Shri Deepak D. Bhatia, Uttar Pradesh V. The Income Tax Officer, Ward-3(2), Surat

ITA 31/AHD/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1101 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 04-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: SAPNESH SHETH
• Keywords: Unexplained cash credit; Peak credit; Competent authority
• Section: 142(1); 148; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.31/AHD/2016 / ASSTT. YEAR: 2007-2008 SHRI DEEPAK D. BHATIA 9/2D, OPP: LAXMI NARAYAN MANDIR KRISHNA NAGAR, KANPUR UTTAR PRADESH 208 007. PAN : AEMPB 9099 J VS ITO, WARD - 3(2) SURAT. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI SAPNESH SHETH REVENUE BY : SHRI DINESH SINGH, SR.DR / DATE OF HEARING : 23/06/2016 / DATE OF PRONOUNCEMENT: 20/07/2016 $%/ O R D E R THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAIN ST THE ORDER OF THE LD.CIT(A)-II, SURAT DATED 9.11.2015 PASSED FOR THE ASSTT.YEAR 2007-08. 2. THE GROUNDS NO.1 TO 3 ARE INTER-CONNECTED WITH E ACH OTHER. IN THESE GROUNDS OF APPEAL, THE ASSESSEE HAS PLEADED THAT TH E LD.AO HAS ERRED IN REOPENING OF THE ASSESSMENT BY ISSUANCE OF NOTICE U NDER SECTION 148 AND PASSING AN EX PARTE ORDER UNDER SECTION 144 R.W.S. 147 OF THE INCOME T AX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE AO GOT AN I NFORMATION FROM AIR WING EXHIBITING THE FACT THAT A SUM OF RS.12,35,100 /- WAS DEPOSITED IN THE SAVING BANK ACCOUNT OF THE ASSESSEE, BEARING NO.013 10120005801 WITH KOTAK MAHENDRA BANK, 17/3, B TH MALL, KANPUR. ARMED WITH THIS INFORMATION, THE LD.AO HAS VERIFIED THAT THE ASSESSEE HAS NOT FILED RETURN OF INCOME OF THIS ITA NO.31/AHD/2016 2 ASSESSMENT YEAR, THEREFORE, HE RECORDED REASONS AND ISSUED NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT. THE ASSESSEE DI D NOT FILE RETURN OF INCOME IN RESPONSE TO THE NOTICE. THE AO, THEREAFTER, ISS UED NOTICE UNDER SECTION 143(2) AND NOTICE UNDER SECTION 142(1). HE PASSED AN EXPARTE ASSESSMENT ORDER ACCORDING TO HIS BEST JUDGMENT ON 24.2.2014. THE LD.AO HAS MADE AN ADDITION OF RS.12,42,150/- THE DEPOSITS MADE IN TH E BANK ACCOUNT AND INTEREST ON SUCH DEPOSITS OF RS.7,050/-. 4. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. BEFORE ME, THE LD.COUNSEL FOR THE ASSESSEE CONTE NDED THAT THE ADDRESS ON WHICH NOTICE UNDER SECTION 148 WAS SERVED IS AVAILA BLE IN THE PERMANENT ACCOUNT OF THE ASSESSEE WITH THE INCOME TAX DEPARTM ENT, BUT, THE ASSESSEE ON ACCOUNT OF ILLNESS, SHIFTED HIS RESIDENCE FROM SURA T TO KANPUR. SUBSEQUENT NOTICES WERE ISSUED TO THE ASSESSEE AT THE ADDRESS OF KANPUR. ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE, NON-SERVICE OF NOT ICE UNDER SECTION 148 AT THE ADDRESS OF THE KANPUR IS FATAL FOR THE ASSESSMENT P ROCEEDINGS. IT DESERVES TO BE QUASHED. IN SUPPORT OF HIS CONTENTIONS, HE RELI ED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PR.CIT-I VS . ATLANTA CAPITAL PVT.LTD. RENDERED IN ITA NO.665 AND 666/2015. HE PLACED ON RECORD COPY OF THE ORDER PUBLISHED IN SOME MAGAZINES. 6. ON THE OTHER HAND, THE LD.DR CONTENDED THAT ISSU E HAS BEEN EXAMINED BY THE LD.CIT(A) IN DETAIL AND HE RELIED UPON THE O RDER OF THE LD.CIT(A). 7. I HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. AS FAR AS THE ADDRESS ON WHICH NOTICE W AS SERVED UPON THE ASSESSEE IS CONCERNED, IT IS THE SAME ADDRESS AS IN THE PAN DATA OF THE ASSESSEE AND THERE IS NO DISPUTE BETWEEN THE PARTIES ON THIS POI NT. THE ASSESSEE HAS NOT ITA NO.31/AHD/2016 3 INTIMATED THE CHANGE OF ADDRESS TO THE AO. THE CAS E OF THE ASSESSEE IS THAT ONCE THE AO WAS AWARE ABOUT HIS CHANGE OF ADDRESS O F KANPUR, THEN, HE SHOULD HAVE ISSUED NOTICE UNDER SECTION 148 AT THIS ADDRESS. TO MY MIND, THE ARGUMENTS OF THE LD.COUNSEL ARE MISPLACED. THE TER RITORIAL JURISDICTION OVER AN ASSESSEE RESTS WITH AN AO ON ACCOUNT OF GEOGRAPHICA L LOCATION. THE SUBSEQUENT ISSUE OF NOTICE BY THE AO UNDER SECTION 142(1) WAS FOR THE PURPOSE OF PROVIDING AN OPPORTUNITY TO THE ASSESSEE , WHICH CAN BE ISSUED ON ANY KNOWN ADDRESS. BUT FOR ASSUMING JURISDICTION U NDER SECTION 147, THE AO WAS BOUND TO ISSUE NOTICE ON THE ADDRESS, WHICH HAS BEEN DISCLOSED BY AN ASSESSEE FOR THE PURPOSE OF ASSESSMENT. THE JURISD ICTION CANNOT BE CHANGED UNLESS THE ASSESSEE HAS INTIMATED THE CHANGE OF ADD RESS OR SOME ORDER HAS BEEN PASSED BY THE COMPETENT AUTHORITY UNDER SECTIO N 127 OF THE INCOME TAX ACT FOR THE CHANGE OF JURISDICTION. AS FAR AS THE ORDER OF THE HONBLE DELHI HIGH COURT IS CONCERNED, IN THAT CASE, THE AO HAD I SSUED NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT ON 27.3.2008 ON THE ADDRE SS AT B-231, OKHLA INDUSTRIAL AREA, PHASE-I, NEW DELHI. THE ASSESSEE HAS SHIFTED FROM THAT ADDRESS W.E.F. 1-4-2007 TO A NEW ADDRESS AT B/115, SARVODAYA ENCLAVA, NEW DELHI. IN THE RETURN FOR THE ASSTT.YEAR 2005-06, T HE ASSESSEE HAS DISCLOSED THIS NEW ADDRESS TO THE DEPARTMENT. THE AO HAD SEN T LETTERS TO THE ASSESSEE AT THE SAME ADDRESS ON 8.8.2007. INTIMATION UNDER SEC TION 143(1) OF THE ACT DATED 2.1.008 FOR THE ASSTT.YEAR 2006-07 WAS ALSO S ENT ON THE NEW ADDRESS. THUS, IN THAT CASE, THE STAND OF THE ASSESSEE WAS T HAT IT HAS CHANGED THE ADDRESS. THIS CHANGE WAS DULY INTIMATED TO THE DEP ARTMENT. IT WAS GIVEN EFFECT IN THE DEPARTMENTS RECORD. THE INTIMATION AND ALL OTHER ASPECTS WERE DULY INTIMATED TO THE ASSESSEE IN SUBSEQUENT ASSESS MENT YEAR ON THE NEW ADDRESS. THE ASSESSMENT FOR THE ASSTT.YEAR 2001-02 WAS SOUGHT TO BE REOPENED BY ISSUANCE OF A NOTICE ON THE OLD ADDRESS . DUE TO THIS REASON, THE HONBLE DELHI HIGH COURT HAS HELD THAT SERVICE OF N OTICE UNDER SECTION148 OF ITA NO.31/AHD/2016 4 THE INCOME TAX ACT WAS NOT EFFECTED ON PROPER ADDRE SS. THIS JUDGMENT, ACCORDING TO MY UNDERSTANDING, GOES AGAINST THE ASS ESSEE, BECAUSE, THE ASSESSEE WANTS TO GET SERVICE OF NOTICE EFFECTED ON AN UNKNOWN ADDRESS, WHICH WAS NOT INTIMATED TO THE DEPARTMENT. WHEREAS, THIS DECISION CONTEMPLATES THAT SERVICE OF NOTICE BE EFFECTED ON ADDRESS WHICH IS MENTIONED BY THE ASSESSEE TO THE DEPARTMENT, FOR THE PURPOSE OF HIS ASSESSMENT. 8. AS FAR AS REOPENING OF THE ASSESSMENT IS CONCERN ED, THE AO HAD INFORMATION ABOUT THE ALLEGED UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT, THEREFORE, HE RIGHTLY FORMED A BELIEF THAT INCOME H AS ESCAPED ASSESSMENT. I DO NOT FIND ANY MERIT IN GROUNDS NO.1 TO 3 OF THE ASSE SSEES APPEAL. 9. AS FAR AS ADDITION OF RS.12.35 LAKHS FOUND DEPOS ITED IN THE BANK ACCOUNT OF THE ASSESSEE IS CONCERNED, THE CASE OF T HE ASSESSEE IS THAT HE HAS BEEN WORKING AS A COMMISSION AGENT. HE HAS BEEN SE LLING CLOTHS OF VARIOUS MANUFACTURES OF SURAT AT KANPUR MARKET. IN ORDER T O BUTTRESS HIS CONTENTIONS, THE LD.COUNSEL FOR THE ASSESSEE TOOK ME THROUGH BAN K STATEMENTS, AND POINTED OUT THAT BEE THREE PRINTS HAD SOLD CERTAIN FABRICS THROUGH THE ASSESSEE. THE AMOUNT WAS DEPOSITED IN THE ACCOUNT OF THE ASSESSEE WHICH WAS FURTHER PAID BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES AND T HE CHEQUES HAVE BEEN CLEARED FROM THE ACCOUNT OF THE ASSESSEE. HE TOOK ME THROUGH PAGE NO.19 OF THE PAPER BOOK, WHERE THE BANK STATEMENT IS AVAILAB LE. I HAVE FURTHER PERUSED VARIOUS BILLS. M/S.BEE THREE PRINTS HAS SOLD CERTA IN GOODS TO GUPTA TRADERS, KANPUR. DEAL WAS FINALIZED THROUGH DEEPAK AGENCIES I.E. THROUGH THE ASSESSEE. SIMILARLY, THERE ARE LARGE NUMBERS OF BI LLS PLACED BY THE ASSESSEE ON THE PAPER BOOK STARTING FROM PAGE NOS.34 TO 56. A PERUSAL OF THIS RECORD WOULD MAKE THINGS CLEAR THAT THE BANK ACCOUNT IS US ED BY THE ASSESSEE FOR THE PURPOSE OF HIS BUSINESS. THE ASSESSEE HAS RETAINED ONLY COMMISSION. IN OTHER ITA NO.31/AHD/2016 5 WORDS, THE AMOUNTS WERE REGULARLY BEING DEPOSITED I N THIS ACCOUNT AND THESE WERE WITHDRAWN FOR THE PURPOSE OF MAKING THE PAYMEN T TO VARIOUS TRADERS AT SURAT. SOME OF THE PAYMENTS WERE MADE THROUGH ACCO UNT PAYEE CHEQUES. THESE PAYMENTS DEMONSTRATE THE USER OF THE BANK ACC OUNT FOR THE PURPOSE OF BUSINESS. IN SUCH SITUATION, INSTEAD OF MAKING ADD ITION ON ACCOUNT OF UNEXPLAINED CREDITS, THE LD.AO OUGHT TO HAVE RESTRI CTED THE ADDITION TO THE EXTENT OF PEAK CREDIT AVAILABLE IN THIS ACCOUNT. S INCE THE ASSESSEE HIMSELF HAS NOT MADE ANY INVESTMENT FOR THE PURPOSE OF THIS COM MISSION AGENCY, THEREFORE, NO INITIAL INVESTMENT WAS REQUIRED BY TH E ASSESSEE. WHEN I CONFRONTED THIS ASPECTS TO THE LD.COUNSEL FOR THE A SSESSEE, HE POINTED OUT THAT WORKING OF THE PEAK-CREDIT WAS GIVEN TO THE LD.FIRS T APPELLATE AUTHORITY, SUCH WORKING CAME TO RS.83,000/-. 10. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTA NCES, I ALLOW THE APPEAL OF THE ASSESSEE, AND RESTRICT THE ADDITION TO RS.83 ,000/-, WHICH IS THE PEAK CREDIT OF THIS ACCOUNT DURING THE YEAR. AS FAR AS CHARGING OF INTEREST IS CONCERNED, IT IS CONSEQUENTIAL IN NATURE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 20 TH JULY, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 20/07/2016