A.C.I.T., Circle-3(1), Gwalior V. Shri Udai Bhagwan Industries, Gwalior

ITA 154/AGR/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0332 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-03-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 13-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: NAVIN GARGH
• Keywords: Revised return; Reason to believe
• Section: 142(1); 139(5); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.154/AGR/2011 ASSESSMENT YEAR: 2003-04 ASSTT. COMMISSIONER OF INCOME TAX, VS. SHRI UDAY BH AGWAN INDUSTRIES, CIRCLE 3(1), GWALIOR. A-5, INDUSTRIAL AREA, MAHARAJPURA, GWALIOR. (PAN : AAAFU 6544 M). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. MISHRA, JR. D.R. RESPONDENT BY : SHRI NAVIN GARGH, ADVOCATE DATE OF HEARING : 06.03.2013 DATE OF PRONOUNCEMENT : 15.03.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 14.02.2011 PASSED BY THE LD. CIT(A), GWALIOR FOR THE ASSESSMEN T YEAR 2003-04. 2. THE REVENUE HAS RAISED AS MANY AS 5 GROUNDS OF A PPEAL BUT THE EFFECTIVE GROUND IS IN RESPECT OF QUASHING THE A.O.S ORDER O N THE GROUND THAT NO NOTICE 2 ITA NO.154/AGR/2011 A.Y. 2003-04 UNDER SECTION 143(2) OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) WAS ISSUED TO THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT ORIGINALLY THE ASSESSEE FILED RETURN OF INCOME SHOWING TOTAL INCOME NIL ON 25.11.2003. THE RETURN WAS PROCESSED UNDER SECTION 143(1) ON 27.01.2004. A SURVEY WAS CONDUCT ED ON 26.12.2008. DURING THE COURSE OF SURVEY, CREDIT OF RS.13,09,283/- WAS OUTS TANDING IN THE NAME OF M/S. KOTHARI & SONS WHICH WAS SURRENDERED AS ADDITIONAL INCOME BY THE ASSESSEE FOR THE A.Y. 2003-04 AND A REVISED RETURN DECLARING SUR RENDERED INCOME WAS FILED ON 29.12.2008. IN ORDER TO REGULARISE THE REVISED RET URN FILED BY THE ASSESSEE, THE A.O. ISSUED NOTICE UNDER SECTION 148 OF THE ACT ON 21.01 .2009. THE A.O., AFTER CONSIDERING THE ASSESSEES SUBMISSION, COMPUTED THE TOTAL INCOME AS UNDER :- (PAGE NO.6) TOTAL INCOME AS PER REVISED RETURN FILED RS.13, 09,283/- ON 29.12.2008 ADD : ADDITION MADE :- (A) ON ACCOUNT OF VALUATION OF CLOSING STOCK AS DISCUSSED IN PARA NO.2 ABOVE RS.81,741/- (B) ON ACCOUNT OF EXPENSES DISALLOWED AS DISCUSSED IN PARA NO.3 ABOVE RS.24,657/- (C) ON ACCOUNT OF DIFFERENCE IN FICTITIOUS LIABILITY IN THE NAME OF M/S. KOTHARI & SONS, VYAWAR AS DISCUSSED IN PARA NO.4 ABOVE. RS.11,63,575/- 3 ITA NO.154/AGR/2011 A.Y. 2003-04 (D) ON ACCOUNT OF DIFFERENCE IN FICTITIOUS LIABILITY IN THE NAME OF M/S RIDHHI SIDHHI CONTAINER (P) LTD., JAIPUR AS DISCUSSED IN PARA NO.5 ABOVE. RS.1,05,489/- : RS.13,75,462/- TOTAL INCOME : RS.26,84,745/- R/O : RS.26,84,750/- 4. THE ASSESSEE CHALLENGED THE ORDER OF A.O. AGAINS T PROCEEDINGS UNDER SECTION 147 AND THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT. THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT THE SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT IS MANDATORY EVEN IN CASES WHERE THE RETURN HAS NOT BE EN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT BEFORE TAKING THE ASSE SSMENT PROCEEDINGS. THE TIME LIMIT FOR SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT IS STIPULATED IN PROVISO OF CLAUSE (II) OF SUB-SECTIN-2 OF SECTION 143 OF THE A CT. ACCORDINGLY, THE NOTICE UNDER SECTION 143(2) OF THE ACT CAN BE SERVED UP TO 6 MON THS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FILED. IN TH E CASE UNDER CONSIDERATION, THE RETURN OF INCOME WAS FURNISHED ON 29.12.2008. ACCO RDINGLY, NOTICE UNDER SECTION 143(2) OF THE ACT COULD BE SERVED UP TO 30.09.2009 BUT IT WAS ISSUED ON 16.11.2009 AND SERVED ON 17.11.2009. THE CIT(A) FOLLOWED THE ORDER OF I.T.A.T. AGRA BENCH PASSED IN THE CASE OF SHRI NARENDRA SINGH VS. ITO I N ITA NO.317/AGR/2010 FOR A.Y.2001-02, WHERE IN IT HAS BEEN HELD THAT THE ISS UE OF NOTICE UNDER SECTION 143(2) WITHIN THE PRESCRIBED TIME LIMIT IS MANDATOR Y. THE CIT(A) HAS FOLLOWED THE ABOVE ORDER OF I.T.A.T., AGRA BENCH AND DELETED THE ADDITION HOLDING THAT NOTICE 4 ITA NO.154/AGR/2011 A.Y. 2003-04 UNDER SECTION 143(2) HAS BEEN HELD TO BE A NON-CURA BLE DEFECT, THE A.O. CANNOT MAKE THE ADDITION TO THE INCOME OF THE ASSESSEE AS HE IS BOUND TO ACCEPT THE INCOME AS RETURNED BY THE ASSESSEE. THE CIT(A) DIR ECTED TO ASSESS THE INCOME AT RS.13,09,283/-. THE CIT(A) DID NOT ADJUDICATE THE ISSUE ON MERIT. 5. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES. THE ISSUE TO BE EXAMINED IN THIS CASE IS WHETHER THE ORDER OF CIT(A ) QUASHING A.O.S ORDER IS IN ACCORDANCE WITH LAW. BEFORE COMING TO THE ISSUE, I T IS RELEVANT TO NOTE THE IMPORTANT FACTS OF THE CASE THAT THE SO-CALLED REVI SED RETURN FILED ON 29.12.2008 WHICH IS NOT A VALID RETURN OF INCOME. THE REVISED RETURN CAN BE FILED UNDER SECTION 139(5). SECTION 139(5) PROVIDES THAT IF ANY PERSON HAVING FURNISHED A RETURN UNDER SUB-SECTION (1) OF SECTION 139 OF THE ACT OR IN PUR SUANCE OF NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 DISCOVERS ANY OMISSI ON OR WRONG STATEMENT THEREIN HE MAY FURNISH A REVISED RETURN OF ANY TIME BEFORE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT A.Y. OR BEFORE THE COMPLETION OF AS SESSMENT WHICHEVER IS EARLIER. IN THE CASE UNDER CONSIDERATION, ONE YEAR FROM THE END OF THE ASSESSMENT YEAR HAS BEEN EXPIRED ON 31.03.2005. THE ORIGINAL RETURN FI LED WAS PROCESSED ON 25.11.2003. THE ASSESSEE HAS FILED THE SO-CALLED R EVISED RETURN ON 29.12.2008 SURRENDERING THE AMOUNT SURRENDERED AT THE TIME OF SURVEY. THUS, THE SO-CALLED REVISED RETURN WAS FILED AFTER THE PRESCRIBED PERIO D UNDER SECTION 139(5). 5 ITA NO.154/AGR/2011 A.Y. 2003-04 THEREFORE, IN THE EYES OF LAW THE SO-CALLED REVISED RETURN FILED BY THE ASSESSEE ON 29.1.2008 IS NOT A VALID REVISED RETURN. IT IS ALS O ADMITTED FACT THAT AFTER THE ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT, THE ASSESSE E DID NOT FILE ANY RETURN OR MADE SUBMISSION THAT THE ORIGINAL RETURN FILED MAY BE TR EATED AS RETURN FILED AGAINST THE NOTICE UNDER SECTION 148 OF THE ACT. FURTHER NO NO TICE UNDER SECTION 142(1) OF THE ACT ISSUED BY THE A.O. FOR FURNISHING RETURN OF INC OME. 6. NOW, IT IS TO BE SEEN WHETHER UNDER THE CIRCUMST ANCES, IS THERE ANY REQUIREMENT OF ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT. FOR THE PURPOSE OF READY REFERENCE, SECTION 143(2) IS REPRODUCED AS BE LOW:- 143(1) (2) WHERE A RETURN HAS BEEN FURNISHED UNDER SECTION 139, OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SE CTION 142, THE ASSESSING OFFICER SHALL,- (I) WHERE HE HAS REASON TO BELIEVE THAT ANY CLAIM O F LOSS, EXEMPTION, DEDUCTION, ALLOWANCE OR RELIEF MADE IN T HE RETURN IS INADMISSIBLE, SERVE ON THE ASSESSEE A NOTICE SPECIF YING PARTICULARS OF SUCH CLAIM OF LOSS, EXEMPTION, DEDUCTION, ALLOWANCE OR RELIEF AND REQUIRE HIM, ON A DATE TO BE SPECIFIED THEREIN TO P RODUCE, OR CAUSE TO BE PRODUCED, ANY EVIDENCE OR PARTICULARS SPECIFIED THEREIN OR ON WHICH THE ASSESSEE MAY RELY, IN SUPPORT OF SUCH CLA IM: [ PROVIDED THAT NO NOTICE UNDER THIS CLAUSE SHALL BE SERVED O N THE ASSESSEE ON OR AFTER THE 1 ST DAY OF JUNE, 2003;] 6 ITA NO.154/AGR/2011 A.Y. 2003-04 (II) NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE ( I), IF HE CONSIDERS IT NECESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDER-STATED THE INCOME OR HAS NOT COMPUTED EXCESSI VE LOSS OR HAS NOT UNDER-PAID THE TAX IN ANY MANNER, SERVE ON THE ASSE SSEE A NOTICE REQUIRING HIM, ON A DATE TO BE SPECIFIED THEREIN, E ITHER TO ATTEND HIS OFFICER OR TO PRODUCE, OR CAUSE TO BE PRODUCED, ANY EVIDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETURN: [ PROVIDED THAT NO NOTICE UNDER CLAUSE (II) SHALL BE SERVED O N THE ASSESSEE AFTER THE EXPIRY OF TWELVE MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED.]] 7. ON PERUSAL OF THE ABOVE SECTION 143(2), WE NOTIC ED THAT FOR ISSUING NOTICE UNDER SECTION 143(2), FOLLOWING ARE THE BASIC REQUI REMENT OF THE LAW (1) THAT THE RETURN MUST BE FURNISHED UNDER SECTION 139 OR (2) T HE RETURN TO BE FURNISHED IN RESPONSE TO NOTICE UNDER SUB-SECTION (1) OF SECTION 142 OF THE ACT. IN THE CASE UNDER CONSIDERATION, NEITHER ASSESSEE FURNISHED THE SO-CALLED REVISED RETURN OF INCOME UNDER SECTION 139 NOR IT WAS FURNISHED IN RE SPONSE TO NOTICE UNDER SUB- SECTION(1) OF SECTION 142. RETURN FILED ON 29.12.2 008 IS INVALID RETURN. THUS, BOTH CONDITIONS ARE NOT APPLICABLE IN THE CASE UNDER CON SIDERATION. FROM THE FACTS OF THE CASE AND ABOVE DISCUSSION, IT IS ADMITTED FACT OF T HE CASE THAT THE SO-CALLED REVISED RETURN IS NOT A RETURN FURNISHED UNDER SECTION 139 OF THE ACT NOR THE A.O. ASKED UNDER SECTION 142(1) TO FURNISH RETURN OF INCOME. SECTION 148(1) OF THE ACT IS ALSO RELEVANT TO BE EXAMINED. FOR THE PURPOSE OF READY REFERENCE, SECTION 148(1) OF THE ACT IS REPRODUCED AS UNDER :- 7 ITA NO.154/AGR/2011 A.Y. 2003-04 148[(1)] BEFORE MAKING THE ASSESSMENT, REASSESSMEN T OR RECOMPUTATION UNDER SECTION 147, THE ASSESSING OFFI CER SHALL SERVE ON THE ASSESSEE A NOTICE REQUIRING HIM TO FURNISH WITH OUT SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, A RETURN OF HIS INC OME OR THE INCOME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSAB LE UNDER THIS ACT DURING THE PREVIOUS YEAR CORRESPONDING TO THE RELEV ANT ASSESSMENT YEAR, IN THE PRESCRIBED FORM AND VERIFIED IN THE PR ESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED; AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APP LY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139;] (UNDERLINED BY US) [ PROVIDED THAT IN A CASE- (A) WHERE A RETURN HAS BEEN FURNISHED DURING THE PE RIOD COMMENCING ON THE 1 ST DAY OF OCTOBER, 1991 AND ENDING ON THE 30 TH DAY OF SEPTEMBER, 2005 IN RESPONSE TO A NOTICE SER VED UNDER THIS SECTION, AND (B) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER SUB -SECTION (2) OF SECTION 143 AFTER THE EXPIRY OF TWELVE MONTHS SPECI FIED IN THE PROVISO TO SUB-SECTION (2) OF SECTION 143, AS IT ST OOD IMMEDIATELY BEFORE THE AMENDMENT OF SAID SUB-SECTIO N BY THE FINANCE ACT, 2002 (20 OF 2002) BUT BEFORE THE EXPIR Y OF THE TIME LIMIT FOR MAKING THE ASSESSMENT, REASSESSMENT OR RE COMPUTATION AS SPECIFIED IN SUB-SECTION (2) OF SECTION 153, EVE RY SUCH NOTICE REFERRED TO IN THIS CLAUSE SHALL BE DEEMED TO BE A VALID NOTICE: PROVIDED FURTHER THAT IN CASE- (A) WHERE A RETURN HAS BEEN FURNISHED DURING THE PE RIOD COMMENCING ON THE 1 ST DAY OF OCTOBER, 1991 AND ENDING ON THE 30 TH DAY OF SEPTEMBER, 2005, IN RESPONSE TO A NOTICE SE RVED UNDER THIS SECTION, AND (B) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER CLA USE (II) OF SUB- SECTION (2) OF SECTION 143 AFTER THE EXPIRY OF TWEL VE MONTHS SPECIFIED IN THE PROVISO TO CLAUSE (II) OF SUB-SECT ION (2) OF 8 ITA NO.154/AGR/2011 A.Y. 2003-04 SECTION 143, BUT BEFORE THE EXPIRY OF THE TIME LIMI T FOR MAKING THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION AS SP ECIFIED IN SUB-SECTION (2) OF SECTION 153, EVERY SUCH NOTICE R EFERRED TO IN THIS CLAUSE SHALL BE DEEMED TO BE A VALID NOTICE.] [EXPLANATION.- FOR THE REMOVAL OF DOUBTS, IT IS HE REBY DECLARED THAT ANYTHING CONTAINED IN THE FIRST PROVISO OR THE SECO ND PROVISO SHALL APPLY TO ANY RETURN WHICH HAS BEEN FURNISHED ON OR AFTER THE 1 ST DAY OF OCTOBER, 2005 IN RESPONSE TO NOTICE SERVED UNDER TH IS SECTION.] 8. ON PERUSAL OF SECTION 148(1) ALONG WITH SECTION 143(2) OF THE ACT, WE NOTICE THAT BEFORE MAKING ASSESSMENT UNDER SECTION 147 OF THE ACT THE A.O. IS TO SERVE NOTICE UNDER SECTION 148 OF THE ACT REQUIRING THE A SSESSEE TO FURNISH THE RETURN OF INCOME. ON FURNISHING RETURN OF INCOME IN COMPLIAN CE TO NOTICE UNDER SECTION 148 OF THE ACT THEN THE PROVISIONS OF THIS ACT INCLUDIN G ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT SHALL APPLY ACCORDINGLY. IF WE S EE THE OBJECTS OF ISSUING NOTICE UNDER SECTION 143(2) AFTER FILING RETURN OF INCOME, WE NOTICED THAT NOTICE IS REQUIRED TO BE ISSUED TO EXAMINE AND TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HA S NOT UNDER-PAID THE TAX IN ANY MANNER. FOR THIS PURPOSE OPPORTUNITY IS REQUIRED T O BE GIVEN TO THE ASSESSEE TO PRODUCE OR TO BE PRODUCED ANY EVIDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETURN. WHEN THE ASSESSEE HAS CHOSEN NOT TO FILE RETURN, WE ARE OF THE CONSIDERED VIEW THAT NO NOTICE UNDER SECTION 143(2) IS REQUIRED TO BE SERVED. IN THE CASE UNDER CONSIDERATION, AS STATED ABOVE, IT IS AD MITTED FACT THAT THE ASSESSEE DID 9 ITA NO.154/AGR/2011 A.Y. 2003-04 NOT FURNISH RETURN IN COMPLIANCE TO NOTICE UNDER SE CTION 148 OF THE ACT NOR IT WAS STATED THAT THE ORIGINAL RETURN FILED BE TAKEN AS R ETURN IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. IN THE CASE UNDER CONSIDER ATION, THE SO-CALLED REVISED RETURN HAS BEEN FILED ON 29.12.2008 WHICH IS NOT A VALID R EVISED RETURN IN THE EYES OF LAW BUT AT THE MOST THAT MAY BE INFORMATION FOR THE BAS IS OF ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. SINCE NO VALID RETURN IS F ILED UNDER SECTION 148, 139 OR 142, THEREFORE, PERIOD OF ISSUE OF NOTICE UNDER SECTION 143(2) AS PER PROVISO TO SECTION 143(2) CANNOT BE COUNTED WHICH IS TO BE RECKONED FR OM FURNISHING OF RETURN. WE ACCORDINGLY HOLD THAT THERE IS NO RETURN FILED IN C OMPLIANCE TO NOTICE UNDER SECTION 148 OF THE ACT, THEREFORE, THE ISSUE OF NOTICE UNDE R SECTION 143(2) OF THE ACT IS NOT A MANDATORY REQUIREMENT. 9. IN THE LIGHT OF THE ABOVE DISCUSSION, WE FIND TH AT THE CIT(A) HAS WRONGLY RELIED UPON THE ORDER OF I.T.A.T., AGRA BENCH. THE SAID ORDER OF I.T.A.T., AGRA BENCH IN THE CASE OF SHRI NARENDRA SINGH VS. ITO IN ITA NO.317/AGR/2010 IS DISTINGUISHABLE ON FACTS AS IN THAT CASE THE FACT W AS THAT THE ASSESSEE FILED RETURN OF INCOME IN COMPLIANCE TO NOTICE UNDER SECTION 148 OF THE ACT. THEREFORE, WE SET ASIDE THE ORDER OF CIT(A) AS SHE HAS WRONGLY FOLLOW ED THE SAID ORDER OF THE I.T.A.T. AGRA BENCH ON ALL GROUNDS OF REVENUES APP EAL. 10 ITA NO.154/AGR/2011 A.Y. 2003-04 10. SINCE THE CIT(A) DID NOT EXPRESS HIS OPINION OR ADJUDICATE THE APPEAL ON MERIT, WE THEREFORE, SEND BACK THE MATTER TO THE FI LE OF CIT(A) WITH DIRECTION TO ADJUDICATE THE GROUNDS ON MERIT IN ACCORDANCE WITH LAW, AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO BOTH THE SIDES. 11. IN THE RESULT, APPEAL OF REVENUE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY