Shri Kamla Kant Rastogi, V. ITO-I,

ITA 149/LKW/2006

• Counselvise Citation: 14923714 RSA 2006
• Duration Of Justice: 5 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 24-02-2006
• Court: TRIBUNAL
• Keywords: Business income; Principle of natural justice; Valuation report; Assessment record
• Section: 234B; 147; 131; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI H.L. KARWA, VICE PRESIDENT AND SHRI N.K. SAINI, ACCOUNTANT MEMBER ITA NO.149/LKW/2006 ASSESSMENT YEAR:2002-03 KAMLA KANT RASTOGI PILIBHIT V. ITO WARD 1, PILIBHIT PAN:AFVPR8485G (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. AMIT SHUKLA, ADVOCATE RESPONDENT BY: SHRI. RAJESH YADAV, CIT (DR) DATE OF HEARING: 17.8.2011 DATE OF PRONOUNCEMENT: 19.8.2011 O R D E R PER H. L. KARWA: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), BAREILLY DATED 29.11.2005 RELATING TO ASSESSMENT YEAR 2002-03. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. BECAUSE THE ID. 'CIT(APPEALS)' HAS FAILED TO APPRECIATE TO MISSED TO NOTE THAT; (A) THE APPELLANT WAS BEING ASSESSED TO TAX REGULARLY, WITHIN THE JURISDICTION OF THE ASSESSING OFFICER AT LUCKNOW; (B) IN CONTINUATION TO THE EARLIER YEARS, HE HAD DULY AND VOLUNTARILY FILED HIS RETURN UNDER SECTION 139(1) FOR THE ASSESSMENT YEAR 2002-03 ALSO, WITH THE ASSESSING OFFICER AT LUCKNOW HAVING JURISDICTION IN HIS CASE; (C) THE APPELLANT HAD BEEN DULY ASSESSED AT LUCKNOW AS SOON AS HE WAS ISSUED THE ACKNOWLEDGEMENT (FOR FILING THE RETURN); AND THE ITO, WARD-1, PILIBHIT COULD NOT HAVE ASSUMED THE JURISDICTION AS ASSESSING OFFICER IN THE CASE OF APPELLANT, UNLESS AN :-2-: ORDER IS PASSED BY THE CIT UNDER SECTION 127 (CONFERRING SUCH A JURISDICTION) AFTER FOLLOWING DUE PROCESS OF LAW. 2. BECAUSE NO ORDER UNDER SECTION 127 HAVING BEEN UNDISPUTEDLY PASSED BY THE CIT UNDER SECTION 127 TRANSFERRING THE JURISDICTION IN THE CASE OF THE APPELLANT FROM LUCKNOW TO PILIBHIT, EXERCISE OF JURISDICTION OF ASSESSING OFFICER BY THE INCOME-TAX OFFICER, WARD-1, PILIBHIT, WAS WHOLLY ILLEGAL AND ALL THE PROCEEDINGS AS HAD BEEN MADE BY HIM ARE WITHOUT JURISDICTION. 3. BECAUSE, THE APPELLANT DULY OBJECTED TO THE JURISDICTION OF THE INCOME-TAX OFFICER, WARD-1, PILIBHIT, AS PER THE PROVISIONS OF LAW AND VIEW TO THE CONTRARY AS HAS BEEN TAKEN BY THE ID. CIT(APPEALS) IS WHOLLY ERRONEOUS, AS BEING INCONSISTENT WITH THE MATERIAL AND INFORMATION ON RECORD AND PROVISIONS OF LAW. 4. BECAUSE IN ANY CASE, THE PLEA OF LACK OF JURISDICTION CAN BE RAISED AT ANY STAGE PARTICULARLY WHEN SUCH A JURISDICTION WAS ASSUMED BY ISSUE OF NOTICE UNDER SECTION 148 AND SUCH AN OBJECTION HAVING REMAINED UNADJUDICATED UPON AT THE STAGE OF THE ASSESSING OFFICER HIMSELF, THE ASSESSMENT ORDER CAPTIONED AS 'ORDER UNDER SECTION 144/148 IS VOID AB-INITIO.' 5. BECAUSE THE PROCESS OF ASSESSMENT FOR THE ASSESSMENT YEAR 2002-03 GOT COMPLETED, WITH THE EXPIRY OF A PERIOD OF ONE YEAR FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FILED [DURING WHICH NO NOTICE UNDER SECTION 143(2) WAS SERVED ON HIM]. 6. BECAUSE IN ANY CASE, THE REASONS RECORDED (SO CALLED) BY THE ITO WARD-1, PILIBHIT, DID NOT MEET THE REQUIREMENT OF LAW AND INITIATION OF PROCEEDINGS UNDER SECTION 147 WAS BAD IN LAW ON THIS COUNT ALSO. 7. BECAUSE THE ENQUIRIES SAID TO HAVE BEEN MADE BY THE ITO, WARD-1, PILIBHIT, AT THE LUCKNOW ADDRESS OF THE APPELLANT WERE WHOLLY IRRELEVANT AT THE TIME (WHEN ENQUIRIES WERE MADE) AND IN ANY CASE IN VIEW OF THE FACT THAT; :-3-: (A) THE APPELLANT BEING IDENTIFIABLE AS AN 'ASSESSEE HAVING JURISDICTION AT LUCKNOW'; AND (B) EVEN HIS ASSESSMENT RECORDS AT LUCKNOW WERE ACCESSED BY THE ITO, WARD-1, PILIBHIT, SO MUCH SO THE INFORMATION CONTAINED THEREIN WAS TAKEN COGNIZANCE OF BY HIM. AND THE ASSESSMENT AS MADE BY THE ITO, WARD-1, PILIBHIT IS HOLLY ILLEGAL. WHOLLY WITHOUT PREJUDICE TO THE AFORESAID 8. BECAUSE THE LEARNED 'CIT (APPEALS)' HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ESTIMATE OF INCOME FROM PHOTOCOPY BUSINESS AT RS.1 LAKH. 9. BECAUSE THEIR EXISTED NO MATERIAL WHATSOEVER TO SUPPORT THE ESTIMATE OF TAXABLE INCOME AND THE SAME STAND WHOLLY VITIATED. 10. BECAUSE THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN MAKING/SUSTAINING AN ADDITION OF RS.1,80,000 ON ACCOUNT OF INVESTMENT IN PURCHASE OF PLOT AT GOMTINAGER, LUCKNOW, ON THE GROUND THAT SOURCES OF SUCH ESTIMATE REMAINED UNEXPLAINED. 11. BECAUSE THE APPELLANT HAD LED PLETHORA OF MATERIAL AND EVIDENCES, DIRECT AS WELL AS COLLATERAL, WHICH WENT TO SUPPORT FULLY THE SOURCES OF INVESTMENT AND NO ADDITION ON THAT SCORE WAS CALLED FOR, EITHER ON FACTS OR IN LAW. 12. BECAUSE THE APPELLANT DENIES THE LIABILITY OF INTEREST UNDER SECTION 234A AND 234B, LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 13. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 3. FIRSTLY WE WILL DECIDE GROUNDS NO.8 AND 9 OF THE APPEAL. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL WHO HAS BEEN ENGAGED IN THE BUSINESS OF PHOTOSTAT AND PHOTOGRAPHY FROM HIS SHOP AT BISALPUR, TEHSIL, DISTRICT PILIBHIT AND WAS ALSO ENGAGED IN SUPPLY OF BOOKS, PAPERS AND MATERIALS TO :-4-: VARIOUS SCHOOLS AT LUCKNOW. FOR THE BUSINESS INCOME SO DERIVED BY HIM, HE HAS BEEN FILING HIS RETURN OF INCOME REGULARLY AT THE INCOME-TAX OFFICE AT LUCKNOW AND WAS ASSESSED TO TAX THERE FOR LAST SEVERAL YEARS. EVEN FOR THE YEAR UNDER APPEAL I.E. ASSESSMENT YEAR 2002-03, THE RETURN WAS FILED AT LUCKNOW UNDER SECTION 139(1) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) IN CONTINUATION TO THE RETURNS FILED IN EARLIER YEARS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS SUMMONED BY THE ASSESSING OFFICER UNDER SECTION 131 OF THE ACT AND HIS STATEMENT ON OATH WAS RECORDED ON 9.9.2004. IN HIS SUBMISSION, THE ASSESSEE CATEGORICALLY ADMITTED THAT HIS INCOME DURING THE YEAR FROM BUSINESS OF PHOTOSTAT AND VIDEOGRAPHY WAS ` 100 TO ` 150 PER DAY. HOWEVER, THE ASSESSING OFFICER ON THE BASIS OF INCOME TAX INSPECTORS REPORT THAT HIS INCOME FROM PHOTOSTAT IS AROUND ` 2,000 PER DAY, ESTIMATED THE BUSINESS INCOME OF THE ASSESSEE AT ` 1,50,000. 4. ON APPEAL, THE LD. CIT(A) REDUCED THE ADDITION TO ` 1 LAKH AND HENCE THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL DISPUTING THE ORDER OF THE LD. CIT(A) IN SUSTAINING THE ADDITION OF ` 1 LAKH. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. SHRI. AMIT SHUKLA, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS HAVING ONE PHOTOSTAT MACHINE WITHIN THE TEHSIL PREMISES AT BISALPUR, WHEREIN THE ELECTRICITY IS AVAILABLE ONLY FOR 10 TO 12 HOURS A DAY AND THE COST OF PHOTOCOPY PER PAPER AT THAT TIME WAS NOT MORE THAN 50 PAISA. HE FURTHER SUBMITTED THAT OUT OF 50 PAISA, THE COST OF PAPER, ELECTRICITY, AND OTHER EXPENSES IS MORE THAN 60%, WHICH MEANS THE OVER ALL PROFIT IS NOT MORE THAN 20 PAISA PER PAGE. WITH SUCH A LOW MARGIN, IT IS NOT POSSIBLE FOR THE ASSESSEE TO EARN EVEN RS.100/- PER DAY. SHRI. AMIT SHUKLA, LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT ESTIMATE MADE BY THE ASSESSING OFFICER IS NOT ONLY ARBITRARY BUT ALSO DIVORCED FROM THE ACTUAL STATE OF AFFAIRS AND THE EXTENT OF ASSESSEES BUSINESS. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION SOLELY ON THE BASIS OF UNAUTHENTIC REPORT OF THE INCOME TAX INSPECTOR. NO OPPORTUNITY WAS AFFORDED TO THE ASSESSEE TO CROSS-EXAMINE THE SAID INCOME TAX INSPECTOR. SHRI. AMIT SHUKLA, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITION SUSTAINED BY THE LD. CIT(A) AT ` 1 LAKH IS HIGHLY EXCESSIVE AND ARBITRARY. CONSIDERING THE ENTIRE FACTS :-5-: AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE ADDITION OF ` 50,000 IN THIS CASE WILL MEET THE ENDS OF JUSTICE. THUS, THE ASSESSEE GETS RELIEF OF ` 50,000. ACCORDINGLY, GROUNDS NO.8 & 9 ARE ALLOWED PARTLY. 6. GROUNDS NO.10 AND 11 OF THE APPEAL RELATE TO ADDITION OF ` 1.80 LAKHS MADE UNDER SECTION 69 OF THE ACT ON ACCOUNT OF PAYMENT MADE FOR BOOKING OF PLOT IN LUCKNOW DEVELOPMENT AUTHORITY. 7. THE FACTS RELATING TO THIS ISSUE ARE THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT FOR PURCHASE OF A PLOT FROM SRI TEJ KRISHAN RASTOGI WHO WAS THE INITIAL ALLOTTEE OF A PLOT AT SHARDA NAGAR YOJANA OF LUCKNOW ALLOTTED BY LUCKNOW DEVELOPMENT AUTHORITY. THE SAID PLOT ALLOTTED BY THE LUCKNOW DEVELOPMENT AUTHORITY WAS PROMISED TO BE TRANSFERRED IN GOMTI NAGAR, LUCKNOW. AS A PREMIUM, THE APPELLANT HAD PAID ` 4,00,000/- IN THE FORM OF GOLD TO SRI TEJ KRISHAN RASTOGI FOR THIS PURPOSE. BESIDE THE GOLD OF ` 4.00 LAKHS, FOLLOWING PAYMENT WERE ALSO MADE IN THE VARIOUS YEARS:- I) F.Y. 1996-97 ` 1,63,202/- (THIS AMOUNT OF ` 1,63,202/- INCLUDES AN AMOUNT OF ` 22,483/- PAID TO SRI TEJ KRISHNA RASTOGI AGAINST THE MONEY HE HAD DEPOSITED ALREADY, WITH LUCKNOW DEVELOPMENT AUTHORITY.) II) F.Y. 1997-98 ` 1,05,000/- III) F.Y. 1999-2000 ` 54,000/- IV) F.Y. 2001-02 AN AMOUNT OF ` 1,80,000/- WAS PAID IN 'GOLD' FORM TO SRI TEJ KRISHAN RASTOGI FOR FURTHER DEPOSIT IN LUCKNOW DEVELOPMENT AUTHORITY AGAINST THE PLOT ALLOTTED IN GOMTI NAGAR, (VISHESH KHAND), AFTER BEING TRANSFERRED FROM SHARDA NAGAR, SCHEME PLOT. 7.1 IN THE ASSESSMENT YEAR 2002-03 THE ASSESSEE HAD MADE THE PAYMENT AGAIN IN THE FORM OF GOLD OF ` 1,80,000/- TO SRI TEJ KRISHAN RASTOGI. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PROVE THE INVESTMENT OF ` 1,80,000 MADE ON 30.9.2001 WITH LUCKNOW DEVELOPMENT AUTHORITY. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COULD NOT PROVE THE SOURCE OF INVESTMENT IN LUCKNOW :-6-: DEVELOPMENT AUTHORITY OF ` 1,80,000 MADE ON 30.9.2001. THE ASSESSING OFFICER, THEREFORE, MADE AN ADDITION OF ` 1,80,000 UNDER SECTION 69 OF THE ACT. 8. ON APPEAL, THE LD. CIT(A) UPHELD THE ADDITION AND HENCE THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. SHRI. AMIT SHUKLA, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AN AMOUNT OF ` 1,80,000 WAS PAID IN GOLD FORM TO SRI TEJ KRISHAN RASTOGI FOR FURTHER DEPOSIT IN LUCKNOW DEVELOPMENT AUTHORITY AGAINST PLOT ALLOTTED IN GOMTINAGAR. SHRI. AMIT SHUKLA, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IN HIS BALANCE SHEET AS AT 31.3.1995 AND 31.3.1996 FILED ALONG WITH RETURN AND FILED COPY OF GOLD VALUATION REPORT IN SUPPORT OF THE FACT THAT THE ASSESSEE WAS HAVING SUBSTANTIAL GOLD WITH HIM. THE COPY OF THE SAID VALUATION REPORT IS APPEARING AT PAGE 7 OF THE PAPER BOOK AND THE COPY OF BALANCE SHEET IS APPEARING AT PAGE 5 OF THE PAPER BOOK. SHRI. AMIT SHUKLA, LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT IN THE ASSESSMENT YEAR 2002-03 THE ASSESSEE HAD MADE THE PAYMENT AGAIN IN THE FORM OF GOLD OF RS.1,80,000/- TO SRI TEJ KRISHAN RASTOGI. THIS FACT WAS DULY DISCLOSED BY THE ASSESSEE IN THE BALANCE SHEET FILED ALONG WITH THE RETURN FOR THE ASSESSMENT YEAR 2002-03, WHEREIN IT WAS DULY MENTIONED THAT HE HAS UTILIZED GOLD FOR THE PURCHASE OF LAND. THE COPY OF SAID BALANCE SHEET IS APPEARING AT PAGE 4 OF THE PAPER BOOK. SHRI. AMIT SHUKLA, LD. COUNSEL FOR THE ASSESSEE ALSO BROUGHT TO OUR NOTICE THAT THE BALANCE SHEET WAS FILED ALONG WITH RETURN ITSELF FILED FOR ASSESSMENT YEAR 2002-03 (MUCH BEFORE THE ISSUANCE OF NOTICE UNDER SECTION 148). THE ASSESSEE HAD DULY FILED THE FOLLOWING DOCUMENTS EVIDENCING PAYMENT MADE THROUGH GOLD AND ALSO AVAILABILITY WITH HIM:- A) BALANCE SHEET AS AT 31.03.2002 WHERE IN THERE APPEARS A NOTE ABOUT THE PAYMENT MADE IN THE FORM OF GOLD FOR THE PURCHASE OF LAND. B) BALANCE SHEET AT 31.03.1995 AND 31.03.1996 WHEREIN THE COPY OF VALUATION REPORT FOR THE GOLD JEWELLARY WAS FILED ALONG WITH RETURN. :-7-: C) BALANCE SHEET AS AT 31.03.1997 WHEREIN FOLLOWING NOTE APPEARS THEREIN. NOTE:- THE INVESTMENT IN LAND SHOWS THE PAYMENT MADE TO LDA. THE PREMIUM PAID TO ORIGINAL ALLOTTEE SHRI T.K RASTOGI R/O CHOORI VALSI GALI, LUCKNOW IS IN FORM OF GOLD ( ALREADY SHOWING IN PREVIOUS YEAR ANNEXED VALUATION REPORT) THE VALUATION OF THE JEWELLARY HAS NOT BEEN TAKEN IN THE BOOKS OF ACCOUNT AS THE SAME WAS ACQUIRED BY THE ASSESSEE FROM INHERITANCE ETC. D) A COPY OF SOLVENCY CERTIFICATE DATED 15.01.2002 GIVEN BY TEHSILDAR, BISALPUR. 9.1 SHRI. AMIT SHUKLA, LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT IN THE STATEMENT ON OATH RECORDED BY THE ASSESSING OFFICER ON 09.09.2004, THE ASSESSEE HAS CATEGORICALLY MADE AN AVERMENT THAT HE HAS GIVEN THE PAYMENT FOR PURCHASE OF LAND PARTLY IN THE FORM OF GOLD AND PARTLY IN CASH. FURTHER, THE ABOVE FACT IS ALSO CORROBORATED BY THE CERTIFICATES GIVEN BY TEHSILDAR THAT THE PAYMENT FOR THE PURCHASED PLOT IN GOMTI NAGAR AS THROUGH TEJ KRISHAN RASTOGI WAS GIVEN IN THE FORM OF GOLD JEWELLARY FOR SUM OF RS.1,80,000/- AND RS.4.00 LAKHS 9.2 WE FIND SUBSTANCE IN THE ABOVE SUBMISSIONS OF SHRI. AMIT SHUKLA, LD. COUNSEL FOR THE ASSESSEE. A COPY OF THE STATEMENT OF THE ASSESSEE RECORDED BY THE ASSESSING OFFICER IS AVAILABLE AT PAGE 16 OF THE PAPER BOOK. WE OBSERVE THAT THE ASSESSING OFFICER HAS NOT REBUTTED CATEGORICALLY THE AVERMENTS MADE BY THE ASSESSEE IN HIS STATEMENT ON OATH. IT IS ALSO OBSERVED THAT THE LD. CIT(A) HAS PARTLY ACCEPTED TEHSILDARS CERTIFICATE FILED FOR THE PURPOSE OF AGRICULTURAL INCOME IN HIS ORDER FOR ASSESSMENT YEAR 1997-98 BUT HAS FAILED TO TAKE NOTE OF THE PAYMENT OF ` 1.80 LAKHS IN THE FORM OF GOLD DULY MENTIONED IN THE SAID CERTIFICATE. THERE IS NO MATERIAL ON RECORD TO REBUT THE CONTENTION OF THE ASSESSEE REGARDING AVAILABILITY OF GOLD WITH HIM WHICH IS MENTIONED IN THE VALUATION REPORT FILED ALONG WITH THE RETURN. IN OUR VIEW, THE LOWER AUTHORITIES HAVE NOT CORRECTLY APPRECIATED THE FACTS OF THE PRESENT CASE AND THE IMPUGNED ADDITION HAS BEEN MADE MERELY ON THE BASIS OF SURMISES AND CONJECTURES WITHOUT APPRECIATING THE EXPLANATION OF THE ASSESSEE REGARDING PAYMENT OF ` 1.80 LAKHS IN THE FORM OF GOLD. KEEPING IN :-8-: VIEW THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) DESERVES TO BE DELETED. WE ORDER ACCORDINGLY AND ALLOW GROUNDS NO.10 AND 11 OF THE APPEAL OF THE ASSESSEE. 10. GROUND NO. 12 OF THE APPEAL RELATES TO CHARGING OF INTEREST UNDER SECTION 234A AND 234B OF THE ACT. AT THE TIME OF HEARING, SHRI. AMIT SHUKLA, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT CHARGING OF INTEREST UNDER SECTION 234A AND 234B OF THE ACT IS CONSEQUENTIAL IN NATURE AND WE HOLD ACCORDINGLY. 11. AT THE TIME OF HEARING OF APPEAL, SHRI. AMIT SHUKLA, LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS FOR GROUNDS NO.1 TO 7 OF THE APPEAL AND HENCE THE SAME ARE DISMISSED AS NOT PRESSED. 12. IN THE ABOVE TERMS, APPEAL IS ALLOWED PARTLY. ORDER PRONOUNCED IN THE OPEN COURT ON 19.8.2011. SD/- SD/- [ N. K. SAINI] [H. L. KARWA] ACCOUNTANT MEMBER VICE PRESIDENT DATED:19.8.2011 JJ:1708 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR