Kum. Puja V Sherlekar, Mangaluru V. Assistant Commissioner of Income Tax, Central Circle-2, Mangaluru

ITA 2924/BANG/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0155 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 28-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NANDINI DAS
• Assessee Lawyers: SHREEHARI KUTSA
• Keywords: Reason to believe
• Section: 147; 145; 148; 132; 250; 153C

Judgement Text

ITA No.2924/Bang/2017 Kum. Puja V. Sherlekar, Mangaluru IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA No.2924/Bang/2017 Assessment Year: 2012-13 Kum. Puja V. Sherlekar SHILPA A Bejai Church Road Mangaluru PAN NO : DEVPS5809R Vs. ACIT Central Circle-2 Mangaluru APPELLANT RESPONDENT Appellant by : Shri Shreehari Kutsa, A.R. Respondent by : Smt. Nandini Das, D.R. Date of Hearing : 17.01.2022 Date of Pronouncement : 17.01.2022 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order of CIT(A)-2 Panaji dated 27.9.2017 for the assessment year 2012-13. The assessee has raised following grounds of appeal:- 1. The Order of the learned Commissioner of Income-tax Appeals, passed under section 250 of the Act in so far as it is against the Appellant is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant's case. 2. The learned CIT(A) failed to appreciate that the order of re-assessment is bad in law and void-ab-initio for want of requisite jurisdiction as the mandatory requirements to assume jurisdiction under section 148 of the Act did not exist and have not been complied with and consequently, the re-assessment requires to be cancelled. ITA No.2924/Bang/2017 Kum. Puja V. Sherlekar, Mangaluru Page 2 of 6 3. The reason to believe was not recorded prior to issue of notice u/s 148 and therefore the entire proceedings are void-ab-initio on the facts and circumstances of the case. 4. The learned Assessing Officer lacked the requisite jurisdiction to assess the Appellant and the order impugned is therefore not maintainable in law on the facts and circumstances of the case. 5. The impugned order having been passed under incorrection provision i.e., section 147 r.w.s. 144 instead of 153C r.w.s 144, the order is not sustainable in law on the facts and circumstances of the case. 6. The learned AO is not justified in invoking the rigorous provisions of section 144 on the facts and circumstances of the case. 7. The learned AO failed to appreciate that there have been numerous appearances by Authorized Representative, the accounts manager of the company and the appellant’s father and therefore the A.O. is not justified in passing the order to the best of his judgement on the facts and circumstances of the case. 8. The order of assessment passed to the best judgment of the AO is not in accordance with law and not sustainable on the facts and circumstances of the case. 9. The primary conditions essential for the invocation of section 144 of the Act are absent and the order of assessment passed by invoking section 144 js not sustainable in law on the facts and circumstances of the case. 10. The primary conditions essential for the invocation of section 145 of the Act are absent and the order of assessment passed by rejecting the books of account under section 145 is not sustainable in law on the facts and circumstances of the case. 11. The learned AO is not justified in invoking the rigorous provisions of section 145 of the Act on the facts and circumstances of the case. 12. The completion of the assessment proceedings by rejecting the books of account, yet adopting the values therefrom and quoting profusely and relying on the same reflect the non-application of mind on the part of the AO and therefore the order of assessment is not sustainable in law and on the facts and circumstances of the case. 13. Without prejudice to the above, the learned CIT(A) failed to appreciate that the learned AO is not justified in assessing the Appellant on a total income ITA No.2924/Bang/2017 Kum. Puja V. Sherlekar, Mangaluru Page 3 of 6 of Rs.73,13,800/- as against the declared total income of Rs.6,63,000/- on the facts and circumstances of the case. 14. The learned CIT(A) failed to appreciate that the disallowances made by the learned AO on account of cost of land, cost of construction, interest on bank loan and other expenses are not justified and have to be deleted on the facts and circumstances of the case. 15. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 2. There was a delay of 7 days in filing the appeal and the Ld. A.R. has requested to condone the delay and accordingly the delay was condoned. 3. The facts of the case are that the assessee is an individual engaged in the business of real estate, construction etc. The assessee is a daughter of Mr. Vinod and Mrs. Nita Sherlekar. A search u/s. 132 of the Income-tax Act,1961 ['the Act' for short] was carried on in the business of premises of Veenu group and residential premises of the assessee’s parents on 04.09.2013. During the course of search, the assessee’s father stated that the assessee was engaged in construction of commercial project by name 'Veenu Sky Plaza" at Moodabidri. The assessee had availed loan of Rs.4,93,85,510/- from M/s Bharat Co-operative Bank, out of which Rs.2,15,00.000/- was utilized for purchase of land and construction of building thereon. The assessee claimed interest on the said loan of Rs.50,03,190/- and returned loss of Rs.25,34,417/-. The AO found that major part of the loan availed by the assessee was diverted to the other concerns of the group, which were not paying any interest to the assessee nor there was any business relation of the said concerns with the assessee. Accordingly, the assessee declared an additional income of Rs.31,85.124/- being excess claim of interest. The AO found that the income of the assessee had ITA No.2924/Bang/2017 Kum. Puja V. Sherlekar, Mangaluru Page 4 of 6 escaped assessment and accordingly issued notice u/s. 148 on 22.05.2015 to the assessee. The assessee filed the return on 29.01.2016 declaring total income of Rs.6,63,000/- as against original return of loss of Rs.25,22,125/-. The AO during assessment proceedings found lot of discrepancies in the books of accounts maintained. The AO completed the assessment u/s. 144 r.w.s. 147 dated 26.03.2016 assessing total income of the assessee at Rs.73,13,800/-. The AO has made various additions in the assessment. Aggrieved by the said additions, the assessee is before us in appeal. 4. At the time of hearing, the Ld. A.R. submitted that the assessee has raised various additional grounds before Ld. CIT(A) vide his petition dated 11.1.2017 which were failed to adjudicate by Ld. CIT(A). Accordingly, he submitted that those additional grounds are very important so as to decide the appeals before the Tribunal and submitted that the additional grounds may be remitted to Ld. CIT(A) for his fresh consideration. The Ld. D.R. has not put any objections. 5. We have heard the rival submissions and perused the record. Admittedly assessee has raised following additional grounds of appeal:- 1. “The reason to believe was not recorded prior to issue of notice u/s 148 and therefore the entire proceedings are void-ab-initio on the facts and circumstances of the case. 2. The learned AO is not justified in invoking the rigorous provisions of section 144 on the facts and circumstances of the case. 3. The learned AO failed to appreciate that there have been numerous appearances by Authorized Representative, the accounts manager of the company and the Appellant's father and therefore the AO is not justified in passing the order to the best of his judgment on the facts and circumstances of the case. ITA No.2924/Bang/2017 Kum. Puja V. Sherlekar, Mangaluru Page 5 of 6 4. The order of assessment passed to the best judgment of the AO is not in accordance with law and not sustainable on the facts and circumstances of the case. 5. The primary conditions essential for the invocation of section 144 of the Act are absent and the order of assessment passed by invoking section 144 is not sustainable in law on the facts and circumstances of the case. 6. The primary conditions essential for the invocation of section 145 of the Act are absent and the order of assessment passed by rejecting the books of account under section 145 is not sustainable in law on the facts and circumstances of the case. 7. The learned AO is not justified in invoking the rigorous provisions of section 145 of the Act on the facts and circumstances of the case. 8. The completion of the assessment proceedings by rejecting the books of account, yet adopting the values therefrom and quoting profusely and relying on the same reflect the non-application of mind on the part of the AO and therefore the order of assessment is not sustainable in law and on the facts and circumstances of the case. 9. The learned Assessing Officer lacked the requisite jurisdiction to assess the Appellant and the order impugned is therefore not maintainable in law on the facts and circumstances of the case. 10. The impugned order having been passed under incorrection provision i.e., section 147 r.w.s. 144 instead of 153C r.w.s 144, the order is not sustainable in law on the facts and circumstances of the case. 11. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above., 12. In the view of the above additional grounds of appeal, the grounds of appeal filed at the time of filing this appeal and such other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that this appeal may be allowed in the interest of justice and equity.” 6. Ld. CIT(A) failed to adjudicate these additional grounds. Hence, in the interest of justice, we remit the entire issue to the file of the Ld. CIT(A) with the direction to first adjudicate the additional grounds and thereafter if required he has to adjudicate the impugned grounds of appeal. ITA No.2924/Bang/2017 Kum. Puja V. Sherlekar, Mangaluru Page 6 of 6 7. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 17 th Jan, 2022. Sd/- (N.V. Vasudevan) Vice President Sd/- (Chandra Poojari) Accountant Member Bangalore, Dated 17 th Jan, 2022. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore.