Shri Vipul Kanjibhai Patel, Ahmedabad V. The ACIT, Cen. Circle-2(4), Ahmedabad

ITA 1756/AHD/2019

AI Insights

The case involves an appeal by Vipul Kanjibhai Patel against the order of the Commissioner of Income-Tax (Appeals)-12, Ahmedabad, which confirmed the addition made by the Assessing Officer regarding alleged unreported cash investments in land. The primary legal issues revolved around the validity of the reassessment under section 147 and the service of notice under section 148 of the Income Tax Act, 1961. The Tribunal examined whether the notice was properly served and if the reassessment was based on a valid belief of income escapement. The Tribunal concluded that the notice was not properly served as it was sent to an outdated address and the electronic service to the assessee's CA did not constitute valid service to the assessee himself.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133548 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-01-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 25-11-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ISSUING A NEW
• Keywords: Documents seized; Set aside
• Section: 147; 148; 133A

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘B’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No.1756/Ahd/2019 Assessment Year :2011-12 Vipul Kanjibhai Patel 12, Tulsi Twin Bungalows Jodhpur Char Rasta Satellite, Ahmedabad 380 052. PAN : ACSPP 9702 E Vs The ACIT, Cent.Cir.2(4) Ahmedabad. अपीलाथ / (Appellant) यथ /(Respondent) Assesseeby : Shri A.C. Shah, AR with Shri BhadreshGandhakwala, AR Revenue by : Shri Rakesh Jha, Sr.DR स ु नवाई क तार ख/Date of Hearing : 31/01/2023 घोषणा क तार ख /Date of Pronouncement: 19/04/2023 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present appeal has been filed by the assessee against order passed by the ld.Commissioner of Income-Tax (Appeals)-12, Ahmedabad [hereinafter referred to as “Ld.CIT(A)”] dated 13.9.2019 pertaining to the Asst.Year 2011-12 passed under section 250(6) of the Income Tax Act, 1961 ("the Act" for short). 2. Briefly stated the facts relating to the present case are that the assessee had originally filed his return of income for impugned Asst.Year 2011-12 declaring total income at Rs.6,46,530/-. Subsequently information was received from Asstt.Director of IT (Inv.), Unit-2(2), Ahmedabad vide report dated 26.3.2018, that the ITA No.1756/Ahd/2019 2 assessee had made investment in land and paid in cash. The case of the assessee was reopened; notice was issued under section 148 of the Act, and after duly recording reasons for reopening, the assessment was framed under section 147 of the Act making addition on account of alleged cash investment made by the assessee in the land purchased. The matter was carried in appeal before the ld.CIT(A) where the assessee raised legal ground, challenging jurisdiction assumed by the Assessing Officer (AO) to frame assessment under section 147 of the Act as well as on merits of the addition. All the grounds raised by the assessee were dismissed and the addition made by the AO confirmed. Aggrieved by the same, the assessee has now come in appeal before the Tribunal raising the following grounds: 1. The ld.CIT(A) has erred in confirming the reassessment in as much as the reassessment is bad in law since: a) There is no escapement of income and that the alleged escapement of income is without any evidences; (b) the notice under Section 148 is not served to the assessee; (c) there is no same officer recording the satisfaction and passing the order; (d) the approval is not as per Section 151 [2] at the relevant time; 2. The learned CIT(A) has erred in confirming the addition of cash of Rs.78,07,500 found from the slip on which there is no name of the assessee or there is no name of assessee on any slip. 3. Ground no.1 raised by the assessee is legal ground, where the assessee has challenged validity of the assessment framed for several reasons. 4. Before us, arguments were made with respect to clause (a) & (b) of the ground i.e. there being no valid reason for believing that any income of the assessee had escaped assessment and notice under section 148 of the Act not having been served to the assessee. ITA No.1756/Ahd/2019 3 Therefore, ground no.1(c) and (d) on which no arguments were made before us, are treated as dismissed. 5. With respect to the challenge to validity of the assessment framed on the grounds that the notice under section 148 notice was not served on the assessee at all as raised in ground No.(i)(b) above, the contentions of the ld.counsel for the assessee was that • notice under section 148 of the Act issued physically was never served on the assessee, and • notice issued by email was served on the email address of the Chartered Accountant of the assessee. Therefore, there was no service of notice to the assessee at all. 6. In this regard, he drew our attention to the facts relating to the notice issued under section 148 of the Act in the present case, pointing out from the assessment order that the notice was issued on 30.3.2018 by the AO by speed post, and the same was returned un-served as not claimed. Therefore, he contended that physical notice issued under section 148 was never served on the assessee at all. In this regard, he also contended that the notice was issued at the address which though mentioned in his ITR, but was not that as mentioned in his PAN detail wherein he had changed his address, and the same was noted also by the Department by issuing a new PAN card at the new address on 31.8.2016 itself. He pointed out from the PB Page No.6, which is the notice issued to the assessee under section 148 of the Act dated 30.3.2018, that the same was issued at the address noted therein i.e12-Tulsi Twin Bungalow, Jodhpur Char Rasta, Satellite, Ahmedabad. He pointed out that his changed address noted by the department for issuing new PAN card way back in 2016 i.e. 31.8.2016, was A/801, StavanAvisha, Nr. ITA No.1756/Ahd/2019 4 Seema Hall, Anandnagar Satellite Road, Ahmedabad, Gujarat 380 015. Our attention was drawn to PB Page no.7 being the letter issued by the Income Tax PAN Service Unit accepting the assessee’s request for change in the PAN data and issuing a new PAN card. Our attention was thereafter drawn to Rule 127 of the Income Tax Rules, 1962, which the ld.counsel for the assessee contended, required notice to be served at the address mentioned in the PAN card. As for the notice issued through email, his contention for non- service of the said notice was that it was issued at the email address of his Chartered Accountant (CA). To this, the ld.DR contended that this email address was mentioned in the Income Tax Return filed by the assessee, and the ld.counsel for the assessee fairly agreed to the same. 7. Having heard the contentions of the ld.counsel for the assessee, and having gone through orders of the authorities below, and considering the provision of law with regard to service of notice, we do not find any merit in the contentions of the ld.counsel for the assessee that no notice under section 148 was served on the assessee in the present case. 8. The grievance of the assessee is that the physically issued notice through Post was returned back unserved while that issued electronically was on the email address of his CA. The undeniable and admitted fact being that the email address was provided by the assessee himself in his return of income filed, for communication purpose, the assessee is precluded now from contending that the notice was not served on him at all. The fact of the matter being that the assessee himself had provided email address to the Department for all communications, the issuance and service of ITA No.1756/Ahd/2019 5 notice at this email address by the Department is a foregone conclusion. In the ITR, the assessee is required to provide email address for communication and whatever address is mentioned therein, the department is required to send all notices at the said address. It does not matter and makes no difference to validity of service whether the address was actually of the assessee or anybody else. It is only on the instance of the assessee himself that this address was provided to the department and who had rightly served the notice at this address. Service of notice by email is therefore, we find, valid in the eyes of law, and there is no illegality in the same. It cannot be said that the notices were served on the CA of the assessee and not the assessee, when the assessee himself had provided email address of his CA for all communication to be done by the Department. Noting this fact alone that the service of notice under section 148 was duly completed by email on the address provided by the assessee itself, we hold that there was a valid service of notice. The contention of the assessee that no notice under section 148 of the Act was served, is outrightly rejected. 9. Section 282 of the Act which deals with service of notices provides alternative means and mode of service of notice including service by any electronic mode. The provisions of section 282(1) are reproduced hereunder: 282. (1) The service of a notice or summon or requisition or order or any other communication under this Act (hereafter in this section referred to as "communication") may be made by delivering or transmitting a copy thereof, to the person therein named,— (a) by post or by such courier services as may be approved by the Board; or (b) in such manner as provided under the Code of Civil Procedure, 1908 (5 of 1908) for the purposes of service of summons; or (c) in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000); or ITA No.1756/Ahd/2019 6 (d) by any other means of transmission of documents as provided by rules made by the Board in this behalf. 10. In the present case, the assessee having been served notice under section 148 of the Act through the electronic mode, the service of notice is complete and valid, we hold. Electronic service of notice having been found to be validly done, we see no reason to deal with the aspect of physical service of notice in the present case. Therefore, in the light of the above, we hold that there is no legal infirmity in the service of notice under section 148 of the Act on the issue and this argument of the ld.counsel for the assessee challenging the validity of the assessment framed for the above reason is accordingly rejected. Ground no.1(b) of the assessee’s appeal is therefore dismissed. 11. Taking up ground no.1(a) where the challenge to the validity of the assessment framed on the ground that reason could not have lead to the formation of belief of the escapement of income. The ld.counsel for the assessee first took us to reasons recorded by the AO in the present case, reproduced at page no.3 of his order as under: "A Survey action was conducted in the case of M/s. Maruti Nandan Developers at their business premises on 16.02.2018. From the investigation carded I out in the case of M/s. Marutinandan Developers, it is seen that the assesses (having share of 30%) alongwith three co-owners have purchased a land on 17.02.011 costing of Rs.7,25000/- mentioned in the purchase deed. In addition to this, Rs.2,60,25,000/~ in cash was also paid to the seller of land in the same ratio mentioned in the purchase deed. Accordingly, the assessee has paid Rs.2,25,000/-in cheque and Rs. 78,07,500/- in cash for this transaction. From the information received, it can be seen that theassessee has made cash payment of Rs. 78,07,500/- being his share of 30% of Rs. 2,60,25,000/ - for the purchase of land. From the ROI filed, the investment details does not commensurate with the income declared by the assessee in the ROI filed for A. Y. 2011-12. Such omission on the part of the assessee resulted into escapement of income of Rs. 78,07,500/- From the information received and as stated above, the assessee has made payment of Rs.78,07,500/- for the purchase of land which is not ITA No.1756/Ahd/2019 7 recorded in of account and also not offered for taxation. I have therefore, reason to believe that by omission on the part of the assesses to disclose fully and truly all the-material facts necessary for the assessment, the income of the assesses to the extent of Rs.78,07,500/- is escaped assessment within the meaning of section of 147 of the Act.” 12. Referring to the same, he pointed out that the information available with the AO was from the investigation carried out in the case of Marutinandan Developers. He thereafter took us to para 8.3 of the assessment order, where the AO had mentioned information which was so received. Referring to the said paragraph, the ld.counsel pointed out that on account of survey action under section 133A of the Act conducted in the cases of M/s.Narnarayan Developers, Elegance Developers and others at their business premises on 16.2.2018, a document was seized there from (annexed A/56 Page No.133) which the AO noticed contained notings of purchase of land at Village Ranheja, Dist. Gandhinagar at the cost of Rs.2,60,25,000/- by the following persons in the following ratios: i) Ratilal Patel : 45% ii) Kanaiyalal D. Pael : 12.5% iii) Jagdishbhai : 12.55% iv) Hareshbhai : 30% 13. He drew our attention to the said documents which were in Gujarati; English transaction of which was placed before us at PB at Page no.33 as under: A/56 RANDHEJA (PLOT OF LAND OF VAGHARI) NO. 133 Total Unit Jagdishbhai Kanubhai Ratikaka Hareshbhai 12.50% 12.50% 45% 30% 2,60,25,000/- 78,00,000/- 31,31,250/- ITA No.1756/Ahd/2019 8 Note:(*) 15,65,6257- less (*) Note: Above figure 31,31,2507- sent by Jagdishbhai 2,60,000/- will be deducted since it is paid less to Vaghari 14. The ld.counsel for the assessee thereafter contended that on the basis of a purchase deed of the said land, copy of which was furnished by one of the parties to the transactions, viz. Kanaiyalal D. Patel, the AO noticed that the assessee’s name appeared in the purchase deed with 30% share along with three co-owners, viz. Ratilal K. Patel-33%, Kanaiyalal D. Patel-25% and Salil Devendrabhai Patel-12% share. He thereafter pointed out that AO interpreted the contents of the said documents as revealing that an amount of Rs.2,60,25,000/- had been paid in cash to the seller, over and above, the cost mentioned in the purchase deed and the assessees share being 30% in the transaction, the AO accordingly had formed a belief from the said documents that the assessee had paid cash amounting toRs.78,07,500/- pertaining to his share in the impugned purchase of land. Our attention was drawn to para 8.3 of the assessment order stating so as under: ITA No.1756/Ahd/2019 9 profit/Joss sharing ratio is as under as mentioned against their names on the page No. Name of Party Share 1 Ratilal Patel 45% 2 KanaiyaJal D. Patel 12.5% 3 Jagdishbhai 12.55 4 Hareshbhai 30% On further verification of the page it is noticed that there the amount of Rs.31,31,250/- and Rs.78,00,000/- are written in the column of Jagdishbhai and Hareshhai respectively. Later on one to two of the persons were changed and instead of Hareshbhai, the name of the assessee was entered in deal. Shri Kanaiyalal D. Patel vide letter dated 24.03.2018 furnished copy of purchase deed of the above mentioned land. On verification of the same, it is noticed that the land bearing Survey No. 522, ITA No.1756/Ahd/2019 10 523/1., 524/1 and 524/2 situated at Vill. Randheja, Dist. Gandhinagar was purchase on 17.02.2011 at a cost of Rs. 7,25,000/- from DharmendrabhaiShantilal Patel, 32 Viveknagar Society, Amraiwadi, Ahmedabad. The name of assessee appears in the purchase deed with 30% share alongwith three co-owners Ratilal K. Patel (33% share), Kanaiyalal D Patel (25% share) and Salil Devendrabhai Patel (12%). 15. The ld.counsel for the assessee pointed out that impugned documents did not mention name of the assessee, and it did not carry signature of the assessee. Further document was not dated and also carried no survey number of the land therein. He contended that document at the best could be interpreted to revealing details of certain transaction to be undertaken with respect to the parties mentioned therein and the contents of the transaction could not by any stretch be stated to be revealing anything relating to the assessee or for that matter to the land purchased by him during the impugned. He drew our attention to purchase deed of the land placed before us at PB Pg.No.36 to 61 (in Gujarati) and 62 to 88 (translated copy) and pointed out that survey number of the land mentioned therein,522,523/1,524/1 and 524/2 was totally different from that mentioned in the document ,Plot of Land No.133. He therefore contended that documents found during the survey could by no stretch be said to be containing any information in relation to the assessee with respect to the land purchased by him during the year. At this juncture, the ld.DRasked to point out as to what was the report of the investigation pertaining to the impugned land in Ranheja and in this regard he drew our attention to the copy of the investigation report placed before us in paper book. He specifically drew our attention to PB Page No.5 to 6 which contained the report of the investigation with respect to the impugned land as under: ITA No.1756/Ahd/2019 11 The ld.DR, otherwise, relied heavily on the order of the CIT(A). ITA No.1756/Ahd/2019 12 16. We have heard contentions of both the parties, and carefully gone through the documents filed before us including the reasons recorded in the present case, sufficiency of which has been challenged before us, for a valid assumption of jurisdiction by the AO to frame assessment under section147 of the Act. 17. As per the reasons recorded by the AO, the information from the survey conducted in the case of Marutinandan Developers revealed that the cash payments had been made in relation to a transaction of purchase of land, which included the assessee also. The information in the possession of the AO clearly was the documents reproduced at para 8.3 of the assessment order which as per the AO also does not include the name of the assessee, as one of the parties to the transaction. Therefore, this information surely could not have been lead to formation of belief of escapement of income in the hands of the assessee. The Revenues case is that subsequently in the case of one of the buyers, the assessee was substituted and putting the two information together, the AO concluded that cash payment was made by the assessee. 18. We find that reopening in the present case is based more on suspicion and is not based on “belief” of escapement of income. Clearly, the noting in the documents seized during survey does not reveal the assessee’s name. Therefore, so far as the document is concerned which speaks of cash having been paid in the transaction of land purchase, the assessee by no stretch was a party to the said deal. Also even if subsequently, the assessee became a party to the said deal, does not automatically lead to the conclusion that the assessee must have paid the cash agreed to upon by a totally different set of persons. It can only be a case of suspicion that the assessee must have carried forward the deal as agreed to by initially ITA No.1756/Ahd/2019 13 four parties to the deal. It could not be a case of belief of escapement of income surely. Therefore, we agree with the ld.counsel for the assessee that there was no live link between the information in the possession of the AO and formation of belief of escapement of income. The jurisdiction assumed by the AO, therefore to frame assessment in the present case under section 147 of the Act is, we hold, not in accordance with law. The assessment order, therefore, passed is held to be invalid and set aside. The ground no.1(a) of the appeal is, therefore, allowed. 19. Since we have set aside the assessment order itself, the grounds raised by the assessee on merits of the case, are merely academic in nature, and there is no need to adjudicate the same separately. 20. In the result, the appeal of the assessee is allowed in the above terms. Order pronounced in the Court on 19 th April, 2023 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad,dated 19/04/2023 vk*