Sh. Rakesh Gupta Through L/H Rikshit Gupta, Pathankot V. The Income Tax Officer, Pathankot

ITA 222/ASR/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3803 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-12-2018
• Assessment Year: 2005-2006
• Appeal Filed On: 18-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Deemed to accrue or arise in india
• Section: 143(3); 142(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A. NO. 222/ASR/2016 AS SESSMENT YEAR: 2005-06 RAKESH GUPTA (THROUGH LRS RIKSHIT GUPTA & ORS.), PATHANKOT [PAN: AAXPG 3084F] VS. INCOME TAX OFFICER, WARD-2, PATHANKOT (APPELLANT) (RESPONDENT) APPELLANT BY : SH. J. S. BHASIN (ADV.) RESPONDENT BY: SH. CHARAN DASS (D.R.) DATE OF HEARING: 12.12.2018 DATE OF PRONOUNCEMENT: 31.01.2019 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE ORD ER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AMRITSAR ('CIT(A)' FOR S HORT) DATED 29.01.2016, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING HIS ASSES SMENT U/S. 143(3) R/W S. 147 OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) DA TED 28.03.2013 FOR THE ASSESSMENT YEAR (AY) 2005-06. 2. WE SHALL FIRST CONSIDER THE ASSESSEES ADDITIONA L GROUND, AS UNDER, ADMISSION OF WHICH WAS ALSO CONTESTED BY THE LD. DEPARTMENTAL REPRESENTATIVE (DR), SH. CHARAN DASS, IN-AS-MUCH AS ITS, CHALLENGING THE VA LIDITY OF ASSESSMENT, ACCEPTANCE MAY PRECLUDE THE ADJUDICATION OF THE OTHER GROUNDS OF APPEAL, I.E., QUA VARIOUS ADJUSTMENTS MADE IN ASSESSMENT: ITA NO. 222/ASR/2016 (AY 2005-06) RAKESH GUPTA V. ITO 2 WITH THE ASSESSMENT ORDER HAVING BEEN PASSED IN TH E NAME OF A DEAD PERSON, THE SAME IS ILLEGAL PER SE AND HENCE UNSUSTAINABLE IN LAW. 3. THE ASSESSEES CASE IN THIS REGARD IS THAT, FIRS TLY, ADMISSION OF THE LEGAL PLEA CANNOT BE DENIED MERELY BECAUSE IT, A PURELY LEGAL GROUND, IS TAKEN FOR THE FIRST TIME BEFORE THE TRIBUNAL. ALL THE FACTS NECESSARY FOR TH E ADJUDICATION ARE ON RECORD, I.E., IMPUGNED ASSESSMENT ORDER IS IN THE NAME OF THE DEC EASED ASSESSEE, INFORMATION OF WHOSE DEATH (ON 09.06.2012), LEAVING BEHIND TWO SON S AND WIFE, HAD BEEN CONVEYED TO THE ASSESSING OFFICER (AO) ON 28.08.201 2 IN RESPONSE TO THE NOTICES U/SS. 143(2) AND 142(1) DATED 21.08.2012, SERVED ON 22.08.2012. THERE COULD BE NO ASSESSMENT ON A DEAD PERSON, WHOSE LEGAL HEIRS HAD NECESSARILY TO BE IMPLEADED BY THE AO. THE ASSESSMENT, ACCORDINGLY, IS BAD IN LAW. THE LD. COUNSEL, SH. BHASIN, WAS UPON THIS QUESTIONED AS TO IF IT WOULD MATTER I F THE INFORMATION OF THE ASSESSEES DEATH HAD NOT BEEN COMMUNICATED BY THE A SSESSEES LEGAL HEIR, SH. RIKSHIT GUPTA, HIS SON AND LEGAL HEIR, THE APPELLAN T BEFORE THE TRIBUNAL, IN-AS-MUCH AS THE DEATH OF A PERSON, ON BEING NOTIFIED, OPERAT ES AS A PUBLIC NOTICE THEREOF. HE WOULD SUBMIT THAT EVEN IF THAT BE SO, IN THE PRESEN T CASE, THE DECEASED ASSESSEES LEGAL HEIR HAD IN GOOD FAITH INFORMED THE AO, WHO Y ET DID NOT IMPLEAD HIM, AND FRAMED THE ASSESSMENT IN THE NAME OF THE DECEASED A SSESSEE, I.E., A DEAD PERSON. HE WOULD THOUGH ON BEING INQUIRED IN ITS RESPECT, CONC EDE THAT THERE WAS PARTICIPATION OF SH. RIKSHIT GUPTA, AS THE LEGAL REPRESENTATIVE ( LR) OF THE DECEASED ASSESSEE, IN THE ASSESSMENT PROCEEDINGS, WHO IN FACT RECEIVED TH E NOTICES U/SS. 143(2) AND 142(1). ON BEING FURTHER ASKED ABOUT THE STATUS OF THE ASSESSMENT IF THE ASSESSMENT ORDER HAD INSTEAD BEEN ADDRESSED TO OR MADE OUT IN THE NAME OF RIKSHIT GUPTA, THE LEGAL REPRESENTATIVE OF THE LATE SH. RAKESH GUPTA, HE WOULD SUBMIT THAT THAT WOULD BE A DIFFERENT MATTER, AS IN THAT CASE THERE WOULD BE NO OCCASION FOR THE GRIEVANCE BEING NOW RAISED. HE WAS FURTHER ASKED ABOUT THE PR EJUDICE, IF ANY, SUFFERED ON ACCOUNT OF THE ASSESSMENT ORDER BEING MADE OUT IN T HE NAME OF THE ASSESSEE, SINCE ITA NO. 222/ASR/2016 (AY 2005-06) RAKESH GUPTA V. ITO 3 DECEASED, MORE PARTICULARLY AS THE ORDER ITSELF NOT ES OF HIS DEATH, SO THAT IN EFFECT AND SUBSTANCE IT IS ON HIS LEGAL REPRESENTATIVES, I N TERMS OF S. 159; THERE BEING NO ESTOPPEL IN THESE MATTERS, HE WOULD SUBMIT THAT THE QUESTION IS OF THE LEGALITY OF THE ASSESSMENT AS FRAMED AND NOT OF PREJUDICE, IF ANY, CAUSED. THE LD. DR WOULD, ON THE OTHER HAD, SUBMIT THAT THE RAISING OF THE LEGAL GROUND ITSELF SUFFERS FROM LACK OF BONA FIDES , AS IT WAS, DESPITE THE RELEVANT FACTS BEING ON RE CORD, NOT RAISED EARLIER, AND IS ONLY AN AFTERTHOUGHT, AND TOWARD WHICH HE WO ULD REFER TO THE FOLLOWING DECISIONS: 1. MANJI DANA VS. CIT [1966] 60 ITR 582 (SC) 2 . ULTRATECH CEMENT LTD. VS. ADDL. CIT (IN ITA NO. 1 060/2014, DATED 18/04/2017)(BOM) 3. MUKTI PROPERTIES (P.) LTD . V. CIT [2012] 344 ITR 177 (CAL) [50 DTR 273] 4. GOODFAITH CONSTRUCTION (P) LTD. VS. ACIT [2013] (AMRITSAR ITAT). ON MERITS, HE WOULD ADVERT TO SECTIONS 159 AND SECT ION 292B OF THE ACT, WHICH READ AS UNDER: LEGAL REPRESENTATIVES. 159. (1) WHERE A PERSON DIES, HIS LEGAL REPRESENTATIVES SHALL BE LIABLE TO PAY ANY SUM WHICH THE DECEASED WOULD HAVE BEEN LIABLE TO PAY IF HE HA D NOT DIED, IN THE LIKE MANNER AND TO THE SAME EXTENT AS THE DECEASED. (2) FOR THE PURPOSE OF MAKING AN ASSESSMENT (INCLUD ING AN ASSESSMENT, REASSESSMENT OR RECOMPUTATION UNDER SECTION 147) OF THE INCOME OF T HE DECEASED AND FOR THE PURPOSE OF LEVYING ANY SUM IN THE HANDS OF THE LEGAL REPRESENT ATIVE IN ACCORDANCE WITH THE PROVISIONS OF SUBSECTION (1), (A) ANY PROCEEDING TAKEN AGAINST THE DECEASED BEFORE H IS DEATH SHALL BE DEEMED TO HAVE BEEN TAKEN AGAINST THE LEGAL REPRESENTATIVE AND MAY BE C ONTINUED AGAINST THE LEGAL REPRESENTATIVE FROM THE STAGE AT WHICH IT STOOD ON THE DATE OF THE DEATH OF THE DECEASED; (B) ANY PROCEEDING WHICH COULD HAVE BEEN TAKEN AGAINST THE DECEASED IF HE HAD SURVIVED, MAY BE TAKEN AGAINST THE LEGAL REPRESENTATIVE; AND (C) ALL THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDI NGLY. (3) THE LEGAL REPRESENTATIVE OF THE DECEASED SHALL, FOR THE PURPOSES OF THIS ACT, BE DEEMED TO BE AN ASSESSEE. ITA NO. 222/ASR/2016 (AY 2005-06) RAKESH GUPTA V. ITO 4 (4) EVERY LEGAL REPRESENTATIVE SHALL BE PERSONALLY LIABLE FOR ANY TAX PAYABLE BY HIM IN HIS CAPACITY AS LEGAL REPRESENTATIVE IF, WHILE HIS LIAB ILITY FOR TAX REMAINS UNDISCHARGED, HE CREATES A CHARGE ON OR DISPOSES OF OR PARTS WITH ANY ASSETS OF THE ESTATE OF THE DECEASED, WHICH ARE IN, OR MAY COME INTO, HIS POSSESSION, BUT SUCH LIABILIT Y SHALL BE LIMITED TO THE VALUE OF THE ASSET SO CHARGED, DIS6POSED OF OR PARTED WITH. (5) THE PROVISIONS OF SUB- SECTION (2) OF SECTION 1 61, SECTION 162 AND SECTION 167 SHALL, SO FAR AS MAY BE AND TO THE EXTENT TO WHICH THEY ARE NOT I NCONSISTENT WITH THE PROVISIONS OF THIS SECTION, APPLY IN RELATION TO A LEGAL REPRESENTATIV E. (6) THE LIABILITY OF A LEGAL REPRESENTATIVE UNDER T HIS SECTION SHALL, SUBJECT TO THE PROVISIONS OF SUB-SECTION (4) AND SUB-SECTION (5), BE LIMITED TO THE EXTENT TO WHICH THE ESTATE IS CAPABLE OF MEETING THE LIABILITY. B. REPRESENTATIVE ASSESSEES- GENERAL PROVISIONS RETURN OF INCOME, ETC., NOT TO BE INVALID ON CERTA IN GROUNDS 292B. NO RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS O R OTHER PROCEEDING, FURNISHED OR MADE OR ISSUED OR TAKEN OR PURPORTED TO HAVE BEEN F URNISHED OR MADE OR ISSUED OR TAKEN IN PURSUANCE OF ANY OF THE PROVISIONS OF THIS ACT SHAL L BE INVALID OR SHALL BE DEEMED TO BE INVALID MERELY BY REASON OF ANY MISTAKE, DEFECT OR OMISSION IN SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IF SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT. THE NOTICE U/S. 148, WHICH IS A JURISDICTIONAL NOTI CE, HE WOULD CONTINUE, WAS ADMITTEDLY ISSUED (ON 23.03.2012) AND ALSO SERVED O N THE ASSESSEE, LATE SH. RAKESH GUPTA. THE JURISDICTION TO FRAME THE ASSESSMENT HAD THUS BEEN VALIDLY ASSUMED. THERE IS NO DISPUTE QUA THE SERVICE OF THE NOTICE U/S. 143(2), WHICH IS ON THE LEGAL HEIR, A REPRESENTATIVE ASSESSEE UNDER LAW, AND HAS ALSO PARTICIPATED IN THE PROCEEDINGS. NO CLAIM FOR BRINGING THE OTHER TWO LE GAL HEIRS, BEING HIS WIFE (NEELAM GUPTA) AND SECOND SON (RISHABH GUPTA), HAS BEEN MADE AT ANY STAGE, INCLUDING BEFORE THE TRIBUNAL. HOW COULD THEN THE A SSESSMENT PROCEEDINGS OR THE ENSUING ASSESSMENT BE QUESTIONED AS TO ITS LEGALIT Y MERELY BECAUSE THE ASSESSMENT ORDER IS NOT ADDRESSED TO OR MADE OUT IN THE NAME O F THE REPRESENTATIVE ASSESSEE, AS ITA NO. 222/ASR/2016 (AY 2005-06) RAKESH GUPTA V. ITO 5 WITHOUT DOUBT OUGHT TO BE THE CASE, BUT OF THE ASSE SSEE. THE ASSESSMENT ORDER IS IN SUCH A CASE IS SURELY SAVED BY SECTION 292B. 4. I HAVE HEARD THE PARTIES, AND PERUSED THE MATERI AL ON RECORD. IN MY VIEW, THE ASSESSEE IS IN THE INSTANT CASE WI THIN HIS RIGHT TO PRESS THE LEGAL GROUND IN-AS-MUCH AS IT GOES TO THE ROOT OF T HE MATTER, WITH ALL THE FACTS NECESSARY FOR DECIDING THE SAME BEING ON RECORD AND NOT IN DISPUTE ( NTPC LTD. V. CIT [1998] 229 ITR 383 (SC)). AS REGARDS THE MERITS OF THE LEGAL GROUND RAISED, THERE IS, IN MY VIEW, NO SUBSTANCE IN THE ASSESSEE S CASE. IT IS, TO BEGIN WITH, THE LEGALITY OF THE ASSESSMENT THAT IS BEING QUESTIONED WITH REFERENCE TO THE MANNER IN WHICH THE ASSESSMENT ORDER HAS BEEN WRITTEN; RATHER , OR IN FACT, ADDRESSED TO. DOES IT MEAN THAT THE ASSESSMENT WOULD BE A VALID ASSESS MENT WHERE THE ASSESSMENT ORDER, INSTEAD OF BEING ADDRESSED TO THE ASSESSEE, SINCE DECEASED, STATES HIS SONS (OR OTHER REPRESENTATIVE ASSESSEES) NAMES, AS THE L EGAL REPRESENTATIVES OF THE DECEASED ASSESSEE, WHO WERE AWARE OF THE ASSESSMENT PROCEEDINGS IN THE CASE OF THE DECEASED ASSESEE AND HAD IN FACT PARTICIPATED T HEREIN? THAT IS, STATES OF SH. RIKSHIT GUPTA (AND OTHERS BY NAME), LRS OF SH. RIKS HIT GUPTA (DECEASED), AS THE NAME OF THE ASSESSEE INSTEAD OF THAT OF SH. RIKSHIT GUPTA. EVEN IF THE ASSESSEES LEGAL REPRESENTATIVES WERE NOT FORMALLY IMPLEADED, THE PROCEEDINGS FROM THE DATE OF THE DEATH OF THE ASSESSEE ONWARDS WERE ON THEM, HAVING PARTICIPATED AND RESPONDED TO BY HIS ELDER SON AND LEGAL HEIR OF THE SINCE DECEASED ASSESSEE, I.E., SH. RIKSHIT GUPTA, WHO IN FACT HAS PREFERRED THE APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AS WELL AS BEFORE THE TRIBUNAL. HE IMPLIE DLY HAD THE AUTHORITY OF THE OTHER TWO LEGAL HEIRS AS WELL AS, WHICH ASPECT HAS NOT BE EN AGITATED AT ANY STAGE. IN FACT, AS THE AUTHORITY (VAKALATNAMA) IN FAVOUR OF SH. BHA SIN WAS ALSO SIGNED ONLY BY HIM (AS THE APPELLANT), WHILE IT IS ALL THE LEGAL REPRE SENTATIVES (U/S. 159) WHO HAVE THE RIGHT TO BE HEARD, WHICH CANNOT BE PRESUMED TO BE W AIVED (I.E., IN FAVOUR OF THE ITA NO. 222/ASR/2016 (AY 2005-06) RAKESH GUPTA V. ITO 6 THIRD LEGAL HEIR), NO OBJECTION LETTERS WERE SPECIF ICALLY SOUGHT BY THE TRIBUNAL (COPY ON RECORD) BEFORE HEARING THE MATTER. A GRIEVANCE I N THIS RESPECT, I.E., LACK OF OPPORTUNITY BEING EXTENDED TO THE OTHER LEGAL REPRE SENTATIVES, WHERE RAISED, I.E., BEFORE THE ASSESSING OR THE FIRST APPELLATE AUTHORI TY, WOULD HAVE NECESSITATED RESTORING THE MATTER BACK TO THEIR RESPECTIVE FILES , AS WAS DONE IN CIT V. ROSHAN LAL & ORS. [1982] 134 ITR 145 (DEL), AND TOWARD WHICH REFEREN CE, WITH PROFIT, MAY ALSO BE MADE TO THE DECISION IN GUDUTHUR BROS. V. ITO [1960] 40 ITR 298 (SC) BY THE LARGER BENCH OF THE APEX COURT. IN FACT, CLARIF ICATION ON THIS WAS SPECIFICALLY SOUGHT FROM SH. BHASIN, WHO MADE IT CLEAR THAT THER E WAS AS IS OTHERWISE APPARENT, NO GRIEVANCE IN THIS REGARD, EVEN AS, AS AFORE-STATED, NO OBJECTION LETTERS FROM THE ASSESSEES OTHER TWO LEGAL HEIRS WERE SPEC IFICALLY BROUGHT ON RECORD BY THE TRIBUNAL. THE LAW IN THE MATTER, AS WOULD AGAIN BE APPARENT FROM A BARE READING OF SECTION 159, IS CLEAR AND AMBIGUOUS. THE JURISDICTI ON TO FRAME AN ASSESSMENT U/S. 147 STANDS VALIDLY ASSUMED BY THE ISSUE OF NOTICE U /S. 148(1) ON THE ASSESSEE ON 23.03.2012, DULY SERVED ON HIM. THE SUBSEQUENT NOTI CES U/S. 143(2)/142(1), I.E., DATED 21.08.2012, THOUGH IN THE ASSESSEES NAME, WE RE SERVED ON THE ASSESSEES LEGAL REPRESENTATIVE, RISHIB GUPTA, WHO PARTICIPATE D IN THE PROCEEDINGS FROM THAT STAGE ONWARDS. WITHOUT DOUBT, THE ASSESSMENT ORDER OUGHT TO HAVE BEEN MADE OUT IN THE NAME OF THE ASSESSEES LEGAL REPRESENTATIVES , WHO BECOME HIS REPRESENTATIVE ASSESSEES IN LAW, YET, NOT DOING SO WOULD ONLY BE A N IRREGULARITY, AND NOT DETRACT FROM THE SUBSTANCE OF THE ASSESSMENT ORDER, MUCH LE SS THE ASSESSMENT PROCEEDINGS THEMSELVES. IT IS TRITE LAW THAT THE SUBSTANCE WOUL D PREVAIL OVER FORM. THE ASSESSMENT IS EVEN OTHERWISE SAVED BY SECTION 292B, REPRODUCED SUPRA. ALL THAT IS NEEDED TO BE DONE IS TO REMOVE THE DEFECT SUO MOTU , OR EVEN AT THE ASSESSEES INSTANCE, U/S. 154, ADDRESSING THE ASSESSMENT ORDER IN THE NAME OF THE LATE ASSESSEES LEGAL REPRESENTATIVES, WHO BY LAW (I.E., SECTION 159) BECOME HIS ITA NO. 222/ASR/2016 (AY 2005-06) RAKESH GUPTA V. ITO 7 REPRESENTATIVE ASSESSEES. THE ASSAILING OF THE ASSE SSMENT ON THE BASIS OF THE ASSESSMENT ORDER BEING NOT PROPERLY ADDRESSED, I.E. , IN THE NAME OF THE LEGAL REPRESENTATIVE, IS DEVOID OF ANY BASIS IN LAW. IN F ACT, THE HONBLE COURTS HAVE BEEN TAKING A VIEW OF SAVING ACTIONS, REPRESENTED BY ORD ERS, NOTICES, ETC. WHICH ARE IN SUBSTANCE AND EFFECT IN CONFORMITY WITH THE INTENT AND PURPOSES OF THE ACT, THOUGH MAY SUFFER FROM MISTAKE, OMISSION, ETC., AS IN THE INSTANT CASE, I.E., EVEN PRIOR TO THE COOPTION OF SECTION 292B ON THE STATUTE-BOOK, WHICH IS BY TAXATION LAWS (AMENDMENT) ACT, 1975, W.E.F. 01.10.1975. THE LAW I N THE MATTER IS WELL-SETTLED, NOT ADMITTING OF ANY DIVERGENCE. THE ATTENTION OF T HE LD. COUNSEL, SH. BHASIN, WAS IN THIS REGARD DRAWN DURING HEARING TO THE DECISION IN CIT V. JAI PRAKASH SINGH [1996] 219 ITR 737 (SC), WHEREIN THERE IS EXTENSIVE REFERENCE BY THE APEX COURT TO ITS EARLIER DECISION IN ESTATE OF LATE RANGALAL JAJODIA V. CIT [1971] 79 ITR 505 (SC). REFERENCE WAS MADE (AT PAGE 746), TO FOLLOWIN G OBSERVATIONS BY THE APEX COURT IN ITS LATER JUDGMENT (AT PAGE 511): THE LACK OF A NOTICE DOES NOT AMOUNT TO THE REVENU E AUTHORITY HAVING HAD NO JURISDICTION TO ASSESS, BUT THAT THE ASSESSMENT WAS DEFECTIVE BY REASON OF NOTICE NOT HAVING BEEN GIVEN TO HER. AN ASSESSMENT PROCEEDING DOES NOT CEASE TO BE A PROCEE DING UNDER THE ACT MERELY BY REASON OF WANT OF NOTICE. IT WILL BE A PROCEEDING LIABLE TO BE CHALLENGED AND CORRECTED. THEREAFTER, THE APEX COURT NOTED THE FACTS OF THE S AID DECISION (AT PAGES 746-747) AS UNDER: THE FACTS IN THIS CASE ARE TELLING. THEY ARE: RANG ALAL JAJODIA FILED HIS INCOME TAX RETURN FOR THE ASST. YRS. 1942-43 AND 1943-44 UNDER THE IN COME TAX ACT AS WELL AS UNDER THE EXCESS PROFITS TAX ACT. BEFORE THE ASSESSMENTS WERE COMPLETED, HE DIED (ON 11 TH JAN., 1946). RANGALAL HAD A SON, SHANKAR LAL, BY HIS PRE- DECEASED WIFE. HE MARRIED A SECOND TIME AND HAD CHILDREN FROM THE SECOND WIFE, ARUNA D EVI. RANGALAL EXECUTED A WILL TOTALLY DISINHERITING SHANKAR LAL AND APPOINTING ARUNA DEVI AND ANOTHER AS EXECUTORS OF HIS WILL. THE ITO, PROBABLY UNAWARE OF THE WILL, GAVE NOTICE TO SHANKAR LAL, WHO OBJECTED THAT HE IS NOT THE LEGAL REPRESENTATIVE OF THE DECEASED AND THAT THE SECOND WIFE (ARUNA DEVI) AND ITA NO. 222/ASR/2016 (AY 2005-06) RAKESH GUPTA V. ITO 8 THE OTHER EXECUTOR ARE THE PROPER PERSONS TO BE NOT IFIED. THE ITO CALLED FOR A COPY OF THE WILL BUT IT WAS NOT PRODUCED. THE ITO THEREUPON COM PLETED THE ASSESSMENT DESCRIBING THE ASSESSEE AS 'THE ESTATE OF LATE SRI RANGALAL JAJODI A BY LEGAL HEIRS AND REPRESENTATIVES SRI SHANKAR LAL JAJODIA, SON OF RANGALAL JAJODIA, SMT. ARUNA DEVI, WIFE OF RANGALAL JAJODIA AND HER CHILDREN'. APPEALS WERE PREFERRED BY THE SE COND WIFE, ARUNA DEVI, CONTENDING, INTER ALIA , THAT THE ASSESSMENTS HAVING BEEN MADE WITHOUT NOT ICE TO HER OR THE OTHER EXECUTOR WERE ILLEGAL AND INVALID. THIS PLEA WAS RE JECTED BY THE APPELLANT ASSISTANT COMMISSIONER AND THE TRIBUNAL, WHO REMITTED THE MATTERS TO THE ITO TO COMPLETE THE ASSESSMENTS AFTER NOTICE TO ARUNA DEVI . THE HIGH COURT TOO REJECTED THE SAID CONTENTION WHEREUPON THE MATTER WAS BROUGHT TO THIS COURT, WHI CH HELD THAT ABSENCE OF NOTICE TO ARUNA DEVI MAKES THE ASSESSMENT MERELY DEFECTIVE BU T NOT NULL AND VOID. IT IS IN THIS CONNECTION THAT THE AFORESAID OBSERVATION WAS MADE. THIS COURT SUSTAINED THE DIRECTION GIVEN BY THE APPELLANT ASSISTANT COMMISSIONER TO TH E ITO TO MAKE FRESH ASSESSMENT ON ARUNA DEVI IN ACCORDANCE OF THE PROVISIONS OF THE A CT. THIS DECISION, IN OUR OPINION, IS SUFFICIENT TO REJECT THE ASSESSEE'S CONTENTION HERE IN. IF AN ASSESSMENT MADE WITH NOTICE TO SHANKAR LAL (WHO WAS NOT REALLY THE LEGAL REPRESENT ATIVE OF THE DECEASED RANGALAL) AND WITHOUT SERVING NOTICE UPON THE LAWFUL LEGAL REPRES ENTATIVES (ARUNA DEVI, THE OTHER EXECUTOR OR ARUNA DEVI'S CHILDREN) - THAT TOO, DESP ITE THE OBJECTION OF SHANKAR LAL THAT HE IS NOT THE LEGAL REPRESENTATIVE AND THAT NOTICE MUS T BE SENT TO ARUNA DEVI, ETC., WHO ARE THE LEGAL REPRESENTATIVES OF THE DECEASED RANGALAL - IS ONLY 'DEFECTIVE' AND NOT NULL AND VOID, IT WOULD BE RATHER ODD TO CONTEND THAT ASSESS MENTS MADE ON THE BASIS OF RETURNS FILED BY ONE OF THE LEGAL REPRESENTATIVES (DISCLOSING THE TOTAL INCOME RECEIVED BY THE DECEASED) IS NULL AND VOID ON THE GROUND THAT NOTICES WERE NO T SENT TO OTHER LEGAL REPRESENTATIVES. ACCORDINGLY, IT WENT ON TO CONCLUDE AS UNDER (AT PA GE 747): THE PRINCIPLE THAT EMERGES FROM THE ABOVE DECISION IS THAT AN OMISSION TO SERVE OR ANY DEFECT IN THE SERVICE OF NOTICES PROVIDED BY PROCED URAL PROVISIONS DOES NOT EFFACE OR ERASE THE LIABILITY TO PAY TAX WHERE SUCH LIABILITY IS CR EATED BY DISTINCT SUBSTANTIVE PROVISIONS (CHARGING SECTIONS). ANY SUCH OMISSION OR DEFECT MA Y RENDER THE ORDER MADE IRREGULAR - DEPENDING UPON THE NATURE OF THE PROVISION NOT COMP LIED WITH - BUT CERTAINLY NOT VOID OR ILLEGAL. EQUALLY RELEVANT WOULD BE THE DECISION IN MAHARAJA OF PATIALA VS. CIT (1943) 11 ITR 202 (BOM), ALSO REFERRED TO BY THE APEX COURT I N ITS SAID DECISION (AT PAGE 744-746) ITA NO. 222/ASR/2016 (AY 2005-06) RAKESH GUPTA V. ITO 9 IN MAHARAJA OF PATIALA VS. CIT [1943] 11 ITR 202 (BOM), A DECISION RENDERED BY THE BOMBAY HIGH COURT, THE FACTS WERE THESE: THE LA TE MAHARAJA OF PATIALA HAD INCOME FROM PROPERTY AND BUSINESS IN BRITISH INDIA. HE DIED ON 23RD MARCH, 1938. ON 23RD NOV., 1938, THE ITO, BOMBAY SENT TWO NOTICE S UNDER SS. 22(2) AND 38 OF THE INDIAN INCOME TAX ACT, 1922 ADDRESSED TO THE MA HARAJA OF PATIALA REQUIRING HIM TO MAKE A RETURN OF HIS INCOME FROM ALL SOURCES FOR THE ASST. YRS. 1937-38 AND 1938-39. THEY WERE SERVED UPON THE SUCCESSOR MAHARA JA. RETURNS WERE FILED, SIGNED BY THE FOREIGN MINISTER OF PATIALA. THE ITO PASSED ASSESSMENT ORDERS DESCRIBING THE ASSESSEE AS 'HIS HIGHNESS....LATE MA HARAJA OF PATIALA'. THE SUCCEEDING MAHARAJA APPEALED AGAINST THE ASSESSMENT ORDERS CONTENDING THAT INASMUCH AS THE NOTICES WERE SENT IN THE NAME OF MA HARAJA OF PATIALA AND NOT TO HIM AS THE LEGAL REPRESENTATIVE OF THE MAHARAJA OF PATIALA, THE ASSESSMENTS MADE WERE ILLEGAL. THE CONTENTION WAS THAT THE NOTICES W ERE REALLY ADDRESSED TO THE LATE MAHARAJA, WHO WAS NOT ALIVE WHEN THE SAID NOTICES W ERE ISSUED AND THAT THEY WERE WRONGLY SERVED UPON HIM. THE ARGUMENT WAS REJECTED BY THE AUTHORITIES UNDER THE ACT AS WELL AS BY THE HIGH COURT ON REFERENCE. THE DIVISION BENCH COMPRISING BEAUMONT, C.J. AND KANIA, J. HELD THAT INASMUCH AS THE PRESENT MAHARAJA (WHO RAISED THE CONTENTION OF NULLITY) WAS THE LEGAL REP RESENTATIVE OF THE LATE MAHARAJA OF PATIALA AND BECAUSE THE RETURN OF THE LATE MAHARAJA 'S INCOME WAS MADE BY THE FOREIGN MINISTER ON HIS BEHALF AND BECAUSE HE KNEW PERFECTLY WELL THAT WHAT WAS BEING ASSESSED WAS THE INCOME OF HIS PREDECESSOR, T HE ASSESSMENT MADE, THOUGH NOT COMPLYING STRICTLY WITH S. 24B (CORRESPONDING T O S. 159 OF THE PRESENT ACT), IS YET VALID. THE FOLLOWING OBSERVATIONS OF BEAUMONT, C.J., ARE RELEVANT FOR OUR PURPOSE: 'IN THIS CASE, THE PERSON TO BE ASSESSED WAS THE LA TE MAHARAJA, WHO HAD DIED BEFORE HE WAS SERVED WITH ANY NOTICE UNDER SEC TION 22, AND, THEREFORE, THE PROVISIONS OF S. 24B(2) APPLY, AND T HE ITO WAS ENTITLED TO SERVE ON THE EXECUTOR, ADMINISTRATOR OR OTHER LEGAL REPRESENTATIVE OF THE DECEASED MAHARAJA A NOTICE UNDER S. 22(2) OR UNDER SECTION 34 AS THE CASE MIGHT BE, AND THEN PROCEED TO ASSESS THE TOTAL INCOME OF THE DECEASED MAHARAJA AS IF SUCH EXECUTOR, ADMINISTRATO R OR OTHER LEGAL REPRESENTATIVE WERE THE ASSESSEE. AS OBSERVED BY TH E PRESIDENT OF THE TRIBUNAL IN HIS JUDGMENT, THE ITO MADE NO ATTEMPT T O OBSERVE THE PROVISIONS OF THAT SUB-SECTION. HE SERVED THE NOTIC E ON THE PRESENT MAHARAJA, WITHOUT SHOWING IN WHAT CAPACITY. BUT THE TRIBUNAL HAVE FOUND, AS A FACT, THAT THE PRESENT MAHARAJA IS THE LEGAL REPRESENTATIVE OF THE DECEASED MAHARAJA, AND ALTHOUGH IT WOULD OBVIOU SLY HAVE BEEN BETTER SO TO DESCRIBE HIM IN THE NOTICE, I AM NOT P REPARED TO SAY THAT THE NOTICE WAS BAD, IF IT WAS SERVED ON THE LEGAL REPRE SENTATIVE, MERELY BECAUSE IT OMITTED TO STATE THAT IT WAS SERVED IN T HAT CAPACITY. IT SHOULD ITA NO. 222/ASR/2016 (AY 2005-06) RAKESH GUPTA V. ITO 10 HAVE BEEN STATED THAT IT WAS SERVED ON THE LEGAL RE PRESENTATIVE OF THE LATE MAHARAJA, AND THAT THE RETURN REQUIRED WAS OF THE LATE MAHARAJA'S INCOME. IT WAS NOT SO STATED, AND THE PRESENT MAHAR AJA HIMSELF MAY HAVE HAD TAXABLE INCOME FOR THE YEARS IN QUESTION; BUT I THINK THERE IS A GOOD DEAL OF FORCE IN THE CONTENTION OF THE TRIBUNA L THAT ANY IRREGULARITIES IN THIS RESPECT WERE WAIVED BY THE M AHARAJA, BECAUSE RETURNS OF THE LATE MAHARAJA'S INCOME WERE MADE BY THE FOREIGN MINISTER ON BEHALF OF THE MAHARAJA, AND THEN SUBSEQ UENTLY CORRECTIONS WERE MADE IN THE ASSESSMENT AT THE INSTANCE OF THE MAHARAJA. THERE IS NO DOUBT THAT THE PRESENT MAHARAJA KNEW PERFECTLY W ELL THAT WHAT WAS BEING ASSESSED WAS THE INCOME OF HIS PREDECESSOR.' THE FACTS OF THE PRESENT CASE, IT MAY BE NOTED, ARE STRIKINGLY SIMILAR TO THAT IN MAHARAJA OF PATIALA (SUPRA), WHICH DECISION STANDS ENDORSED BY THE APE X COURT. THE RETURN WAS FILED BY THE ASSESSEE HIMSELF, ON WH OM THE NOTICE U/S 148(1) WAS SERVED. THE SAID RETURN WAS, BY HIS FAMILY, COMPRIS ING HIS LEGAL REPRESENTATIVES, STATED TO BE REGARDED AS IN RESPONSE TO NOTICE U/S. 148(1). THE PROCEEDINGS WERE DULY REPRESENTED BY THE COUNSEL, APPEARING ON BEHAL F OF THE LRS. THE ASSESSMENT PROCEEDINGS AND THE CONSEQUENT ASSESSMENT IS VALID IN LAW NOTWITHSTANDING THE FACT THAT THE ASSESSMENT ORDER DOES NOT MENTION, INCORRE CTLY SO, THE NAME OF THE LRS, WHO IN FACT REPRESENT THE ASSESSEE, SH. RAKESH GUPT A, SINCE DECEASED, INASMUCH AS THEY ARE NOW THE ASSESSEES IN RESPECT OF HIS INCOME , AND IN WHOSE NAMES, THEREFORE, THE ASSESSMENT ORDER OUGHT TO HAVE BEEN PASSED INST EAD OF THE LATE ASSESSEE. AGAIN, UNDER SIMILAR CIRCUMSTANCES, THE HONBLE JURISDICTI ONAL HIGH COURT HAS UPHELD THE ASSESSMENT IN SWARAN KANTA VS. CIT [1989] 176 ITR 291 (P&H), STATING THE MENTION OF THE NAME OF THE DECEASED ASSESSEE IN THE ASSESSMENT ORDER INSTEAD OF THE LEGAL HEIR TO BE A CLERICAL MISTAKE. BOTH THE S IDES HAVE CITED SEVERAL DECISIONS, ALL OF WHICH HAVE BEEN GONE THROUGH. IT IS, HOWEVER , NOT NECESSARY, IN VIEW OF THE CLEAR ENUNCIATION OF LAW PER DECISION IN JAI PRAKASH SINGH (SC), READ OUT DURING THE HEARING, AND THE OTHERS BY THE APEX COURT, REFE RRED TO THEREIN, DWELL THEREON ITA NO. 222/ASR/2016 (AY 2005-06) RAKESH GUPTA V. ITO 11 INDIVIDUALLY. THERE IS, IN FACT, ABUNDANT CASE LAW IN THE MATTER TO WHICH, AS AFORE- STATED, REFERENCE IS NOT REQUIRED IN VIEW OF THE SE TTLED POSITION OF LAW. 5. I MAY NEXT PROCEED TO DISCUSS IMPUGNED ADDITION ON MERITS. THE BRIEF FACTS ARE THAT THE ASSESSEE, ALONG WITH OTHERS, WAS FOUND TO PURCHASED TWO PIECES OF LAND FOR AN AGGREGATE OF RS.63.60 LACS DURING THE RELEVA NT YEAR, AS UNDER: S. NO. DESCRIPTION OF THE PROPERTY AMOUNT PURCHASED BY 1. 1 KANAL 1 MARLA LAND AT MOHALLA KHAZANCHIAN, GURDASPUR, PURCHASED ON 27.05.2004 RS.21,20,000/- SH. RAKESH GUPTA, (THE ASSESSEE), SH. SRIJAL GUPTA, SH. VIJAY MOHAJAN AND SAHIL MAHAJAN. 2. 27-95 MARLA LAND AT MOHALLA KHAZANCHIAN, GURDASHPUR, PURCHASED ON 09.02.2005 RS.42,40,000/- SH. RAKESH GUPTA, (THE ASSESSEE), SH. SRIJAL GUPTA, SH. VIJAY MAHAJAN AND SAHIL MAHAJAN. THE SAME WERE EXPLAINED TO BE INVESTED BY THE FIRM, M/S. REAL ESTATES, PATHANKOT (OR MAIN BAZAR, GURDASPUR), FROM WHOSE BANK ACCOUNT (WITH CENTRAL BANK OF INDIA, GURDASPUR) CHEQUES FOR INVESTMENT IN THE PRO PERTY (LAND) WERE ISSUED. THE BANK ACCOUNT REVEALED THE SAID FIRM TO HAVE THE FOL LOWING PARTNERS: 1. SH. RAKESH GUPTA 20% (THE ASSESSEE) 2. SH. SRIJAL GUPTA 30% ITA NO. 222/ASR/2016 (AY 2005-06) RAKESH GUPTA V. ITO 12 3. SH. VIJAY MAHAJAN 25% 4. SH. SAHIL MAHAJAN 25% THE ASSESSEE EXPLAINED THE INVESTMENT TO BE BY THE SAID FIRM, EVIDENCED BY PARTNERSHIP DEED, WHICH THEREFORE COULD NOT BE REGA RDED AS A BENAMI FIRM, I.E., OF THE PARTNERS, OR A BOGUS FIRM, HAVING IN FACT SECUR ED A BANK LOAN FROM HINDU URBAN CO-OPERATIVE BANK, PATHANKOT (DURING THE AY 2006-07 ). IN VIEW OF THE AO THE FIRM IS NOT A SEPARATE LEGAL ENTITY, WITH THE PARTN ERS BEING THE LEGAL OWNERS OF ASSETS OF THE FIRM, AS CLARIFIED BY THE APEX COURT IN N. KHADERVALI SAHEB VS. N. GUDU SAHEB (DECEASED) [2003] 261 ITR 1 (SC). AS SUCH, STATING OF THE INV ESTMENT AS HAVING BEEN MADE BY THE FIRM WOULD NOT ASSIST THE A SSESSEES CASE. IN THE FACTS OF THE CASE, THE FIRM HAD IN FACT MENTIONED A FICTITIO US PAN TO THE BANK FOR OPENING ITS ACCOUNT WITH IT. THAT IS, IT DID NOT APPLY FOR THE PAN. THE BANK ACCOUNT WHEREIN THERE WERE CASH DEPOSITS FOR RS.68,80,914/- DURING THE YEAR, WAS THUS A BENAMI ACCOUNT OF THE PARTNERS DEPOSITING THE SAID CASH. NO BOOKS OF ACCOUNT OF THE FIRM WERE PRODUCED NOR ANY RETURN OF INCOME FIL ED. THE INVESTMENT IN LAND AT RS.68,68,475/- DURING THE YEAR, WAS ALSO IN THE NAM E OF THE PARTNERS. TWENTY PER CENT OF THE CASH DEPOSITS, I.E., ASSESSEES SHARE T HEREIN, WAS REGARDED AS UNEXPLAINED CASH IN THE ASSESSEES HAND AND BROUGHT TO TAX, I.E. AT RS.13,73,695/-. IN APPEAL, THE ASSESSEE EXPLAINING THE SOURCE OF CA SH TO THE EXTENT OF RS.5.65 LACS, THE LD. CIT(A) ALLOWED RELIEF TO THAT EXTENT. FURTH ER, THE TOTAL CASH DEPOSITS WERE NOT FOR RS.68.68 LACS, BUT FOR RS.50.43 LACS, SO TH AT THE ASSESSEES SHARE THEREIN CAME TO RS.10.09 LACS (AND NOT RS.13.74 LACS). THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNT OF TH E FIRM BY THE ASSESSEE WAS ACCORDINGLY LIABLE TO BE RESTRICTED TO RS.4.44 LACS I.E. (RS.10.09 - RS.5.65). AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 5. I HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. ITA NO. 222/ASR/2016 (AY 2005-06) RAKESH GUPTA V. ITO 13 THE FIRST OBSERVATION IN THE MATTER IS THAT THE BAS IS OF THE IMPUGNED ADDITION IS THE CASH DEPOSITED BY THE ASSESSEE, A PARTNER IN TH E FIRM M/S. REAL ESTATES, GURDASPUR (RE), U/S. 69A WITH IT, WHICH IN TURN WAS DEPOSITED BY THE FIRM IN ITS BANK ACCOUNT. THE QUESTION OF THE SAID FIRM BEING A BOGUS FIRM, OR A BENAMI FIRM, IN WHICH THE PARTNERS ARE DEPOSITING CASH AND WITHD RAWING BY CHEQUE FOR INVESTMENT IN THE OWN NAMES, I.E. AS A DEVICE FOR A CCOMMODATION ENTRIES, AS ALLEGED BY THE AO ON WHICH I OBSERVE NO FINDING B Y THE LD. CIT(A), IS RENDERED LARGELY IRRELEVANT. IN FACT, IT STANDS EXPLAINED IN THE FIRST APPELLATE PROCEEDINGS THAT THE PAN GIVEN TO THE BANK FOR OPENING THE BANK ACCO UNT WAS OF THE ASSESSEE (THOUGH BY MISTAKE ONE ALPHABET WAS MISTYPED), GIVE N WITH THE CONSENT OF THE BANK, AS THE FIRMS PAN HAD NOT BEEN APPLIED FOR AT THE RELEVANT TIME, THOUGH APPLIED FOR AND OBTAINED LATER AS AAPFR 4418L. FU RTHER, THE FIRM, CONSTITUTED BY A PARTNERSHIP DATED 24.12.2003, W.E.F. 1.12.2003, W AS REGISTERED WITH THE REGISTRAR OF FIRMS (REFER PAGE 7 OF THE IMPUGNED ORDER). A FI RM COULD WELL PURCHASE ITS ASSETS IN THE NAME OF A PARTNER, WHICH THOUGH A SEP ARATE TAXABLE ENTITY UNDER THE ACT, IS ONLY A COMPENDIOUS MANNER OF DESCRIBING THE PARTNERS WHO HAVE ENTERED INTO A CONTRACT OF PARTNERSHIP, I.E., TO SHARE THE PROFITS & LOSSES OF THE BUSINESS OF THE FIRM IN A DEFINED MANNER. I AM THOUGH, IT MAY B E CLARIFIED, NOT ISSUING ANY FINAL FINDING ON THIS ASPECT OF THE MATTER, I.E., WHETHER THE FIRM RE IS A GENUINE FIRM OR ONLY A DEVICE SET UP BY THE PARTNERS TO ROUTE THE IR MONIES FOR INVESTMENT IN REAL ESTATE THROUGH IT. AND PROCEED TO ADJUDICATE ONLY O N THE SUSTAINABILITY OF THE IMPUGNED ADDITION, DETERMINED BY THE LD. CIT(A) AT RS.4,43,540, AS AGAINST AT RS.13.74 LACS BY THE AO, I.E., THE EXTENT TO WHICH THE ASSESSEE HAS BEEN UNABLE TO SATISFACTORILY EXPLAIN THE NATURE AND SOURCE OF THE AMOUNT INVESTED BY HIM IN THE SAID FIRM RE. ITA NO. 222/ASR/2016 (AY 2005-06) RAKESH GUPTA V. ITO 14 BEFORE ME, IT WAS SUBMITTED THAT THE LD. CIT(A) HAD FAILED TO ALLOW CREDIT FOR RS.7.50 LACS TRANSFERRED TO RE BY THE ASSESEE THROU GH TRANSFER FROM THE BANK ACCOUNT OF HIS PROPRIETARY CONCERN, M/S. SANGAM EST ATES, PATHANKOT, (SE), ASSESSED UNDER PAN: AABFS 0920J WITH ITO, WARD-2, PATHANKOT. MY SECOND OBSERVATION IN THE MATTER IS THAT THE EXPLANATION THAT THE ASSE SSEE COULD BE CALLED UPON TO FURNISH IN LAW IS ONLY FOR THE AMOUNT INVESTED IN T HE FIRM, IN CASH OR OTHERWISE, DURING THE YEAR, AND WHICH COULD BE ASCERTAINED ONL Y WITH REFERENCE TO THE BOOKS OF THE FIRM, NOT PRODUCED AT ANY STAGE. THIS NEEDS TO BE CLARIFIED AS BOTH THE REVENUE AUTHORITIES, AS WELL AS THE ASSESSEE HIMSELF, HAVE PROCEEDED ON THE BASIS THAT THE INVESTMENT OF THE PARTNERS IN RE IS PROPORTIONATE T O THEIR PROFIT SHARING RATIO, WHICH MAY OR MAY NOT BE CORRECT. THIS ASPECT, NOTED DURIN G HEARING, WAS NOT OBJECTED TO BY THE LD. COUNSEL, SH. BHASIN, WHO, RATHER, CONFIR MED IT AS SO, ARGUING FOR AN ALMOST TOTAL RELIEF BY ADOPTING THE SAID BASIS, AS -- CREDIT IN BANK A/C (OF RE): RS.68.68 LACS. -- ASSESSEES SHARE : RS.13.74 LACS -- ASSESSEES EXPLANATION : RS.13.15 LACS (RS. 5 .60 LACS + RS.7.50 LACS) THE ARGUMENT IS VALID IN PRINCIPLE, SUBJECT OF COUR SE TO THE VERIFICATION OF THE SAID INVESTMENT OF RS.7.50 LACS BY THE ASSESSEE DURING T HE YEAR. IN FACT, THIS IS THE PRINCIPAL FLAW IN THE QUANTIFICATION ASPECT AS WORK ED OUT BY THE LD. CIT(A). ACCEPTING THE ASSESSEES EXPLANATION THAT THE TOTAL CASH DEPOSITS IN RE DURING THE YEAR ARE AT RS.50.43 LACS (AND NOT RS.68.68 LACS), HE OUGHT TO HAVE ENQUIRED ABOUT THE SOURCE OF THE BALANCE AMOUNT; THE FIRM HAVING A DMITTEDLY MADE A TOTAL INVESTMENT OF RS.68.81 LACS DURING THE YEAR. TWO TH INGS, HOWEVER, WOULD NEED TO BE VERIFIED PRIOR TO THE ASSESSEE BEING ALLOWED REL IEF IN TERMS OF THE WORKING AFORE- REFERRED, I.E., AT RS.13.15 LACS. FIRSTLY, OF RS.7. 50 LACS, STATED TO BE TRANSFERRED TO THE ITA NO. 222/ASR/2016 (AY 2005-06) RAKESH GUPTA V. ITO 15 RE, THE FIRST TRANSFER FROM SE IS BY A BANK DRAFT D ATED 31.03.2004 (PAGE-8 OF THE APPELLATE ORDER). IF THE SAME STANDS CREDITED TO TH E BANK ACCOUNT OF RE ON 31.03.2004 ITSELF, COULD THE ASSESSEE CLAIM CREDIT FOR THE SAME AS PART OF THE AMOUNT TRANSFERRED DURING THE CURRENT YEAR? SURELY NOT. IF , HOWEVER, THE TRANSFER IS IN THE FOLLOWING YEAR, CREDIT FOR THE SAME SHALL ARISE. TW O, IT IS THE TOTAL AMOUNT OF CREDIT IN THE BANK ACCOUNT OF RE, AND NOT THE CASH DEPOSIT S ALONE, WHICH MAY BE IN EXCESS OF RS.68.68 LACS, THAT WOULD NEED TO BE EXPLAINED, I.E., TO THE EXTENT OF 20% THEREOF, BY THE ASSESSEE. THIS IS AS THE TOTAL CREDIT IN THE FIRMS BANK ACCOUNT MAY BE IN EXCESS OF RS. 68.68 LACS, THE AMOUNT STATED BY THE LD. COUNSEL. THIS ASSUMES RELEVANCE AS THE ASSESSEE SEEKS CREDIT FOR TRANSFER OF FUNDS THROUGH BANK (RS. 7.50 LACS) IN EXPLANATION OF THE CASH DEPOSITED IN THE F IRMS BANK ACCOUNT, AND WHICH CANNOT BE. IF, THEREFORE, THE ASSESSEES SHARE, TAK ING IT AT 20%, IN THE TOTAL CREDIT IN THE FIRMS BANK ACCOUNT DURING THE YEAR, DOES NOT E XCEED RS. 13.15 LACS, HE CANNOT BE TAXED, SO THAT HIS LIABILITY WOULD STAND RESTRIC TED TO THAT DETERMINED IN EXCESS OF RS. 13.15 LACS. THIS WILL ALSO MEET THE FLAW IN THE ADJUDICATION BY THE LD. CIT(A) WHO, WHILE ACCEPTING THE ASSESSEES CLAIM OF THE TO TAL CASH DEPOSITS BEING IN FACT AT RS. 50.43 LACS, DID NOT INQUIRE INTO THE BASIS OF T HE BALANCE AMOUNT. HIS NOT ALLOWING CREDIT FOR RS. 7.50 LACS TRANSFERRED THROU GH BANK IS INCONSISTENT WITH THE ASSUMPTION THAT EACH PARTNER HAS INVESTED IN THE FI RM PROPORTIONATE TO HIS SHARE IN THE PROFITS, SO THAT IT BECOMES IRRELEVANT WHETHER THE SAID INVESTMENT IS IN CASH OR THROUGH BANK. SUBJECT TO THESE TWO VERIFICATIONS A ND POSITIVE CONFIRMATION BY THE AO, THE ASSESSEE BE ALLOWED TOTAL RELIEF AT RS.13.1 5 LACS, LEAVING A BALANCE OF RS.0.49 LACS, OR ANY HIGHER OR LOWER SUM, AS THE CA SE MAY BE, FOR BEING CONFIRMED AS DEEMED INCOME U/S. 69A. 7. BEFORE PARTING, IT MAY BE CLARIFIED THAT THOUGH THE APPEAL RAISES SEVERAL OTHER GROUNDS, NONE OF THEM, I.E., OTHER THAN THAT DISCUS SED HEREINABOVE, WERE PLEADED OR ITA NO. 222/ASR/2016 (AY 2005-06) RAKESH GUPTA V. ITO 16 PRESSED DURING THE HEARING AND, ACCORDINGLY, WERE A LSO NOT RESPONDED TO BY THE OTHER SIDE. THE SAME, THEREFORE, DO NOT FORM PART O F THE ADJUDICATION. 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED ON THE AFORE-SAID TERMS. ORDER PRONOUNCED IN THE OPEN CO URT ON JANUARY 31, 2019 SD/- (SANJAY ARORA) ACCOUNTANT MEMBER DATE: 31.01.2019 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: SH. RAKESH GUPTA THROUGH L/H RIKSHIT GUPTA PATHANKOT (2) THE RESPONDENT: INCOME TAX OFFICER, WARD-2, PATHANKOT (3) THE CIT(APPEALS)-2, AMRITSAR (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T TRUE COPY BY ORDER