The DCIT, SNR Circle, Surendranagar V. Shri Jayantilal Amichand Shah & Others, Surendranagar

ITA 457/RJT/2012

• Counselvise Citation: 45724914 RSA 2012
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 03-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR J B JHAVERI
• Assessee Lawyers: TEJ SHAH ADV
• Section: 148; 144; 139; 142(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA JM AND SHRI B. R. JAIN AM ITA NOS. 454 TO 457/RJT/2012 / ASSESSMENT YEARS 2002-03 TO 2005-06. DEPUTY COMMISSIONER OF INCOME TAX, SURENDRANAGAR CIRCLE, SURENDRANAGAR. ( / APPELLANT V/S JAYNTILAL AMICHAND SHAH & OTHERS, 20 BHARAT SOCIETY, JINTAN ROAD, SURENDRANAGAR. PAN- AAAAJ1902E / RESPONDENT ITA NOS. 458 TO 461/RJT/2012 / ASSESSMENT YEARS 2002-03 TO 2005-06. DEPUTY COMMISSIONER OF INCOME TAX, SURENDRANAGAR CIRCLE, SURENDRANAGAR. ( / APPELLANT V/S JAYNTILAL AMICHAND SHAH & OTHERS, 20 BHARAT SOCIETY, JINTAN ROAD, SURENDRANAGAR. PAN- AAAAJ1902E / RESPONDENT ! '# / REVENUE BY DR. J.B. JHAVERI, D.R. $% ! '# / ASSESSEE BY SHRI TEJ SHAH, ADV. ' & ' %( / DATE OF HEARING 03/01/2014 ) %( / DATE OF PRONOUNCEMENT 09/01/2014 / ORDER PER B. R. JAIN, A. M. : THESE FOUR APPEALS BY REVENUE IN ITAS NO. 454 TO 45 7/RJT/2012 INSTITUTED AGAINST THE COMMON ORDER DATED 21/5/2012 OF SHRI AMITHABH SHUKLA, LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-XVI, AHMEDABAD RAISES THE IDENTICAL GROUNDS IN ALL THE APPEALS AS UNDER:- GROUNDS OF ASSESSMENT YEAR 2002-03 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF PROFIT EARNED BY THE ASSESSEE FROM THE BUSINESS OF SALE AND PURCHASE OF PLOTS OF LAND OF RS. 8,19,240/ - AFTER TREATING IT AS A.O.P. AND THE ABOVE SAID TRANSACTIO NS AS AN ADVENTURE IN THE NATURE OF TRADE. ITAS 454 TO 461/RJT/2012 2 2. THE LD. CIT(A) HAS NOT APPRECIATED THE FACT THAT THE INTENTION OF THE ASSESSEE WHILE PURCHASING THE LAND WAS TO DO THE BUSINESS IN SALE OF LAND AFTER CONVERTING AND DEVEL OPING INTO SMALL PLOTS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 4. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A) MAY BE SET ASIDE AND THAT THE ORDER OF THE ASSESSING OFFIC ER BE RESTORED TO THE ABOVE EXTENT. GROUNDS OF ASSESSMENT YEAR 2003-04 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF PROFIT EARNED BY THE ASSESSEE FROM THE BUSINESS OF SALE AND PURCHASE OF PLOTS OF LAND OF RS. 11,22,052 /- AFTER TREATING IT AS A.O.P. AND THE ABOVE SAID TRANSACTIO NS AS AN ADVENTURE IN THE NATURE OF TRADE. 2. THE LD. CIT(A) HAS NOT APPRECIATED THE FACT THAT THE INTENTION OF THE ASSESSEE WHILE PURCHASING THE LAND WAS TO DO THE BUSINESS IN SALE OF LAND AFTER CONVERTING AND DEVEL OPING INTO SMALL PLOTS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 4. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A) MAY BE SET ASIDE AND THAT THE ORDER OF THE ASSESSING OFFIC ER BE RESTORED TO THE ABOVE EXTENT. GROUNDS OF ASSESSMENT YEAR 2004-05 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF PROFIT EARNED BY THE ASSESSEE FROM THE BUSINESS OF SALE AND PURCHASE OF PLOTS OF LAND OF RS. 11,56,367 /- AFTER TREATING IT AS A.O.P. AND THE ABOVE SAID TRANSACTIO NS AS AN ADVENTURE IN THE NATURE OF TRADE. 2. THE LD. CIT(A) HAS NOT APPRECIATED THE FACT THAT THE INTENTION OF THE ASSESSEE WHILE PURCHASING THE LAND WAS TO DO THE BUSINESS IN SALE OF LAND AFTER CONVERTING AND DEVEL OPING INTO SMALL PLOTS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 4. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A) MAY BE SET ASIDE AND THAT THE ORDER OF THE ASSESSING OFFIC ER BE RESTORED TO THE ABOVE EXTENT. GROUNDS OF ASSESSMENT YEAR 2005-06 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF PROFIT EARNED BY THE ASSESSEE FROM THE BUSINESS OF SALE AND PURCHASE OF PLOTS OF LAND OF RS. 10,10,548 /- AFTER TREATING IT AS A.O.P. AND THE ABOVE SAID TRANSACTIO NS AS AN ADVENTURE IN THE NATURE OF TRADE. ITAS 454 TO 461/RJT/2012 3 2. THE LD. CIT(A) HAS NOT APPRECIATED THE FACT THAT THE INTENTION OF THE ASSESSEE WHILE PURCHASING THE LAND WAS TO DO THE BUSINESS IN SALE OF LAND AFTER CONVERTING AND DEVEL OPING INTO SMALL PLOTS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 4. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A) MAY BE SET ASIDE AND THAT THE ORDER OF THE ASSESSING OFFIC ER BE RESTORED TO THE ABOVE EXTENT. 2. BRIEFLY THE FACTS ARE THAT THE ASSESSING OFFICER ISSUED NOTICES U/S 148 OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED AS THE ACT). THE ASSESSEE, HOWEVER, DID NOT FILE ANY RETURN OF INCOME IN RESPO NSE TO SUCH NOTICES. THEREAFTER, THE A.O. ISSUED NOTICES U/S 143(2) OF T HE ACT IN ALL THESE YEARS. THE ASSESSEE NEITHER ATTENDED NOR SUBMITTED WRITTEN SUBMISSIONS IN RESPONSE THERETO ALSO. AGAIN NOTICE U/S 142(1) OF T HE ACT WAS ISSUED IN ALL THESE YEARS AND IN RESPONSE TO WHICH THE ASSESSEE F URNISHED REPLY. THE A.O. AFTER CONSIDERING THE REPLY AND THE FACTS AND MATERIAL ON RECORD, PROCEEDED TO ASSESSEE INCOME FROM BUSINESS OF SALE AND PURCHASE OF PLOTS AT RS. 8,19,240/- FOR A.Y. 2002-03, RS. 11,22 ,052/- FOR A.Y. 2003-04, RS. 11,56,367/- FOR A.Y. 2004-05 AND RS. 10,10,548/ - FOR A.Y. 2005-06 IN THE STATUS OF A.O.P. AND CREATED TAX DEMAND OF RS. 6,32,209/- FOR A.Y. 2002-03, RS. 8,34,870/- FOR A.Y. 2003-04, RS. 8,15, 430/- FOR A.Y. 2004-05 AND RS. 6,49,860/- FOR A.Y. 2005-06. 3. THE LD. COMMISSIONER OF INCOME TAX VIDE PARA 3. 4 OF THE COMMON ORDER FOR ALL THE YEARS, ENTERTAINED THE VIEW THAT NOTICE U/S 143(2) OF THE ACT CANNOT BE ISSUED UNLESS THE TAX PAYER FILED A RETUR N IN RESPONSE TO SECTION 139 OR SECTION 142(1) OF THE ACT. THE ACTION OF THE A.O. IN ISSUING NOTICE U/S 143(2) OF THE ACT, EVEN THOUGH, ADMITTING THAT NO RETURN OF INCOME WAS FILED U/S 148 OF THE ACT, SUPRA, AND THEREAFTER PAS SING ASSESSMENT ORDERS IN PURSUANCE THEREOF, THUS, BECOMES ERRONEOUS AND B AD IN LAW AND ALLOWED THE GROUNDS, THUS, RAISED IN APPEAL BY THE ASSESSEE. THAT APART, ITAS 454 TO 461/RJT/2012 4 HE HAS DELETED THE ADDITION ON MERITS AND ALLOWED T HE APPEAL OF THE ASSESSEE IN ALL THE YEARS UNDER APPEAL. 4. DR. J.B. JHAVERI, LD. D.R. CONTENDS THAT THE A.O . ACQUIRED HIS JURISDICTION BY ISSUING NOTICE U/S 148 OF THE ACT. THE SAME REMAINED UNCOMPLIED WITH. THE A.O., HOWEVER, HAS ISSUED NOTI CE U/S 143(2) OF THE ACT BY MISTAKE. THE A.O. HAS ALSO ISSUED NOTICE U/S 142(1) OF THE ACT CALLING FOR INFORMATION AND FURNISHING OF RETURN AN D AS THE ASSESSEE FAILED TO COMPLY WITH ALL THE REQUIREMENTS CONTAINED IN TH E NOTICE U/S 142(1) OF THE ACT, PROCEEDED TO COMPLETE THE ASSESSMENT U/S 1 44 OF THE ACT. UNDER THESE CIRCUMSTANCES, THE ASSESSING OFFICER HAD ACQU IRED A VALID JURISDICTION BY ISSUANCE OF NOTICE U/S 148 OF THE A CT. THE LD. COMMISSIONER OF INCOME TAX HAS ERRED IN HOLDING THE ASSESSMENT A S BAD IN LAW WITHOUT QUASHING NOTICE U/S 148 OR 143(2) OF THE ACT AND DE LETED THE ADDITIONS ON MERITS ALSO WHICH ARE CONTRARY TO FACT AND MATERIAL ON RECORD. 5. ON THE OTHER HAND, THE ASSESSEES COUNSEL SHRI T EJ SHAH, ADVOCATE, CONTENDS THAT THE LD. CIT(A) HAS COMMITTED NO ERROR IN HOLDING THE ASSESSMENT BAD IN LAW AS THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME IN PURSUANCE OF NOTICE U/S 148 OF THE ACT. IF NO RETUR N OF INCOME WAS FILED, NOTICE U/S 143(2) OF THE ACT CANNOT BE ISSUED FOR C OMPLETING ASSESSMENT EX PARTE U/S 144 OF THE ACT. 6. HEARD PARTIES WITH REFERENCE TO MATERIAL ON REC ORD. ADMITTEDLY AND AS IS ALSO REVEALED FROM THE REPORT DATED 18/1/2013 SUBMITTED BY THE ASSESSING OFFICER TO THE JOINT COMMISSIONER OF INCO ME TAX, SURENDRANAGAR RANGE, SURENDRANAGAR AND LAID ON TRIB UNALS RECORD, IT IS REVEALED THAT NOTICES U/S 148 OF THE ACT WERE ISSUE D FOR ALL THE YEARS UNDER APPEAL ON 23/4/2008. NO COMPLIANCE OF SUCH NOTICES WERE MADE BY THE ASSESSEE. IT IS UNDER THIS CIRCUMSTANCE, THE A.O. I SSUED NOTICES U/S 143(2) OF THE ACT ON 02/9/2008 FOR ALL THE YEARS AND THE S AME STOOD SERVED ON THE ASSESSEE ON 05/2/2009. THE ASSESSEE RECEIVED THESE NOTICES WITH THE ITAS 454 TO 461/RJT/2012 5 REMARK THAT THERE IS NO EXISTENCE OF SUCH A.O.P. THEREAFTER, DUE TO CHANGE IN INCUMBENT NOTICES U/S 142(1) OF THE ACT W ERE ALSO ISSUED ON 23/10/2009 AND THE ASSESSMENT STOOD COMPLETED U/S 1 44 OF THE ACT ON 16/12/2009. 7. UNDER THE PECULIAR FACTS AS AFORESAID, IT IS EVI DENT THAT THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME PURSUANT TO NOTIC ES ISSUED U/S 148 OF THE ACT NOR THERE WERE ANY RETURNS MADE U/S 139 OF THE ACT. THE SCHEME OF THE ACT AS CONTAINED U/S 143(2) OF THE ACT REVEALS THAT NOTICE U/S 143(2) OF THE ACT CAN BE ISSUED ONLY IF A RETURN OF INCOME HAS BE EN FURNISHED U/S 139 OF THE ACT. IN THE PRESENT CASE IN APPEAL, NO NOTICE U /S 142(1) OF THE ACT WAS SHOWN TO HAVE BEEN ISSUED PRIOR TO ISSUANCE OF NOTI CE U/S 143(2) OF THE ACT. THE LD. COMMISSIONER OF INCOME TAX, THEREFORE, ENTERTAINED THE VIEW THAT UNLESS THE TAX PAYER FILES A RETURN OF INCOME, NOTICE U/S 143(2) OF THE ACT CANNOT BE ISSUED. HE ACCORDINGLY, HELD THE ASSE SSMENT FOR ALL THE FOUR YEARS UNDER APPEAL TO BE BAD IN LAW AND ALLOWED THE GROUNDS RAISED IN APPEAL. THE ASSESSEE IS ALSO FOUND TO HAVE ASSAILED THE ACTION OF ISSUANCE OF NOTICE U/S 148 OF THE ACT FOR ALL THESE YEARS IN APPEAL BEFORE THE LD. CIT(A). EVEN THOUGH, HE DID NOT DECIDE THIS GROUND SPECIFICALLY BY WAY OF A SPEAKING ORDER YET BY ALLOWING ALL THE APPEALS OF T HE ASSESSEE, HE IS DEEMED TO HAVE ALLOWED GROUND OF ISSUANCE OF NOTICE U/S 148 OF THE ACT ALSO IN FAVOUR OF THE ASSESSEE. THIS VIEW FINDS SUP PORT FROM THE JUDGMENT BY THE HONBLE DELHI HIGH COURT IN THE CASE OF ROHT AK & HISSAR DISTRICTS ELECTRIC SUPPLY CO.(P) LTD. V. CIT (1981) 128 ITR 5 2 (DEL). THE REVENUE IN APPEAL, HOWEVER, HAS NOT ASSAILED THE LEGAL GROUNDS , RESULTING INTO CANCELLATION OF ASSESSMENT. WE, THEREFORE, FIND NO INFIRMITY IN HIS ORDER IN CANCELLING THE ASSESSMENT. HAVING UPHELD THE CANCEL LATION OF ASSESSMENTS, WE DO NOT CONSIDER IT NECESSARY TO REN DER ANY DECISION ON THE MERITS OF THE GROUNDS RAISED IN APPEAL AS BY QU ASHING THE ASSESSMENT ON LEGAL GROUND, ALL CONSEQUENCES SHALL FOLLOW. ITAS 454 TO 461/RJT/2012 6 8. APPEAL NOS. 458 TO 461/RJT/2012 IN THESE FOUR APPEALS AGAINST THE ORDER DATED 22.5. 2012 OF LD. CIT(A) XVI, AHMEDABAD, THE IDENTICAL GROUNDS HAVE BEEN RAISED B Y CHALLENGING THE CANCELLATION OF PENALTY U/S 271(1)(C) OF THE ACT FO R RS. 2,24,170/- FOR A.Y. 2002-03, RS. 3,26,150/- FOR A.Y. 2003-04, RS. 3,53, 000/- FOR A.Y. 2004-05 AND RS. 3,10,978/- FOR A.Y. 2005-06. 9. HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECO RD. IN THE AFORESAID APPEALS, AS THE ASSESSMENTS DO NOT SURVIVE, THE PEN ALTY SHALL ALSO NOT SURVIVE. CANCELLATION OF PENALTY, THEREFORE, DOES N OT CALL FOR ANY INTERFERENCE IN THE LIGHT OF JUDGMENT RENDERED BY T HE HONBLE SUPREME COURT IN CASE OF K.C. BUILDERS VS. ACIT 265 ITR 562 (SC). 10. IN THE RESULT, ALL THE EIGHT APPEALS BY REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/01/2014. SD/- SD/- ( T. K. SHARMA ) ( B. R. JAIN ) '* /JUDICIAL MEMBER #( '* / ACCOUNTANT MEMBER *#+ ,*-/ ORDER DATE 09/01/2014 /RAJKOT *RANJAN / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT- DEPUTY COMMISSIONER OF INCOME TAX, SURENDRANAGAR CIRCLE, SURENDRANAGAR. 2. /RESPONDENT- JAYNTILAL AMICHAND SHAH, SURENDRANAGAR . 3. '-2- % & 3% / CIT-I, RAJKOT. 4. & 3%- / CIT (A)- XVI, AHMEDABAD. 5. 789 % , , / DR, ITAT, RAJKOT 6. 9; <= / GUARD FILE. *#+ '# / BY ORDER , TRUE COPY PRIVATE SECRETARY, , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.