DCIT, New Delhi V. Madhu Suri Prakash, New Delhi

ITA 4679/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5685 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 11-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SAHOTA
• Keywords: Unexplained investment
• Section: 142(1); 69; 6; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI B.P. JAIN, ACCOUNTANT MEMBER I.T.A.NO.4679/DEL/2009 ASSESSMENT YEAR : 2005-06 DY. COMMISSIONER OF INCOME-TAX, MRS. MADHU SURI PRA KASH, CIRCLE 31(1), NEW DELHI. VS. 45, LODHI ESTATE, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.S. SAHOTA, SR.DR. RESPONDENT BY : NONE O R D E R PER B.P. JAIN, ACCOUNTANT MEMBER. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XXVI, NEW DELH I, DATED 24.09.2009 IN AN APPEAL AGAINST ORDER UNDER SECTION 144 OF THE INCOME-TAX ACT (THE ACT). 2 2. AS IDENTICAL ISSUE IS INVOLVED, ALL THE GROUNDS ARE TAKEN TOGETHER WHICH IS READ AS UNDER:- 1. THAT LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION OF RS.10 LAKH MADE BY THE AO ON A/C OF UNEXPLAINED INVESTMEN T IN MUTUAL FUNDS IN THE ABSENCE OF ANY CORROBORATIVE DO CUMENTARY EVIDENCE SHOWING THAT SUBJECT INVESTMENT WAS MADE O UT OF THE NRO ACCOUNT. 2. THAT LD. CIT(A) HAS FAILED TO APPRECIATE THE FAC T THAT STATUTORY NOTICES REMAINED UN-COMPLIED WITH, THEREB Y LEAVING AO HAVING NO OPTION BUT TO COMPLETE THE ASSESSMENT PROCEEDINGS ON THE BASIS OF MATERIAL AVAILABLE ON R ECORD. 3. THAT LD. CIT(A) HAS FAILED TO APPRECIATE THE FAC T THAT, A.O. SERVED UPON THE ASSESSEE STATUTORY NOTICE U/S 142(1 ) AS PER ADDRESS AVAILABLE ON RECORD WHICH NEVER RETURNED BA CK TO HIM, WHICH IS SUFFICIENT ENOUGH FOR THE A.O. THAT, NOTIC E WAS PROPERLY SERVED UPON THE ASSESSEE. 4. THAT LD. CIT(A) HAS FAILED TO APPRECIATE THE FAC T THAT JURISDICTION OF THE A.O. WAS NOT CHALLENGED BY THE ASSESSEE OR HER REPRESENTATIVE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HENCE PROCEEDINGS INITIATED BY THE A.O. CANNOT BE H ELD VOID. 3. BRIEF FACTS OF THE CASE ARE THAT AN INFORMATION WAS RECEIVED BY THE INCOME-TAX OFFICER, WARD 31(4), NEW DELHI FROM THE AIR DATA BASE OF THE INCOME-TAX DEPARTMENT THAT THE ASSESSEE HAD MADE AN INVESTMENT OF RS.10 LAC ON 25.11.2004 IN MUTUAL FUNDS. THE ASSESSING O FFICER ISSUED A NOTICE UNDER SECTION 142(1) OF THE ACT ON 19.9.2007 ASKING THE ASSESSEE TO FILE RETURN OF HER INCOME AS NO RETURN WAS VOLUNTARILY F ILED BY HER UNDER THE PROVISIONS OF SEE. 139(1) OF THE ACT. THE NOTICE U NDER SEC. 142(1) WAS SENT 3 AT THE ADDRESS AS PER THE AIR RECORDS AT C/O MALTI SEN, 45, LODHI ESTATE, NEW DELHI, BY SPEED POST. IN THE ABSENCE OF ANY RE SPONSE TO THE NOTICE, ANOTHER NOTICE U/S 142(1) WAS ISSUED TO THE ASSESSE E ON 1.11.2007 ASKING HER TO EXPLAIN THE INVESTMENT IN MUTUAL FUNDS OF RS.10 LAC MADE ON 25.11.2004. IN ADDITION, INFORMATION REGARDING THE INCOME OF TH E ASSESSEE DURING THE YEAR AND DETAILS OF THE HOUSE HOLD AND PERSONAL EXPENSE S INCURRED BY HER DURING THE YEAR WERE CALLED FOR. IN THE ABSENCE OF ANY RE SPONSE FROM THE ASSESSEE, THE ASSESSING OFFICER PASSED BEST JUDGMENT ASSESSME NT U/S 144 OF THE ACT BASED ON THE MATERIAL AVAILABLE ON RECORD, AND TREA TED THE INVESTMENT OF RS.10 LACS IN MUTUAL FUNDS MADE BY THE ASSESSEE ON 25.11.2004 AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. SECONDLY , IN THE ABSENCE OF ANY DETAILS OF INCOME OR EXPENDITURE, THE ASSESSING OFF ICER ESTIMATED INCOME OF THE ASSESSEE FOR THE YEAR AT RS.1,20,000/-. 4. BEFORE THE LEARNED CIT(A) THE LEARNED COUNSEL FO R THE ASSESSEE SUBMITTED THAT NO NOTICE HAD BEEN SERVED ON THE ASS ESSEE BEING A NON- RESIDENT. THE NOTICE SERVED ON THE SISTER OF THE A SSESSEE WAS SERVED AFTER THE ASSESSMENT HAD BEEN FRAMED. ALL THE EXPLANATIONS W ITH REGARD TO THE SOURCE OF INVESTMENT WERE FILED BEFORE THE LEARNED CIT(A) WHICH WERE SENT TO THE ASSESSING OFFICER FOR THE REPORT BUT THE ASSESSING OFFICER EVEN AFTER REPEATED REMINDERS BY THE LEARNED CIT(A) DID NOT RE SPOND TO THE LETTER OF THE 4 LEARNED CIT(A) AND NO REPORT OR COMMENT WAS RECEIVE D BY THE LEARNED CIT(A). ACCORDINGLY, THE LEARNED CIT(A) AFTER ACCE PTING ALL THE EVIDENCES AND EXPLANATIONS SUBMITTED BEFORE HIM VIDE PARA 8 T O 8.2 OF HIS ORDER HELD THAT THERE WAS NO EVIDENCE OF SERVICE OF NOTICE UND ER SECTION 142(1) TO THE ASSESSEE. MOREOVER, THE JURISDICTION IN RESPECT OF NON-RESIDENT TAXPAYERS VESTS WITH THE DIRECTOR GENERAL OF INCOME TAX (INTE RNATIONAL TAXATION), NEW DELHI AND THEREFORE, THE ASSESSING OFFICER WAS NOT EMPOWERED UNDER SECTION 127 TO MAKE AN ASSESSMENT IN THE CASE OF THE ASSESS EE. THE ASSESSEE HAVING FURNISHING ALL THE EVIDENCES AND EXPLANATIONS, IS H ELD TO BE NON-RESIDENT UNDER SECTION 6 OF THE ACT AND ON THE BASIS OF PASS PORT FURNISHED, SHE HAS NOT BEEN TO INDIA FOR MORE THAN 30 DAYS SINCE THE YEAR 2002 TO 2005 WHICH IS FURTHER CORROBORATED BY THE FACT THAT THE INVESTMEN T HAS BEEN MADE OUT OF THE NRO ACCOUNT WITH HSBC BANK. THE NRO ACCOUNT OBVIOU SLY IS OPENED AND HELD BY THE NON-RESIDENT. ON MERIT, THE LEARNED CI T(A) HELD THAT THE INVESTMENT IN MUTUAL FUNDS OF RS.10 LAC HAS BEEN MA DE BY ISSUING A CHEQUE ON 29.11.2004 ON PERUSAL OF THE BANK STATEMENT AND THERE NO ADVERSE FINDING TO THE SOURCE OF THE CREDIT TO THE SAID BANK ACCOUN T WHICH HAS BEEN MADE BY THE ASSESSEE FROM HER BANK ACCOUNT FROM NRO SAVINGS BANK ACCOUNT WITH HSBC BANK. THE ADDITION OF RS.1,20,000/- IS PURELY ON ESTIMATE BASIS. ACCORDINGLY, THE LEARNED CIT(A) DELETED BOTH THE AD DITIONS. 5 5. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MAT ERIAL ON RECORD. WE CONCUR WITH THE VIEWS OF THE LEARNED CIT(A) THAT THERE IS NOTHING ON RECORD TO PROVE THAT THE NOTICE HAS BEEN SERVED ON THE ASSESSEE. EVEN THE ORDER OF THE ASSESSING OFFICER MENTIONS OF THE ISSU ANCE OF THE NOTICE BUT NOT OF THE SERVICE OF THE NOTICE. NOTHING HAS BEEN BRO UGHT ON RECORD BY THE LEARNED DR WITH RESPECT TO THE SERVICE OF THE NOTIC E. THEREFORE, IN THE CIRCUMSTANCES AND FACTS OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) THAT NO NOTICE HAD BEEN SERVE D ON THE ASSESSEE AND THE ASSESSING OFFICER DOES NOT ACQUIRE ANY JURISDICTION TO MAKE ASSESSMENT UNDER SECTION 144 OF THE ACT. MOREOVER, AS OBSERVE D BY THE LEARNED CIT(A) THAT IN THE CASE OF NON-RESIDENT, JURISDICTION OF T HE ASSESSMENT VESTS WITH DGIT(IT), NEW DELHI AND THE PRESENT ASSESSING OFFIC ER IS NOT EMPOWERED UNDER SECTION 127 OF THE ACT. THEREFORE, ON THE LE GAL GROUND THE LEARNED CIT(A) HAS RIGHTLY ALLOWED THE GROUNDS OF THE ASSES SEE SINCE THE ASSESSING OFFICER DOES NOT ACQUIRE ANY JURISDICTION TO MAKE T HE ASSESSMENT. 6. AS REGARDS THE GROUNDS ON MERIT, WE CONCUR WITH THE VIEWS OF THE LEARNED CIT(A) THAT THE FUNDS HAVE BEEN TRANSFERRED IN THE NRO ACCOUNT BY THE ASSESSEE HERSELF AND INVESTMENT HAS BEEN MADE O UT OF THE SAID ACCOUNT. THEREFORE, THE SOURCES OF THE SAID INVESTMENT CANNO T BE IN QUESTION. AS REGARDS THE ADDITION ON ACCOUNT OF RS.1,20,000/-, T HE LEARNED CIT(A) HAS 6 RIGHTLY HELD THAT THE ADDITION IS PURELY ON ESTIMAT E BASIS AND IN THE ABSENCE OF ANY ADVERSE FINDING IN THIS REGARD, THE LEARNED CIT(A) HAS THEREFORE, RIGHTLY DELETED THE ADDITION OF RS.10,00,000/- AND RS.1,20,000/-. WE FIND NO INFIRMITY IN HIS ORDER. THUS GROUND NOS. 1 TO 4 OF THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON 11 TH FEBRUARY, 2010. SD/- SD/- (A.D. JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11 TH FEBRUARY, 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.