Shri Gaurav Sharma, Bhopal V. THE ACIT 1(1), Bhopal

ITA 18/IND/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9830 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-11-2018
• Assessment Year: 2001-2002
• Appeal Filed On: 19-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B K NEMA; MEGHA NEMA ADV S
• Keywords: Unexplained investment; Loose papers; Opportunity of being heard; Period of limitation
• Section: 147; 69; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCHE, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.18/IND/2017 ASSESSMENT YEAR: 2001-02 / VS. SHRI GAURAV SHARMA, A-70, SHAKTI NAGAR, BHOPAL (APPELLANT) A CIT - 1(1) BHOPAL (REVENUE ) P.A. NO. ANOPS8611A APPELLANT BY SHRI B.K. NEMA & MEGHA NEMA ADV S . REVENUE BY SHRI RAJIV JAIN , SR. DR DATE OF HEARING: 30.11.2018 DATE OF PRONOUNCEMENT: 13.12.2018 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. CIT(A)-I, BHOPAL, DATED 30.11.2016 PERTAINING TO TH E A.Y. 2001-02. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. THE NOTICE ISSUED U/S 148 OF INCOME TAX ACT 1961 IS ILLEGAL, INVALID AND BAD IN LAW AND THUS CONSEQUENT ASSESSMENT FRAMED T HERE UPON IS LIABLE TO BE CANCELLED. 2. THE NOTICE ISSUED U/S 148 OF I.T. ACT 1961 IS BARRED BY LIMITATION AND THUS CONSEQUENT ASSESSMENT FRAMED IS LIABLE TO BE CANCELLED. 3. THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT NOTICE IS SUED U/S 148 OF INCOME TAX ACT 1961 IS BAD IN LAW AND BARRED BY LIM ITATION. GAURAV SHARMA 2 4. THE ADDITION MADE BY A.O. AT RS.21,39,338/- I S UNJUSTIFIED, UNWARRANTED AND EXCESSIVE. 5. THE LEARNED A.O. ERRED IN MAKING ADDITION AT RS.21,39 ,338/- ON THE BASIS OF LOOSE PAPERS. 7. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION A T RS.21,39,338/- AS UNEXPLAINED INVESTMENT IN THE HOU SE. THE ASSESSEE DENIES LIABILITY TO PAY INTEREST UNDER SECT ION 234A, 234B, 234C AND 234D OF I.T ACT 1961. WITHOUT PREJUDICE, LE VY OF INTEREST UNDER SECTION 234A, 234B, 234C AND 234D OF I.T ACT 19 61 IS UNJUSTIFIED, UNWARRANTED AND EXCESSIVE. 2. BRIEFLY STATED THE FACTS ARE THAT THE RETURN OF INCOME FOR A.Y. 2001-02 WAS FILED U/S 139(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) ON 27.03.2002 DECL ARING TOTAL INCOME AT RS.23,644/-. THE CASE WAS REOPENED U/S 147 OF TH E ACT AFTER RECORDING REASONS. NOTICE U/S 148 OF THE ACT WAS IS SUED AND SERVED UPON THE ASSESSEE BY SPEED POST. SUBSEQUENTLY, THE ASSESSING OFFICER MADE ADDITION OF RS.21,39,338/- IN RESPECT OF RENOVATION MADE IN THE HOUSE. THUS, ASSESSED TOTAL INCOME AT R S.21,62,982/-. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO SUSTAINED THE FINDING OF THE ASSESSING O FFICER. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUN AL. 4. GROUND NOS. 1 TO 3 ARE AGAINST INITIATION OF PRO CEEDINGS U/S 148 OF THE ACT. 5. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PROCEEDINGS SO INITIATED ARE BAD IN LAW AND BARRED BY LIMITATION. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REASONS FOR INITIATION FOR PROCEEDINGS IS BY VIRTUE OF OBSERVATION MADE BY THE TRIBUNAL IN IT (SS)A NO.532 & 545/IND/2013 IN THE CASE OF DR. YOGIRAJ SHARMA. HE SUBMITTED THAT THE ORDER WAS PASSED ON 17.11.2014. HE SUBMITTED TH AT THE HON'BLE GAURAV SHARMA 3 TRIBUNAL HAD MERELY EXPRESSED ITS OPINION ABOUT TAX ABILITY OF THE AMOUNT. HE SUBMITTED THAT THIS OBSERVATION OF THE H ON'BLE TRIBUNAL WOULD NOT EXTEND THE PERIOD OF LIMITATION AS PRESCR IBED UNDER THE STATUTE. LD. COUNSEL SUBMITTED THAT THE RELEVANT FA CTS ARE THAT THE ASSESSMENT RELATES TO A.Y. 2001-02 NOTICE U/S 148 O F THE ACT WAS ISSUED ON 27.03.2015 WELL BEYOND THE PRESCRIBED LIM IT OF LIMITATION. LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF RU RAL ELECTRIFICATION CORPORATION LTD. VS. CIT & ANR 355 ITR 345 (DEL.) TO BUTTRESS THE CONTENTION THAT TRIBUNAL WHILE MAKING SUCH OBSERVATION HAS NOT MADE THE ASSESSEE AS A PARTY, E VEN NOT GIVEN OPPORTUNITY TO MAKE SUBMISSIONS. HE FURTHER SUBMITT ED THAT PASSING REFERENCE CANNOT BE CONSTRUED AS THE DIRECT ION OF THE TRIBUNAL. HE FURTHER SUBMITTED THAT EVEN OTHERWISE ALSO NO DIRECTION CAN BE GIVEN CONTRARY TO ANY PROVISION OF LAW. IF THE FINDING OF THE AUTHORITIES BELOW ARE CONFIRMED THAT WOULD T ANTAMOUNT TO GIVING UNLIMITED PERIOD TO REVENUE FOR MAKING ASSES SMENT AND REASSESSMENT OF THE INCOME. LD. COUNSEL ALSO PLACED RELIANCE ON THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F LOTUS INVESTMENT LTD. VS. G.Y. WAGH, ACIT & ORS. 288 ITR 459 (BOM) WHEREIN HON'BLE BOMBAY HIGH COURT QUASHED THE NOTIC E U/S 148 OF THE ACT BEING TIME BARRED. 6. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE(DR) S UPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED MATERIAL ON RECORD. ADMITTEDLY, ASSESSING OFFICER IN THE REASON S RECORDED U/S GAURAV SHARMA 4 147 OF THE ACT FOR THE REOPENING HAS MENTIONED THE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL RENDERED IN IT(SS )A NO. 532 & 545/IND/2013 DATED 17.11.2014 FOR THE SAKE OF CLARI TY. THE RELEVANT OBSERVATIONS ARE REPRODUCED AS UNDER: OUR ATTENTION WAS ALSO DRAWN TO SUM OF RS.55,000/- WHICH RELATED TO DUPLICATE PAYMENT. WE ARE NOT GOING THRO UGH THIS ISSUE, AS IN OUR OPINION, ONCE THE HOUSE DOES NOT B ELONG TO THE ASSESSEE, THERE IS NO EVIDENCE FOUND DURING THE COU RSE OF SEARCH THAT THE ASSESSEE HAS INVESTED IN THE RENOVA TION OF THE HOUSE, U/S 69 THE ONUS IS ON THE REVENUE TO PROVE T HAT THE ASSESSEE HAS MADE THE INVESTMENT WHICH ARE NOT RECO RDED IN THE BOOKS OF ACCOUNTS, IF ANY, MAINTAINED BY THE AS SESSEE. THE HOUSE WHERE THE RENOVATION HAS BEEN CARRIED OUT DOE S NOT BELONG TO THE ASSESSEE. THE PAPERS AND DOCUMENTS ON THE BASIS OF WHICH THE ADDITION HAS BEEN MADE HAS BEEN FOUND FROM THE HOUSE IN WHICH NOT ONLY THE ASSESSEE, BUT THE FAMIL Y OF THE ASSESSEE WAS PUTTING UP. THE RENOVATION WAS TO BE C ARRIED OUT BY THE PERSON TO WHOM THE HOUSE BELONGED. NO COGENT MATERIAL OR EVIDENCE HAS BEEN BROUGHT ON RECORD EVEN ON THE BASIS OF THE MATERIAL SEIZED THAT THE EXPENSES FOR RENOVATING HA VE BEEN INCURRED BY THE ASSESSEE. IN OUR OPINION, THE ONUS LIES ON THE REVENUE BY MAKING THE ADDITION TO PROVE THAT THE AS SESSEE HAD MADE THE INVESTMENT. IN OUR OPINION, IF ANY ADDITION HAS TO BE MADE FOR THE RENOVATION OF THE HOUSE, SAME SHOUL D BE MADE IN THE HANDS OF THE MOTHER OF THE ASSESSEE AS WELL AS THE SON OF THE ASSESSEE TO WHOM THE HOUSE BELONG . WE, THEREFORE, DELETE THE ADDITION. IN THE RESULT GROUN D NO.3 TO 6 IN ASSESSEES APPEAL ARE ALLOWED WHILE THE ONLY GROUND IN REVENUES APPEAL STANDS DISMISSED. 8. RELIANCE HAS BEEN PLACED BY THE LD. COUNSEL FOR THE ASSESSEE ON THE JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED I N THE CASE OF RURAL ELECTRIFICATION CORPORATION LTD. VS. CIT & AN R.(SUPRA) WHEREIN THE HON'BLE HIGH COURT HAS RULED AS UNDER: GAURAV SHARMA 5 14. IT IS APPARENT FROM THE SAID DECISION THAT BEFO RE A NOTICE UNDER SECTION 148 CAN BE ISSUED BEYOND THE TIME LIMITS PRESCRIBED UNDER SECTION 149 , THE INGREDIENTS OF EXPLANATION 3 TO SECTION 153 HAVE TO BE SATISFIED. THOSE INGREDIENTS REQUIRE THAT THERE MUST BE A FINDING THAT INCOME WHICH IS E XCLUDED FROM THE TOTAL INCOME OF ONE PERSON MUST BE HELD TO BE I NCOME OF ANOTHER PERSON. THE SECOND INGREDIENT BEING THAT BE FORE SUCH A FINDING IS RECORDED, SUCH OTHER PERSON SHOULD BE GI VEN AN OPPORTUNITY OF BEING HEARD. IN THE CONTEXT OF THE P RESENT CASE, WHEN THE TRIBUNAL HELD IN FAVOUR OF THE SAID SOCIET Y BY CONCLUDING THAT THE INTEREST INCOME WAS NOT TAXABLE IN ITS HANDS AND HELD AGAINST THE PETITIONER BY CONCLUDING THAT THE SAID INTEREST INCOME OUGHT TO HAVE BEEN TAXED IN THE HAN DS OF THE PETITIONER, AN OPPORTUNITY OF HEARING OUGHT TO HAVE BEEN GIVEN TO THE PETITIONER. THE FACT THAT SUCH AN OPPORTUNITY W AS NOT GIVEN, HAS BEEN RECOGNIZED BY THE REVENUE IN THE ORDER DIS POSING OF THE OBJECTIONS DATED 20.10.2011, WHERE IT HAS BEEN OBSERVED THAT THERE WAS NO NEED TO HAVE AFFORDED AN OPPORTUN ITY TO THE PETITIONER. EVEN IN THE COUNTER AFFIDAVIT, THE REVE NUE HAS TAKEN THE STAND THAT IT WAS NOT AT ALL NECESSARY FOR THE INCOME TAX APPELLATE TRIBUNAL TO HAVE ALLOWED AN OPPORTUNITY O F HEARING TO THE PETITIONER BECAUSE THAT WAS IN RESPECT OF THE A SSESSMENT PROCEEDINGS PERTAINING TO THE SAID SOCIETY. 15. FROM THE ABOVE, IT IS CLEAR THAT NO OPPORTUNITY OF HEARING WAS GIVEN TO THE PETITIONER PRIOR TO THE PASSING OF THE ORDER DATED 13.01.2010 BY THE INCOME TAX APPELLATE TRIBUN AL, HYDERABAD IN THE CASES OF THE SAID SOCIETY. AS SUCH , ONE ESSENTIAL INGREDIENT OF EXPLANATION 3 WAS MISSING A ND, THEREFORE, THE DEEMING CLAUSE WOULD NOT GET TRIGGER ED. THAT BEING THE POSITION, SECTION 150 WOULD NOT APPLY AND, THEREFORE, THE BAR OF LIMITATION PRESCRIBED BY SECTION 149 IS NOT LIFTED. 16. THE LEARNED COUNSEL FOR THE REVENUE SUBMITTED T HAT AN OPPORTUNITY OF HEARING COULD NOT BE GIVEN TO THE PE TITIONER BECAUSE AT THE STAGE WHEN THE TRIBUNAL AT HYDERABAD WAS HEARING THE APPEAL PERTAINING TO THE SAID SOCIETY, THERE WAS NO WAY TO ASCERTAIN AS TO WHETHER THE DECISION WOULD G O IN FAVOUR OF THE SAID SOCIETY OR NOT. IN PARTICULAR, THE LEAR NED COUNSEL FOR GAURAV SHARMA 6 THE RESPONDENT / REVENUE SUBMITTED THAT THE QUESTIO N AS TO WHETHER THE INTEREST INCOME COULD BE TAXED AT THE H ANDS OF THE PETITIONER WOULD ONLY COME TO BE DECIDED AFTER THE TRIBUNAL CAME TO THE CONCLUSION THAT IT WAS NOT TO BE TAXED IN THE HANDS OF THE SOCIETY AND, TILL THAT STAGE, THERE WAS NO Q UESTION OF GRANTING ANY OPPORTUNITY OF HEARING TO THE PETITION ER. BE THAT AS IT MAY, THE SPECIFIC CONDITION FOR ATTRACTING THE D EEMING PROVISION OF EXPLANATION 3 TO SECTION 153 REQUIRES THAT THE PERSON OUGHT TO BE GIVEN AN OPPORTUNITY OF BEING HE ARD BEFORE AN ORDER IS PASSED WHEREUNDER ANY INCOME IS EXCLUDE D FROM THE TOTAL INCOME OF ONE PERSON AND HELD TO BE THE INCOM E OF ANOTHER PERSON. IT IS NOT AS IF THE REVENUE IS BEING FAULTE D OR THE TRIBUNAL IS BEING FAULTED FOR NOT GRANTING AN OPPORTUNITY OF HEARING TO THE PETITIONER. THE PLACING OF A BLAME IS NOT THE ISSUE . WHAT IS RELEVANT IS WHETHER THE PETITIONER HAD BEEN GIVEN A N OPPORTUNITY OF HEARING BEFORE THE TRIBUNAL CONCLUDED THAT THE I NTEREST INCOME WAS TAXABLE IN ITS HANDS AND NOT IN THE HAND S OF THE SOCIETY. IT IS OBVIOUS THAT THIS FLOWS FROM THE GEN ERAL PRINCIPLE THAT NO PREJUDICE SHOULD BE CAUSED TO ANYBODY WITHO UT THAT PERSON HAVING BEEN HEARD. 17. IN VIEW OF THE FACT THAT THE DEEMING PROVISION PROVIDED IN EXPLANATION 3 TO SECTION 153 DOES NOT GET ATTRACTED IN THE PRESENT CASE BECAUSE AN OPPORTUNITY OF HEARING HAD NOT BEEN GIVEN TO THE PETITIONER, THE PROVISIONS OF SECTION 150 WOULD ALSO NOT BE ATTRACTED. IN SUCH A SITUATION, THE NORMAL P ROVISIONS OF LIMITATION PRESCRIBED UNDER SECTION 149 OF THE SAID ACT WOULD APPLY. THOSE PROVISIONS RESTRICT THE TIME PERIOD FO R REOPENING TO A MAXIMUM OF SIX YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IN THE PRESENT WRIT PETITIONS, THE NOTICES UNDER SECTION 148 HAVE ALL BEEN ISSUED BEYOND THE SAID PERIOD OF SIX YEARS. THEREFORE, WE ARE OF THE VIEW THAT TH E SAID NOTICES ARE TIME BARRED. 18. CONSEQUENTLY, THE WRIT PETITIONS ARE ALLOWED. T HE IMPUGNED NOTICES UNDER SECTION 148 OF THE SAID ACT ARE SET ASIDE AND SO, TOO, ARE ALL THE PROCEEDINGS PURSUANT THERETO, INCL UDING THE ASSESSMENT ORDERS THAT HAVE BEEN PASSED. THERE SHAL L BE NO ORDER AS TO COSTS. GAURAV SHARMA 7 9. IN THE PRESENT CASE UNDISPUTEDLY THE ASSESSEE WA S NOT A PARTY BEFORE THE TRIBUNAL. EVEN NO NOTICE OF HEARING WAS GIVEN TO THE ASSESSEE BY THE TRIBUNAL. IN VIEW OF THE ABOVE JUDG MENT THE HON'BLE DELHI HIGH COURT, WE ARE OF THE CONSIDERED VIEW THA T THE ASSESSEE WAS NOT GIVEN OPPORTUNITY OF BEING HEARD, THEREFORE , RELYING UPON JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF RURAL ELECTRIFICATION CORPORATION LTD. VS. CIT & ANR (SUP RA) WE HOLD THAT NORMAL PERIOD OF LIMITATION WOULD APPLY AS PER THE NOTICE ISSUED U/S 148 OF THE ACT AND ASSESSMENT FRAMED THEREAFTER IS CLEARLY BARRED BY TIME. THE ASSESSMENT FRAMED IS HEREBY QUASHED FO R BEING TIME BARRED. SINCE, WE HAVE QUASHED THE ASSESSMENT BEING TIME BARRED, WE ARE NOT ADJUDICATING THE OTHER GROUNDS ON MERITS . 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13 .12.2 018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIAL MEMBER INDORE; DATED : 13 / 12/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER ASSISTANT REGISTRAR, INDORE