The Income Tax Officer, Ward-5(3)(1), Ahmedabad V. Shri Manjil DineshKumar Shah, Ahmedabad

ITA 1803/AHD/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7524 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 03-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.S. SHUKLA
• Section: 148; 143(3); 201; 13

Judgement Text

, ‘A’ । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD (Convened through Virtual Court) BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR & SHRI WASEEM AHMED, ACCOUNTANT MEMEBR आयकर अपील सं./I.T.A. Nos. 1802 & 1803/Ahd/2019 ( Assess ment Ye ars : 2 010-11 & 2011-12) In co me T ax Of fi ce r W ar d- 5( 3) (1 ), Ah m eda ba d / V s . Sh ri M an jil Di ne sh ku ma r Sh a h 52, L av an a So cie t y, Ne w Vi kas G ru h Ro ad , Vas na , Ah me da bad -7 यी ल सं./ ीआइआर सं./P A N / G IR N o . : A IR P S 3 8 9 3 G (अपील Appellant) . . ( य / Respondent) अपील र स /Appellant by : Shri S. S. Shukla, Sr.D.R. य क र स / Respondent by : S mt. Pr e ya s hi T ate d, A. R. स क र D a t e o f H e a r i n g 09/02/2022 !"# क र /D a t e o f P r o n o u n c e m e n t 04/03/2022 ORDER PER MAHAVIR PRASAD, JM: Both caption ed appeals hav e b een filed at th e instance of the Revenu e against the order of the Co mmissioner of Inco me Tax ( Ap peals)-5, Ah med abad (‘ CI T(A)’ in short) ITA Nos. 1802 & 1803/Ahd/2019 (ITO vs. Shri Manjil Dineshkumar Shah) AY 2010-11 & 2011-12 - 2 - vide App eal No. CIT( A)-5/ITO.Wd.5(3)(1)/10800/2017-18, both dated 23.09 .2019 arising in the assess ment order both dated 29.12.2017 passed by the Ass essing Officer (AO) under s. 143(3) r.w.s. 147 of the Inco me Tax Act, 1961 (the Act) concerning AYs . 2010-11 & 2011-12. 2. Since, in thes e two app eals assess ee and facts & cir cu mstan ces ar e co mmon , ther ef ore, for the sake of brevity, we would like to dispose of these matte rs by way of a common o rder. 3. The ground of appeal r aised by Rev enue in ITA No.1802/Ahd/2019 read as under: “ (I ) Wh e t h e r , o n t h e f a c t s a n d c i r c u m s t a n c e s o f t h e c a s e , t h e L d C I T ( A ) i s r i g h t i n a l l o w i n g t h e a s s e s s e e ' s a p p e a l by t r e a t i n g t h e r e - a s s e s s m e n t p r o c e e d i n g s i n v a l i d h o l d i n g t h a t t h e n o t i c e i s s u e d u / s 1 4 3 (2 ) o f t h e A c t w a s i s s u e d b e y on d t h e s t a t u t o r y l i m i t , t h o u g h t h e f a c t s a r e t h a t t h e a s s es s e e h a s i n t e n t i o n a l l y a v o i d e d t o i n t i m a t e t h e A O a b o u t f i l in g o f I T R i n s p i t e o f r e p e a t e d r e m i n d e r s i s s u e d d u r i n g t h e c ou r s e o f a s s e s s m e n t p r o c e e d i n g s . ( I I ) Wh e t h e r t h e b e n e f i t o f l a w c a n b e a l l o w e d t o as s e s s e e f o r m i s l e a d i n g t h e A O b y w i t h h o l d i n g t h e f a c t s o f f i l i ng o f r e t u r n u / s 1 4 8 o f t h e . A c t . ( I I I ) T h e L d C I T ( A ) h a s e r r e d i n l a w a n d o n f a c t s i n a l l o w i n g t h e d e d u c t i o n o f R s . 8 , 3 7 , 0 4 4 / - m a d e o n a c c o u n t o f b o g us p u r c h a s e s . ( I V ) T h e a d d i t i o n m a d e o n a c c o u n t o f b o g u s p u r c h a s es i s b a s e d o n i n f o r m a t i o n f r o m V A T d e p a r t m e n t w h i c h f a l l s u n d er e x c e p t i o n c l a u s e 1 0 ( e ) o f C B D T C i r c u l a r N o . 0 3 o f 20 1 8 r w C i r c u l a r N o . 1 7 o f 2 0 1 9 . , h e n c e t h e a p p e a l b e d e c i de d o n m e r i t s . ( V ) O n t h e f a c t s a n d c i r c u m s t a n c e s , t h e L d C I T ( A ) o u g h t t o h a v e u p h e l d t h e o d d e r o f t h e A O . ITA Nos. 1802 & 1803/Ahd/2019 (ITO vs. Shri Manjil Dineshkumar Shah) AY 2010-11 & 2011-12 - 3 - ( V I ) I t i s t h e r e f o r e , p r a y e d t h a t t h e o r d e r o f t h e L d . C I T ( A ) m a y b e s e t a s i d e a n d r e s t o r e d t h e o r d e r o f A O . ” 4. The brief f acts o f the cas e ar e th at assess ee is in the business of building material, such as, s and, stone, bricks etc. In this cas e re-ass ess men t order under s.143 (3) r.w.s . 147 of the Act was p ass ed on 19.03.2014 deter mining total inco me of Rs .2 ,82,06,410/- which in cludes add ition on account of bogus purchas es of Rs.2 ,78,37,535/- fro m 13 parties under Hawala Billers. Su bsequent to the f inalization ass ess ment under s.143(3) r.w.s. 147 of the Act was pass ed and learn ed AO receiv ed information fro m Sales Tax Dep artment, which was forwarded by DGI T(Inv.) , Mu mbai vide letter dated 26.12.2013 received by the learned AO on 26.03.2014. On an alysis of the data receiv ed, it is found that addition to the above Hawala Billers , th e ass essee h as mad e bogus purchases amounting to Rs .8,37,044/- from R. K. Enterpris es also during F.Y. 2009-10 relevant to A.Y. 2010-11. Thus, the learn ed AO h eld that in co me chargeable to tax to the ex tent of Rs.8 ,37,044/- escaped assess ment within the meaning of Section 147 of the Act and ass ess ment was r eopen ed b y issue of notice und er s.148 of the Act on 31.03.2017 asking the ass essee to co mply with the same within 30 days . In reply, ass ess ee ch allenged th e reopening b y citing the order of ITAT and High Court but learned AO did not agree with the same and made addition of Rs .8,37,044/-. ITA Nos. 1802 & 1803/Ahd/2019 (ITO vs. Shri Manjil Dineshkumar Shah) AY 2010-11 & 2011-12 - 4 - 5. Ther eafter, ass essee pref erred f irst statutory ap peal before the learn ed CIT( A) who allowed th e app eal on th e ground that r e- as sess ment proceed ings wer e inv alid . 6. Now, Revenu e has co me b efore us. 6.1 At the outset, learned counsel on behalf of the ass ess ee Smt. Pr eyashi Tated argu ed that these cas es ar e covered b y CBDT Circular No. 3 of 2018 dated 11/07/2018 which contemplates that if in an app eal wh ere tax is less th an Rs.50 Lakhs th at cannot b e filed before the ITAT if alr ead y has been filed by the Rev enue, then same to be dis missed b y the Tribunal. 6.2 On the other han d, learned Sr. D.R. Shri S. S. Shukla argued th at this argu ment cannot be accepted as in Circular No. 03 of 2018 dated 11 t h July 2 018. It is contemplated as follows: “ S u b j e c t : A m e n d m e n t t o p a r a 1 0 o f t h e Ci r c u l a r N o . 3 o f 2 0 1 8 d a t e d 1 1 . 0 7 . 2 0 1 8 - r e g : M a d a m / S i r , K i n d l y r e f e r t o t h e a b o v e . 2 . T h e m o n e t a r y l i m i t s f o r f i l i n g o f a p p e a l s b y t h e D e p a r t m e n t b e f o r e I n c o m e T a x A p p e l l a t e T r i b u n a l , H i g h C o u r t s an d S L P s / a p p e a l s b e f o r e S u p r e m e C o u r t h a v e b e e n r e v i s e d b y B o a r d ' s C i r c u l a r N o . 3 o f 2 0 1 8 d a t e d 1 1 , 0 7 . 2 0 1 8 . 3 . P a r a . 1 0 o f t h e s a i d C i r c u l a r p r o v i d e s t h a t a d v er s e j u d g m e n t s r e l a t i n g t o t h e i s s u e s e n u m e r a t e d i n t h e s a i d p a r a ITA Nos. 1802 & 1803/Ahd/2019 (ITO vs. Shri Manjil Dineshkumar Shah) AY 2010-11 & 2011-12 - 5 - s h o u l d b e c o n t e s t e d o n m e r i t s n o t w i t h s t a n d i n g t h a t , t h e t a x e f f e c t e n t a i l e d i s l e s s t h a n t h e m o n e t a r y l i m i t s s p e c i f i e d i n p a r a 3 t h e r e o f o r t h e r e i s n o t a x e f f e c t . P a r a 1 0 o f t h e Ci r c u l a r . N o . 3 o f 2 0 1 8 d a t e d 1 1 . 0 7 . 2 0 1 8 i s h e r e b y a m e n d e d a s u n d e r : " 1 0 . A d v e r s e j u d g m e n t s r e l a t i n g t o t h e f o l l o w i n g i ss u e s s h o u l d b e c o n t e s t e d o n m e r i t s n o t w i t h s t a n d i n g t h a t t h e t a x e f f e c t e n t a i l e d i s l e s s t h a n t h e m o n e t a r y l i m i t s s pe c i f i e d i n p a r a 3 a b o v e o r t h e r e i s n o l a x e f f e c t : ( a ) Wh e r e t h e C o n s t i t u t i o n a l v a l i d i t y o f t h e p r o v i si o n s o f a n A c t o r R u l e i s u n d e r c h a l l e n g e , o r ( b ) Wh e r e B o a r d ' s o r d e r , N o t i f i c a t i o n , I n s t r u c t i o n o r C i r c u l a r h a s b e e n h e l d t o b e i l l e g a l o r u l t r a , v i r es , o r ( c ) Wh e r e R e v e n u e A u d i t o b j e c t i o n i n t h e c a s e h a s be e n a c c e p t e d b y t h e D e p a r t m e n t , o r ( d ) Wh e r e a d d i t i o n r e l a t e s t o u n d i s c l o s e d f o r e i g n i n c o m e / u n d i s c l o s e d f o r e i g n a s s e t s ( i n c l u d i n g f i n a n ci a l a s s e t s ) / u n d i s c l o s e d f o r e i g n b a n k a c c o u n t . ( e ) Wh e r e a d d i t i o n i s b a s e d o n i n f o r m a t i o n r e c e i v e d f r o m , e x t e r n a l s o u r c e s i n t h e n a t u r e o f l a w e n f o r c e m e n t ag e n c i e s s u c h a s C B I / E D / D R I / S F 1 O / D i r e c t o r a t e G e n e r a l o f G S T I n t e l l i g e n c e ( D G G I ) . ( f ) C a s e s w h e r e p r o s e c u t i o n h a s b e e n f i l e d b y t h e D e p a r t m e n t a n d i s p e n d i n g i n t h e C o u r t . ' ' 4 . T h e s a i d m o d i f i c a t i o n s h a l l c o m e i n t o e f f e c t f r om t h e d a t e o f i s s u e o f t h i s l e t t e r . 5 . T h e s a m e m a y b e b r o u g h t t o t h e k n o w l e d g e o f a l l o f f i c e r s w o r k i n g i n y o u r r e g i o n . ” 7. We hav e heard both the parties. Undisputedly, addition was mad e on th e basis of information r eceived fro m the S ales Tax Depar tment of th e State Govern ment and it has b een categor ically mention ed in th e above said cir cular that wh ere additions hav e b een mad e on th e basis of information r eceived fro m extern al sources in th e nature of law, inv estments agen cies , such as , CBI / ED / DRI / SFIO / ITA Nos. 1802 & 1803/Ahd/2019 (ITO vs. Shri Manjil Dineshkumar Shah) AY 2010-11 & 2011-12 - 6 - Director ate Gen eral of GST Intelligence ( DGGI). In our consider ed opinion, this case f all in the ex ceptional claus e of the cir cular and to our mind, thes e cas es filed by th e Dep artment should not be dismissed on account of low tax eff ect. The learned AO has p assed the ass ess ment ord er under s.143(3) r.w.s. 147 of the Act on 29.1 2.2017 by deter mining total inco me as under : T o t a l i n c o m e a s p e r r e t u r n f i l e d U / S 1 4 8 o f t h e A c t R s . 3 , 6 8 , 8 7 2 / - A d d . A d d i t i o n s m a d e i n t h e a s s e s s m e n t o r d e r U / S 1 4 3 ( 3 ) r . w . s . 1 4 7 d a t e d 1 9 . 0 3 . 2 0 1 4 R s . 2 , 7 8 , 3 7 , 5 3 5 / - A d d . Bo g u s p u r c h a s e a s d i s c u s s e d R s . 8 , 3 7 , 0 4 4 T o t a l In c o m e R s . 2 , 9 0 , 4 3 , 4 5 0 / - Ther eafter, ITAT, Ah med ab ad vide its ord er d ated 16.06.2017 has deleted addition made of Rs .2,78,3 7,535/- in ass ess ment ord er under s. 143(3) r.w.s . 147 of the Act d ated 19.03.2014. The learned AO has p ass ed order on 29.01.2018 giving appeal eff ect to the order of I TAT and deter min ed total inco me at Rs.12,05,919/-. It is argued that AO cannot d erive jurisdiction to reopen the as sess ment which was co mpleted u/s. 143(3) of the Act fro m the end or the ass ess ment year. In this cas e, assess ee r eceived notice under s.148 of the Act on 31.03 .2017 from th e learned AO. In response to s aid notice, ass es see sub mitted th at h e has filed r eturn of inco me for AY 201 0-11 showing total in co me of Rs.3,68 ,872/- on 14.10.2010. During the year under ref eren ce ass es see has purchased th e goods of Rs.4 ,03,26,300/-. The case of assess ee was r eopened and ITA Nos. 1802 & 1803/Ahd/2019 (ITO vs. Shri Manjil Dineshkumar Shah) AY 2010-11 & 2011-12 - 7 - notice u/s.148 of the Act was issued on 25.03.2013. Ther eafter, ass es see vide letter d ated 15.05.2013 submitted that r eturn filed on 14.10.2010 may be tr eated filed in response to notice issued u/s .148 of the Act. Th e assess ee has filed r eturn o f inco me for A.Y. 2011-12 showing inco me of Rs.4,38 ,377/- on 30.09.2011. During the year under ref eren ce ass es see has purchased th e goods of Rs.3 ,88,06,374/-. The case of assess ee was r eopened and notice u/s.148 o f the Act was is sued on 25.03.2 013. Th e ass essee vide letter dated 15.05.2 013 submitted th at return filed on 30.09.2 011 may be tr eated filed in r esponse to notice issu ed under s .148 of th e Act. In this matter, learned CIT( A) held th at assess men t proceedings under s.147 of the Act wer e co mpleted without issu e of statutory notice under s.143(2) within time sp ecified under the Act and although learned CI T( A) called for r eman d report and a misleading report was filed before him. Learned CI T(A) cautioned that in future lower authority sh ould be cautio us while submitting their r emand r eport to the learned CI T( A). It h as been held in plethora of judg ments that th e s ervice of notice under s.143(2) of the Act within the statutory time limit is mand ator y and is not an inconsequ ential procedur al requirement. Omission to issue notice u/s .143(2) of the Act is not curable an d the requir emen t cannot be dispensed with s.143(2) of the Act is applicable to proceedings under s .147 & 148 of th e Act. Undisputedly, in this cas e notice has b een issued beyond th e statutor y perio d of four years as notice ITA Nos. 1802 & 1803/Ahd/2019 (ITO vs. Shri Manjil Dineshkumar Shah) AY 2010-11 & 2011-12 - 8 - under s.143(2) of the Act was iss ued beyond th e p res cribed time limit in th e Act. In view of the above, we do not find any infir mity in the order pass ed by th e learned CIT(A) and we ar e not inclined to interf er e in the order of the learn ed CIT( A). In our consider ed opinion, the learn ed CIT( A) h as passed a d etailed and reason ed or der as per law. 8. In the r esult, b oth captioned appeals filed by the Revenu e ar e dis missed . Sd/- Sd/- (WASEEM AHMED) (MAHAVIR PRASAD) ACC OUNTANT MEMB ER JUDICIAL MEMBER Ahmedabad: Dated 04/03/2022 True Copy S.K.SINHA ेश ! " #े" / Copy of Order Forwarded to:- $. र / Revenue 2. आ दक / Assessee '. सं(ं)* आयकर आय + / Concerned CIT 4. आयकर आय + - अपील / CIT (A) .. / 0 1ीय 2 2 )*3 आयकर अपील य अ)*कर#3 अ45द ( द / DR, ITAT, Ahmedabad 6. 1 78 9 इल / Guard file. By order/आद श स 3 उप/स4 यक पं ीक र आयकर अपील य अ)*कर#3 अ45द ( द । This Order pronounced in Open Court on 04/03/2022