Smt. Charanjit Kaur, Kurukshetra V. ITO Ward-1, Kurukshetra

ITA 193/CHANDI/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9433 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 24-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Competent authority; Set aside
• Section: 142(1); 69A; 48; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRIR.L NEGI, JUDICIAL MEMBER ./ ITA NO. 193/CHD/2020 / ASSESSMENT YEAR : 2010-11 SMT. CHARANJIT KAUR, C/O SARABJIT SINGH, DERA JALANDHARIAN VILL. LUKHI DISTT.KURUKSHETRA THE ITO, WARD-1, KURUKSHETRA ./PAN NO: BHNPK9151P / APPELLANT /RESPONDENT HEARING THROUGH VIDEO CONFERENCING /ASSESSEE BY : SHRI SUDHIR SEHGAL, ADVOCATE / REVENUE BY : SMT. MEENAKSHI VOHRA, ADDL. CIT /DATE OF HEARING : 22.12.2020 / DATE OF PRONOUNCEMENT : 15.03.2021 / ORDER PER R.L. NEGI, JUDICIAL MEMBER: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 12.12.2019 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS), KARNAL (FOR SHORT THE CIT(A)], FOR THE ASSESSMENT YEAR 2010-11 WHEREBY, THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE FILED AGAINST THE ASSESSMENT ORDER PASSED U/S 144 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT'). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE AO ISSU ED NOTICE U/S 148 OF THE ACT TO THE ASSESSEE ON THE BASIS OF INFORMATION THAT DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE 2 ITA NO. 193/CHD/2020- SMT. CHARANJIT KAUR , KURUKSHETRA DEPOSITED CASH AMOUNTING TO RS. 14.32 LACS IN HER S AVING BANK ACCOUNT. THE AO FURTHER ISSUED NOTICE U/S 142(1) OF THE ACT AND ASKED THE ASSESSEE TO COMPLY WITH THE NOTICE U/S 148 AND POST ED THE CASE FOR HEARING. THE ASSESSEE DID NOT RESPOND THE SAME. THE REAFTER THE AO ISSUED SHOW CAUSE NOTICE AND SERVED UPON THE ASSESS EE BY AFFIXING AT THE RESIDENCE OF THE ASSESSEE. SINCE THE ASSESSEE D ID NOT APPEAR ON THE SAID DATE, AO PASSED ASSESSMENT ORDER U/S 144 R.W.S . 147 OF THE ACT AND DETERMINED THE INCOME OF THE ASSESSEE AT RS. 14,32, 000/- TREATING THE AMOUNT DEPOSITED IN HER BANK ACCOUNT AS HER INCOME U/S 69A OF THE ACT. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT(A). THE LD. CIT(A) AFTER HEARING THE ASSESSEE AND CONSI DERING THE ADDITIONAL EVIDENCE ADDUCED DURING THE APPELLATE PROCEEDING, P ARTLY ALLOWED THE APPEAL OF THE ASSESSEE, HOWEVER, SUSTAINED THE ADDI TION OF RS. 10.32 LACS. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BE FORE THE BEFORE THIS TRIBUNAL. 3. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER BY RAISING THE FOLLOWING GROUNDS: - 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS), KARNAL HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN REOPENING OF THE CASE U/S 148 AS THERE WAS NO REASO N TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSM ENT 3 ITA NO. 193/CHD/2020- SMT. CHARANJIT KAUR , KURUKSHETRA 2. THAT THE LD. CIT(A) HAS ALSO ERRED IN CONFIRMING THE ACTION WITH REGARD TO REOPENING OF THE CASE WITHOUT CONSID ERING THE FACT THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS OWN MIND HAVING NO INDEPENDENT SATISFACTION AND ALSO, THERE WAS MECHANICAL APPROVAL OF THE PR. CIT, WITH REGARD TO REOPENING OF THE CASE U/S 148 AND, AS SUCH, PROCEEDINGS U/S 1 48 ARE LIABLE TO BE QUASHED. 3. NOTWITHSTANDING THE ABOVE SAID GROUND OF APPEAL, THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF R S. 10,32,000/- OUT OF TOTAL ADDITION OF RS. 14,32,000/ - AS MADE BY THE ASSESSING OFFICER. 4. THAT THE LD. CIT(A) HAS FAILED TO CONSIDER THE D OCUMENTARY EVIDENCES WITH REGARD TO AVAILABILITY OF FUNDS AND IGNORING THE DOCUMENTARY EVIDENCES. 5. THAT THE CONFIRMATION PART ADDITION IS AGAINST T HE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THAT THE DETAILED SUBMISSION AS FILED DURING THE COURSE OF PROCEEDING HAS NOT BEEN CONSIDERED PROPERLY. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOS ED OF. 4. THE ASSESSEE FURTHER CHALLENGED THE IMPUGNED OR DER BY RAISING AN ADDITIONAL GROUND THAT SINCE THE NOTICE U/S 148 OF THE ACT WAS NOT SERVED UPON THE ASSESSEE EITHER BY POST OR BY AFFIX TURE, THE PROCEEDINGS U/S 147 R/W SECTION 148 OF THE ACT IS VOID AB INITIO , THEREFORE, LIABLE TO BE QUASHED. 4 ITA NO. 193/CHD/2020- SMT. CHARANJIT KAUR , KURUKSHETRA 5. AT THE OUTSET, THE LD. COUNSEL SUBMITTED BEFORE US THAT SINCE, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS LEG AL IN NATURE AND NO FRESH ENQUIRY IS REQUIRED, THE SAME MAY BE ADMITTED AND THE ASSESSEE MAY BE ALLOWED TO ARGUE ON THE SAID GROUND AS WELL. THE LD. COUNSEL RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER PLANT CO. LTD. VS. CIT 229 ITR 383 TO SUBSTANTIATE HIS ARGUMENT. 6. ON THE OTHER HAND, THE LD. DR OPPOSED THE PRAYE R OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS RAISED THIS GROUND FOR THE FIRST TIME BEFORE THIS TRIBUNAL. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. AS PER THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER PLANT CO. LTD. VS. CIT (SUPRA) THE TRIBUNAL HAS POWER TO EXAMINE THE LEGAL ISSUE RAISED BEFORE IT BY ALLOWING THE APPLICATION FOR PERMISSIO N TO RAISE ADDITIONAL GROUND. ADMITTEDLY, IN THE PRESENT CASE THE GROUND RAISED BY THE ASSESSEE IS LEGAL GROUND WHICH DOES NOT REQU IRE ANY FURTHER INQUIRY TO DETERMINE THE SAME. HENCE, IN THE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE AFORESAID CASE AND IN OTHER CASES, WE ADMIT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE 5 ITA NO. 193/CHD/2020- SMT. CHARANJIT KAUR , KURUKSHETRA AND ALLOWED THE LD. COUNSEL TO ARGUE THE APPEAL ON THE ADDITIONAL GROUND AS WELL RAISED DURING PENDENCY OF THIS APPEA L. 8. THE LD. COUNSEL CONTENDED THAT SINCE NOTICE U/S 148 WAS NOT SERVED UPON THE ASSESSEE, THE PROCEEDINGS INITIATED 147 R.W.S. 148 AND THE ASSESSMENT ORDER PASSED U/S 144 OF THE ACT IS VOID AB INITIO AND LIABLE TO BE QUASHED. THE LD. COUNSEL INVITED O UR ATTENTION TO PAGE 3 AND 4 OF THE PAPER BOOK PLACED ON RECORD, WH ICH ARE THE COPIES OF NOTICE ISSUED IN THE NAME OF THE ASSESSEE U/S 148 OF THE ACT AND THE PHOTOCOPY OF ENVELOP ON CONTAINING ENDORSEM ENT BY POSTAL AUTHORITY, TO DEMONSTRATE THAT THE NOTICE U/S 148 O F THE ACT WAS NOT SERVED UPON THE ASSESSEE EITHER BY POST OF BY AFFIX ING THE SAME AS PER THE PROVISIONS OF THE CPC. THE LD. COUNSEL RELI ED ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. CHETAN GUPTA [2015] 62TAXMANN.COM249(DELHI) AND THE DECISIONS OF THE VARIOUS BENCHES OF THE TRIBUNAL TO SUBSTANTIATE HIS CONTENTION. 9. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT SI NCE THE ASSESSEE HAD DELIBERATELY EVADED THE NOTICE ISSUED BY THE AO , THE ASSESSEE IS NOW ESTOPPED FROM TAKING THIS PLEA THAT NO NOTICE W AS SERVED. THE LD. DR FURTHER POINTED OUT THAT THIS ISSUE WAS NOT RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A). THE LD. DR ACCORDIN GLY SUBMITTED 6 ITA NO. 193/CHD/2020- SMT. CHARANJIT KAUR , KURUKSHETRA THAT THERE IS NO MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PART IES AND CAREFULLY PERUSED THE MATERIAL ON RECORD INCLUDING THE CASE L AW RELIED UPON BY THE LD. COUNSEL. THE EVIDENCE ON RECORD PRIMA FACIE SHOWS THAT NOTICE U/S 148 OF THE ACT WAS NOT SERVED UPON THE A SSESSEE. THE REVENUE IS NOT IN A POSITION TO REBUT THE CONTENTIO N OF THE ASSESSEE. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. CHETAN GUPTA (SUPRA) HAS HELD THAT IN ORDER TO INITIATE REASSESS MENT PROCEEDINGS, NOTICE U/S 148 OF THE ACT HAS TO BE SERVED MANDATOR ILY SERVED UPON ASSESSEE IN ACCORDANCE WITH SECTION 282(1) OF THE A CT READ WITH ORDER V, RULE 12 AND ORDER III RULE 6 OF THE CIVIL PROCEDURE CODE. HENCE, IN OUR CONSIDERED VIEW, THE REASSESSMENT PRO CEEDINGS INITIATED BY THE AO IN THIS CASE IS CONTRARY TO THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI AND DECISIONS OF THE VA RIOUS BENCHES OF THE TRIBUNAL, RELIED UPON BY THE LD. COUNSEL FOR TH E ASSESSEE, THEREFORE LIABLE TO BE QUASHED. 11. THE ASSESSEE HAS FURTHER CHALLENGED THE ACTION OF THE LD. CIT(A) BY RAISING ANOTHER LEGAL GROUND THAT THE LD. CIT(A) HAS EARED IN CONFIRMING THE ACTION OF AO IN INITIATING REASSE SSMENT PROCEEDINGS ON THE BASIS OF APPROVAL GRANTED BY THE PRINCIPAL 7 ITA NO. 193/CHD/2020- SMT. CHARANJIT KAUR , KURUKSHETRA COMMISSIONER OF INCOME TAX (PR. CIT) IN A MECHANICA L MANNER. THE LD. COUNSEL SUBMITTED BEFORE US THAT IN THIS CASE T HERE WAS NO APPLICATION OF MIND BY THE AO TO COME TO THE CONCLU SION THAT THE INCOME OF THE ASSESSEE HAS ESCAPED, DESPITE THIS TH E LD. PR. CIT APPROVED THE PROPOSAL FOR ISSUING NOTICE U/S 148 OF THE ACT IN A MECHANICAL MANNER THE LD. COUNSEL FURTHER INVITED O UR ATTENTION TO PAGE 1 AND 2 OF THE PAPER BOOK CONTAINING COPY OF R EASONS RECORDED FOR REASSESSMENT AND THE PERMISSION ACCORDED BY THE COMPETENT AUTHORITY TO DEMONSTRATE LACK OF APPLICATION BY THE AUTHORITIES CONCERNED. THE LD. COUNSEL PLACING RELIANCE ON THE JUDGMENT OF THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. S. GOYANKA LIME & CHEMICALS LTD. [2015] 56 TAXMANN.COM 390(MP) WHEREIN THE HONBLE COURT HAS DECLARED THE REOPENIN G INVALID ON THE GROUND THAT THE COMPETENT AUTHORITY HAS ACCORDED SA NCTION FOR ISSUING NOTICE U/S 148 IN A MECHANICAL MANNER WITHO UT APPLICATION OF MIND. THE LD. COUNSEL FURTHER RELIED ON THE DECISIO N OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF BIR BAHADUR SINGH SIJWALI VS. ITA [2015] 53 TAXMANN.COM 366(DELHI-TRIB.) TO JUSTIFY HIS ARGUMENTS THAT THE PROCEEDINGS U/S 147 R.W.S.148 OF THE ACT B Y AO WITHOUT APPLICATION OF MIND IS NOT SUSTAINABLE IN LAW. 8 ITA NO. 193/CHD/2020- SMT. CHARANJIT KAUR , KURUKSHETRA 12. ON THE OTHER HAND, THE LD. DR SUPPORTING THE O RDER PASSED BY THE LD. CIT(A) SUBMITTED THAT THERE IS NO INFIRMITY IN THE REASONS RECORDED BY THE AO AND THE SANCTION ACCORDED BY THE COMPETENT AUTHORITY. THE LD. DR FURTHER SUBMITTED THAT THE CO MPETENT AUTHORITY HAS APPROVED THE PROPOSAL AFTER GOING THROUGH THE P ROPOSAL OF THE AO IN THE LIGHT OF THE FACTS OF THE CASE. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PAR TIES AND PERUSED THE MATERIAL ON RECORD. THE GRIEVANCE OF THE ASSESS EE IS THAT THE AO HAD SENT PROPOSAL FOR ISSUING NOTICE U/S 148 OF THE ACT WITHOUT APPLICATION OF MIND AND WITHOUT RECORDING SATISFACT ION THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND T HE LD. PR. CIT ACCORDED THE SANCTION THEREON WITHOUT RECORDING HIS SATISFACTION. WE NOTICE THAT THE AO HAS ONLY RECORDED IN THE REASONS THAT DURING THE PREVIOUS YEAR, ASSESSEE DEPOSITED CASH AMOUNTING TO RS.14,32,000/- IN HER BANK ACCOUNT, WHICH HAS ESCAPED ASSESSMENT. WE FURTHER NOTICE THAT THE LD. PR. CIT ACCORDED PERMISSION BY WRITING AS YES, SATISFIED, IT IS A FIT CASE FOR ISSUE OF NOTICE U/S 148. 14. AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSES SEE, THE HONBLE MADHYA PRADESH HIGH COURT HAS HELD IN THE CASE OF CIT VS. S. GOYANKA LIME & CHEMICALS LTD. (SUPRA) THAT WHERE JOINT 9 ITA NO. 193/CHD/2020- SMT. CHARANJIT KAUR , KURUKSHETRA COMMISSIONER RECORDED SATISFACTION IN MECHANICAL MA NNER AND WITHOUT APPLICATION OF MIND TO ACCORD SANCTION FOR ISSUING NOTICE U/S 148 OF THE ACT, THE REOPENING OF THE ASSESSMENT WAS INVALID. THE OBSERVATIONS OF THE HONBLE COURT ARE AS UNDER: 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND WE FIND THAT WHILE ACCORDING SANCTION, THE JOINT COMMISSIONER, INCOME TAX ONLY RECORDED SO YES, I AM SATISFIED WHICH INDICATES AS IF HE WAS TO SIGN ONLY ON THE DOTTED LINE. EVEN OTHERWISE ALSO, THE EXERCI SE IS SHOWN TO HAVE BEEN PERFORMED IN LESS THAN 24 HOU RS OF TIME WHICH ALSO GOES TO INDICATE THAT THE COMMISSIONER DID NOT APPLY HIS MIND AT ALL WHILE GRANTING SANCTION. THE SATISFACTION HAS TO BE WITH OBJECTIVITY ON OBJECTIVE MATERIAL. 8. IF THE CASE IN HAND IS ANALYSED ON THE BASIS OF THE AFORESAID PRINCIPLE, THE MECHANICAL WAY OF RECORDIN G SATISFACTION BY THE JOINT COMMISSIONER, WHICH ACCOR DS SANCTION FOR ISSUING NOTICE UNDER 148, IS CLEARLY UNSUSTAINABLE AND WE FIND THAT ON SUCH CONSIDERATIO N BOTH THE APPELLATE AUTHORITIES HAVE INTERFERED INTO THE MATTER. IN DOING SO, NO ERROR HAS BEEN COMMITTED WARRANTING RECONSIDERATION. 15. IN THE PRESENT CASE, THE PR. CIT HAS RECORDED H IS SATISFACTION BY WRITING YES, SATISFIED, IT IS A FIT CASE FOR ISSUE NOTICE U /S 148 ON THE FORMAT. IN OUR CONSIDERED VIEW, THE SATISFACTION RE CORDED IN THE PRESENT CASE IS SIMILAR TO THE SATISFACTION RECORDE D IN THE CASE DISCUSSED ABOVE. 10 ITA NO. 193/CHD/2020- SMT. CHARANJIT KAUR , KURUKSHETRA 16. SO FAR AS, THE APPLICATION OF MIND BY AO IS CON CERNED, THE REASONS RECORDED BY AO FOR REOPENING OF THE CASE PRIMA FACIE INDICATE THAT HE HAS NOT APPLIED HIS MIND AND PROCE EDED ON ASSUMPTION THAT THE BANK DEPOSIT CONSTITUTES UNEXPL AINED INCOME OF THE ASSESSEE. AS POINTED OUT BY THE LD. COUNSEL, TH E DELHI BENCH OF THE ITAT IN THE CASE OF BIR BAHADUR SINGH SIJWALI VS. ITA (SUPRA) HAS SET ASIDE THE ACTION OF AO IN REOPENING THE CAS E OF THE ASSESSEE INITIATED ON FALLACIOUS ASSUMPTION THAT BANK DEPOSI TS CONSTITUTE UNDISCLOSED INCOME OF THE ASSESSEE, OVERLOOKING THE FACT THAT SOURCE OF DEPOSIT NEED NOT NECESSARILY BE INCOME OF THE AS SESSEE. WE FURTHER NOTICE THAT IN THE PRESENT CASE, THE LD. PR. CIT HA S ACCORDED SANCTION FOR ISSUING NOTICE U/S 148 OF THE ACT, WITHOUT ENSU RING THAT THE AO HAS RECORDED THE REASONS AFTER DUE APPLICATION OF M IND. 17. HENCE, IN OUR CONSIDERED VIEW, THE LD. CIT(A) H AS SUSTAINED THE ADDITION IN QUESTION IGNORING THAT THE IMPUGNED ORDER SUFFERS FROM THE LEGAL INFIRMITIES DISCUSSED IN THE FORGOIN G PARAS. IN THE LIGHT OF THE FACTS OF THE CASE AND THE CASES RELIED UPON BY THE LD. COUNSEL, WE ARE OF THE OPINION THAT THE IMPUGNED OR DER IS NOT SUSTAINABLE IN LAW AS THE LD. CIT(A) HAS PASSED THE IMPUGNED ORDER IGNORING THE RATIO LAID DOWN BY THE HONBLE HIGH CO URT OF DELHI AND 11 ITA NO. 193/CHD/2020- SMT. CHARANJIT KAUR , KURUKSHETRA MADHYA PRADESH AND ALSO THE DECISION OF THE DELHI B ENCH OF THE TRIBUNAL DISCUSSED ABOVE. WE ACCORDINGLY ALLOW THE LEGAL GROUNDS RAISED BY THE ASSESSEE AND SET ASIDE THE IMPUGNED O RDER PASSED BY THE. LD. CIT(A). 18. SINCE WE HAVE ALLOWED THE APPEAL OF THE ASSESSE E, WE DO NOT CONSIDER IT NECESSARY TO ADJUDICATE THE OTHER GROUN DS OF APPEAL RAISED ON MERIT. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 15.03.2021. SD/- SD/- ( N.K. SAINI) (R.L.NEGI) / VICE PRESIDENT / JUDICIAL MEMBER DATED : 15.03.2021 . . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. / CIT 4. ( )/ THE CIT(A) 5. , , / DR, ITAT, CHANDIGARH 6. / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR