Major Singh, Amritsar. V. The Income Tax Officer, Amritsar.

ITA 426/ASR/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9000 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-04-2019
• Assessment Year: 2005-2006
• Appeal Filed On: 10-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Search and seizure; Question of law
• Section: 143(3); 142(1); 153A; 147; 145; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A. NO. 426/ASR/2015 A SSESSMENT YEAR: 2005-06 MAJOR SINGH, 323-A SANT AVENUE, AMRITSAR [PAN: BMNPS 7534K] VS. ITO, WARD 4(3), AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ASHWANI KALIA (A DV.) RESPONDENT BY: SH. CHARAN DASS (D.R.) DATE OF HEARING: 03.04.2019 DATE OF PRONOUNCEMENT: 01.07.2019 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AMRITSAR (' CIT(A)' FOR SHORT) DATED 09.6.2015, PARTLY ALLOWING THE ASSESSEES APPEAL CO NTESTING HIS ASSESSMENT U/S. 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) DATED 20.3.2013 FOR THE ASSESSMENT YEAR (AY) 2005-0 6. 2. THE APPEAL RAISES A LEGAL ISSUE, PER AN ADDITION AL GROUND, AS UNDER, WHICH SHALL THEREFORE BE TAKEN A FIRST IN-AS-MUCH AS THE SAME, CHALLENGING THE ASSESSMENT AS BAD IN LAW, GOES TO THE ROOT OF THE A SSESSMENT: THAT THE LD. CIT(A) HAS ERRED IN LAW IN ASSUMING T HE JURISDICTION TO MAKE ASSESSMENT U/S. 148/143(3) WITHOUT FULFILLING THE M ANDATORY REQUIREMENT OF ISSUING NOTICE U/S. 143(2) AND THE WORTHY CIT(A)-1, AMRITSAR HAS ALSO EARNED IN CONFIRMING THE SAME. ITA NO. 426/ASR/2015 (AY 2005-06) MAJOR SINGH V. ITO 2 2.2 THE FACTS IN-SO-FAR AS ARE RELEVANT ARE THAT TH E ASSESSEE WAS SERVED A NOTICE U/S. 148(1) (DATED 28.03.2012) ON 29.03.2012 . NO RETURN OF INCOME WAS FILED BY THE ASSESSEE IN RESPONSE THERETO WITHIN TH E REGULAR 30 DAY PERIOD, AS STATED IN THE SAID NOTICE, OR IN FACT EVEN THEREAFT ER. NOTICE U/S. 142(1) WAS ACCORDINGLY ISSUED ON 16.05.2012 , AND THE PROCEEDINGS CONTINUED WITH. THE DEPOSIT OF RS.20,60,917 IN HIS BANK ACCOUNT WAS EXPLAINED BY THE ASSESSEE VIDE HIS LETTER DATED 10.12.2012, AS UNDER: (A) CASH GIFT OF RS.15 LACS FROM HIS FATHER-IN-LAW S. J AGJIT SINGH; (B) SALE PROCEEDS OF CROPS IN CASH (RS.4 LACS) THE SAME WAS SUBSEQUENTLY MODIFIED (VIDE LETTERS DA TED 29.01.2013 AND 12.02.2013) TO STATE OF RS.4 LACS AS RECEIVED BY HI M FROM ONE, S. DILBAGH SINGH S/O SH. TARLOCHAN SINGH, R/O VILLAGE BALACHAK, TARN TARAN, ON 15.02.2005. THE SAME WAS FOUND, IN THE ABSENCE OF SATISFACTORY AND NECESSARY EVIDENCES, AS UNEXPLAINED AND, ACCORDINGLY, DEEMED AS UNEXPLAINED BANK DEPOSIT/S VIDE THE IMPUGNED ASSESSMENT. THE ASSESSEE HAD, PRIOR TO THE SAID ASSESSMENT, E-FILED A RETURN DECLARING AN INCOME OF RS.44,690 AND AGRICUL TURAL INCOME OF RS. 4 LACS ON 20.3.2013 . THE REASSESSMENT BEING, THUS, WITHOUT ISSUING (AN D SERVING) NOTICE U/S. 143(2)), MANDATORY IN NATURE ( ASSTT. CIT V. HOTEL BLUE MOON [2010] 321 ITR 362 (SC)), THE SAME, IT WAS SUBMITTED BY TH E LD. COUNSEL FOR THE ASSESSEE SH. KALIA, WAS WITHOUT JURISDICTION AND, H ENCE, LIABLE TO THE QUASHED. RELIANCE WAS ALSO PLACED BY HIM ON THE DECISION IN ANIL KUMAR V. ITO (IN ITA NOS. 369-370, 374-375/ASR/2012, DATED 01.08.2016/PB PGS. 44-58). THE ASSESSMENT IN THESE CASES, THE RELEVANT YEARS BEING AYS. 2004-05 AND 2005-06, WERE MADE VIDE ORDERS DATED 30.12.2008 AFTER HEARIN G THE ASSESSEE, AS APPARENT FROM ORDER-SHEET ENTRY DATED 30.12.2008 (FOR BOTH T HE YEARS), WHILE THE RETURNS OF INCOME FOR THE TWO RELEVANT YEARS HAD BEEN FILED BY THE ASSESSSEE ON 29.12.2008 AND 30.12.2008 RESPECTIVELY. THE ASSESSM ENTS BEING SANS THE ISSUE OF THE MANDATORY NOTICE U/S. 143(2), WERE HELD AS W ITHOUT JURISDICTION, REJECTING ITA NO. 426/ASR/2015 (AY 2005-06) MAJOR SINGH V. ITO 3 THE ARGUMENT BY THE REVENUE THAT THE SAID RETURNS W ERE NOT VALID IN LAW, SO THAT THERE WAS UNDER THE CIRCUMSTANCES NO OCCASION FOR T HE ASSESSING OFFICER (AO) TO ISSUE NOTICE U/S. 143(2), WHO IN FACT HAD TIME O NLY UP TO 31.12.2008 FOR FRAMING THE ASSESSMENT, I.E., BARELY 1-2 DAYS AFTER THE FILING OF THE RETURN, WHILE IN THE PRESENT CASE, THE AO HAD TIME UP TO 31.3.201 3, THOUGH YET CHOSE TO COMPLETE THE ASSESSMENT ON 20.3.2013. ON BEING QUER IED BY THE BENCH QUA THE VALID ASSUMPTION OF JURISDICTION FOR FRAMING AN ASS ESSMENT U/S. 147 BY THE ISSUE OF NOTICE U/S. 148(1) ON 28.3.2012, AS EXPLAINED IN R.K. UPADHYAYA V. SHAMABHAI P. PATEL [1987] 166 ITR 163 (SC), HE COULD NOT FURNISH ANY SATISFACTORY ANSWER. ON BEING FURTHER ASKED ABOUT T HE PREJUDICE CAUSED TO THE ASSESSEE BY THE NON-ISSUE OR, AS THE CASE MAY BE, T HE NON-SERVICE OF THE NOTICE U/S. 143(2), HE WOULD SUBMIT THAT THE QUESTION IS N OT OF PREJUDICE CAUSED, BUT OF THE ASSUMPTION OF JURISDICTION TO FRAME A VALID ASS ESSMENT, WHICH IS, IN VIEW OF THE ADMITTED NON-ISSUE OF NOTICE U/S. 143(2), ABSEN T. THE TRIBUNAL HAD, IN ARRIVING AT ITS DECISION IN ANIL KUMAR (SUPRA), RELIED ON THE DECISION IN HOTEL BLUE MOON (SUPRA), I.E., BESIDES ON THE DECISIONS BY OTHER H IGH COURTS AS WELL. ON BEING FURTHER ASKED BY THE BENCH AS TO IF IN ANY OF THESE DECISIONS, THE RETURN OF INCOME HAD BEEN FILED AT THE FAG END OF THE ASSE SSMENT PROCEEDINGS, MUCH LESS DELIBERATELY SO, AS IN THE PRESENT CASE, HE AD MITTED TO IT BEING NOT THE CASE EVEN AS RETURN IN THESE CASES, HE WOULD ADD, IT APP EARS, HAD BEEN FILED AFTER THE PRESCRIBED PERIOD THEREFOR IN THE NOTICE U/S. 148(1 ). AT THIS STAGE, SH. KALIA WAS REFERRED TO THE DECISION BY THE HONBLE JURISDICTIO NAL HIGH COURT IN CIT V. RAM NARAIN BANSAL [2011] 202 TAXMAN 213 (P&H). IN THAT CASE AN ASSES SMENT FRAMED U/S. 147 WITHOUT ISSUE OF NOTICE U/S. 143(2) WAS REGARDED BY THE HONBLE HIGH COURT AS VALID. SH. KALIA RESPONDED, ON THE NE XT DATE OF HEARING, BY RELYING, ONCE AGAIN, ON DECISION IN HOTEL BLUE MOON (SUPRA), STATING IT TO BE BY THE APEX COURT. 3. I HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. ITA NO. 426/ASR/2015 (AY 2005-06) MAJOR SINGH V. ITO 4 3.1 THE ASSESSMENT IN HOTEL BLUE MOON (SUPRA) WAS U/S. 158BC WHICH, IT WAS EXPLAINED, HAD TO BE OBSERVING THE PROCEDURE UNDER CHAPTER XIV-B OF THE ACT; THE ASSESSMENT BEING U/S. 143(3) ONLY. THIS, IT NOT ED, WAS MADE CLEAR BY THE USE OF THE WORDS AS FAR AS MAY BE IN S. 158BC(B), WHI CH PROVIDES FOR INQUIRY AND ASSESSMENT. THE SAME ITSELF STATES THAT THE AO SHAL L DETERMINE THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD IN THE MANNER PROVIDED U/S. 158BB AND THE PROVISIONS OF S. 142, SUB-SS. (2) AND (3) OF S. 143 , S. 144 AND S. 145 SHALL, SO FAR AS MAY BE, APPLY. THIS, THEREFORE, MADE THE PROVI SION OF S. 143(2) APPLICABLE TO AN ASSESSMENT U/S. 158BC. THE APEX COURT NOTED THAT THE ASSESSEE MAY NOT FILE THE RETURN, OR MAY NOT, AFTER DOING SO, COMPLY WITH THE NOTICE U/S. 143(2)/142, STATING THAT IN SUCH A CASE, THE AO WAS AUTHORIZED TO COMPLETE THE ASSESSMENT U/S. 144 (PG. 369 OF THE REPORTS). THE NOTICE U/S. 143(2), IT EMPHASIZED, BECOMES NECESSARY WHERE IT BECOMES NECESSARY TO CHE CK A RETURN. 3.2 THE SUBSTANTIAL QUESTION OF LAW RAISED IN RAM NARAIN BANSAL (SUPRA) WAS: 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE TRIBUNAL WAS RIGHT IN LAW IN CONCURRING WITH THE FINDING OF CIT(A) IN HOLDING TH E ASSESSMENT BAD IN LAW, MADE PURSUANT TO THE ISSUE OF NOTICE UNDER S. 148 WITHOU T APPRECIATING THAT NO PREJUDICE WAS CAUSED TO THE ASSESSEE BY NON-ISSUANCE OF NOTICE UN DER S. 143(2), PARTICULARLY, WHEN THE ASSESSEE WAS PARTICIPATING IN THE ASSESSMENT PROCEE DING WITHOUT OBJECTING TO THE ASSESSMENT PROCEEDINGS ON THIS ACCOUNT AT THE ASSES SMENT STAGE ?' THE HONBLE COURT UPHELD THE ASSESSMENT. ITS DECIS ION WAS ON THE BASIS THAT THE ASSESSEE HAD PARTICIPATED IN THE PROCEEDINGS AND, I N FACT, RAISED NO OBJECTION TO THE SERVICE OF NOTICE U/S. 143(2), AND WHICH COULD, THEREFORE, NOT BE BEFORE THE HIGHER FORUMS FOR THE FIRST TIME IN VIEW OF S. 292 BB, EVEN AS NOTED BY IT EARLIER IN CIT V. PANCHVATI MOTORS (P.) LTD . [2011] 59 DTR 289 (P&H). THE HONBLE COURT ALSO RELIED UPON THE DECISION IN K.J. THOMAS V. CIT [2008] 301 ITR 301 (KER) WHEREIN, AGAIN, A REASSESSMENT MADE WITHOUT O BSERVING THE PROCEDURE U/S. 143(2) WAS NOT REGARDED, FOR THAT REASON, INVALID; THE HONBLE COURT REPRODUCING THE RELEVANT PART OF THE SAID DECISION, WHICH IS AS FOLLOWS: ITA NO. 426/ASR/2015 (AY 2005-06) MAJOR SINGH V. ITO 5 'THE PROCEDURE UNDER S. 143(2) OF THE ACT IS TO ENS URE THAT AN ADVERSE ORDER IS ISSUED ONLY AFTER PROPER OPPORTUNITY IS GIVEN TO THE ASSESSEE. IN THIS CASE, IT IS CONCEDED THAT THE ASSESSEE GOT OPPORTUNITY TO FILE REPLY AND DETAILED REPLY WAS IN FACT FILED AND REASSESSMENT NOTICE AND FINAL ORDER WERE ALSO ISSUED WITHIN THE TIME LIMIT PRESCRIBED UNDER THE ACT . ' THE POSITION IN LAW IS NOT VERY DIFFERENT FOR AN A SSESSMENT U/S. 153A, AS NOTED IN ASHOK CHADDHA V. ITO [2011] 337 ITR 399 (DEL). IN THIS CASE, THE SPECIF IC ISSUE RAISED WAS IF THE ISSUE OF NOTICE U/S. 143(2) MANDATORY FOR AN ASSESSMENT U/S. 153A. THE HONBLE COURT, AFTER NOTICING A NUMB ER OF DECISIONS, INCLUDING HOTEL BLUE MOON (SUPRA), FOUND THAT S. 153A ITSELF CONFERRED THE J URISDICTION UPON THE AO TO CALL FOR A RETURN AND FRAME THE ASSE SSMENT THEREUNDER. THERE WAS NO REFERENCE TO S. 143, AS WAS THE CASE FOR S. 158B C. REFERENCE WAS MADE BY IT TO ITS EARLIER DECISION IN CIT V. MADHYA BHARAT ENERGY CORPORATION LTD . [2011] 62 DTR 37 (DEL), WHEREIN THE ASSESSMENT WAS U/S. 14 7, AS OBTAINS IN THE INSTANT CASE. 3.3 THE ASSUMPTION OF JURISDICTION FOR AN ASSESSMEN T U/S. 147 IS BY THE ISSUE OF A VALID NOTICE U/S. 148, AS EXPLAINED IN R.K. UPADHYAYA (SUPRA). THE SAME VIEW HAD EARLIER BEEN EXPRESSED BY THE HONBLE HIGH COURTS, INCLUDING BY THE HONBLE JURISDICTIONAL HIGH COURT, PRIOR THERE TO, AS IN JAI HANUMAN TRADING CO. V. CIT [1977] 110 ITR 36 (P&H)(FB); CIT V. SHEO KUMARI DEVI [1986] 157 ITR 13 (PATNA)(FB). THERE IS NO REFERENCE TO, EITHER AS REGARDS THE ASSUMPTION OF JURISDICTION FOR AN ASSESSMENT U/S. 147, OR ITS COMPLETION , TO SECTION 143(2) OF THE ACT. WHY, IN A PARTICULAR CASE, THE ASSESSEE MA Y NOT FILE A RETURN IN RESPONSE TO THE NOTICE U/S. 148(1), AS IN THE INSTANT CASE, SO THAT THE ASSESSING OFFICER (AO) IS CONSTRAINED TO FRAME THE ASSESSMENT U/S. 14 4. THE AO, ON THE COMPLIANCE OF THE NOTICE U/S. 148(1) BY FILING RETU RN WITHIN TIME, AS PRESCRIBED THEREBY, BY THE ASSESSE, MAY EITHER PROCEED TO VERI FY THE SAID RETURN OR ACCEPT IT AS SUCH, EVEN AS EXPLAINED BY THE TRIBUNAL IN RAJ KUMAR CHAWALA V. ITO [2005] 94 ITD 1 (DEL)(SB), ALSO RELIED UPON BY THE ASSESSE E. IN CASE HE WISHES TO EXAMINE THE SAID RETURN, HE HAS TO ISSUE AND SERVE A NOTICE U/S. 143(2). THIS IS IN ITA NO. 426/ASR/2015 (AY 2005-06) MAJOR SINGH V. ITO 6 VIEW OF, EVEN AS EXPLAINED IN HOTEL BLUE MOON (SUPRA), THE PROCEDURE OF ASSESSMENT TO BE ADOPTED QUA A RETURN U/S. 158BC IS TO BE, SO FAR AS MAY BE, TH E SAME AS QUA A RETURN U/S. 139. IN SUCH A CASE, AS INDEED WHERE THE RETURN IS FURNISHED U/S. 139, AS EXPLAINED IN HOTEL BLUE MOON (SUPRA), THE SAID RETURN CANNOT BE REPUDIATED, IN VIEW OF PROVISO TO SECTION 143(2), UNLESS THE AO SERVES ON THE ASSESSEE THE SAID NOTICE WITHIN THE STIPULAT ED TIME PERIOD. (THE REQUIREMENT OF THE SERVICE OF NOTICE U/S. 143(2) HA S BEEN READ DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN V.R.A. COTTON MILLS PVT. LTD. V. UNION OF INDIA [2013] 359 ITR 495 (P&H) TO AN ISSUE OF NOTICE U/S . 143(2) WITHIN THE PRESCRIBED TIME.) THAT IS, THE NOTICE U/S. 143(2) ASSUMES A NATURE OF A JURISDICTIONAL NOTICE, I.E., FOR FRAMING AN ASSESSM ENT U/S. 143(3), INVALIDATING THE ASSESSMENT FRAMED WITHOUT OBSERVING THE SAME. THE J URISDICTION TO FRAME AN ASSESSMENT QUA AN ASSESSMENT U/S. 147, ON THE OTHER HAND, IS UPON ISSUE OF A VALID NOTICE U/S. 148, SO THAT IT IS THIS NOTICE WH ICH IS THE JURISDICTIONAL NOTICE IN SUCH A CASE, AS SHALL BE PRESENTLY SEEN. 3.4 IT MIGHT APPEAR THAT THE HON'BLE COURT IN RAM NARAIN BANSAL (SUPRA) HAD DECIDED THE QUESTION OF LAW RAISED BEFORE IT ON EQU ITABLE GROUNDS IN-AS-MUCH AS THE ASSESSEE WAS PROVIDED REASONABLE OPPORTUNITY TO STATE HIS CASE IN THE ASSESSMENT PROCEEDINGS. IT IS SO SAID AS IN THE FAC TS OF THAT CASE, UNLIKE IN THE INSTANT CASE, ASSESSEE RESPONDED TO THE NOTICE U/S. 148 BY GIVING HIS REPLY ON 24/04/2007, I.E., SOON AFTER THE RECEIPT OF SAID NO TICE ISSUED ON 13/4/2007, AS INDEED THE CASE WAS IN K.J. THOMAS (SUPRA). THIS IS, HOWEVER, NOT SO, THOUGH WAS NO DOUBT CONSCIOUS OF THE EQUITABLE ASPECT., TH IS IS AS THE HON'BLE COURTS, INCLUDING THE APEX COURT, HAVING PRIOR TO THE AMEND MENT IN SECTION 143(2) W.E.F.01/04/1989 BY WAY OF INSERTION OF PROVISO PROVIDING A TIME LIMIT TO ISSUE NOTICE U/S. 143(2), SO THAT IT ACQUIRES THE NATURE OF A JURISDICTIONAL NOTICE, CLARIFIED THAT THE SAID NOTICE IS ONLY TO EXTEND OP PORTUNITY TO THE ASSESSEE BEFORE FRAMING REGULAR ASSESSMENT, SO THAT WHERE THIS COND ITION IS SATISFIED, ITS NON- ITA NO. 426/ASR/2015 (AY 2005-06) MAJOR SINGH V. ITO 7 ISSUE WOULD NOT BE FATAL TO THE PROCEEDINGS. THIS I S AS THE HON'BLE COURT IN RAM NARAIN BANSAL (SUPRA) WAS KEENLY AWARE OF THE PROVISION OF LAW, WHICH PROVIDED RAISING AN OBJECTION ABOUT THE SERVICE OF NOTICE IN ASSESSMENT PROCEEDINGS, IN VIEW OF SECTION 292BB, SO THAT WHER E NOT RAISED BEFORE THE ASSESSING AUTHORITY, IT COULD BE BEFORE APPELLATE F ORUMS. THIS THOUGH MAY NOT BE OF MUCH CONSEQUENCE IF THE SAID NOTICE, AS IN THE C ASE OF RETURN U/S. 139, IS A JURISDICTIONAL NOTICE. NOT SO FOR AN ASSESSMENT U/S . 147, IN-AS-MUCH AS THE JURISDICTION TO ASSESS GETS ASSUMED ON THE ISSUE OF THE NOTICE U/S. 148(1), AND TO PASS A REASSESSMENT ORDER ON THE SERVICE THEREOF (R EFER R.K. UPADHYAYA (SUPRA)). SECTION 143(2), IN SUCH A CASE, THUS, IS ONLY TOWAR D PROVISION OF PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE TO STATES IT S CASE WHERE A RETURN IS FILED BY THE ASSESSEE, I..E, IN RESPONSE TO NOTICE U/S.14 8(1), WHICH IS THE RATIO OF THE DECISION IN RAM NARAIN BANSAL (SUPRA); MADHYA BHARAT ENERGY CORPORATION LTD . (SUPRA) AND K.J. THOMAS (SUPRA), BY WHICH DECISIONS THEREFORE THE ISSUE UNDER REFERENCE IS SQUARELY COVERED. THIS IS PRECIS ELY WHAT STANDS CLARIFIED IN THE CONTEXT OF DIFFERENT NOTICES, INCLUDING U/S. 23 (2) (UNDER THE I.T. ACT, 1922, CORRESPONDING TO S.143(2) UNDER THE ACT, (VIZ. CIT V. JAI PRAKASH SINGH [1996] 219 ITR 737 (SC); ESTATE OF LATE RANGALAL JAJODIA V. CIT [1971] 79 ITR 505 (SC). DE HORS ITS JURISDICTIONAL ASPECT, S. 143(2) NOTICE IS TOW ARD VERIFICATION OF RETURN OF INCOME. THE FUNCTION OF A NOTICE, EXPLAIN ED IN MANY A CASE BY THE HONBLE APEX COURT, VIZ. ( CST V. SUBHASH & CO ., IN C.A. NO. 1374 OF 2003, DATED 17/2/2003); JAI PRAKASH SINGH (SUPRA); ESTATE OF LATE RANGALAL JAJODIA (SUPRA)), IS TO PUT THE ASSESSEE (NOTICEE) TO NOTIC E ABOUT THE CONTEMPLATED PROCEEDINGS; IN THE PRESENT CASE OF THE PROCEEDINGS FOR REASSESSMENT IN HIS CASE FOR THE RELEVANT YEAR HAVING BEEN INITIATED, REQUIR ING HIM TO FURNISH HIS RETURN FOR THE SAID YEAR. THE ASSESSEE NOT COMPLYING THERE WITH BY FILING THE SAID RETURN, WAS, AFTER AWAITING THE SAME, THE AO ISSUED NOTICE U/S. 142(1), REQUIRING HIM TO FURNISH THE DETAILS AS CALLED FOR, BEING CONSIDERED FIT AND PROPER BY THE ASSESSING AUTHORITY TO EXAMINE THE ISSUE AT HAND, OR, VERIFY THE INFORMATION FURNISHED IN ITA NO. 426/ASR/2015 (AY 2005-06) MAJOR SINGH V. ITO 8 RESPONSE. THE MATTER IN FACT STANDS DISCUSSED AT LE NGTH BY THE TRIBUNAL IN RAKESH GUPTA V. ITO (ITA NO. 222/ASR/2016,DATED 31/1/2019) AND ASST. CIT V . KHOSLA INTERNATIONAL (IN ITA NO. 307/ASR/2016, DATED 28/3/2019). 3.5 WITHOUT PREJUDICE, THERE IS, IN THE FACTS OF TH E INSTANT CASE, NO OCCASION, MUCH LESS A REQUIREMENT IN LAW, FOR THE AO TO ISSUE A NOTICE U/S. 143(2), WHICH IS ONLY TOWARD THE VERIFICATION OF A RETURN. THE AS SESSMENT ORDER IS DATED 20.3.2013, SO THAT THE HEARING HAD BEEN CLOSED PRIO R THERETO. THERE IS, IN ANY CASE, NOTHING ON RECORD TO INDICATE THAT IT IS NOT SO. THE ASSESSEE DID NOT FILE A RETURN IN RESPONSE TO NOTICE U/S. 148(1), I.E., WIT HIN THE TIME PRESCRIBED THEREBY, AND IN FACT EVEN WITHIN A REASONABLE TIME THEREAFTE R. THE AO IS, NONE-THE-LESS, LEGALLY BOUND TO PROCEED IN THE MATTER AND FRAME TH E ASSESSMENT WITHIN THE STATUTORILY PRESCRIBED TIME . REFERENCE HERE MAY BE MADE TO THE DECISIONS IN JAI HANUMAN TRADING CO . (SUPRA); SHEO KUMARI DEVI (SUPRA). THE AO CANNOT EITHER WAIT INDEFINITELY FOR THE ASSESSEE TO FILE A RETURN, AND NEITHER IS THERE ANY OCCASION FOR HIM TO ISSUE (AND SERVE) NOTICE U/S. 1 48 AGAIN, WHICH WOULD REQUIRE A SEPARATE CAUSE OF ACTION, AS EXPLAINED IN AVNEESH KUMAR SINGH V. ITO [2010] 126 ITD 1 (AGRA)(TM). HE, ACCORDINGLY, RIGHTLY PROC EEDED WITH THE MATTER, ISSUING A NOTICE U/S. 142(1). THIS IS PRECISELY WHA T THE LD. CIT(A) HAS HELD. NOT SO DOING WOULD BE TO ASCRIBE THE AO WITH PRESCIENCE , TO KNOW THAT THE ASSESSE SHALL, LONG AFTER THE ISSUE OF THE NOTICE U/S. 148( 1|), AND THE TIME PROVIDED THEREBY, FILE THE RETURN, CLAIMING, IN THE APPELLAT E PROCEEDINGS, TO HAVE THUS COMPLIED WITH THE SAID NOTICE. EVEN SO, COULD ANY MEANINGFUL VERIFICATION BE CARRIED OUT AT THAT TIME, OR EVEN THE SAID FURNISHI NG OF RETURN OPERATE TO EXTEND THE TIME PERIOD AVAILABLE UNDER LAW FOR THE COMPLET ION OF ASSESSMENT ? IS IT, ONE MAY ASK, A COINCIDENCE THAT THE SAID FILING, WHICH IS WITHOUT DOUBT A RESULT OF A DELIBERATE ACTION ON THE PART OF THE ASSESSEE, AT T HE FAG-END OF THE PERIOD WITHIN WHICH THE ASSESSMENT IS TO BE IN LAW COMPLETED. THE FILING OF THE RETURN BY THE ASSESSEE ON 20.3.2013 IS MISCHIEVOUS; IN FACT, AN A BUSE OF THE PROCESS OF LAW. IT ITA NO. 426/ASR/2015 (AY 2005-06) MAJOR SINGH V. ITO 9 IS, AS OBSERVED, AFTER THE CLOSE OF THE HEARING IN THE ASSESSMENT PROCEEDINGS. SH. KALIA COULD NOT, ON BEING ASKED DURING HEARING ABOU T THE PROVISION OF LAW UNDER WHICH THE SAID RETURN WAS FILED ON 20.3.2013, STATE ANY. NO COGNIZANCE IN LAW COULD BE PLACED ON SUCH A RETURN OF INCOME. THE I NCOME, VOLUNTARILY RETURNED, IS, IN ANY CASE, A SOURCE OF INFORMATIO N WITH THE AO, WHICH COULD WITHOUT DOUBT BE TAKEN INTO ACCOUNT BY HIM IN FRAMI NG THE ASSESSMENT. FURTHER STILL, THE OBLIGATION ON THE AO TO ISSUE A NOTICE U /S. 143(2) IS ONLY IF HE INTENDS TO VERIFY THE RETURN. BEING NOT IN A POSITION TO VE RIFY THE RETURN; A NOTICE U/S. 143(2) CANNOT BE REGARDED AS AN EMPTY FORMALITY, HE MAY IN AN APPROPRIATE CASE, AS INDEED THE INSTANT CASE, CHOOSE NOT VERIFY THE S AME AND, CONSEQUENTIALLY, NOT ISSUE NOTICE U/S. 143(2). THE ENSUING ASSESSMENT, A S ALSO OBSERVED IN HOTEL BLUE MOON (SUPRA) IS AN ASSESSMENT U/S. 144. THE INSTANT ASS ESSMENT IS AN ASSESSMENT U/S. 144, AND NOT, AS STATED, U/S. 143(3). RATHER, A RETURN IS NOT FILED HAS TO BE SUPPLEMENTED BY PHYSICAL RETURN, OF WHICH THERE IS NO MENTION OR CONTENTION, IN THE ABSENCE OF WHICH THE SAME CANNOT BE SAID TO HAV E BEEN FILED. IN FACT, THE COMPLETION OF THE SAID PROCEDURE AFTER 20.03.2013, THE DATE OF ASSESSMENT, EVEN IF SO, IS TO MOMENT, AS THE ASSESSMENT STAND ALREAD Y COMPLETED ON THAT DATE. THE ASSESSMENT IN THE INSTANT CASE, IS ACCORDINGLY, TO BE REGARDED AS U/S. 144 R/W S. 147, AND THE AO IS INCORRECT STATING IT TO BE U/S. 143(2) R/W S. 147. 3.6 THE DECISION IN ANIL KUMAR (SUPRA) IS DISTINGUISHABLE IN-AS-MUCH AS THE HEARING, FOR BOTH THE YEARS, TOOK PLACE ON 30.3.200 8, AS NOTED BY THE TRIBUNAL, SO THAT, CLEARLY, THE HEARING HAD NOT BEEN CLOSED B EFORE THAT DATE. THE AO, WHERE HE WANTED TO, COULD THEREFORE TAKE COGNIZANCE OF TH OSE RETURNS, EVEN AS IT APPEARS (FROM THE ORDER-SHEET ENTRY), THAT HE WAS N OT AWARE OF THE SAID RETURNS, FILED SURREPTITIOUSLY BEHIND HIS BACK. THE PROCESS OF LAW, DESIGNED TO PROVIDE A FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE, AND TH E COMPLETION OF ASSESSMENT IN A TIME BOUND MANNER, HAS THUS BEEN ABUSED. THE DECI SION IN THE TRIBUNAL, WHOSE DECISION, AFRAID TO SAY, IS INCONSISTENT WITH THAT BY THE APEX COURT AND BY ITA NO. 426/ASR/2015 (AY 2005-06) MAJOR SINGH V. ITO 10 THE HONBLE COURTS, INCLUDING THE JURISDICTIONAL HI GH COURT, IN R.K. UPADHYAYA (SUPRA); JAI HANUMAN TRADING CO. (SUPRA); SHEO KUMARI DEVI (SUPRA); AND R.N. BANSAL (SUPRA), ALSO DOES NOT ADDRESS THE QUESTION AS TO THE PROVISION OF LAW UNDER WHICH THE RETURN HAS BEEN FILED BY THE ASSESS EE ON 29/30.3.2008. THAT APART, THE RETURN HAVING NOT BEEN ACCOMPANIED BY A PHYSICAL RETURN, THERE IS IN EFFECT NO FILING OF THE RETURN, AND NO COGNIZANCE T HEREOF COULD BE TAKEN. THE FILING OF THE RETURN HAS IN ANY CASE BEEN FOUND TO BE, NOT WITH A VIEW TO DISCHARGE HIS OBLIGATION UNDER LAW TO DO SO, BUT MA LICIOUSLY SO, SO AS TO DEFEAT THE PROCESS OF LAW, IN THE PRESENT CASE. 3.7 CONSIDERED WHICHEVER WAY, THE ASSESSEES LEGAL CHALLENGE IS WITHOUT MERIT, BOTH ON FACTS AS WELL AS, AND FOR THAT REASO N AS WELL, IN LAW. IN FACT, THE ASSESSMENT AS FRAMED IS IN U/S. 144, AND THE REVENU E AUTHORITIES, WERE IN LAW, UNDER NO OBLIGATION TO ACCEPT THE ADDITIONAL EVID ENCES SOUGHT TO BE FURNISHED BY THE ASSESSEE IN THE APPELLATE PROCEEDINGS. AN AP PELLATE AUTHORITY, WHEN HE SO DOES, CONVERTS A S. 144 ASSESSMENT INTO A S. 143(3) ASSESSMENT, WHICH IS IMPERMISSIBLE, AS EXPLAINED IN CIT V. RAYALA CORPORATION (P.) LTD . [1995] 215 ITR 883 (MAD). THAT ASPECT OF THE ASSESSMENT, WHICH IS EVEN OTHERWISE A MATTER OF QUANTUM, IS NOT DWELLED UPON FURTHER. SUFFICE TO SAY THAT THE ASSESSEE, BY SEEKING THE CONSIDERATION OF THE SAID EVIDENCES AT THE APPELLATE STAGE, FOR WHICH HE STOOD ALLOWED OPPORTUNITY ALSO IN THE ASSESSMENT PROCEEDINGS, IS, AS THE COMMON SAYING GOES, TRYING TO HAVE HIS CAKE AND EAT IT TOO. 4. COMING TO THE MERITS OF THE ASSESSMENT, THE QUAN TUM ADDITION, ALSO UNDER CHALLENGE, WAS MADE ON ACCOUNT OF BEING SANS ANY EVIDENCE, DIRECT OR CORROBORATIVE, BEING LED BY THE ASSESSEE. IN APPEAL , THE ASSESSEE FILED AN AFFIDAVIT FROM SH. DILBAGH SINGH DATED 20.02.2013 T O THE EFFECT THAT HE HAD PAID THE ASSESSEE RS. 4 LACS ON 15.02.2005 AS LEASE RENT FOR THE AGRICULTURAL LAND. THE MATTER WAS REMANDED TO THE AO, WHO FAILED TO CROSS- EXAMINE S. DILBAGH SINGH ITA NO. 426/ASR/2015 (AY 2005-06) MAJOR SINGH V. ITO 11 S/O TARLOCHAN SINGH. GRANTING THE ASSESSEE THE BENE FIT OF DOUBT, THE LD. CIT(A), EVEN AS HE OBSERVED THE AFFIDAVIT TO BE A SELF-SERV ING DOCUMENT, ACCEPTED THE ASSESSEES PLEA, ACCEPTING THE SAME AS THE SOURCE O F CASH DEPOSIT OF RS.4 LACS ON 18.02.2005 (ALBEIT IN FIVE INSTALLMENTS OF RS.80,00 0/- EACH.). AN AFFIDAVIT DATED 05.04.2004 BY S. JAGJIT SINGH, THE ASSESSEES FATHE R-IN-LAW, WAS ALSO FILED IN THE REMAND PROCEEDINGS, WHO THOUGH COULD NOT BE PRODUCE D IN PERSON AS HE HAD EXPIRED SINCE (ON 01.11.2011). NO CORROBORATIVE EVI DENCE AS REGARDS HIS FINANCIAL WORTH WAS, HOWEVER, FURNISHED, APART FROM STATING HIM TO OWN 21.82 ACRES OF AGRICULTURAL LAND. THE PLEA OF CASH GIFT B EING WHOLLY UNEVIDENCED, WAS NOT ACCEPTED BY THE LD. CIT(A). THE ASSESSEE HAD AL SO, ALTERNATIVELY, FILED A CASH FLOW STATEMENT IN THE REMAND PROCEEDINGS, WHICH WAS NOT COMMENTED UPON BY THE AO IN HIS REMAND REPORT DATED 17.7.2014. THE OP ENING CASH (ON 01.4.2004) THEREIN WAS TAKEN AT RS.10.50 LACS ON THE BASIS OF CASH FLOW STATEMENT FOR F.Y. 2003-04, SHOWING A BALANCE OF RS.8.11 LACS ON 31.3. 2004. THE BALANCE AS ON 01.4.2004, I.E., AT THE BEGINNING OF THE YEAR, WAS HOWEVER TAKEN BY THE AO AT RS. 1 LAC ONLY, I.E., ON THE BASIS OF THE CASH WITH DRAWAL FROM BANK (#927 WITH PUNJAB AND SIND BANK) FOR THAT AMOUNT JUST PRIOR TO THAT DATE, I.E., ON 29.3.2004. ON THE BASIS OF THE SAID CASH FLOW STATEMENT, PREPA RED JOINTLY FOR THE ASSESSEE, HIS WIFE (NARINDER KAUR) AND SON (MANJIT SINGH), TH E LD. CIT(A) CONFIRMED AN ADDITION FOR RS.12 LACS. THE SAID CASH FLOW STATEME NT NOT ACCOUNTING FOR ANY AMOUNT SPENT ON HOUSEHOLD EXPENDITURE, TAKEN AT RS. 3 LACS, THE SHORTFALL IN CASH WORKED TO RS.15 LACS AND, ACCORDINGLY, ADDITION CON FIRMED BY THE LD. CIT(A) AT RS.15 LACS, ALLOWING RELIEF FOR THE BALANCE RS.5,60 ,917 (I.E., RS.20,60,917 - RS.15,00,000). AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 5. I HAVE HEARD THE PARTIES, AND PERUSED THE MATERI AL ON RECORD. THE ASSESSEES EXPLANATION WITH REGARD TO RS.4 LAC S, STATING TO BE RECEIVED AS LEASE RENTAL OF AGRICULTURAL LAND, HAS BEEN ACCE PTED BY THE LD. CIT(A), IMPLYING ACCEPTANCE OF THE ASSESSEES CLAIM OF AGRI CULTURAL INCOME TO THAT ITA NO. 426/ASR/2015 (AY 2005-06) MAJOR SINGH V. ITO 12 EXTENT. THE SAME HAS, ACCORDINGLY, BEEN INCORPORATE D IN THE CASH FLOW STATEMENT AT RS.4 LACS (ON 15.02.2005), AS AGRICULTURAL INCOM E. AS REGARDS THE CLAIM OF CASH GIFT OF RS.15 LACS RE CEIVED ON 03.4.2004 (AS PER THE CASH FLOW STATEMENT). THE SAME IS STATED TO BE FROM S. JAGJIT SINGH, THE ASSESSEES FATHER-IN-LAW, ON THE OCCASION OF THE GO LDEN JUBILEE OF THE ASSESSEES MARRIAGE; THE ASSESSEES WIFE BEING THE ONLY DAUGHT ER OF HER PARENTS. SH. KALIA WAS DURING HEARING ASKED ABOUT THE DATE OF THE ASSE SSEES MARRIAGE; THE CASH GIFT BEING STATED TO BE MADE ON THE OCCASION OF THE GOLD EN JUBLEE (50 TH YEAR) OF THE ASSESSEES MARRIAGE, TO NO ANSWER , DESPITE SEEKING TIME FOR THE SAME. THERE IS ALSO NO EVIDENCE OF THE STATED DONOR, S. JAGJIT SIN GH, OWNING 21.82 ACRES OF AGRICULTURAL LAND, OR HIS INCOME, ON RECORD. WHY, N OBODY KEEPS CASH IN SUCH A HIGH AMOUNT AT HOME, AND THERE IS NOTHING TO SHOW O F CASH BEING WITHDRAWN FROM BANK ON OR BEFORE 03.04.2004. RATHER WHY SHOUL D THE GIFT, WHICH COULD EASILY BE SO FROM HIS BANK ACCOUNT, BE IN CASH, I.E ., IF IT WAS FROM ACCOUNTED INCOME, I.E., ASSUMING THE SOURCE TO BE THE SAID GI FT. IN THE ABSENCE OF ANY CORROBORATIVE MATERIAL; RATHER, EVEN AS TO THE ASSE SSEES MARRIAGE DATE BEING UNSTATED, THE 50 TH ANNIVERSARY OF WHICH FORMS THE OCCASION FOR THE GI FT, IS NOT STATED, THE EXPLANATION OF CASH GIFT HAS, IN MY VIE W, BEEN RIGHTLY NOT ACCEPTED BY THE REVENUE. SH. KALIA, WOULD, WITH REFERENCE TO THE CASH FLOW STATEMENT (AT PB PGS. 13-15 OF THE IMPUGNED ORDER IO), STATE THAT ONCE THE SUM OF RS.9 LACS, INCLUDED IN THE CASH FLOW STATEMENT ON 03/4/2004, I S REGARDED AS UNEXPLAINED INCOME, THERE WOULD BE NO NEED FOR ANY FURTHER ADDI TION AS THE ASSESSEE WOULD, IN THAT CASE, HAVE SUFFICIENT CASH-IN-HAND ON ANY D ATE DURING THE YEAR. THE LD. CIT(A) HAD, IT WAS SUBMITTED, WRONGLY ADDED A FURTH ER SUM OF RS.6 LACS, CONFIRMING THE ADDITION BASED ON THE CASH FLOW STAT EMENT AT RS.15 LACS. A REVISED CASH FLOW STATEMENT WAS FILED (AT PB PGS. 1 0-12) TO EXHIBIT THE SAME, INTRODUCING CASH AT RS.9 LACS (ON 08.4.2004) AS AD DITION AS MADE BY THE LD. CIT(A). THE ARGUMENT IS VALID. THE CASH-IN-HAND BE ING AT RS. 1 LAC ON ITA NO. 426/ASR/2015 (AY 2005-06) MAJOR SINGH V. ITO 13 01.4.2004, RANGES FROM A MINIMUM OF NIL (ON 08.04.2 004) THE NEXT LOWEST BEING AT RS.30,000 ON 24.4.2004, TO A MAXIMUM OF RS .16.53 LACS ON 31.3.2005. THE ADDITION, THUS, SHOULD BE RESTRICTED TO RS.9 LA CS INSTEAD OF RS.15 LACS BY THE LD. CIT(A). THERE ARE, HOWEVER, SOME OBSERVATIONS D EEMED PERTINENT IN THE MATTER. FIRSTLY, THE SAID CASH FLOW STATEMENT WOULD REQUIRE BEING VERIFIED BY THE AO IN-SUCH-AS IT HAS NOT BEEN. IN THIS REGARD IT IS OBSERVED THAT WHILE THE CASH STANDS WITHDRAWN, BESIDES THE ASSESSEES BANK ACCOU NT, FROM THAT OF HIS WIFE AND SON, THE CASH DEPOSITED IN BANK IS ONLY IN THE ASSE SSEES BANK ACCOUNT. SURELY, THE CASH WITHDRAWALS AND DEPOSITS IN ALL THE BANK A CCOUNTS (OF ALL THESE THREE PERSONS), IS TO BE TAKEN INTO ACCOUNT, TO ARRIVC AT THE AVAILABILITY OF CASH AT ANY PARTICULAR DATE DURING THE YEAR. AGAIN, ASSUMING NO ADVERSE CIRCUMSTANCE/S, THE SAID CASH FLOW STATEMENT BEING PREPARED TOWARD EXPL ANATION OF CASH DEPOSIT OF RS.20.61 LACS IN THE ASSESSEES BANK ACCOUNT DURING THE YEAR, CANNOT BE REGARDED AS AN EVIDENCE OF RS.16 PLUS LACS CASH WITH THE FAM ILY ON 31.3.2005. THE SAME, IN FACT, IS WITHOUT DEDUCTING RS.3 LAC TOWARD HOUSE HOLD EXPENSES. SUBJECT TO THE AOS FINDING, AND IN THE ABSENCE OF ANY ADVERSE FIN DING, THE ASSESSEES INCOME IS TO BE ASSESSED AS UNDER: (1) RS.44,690, AS RETURNED (INCLUDING AS TO THE SOU RCE AND HEAD OF INCOME); (2) RS.9 LACS AS UNEXPLAINED BANK DEPOSIT U/S. 69A (ON 08.04.2004) (FORMING PART OF RS.10 LACS DEPOSITED CASH ON THAT DATE); (3) RS.4 LACS AS AGRICULTURAL INCOME (FOR RATE PURP OSES). ANY ADVERSE FINDING BY THE AO, NEEDLESS TO ADD, SHA LL BE PRECEDED BY DUE OPPORTUNITY OF HEARING TO THE ASSESSEE AND, FURTHER , PER DEFINITE FINDINGS OF FACT (BY THE AO). THE ASSESSEE SHALL COOPERATE IN THE MA TTER LEST THE AO DRAW ADVERSE INFERENCE AS ADMISSIBLE UNDER THE CIRCUMSTA NCES. THE AO SHALL COMPLETE THE SAID VERIFICATION IN A TIME BOUND MANN ER, BEING ALSO REQUIRED TO OBSERVE THE TIME LIMIT U/S. 153 OF THE ACT, AS SPEC IFIED AFTER 01.06.2016. I DECIDE ACCORDINGLY. ITA NO. 426/ASR/2015 (AY 2005-06) MAJOR SINGH V. ITO 14 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED ON THE AFORE-SAID TERMS. ORDER PRONOUNCED IN THE OPEN CO URT ON JULY 01, 2019 SD/- (SANJAY ARORA) ACCOUNTANT MEMBER DATE: 01.07.2019 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: MAJOR SINGH, 323-A SANT AVEN UE, AMRITSAR (2) THE RESPONDENT: ITO WARD 4(3), AMRITSAR (3) THE CIT(APPEALS)-2, AMRITSAR (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T TRUE COPY BY ORDER