MUJEEB KHAN, Jaipur V. ITO, Jaipur

ITA 421/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2057 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Assessee Lawyers: TANUJ AGRAWAL
• Keywords: Reopening of assessment; Unexplained investment; Principle of natural justice; Opportunity of cross examination; Reason to believe
• Section: 143(3); 147; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 421/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 MUJEEB KHAN PROP. M/S M.K. REPAIR CENTER NEAR RAILWAY PHATAK, JAGATPURA, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD 6(5), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AHTPK 2174 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI TANUJ AGRAWAL (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20/12/2017 MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 27/02/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 12.04.2017 OF CIT(A), JAIPUR FOR THE ASSESSMENT YEA R 2007-08. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GROSSL Y ERRED IN NOT QUASHING THE REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961, AND ALSO ERRED IN NOT TREATIN G THE ITA 421/JP/17_ MUJEEB KHAN VS. ITO 2 REASSESSMENT ORDER PASSED AS ILLEGALLY, UNJUSTIFIED AND VOID-AD-INITO THEREBY IGNORING THE FOLLOWING FACTS:- A) NON-RECEIPT OF NOTICE U/S 148 BY THE ASSESSEE WI THIN STATUTORY TIME LIMIT. B) NON-ISSUANCE OF NOTICE U/S 134(2) OF THE INCOME- TAX ACT, 1961; AND C) NON-DISPOSAL OF OBJECTIONS RAISED BY THE APPELLA NT BY THE LD. A.O. BY WAY OF A SPEAKING ORDER AS PROVIDED BY THE HONB LE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. V S. ITO 259 ITR 19 (SC). 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GR OSSLY ERRED IN SUSTAINING AN ADDITION OF RS. 22,20,000/- AS UNEXPL AINED INVESTMENT IN IMMOVABLE PROPERTY. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GR OSSLY ERRED IN NOT CONSIDERING THE CONTENTION RAISED BY THE APPELL ANT THAT NO OPPORTUNITY OF CROSS-EXAMINATION OF WITNESS SHRI SI TARAM GURJAR WAS PROVIDED TO THE APPELLANT BEFORE FINALIZATION OF TH E ASSESSMENT PROCEEDINGS AGAINST HIM. 4. THAT THE HUMBLE APPELLANT CRAVES LEAVE TO ADD, A MEND, ALTER, MODIFY, SUBSTITUTE OR DELETE ANY GROUND OR GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF THE APPEAL. 2. THE ASSESSEE IS AN INDIVIDUAL AND FILED ITS RETU RN OF INCOME ON 16.11.2007. SUBSEQUENTLY ON THE BASIS OF INFORMATIO N RECEIVED FROM ADIT INVESTIGATION-II, JAIPUR THE AO PROPOSED TO REOPEN THE ASSESSMENT BY ISSUING A NOTICE U/S 148 OF THE ACT DATED 25.03.201 4. THE AO PROPOSED TO ITA 421/JP/17_ MUJEEB KHAN VS. ITO 3 ASSESSEE THE INCOME OF RS. 22,20,000/- BEING ESCAP ED ASSESSMENT BASED ON AN AGREEMENT FOR PURCHASE OF 10 BIGHAS OF LAND. THE REASSESSMENT WAS FRAMED VIDE ORDER DATED 27.03.2015 WHEREBY THE AO MADE AN ADDITION OF RS. 22,20,000/- U/S 69 OF THE ACT BEING UNEXPLAINED INVESTMENT. THE ASSESSEE CHALLENGED THE ORDER OF THE AO BEFORE THE LD. CIT(A) AND RAISED VARIOUS GROUNDS INCLUDING VALIDITY OF REOPENING AS WELL AS VALIDITY OF REASSESSMENT. THE LD. CIT(A) WAS NOT IMPRESSED WITH THE CONTENTIONS OF THE ASSESSEE AND UPHELD THE ADDITION MADE BY THE AO AS WELL AS REOPENING OF THE ASSESSMENT. 3. BEFORE THE TRIBUNAL THE LD. AR OF THE ASSESSEE H AS ASSAILED THE ORDER OF THE AUTHORITIES BELOW MAINLY ON THREE GROUNDS FIRSTLY THE REOPENING ON THE BASIS OF THE ALLEGED AGREEMENT IS NOT VALID AS THE SAID DOCUMENT IS A DUM DOCUMENT NOT REVEALING ANY INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT. THE LD. AR OF THE ASSESSEE FORCIBLY CON TENDED THAT THIS IS NOT AN AGREEMENT SHOWING ANY TRANSACTION OF PURCHASE OR SALE OF THE LAND BUT IT IS ONLY A DOCUMENT CONTAINING MODE OF SHARING OF THE SALE CONSIDERATION IN THE EVENT OF SALE OF THE LAND. HE HAS FURTHER CO NTENDED THAT MERELY BECAUSE A PROPERTY WAS PURCHASE IT DOES NOT AUTOMAT ICALLY LEAD TO INFERENCE THAT INCOME HAS ESCAPED ASSESSMENT AS THE ASSESSEE MIGHT HAVE USED HIS DISCLOSED INCOME FOR INVESTMENT IN THE ASS ET PURCHASED. THE AO ITA 421/JP/17_ MUJEEB KHAN VS. ITO 4 CANNOT REOPEN THE ASSESSMENT FOR VERIFICATION OF SO URCE OF PURCHASE AND THEREFORE, THERE IS NO REASON TO BELIEVE THAT INCOM E HAS ESCAPED ASSESSMENT. THE SECOND CONTENTION OF LD. AR IS THAT THE REASSESSMENT HAS BEEN FRAMED WITHOUT ISSUING ANY MANDATORY NOTIC E U/S 143(2) OF THE ACT AND THEREFORE, THE IMPUGNED REASSESSMENT ORDER IS ILLEGAL AND VALID AND DESERVES TO BE QUASHED. IN SUPPORT OF HIS CONTE NTION HE HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF ACIT VS. HOTEL BLUE MOON 321 ITR 362. THE THIRD CONTENTION OF THE LD. AR OF THE ASSESSEE IS THAT THE ADDITION HAS BEEN MADE BY THE AO ON THE BASIS OF DUMB DOCUMENT AND STATEMENT OF ONE SHRI SITARAM GUR JAR A WITNESS TO THE ALLEGED AGREEMENT DATED 31.07.2006 WITHOUT PROVIDIN G AN OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE. THUS, THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE STATEMENT OF SHRI SITARAM GURJAR CANNOT BE THE BASIS OF ASSESSMENT WITHOUT GIVING AN OPPORTUNITY OF CROSS E XAMINATION TO THE ASSESSEE. IN SUPPORT OF HIS CONTENTION HE HAS RELIE D UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF ANDAMAN TIMBER INDUSTRIES VS. CCE 127 DTR 241. 4. ON THE OTHER HAND, LD. DR HAS SUBMITTED THAT THE AGREEMENT IN QUESTION CLEARLY REVEALS THE TRANSACTION OF LAND WH EREIN THE ASSESSEE BEING EXECUTOR OF THE DOCUMENT HAS ADMITTED THE TRANSFER OF RS. 37,00,000/- IN ITA 421/JP/17_ MUJEEB KHAN VS. ITO 5 WHICH THE SHARES OF THE ASSESSEE IS 3/5. THEREFORE, THE AO HAS RIGHTLY FORMED TO BELIEF THAT THE INCOME ASSESSABLE TO TAX TO THE EXTENT OF RS. 22,20,000/- HAS ESCAPED ASSESSMENT AS THE SAME WAS NOT DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME. HE HAS SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD IT IS NOTED THAT THE ASSESSEE RAISED VARI OUS LEGAL OBJECTIONS BEFORE THE LD CIT(A) AGAINST THE REOPENING OF THE A SSESSMENT VALIDITY OF THE REASSESSMENT AS WELL AS THE ADDITION MADE BY TH E AO WITHOUT GIVING AN OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE AS THE AO HAS MADE THE ADDITION BASED ON THE STATEMENT OF SHRI SITARAM GURJAR ATTESTING WITNESS OF THE AGREEMENT IN QUESTION. IT IS PERTINE NT TO NOTE THAT THE ASSESSEE RAISED SPECIFIC OBJECTION BEFORE THE LD. C IT(A) REGARDING NO NOTICE U/S 143(2) WAS ISSUED BY THE AO BEFORE THE REASSESS MENT WAS COMPLETED U/S 143(3) R.W.S. 147 AS WELL AS THE OBJECTION OF N OT GIVING AN OPPORTUNITY OF CROSS EXAMINATION OF SHRI SITARAM GURJAR. THE LD . CIT(A) WHILE PASSING THE IMPUGNED ORDER HAS NOT DEALT WITH AND ADJUDICAT ED THESE SPECIFIC OBJECTIONS RAISED BY THE ASSESSEE. THERE IS NO QUAR REL ON THE POINT THAT THE OBJECTIONS RAISED BY THE ASSESSEE ARE LEGAL IN NATU RE AND GO TO THE ROOT OF THE MATTER. THE NOTICE U/S 143(2) GIVES THE JURISDI CTION TO THE ASSESSING ITA 421/JP/17_ MUJEEB KHAN VS. ITO 6 OFFICER TO PROCEED WITH THE ASSESSMENT AND IN THE A BSENCE OF THE NOTICE U/S 143(2) OF THE ACT THE ASSESSMENT FRAMED BY THE AO WILL BE NULLITY FOR WANT OF JURISDICTION. FURTHER, IF THE ASSESSMENT IS MERELY BASED ON STATEMENT RECORDED BY THE AO WITHOUT GIVING AN OPPO RTUNITY OF CROSS EXAMINATION TO THE ASSESSEE THEN THE SAME WOULD AMO UNT TO VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND THE ORDER PASSED W ITHOUT GIVING AN OPPORTUNITY OF CROSS EXAMINATION WOULD SUFFER FROM A SERIOUS FLOW WHICH RENDERS THE ORDERS A NULLITY. THUS, BOTH THESE ISSU ES RAISED BY THE ASSESSEE GO TO THE ROOT OF THE MATTER AND REQUIRED TO BE DEC IDED PRIOR TO THE ISSUE OF ADDITION ON MERITS. HENCE, IN THE FACTS AND CIRC UMSTANCE OF THE CASE WHERE THE LD. CIT(A) HAS NOT ADJUDICATED THESE TWO ISSUE THE MATTER IS SET ASIDE TO THE RECORD OF THE LD. CIT(A) FOR FRESH ADJ UDICATION AND SPECIFICALLY ADJUDICATION OF THE LEGAL OBJECTIONS RAISED BY THE ASSESSEE. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27/02/2018. SD/- FOT; IKY JKO (VIJAY PAL RAO) U;KF;D LNL; @ JUDICIAL MEMBER TK;IQJ@ JAIPUR ITA 421/JP/17_ MUJEEB KHAN VS. ITO 7 FNUKAD@ DATED:- 27/02/2018 *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- MUJEEB KHAN, JAIPUR. 2. IZR;FKH @ THE RESPONDENT- THE ITO, WARD 6(5), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 421/JP/17) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR