Kailash Chand Maheshwari, Kanpur V. Inocme Tax Officer-2(2), Kanpur

ITA 280/LKW/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4701 (ITAT-LUCKNOW)
• Duration Of Justice: 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 07-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Assessment record
• Section: 143(3); 142(1); 234B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.280/LKW/2015 ASSESSMENT YEAR 2007-08 THE INCOME TAX OFFICER-2(2), 16/69,AAYAKAR BHAWAN, CIVIL LINES, KANPUR - 208001 VS KAILASH CHAND MAHESWARI 75/232, 1ST FLOOR, BHANDARI BUILDING, KANPUR PAN ACNPM 1531 F (RESPONDENT) (APPELLANT) SHRI PRADEEP SETH , CA APPELLANT BY SHRI AMIT NIGAM, DR RESPONDENT BY 03/02/2016 DATE OF HEARING 19 /0 2 /2016 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF LD. CIT (A)-I, KANPUR DATED 30.01.2015 FOR THE AY 2007-08. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL ) I, KANPUR VIDE HER ORDER PASSED ON 30.01.2015 IN 1ST APPEAL N O. CIT(A) II/428/ITO-2(2)/KNP/2009-10 OLD)/CIT(A) I/428/ITO-2 (2)/ KNP/2009-10 (NEW)/336 HAS ERRED IN LAW AND WRON GLY CONFIRMED THE WRONG ADDITION AS WAS MADE BY THE A.O . I.E. THE ITO-2(2) KANPUR IN 'LAHI A/C.' TO THE E XTENT OF RS. 1,59,827/- TREATING THE SAME AS SUPPRESSED SALE OF LAHI (MUSTARD OLD SEEDS) WHEREAS THE ASSESSEE APPEL LANT HAS SHOWN LOSS IN THE TRADING OF LAHI AND SHE DID NOT C ONSIDER THE EVIDENCES PRODUCED BEFORE HIM IN RESPECT OF RA TE OF SALES WHICH ALWAYS VARIES WITH MARKET FLUCTUATIONS OR WIT H GALLA ADHATIYA ASSOCIATION RATES AS THE APPELLANT HAS MAD E SELLS OF 2 LAHI THROUGH KRISHI UTPADAN MANDI SAMITI, ORAI, DIS TT. JALAUN (U.P.) BUT THE LD. A.O. HAS WRONGLY COMPUTED THE DI FFERENCE BETWEEN SALE PRICE OF LAHI AS SHOWN BY THE APPELLAN T AND THE RATES AS WAS CERTIFIED BY THE SENIOR AGRICULTURE MA RKET INSPECTOR AND WORKED OUT THE DIFFERENCE AS SUPPRESS ED SALES TO THE EXTENT OF RS.1,59,827/- WITHOUT CONSIDERING THE EVIDENCES PRODUCED AND THE DETAILS OF 'SAUDA SETTLE MENTS' MADE BEFORE THE PURCHASES AND ADDED BACK TO THE INC OME DISCLOSED TO THE EXTENT OF RS. 1,59,827/- WHICH REQ UIRED TO BE QUASHED ACCORDINGLY AS THE BILLS/VOUCHERS ARE SINCE VOUCHED AND A/CS ARE AUDITED. 2. THAT THE LD. C.I.T. (A) I, KANPUR VIDE HER ORDE R DT. 30.01.2015 HAS ERRED IN LAW BY CONFIRMING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF DIFFERENCES IN CLOSING STOCK OF LAHI TO THE EXTENT OF RS.1,29,689/- IN VIEW OF THE PURCHASES MADE BY T HE APPELLANT HAS WRONGLY ENHANCED BY RATE APPLIED TO T HE PURCHASES WITHOUT EXCLUDING THE EXPENSES RELATED TO THE PURCHASES AND ALSO CONSEQUENTIAL EFFECT TO THE OPEN ING STOCK HAS ALSO NOT BEEN ALLOWED SO FOR, THEREFORE, THE AD DITION TO THE EXTENT OF RS.1,29,689/- REQUIRED TO BE QUASHED ACCORDINGLY. 3. THAT THE LD. C.I.T. (A) I, KANPUR VIDE HER ORDE R DT. 30.01.2015 HAS WRONGLY CONFIRMED THE ADDITION MADE BY THE LD. A.O. ON A/C. OF CASH CREDIT U/S. 68 FOR RS. 3413/-APPEARING IN THE NAME OF SMT. ANUPAMA SOMANI AS THE BALANCE OF OUTST ANDING IN THE APPELLANT'S BOOKS WAS HIGHER THAN THE AMOUNT CONFIRMED AS SHE IS THE SISTER OF THE ASSESSEE APPE LLANT WHO REQUIRED MONEY FOR HER PERSONAL USE BUT THE SAME DI D NOT CONSIDERED BY THE LD. A.O. AND ADD BACK BOOK TO THE INCOME DISCLOSED WHICH REQUIRED TO BE QUASHED ACCORDINGLY. 4. THAT THE LD. CIT(A) I, KANPUR VIDE HER ORDER DAT ED 30.01.2015 HAS ERRED IN LAW BY CONFIRMING THE LD. A.O.'S PROCE EDING AS WAS INITIATED U/S 269T/271E FOR PAYMENT OF RS. 15,0 00/- TO THE APPELLANT'S WIFE AS THE LOAN OF RS. 3,44,100/-. WAS REPAID BUT PARTLY LOAN OF RS. 15,000/- WAS PAID IN CASH, W HEREAS THE SAME WAS DRAWN ONLY FOR DOMESTIC USE AND MEDICAL PU RPOSES AND THIS REQUIRED TO BE QUASHED ACCORDINGLY, AS THE LD. A.O. DID NOT CONSIDER THE NATURAL JUSTICE OF LAW AND HAD UN- NECESSARILY INITIATED THE AFORESAID PROCEEDINGS U/S 269T/271E WHEN THE LOAN A/C WAS SETTLED AND THE SAME REQUIRED TO BE QUASHED ACCORDINGLY. 3 5. THAT THE LD. CIT(A) I, KANPUR VIDE HERE ORDER DT . 30.01.2015 DID NOT CONSIDER THE MERITS FOR INITIATION OF PENAL TY PROCEEDING U/S 271(1)(C) AS INITIATED BY THE LD. A.O. AND THE INTEREST WHICH HAS WRONGLY BEEN LEVIED U/S 234B BY HIM WHICH REQUIRED TO BE QUASHED. 6. THAT THE APPELLANT CRAVES LEAVE TO MODIFY AND AN Y OF THE GROUND OF APPEAL MENTIONED ABOVE AND/OR TO ADD ANY FRESH GROUNDS AS AND WHEN IT IS REQUIRED TO DO SO. 3. IT WAS SUBMITTED BY LD. AR OF THE ASSESSEE THAT CERTIFIED COPY OF THE ORDER SHEET ENTRY IN THE ASSESSMENT FOLDER IS AVAIL ABLE ON PAGES 1 TO 5 OF THE PAPER BOOK AND THE CERTIFIED COPY OF THE REPORT OF THE INSPECTOR REGARDING SERVICE OF NOTICE ON THE ASSESSEE BY WAY OF AFFIXTU RE IS AVAILABLE ON PAGE 6 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT THIS SERV ICE OF NOTICE ON THE ASSESSEE BY WAY OF AFFIXTURE IS NOT VALID SERVICE F OR TWO REASONS. THE FIRST REASON IS THIS THAT BEFORE RESORTING TO SERVICE OF NOTICE ON THE ASSESSEE BY WAY OF AFFIXTURE, NO OTHER EFFORT WAS MADE BY THE A SSESSING OFFICER TO SERVE NOTICE ON THE ASSESSEE IN A REGULAR MODE I.E. BY RE GISTERED POST OR THROUGH NOTICE SERVER. THE SECOND REASON GIVEN BY HIM IS TH IS THAT THERE IS NO SIGNATURE OF ANY WITNESS ON THIS NOTE OF THE INSPEC TOR REGARDING SERVICE BY WAY OF AFFIXTURE AND IN THE ABSENCE OF IT, THIS IS NOT A VALID SERVICE. 4. LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF T HE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 18.09.2008 ALONG WITH QUESTIONNAI RE AND NOTICE U/S 142(1) OF THE ACT WAS ALSO ISSUED ON THE SAME DATE FIXING THE DATE OF COMPLIANCE ON 30.09.2008. THEREAFTER, HE HAS NOTED THAT A FRESH S ET OF NOTICES U/S 143(2) AND 142(1) WERE ISSUED ON 02.06.2009. AS PER THE RE PORT OF INCOME TAX INSPECTOR AVAILABLE ON PAGE 6 OF THE PAPER BOOK, TH E SAME NOTICE DATED 18.09.2008 FIXING THE DATE OF HEARING ON 30.09.2008 WAS SERVED BY HIM ON 4 THE ASSESSEE BY WAY OF A FIXTURES BUT THERE IS NO N AME OR ADDRESS OF ANY WITNESS ON THIS REPORT OF INCOME TAX INSPECTOR REGA RDING SERVICE OF NOTICE BY WAY OF AFFIXTURE. ON THE DIRECTION OF BENCH, LD. DR OF THE REVENUE ALSO PRODUCED THE ASSESSMENT RECORDS AND FROM THE ASSESS MENT RECORDS ALSO, HE COULD NOT SHOW ANY EVIDENCE REGARDING SERVICE OF NO TICE BY WAY OF AFFIXTURE IN WHICH NAME, ADDRESS AND SIGNATURE OF WITNESS IS AVA ILABLE. IN THE ABSENCE OF SIGNATURE, NAME AND ADDRESSES OF THE WITNESSES, SER VICE OF NOTICE BY WAY OF AFFIXTURE IS NOT A VALID SERVICE. IT IS SETTLED POS ITION LAW THAT IF THE NOTICE U/S 143(2) OF THE ACT IS NOT VALIDLY SERVED ON THE ASSE SSEE WITHIN THE PRESCRIBED TIME, THE ASSESSMENT ORDER FRAMED BY ASSESSING OFFI CER U/S 143(3) IS NOT VALID. HENCE, WE HOLD THAT IN THE FACTS OF THE PRES ENT CASE, THE ASSESSMENT ORDER FRAMED BY THE ASSESSING OFFICER U/S 143(3) IS NOT VALID BECAUSE THE SAME IS WITHOUT VALID SERVICE ON THE ASSESSEE OF NO TICE U/S 143(2) WITHIN THE PRESCRIBED TIME. HENCE, THE SAME IS ANNULLED. IN VI EW OF THIS, NO ADJUDICATION IS CALLED FOR ON MERIT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (SUNIL KUMAR YADAV) (A.K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19/02/2016 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTR AR