ACIT, Circle-10(1), Hyderabad V. Shri Bhupender Singh Talwar, Secunderabad

ITA 1579/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77830 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 26-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARJEET SINGH
• Keywords: Unexplained cash credit; Opportunity of being heard
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ANDSHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 1579/HYD/2013 A.Y. : 2009-10 ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 10(1), HYDERABAD VS. SHRI BHUPENDER SINGH TALWAR, SECUNDERABAD. PAN ACDPT1686N) APPELLANT RESPONDENT REVENUE BY: SHRI SOLGY JOSE T. KOTTARAM ASSESSEE BY: SHRI HARJEET SINGH DATE OF HEARING: 25.03.2014 DATE OF PRONOUNCEMENT: 02.04.2014 O R D E R PER SAKTIJIT DEY, JM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VI, HYDERABAD DATED 14/08/2013 FOR THE ASSES SMENT YEAR 2009-10. 2. THE DEPARTMENT IS AGGRIEVED BY THE ACTION OF TH E CIT(A) IN CANCELLING PENALTY IMPOSED U/S 271(1)(C) OF THE IT ACT. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE AN INDIVIDUA L FILED HIS RETURN OF INCOME FOR THE AY UNDER DISPUTE ON 28/08/2009 DE CLARING INCOME OF RS. 24,16,360/-. IN COURSE OF SCRUTINY ASSESSMENT P ROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAD MADE CASH DEPOSITS TO THE EXTENT OF RS. 45 LAKHS IN HIS BANK ACCOUNTS. THE ASSESSING OF FICER, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF SUCH DE POSITS. THE ASSESSEE IN RESPONSE TO THE QUERY MADE BY THE ASSES SING OFFICER, REPLIED THAT HIS DECEASED FATHER HAS LEFT CASH IN H AND, WHICH WAS RECEIVED BY THE ASSESSEE AND DEPOSITED IN HIS BANK ACCOUNT. IN I.T.A. NO. 1579/HYD/2013 SRI BHUPENDER SINGH TALWAR 2 SUPPORT OF SUCH CONTENTION, THE ASSESSEE SUBMITTED RETURNS OF HIS FATHER. THE ASSESSING OFFICER, HOWEVER, WAS NOT FUL LY CONVINCED WITH THE EXPLANATION OF THE ASSESSEE AND WAS OF THE VIEW THAT THE ASSESSEE COULD HAVE RECEIVED AN AMOUNT OF RS. 15 LA KHS AND NOT RS. 45 LAKHS AS CLAIMED BY THE ASSESSEE. HE, THEREFORE, MADE FURTHER QUERIES TO THE ASSESSEE TO EXPLAIN THE SOURCE FOR T HE BALANCE AMOUNT OF RS. 30 LAKHS. AS MENTIONED BY THE ASSESSING OFFI CER IN THE ORDER, SINCE THE ASSESSEE COULD NOT EXPLAIN THE SOURCE FOR THE BALANCE CASH DEPOSIT OF RS. 30 LAKHS AND AGREED FOR ADDITION OF THE SAME THROUGH HIS AR, THE ASSESSING OFFICER COMPLETED THE ASSESSM ENT BY TREATING THE AMOUNT OF RS. 30 LAKHS AS UNEXPLAINED CASH DEPO SIT U/S 68 OF THE ACT AND COMPLETED THE ASSESSMENT ACCORDINGLY. THE A SSESSEE ALSO ACCEPTED THE INCOME DETERMINED BY NOT FILING ANY AP PEAL AGAINST THE ASSESSMENT ORDER. IN CONSEQUENCE OF THE ADDITION MA DE IN THE ASSESSMENT ORDER, PENALTY PROCEEDINGS WERE INITIATE D U/S 271(1)(C) OF THE ACT BY ISSUING SHOW CAUSE NOTICE TO THE ASSESSE E. IN REPLY TO THE SHOW CAUSE NOTICE, THE ASSESSEE EXPLAINED THAT HE H AS AGREED FOR THE ADDITION TO BUY PEACE WITH THE DEPARTMENT AND REQUE STED FOR NOT IMPOSING PENALTY. THE ASSESSING OFFICER, HOWEVER, REFUSING TO ACCEPT THE EXPLANATION OF THE ASSESSEE, PROCEEDED TO PASS AN ORDER U/S 271(1)(C) OF THE ACT ON 29/06/2012 IMPOSING PENALTY OF RS. 10,19,700/-. 4. BEING AGGRIEVED OF THE PENALTY ORDER SO PASSED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 5. IN COURSE OF HEARING OF APPEAL BEFORE CIT(A), AP ART FROM CHALLENGING THE IMPOSITION OF PENALTY ON MERITS THE ASSESSEE ALSO CHALLENGED THE SAME ON THE ISSUE OF JURISDICTION. I T WAS CONTENDED BY THE ASSESSEE THAT AFTER COMPLETION OF THE ASSESSMEN T U/S 143(3) VIDE ORDER DATED 21/12/2011, THE ASSESSING OFFICER INITI ATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE ASSESSEE IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED HAS ALSO SUBMITTED HIS REP LY ON 05/01/2012. I.T.A. NO. 1579/HYD/2013 SRI BHUPENDER SINGH TALWAR 3 IT WAS SUBMITTED THAT MEANWHILE THOUGH THERE WAS A CHANGE IN THE JURISDICTION OF THE ASSESSING OFFICER, THE PREVIO US ASSESSING OFFICER, STILL HAS PROCEEDED TO LEVY PENALTY U/S 271(1)(C) V IDE ORDER DATED 29/06/2012 OF AN AMOUNT OF RS. 10,19,700/-. IT WAS SUBMITTED THAT WHILE DOING SO NO FRESH OPPORTUNITY WAS GIVEN TO TH E ASSESSEE. IT WAS FURTHER CONTENDED THAT WHEN PENALTY ORDER WAS PASSE D THE OFFICER CONCERNED HAD NO JURISDICTION OVER THE ASSESSEE AS JURISDICTION HAD BEEN TRANSFERRED TO ANOTHER ASSESSING OFFICER THOUG H IN THE SAME RANGE. THE ASSESSEE, THEREFORE, CONTENDED THAT NOT ONLY PENALTY ORDER WAS PASSED WITHOUT AFFORDING PROPER OPPORTUNITY TO THE ASSESSEE BUT THE ASSESSING OFFICER, WHO PASSED THE PENALTY ORDER ALSO DID NOT HAVE THE JURISDICTION. 6. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE WITH REGARD TO LACK OF JURISDICTION OF THE ASSESSIN G OFFICER, WHO HAS PASSED THE PENALTY ORDER, HELD THAT THE ASSESSING O FFICER HAD NO JURISDICTION OVER THE ASSESSEE AS ON THE DATE THE P ENALTY ORDER WAS PASSED, THE JURISDICTION STOOD TRANSFERRED TO THE I TO, WARD 10(2) BY VIRTUE OF ORDER U/S 120 DATED 26/03/2012 OF THE ADD L. CIT. THE RELEVANT FINDINGS OF THE CIT(A) ARE AS UNDER: 4.7 REGARDING THE ISSUE OF LACK OF JURISDICTION FOR THE ASSESSING OFFICER WHO HAS PASSED THE PENALTY ORDER, WHERE THE JURISDICTION OVER THE CASE WAS TRANSFERRED TO THE O THER OFFICER, THE FACTS OF THIS CASE ARE THAT THE ACIT, CIRCLE 10(1) PASSED THE ASSESSMENT ORDER FOR THE YEAR UNDER REFERENCE U /S 143(3) ON 21/12/2011, WHILE MAKING AN ADDITION OF RS. 30.0 0 LAKHS ON ACCOUNT OF TREATING THE CASH DEPOSITS INTO BANK ACC OUNTS OF THE APPELLANT, AS UNEXPLAINED CREDITS AND THE CASE WAS SUBSEQUENTLY TRANSFERRED TO ITO, WARD-10(2), HYDERA BAD VIDE THE ORDER U/S 120 OF IT ACT PASSED BY THE ADDL. CIT , RANGE 10, HYDERABAD ON 26/03/2012. IT APPEARS THAT THE ASSESS ING OFFICER HAS NOT TAKEN THESE FACTS INTO CONSIDERATION AND PR OCEEDED FOR LEVYING THE PENALTY ON THE ASSESSEE. FURTHER, THERE WAS NO OCCASION FOR THE ASSESSEE TO REQUEST FOR THE NEEDED OPPORTUNITY OF BEING HEARD OR TO RAISE THE OBJECTION ON THE ISS UE OF LACK OF JURISDICTION TO THE ASSESSING OFFICER, WHO HAS LEVI ED THE PENALTY, SINCE NO FRESH NOTICE WAS ISSUED BY THE ASSESSING O FFICER FROM THE DATE OF PASSING THE ORDER ON 21/12/2011 AND THE DATE OF TRANSFER OF CASE FROM ACIT TO ITO, ON 26/03/2012. H ENCE, THERE I.T.A. NO. 1579/HYD/2013 SRI BHUPENDER SINGH TALWAR 4 WAS NO OPPORTUNITY FOR THE APPELLANT TO QUESTION TH E JURISDICTION OF THE ASSESSING OFFICER AT THE TIME OF LEVYING THE PENALTY, SINCE THE PENALTY WAS LEVIED BASED ON THE NOTICE ISSUED B Y THE EARLIER OFFICER AND REPLY FURNISHED TO IT. THUS, BASED ON T HE FACTS, IT REVEALS THAT AS ON THE DATE OF PASSING THE ORDER U/ S 271(1)(C) IN THIS CASE ON 29/06/2012, THE JURISDICTION OVER THE CASE/APPELLANT VESTED WITH THE ITO, WARD 10(2), HYDERABAD AND NO T WITH THE ACIT, CIRCLE 10(1), HYDERABAD. FURTHER, THERE WAS NO OPPORTUNITY TO THE APPELLANT TO RAISE THE OBJECTION AGAINST EXERCISING OF SUCH JURISDICTION. UNDER THE CIRCUMST ANCES, I AM OF THE CONSIDERED OPINION THAT THERE IS NO JURISDICTIO N FOR ACIT- 10(1), HYDERABAD FOR PASSING THE ORDER U/S 271(1)(C ) AS ON THE DATE OF PASSING THE ORDER OF PENALTY ON 29/06/2012, WHERE THE JURISDICTION STAND TRANSFERRED TO ITO, WARD 10(2) , HYDERABAD BY VIRTUE OF ORDER U/S 120 DATED 26/03/2012. AS SUC H THE ORDER OF PENALTY U/S 271(1)(C), WHEREBY A PENALTY OF RS. 10,19,700/- LEVIED, BECOME INFRUCTUOUS. ACCORDINGLY, THE ORDER OF PENALTY STAND NULLIFIED. SINCE THE ORDER OF PENALTY IS HELD TO BE CANCELLED, THE OTHER ISSUES RAISED BY THE APPELLANT ARE CONSIDERED TO BE DISPOSED IN FAVOUR OF THE APPELLAN T. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE OTHER MATERIALS ON RECORD. THE LEARNED DR TRIED TO MAKE OUT A CASE BY CONTENDING THAT SINCE THE ASSESSING OFFICER IS WITHIN THE SAME RANGE HEADED BY ADDITIONAL COMMISSIONER OF INC OME-TAX, IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAD NO JU RISDICTION TO PASS THE PENALTY ORDER. IN SUPPORT OF SUCH CONTENTION, H E RELIED ON THE DECISION OF THE HONBLE AP HIGH COURT IN CASE OF A CTION FOR WELFARE & AWAKENING IN RURAL ENVIRONMENT (AWARE) VS. DEPUTY C OMMISSIONER OF INCOME TAX, 263 ITR 13 (AP). THE LEARNED AR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A). 8. AS CAN BE SEEN FROM THE FACTS ON RECORD, WHICH H AVE BEEN CLEARLY BROUGHT OUT AT PARAGRAPH 4.7 OF THE CIT(A) S ORDER EXTRACTED HEREINABOVE, THE ASSESSMENT ORDER IN CASE OF THE AS SESSEE WAS PASSED U/S 143(3) OF THE ACT VIDE ORDER DATED 21/12 /2011 BY THE ACIT, CIRCLE 10(1). HOWEVER, THE ADDL. CIT OF THE CONCERNED RANGE, IN EXERCISE OF POWER U/S 120 OF THE IT ACT TRANSFER RED THE CASE OF THE ASSESSEE FROM THE JURISDICTION OF ACIT, CIRCLE 10(1 ), HYDERABAD TO THE ITO, WARD 10(2), HYDERABAD VIDE ORDER NO. ADDL.CI T/R-10/2011-12, I.T.A. NO. 1579/HYD/2013 SRI BHUPENDER SINGH TALWAR 5 DATED 26/03/2012. ADMITTEDLY, THE PENALTY ORDER U/S 271(1)(C) OF THE ACT HAS BEEN PASSED ON 29/06/2012. THEREFORE, IT IS ABUNDANTLY CLEAR THAT WHEN THE PENALTY ORDER WAS PASSED THE CONCERNE D OFFICER DID NOT HAVE THE JURISDICTION OVER THE ASSESSEE, WHICH STOO D TRANSFERRED TO ITO, WARD 10(2), HYDERABAD WITH EFFECT FROM 26/03 /2012. IN THAT VIEW OF THE MATTER, THE PENALTY ORDER COULD NOT HAV E BEEN PASSED BY THE ACIT, CIRCLE 10(1) AS SHE HAD NO JURISDICTION OVER THE ASSESSEE ON THE DATE PENALTY ORDER WAS PASSED. IN THAT VIEW OF THE MATTER, THERE IS NO INFIRMITY IN THE ORDER OF THE CIT(A) IN DECLARING THE ORDER PASSED U/S 271(1)(C) OF THE ACT, TO BE A NULLITY DU E TO LACK JURISDICTION AND CONSEQUENTLY CANCELLING THE PENALTY. SO FAR AS THE DECISION RELIED UPON BY THE LEARNED DR IS CONCERNED, ON A CAREFUL R EADING OF THE SAME, WE FIND THE FACTS ARE QUITE DISTINGUISHABLE A ND WILL NOT APPLY TO THE FACTS OF THE PRESENT CASE. HENCE, THE DECISION RELIED UPON BY THE LEARNED DR IS NOT RELEVANT FOR THE PURPOSE OF THE P RESENT CASE. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) BY D ISMISSING THE GROUND RAISED BY THE REVENUE IN THIS REGARD. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 02/04/2 014. (CHANDRA POOJARI) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED 2 ND APRIL, 2014 KV I.T.A. NO. 1579/HYD/2013 SRI BHUPENDER SINGH TALWAR 6 COPY FORWARDED TO: 1. ACIT, CIRCLE 10(1), ROOM NO. 515, 5 TH FLOOR, A BLOCK, IT TOWERS, AC GUARDS, HYD. 2. SRI BHUPINDER SINGH TALWAR, 149, RP ROAD, SECUNDERABAD 500 003. 3. THE CIT(A)-VI, HYDERABAD. 4. THE CIT-V, HYDERABAD 5. THE DR, ITAT, HYDERABAD