Ms. Parul J. Sampat, Ahmedabad V. The Income Tax Officer, Ward-2(5), Baroda

ITA 1321/AHD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1929 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 31-03-2016
• Assessment Year: 1998-1999
• Appeal Filed On: 05-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIA
• Section: 147; 246; 148

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA.NO.1321/AHD/2014 / ASSTT. YEAR: 1998-99 MS.PARUL J. SAMPAT 202, INDRAPRASTH COMPLEX RACE COURSE, BARODA. PAN : AMLPS 5414 R VS ITO, WARD - 2(5) BARODA. ./ ITA.NO.1322/AHD/2014 / ASSTT. YEAR: 1998-99 MS.PREETI M. SAMPAT 202, INDRAPRASTH COMPLEX RACE COURSE, BARODA. PAN: AVPPS 1664 R VS ITO, WARD - 2(5) BARODA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI ANIL R.SHAH WITH MRS.KINJAL SHAH REVENUE BY : SHRI DEEPAK SUTARIA, SR.DR / DATE OF HEARING : 31/03/2016 / DATE OF PRONOUNCEMENT: 01/04/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANC E OF THE ASSESSEES AGAINST COMMON ORDER OF THE LD.CIT(A)-II, BARODA DATED 27.2.2014 PASSED IN THE ASSTT.YEAR 1998-99. ITA NO.1321 AND 1322/AHD/2014 2 2. BEFORE ADVERTING TO THE SPECIFIC GRIEVANCE OF TH E ASSESSEE, WE FIND PECULIAR FACTS IN THE PRESENT APPEALS. THE ASSESSE ES HAVE MADE DECLARATION UNDER VDIS 1997. MS.PARUL SAMPAT HAS D ISCLOSED A CASH OF RS.3.00 LAKHS. SIMILARLY, MS. PREETI SAMPATI HAS ALSO MADE A DECLARATION OF RS.3.00 LAKHS. BOTH THE ASSESSEES H AVE FAILED TO PAY TAX ON THE SO-CALLED DISCLOSURE. THE AO HAS INITIATED PROCEEDINGS UNDER SECTION 147 ON THE GROUND THAT BOTH THE ASSESSEES H AVE ADMITTED UNDISCLOSED INCOME OF RS.3.00 LAKHS IN THEIR DISCLO SURE UNDER VDIS SCHEME. THEREFORE, THE INCOME TO THIS EXTENT ESCAP ED TAXATION. HE ISSUED SHOW CAUSE NOTICE UNDER SECTION 148 OF THE I NCOME TAX ACT, WHICH WAS DULY SERVED UPON THE ASSESSEE. AFTER HEA RING THE ASSESSEE, THE LD.AO HAS PASSED THE ASSESSMENT ORDER ON 29.3.2 006. HE MADE ADDITION OF RS.3.00 LAKHS IN THE HANDS OF EACH ASSE SSEE, AND FURTHER INTEREST AT THE RATE OF 14%. THUS, HE CALCULATED T HE TOTAL TAXABLE INCOME IN THE HANDS OF EACH ASSESSEE AT RS.3,42,000/-. 3. DISSATISFIED WITH THE ASSESSMENT ORDERS, THE ASS ESSEES WENT IN APPEAL BEFORE THE LD.FIRST APPELLATE AUTHORITY, AND ULTIMATELY THE DISPUTE TRAVELLED TO THE TRIBUNAL VIDE ITA NO.173/AHD/2008 IN THE CASE OF MS.PARUL J. SAMPAT AND ITA NO.196/AHD/2008 IN THE C ASE OF MS.PREETI M. SAMPAT. THE TRIBUNAL HAS DECIDED THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 20.2.2009 IN THE CASE OF PARUL J. SAMPA T AND ORDER DATED 12.6.2009 IN THE CASE OF MS.PREETI M. SAMPAT. THE ORDER PASSED IN THE CASE OF PARUL J. SAMPAT HAS BEEN FOLLOWED IN THE CA SE OF PREETI J. SAMPAT. THE ASSESSEE TOOK AN OBJECTION THAT SHE HA S FILED OBJECTIONS BEFORE THE AO AGAINST REOPENING OF THE ASSESSMENT. THESE OBJECTIONS HAVE NOT BEEN DISPOSED OF BY THE AO. THEREFORE, TH E ASSESSMENT ORDER IS ITA NO.1321 AND 1322/AHD/2014 3 NOT SUSTAINABLE. THE TRIBUNAL TOOK COGNIZANCE OF T HIS ARGUMENT OF THE ASSESSEE AND SET ASIDE THE ASSESSMENT ORDERS. THE FINDING RECORDED BY THE TRIBUNAL IN THE CASE OF PARUL J.SAMPAT READS AS UNDER: 6.2 THE ORDERS OF LOWER AUTHORITIES REVEAL THAT TH E COVER CONTAINING NOTICE U/S 148 OF THE ACT WAS DELIVERED TO ONE SHRI SUKHDEV, WATCHMAN OF THE BUILDING, WHEREIN THE ASSE SSEE RESIDED. THE ASSESSEE CONTENDED THAT THE SAID WATCHMAN DID N OT DELIVER THE COVER TO HER WHILE THE AO AND ID. CIT(A) RELYING UP ON PROVISIONS OF SEC. 282 OF THE ACT CONCLUDED THAT THERE IS A PR ESUMPTION THAT IT HAS REACHED THE ASSESSEE. THE ASSESSEE IS STATED TO HAVE FILED AN AFFIDAVIT OF SHRI SUKHDEV ON 27.3.2006 WHILE ASSESS MENT IS COMPLETED ON 29.3.2006, APPARENTLY CONTENTS OF THE AFFIDAVIT HAVE NOT BEEN CROSS EXAMINED BY THE AO NOR ANY CORROBORA TIVE EVIDENCE IN SUPPORT OF AVERMENTS IN THE AFFIDAVIT, HAS BEEN BROUGHT TO OUR NOTICE BY THE ID. AR ON BEHALF OF THE ASSESS EE. MOREOVER, THERE IS NOTHING IN THE ORDERS OF LOWER AUTHORITIES TO SUGGEST THAT THE REASONS RECORDED BY THE ASSESSING OFFICER BEFOR E ISSUE OF NOTICE U/S 148 OF THE ACT, WERE DISCLOSED TO THE AS SESSEE DURING THE ASSESSMENT PROCEEDINGS. NOW WHEN REASONS ARE ALREAD Y AVAILABLE WITH THE ASSESSEE, THE PROCEDURE LAID DOWN BY HON'B LE SUPREME COURT IN THE CASE OF G.K.N DRIVESHAFTS (INDIA) LTD. VS INCOME-TAX OFFICER AND OTHERS,259 ITR 19(SC) HAS TO BE FOLLOWE D. HON'BLE SUPREME COURT HELD IN THE SAID JUDGMENT THAT , ' WE SEE NO JUSTIFIABLE REASON TO INTERFERE WITH TH E ORDER UNDER CHALLENGE. HOWEVER, WE CLARIFY THAT WHEN A NOTICE U NDER SECTION 148 OF THE INCOME-TAX ACT IS ISSUED, THE PROPER COU RSE OF ACTION FOR THE NOTICEE IS TO FILE A RETURN AND IF HE SO DESIRE S, TO SEEK REASONS FOR ISSUING NOTICES. THE ASSESSING OFFICER IS TO FU RNISH REASONS WITHIN A REASONABLE TIME. ON RECEIPT OF REASONS, TH E IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE AND THE ASSES SING OFFICER BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. IN THE CASE, AS THE REASONS HAVE BEEN DISCLOSED IN THESE P ROCEEDINGS, THE ASSESSING OFFICER HAS TO DISPOSE OF THE OBJECTIONS, IF FILED, BY PASSING A SPEAKING ORDER, BEFORE PROCEEDING WITH T HE ASSESSMENT IN RESPECT OF THE ABOVESAID FIVE ASSESSMENT YEARS.' ITA NO.1321 AND 1322/AHD/2014 4 6.3 HON'BLE GUJRAT HIGH COURT IN A SUBSEQUENT DECIS ION IN THE CASE OF GARDEN FINANCE LTD. V CIT (ASST.) [2004] 26 8 ITR 48 (GUJ),CONSIDERED THE EFFECT OF THE AFORESAID SUPREM E COURT DECISION IN THE CASE OF GKN DRIVESHAFTS [2003] 259 ITR 19 AND THUS, LAID DOWN : 'WHAT THE SUPREME COURT HAS NOW DONE IN THE GKN DRI VESHAFTS (INDIA) LTD.'S CASE [2003] 259 ITR 19 IS NOT TO WHI TTLE DOWN THE PRINCIPLE LAID DOWN BY THE CONSTITUTION BENCH OF TH E APEX COURT IN CALCUTTA DISCOUNT CO LTD. CASE [1961] 41 ITR 191 BU T TO REQUIRE THE ASSESSEE FIRST TO LODGE PRELIMINARY OBJECTION B EFORE THE ASSESSING OFFICER WHO IS BOUND TO DECIDE THE PRELIM INARY OBJECTIONS TO ISSUANCE OF THE REASSESSMENT NOTICE B Y PASSING A SPEAKING ORDER AND, THEREFORE, IF SUCH ORDER ON THE PRELIMINARY OBJECTIONS IS STILL AGAINST THE ASSESSEE, THE ASSES SEE WILL GET AN OPPORTUNITY TO CHALLENGE THE SAME BY FILING A WRIT PETITION SO THAT HE DOES NOT HAVE TO WAIT TILL COMPLETION OF THE REA SSESSMENT, PROCEEDINGS WHICH WOULD HAVE ENTAILED THE LIABILITY TO PAY TAX AND INTEREST ON REASSESSMENT AND ALSO TO GO THROUGH THE GAMUT OF APPEAL, THE SECOND APPEAL BEFORE INCOME-TAX APPELLA TE TRIBUNAL AND THEN REFERENCE/TAX APPEAL TO THE HIGH COURT.' 6.4 THE AFORESAID DECISION IN GARDEN FINANCE LTD.( SUPRA) WAS FOLLOWED IN THE CASE OF ARVIND MILLS LTD.VS ASSISTA NT COMMISSIONER OF WEALTH-TAX (NO. 1),270ITR467(GUJ). 6.5 IN THE LIGHT OF AFORESAID DECISIONS OF THE HON 'BLE SUPREME COURT AND JURISDICTIONAL HIGH COURT, THE POSITION I N LAW IS THUS WELL SETTLED. AFTER A NOTICE FOR REASSESSMENT HAS B EEN ISSUED, AN ASSESSEE IS REQUIRED TO FILE THE RETURN AND SEEK RE ASONS FOR ISSUANCE OF SUCH NOTICE. THE ASSESSING OFFICER IS T HEN BOUND TO SUPPLY THE REASONS WITHIN A REASONABLE TIME. ON REC EIPT OF REASONS, THE ASSESSEE IS ENTITLED TO FILE PRELIMINA RY OBJECTIONS TO ISSUANCE OF NOTICE AND THE ASSESSING OFFICER IS UND ER A MANDATE TO DISPOSE OF SUCH PRELIMINARY OBJECTIONS BY PASSING A SPEAKING ORDER. APPARENTLY, THIS MANDATE HAS NOT BEEN FOLLOW ED BY THE ASSESSEE OF THE AO IN THE CASE UNDER CONSIDERATION STEAD THE ASSESSEE CHOSE TO RAISE THE ISSUES BY WAY OF ADDITI ONAL GROUND OF I BEFORE THE ID. CIT(A). UNDER THE CIRCUMSTANCES, WE SET ASIDE THE ITA NO.1321 AND 1322/AHD/2014 5 ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO T HE FILE OF THE AO WITH THE DIRECTIONS TO FOLLOW THE MANDATE IN TERMS OF THE AFORESAID DECISIONS OF HON'BLE SUPREME COURT AND JURISDICTION AL HIGH COURT AND THEREAFTER PROCEED WITH THE ASS ESSMENT IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT THE ASSES OFFICER SHOULD PASS A SPEAKING ORDER AFTER ALLOWING SUFFICIENT OPP ORTUNITY HEARING TO THE ASSESSEE FOR REBUTTING THE PRESUMPTION LAI D DOWN U/S 282 OF THE ACT AND CONFRONTING ALL THE MATERIAL FORMING BA SIS FOR THE REASSESSMENT. 4. IN COMPLIANCE TO THIS ORDER, THE LD.AO WAS REQUI RED TO PASS FRESH ASSESSMENT ORDER. BUT INSTEAD OF PASSING ANY ASSES SMENT ORDER, HE SIMPLY DISPOSED OF OBJECTIONS. THE ORDER OF THE AO DATED 4.11.2010 HAS BEEN PLACED ON RECORD. IT IS AN ORDER REJECTING OB JECTION AGAINST THE REOPENING OF THE ASSESSMENT UNDER SECTION 147 OF TH E ACT. IN OTHER WORDS, IT IS NOT AN ASSESSMENT ORDER, BUT, IT IS JU ST EQUIVALENT TO INTERIM ORDER, VIDE WHICH OBJECTION ON REOPENING OF THE ASS ESSMENT ORDER HAS BEEN MADE. SECTION 246 OF THE INCOME TAX ACT PROVI DES ORDERS WHICH ARE APPEALABLE BEFORE THE COMMISSIONER OF INCOME TA X. DISPOSAL OF ANY OBJECTIONS AGAINST REOPENING OF THE ASSESSMENT ORDE R IS NOT AN ORDER OF THE NATURE AGAINST WHOM THE APPEAL HAS BEEN PROVIDE D BEFORE THE CIT(A). THEREFORE, NO APPEAL WOULD LIE BEFORE THE CIT(A) AGAINST THE ORDER DATED 4.11.2010. THUS, THE APPEAL WAS NOT MA INTAINABLE BEFORE THE LD.CIT(A) IN BOTH THE CASES. IF THE APPEAL IS NOT MAINTAINABLE BEFORE THE LD.CIT(A), THEN THE APPEALS BEFORE THE TRIBUNAL ARE NOT VALID APPEALS. THE ORDER DATED 4.11.2010 CANNOT BE TREATED AT PAR WITH AN ASSESSMENT ORDER AND DEMAND CANNOT BE ENFORCED BY EXECUTION OF SUCH AN ORDER. THEREFORE, BOTH THESE APPEALS ARE DISMISSED BEING N OT MAINTAINABLE. ITA NO.1321 AND 1322/AHD/2014 6 5. IN VIEW OF THE ABOVE SITUATION, WE ARE NOT REQUI RED TO CONSIDER ANY OTHER ISSUES. 6. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 1 ST APRIL, 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/04/2016