The ITO, Ward-2(4), Ahmedabad V. Shri Kamlesh Dahyabhai Patel, Ahmedabad

ITA 2896/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0126 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-08-2010
• Assessment Year: 1992-1993
• Appeal Filed On: 05-07-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Assessee Lawyers: A C SHAH
• Keywords: Opportunity of being heard
• Section: 143(3); 142(1); 147; 148; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.2896/AHD/2007 A.Y.: 1992-93 THE INCOME TAX OFFICER, WARD 2(4), 2 ND FLOOR INSURANCE BUILDING, ASHRAM ROAD, AHMEDABAD VS SHRI KAMLESH DAHYABHAI PATEL, C/L. M/S. DAHYABHAI VITHALDAS, 1450, NAVA MADHURUPURA, SAHIBAUG ROAD, AHMEDABAD PA NO. -- (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SHELLEY JINDAL, DR RESPONDENT BY SHRI A. C. SHAH, AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-VI, AHMEDAB AD DATED 26-04-2007 FOR ASSESSMENT YEAR 1992-93 ON THE FOLLOWING GROUND : 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN QUA SHING THE ORDER MADE U/S 143(3) R. W. S. 254 DATED 27/9/2006 BY HOLDING THAT IT IS B AD IN LAW. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER 2. WE HAVE HEARD LEARNED REPRESENTATIVES OF BOTH THE P ARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERE D THE MATERIAL ON RECORD. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT A SEARCH U/S 132 OF THE IT ACT WAS CARRIED OUT ON THE GROUP CASES OF THE ASSESSEE ON 27-10-1993. ON THE BASIS OF THE STATEMENT RECORDED U/S 132(4) OF T HE IT ACT FROM SHRI DAHYABHAI V. PATEL, FATHER OF THE ASSESSEE AND SHRI NARANBHAI J. PATEL OF GANDHI GROUP, IT WAS FOUND THAT THE ASSESSEE RECEIV ED HIS SHARE OF ON ITA NO.2896/AHD/2007 ITO- 2(4), SURAT VS SHRI KAMLESH DAHYABHAI PATEL, A HMEDABAD 2 MONEY IN THE LAND TRANSACTION TO THE EXTENT OF RS.1 6,88,731/- BEING ONE OF THE PARTNERS OF GANDHI CORPORATION. ON THE BASIS OF INFORMATION AND STATEMENT OF THE FATHER OF THE ASSESSEE, THE AO MAD E ADDITION OF RS.16,88,731/- IN THE CASE OF THE ASSESSEE IN THE A SSESSMENT YEAR 1993- 94. ABOVE ADDITION WAS CONFIRMED BY THE LEARNED CIT (A). HOWEVER, THE TRIBUNAL DELETED THE ABOVE ADDITION BY OBSERVING TH AT THE ADDITION OF ALLEGED ON MONEY CANNOT BE MADE IN THE ASSESSMENT Y EAR 1993-94 AND ALSO OBSERVED THAT THE AO IS AT LIBERTY TO MAKE ADD ITION OF THIS INCOME IN THE RELEVANT ASSESSMENT YEAR IN ACCORDANCE WITH LAW . WHILE PASSING THE ABOVE ORDER, THE TRIBUNAL RELIED UPON ANOTHER ORDER OF ITAT AHMEDABAD BENCH IN APPEAL NO.2806/AHD/1997 IN THE CASE OF D. S. PATEL THROUGH LEGAL HEIR SHRI ARVINDKUMAR D. PATEL. IN THIS YEAR, THE ISSUE OF ADDITION OF ON MONEY WAS CONSIDERED AND IT WAS HELD BY THE TRIB UNAL THAT SINCE THE DEED OF CONVEYANCE WAS REGISTERED IN APRIL, 1991, T HE ON MONEY CAN BE SAID TO HAVE BEEN RECEIVED DURING THE FINANCIAL YEA R 1991-92 RELEVANT TO THE ASSESSMENT YEAR 1992-93 NOW UNDER APPEAL. IN VI EW OF THE ABOVE FINDING OF THE TRIBUNAL IN ASSESSMENT YEAR 1993-94, THE AO ISSUED NOTICE U/S 143(2) OF THE IT ACT FOR THE ASSESSMENT YEAR 19 92-93 IN ORDER TO GIVE EFFECT TO THE ORDER OF THE TRIBUNAL. THE ASSESSEE S UBMITTED BEFORE THE AO THAT NOTICE U/S 143(2) OF THE IT ACT CANNOT BE ISSU ED IN THE ABSENCE OF ANY RETURN FILED U/S 147 OF THE IT ACT. THEREFORE, ASSESSMENT IS TIME BARRED. THE AO HOWEVER, DID NOT ACCEPT THE CONTENTI ON OF THE ASSESSEE AND PROCEEDED WITH THE MATTER AND AGAIN MADE ADDITI ON OF RS.16,88,731/- IN THE ASSESSMENT YEAR UNDER APPEAL BY FOLLOWING THE ORDER OF THE TRIBUNAL. THE ADDITION WAS CHALLENGED BEFORE THE LEARNED CIT(A) AND IT WAS EXPLAINED THAT THE ORDER PASSED U /S 254 OF THE IT ACT BY ISSUING NOTICE U/S 143(2) OF THE IT ACT IS BAD I N LAW AND ADDITION IS UNJUSTIFIED. IT WAS SUBMITTED THAT IF THE AO WANTED TO INITIATE PROCEEDINGS AGAINST THE ASSESSEE IN THE ASSESSMENT YEAR UNDER APPEAL, HE SHOULD HAVE REOPENED THE ASSESSMENT WHICH HAS NO T BEEN DONE IN THE ITA NO.2896/AHD/2007 ITO- 2(4), SURAT VS SHRI KAMLESH DAHYABHAI PATEL, A HMEDABAD 3 MATTER. IT WAS ALSO SUBMITTED THAT THE ORDER IN QUE STION IS TIME BARRED AND AS SUCH LIABLE TO BE QUASHED. 4. THE LEARNED CIT(A) CONSIDERING THE FACTS OF THE CASE DELETED THE ENTIRE ADDITION. HIS FINDINGS IN PARA 7 TO 8 ARE RE PRODUCED AS UNDER: 7. I HAVE CONSIDERED THE ABOVE SUBMISSION AND I) FIND MYSELF IN AGREEMENT WITH THE APPELLANT. THIS I S A CASE WHERE THE HONBLE ITAT IN APPELLANTS OWN CASE FOR A. Y. 1993-94 DELETED THE ADDITION OF RS.16,88,731/- BY H OLDING THAT THE ON MONEY WHICH IS RECEIVED AT THE TIME OF REGISTRATION CANNOT BE ADDED TO THE TOTAL INCOME OF 1993-94 BECA USE REGISTRATION OF THE PROPERTY WAS MADE DURING APRI L, 1991, THEREBY IMPLYING THAT THE ADDITION ON ACCOUNT OF ON MONEY CAN BE MADE FOR A. Y. 1992-93. THE HONBLE ITAT DELETED THE ADDITION OF RS.16,88,731 FOR A.Y. 1993-94 AND ALSO OBSERVED THAT THE AO WAS AT LIBERTY TO MAKE ADDITION OF THIS ON MONEY IN THE RELEVANT YEAR AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS ORDER OF ITAT HAD BEEN PASSED ON 20.8.2004. AS ON THIS STAGE, THE POSITION OF ASSESS MENT PROCEEDINGS OF THE APPELLANT FOR A. Y. 1992-93 WAS AS UNDER. 7.1 IN RESPONSE TO ORIGINAL RETURN FILED FOR A. YR. 1992-93, ORDER U/S 143(3) WAS PASSED ON 26.3.1996. SUBSEQUENTLY, ASSESSMENT WAS REOPENED AND ANOTHER ORDER U/S 143(3 ) WAS PASSED ON 23.3.1999. IN THIS ORDER DAT4D 23.3.99, A COPY OF WHICH HAS BEEN FILED BY THE APPELLANT, THE RETURN O F INCOME FILED BY THE APPELLANT IN RESPONSE TO NOTICE U/S 14 8 WAS ACCEPTED BY THE AO WHEREBY TOTAL INCOME WAS COMPUTE D AT RS.1,44,870/-. THUS, AS ON 23.3.1999, ASSESSMENT PROCEEDINGS HAVE REACHED FINALITY. NOW, TO GIVE EFF ECT TO THE OBSERVATION OF THE HONBLE ITAT DT. 20.8.2004 THAT ON MONEY CAN BE ADDED TO INCOME FOR A. YR. 1992-93, IT IS NE CESSARY THAT THE AO SHOULD ISSUE A NOTICE U/S 148 R. W. S. 150. WITHOUT REOPENING HE CANNOT ISSUE A NOTICE U/S 143(2) TO GI VE EFFECT TO THE OBSERVATION OF THE ITAT IN THE APPEAL ORDER FOR A. Y. 1993- 94. AS PER PROVISIONS OF LAW, ASSESSMENT CAN BE MAD E ON THE BASIS OF RETURN FILED U/S 139 OR RETURN FILED IN RE SPONSE TO NOTICE U/S 142(1) OR 148. IN THE PRESENT CASE, AT T HE TIME OF ORDER OF HONBLE ITAT ON 20.8.2004, THE AO WAS REQU IRED TO ISSUE NOTICE U/S 148 R. W. S. 150. SINCE HE HAS NOT REOPENED ASSESSMENT BY ISSUING NOTICE U/S 148, NO FURTHER PR OCEEDINGS CAN BE INITIATED. SINCE THERE IS SPECIFIC PROVISION U/S 150 FOR ISSUING NOTICE U/S 148 WITHOUT ANY TIME LIMIT FOR G IVING EFFECT ITA NO.2896/AHD/2007 ITO- 2(4), SURAT VS SHRI KAMLESH DAHYABHAI PATEL, A HMEDABAD 4 TO ANY FINDING OR DIRECTION OF ANY AUTHORITY IT WAS NECESSARY THAT AO SHOULD HAVE ISSUED SUCH A NOTICE U/S 148. S INCE HE HAS NOT ISSUED NOTICE U/S 148, NO RECOMPUTATION OR REASSESSMENT CAN BE MADE. IT IS TO BE NOTED THAT TH E DIRECTION OF HONBLE ITAT IS NOT FOR A. Y. 1993-94, IT IS REL ATED TO A. Y. 1992-93, THE PROCEEDINGS FOR WHICH WAS NOT BEFORE T HE HONBLE ITAT. 7.2 ON CAREFUL CONSIDERATION OF THE FACTS OF THE CA SE AND TAKING INTO ACCOUNT THE PROVISIONS OF SEC. 150, SEC . 147 AND SEC. 148, I HOLD THAT THE ORDER MADE U/S 254 DTD. 2 7.9.2006 FOR GIVING EFFECT TO OBSERVATION OF THE HONBLE I. T. A. T. IS BAD IN LAW. ACCORDINGLY, THE ORDER IS QUASHED. SINCE TH E ORDER HAS BEEN HELD AS BAD IN LAW, OTHER GROUNDS OF APPEAL AR E NOT DECIDED. 8. SUBJECT TO ABOVE OBSERVATION, THE APPEAL IS ALLO WED. 5. ON CONSIDERATION OF THE ABOVE FACTS, WE DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE TRIBUNAL WHILE DELETIN G THE ADDITION IN ASSESSMENT YEAR 1993-94 HELD THAT THE AO IS AT LIBE RTY TO MAKE THE ADDITION ON THIS INCOME IN THE RELEVANT ASSESSMENT YEAR IN ACCORDANCE WITH LAW. SUCH A FINDING WAS GIVEN BECAUSE THE DOCU MENT IN QUESTION WAS REGISTERED IN APRIL, 1991 AND AS SUCH IF ANY AD DITION WAS TO BE MADE WOULD HAVE BEEN CONSIDERED ONLY IN THE ASSESSMENT Y EAR 1992-93 UNDER APPEAL. HOWEVER, THE AO WITHOUT APPRECIATING THE DI RECTION OF THE TRIBUNAL PROCEEDED WITH THE MATTER BY ISSUING NOTIC E U/S 143)3) OF THE IT ACT AND AGAIN MADE THE ADDITION IN ASSESSMENT YEAR 1992-93. THE LEARNED CIT(A) NOTED IN THE IMPUGNED ORDER THAT EAR LIER ORDER U/S 143(3) FOR ASSESSMENT YEAR 1992-93 WAS PASSED ON 26-03-199 6. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED AND ANOTHER ORDER U/S 1 43(3) OF THE IT ACT WAS PASSED ON 23-03-1999 AND INCOME WAS COMPUTED AT RS.1,44,870/-. THUS, THE ASSESSMENT IN ASSESSMENT YEAR 1992-93 UND ER APPEAL HAS BECOME FINAL. THE TRIBUNAL ISSUED DIRECTION VIDE OR DER DATED 20-08-2004 WHILE DELETING THE ADDITION IN ASSESSMENT YEAR 1993 -94 AND NOTED THAT THE AO IS AT LIBERTY TO MAKE THE ADDITION IN THE RE LEVANT ASSESSMENT YEAR IN ACCORDANCE WITH LAW. THEREFORE, IN THAT EVENT TH E AO INSTEAD OF ITA NO.2896/AHD/2007 ITO- 2(4), SURAT VS SHRI KAMLESH DAHYABHAI PATEL, A HMEDABAD 5 PASSING ORDER U/S 254 OF THE IT ACT SHOULD HAVE PRO CEEDED TO REOPEN THE ASSESSMENT BY RECORDING APPROPRIATE REASONS FOR ASS ESSING THE INCOME ESCAPED. THE ASSESSMENT WHICH HAS BECOME CONCLUDED FOR ASSESSMENT YEAR 1992-93 WAS NOT SUBJECT MATTER IN APPEAL BEFOR E THE TRIBUNAL. THEREFORE, THE AO COULD NOT HAVE TREATED THE MATTER REMANDED TO HIM U/S 254 OF THE IT ACT. THUS, THE AO WITHOUT APPRECI ATING THE CORRECT LEGAL POSITION WRONGLY ISSUED THE NOTICE U/S 143(2) OF TH E ACT IN THE MATTER. THUS, THE ENTIRE PROCEEDINGS U/S 254 OF THE IT ACT IS VITIATED AND IS BAD IN LAW. THE LEARNED CIT(A) WAS JUSTIFIED IN QUASHIN G THE IMPUGNED ORDER AND IN DELETING THE ADDITION. CONSIDERING THE ABOVE DISCUSSIONS, WE DO NOT FIND IT TO BE A FIT CASE FOR INTERFERENCE. WE A CCORDINGLY DISMISS THE APPEAL OF THE REVENUE. 6. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 1-09-2010 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 1-09-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD