Ramesh Kumar, Hardoi V. ITO Ward 3(3), Hardoi, Hardoi

ITA 225/LKW/2022

AI Insights

The case involves an appeal by the assessee, Ramesh Kumar, against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] which confirmed the addition of Rs.9,12,008 to the assessee's income under section 56(2)(vii)(c) of the Income Tax Act, 1961. The addition was made following the assessee's failure to respond to notices under sections 142(1) and 148, leading to an ex parte assessment under section 144/147. The Tribunal found that the CIT(A) did not adequately verify the facts regarding the limitation period for the assessment order and did not provide the assessee an opportunity to contest the taxability of the amount under a different provision, specifically section 28(iv) instead of section 56(2)(vii)(c).

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123099 (ITAT-LUCKNOW)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 02-07-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 11-12-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Assessment record
• Section: 147; 148; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “SMC”, LUCKNOW BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA No.225/LKW/2022 Assessment Year: 2011-12 Ramesh Kumar C/o Sanjay Saxena 12, Pratap Enclave Bisrat Road Shajahanpur v. The Income Tax Officer Ward 3(3) Hardoi TAN/PAN:BXKPK2043R (Appellant) (Respondent) Appellant by: Shri Sanjay Saxena, C.A. Respondent by: Shri Ranjan Srivastava, Senior Departmental Representative (“ld. Sr. DR” for short) Date of hearing: 03 07 2023 Date of pronouncement: 19 07 2023 O R D E R PER ANADEE NATH MISSHRA, A.M.: (A) Appeal in I.T.A. No.225/LKO/2022 has been filed by the assessee for Assessment Year 2011-12 against the impugned appellate order dated 14.10.2022 vide DIN & Order No. ITBA/ NFAC/S/250/2022-23/1046319512(1) of ld. Commissioner of Income Tax (Appeals) [“ld. CIT(A)” for short]. The grounds of appeal are as under: 1. That the initiation of re-assessment proceedings by issue of notice u/s 148 of the I.T. Act, 1961, its continuation and culmination vide order u/s 147 r.w.s.144 of the I.T. Act, 1961 dated 21.12.2018 is bad in law and be cancelled. Page 2 of 8 2. That the assessment order u/s 147/144 of the Income Tax 1961 is time barred by limitation and be cancelled. 3. The ld. CIT(A)/A.O. erred on facts and in law in adding Rs.9,12,008/- to the total income invoking section 56(2)(vii)(c) of the Income Tax Act, 1961. The said section is not applicable to the appellant. (B) In this case, proceedings under section 147 of the Income Tax Act, 1961 [“I.T. Act” for short] were initiated and notice under section 148 of the I.T. Act was issued to the assessee. The assessee, however, did not file any return in response to the aforesaid notice under section 148 of the I.T. Act. The Assessing Officer issued notices under section 142(1) of the I.T. Act, dated 10.8.2018, 19.9.2018, 12.10.2018 and 14.11.2018. However, the assessee did not comply with the notices. Eventually, the Assessing Officer passed the assessment order dated 21.12.2018 under section 144/147 of the I.T. Act, wherein the assessee’s income was assessed at Rs.9,12,008/-. The relevant portion of the assessment order is reproduced below: “As per CIB information available with department the Assessee had purchased a motor vehicle of Rs.9,12,008/-. A query letter vide NMS2/BXKPK2043R/3768702 was issued to the assessee but the assessee failed to submit documents to verify the source of investment for the purchase of motor vehicle. As per records of the department, the assessee has neither filed ITR for the AY 2011-12 nor furnished any documentary evidences. Therefore, after duly recording reasons and obtaining sanction u/s 151 of the LT. Act 1961, Page 3 of 8 proceedings u/s 147 of I.T. Act 1961 were initiated against the assessee for the escapement of income to the extent of Rs.9,12.008/. Accordingly, notice u/s 148 was issued on 26.03.2018 and duly served upon the assessee but the assessee neither filed any return of income nor filed any other reply. Therefore, notices u/s 142(1) of Income- tax Act, 1961 were issued as detailed under:- S. No. Under Section Date of Issue Date of Compliance Remark 1 142(1) of Income tax Act, 1961 10.08.2018 23.08.2018 Assessee asked for reason 2 142(1) of Income tax Act, 1961 19.09.2018 03.10.2018 Neither anybody attended nor any reply was filed 3 142(1) of Income- tax Act, 1961 12.10.2018 26.10.2018 Seven cay time was sought 4. 142(1) of Income tax Act. 1961 14.11.2018 22.11.2018 Neither anybody attended nor any reply was filed Information in regard to acquisition of vehicle was gathered. As per the information provided by the assessee vide reply dated 26.10.2018, and also confirmed by letter of V care Multitrade Pvt. Limited, A-8, Sindhu Nagar (Krishna Nagar), Lucknow, a TATA Safari-Ex car was gifted to the assessee Page 4 of 8 on 28.02.2011. The registration number of the car is U.P. 30 Q 1011. Assesssee is engaged with V Care Multitrade Private Ltd. Assessee received the gift of Safari Car as gift for his work done with the company. Assessee had been receiving commission (accepted by assessee in his reply) from the company for his performance. In addition to commission, gift of Safari Car was received from the company. This car was received by the assessee from company without any consideration. As per section 56(2)(vii) (c) of the Income Tax Act, 1961 - any property, other than immovable property received without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property shall be chargeable to income tax under the head "Income from other sources. In the instant case, the assessee did not pay any cost of safari vehicle and the vehicle was gifted to the assessee without consideration. Under the fact, the cost of Car Rs 9,12,008/- is added to the income of the assessee under the head "Income from other sources" as per the provisions of sections 56(2)(vii) (c) of Income-tax Act, 1961.” (B.1) The assessee filed appeal in the office of the ld. CIT(A) against the aforesaid assessment order dated 21.12.2018. Vide impugned appellate order dated 14.10.2022, the ld. CIT(A) dismissed the assessee’s appeal. The relevant portion of the impugned appellate order dated 14.10.2022 of the ld. CIT(A) is reproduced below: Page 5 of 8 “4. I have considered the facts of the case, records and submissions of the appellant. The adjudication on various grounds is as under: 4.1 Ground No. 1: The appellant had claimed that the order was dispatched on 01.01.2019 through speed post and was received by him on 07.01.2019. It indicates that assessment had got time barred and order has been made on back date on 21.12.2018. 4.1.1 It is observed that as per the IT Act, 1961 the assessment order had to be passed within the time barring period and not served upon the appellant. The order had been dispatched on 01.01.2019, thereby indicating that it has been passed at least by 31.12.2018 (within the limitation period). It is observed that the AO had to pass majority of the orders near the time barring date and there are processes of calculation sheet, entries at various places in records, dispatch the order etc. These processes may take time after the order passed by the AO is dispatched to the appellant. These are facts which can always be obtained by the appellant under RTI to substantiate its claim. The appellant had not submitted any such documents, which can point towards passing of the assessment order after the time barring date of 31.12.2018. In these facts and circumstances of the case, this ground taken by the appellant on the basis of presumptions, is not sustainable and is hereby dismissed. 4.2 Ground No. 2: The appellant had claimed that the AO had added and amount of Rs.912008/- (value of the car) u/s 56(2)(vii)(c), which had been received as gift apart from the commission from the company for his work done with the company. The appellant claimed that the Motor car does not Page 6 of 8 fall under the definition of the property in explanation (d) to this section. 4.2.1 It is observed from the assessment order the appellant had been doing some business/professional work for the company for which it is getting commission income from the company. During the year under consideration the appellant had claimed that it had received a Tata Safari car as "gift" from the company for the work done by him. The AO had considered "gift" by the nomenclature as contended by the appellant and added it u/s 56(2)(vii) (c) without appreciating the fact that the appellant had received this car in liueof the services/business connection with the company and is not otherwise. In my opinion this amount is taxable u/s 28(iv) which read as under: "the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession;" Accordingly, it is held that the car had been received as benefit/perquisite convertible into amount of Rs. 912008/- which has arisen to the appellant in exercise of his business or profession. Accordingly, this amount is taxed u/s28(iv) as income of the appellant. In these facts and circumstances of the case, the ground taken by the appellant that this amount is not covered u/s 56(2)(vii)(c) explanation (d) is no longer valid and is rendered infructuous. 4.3 Ground No. 3 is general in nature and does not require any adjudication. 5. In the result, appeal is "dismissed". (B.2) The present appeal before us has been filed by the assessee against the aforesaid impugned appellate order dated Page 7 of 8 14.10.2022 of the ld. CIT(A). At the time of hearing before us, the assessee was represented by Shri Sanjay Saxena, Chartered Accountant, learned Authorized Representative (“ld. AR” for short) for the assessee, whereas the Revenue was represented by Shri Ranjan Srivastava, ld. Sr. DR for the Revenue. The ld. AR for the assessee contended that the assessment order was barred by limitation. He further contended that the ld. CIT(A) erred in confirming the addition of Rs.9,12,008/-, under section 28(4) of the I.T. Act, whereas the Assessing Officer had erroneously made the addition under a different provision of the I.T. Act, i.e. under section 56(2)(vii)(c) of the I.T. Act. The ld. Sr. DR for Revenue relied on the order of the ld. CIT(A). (B.2.1) We have heard both the sides, we have perused the material on record. As regards the assessee’s contention that the assessment order was barred by limitation, we find that the ld. CIT(A) has dealt with that in paragraphs 4.1 and 4.1.1. of his impugned appellate order (already reproduced in the foregoing paragraph No.B.1 of this order). However, the ld. CIT(A) failed to verify the facts from the assessment records, as to whether the assessment order was barred by limitation. Further, the ld. CIT(A) did not give any opportunity to the assessee before deciding to tax of aforesaid amount of Rs.9,12,008/- under section 28(4) of the I.T. Act instead of under a different provision of law under section 56(2)(vii)(c) of the I.T. Act, under which the addition was made by the Assessing Officer. On the other hand, we find that the assessee also did not co-operate with the Assessing Officer during the assessment proceedings. The assessee neither filed the return of income in response to notice under section 148 of the I.T. Act, nor did the assessee submit reply to the queries raised in notices under section 142(1) of the Page 8 of 8 I.T. Act. Evidently, the Assessing Officer was denied the benefit of proper representation and submissions from the assessee’s side. In view of the foregoing, we are of the view that all the issues in dispute should be examined afresh by the ld. CIT(A). Accordingly, we set aside the impugned appellate order dated 14.10.2022 of the ld. CIT(A) and we direct the ld. CIT(A) to pass de novo order in accordance with law after providing reasonable opportunity to the Assessing Officer as well as to the assessee. We also direct the ld. CIT(A) to examine the assessment records to ascertain whether the assessment order was barred by limitation. All the grounds of appeal are treated as disposed of in accordance with the aforesaid directions. (C) In the result, for statistical purposes, the appeal is partly allowed. Order pronounced in the open Court on 19/07/2023. Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [ANADEE NATH MISSHRA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:19/07/2023 JJ: Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR By order Assistant Registrar