Smt. Neerja Dwivedi, Farrukhabad V. ITO, Farrukhabad

ITA 171/AGR/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0371 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-09-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 29-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift; Valuation report; Reassessment proceedings; Set aside
• Section: 143(3); 234B; 143(1); 195; 143(2); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NOS.170 & 171/AGR/2009 ASST. YEARS: 2001-02 & 2002-03 SMT. NEERJA DWIVEDI, VS. INCOME-TAX OFFICER, WA RD 2, PROP. OF M/S V.S. DWIVEDI MEMORIAL HOSPITAL, FARRU KHABAD. AVAS VIKAS, BARHPUR, FARRUKHABAD. (PAN : AHNPD 6397 B). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PANKAJ GARGH, ADVOCATE RESPONDENT BY : SHRI VINOD KUMAR, JR. D.R. ORDER PER P.K. BANSAL, A.M.: BOTH THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS OF THE CIT(A) DATED 07.01.2009 FOR THE A.YS. 2001-02 & 200 2-03 RESPECTIVELY BY TAKING THE FOLLOWING GROUNDS OF APPEAL :- ITA NO.170/AGR/2009 - ASST. YEAR: 2001-02 (1) BECAUSE THE CASE (ORIGINALLY COMPLETED U/S 143 (1) PRIOR TO 30.09.04) REOPENED ON THE ALONE BASIS OF VALUERS REPORT U/S 1 42A WAS FORBIDDEN BY LAW AS PER THE PROVISO TO SEC.142A AND THE LD. C.I.T. (APP EALS) WAS NOT JUSTIFIED IN REJECTING THIS PLEA MERE SAYING THAT THE ASSESSMENT U/S 143(1) CAN NOT BE TREATED AS FINAL & CONCLUSIVE WITHOUT GOING INTO RELEVANT F ACTS & LAW. (2) BECAUSE THE PROCEEDINGS INITIATED U/S 147 OF TH E INCOME TAX ACT, SOLELY ON THE BASIS OF VALUATION OFFICERS REPORT WHICH IS ON LY AN ESTIMATE & THAT TOO DEFECTIVE & JOINT REPORT OF PROPERTY BUILT ON 2 SEP ARATE PLOTS OF SEPARATE OWNERS (ASSESSEE & HER SPOUSE), ARE ILLEGAL & THE ASSESSME NT IS LIABLE TO BE ANNULLED. 2 (3) THAT THE LD. A.O. PASSED THE ORDER IN VERY HAPH AZARD & ARBITRARY MANNER COMMITTING EVEN APPARENT MISTAKES & DOUBLE ADDITION S & THE LD. CIT (A), WHILE PASSING JUDGEMENT, ADOPTED HARSH VIEW WITH THE THIN KING THAT THE ASSESSEE FAILED TO PRODUCE RECORD/REQUIRED INFORMATIONS ETC. BEFORE THE ASSESSING OFFICER HENCE HE DID NOT PAY PROPER HEED & IGNORED EVEN AFFIDAVIT S EVIDENCE & VITAL FACTS WHILE CONFIRMING WRONG ADDITIONS & HAS ERRED IN LAW. (4) THAT THE ADDITION OF CERTAIN AMOUNTS TOTAL 6430 0/- (CORRECT TOTAL 114300/-) DULY SUPPORTED BY AFFIDAVIT & CERTIFICATES, IS WRON G & THE LD. CIT(A) OVER LOOKED RELEVANT EVIDENCE ALREADY ON RECORD & CONFIRMED THE ADDITION AT RS.114300/- IN ARBITRARY MANNER. (5) THAT OUT OF DOUBLE WRONG ADDITION (114300 + 195 00) = 133800 + 156243 TOTAL 290043 THE LD. CIT(A) HAS WRONGLY CONFIRMED T HE ADDITION OF 19500/- & OF RS.156243/- & IGNORED VITAL EVIDENCE ABOUT DEPOSIT 19500/- & ANALYSIS ABOUT THE 156243/-. IN NUT SHELL DURING THE YEAR AS PER ACCO UNTS ON RECORD, ENTIRE DEPOSITS/GIFTS ARE OF RS.114300/- (I.E. 59800+19500 +19000+16000) AND RS.19500 TOTAL 133800/- AND AS AGAINST THIS TOTAL 1 33800/- UNDER MISCONCEPTION RS.64300+290043+136203 HAVE BEEN ADDED BY THE I.T.O . & LD. CIT(A) CONFIRMED RS.114300, 156243 & 19500/- WRONGLY, BESI DES CERTAIN OTHER ADDITIONS. (6) BECAUSE OUTSTANDING DUES AT THE YEAR END OF RS. 24649/- OF WHICH PAYMENT WAS MADE NEXT YEAR HAVE WRONGLY BEEN ADDED AS INCOM E & WRONGLY CONFIRMED IN APPEAL. (7) BECAUSE OPENING CAPITAL BALANCE BROUGHT FORWARD FROM LAST YEAR (CASH 238+71562/- PLOT INSTALLMENT PAID LAST YEAR TOTAL 7 1800/-) HAS WRONGLY BEEN ADDED & ALSO CONFIRMED IN APPEAL. (8) BECAUSE WITHOUT ANY BASIS THE ESTIMATION OF HOS PITAL INCOME (WHICH WAS NOT IN EXISTENCE DURING THE YEAR) AT RS.3 LACS IN P LACE OF DECLARED NET INCOME 92710/- FROM OPHTHALMOLOGY, WAS A BLUNDER & LD. CIT WAS NOT JUSTIFIED IN DETERMINING AT RS.2 LACS INSTEAD OF 92710/- WITHOUT BASIS. (9) THE ADDITION OF 105541 FOR LOW HOUSE EXP. CONFI RMED BY THE LD. CIT(A) IGNORING SOURCE OF HUSBAND DR. K.M. DWIVEDI WHO IS A DOCTOR IN (GOVT.) LOHIYA HOSPITAL, FARRUKHABAD IS ARBITRARY & CONTRARY TO D EPTT.S OWN VIEW ADOPTED IN ASSESSMENT U/S 143(3) IN A.Y. 2004-05. HOWEVER AS PER THE LD. CIT(A), THE AMOUNT WAS TREATED AS MET OUT FROM AFORESAID ADDITI ON & NOT TO BE ADDED. (10) THE DETERMINATION OF RS.107711/- BY THE A.O. A S UNDISCLOSED PLOT PRICE DIFFERENCE IS WRONG BEYOND DOUBT HOWEVER THIS WAS N OT ADDED SAYING OTHER ADDITION MADE, COVERS THE AMOUNT AND THE LD. CIT WA S NOT JUSTIFIED IN CONFIRMING THE SAID DETERMINATION. 3 (11) THERE WAS NO DEFAULT SO AS TO CHARGE INTT. U/S 234B IN REGULAR ASSESSMENT PASSED U/S 143(1) HENCE ON ENHANCED TAX LIABILITY T HE CHARGING OF INTT. U/S 234B IN RE-OPENED CASES (A.Y. 2001-02 & 2002-03) IS ILLEGAL & IS LIABLE TO BE DELETED. ITA NO.171/AGR/2009 - ASST. YEAR: 2002-03 (1) BECAUSE THE CASE (ORIGINALLY COMPLETED U/S 143 (1) PRIOR TO 30.09.04) REOPENED ON THE ALONE BASIS OF VALUERS REPORT U/S 1 42A WAS FORBIDDEN BY LAW AS PER THE PROVISO TO SEC.142A AND THE LD. C.I.T. (APP EALS) WAS NOT JUSTIFIED IN REJECTING THIS PLEA MERE SAYING THAT THE ASSESSMENT U/S 143(1) CAN NOT BE TREATED AS FINAL & CONCLUSIVE WITHOUT GOING INTO RELEVANT F ACTS & LAW. (2) BECAUSE THE PROCEEDINGS INITIATED U/S 147 OF TH E INCOME TAX ACT, SOLELY ON THE BASIS OF VALUATION OFFICERS REPORT WHICH IS ON LY AN ESTIMATE & THAT TOO DEFECTIVE & JOINT REPORT OF PROPERTY BUILT ON 2 SEP ARATE PLOTS OF SEPARATE OWNERS (ASSESSEE & HER SPOUSE), ARE ILLEGAL & THE ASSESSME NT IS LIABLE TO BE ANNULLED. (3) THAT THE LD. A.O. PASSED THE ORDER IN VERY HAPH AZARD & ARBITRARY MANNER COMMITTING EVEN APPARENT MISTAKES & DOUBLE ADDITION S & THE LD. CIT (A), WHILE PASSING JUDGEMENT, ADOPTED HARSH VIEW WITH THE THIN KING THAT THE ASSESSEE FAILED TO PRODUCE RECORD/REQUIRED INFORMATIONS ETC. BEFORE THE ASSESSING OFFICER HENCE HE DID NOT PAY PROPER HEED & IGNORED EVEN AFFIDAVIT S EVIDENCE & VITAL FACTS WHILE CONFIRMING WRONG ADDITIONS & HAS ERRED IN LAW. (4) THE ADDITION OF 105991/- MADE BY THE A.O. HAS W RONGLY BEEN CONFIRMED BY THE LD. CIT(A) WITHOUT GOING INTO THE FACTS THAT TH E MONEY OUT COME WAS FROM THE ASSESSED INCOME SAVINGS OF EARLIER YEARS (AS THE AP PELLANT HAS BEEN PRACTICING SINCE 1992 & BEING ASSESSED SINCE A.Y. 1998-99). (5) THE LD. CIT(A) COMMITTED BLUNDER IN CONFIRMING THE ADDITION OF DEPOSITS 140000/- & INTEREST THEREON 6960/- WITHOUT GOING IN TO SOLID EVIDENCE ON RECORD & STATEMENT ON OATH OF THE DEPOSITOR AND THUS THE ENT IRE RECORD IGNORED. (6) THE BASIS LESS ESTIMATION OF HOSPITAL INCOME AT 300000/- INSTEAD OF DECLARED INCOME RS.124585/- OF THE APPELLANT AN OPH THALMOLOGIST IS WRONG, AS THE HOSPITAL STARTED NEXT YEAR. (7) THE ADDITION 106000/- FOR LOW HOUSE HOLD EXP. I S WRONG AND IS WITHOUT CONSIDERING THE FACT THAT HUSBAND WHO IS A DOCTOR I N GOVT. HOSPITAL BEARS EXP. & WHILE ACCEPTING THIS FACT IN A.Y. 2004-05 (ASSESSED U/S 143(3) ON 11-12-07) EXP. SHOWN 24000/- WERE NOT DISTURBED. (8) (A) ADDITION 176087/- AS BUILDING CONSTRUCTION VALUE DIFFERENCE FOR THE YEAR IS BASED ON WRONG, ARBITRARY & DEFECTIVE ESTIM ATION OF VALUATION 4 OFFICER AND IS LIABLE TO BE DELETED, ALSO IN THE LI GHT OF APPROVED VALUERS REPORT DT. 1-11-06 FILED LATER ON BEFORE THE LD. CI T(A) AS PER WHICH THERE IS NO SHORT FALL INVESTMENT AT ALL. (B) THAT WHILE MAKING VALUATION LOCAL PWD RATES SHO ULD BE APPLIED INSTEAD OF CPWD RATES AS HELD IN CIT V/S RAJ KUMAR (1990) 182 PAGE 436 (ALL.) WHILE THE LD. V.O. APPLIED CPWD RATES & THE LD. A.O. AS WELL AS LD,. CIT(A) HAS ERRED IN LAW TO RELY ON SUCH DEF ECTIVE REPORT. (C) THAT IN VIEW OF CERTAIN JUDICIAL DECISIONS AND ALSO AS PER THE CASE OF SMT. SAROJ GUPTA 106 TTJ 1073 (ITAT DELHI B BENC H) 10% DEDUCTION FOR SELF SUPERVISION WAS ALLOWED WHILE THE LD. D.V. O. ALLOWED ONLY 7.5%. (9) THERE WAS NO DEFAULT SO AS TO CHARGE INTT. U/S 234B IN REGULAR ASSESSMENT PASSED U/S 143(1) HENCE ON ENHANCED TAX LIABILITY T HE CHARGING OF INTT. U/S 234B IN RE-OPENED CASES (A.Y. 2001-02 & 2002-03) IS ILLEGAL & IS LIABLE TO BE DELETED. 2. AT THE OUTSET, THE LD. A.R. POINTED OUT THAT IN BOTH THE APPEALS THERE ARE COMMON GROUNDS RELATING TO THE PROCEEDINGS INITIATED UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961 (THE ACT) HEREINAFTER). IT WAS POINTED OUT THAT THE ASSESSEE HAD FIELD RETURN FOR THE A.Y. 2001-02 ON 28.08.2001 AND FOR THE A.Y. 2002-03 ON 13.03.2003. THE INTIMATION UNDER SECTION 143(1) FOR THE A.Y. 2001-02 WAS RECEIVED ON 12.08.2002 WHILE FOR T HE A.Y. 2002-03 NO INTIMATION WAS RECEIVED BY THE ASSESSEE. NOTICE UNDER SECTION 143 (2) COULD HAVE BEEN ISSUED FIRST FOR THE A.Y. 2001-02 AND 2002-03 UPTO 31.08.2002 AND 31.03.2004 RESPECTIVELY. THE ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 148 FOR BOTH THE A.YS. INVOKING PROVISIONS OF SECTION 147 OF THE ACT ON 15.03.2005 ON THE BASIS OF VALUATION REPORT DATE D 04.01.2005 PREPARED WITH REFERENCE TO THE REFERENCE MADE UNDER SECTION 142A OF THE ACT FOR TH E PERIOD 2000-01 TO 2004-05 UPTO OCTOBER 2004 IN THE CASE OF THE ASSESSEE AS WELL AS HER HUS BAND. THE ASSESSING OFFICER SENT A LETTER TO THE VALUATION OFFICER ON 21.12.2005 FOR FURNISHING THE VALUATION REPORT FOR EACH PORTION BELONGING TO DR. K.M. DWIVEDI AND THE ASSESSEE. THE ASSESSMENT UNDER SECTION 144 OF THE ACT WAS COMPLETED FOR THE A.Y. 2001-02 VIDE ORDER DATED 27.03.2006 WH ILE FOR THE A.Y. 2002-03 VIDE ORDER DATED 5 27.03.2006 MAKING THE ADDITION NOT ONLY ON THE BASI S OF THE VALUATION REPORT BUT OTHERWISE ALSO. THE PROVISION OF SECTION 142A WOULD HAVE NOT ASSIST ED THE REVENUE AS THE ASSESSMENT FOR THE A.Y. 2001-02 AND 2002-03 HAVE ALREADY BEEN DEEMED C OMPLETED PRIOR TO 13.09.2004. IT WAS POINTED OUT THAT THE ASSESSMENT FOR BOTH THE A.YS. HAVE ALREADY BEEN COMPLETED BEFORE 13.09.2004 AND IN VIEW OF PROVISO TO SECTION 142A T HE ASSESSING OFFICER WAS NOT COMPETENT TO MAKE A REFERENCE UNDER SECTION 142A TO THE DEPARTME NTAL VALUER. RELIANCE WAS PLACED IN THIS REGARD ON THE DECISION OF HONBLE ALLAHABAD HIGH CO URT IN THE CASE OF CIT VS. IQBAL HUSSAIN, 320 ITR 142 (ALLD). RELIANCE WAS ALSO PLACED ON TH E DECISION OF SINGLE MEMBER BENCH TO WHICH THE ACCOUNTANT MEMBER WAS THE AUTHOR IN THE CASE OF DR. K.M. DWIVEDI VS. ITO IN ITA NOS.74, 75 & 73/AGR/2009 FOR A.YS. 2001-02, 2002-03 & 2003- 04 IN WHICH VIDE ORDER DATED 26.02.2010 THIS TRIBUNAL HAS HELD THAT NO REASSESSMENT CAN BE MADE ON THE BASIS OF THE REPORT OF THE D.V.O. LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF THE ASSESSING OFFICER. 3. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. WE NOTED THAT FOR BOTH THE A.YS. I.E. 2001-02 AND 2002-03 THE RETURNS WERE FILED BY THE ASSESSEE RESPECTIVELY ON 28.08.2001 AND 13.03.2003. THE ASSESSMENT HAS BEEN REOPENED BY THE ASSESSING O FFICER BY ISSUING OF NOTICE UNDER SECTION 148 ON 15.03.2005 ON THE BASIS OF THE D.V.O.S REPO RT DATED 04.01.2005. THE ASSESSING OFFICER HAS MADE THE REFERENCE TO THE D.V.O. IN RESPECT OF THE CONSTRUCTION FOR THE PERIOD 2000-01 TO 2004-05 UPTO OCTOBER, 2004. THE ASSESSEE, BEFORE U S, HAS TAKEN A NUMBER OF GROUNDS. THE GROUNDS NO.1 & 2 IN BOTH THE A.YS. RELATE TO THE IN ITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT AND CONTENDED THAT THE REPORT OF THE D.V.O. IN BOTH THE A.YS. COULD NOT HAVE BEEN A GROUND FOR THE REASSESSMENT. THERE WERE NO PROCEED INGS PENDING BEFORE THE REVENUE WHEN THE 6 REFERENCE WAS MADE TO THE VALUATION OFFICER. WE HA VE GONE THROUGH THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. IQBAL H USSAIN REPORTED IN 320 ITR 142 (ALLD.) WE NOTED THAT IN THIS CASE IT WAS HELD AS UNDER :- THE ORIGINAL ASSESSMENT ON THE ASSESSEE UNDER SECT ION 143(1)(A) OF THE INCOME TAX ACT, 1961, WAS COMPLETED ON NOVEMBER 19, 1992. REASSESSMENT PROCEEDINGS UNDER SECTION 148 OF THE ACT WERE INITI ATED AND ON THE BASIS OF THE REPORT OF THE DISTRICT VALUATION OFFICER INVESTMENT IN PROPERTY WAS ADDED. THE TRIBUNAL SET ASIDE THE REASSESSMENT ORDER. ON APPEA L TO THE HIGH COURT. HELD, DISMISSING THE APPEAL, THAT IN VIEW OF THE PR OVISO TO SECTION 142A OF THE ACT, REFERENCE TO THE DEPARTMENTAL VALUATION OF FICER FOR THE PURPOSE OF REASSESSMENT CANNOT BE TAKEN, IF THE ASSESSMENT HAS BECOME FINAL BETWEEN THE PARTIES BEFORE SECTION 142A WAS INSERTED, I.E., SEP TEMBER 30, 2004. THE ORDER OF THE TRIBUNAL WAS VALID. 4. IN OUR OPINION, THE SAID DECISION IS FULLY APPLI CABLE IN THE CASE OF THE ASSESSEE FOR THE A.YS. 2001-02 AND 2002-03 AS IN BOTH THE CASES NOTI CE UNDER SECTION 143(2) COULD HAVE BEEN ISSUED BY 31.08.2002 AND 31.03.2004. THEREFORE, TH E ORIGINAL ASSESSMENTS IN THE CASE OF THE ASSESSEE FOR BOTH THE A.YS. STAND COMPLETED IN VIEW OF THE DECISION OF THE ALLAHABAD HIGH COURT UNDER SECTION 143(1)(A) ON 31.08.2002 AND 31.03.200 4. THIS IS A FACT THAT NO NOTICE BY 31.08.2002 AND 31.03.2004 WERE RESPECTIVELY ISSUED BY THE REVENUE IN EACH OF THE A.Y. THE PROCEEDINGS UNDER SECTION 148 WERE INITIATED IN THE CASE OF THE ASSESSEE ON THE BASIS OF THE REPORT OF THE D.V.O. IN VIEW OF THE PROVISO TO SECTION 142 A OF THE ACT. REFERENCE TO THE D.V.O. FOR THE PURPOSE OF REASSESSMENT COULD HAVE NOT BEEN MADE IF THE ASSESSMENT HAS BECOME FINAL BEFORE SECTION 142A WAS INSERTED. SECTION 142A WAS INSERT ED W.E.F. 30 TH SEPTEMBER, 2004 WHILE THE ASSESSMENT IN THE CASE OF THE ASSESSEE HAD BECOME F INAL FOR THE A.Y. 2001-02 ON 31.08.2002 AND FOR THE A.Y. 2002-03 ON 31.03.2004 RESPECTIVELY I.E . PRIOR TO THE INSERTION OF SECTION 142A I.E. PRIOR TO 30 TH SEPTEMBER, 2004. IN VIEW OF THIS POSITION, THE DE CISION OF THE JURISDICTIONAL HIGH 7 COURT IS EQUALLY APPLICABLE IN THE CASE OF THE ASSE SSEE AND IS BINDING ON US UNDER ARTICLE 141 OF THE CONSTITUTION OF INDIA. WE, ACCORDINGLY, RESPEC TFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT, HOLD THAT THE PROCEEDING S INITIATED UNDER SECTION 147 ARE NOT VALID AND CONSEQUENTLY THE ASSESSMENTS FRAMED ARE VOID. ACCO RDINGLY, WE ANNUL BOTH THE ASSESSMENTS. 5. SINCE WE HAVE ALREADY CANCELLED THE ASSESSMENTS, THEREFORE, ADJUDICATION OF OTHER GROUNDS OF APPEAL ON MERIT ARE NOT REQUIRED. 6. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 20.10.2010) SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 20 TH OCTOBER, 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY