The Asstt. Commissioner of Income-tax, Jalandhar V. Sh. Ashwani Gandhi, Nawanshahr

ITA 372/ASR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0600 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 05-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMIR MAHAJA N CAS; SSH SURINDER MAHAJAN
• Assessee Lawyers: BHAWANI SHANKER
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence
• Section: 143(3); 153A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. (CAMP AT JALANDHAR) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NOS.346, 347, 348 & 349(ASR)/2013 ASSESSMENT YEARS:2007-08, 2008-09,2009-10 & 2010-11 PAN:ADAPG0076R SH. SUBHASH GANDHI VS. DY. COMMR. OF INCOME TAX, PROP. M/S. K.C. RESTAURANT & HOTEL, CENTRAL CIRCLE -1I BANGA ROAD, NAWANSHAHAR. JALANDHAR. ITA NOS.366, 367, 368 & 369(ASR)/2013 ASSESSMENT YEARS:2007-08, 2008-09,2009-10 & 2010-11 PAN:ADAPG0076R ASSTT. COMMR. OF INCOME TAX, VS. SH. SUBHASH GANDH I CENTRAL CIRCLE-1I, PROP. M/S. K.C. RESTAURANT & HOTEL, JALANDHAR. BANGA ROAD, NAWANSHAHAR. (APPELLANT) (RESPONDENT) ITA NOS.350, 351 & 352(ASR)/2013 ASSESSMENT YEARS:2007-08, 2008-09 & 2010-11 PAN:GUPG6511G SH. ASHWANI GANDHI VS. DY. COMMR. OF INCOME TAX, 617, BHATTI COLONY, CHANDIGARH ROAD, CENTRAL CIRCLE -1I NAWANSHAHAR. JALANDHAR. ITA NOS.372, 373 & 374(ASR)/2013 ASSESSMENT YEARS: 2007-08, 2008-09, & 2010-11 PAN: GUPG6511G ASSTT. COMMR. OF INCOME TAX, VS. SH. ASHWANI GANDH I, CENTRAL CIRCLE-1I, 617, BHATTI COLONY, JALANDHAR. CHANDIGARH ROAD, NAWANSHAHAR. (APPELLANT) (RESPONDENT) ITA NOS.335, 336 & 337(ASR)/2013 ASSESSMENT YEARS: 2008-09, 2009-10 & 2010-11 PAN:AAGTS5476C 2 ITA NOS.346 TO 349, 350 TO 352 & 335 TO 337/ASR /2013 ITA NOS.366 TO 369 & 372 TO 374(ASR)/2013 SMT. KRISHNA GANDHI WELFARE SOCIETY, VS. DY. COMMR . OF INCOME TAX, BHATTI COLONY, CHANDIGARH ROAD, CENTRAL CIRCLE-1I NAWANSHAHAR. JALANDHAR. APPELLANT BY: S/SH. SURINDER MAHAJAN & SAMIR MAHAJA N, CAS RESPONDENT BY: SH. BHAWANI SHANKER, DR DATE OF HEARING: 27/06/2016 DATE OF PRONOUNCEMENT: 30/06/2016 ORDER PER A.D. JAIN, JM; THESE SEVENTEEN CROSS APPEALS TEN BY THREE DIFFE RENT ASSESSEES AND THE OTHER SEVEN BY THE DEPARTMENT, DECIDED BY THIS COMM ON ORDER, ARE DIRECTED AGAINST THE SEPARATE ORDERS OF LD. CIT(A)-1, LUDHIA NA, AS PER DETAILS GIVEN BELOW: NAME OF THE PARTY ITA NO. ASSESSMENT YEAR DATE OF CIT(AS ORDER SH. SUBHASH GANDHI 346 TO 349 (ASR)/2013 2007-08 TO 2010-11 DATED 26.03.2013 REVENUE 366 TO 369 (ASR)/2013 -DO- -DO- SH. ASHWANI GANDHI 350 TO 352 (ASR)/2013 2007-08, 2008- 09 & 2010-11 -DO- REVENUE 372 TO 374 (ASR)/2013 -DO- -DO- SMT. KRISHNA GANDHI WELFARE SOCIETY 335 TO 337 (ASR)/2013 2008-09,2009- 10 & 2010-11 19.03.2013 2. IN ITA NO.346(ASR)/2013 FOR THE ASSESSMENT YEAR 2007-08, IN THE CASE OF SH. SUBHASH GANDHI, THE FOLLOWING GROUNDS HAVE BEEN TAKEN, WHICH ARE ALMOST IDENTICAL IN OTHER APPEALS: 3 ITA NOS.346 TO 349, 350 TO 352 & 335 TO 337/ASR /2013 ITA NOS.366 TO 369 & 372 TO 374(ASR)/2013 1. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS GROSSLY ERRED IN LAW IN CONCLUDING THAT LD. AO HAS FRAMED ASSESSMENT ON ASSUMPTION OF VALID JURISDICTION. 2 A) THAT ON THE FACTS & CIRCUMSTANCES OF THE CAS E, LD. CIT(A) HAS GROSSLY ERRED IN LAW IN CONCLUDING THAT IMPUGNED AS SESSMENT FRAMED U/S 153A READ WITH SECTION 143(3) OF THE ACT DOES NOT SUFFER FROM ANY JURISDICTIONAL INFIRMITY. B. THAT IMPUGNED ASSESSMENT IS ILLEGAL AND BAD IN LAW SINCE ASSESSMENT HAS BEEN FRAMED ON THE BASIS OF NON-EST RETURN. C. THAT IMPUGNED ASSESSMENT FRAMED U/S 153A READ W ITH SECTION 143(3) OF THE ACT IS ILLEGAL AND BAD IN LAW SINCE ORDER U/S 127 OF THE ACT DATED 14.11.2011 HAS BEEN PASSED WIT HOUT GIVING ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3. THAT WITHOUT PREJUDICE TO ORU STAND THAT LD. CIT (A) HAS GROSSLY ERRED IN LAW IN CONCLUDING THAT IMPUGNED ASSESSMENT FRAMED U/S 153A READ WITH SECTION 143(3) OF THE ACT DOES NOT SUFFER FROM ANY JURISDICTIONAL INFIRMITY, EVEN OTHERWISE:- A) THAT THE LD. CIT(A) HAS GROSSLY ERRED IN LAW IN CON FIRMING ADDITION OF RS.2,28,333/- BEING DEPOSITS/CREDITS IN THE SAVING BANK ACCOUNT NO.14301000002035 WITH INDIAN OVERSEAS BANK, NAWANSHAHAR TREATING THE SAME AS UNEXPLAINED INCOME OF THE APPELLANT. ADDITION CONFIRMED IS ILLEGAL AND BAD IN LAW. B) THAT THE LD. CIT(A) HAS GROSSLY ERRED IN LAW IN CON FIRMING ADDITION OF RS.19,00,000/- BEING ADDITION TO CAPITA L ACCOUNT ON ACCOUNT OF AMOUNT RECEIVED FROM SMT. KAUSHALYA DEVI W/O LATE GURBAX RAI R/O SEC.13, H.NO.58, KURUKESHETRA, HARYA NA TREATING THE SAME AS UNEXPLAINED INCOME OF THE APPE LLANT. ADDITION CONFIRMED IS ILLEGAL AND BAD IN LAW. C) THAT THE LD. CIT(A) HAS GROSSLY ERRED IN LAW IN CON FIRMING ADDITION OF RS.7,72,500/- ON ACCOUNT OF ALLEGED TR ANSACTION BETWEEN SH. VARINDER GARG AND THE ASSESSEE. ADDITIO N CONFIRMED IS ILLEGAL AND BAD IN LAW. 4. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN LAW BY NOT DISPOSING OF GROUND OF APPEAL NO. 3F, 3G, 3H, 3I & 3J. 4 ITA NOS.346 TO 349, 350 TO 352 & 335 TO 337/ASR /2013 ITA NOS.366 TO 369 & 372 TO 374(ASR)/2013 3. THE REVENUE, IN ITA NO.366(ASR)/2013, HAS RAISED THE FOLLOWING GROUNDS OF APPEAL, WHICH ARE COMMON IN THE OTHER APPEALS OF THE REVENUE: 1. THE LD. CIT(A)-1, LUDHIANA HAS ERRED IN LAW AND FACT BY ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULE S, EVEN WHEN THE CASE DOES NOT FALL UNDER RULE 46(1)(A), (B), (C) OR (D) OF THE I.T. RULES, 1962 AND THEREBY IN DELETING THE ADDITION OF RS.8,0 0,000/- OUT OF THE ADDITION OF RS.12,46,933/- BEING REVERSE ENTRY MADE BY BANK, IGNORING THE FACT REPORTED BY THE AO IN REMAND REPO RT THAT THE ASSESSEE HAS NOT EXPLAINED THESE CREDITS DESPITE M ULTIPLE OPPORTUNITIES WERE PROVIDED TO THE ASSESSEE DURING ASSESSMENT PROCEEDINGS. 2. THE LD. CIT(A)-1, LUDHIANA HAS ERRED IN LAW AND FACT BY ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULE S, EVEN WHEN THE CASE DOES NOT FALL UNDER RULE 46(1)(A), (B), (C) OR (D) OF THE I.T. RULES, 1962 AND THEREBY IN DELETING THE ADDITION OF UNEXPL AINED INVESTMENT IN PROPERTY OF RS.31,87,000/- OUT OF TOT AL ADDITION OF RS.39,60,000/-, IGNORING THE OBJECTIONS RAISED BY THE AO IN THE REMAND REPORT THAT THE AGREEMENT WAS MADE FOR RS.51 ,00,000/- WHEREAS AS PER PURCHASE DEED DATED 22.11.2006 NO AG REEMENT WAS MADE. HOWEVER, IN ACTUAL THE AGREEMENT WAS EXISTING AND THIS SHOWS THE WILLFUL EFFORT OF THE ASSESSEE TO AVOID T AX. THE LD. CIT(A)- 1, LUDHIANA, HAS ALSO IGNORED THE FACT REPORTED BY THE A.O. IN REMAND REPORT THAT THE ASSESSEE HAS NOT EXPLAINED T HE INVESTMENT MADE IN THIS PROPERTY DESPITE MULTIPLE OPPORTUNITIE S WERE PROVIDED TO THE ASSESSEE DURING ASSESSMENT PROCEEDINGS. 3. THE LD. CIT(A)-1, LUDHIANA HAS ERRED IN LAW AND FACT BY ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULE S, EVEN WHEN THE CASE DOES NOT FALL UNDER RULE 46(1)(A), (B), (C) OR (D) OF THE I.T. RULES, 1962 AND THEREBY IN DELETING THE ADDITION OF UNEXPL AINED REPAYMENT OF LOAN RS.1,75,000/- RELYING ON ADDITION AL EVIDENCE, IGNORING THE FACT REPORTED BY THE AO IN REMAND REPO RT BY THE A.O. THAT THE ASSESSEE HAS NOT EXPLAINED THE SOURCE OF R EPAYMENT OF LOAN DESPITE MULTIPLE OPPORTUNITIES WERE PROVIDED T O THE ASSESSEE DURING ASSESSMENT PROCEEDINGS AS WELL AS REMAND VER IFICATION PROCEEDINGS. 4. GROUND NOS. 1 & 2 OF THE ASSESSEES ARE AGAINST T HE ASSUMPTION OF JURISDICTION UNDER SECTION 153A READ WITH SECTION 143(3), CONTENDING THAT THE 5 ITA NOS.346 TO 349, 350 TO 352 & 335 TO 337/ASR /2013 ITA NOS.366 TO 369 & 372 TO 374(ASR)/2013 ASSESSMENT FRAMED IS ILLEGAL, SINCE THE ORDER UNDER SECTION 127 OF THE INCOME TAX ACT, 1961, PASSED ON 14.11.2011 WAS PASSED WITH OUT GIVING ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE CASE OF SH. ASHWANI GANDHI, GROUND NOS. 1 & 2 ARE SIMILAR TO THOSE RAISED IN THE CASE OF SH. SUBHASH GANDHI, WIT H THE ONLY DIFFERENCE THAT IN THIS CASE, ASSESSMENTS WERE FRAMED U/S 153A READ WITH SECTION 144 OF THE ACT. 6. IN THE CASE OF SMT. KRISHNA GANDHI WELFARE SOCIE TY, GROUND NOS. 1 & 2, BESIDES CHALLENGING THE JURISDICTION AS DONE BY THE OTHER TWO ASSESSES, THIS THIRD ASSESSEE HAS ALSO CHALLENGED THE ASSESSMENT O N THE BASIS THAT NOTICE UNDER SECTION 153A OF THE ACT WAS BAD IN LAW, SINCE THE ASSESSEE IS A PERSON OTHER THAN PERSON SEARCHED. 7. THE UNDISPUTED FACTS WITH REGARD TO THIS ISSUE A RE THAT A SEARCH WAS CONDUCTED IN THE CASE, ON 18.02.2010. VIDE ORDER DA TED 09.08.2010, PASSED UNDER SECTION 127 OF THE I.T. ACT, THE LD. CIT TRAN SFERRED THE JURISDICTION OF THE CASE TO CENTRAL CIRCLE-II, JALANDHAR. LATER, VIDE O RDER DATED 28.10.2011, THE AFORESAID ORDER DATED 09.08.2010 WAS CANCELLED AND THE LD. CIT RESTORED THE JURISDICTION TO THE INCOME TAX OFFICER, NAWANSHAHAR . STILL LATER, VIDE ORDER DATED 14.11.2011, THE JURISDICTION WAS AGAIN TRANSF ERRED BY THE LD. CIT TO CENTRAL CIRCLE-II, JALANDHAR. 8. THE OBJECTION OF THE ASSESSEE IS THAT NO OPPORTU NITY WAS EVER GRANTED TO THE ASSESSEE TO ENABLE HIM TO RAISE OBJECTION, IF A NY, AGAINST TRANSFER OF THE 6 ITA NOS.346 TO 349, 350 TO 352 & 335 TO 337/ASR /2013 ITA NOS.366 TO 369 & 372 TO 374(ASR)/2013 CASE OF THE ASSESSEE TO CENTRAL CIRCLE-II, JALANDH AR, WHICH TRANSFER WAS ORDERED VIDE THE AFORESAID ORDER DATED 14.11.2011 P ASSED BY THE LD. CIT. 9. THE ASSESSEE TOOK UP THIS ISSUE SPECIFICALLY WI TH THE LD. CIT(A) IN ALL THE CASES. THE LD. CIT(A) ASKED FOR A REMAND REPORT/COM MENTS FROM THE A.O. IN THE REMAND REPORT, THE AO DID NOT MAKE ANY COMMENT ON THIS ISSUE. 10. COPIES OF ALL THE ABOVE REFERRED DOCUMENTS HA VE BEEN PLACED BEFORE US IN THE RELEVANT PAPER BOOK. THE LD. CIT(A) HELD THA T THE LAPSES IN THE CENTRALIZATION PROCESS BY THE LD. CIT COULD BE RECT IFIED BY APPLICATION OF THE PROVISIONS OF SECTION 292BB OF THE ACT. 10. THE ASSESSEES, AGGRIEVED, ARE NOW BEFORE US. 11. WE HAVE HEARD THE CHALLENGE OF THE ASSESSEES, M ADE THROUGH THE ARGUMENTS OF THE LD. COUNSEL AND THE WRITTEN SUBMIS SIONS FILED. THE LD. DR HAS STRONGLY SUPPORTED THE IMPUGNED ORDER. 12. THE ISSUE OF GRANT OF OPPORTUNITY TO THE AFFECT ED ASSESSEE BEFORE TRANSFERRING OF THE JURISDICTION OF THE CASE STAND S SETTLED IN FAVOUR OF THE ASSESSEE IN NUMEROUS CASE LAWS. 13. IN KUMAR KUMAR & BROTHERS & ANR. VS. UOI, 212 CTR 213 (CALCUTTA), NITIN DEVELOPERS & CONST. VS. CIT, 284 ITR 605 ( DEL. AND MANOHAR SWEETS VS. CIT, 221 CTR 187 (MP), THE POSITION LAID DOWN IS, IN ACCORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE, THAT NO GRANT OF OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE TRANSFERRING THE CASE, RENDERS THE ORDER UNDER SECTION 127 OF THE ACT INVALID. 7 ITA NOS.346 TO 349, 350 TO 352 & 335 TO 337/ASR /2013 ITA NOS.366 TO 369 & 372 TO 374(ASR)/2013 14. CONSEQUENT UPON THE INVALIDITY OF THE ORDER PAS SED UNDER SECTION 127 OF THE ACT, OBVIOUSLY, ALL PROCEEDINGS PURSUANT THERET O ARE INVALID, AS ALSO HELD IN DR. PARTHASARATHY SESHAN IYENGAR VS. DCIT, 45 DTR 40 (GUJ.). 15. APROPOS THE LD. CIT(A)S OBSERVATION OF THE ALL EGED LAPSES IN THE CENTRALIZATION PROCESS BY THE LD. CIT BEING RECTIFI ABLE UNDER SECTION 292BB OF THE ACT, IT CANNOT BE OVER EMPHASIZED THAT SECTION 292BB OF THE ACT CANNOT BE BROUGHT IN TO CURE A JURISDICTIONAL DEFECT IN THE A SSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDINGS. THE FOLLOWING DECISIONS IN TH IS REGARD ARE ELOQUENT: I) CIT VS. CEBON INDIA LTD., 77 CCH 579 (P&H) II) ITO VS. NASEMAN FARMS (P) LTD., 134 TTJ 472 (DEL.) 16. IN THE PRESENT CASE, AS DISCUSSED HEREINABOVE, NO OPPORTUNITY WAS GRANTED TO THE ASSESSEES BEFORE TRANSFER OF THE JUR ISDICTION OF THE CASE VIDE ORDER DATED 14.11.2011 (SUPRA), PASSED UNDER SECTIO N 127 OF THE ACT. THE SAID ORDER WAS, THUS, AS SEEN HEREINABOVE, INVALID. THE SAME IS QUASHED. 17. THE JURISDICTION OF THE CASES, IN VIEW OF THE A BOVE FACTS, LAY WITH THE ASSESSING OFFICER AT NAWANSHAHAR. THE AO AT NAWANSH AHAR DID NOT MAKE ANY ASSESSMENT. THAT BEING SO, THE ORDERS PASSED BY THE ASSESSING OFFICER, CENTRAL CIRCLE-II, JALANDHAR, IS VITIATED, FOLLOWING THE DE CISION IN LT. COL. PARAMJIT SINGH VS. CIT & ANRS, 220 ITR 446 (P&H) AND THAT I N SMT. SMRITI KEDIA VS. UOI & ORS., 339 ITR 39 (CAL.). 18. FOR THE ABOVE DISCUSSION, THE GRIEVANCE OF THE ASSESSEE IN THIS REGARD IS FOUND TO BE JUSTIFIED AND IS ACCEPTED AS SUCH. THE ORDERS UNDER APPEAL ARE 8 ITA NOS.346 TO 349, 350 TO 352 & 335 TO 337/ASR /2013 ITA NOS.366 TO 369 & 372 TO 374(ASR)/2013 REVERSED. AS NOTED ABOVE, THE ORDER OF TRANSFERRIN G OF JURISDICTION, PASSED UNDER SECTION 127 OF THE ACT ON 14.11.2011 STANDS Q UASHED. 19. THEREFORE, ALL THE APPEALS OF ALL THE THREE AS SESSES ARE ALLOWED. 20. THE DEPARTMENT HAS FILED ITA NOS.366 TO 369(ASR )/2013 IN THE CASE OF SH. SUBHASH GANDHI FOR THE ASSESSMENT YEARS 2008-09 TO 2010-11 AND ITA NOS. 372 TO 374(ASR)/2013 IN THE CASE OF SH. ASHWAN I GANDHI, FOR THE ASSESSMENT YEARS 2007-08, 2008-09 & 2010-11. SINCE THE ORDERS PASSED BY THE LD. CIT(A) STAND REVERSED BY US WHILE ALLOWING THE APPEAL OF THE ASSESSES, , THE DEPARTMENTAL APPEALS THEIR AGAINST NO LONGER SU RVIVE AND ALL THE APPEALS FILED BY THE DEPARTMENT ARE DISMISSED AS INFRUCTUOU S. 21. IN THE RESULT, ALL THE APPEALS FILED BY THE ASS ESSEES ARE ALLOWED AND ALL THE APPEALS FILED BY THE DEPARTMENT ARE DISMISSED AS IN FRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH JUNE, 2016. SD/- SD/- (T. S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30/06/2016. /SKR/ COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEES: I) SH. SUBHASH GANHI (II) SH. ASHWAN I GANDHI & (III) SMT. KRISHNA GANDHI WELFARE SOCIETY, NAWANSHAHR. (2) THE ACIT/DCIT,CENTRAL CIRCLE-II, JALANDHAR. (3) THE CIT(A), JLR (4) THE CIT, JLR (5) THE SR DR, I.T.A.T. TRUE COPY BY ORDER