Mukesh Kumar, New Delhi V. ITO, New Delhi

ITA 2358/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91143 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 14-05-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 17-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DANKANUNJNA
• Keywords: Gift; Principle of natural justice; Reason to believe; Reassessment proceedings
• Section: 142(1); 147; 68; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI I. C. SUDHIR , JUDICIAL MEMBER AND SHRI I NTURI R AMA RAO, ACCOUNTANT MEMBER I .T.A .NO. - 2358 /DEL/201 2 (ASSESSMENT YEAR - 2004 - 0 5 ) MUKESH KUMAR VS. ITO 104 BD CHAMBER DB GUPTA ROAD, WARD - 26(3 ), KAROL BAGH NEW DELHI. NEW DELHI. PAN: AA OPK7626A (APPELLANT) (RESPONDENT) ASSESSEE BY: - NONE REVENUE BY: - SH. P. DANKANUNJNA, SR. DR. DATE OF HEARING: 14/05/2015 DATE OF PRONOUNCEMENT: 12 /06/2015 ORDER PER INTURI RAMA RAO , AM : THIS IS AN APPEAL FILED BY THE A PPELLANT DIRECTED AGAINST THE ORDER OF LD. CIT(A) - XVIII, NEW DELHI IN APPEAL NO.95/11 - 12 DATE D 01 .03.2012 FOR THE ASSESSMENT YEAR 2004 - 05. THE SE GROUNDS RAISED IN THIS APPEAL ARE AS UNDER: 1. THAT THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS BY UPHOLDING ASSESSMENT ORDER FRAMED BY ASSESSING OFFICER U/S 144/147 OF THE ACT, DETERMINING THE ALLEGED TOTAL INCOME OF RS.4,53,179/ - AGAINST THE INCOME RETURNED OF RS.1,13,710/ - BY TAKING RECOURSE TO THE PROVISIONS OF SECTION 147/148 OF THE IT ACT AND INTER ALIA MAKING WHOLLY UNWARRANTED ADDITION OF RS.9,13,710/ - ON ACCOUNT OF UNEXPLAINED AND BOGUS GIFT. 2. THAT THE NOTICE U/S 148 OF THE IT ACT DATED 16/03/2009 IS BAD IN LAW AND WITHOUT JURISDICTION IN AS MUCH AS THERE WAS NO MATERIAL OR EVIDENCE ON RECORD TO FORM A REASON TO BELIEVE THAT ANY INCOME OF THE ASSESSEE, FOR THE CONCERNED ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE INFORMATION RECEIVED FROM DIT (INV.) - I, NEW DELHI, WAS WHOLLY I.T.A .NO. - 2358/DEL/2012 2 INSUFFICIENT AND C OULD NOT BE COGENT MATERIAL TO ASSME A VALID JURISDICTION U/S 147/148 OF IT ACT. LEARNED CIT(A) TURNED DOWN THE SUBMISSION OF THE ASSESSEE WITHOUT LOOKING IN TO THE DETAIL. 3. THAT THE ASSESSMENT AS FRAMED IS AB - INITIO BEING WITHOUT JURISDICTION AS SAME H AS BEEN FRAMED WITHOUT CONFRONTING TO THE ASSESSEE ANY MATERIAL OR EVIDENCE RECEIVED FROM THE DIT (INV) - I, NEW DELHI, TO SHOW THAT THE ASSESSEE HAS RECEIVED BOGUS ACCOMMODATION ENTRY AMOUNTING TO RS.9,13,710/ - . THE ASSESSMENT HAS BEEN MADE ON COMPLETE NON APPLICATION OF MIND. LEARNED CIT(A) IGNORED THE REPLY/REBUT OF REMAND REPORT SUBMITTED BY THE ASSESSEE. NO OPPORTUNITY FOR CROSS EXAMINATION WAS GIVEN BY THE CIT(A). 4. THAT THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND LAW BY UPHOLDING THE IMPUGNED ADDITION U/S 68 OF THE ACT, FAILING TO APPRECIATE THAT PROVISION OF SECTION 68 OF THE ACT WERE WHOLLY INAPPLICABLE AS THE ASSESSEE NEVER MAINTAINED ANY BOOKS OF ACCOUNTS. 5. THAT IN ANY CASE, THE IMPUGNED ASSESSMENT HAS BEEN FRAM ED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE WITHOUT GRANTING TO THE ASSESSEE A FAIR, PROPER AND REASONABLE OPPORTUNITY TO THE INSTANT CASE. 2 . BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE APPELLANT IS AN INDIVIDUAL . HE FILED RETURN OF INCOME FOR A.Y. 2004 - 05 SUBSEQUENTLY ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING , NEW DELHI THAT THE APPELLANT HAD RECEIVED AN ENTRY OF RS.4 LAC FROM ONE SHRI TRILOK CHAND BANSAL ON 3 RD SEPTEMBER 2003 AND RS.4 LAC FROM SHRI SUBHASH GUPT A ON 4 TH SEPTEMBER 2003, A NOTICE U/S 148 OF THE INCOME TAX ACT WAS ISSUED ON 16 TH MARCH 2009 . I N RESPONSE TO SAID NOTICE , THE APPELLANT SUBMITTED THAT THE RETURN FILED U/S 139 MAY BE TREATED AS RETURN IN RESPONSE TO SECTION 148 OF THE ACT. FROM THE ASSESS MENT ORDER , IT WAS CLEAR THAT THE NOTICE U/S 148 WAS ISSUED BY THE ITO WARD - 26(4 ) , NEW DELHI . B ASED ON THE REPLY FILED BY THE LD. REPRESENTATIVE THE CASE WAS I.T.A .NO. - 2358/DEL/2012 3 TRANSFERRED TO ITO WARD - 26(3) NEW DELHI WHO HAD VALID JURISDICTION OVER THE APPELLANT. THE APPELLANT HAS NOT COMPLIED WITH THE NOTICES U/S 143(2) AND 142(1) OF THE ACT, THEREFORE, THE AO WAS CONSTRAINED TO COMPLETE ASSESSMENT EX PARTE BY BRINGING TO TAX THE SAID AMOUNT OF RS.8 LAC . 3. BEING AGGRIEVED , THE APPELLANT FILED AN APPEAL BEFORE THE CIT(A) - XVIII, NEW DELHI, WHO VIDE ORDER DATED 1 ST MARCH 2012 IN APPEAL NO.95/11 - 12 HAD DISMISS ED THE APPEAL. IT WAS CONTENDED BEFORE THE LD. CIT(A) THAT THE RE - ASSESSMENT PROCEEDINGS U/S 147 ARE INVALID IN LAW , INASMUCH , AS THERE WERE NO REASONS TO BELIEVE THAT THE ASSESSMENT G O T ESCAPED TAX. IT WAS FURTHER CONTENDED THAT THE NO TICE ISSUE U/S 148 WAS INVALID, S INCE THE ITO WHO ISSUED NOTICE U/S 148 HAD NO VALID JURISDICTION OVER THE APPELLANT. ON THE MERIT IT WAS CONTENDED THAT THE AP PELLANT DISCHARGED HIS ONUS THAT LYING UPON THE APPELLANT AS THE IDENTITY AND GENUINENESS AND CREDITWORTHINESS OF THE LENDER HAVE BEEN PROVED BY FILING THE PAN AND ITR OF THE CREDITORS, HOWEVER, THE LD. CIT(A) HAS REJECTED THE CONTENTION OF THE APPELLANT O N THE LEGALITY OF THE REASSESSMENT PROCEEDINGS AND AS WELL AS ON MERITS. AGGRIEVED THE APPELLANT IS BEFORE US. 4 . NO ONE WAS PRESENT ON BEHALF OF THE APPELLANT . L D. SR. D EPARTMENTAL R EPRESENTATIVE HAS PLACED RELIANCE ON THE ORDER OF THE LOWER AUTHORITIES. 5 . WE PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE PRESENT CASE THE NOTICE U/S 148 WAS ISSUED ON 2 ND MARCH 2009 BY ITO WARD - 26(4) NEW DELHI. AFTER RECEIPT OF NOTICE THE APPELLANT HAD RESPONDED THROUGH ITS AUTHORIZED I.T.A .NO. - 2358/DEL/2012 4 REPRESENTATIVE AND SUBMITTED THE COPY OF THE RETURN FILED UNDER PROVISIONS OF SECTION 139 . A FTER NOTICING THAT THE JURISDICTION OVER THE APPELLANT IS VESTED WITH ITO WARD - 26(3) , THE FILE WAS TRANSFERRED BY ITO WARD - 26(4) TO ITO WARD - 26(3). THE ITO WARD - 26(3), NEW DELHI HAD PROCEEDED WITH THE FRAMING ASSESSMENT WITHOUT ISSUING FRESH NOTICE U/S 148 . I T MEANS THAT ITO WARD - 26(4), NEW DELHI HAD NO VALID JURISDICTION OVER THE APPELLANT , A T THE TIME OF ISSUING NOTICE U/S 148 OF THE ACT . IN SUCH CIRCUMSTANCES, I T WAS HELD BY THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. M/S MT BUILDERS PVT. LTD., (2012) 349 ITR 271 (ALL.) THAT THE NOTICE ISSUED BY AN OFFICER WHO HAD NO VALID JURISDICTION OVER THE ASSESSEE IS INVALID. THE NOTICE U NDER SECTION 148 OF THE ACT IS SUED BY THE INCOME TAX OFFICER, WARD - 26(4) IS NON EST IN THE EYES OF LAW SINCE HE HAD NO VALID JURISDICTION OVER THE APPELLANT EITHER TERRITORIAL AS NOTIFIED UNDER SECTION 124 OF THE ACT OR BY TRANSFERRING THE CASE UNDER THE P ROVISIONS OF SECTION 127 OF THE ACT. NOW, THE QUESTION IS WHETHER THE ACTION OF THE INCOME TAX OFFICER, WARD - 26(3) NEW DELHI WAS VALID IN LAW IN CONCLUDING THE ASSESSMENT PROCEEDINGS BASED ON THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT BY THE INCOME TAX OFFICER, WARD - 26(4) WHO HAD NO VALID JURISDICTION TO ISSUE THE NOTICE. THE ISSUE OF VALID JURISDICTION IS A CONDITION PRECEDENT TO THE VALIDITY OF ANY ASSESSMENT UNDER SECTION 147 OF THE ACT; THEREFORE, THE ASSESSMENT MADE PURSUANT TO SUCH NOTICE IS BAD I N LAW. IN SUPPORT OF THIS PROPOSITION WE RELY UPON THE CASES OF HON BLE APEX COURT IN THE CASES OF Y. NARAYANA CHETTY VS. ITO, 35 ITR 388, 392 (SC); CIT VS. MAHARAJA PRATAP SINGH BAHADUR, 41 ITR 421 I.T.A .NO. - 2358/DEL/2012 5 (SC); AND CIT VS. ROBERT, 48 ITR 177 (SC). IN THE LIGHT O F THE ABOVE SETTLED PRINCIPLE OF LAW, WE HAVE NO HESITATION TO QUASH THE REASSESSMENT PROCEEDINGS SINCE THERE WAS NO VALID NOTICE PURSUANT TO WHICH THE REASSESSMENT PROCEEDING WAS MADE IN THE PRESENT CASE. ACCORDINGLY, THE APPEAL FILED BY THE APPELLANT IS ALLOWED. 6 . SINCE WE HAVE QUASHED THE REASSESSMENT PROCEEDINGS, WE FIND IT NOT NECESSARY TO ADJUDICATE THE GROUNDS RELATING TO THE MERITS OF THE ADDITION. 7 . IN THE RESULT, THE APPEAL IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 12 /06/2015. SD/ - SD/ - (I.C. SUDHIR) ( INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12 /06/2015 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR I.T.A .NO. - 2358/DEL/2012 6 DATE INITIAL 1. DRAFT DICTATED ON 11 /06/2015 PS 2. DRAFT PLACED BEFORE AUTHOR 12 /06/2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.