Smt. Sangeeta Mukesh Jain, Ahmedabad V. The Dy.CIT.,Circle-12, Ahmedabad

ITA 2400/AHD/2011

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5108 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 30-09-2019
• Assessment Year: 2005-2006
• Appeal Filed On: 22-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALI P JAIN
• Keywords: Opportunity of being heard; Competent authority; Assessment record; Set aside
• Section: 143(3); 143(2); 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ./ITA NO.2400/AHD/2011 ( / ASSESSMENT YEAR : 2005-06) SMT. SANGEETA MUKESHKUMAR JAIN PROP. OF EES JAE INC., B-601, ANMOL TOWER NR.SHAHIBAUG DAFNALA SHAHIBAUG, AHMEDABAD-380 004 / VS. THE ITO WARD-2(3) AHMEDABAD ./ ./ PAN/GIR NO. : ABSPJ 8269 M ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI RAJEEV KUMAR, AR / RESPONDENT BY : SHRI LALI P.JAIN, SR.DR / DATE OF HEARING 21/08/2019 !'# / DATE OF PRONOUNCEMENT 25/10/2019 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)6, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEA L NO.CIT(A)- VI/ITO.WD.2(3)/494/10-11 DATED 17/08/2011 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) R.W.S.263 OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'THE ACT') DATED 07 /12/2010 RELEVANT TO ASSESSMENT YEAR (AY) 2005-06. ITA NO.2400/AHD/2011 SMT. SANGEETA MUKESH JAIN VS. ITO ASST. YEAR - 2005-06 - 2 - 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE IMPUGNED ASSESSMENT ORDER DATED 07-12-2010 , PASSED BY THE INCOME TAX OFFICER, WARD 2(3), AHMEDABAD (ITO), IMPOSING A TA X DEMAND OF RS. 66, 11,188/- ( RS. SIXTY-SIX LAKH ELEVEN THOUSAND O NE HUNDRED EIGHTY EIGHT ONLY), IN RESPECT OF THE ASSESSMENT A.Y. 2005-06, , IS AB INI TIO VOID AS THE ITO HAS NO JURISDICTION TO PASS THE ASSESSMENT ORDER FOR A.Y. 2005-06, IN CASE OF THE APPELLANT. 2. THE ASSESSMENT HAS BEEN DONE, WITHOUT AFFORDIN G ANY PROPER AND REASONABLE OPPORTUNITY OF HEARING TO THE APPELLANT, WHICH IS A MANDATORY REQUIREMENT UNDER THE ACT. 3. THE ASSESSMENT HAS BEEN DONE WITHOUT ISSUING A NOTICE U/S 143(2) WHICH IS A MANDATORY REQUIREMENT UNDER THE ACT. 4. THE AMOUNT OF RS. 5, 33,174/-, WHICH WAS ADDED IN THE INCOME OF THE APPELLANT VIDE ASSESSMENT ORDER, APPLYING SECTION 40(I)(IA) R EAD WITH FIRST PROVISO OF SECTION 194 A (1), IS TOTALLY ILLEGAL. THIS SECTION CAME IN TO OPERATION IN THE SUBSEQUENT YEAR. THE LD. ITO FAILED TO CONSIDER THIS FACT. 5. AN AMOUNT OF RS. 1,23,46,500/- ADDED IN THE IN COME OF THE APPELLANT IN THE ASSESSMENT ORDER HAS ALREADY BEEN CONFIRMED IN THE HANDS OF SHRI MANGILAL DEVAJI DEVASI, AN EX-EMPLOYEE OF THE APPELLANT, BY THE CIT -APPEALS-4L,MUMBAI VIDE HIS ORDER DATED 01-10-2010. THE SAME AMOUNT CANNOT BE A DDED IN THE HANDS OF THE APPELLANT. 6. THE ADDITION OF RS 18, 49,345/- IS BASED ON TH E ESTIMATE OF GROSS PROFIT OF THE APPELLANT, ARBITRARILY ESTIMATED BY THE ITO AT THE RATE OF 1.5% OF THE SALES. 7. THE LD. ITO HAS NOT AT ALL APPLIED HIS MIND TO T HE FACTS AND CIRCUMSTANCES OF THE CASE. HE HAS BLINDLY COPIED THE EARLIER ORDER THAT HAD BEEN SET ASIDE BY THE CIT- I, AHMEDABAD. 8. ALL THESE ADDITIONS ARE CONTRARY TO THE PROVISI ONS OF THE I.T. ACT, BUT THE LD. CIT- APPEALS FAILED TO DELETE THESE ADDITIONS. 9. THE APPELLANT CRAVES LEAVE OF THE HONBLE TRIBU NAL TO AMEND, MODIFY, AND ADD ABOVE GROUNDS OF APPEAL IF NECESSARY. ITA NO.2400/AHD/2011 SMT. SANGEETA MUKESH JAIN VS. ITO ASST. YEAR - 2005-06 - 3 - 3. THE 1 ST ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 1 IS TH AT THE AO OF WARD 2(3) OF THE ACT HAS FRAMED ASSESSMENT UNDER SE CTION 143(3) READ WITH SECTION 263 OF THE ACT WITHOUT HAVING JURISDIC TION OVER THE ASSESSEE, THEREFORE THE ORDER IS VOID AB INITIO. 4. AT THE OUTSET, THE LEARNED AR BEFORE US SUBM ITTED THAT THE CASE OF THE ASSESSEE WAS TRANSFERRED FROM THE JURISDICTION OF THE ITO 12(1), AHMEDABAD TO DY.CIT CIRCLE 12, AHMEDABAD TO THE PRE SENT ITO 2(3), AHMEDABAD (THE A.O. FOR SHORT) WITHOUT FOLLOWING TH E PROCEDURE FOR THE TRANSFER OF A CASE OF AN ASSESSEE FROM THE JURISDIC TION OF ONE ASSESSING OFFICER TO ANOTHER AS PRESCRIBED U/S 127 OF THE ACT . THE ASSESSEE HAS NOT BEEN SERVED WITH ANY ORDER PASSED BY THE COMPETENT AUTHORITY TRANSFERRING HER CASE FROM THE ITO 12(1) AHMEDABAD TO DY.CIT, CIRCLED 12, AHMEDABAD AND THEN AGAIN TO THE PRESENT A.O. T HIS MAKES THE ENTIRE PROCEEDINGS WITHOUT JURISDICTION NULL AND VOID. TH E ASSESSEE RELIES UPON THE JUDGMENTS OF THE HONBLE SUPREME COURT AND HIGH COURT IN SUPPORT OF HER CONTENTION. 5. ON THE OTHER HAND, THE LEARNED DR SUBMITTED T HAT THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 HAS FILED HER RETURN OF INC OME IN THE WARD NO. 12(1) WHICH WAS SUBSEQUENTLY TRANSFERRED TO DCIT-CI RCLE 12 AND ACCORDINGLY, THE ASSESSMENT WAS MADE THEREIN. LATER ON THE CASE OF THE ASSESSEE WAS TRANSFERRED TO THE WARD NO. 2(3) BY TH E ORDER OF THE DCIT DATED 30-01-2009. ACCORDINGLY, THE LEARNED DR VEHEM ENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. ITA NO.2400/AHD/2011 SMT. SANGEETA MUKESH JAIN VS. ITO ASST. YEAR - 2005-06 - 4 - 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE PRECEDI NG DISCUSSION, WE NOTE THAT THE ASSESSEE HAD BEEN FILING HER RETURN OF INC OME CONSISTENTLY TO THE ITO WARD 2(3) EXCEPT FOR THE YEAR UNDER CONSIDERATI ON. AS SUCH THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAS FILED HER RETURN OF INCOME DATED 31 OCTOBER 2005 IN WARD 12(1) OF THE INCOME T AX OFFICE AS EVIDENT FROM THE COPY OF THE ACKNOWLEDGMENT OF THE ITR WHIC H IS PLACED ON PAGE 1 OF THE PAPER BOOK FILED BY THE REVENUE. SUBSEQUENTLY, THE FILE OF THE ASSESSEE WAS TRANSFER RED FROM THE ITO 12(1) TO THE DCIT-CIRCLE 12 VIDE LETTER NO. ADDL.CIT.R-12 /AHD/TECH-8/2007- 08 DATED 30-08-2007 AS EVIDENT FROM THE TRANSFER ME MO FROM INCOME TAX ASSESSMENT RECORDS WHICH IS PLACED ON PAGE 4 OF THE PAPER BOOK FILED BY THE REVENUE. THIS FACT CAN ALSO BE VERIFIED FROM TH E ASSESSMENT ORDER DATED 27-12-2007 AS REPRODUCED UNDER: THIS CASE IS ASSIGNED IN THIS CIRCLE VIDE ADDL.CIT , RANGE-12, AHMEDABADS LETTER NO.ADDL.CIT R-12/AHD/TECH-8/2007-08 DATED 30 -8-2007. ACCORDINGLY, THE ASSESSMENT WAS FRAMED BY THE DCIT- CIRCLE 12, AHMEDABAD VIDE ORDER DATED 27-12-2007. HOWEVER, THE ASSESSMENT ORDER DATED 27-12-2007 WAS REVISED BY THE COMMISSIONER OF INCOME TAX UNDER SECTION 263 OF THE ACT VIDE ORDER DATED 29 DECEMBER 2009. ITA NO.2400/AHD/2011 SMT. SANGEETA MUKESH JAIN VS. ITO ASST. YEAR - 2005-06 - 5 - IN THE MEANTIME, THE JURISDICTION OF THE ASSESSEE W AS TRANSFERRED FROM THE DCIT-CIRCLE 12 TO ITO WARD 2(3) BY THE DCIT VIDE LE TTER DATED 30 JANUARY 2009 WHICH IS PLACED ON PAGE 8 OF THE PAPER BOOK FILED BY THE REVENUE. ACCORDINGLY, THE ORDER IN CONSEQUENCE TO THE DIRECT ION OF THE LEARNED CIT UNDER SECTION 263 OF THE ACT WAS PASSED BY THE ITO WARD 2(3) UNDER SECTION 143(3) READ WITH SECTION 263 OF THE ACT VID E ORDER DATED 7-12- 2010. NOW THE CONTROVERSY ARISES WHETHER THE TRANSFER OF JURISDICTION OF THE ASSESSEE IN THE LIGHT OF THE FACTS AND CIRCUMSTANCE S DESCRIBED ABOVE, IS WITHIN THE PROVISIONS OF LAW AS SPECIFIED UNDER SEC TION 127 OF THE ACT. THE RELEVANT EXTRACT OF THE PROVISION OF SECTION 12 7 OF THE ACT READS AS UNDER: (1) THE DIRECTOR GENERAL OR CHIEF COMMISSIONER OR C OMMISSIONER MAY, AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEI NG HEARD IN THE MATTER, WHEREVER IT IS POSSIBLE TO DO SO, AND AFTER RECORDI NG HIS REASONS FOR DOING SO, TRANSFER ANY CASE FROM ONE OR MORE ASSESSING OFFI CERS SUBORDINATE TO HIM (WHETHER WITH OR WITHOUT CONCURRENT JURISDICTION) T O ANY OTHER ASSESSING OFFICER OR ASSESSING OFFICERS (WHETHER WITH OR WIT HOUT CONCURRENT JURISDICTION) ALSO SUBORDINATE TO HIM. (2) WHERE THE ASSESSING OFFICER OR ASSESSING OFFIC ERS FROM WHOM THE CASE IS TO BE TRANSFERRED AND THE ASSESSING OFFICER OR ASSE SSING OFFICERS TO WHOM THE CASE IS TO BE TRANSFERRED ARE NOT SUBORDINATE TO TH E SAME DIRECTOR GENERAL OR CHIEF COMMISSIONER OR COMMISSIONER, ( A ) WHERE THE DIRECTORS GENERAL OR CHIEF COMMISSIONE RS OR COMMISSIONERS TO WHOM SUCH ASSESSING OFFICERS ARE S UBORDINATE ITA NO.2400/AHD/2011 SMT. SANGEETA MUKESH JAIN VS. ITO ASST. YEAR - 2005-06 - 6 - ARE IN AGREEMENT, THEN THE DIRECTOR GENERAL OR CHIE F COMMISSIONER OR COMMISSIONER FROM WHOSE JURISDICTION THE CASE IS TO BE TRANSFERRED MAY, AFTER GIVING THE ASSESSEE A REASON ABLE OPPORTUNITY OF BEING HEARD IN THE MATTER, WHEREVER IT IS POSSIB LE TO DO SO, AND AFTER RECORDING HIS REASONS FOR DOING SO, PASS THE ORDER; ( B ) WHERE THE DIRECTORS GENERAL OR CHIEF COMMISSIONE RS OR COMMISSIONERS AFORESAID ARE NOT IN AGREEMENT, THE O RDER TRANSFERRING THE CASE MAY, SIMILARLY, BE PASSED BY THE BOARD OR ANY SUCH DIRECTOR GENERAL OR CHIEF COMMISSIONER OR COMM ISSIONER AS THE BOARD MAY, BY NOTIFICATION IN THE OFFICIAL GAZE TTE, AUTHORISE IN THIS BEHALF. (3) NOTHING IN SUB-SECTION (1) OR SUB-SECTION (2) S HALL BE DEEMED TO REQUIRE ANY SUCH OPPORTUNITY TO BE GIVEN WHERE THE TRANSFER IS FROM ANY ASSESSING OFFICER OR ASSESSING OFFICERS (WHETHER WITH OR WIT HOUT CONCURRENT JURISDICTION) TO ANY OTHER ASSESSING OFFICER OR ASS ESSING OFFICERS (WHETHER WITH OR WITHOUT CONCURRENT JURISDICTION) AND THE OF FICES OF ALL SUCH OFFICERS ARE SITUATED IN THE SAME CITY, LOCALITY OR PLACE. (4) THE TRANSFER OF A CASE UNDER SUB-SECTION (1) OR SUB-SECTION (2) MAY BE MADE AT ANY STAGE 40 OF THE PROCEEDINGS, AND SHALL NOT RENDER NECESSARY THE RE- ISSUE OF ANY NOTICE ALREADY ISSUED BY THE ASSESSING OFFICER OR ASSESSING OFFICERS FROM WHOM THE CASE IS TRANSFERRED. EXPLANATION. IN SECTION 120 AND THIS SECTION, THE WORD 'CASE', IN RELATION TO ANY PERSON WHOSE NAME IS SPECIFIED IN ANY ORDER OR DIRECTION ISSUED THEREUNDER, MEANS ALL PROCEEDINGS UNDER THIS ACT 40A IN RESPECT OF ANY YEAR WHICH MAY BE PENDING ON THE DATE OF SUCH ORDER OR D IRECTION OR WHICH MAY HAVE BEEN COMPLETED ON OR BEFORE SUCH DATE, AND INC LUDES ALSO ALL PROCEEDINGS UNDER THIS ACT WHICH MAY BE COMMENCED AFTER THE DAT E OF SUCH ORDER OR DIRECTION IN RESPECT OF ANY YEAR.] A PERUSAL OF THE ABOVE PROVISIONS REVEALS THAT THE JURISDICTION OF THE ASSESSEE FROM ONE AO TO THE OTHER AO CAN BE TRANSFE RRED BY DIRECTOR GENERAL, PRINCIPLE COMMISSIONER OR COMMISSIONER ONL Y AFTER RECORDING THE REASON AND GIVING AN OPPORTUNITY OF BEING HEARD TO ASSESSEE IN PURSUANCE TO THE PROVISIONS SPECIFIED UNDER SECTION 127 OF THE ACT. HOWEVER, WE NOTE THAT THERE WAS NO COMPLIANCE OF TH E PROVISION OF ITA NO.2400/AHD/2011 SMT. SANGEETA MUKESH JAIN VS. ITO ASST. YEAR - 2005-06 - 7 - SECTION 127 OF THE ACT FOR TRANSFERRING THE CASE OF THE ASSESSEE FROM ITO WARD 12(1) TO DCIT-CIRCLE 12 AND THEN FURTHER TRANS FER TO ITO WARD 2(3) OF THE INCOME TAX OFFICE. ON A QUESTION TO THE LEAR NED DR TO ASCERTAIN WHETHER THERE WAS ANY ORDER PASSED BY THE COMPETENT INCOME TAX AUTHORITIES UNDER SECTION 127 OF THE ACT FOR TRANSF ERRING THE CASE OF THE ASSESSEE FROM ONE AO TO THE AO. BUT HE COULD NOT MA KE ANY SATISFACTORY REPLY. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSMENT O RDER PASSED UNDER SECTION 143(3) OF THE ACT DATED 27 DECEMBER 2007 BY THE DCIT-CIRCLE 12 AND CONSEQUENTIAL ASSESSMENT ORDER UNDER SECTION 143(3) READ WITH SECTION 263 OF THE ACT DATED 7 DECEMBER 2010 BY THE AO OF WARD 2(3) IS INVALID AS SUCH INCOME AUTHORITIES NEVER HAD JURISD ICTION OVER THE ASSESSEE IN THE MANNER PROVIDED UNDER SECTION 127 O F THE ACT. THUS BOTH THE ORDERS ARE LIABLE TO BE QUASHED. IN THIS REGARD, WE DRAW SUPPORT AND GUIDANCE FROM T HE JUDGMENT OF HONBLE SUPREME COURT IN CASE OF AJANTA INDUSTRIES REPORTED IN 102 ITR 281 WHEREIN IT WAS HELD AS UNDER: WE FIND THAT IN THE 1961 ACT SECTION 127 REPLACED SECTION 5(7A) WHERE THE LEGISLATURE HAS INTRODUCED, INTER ALIA, THE REQUIRE MENT OF RECORDING REASONS IN MAKING THE ORDER OF TRANSFER. IT IS MANIFEST THAT O NCE AN ORDER IS PASSED TRANSFERRING THE CASE FILE OF AN ASSESSEE TO ANOTHE R AREA THE ORDER HAS TO BE COMMUNICATED. COMMUNICATION OF THE ORDER IS AN ABSO LUTELY ESSENTIAL REQUIREMENT SINCE THE ASSESSEE IS THEN IMMEDIATELY MADE AWARE OF THE REASONS WHICH IMPELLED THE AUTHORITIES TO PASS THE ORDER OF TRANSFER. IT IS APPARENT THAT IF A CASE FILE IS TRANSFERRED FROM THE USUAL PLACE OF RESIDENCE OR OFFICE WHERE ORDINARILY ASSESSMENTS ARE MADE TO A DISTANT AREA, A GREAT DEAL OF INCONVENIENCE AND EVEN MONETARY LOSS IS INVOLVED. T HAT IS THE REASON WHY ITA NO.2400/AHD/2011 SMT. SANGEETA MUKESH JAIN VS. ITO ASST. YEAR - 2005-06 - 8 - BEFORE MAKING AN ORDER OF TRANSFER THE LEGISLATURE HAS ORDINARILY IMPOSED THE REQUIREMENT OF A SHOW-CAUSE NOTICE AND ALSO RECORDI NG OF REASONS. THE QUESTION THEN ARISES WHETHER THE REASONS ARE AT ALL REQUIRED TO BE COMMUNICATED TO THE ASSESSEE. IT IS SUBMITTED, ON B EHALF OF THE REVENUE, THAT THE VERY FACT THAT REASONS ARE RECORDED IN THE FILE , ALTHOUGH THESE ARE NOT COMMUNICATED TO THE ASSESSEE, FULLY MEETS THE REQUI REMENT OF SECTION 127(1). WE ARE UNABLE TO ACCEPT THIS SUBMISSION IN VIEW OF THE ABOVE, WE HOLD THAT THE ORDER PASSED BY THE AO AS DISCUSSED ABOVE IS NOT SUSTAINABLE IN THE EYES OF L AW. ACCORDINGLY, ANY ADDITION MADE TO THE TOTAL INCOME OF THE ASSESSEE I N SUCH ORDER CANNOT BE UPHELD. ACCORDINGLY, THE ASSESSEE SUCCEEDS ON TECHN ICAL REASON AS DISCUSSED ABOVE. THUS, WE ARE NOT INCLINED TO ADJUD ICATE THE ISSUE ON MERIT. HENCE THE GROUND OF APPEAL OF THE ASSESSEE I S ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 25 /10/2019 SD/- SD/- (MS. MADHUMITA ROY) (WAS EEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 25/10/2019 &.., .(.. / T.C. NAIR, SR. PS ITA NO.2400/AHD/2011 SMT. SANGEETA MUKESH JAIN VS. ITO ASST. YEAR - 2005-06 - 9 - !'#' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-6, AHMEDABAD 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 24.10.2019 ( WORD PROCESSED BY HONBLE AM IN HIS COMPUTER BY DRA GON ) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 24.10.2019 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.25.10.2019 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 25.10.2019 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER