hyderabad

CO 3/HYD/2015

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0554 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 05-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Additional evidence
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1428/HYD/2014 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER, WARD 2(1), HYDERABAD. VS. SRI B. VENKATA RAO, HYDERABAD PAN AFPDB 4375 P (APPELLANT) (RESPONDENT) C.O. NO. 03/HYD/2015 (IN ITA NO. 1428/HYD/2014 ASSESSMENT YEAR: 2009-10) SRI B. VENKATA RAO, HYDERABAD PAN AFPDB 4375 P VS. INCOME TAX OFFICER, WARD 2(1), HYDERABAD. (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI RAMAKRISHNA BANDI ASSESSEE BY : SHRI V. RAGHAVENDRA RAO DATE OF HEARING 13-05-2015 DATE OF PRONOUNCEMENT 27-05-2015 O R D E R PER SAKTIJIT DEY, J.M.: DEPARTMENTS APPEAL AND ASSESSEES C.O ARE DIRECTE D AGAINST ORDER DATED 31/03/14 OF LD. CIT(A)-V, HYDERABAD FOR THE AY 2009-10. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE DEPARTME NT IS AS UNDER: 2. THE LD. CIT(A) ERRED IN ADMITTING ADDITIONAL EVI DENCE ON THE ISSUE OF UNEXPLAINED CASH DEPOSITS WITHOUT AFFORDIN G AN OPPORTUNITY TO THE AO UNDER RULE 46A OF THE ACT. 3. GROUNDS RAISED BY ASSESSEE IN C.O. ARE AS UNDER: 2 ITA NO. 1428 /HYD/2014 & C.O. NO. 03/H/15 SRI B. VENKATA RAO ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND IN ITS C .O., WHICH IS AS UNDER: ASSESSEE DID NOT MAKE ANY CASH DEPOSITS IN SB ACCOU NT NO. 000801534265 WITH ICICI BANK. THEREFORE THE ADDITIO N MADE IS WITHOUT BASIS AND LIABLE TO BE DELETED. 4. BRIEFLY THE FACTS ARE, ASSESSEE AN INDIVIDUAL FI LED HIS RETURN OF INCOME FOR THE AY UNDER CONSIDERATION ON 30/07/09 D ECLARING INCOME OF RS. 22,48,560 UNDER THE HEAD SALARY. AS STATED BY AO, THOUGH, NOTICES U/S 143(2) AND 142(1) WERE ISSUED, ASSESSEE DID NOT RESPOND TO THE SAME. FOR THAT REASON, NOTICE U/S 142(1) WAS AFFIXED AT THE LAST KNOWN ADDRESS AVAILABLE WITH AO. AS THERE WAS NO RE SPONSE EVEN TO THE NOTICE MADE BY AFFIXTURE AND SINCE ASSESSMENT I S GETTING BARRED BY LIMITATION, AO PROCEEDED TO COMPLETE ASSESSMENT U/S 144 ON THE BASIS OF THE INFORMATION AVAILABLE ON RECORD. AS OB SERVED BY AO, ON THE BASIS OF INFORMATION AVAILABLE ON RECORD IT WAS FOUND THAT ASSESSEE HAD MADE CASH DEPOSITS TO THE TUNE OF RS. 21,40,850 IN SB 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-V HYDERABAD (CIT{A)] HAS ERRED IN REJECTING BY NOT CONSIDERING THE GROUNDS RELATING TO JURISDICTION RAISED BY THE ASSESSEE. 2. THE LEARNED ASSESSING OFFICER (AO) HAS NOT SPECI FIED THE PARTICULARS OF DATES OF ISSUE AND ATTEMPTED SERVICE IN RESPECT OF NOTICES U / S 143(2) AND 142(I). 3. THE NOTICE U/S 143(2) WOULD BE BARRED BY LIMITAT ION IF NOT SERVED IN TIME UNDER PROVISO 143(2) WHILE THE AO FA ILED TO RECORD THE PARTICULARS IN THE ASSESSMENT ORDER. THE ASSESSMENT ORDER IS THEREFORE INVALID IN LAW. 4. ALLEGED SERVICE BY AFFIXTURE OF NOTICE U/S 142(1) I S NOT SUPPORTED BY THE STATEMENT OF THE OFFICIAL SERVING IT OR HIS AFFIDAVIT OR THE ASSESSING OFFICER'S SATISFACTION T HEREON WHICH ARE REQUIRED UNDER THE RELEVANT PROVISIONS OF CIVIL PROCEDURE CODE APPLICABLE TO SERVICE OF NOTICES UNDER THE IT ACT. 5. THE LD. CIT(A) IS JUSTIFIED IN CONSIDERING THE E VIDENCE PRODUCED BY THE ASSESSEE AS THE AO DID NOT GRANT OP PORTUNITY TO FILE THE EVIDENCE. 3 ITA NO. 1428 /HYD/2014 & C.O. NO. 03/H/15 SRI B. VENKATA RAO A/C NO. 000801534265 WITH ICICI BANK, KHAIRATHABAD BRANCH, HYD. SINCE THE SOURCE OF SUCH CASH DEPOSITS WERE NOT EXP LAINED BY ASSESSEE, TREATING THE ENTIRE DEPOSITS AS UNEXPLAIN ED, AO ADDED IT TO THE INCOME OF ASSESSEE. ACCORDINGLY, TOTAL INCOME W AS DETERMINED AT RS. 42,89,410. AGAINST THE ASSESSMENT ORDER PASSED BY AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) BOTH ON THE VALIDITY OF THE ASSESSMENT ORDER PASSED EX-PARTE U/S 144 WITHOU T PROPER SERVICE OF NOTICE U/S 143(2) AND 142(1) OF THE ACT AS WELL AS ON MERITS OF THE ADDITION. 5. AS FAR AS THE MERITS OF THE ADDITIONS ARE CONCER NED, ASSESSEE SUBMITTED HE RECEIVED SALARY AMOUNTING TO RS. 22,48 ,560 AS AN EMPLOYEE OF THE WORLD BANK, WHICH IS EXEMPT FROM IN COME-TAX AS PER THE UNITED NATIONS CONVENTION. IN SUPPORT OF SUCH C LAIM, A CERTIFICATE ISSUED BY THE ACTING DIRECTOR OF WORLD BANK AT NEW DELHI WAS ALSO SUBMITTED BEFORE LD. CIT(A). ON THE BASIS OF THE EV IDENCES PRODUCED BY ASSESSEE, LD. CIT(A) DELETED THE ADDITION OF RS. 22,48,560. AS FAR AS THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS TO BANK ACCOUNT, LD. CIT(A) AFTER VERIFYING THE COPIES OF THE BANK ACCOUNT FOUND OBSERVED THAT ASSESSEES EXPLANATION THAT DEPOSITS MADE INTO BANK ACCOUNT WERE OUT OF WITHDRAWALS FROM THE VERY SAME ACCOUNT AS WELL AS OTHER ACCOUNT IS ACCEPTABLE. HE ALSO OBSERVED THAT ASSESSEE BEING WORLD BANK EMPLOYEE, THE CONDITIONS OF SERVICE DO NOT PERMIT HIM TO PURSUE ANY OTHER OCCUPATION OR EMPLOY MENT. ON THE BASIS OF AFORESAID REASONING, HE DELETED THE ADDITI ON OF RS. 21,40,850. BEING AGGRIEVED OF THE DECISION OF LD. CIT(A), DEPARTMENT IS BEFORE US. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD AS WELL AS ORDERS OF REVENU E AUTHORITIES. AS CAN BE SEEN FROM THE GROUNDS RAISED BY THE DEPARTME NT, IT IS ONLY AGGRIEVED WITH THE DECISION OF THE LD. CIT(A) IN DE LETING THE ADDITION OF UNEXPLAINED CASH DEPOSITS BY TAKING COGNIZANCE O F ADDITIONAL EVIDENCE PRODUCED BY ASSESSEE WITHOUT GIVING OPPORT UNITY TO AO IN 4 ITA NO. 1428 /HYD/2014 & C.O. NO. 03/H/15 SRI B. VENKATA RAO TERMS WITH RULE 46A OF THE ACT. LD. DR THOUGH TRIED TO MAKE OUT A CASE BEFORE US THAT THE DECISION OF LD. CIT(A) DELE TING BOTH THE ADDITIONS SUFFERS FROM VIOLATION OF RULE 46A, BUT, WE ARE OF THE VIEW THAT THE GROUND RAISED BY THE DEPARTMENT DOES NOT C OVER THE AMOUNT OF RS. 22,48,560. HAVING HELD SO, WE WILL DECIDE TH E ISSUE RELATING TO ADDITION OF RS. 21,40,850 MADE ON ACCOUNT OF UNEXPL AINED CASH DEPOSITS. IT IS TRUE THAT BEFORE AO, ASSESSEE NEITH ER APPEARED NOR PRODUCED NECESSARY INFORMATION CALLED FOR BY THE AO , HENCE, ASSESSMENT WAS COMPLETED EX-PARTE BY TREATING THE S O CALLED CASH DEPOSITS IN SB A/C HELD WITH ICICI BANK AS UNEXPLAI NED. HOWEVER, BEFORE US, LD. AR SUBMITTED, SB A/C NO. 00080153436 5 WITH ICICI BANK, KHAIRATHABAD BRANCH, HYDERABAD DOES NOT CONTA IN ANY SUCH CASH DEPOSITS OF RS. 21,40,850. A COPY OF THE STATE MENT OF ACCOUNT PERTAINING TO THE SAID BANK ACCOUNT WAS ALSO FILED BEFORE US. ON PERUSAL OF THE SAID BANK ACCOUNT, THE STATEMENT OF LD. AR APPEARS TO BE CORRECT AS IT DOES NOT SHOW THE DEPOSIT OF RS. 2 1,40,850. THUS, PRIMA FACIE IT APPEARS, THE ADDITION MADE BY AO IS ON TOTAL MIS- APPRECIATION OF FACTS. THIS ASPECT REQUIRES VERIFIC ATION. IT IS THE FURTHER CONTENTION OF LD. AR BEFORE US, IN ANY CASE OF THE MATTER ISSUE OF ADDITION WILL BECOME INCONSEQUENTIAL IF ASSESSEES CHALLENGE ON THE LEGAL ISSUE IS UPHELD. LD. AR SUBMITTED, WHILE ISSU ING NOTICE U/S 142(1) THROUGH AFFIXTURE, AO HAS NOT FOLLOWED THE P ROCEDURE LAID DOWN IN THE STATUTE. HE FURTHER SUBMITTED, NO NOTICE U/S 143(2) HAS BEEN ISSUED TO ASSESSEE. THEREFORE, IN ABSENCE OF VALID SERVICE OF STATUTORY NOTICE ASSESSMENT ORDER PASSED IS INVALID . HE SUBMITTED, THOUGH, ASSESSEE HAS RAISED SPECIFIC GROUND ON THIS LEGAL ISSUE BEFORE LD. CIT(A), BUT, HE FAILED TO DECIDE THE SAM E. 7. UPON HEARING THE PARTIES, WE ARE OF THE VIEW THA T LEGAL ISSUE RAISED BY ASSESSEE CHALLENGING THE VALIDITY OF THE ASSESSMENT ORDER PASSED U/S 144 OF THE ACT IS REQUIRED TO BE DECIDED AT THE OUTSET. THOUGH, LD. CIT(A) HAS DISCUSSED THE FACTS RELATING TO THIS ISSUE AND HAS HELD THAT ASSESSMENT ORDER PASSED EXPARTE IS NO T LEGALLY VALID BUT 5 ITA NO. 1428 /HYD/2014 & C.O. NO. 03/H/15 SRI B. VENKATA RAO AT THE SAME TIME HE HAS OBSERVED THAT HE IS NOT A BLE TO SET ASIDE THE ASSESSMENT BECAUSE OF THE STATUTORY PROVISION. WHEN THE ASSESSEE HAS RAISED SPECIFIC GROUNDS CHALLENGING THE VALIDIT Y OF ASSESSMENT ORDER IN ABSENCE OF PROPER SERVICE OF NOTICES, IN O UR VIEW, LD. CIT(A) SHOULD HAVE DECIDED IT AT THE FIRST INSTANCE BEFORE GOING INTO THE MERITS OF ADDITIONS MADE. IN THE AFORESAID FACTUAL BACKDROP, WE ARE INCLINED TO REMIT THE ISSUE BACK TO THE FILE OF LD. CIT(A) FOR DECIDING THE LEGAL ISSUE RAISED BY ASSESSEE CHALLENGING THE JURISDICTION OF AO IN COMPLETING THE ASSESSMENT U/S 144 OF THE ACT IN ABSENCE OF VALID/PROPER SERVICE OF NOTICES U/S 143(2) AND 142( 1) AND THEREAFTER, IF WARRANTED, MAY DECIDE THE ISSUE ON MERITS AFTER GIV ING OPPORTUNITY TO AO TO GO THROUGH THE ADDITIONAL EVIDENCES PRODUCED BY ASSESSEE. 8. IN THE RESULT, BOTH THE APPEAL OF THE DEPARTMENT AND C.O BY ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 27 TH MAY, 2015. SD/- SD/- (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 27 TH MAY, 2015 KV COPY TO:- 1) ITO, WARD 12(1), 2 ND FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2) SRI B. VENKATA RAO, FLAT NO. 301, SIMHARSHI APTS ., H.NO. 8-3-667/2 ENGINEERS COLONY, YELLAREDDYGUDA, HYDERABAD 73. 3) CIT(A)-V, HYDERABAD 4) CIT-I, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6 ITA NO. 1428 /HYD/2014 & C.O. NO. 03/H/15 SRI B. VENKATA RAO DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S. 2. DRAFT PLACED BEFORE AUTHOR SR.P.S 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER VP 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S. 6. KEPT FOR PRONOUNCEMENT ON SR.P S. 7. FILE SENT TO THE BENCH CLERK SR.P.S. 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER