Smt. Jawinderwant Kaur Bains, Chandigarh V. ACIT, Chandigarh

ITA 194/CHANDI/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57704 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-02-2012
• Assessment Year: 1997-1998
• Appeal Filed On: 10-03-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: TEJ MOHAN SINGH
• Keywords: Revision of order; Opportunity of being heard; Principle of natural justice
• Section: 263; 63; 144; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.344/CHD/2003 (ASSESSMENT YEAR : 1997-98) SMT.JASWINDERWANT KAUR BAINS, VS. THE J.C.I.T., # 86, SECTOR 8-A,NOW RESIDENT OF SPECIAL RANGE I I, HOUSE NO.3068,SECTOR 21-D, CHANDIGARH. CHANDIGARH. ITA NO.194/CHD/2008 (ASSESSMENT YEAR : 1997-98) SMT.JASWINDERWANT KAUR BAINS, VS. THE A.C.I.T., # 3068, SECTOR 21-D, CIRCLE 3(1), CHANDIGARH. CHANDIGARH. AND ITA NOS.840 & 841/CHD/2009 (ASSESSMENT YEAR : 1997-98) SMT.JASWINDERWANT KAUR BAINS, VS. THE A.C.I.T., # 3068, SECTOR 21-D, CIRCLE 1(1), CHANDIGARH. CHANDIGARH. PAN: AINPB5712H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI N.K.SAINI, DR DATE OF HEARING : 27.02.2012 DATE OF PRONOUNCEMENT : 09.03.2012 O R D E R PER SUSHMA CHOWLA, J.M, : OUT OF THESE FOUR APPEALS FILED BY THE ASSESSEE, O NE APPEAL IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX PAS SED UNDER SECTION 263 OF THE INCOME TAX ACT AND THE BALANCE APPEALS A RE AGAINST THE DIFFERENT ORDERS OF CIT (APPEALS) PASSED AGAINST TH E ORDER UNDER SECTION 144 R./W.S.263 OF THE INCOME TAX ACT, 1961, PENALTY LEVIED U/S 271(1)(C) OF THE ACT AND ORDER OF RECTIFICATION UNDER SECTION 154 OF THE ACT. ALL THE ABOVESAID APPEALS RELATE TO ASSESSMENT YEAR 199 7-98. 2 2. ALL THESE FOUR APPEALS RELATING TO THE SAME ASSE SSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED OR FOR THE SAKE OF CONVENIENCE. 3. IN ITA NO.344/CHD/2003, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX-I, CHANDIGARH HAS ERRED BOTH ON FACTS AND LAW WHILE PASSING THE ORDER U/S 263 OF THE INCOME TAX ACT, 1961. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX-I, CHANDIGARH HAS ERRED IN NOT ALLOWING OPPORTUNITY OF BEING HEARD TO THE APPELLANT WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE HENCE VOID AND ILLEGAL. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX-I, CHANDIGARH HAS ERRED IN PASSING OF THE ORDER U/S 263 WITHOUT PROPER SERVICE OF NOTICE. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX-I, CHANDIGARH HAS ERRED IN BOTH IN FACTS & IN LAW BY SETTING ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER U/S 144. 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX-I, HAS ERRED BY CONSIDERING THE RECORDS RELATING TO OTHER ASSESSMENT YEAR FOR SETTING ASIDE THE ORDERS OF LEARNED ASSESSING OFFICER TREATING THEM AS RECORDS FOR THE CONCERNED ASSESSMENT YEAR. 6. THAT THE LEARNED COMMISSIONER OF INCOME TAX-I, HAS ERRED BY TREATING THE CAPITAL APPRECIATION BY SALE OF AGRICULTURAL LAND, AS INTEREST ON DEPOSITS. 7. THAT THE LEARNED COMMISSIONER OF INCOME TAX-I, HAS ERRED IN RELYING ON THE ASSESSMENT ORDER IN RELATION TO ASSESSMENT YEAR 1998-99, WHICH IS ITSELF BASED ON WRONG GROUNDS & MADE WITHOUT APPRECIATING THE FACTS OF THE CASE, AGAINST WHICH THE ASSESSEE HAS GONE IN APPEAL. 4. THE LEARNED A.R. FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS IDENTICAL TO THE ISSUE RAISED IN THE CASE OF HUSBAND OF THE ASSESSEE SHRI HARMAIL SINGH BAINS VS. JCIT IN ITA NO.345/CHANDI/2003 (ORDER DATED 30.3.2005). 3 5. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX UNDER SECT ION 263 OF THE ACT AND DIFFERENT ORDERS OF CIT (APPEALS).. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE COMMISSIONER OF INCOME TAX WHILE EXERCISING THE JUR ISDICTION UNDER SECTION 263 OF THE ACT NOTED THAT THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 144 OF THE ACT WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON ACCOUNT OF NON-INCLUSION OF INTEREST OF TWO DEPOSITS OF RS.50 LACS EACH FOR THE PERIOD 26.7.199 6 TO 31.3.1997 IN THE INCOME OF THE ASSESSEE FOR THE FINANCIAL YEAR RELEV ANT TO THE ASSESSMENT YEAR 1997-98. FURTHER THE SOURCE OF INVESTMENT OF RS.1 CRORE MADE BY THE ASSESSEE WITH M.S GOLDENT FOREST INDIA LTD. ON 26.7.1996 ALSO NEEDED VERIFICATION. IN VIEW THEREOF, THE ORDER OF THE ASSESSING OFFICER WAS SET ASIDE AND THE ASSESSING OFFICER WAS DIRECTE D TO PASS A FRESH ASSESSMENT ORDER AFTER CONDUCTING PROPER ENQUIRIES AND INVESTIGATIONS. WE FIND FROM THE PERUSAL OF THE ORDER OF THE TRIBUN AL IN THE CASE OF THE HUSBAND OF THE ASSESSEE SHRI HARMAIL SINGH BAINS, W HICH WAS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX PASSED UNDER SE CTION 263 OF THE ACT, THE POWER WAS EXERCISED BY THE COMMISSIONER OF INCOME TAX ON ACCOUNT OF SIMILAR DEPOSITS WITH M/S GOLDEN FOREST INDIA LTD. AND THE INTEREST ACCRUING THEREON FOR THE FINANCIAL YEAR 19 96-97. THE TRIBUNAL VIDE PARA 4 NOTED THE FACTS IN THE CASE OF SHRI HAR MAIL SINGH BAINS (SUPRA) AS UNDER: 4. ON EXAMINATION OF INCOME-TAX RECORD, IT WAS NOTI CED BY THE CIT THAT THE ORDER PASSED U./S 144 BY THE AO WAS ERRONE OUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263 AND NOTED THE FOLLOWING DISCREPANCIES O N THE BASIS OF MATERIAL AVAILABLE ON RECORD: A) THE ASSESSEE HAS RECEIVED RS. 2574000/- ON 26.4.1997 ON ACCOUNT OF MATURITY PAYMENT WITH REGAR D TO INVESTMENT OF RS. 22000000/- MADE WITH M/S GOLDEN FOREST INDIA LTD (GFIL) JOINTLY WITH MRS. JASWINDER WANT KAUR BAINS. OUT OF THIS, RS. 12000000/- WAS INVES TED BY 4 THE ASSESSEE ON WHICH INTEREST OF RS. 2040000/- WAS RECEIVED BY THE ASSESSEE FOR THE PERIOD FROM 26.7.1 996 TO 26.7.1997. INTEREST OF RS. 680000/- RELATING TO PE RIOD FROM 1.4.1997 TO 31.7.1997 WAS TAXED BY THE AO IN ASSESSMENT ORDER FOR AY 98-99. HOWEVER, SIMILAR ADDITION WAS NOT MADE FOR THE INTEREST INCOME EARNE D FOR THE PERIOD PRIOR TO THIS, I.E. 26.7.1996 TO 31.3.19 97 WHICH COMES TO RS. 136000/-. THE CIT WAS OF THE VIEW THA T THE SAME WAS REQUIRED TO BE ADDED BACK IN THE ASSESSEE S INCOME. B) THE SOURCE OF INVESTMENT OF RS. 12000000/- MADE BY THE ASSESSEE WITH GFIL ON 26.7.1996 ALSO NEEDED VERIFICATION. BASED ON ABOVE TWO DISCREPANCIES IN THE ORDER FRAME D BY THE AO, THE CIT ISSUED SHOW CAUSE NOTICE U/S 263 DATED 21.3 .2003 TO THE ASSESSEE FIXING THE CASE F OR 26.3.2003. 7. THE TRIBUNAL FURTHER ON CONSIDERATION OF THE ISS UE RAISED BEFORE IT HELD AS UNDER: 7.6 COMING TO THE LAST LEGAL ASPECT RAISED BY THE ASSESSEE IN DROPPING RE-ASSESSMENT PROCEEDINGS ON 7.11.2000 OBS ERVING THAT THE REASONS FOR REOPENING ONLY ARISE DURING NEXT FI NANCIAL YEAR 98-99 WHILE MAKING ENTRY IN THE ORDER SHEET, THE SA ME HAS BEEN TAKEN INTO CONSIDERATION WHILE DEALING WITH THE GRO UND OF THE ASSESSEE ON MERITS. 7.7 COMING TO THE MERITS OF THE APPEAL, WE FIND THA T SO FAR AS INVESTMENT PART BY THE ASSESSEE WITH GFIL IS CONCER NED, IT WAS WELL EXPLAINABLE AS THE ASSESSEE HAD SOLD HIS LAND TO GFIL ON 26.1.1996 WHICH WAS CONVERTED INTO FDR BY THE PURCH ASER AS SUCH INFORMATION HAD DULY BEEN CONVEYED TO THE ACIT DURING ASSESSMENT PROCEEDINGS FOR AY 96-97 AS EVIDENT FROM PAGE 7 OF THE PAPER BOOK FILED BY THE ASSESSEE. 7.8 SO FAR AS INTEREST AMOUNT OF SUCH INVESTMENT IS CONCERNED, THE SAME WAS ALSO NOT TAXABLE IN THE HANDS OF THE ASSES SEE DURING THE YEAR AND WAS TAXABLE ONLY IN SUBSEQUENT YEAR AS OBS ERVED BY THE AO. 7.9 WE ALSO FIND THAT THE ABOVE INFORMATION REGARDI NG INVESTMENT AND INTEREST THEREON WAS DULY CONVEYED TO JCIT WHIL E COMPLETING THE ASSESSMENT AND SINCE INVESTMENT WAS DULY EXPLAI NED AND INTEREST INCOME WAS TAXABLE ONLY IN SUBSEQUENT YEAR AND THEREFORE THERE WAS NO HARM OR LOSS TO THE REVENUE IN THIS YEAR AND ORDER PASSED BY THE AO COULD NOT BE HELD AS PRE JUDICIAL TO THE INTERESTS OF THE REVENUE CALLING FOR ASSUMPTION OF JURISDICTION BY CIT U/S 263. PROVISIONS U/S 263 ONLY EMPOWERS T HE CIT TO CALL AND REEXAMINE THE RECORD OF ORDER OF THE AO FO R VERIFYING THE FACT AS TO WHETHER SUCH ORDER IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE OR NOT. SINCE IN THE PRESENT CASE, THE ORD ER OF THE AO WAS NOT PREJUDICIAL TO THE INTERESTS OF THE REVENUE , IN OUR CONSIDERED OPINION, THE CIT WAS NOT JUSTIFIED IN EX ERCISING HIS REVISIONARY POWERS U/S 263. WE, THEREFORE, SET ASI DE THE ORDER OF THE CIT FRAMED U/S 263. 5 8. BEFORE PARTING WITH THE MATTER, WE MAY OBSERVE T HAT HE CIT WHILE ASSUMING JURISDICTION U/S 263 INITIATED PROCEEDINGS ON 21.3.2003, FIXING THE HEARING FOR 26.3.2003 AND COMPLETED THE SAME ON 27.3.2003, THEREBY COMPLETING THE PROCEEDINGS U/S 2 63 WITHIN A PERIOD OF SEVEN DAYS, WHICH IS AGAINST THE PRINCIPL ES OF NATURAL JUSTICE AS THE ESSENCE OF NATURAL JUSTICE IS DOING JUSTICE. IN THE PRESENT CASE, SINCE THE ASSESSEE WAS A NRI RESIDING IN TANZANIA, THE CIT WAS NOT JUSTIFIED IN COMPLETING SUCH PROCEE DINGS U/S 263 WITHIN SEVEN DAYS WITHOUT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE, WHICH ALSO STRENGTHENS OUR VIEW WHILE QUAS HING THE PROCEEDINGS FRAMED BY THE CIT U/S 263. 8.1 WE, THEREFORE, KEEPING IN VIEW OUR ABOVE DISCUS SION AND CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE PRES ENT CASE, SET ASIDE THE ORDER FRAMED BY THE CIT U/S 263 AND ACCEP T THE GROUNDS RAISED BY THE ASSESSEE IN APPEAL. 8. FROM THE PERUSAL OF THE ORDER OF THE TRIBUNAL (S UPRA) WE FIND THAT THE ASSESSEE ALONGWITH HER HUSBAND HAD MADE A JOINT DEPOSIT WITH GOLDEN FOREST INDIA LTD WHICH FACT WAS NOTED BY THE TRIBUN AL VIDE PARA 4 (A) OF ITS ORDER, WHICH IS REPRODUCED BY US IN THE PARA HE REINABOVE. THE ISSUE RAISED IN THE PRESENT APPEAL IS IDENTICAL TO THE IS SUE BEFORE THE TRIBUNAL IN THE CASE OF HUSBAND OF THE ASSESSEE SHRI HARMAIL SINGH BAINS WHERE THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX UNDER SECTION 263 OF THE ACT WAS SET ASIDE BY HOLDING THAT THERE WAS NO JUSTIFICATION IN EXERCISE OF REVISIONARY POWER UNDER SECTION 263 OF THE ACT. THE FACTS OF THE PRESENT CASE BEING IDENTICAL TO THE FACTS BEFOR E THE TRIBUNAL IN THE CASE OF SHRI HARMAIL SINGH BAINS, HUSBAND OF THE AS SESSEE, FOLLOWING THE PARITY OF REASONING ADVANCED BY THE TRIBUNAL VIDE O RDER DATED 30.3.2005, WE SET ASIDE THE ORDER PASSED BY THE COMMISSIONER O F INCOME TAX UNDER SECTION 263 OF THE ACT HOLDING THAT THERE WAS NO JU STIFICATION IN EXERCISE OF THE REVISIONARY POWER UNDER SECTION 263 OF THE A CT, IN VIEW OF THE OBSERVATION OF THE TRIBUNAL (SUPRA) VIDE PARAS 7.6 TO 8.1 OF ORDER DATED 30.3.2005. THE GROUNDS OF APPEAL RAISED BY THE ASS ESSEE ARE THUS ALLOWED. 6 9. THE APPEAL VIDE ITA NO.840/CHD/2009 IS AGAINST T HE ORDER OF CIT (APPEALS) UPHOLDING THE ORDER OF THE ASSESSING OFFI CER PASSED UNDER SECTION 144/263 OF THE ACT. THE ASSESSING OFFICER IN COMPLIANCE TO THE DIRECTIONS OF THE COMMISSIONER OF INCOME TAX UNDER SECTION 263 OF THE ACT VIDE ORDER DATED 27.2.2004 HAD MADE CERTAIN ADD ITIONS, WHICH WERE UPHELD BY THE CIT (APPEALS) AND THE ASSESSEE IS IN APPEAL AGAINST THE SAME. THE BASIS FOR MAKING THE AFORESAID ADDITIONS WAS THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX UNDER SECTION 263 OF THE ACT. WHILE DECIDING THE APPEAL IN ITA NO.344/CHD/2003 IN PARAS ABOVE WE HAVE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME TAX P ASSED UNDER SECTION 263 OF THE ACT AND CONSEQUENTLY THE PRESENT ASSESSM ENT FRAMED PURSUANT TO THE DIRECTIONS OF THE COMMISSIONER OF INCOME TAX UNDER SECTION 263 OF THE ACT DO NOT STAND. WE STRIKE DOWN THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 144 R.W.S. 263 OF T HE ACT DATED 27.2.2004. THE GROUNDS OF APPEAL RAISED BY THE ASS ESSEE ARE ALLOWED. 10. THE APPEAL IN ITA NO.841/CHD/2009 IS AGAINST TH E PENALTY LEVIED U/S 271(1)(C) OF THE ACT VIDE ORDER DATED 31.8.2004 , WHICH IN TURN IS PURSUANT TO THE FRESH ASSESSMENT FRAMED UNDER SECTI ON 144 R.W.S. 263 OF THE ACT. IN VIEW OF OUR STRIKING DOWN THE ORDER OF ASSESSMENT FRAMED UNDER SECTION 144 R.W.S.263 OF THE ACT, THERE IS NO MERIT IN THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AS THE VERY BASIS ON WHICH THE SAID PENALTY WAS LEVIED HAS BEEN CANCELLED. IN VIEW THE REOF, WE DELETE THE PENALTY LEVIED U/S 271(1)(C). THE GROUNDS OF APPEA L RAISED BY THE ASSESSEE ARE THUS ALLOWED. 11. THE APPEAL IN ITA NO.194/CHD/2008 FILED BY THE ASSESSEE IS AGAINST THE ORDER UNDER SECTION 154 OF THE INCOME T AX ACT. PURSUANT TO THE ORDER PASSED UNDER SECTION 144 R.W.S. 263 OF TH E ACT, THE ASSESSEE MOVED AN APPLICATION FOR RECTIFICATION UNDER SECTIO N 154 OF THE ACT 7 WHICH WAS REJECTED AND CONSEQUENT THERETO THE ORDER OF THE ASSESSING OFFICER WAS UPHELD BY THE CIT (APPEALS). THE ASSES SEE IS IN APPEAL AGAINST THE AFORESAID ORDER REJECTING HIS APPLICATI ON UNDER SECTION 154 OF THE ACT. IN VIEW OF OUR ANNULLING THE ASSESSMENT F RAMED UNDER SECTION 144 R.W.S.263 OF THE ACT THERE IS NO MERIT IN THE O RDER PASSED UNDER SECTION 154 OF THE ACT. THE SAME IS CANCELLED. 12. IN THE RESULT, ALL THE FOUR APPEALS FILED BY TH E ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH DAY OF MARCH, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 9 TH MARCH, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH