ITO, Dausa V. SHRI ASHOK KUMAR AGARWAL, Dausa

ITA 518/JPR/2012

• Counselvise Citation: 51823114 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 29-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: G C JAIN
• Keywords: Bogus purchase; Income from undisclosed sources; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JAIPUR BENCH JAIPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 518/JP/2012 (A.Y. 2003-04) ITO WARD, DAUSA. VS. SHRI ASHOK KUMAR AGARWAL, S/O SHRI JAGDISH PRASAD AGARWAL, PROP. M/S GOURAV ENTERPRISES, VILLAGE KHEDLA, TEHSIL MAHUWA, DISTRICT DAUSA. PAN NO. ACMPA 2655 H (APPELLANT) (RESPONDENT) C.O. NO. 62/JP/2012 (ITA NO. 518/JP/2012) (A.Y. 2003-04) SHRI ASHOK KUMAR AGARWAL, VS. ITO, DAUSA. S/O SHRI JAGDISH PRASAD AGARWAL, PROP. M/S GOURAV ENTERPRISES, VILLAGE KHEDLA, TEHSIL MAHUWA, DISTRICT DAUSA. PAN NO. ACMPA 2655 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.C. JAIN. DEPARTMENT BY : SHRI D.C. SHARMA - D.R. 2 DATE OF HEARING : 23/01/2014. DATE OF PRONOUNCEMENT : 27/01/2014. O R D E R PER N.K.SAINI, A.M THE APPEAL BY THE DEPARTMENT AND THE CROSS OBJECTI ON BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 3 0/03/2011 OF CIT(A), ALWAR. IN THE DEPARTMENTAL APPEAL, THE FOL LOWING GROUNDS HAVE BEEN RAISED: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CA SE IN QUASHING OF ASSESSMENT MADE UNDER SECTION 147/148/1 43(3) BY THE AO AND NOT CONSIDERING DECISION OF THE PANJA B AND HARIYANA HIGH COURT IN THE CASE OF PANJAB TRACTORS LTD. VS. DCIT 254 ITR 242 AND SHRI KRISHAN MAHAL VS. ACIT MA DRAS HIGH COURT 250 ITR 333 WHEREIN IT WAS HELD THAT ISS UE OF NOTICE U/S 147 IS VALID EVEN WHEN TIME TO ISSUE NOT ICE U/S 143(2) WAS THERE. 2. THAT LD. COMMISSIONER OF INCOME TAX (A) HAS ERRE D IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCE OF THE CASE I N NOT ADJUSTING OTHER GROUNDS OF APPEAL. 3. THE DEPARTMENT RESERVE ITS RIGHT TO ADD, ALTER, MODIFY, DELETE OR AMEND ALL OR ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. 2 FROM THE ABOVE GROUNDS, IT IS GATHERED THAT THE ON LY GRIEVANCE OF THE DEPARTMENT RELATES TO THE QUASHING OF ASSESSMENT ORDER PASSED BY THE AO UNDER SECTION 147/148/143(3) OF THE I.T. ACT 1961 (HEREINAFTER REFERRED TO AS ACT, IN SHOR T). 3 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF DALHAN, VANASPATI GHEE, TILHAN A ND WHEAT ETC. THE ASSESSEE FILED RETURN OF INCOME ON 28/11/2003 D ECLARING TOTAL INCOME OF RS. 1,03,951/-. THE AO ISSUED NOTICE UND ER SECTION 148 OF THE ACT TO THE ASSESSEE ON 04/11/2004 AFTER HAVI NG BELIEF OF ESCAPEMENT OF INCOME AND RECORDING REASONS FOR THE SAME. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE STATED TH AT THE RETURN OF INCOME FILED ON 28/11/2003 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. T HE REASONS RECORDED BY THE AO AS MENTIONED BY THE LD. CIT(A) A T PAGES 7 & 8 IN THE IMPUGNED ORDER WERE AS UNDER:- THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE Y EAR UNDER CONSIDERATION ON 28/11/2003 DECLARING TOTAL INCOME OF RS. 1,03,951/- FROM THE BUSINESS OF TRADING IN DALLAHAN , VANSPATI GHEE, TILLHAN & WHEAT. THE BUSINESS WAS RUN IN THE NAME AND STYLE OF M/S. GAURAV ENTERPRISES, KHERLA. RETURN OF INCOME W AS ACCOMPANIED BY COMPUTATION OF INCOME, AUDIT REPORT UNDER SECTION 44AB IN THE FORM NO. 3CB & 3CD, BALANCE SHEET, TRAD ING AND PROFIT & LOSS A/C, CAPITAL ACCOUNT, COPIES OF LIC RECEIPTS , POWER OF ATTORNEY ETC. RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) AT RETURNED INCOME ON 17/02/2004. DURING THE PERIO D THE ASSESSEE HAS SHOWN TOTAL PURCHASES OF RS. 3,30,46,654/- AND SALES OF RS. 3,46,38,773/-. GROSS PROFIT AND NET PROFIT HAS BEEN SHOWN AT RS. 509086/- AND RS. 103892/- GIVING RATES OF 1.47% AND 0.300% RESPECTIVELY. VIDE HER LETTER NO. JCIT/R-BPR/2003-04/1583 DATED 16/03/2004, THE WORTHY JT. CIT, BHARATPUR RANGE, BH ARATPUR INFORMED THAT THE ABOVE ASSESSEE WAS ENGAGED IN BOG US PURCHASES BY OBTAINING BOGUS PURCHASE BILLS FROM ONE PARTY NA ME AS M/S AMBIKA TRADERS, VILLAGE ITAMDA, BHUSAWAR, BHARATPUR . THE BOGUS TRANSACTIONS MADE BY THE ASSESSEE DURING THE YEAR U NDER 4 CONSIDERATION WITH THE ABOVE PARTY, AS INFORMED, AR E DETAILED AS UNDER:- S.NO. BILL NO. BILL DATE JEANS QTY. AMOUNT MANDI TAX 1 245 27/11/2002 WHEAT 171.00 118845.00 1901.52 2 246 27/11/2002 WHEAT 166.25 115543.75 1848.70 3 247 28/11/2002 WHEAT 185.25 128748.75 2059.98 4 248 28/11/2002 WHEAT 170.00 112242.50 1795.88 5 328 07/04/2003 WHEAT 171.00 105079.00 1681.26 6 329 07/04/2003 WHEAT 171.00 105079.00 1681.26 7 465 10/02/2003 WHEAT 180.50 110105.00 1761.68 8 466 18/02/2003 WHEAT 185.25 113928.75 1822.86 9 467 19/02/2003 WHEAT 175.75 109843.75 1757.50 10 468 19/02/2003 WHEAT 180.50 110105.00 1761.68 TOTAL 1756.50 1129520.50 18072.25 THUS THE ASSESSEE HAS ENTERED INTO BOGUS PURCHASES OF RS. 1129520.50 FOR THE A.Y. 2003-04 AND 2004-05. DURIN G THE YEAR ASSESSEE HAS INVESTED RS. 919362.00 AND RS. 210158.00 DURING THE A.Y. 2004-05 OUT OF HIS UNACCOUNTED INCOME EARN BY HIM. HE HAS CHAN NELISED, ROUTED THIS INCOME IN HIS BUSINESS FOR THE PERIOD UNDER CONSIDE RATION IN SHAPE OF BOGUS PURCHASES. THUS THIS SUM OF RS. 919362.00 HA S REMAINED ESCAPED TO ASSESSMENT WITHIN THE MEANING OF SECTION 147/148 OF THE I.T. ACT. THUS I HAVE REASON TO BELIEVE THAT INCOME OF RS. 9 19362.00 HAS REMAINED ESCAPED TO ASSESSMENT. NOTICE U/S 148 IS ISSUED ACCORDINGLY. SD/- XXXXX (ANITA RINESH) INCOME-TAX OFFICER, DAUSA 4. THE ASSESSEE SUBMITTED TO THE LD. CIT(A) THAT THE PROCEEDINGS UNDER SECTION 147 OF THE ACT COULD NOT BE INITIATED WHEN TIME AVAILABLE FOR ISSUING NOTICE UNDER SECTIO N 143(2) OF THE ACT HAD NOT EXPIRED. RELIANCE WAS PLACED ON THE FOL LOWING CASE- LAWS:- 5 1. JORA SINGH VS. ITO (2011) 139 TTJ 380 (LUCKNOWB BENCH). 2. CIT VS. QATALYS SOFTWARE TECHNOLOGIES LTD. (2009 ) 308 ITR 249 (MAD) 3. B.R. INDUSTRIES VS. ITO 144 TTJ 103 (JAIPUR) 5. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE OBSERVED THAT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 28/11/2003 AND THE TIME AVAILABLE TO ISSUE NOTICE U NDER SECTION 143(2) OF THE ACT TO TAKE UP THE CASE FOR ASSESSMEN T WAS AVAILABLE UPTO 30/11/2004 AND THE AO ISSUED NOTICE UNDER SECT ION 148 OF THE ACT ON 04/11/2004 WHICH WAS SERVED ON 05/11/200 4 WHICH CLEARLY SHOWS THAT THE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED WHEN THE TIME AVAILABLE FOR ISSUANCE OF NOTI CE UNDER SECTION 143(2) OF THE ACT HAD NOT EXPIRED. LD. CIT (A) POINTED OUT THAT THE AO HAD BEEN INFORMED BY THE JT. CIT, BHARA TPUR RANGE, BHARATPUR VIDE LETTER DATED 19/03/2003 TO MAKE ENQU IRY WITH RESPECT TO BOGUS PURCHASES MADE BY M/S. GAURAV ENTE RPRISES KHEDLA REGARDING BOGUS PURCHASES BILLS FROM M/S. AM BIKA TRADERS, VILLAGE ITAMDA, BHUSAWAR, BHARATPUR. ACCORDING TO THE LD. CIT(A), THE AO HAD SUFFICIENT TIME TO TAKE UP THE MATTER UN DER SCRUTINY BY ISSUING THE NOTICE UNDER SECTION 143(2) OF THE ACT RATHER THAN ISSUING NOTICE UNDER SECTION 148 OF THE ACT ON 04/1 1/2004. LD. CIT(A) WAS OF THE OPINION THAT THE NOTICE UNDER SEC TION 148 OF THE 6 ACT ISSUED ON 04/11/2004 WAS WITHOUT JURISDICTION. HE FURTHER OBSERVED THAT FIRST NOTICE UNDER SECTION 143(2) WAS ISSUED ON 08/09/2005 FOLLOWED BY ANOTHER NOTICE ON 28/09/2005 AND IN ABSENCE OF VALID NOTICE UNDER SECTION 148 OF THE AC T, THE ASSESSEE COULD HAVE BEEN SERVED NOTICE UNDER SECTION 143(2) OF THE ACT FOR REGULAR ASSESSMENT PROCEEDINGS TILL 30/11/2004. TH EREFORE, THERE WAS NO VALID SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT WITHIN ONE YEAR FROM THE END OF THE MONTH OF FILING OF THE RETURN BY THE ASSESSEE UNDER SECTION 139 OF THE ACT. HENC E, THERE WAS NO VALID ASSESSMENT ORDER EVEN UNDER SECTION 143(3) OF THE ACT IN THE ABSENCE OF VALID NOTICE UNDER SECTION 148 OF THE AC T ON 04/11/2004. LD. CIT(A) ACCORDINGLY HELD THAT THE A SSESSMENT ORDER FOR THE YEAR UNDER CONSIDERATION WAS WITHOUT JURISDICTION, THEREFORE, THE SAME WAS QUASHED. NOW THE DEPARTMEN T IS IN APPEAL. 6 . LD. D.R. SUPPORTED THE ORDER OF THE AO AND FURTHE R SUBMITTED THAT THE AO RECORDED THE REASONS FOR ESCA PEMENT OF THE INCOME. THEREFORE, NOTICE ISSUED UNDER SECTION 148 OF THE ACT WAS VALID. 7 . LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMI SSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT SINCE 7 TIME WAS AVAILABLE WITH THE AO TO FRAME THE ASSESSM ENT UNDER SECTION 143(3) OF THE ACT BY ISSUING NOTICE UNDER S ECTION 143(2) OF THE ACT, HOWEVER, NO SUCH NOTICE WAS ISSUED. ON TH E OTHER HAND, A NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED WH ICH WAS NOT VALID. THEREFORE, THE ASSESSMENT FRAMED BY THE AO WAS RIGHTLY QUASHED BY THE LD. CIT(A). RELIANCE WAS PLACED ON T HE FOLLOWING CASE-LAWS:- 1. M/S. B.R. INDUSTIRES VS. ITO [TAX WORLD VOL. XXX VIII, 267] (JAIPUR) 2. ITO VS. M/S. MOTILAL ANKIT KUMAR [TAX WORLD VOL. XXXVI, 93] (JAIPUR) 3. DCIT VS. KISHAN LAL LILA [TAX WORLD VOL. XXXIV 4 0] (JODH) 4. CIT VS. QATALYS SOFTWARE TECHNOLOGIES LTD. (2009 ) 308 ITR 249 (MAD) 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON TH E RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSES SEE FILED RETURN OF INCOME UNDER SECTION 139 OF THE ACT ON 28/11/200 3. THEREFORE, THE TIME AVAILABLE TO FRAME THE ASSESSMENT WITH THE AO WAS UPTO 30/11/2004 BY ISSUING NOTICE UNDER SECTION 143(2) O F THE ACT. HOWEVER, THE AO INSTEAD OF MAKING REGULAR ASSESSMEN T, PREFERRED TO ISSUE NOTICE UNDER SECTION 148 OF THE ACT. IN O UR OPINION, 8 ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT WAS NOT JUSTIFIED WHEN THE TIME AVAILABLE FOR ISSUING NOTICE UNDER SE CTION 143(2) OF THE ACT HAD NOT EXPIRED. 9. ON A SIMILAR ISSUE, THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. QATALYS SOFTWARE TECHNOLOGIES LTD. (SUPRA) HAS HELD AS UNDER:- THAT THE TRIBUNAL WAS RIGHT IN COMING TO THE CONC LUSION THAT THE ASSESSING OFFICER WAS BARRED FROM INITIATI NG REASSESSMENT PROCEEDINGS UNDER SECTION 147 WHEN THE TIME FOR ISSUANCE OF NOTICE UNDER SECTION 143(2) HAD NOT EXP IRED. WE, THEREFORE, KEEPING IN VIEW THE RATIO LAID DOWN BY THE HONBLE MADRAS HIGH COURT, ARE OF THE VIEW THAT THE LD. CIT(A) WAS JUSTIFIED IN QUASHING THE ASSESSMENT ORDER PASS ED BY THE AO. FOR THE AFORESAID VIEW, WE ARE ALSO FORTIFIED BY TH E DECISION OF THE ITAT LUCKNOW B BENCH, LUCKNOW IN THE CASE OF JORA SINGH VS. ITO 2011 (139) TTJ 380 AND THE DECISION OF THE ITAT JAIPUR BENCH A, JAIPUR IN THE CASE OF M/S. B.R. INDUSTRIES VS. ITO 144 TTJ 103 . 10. AS REGARDS TO THE CROSS-OBJECTION FILED BY THE ASS ESSEE, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE HAS THE INSTRUCTION NOT TO PRESS THE CROSS-OBJECTION. ACCO RDINGLY, THE CROSS-OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 9 11. IN THE RESULT, APPEAL OF THE DEPARTMENT AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 27 TH JANUARY, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 27 TH JANUARY, 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R BY ORDER ASSISTANT REGISTRAR, ITAT, JAIPUR.