Dr. Neeraja Sharma, Patna V. ACIT, Circle-1, , Patna

ITA 203/PAT/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1414 (ITAT-PATNA)
• Duration Of Justice: 2 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 1998-1999
• Appeal Filed On: 20-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SUDHIR KUMAR NARAYAN
• Keywords: Unexplained investment; Reassessment proceedings; Set aside
• Section: 69; 148; 2

Judgement Text

1 ITA NO. 203/PAT/2018 DR. NEERAJA SHARMA, AY 1998-99 IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, VIRTUAL HEARING AT KOLKATA ( ) . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 203/PAT/2018 ASSESSMENT YEAR:1998-99 DR. NEERAJA SHARMA (PAN: AMRPS5713R) VS. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, PATNA APPELLANT RESPONDENT DATE OF HEARING 10.12.2020 DATE OF PRONOUNCEMENT 16.12.2020 FOR THE APPELLANT SHRI SUDHIR KUMAR NARAYAN, AR FOR THE RESPONDENT SHRI AJAY KUMAR, DR ORDER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-1, PATNA DATED 05-06-2018 FOR ASSESSMENT YEAR 1998-99. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SHRI SUDHIR KUMAR NARAYAN HAS RAISED A LEGAL ISSUE THAT THE AO HAD ISSUED NOTICE U/S. 148 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AFTER APPROVAL OF THE COMMISSIONER OF INCOME-TAX (CIT) IN THE YEAR 2004 WHICH WAS LATER WITHDRAWN BY THE AO AND LATER HAVE ISSUED A FRESH NOTICE U/S. 148 OF THE ACT IN THE YEAR 2005 AFTER GETTING APPROVAL OF THE ADDITIONAL COMMISSIONER OF INCOME-TAX WHICH ACCORDING TO LD. AR IS ERRONEOUS, SINCE IN THIS ASSESSMENT YEAR AS PER THE LAW IN FORCE IT WAS THE JOINT COMMISSIONER WHO WAS EMPOWERED TO GIVE APPROVAL FOR REOPENING U/S. 148 OF THE ACT. SINCE ADMITTEDLY, THE AO HAD TAKEN THE APPROVAL FROM ADDITIONAL COMMISSIONER OF INCOME-TAX AND NOT FROM JOINT COMMISSIONER OF INCOME-TAX, THE NOTICE U/S. 148 OF THE ACT ISSUED BY THE AO IS BAD IN LAW AND, THEREFORE, THE ASSESSMENT FRAMED IS NULL IN THE EYES OF LAW AND SO IT MAY BE QUASHED. 3. PER CONTRA, THE LD. DR SHRI AJAY KUMAR DREW OUR ATTENTION TO SUB-CLAUSE 28(C) OF SECTION 2 OF THE ACT WHICH IS A DEFINITION CLAUSE WHICH READS AS UNDER: 2 ITA NO. 203/PAT/2018 DR. NEERAJA SHARMA, AY 1998-99 JOINT COMMISSIONER MEANS A PERSON APPOINTED TO BE A JOINT COMMISSIONER OF INCOME-TAX OR AN ADDITIONAL COMMISSIONER OF INCOME-TAX UNDER SUB-SECTION (1) OF SECTION 117. 4. JOINT COMMISSIONER MEANS A PERSON APPOINTED TO BE A JOINT COMMISSIONER OF INCOME-TAX OR AN ADDITIONAL COMMISSIONER OF INCOME-TAX UNDER SUB-SECTION (1) OF SECTION 117 OF THE ACT, WHICH READS AS UNDER: APPOINTMENT OF INCOME-TAX AUTHORITIES. 117(1) THE CENTRAL GOVERNMENT MAY APPOINT SUCH PERSONS AS IT THINKS FIT TO BE INCOME-TAX AUTHORITIES. 5. ACCORDING TO LD. DR SHRI AJAY KUMAR A PERUSAL OF THE AFORESAID DEFINITION WILL REVEAL THAT A JOINT COMMISSIONER IS A PERSON APPOINTED TO BE JOINT COMMISSIONER OF INCOME- TAX OR AN ADDITIONAL COMMISSIONER OF INCOME-TAX. THEREFORE ACCORDING TO HIM, WHEN THE CENTRAL GOVERNMENT APPOINTS A PERSON AS A JOINT COMMISSIONER IT WOULD ALSO MEAN AN ADDITIONAL COMMISSIONER FOR THE PURPOSE OF THIS ACT. 6. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS STATED BY THE LD. AR IS NOT CONTROVERTED BY THE LD. DR, BUT HE CONTESTS THE LEGAL ISSUE AS CONTENTED ABOVE. THE ONLY LEGAL ISSUE IS WHETHER THE APPROVAL GRANTED BY THE ADDITIONAL COMMISSIONER IS BAD IN LAW WHEN SUB-SECTION (2) OF SECTION 151 OF THE ACT SPECIFIES AS UNDER: SANCTION FOR ISSUE OF NOTICE. 1.. 2. IN A CASE OTHER THAN A CASE FALLING UNDER SUB-SECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF (JOINT) COMMISSIONER, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE (JOINT) COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. 7. SO, ACCORDING TO LD. AR SINCE IN THIS CASE JOINT COMMISSIONER DID NOT APPROVE THE REASONS FOR REOPENING, THE NOTICE U/S. 148 OF THE ACT IS BAD IN LAW. I DO NOT AGREE WITH THE SAID CONTENTION OF THE LD. AR BECAUSE AS PER CLAUSE 28(C) OF SECTION 2 OF THE ACT WHICH DEFINES THE JOINT COMMISSIONER MEANS ALSO THE PERSON APPOINTED AS ADDITIONAL COMMISSIONER FOR THE PURPOSE OF THIS ACT. THEREFORE, SINCE THE AO HAS ISSUED THE NOTICE U/S. 148 OF THE ACT AFTER GETTING APPROVAL OF THE ADDITIONAL COMMISSIONER WHICH THE STATUTE RECOGNIZES AS ALSO THE JOINT COMMISSIONER BY VIRTUE OF SECTION 2(28C) OF THE ACT, THE 3 ITA NO. 203/PAT/2018 DR. NEERAJA SHARMA, AY 1998-99 ISSUANCE OF NOTICE BY AO CANNOT BE HELD AS BAD. SO, THE LEGAL ISSUE RAISED BY THE ASSESSEE IS DISMISSED. 8. COMING TO THE MERITS OF THE MATTER. THE GROUND NO. 1 IS AGAINST THE ACTION OF THE LD.CIT(A) IN SUSTAINING THE ADDITION OF RS.1,98,847/- MADE BY THE AO U/S. 69 OF THE ACT. 9. BRIEF FACTS OF THE CASE AS NOTED BY THE AO ARE AS UNDER: UNEXPLAINED OPENING CAPITAL IN COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED BALANCE SHEET FOR YEAR CONSIDERATION. FROM BALANCE SHEET IT HAS TRANSPIRED THAT THE ASSESSEE HAS SHOWN OPENING CAPITAL (BALANCE) OF RS.2,05,000/-. THE AR STATED THAT THE OPENING BALANCE REPRESENTS INVESTMENTS MADE BY THE ASSESSEE IN EARLIER YEARS. HOWEVER, THE AR DID NOT FURNISH ANY SUCH DETAILS OF INVESTMENTS MADE IN EARLIER YEAR EXCEPT BANK ACCOUNT. NO RETURN HAD BEEN FILED FOR ANY EARLIER YEAR TO SUBSTANTIATE THE OPENING CAPITAL. FROM PERUSAL OF BANK ACCOUNT IT HAS TRANSPIRED THAT THE BALANCE AS ON 7.4.1997 IS RS.6153/-. HENCE, AS THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE QUANTUM OF THE OPENING CAPITAL, HENCE OUT OF OPENING CAPITAL, A SUM OF RS.2,05,000-6155 IS ADDED BACK AS UNEXPLAINED OPENING CAPITAL U/S. 69 OF THE ACT. 10. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO HAS SUSTAINED THE ADDITION BY OBSERVING AS UNDER: 3.1 IN THE COURSE OF THE APPELLATE PROCEEDINGS OF THE CASE, IT HAS BEEN CONTENDED BY THE APPELLANT THAT THE AO HAD ONLY A SEPARATE THE OPENING BANK BALANCE AND HAD NOT ACCEPTED THAT IVPS AND KVPS WHICH WERE PART OF THE OPENING BALANCES WAS PURCHASE IN THE YEAR 1995-96. THESE POST OFFICE INVESTMENTS GOT MUCH OWED IN THE ASSESSMENT YEAR 2002-03 AND THE INTEREST THEREON WAS SHOWN IN THAT YEAR, WHICH WAS ALSO ACCEPTED BY THE AO IN THE COURSE OF THE REASSESSMENT PROCEEDINGS UNDER SECTION 148 OF THE ACT FOR THAT YEAR. FURTHER, IT WAS ALSO CONTENDED BY THE APPELLANT THAT THERE WAS MEAGRE OPENING BALANCE OF RS.28,847/-WHICH WAS REASONABLE CONSIDERING THE FACT THAT THE APPELLANT WAS WORKING AS A JUNIOR WITH THE HEAD OF THE DEPARTMENT OF MEDICINE AT NMCH, PATNA AND ALSO SUPPORTED BY THE WITHDRAWAL FROM THE BANK ACCOUNT. BUT, NEITHER IN THE COURSE OF THE ASSESSMENT PROCEEDINGS OF THE CASE NOR IN THE COURSE OF THE APPELLATE PROCEEDINGS OF THE CASE, ANY EVIDENCE IN RESPECT OF SOURCES OF THE FUNDS INVESTED IN THE PURCHASE OF POST OFFICE INSTRUMENTS OR ALSO THE FACT THAT THE SAME WAS PURCHASED IN THE YEAR 1995-96 WAS BROUGHT ON RECORD. FURTHER, THE CONTENTION THAT OPENING CASH IN HAND BAD BEEN SUPPORTED BY THE WITHDRAWAL FROM THE BANK ACCOUNT OF THE APPELLANT IS ALSO WITHOUT ANY EVIDENCE. IN THIS SCENARIO, THE CONTENTION OF THE APPELLANT IS AT BEST SELF-SERVING STATEMENT WITHOUT ANY BASIS. ACCORDINGLY, I'M INCLINED TO CONFIRM THE ACTION OF AO IN BRINGING OF THE CHAPTER TO TAX IN THE HANDS OF THE APPELLANT AS UNEXPLAINED INVESTMENT IS BEING UPHELD AND THIS GROUND OF APPEAL IS, THEREFORE, DISMISSED. 11. AGGRIEVED, THE ASSESSEE IS BEFORE ME. 12. THE LD. AR SHRI SUDHIR KUMAR NARAYAN CONTENDED THAT THE ASSESSEE HAD SHOWN IN HER BALANCE SHEET AN OPENING CAPITAL BALANCE OF RS.2,05,000/-. THE AO HAS MADE THE ADDITION STATING THAT NO RETURNS HAVE BEEN FILED BY THE ASSESSEE FOR THE EARLIER YEARS TO SUBSTANTIATE THE OPENING CAPITAL AND THE AO AFTER TAKING NOTE OF THE BANK ACCOUNT NOTED THAT 4 ITA NO. 203/PAT/2018 DR. NEERAJA SHARMA, AY 1998-99 THE BALANCE AS ON 07.04.1997 WAS ONLY TO THE TUNE OF RS.6,153/-. THEREFORE, THE BALANCE OF THE AMOUNT I.E. RS.2,05,000/- - RS.6155/- = RS.1,98,847/- WAS ADDED U/S. 69 OF THE ACT AS UNEXPLAINED INVESTMENT AND THE LD. CIT(A) HAS CONFIRMED THE ADDITION. ACCORDING TO LD. AR, THE ASSESSEE HAD OPENING CAPITAL WHICH COULD BE SEEN FROM A PERUSAL OF THE PAPER BOOK PAGE 10 TO 12 WHICH SHOWS THAT THE ASSESSEE HAD MADE INVESTMENT IN INDIRA VIKAS PATRA TO THE TUNE OF RS.1,60,000/- IN THE YEAR 1995 AND THE ASSESSEE HAD ENCASHED THE SAME ON MATURITY IN THE YEAR 2001 WHICH WAS TO THE TUNE OF RS.2,80,000/-. THEREFORE, ACCORDING TO THE LD AR, THE AMOUNT OF RS.1,60,000/- SHOULD HAVE BEEN ACCEPTED AS EXPLAINED. ACCORDING TO THE LD, AR, IN THE REOPENING PROCEEDING OF THE ASSESSEE FOR THE AY 2002-03 THE AO HAS ACCEPTED THE RECEIPT (MATURED AMOUNT) FROM INDIRA VIKASH PATRA AMOUNT AND HAS TAXED THE INTEREST COMPONENT THEREON. THEREFORE ACCORDING TO LD. AR, NO ADDITION IN RESPECT OF RS.1,60,000/- SHOULD HAVE BEEN MADE. I FIND SUBSTANCE IN THE CONTENTION OF THE LD. AR OF THE ASSESSEE WHICH NECESSARILY REQUIRES VERIFICATION OF FACTS, THEREFORE, I SET ASIDE THIS ISSUE BACK TO THE FILE OF AO FOR VERIFICATION AS TO WHETHER THE ASSESSEES CONTENTION THAT SHE HAD INVESTED RS.1,60,000/- IN THE YEAR 1995 IN INDIRA VIKASH PATRA WHICH GOT MATURED ON 30.04.2001, 12,06.2001 AND 19.10.2001 AND THE INTEREST PORTION THEREOF HAS BEEN BROUGHT TO TAX IN AY 2002-03. IN CASE, IF THE ASSESSEE IS ABLE TO PROVE THIS FACT OF INVESTMENT IN INDIRA VIKASH PATRA IN THE YEAR 1995 THEN THE OPENING CAPITAL SHOWN IN THE BALANCE SHEET FOR THIS YEAR (AY 1998-99) TO THIS EXTENT SHOULD BE ACCEPTED AND ADDITION OF THIS AMOUNT CANNOT BE MADE IN THIS ASSESSMENT YEAR. THEREFORE, I REMAND THIS ISSUE BACK TO THE FILE OF AO FOR THE LIMITED PURPOSE OF VERIFICATION IN RESPECT OF RS.1,60,000/- AND THE REMAINING AMOUNT OF RS.28,847/- WHICH IS NOT PRESSED FOR THE SMALLNESS OF AMOUNT STANDS CONFIRMED. THEREFORE, THIS GROUND OF APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 13. GROUND NOS. 2 AND 3 IS IN RESPECT OF AN ADDITION OF RS.11,656/- OUT OF RS.1,25,000/- MADE U/S. 69 OF THE ACT. FOR THE SMALLNESS OF THE AMOUNT THE ASSESSEE HAS NOT PRESSED THE SAME AND SO, IT IS DISMISSED. 14. GROUND NO. 4 IS IN RESPECT OF ADDITION OF RS.35,000/- U/S. 69 OF THE ACT WHICH WAS ALSO NOT PRESSED DUE TO THE SMALLNESS OF THE AMOUNT AND SO IT IS ALSO DISMISSED. 5 ITA NO. 203/PAT/2018 DR. NEERAJA SHARMA, AY 1998-99 15. GROUND NO. 5 IS IN RESPECT OF ADDITION OF RS.1,50,000/- MADE BY THE AO AS UNEXPLAINED INVESTMENT IN FLAT IN THE NAME OF THE ASSESSEE. 16. BRIEF FACTS OF THE CASE AS NOTED BY THE AO ARE AS UNDER: 17. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO SUSTAINED THE SAME. AGGRIEVED, THE ASSESSEE IS BEFORE ME. 18. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS NOTED THAT THE AO HAS NOTED THAT THE ASSESSEE HAD PURCHASED A FLAT FOR RS.3,98,945/- WHICH INCLUDED A DEPOSIT OF RS.1,50,000/- MADE BY DRAFT BY THE MOTHER OF THE ASSESSEE TO THE BUILDER. IT IS NOTED THAT THE ASSESSEES CONSISTENT STAND WAS THAT RS.1,50,000/- HAS BEEN GIVEN BY HER MOTHER SMT. ASHA SHARMA DIRECTLY TO THE BUILDER IN THE FORM OF DRAFT. IN SUCH A SCENARIO, THE ASSESSEE HAS DISCHARGED HER BURDEN TO SHOW THE SOURCE OF RS.1,50,000/-. THEREAFTER, IF THE AO HAD ANY DOUBT ABOUT THE SOURCE OF THIS AMOUNT, THEN 6 ITA NO. 203/PAT/2018 DR. NEERAJA SHARMA, AY 1998-99 THE AO WAS AT LIBERTY TO PROCEED AGAINST SMT. ASHA SHARMA WHICH THE AO HAS NOT DONE. THEREFORE, SINCE THE ASSESSEE HAS DISCHARGED HER ONUS TO SHOW THE SOURCE OF RS.1,50,000/- NO ADDITION COULD HAVE BEEN LEGALLY MADE AGAINST THE ASSESSEE AS PER THE LAW IN FORCE IN AY 1998-99, THEREFORE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION, THEREFORE, I DIRECT THE DELETION OF ADDITION OF RS.1,50,000/-. THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED. 19. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 16TH DECEMBER, 2020. SD/- (ABY. T. VARKEY) JUDICIAL MEMBER DATED : 16TH DECEMBER, 2020 JD(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT DR. NEERAJA SHARMA, KAVI RAMAN PATH, BORING CANAL ROAD, PATNA-800 001. 2 RESPONDENT ACIT, CIRCLE-1, PATNA 3. 4. 5. CIT(A)-1, PATNA CIT, PATNA DR, ITAT, PATNA. / TRUE COPY, BY ORDER, SENIOR PVT. SECY/DDO.