Shri S. M. Sakthivel, Salem V. ITO, Salem

ITA 132/CHNY/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6230 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-05-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 15-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRAMOD NANGIA
• Assessee Lawyers: T S LAKSHMIVENKATARAMAN
• Keywords: Competent authority

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHE NNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NOS. 132 & 133 /MDS/2014 ASSESSMENT YEARS : 2000-01 & 2001-02 SHRI S.M.SAKTHIVEL, NO.311, E.B.COLONY, MOHANUR, NAMAKKAL DIST., [PAN: AVTPS 3045 B] ( !% /APPELLANT) VS INCOME TAX OFFICER, WARD-I(2), NAMAKKAL ( &'!% /RESPONDENT) / APPELLANT BY : SHRI T.S.LAKSHMIVENKATARAMAN, FCA / RESPONDENT BY : SHRI PRAMOD NANGIA, CIT / DATE OF HEARING : 20-05-2014 / DATE OF PRONOUNCEMENT : 21-07-2014 #( / O R D E R PER VIKAS AWASTHY, J.M: THE APPEALS HAVE BEEN FILED BY THE ASSESSEE IMPUGN ING THE ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS), SALEM RELEVANT TO THE ASSESSMENT YEARS (AYS) 2000-01 & 20 01-02, BOTH DATED 31-10-2013. 2. THE FACTS IN BRIEF AS EMANATING FROM THE RECORDS ARE : I.T.A. NOS. 132 & 133/MDS/14 2 A SURVEY OPERATION U/S.133A OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) WAS CONDUCTED AT TH E RESIDENCE CUM BUSINESS PREMISES OF THE ASSESSEE ON 10-01-2003. T HE ASSESSEE ALONG WITH OTHER PERSONS WAS CARRYING ON THE BUSINE SS OF SAND QUARRYING. A SWORN STATEMENT OF THE ASSESSEE WAS R ECORDED ON 30-01-2003, WHEREIN HE ADMITTED THAT THE NET INCOME FROM THE SAND QUARRY BUSINESS WAS ` 69,09,200/- AND HE HAS 2.5% SHARE IN THE SAID INCOME. THIS FACT WAS SUPPORTED BY THE DO CUMENTS AND NOTINGS IMPOUNDED BY THE DEPARTMENT DURING THE SURV EY. FOR THE AY.2000-01, THE ASSESSEE HAD NOT FILED ANY RETURN O F INCOME AND NOTICE U/S.148 OF THE ACT WAS ISSUED TO THE ASSESSE E ON 18-04- 2005. ANOTHER NOTICE U/S.142(1) WAS ALSO SERVED ON THE ASSESSEE ON 03-06-2005. THEREAFTER, SEVERAL LETTERS WERE IS SUED TO THE ASSESSEE TO FILE THE RETURN OF INCOME AND FURNISH D ETAILS. THE ASSESSEE NEITHER FURNISHED THE DETAILS AS CALLED FO R, NOR FILED RETURN OF INCOME. THUS, THE ASSESSING OFFICER WAS CONSTRA INED TO MAKE BEST JUDGMENT ASSESSMENT U/S.144 R.W.S.147 OF THE ACT. THE ASSESSING OFFICER VIDE ORDER DT.29-12-2006, FOR AY. 2000-01 ASSESSED THE TOTAL INCOME OF THE ASSESSEE FROM UN-E XPLAINED SOURCES AS ` 11,16,510/-. I.T.A. NOS. 132 & 133/MDS/14 3 AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE CIT(APPEALS), CHALLENGING THE JURISDICTION OF ASSESSING OFFICER TO INITIATE RE-ASSESSMENT PROCEED INGS U/S.147 BEYOND FOUR YEARS WITHOUT SEEKING APPROVAL FROM COM PETENT AUTHORITY. THE ASSESSEE ALSO ASSAILED THE ADDITION S MADE IN ASSESSMENT ORDER. THE CIT(APPEALS) VIDE IMPUGNED O RDER SUMMARILY REJECTED THE SUBMISSIONS OF THE ASSESSEE CHALLENGING RE-ASSESSMENT PROCEEDINGS. HOWEVER, ON MERITS, THE CIT(APPEALS) PARTLY ALLOWED THE APPEAL OF THE ASSES SEE. 3. IN RESPECT OF AY.2001-02, THE ASSESSEE FILED RET URN OF INCOME ON 19-12-2007 DECLARING INCOME OF ` 71,520/-. ASSESSMENT U/S.143(3) WAS COMPLETED ON 28-12-2007. HOWEVER, IN THE COURSE OF SURVEY U/S.133A, IT TRANSPIRED THA T THE ASSESSEE HAD EARNED INCOME FROM SAND QUARRY BUSINESS WHICH H AD ESCAPED ASSESSMENT. ACCORDINGLY, NOTICE U/S.148 OF THE ACT WAS ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER VIDE ORDER DT. 28-12-2007 U/S.143(3) R.W.S.147 MADE CERTAIN ADDITIONS IN THE INCOME RETURNED BY THE ASSESSEE. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APP EALS) AGAINST THE ASSESSMENT ORDER DT.28-12-2007 CHALLENG ING I.T.A. NOS. 132 & 133/MDS/14 4 RE-OPENING OF ASSESSMENT, AS WELL AS ADDITIONS MADE IN THE INCOME RETURNED BY THE ASSESSEE. THE CIT(APPEALS) UPHELD THE VALIDITY OF RE-OPENING PROCEEDINGS BUT DELETED SOME OF THE ADDITIONS MADE BY THE ASSESSING OFFICER. NOW, THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE ORDERS OF THE CIT(APPEALS) F OR BOTH THE AYS. 4. SHRI T.S.LAKSHMIVENKATARAMAN, APPEARING ON BEHAL F OF THE ASSESSEE SUBMITTED THAT IN THE AY.2000-01, RE-ASSES SMENT PROCEEDINGS HAVE BEEN INITIATED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT AY. THE ASSESSING OFFICER HAS NOT TAKEN SANCTION FROM COMPETENT AUTHORITY FOR INITIATING RE -ASSESSMENT PROCEEDINGS. THEREFORE, THE ASSESSMENT IS BAD IN L AW. THE CIT(APPEALS) IN APPELLATE PROCEEDINGS HAS NOT PROPE RLY ADJUDICATED THE ISSUE OF RE-OPENING OF ASSESSMENT. THE IMPORTANT LEGAL ISSUE RAISED BY THE ASSESSEE REGARDING SERVIN G OF NOTICE U/S.148 WITHOUT COMPLYING WITH THE PROVISIONS OF SE CTION 151 HAS NOT BEEN ANSWERED BY THE CIT(APPEALS). AS REGARDS THE ADDITION OF ` 5,96,434/- U/S.69 OF THE ACT, THE LD.AR SUBMITTED T HAT THE ASSESSING OFFICER HAS TAKEN THE CLOSING CAPITAL ON 31-03-2002 AS ` 21,33,304/-, WHEREAS A PERUSAL OF STATEMENT OF AFFA IRS AS ON I.T.A. NOS. 132 & 133/MDS/14 5 31-03-2002 CLEARLY SHOW THAT THE CAPITAL AS ON 31-0 3-2002 WAS ONLY ` 9,87,990/-. 5. IN RESPECT OF AY.2001-02, THE LD.AR CONTENDED TH AT THE ADDITION U/S.69 OF THE ACT AS UN-EXPLAINED INVESTME NT IN CONSTRUCTION OF RESIDENTIAL HOUSE HAS BEEN MADE MER ELY ON THE BASIS OF FINDINGS GIVEN IN THE ASSESSMENT ORDERS RE LEVANT TO THE AY.2000-01 WHICH IS ALREADY UNDER APPEAL. APART FROM THE ABOVE, NO OTHER ISSUE WAS RAISED BY THE LD.AR OF THE ASSESSEE FROM THE GROUNDS OF APPEAL. 6. ON THE OTHER HAND, SHRI PRAMOD NANGIA, APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDERS OF T HE CIT(APPEALS) FOR BOTH THE AYS. THE LD.DR FURTHER CONTENDED THAT FOR ISSUING NOTICE U/S.148, PROPER PROCEDURE HAS BE EN FOLLOWED. THE LD.DR MADE ALTERNATIVE SUBMISSION THAT, IN AY.2 000-01, THE ASSESSEE HAS NOT FILED RETURN OF INCOME, WHERE NO R ETURN HAS BEEN FILED, THE PROVISIONS OF SECTION 151 WILL NOT BE AP PLICABLE. THUS, NO SANCTION IS REQUIRED TO BE TAKEN FOR INITIATING RE- ASSESSMENT PROCEEDINGS. I.T.A. NOS. 132 & 133/MDS/14 6 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. A PERUSAL OF THE IMPUGNED O RDER FOR THE AY.2000-01 SHOWS, THAT THE FINDINGS OF THE CIT(APPE ALS) ON THE ISSUE OF RE-OPENING OF ASSESSMENT U/S.147 ARE SKETC HY AND ARE THEREFORE, NOT SUSTAINABLE. THE CIT(APPEALS) HAS O NLY MENTIONED THAT THE ASSESSING OFFICER HAS FOLLOWED THE DUE PRO CESS OF LAW. THE CIT(APPEALS) HAS NEITHER DISCUSSED ABOUT THE VA LIDITY OF RE- ASSESSMENT NOR HE HAS GIVEN THE DETAILS OF APPROVAL FOR ISSUANCE OF NOTICE U/S.148. THE PROVISO TO SUB-SECTION(1) O F SECTION 151 CLEARLY STATES THAT, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT AY, NO NOTICE U/S.148 SHALL BE ISSUED UNLE SS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE R EASONS RECORDED BY THE ASSESSING OFFICER, THAT IT IS A FIT CASE FOR ISSUE OF SUCH NOTICE. THEREFORE, THE ARGUMENT OF THE LD.DR THAT NO SANCTION IS REQUIRED U/S.151, IN CASE NO RETURN HAS BEEN FIL ED, IS NOT TENABLE. IT IS AN UN-DISPUTED FACT THAT IN AY.2000-01, RE-AS SESSMENT PROCEEDINGS HAVE BEEN INITIATED AGAINST THE ASSESSE E AFTER THE EXPIRY OF FOUR YEARS. IN SUCH CIRCUMSTANCES, IT WA S ESSENTIAL FOR THE ASSESSING OFFICER TO SEEK SANCTION FROM THE COM PETENT AUTHORITY BEFORE ISSUE OF NOTICE U/S.148. AFTER PE RUSAL OF IMPUGNED ORDER AND ASSESSMENT ORDER FOR THE AY.2000-01, WE F IND THAT, VITAL I.T.A. NOS. 132 & 133/MDS/14 7 INFORMATION WITH RESPECT TO APPROVAL FROM COMPETENT AUTHORITY FOR RE-OPENING ASSESSMENT AFTER EXPIRY OF FOUR YEARS IS NOT FORTH COMING. THE SAID INFORMATION IS NECESSARY TO ADJUD ICATE THE VALIDITY OF RE-ASSESSMENT PROCEEDINGS. IN THE BACK DROP OF AFORESAID FACTS, WE DEEM IT APPROPRIATE TO REMIT TH E CASE BACK TO THE ASSESSING OFFICER, TO GIVE COMPLETE DETAILS OF THE APPROVALS FOR RE-OPENING OF THE ASSESSMENT FOR AY.2000-01. 8. IN BOTH THE AYS, THE ASSESSEE HAS ASSAILED THE F INDINGS OF THE CIT(APPEALS) ON THE ISSUE OF CONFIRMING ADDITIO N U/S.69 OF THE ACT. THE LD.AR HAS PLACED ON RECORD A PHOTO COPY O F STATEMENT OF AFFAIRS FOR THE PERIOD STARTING FROM 01-04-2001 TO 31-03-2002. AS PER THE STATEMENT, CAPITAL AS ON 31-03-2002 IS ` 9,87,790/-. THE CIT(APPEALS) IN HIS ORDER HAS MENTIONED THAT THE AS SESSEE HAD NOT PRODUCED ANY DOCUMENT BEFORE THE ASSESSING OFFI CER FOR VERIFICATION. WE DEEM IT APPROPRIATE TO REMIT THIS ISSUE BACK TO THE ASSESSING OFFICER FOR PROPER APPRECIATION OF FACTS AND TO VERIFY THE OPENING AND CLOSING BALANCES FROM THE BOOKS OF ACCO UNTS MAINTAINED BY THE ASSESSEE. THE ASSESSING OFFICER SHALL ALSO ASCERTAIN THE VERACITY OF THE FINANCIAL STATEMENTS OF THE ASSESSEE BEFORE RECORDING HIS FINDINGS. THE ASSESSEE IS DIR ECTED TO PRODUCE ALL RELEVANT RECORDS BEFORE THE ASSESSING OFFICER F OR THE AYS.2000- I.T.A. NOS. 132 & 133/MDS/14 8 01, AND AY.2001-02. THE ASSESSING OFFICER SHALL DE CIDE THIS ISSUE AFRESH, IN ACCORDANCE WITH LAW. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON MONDAY, THE 21 ST JULY, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( ! ) (DR. O.K. NARAYANAN) (VIKAS AWAS THY) / VICE PRESIDENT ! '# / JUDICIAL MEMBER $ /CHENNAI, %'& /DATED: 21 ST JULY, 2014 TNMM ''(!)*+* /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ' ' ,-. /CIT(A) 4. ' ' , /CIT 5. */0!!12 /DR 6. 0345 /GF