Shri Pragji Amarsinh Jadeja, V. The ITO, Gandhidham, Bhuj

ITA 511/RJT/2006

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56688 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-08-2011
• Assessment Year: 1993-1994
• Appeal Filed On: 27-12-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LD BHARTI
• Assessee Lawyers: DM RINDANI
• Keywords: Assessment record; Reason to believe
• Section: 142(1); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.511/RJT/2006 (ASSESSMENT YEAR 1993-94) SHRI PRAGJI AMARSINH JADEJA VS ITO, WD.(1) VILLAGE VINJAN GANDHIDHAM, BHUJ TAL : ABDASA, KUTCH PAN : ACYPJ4308A (APPELLANT) (RESPONDENT) DATE OF HEARING : 24-08-2011 DATE OF PRONOUNCEMENT : 30-08-2011 APPELLANT BY : SHRI DM RINDANI RESPONDENT BY: SHRI LD BHARTI O R D E R PER N.R.S. GANESAN, JM THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A)- II, RAJKOT DATED 16-10-2006 PERTAINING TO THE ASSE SSMENT YEAR 1993-94. 2. THE MAIN ISSUE INVOLVED IN THIS APPEAL IS ASSESS MENT OF VALUE OF SILVER SEIZED BY THE CUSTOMS AUTHORITIES. 3. SHRI DM RINDANI, THE LD.REPRESENTATIVE FOR THE A SSESSEE SUBMITTED THAT THE CUSTOMS AUTHORITIES INTERCEPTED TWO TRUCK S AT RAMDEVPIR TEMPLE AND SEIZED 275 SILVER SLABS VALUED AT RS. 5,86,50,6 20. SIX PERSONS WERE FOUND IN THE TWO TRUCKS ALONGWITH THE PRESENT ASSES SEE. THE CUSTOMS AUTHORITIES SEIZED THE SILVER AND THE TRUCK AND PEN ALTY WAS ALSO IMPOSED AGAINST ALL THE ACCUSED ALONG WITH THE ASSESSEE. T HE ASSESSEE WAS ALSO ITA NO.511/RJT/2006 2 DETAINED UNDER COFEPOSA ACT. SUBSEQUENTLY THE HIGH COURT QUASHED THE DETENTION ORDER PASSED UNDER THE COFEPOSA ACT . THE INCOME-TAX AUTHORITIES HAVE NOT INITIATED ANY PROCEEDINGS AGAI NST OTHER PERSONS BUT THE ASSESSEE WAS HELD TO BE THE OWNER OF ALL THE SI LVER SLABS WITHOUT ANY MATERIAL. ACCORDINGLY THE VALUE OF SEIZED SILVER S LABS AND THE CASH OF RS. 18,100 FOUND IN THE TRUCK WERE ASSESSED AS INCOME O F THE ASSESSEE. 4. THE LD.REPRESNTATIVE FURTHER SUBMITTED THAT THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND WITH REGARD TO THE ISSUE OF NO TICE U/S 143(2) OF THE ACT. ACCORDING TO THE LD.REPRESENTATIVE, NO NOTICE WAS ISSUED U/S 143(2) OF THE ACT. THEREFORE, THE ENTIRE PROCEEDINGS ARE INV ALID. THE LD.REPRESENTATIVE PLACED HIS RELIANCE ON THE JUDGME NT OF THE PUNJAB & HARYANA HIGH COURT IN CIT VS CEBON INDIA LTD (2010) 229 CTR (P&H) 188. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THE AS SESSING OFFICER REOPENED THE ASSESSMENT U/S 148 ON THE BASIS OF VAGUE REASON ING. REFERRING TO THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VS ATUL JAIN (2008) 299 ITR 383 (DEL), THE LD.REPRESENTATIVE SUBMITTED THAT THE ASSESSMENT CANNOT BE REOPENED ON THE BASIS OF VAGUE REASONING. THE L D.REPRESENTATIVE FURTHER SUBMITTED THAT THE SILVER BARS FOUND IN THE TRUCK DO NOT BELONG TO THE ASSESSEE. THE SILVER BARS WERE NOT FOUND FROM THE ASSESSEE. ACCORDING TO THE LD.REPRESENTATIVE, THE REASONS RECORDED BY T HE ASSESSING OFFICER ARE VAGUE AND INCORRECT. THEREFORE, THE REOPENING OF T HE ASSESSMENT U/S 147 IS NOT A VALID ONE. 5. REFERRING TO THE MERIT OF THE ADDITION MADE BY T HE ASSESSING OFFICER, THE LD.REPRESENTATIVE POINTED OUT THAT THE SILVER B ARS SEIZED BY THE CUSTOMS AUTHORITY WAS NOT FOUND FROM THE ASSESSEE BUT IT WA S FOUND FROM THE TRUCK. THE TRUCK IS NEITHER OWNED NOR HIRED BY THE ASSESSE E. THEREFORE, THERE ITA NO.511/RJT/2006 3 CAN BE NO PRESUMPTION THAT THE SILVER BAR BELONGS T O THE ASSESSEE. REFERRING TO THE ORDER OF THE LOWER AUTHORITIES, TH E LD.REPRESENTATIVE SUBMITTED THAT THE INCOME-TAX AUTHORITIES RELIED UP ON THE ORDER OF THE CUSTOMS AUTHORITIES WITHOUT MAKING ANY INDEPENDENT ENQUIRY. THE CUSTOMS AUTHORITIES FOUND THAT ONE JAKAB BAVA PADH IYAR AS GUILTY AND MASTERMIND FOR SMUGGLING AND NOT THE ASSESSEE. THE CUSTOMS AUTHORITIES LEVIED PENALTY AGAINST THE OTHER PERSONS ALSO ALONG WITH THE ASSESSEE. THEREFORE, TAKING THE VALUE OF THE SILVER BARS AS I NCOME OF THE ASSESSEE IS NOT JUSTIFIED. 6. ON THE CONTRARY, SHRI LD BHARTI, THE LD.DR SUBMI TTED THAT THE ASSESSING OFFICER REOPENED THE ASSESSMENT U/S 148 O F THE INCOME-TAX ACT BY ISSUING A NOTICE ON 03-05-2001 WHICH WAS DULY SE RVED ON THE ASSESSEE ON 15-05-2001. HOWEVER, THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME WITHIN THE SPECIFIED PERIOD. THE ASSESSEE FILED TH E RETURN OF INCOME BELATEDLY ON 12-12-2001. THEREFORE, THE ASSESSING OFFICER IGNORED THE RETURN FILED BY THE ASSESSEE AND PROCEEDED TO ASSES S THE INCOME ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. ACCORDING T O THE LD.DR, THE CUSTOMS AUTHORITIES SEIZED 275 SILVER SLABS FROM T HE TRUCK IN WHICH THE ASSESSEE WAS ONE OF THE OCCUPANTS. THEREFORE, IT I S NOT CORRECT TO SAY THAT THE SILVER SLABS DO NOT BELONG TO THE ASSESSEE. SI NCE DEFINITE INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER WITH REGARD T O SEIZURE OF SILVER SLABS, THE CASE WAS REOPENED. THEREFORE, IT CANNOT BE SAI D THAT THE ASSESSING OFFICER HAS RECORDED A VAGUE REASON WHILE REOPENING THE ASSESSMENT. REFERRING TO THE MERIT OF THE ADDITION, THE LD.REPR ESENTATIVE POINTED OUT THAT THE CUSTOMS AUTHORITIES FOUND THAT THE ASSESSEE AC TIVELY PARTICIPATED IN BRINGING THE SILVER SLABS OF FOREIGN ORIGIN INTO IN DIA. IT WAS ALSO FOUND BY THE CUSTOMS AUTHORITIES THAT THE ASSESSEE ACQUIRED THE SILVER SLABS FROM ITA NO.511/RJT/2006 4 HIS UNDISCLOSED INCOME. SINCE THE ASSESSEE COULD N OT PROVE THAT THE SILVER BARS DID NOT BELONG TO HIM, THE REVENUE AUTHORITIES RIGHTLY CONCLUDED THAT THE ASSESSEE IS THE OWNER OF THE SILVER SLABS. THE REFORE, NO INTERFERENCE CAN BE CALLED FOR. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS RAISED A LEGAL ISSUE WITH REGARD TO ISSUE OF NOTICE U/S 143(2) AND THE V ALIDITY OF PROCEEDINGS U/S 147 OF THE INCOME-TAX ACT. FOR THE PURPOSE OF DECI DING THIS ISSUE WE HAVE TO NECESSARILY REFER TO THE ASSESSMENT RECORDS AND OTHER RELATED DOCUMENTS. MOREOVER, IT IS ALSO NECESSARY TO EXAMI NE AS TO WHETHER THE ISSUE OF NOTICE U/S 143(2) IS MANDATORY ESPECIALLY WHEN THE ASSESSEE HAS NOT FILED THE RETURN WITHIN THE TIME SPECIFIED IN T HE NOTICE ISSUED U/S 148 OF THE ACT? SECTION 143(2) PROVIDES FOR ISSUE OF NOTI CE IN A CASE WHERE THE RETURN HAS BEEN FURNISHED U/S 139 OR IN RESPONSE TO NOTICE U/S 142(1) AND THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT TH E CLAIM OF LOSS, EXEMPTION, DEDUCTION, ALLOWANCE, ETC. MADE IN THE R ETURN IS INADMISSIBLE. IN THIS CASE, THE ASSESSEE HAS NOT FILED THE RETURN U/S 139 OR U/S 142(1). NO RETURN WAS FILED WITHIN THE TIME SPECIFIED IN TH E NOTICE U/S 148. THEREFORE, THE ASSESSING OFFICER HAS IGNORED THE RE TURN FILED BY THE ASSESSEE AND PROCEEDED TO COMPLETE THE ASSESSMENT O N THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. IN SUCH CIRCUMSTANCE S, IS IT NECESSARY TO ISSUE A NOTICE U/S 143(2) OF THE INCOME-TAX ACT? H AD HE ASSESSEE FILED THE RETURN OF INCOME WITHIN THE TIME SPECIFIED IN T HE NOTICE U/S 148, THE MATTER MAY STAND ENTIRELY ON DIFFERENT FOOTING ITA NO.511/RJT/2006 5 9. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS CEBON INDI A LTD (SUPRA). IN THE CASE BEFORE THE PUNJAB & HARYANA HIGH COURT, THE AS SSESSEE HAD FILED THE RETURN OF INCOME ON 30-11-1996 WHICH WAS PROCESSED U/S 143(1)(A) ON 30- 11-1997. IN THE ABSENCE OF ANY EVIDENCE TO SHOW TH AT NOTICE U/S 143(2) WAS SERVED ON THE ASSESSEE BEFORE 30-11-1997, THE H IGH COURT CONCLUDED THAT THE NOTICE WAS NOT SERVED WITHIN THE STIPULATE D PERIOD OF ONE YEAR, THEREFORE, THE ASSESSING OFFICER HAD NO JURISDICTIO N TO MAKE THE ASSESSMENT. IN THE CASE ON HAND, THE LOWER AUTHORI TIES HAS NOT EXAMINED THIS ASPECT OF APPLICABILITY OF PROVISIONS OF SECTI ON 143(2), WHEN THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME EITHER U/S 139 OR U/S 142 OR WITHIN THE PERIOD SPECIFIED IN THE NOTICE ISSUED U/ S 148, IN OUR OPINION, THE MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OF FICER, AT THE FIRST INSTANCE. 10. NOW COMING TO THE MERIT OF THE APPEAL, THE ADDI TION WAS MADE MAINLY ON THE FINDING RECORDED BY THE CUSTOMS AUTH ORITIES. IT IS WELL SETTLED PRINCIPLES OF LAW THAT PROCEEDINGS UNDER CU STOMS ACT IS DIFFERENT AND PROCEEDINGS UNDER THE INCOME-TAX ACT IS A DIFFE RENT ONE. THEREFORE, THE INCOME-TAX AUTHORITIES HAVE TO EXAMINE THE FACT S SEPARATELY AND FIND OUT WHETHER THE VALUE OF THE SEIZED SILVER BELONGS TO THE ASSESSEE OR NOT. UNFORTUNATELY, THE LOWER AUTHORITIES HAVE NOT MADE SUCH AN ENQUIRY. THE ASSESSING OFFICER HAS SIMPLY REPRODUCED THE FINDING OF THE CUSTOMS AUTHORITY AND CONCLUDED THAT THE ASSESSEE IS THE OW NER OF THE SILVER WITHOUT MAKING ANY INDEPENDENT ENQUIRY. SINCE INCO ME-TAX PROCEEDINGS ARE SEPARATE PROCEEDINGS, THE ASSESSING OFFICER HAS TO ADJUDICATE INDEPENDENTLY ON THE BASIS OF THE MATERIAL AVAILABL E ON RECORD. THE ORDER OF THE CUSTOMS AUTHORITY MAY BE ONE OF THE RELEVAN T MATERIALS THAT MAY ITA NO.511/RJT/2006 6 REQUIRE TO BE CONSIDERED. HOWEVER, THE ASSESSING O FFICER HAS TO COME TO AN INDEPENDENT CONCLUSION AS TO HOW THE ASSESSEE IS THE OWNER OF THE SEIZED SILVER. SINCE SUCH AN EXERCISE WAS NOT DONE BY THE LOWER AUTHORITIES, IN OUR OPINION, THE MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITY ARE SET ASIDE AND THE ENTIRE ISSUE RAISED BY THE ASSESSEE I S REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION. THE ASSESSING OFFICER SHALL RE-CONSIDER THE ISSUE AFRESH AND DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESS EE. 11. WITH THE ABOVE OBSERVATION, THE APPEAL OF THE A SSESSEE IS ALLOWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30-08-2011. SD/- SD/- (A.L. GEHLOT) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT : 30 TH AUGUST, 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-II, RAJKOT 4. THE CIT-I, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT