ITO,WARD-41(2),KOLKATA, Kolkata V. Shri Subrata Saha, Kolkata

ITA 226/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4137 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 28-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 07-02-2014
• Court: TRIBUNAL
• Department Lawyers: ANIL KR PANDE
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Unexplained investment; Invalid notice; Peak credit; Period of limitation; Source of fund; Additional evidence; Validity of assessment; Assessment record; Reassessment proceedings; Capital expenditure
• Section: 142(1); 133(6); 147; 131; 148; 144

Judgement Text

ITA NO.226/KOL/2014-SHRI SUBRATA SAHA A.Y.2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI P.M.JAGTAP, AM & SRI N.V.VA SUDEVAN, JM ] I.T.A NO.226/KOL/2014 ASSESSMENT YEAR : 2006-07 I.T.O., WARD-41(2) -VS.- SHRI SUBRATA SA HA KOLKATA KOLKATA [PAN : AVQPS9056F] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI ANIL KR.PANDE, ADDL. CIT FOR THE RESPONDENT : SHRI MIRAJ D.SHAH, AR DATE OF HEARING : 22.11.2016. DATE OF PRONOUNCEMENT : 2.12.2016. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 06.10.2013 PASSED BY THE CIT(A)-XIX, KOLKATA RELATING TO A.Y.2006-07. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE READS AS FOLLOWS :- 1. THAT ON THE FACT AND IN THE CIRCUMSTANCES OF TH E CASE THE LD.CIT(A) ERRED BOTH IN LAW AND FACTS IN QUASHING ASSESSMENT IGNORING THE F ACTS THAT ASSESSEE RAISED NO OBJECTION REGARDING THE ISSUANCE OF NOTICE U/S. 143 (2) OF THE INCOME TAX ACT, 1961 AND HE CO-OPERATED IN THE ASSESSMENT PROCEEDINGS AND CO NSEQUENTLY THE PROVISIONS OF SECTION 29288 OF THE INCOME TAX ACT, 1961 ARE CLEAR LY APPLICABLE IN THIS CASE. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN QUASHING THE ASSESSMENT WITHOUT AFFORDING THE OPPORTUNITY TO THE A.O. TO GIVE HIS VIEW IN THIS REGARD. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) IS NOT RIGHT IN DELETING THE ADDITION OF RS. 78,60,000/- MADE ON ACCOUNT OF UNEX PLAINED INVESTMENT IN MUTUAL FUND BY ADMITTING FRESH EVIDENCE IN VIOLATION OF PROVISI ONS OF RULE 46A OF THE INCOME TAX RULES, 1962. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION TO RS. 13,46,517/- MADE ON ACCOUNT OF UNEX PLAINED CASH DEPOSIT TO THE BANK. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS MA DE TO THE BANK BY ADOPTING PEAK CREDIT METHOD WHEN THE ASSESSEE FAILED TO EXPLAIN T HE CASH DEPOSITS MADE TO THE BANK. ITA NO.226/KOL/2014-SHRI SUBRATA SAHA A.Y.2006-07 2 3. THE ASSESSEE IS AN INDIVIDUAL. HE FILED RETURN O F INCOME FOR A.Y.2006-07 ON 15.11.2006 DECLARING TOTAL INCOME OF RS.1,04,130/-. THE ASSESSMENT FOR A.Y.2006-07 WAS REOPENED BY ISSUE OF NOTICE U/S 147 OF THE ACT BY ISSUING OF NOTICE U/S 148 OF THE ACT DAT ED 16.07.2008.THE ASSESSEE HAD NOT FILED ANY RETURN OF INCOME IN RES PONSE TO THE NOTICE U/S 148 OF THE ACT. LATER ON NOTICE U/S 142(1) OF THE A CT WAS ISSUED ON 18.08.2008 BY THE AO. THE ASSESSEE HAD NOT FILED AN Y RETURN OF INCOME IN RESPONSE TO THIS NOTICE ALSO. 4. THE AO THEREAFTER PROCEEDED TO FRAME THE ASS ESSMENT U/S 144 R.W.S. 147 OF THE ACT. THE AO NOTICED FROM THE PHOTO COPIE S OF THE ANNUAL INFORMATION REPORT THAT THE ASSESSEE HAD MADE INVES TMENTS IN MUTUAL FUNDS AMOUNTING TO RS.78,60,000/- AND CASH DEPOSITS OF RS.27,31,600/- IN HIS BANK ACCOUNTS. THE AO CALLED UPON THE ASSESS EE TO EXPLAIN THE SOURCE OF FUNDS BY MAKING THE AFORESAID INVESTMENTS AS WELL AS CASH DEPOSITS. THE ASSESSEE DID NOT RESPOND TO THIS NOTI CE. THE AO ISSUED A SUMMON U/S 131 OF THE ACT DATED 19.11.2009 FOR PERS ONAL ATTENDANCE OF THE ASSESSEE WITH REQUIRED DOCUMENTS. EVEN TO THIS THE ASSESSEE DID NOT RESPOND. THE AO ISSUED NOTICE U/S 133(6) OF THE ACT TO THE MUTUAL FUND AUTHORITIES AND OBTAINED THE CONFIRMATION FROM THEM . THE ASSESSEE FILED RETURN OF INCOME ON 17.12.2009 AT THE FAG END OF TH E PERIOD OF LIMITATION FOR COMPLETION OF ASSESSMENT. ACCORDING TO THE AO S INCE THE RETURN OF INCOME WAS FILED AT THE FAG END OF THE PERIOD OF LI MITATION FOR COMPLETION OF ASSESSMENT THE SAME CANNOT BE TAKEN C OGNIZANCE. 5. THEREAFTER THE AO PROCEEDED TO FRAME THE ASSE SSMENT AND DETERMINED THE TOTAL INCOME AS FOLLOWS :- A SHOW CAUSE LETTER DT.18.12.2009 WAS ISSUED AND S ERVED ON THE ASSESSEE ASKING TO SHOW CAUSE WHY THE INVESTMENT OF RS.78,60,000/- TOWARDS MUTUAL FUND AND CASH DEPOSITS OF RS.27,31,6 00/- TO THE BANK A/C. MAINTAINED WITH STANDARD CHARTERED BANK.BIDHAN SARA NI, SHYAMBAZAR.KOLKATA, SHOULD NOT BE ADDED TO THE TOTA L INCOME AS UNEXPLAINED INVESTMENT U/S.69 OF THE I.T.ACT, 1961, AND COMPLIANCE IN THIS REGARD SHOULD REACH THE UNDERSIGNED BY 24.12.2 009. THE A.R.. OF THE ITA NO.226/KOL/2014-SHRI SUBRATA SAHA A.Y.2006-07 3 ASSESSEE FILED A LETTER DT. 18.12.2009 ON 24.12.200 9 ALONG WITH SOME ENCLOSURES, HUT THE SAME IS NOT ACCEPTABLE, AS THE A.R. IN HIS LETTER ABOVE HAS STATED THAT THE ABOVE INVESTMENTS AND DEPOSITS ARE REFLECTED IN THE BALANCE-SHEET FILED WITH THE RETURN OF INCOME U/S. 148, BUT NO COPY OF BALANCE-SHEET FOR THE RELEVANT ASSESSMENT YEAR HAS BEEN FILED WITH THE RETURN. IN VIEW OF THE ABOVE FACTS, IT IS CLEAR THAT NEITHE R THE ASSESSEE NOR HIS A.R. HAS SUFFICIENT GROUND TO EXPLAIN THE SHOW CAUS E LETTER. SINCE IT IS A TIME BARRING CASE TO BE COMPLETED BY 31.12.2009, I HAVE NO OTHER ALTERNATIVE, BUT TO COMPLETE THE ASSESSMENT T O THE BEST OF MY JUDGMENT. THE TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS UND ER:- I. INCOME FROM HOUSE PROPERTY :- IT APPEARS FROM THE BALANCE SHEET TILED WITH THE OR IGINAL RETURN THAT THE ASSESSEE HAS POSSESSED TWO FLATS AT BAGUIHATI AND U LTADANGA MAIN ROAD.KOLKATA, BUT NO DETAILS WAS FILED, THE INTERES T ON BORROWED CAPITAL AS CLAIMED BY THE ASSESSEE IS NOT ALLOWED - NIL 2. INCOME FROM BUSINESS :- AS PER STATEMENT - RS. 2,69,947/- 3 INCOME FROM OTHER SOURCE :- AS PER ORIGINAL COMPUTATION - RS. 13,671/- 4. UNEXPLAINED INVESTMENT TOWARDS MUTUAL FUNDS AND CASH DEPOSITS WITH BANK AS DISCUSSED ABOVE- RS.1,05,91,600/- RS.1,08,75,218/- LESS: DEDUCTION UNDER CHAPTER VIA :- UNDER SEC.80C ON LIP & NSC RS. 53,2 67/- TOTAL INCOME RS.1,08,21,951/- ROUNDED OFF RS.1,08,21,950/- 6. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). IN THE COURSE OF APPELLATE PROCEEDIN GS THE ASSESSEE ALSO FILED DETAILS OF MUTUAL FUND, CALCULATION OF CAPITA L GAIN, DETAILS OF CASH WITHDRAWALS AND DEPOSITS AND CASH IN BANK BOOK AS W ELL AS EXPLANATION REGARDING SOURCE OF DEPOSIT OF CASH AND INVESTMENTS IN MUTUAL FUND. THESE DOCUMENTS WERE FORWARDED TO THE AO FOR HIS CO MMENTS AND REMAND REPORT WAS DULY OBTAINED FROM THE AO. THEREA FTER THE CIT(A) DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS FOLLOWS :- 7.4. I HAVE CONSIDERED THE SUBMISSION OF THE AR A ND PERUSED THE ASSESSMENT ORDER, THE PAPER BOOK, THE REMAND REPORT AND THE SUBMISSIONS MADE. I FIND THAT THE AO HAS NOT TAKEN THE EFFORTS TO EXAMINE THE DOCUMENTS IN THE REMAND PROCEEDINGS. ON PERUSAL OF THE BANK STATEMENT ITA NO.226/KOL/2014-SHRI SUBRATA SAHA A.Y.2006-07 4 AND THE CASH FLOW I FIND THAT THE APPELLANT WAS WIT HDRAWING AND DEPOSITING CASH FROM THE SAID BANK ACCOUNT. AS A RE SULT OF THE CASH DEPOSITS, I FIND THAT THE PEAK NEGATIVE CASH BALANC E WAS ON 07/11/2005 FOR RS.13,46,517/- FOR WHICH THE APPELLANT COULD NO T GIVE ANY REASONS. ON PERUSAL OF THE BANK STATEMENT AND THE MUTUAL FUN D PURCHASE AND REDEMPTION DETAILS I FIND THAT DURING THE YEAR APPE LLANT MADE THE FOLLOWING INVESTMENT IN MUTUAL FUND DURING THE YEAR UNDER CONSIDERATION: 02/05/2005 HSBC MIDCAP EQUITY FUND - DIVIDEND 400000.00 24/06/2005 KOTAK MAHINDRA MNC SCHEME 5000 00.00 24/06/2005 RELIANCE EQUITY OPPORTUNITIES FUND- 500000.00 DIVIDEND PLAN 13/07/2005 STANDARD CHARTERED CLASSIC FUND- 1000000.00 DIVIDEND 26/07/2005 HDFC MULTIPLE YIELD FUND-PLAN 2005- 200000.00 DIVIDEND 01/08/2005 PRUDENTIAL ICICI INFRASTRUCTURE FUND 1100000.00 25/08/2005 SUNDARAM CAPEX OPPORTUNITIES - 400000.00 DIVIDEND 08/09/2005 HSBC MIDCAP EQUITY FUND - DIVIDEND 300000.00 08/09/2005 STANDARD CHARTERED CLASSIC FUND- 500000.00 DIVIDEND 13/09/2005 FIDELITY EQUITY FUND - DIVIDEND OPTION 500000.00 21/09/2005 SUNDARAM SMILE - DIVIDEND 200000.00 24/09/2005 BIRLA INDIA TOP 100 FUND - DIVIDEND 400000.00 21/10/2005 DSP MERRILL LYNCH EQUITY FUND-REGULAR 330000.00 21/10/2005 PRINCIPLE LARGE CAP FUND DIVIDEND REINVESTMENT 330000.00 08/11/2005 PRUDENTIAL ICICI SERVICES INDUSTRIES 260000.00 FUND-DIVIDEND 16/11/2005 PRUDENTIALLCICI SERVICES INDUSTRIES FUND-DIVIDEND 1000000.00 13/12/2005 DSP MERRILL LYNCH EQUITY FUND-REGULAR 700000.00 14/12/2005 FRANKLIN INDIA SMALLER COMPANIES FUND DIVIDEND 300000.00 TOTAL INVESTMENT 8920000.00 I FURTHER FIND THAT THE INVESTMENT IN MUTUAL FUNDS HAVE BEEN PURCHASED OUT OF THE REDEMPTION OF INVESTMENT OF MUTUAL FUNDS . THE MUTUAL FUND REDEMPTIONS DURING THE RELEVANT ASSESSMENT YEAR ARE AS FOLLOWS: 16/06/2005 HSBC MIDCAP EQUITY FUND - DIVIDEND 416741.52 20/06/2005 TATA DIVIDEND YIELD FUND - DLV 1090738.05 07/07/2005 RELIANCE VISION FUND - DIVIDEND PLAN 1069477.40 29/07/2005 PRUDENTIAL ICICI DISCOVERY FUND -DIV 1153261.18 01/09/2005 RELIANCE EQUITY OPPORTUNITIES FUND- 569936.70 DIVIDEND PLAN 02/09/2005 KOTAK MAHINDRA MNC SCHEME 574168.97 ITA NO.226/KOL/2014-SHRI SUBRATA SAHA A.Y.2006-07 5 23/09/2005 HDFC MULTIPLE YIELD FUND-PLAN 2005- 200460.00 DIVIDEND 08/11/2005 STANDARD CHARTERED CLASSIC FUND- 1033625.82 DIVIDEND 06/12/2005 HSBC MIDCAP EQUITY FUND - DIVIDEND 306843.85 06/12/2005 DSP MERRILL LYNCH EQUITY FUND-REGULA R 355851.39 06/12/2005 PRUDENTIAL ICICI INFRASTRUCTURE FUND 1172417.73 19/01/2006 SUNDARAM SMILE - DIVIDEND 196771.09 19/01/2006 SUNDARAM CAPEX OPPORTUNITIES - 447823.00 DIVIDEND 19/01/2006 BIRLA INDIA TOP 100 FUND - DIVIDEND 449817.82 19/01/2006 STANDARD CHARTERED CLASSIC FUND- 536776.12 DIVIDEND 19/01/2006 FIDELITY EQUITY FUND - DIVIDEND OPTIO N 540105.38 TOTAL REDEMPTION 10114816.02 7.5. I THEREFORE FIND THAT THE SOURCE OF INVESTMENT IN THE MUTUAL FUNDS WERE FROM THE REDEMPTION OF THE OLD INVESTMENT IN M UTUAL FUNDS. THUS THE APPELLANT HAS SATISFACTORILY EXPLAINED THE SOUR CE OF INVESTMENT IN MUTUAL FUNDS. IN THE RETURN FILED IN RESPONSE TO NO TICE U/S 148 OF THE ACT THE APPELLANT HAS ALSO OFFERED CAPITAL GAINS EARNED FROM THE REDEMPTION OF MUTUAL FUNDS FOR RS.8,51,641/-. THE APPELLANT HA VING EXPLAINED THE SOURCE OF INVESTMENT IN MUTUAL FUNDS, I THEREFORE H OLD THAT THE ADDITION OF RS.78,60,000/- ON ACCOUNT OF INVESTMENT IN MUTUA L FUND WAS NOT JUSTIFIED AND THEREFORE THE ADDITION OF RS.78,60,00 0/- ON ACCOUNT OF INVESTMENT IN MUTUAL FUND IS DELETED. 7.6. WITH RESPECT TO THE ADDITION OF RS.27,31,600/- ON ACCOUNT OF DEPOSIT OF CASH IN BANK ACCOUNT, I FIND FROM THE CASH FLOW THAT THE APPELLANT WAS DEPOSITING AND WITHDRAWING CASH FROM THE SAID BANK ACCOUNT. ON PERUSAL OF THE CASH FLOW STATEMENT I FIND THAT THE PEAK NEG ATIVE CASH DEPOSIT WAS ACHIEVED ON 07/11/2005 FOR RS.13,46,517/- FOR WHICH THE APPELLANT COULD NOT GIVE ANY EXPLANATION. I THEREFORE HOLD AND DIRE CT THE AO THAT THE ADDITION OF ACCOUNT OF DEPOSIT OF CASH IN BANK ACCO UNT SHOULD BE RESTRICTED TO RS.13,46,5171- IN PLACE OF RS.27,31,6 00/- BEING THE NEGATIVE PEAK CREDIT ON ACCOUNT OF CASH DEPOSIT. 7. APART FROM THE ABOVE FINDINGS ON MERITS THE A SSESSEE ALSO CHALLENGED THE VALIDITY OF ORDER OF ASSESSMENT PASS ED BY THE AO ON THE GROUND THAT NO NOTICE U/S 143(2) WAS ISSUED AFTER A SSESSEE FILED THE RETURN OF INCOME IN THE PROCEEDINGS U/S 147 OF THE ACT. ON THE ABOVE SUBMISSION THE CIT(A) HELD AS FOLLOWS :- ITA NO.226/KOL/2014-SHRI SUBRATA SAHA A.Y.2006-07 6 6.2 I HAVE CONSIDERED THE SUBMISSION OF THE AR AND PERUSED THE ASSESSMENT ORDER AND THE SUBMISSIONS. I FIND THAT T HE AO HAS NOT ISSUED ANY NOTICE U/S 143(2) OF THE ACT. I FIND THAT THE I T AT KOLKATA IN THE CASE OF MLS HUMBOLDET WEDAG INDIA (P) LTD. AY: 2005 -06 IN ITA NO. 9101K/2012 HAS DEALT WITH THE ISSUE REGARDING PROVI SIONS OF SECTION 29288 OF THE ACT AS WELL AS THE APPLICABILITY OF NO TICE U/S 143(2) OF THE ACT IN PROCEEDINGS U/S 148 OF THE ACT. THE ITAT HAS HELD AS FOLLOWS: 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE ALSO PERUSED THE ASSESSMENT RECORDS. IT IS A FACT THAT THE ASSESSEE COMPANY FILED ERETUR N OF INCOME ON 31.10.2005 AND SUBSEQUENTLY NOTICE U/S. 148 OF THE ACT WAS ISSUED ON 02.06.2010. FROM THE ASSESSMENT RECORDS, IT IS NOTI CED THAT THERE IS NO NOTICE U/S. 143(2) OF THE ACT WAS ISSUED AS STATED IN THE ASSESSMENT ORDER BY THE AO. AS REGARDS TO THE CONTENTION OF THE ASSE SSEE THAT HE NEVER REPRESENTED BEFORE THE AO DURING THE COURSE OF ASSE SSMENT PROCEEDINGS OR HE DID NOT PARTICIPATE IN THE ASSESSMENT PROCEED INGS, THIS FACT WAS VERIFIED FROM THE ASSESSMENT RECORDS AND ORDER SHEE T ENTRIES THAT THERE IS NO MENTION OF REPRESENTATION BY THE ASSESSEE DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS. ONLY ONE ENTRY RELATING TO SEEKING OF REASONS RECORDED BY THE LD. COUNSEL FOR THE ASSESSEE IS ,TH ERE. FIRST OF ALL, WE ARE IN AGREEMENT WITH THE LD. COUNSEL FOR THE ASSESSEE THAT THE PROVISION OF SECTION 292BB OF THE ACT IS TO BE SEEN. THE RELEVANT PROVISION READS AS UNDER: ' 292BB . WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDING OR CO-OPERATED IN ANY INQUIRY RELATING TO AN ASSESSMEN T OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UNDER ANY PROVISION OF THIS ACT, WHICH IS REQUIRED TO BE SERVED UPON HIM, HAS BEEN DULY SE RVED UPON HIM IN TIME IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT AND SUCH ASSESSEE SHALL BE PRECLUDED FROM TAKING ANY OBJECTION IN ANY PROCEEDING OR INQUIRY UNDER THIS ACT THAT THE NOTICE WAS- (A) NOT SERVED UPON HIM; OR (B) NOT SERVED UPON HIM IN TIME; OR (C) SERVED UPON HIM IN AN IMPROPER MANNER: PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHA LL APPLY WHERE THE ASSESSEE HAS RAISED SUCH OBJECTION BEFORE THE COMPL ETION OF SUCH ASSESSMENT OR REASSESSMENT. ' BUT, LD. COUNSEL FOR THE ASSESSEE STATED THAT THIS PROVISION OF SECTION 292BB OF THE ACT HAS BEEN HELD TO BE PROSPECTIVE AN D NOT RETROSPECTIVE I.E. APPLICABLE ONLY WITH EFFECT FROM 01.04.2008. F OR THIS PROPOSITION HE RELIED ON THE DECISION OF SPECIAL BENCH OF DELHI TR IBUNAL IN THE CASE OF KUBER TOBACCO PRODUCTS (P) LTD. VS. DCIT (2009) 117 ITD 273 (DEL.) (SB) , WHEREIN THE FOLLOWING PROPOSITIONS ARE LAID DOWN: '(1) S. 292BB, INSERTED BY THE F.A. 2008 W.E.F. 01. 04.2008, CREATES A LEGAL FICTION AND TAKES AWAY THE RIGHT OF AN ASSESS EE TO CLAIM THAT IN CASE OF INVALID NOTICE THE WHOLE PROCEEDINGS TAKEN PURSU ANT TO THAT NOTICE WOULD BE VOID AB INITIO AND WILL HAVE NO LEGAL CONS EQUENCES; ITA NO.226/KOL/2014-SHRI SUBRATA SAHA A.Y.2006-07 7 (2) HOWEVER, THE RULE OF INTERPRETATION OF STATUTES IS THAT A PROVISION CREATING A NEW DISABILITY OR OBLIGATION AND IMPOSIN G A NEW DUTY IN RESPECT OF COMPLETED TRANSACTIONS CANNOT BE CONSTRU ED TO BE RETROSPECTIVE; (3) THOUGH THE ISSUE AND SERVICE OF NOTICE RELATES TO PROCEDURAL LAW S. 292-BB TAKES AWAY THE VALUABLE RIGHT OF AN ASSESSEE TO CHALLENGE THE VALIDITY OF ASSESSMENT DURING THE COURSE OF APPELLA TE PROCEEDINGS AND CREATES A NEW DISABILITY ON THE ASSESSEE BY DEBARRI NG HIM FROM CHALLENGING THE VALIDITY OF THE SAME; (4) CONSEQUENTLY, S. 292-BB CANNOT BE CONSTRUED TO BE RETROSPECTIVE AND HAS TO BE APPLIED PROSPECTIVELY IN RESPECT OF AY 20 08-09 AND SUBSEQUENT YEARS.' - WE FIND THAT THIS PROVISION WILL APPLY PROSPECTIVEL Y FOR AND FROM AY 2008-09 AND THE RELEVANT ASSESSMENT YEAR INVOLVED I N THE PRESENT CASE IS AY 2005-06, HENCE, PROVISION OF SECTION 292BB OF TH E WILL NOT APPLY. 6. NOW COMING TO THE ISSUE OF NON-ISSUE OF NOTICE U /S. 143(2) OF THE ACT WHICH GOES TO THE VERY ROOT OF THE VALIDITY OF THE ASSESSMENT ORDER, WE FIND THAT BY VIRTUE OF SECTION 143(2) OF THE ACT TH E ASSESSEE HAS BEEN GIVEN OPPORTUNITY TO SUBSTANTIATE THE RETURN FILED. THEREFORE, FOR INITIATING SCRUTINY ASSESSMENT OR REASSESSMENT PROC EEDINGS SERVICE OF NOTICE U/S. 143(2) OF THE ACT IS A CONDITION PRECED ENT. HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. HOTEL BLUE MOON (2010 ) 321 ITR 362 (SC) AND ALSO THE DECISION OF HON'BLE ALLAHABAD HIGH COU RT IN THE CASE OF CIT VS. RAJEEV SHARMA (2010) 232 CTR (ALL.) 303 HAS HELD THAT NON ISSUE OF NOTICE U/S. 143(2) OF THE ACT AFTER FILING OF RETURN BY ASSESSEE IN RESPONSE TO NOTICE U/S. 148 OF THE ACT VITIATES THE ASSESSMENT ORDER OR REASSESSMENT PROCEEDINGS. CONSIDERING THE FACTS OF THE CASE AND RESPECTFULLY FOLLOWING THE JUDICIAL PRONOUNCEMENTS IN THE CASE OF HOTEL BLUE MOON, SUPRA AND ALSO RAJEEV SHARMA, SUPRA, WE ARE OF THE VIEW THAT THE AO IS BOUND TO SERVE ON THE ASSESSEE A NOTICE U /S. 143(2 OF THE ACT, WHICH HE NEVER DID IN THIS CASE. SIMILARLY, LD. COU NSEL FOR THE ASSESSEE ALSO RELIED ON THE DECISION OF HON'BLE PUNJAB & HAR YANA HIGH COURT IN THE CASE CIT VS. CEBON INDIA LTD. (2012) 347 ITR 58 3 (P&H), WHEREIN HON'BLE HIGH COURT HAS NOTED THE FACTS THAT CIT(A) FOUND THAT THERE IS NO EVIDENCE TO SHOW THAT NOTICE U/S. 143(2) OF THE ACT HAS BEEN SERVED ON THE ASSESSEE BEFORE NOVEMBER 30, 1997, I.E. WITHIN ONE YEAR FROM THE DATE OF FILING OF RETURN OF INCOME AND THEREFORE, H ON'BLE HIGH COURT HELD AS UNDER: 'WE FIND THAT CONCURRENT FINDING HAS BEEN RECORDED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AS WELL AS THE TRIBUNAL ON THE QUESTION OF DATE OF SERVICE OF NOTICE. NOTICE WAS N OT SERVED WITHIN THE STIPULATED TIME. MERE GIVING OF DISPATCH NUMBER WIL L NOT RENDER THE SAID FINDING TO BE PERVERSE. IN THE ABSENCE OF NOTI CE BEING SERVED, THE ASSESSING OFFICER HAD NO JURISDICTION TO MAKE ASSES SMENT. ABSENCE OF NOTICE CANNOT BE HELD TO BE CURABLE UNDER SECTION 2 92BB OF THE ACT.' ITA NO.226/KOL/2014-SHRI SUBRATA SAHA A.Y.2006-07 8 ONCE NOTICE U/S. 143(2) OF THE ACT IS NOT ISSUED, A SSESSMENT FRAMED HAS RIGHTLY BEEN QUASHED BY THE CIT(A) , WE CONFIRM THE SAME. NO GROUND QUA MERITS IS RAISED BY REVENUE. APPEAL OF REVENUE IS DISMISSED. 6.3. I FIND THAT IN THE CASE OF THE APPELLANT, NO N OTICE U/S 143(2) OF THE ACT WAS ISSUED. IN ABSENCE OF THE NOTICE THE AO DID NOT HAVE JURISDICTION TO PASS AN ASSESSMENT ORDER. THE AY CONCERNED IS AY 2006-07 AND THEREFORE THE PROVISION OF SECTION 292BB OF THE ACT ALSO DOES NOT SAVE THE ASSESSMENT. I FIND THAT THE APPELLANTS CASE IS SQUARELY COVERED BY THE DECISION OF THE ITAT KOLKATA IN THE CASE OF M/S HUM BOLDET WEDAG INDIA (P) LTD AY 2005-06 IN ITA NO.910/K/2012 WHICH HAS R ELIED ON THE DECISIONS OF THE APEX COURT, THE SPECIAL BENCH AND THE PUNJAB HIGH COURT. IN VIEW OF THE ABOVE FACTS AND THE CASE LAW CITIED I AM OF THE OPINION THAT IN ABSENCE OF NOTICE BEING SERVED, THE AO HAD NO JURISDICTION TO MAKE ASSESSMENT. ONCE NOTICE U/S 14 3(2) OF THE IT ACT IS NOT ISSUED, THE ASSESSMENT IS TO BE QUASHED. I THER EFORE QUASH THE ASSESSMENT FOR NON SERVICE OF NOTICE U/S 143(2) OF THE ACT. 8. THE ASSESSEE ALSO SUBMITTED BEFORE CIT(A) THA T THE RETURN OF INCOME FILED IN THE PROCEEDINGS U/S 147 OF THE ACT WAS VALID AND COULD NOT HAVE BEEN IGNORED. ON THE ABOVE SUBMISSION THE CIT(A) HELD AS UNDER :- 5.2. I HAVE CONSIDERED THE SUBMISSION OF THE AR AN D PERUSED THE ASSESSMENT ORDER AND THE SUBMISSIONS. I FIND THAT T HE APPELLANT HAS FILED A BELATED RETURN IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. I FIND THAT THE AO HAS REJECTED THE SAID RETURN IN THE ASSESSME NT ORDER ON THE GROUNDS THAT THE RETURN WAS FILED AT THE FAG END OF THE YEAR HENCE NO COGNIZANCE OF SUCH RETURN CAN BE TAKEN. I AM OF THE OPINION THAT THE AO WAS WRONG IN REJECTING THE RETURN FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE UNDER THE ACT, THE AO HAS POWERS TO REJECT T HE RETURN ON THE GROUNDS OF THE E BEING DEFECTIVE AS PROVIDED U/S 13 9(9) OF THE ACT. IN THIS CASE THE AO HAS NOT ISSUED ANY SUCH NOTICE HOL DING THE RETURN TO BE DEFECTIVE. I FIND THAT THERE IS NO BAR IN FILING OF LATE RETURN U/S 148 OF THE IT ACT 1961. IN FACT THE PROVISIONS OF SECTION 234A OF THE ACT, PROVIDES FOR THE CHARGE OF INTEREST FOR BELATED RETURNS FILE D U/S 148 OF THE ACT. I THEREFORE HOLD THAT THE RETURN OF INCOME FILED IN T O THE NOTICE U/S 148 OF THE ACT WAS VALID AND THE AO WAS NOT JUSTIFIED IN R EFUSING TO TAKE COGNIZANCE OF THE SAME. I THEREFORE DIRECT THE AO T O TREAT THE INCOME RETURNED AS PER THE RETURN FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT, OFFERING NET TAXABLE INCOME OF RS.9,59,460/- A ND TAX THE SAME. 9. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE HAS PREFERRED THE PRESENT APPEAL BY RAISING THE GROUNDS WHICH HAVE AL READY BEEN SET OUT IN THE EARLIER PART OF THIS ORDER. ITA NO.226/KOL/2014-SHRI SUBRATA SAHA A.Y.2006-07 9 10. WE HAVE HEARD THE RIVAL SUBMISSIONS. BEFORE GOING INTO THE ISSUE RAISED BY THE REVENUE GROUND NOS. 1 AND 2, REGARDIN G THE VALIDITY OF ORDER OF ASSESSMENT PASSED BY THE AO, WE DEEM IT AP PROPRIATE TO DECIDE THE GROUNDS IN WHICH THE ADDITIONS MADE BY THE AO T HAT WERE DELETED BY CIT(A) ARE CHALLENGED. IN GROUND NO.3 THE REVENUE H AS ONLY CHALLENGED THE ACTION OF CIT(A) IN ADMITTING FRESH EVIDENCE IN VIOLATION OF THE PROVISION OF RULE 46A OF IT RULES, 1962. ON THE ABO VE GROUND OF APPEAL WE FIND THAT ALL THE EVIDENCES THAT WERE CONSIDERED BY CIT(A) WERE ALREADY FILED BY THE ASSESSEE BEFORE THE AO. THE AS SESSEE HAS FILED A PAPER BOOK IN WHICH HE HAS CERTIFIED THE FACT THAT THERE WAS NO ADDITIONAL EVIDENCE FILED BEFORE CIT(A). BESIDES TH E ABOVE WE ALSO FIND THAT THE AO IN THE ORDER OF ASSESSMENT HAS MADE A R EFERENCE TO THE BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. THE AR HAD ALSO FILE D A LETTER DATED 18.12.2009 AND 24.12.2009 BEFORE THE AO ALONG WITH THE ANNEXURES AND THIS FACT HAS BEEN RECORDED BY THE AO IN THE ORDER OF ASSESSMENT. APART FROM THE ABOVE WE ALSO FIND THAT THE CIT(A) HAS CAL LED FOR A REMAND REPORT FROM THE AO BEFORE DELETING THE ADDITION OF RS.78,60,000/- BEING INVESTMENTS MADE IN VARIOUS MUTUAL FUNDS. THE SOURC E OF ALL THE INVESTMENTS HAVE BEEN DULY EXPLAINED BY THE ASSESSE E. THE LD. DR COULD NOT CONTROVERT THE FINDINGS OR FACTUAL ERRORS IN TH E FINDINGS OF CIT(A). IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THER E IS NO MERIT IN GROUND NO.3 RAISED BY THE REVENUE AND ACCORDINGLY D ISMISS THE APPEAL ON THIS ISSUE. 11. AS FAR AS GROUND NOS. 4 AND 5 RAISED BY THE REVENUE ARE CONCERNED THESE RELATE TO UNEXPLAINED CASH DEPOSIT IN THE BAN K ACCOUNT. AT PAGE 28 OF THE ASSESSEES PAPER BOOK THE DEPOSIT AND WITHDR AWALS OF CASH HAVE BEEN GIVEN. ON A PERUSAL OF THE SAME IT IS CLEAR TH AT THE CASH DEPOSITS AS WELL AS CASH WITHDRAWALS WERE CONTINUOUS AND EACH W ITHDRAWAL WOULD EXPLAIN THE DEPOSITS IN THE BANK ACCOUNT. IN THE GI VEN CIRCUMSTANCES ADOPTING THE PEAK CREDIT IN THE BANK ACCOUNT WAS PR OPER AND ACCEPTED ITA NO.226/KOL/2014-SHRI SUBRATA SAHA A.Y.2006-07 1 0 METHOD IN MAKING THE ADDITION ON UNEXPLAINED CASH C REDIT. THE CIT(A) HAS ADOPTED THE PEAK CREDIT AND ACCORDINGLY RESTRIC T THE ADDITION MADE BY THE AO FROM RS.27,31,600/- TO RS.13,46,577/-. WE DO NOT FIND ANY ERROR IN THE FINDINGS OF CIT(A) AND CONSEQUENTLY HO LD THAT THERE IS NO MERIT IN GROUND NOS. 4 AND 5 RAISED BY THE REVENUE. 12. WE ARE OF THE VIEW THAT SINCE THE ADDITIONS THAT WERE CHALLENGED IN THIS APPEAL WHICH WERE DELETED BY CIT(A) HAVE BEEN UPHELD THERE IS NO REQUIREMENT TO DECIDE GROUND NOS.1 AND 2 RAISED BY THE REVENUE. CONSEQUENTLY THESE GROUNDS ARE ALSO DISMISSED AS RE QUIRING NO ADJUDICATION. 13. IN THE RESULT THE APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02 .12.2016 ORDER PRONOUNCED IN THE COURT ON 02.12.2016. SD/- SD/- [P.M.JAGTAP] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : [RG PS] COPY OF THE ORDER FORWARDED TO: 1.SHRI SUBRATA SAHA, FLAT D-601, SUNCITY, 105/1, BI DHAN NAGAR ROAD, KOLKTA-700067. 2. I.T.O., WARD-41(2), KOLKATA. 3. C.I.T.(A)-XIX, KOLKATA. 4. CIT-XIV, KO LKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, KOLKATA BENCHES