Sri Pramod Kumar Gupta(HUF), Hyderabad V. Commissioner of Income Tax-(Central), Hyderabad

ITA 1104/HYD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87334 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-02-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 30-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Keywords: Opportunity of being heard
• Section: 143(3); 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI P. M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.1104, 1105, 1106 & 1107/HYD/2014 ASSESSMENT YEARS 2004-05, 2006-07, 2007-08 & 2010-2 011 MR. PRAMOD KUMAR GUPTA (HUF) HYDERABAD 500 001 PAN AACHP4412P VS. COMMISSIONER OF INCOME TAX (CENTRAL), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : -NONE- FOR REVENUE : MR. D. SUDHAKAR RAO DATE OF HEARING : 18.02.2015 DATE OF PRONOUNCEMENT : 20.02.2015 ORDER PER P.M. JAGTAP, A.M. THESE FOUR APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE TWO SEPARATE ORDERS PASSED BY LD. CIT UNDER SECTION 263, ONE DATED 25.03.2014 FOR A.YS. 2 004-05, 2006-07 AND 2010-11 AND THE OTHER DATED 26.03.2014 FOR A.Y. 2007-08. SINCE THE ISSUE INVOLVED IN ALL THESE APPE ALS IS COMMON, THE SAME HAVE BEEN HEARD TOGETHER AND ARE B EING DISPOSED OF BY A SINGLE CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE IN THE PRESENT CASE IS A HUF WHICH DERIVES INCOME FROM BUSINESS AND OTHER SOURCES. A S EARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT WAS CON DUCTED IN THE CASES BELONGING TO MBS JEWELLERS. DURING THE CO URSE OF SEARCH, CERTAIN DOCUMENTS RELATING TO THE ASSESSEE WERE FOUND AND SEIZED. CONSEQUENTLY, NOTICES UNDER SECTION 153 C WERE 2 ITA.NO.1102 TO 1107/HYD/2014 MR. PRAMOD KUMAR GUPTA (HUF), HYDERABAD. ISSUED BY THE A.O. ON 11.11.2011, IN RESPONSE TO WH ICH, THE RETURNS OF INCOME FOR THE YEARS UNDER CONSIDERATION WERE FILED BY THE ASSESSEE DECLARING THE INCOME AS UNDER : A.Y. AMOUNT 2004-05 RS.6,16,658 2006-07 RS. 2,40,000 2007-08 RS. 86,340 2010-11 RS.3,01,250 3. IN THE ASSESSMENTS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 153C BY ORDERS DATED 30.12 .2011, THE TOTAL INCOME AS RETURNED BY THE ASSESSEE FOR ALL TH E YEARS UNDER CONSIDERATION WAS ACCEPTED BY THE A.O. SUBSEQ UENTLY, THE RECORD OF THE SAID ASSESSMENTS WAS EXAMINED BY THE LD. CIT AND ON SUCH EXAMINATION, HE FOUND THAT ASSESSEE HAD NOT OFFERED ANY INCOME/REMUNERATION RECEIVED FROM THREE COMPANIES NAMELY M/S. MUSADDILAL PROJECTS LTD., M/S . EGWOOD BOARDS AND PANELS P. LTD., AND M/S. EGWOOD INDUSTRIES P. LTD., HE ALSO NOTED THAT CASH DEPOSIT S OF RS.12.75 LAKHS WERE MADE BY THE ASSESSEE IN THE BANK OF INDI A, SECUNDERABAD BRANCH WHICH WERE NOT ENQUIRED INTO BY THE A.O. WHILE COMPLETING THE ASSESSMENT FOR A.Y. 2006- 07. HE FURTHER NOTED THAT A SUM OF RS. 12.50 LAKHS WAS SEI ZED DURING THE COURSE OF SEARCH WHICH WAS ALSO NOT DULY EXAMIN ED BY THE A.O. HE ALSO NOTED THAT AS PER THE STATEMENT OF BAN K OF INDIA, SECUNDERABAD BRANCH, RENTAL INCOME AGGREGATING TO RS.4,06,560 WAS DEPOSITED DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2007-08 WHICH AGAIN WAS NOT ENQUIRED INTO BY T HE ASSESSING OFFICER. ACCORDING TO THE LD. CIT(A), THE ASSESSMENTS IN THE CASE OF THE ASSESSEE FOR ALL THE FOUR YEARS UNDER CONSIDERATION THUS WERE COMPLETED BY THE A.O. WITHO UT MAKING PROPER AND ADEQUATE ENQUIRIES RENDERING THE SAME TO BE 3 ITA.NO.1102 TO 1107/HYD/2014 MR. PRAMOD KUMAR GUPTA (HUF), HYDERABAD. ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS O F THE REVENUE. HE, THEREFORE, ISSUED NOTICES SEEKING EXPL ANATION OF THE ASSESSEE AS TO WHY THE ASSESSMENT ORDERS PASSED BY THE A.O. FOR ALL THE FOUR YEARS UNDER CONSIDERATION UND ER SECTION 143(3) READ WITH SECTION 153C SHOULD NOT BE REVISED UNDER SECTION 263. 4. IN RESPONSE TO THE NOTICES ISSUED BY THE LD. CI T(A) UNDER SECTION 263, IT WAS SUBMITTED BY THE ASSESSEE THAT THE ONLY INCOME EARNED BY IT DURING ALL THE FOUR YEARS UNDER CONSIDERATION WAS FROM COMMISSION AND THE SAME WAS DULY OFFERED TO TAX. IT WAS SUBMITTED THAT THERE WAS NO REMUNERATION RECEIVED BY THE ASSESSEE FROM ANY OF T HE THREE CONCERNS DURING ALL THE FOUR YEARS UNDER CONSIDERAT ION AND SUCH REMUNERATION ACTUALLY RECEIVED BY MR. PRAMOD K UMAR GUPTA IN HIS INDIVIDUAL CAPACITY WAS DULY DECLARED BY HIM IN HIS INDIVIDUAL RETURNS OF INCOME. IT WAS POINTED OU T THAT MR. PRAMOD KUMAR GUPTA WAS A DIRECTOR IN ALL THE THREE COMPANIES IN HIS INDIVIDUAL CAPACITY AND THE REMUNE RATION FROM THE SAID COMPANIES WAS RECEIVED BY HIM IN HIS INDIVIDUAL CAPACITY AND NOT BY THE ASSESSEE AS HUF. AS REGARDS THE CASH DEPOSITS OF RS.12.75 LAKHS AND RENTAL DEPOSITS OF R S.4,06,560 MADE IN THE BANK ACCOUNT WITH BANK OF INDIA, SECUND ERABAD BRANCH, IT WAS SUBMITTED THAT THE SAID BANK ACCOUNT DID NOT BELONG TO THE ASSESSEE HUF BUT WAS JOINTLY OWNED BY MR. PRAMOD KUMAR GUPTA IN HIS INDIVIDUAL CAPACITY AND T HREE OTHER PERSONS. AS REGARDS CASH OF RS.12.50 LAKHS SE IZED DURING THE COURSE OF SEARCH, IT WAS CLARIFIED BY THE ASSES SEE THAT THE SAME HAD ALREADY BEEN ADDED TO THE INCOME OF THE IN DIVIDUALS. IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE RE WERE THUS NO ERRORS IN THE ASSESSMENT ORDERS PASSED BY T HE A.O. 4 ITA.NO.1102 TO 1107/HYD/2014 MR. PRAMOD KUMAR GUPTA (HUF), HYDERABAD. UNDER SECTION 143(3) READ WITH SECTION 153C FOR ALL THE FOUR YEARS UNDER CONSIDERATION AS ALLEGED BY THE LEARNED CIT IN THE NOTICES ISSUED UNDER SECTION 263 AND THE REVISION O F SAID ASSESSMENT ORDERS WAS NOT CALLED FOR. 5. THE LEARNED CIT DID NOT FIND MERIT IN THE SUBMISSIONS MADE BY THE ASSESSEE AND PROCEEDED TO T REAT THE ASSESSMENT ORDERS PASSED BY THE A.O. FOR ALL THE FO UR YEARS UNDER CONSIDERATION AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE FOR THE FOLLOWING REASONS GIVE N IN HIS IMPUGNED ORDER. 9. I HAVE GONE THROUGH THE SUBMISSION OF THE ASSESSEE. IT IS EVIDENT FROM THE ASSESSMENT ORDERS THAT THE ISSUES RAISED IN THE NOTICE FOR THE ABOVE REFER RED ASSESSMENT YEARS WERE NOT EXAMINED BY THE A.O. AND THE ASSESSMENT ORDERS WERE PASSED ACCEPTING THE RETURNE D INCOME. IT HAS BEEN JUDICIALLY HELD THAT AN ASSESSM ENT MADE WITHOUT NECESSARY ENQUIRY CAN BE HELD TO BE ERRONEOUS AND CAN BE REVISED UNDER SECTION 263 OF T HE I.T. ACT, 1961. REFERENCE IN THIS REGARD CAN BE MADE TO THE DECISION OF SPECIAL BENCH, ITAT, CHENNAI REPORTED I N 313 ITR (AT) 182, CHENNAI SB WHEREIN IT WAS OBSERVED TH AT IT IS NOT NECESSARY FOR THE COMMISSIONER OF INCOME TAX IN REVISION TO MAKE FURTHER ENQUIRIES BEFORE CANCELLIN G THE ASSESSMENT ORDER OF THE A.O. THE COMMISSIONER OF IN COME TAX CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE, THE A.O. SHOULD H AVE MADE FURTHER ENQUIRES BEFORE ACCEPTING THE STATEMEN TS MADE BY THE ASSESSEE IN HIS RETURN. IT IS INCUMBENT ON THE A.O. TO INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN ENQUIRY PRUDENT. T HE WORD ERRONEOUS IN SECTION 263 OF INCOME TAX ACT, 19 61 INCLUDES CASES WHERE THERE HAS BEEN FAILURE TO MAKE NECESSARY ENQUIRIES. CONSIDERING THE ABOVE, THE ORD ER PASSED BY A.O. WITHOUT EXAMINING THE ISSUES NARRATE D ABOVE ARE DEFINITELY ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF REVENUE. 6. FOR THE REASONS GIVEN ABOVE, THE ASSESSMENT ORDERS PASSED BY THE A.O. FOR ALL THE YEARS UNDER C ONSIDERATION 5 ITA.NO.1102 TO 1107/HYD/2014 MR. PRAMOD KUMAR GUPTA (HUF), HYDERABAD. WERE SET ASIDE BY THE LD. CIT WITH A DIRECTION TO H IM TO MAKE THE ASSESSMENTS AFRESH AFTER EXAMINING THE ISSUES I N PROPER PERSPECTIVE AND AFTER CONSIDERING THE EXPLANATION O FFERED BY THE ASSESSEE DURING THE COURSE OF REVISED PROCEEDIN GS. AGGRIEVED BY THE ORDERS OF LD. CIT PASSED UNDER SEC TION 263, ASSESSEE HAS PREFERRED THESE APPEALS BEFORE THE TRI BUNAL. 7. AT THE TIME OF HEARING BEFORE US, NONE HAS APPEARED ON BEHALF OF THE ASSESSEE. THESE APPEALS O F THE ASSESSEE THEREFORE ARE BEING DISPOSED OF EXPARTE AF TER CONSIDERING THE ARGUMENTS OF THE LEARNED D.R. AND P ERUSING THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THA T THE SOLITARY GROUND RAISED BY THE ASSESSEE, WHICH IS IDENTICAL I N ALL THE FOUR APPEALS, READS AS UNDER : FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT (CENTRAL) HAS ERRED IN SETTING ASIDE THE OR DER OF THE A.O. UNDER SECTION 263 OF THE I.T. ACT, WITHOUT TAK ING INTO CONSIDERATION THE MATERIAL AND EXPLANATIONS GIVEN B Y THE ASSESSEE AND NON APPLICATION OF MIND IN THE MATTER. AS SUCH, THE ORDER PASSED UNDER SECTION 263 OF THE I.T . ACT IS VOID AB-INITIO. THE ACTION OF THE LD. CIT WAS WHOLL Y UNREASONABLE, UNCALLED FOR AND BAD IN LAW. 8. AS IS CLEARLY EVIDENT FROM THE COMMON GROUND RAISED BY THE ASSESSEE IN ALL THE FOUR APPEALS, ASS ESSEE IS MAINLY CHALLENGING THE IMPUGNED ORDERS OF THE LD. C IT ON THE GROUND THAT THE SAME HAVE BEEN PASSED WITHOUT CONSI DERING THE EXPLANATION OFFERED DURING THE COURSE OF REVISI ON PROCEEDINGS AND WITHOUT APPLYING HIS MIND IN THE MA TTER. IN THIS REGARD, IT IS OBSERVED THAT CERTAIN ISSUES WER E RAISED BY THE LD. CIT IN THE NOTICES ISSUED UNDER SECTION 263 POINTING OUT THAT THE SAME WERE NOT PROPERLY ENQUIRED INTO O R EXAMINED BY THE A.O. DURING THE COURSE OF ASSESSMENT PROCEED INGS. IN REPLY TO THE SAID NOTICES, A DETAILED SUBMISSION WA S FILED BY THE 6 ITA.NO.1102 TO 1107/HYD/2014 MR. PRAMOD KUMAR GUPTA (HUF), HYDERABAD. ASSESSEE EXPLAINING AS TO HOW THE ISSUES RAISED BY THE LD. CIT IN THE NOTICES ISSUED UNDER SECTION 263 WERE NOT RE LEVANT FOR THE PURPOSE OF COMPLETING THE ASSESSMENTS IN THE C ASE OF THE ASSESSEE FOR ALL THE FOUR YEARS UNDER CONSIDERATION . ON THE BASIS OF THIS EXPLANATION OFFERED IN RESPECT OF EAC H AND EVERY ISSUE, IT WAS CONTENDED ON BEHALF OF THE ASSESSEE B EFORE THE LD. CIT THAT IT WAS NOT THE CASE OF ASSESSMENTS HAVING BEEN COMPLETED BY THE A.O. WITHOUT MAKING PROPER AND ADE QUATE ENQUIRIES AS REQUIRED IN THE FACTS AND CIRCUMSTANCE S OF THE CASE. A PERUSAL OF THE OPERATIVE PORTION OF THE LD. CIT IMPUGNED ORDER HOWEVER SHOWS THAT HE HAS NEITHER CO NSIDERED THIS EXPLANATION OF THE ASSESSEE NOR MADE ANY COMME NT/ OBSERVATION THEREON POINTING OUT SPECIFICALLY THAT IT WAS STILL A CASE OF FAILURE ON THE PART OF THE A.O. TO MAKE PRO PER AND ADEQUATE ENQUIRIES BEFORE COMPLETING THE ASSESSMENT S AS WERE REQUIRED IN THE FACTS AND CIRCUMSTANCES OF THE CASE . HE HAS NOT POINTED OUT SPECIFICALLY EVEN A SINGLE ENQUIRY WHIC H A.O. OUGHT TO HAVE DONE IN THE FACTS AND CIRCUMSTANCES OF THE CASE BUT HAS FAILED TO DO. WE, THEREFORE, FULLY AGREE WITH T HE STAND OF THE ASSESSEE THAT THE IMPUGNED ORDERS HAVE BEEN PASSED BY THE LD. CIT UNDER SECTION 263 WITHOUT CONSIDERING THE E XPLANATION OFFERED BY THE ASSESSEE AND WITHOUT APPLYING HIS MI ND. IN OUR OPINION, THIS FAILURE OF THE LD. CIT, HOWEVER, DOES NOT CONSTITUTE ANY LEGAL INFIRMITY TO MAKE THE ORDERS P ASSED BY HIM UNDER SECTION 263 INVALID OR VOID ABINITIO AS SOUGHT TO BE MADE OUT BY THE ASSESSEE IN THE GROUND RAISED IN THESE A PPEALS. WE ARE OF THE VIEW THAT IT WOULD BE JUST AND PROPER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TO SET ASIDE THE IMPUGNE D ORDERS OF THE LD. CIT PASSED UNDER SECTION 263 AND REMIT THE MATTER BACK TO HIM WITH A DIRECTION TO PASS FRESH ORDERS U NDER SECTION 263 AFTER DULY TAKING INTO CONSIDERATION THE EXPLAN ATION OFFERED 7 ITA.NO.1102 TO 1107/HYD/2014 MR. PRAMOD KUMAR GUPTA (HUF), HYDERABAD. BY THE ASSESSEE AND AFTER APPLYING HIS MIND. NEEDLE SS TO OBSERVE THAT THE LD. CIT(A) SHALL PASS WELL DISCUSS ED AND WELL REASONED ORDERS AFTER GIVING PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. IN THE RESULT, APPEALS OF THE ASSESSEE ARE TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20.02.2015. SD/- SD/- (SAKTIJIT DEY) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 20 TH FEBRUARY, 2015 VBP/- COPY TO 1. MR. PRAMOD KUMAR GUPTA (HUF), 3-5-784/B & C NAGEENA BUILDING, KING KOTI ROAD, HYDERABAD 500 001. 2. COMMISSIONER OF INCOME TAX (CENTRAL), 7 TH FLOOR, AAYAKAR BHAVAN, HYDERABAD. 3. ADDL. CIT, C.R. 3, HYDERABAD 4. ASST. COMMISSIONER OF INCOME TAX, CC.8, HYDERABAD. 5. D.R. I.T.A.T. B BENCH, HYDERABAD.