Shri SanJay Kumar Agrawal, V. The ACIT 5 (1),

ITA 490/IND/2008

• Counselvise Citation: 49022714 RSA 2008
• Duration Of Justice: 3 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 04-12-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: H P VERMA; GIRISH AGARWAL S
• Keywords: Depreciation; Period of limitation; Validity of assessment
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARMA, A.M. PAN NO. : ABHPA2475R I.T.A.NO. 490 /IND/20 08 . A.Y. : 2004 - 05 SHRI SANJAY KUMAR AGARWAL, AGARWAL HOUSE, 5, YESHWANT COLONY, INDORE VS ACIT, 5(1), INDORE. APPELLANT RESPONDENT PAN NO. : ABGPA5345K I.T.A.NO. 455/IND/2008. A.Y. : 2004 - 05 SMT. MEENA AGARWAL, AGARWAL HOUSE, 5, YESHWANT COLONY, INDORE VS ACIT, 5(1), INDORE. APPELLANT RESPONDENT A PPELLANT S BY : SHRI H.P.VERMA AND SHRI GIRISH AGARWAL, ADVOCATES RESPONDENT BY : SHRI R. A. VERMA, SR. DR DATE OF HEARING : 23 . 10 .2012 DATE OF : 2 7 . 1 1 .201 2 -: 2: - 2 PRONOUNCEMENT O R D E R PER R. C. SHARMA, A.M. THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 22.9.08 FOR THE ASSESSMEN T YEAR 2004-05 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME-TAX ACT, 1961. COMMON GROUNDS HAVE BEEN TAKEN IN BOTH THE APPEALS. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A N INDIVIDUAL DECLARED INCOME UNDER THE HEAD CAPITAL GAINS, INCOME FROM BUSINESS, AND INCOME FROM HOUSE PROPERTY. DURING THE COURSE OF ASSESSMENT, T HE ASSESSING OFFICER DECLINED ASSESSEES CLAIM OF CAPI TAL GAINS AND TREATED THE SAME AS INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER ALSO DISALLOWED EXPENDITURE ON ACCOUNT OF DEPRECIATION AMOUNTING TO RS. 30,000/- AND LOSS OF RS. 13,259/- CLAIMED UNDER THE HEAD LOSS ON SALE OF SHARES. BY THE IMPUGNED ORD ER, -: 3: - 3 THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSIN G OFFICER AGAINST WHICH THE ASSESSEE IS IN APPEAL BEF ORE US. 3. AS COMMON GROUNDS ARE INVOLVED IN BOTH THE APPEALS, THE SAME WERE HEARD TOGETHER AND ARE NOW DISPOSED OF BY THIS CONSOLIDATED ORDER. 4. IN THE GROUNDS OF APPEAL, THE ASSESSEE IS AGGRIEVED FOR FRAMING OF ASSESSMENT U/S 143(3) ON T HE PLEA THAT NOTICE U/S 143(2) WAS SERVED BEYOND STATU TORY PERIOD OF LIMITATION, THEREFORE, ASSESSMENT SO FRAM ED WAS ARGUED TO BE INVLAID AND VOID AB INITIO. ON MERITS, THE ASSESSEE HAS CHALLENGED DISALLOWANCE OF CAPITAL LOS S AND THE ADDITIONS MADE BY THE ASSESSING OFFICER BY DISALLOWING CLAIM OF DEPRECIATION AMOUNTING TO RS. 30,000/- AND CAPITAL LOSS OF RS. 13,259/-. 5. IT WAS CONTENDED BY THE LD. AUTHORIZED REPRESENTATIVE THAT THE RETURN OF INCOME WAS FILED ON 28.10.2004. HE FURTHER INVITED OUR ATTENTION TO THE C. B. D. T. CIRCULAR NO. 10/2004, WHICH PROVIDED THAT THE PROCESS OF SELECTION OF SCRUTINY OF RETURN FILED DU RING THE FINANCIAL YEAR 2004-05 MUST BE COMPLETED WITHIN 3 -: 4: - 4 MONTHS OF THE DATE OF FILING OF RETURN. AS PER THIS INSTRUCTION, THE PROCESS OF SELECTION OF CASES FOR SCRUTINY OF RETURN FILED UP TO 31.3.2004 MUST BE COMPLETED B Y 15 TH OCTOBER, 2004. FOR THE RETURNS FILED DURING THE CURRENT FINANCIAL YEAR 2004-05, THE SELECTION OF CA SES FOR SCRUTINY WILL HAVE TO BE COMPLETED WITHIN THREE MON THS OF THE DATE OF FILING OF RETURN. AS PER LD. AUTHORI ZED REPRESENTATIVE , THE LAST DATE OF SERVICE OF NOTICE IN TERMS OF ABOVE INSTRUCTIONS WAS 27.1.2005, IN SO FAR AS R ETURN WAS FILED BY THE ASSESSEE ON 28.10.2004. HOWEVER, N OTICE U/S 143(2) DATED 28.7.2005 WAS SERVED ON THE ASSESS EE ON 8.8.2005. AS PER LD. AUTHORIZED REPRESENTATIVE, SINCE NOTICE U/S 143(2) WAS SERVED BEYOND THE PERIOD OF T HREE MONTHS, PROCEEDINGS U/S 143(3) WAS INVALID, THEREFO RE, LIABLE TO BE QUASHED. DIRECT DECISION ON THE ISSUE IN THE CASE OF DY. CIT VS. SUNITA FINLEASE LIMITED, BY HO N'BLE CHHATISGARH HIGH COURT REPORTED IN 17 ITJ 272, WAS ALSO PLACED ON RECORD. IN THIS CASE, AFTER CONSIDERING T HE IDENTICAL NORMS THAT WERE SET FOR CORPORATE ASSESSE E VIDE NOTIFICATION NO.9/2004, IT WAS HELD THAT PROCEEDING S ARE -: 5: - 5 BAD IN LAW. THE LD. AUTHORIZED REPRESENTATIVE FURT HER CONTENDED THAT CBDT SCRUTINY NORMS ARE BINDING ON T HE ASSESSING OFFICER AND IF THE ASSESSING OFFICER DOES NOT FOLLOW THE SCRUTINY NORMS, PROCEEDINGS WOULD BE BAD IN LAW AND FOR THIS PURPOSE, RELIANCE WAS PLACED ON TH E DECISION IN THE CASE OF CIT VS. SMT. NAINA P. DEDHI A, 270 ITR 572 ( U.P.) AND AGARWAL FARMS EQUIPMENT, 85 TTJ 723. 6. ON THE OTHER HAND, THE LD. SR.DR RELIED ON THE DECISION OF AMBIKA CONSTRUCTION, 99 TAXMAN 561, KERALA FINANCIAL CORPORATION, 210 ITR 129, AND CONTENDED THAT THE ASSESSING OFFICER WAS JUSTIFIED IN PASSING THE ORDER EVEN THOUGH NOTICE U/S 143(2) WAS ISSUED BEYOND THE TIME LIMIT PRESCRIBED BY NOTIFICA TION NO. 10/2004. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BEL OW IN THE LIGHT OF JUDICIAL PRONOUNCEMENT CITED AT BAR. T HERE IS NO DISPUTE TO THE FACTUAL POSITION REGARDING DATE O F FILING THE RETURN, DATE OF ISSUE OF NOTICE U/S 143(2) AND THE -: 6: - 6 DATE ON WHICH SUCH NOTICE WAS SERVED ON THE ASSESSE E. AS PER C.B.D.T. INSTRUCTION NO.10/2004, THE PROCESS OF SELECTION OF SCRUTINY OF RETURNS FILED DURING THE F INANCIAL YEAR 2004-05 MUST BE COMPLETED WITHIN 3 MONTHS OF T HE DATE OF FILING OF RETURN. HOWEVER, IN THE INSTANT C ASE BEFORE US, AS THE RETURN WAS FILED ON 28.10.2004, T HE SAME FALLS DURING THE FINANCIAL YEAR 2004-05, THERE FORE, AS PER THIS INSTRUCTION OF C. B. D. T., NOTICE U/S 143(2) WAS TO BE SERVED LATEST BY 27.1.2005. HOWEVER, THE ASSESSING OFFICER HAS ISSUED NOTICE DATED 28.7.2005 , WHICH WAS SERVED ON THE ASSESSEE ON 8.8.2005. SINCE NOTICE U/S 143(2) SERVED BEYOND THE PERIOD OF THREE MONTHS, PROCEEDINGS U/S 143(2) WAS LIABLE TO BE QUASHED IN VIEW OF THE DIRECT DECISION OF HON'BLE CHHATISGARH HIGH COURT IN THE CASE OF SUNITA FINLEA SE LIMITED, 17 ITJ 272, WHEREIN THE COURT HELD THAT C.B.D.T. INSTRUCTION NO.9/2004 IS BINDING ON DEPARTMENT AND SAME IS NOT VIOLATIVE OF THE PROVISI ONS OF THE ACT. ACCORDINGLY, TRIBUNAL WAS HELD TO BE JUSTI FIED IN HOLDING THAT SINCE THE NOTICE U/S 143(2) WAS ISSUED IN -: 7: - 7 NON-COMPLIANCE OF SAID C.B.D.T. INSTRUCTION NO.9/20 04, WHICH WAS BINDING ON THE REVENUE, THE ASSESSMENT SO FRAMED WAS INVALID. AS THE ISSUE UNDER CONSIDERATIO N IS SQUARELY COVERED BY THE DECISION OF HON'BLE HIGH CO URT, RESPECTFULLY FOLLOWING THE SAME, WE ALLOW THE GROUN D OF INVALIDITY OF ASSESSMENT. HOWEVER, NO CONTRARY JUDI CIAL PRONOUNCEMENT WAS BROUGHT TO OUR NOTICE. WE, THEREFORE, FOLLOW THE JUDGMENT OF CHHATISGARH HIGH COURT. 8. IN THE RESULT, APPEALS ARE ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2012. (JOGINDER SINGH) (R. C. SHARMA) JUD ICIAL MEMBER ACCOUNTANT MEMBER DATED : 27 TH NOVEMBER, 2012. CPU* 9.11