SHALUBAI A ARKERI, MUMBAI V. ITO 21(3)(2), MUMBAI

ITA 2848/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9722 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 29-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 25-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK
• Keywords: Income from undisclosed sources; Principle of natural justice; Source of fund; Validity of assessment
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SHRI P.K. BANSAL, VICE-PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.2848/MUM/2014 (ASSESSMENT YEAR- 2009-10) SMT. SHALUBAI A ARKERI ROOM NO. 7, HANUMAN CHAWI, AAREY ROAD, POWAI, MUMBAI-400087 PAN: AJZPA5635M VS. ITO-21(3)(2), ROOM NO. 508, 5 TH FLOOR, PRATYAKSHA KAR BHAVAN, BKC, MUMBAI-400051. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY K THAKORE WITH SH. YASHESH JAKHELIA (AR) REVENUE BY : DR. A.K. NAYAK (DR) DATE OF HEARING : 14.06.2017 DATE OF PRONOUNCEMENT : 11.09.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE INCOME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-32, MUM BAI DATED 12.02.2014 FOR THE ASSESSMENT YEAR (AY) 2009-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL . 1. ON THE FACTS AND CIRCUMSTANCE OF THE CASE, THE L EARNED CIT(A) ERRED IN CONFIRMING ASSESSMENT MADE U/S 143(3) INSTEAD OF TH E SEC. 144, SINCE MANDATORY CONDITIONS AS STIPULATED BY SEC. 143(2) AND 142(1) HAVE NOT BEEN COMPLIED WITH AND THEREFORE ORDER SO FRAMED IN CONTRAVENTION OF M ANDATORY PROVISIONS WOULD BE ILLEGAL AND VOID AB-INITO AND THEREFORE DESERVES TO BE ANNULLED. 2. ON THE FACTS AND CIRCUMSTANCE OF THE CASE THE LE ARNED CIT(A) ERRED IN HOLDING THAT SINCE ASSESSMENT IS A SCRUTINY ASSESSMENT, NO PRIOR PERMISSION NEEDS TO BE TAKEN FROM THE JT.CIT AS IT IS A CASE SELECTED UNDE R CASS. ITA NO.28 48/M/2014- SMT. SHALUBAI A ARKERI 2 3. ON THE FACTS AND CIRCUMSTANCE OF THE CASE THE LE ARNED CIT(A) ERRED IN HOLDING THAT DURING REMAND PROCEEDINGS THAT THE ASSESSEE WA S UNABLE TO CLARIFY MOST OF THE DISCREPANCIES WHICH IS FACTUALLY INCORRECT AND CAN BE BORNE OUT BY THE DETAILED PAPER BOOK FILED AND HAS FAILED TO PASS TH E SPEAKING ORDER IN RESPECT OF THE SAME. 4. THE LEARNED CIT(A) ERRED IN CONFIRMING OPENING B ALANCE IS RS.4,22,275/ - AS INCOME OF A.Y.09-10 AND FAILED TO APPRECIATE THAT T HE OPENING BALANCE CANNOT BE TAXED IN THE RELEVANT ASSESSMENT YEAR. 5. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT SIN CE ASSESSEE IS NOT MAINTAINING BOOKS OF ACCOUNT AND DEPOSITS MADE IN BANK ACCOUNT CANNOT BE TAXED UNDER INCOME FROM OTHER SOURCE. THEREFORE THE ADDITION OF RS 4,22,275/- 6 (A) ON THE FACTS & CIRCUMSTANCE OF THE CASE THE L EARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS.7,45,000/ - BEING INCOME FROM UNDISCLOSED SOURCES INTRODUCED BY WAY OF LOANS, BY TOTALLY IGNORING THE FACT THAT THE LOANS WERE TAKEN FROM TWO DAUGHTERS, WHO ARE INCOME TAX ASSESSEE AND HAVE CONFIRMED THE GRANTING OF LOANS FROM THEIR ACCUMULATED SAVINGS. 6(B) WITHOUT PREJUDICE TO THE AFOREMENTIONED THE LE ARNED CIT(A) FAILED TO APPRECIATE THAT BOTH THE DAUGHTERS OF THE ASSESSEE HAVE ALSO TAKEN LOANS FROM VARIOUS PARTIES WHO HAVE CONFIRMED THE GRANTING OF THE LOAN FUND WERE PRODUCED BEFORE THE LEARNED ASSESSING OFFICER DURING REMAND PROCEEDINGS BUT HE FAILED TO RECORD THEIR STATEMENT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.7,45,000/- BEING INCOME FROM UNDISCLOSED SOURCES THE DETAILS OF WHICH ARE UNDER ;- (A) LOAN FROM DAUGHTER MS. SHOBHA ARKERI RS.3,72,00 0/- (B) LOAN FROM DAUGHTER MS. POOJA ARKERI RS.3,73,000 /- THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE DA UGHTERS HAVE ALREADY DISCLOSED THEIR SOURCE OF FUNDS AND THE LEARNED CIT (A) HAS ERRED IN TAXING THE SOURCE OF SOURCE WHILE CONFIRMING THE SAID ADDITION OF RS.7,45,000/-. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HER RETURN OF INCOME FOR RELEVANT AY ON 10.07.2009 DECLARING TOTAL INCOME AT RS. 1,43,980/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 3 0.11.2011. THE ITA NO.28 48/M/2014- SMT. SHALUBAI A ARKERI 3 ASSESSING OFFICER (AO) WHILE FRAMING THE ASSESSMENT ORDER MADE THE ADDITION OF RS. 12,18,700/- AS INCOME FROM UNDISCL OSED SOURCES, RS. 7,45,000/- ON ACCOUNT OF UNDISCLOSED SOURCE INTRODU CED BY WAY OF LOANS AND FURTHER ADDITION OF RS. 63,000/- ON ACCOUNT OF DEPO SIT IN THE SAVING BANK ACCOUNT FROM UNDISCLOSED SOURCE. ON APPEAL BEFORE T HE LD. CIT(A), ALL THE ADDITION WERE CONFIRMED. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US . 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) FOR THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENU E AND PERUSED THE MATERIAL AVAILABLE ON RECORD. GROUND NO. 1 & 2 RELA TED TO VALIDITY OF ASSESSMENT ORDER. THE LD. AR OF THE ASSESSEE ARGUED THAT NO NOTICE U/S 143(2) AND 142(1) SERVED UPON THE ASSESSEE. THE ASS ESSMENT ORDER IS BAD-IN- LAW AND INVALID IN ABSENCE OF SERVICE OF NOTICE U/ S 143(2) AND 142(1) OF THE ACT. IT WAS FURTHER ARGUED THAT THE AO PASSED THE A SSESSMENT ORDER IN GROSS VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. THE ASSE SSEE WAS NOT SERVED WITH THE NOTICE, THE NOTICE WAS SENT ON SOME DIFFERENT A DDRESS. THE ASSESSEE WAS NOT RESIDING ON SUCH ADDRESSES. THE NOTICE DATED 14 .09.2010 U/S 143(2), NOTICE DATED 02.02.2011 DATED 14.07.2011 AND NOTICE D DATED 02.08.2011 U/S 142(1) WERE ALLEGEDLY SENT ON DIFFERENT ADDRESS. T HE ASSESSEE HAS NO KNOWLEDGE ABOUT THE ISSUANCE OF SUCH NOTICE, THE CO PIES OF SUCH NOTICES IS PACED ON RECORD. THE ASSESSEE OBTAINED THE COPIES OF THE SAID NOTICES FROM ITA NO.28 48/M/2014- SMT. SHALUBAI A ARKERI 4 THE OFFICIAL RECORD WITH THE PERMISSION. THE ASSESS MENT ORDER PASSED WITHOUT SERVICE OF MANDATORY NOTICES U/S 142(1) AND 143(2) IS INVALID. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDE R OF AUTHORITIES BELOW AND ARGUED THAT THE ASSESSEE HAS NOT RAISED SUCH IS SUE BEFORE THE FIRST APPELLATE AUTHORITY (FAA). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE AO HAS RECORDED THAT NOTICE U/S 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE AND SUBSEQUENTLY THE NOTICE U/S 142(1) DATED 14.07.2011 ALONG WITH DETAILED QUE STIONNAIRE WAS ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE HAS PLAC ED ON RECORD THE COPY OF NOTICE DATED 14.09.2010 U/S 143(2). THE SAID NOTICE IS ADDRESSED AT THE ADDRESS OF ROOM NO. 1, CHAWL NO.4, ARKERI CHAWL PAS POLI SAKI VIHAR ROAD, POST NITIE, POWAI, MUMBAI. FURTHER, PERUSAL O F NOTICE DATED 02.02.2011, 14.07.2011 AND 02.08.2011 ALLEGEDLY ISS UED BY AO CONTAINS THE ADDRESS AT ROOM NO. 01, CHAWL NO. 04, ARKERI CHAWL, PASPOLI, SAKIVIHAR ROAD, POST NITIE, POWAI, MUMBAI-400076. THE AO WHIL E PASSING THE ASSESSMENT ORDER HAS REFERRED THE ADDRESSES OF ASSE SSEE AT SMT. SHALUBAI APPASAHEB ARKERI, ROOM NO.7, HANUMAN CHAWL, AAREY R OAD, POWAI, AND MUMBAI-87. THE LD. DR FOR THE REVENUE FAILED TO GIV E ANY SATISFACTORY EXPLANATION AS TO WHY THE NOTICES U/S 143(2) AND 14 2(1) WAS SENT AT THE DIFFERENT ADDRESS. THE PERUSAL OF THE NOTICE U/S 14 3(2) AND 142(1) REVEALS THAT THE NOTICE WAS NOT PROPERLY ADDRESSED. THUS, T HERE IS NO OCCASION FOR ITA NO.28 48/M/2014- SMT. SHALUBAI A ARKERI 5 SERVICE ON SUCH NOTICE. THE REVENUE HAS NOT PLACED ON RECORD ANY MATERIAL TO SUBSTANTIATE THEIR CONTENTION THAT NOTICES U/S 1 43(2) AND 142(1) WAS PROPERLY SERVED UPON THE ASSESSEE. AS NO NOTICE U/S 143(2) AND 142(1) WAS SERVED, WE HOLD THAT THE ASSESSMENT ORDER WAS PASSE D WITHOUT SERVICE OF NOTICE AND THE SAME IS INVALID. HENCE, THE GROUND NO.1 &2 OF THE APPEAL ARE ALLOWED. AS WE HAVE HELD THE ASSESSMENT ORDER AS IN VALID THUS, THE DISCUSSION ON OTHER GROUNDS OF APPEAL HAS BECOME AC ADEMIC. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH DAY OF SEPTEMBE R 2017. SD/- SD/- (P.K. BANSAL) (PAWAN SINGH) VICE-PRESIDENT JUDICIAL MEMBER MUMBAI; DATED 15/09/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/