Smt. Meenaben Ashokbhai Patel, Gandhinagar V. The ITO, Ward-3, Gandhinagar

ITA 1586/AHD/2019

AI Insights

The case revolves around the re-assessment of Smt. Meenaben Ashokbhai Patel for the Assessment Year 2013-14, initiated by the Income Tax Officer (ITO), Ward-3, Gandhinagar under Section 148 of the Income Tax Act, 1961. The re-assessment was based on alleged unexplained transactions and non-filing of the return by the assessee. However, the assessee contested that the return was indeed filed, and the initiation of re-assessment was based on incorrect facts. The Tribunal examined the reasons recorded for re-assessment and found them to be factually incorrect, leading to the quashing of the re-assessment order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125339 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-07-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 20-10-2019
• Other Referred Cases: Sagar Enterprises vs. ACIT, Deepak Wadhwa vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Reason to believe; Set aside
• Section: 148; 132; 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./I. T. A. No . 1 586/Ahd/20 19 ( नधा रण वष / A ss es sment Year : 2013-14) Sm t . Me en a be n A s ho k b ha i Pa t e l 40 3, Se ct o r – 8 B , G a nd hin a g a r बनाम/ Vs . In c o m e T ax Of f ice r W ar d - 3, G a n dh i na gar थायी लेखा सं./जीआइआर सं./P A N/ G I R N o . : A O A P P 7 6 6 1 Q (अपीलाथ /Appellant) . . ( यथ / Respondent) अपीलाथ ओर से /Appellant by : Shri Manish J. Shah, AR यथ क ओर से/Respondent by : Smt. Trupti Patel, Sr. D.R. स ु नवाई क तार ख / D a t e o f H e a r i ng 10/07/2023 घोषणा क तार ख /D a t e o f P ro n o u nc e me n t 12/07/2023 O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeal filed at the behest of the assessee is directed against the order dated 02.07.2019 passed by the Ld. Commissioner of Income Tax (Appeals), Gandhinagar (in short ‘CIT(A)’) arising out of the order dated 22.12.2017 passed by the ITO, Ward-3, Gandhinagar under Section 143(3) r.w.s. 147 of the Income Tax Act, 1961, (hereinafter referred to as ‘the Act’) for Assessment Year 2013-14. ITA No. 1586/Ahd/2019 (Smt. Meenaben Ashokbhai Patel vs. ITO) A.Y.– 2013-14 - 2 - 2. The appellant has filed an addition ground of appeal challenging the initiation of re-assessment proceeding under Section 148 of the Act and thereby the consequential order passed under Section 143(3) r.w.s. 147 of the act dated 22.12.2017 on the ground of lack of jurisdiction of the authorities below. 3. The brief facts leading to the case is this that on the basis of the information that the appellant had consented transfer fund of Rs.7 Lakhs from Account No. 01901160003225 to one Shri Ashokbhai B Patel having Account No. 01902320000694 of HDFC Bank Ltd. which was not reflected in the ledger account and in the books of accounts maintained by the appellant, and further that, information from AIR to this effect that the assessee deposited cash of Rs.30,01,000/- in HDFC Bank Ltd. and Rs.28,00,000/- in Kotak Mahindra Bank Ltd. and also the appellant purchased immovable property for a consideration of Rs.1,27,00,000/- for the year under consideration, the case under scrutiny was reopened under Section 148 of the Act dated 03.05.2016 upon recording reasons. The said recording of reasons has been filed by the Ld. DR before us on 30 th June, 2022. On 19.04.2016, ITO, Ward-3, Gandhinagar has recorded the reasons in the following manner: “As per information provided by the HDFC Bank Ltd during the assessment proceedings of Shri Ahokbhai B Patel, the assessee, Smt Meenaben Ashokbhai Patel had consented transfer fund of Rs. Seven lacs from a/c. No.01901160003225 to Shri Ashok B Patel a/c No.01902320000694, but the same amount is not reflected in ledger a/c. in books of the assessee. Also as per AIR information, the assessee Smt Meenaben Ashokbhai Patel has deposited cash of Rs 30,01,000/- in HDFC Bank Ltd and Rs 28 lacs in Kotak Mahindra Bank Ltd. Also she has purchased immovable property of Rs.1.82 crores (1.27+ 0.55) during the FY.2012-13. As per ITD she has not filed her return of income for the A.Y.2013-14. Hence, Rs.7lacs given Shri Ashokbhai 13 Patel, Cash deposit of Rs. 58 lacs and investment of Rs. 1.82 crores in immovable property remained unexplained. Therefore, I have reason to believe that the above mentioned transactions totaling to Rs. 2.47 crores chargeable to tax had ITA No. 1586/Ahd/2019 (Smt. Meenaben Ashokbhai Patel vs. ITO) A.Y.– 2013-14 - 3 - escaped assessment to that extent, for AY 2013-14, within the meaning of Section 147 of the Act. Hence, in my opinion, this is a fit case for re-opening of assessment u/s 147 of the 1.T.Act, 1961.” 4. It is relevant to mention that the form of recording reasons for initiation of proceeding under Section 148 of the Act and for obtaining approval of the Joint/Additional Commissioner of Income Tax/Commissioner of Income Tax specifically mentions in Column 18 therein that voluntary return has not been filed by the appellant. On the other hand, the appellant filed before us the copy of the return of income and also the copy of acknowledgment for the year under consideration. Copies whereof have also been forwarded to the Ld. DR. The case of the appellant before us is this that the main basis of recording of reasons for issuance of notice under Section 148 of the Act for initiation of re-assessment proceeding is mainly on the fact of non-filing of return for A.Y. 2013-14 by the appellant which is absolutely wrong finding of fact which has been pointed out by the Ld. AR at the time of hearing of the instant appeal. On this aspect, he has further drawn our attention to the assessment order wherein filing of return of income by the appellant on 10.01.2015 to be treated as return filed under Section 148 of the Act has been duly recorded by the Ld. AO during re-assessment proceeding. He, therefore, contended that as the main basis of reopening of assessment was on the fact of not filing return of income by the appellant and the cash deposit and the investment in the immovable property remained unexplained, culminating into belief of transaction totaling of Rs.2.47 Crores chargeable to tax having been escaped assessment for A.Y. 2013-14 is admittedly wrong which vitiates the entire proceeding and therefore, the consequential order impugned before us is liable to be set aside. On this count, he has relied upon the judgment passed ITA No. 1586/Ahd/2019 (Smt. Meenaben Ashokbhai Patel vs. ITO) A.Y.– 2013-14 - 4 - by the Hon’ble Jurisdictional High Court in the case of Sagar Enterprises vs. ACIT, reported in [2002] 124 taxman 641 (Gujarat) and the judgment passed by the Hon’ble Delhi High Court in case of Deepak Wadhwa vs. ACIT, reported in [2021] 435 ITR 699 (Del). On the other hand, Ld. DR relied upon the orders passed by the authorities below and vehemently argued in support of the re-assessment proceeding culminating into order of addition made by the authorities below. 5. After careful consideration of the order passed by the authorities below and the reasons so recorded by the ITO, Ward-3, Gandhinagar of escaping assessment to the extent of Rs.2.74 Crores by the assessee as chargeable to tax mainly on the basis of the fact of not filing of return for the year under consideration by the appellant seems to be absolutely wrong in view of the mentioning filing of return by the assessee on 10.01.2015 much prior to the recording of reasons by the ITO, Ward-3, Gandhinagar dated 19.04.2016 itself. The very basis of reopening of assessment was found to be incorrect which leads to the belief of escaping assessment by the assessee and finally culminating into the order of addition under Section 143(3) r.w.s. 147 of the Act. The entire proceeding is thus liable to be quashed in view of wrong foundation. On this aspect, we have further considered the judgment passed by the Hon’ble Jurisdictional High Court in the case of Sagar Enterprises (supra). While dealing the issue, the Hon’ble Court was pleased to observe as follows: “When the matter came up for hearing earlier, it was submitted on behalf of the petitioner that the reasons recorded to the following effect are factually incorrect. "The ace firm is engaged in the business of construction. The said firm came into existence vide partnership deed dated 1-10-1990. Therefore, the ITA No. 1586/Ahd/2019 (Smt. Meenaben Ashokbhai Patel vs. ITO) A.Y.– 2013-14 - 5 - relevant previous year for the firm for filing its first return of income would be 1-10-1990 to 31-3-1991. On perusal of the records it is noted that no return for assessment year 1991-92 has been filed by the assessee-firm. As per Explanation (2)(a) to section 147 the following shall be deemed to be a case where income chargeable to tax has escaped assessment.” Therefore Me Kaji, the learned counsel appearing on behalf of the petitioner sought time to place on record the details about the filing of the return. Along with the affidavit-in-rejoinder, xerox copies of following documents have been annexed. (i)Intimation dated 9-3-1992, issued under section 143(1)(a) of the Act. (ii)Acknowledgement dated 28-8-1991, of filing of return for the assessment year 1991-92. (iii)Statement of income for the assessment year 1991-92. At the time of hearing, originals of all the three documents have been produced for perusal of the Court. “3. On going through the reasons recorded and the documents which have been produced on affidavit, it is apparent that the reasons which are recorded are ide hors the facts available on record. Mr. Mihir Joshi learned standing counsel appearing on behalf of the respondent stated that in para 2 of the reasons recorded, the respondent has also referred to action under section 132 of the Act which was claimed out at the premises of one Shri GD. Shah in February, 1992, and has submitted that at least that part of the reasons would survive vesting the respondent with jurisdiction to initiate and continue action under section 147 of the Act. 4. On going through the entire reasons recorded, it can be seen that in the penultimate paragraph, the respondent has further recorded as under: "Further, the assessee was required to file the return of the income for assessment year 1991-92 which the assessee has failed. Morever, it was the duty of the assessee to declare this transaction and to file the return of income for assessment year 1991-92. The assessee has failed on both these counts. Therefore, the escapement of assessment of income is solely attributable to the assessee. Therefore, it is apparent that the factor of non-filing of the return for the assessment year 1991-92 has overbearingly weighed with the respondent for arriving at the satisfaction about the failure on the part of the assessee and escapement of assessment of income. On the basis of the same, even for the sake of argument, if the contention raised by Mr. Joshi is taken into consideration, the settled legal position is that in such circumstances, it would not be possible to say with certainty as to which factor would have weighed with the officer concerned and once it is shown that an irrelevant fact has been taken into consideration, to what extent the decision ITA No. 1586/Ahd/2019 (Smt. Meenaben Ashokbhai Patel vs. ITO) A.Y.– 2013-14 - 6 - is vitiated would be difficult to say. On this count alone, the petition requires to be accepted.” 6. We have further considered the judgment passed by the Hon’ble Delhi High Court in the case of Deepak Wadhwa (supra), wherein the proof of filing of return being acknowledgement of return filed by the appellant for the year under consideration has not been disputed by the Revenue. The challenge to the notice under Section 148 of the Act, order has been found to be not sustainable and finally Hon’ble Court was pleased to quash the impugned notice under Section 147 of the Act dated 27.03.2018 and consequential order dated September 28, 2018 with the following manner: “4. On the other hand, Ms. Adeeba Mujahid, who appears on behalf of the Revenue, has drawn my attention to paragraphs 27 and 28 of the counteraffidavit wherein it is averred that the administrative approval of the Principal Commissioner of Income-tax was taken on 26, 2018. 4.1. As regards the other submissions made on behalf of the petitioner- assessee, Ms. Mujahid says that a communication was issued on February 9, 2018 to the petitioner-assessee, prodding him to file his returns as his case had been flagged by the non-filers monitoring system (NMS), put in place by the Income-tax Department. 4.2. Ms. Mujahid says that the aforementioned communication (which was a computer-generated letter) was, consequently, attempted to be served on the petitioner-assessee which, though was returned by the postal department and, thus, left with no option, service was effected on the authorized representative of the petitioner-assessee. 4.3. Ms. Mujahid submits that since no response received to its communication and the petitioner-assessee's Income-tax return (ITR) could not be found in the system, the Revenue took the next step, which was, the issuance of notice under section 148 of Act. 4.4. Ms. Mujahid, however, cannot but accept that since the relevant proof has been placed on record by the petitioner-assessee that the return for the assessment year 2011-12 was filed by him and its receipt was duly acknowledged by the Revenue the notice issued to him under section 148 would be rendered untenable. ITA No. 1586/Ahd/2019 (Smt. Meenaben Ashokbhai Patel vs. ITO) A.Y.– 2013-14 - 7 - 5. Having heard learned counsel for the parties, we are of the view that even in so far as the first aspect of the matter is concerned, which is that, notice under section 148 of the Act was issued after obtaining the requisite administrative approval, we are not satisfied with the explanation given in the counter-affidavit (if it all, it can be called, as ant explanation) as no attempt has been made to explain what is stated in paragraph 1 of the impugned order dated September 28, 2018. 5.1. For the sake of convenience, paragraph 1 of the letter dated Sep tember 28, 2018 and the averment made in paragraphs 27-28 of the coun ter- affidavit is extracted hereafter. When one compares the two, the lack of explanation is writ large. No attempt has been made to place on record the extract of the relevant file noting setting out the approval. Letter dated September 28, 2018 "1. The case of the assessee for the assessment year 2011-12 was reopened under section 147/148 after proper recording of the following reasons for forming belief that income has escaped assessment and taking administrative approval of the Principal Commissioner of Income-tax, Delhi-11 on March 30, 2018," Counter-affidavit 27-28 The contents of paras 27 to 28 are wrong and denied. It is submitted that administrative approval of the Principal Commissioner of Income-tax- 11, New Delhi was taken on March 26, 2018 as laid down under section 151 of the Income-tax Act, 1961 before issuing notice under 148 of the Income- tax Act, 1961." 5.2. As far as the other aspect is concerned, in our view, since the proof put in place by the petitioner-assessee with regard to the acknowledgment of return filed for the assessment year 2011-12 has not been disputed by the Revenue, as noticed above, the challenge to the impugned notice and the impugned order will have to be sustained. 6. Therefore, for the foregoing reasons, we are inclined to quash the impugned notice dated March 27, 2018 as also the impugned order dated September 28, 2018. It is ordered accordingly. 6.1. The Revenue will pay towards cost Rs. 20,000 to the petitionerassessee. The costs will be remitted to the petitioner-assessee within ten days of the receipt of a copy of this order. 7. The captioned writ petition is disposed of in the aforesaid terms.” 7. Thus, it appears from the about judgments that as the very basis of assessment under Section 148 of the Act on the wrong finding of fact of non- ITA No. 1586/Ahd/2019 (Smt. Meenaben Ashokbhai Patel vs. ITO) A.Y.– 2013-14 - 8 - filing of return by the appellant found to be non-sustainable, we do not find any reason to deviate from the stand taken by the Hon’ble High Courts as mentioned hereinabove. In the case in hand, initiation of proceeding by recording of reasons dated 19.04.2016 by the ITO, Ward-3, Gandhinagar on the fact of non-filing of return of income for the year under consideration by the appellant which admittedly is found to be wrong, particularly, in view of the recording of filing of return by the appellant on 10.01.2015 by the Ld. AO found to be bad in law. Thus, the entire proceeding is thus vitiated and found to be not sustainable in the eye of law and therefore, quashed. Consequently, the order impugned making addition under Section 143 r.w.s. 147 of the Act is also quashed. 8. In the result, the appeal of the assessee is allowed. This Order pronounced on 12/07/2023 Sd/- Sd/- (WASEEM AHMED) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 12/07/2023 S. K. SINHA True Copy आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं%धत आयकर आय ु 'त / Concerned CIT 4. आयकर आय ु 'त(अपील) / The CIT(A)- 5. *वभागीय -त-न%ध, आयकर अपील य अ%धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड3 फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील$य अ%धकरण, अहमदाबाद / ITAT, Ahmedabad