Shreemati Kene Willy, Itanagar V. Income Tax Officer, Ward-1& TPS, Tezpur

ITA 146/GTY/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8922 (ITAT-GUWAHATI)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 09-09-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: WITHOUT ISSUING ANY VALID SHOW CAUSE NOTICE; WITHDRAWING EXEMPTION UNDER SECTION OF
• Keywords: Principle of natural justice; Competent authority
• Section: 143(3); 251; 143(2); 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH SMC GAUHATI BEFORE SHRI S ANJAY GARG , JUDICIAL MEMBER . / ITA NO. 146 / GAU/20 20 ASSESSMENT YEAR: 20 1 5 - 16 SMT. KENE WELLY PAN: ALJPK 2595G / V/S . I.T.O., WARD - 1, TPS, TEZPUR / APPELLANT .. / RESPONDENT AND . / ITA NO. 148 / GAU/2020 ASSESSMENT YEAR: 2015 - 16 SHRI TAKING WELLY PAN: AAVPPW 6671L / V/S . I.T.O., WARD - 1, TPS, TEZPUR / APPELLANT .. / RESPONDENT HEARING THROUGH VIDEO CONFERENCING / BY APPELLANT SHRI SANJAY MODY, FCA, A .R / BY RESPONDENT SHRI SUBHRAJYOTI BHATTACHARYA, ADDL.CIT , DR / DATE OF HEARING 1 8 - 03 - 20 2 1 / DATE OF PRONOUNCEMENT 1 8 - 03 - 20 2 1 / O R D E R TH E SE TWO APPEAL S HA VE BEEN PREFERRED BY THE DIFFERENT ASSESSEE AGAINST THE SEPARATE ORDER S DATED 13 - 03 - 2020 OF THE COMMISSIONER OF INCOME TAX (APPEALS) , GUWAHATI - 1, GUWAHATI [HEREINAFTER REFERRED TO AS CIT(A)] . SINCE THE FACTS AND ISSUE INVOLVED THEREIN ARE IDENTICAL, HENCE, THESE APPEALS ARE TAKEN TOGETHE R FOR ADJUDICATION. ITA NO. 146 /GAU/20 20 A.Y 2015 - 16 SMT. KENE WELLY AND ITA NO. 148/GAU/2020 A.Y 2015 - 16 SRI TAKING WELLY PAGE 2 THE FACTS FOR THE SAKE OF CONVENIENCE ARE TAKEN FROM ITA NO. 146/GAU/2020 A.Y 2015 - 16 IN THE CASE OF SMT. KENE WELLY . ITA NO. 146/GAU/2020 A.Y 2015 - 16 . 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL : - 1 . FOR THAT THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [ CIT(A) ] IS BAD IN LAW, FACTS AND PROCEDURE . 2. FOR THAT THE LD. CIT(A) OUGHT TO HAVE HELD THAT IN ABSENCE OF ANY NOTICE UNDER SECTION 143(2) OF THE ACT HAVING BEEN ISSUED BY THE LD. AO, THE IMPUGNED ORDER OF ASSESSMENT IS WITHOUT JURISDICTION AND UNSUSTAINABLE. 3. FOR THAT THE LD. CIT(A) HAS ERRED IN NOT HOLDING THAT THE ORDER OF ASSESSMENT PASSED BY THE LD. AO IN ABSENCE OF AN ORDER PASSED UNDER SECTION 127 OF THE ACT BY A COMPETENT AUTHORITY, THE ORDER OF ASSESSMENT IS WITHOUT JURISDICTION AND AB - INITIO VOID. 4. FOR THAT THE LD. CIT(A) OUGHT TO HAVE HOLD THE ORDER OF ASSESSMENT PASSED BY THE LD. AO BEING BARRED BY LIMITATION WAS BAD IN LAW AND UNSUSTAINABLE. 5.(A) FOR THAT THE LD. CIT(A) OUGHT TO HAVE HOLD THAT THE LD. AO AFTER ACCEPTING THE ENTIRE INCOME OF RS. 1,05,87,134/ - AS DECLARED BY THE APPELLANT IN ITS RETURN OF INCOME WAS NOT JUSTIFIED IN NOT ACCEPTING RS. 8,00,000/ - OUT OF THE SAME ONLY FOR THE PURPOSE OF ALLOWING EXEMPTION UNDER SECTION 10(1) AND/ OR 10(26) OF THE ACT AND ARBITRARILY TREATING THE SAME AS TAXABLE INCOME. (B). FOR TH AT THE LD. CIT(A) WAS NOT JUSTIFIED IN ARBITRARILY CONFIRMING THE ADDITION OF RS. 8,00.000/ - WHICH WAS MADE BY THE LD. AO MERELY OF THE BASIS OF SURMISES AND CONJECTURES. (C ) FOR THAT THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE ORDER OF ASSESSMENT PASSED BY THE LD. AO WAS BAD IN LAW AND UNTENABLE BEING PASSED WITHOUT ALLOWING ANY REASONABLE OPPORTUNITY OF HEARING TO THE APPELLANT. 6. FOR THAT THE LD. CIT(A) OUGHT TO HAVE HOLD THAT THE LD. AO WAS NOT JUSTIFIED IN ASSESSING RS. 2,30,380/ - AS TAXA BLE INCOME. FOR THAT STATUTORILY ALLOWABLE EXEMPTION UNDER SECTION 10(26) OF THE ACT OUGHT TO HAVE BEEN ALLOWED TO THE APPELLANT. 7. FOR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN ENHANCING THE INCOME OF THE APPELLANT BY RS. 96,27,115/ - WITHOUT ISSUING ANY VALID SHOW CAUSE NOTICE IN TERMS OF SUB - SECTION (2) OF SECTION 251 OF THE ACT AND IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. THE ENHANCEMENT SO MADE BEING BAD IN LAW IS LIABLE TO BE DELETED IN ITS ENTIRETY. 8. FOR THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS BAD IN LAW, VITIATED AND IS LIABLE TO BE QUASHED AS THE LD. CIT(A) PROCEEDED IN THE ITA NO. 146 /GAU/20 20 A.Y 2015 - 16 SMT. KENE WELLY AND ITA NO. 148/GAU/2020 A.Y 2015 - 16 SRI TAKING WELLY PAGE 3 INSTANT CASE IN A BIASED MANNER, IN EXCESS OF HIS JURISDICTION AND WITH A PRE - CONCEIVED CONCLUSION AND THE APPELLANT WAS BLATANTLY DENIED JUSTICE. 9. FOR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN ARBITRARILY ENHANCING INCOME OF THE APPELLANT BY WITHDRAWING EXEMPTION UNDER SECTION 10(26) OF THE ACT IN RESPECT OF RS. 42,51,542/ - (RS. 50,51,542/ - MINUS RS. 8,00,000) WITHOUT PROPERLY APPRECIATING THE ENTIRE FACTS OF THE CASE IN ITS PROPER PERSPECTIVE AND IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 10.(A) FOR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN ARBITRARILY ENHANCING THE INCOME OF THE APPELLANT BY RS. 42,97,457/ - BEING THE AMOUNT OF DEPOSIT IN VA RIOUS BANK ACCOUNTS DURING THE YEAR WHICH IS WITHOUT JURISDICTION AND BAD IN LAW AND IS IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. B) FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) COULD NOT CITE ANY SPECIFIC PROVISION OF LAW, WHICH EMPOWERED HIM TO TAX THE SAID BANK DEPOSITS AS INCOME OF THE APPELLANT. C) FOR THAT, WITHOUT PREJUDICE TO THE ABOVE, THE AFORESAID ENHANCEMENT IS BAD IN LAW ALSO BECAUSE IT AMOUNTS TO DOUBLE ADDITION OF THE SAME INCOME. D) FOR THAT, WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIIT(A) WAS NOT JUSTIFIED IN NOT ALLOWING EXEMPTION UNDER SECTION 10(26) IN RESPECT OF THE SAID INCOME. 11. A) FOR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN ARBITRARILY ENHANCING THE INCO ME OF THE APPELLANT BY RS. 10,78,166/ - AS LONG TERM CAPITAL GAIN ON ACCOUNT OF SALE OF FLAT WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE IN PROPER PERSPECTIVE. B) THE AFORESAID ENHANCEMENT IS WITHOUT JURISDICTION AND BAD IN LAW. C) THE AFORESAID ENHANCEMENT IS BAD IN LAW BEING MADE IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 12. FOR THE IMPUGNED ORDER HAVING BEEN PASSED BY THE LD. CIT(A) IN UTTER DISREGARD TO THE PRINCIPLES OF NATURAL JUSTICE AND MERELY ON THE BASIS OF IMAG INATIONS AND SUPPOSITIONS, IGNORING THE VARIOUS MATERIALS ON RECORD AND WITHOUT ALLOWING ANY OPPORTUNITY TO SHOW THAT THE CASE LAWS RELIED UPON BY HIM ARE NOT A PPLICABLE AND/ OR DISTINGUISHABLE ON FACTS, IMPUGNED ORDER IS BAD IN LAW AND UNSUSTAINABLE. 13. FOR THAT THE APPELLANT CANNOT BE ASSESSED AT THE HIGHER AMOUNT AND THE STATUTORILY ALLOWABLE EXEMPTION AND/OR DEDUCTION CANNOT BE DENIED TO HER WITHOUT ANY MATERIAL TO SHOW THAT INCOME OF EVEN A SINGLE RUPEE WAS EARNED OUTSIDE THE SPECIFIED TRIBAL AREA M ERELY ON SURMISES AND CONJECTURE AND FOR THE REASON THAT HER HUSBAND IS A GOVERNMENT EMPLOYEE. 14. FOR THAT THE VARIOUS ADVERSE REMARKS, COMMENTS AND DIRECTIONS STATED BY THE LD. CIT(A) IN THE IMPUGNED ORDER BEING IN EXCESS OF THE JURISDICTION THE SAME ARE BAD IN LAW AND THE SAME ARE LIABLE TO BE EXPUNGED. ITA NO. 146 /GAU/20 20 A.Y 2015 - 16 SMT. KENE WELLY AND ITA NO. 148/GAU/2020 A.Y 2015 - 16 SRI TAKING WELLY PAGE 4 15. FOR THAT YOUR APPELLANT CRAVES LEAVE OF YOUR HONOURS TO TAKE ADDITIONAL GROUND OR GROUNDS AND/ OF TO MODIFY ANY GROUND(S) OF APPEAL AT OR BEFORE THE TIME OF HEARING. 3. AT THE OUTSET, LD. COUNSE L FOR THE ASSESSEE HAS SUBMITTED THAT GROUND NOS. 2 & 3 BEING ON THE LEGAL ISSUE RAISED BY THE ASSESSEE RELATING TO THE VALIDITY OF THE ASSESSMENT FRAMED BY THE LEARNED ASSESSING OFFICER ( IN SHORT, THE LD. AO) MAY BE ADJUDICATED FIRST AND IF THE ISS UE IS DECIDED IN FAVOUR OF THE ASSESSEE THEN THE VALIDITY OF IMPUGNED ADDITIONS ON MERIT WILL BE RENDER ED ACADEMIC IN NATURE. THE LD. DR HAS NOT OBJECTED TO THE SAME. THEREFORE, THE ASSESSEES LEGAL ISSUE IS HEARD FIRST. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT EARLIER SCRUTINY ASSESSMENT PROCEEDING S WERE INITIATED BY ITO, WARD - ITANAGAR AND HE HAD ISSUED NOTICE DATED 21.09.2017 U/S 143(2) OF THE ACT . HOWEVER, LATER ON WITHOUT ANY ORDER OF TRANSFER OF CASE P ASSED BY THE LEARNED COMMISSIONER OF INCOME T AX (LD. CIT, IN SHORT ) U/S. 127 OF THE ACT , THE CASE OF ASSESSEE WAS TRANSFERRED BY THE LEARNED JOINT COMMISSIONER OF INCOME T AX (LD. JCIT) FROM ITO, WARD ITANAGAR TO ITO, WARD - 1, TEZPUR . THE ITO, WARD - 1, TEZP UR DID NOT ISSUE ANY NOTICE U/S 143(2) OF THE ACT RATHER CONTINUED THE PROCEEDINGS ONLY FROM THE STAGE IT WAS LEFT BY THE LD. ITO, WARD - ITANAGAR. LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE LD. JCIT DID NOT HAVE ANY POWER TO TRANSFER THE CASE IN WHICH ASSESSMENT PROCEEDINGS HAD ALREADY COMMENCED. EVEN IF THE CASE WAS RE - ALLOCATED , IN SUCH CIRCUMSTANCES , T HE I TO, WARD - 1 TEZPUR SH OULD HAVE ISSUED NOTICE U/S. 143(2) OF THE ACT , WHICH IS SINE QU A NON FOR INITIATION OF THE ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT . THOUGH , THE ABOVE PLEA RELATING TO THE TRANSFER OF THE CASE BY THE LD. JCIT FROM ITO, WARD ITANAGAR TO ITO, WARD - 1, TEZPUR HAS NOT BEEN DISPUTED BY THE LD. DR , B UT HE HAS CONTENDED THAT THE CASE WAS DULY TRANSFERRED BY THE LD. JC IT BY EXERCISING HIS JURISDICTION FOR ALLOCATION OF CASE TO DIFFERENT ITO S (INCOME - TAX OFFICER S ). THAT THE ASSESSEE WAS REQUIRED TO OBJECT TO THE JURISDICTION OF THE AO WITHIN ONE MONTH FROM THE DATE OF INITIATION OF ASSESSMENT ITA NO. 146 /GAU/20 20 A.Y 2015 - 16 SMT. KENE WELLY AND ITA NO. 148/GAU/2020 A.Y 2015 - 16 SRI TAKING WELLY PAGE 5 PROCEEDINGS AS PER PROVI SIONS OF SECTION 124(3) OF THE ACT. HOWEVER, THE ASSESSEE AT THAT TIME DID NOT RAISE SUCH OBJECTION REGARDING THE JURISDICTION OF THE LD. AO. 5 . I HAVE CONSIDERED THE RIVAL CONTENTIONS. THOUGH THE LD. JCIT HAS BEEN EMPOWERED TO ALLOCATE THE CASES TO DIFFERENT ASSESSING OFFICERS/INCOME TAX OFFICERS AS PER THEIR TERRITORIAL JURISDICTION. HOWEVER, ONCE THE PROCEEDINGS U/S. 143(3) ARE COMMENCED , THE CASE CAN BE TRANSFERRED FROM ONE AO/ITO TO ANOTHER AO/ITO BY AN ORDER OF THE COMMISSIONER AS PROVIDED U/ S 127 OF THE ACT . I N CASE , THE CASE IS RE - ALLOCATED BY THE JCIT , I N THAT EVENT , THE CONCERNED AO TO WHOM THE CASE IS RE - ALLOCATED, SHOULD HAVE COMMENCED THE ASSESSMENT PROCEEDINGS BY WAY OF ISSUANCE OF THE STATUTORY NOTICE S . IT HAS BEEN HELD BY THE HON BLE SUPREME COURT IN THE CASE OF ACIT VS. HOTEL BLUE M OON REPORTED IN 321 ITR 362 (S.C) THAT THE SERVICE OF THE STATUTORY NOTICE U/S. 1 43(2) OF THE ACT IS SINE THE QUA NO N TO INITIATE/COMMENCE THE ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT. IN TH IS CASE , THE AO, WHO HAS PASSED THE IMPUGNED ASSESSMENT ORDER U /S 143(3) OF THE ACT , DID NOT ISSUE NOTICE U/S. 143(2) OF THE ACT . BUT THE SAID NOTICE WAS ISSUED BY EARLIER AO/ITO U/S. 143(2) OF THE ACT . THE CASE OF THE ASSESSEE WAS NOT TRANSFERRED BY COMP ETENT OFFICER I.E. COMMISSIONER AS PER PROVISION OF SECTION 127 OF THE ACT. THEREFORE, THE PROCEEDINGS COULD NOT HAVE BEEN CONTINUED BY THE NEW OFFICER/ITO FROM THE STAGE IT WAS LEFT BY ITO, WARD - ITANAGAR. IN THE CIRCUMSTANCES, THE ASSESSMENT FRAMED BY ITO, WARD - TEZPUR I S INVALID FOR NON - ISSUANCE OF MANDATORY NOTICE U/S 143(2) OF THE ACT. THEREFORE, THE IMPUGNED ASSESSMENT IS LEGALLY INVALID AND THE SAME IS HEREBY QUASHED. THE ASSESSEES APPEAL - ITA NO. 146/GAU/2020 FOR THE A.Y 2015 - 16 STANDS ALLOWED. ITA NO. 146 /GAU/20 20 A.Y 2015 - 16 SMT. KENE WELLY AND ITA NO. 148/GAU/2020 A.Y 2015 - 16 SRI TAKING WELLY PAGE 6 ITA NO. 148/GAU/2020 FOR THE A.Y 2015 - 16 - SRI TAKING WELLY 6. SINCE THE LEGAL ISSUE INVOLVED IN THIS APPEAL IS IDENTICAL, THEREFORE, FOLLOWING THE SAME REASON , THIS APPEAL OF ASSESSEE IN ITA NO. 148/GAU /202 FOR THE A.Y 2015 - 16 - SRI TAKING WELLY, STANDS ALLOWED. IN VIEW OF THE ABOVE, BOTH THE CAPTIONED APPEALS STAND ALLOWED. ORDER PRONOUNCED IN OPEN COURT AT THE TIME OF HEARING ON T HURSDAY , 1 8 TH MARCH , 2021 . SD/ - (S ANJAY GAR G ) JUDICIAL MEM BER * *PP /SR.PS - 1 8 - 03 - 2021 /KOLKATA / COPY OF ORDER FORWARDED TO: - 1. /APPELLANT /ASSESSEE: SMT KENE WELLY, C - SECTOR, ITANAGAR, PAPUMPARA , ARUNACHAL PRADESH, 791 111 (INDIA) AND SRI TAKING WELLY, C - SECTOR, ITANAGAR, PAPUMPARA, ARUNACHAL PRADESH, 791 111 (INDIA) 2. /RESPONDENT - I.T.O., WARD - 1 & TPS TEZPUR, EX - POLICE LINE, TEZPUR, ASSAM,784 001 (ASSAM) 3. / CONCERNED CIT 4. - / CIT (A) 5. , / DR, ITAT, GUWAHATI 6. / GUARD FILE. BY ORDER/ , /TRUE COPY/ SENIOR PRIVATE SECRETARY