The Khushian Co-op Group Housing Society Ltd., Panchkula V. ITO, W-5, Panchkula

ITA 1149/CHANDI/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7012 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 21-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAYA INDER SINGH SIDHU CIT
• Keywords: Principle of natural justice; Additional evidence; Reason to believe; Set aside
• Section: 142(1); 147; 148; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH .., !' '# $, % &' BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M ITA NO. 1149/CHD/2019 ASSESSMENT YEAR : 2010-11 THE KHUSHIAN CO - OPERATIVE GROUP HOUSING SOCIETY LTD. #303, GHS 7A, SECTOR 24, PANCHKULA THE ITO WARD-5, PANCHKULA PAN NO: AABTT3479M APPELLANT RESPONDENT !' ASSESSEE BY : SHRI TEJ MOHAN SINGH, ADVOCATE #!' REVENUE BY : SHRI DAYA INDER SINGH SIDHU, ADDL. CIT $ %! & DATE OF HEARING : 07/09/2020 '()*! & DATE OF PRONOUNCEMENT : 07/09/2020 &(/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DT. 18/06/2019 OF LD. CIT(A)-4, LUDHIANA. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L: 1. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HA S ERRED IN LAW IN UPHOLDING THE FRAMING OF EX-PARTE ASSESSMENT FRAMED U/S 148 I N THE ABSENCE OF SERVICE OF ANY NOTICE UPON THE ASSESSEE WHICH IS AGAINST THE PRINCIPALS O F NATURAL JUSTICE AND AS SUCH THE ORDER PASSED IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 2. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HA S ERRED IN LAW IN UPHOLDING THE REOPENING THE ASSESSMENT BY ISSUANCE OF NOTICE U/S 148 IN AS MUCH AS THERE HAS BEEN NO ESCAPEMENT OF INCOME AND ORDER PASSED IS ILLEGAL , ARBITRARY AND UNJUSTIFIED. 3. THAT THE ENTIRE REASSESSMENT HAS BEEN FRAMED WIT HOUT THERE BEING A REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT BUT ONLY UNDER THE REALM OF SUSPICION AND MAKING OF ROVING AND FISHING ENQUIRIES WHICH IS NOT PERMISSIBLE AND AS SUCH THE REASSESSMENT FRAMED IS ILLEGAL, ARBITRARY AND UNJUS TIFIED. 2 4. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN UPHOLDING OF THE ASSESSMENT FRAMED U/S 148 ON THE BASIS OF MECHANICA L APPROVAL GIVEN BY THE PR.CIT, PANCHKULA WHICH IS NOT PERMISSIBLE AND AS SUCH THE ORDER PASSED IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 5. WITHOUT PREJUDICE TO THE ABOVE, THE LD. COMMISSI ONER OF INCOME TAX(APPEALS) HAS ERRED IN UPHOLDING THE ADDITION OF RS.48,82,699/- ON ACCO UNT OF CASH DEPOSITS IN THE BANK ACCOUNT IN UTTER DISREGARD OF THE EXPLANATIONS REND ERED DURING THE COURSE OF APPELLATE PROCEEDINGS ALONGWITH EVIDENCE PLACED ON RECORD IN THE SHAPE OF LIST OF MEMBERS/AFFIDAVITS AND AS SUCH THE ORDER PASSED IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 6. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS FURTHER ERRED IN HOLDING THAT THE PRINCIPAL OF MUTUALITY IS NOT ATTRACTED IN THE CASE OF THE ASSESSEE WHICH IS ARBITRARY AND UNJUSTIFIED. 7. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AND FACTS OF THE CASE AND IS, THUS, UNTENABLE. 3. THE MAIN GRIEVANCE OF THE ASSESSEE RELATES TO TH E SUSTENANCE OF ADDITION OF RS. 48,82,699/- MADE BY THE A.O. ON ACCOUNT OF C ASH DEPOSITED IN THE BANK ACCOUNT. 4. FACTS OF THE CASE IN BRIEF ARE THAT THE A.O. ON THE BASIS OF INFORMATION THAT THE ASSESSEE HAD MADE CASH DEPOSITS OF RS. 48,82,69 9/- IN ITS SAVING BANK ACCOUNT DURING THE YEAR UNDER CONSIDERATION, REOPEN ED THE CASE OF THE ASSESSEE UNDER SECTION 147 OF THE INCOME TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS ACT). THE A.O. ISSUED THE NOTICE UNDER SECTION 148 OF THE ACT WHICH WAS SERVED UPON THE ASSESSEE THROUGH AFFIXTURE. THE A.O . ALSO ISSUED NOTICE UNDER SECTION 142(1) OF THE ACT. ACCORDING TO THE A.O. NO BODY COMPLIED THE NOTICES, HE THEREFORE FRAMED THE ASSESSMENT UNDER SECTION 14 4 OF THE ACT AND MADE THE ADDITION OF RS. 48,82,699/-. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND FURNISHED THE WRITTEN SUBMISSION WHICH HAS BEEN INC ORPORATED IN PARA 3 OF THE IMPUGNED ORDER, FOR THE COST OF REPETITION THE SAME IS NOT REPRODUCED HEREIN. 6. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE SUSTAINED THE ACTION OF THE A.O. IN REOPENING OF THE ASSESSME NT UNDER SECTION 147 OF THE ACT BY OBSERVING THAT THE FORMATION OF BELIEF BY TH E A.O. WAS WITHIN THE REALM OF 3 THE SUBJECTIVE SATISFACTION AND THAT THE A.O. HAD F ORMED REASONS TO BELIEVE REGARDING ESCAPEMENT OF INCOME ON THE BASIS OF INFO RMATION RECEIVED, FURTHER EXAMINED THE CASE REPORT OF THE ASSESSEE AND ON THE BASIS OF INFORMATION THAT THE PRIMAFACIE INCOME HAS ESCAPED ASSESSMENT, THE R EASONS WERE RECORDED AND ASSESSMENT OF THE ASSESSEES INCOME WHICH HAD E SCAPED INCOME WAS REOPENED. RELIANCE WAS PLACED ON THE JUDGMENT OF TH E HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKER S PVT. LTD. REPORTED AT 291 ITR 500. 6.1 THE LD. CIT(A) ALSO SUSTAINED THE ADDITION MADE BY THE A.O. BY OBSERVING THAT THE ASSESSEE ALTHOUGH EXPLAINED THE CONCEPT OF MUTUALITY AT LENGTH, HOWEVER, THE COPY OF MEMORANDUM OF ASSOCIATION, ART ICLE OF ASSOCIATION OF THE ASSESSEE SOCIETY AND THE MERE FACTS THAT THE ASSESS EE WAS A REGISTERED SOCIETY, DID NOT PROVE THE NATURE OF ACTIVITY OF THE SOCIETY . SHE ALSO OBSERVED THAT THE ASSESSEE SOCIETY HAD MADE PAYMENTS TO HUDA TOWARDS THE CONSTRUCTION OF SOCIETY IN THE LAND ALLOTTED BY THE HUDA WHICH FAIL ED TO PROVE THAT HOW IT WAS A MUTUAL BENEFIT ORGANIZATION. 7. NOW THE ASSESSEE IS IN APPEAL. 8. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBM ISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED AN APPLICATION FOR ADMISSION OF THE ADDITIONAL EVIDENCE WHICH READ AS UNDER: THE ABOVEMENTIONED APPEAL IS FIXED FOR HEARING ON T HE 7 TH OF SEPTEMBER, 2020. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS MADE AN ADDITION OF RS. 48,82,699/- ON ACCOUNT OF DEPOSITS IN THE BANK ACCO UNT OF THE ASSESSEE-SOCIETY. THE NOTICES FOR THE INSTANT YEAR WERE ISSUED AT THE EAR LIER ADDRESS OF THE OFFICE BEARER # G-303, RAIL VIHAR, SECTOR 4, MDC, PANCHKULA SH. RAJESH SHO ERAN. HE HAD SOLD THIS PLACE IN THE YEAR 2010-11. THUS, THE ASSESSEE-SOCIETY WAS NOT IN A PO SITION TO APPEAR BEFORE THE ASSESSING OFFICER AND PLACE ON RECORD THE EXPLANATION IN RESP ECT OF CASH DEPOSITS IN THE BANK ACCOUNT. THE FACT OF NOT HAVING RECEIVED ANY NOTICE OF HEARING ISSUED BY THE ASSESSING OFFICER WAS BROUGHT TO THE NOTICE OF THE COMMISSION ER OF INCOME TAX (APPEALS). IT WAS FURTHER SUBMITTED THAT THE AMOUNT REPRESENTED CONTR IBUTIONS RECEIVED FROM ITS MEMBERS. LIST OF MEMBERS ALONGWITH A FEW AFFIDAVITS WERE PLA CED ON RECORD AS IS EVIDENT FROM THE SUBMISSIONS OF THE ASSESSEE REPRODUCED IN THE APPEL LATE ORDER. THE ASSESSEE HAS SINCE RECEIVED AFFIDAVITS FROM ALL THE MEMBERS, COPIES OF THE RECEIPTS ISSUED, CASH BOOK, LEDGER 4 AS WELL AS ASSESSMENT ORDERS FOR THE SUBSEQUENT TWO YEARS, ETC. WHICH ARE PLACED AS ADDITIONAL EVIDENCE. AS SUCH IT IS, THEREFORE, RESPECTFULLY PRAYED THAT THE ADDITIONAL EVIDENCE MAY PLEASE BE ADMITTED AND ADJUDICATED UPON WHICH GOES TO THE ROO T OF THE ADDITIONS MADE AND UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE ALSO FURNISHED FOLLOWING DOCUMENTS ALO NGWITH THE AFORESAID APPLICATION : SR. NO. DESCRIPTION PAGES 1. DETAILS OF AMOUNT DEPOSITED IN CASH BY THE MEMBERS OF THE SOCIETY ALONGWITH THEIR AFFIDAVITS AND RECEIPTS. 1-52 2. COPY OF THE CASH-BOOK FOR THE PERIOD OF 01.04.20 09 TO 31.03.2010 OF THE SOCIETY. 53-57 3. COPY OF THE LEDGER ACCOUNT FOR THE PERIOD OF 01.04.2009 TO 31.0 3.2020 OF THE SOCIETY. 58-68 4. COPY OF THE LEDGER ACCOUNT OF BANK MAINTAINED WI TH VIJAYA BANK. 69-70 5. COPY OF THE ASSESSMENT ORDER DATED 27.12.2018 FO R THE ASSESSMENT YEAR 2010-11. 71-72 6. COPY OF THE ASSESSMENT ORDER DATED 27.11.2019 FO R THE ASSESSMENT YEAR 2011-12. 73-74 7. COPY OF FORM - L DATED 31.01.2008 APPROVED BY TH E ASSTT. REGISTRAR, CO- OPERATIVE SOCIETIES, NARAINGARH 75-76 8. COPY OF FORM - L DATED 18.03.2010 APPROVED BY TH E ASSTT. REGISTRAR, CO- OPERATIVE SOCIETIES, NARAINGARH 77-78 9. COPY OF THE PAN CARD OF THE SOCIETY. 79 10. COPY OF THE REGISTRATION CERTIFICATE OF THE SOC IETY DAT ED 04.02.2006 ISSUED BY THE ASSTT. REGISTRAR, CO-OPERATIVE SOCIETIES, NA RAINGARH. 80-81 11. COPY OF THE LETTER DATED 08.01.2009 ADDRESSED T O THE ASSTT. REGISTRAR CO- OP SOCIETIES, NARAINGARH FOR CHANGE OF REGISTERED OFFI CE OF THE SOCIETY ALONGWITH EXTRACT OF MINUTES OF GENERAL BODY MEETIN G OF THE SOCIETY HELD ON 06.06.2008. 82-85 12. COPY OF THE LETTER DATED 08.01.2008 ADDRESSED TO TH E MANAGER, VIJAY BANK, SECTOR 11, PANCHKULA 86 13. COPY OF THE LETTER DATED 22.06.2017 ADDRESSED T O THE MANAGER, VIJAY BANK , SECTOR 11, PANCHKULA. 87 9. IT WAS CONTENDED THAT THE AFORESAID DOCUMENTS IN THE FORM OF AFFIDAVITS AND RECEIPTS GO TO THE ROOT OF THE MATTER WHICH COU LD NOT BE PRODUCED EARLIER, SINCE THE ASSESSEE WAS NOT ABLE TO PROCURE THE SAME FROM ALL THE MEMBERS OF THE ASSESSEE SOCIETY. IT WAS CONTENDED THAT THE A.O . PASSED THE ASSESSMENT ORDER EXPARTE WITHOUT SERVING ANY NOTICE UPON THE A SSESSEE AND THE LD. CIT(A) HAD ALSO NOT APPRECIATED THE FACTS IN RIGHT PERSPEC TIVE. HE REQUESTED THAT THE 5 MATTER MAY BE SET ASIDE TO THE A.O. FOR A FRESH ADJ UDICATION AFTER CONSIDERING THE ADDITIONAL EVIDENCE NOW PRODUCED BY THE ASSESSE E. 10. IN HIS RIVAL SUBMISSIONS THE LD. DR ALTHOUGH SU PPORTED THE ORDERS OF THE AUTHORITIES BELOW BUT COULD NOT CONTROVERT THE AFOR ESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 11. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE IT IS AN ADMITTED FACT THAT THE A.O. PASSED THE ASSESSMENT ORDER EXPARTE, AND E VEN THE NOTICE UNDER SECTION 148 WAS CLAIMED TO HAVE BEEN SERVED UPON TH E ASSESSEE THROUGH AFFIXTURE. HOWEVER, IT IS NOT CLEAR AS TO WHETHER T HE AFFIXTURE WAS IN THE PRESENCE OF INDEPENDENT WITNESSES AND AT THE RIGHT PLACE BEC AUSE THE A.O. HIMSELF ADMITTED IN THE ASSESSMENT ORDER DT. 10/10/2017 THA T THE POSTAL AUTHORITY RETURNED THE NOTICE UNDER SECTION 142(1) OF THE ACT WITH THE REMARKS THAT THE ASSESSEE WAS NOT LOCATED AT THE ADDRESS. THEREFOR E, IT IS NOT CLEAR AS TO WHETHER THE NOTICES UNDER SECTION 148 OF THE ACT OR 142(1) OF THE ACT WERE SERVED UPON THE ASSESSEE BY THE A.O. BEFORE PASSING THE ASSESSMENT ORDER UNDER SECTION 144 OF THE ACT. IT IS ALSO NOTICED TH AT THE LD. CIT(A) SUSTAINED THE ADDITION BY OBSERVING THAT THE ASSESSEE HAD NOT BRO UGHT ON RECORD HOW ITS INCOME WAS EXEMPT AND HAD FAILED TO PROVE, HOW IT W AS A MUTUAL BENEFIT ORGANIZATION. ON THE CONTRARY THE ASSESSEE IN ITS WRITTEN SUBMISS ION REPRODUCED BY THE LD. CIT(A) AT PARA 3 OF THE IMPUGNED ORDER EXPLAINE D THAT IT WAS A CO-OPERATIVE SOCIETY OF EX SERVICE MEN HAVING ITS MAIN OBJECT TO ACQUIRE EITHER THROUGH OUTRIGHT PURCHASE OR ON LEASE LAND FOR DEVELOPMENT AND CONSTRUCTION OF RESIDENTIAL HOUSE / FLATS FOR THE MEMBERS OF THE SO CIETY AND WORKED ON THE PRINCIPLES OF MUTUALITY. IN THE PRESENT CASE THE AS SESSEE FURNISHED THE AFFIDAVITS OF ITS MEMBERS ALONGWITH RECEIPT TO PROVE THE GENUI NENESS OF THE TRANSACTION 6 RELATING TO CASH DEPOSITED IN THE BANK ACCOUNT. THE SAID DOCUMENTS WERE NOT FURNISHED BEFORE THE AUTHORITIES BELOW FOR THE REAS ONS THAT THE ASSESSEE WAS NOT IN A POSITION EARLIER TO HAVE THE AFFIDAVITS OF ALL THE MEMBERS. IN OUR OPINION THE NEW EVIDENCES NOW FURNISHED BY THE ASSESSEE GO TO T HE ROOT OF THE MATTER AND ARE VERY RELEVANT TO RESOLVE THE PRESENT CONTROVERS Y. WE THEREFORE BY KEEPING IN VIEW THE PRINCIPLES OF NATURAL JUSTICE, DEEM IT APP ROPRIATE TO REMAND THIS CASE BACK TO THE FILE OF THE A.O. TO BE ADJUDICATED AFRE SH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF B EING HEARD TO THE ASSESSEE AND BY CONSIDERING THE NEW EVIDENCES NOW FURNISHED BY THE ASSESSEE. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 07/09/2020 ) SD/- SD/- '# $ .., (SANJAY GARG ) ( N.K. SAI NI) % &'/ JUDICIAL MEMBER / VICE PRESIDENT AG DATE: 07/09/2020 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE