G.K. Consultants Ltd., New Delhi V. ITO, New Delhi

ITA 4278/DEL/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6894 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-10-2010
• Assessment Year: 1998-1999
• Appeal Filed On: 05-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAVI GUPTA
• Keywords: Reopening of assessment; Reason to believe; Set aside
• Section: 143(3); 250; 147; 68; 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMEBR AND SHRI B.C. MEENA, ACCOUNTANT MEMBER I.T.A NO. 4278/DEL/2009 ASSTT. YEAR 1998-99 G.K. CONSULTANTS LTD. 302, G.K. HOUSE, 187-A, SANT NAGAR, EAST OF KAILASH, NEW DELHI. VS. ITO WARD 12 (2) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAVI GUPTA, ADVOCATE RESPONDENT BY: SMT. SUNITA SINGH, SR. DR. ORDER PER RAJPAL YADAV, JM: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LD. CIT(A) DATED 8 TH MAY, 2009 PASSED FOR ASST. YEAR 1998-99. THE ASSESSEE HAD RAISED 8 GROUNDS OF APPEAL IN THE ORIG INAL MEMORANDUM OF ITA NO. 4278/DEL/09 ASSTT. YEAR 1998-99 2 APPEALS. IN THESE GROUNDS IT HAS IMPUGNED ADDITION OF RS. 20 LACS MADE U/S 68 OF THE INCOME TAX ACT. IT HAS ALSO PLEADED I N GROUND NO. 4, 5 THAT NOTICE ISSUED U/S 148 FOR REOPENING OF ASSESSMENT W AS VOID AND INVALID. THE ASSESSEE THEREAFTER MOVED AN APPLICATION FOR AD MISSION OF ADDITIONAL GROUND OF APPEAL. IN THE ADDITIONAL GROU ND OF APPEAL IT HAS SPECIFICALLY PLEADED THAT NOTICE ISSUED U/S 148 DAT ED 20 TH MARCH, 2005 IS BAD IN LAW AND VOID AB INITIO AS THE SAME HAS BEEN ISSUED BEYOND THE STATUTORY LIMIT OF FOUR YEARS FROM THE END OF THE A SST. YEAR AS PROVIDED IN PROVISO TO SECTION 147 OF THE INCOME TAX ACT. 2. LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT ISSUE OF REOPENING WAS NOT TAKEN UP BEFORE THE LD. CIT(A) DUE TO SOME INADVERTENT MISTAKE. THE ASSESSEE HAS BEEN RAISING THIS GROUND OF APPEAL FOR THE FIRST TIME BEFORE THE TRIBUNAL. HE C ONTENDED THAT IT IS A JURISDICTIONAL ISSUE WHICH CAN BE RAISED EVEN IN TH E SECOND APPELLATE STAGE FOR THE FIRST TIME. IN SUPPORT OF HIS CONTENT ION HE RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NA TIONAL THERMAL POWER CORPORATION LTD. VS CIT REPORTED IN 229 ITR 3 83. LD. DR ON THE OTHER HAND POINTED OUT THAT ASSESSEE OUGHT TO HAVE RAISED THIS PLEA BEFORE THE LD. FIRST APPELLATE AUTHORITY. THERE IS NO FINDING RECORDED BY ITA NO. 4278/DEL/09 ASSTT. YEAR 1998-99 3 THE LD. FIRST APPELLATE AUTHORITY THEREFORE COMPLE TE FACTS ARE NOT AVAILABLE ON THE RECORD FOR ADJUDICATING THIS ISSUE . 3. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE HAS FILED ITS RE TURN OF INCOME ON 30 TH NOVEMBER, 1998 DECLARING AN INCOME OF RS. 1,80,130/ - AN ASSESSMENT U/S 143(3) WAS PASSED ON 18 TH JANUARY, 2001 WHEREBY RETURN SHOWN BY THE ASSESSEE WAS ACCEPTED. NOTICE U/S 148 WAS ISSUE D ON 22 ND MARCH, 2005. THE AO THOUGH RECORDED THE REASONS FOR REOPEN ING THE ASSESSMENT AND HAS REPRODUCED THOSE REASONS IN SECO ND PARAGRAPH OF THE ASSTT. ORDER. THIS INDICATE THAT NOTICE WAS SER VED UPON THE ASSESSEE AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE REL EVANT ASSTT. YEAR. THE BENEFIT OF PROVISO APPENDED TO SECTION 147 WOULD BE AVAILABLE TO THE ASSESSEE. THUS THE ADDITIONAL GROUND OF APPEAL RAIS ED BY THE ASSESSEE IS A SUBSTANTIAL GROUND OF APPEAL WHICH CHALLENGE T HE JURISDICTION OF THE AO TO PASS THE REASSESSMENT ORDER. IN VIEW OF THE H ONBLE SUPREME COURTS DECISION IN THE CASE OF NTPC WE ENTERTAIN T HIS GROUND OF APPEAL. ITA NO. 4278/DEL/09 ASSTT. YEAR 1998-99 4 4. WITH THE ASSISTANCE OF LD. REPRESENTATIVE WE HAV E GONE THROUGH THE RECORD CAREFULLY. SINCE THE ISSUE OF REOPENING WAS NOT TAKEN UP BEFORE THE LD. CIT(A) NOR ANY OBJECTION WAS FILED B EFORE THE AO. THE INTERDICTION PROVIDED IN THE PROVISO APPENDED TO SE CTION 147 PUT AN EMBARGO UPON THE POWER OF AO TO REOPEN AN ASSTT. EV EN IF AN INCOME HAS AN ESCAPED ASSESSMENT, IN THE CASES WHERE FOUR YEARS HAVE EXPIRED FROM THE END OF THE RELEVANT ASSESSMENT YEA R AND AN ASSESSMENT U/S 143 (3) WAS ORIGINALLY MADE. THE ASS ESSMENT CAN ONLY BE REOPENED IF THE AO HAS REASON TO BELIEVE THAT IN COME HAS AN ESCAPED ASSESSMENT BECAUSE OF THE FAILURE ON THE PA RT OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY AND TRULY. THU S BEFORE ADJUDICATING THIS ISSUE WE HAVE TO EXAMINE WHETHER THERE WAS ANY FAIL URE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY A ND TRULY. IN THE ABSENCE OF FINDING BY ANY OF THE AUTHORITY ON THESE ASPECTS IT IS QUITE DIFFICULT FOR US TO GIVE ANY CONCLUSIVE FINDING. THEREFORE WE DEE M IT FIT TO SET ASIDE THIS ISSUE TO THE FILE OF LD. CIT(A) FOR ADJUDICATI ON. IT IS NEEDLESS TO SAY THAT OBSERVATIONS MADE BY US WILL NOT IMPAIR OR INJ URE THE CASE OF AO OR WOULD CAUSE ANY PREJUDICE TO THE DEFENCE / EXPLANAT ION OF THE ASSESSEE. THE LD. CIT(A) WOULD DECIDE THIS ISSUE IN ACCORDANC E WITH THE LAW. ITA NO. 4278/DEL/09 ASSTT. YEAR 1998-99 5 5. AS FAR AS THE ADDITION ON MERIT ARE CONCERNED TH E AO HAD RECEIVED AN INFORMATION THAT ASSESSEE HAS DEPOSITED A SUM OF RS. 5 LACS, 10 LACS, 5 LACS ON 8.4.1998, 10.4.1998 AND 12.4.1998 RESPECT IVELY IN THE BANK ACCOUNT. HE SOUGHT THE SOURCE OF SUCH DEPOSITS FROM THE ASSESSEE. THE ASSESSEE CONTENDED THAT IT ENTERED INTO AN AGREEMEN T ON 26 TH DECEMBER, 1996 WITH MRS. UMA SINGH WIFE OF SHRI N.S . KAIN FOR THE PURCHASE OF A PROPERTY SITUATED AT A-1/345, PASCHIM VIHAR, NEW DELHI. THE ASSESSEE HAS PAID A SUM OF RS. 20 LACS AS ADVAN CE ON DIFFERENT DATES. THE SALE COULD NOT BE MATERIALISED AND IT H AS RECEIVED BACK EARNEST MONEY FROM MRS. UMA SINGH. THIS MONEY WAS D EPOSITED IN THE BANK. THE AO DID NOT ACCEPT THIS CONTENTION. LD. CI T(A) ALSO DID NOT ACCEPT THE CONTENTION AND MADE AN OBSERVATION THAT IF THE SAID DEED DID NOT MATERIALISED BECAUSE OF ASSESSEES FAILURE TO P ROCURE THE LETTER OF ADMINISTRATION BY 31.12.97 THEN THERE WAS NO QUESTI ON OF THE ADVANCE BEING RETURNED BY SMT. MAYA LAL JAIN THROUGH HER C OUSIN SISTER SMT. UMA SINGH. WE FIND THAT LD. CIT(A) HAS NOT EXAMINED ANY ASPECTS IN DETAILS AND HAS NOT ASSIGNED ANY REASON . SHE HAS J UST REPRODUCED THE FINDING OF THE AO THEN SUBMISSION OF ASSESSEE AND T HEN IN A SWEEPING WAY UPHELD THE FINDING OF THE AO. SUB SECTION 6 OF SECTION 250 MANDATE LD. CITA(A) TO STATE THE POINTS FOR DETERMINATION T HEN RECORD HER DECISIONS WITH SUPPORTING REASONS. NO REASONS ARE D ISCERNABLE FROM THE ITA NO. 4278/DEL/09 ASSTT. YEAR 1998-99 6 ORDER OF THE LD. FIRST APPELLATE AUTHORITY. AS FAR AS THE ONE REASON GIVEN BY HER AND NOTICED BY US IN THE FOREGOING PARAGRAP H IS CONCERNED WE ARE OF THE VIEW THAT WHILE GIVING THIS REASON LD. C IT(A) HAS NOT REFERRED ANY STATEMENT OF THE ALLEGED VENDOR OR THE DIRECTOR S OF THE ASSESSEE COMPANY. IT IS A QUESTION OF FACT WHETHER MRS. UMA SINGH HAS RETURNED RS. 20 LACS OR NOT. IT CANNOT BE DECIDED ON INFEREN CE THAT ASSESSEE FAILED TO GET THE LETTER OF ADMINISTRATION THEREFOR E DEAL WAS NOT MATERIALISED AND IT COULD NOT RECEIVED BACK THE EAR NEST MONEY. IT IS THE CONDUCT OF THE PARTIES WHICH REQUIRE TO BE APPRECIA TED EVEN IF FOR THE ARGUMENTS SAKE IT IS CONSTRUED THAT ASSESSEE FAILED TO PROCURE THE LETTER OF ADMINISTRATION BY 31.12.1997 THEN ALSO THE VENDO R MIGHT HAVE RETURNED THE EARNEST MONEY. IT CAN ONLY BE ASCERTAI NED IF THE VENDOR HAD MADE A CONFIRMATION THAT SHE HAS NOT RETURNED THE M ONEY. ALL THESE ASPECTS ARE RELEVANT QUESTIONS WHICH OUGHT TO HAVE GONE INTO BEFORE ADJUDICATING THIS ISSUE. LD. FIRST APPELLATE AUTHOR ITY HAS NOT CONSIDERED ANY OF THESE ISSUES. THEREFORE WE SET ASIDE THE ORD ER AND DIRECT HER TO DECIDE THE ISSUE ON MERIT AFRESH AFTER TAKING INTO CONSIDERATION THE EVIDENCE PRODUCED BY THE ASSESSEE. IT IS NEEDLESS TO SAY THAT ANY OBSERVATION MADE BY US WOULD NOT BE CONSIDERED AS E XPRESSION OF OPINION ON THE MERIT, THE OBSERVATIONS HAVE BEEN MA DE IN ORDER TO HIGHLIGHT HOW LD. FIRST APPELLATE AUTHORITY HAS FAI LED TO APPRECIATE THE ITA NO. 4278/DEL/09 ASSTT. YEAR 1998-99 7 TRUE CONTROVERSY. SUCH OBSERVATION WOULD NOT IMPAIR OR INJURE THE CASE OF AO OR WOULD CAUSE ANY PREJUDICE TO THE ASSESSEE. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 22.10.2010 SD/- [B.C. MEENA] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22.10.2010 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT