Sh. Sachin Sharma , Delhi V. ITO, Ward 3, Bhiwani

ITA 186/DEL/2022

AI Insights

The case involves Shri Sachin Sharma, the appellant, contesting the reassessment of his income for the assessment year 2010-11, which was reopened under section 147 of the Income Tax Act, 1961. The reassessment was based on alleged cash deposits in the appellant's bank account. The Assessing Officer (AO) made additions to the appellant's income, which were upheld by the CIT(A). The appellant challenged the validity of the reassessment proceedings, arguing that the notice under section 148 was not properly issued or served. The Tribunal, after reviewing the submissions and the lack of production of the assessment record by the Revenue, quashed the reassessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122249 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-09-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 31-01-2022
• Other Referred Cases: CWT vs. Sini Paul Oswal (2007) 293 ITR 273, Abhishek Jain vs. ITO (2018) 94 taxmann.com 355 (Delhi)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Assessment record; Reassessment proceedings
• Section: 147; 148; 142(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “SMC” BENCH: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No.186/Del/2022 [Assessment Year : 2010-11] Shri Sachin Sharma, C/o-Umang Sahai Aggarwal, Adv., 505, Maitri Apartment, Opp. Metro Pillar No.411, Sector-09, Rohini, Delhi-110085. PAN-BNYPS6223F vs ITO, Ward-3, Bhiwani. APPELLANT RESPONDENT Appellant by Shri U.S.Aggarwal, Adv. Respondent by Shri Om Parkash, Sr.DR Date of Hearing 21.09.2023 Date of Pronouncement 27.09.2023 ORDER PER KUL BHARAT, JM : The present appeal filed by the assessee for the assessment year 2010- 11 is directed against the order passed by Ld.CIT(A)-5, Ludhiana dated 24.01.2019. 2. The assessee has raised following grounds of appeal:- 1. “That the learned Authorities Below have erred in law and facts of the case in making and confirming addition of Rs. 3006300/- Thus the order passed by Assessing Officers and confirmed by Ld. C.I.T(Appeals) is totally wrong, illegal and excessive in nature. 2. That the Learned C.I.T (Appeals) has wrongly upheld time barred assessment proceedings as valid proceeding ignoring the evidence and material produced by the appellant. Thus order passed by learned C.I.T(Appeals) is totally wrong and illegal. Page | 2 3. That the learned Assessing Officer has wrongly initiated and issued notice U/s 148 of IT Act. without recording any valid reasons. Thus the reassessing proceedings initiated U/S 148 is Totally wrong and illegal. 4. That even alleged reassessment proceedings initiated U/S 148 are totally wrong and illegal on the appellant. Thus the proceedings initiated U/s 148 and assessment framed there under are totally wrong illegal and excessive in nature. 5. That the Learned C.I.T(Appeals) has wrongly confirmed proceedings U/s 148 of IT Act though provisions of section 147 to 151 of IT Act were not complied with and no speaking approval of C.I.T was obtained before initiating proceedings U/s 148 of IT Act. 6. That the learned C.I.T(Appeals) has further erred in law in treating total Cash deposit as net Income of the appellant without allowing any benefit of cash withdrawals and past savings. Thus the addition of whole of cash deposit is totally wrong and illegal. 7. That the learned C.I.T(Appeals) has further erred in law and facts of the case in ignoring all evidence and material submitted before assessing officer. Thus order of C.I.T(Appeals) ignoring all relevant material is totally wrong, illegal and excessive in nature. 8. That learned C.I.T (Appeals) has further erred in law and facts of the case in confirming addition of Rs. 28601/- being commission income without allowing any expenses from commission. Thus the additions confirmed is totally wrong and illegal. 9. That the appellant craves leave to add, delete or amend any ground or grounds of appeal at the time or before time of hearing.” 3. Facts giving rise to the present appeal are that the case of the assessee was re-opened u/s 147 of the Income Tax Act, 1961 (“the Act”) on the basis that the assessee had deposited cash amounting to Rs.28,64,070/- in his Page | 3 Saving Bank Account. A notice u/s 148 of the Act was issued thereafter, notice u/s 142(1) of the Act was issued. It was stated before the Assessing Officer (“AO”) that the entries mentioned in his bank statement, do not belong to him. The AO did not accept the contention of the assessee and thus, made addition of Rs.29,78,300/- and further, made addition of Rs.28,601/- as commission. Thus, the AO assessed the income at Rs.31,61,500/- of the assessee. 4. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A), who after considering the submissions, sustained the addition. 5. Aggrieved against the order of Ld.CIT(A), the assessee preferred appeal before this Tribunal. 6. The assessee has taken various grounds against the validity of re- opening of the assessment. Ld. Counsel for the assessee pointed out that, one of the grounds of the assessee is that the assessee had not received any notice issued u/s 148 of the Act. To verify the objection of the assessee and to verify the correctness whether notice u/s 148 of the Act was issued, the Revenue was asked to produced assessment record, by the Tribunal vide order sheet entry dated 22.08.2023. 7. On the other hand, Ld. Sr. DR opposed these submissions and supported the orders of the authorities below. However, no assessment record was produced before this Tribunal instead Ld.Sr.DR has filed submissions. For the sake of clarity, the submissions of the Revenue are reproduced as under:- Page | 4 “Kindly refer to your office mail on the subject cited above. 2. In this connection, as desired, para-wise report/reply on the grounds of appeal taken by the assessee is submitted as under :- 1. The addition of Rs.30,06,300/- was made by the Assessing Officer on authentic footing, which has correctly been confirmed by the Id. CIT(A). During the course of assessment proceedings, the assessee has not even filed false affidavits but recorded wrong statement on oath. Therefore, it was amply clear that the assessee has made cash deposits in his bank account. The assessee has failed to furnish any justification regarding the sources of such cash deposits even after a number of opportunities allowed to him. Thus, the said grounds of appeal is not tenable. 2. During the course of assessment proceedings, sufficient opportunities of being heard have been provided. The assessee furnished replies during the course of assessment proceedings in response notices issued under section 142(1) of the Income- tax Act, 1961. The assessee had also filed ITR in response to notice under section 148. During the course of assessment proceedings, the assessee has no objection of any kind regarding validity of proceedings. When the assessee has cooperated during the course of assessment proceedings, question of challenging of proceedings does not arise. Thus the said grounds of appeal is not tenable. 3. Notice under section 148 was issued after duly consideration of all the facts of the case by the Assessing Officer and addition of Rs.30,06,300/- was made by the Assessing Officer on authentic footing, which has correctly been confirmed by the Id. CIT(A). During objection should be taken at the earliest possible opportunity and for before the settlement of issues and not at the subsequent stage. Jurisdiction as to the subject matter is distinct and stands on a different footing. 23. In view of the above discussion, objections as to the jurisdiction of assessing officer in the present case cannot be equated with lack of subject matter Page | 5 jurisdiction. They relate to place of assessment. Income-Tax Officer Ward 1(1). Noida would not per se lack jurisdiction, albeit he had concurrent jurisdiction with the Income-Tax Officer Ward 36(1)/58, Delhi. In the facts of the present case the contention raised about the lack of jurisdiction would not justify quashing the notice under Section 147 148 of the Act. 24. Accordingly, we do not find any merit in the present petition and the same is dismissed. Stay order is vacated. However, in the facts of the present case there would be no order as to costs. 6. It is submitted that during the assessment proceedings, the assessee had never raised any such objection. As per section 124(3)(a), no person can challenge the jurisdiction after one month from the date of service of notice u/s 148, 143(2) and 142(1). Therefore, jurisdiction cannot be called in question by the assessee after the expiry of one month from the date of service of notice. Even in a case where jurisdiction is irregularly exercised, the assessee can be said to have waived the objection regarding jurisdiction if such assessee has participated in the proceedings. For the above proposition, reliance is placed on the decision of the Hon'ble Punjab & Haryana High Court in the case of CWT vs. Sini Paul Oswal (2007) 293 ITR 273. Referring to the provisions of section 124(3), it is submitted that no person can challenge the jurisdiction of the Assessing Officer after one month from the date of service of notice u/s 143(2) and 142(1). Further, the assessee, during the course of assessment proceedings regularly appeared before the Assessing Officer and till the completion of the assessment, the jurisdiction was never challenged. Reliance is also placed on the decision of the Hon'ble Delhi High Court in the case of Abhishek Jain vs. ITO (2018) 94 taxmann.com 355 (Delhi). the Hon'ble Delhi High Court in the said decision has held that in terms of section 124(3)(b) the jurisdiction of an Assessing Officer cannot be called in question by an assessee after expiry of one month from the date on which he was served with a notice for reopening of assessment u/s 148. The assessee has not challenged the jurisdiction during the course of proceedings assessment proceedings of the Income-tax Act, 1961. The Page | 6 assessee has not challenged the jurisdiction during the course of proceedings appellate proceedings before the ld. CIT(A). In view of all these facts, grounds of appeal taken by the assessee are not tenable.” 7.1. Further, it is stated by Ld.Sr.DR that the assessment record is not traceable. 8. I have heard Ld. Authorized Representatives of the parties and perused the material available on record and gone through the orders of the authorities below. The assessee has raised an objection which goes to the jurisdiction of the re-opening of assessment. It is the contention of the assessee that no notice u/s 148 of the Act was issued. However, as per the Revenue, it is stated that the assessee was issued a notice u/s 148 of the Act and in pursuance the assessee participated in the assessment proceedings. Now, at such a belated stage, the assessee is taking the objection regarding non- receipt of notice issued u/s 148 of the Act. It is contented on behalf of the Revenue that the assessment being very old therefore, the assessment record is not traceable. I have considered the submission of the Ld.Sr.DR. There is no dispute with regard to the fact that issuance of notice u/s 148 of the Act and receipt of the same by the assessee is a condition precedent for assumption of jurisdiction by the AO in respect of the assessment proceedings. The Revenue has to prove that a valid notice u/s 148 of the Act was issued and served upon the assessee as mandated by law. Thereafter, the assessee has to file objection against the re-opening of the assessment u/s 147 of the Act. A conjoint reading of section 147 & 148 of the Act, makes it clear that “the AO is Page | 7 required to serve a notice on the assessee before making the assessment or re- assessment.” The Revenue could not produce copy of notice issued u/s 148 of the Act and proof of service of the same. Therefore, in my considered view, the initiation of proceedings do not meet requirement of law. I therefore, quash the assessment. However, it is clarified if the Revenue is able to trace the assessment record and find evidence of issuance and service of notice u/s 148 of the Act. It will have a liberty to approach this Tribunal for recalling of the order. The grounds raised by the assessee are allowed in terms indicated above. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 27 th September, 2023. Sd/- (KUL BHARAT) JUDICIAL MEMBER * Amit Kumar * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI