Radha Mittal, Ludhiana V. ITO- Ward 7(3), Ludhiana

ITA 1140/CHANDI/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0574 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-10-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 13-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA DHAR
• Keywords: Cost of acquisition; Capital Gains
• Section: 147; 68; 148; 143(3); 142(1); 143(1); 48

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘A’,CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER ITA No. 1140/Chd/2019 (Assessment Year: 2011-12) Radha Mittal, H. No. 85-A, Aggar Nagar, Ludhiana- 141012 बनाम ITO Ward- 7(3), Ludhiana थायी लेखा सं./PAN NO: ADGPR 5761 E नधा रती क ओर से/Assessee by : Shri Sarabjit Garg, C.A राज व क ओर से/ Revenue by : Smt. Priyanka Dhar, Sr. D.R स ु नवाई क तार ख/Date of Hearing: 17.10.2022 उदघोषणा क तार ख/Date of Pronouncement: 18.10.2022 आदेश/ORDER Per Vikram Singh Yadav, Accountant Member: This is an appeal filed by the assessee against the order of Learned Commissioner of Income Tax (Appeals)-3, Ludhiana, [in short the ‘Ld.CIT(A)’] dated 01.05.2019 pertaining to assessment year 2011-12 wherein the assessee has taken the following revised grounds of appeal: “1.That on the facts and in the circumstances of the case and in law, ld. CIT-A erred in sustaining the order passed by Ld AO u/s 147/143(3) without appreciating that assumption of jurisdiction u/s 148 by Ld AO was in violation of mandatory jurisdictional conditions stipulated under the Act. 2. That on the facts and in the circumstances of the case and in law, ld. CIT-A erred in sustaining the order passed by Ld. AO u/s 147/143(3) without appreciating ITA No. 1140/Chd/2019 Radha Mittal vs. ITO, Ludhiana 2 that assessment has been made without following law of natural justice. 3. That on the facts and in the circumstances of the case and in law, ld CIT-A erred in sustaining the order passed by Ld AO u/s 147/143(3) without appreciating addition made u/s 68 is against law. 4. That on the facts and in the circumstances of the case and in law, ld CIT-A erred in sustaining the order passed by Ld AO u/s 147/143(3) without appreciating that no addition has been made on the grounds mentioned in the Show Cause Notice.” 2. Briefly, the facts of the case are that the assessee has filed her return of income declaring total income of Rs. 7,01,407/- which was processed u/s 143(1) of the Act. Thereafter, notice u/s 148 was issued by ITO, Ward 6(2), Ludhiana on 30.03.2018 which was duly served upon the assessee. In response to notice u/s 148, the assessee filed her return of income on 23.04.2018 declaring gross total income of Rs. 7,01,407/- as originally declared, thereafter notices u/s 143(2) and 142(1) were issued and reassessment was completed u/s 143(3) read with section 147 of the Act by ITO, Ward 7(3), Ludhiana dated 26.12.2018 wherein addition of Rs 12,26,948/- was made under section 68 of the Act. 3. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) wherein the assessment proceedings were challenged both on the legality as well as merits of the case. However, the appeal of the assessee was dismissed and against the said findings and order of the ld. CIT(A), the assessee is in appeal before us. ITA No. 1140/Chd/2019 Radha Mittal vs. ITO, Ludhiana 3 4. During the course of hearing, the ld. AR submitted that the basic requirement of section 147 is that the jurisdictional Assessing Officer must have reason to believe that any income chargeable to tax has escaped assessment and such belief must be of the jurisdictional Assessing Officer and not any other Assessing Officer. It was submitted that the jurisdiction of Assessing Officer to reopen the assessment u/s 147 depends upon issuance of a valid notice and in absence of the same, the entire proceedings initiated by him would become void for want of jurisdiction. It was submitted that in the instant case, the notice u/s 148 was issued by ITO, Ward 6(2), Ludhiana wherein the assessment was completed by ITO, Ward 7(3), Ludhiana which cannot be sustained in the eyes of law and in support, reliance was placed on the following decisions: • ACIT vs. Resham Petrotech Ltd. (2012) 136 ITD 185 (Ahd.) (Trib.) • Smriti Kedia (Smt.) v. UOI (2012) 71 DTR 245/250 CTR 221 (Cal.) • ITO v. Rajender Prasad Gupta (2010) 48 DTR 489 (JD) (Trib.) 5. It was further submitted that the notice u/s 148 was issued on the ground that the assessee has not disclosed the amount of long term capital gains on sale of shares whereas in the computation of income as per the original return of income as well as in the return filed in response to notice u/s 148 of the Act, the income of long term capital gains has been duly ITA No. 1140/Chd/2019 Radha Mittal vs. ITO, Ludhiana 4 disclosed in the return of income and therefore, the question of escapement of income does not arise and the notice u/s 148 is therefore issued in absence of any reasons to believe that the income has escaped assessment and therefore, the same deserves to be set aside. It was further submitted that despite being such glaring mistake that income disclosed in the return of income has been stated to be not disclosed in the reasons recorded, the ld. Pr. CIT granted approval u/s 151 concurring with the observations of the Assessing Officer which clearly shows the approval granted by the ld. Pr.CIT was mechanical without application of mind and in support, reliance was placed on the following decisions as under:- • Kumar Chatterjee v. ITO [1974] 93 ITR 130 (Calcutta) • Lakhmani Mewal. Chhugamal Rajput v. Chaliha [1971] 79 ITR 603 (SC) • Chanchal Das v. ITO [1975] 99 ITR 296 (Calcutta) • Arjun Singh v. CIT [2000] 246 Taxman 363 (M.P) • United Electrical Co. (P) Ltd. v. CIT [2002] 125 Taxman 775 (Delhi) 6. Per contra, the ld. Sr DR submitted that notice u/s 148 was issued to the assessee on 30.03.2018 which was duly served upon her and in response to the said notice, the assessee has filed her return of income and therefore has duly complied to the said notice and thereafter, the jurisdiction has been transferred from ITO, Ward 6(2), Ludhiana to ITO, Ward 7(3), Ludhiana and the assessment was accordingly be ITA No. 1140/Chd/2019 Radha Mittal vs. ITO, Ludhiana 5 completed by ITO, Ward 7(3), Ludhiana. It was submitted that where the assessee has duly participated in the reassessment proceedings and has not objected to the jurisdiction of the Assessing Officer, the assessee cannot be permitted to raise the jurisdiction issue during appellate proceedings before the Tribunal for the first time. 7. Regarding contention of the ld. AR that the income from long term capital gains has been duly disclosed in the return of income, it was submitted that it is not clear from the return of income that the income from sale of shares which is the subject matter of u/s 148 has been duly disclosed in the return of income and it is only in the computation of income which has been subsequently filed by the assessee during the course of re-assessment proceedings that it has come to the notice of the AO that the assessee has shown income from long terms capital gains and which has also been claimed as exempt u/s 10(38), it cannot be seen that income has been duly declared in the return of income. It was submitted that basis the return of income so filed by the assessee, it cannot be conclusive held that income from sale of shares which is the subject matter of dispute has been duly disclosed. It was further submitted that the approval has been duly granted by the ld. Pr. CIT after due application of mind. It was accordingly submitted that the contentions advanced by the ld. AR challenging the legality of proceedings deserves to be dismissed. ITA No. 1140/Chd/2019 Radha Mittal vs. ITO, Ludhiana 6 8. We have heard the rival submissions and perused the material available on record. In the reasons so recorded by the Assessing officer prior to issuance of notice u/s 148 of the Act, the Assessing officer has stated that he has independently examined the records and information of the assessee and after verification, he has reasons to believe that income of Rs 12,28,920/- has escaped assessment within the meaning of section 147 of the Act. The basis for arriving at such a reasoning by the Assessing officer is that the assessee is beneficiary of long term capital gains on sale of shares and there is a failure on part of the assessee to disclose his income on account of long term capital gains on sale of shares in her return of income and there is thus a failure on part of the assessee to disclose his income truly and fully. In this regard, we refer to the original return of income filed by the assessee on 5.08.2011 wherein under the column “capital gains”, no amount has been shown and thereafter, under the column “details of exempt income which is not included in the total income” under the heading “long term capital gains from transactions on which securities Transaction tax is paid”, the assessee has shown a figure of Rs 11,81,723/-. On perusal of the computation of income, it is noted that the said figure of Rs 11,81,723 is nothing but a figure of Rs 12,26,948 being the sale proceeds on sale of shares less indexed cost of acquisition of Rs 45,225/- resulting in long term capital gains of ITA No. 1140/Chd/2019 Radha Mittal vs. ITO, Ludhiana 7 Rs 11,81,723/- which has been claimed exempt under section 10(38) of the Act. Therefore, we find that the assessee has duly reported the transaction of sale of shares in her return of income. Further, where the assessee is of the belief that she fulfills the conditions of exemption and has gone ahead and claimed exemption under section 10(38), she is well within her rights to claim exemption under section 10(38) of the Act. The reporting of sale transaction and claiming exemption under section 10(38) cannot be equated with non-furnishing of particulars of income. There cannot be different yardsticks to determine whether the assessee has reported the transaction in her return of income in cases where the assessee has not claimed the exemption and in another case, where the assessee has claimed the exemption. The Revenue is well within its right to examine the claim of the exemption and whether the same has been rightly claimed or not and take appropriate action as per law however, as far as reporting of transaction is concerned, the same has been duly complied with by the assessee. Had the Assessing officer carried out basic enquiry and verification of the return of income before recording the reasons, in all likelihood, he himself would have found the basis so stated as not emerging from the material on the record. Therefore, the belief and the reasoning so arrived at by the Assessing officer that the income has escaped assessment on account of failure on part of the assessee to truly and fully ITA No. 1140/Chd/2019 Radha Mittal vs. ITO, Ludhiana 8 disclose the transaction has no material basis and cannot be sustained. The nexus between formation of belief and material basis which such belief is formed is clearly absent in the instant case and therefore, we are of the considered view that the notice issued under section 148 has no legal sanctity and cannot be sustained in the eyes of law and the same is hereby quashed and the consequent reassessment proceedings are thus set-aside. 9. In light of above, the other contentions raised by the ld AR have become academic and the same has been left open and not been adjudicated upon. 10. In the result, the appeal of the assessee is allowed in light of aforesaid directions. Order pronounced on 18.10.2022. Sd/- Sd/- (SANJAY GARG) (VIKRAM SINGH YADAV) या यक सद य/Judicial Member लेखा सद य/Accountant Member Dated: 18.10.2022 *AG* आदेश क % त&ल'प अ*े'षत/ Copy of the order forwarded to : 1. अपीलाथ+/ The Appellant 2. %,यथ+/ The Respondent 3. आयकर आय ु -त/ CIT 4. आयकर आय ु -त (अपील)/ The CIT(A) 5. 'वभागीय % त न0ध, आयकर अपील य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायक पंजीकार/ Assistant Registrar