Mohd Haneef, Hyderabad V. Income Tax Officer, Ward-9(2), Hyderabad

ITA 1853/Hyd/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6140 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 10-02-2020
• Assessment Year: 2009-2010
• Appeal Filed On: 10-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S ANDEEP KUMAR MEHTA
• Keywords: Set aside
• Section: 143(3); 244A; 143(1); 201; 139(1); 48; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES SMC, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 1853/HYD/17 2009-10 MOHD. HANEEF, HYDERABAD [PAN: ABOPM7776L] INCOME TAX OFFICER, WARD-9(2), HYDERABAD 1854/HYD/17 2010-11 FOR ASSESSEE : SHRI MOHD. AFZAL, AR FOR REVENUE : SHRI SANDEEP KUMAR MEHTA, DR DATE OF HEARING : 10-02-2020 DATE OF PRONOUNCEMENT : 12-02-2020 O R D E R BOTH ARE ASSESSEES APPEALS FOR THE AYS.2009-10 & 201 0-11 RESPECTIVELY, AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-7, HYDERABAD, BOTH DATED 21-08-2017 FOR THE RESPECTIVE ASSESSMENT YEARS. 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE, AN I NDIVIDUAL, ENGAGED IN THE BUSINESS OF TRAVELLING GOODS, FILED HI S RETURN OF INCOME FOR THE AY.2009-10 ON 12-06-2009. PRIOR TO FIL ING OF THE RETURNS OF INCOME FOR THE AY.2009-10, THE POLICE WHILE CONDUCTING A GENERAL CHECK AT BADA BAZAR X ROADS AS PART OF THE GENERAL ELECTIONS-2009 ON 13-04-2009, FOUND THE ASSESSEE TRAV ELLING WITH CASH OF RS.5,95,000/-. THE ASSESSEE ALONG WITH CAS H, WAS HANDED OVER TO THE INCOME TAX DEPARTMENT AND SINCE THE ASSESSE E WAS UNABLE TO FURNISH ANY EXPLANATION FOR THE SOURCES OF TH E CASH OF RS.5,95,000/-, ASSESSEE REMITTED THE ENTIRE AMOUNT INTO THE I.T.A. NOS. 1853 & 1854/HYD/2017 :- 2 -: GOVERNMENT ACCOUNT AS SELF-ASSESSMENT TAX FOR THE AY.2 009-10. THEREAFTER, THE ASSESSEE FILED THE RETURN OF INCOME O N 12-06-2009 CLAIMING REFUND OF THE SELF-ASSESSMENT TAX PAID BY THE ASSESSEE. THE ASSESSING OFFICER (AO) DID NOT TAKE UP THE RETURN OF INCOME FILED BY THE ASSESSEE ON 12-06-2009 FOR SCRUTINY. BUT, SUBSEQUENTLY, HE NOTICED THAT THE ASSESSEE HAD NOT ADMITTE D THE UN-EXPLAINED CASH AS INCOME FOR THE AY.2010-11 AND A LSO THAT THE INCOME ADMITTED BY THE ASSESSEE FOR THE AY.2009-10 IS N OT COMMENSURATE WITH THE TAXES PAID. THEREFORE, AO RE-OPE NED THE ASSESSMENT U/S.147 OF THE INCOME TAX ACT [ACT] AND ISSU ED A NOTICE U/S.148 OF THE ACT ON 14-11-2012. IN REPLY TO THE SAME, THE ASSESSEE FILED A LETTER ON 27-11-2012, REQUESTING THE AO TO TREAT THE RETURN FILED ON 12-06-2009 AS COMPLIANCE TO NOTICE U/S.148 OF THE ACT. 3. DURING THE RE-ASSESSMENT PROCEEDINGS, THE AO OBSERV ED THAT THE ASSESSEE WAS FOUND WITH CASH OF RS.5,95,000/- BY THE POLICE ON 13-04-2009 AND HAS REMITTED THE SAME TO THE GOVERNMENT AC COUNT AS SELF-ASSESSMENT TAX BUT THE INCOME RETURNED BY THE ASSESSEE IN THE RETURN OF INCOME FOR AY.2009-10 IS NOT COMMENSURA TE WITH THE TAXES PAID BY THE ASSESSEE. THEREFORE, HE WAS OF THE OPINION THAT THE SAID AMOUNT OF RS.5,95,000/- IS TO BE BROUGHT TO TAX FOR THE AY.2009-10 AFTER ALLOWING A SUM OF RS.45,000/- AS PO SSIBLE SOURCE FOR THE CASH-IN-HAND. THUS, HE BROUGHT THE BALANCE OF RS.5,50,000/- TO TAX PROTECTIVELY FOR THE AY.2009-10 AND SUBSTANTIVELY FOR THE AY.2010-11. THEREAFTER, THE AO AL SO PROCEEDED TO CONSIDER THAT THE ASSESSEE HAS SHOWN CLOSI NG BALANCE OF CREDITORS AS ON 31-03-2009 AT RS.4,67,081/- AND CL OSING BALANCE OF CREDITORS AS ON 31-03-2008 AT RS.98,228/-. HENCE , THE ASSESSEE I.T.A. NOS. 1853 & 1854/HYD/2017 :- 3 -: WAS DIRECTED TO FILE CONFIRMATION LETTERS FROM THE CRED ITORS BUT SINCE THE ASSESSEE FAILED TO SUBMIT THE SAME, THE ENTIRE SUM OF RS.4,67,081/- WAS ALSO BROUGHT TO TAX IN THE AY.2009-10 . 3.1. AGGRIEVED BY THE ASSESSMENT ORDER FOR BOTH THE AS SESSMENT YEARS, THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT( A), CHALLENGING THE RE-ASSESSMENT PROCEEDINGS AND ALSO THE ADDITIONS MA DE BY THE AO. THE CIT(A), HOWEVER, CONFIRMED THE ORDER OF THE AO AS FAR AS THE RE-OPENING OF ASSESSMENT AND UN-EXPLAINED CREDITO RS ARE CONCERNED, BUT OBSERVED THAT THE SUM OF RS.5,50,000/- WAS BROUGHT TO TAX PROTECTIVELY FOR THE AY.2009-10 AND SUBSTAN TIVELY FOR THE AY.2010-11 AND SINCE HE CONFIRMED THE SUBSTANT IVE ADDITION IN THE AY.2010-11, HE DELETED THE ADDITION IN AY.2009-10. AGGRIEVED, THE ASSESSEE FILED APPEALS BEFORE THE TRIB UNAL, RAISING THE FOLLOWING GROUNDS: AY.2009-10: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS AGAINST THE LAW, WEIGHT OF EVIDENCE AND PROBABILITI ES OF CASE. 2. THE LEARNED COMMISSIONER ERRED IN CONFIRMING THE ORDER U/S. 143(3) R.W.S 147, WHERE THE NOTICE U/S 148 WAS ISSUED WITH THE SAME REASONS AS THAT OF REASONS OF NOTICE U/S 148 FOR THE ASSESSMEN T YEAR 2010-11. 3. THE LEARNED COMMISSIONER ERRED IN CONFIRMING THE ORDER U/S.143(3) R.W.S 147 PARTLY, AS THE ADDITION MADE WITH A PRESU MPTION OF ESCAPEMENT OF INCOME BY ISSUING NOTICE U/S 148 IS DELETED, THE REFORE, THE OTHER ADDITION OF RS.4,67,081/ - HAS NO LEGS TO STAND. 4. THE LEARNED COMMISSIONER ERRED IN CONFIRMING THE VALIDITY OF NOTICE U/S 148 AS THE SAME IS ISSUED WITH IDENTICAL REASONS FO R ASSESSMENT YEARS 2009-10 AND 2011-12. 5. THE LEARNED COMMISSIONER ERRED IN CONFIRMING THE ORDER U/S 143(3) R.W.S 147 WHEREIN, NOTICE U/S 148 WAS ISSUED WITHOU T PROCESSING THE RETURN OF INCOME FILED ON 12.06.2009, THEREFORE, TH E LEARNED CIT OUGHT TO HAVE HELD THE NOTICE AS INVALID. I.T.A. NOS. 1853 & 1854/HYD/2017 :- 4 -: 6. THE LEARNED COMMISSIONER OUGHT TO HAVE APPRECIAT ED THAT THE RETURN WAS FILED U/S 139(1) OF THE IT ACT, NO NOTICE U/S 1 43(2) WAS ISSUED IN THE PRESCRIBED TIME, HOWEVER, THE CASE WAS TAKEN UP FOR SCRUTINY (WHEN THE ASSESSEE APPROACHED THE ASSESSING OFFICER FOR REFUN D) BY ISSUING NOTICE U/S 148 OF THE IT ACT WITHOUT APPRECIATING THE FACT OF SEIZURE OF THE CASH BY POLICE AND SUBSEQUENT HANDING OVER THE SAME TO T HE DEPARTMENT, WHICH FACTS WERE IN POSSESSION OF THE DEPARTMENT. 7. THE LEARNED COMMISSIONER ERRED IN NOT ALLOWING T HE CLAIM OF INTEREST U/S 244A WITH AN ASSUMPTION THAT THE PROCEEDINGS RE SULTING IN THE REFUND ARE ATTRIBUTABLE TO THE ASSESSEE. 8. THE LEARNED COMMISSIONER ERRED IN NOT CONSIDERIN G THE ADDITIONAL GROUND WHICH IS IN RESPECT OF ISSUE OF NOTICE U/S 1 48 WITHOUT PROCESSING THE RETURN OF INCOME U/S 143(1) FILED U/S 139(1) OF THE IT ACT. 9. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR MODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF H EARING OF THE APPEAL, IF IT IS CONSIDERED NECESSARY. AY.2010-11: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS AGAINST THE LAW, WEIGHT OF EVIDENCE AND PROBABILITI ES OF CASE. 2. THE LEARNED COMMISSIONER ERRED IN CONFIRMING THE ORDER U/S 143(3) R.W.S.147, WHERE THE NOTICE U/S 148 WAS ISSUED WITH THE SAME REASONS AS THAT OF NOTICE U/S 148 FOR THE ASSESSMENT YEAR 2009 -10. 3. THE LEARNED COMMISSIONER ERRED IN CONFIRMING THE VALIDITY OF NOTICE U/S 148 AS THE SAME IS ISSUED WITH IDENTICAL REASONS FO R ASSESSMENT YEARS 2009-10 AND 2010-11. 4. THE LEARNED COMMISSIONER OUGHT TO HAVE APPRECIAT ED THAT THE ASSESSEE IS HAVING SUFFICIENT CASH BALANCE AS PER THE STATEM ENTS FILED ALONG WITH THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-1 0. 5. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR M ODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF H EARING OF THE APPEAL, IF IT IS CONSIDERED NECESSARY. 4. LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT RE-OPENING OF ASSESSMENT FOR BOTH THE ASSESSMENT YEARS WAS MADE FOR TH E SAME I.T.A. NOS. 1853 & 1854/HYD/2017 :- 5 -: REASON THAT THE CASH FOUND WITH THE ASSESSEE DURING THE GENERAL ELECTIONS, WAS NOT EXPLAINED PROPERLY BY THE ASSESSEE AND SINCE THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME FOR TH E AY.2010-11 AND HAS NOT OFFERED THE SAME TO TAX, IT HAS ESCAPED ASSE SSMENT FOR BOTH THE ASSESSMENT YEARS I.E., AYS.2009-10 & 2010-11. IT IS SUBMITTED THAT THE REASONS FOR RE-OPENING OF ASSESSMENT FOR BOTH THE ASSESSMENT YEARS CANNOT BE THE SAME AND FOR THIS RE ASON ALONE, THE RE-ASSESSMENT IS TO BE HELD AS BAD IN LAW . IT WAS FURTHER SUBMITTED THAT THE CASH FOUND WITH THE ASSESSEE ON 13-04-2009 FALLS IN THE PREVIOUS YEAR I .E., AY.2009-10 RELEVANT TO ASSESSMENT YEAR BEFORE US I.E., AY.2010-11 . THEREFORE, HE SUBMITTED THAT IT COULD NOT HAVE BEEN BROUGHT TO TAX IN THE AY.2009-10. HE FURTHER SUBMITTED THAT THE CIT(A) HAS RIG HTLY HELD THAT THE PROTECTIVE ASSESSMENT MADE IN THE AY.2009-10 IS N OT VALID AND SINCE THE VERY REASON FOR RE-OPENING OF ASSESSME NT HAS BEEN HELD TO BE NOT ON A VALID GROUND, ANY OTHER ADDITION I S ALSO NOT WARRANTED AND CANNOT BE SUSTAINED. IN SUPPORT OF HIS CO NTENTIONS, LD.COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON VARIO US CASE LAW, WHICH ARE FILED AS A PART OF THE PAPER BOOK. 5. LD.DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AO AND THE CIT(A) AND SUBMITTED THAT THE AO AFTER MAKING AN A DDITION OF RS.5,50,000/- FOR THE REASON FOR WHICH THE ASSESS MENT WAS RE- OPENED HAS THEREFORE PROCEEDED TO CONSIDER THE RETURN O F INCOME FILED BY THE ASSESSEE AND MADE THE ADDITION OF UN-E XPLAINED CREDITORS AND THEREFORE, THE RE-ASSESSMENT CANNOT BE H ELD TO BE INVALID. IT IS SUBMITTED THAT ONCE AN ASSESSMENT HAS B EEN VALIDLY RE-OPENED AND THE ADDITION HAS BEEN MADE ON THE GROUND ON WHICH THE ASSESSMENT WAS RE-OPENED, THE AO WAS ENTITLED TO LO OK INTO I.T.A. NOS. 1853 & 1854/HYD/2017 :- 6 -: OTHER ISSUES AND MAKE ANY OTHER ADDITIONS OF INCOME, W HICH COMES TO HIS NOTICE DURING THE RE-ASSESSMENT PROCEEDINGS. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL O N RECORD, I FIND THAT THE SUM OF RS.5,50,000/- HAS BEEN BROUGHT TO TAX IN THE AY.2009-10 ON PROTECTIVE BASIS. AS RIGHTLY P OINTED OUT BY THE LD.COUNSEL FOR THE ASSESSEE, THE CASH WAS FOUND IN POSSESSION OF ASSESSEE ON 13-04-2009 WHICH IS RELEV ANT TO THE AY.2010-11 AND NOT TO THE AY.2009-10. THEREFORE, THE PRESUMPTION THAT THE INCOME HAS ESCAPED ASSESSMENT FO R THE AY.2009-10 ITSELF IS NOT VALIDLY MADE. FOR THIS REAS ON ITSELF, THE RE- OPENING OF THE ASSESSMENT IS NOT VALID. SINCE RE-OPENI NG OF THE ASSESSMENT IS NOT FOR VALID REASONS, THE CONSEQUENT RE- ASSESSMENT PROCEEDINGS WOULD ALSO BE VOID AB INITIO . THEREFORE, I AM INCLINED TO SET ASIDE THE GROUNDS RAISED BY THE ASSESSEE AND SET AS IDE THE ASSESSMENT MADE BY THE AO. 6.1. AS FAR AS AY.2010-11 IS CONCERNED, THE LD.COUNS EL FOR THE ASSESSEE SUBMITTED THAT THROUGH THE ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE AY.2010-11 WITHIN THE TIME, CONSEQUEN T TO ISSUANCE OF NOTICE U/S.148 OF THE ACT, ASSESSEE HAS FI LED RETURN OF INCOME AND DURING THE ASSESSMENT PROCEEDINGS THE ASSES SEE HAS ACCEPTED THAT THE CASH FOUND WITH HIM DURING THE TIME OF GENERAL ELECTIONS WAS ASSESSABLE TO TAX. THE ASSESSEE, HOWEV ER, SUBMITTED THAT ASSESSEE HAD SUFFICIENT BALANCE TO EXPLAIN THE SOU RCES AND THE ALLOWANCE OF RS.45,000/- ONLY AS AVAILABLE CASH WITH THE ASSESSEE IS NOT JUSTIFIABLE. IT IS SUBMITTED THAT ASSESSEE SHOULD BE ALLOWED SOME MORE AMOUNT AS CASH AVAILABLE WITH HIM AS ON 1 3-04-2009. I.T.A. NOS. 1853 & 1854/HYD/2017 :- 7 -: HOWEVER, SINCE THERE IS NO MATERIAL FILED BY THE ASS ESSEE BEFORE THE TRIBUNAL TO PROVE THAT THE ASSESSEE HAD MORE CASH THAN RS.45,000/- AS ESTIMATED BY THE AO AS ON 13-04-2009, I DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD.CIT (A), CONFIRMING THE ADDITION OF RS.5,50,000/- MADE DURING THE YEAR. I FIND THAT FOR THE AY.2009-10, THE ASSESSEE HAS CLAIME D REFUND OF TAXES PAID I.E., RS.5,95,000/- PAID AS SEL F-ASSESSMENT TAX AND THERE IS A LIABILITY OF ASSESSEE FOR THE AY.2010- 11 SINCE THE AMOUNT HAS BEEN BROUGHT TO TAX IN THE AY.2010-11. THE DEPARTMENT IS THEREFORE DIRECTED TO ADJUST THE SELF-ASSESS MENT TAX PAID BY THE ASSESSEE FOR THE AY.2009-10 TOWARDS TAX LIA BILITY OF THE ASSESSEE FOR THE AY.2010-11, AND THE BALANCE AMOUNT SH ALL BE REFUNDED TO THE ASSESSEE AS PER LAW. 7. IN THE RESULT, THE APPEAL OF ASSESSEE FOR THE AY.200 9-10 IS ALLOWED AND THE APPEAL FOR THE AY.2010-11 IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH FEBRUARY, 2020 SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED: 12-02-2020 TNMM I.T.A. NOS. 1853 & 1854/HYD/2017 :- 8 -: COPY TO : 1. MOHD. HANEEF, C/O. MOHD. AFZAL, ADVOCATE, 11-5-4 65, SHERSON'S RESIDENCY, FLAT NO.402, CRIMINAL COURT RO AD, RED HILLS, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-9(2), HYDERABAD. 3. CIT (APPEALS)-7, HYDERABAD. 4. THE PR.CIT-7, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.