Shri Sattarbhai S.Sarvaiya, V. The Income tax Officer, Vapi Ward-3, Vapi

ITA 3033/AHD/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51105 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 27-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 27-08-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: BHUPENDRA SHAH
• Keywords: Income from undisclosed sources; Deemed to accrue or arise in india
• Section: 2; 143(3); 142(1)

Judgement Text

-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI G C GUPTA VICE-PRESIDENT & SHRI B P JAIN ACCOUNTANT MEMBER ITA NO.3033/AHD/2008 (ASSESSMENT YEAR:-2005-06) SHRI SATTARBHAI S SARVAIYA BAVIS FALIA, UMERKUI, SILVASSA, U.T. OF D & N H V/S THE INCOME-TAX OFFICER, VAPI WARD-3, VAPI PAN: APZPS 8296 G [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI BHUPENDRA SHAH, AR REVENUE BY:- SHRI B L YADAV, SR. DR DATE OF HEARING:- 27-12-2011 DATE OF PRONOUNCEMENT:- 30-12-2011 O R D E R PER B P JAIN (AM) :- THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF LEARNED CIT(A), VALSAD DATED 30-04-2008 FO R THE ASSESSMENT YEAR 2005-06. THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL:- [01] THE ORDER OF ASSESSMENT IS CONTRARY TO THE FAC TS OF THE CASE AND PREJUDICIAL TO THE ASSESSEE. [02] ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE ADDITIONS MADE ARE CONTRARY TO LAW AND BAS ED ON ERRONEOUS UNDERSTANDING OF THE FACTS OF THE CASE. [03] ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN NOT ADJUDICATING THE GROUND RAISED BY THE APPELLANT AGAINST THE ACTION OF THE LEARNED ASSESSING OFFICER IN MAKING THE ASSESSMENT U/S. 144 OF THE ACT WITHOUT ISSUING NOTICE U/S 2 143(2) OF THE INCOME TAX ACT, 1961. THE ACTION OF T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS AND LAW AND DESERVES TO BE DELETED. [04] ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE ACTION OF THE LEARNED ASSES SING OFFICER IN MAKING ADDITION BY WAY OF INVESTMENT BY M/S. BOM BAY BUILDERS TO THE TUNE OF RS.14,85,000/- IN M/S. SOUB HAGYA INN PRIVATE LIMITED AS UNACCOUNTED INCOME EARNED FROM UNDISCLOSED SOURCES. THE ACTION OF THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS AN D LAW AND DESERVES TO BE DELETED. [05] ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE ACTION OF THE LEARNED ASSES SING OFFICER TREATING UNSECURED LOANS TO THE TUNE OF RS.1,57,000 /- AS DEEMED INCOME U/S. 68 R.W.S. 41(1) OF THE ACT THE ACTION O F THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS AND LAW AND DESERVES TO BE DELETED. [06] THE APPELLANT CRAVES TO ADD, AMEND, MODIFY OR ALTER THE ABOVE GROUNDS OF APPEAL AT ANY STAGE OF APPELLATE PROCEED INGS. [07] THE APPELLANT HUMBLY PRAYS THAT THE APPEAL BE ALLOWED IN TOTO. 2 GROUND NOS.1, 2, 6 AND 7 ARE GENERAL IN NATURE AN D THEREFORE DO NOT REQUIRE ANY ADJUDICATION. 3 AS REGARDS GROUND NO.3, THE LEARNED COUNSEL FOR T HE ASSESSEE, SHRI BHUPENDRA SHAH POINTED OUT PAGE-1 OF THE AOS ORDER THAT THE ASSESSEE WAS SERVED FIRST NOTICE U/S 142(1) ON 13- 09-2006 DIRECTING THE ASSESSEE TO FURNISH THE RETUR N OF INCOME FOR THE IMPUGNED YEAR. THE SAME WAS FURNISHED ON 25-09- 2006. THE AO DID NOT TAKE INTO CONSIDERATION THE RETURN SO FI LED AND WITHOUT 3 ISSUING NOTICE U/S 143(2) OF THE ACT, PROCEEDED TO MAKE EX-PARTE ASSESSMENT U/S 144 OF THE ACT. 4 THE ASSESSEE AGITATED THE LEGAL GROUND I.E. GROUN D NO.3 BEFORE THE LEARNED CIT(A) WHO DID NOT CONSIDER IT N ECESSARY TO ADJUDICATE THE SAME. FOR THE SAKE OF CLARITY, PARA- 8.5 OF THE CIT(A)S ORDER IS REPRODUCED AS UNDER:- 8.5 I HAVE PERUSED THE FACTS OF THE CASE. THE ASSE SSMENT HAS BEEN COMPLETED BY THE ASSESSING OFFICER U/S. 144 OF THE ACT ON ACCOUNT OF NON RESPONSE OF THE APPELLANT TO VARIOUS NOTICES IS SUED U/S. 142(1) OF THE ACT. ON A PLAIN READING OF SECTION 144 THE ASSE SSING OFFICER HAS RIGHTLY FRAMED THE ASSESSMENT UNDER THE SAID SECTIO N BUT IT IS N OBSERVED THAT WHILE FRAMING SUCH ASSESSMENT U/S. 14 4 OF THE ACT THE ASSESSING OFFICER SHOULD HAVE EXAMINED ALL MATERIAL S ON RECORD WHICH HAS NOT BEEN DONE. ADMITTEDLY THE ASSESSMENT HAS B EEN COMPLETED BY THE ASSESSING OFFICER WITHOUT ISSUING NOTICE U/S. 1 43(2). THE ASSESSING OFFICER HAS ALSO ADMITTED IN HIS REMAND REPORT THAT NO NOTICE U/S. 143(2) WAS ISSUED TO THE APPELLANT. I AM OF THE CON SIDERED OPINION THAT THE ASSESSING OFFICER IS BOUND TO COMPLY WITH THE R EQUIREMENT OF SECTION 143(2) OF THE ACT AND AN ASSESSMENT WITHOUT ISSUING NOTICE U/S. 143(2) CANNOT BE SAID TO BE AS PER LAW. BUT FR OM THE COPY OF REMAND REPORT IT IS OBSERVED THAT THE ASSESSING OFF ICER HAS NOW GRANTED AN OPPORTUNITY TO THE APPELLANT TO PRODUCE SUPPORTI NG DOCUMENTS AGAINST THE VARIOUS GROUNDS OF APPEAL. SINCE THE AP PELLANT THEREBY GOT A CHANCE TO CONTEST HIS GROUNDS ON MERITS I DEEM IT PROPER TO ADJUDICATE THE GROUNDS IN RESPECT OF THE MERITS OF THE CASE FIRST. REGARDING THE CONTENTION OF THE APPELLANT AS REGARD S THE VALIDITY OF THE ASSESSMENT I AM ADJUDICATING THE VARIOUS GROUNDS OF APPEAL ON THE BASIS OF MERITS OF THE CASE AND CONSEQUENTLY 1 DO N OT CONSIDER IT NECESSARY TO ADJUDICATE THE LEGAL ISSUE RAISED BY T HE APPELLANT. THIS GROUND OF APPEAL IS ACCORDINGLY DISMISSED. 5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE FACTS OF THE CASE. IN THE PRESENT CASE, THE FACTS ARE NOT THAT THE LEGAL GROUND CAN BE TAKEN AT ANY LEVEL IN VIEW OF THE DEC ISION OF THE HON'BLE SUPREME COURT IN THE CASE OF N T P C LTD. V S. CIT 229 4 ITR 383 BUT THE CASE BEFORE US IS THAT THE LEGAL GR OUND WAS TAKEN UP BEFORE THE LEARNED CIT(A) AS GROUND NO.3, WHICH READS AS UNDER:- 3. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW THE LEARNED ASSESSING OFFICER HAS ERRED IN MAKI NG THE ASSESSMENT WITHOUT ISSUING NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961. THE ACTION OF THE LEARNED ASSESSING OFFICER IS CONTRARY TO THE PROVISIONS OF INCOME TAX ACT AND PREJUDICIAL TO THE APPELLANT AND ENTIRE ASSESSMENT DESERVES TO BE QUASHED AS NULL AND VOID. THE LEARNED CIT(A) VIDE PARA 8.5 OF HIS ORDER HAS C LEARLY MENTIONED THAT THE AO HAS ALSO ADMITTED IN HIS REMA ND REPORT THAT NO NOTICE U/S 143(2) HAS BEEN ISSUED TO THE AS SESSEE. IT IS ALSO MENTIONED THAT HE IS OF THE CONSIDERED OPINION THAT THE AO IS BOUND TO COMPLY WITH THE REQUIREMENTS OF SECTION 14 3(2) OF THE ACT AND AN ASSESSMENT WITHOUT ISSUING NOTICE U/S 14 3(2) CANNOT BE SAID TO BE AS PER LAW. SINCE THE AO HAS GRANTED AN OPPORTUNITY TO THE ASSESSEE TO PRODUCE SUPPORTING DOCUMENTS, TH EREFORE, THE LEARNED CIT(A) THOUGHT IT PROPER TO ADJUDICATE THE GROUNDS ON MERIT BUT CONSIDERED NOT NECESSARY TO ADJUDICATE TH E SAID LEGAL GROUND. AS A MATTER OF FACT, SERVICE OF NOTICE U/S 143(2) IS A PRE- CONDITION TO MAKE ASSESSMENT U/S 143(3) / 144 OF TH E ACT, WHICH HAS NOT BEEN COMPLIED WITH BY THE AO. THE LEARNED C OUNSEL FOR THE ASSESSEE HAS RELIED UPON THE DECISIONS OF VARIO US COURTS OF LAW WHICH ARE MENTIONED IN PARA-8.3 OF THE LEARNED CIT(A)S ORDER. THE LEARNED AR BEFORE US HAS ALSO RELIED UPO N THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS . HOTEL BLUE MOON (2010) 321 ITR 362 IN THIS REGARD. SINCE THE L EGAL ISSUE HAS NOT BEEN DECIDED BY THE LEARNED CIT(A), AND HE IS REQUIRED TO DECIDE THE SAME AS PER SUBMISSIONS MADE BY THE LEAR NED AR 5 APPEARING ON BEHALF OF THE ASSESSEE AND THE RECORDS AVAILABLE BEFORE HIM. THEREFORE, THE MATTER AT PRESENT CANNOT BE DECIDED BY US UNLESS THE DECISION ON THE LEGAL GROUND IS MADE BY THE LEARNED CIT(A). THUS, THE MATTER IS RESTORED TO THE FILE OF THE LEARNED CIT(A) WHO IS DIRECTED TO DECIDE THE ISSUE AS DIREC TED ABOVE AND BY AFFORDING A REASONABLE OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. THUS, GROUND NO.3 OF THE ASSESSEES APPEA L IS ALLOWED FOR STATISTICAL PURPOSES. 6 IN VIEW OF THE DECISION ON GROUND NO.3 HEREINABOV E, GROUND NOS.4 AND 5 OF THE ASSESSEES APPEAL DO NOT REQUIRE ANY ADJUDICATION. 7 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT TODAY ON 30-12-2011 SD/- SD/- (G C GUPTA) VICE-PRESIDENT (B P JAIN) ACCOUNTNT MEMBER DATE : 30-12-2011 COPY OF THE ORDER FORWARDED TO: 1. SHRI SATTARBHAI S SARVAIYA, BAVISA FALIA, UMARKU I ROAD, SILVASSA, U.T. OF D & D.H. 2. THE INCOME-TAX OFFICER, VAPI WARD-3, VAPI 3. CIT CONCERNED 4. CIT(A), VALSAD 6 5. DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD