Twinkle M Shah , Bangalore V. The Income Tax Officer Ward-2(2)(5), Bangalore

ITA 310/BANG/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7591 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 20-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Keywords: Principle of natural justice; Validity of assessment; Accommodation entries; Assessment record
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 310 /BANG/201 9 ASSESSMENT YEAR :20 08 - 09 SMT. TWINKLE M SHAH, NO. D-52, LAKSHMAN BUILDING, CHICKPET, BANGALORE 560 053. PAN: A ADPT5923C VS. THE INCOME TAX OFFICER, WARD 2 (2) (5), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SMT. SUMAN LUNKAR, CA RESPONDENT BY : SMT. PADMA MEENAKSHI, JCIT (DR) DATE OF HEARING : 10 .04.201 9 DATE OF PRONOUNCEMENT : 25 .04.201 9 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF LD. CIT (A)-2, BANGALORE DATED 10.01.2019 FOR ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSING THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN PARTIALLY CONFIRMING THE SAME. THE ORDERS PASSED ARE BAD IN LAW AND ARE LIABLE TO BE QUASHED . 2.1 IN ANY CASE, THE CONDITIONS PRECEDENT FOR THE ISSUE OF NOTICE U/S. 148 OF THE ACT BEING ABSENT, THE RE-OPENING OF ASSESSMENT BECOMES BAD IN LAW AND CONSEQUENTLY THE ORDER AS PASSED/CONFIRMED BEING ALSO BAD IN LAW IS REQUIRED TO BE QUASHED. 2.2 IN ANY CASE THE ASSESSING OFFICER HAVING NOT COMPLIED WITH LEGAL PROVISIONS / PROCEDURE FOR REOPENING / REASSESSMENT, THE CONSEQUENTIAL ORDER BECOMES BAD IN LAW AND LIABLE TO BE QUASHED . 2.3 IN ANY CASE, THE ORDER PASSED IN THE ABSENCE OF SERVICE OF NOTICE U/S 143(2) OF THE ACT IS A NULLITY AND SAME IS TO BE QUASHED. ITA NO.310/BANG/2019 PAGE 2 OF 4 3.1 IN ANY CASE THE ORDER PASSED IS IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY, ESPECIALLY IN THE ABSENCE OF THE CROSS EXAMINATIONS OF THE PERSONS WHOSE AVERMENTS ARE SOUGHT TO BE RELIED UPON BY THE ASSESSING OFFICER WHILE PASSING THE ORDER, MAKES THE ORDER TOTALLY BAD IN LAW AND LIABLE TO BE CANCELLED. 3.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS INSTEAD OF QUASHING THE IMPUGNED ORDER, HAS JUST CONFIRMED THE ORDER OF ASSESSING OFFICER WITHOUT PROPERLY CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, ARGUMENTS OF THE APPELLANT AND THE LAW APPLICABLE. 4.1 THE ASSESSING OFFICER HAD IN ANY CASE, ERRED IN TREATING A SUM OF RS.2,99,005 /- BEING SHORT TERM CAPITAL GAIN EARNED ON SALE OF SHARES AS 'INCOME FROM OTHER SOURCES' AS UNEXPLAINED INCOME. THE CONCLUSION OF CIT (A) BEING WHOLLY ERRONEOUS BOTH ON FACTS AND LAW IS TO BE REJECTED. 4.2 THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSING OFFICER HAD ADDED THE SALE CONSIDERATION UNDER THE HEAD INCOME FROM OTHER SOURCES THEREFORE THE SHORT TERM CAPITAL GAIN OFFERED BY THE APPELLANT IS TO BE DELETED. THIS OBSERVATION IS WHOLLY ERRONEOUS BOTH ON FACTS AND LAW IS TO BE REJECTED 5. IN ANY CASE AND WITHOUT FURTHER PREJUDICE, THE AUTHORITIES BELOW HAVE ERRED IN: A) HOLDING WITHOUT BASIS THAT THE TRANSACTIONS IN SHARES ARE FRAUDULENT B) ALLEGING WITHOUT ANY BASIS THAT THE APPELLANT HAS OBTAINED ACCOMMODATION ENTRIES AND APPELLANT'S OWN MONEY COME BACK IN THE GUISE OF CAPITAL GAINS. AND THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE SAME THE CONCLUSIONS / OBSERVATIONS OF AUTHORITIES BELOW BEING TOTALLY ERRONEOUS AND WITHOUT BASIS BOTH ON FACTS AND LAW IS TO BE DISREGARDED. 6. THE APPELLANT HAD ACTUALLY SOLD SHARES THROUGH DEMAT ACCOUNT AND HAD EARNED CAPITAL GAIN THEREON AND SAME NEEDS TO BE ACCEPTED AS SUCH. 7. THE APPELLANT DENIES THE LIABILITY TO PAY INTEREST U/S. 2348 AND 234C. THE INTEREST HAVING BEEN LEVIED ERRONEOUSLY IS TO BE DELETED. 8. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR AT LEAST THE INCOME FROM SHORT TERM CAPITAL GAIN EARNED ON SALE OF SHARES AS RETURNED BY THE APPELLANT BE ACCEPTED, THE ASSESSMENT OF GAIN RECEIVED ON SALE OF SHARES AS UNEXPLAINED INCOME UNDER THE HEAD INCOME FROM ITA NO.310/BANG/2019 PAGE 3 OF 4 OTHER SOURCES BE DELETED AND THE INTEREST LEVIED BE ALSO DELETED. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT AS PER GROUND NO. 2.3 RAISED BY ASSESSEE BEFORE THE TRIBUNAL, THIS IS THE GRIEVANCE OF THE ASSESSEE THAT IN THE ABSENCE OF SERVICE OF MANDATORY NOTICE U/S. 143(2) OF IT ACT, THE ASSESSMENT ORDER IS BAD IN LAW AND LIABLE TO THE QUASHED. SHE POINTED OUT THAT BEFORE CIT (A) ALSO THIS ISSUE WAS RAISED AS PER GROUND NO. 3 RAISED BEFORE CIT (A) ALTHOUGH THE SAID GROUND DOES NOT TALK ABOUT THIS ASPECT SPECIFICALLY. SHE SUBMITTED THAT IN COURSE OF HEARING OF THE APPEAL OF THE ASSESSEE BEFORE CIT(A), DETAILED SUBMISSIONS WERE MADE BEFORE CIT(A) COPY OF WHICH IS AVAILABLE ON PAGES 32 TO 68 OF PAPER BOOK AND IN PARTICULAR MY ATTENTION WAS DRAWN TO PARA NO. 18.2 OF THE SAID WRITTEN SUBMISSIONS AVAILABLE ON PAGE NO. 63 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT IN THIS PARA, THIS WAS THE SPECIFIC SUBMISSION MADE BY ASSESSEE BEFORE CIT(A) THAT NON ISSUANCE OF NOTICE U/S. 143(2) RENDERS THE ASSESSMENT ORDER TO BE VOID-AB-INITIO AND IN THE SAME PARA RELIANCE HAS BEEN PLACED ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF ACIT &ANR. VS. HOTEL BLUE MOON AS REPORTED IN [2010] 321 ITR 362. SHE SUBMITTED THAT AS PER THE IMPUGNED ORDER, LD. CIT (A) HAS NOT DECIDED THIS ISSUE AND THEREFORE, THE MATTER MAY BE RESTORED BACK TO THE FILE OF CIT (A) FOR DECISION ON THIS ASPECT OF THE MATTER. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT (A). 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND FORCE IN THE SUBMISSIONS OF LD. AR OF ASSESSEE BECAUSE I FIND THAT AS PER GROUND NO. 3 RAISED BY ASSESSEE BEFORE CIT (A) AS REPRODUCED BY HIM ON PAGE NO. 2 OF HIS ORDER AND AS PER WRITTEN SUBMISSIONS FILED BEFORE CIT (A), THIS WAS THE GRIEVANCE OF THE ASSESSEE THAT BECAUSE OF NON ISSUE OF MANDATORY NOTICE U/S. 143(2) OF IT ACT, THE ASSESSMENT ORDER IS BAD IN LAW AND IS LIABLE TO BE QUASHED. AS PER THE IMPUGNED ORDER OF CIT (A), THERE IS NO DECISION ON THIS GROUND RAISED BY THE ASSESSEE BEFORE CIT (A). HENCE I FEEL IT PROPER TO RESTORE THIS MATTER BACK TO THE FILE OF CIT (A) FOR DECIDING THIS ISSUE BECAUSE FOR DECIDING THIS ASPECT, ASSESSMENT RECORDS ARE TO BE LOOKED INTO TO FIND OUT AS TO ITA NO.310/BANG/2019 PAGE 4 OF 4 WHETHER NOTICE U/S 143 (2) WAS ISSUED AND SERVED ON THE ASSESSEE WITHIN TIME. SINCE THE ISSUE ON TECHNICAL ASPECT IS NOT DECIDED BY CIT (A) AS PER IMPUGNED ORDER, THE ISSUE ON MERIT HAS TO BE DECIDED BY HIM AFRESH BECAUSE THE DECISION ON MERIT SHOULD BE AFTER TAKING FINAL DECISION ON TECHNICAL ASPECT. HENCE AT THE PRESENT STAGE, NO DECISION IS CALLED FOR ON MERIT OF THE ISSUE RAISED BY ASSESSEE AS PER REMAINING GROUNDS OF APPEAL. I DO NOT MAKE ANY COMMENT ON THE MERIT OF THE ISSUE. THE CIT (A) SHOULD FIRST DECIDE THE ISSUE IN RESPECT OF VALIDITY OF ASSESSMENT ORDER AS PER GROUND NO. 3 RAISED BY ASSESSEE BEFORE HIM AND IF THE ASSESSEE SUCCEEDS THIS ASPECT, THEN NOTHING MORE REMAINS TO BE DECIDED. BUT IF ASSESSEE FAILS ON THIS ASPECT, THEN THE ISSUE ON MERIT SHOULD BE DECIDED BY CIT (A) AFRESH. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 25 TH APRIL, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT (A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.