Mahasubhalakshmi Kalyana Mandapam, CHENNAI V. ACIT, CHENNAI

ITA 215/CHNY/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6540 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 11-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAMASAMY
• Assessee Lawyers: G NARAYANASAMY
• Keywords: Assessment record
• Section: 143(3); 144

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL CHENNAI B BENCH, CHENNAI. BEFORE SHRI.U.B.S. BEDI J.M. & SHRI. N.S. SAINI A.M. I.T.A. NO S . 21 4 AND 21 5 / MDS/201 1 ASSESSMENT YEAR : 2005 - 06 MAHASUBHALAKSHMI KALYANA MANDAPAM, 41, RAZACK GARDEN ROAD, ARUMBAKKAM, CHENNA I 600 106. [PAN: AA FFM5392N ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE II(2), CHENNAI 600 034 . (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G. NARAYANASAMY REVENUE BY : SHRI K. RAMASAMY, STANDING COUNSEL ORDER PER U.B.S. BED I, J.M . TH E S E TWO APPEAL S OF THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER S PASSED BY THE LD. CIT(A) II, CHENNAI BOTH DATED 12.11.2010 WITH RESPECT TO CONFIRMATION OF THE ASSESSMENT FRAMED UNDER SECTION 144 AND OTHER IN REGARD TO CONFIRMATION OF P ENALTY IMPOSED UNDER SECTION 271(1)(B) FOR THE ASSESSMENT YEAR 2005 - 06 . 2. THESE APPEALS WERE HEARD TOGETHER, THEREFORE BEING DISPOSED OFF BY THIS SINGLE ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 214/MDS/2011 3. FACTS INDICATE THAT THE ASSESSEE HAS FILE D RETURN OF INCOME FOR THE YEAR 2005 - 06 DISCLOSING A TOTAL INCOME OF ` . 3,96,280/ - . DURING THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE PARTNERSHIP DEED AS THERE WAS A CHANGE IN THE CONSTITUTION OF THE FIRM. NO SUCH REVISED PARTNER SHIP DEED WAS STATED TO BE FURNISHED BEFORE THE ASSESSING OFFICER I.T.A. NO S . 21 4 & 215 /MDS/1 1 2 DESPITE SEVERAL REMINDERS, SO IN SCRUTINY PROCEEDINGS , THE ASSESSING OFFICER PASSED THE ASSESSMENT UNDER SECTION 144 BY ACCEPTING THE RETURNED INCOME OF ` .3,96,280/ - . 4. AGAINST SUCH ORDER OF THE ASSESSING OFFICER, THE ASSESSEE TOOK UP THE MATTER IN APPEAL AND SOUGHT RELIEF FOR TREATING THE ASSESSMENT ORDER UNDER SECTION 144 TO BE UNDER SECTION 143(3) AND IT WAS PLEADED BEFORE THE FIRST APPELLATE AUTHORITY THAT THERE WAS NO CHANGE IN THE CO NSTITUTION OF THE FIRM AND HENCE THE ASSESSEE COULD NOT FILE ANY REVISED PARTNERSHIP DEED. HE SUBMITTED THAT OTHERWISE THERE IS NO DEFAULT OF THE ASSESSEE IN COMPLYING WITH THE NOTICE ISSUED BY THE ASSESSING OFFICER, WHICH FACT WAS ALSO ACKNOWLEDGED IN THE ASSESSMENT ORDER BY THE ASSESSING OFFICER. SINCE THE ASSESSMENT SHOULD HAVE RIGHTLY BEEN PASSED UNDER SECTION 143(3) AND NOT UNDER SECTION 144 , THEREFORE, IT WAS PRAYED THAT THE ASSESSING OFFICER MAY BE DIRECTED THAT THE ASSESSMENT COMPLETED SHOULD BE TRE ATED AS HAV ING BEEN PASSED UNDER SECTION 143(3). 5. THE LD. CIT(A), WHILE CONSIDERING BUT NOT ACCEPTING THE PLEA OF THE ASSESSEE HAS CONCLUDED TO CONFIRM THE ORDER OF THE ASSESSING OFFICER AS PER PARA 6 OF HIS ORDER, WHICH READS AS UNDER: 6. I HAVE CON SIDERED THE SUBMISSIONS OF THE LEARNED A.R. AND HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE ASSESSMENT RECORDS. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. ASKED FOR REVISED PARTNERSHIP DEED AS ACCORDING TO HIM THERE WAS A CHANGE IN CONSTITUTION OF THE FIRM. THE APPELLANT DID NOT RESPOND TO THE A.O. SINCE THE APPELLANT FAILED TO RESPOND ON THIS MATTER ITS CASE FALLS U/S 144(1)(C) [FAILURE TO COMPLY WITH ALL THE TERMS OF A NOTICE ISSUED U/S 143(2)]. ACCORDINGLY, THE A.O. COMPLETED THE ASSESSMENT U/S 144, ACCEPTING THE RETURNED INCOME. I THEREFORE, DO NOT FIND MERIT IN THE SUBMISSIONS OF THE LEARNED A.R. THAT THE ASSESSMENT ORDER SHOULD I.T.A. NO S . 21 4 & 215 /MDS/1 1 3 HAVE BEEN MADE U/S 143 (3) AND NOT U/S 144. THE ACTION OF THE A.O IN COMPLETING THE ASSESSMENT U/S 144 IS HEREBY CONFIRMED . 6. STILL AGGRIEVED, THE ASSESSEE HAS CAME UP IN FURTHER APPEAL AND IT WAS CONTENDED BEFORE THIS BENCH THAT THE ASSESSEE WAS DEMANDING A DOCUMENT, WHICH WAS NOT IN EXISTENCE, BECAUSE THERE WAS NO CHANGE IN THE CONSTITUTION OF THE FIRM DURING THE YEAR U NDER CONSIDERATION, THEREFORE, QUESTION OF PRODUCING REVISED PARTNERSHIP DEED DOES NOT ARISE AND SO FAR AS CHANGE IN CONSTITUTION OF FIRM, WHICH TOOK PLACE AS PER DEED OF PARTNERSHIP DATED 31.03.2004, WHICH PERTAINS TO THE ASSESSMENT YEAR 2004 - 05 AND NOT F OR THE YEAR UNDER CONSIDERATION, WHICH ASSESSMENT YEAR IS 2005 - 06. SO, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN COMPLETING THE ASSESSMENT UNDER SECTION 144, WHEN THERE WAS NO VIOLATION ON THE PART OF THE ASSESSEE IN TERMS OF NOTICE UNDER SECTION 143(2). AS ALL THE POINTS RAISED IN SUCH NOTICES OR SUBSEQUENT LETTERS HAVE DULY BEEN COMPLIED WITH AND MOREOVER, THE RETURN ED INCOME OF THE ASSESSEE HAS BEEN ACCEPTED BY THE ASSESSING OFFICER, THEREFORE IT WAS SUBMITTED THAT THE ASSESSMENT FRAMED UNDER SECTION 14 4 SHOULD BE CONVERTED TO ASSESSMENT UNDER SECTION 143(3). 7. THE LD. DR STRONGLY RELIED UPON THE ORDER OF AUTHORITIES BELOW AND PLEADED THAT SINCE THE ASSESSEE HAS NOT FILED THE REVISED PARTNERSHIP DEED AS DEMANDED, SO IT CANNOT BE TERMED OR TREATED THAT ALL THE TERMS OF NOTICE ISSUED UNDER SECTION 143(2) OR SUBSEQUENT LETTERS HAVE BEEN COMPLIED WITH BY THE ASSESSEE. HE FURTHER SUBMITTED THAT SINCE THE RETURNED INCOME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER SO, FRAMING OF ASSESSMENT UNDER SECTION 144 I.T.A. NO S . 21 4 & 215 /MDS/1 1 4 D OES NOT AFFECT THE ASSESSEE. THEREFORE, THE APPEAL OF THE ASSESSEE SHOULD BE DISMISSED. 8. WE HAVE HEARD BOTH THE SIDES AND CONSIDERED THE MATERIAL ON RECORD AND FIND THAT THE ASSESSING OFFICER , DURING THE ASSESSMENT PROCEEDINGS WROTE A LETTER DATED 22.0 4.2009, WHICH WAS FOLLOWED BY ANOTHER LETTER DATED 18.11.2009. IN RESPONSE TO WHICH THE ASSESSEE S COUNSEL FILED LETTER DATED 27.11.2009 AND 18.03.2010 IN WHICH THE ASSESSEE HAS CLEARLY STATED THAT THE FIRM WAS RECONSTITUTED ON 31.03.2004 AND BEFORE THIS B ENCH, THE LD. AR OF THE ASSESSEE BY FILING COPY OF THE RECONSTITUTED DEED DATED 31.03.2004, THE ASSESSEE HAS PLEADED THAT AFTER THE CLOSE OF EARLIER YEAR, THERE WAS NO CHANGE/ RECONSIDERATION OF PARTNERSHIP DEED DURING THE YEAR UNDER CONSIDERATION AS ON 31 .03.2004 FALLS IN THE ASSESSMENT YEAR 2004 - 05. FROM ALL THESE DOCUMENTS, WHICH WERE FILED BEFORE THE ASSESSING OFFICER AND COPIES ARE ENCLOSED IN THE PAPER BOOK BY THE ASSESSEE BEFORE US, THE LD. D R COULD NOT CONTROVERT THE FACT THAT THERE WAS ANY REVISED PARTNERSHIP DEED IN EXISTENCE AFTER ONE DATED 31.03.2004, WHICH FALLS WITHIN THE ASSESSMENT YEAR 2004 - 05 AND NOT 2005 - 06. SO, IN THE ABSENCE OF ANY CONTRARY DOCUMENT PLACED ON RECORD, THE PLEA OF THE ASSESSEE THAT THERE IS NO RECONSTITUTION OF THE FIRM DUR ING THE YEAR UNDER CONSIDERATION CANNOT BE SAID TO BE WRONG AND IT IS HELD THAT FRAMING THE ASSESSMENT UNDER SECTION 144 INSTEAD OF 143(3) FOR NON - FILING OF ALLEGED RECONSTITUTING PARTNERSHIP DEED IS NEITHER PROPER NOR JUSTIFIED. WHILE CONSIDERING THE ENTI RETY OF FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT WHEN THE PROCEEDINGS HAVE BEEN DULY ATTENDED TO BY THE ASSESSEE/ AR OF THE I.T.A. NO S . 21 4 & 215 /MDS/1 1 5 ASSESSEE FROM TIME TO TIME BEFORE THE ASSESSING OFFICER AND ALSO THERE IS NO RECONSTITUTED DEED IN EXISTENCE AS P LEADED BY THE LD. COUNSEL FOR THE ASSESSEE AND NOT CONTROVERTED BY THE LD. DR AND THAT APART THE INCOME DECLARED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE ASSESSING OFFICER , SO IN OUR VIEW THE ASSESSMENT COULD ONLY BE FRAMED UNDER SECTION 143(3) OF THE ACT AND NOT UNDER SECTION 144. AS SUCH, WHILE ACCEPTING THE APPEAL OF THE ASSESSEE, WE DIRECT THE ASSESSING OFFICER TO TREAT THE ASSESSMENT FRAMED UNDER SECTION 144 TO BE UNDER SECTION 143(3) . ITA NO. 215/MDS/2011 9. THE ASSESSING OFFICER, WHILE FRAMING ASS ESSMENT UNDER SECTION 144 DATED 28.12.2007 INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(B) AND AFTER DUE NOTICE TO THE ASSESSEE AND CONSIDERING HIS REPLY, IMPOSED PENALTY OF ` . 10,000/ - AGAINST WHICH THE ASSESSEE PREFERRED APPEAL . I T WAS SUBMITTED BEF ORE THE FIRST APPELLATE AUTHORITY THAT ALL THE DETAILS CALLED FOR HAD BEEN DULY FILED AND THERE WAS NO VALID REASON FOR IMPOSING PENALTY. MOREOVER, THE ASSESSING OFFICER OVERLOOKED THAT HE HAD NEVER ASKED FOR PARTNERSHIP DEED AND EVEN IF IT IS NOT FOUND, T HE ASSESSING OFFICER SHOULD HAVE TREATED THE ASSESSEE AS AOP AND THERE WAS NO BASIS FOR LEVY OF PENALTY. BUT THE LD. CIT(A), WHILE CONSIDERING, BUT NOT ACCEPTING THE PLEA OF THE ASSESSEE HAS CONCLUDED TO CONFIRM THE ACTION OF THE ASSESSING OFFICER AS PER P ARA 5 OF HIS ORDER, WHICH READS AS UNDER: I.T.A. NO S . 21 4 & 215 /MDS/1 1 6 5. I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED A.R. IT IS NOT DISPUTED THAT DURING THE ASSESSMENT PROCEEDINGS THE A.O ASKED FOR REVISED PARTNERSHIP DEED AND RESPONSE TO THAT WAS NOT GIVEN INSPITE OF MANY OPP ORTUNITIES. THE APPELLANT ALSO DID NOT GIVE ANY EXPLANATION TO THE PENALTY NOTICE ISSUED BY THE DCIT, CENTRAL CIRCLE III(2). I DO NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE LEARNED A.R. OF THE AP PELLANT THAT THE PENALTY OF ` .10,000/ - LEVIED U/S. 271(1)(B ) IS UNJUSTIFIED. ACCORDINGLY, PENALTY OF ` .10,000/ - LEVIED U/S. 271(1)(B) BY THE DCIT, CENTRAL CIRCLE II(2) IS SUSTAINED. 10. STILL AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL AND WHILE REITERATING THE SUBMISSIONS AS MADE BEFORE THE LOWER AUTHORITIES, IT WAS PLEADED FOR DELETION OF PENALTY IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A). IT WAS FURTHER SUBMITTED THAT AS PER FIRST PARA OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HIMSELF ADMITS THAT NOTICE UNDER SECTION 143(2) WAS ISS UED AND IN RESPONSE TO THAT NOTICE ASSESSEE S REPRESENTATIVE SHRI S. SWAMINATHAN, CA OF M/S. S. VENKATRAM & CO. APPEARED AND FILED DETAILS CALLED FOR AND AS PER LETTER DATED 22.04.2009, THE ASSESSING OFFICER HAS SOUGHT FOR CERTAIN CLARIFICATION, WHICH HAS BEEN REPLIED TO BY THE ASSESSEE S REPRESENTATIVE. FURTHER DETAILS CALLED FOR WERE ALSO PROPERLY REPLIED AND REFERENCE OF REVISED PARTNERSHIP DEED DATED 31.03.2004 HAS BEEN MADE TO JUSTIFY THE PARTNER S CAPITAL AND CURRENT ACCOUNT BY GIVING DETAILS. NEITHER ANY SPECIFIC LETTER HAS BEEN ISSUED TO THE ASSESSEE TO FILE ANY DOCUMENT NOR DURING THE HEARING, THE ASSESSEE WAS ASKED TO DO SO. THEREFORE, IT CANNOT BE UNDERSTOOD THROUGH WHICH DOCUMENT THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH WHICH PAPER AND THERE IS NO MATERIAL AVAILABLE ON RECORD TO JUSTIFY THAT THE ASSESSING OFFICER HAS EVER DEMANDED ANY DOCUMENT AND THEREFORE, THERE WAS NO OCCASION I.T.A. NO S . 21 4 & 215 /MDS/1 1 7 FOR THE ASSESSING OFFICER TO LEVY PENALTY UNDER SECTION 271(1)(B), WHEN RETURNED INCOME HAS BEEN ACCEPTED. S O, PENALTY MAY BE DELETED. 11. THE LD. DR RELIED UPON THE ORDERS OF AUTHORITIES BELOW SINCE DOCUMENT HAS NOT BEEN FURNISHED BY THE ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 143(2), THEREFORE, PENALTY HAS RIGHTLY BEEN IMPOSED AND LEGALLY BEEN CONFIRMED BY THE LD. CIT(A), WHOSE ACTION SHOULD BE CONFIRMED. 12. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MATERIAL ON RECORD AND FIND THAT THE ASSESSING OFFICER IN PARA 1 OF THE ASSESSMENT ORDER HAS MADE FOLLOWING OBSERVATIONS: THE ASSESSEE FILED THE RETUR N OF INCOME FOR THE ASSESSMENT YEAR 2005 - 06 ADMITTING A TOTAL INCOME OF ` . 3,96,280/ - . THE RETURN WAS PROCESSED U/S 143(1) AND SUBSEQUENTLY, NOTICE U/S 143(2) WAS ISSUED. IN RESPONSE TO THIS NOTICE, ASSESSEE S REPRESENTATIVE SHRI S. SWAMINATHAN, CA OF M/S. S. VENKATRAM & CO., C.A.S APPEARED AND FILED THE DETAILS CALLED FOR. AFTER VERIFYING THE DETAILS, THE ASSESSMENT IS COMPLETED AS UNDER: 13. THERE IS NO DOCUMENT HAVING BEEN PRODUCED BEFORE THE LD. CIT(A) OR BEFORE US TO SHOW THAT THE ASSESSING OFFICER E VER DEMANDED FURNISHING OF ANY RECONSTITUTION DEED WHEN THE ASSESSEE HAS STRONGLY PLEADED THAT THERE IS NO RECONSTITUTION OF FIRM AFTER 31.03.2004, WHICH PERIOD FALLS IN THE ASSESSMENT YEAR 2004 - 05. OTHERWISE ALSO, WE HAVE CONVERTED THE ASSESSMENT ORDER PA SSED UNDER SECTION 144 TO ORDER UNDER SECTION 143(3) IN APPEAL AGAINST QUANTUM IN EARLIER PART OF THE ORDER, THEREFORE, IN VIEW OF THE FACTS , CIRCUMSTANCES AND MATERIAL ON RECORD , WE ARE OF THE VIEW THAT NEITHER THE ASSESSING OFFICER IS JUSTIFIED IN IMPOSI NG PENALTY NOR THE LD. CIT(A) IS LEGALLY CORRECT TO UPH O LD THE ACTION OF THE ASSESSING OFFICER AS PENALTY IS NOT EXIGIBLE IN THIS CASE . AS SUCH, I.T.A. NO S . 21 4 & 215 /MDS/1 1 8 WHILE ACCEPTING THE APPEAL OF THE ASSESSEE, WE DIRECT TO DELETE THE PENALTY IMPOSED BY THE ASSESSING OFFICER AN D CONFIRMED BY THE LD. CIT(A). 14. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ACCEPTED. O RDER PRONOUNCED ON 27 .05.2011 . SD/ - SD/ - ( N.S. SAINI ) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI, DATED, THE 27 . 0 5 .2011 VM/ - TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R .