Smt. Pushpa Rani, Delhi V. ITO, New Delhi

ITA 1287/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3893 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 24-05-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 23-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Assessee Lawyers: K P GANGULI
• Keywords: Gift; Income from undisclosed sources
• Section: 143(3); 234B; 143(2); 147; 148; 144; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI K.G . BANSAL, ACCOUNTANT MEMBER I.T.A. NO.1287/D/2010 ASSESSMENT YEAR : 1999-2000 SMT. PUSHA RANI C/O M/S VS. INCOME TAX OFFICER, ASHOK MOTORS, 144-A, GNA WARD 20(2), MARKET, KASHMERE GATE, DELHI NEW DELHI PAN NO.AAHPR 9557J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.P. GANGULI, ADVOCATE RESPONDENT BY : SHRI H.K. LAL, SR. DR ORDER PER K.G. BANSAL: AM: THIS APPEAL OF THE ASSESSEE EMANATES FROM THE ORDER OF CIT(A)-XXII, NEW DELHI, PASSED ON 18.01.2010 IN APP EAL NO.289/06- 07, PERTAINING TO ASSESSMENT YEAR 1999-00. THE CO RRESPONDING ORDER OF ASSESSMENT WAS FRAMED BY THE INCOME TAX OF FICER, WARD 20(2), NEW DELHI ( ASSESSING OFFICER FOR SHORT), ON 22.12.2006 UNDER THE PROVISIONS OF SECTION 143(3) READ WITH SE CTION 148 OF THE INCOME TAX ACT, 1961. 1.2 THE ASSESSEE HAS TAKEN UP FOUR SUBSTANTIVE GROU NDS IN THE APPEAL, WHICH READ AS UNDER:- 1. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND FAC TS OF THE CASE BY UPHOLDING THAT THE PROCEEDING INITIATED U/S 2 148 OF THE INCOME-TAX ACT ARE VALID PROCEEDINGS AND IGNORED THE FACT THAT THE APPELLANT /HAS DULY DECLA RED THE RECEIPT OF GIFT OF RS.1,00,000/- IN HER INCOME- TAX RETURN ORIGINALLY FILED ON 27.09.1999 AND ALSO IGNO RED THE FACT THAT THE REASONS FOR REOPENING OF THE ASSESSMENT ARE BASED ON THE INFORMATION RECEIVED FROM THE INTELLIGENCE WINGS AND WERE NOT HIS OWN REASONS AND BELIEF. 2. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND FAC TS OF THE CASE BY UPHOLDING THAT THE ASSESSMENT FRAMED U/ S 143(3)/148 OF THE INCOME TAX ACT, WITHOUT ISSUING STATUTORY NOTICE U/S 143(2) OF THE INCOME TAX ACT, ARE VALID IN LAW. 3. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND FAC TS OF THE CASE BY CONFIRMING THE ADDITION OF RS.1,00,000/ - BEING THE AMOUNT OF GIFT FROM SHRI MUKESH GUPTA AS APPELLANTS INCOME FROM UNDISCLOSED SOURCES AND BY NOT CONSIDERING THE DOCUMENTS FILED BY THE APPELLAN T IN SUPPORT OF THE GIFT RECEIVED BY HER. 4. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND FAC TS OF THE CASE BY CONFIRMING THE CHARGING OF INTEREST U/S 234B OF THE INCOME TAX ACT AND IN ANY OTHER EVENT THE INTEREST CHARGED IS EXCESSIVE AND ARBITRARY. 2. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE MADE SUBMISSIONS ONLY IN RESPECT OF GROUND NO.2 TO THE E FFECT THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE ASSESSMENT, W HICH WAS MADE WITHOUT ISSUE OF STATUTORY NOTICE U/S 143(2). 2.1 IN THIS CONNECTION, HE REFERRED TO THE FINDINGS OF CIT(A) ON PAGES 10 & 11 OF HIS ORDER IN PARAGRAPH (IV), WHICH READS AS UNDER:- (IV) SECTION 147 OF THE INCOME-TAX ACT, IS A SELF- CONTAINED CODE DEALING WITH SUBSTANTIVE AS WELL AS PROCEDURAL ASPECT OF REASSESSMENT CASES. WHERE 3 PROCEEDINGS U/S 147 ARE INITIATED, IT DOES NOT MAKE A DIFFERENCE WHETHER THE ASSESSMENT PROCEEDINGS HAVE BECOME FINAL ON ACCOUNT OF FRAMING AN ASSESSMENT UNDER SECTION 143(3) OR ON ACCOUNT OF NON-ISSUE OF A NOTICE U/S 143(2) WITHIN STIPULATED PERIOD. ACT DOES NOT REQUIRE ISSUANCE OF NOTICE U/ S 143(2). THIS WAS PRONOUNCED BY MUMBAI HIGH COURT IN THE CASE OF BHAVIN J. VAKIL VS. DCIT (2006 ) 282 ITR (AT) 32 (MUMBAI). THE ASSESSING OFFICER HAS OF COURSE MENTIONED THAT THE ASSESSMENT WAS COMPLETED U/S 143(3)/148. THIS IS A MISTAKE, WHICH DOES NOT VITIATE THE ASSESSMENT ORDER. KEEPING IN VIEW, THE ISSUE DISCUSSED ABOVE AND THE FACTS OF TH E CASE, I HOLD THE VIEW THAT THE ASSESSING OFFICER HA S DONE RIGHT IN TREATING THE GIFT OF RS.1,00,000/- AS INCOME FROM UNDISCLOSED SOURCES AND I CONFIRM THE ADDITION MADE ON THIS COUNT. OTHER GROUNDS OF APPEAL REQUIRE NO SEPARATE ADJUDICATION. 2.2 HE DISTINGUISHED THE FACTS OF THE CASE OF BHAVI N J. VAKIL (SUPRA) RELIED UPON BY THE LEARNED CIT(A). THE FACTS OF TH AT CASE ARE THAT THE NOTICE U/S 143(2) WAS ISSUED BY THE ASSESSING OFFIC ER ON 23.06.1997, WHICH WAS SERVED ON THE ASSESSEE ON 07.07.1997, AFT ER EXPIRY OF THE TIME-LIMIT. SINCE THERE WAS NO VALID NOTICE U/S 14 3(2), THE PROCEEDINGS WERE DROPPED. SUBSEQUENTLY, A NOTICE U /S 148 WAS ISSUED ON 25.11.1997. THE ASSESSMENT WAS COMPLETED U/S 143(3) READ WITH SECTION 147. ONE OF THE ARGUMENTS TAKEN BY THE ASSESSEE WAS THAT PROCEEDINGS U/S 147 WERE INITIATED BECAUSE THE ASSESSING OFFICER WAS UNABLE TO SERVE NOTICE U/S 143(2) WITHI N THE PRESCRIBED TIME-LIMIT, WHICH CANNOT BE PERMITTED. THIS ARGUME NT FOUND FAVOUR WITH THE TRIBUNAL, AND IT WAS HELD THAT THE CONTENT ION IS FULLY SUPPORTED BY THE DECISION OF HONBLE SUPREME COURT RELIED UPO N BY THE ASSESSEE. THUS, NOTICE U/S 148 WAS HELD TO BE ILLE GAL. 4 2.3 IN ORDER TO SUPPORT THE CASE THAT ASSESSMENT U/ S 143(3) READ WITH SECTION 148 CANNOT BE MADE WITHOUT SERVICE OF NOTICE U/S 143(2), RELIANCE HAS BEEN PLACED ON THE DECISION OF SPECIAL BENCH OF DELHI TRIBUNAL IN THE CASE OF RAJ KUMAR CHAWLA VS. INCOME -TAX OFFICER (2005) 277 ITR (AT) (DELHI). IN THIS CASE, IT HAS BEEN HELD THAT THE ASSESSMENT MUST BE MADE U/S 143(3) OR 144 AFTER COM PLYING WITH ALL THE MANDATORY PROVISIONS. ACCORDINGLY, IT IS INCUM BENT UPON THE ASSESSING OFFICER TO ISSUE NOTICE U/S 143(2) WITHIN THE PERIOD AS STIPULATED IN THE PROVISO THERE-UNDER. IN THAT VIE W OF THE MATTER, IT HAS BEEN HELD THAT WHERE AN ASSESSMENT IS MADE WITHOUT ISSUANCE OF SUCH A NOTICE, THE RETURN WILL BE DEEMED TO HAVE BE EN ACCEPTED. 2.4 THE LEARNED COUNSEL ALSO RELIES ON THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF INCOME-TAX OFFICER V S. R.K. GUPTA (2009) 308 ITR (AT) 49. IN THIS CASE, IT IS HELD T HAT PROVISO TO SECTION 148(1), INSERTED BY FINANCE ACT, 2006 WITH RETROSPE CTIVE EFFECT FROM 01.10.1991, MANDATES SERVICE OF NOTICE U/S 143(2) A T ANY TIME BEFORE COMPLETION OF RE-ASSESSMENT PROCEEDINGS. THEREFORE , IF AN ASSESSMENT IS MADE WITHOUT ISSUANCE OF SUCH A NOTIC E, THE ORDER OF ASSESSMENT SHALL BE BAD IN LAW. 2.5 IN REPLY, THE LEARNED DR RELIES ON THE ORDER OF LEARNED CIT(A). 2.6 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SU BMISSIONS MADE BEFORE US. THE FACTS ARE THAT ASSESSMENT PROC EEDINGS U/S 148 WERE INITIATED BY ISSUING THE NOTICE ON 21.03.2006. THESE PROCEEDINGS WERE COMPLETED ON 22.12.2006. THE ASSE SSEE HAD FILED 5 THE RETURN UNDER PROTEST ON 21.04.2006. NO NOTICE U/S 143(2) WAS SERVED ON THE ASSESSEE BETWEEN 21.04.2006 AND 22.12 .2006. THE DECISION OF THE TRIBUNAL IN THE CASE OF RAJ KUMAR C HAWLA AND R.K. GUPTA (SUPRA) CLEARLY LAY DOWN THAT IT IS INCUMBENT ON THE ASSESSING OFFICER TO ISSUE NOTICE U/S 143(2) BEFORE COMPLETIO N OF ASSESSMENT U/S 147, FAILING WHICH THE RETURN SHALL BE DEEMED T O HAVE BEEN ACCEPTED. THE DECISION IN THE CASE OF BHAVIN J. VA KIL DEALS WITH A TOTALLY DIFFERENT ISSUE AND, THEREFORE, THE RATIO O F THAT CASE IS NOT APPLICABLE ON THE FACTS OF THE CASE BEFORE US. IN THESE CIRCUMSTANCES, IT IS HELD THAT THE ASSESSMENT FRAME D IS BAD IN LAW AND THE RETURN FILED BY THE ASSESSEE IS DEEMED TO H AVE BEEN ACCEPTED. 2.7 AS THE ASSESSMENT FAILS ON THE PRELIMINARY GROU ND, IT IS NOT NECESSARY FOR US TO EXAMINE THE MERITS OF THE ADDIT ION OF RS.1,00,000/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF GIFTS RECEIVED FROM SHRI MUKESH GUPTA. 3. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . 4. THIS ORDER WAS PRONOUNCED IN OPEN COURT ON 04.06 .2010. SD/- SD/- ( A.D. JAIN ) ( K.G. BANSAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER DT.4/6/2010 NS 6 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. THE CIT 4. THE CIT (A), NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY BY ORDER (ITAT, NEW DELHI).