ITO, New Delhi V. M/s. Satwant Singh Sodhi Construction (P) Ltd., New Delhi

ITA 531/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3440 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 29-07-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 04-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHORE B SENIOR
• Assessee Lawyers: R S ADLAKHA
• Keywords: Set aside
• Section: 143(1); 143(2); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G, NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.531/DEL/2010 (ASSESSMENT YEAR : 2003-04) ITO, WARD 7 (4), VS. M/S. SATWANT SINGH SODHI CONS TRUCTION P. LTD., NEW DELHI. A 4/81, SECTOR 17, ROHINI, NEW DELHI. (PAN : AAACS3827J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.S. ADLAKHA, ADVOCATE REVENUE BY : SHRI KISHORE B., SENIOR DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL BY THE REVENUE IS FILED AGAINST THE ORD ER OF THE CIT (APPEALS)-X, NEW DELHI DATED 4.11.2010 FOR THE ASSESSMENT YEAR 2003- 04. THE FOLLOWING GROUNDS OF APPEAL READ AS UNDER : 1. LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN ANNULLI NG THE ASSESSMENT BY HOLDING THAT THE ISSUE OF NOTICE U/S 148 IS INVALID . 2. LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN REDUCIN G NET PROFIT OF THE ASSESSEE FROM CONTRACT BUSINESS FROM 8% TO 5%. 3. LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN REDUCIN G COMMISSION INCOME FROM RS.9,42,080/- TO RS.6,22,251/-. 4. LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DELETIN G THE ADDITION OF RS.75,000/- MADE BY THE A.O. UNDER THE HEAD INCOME FROM OTHER SOURCES. ITA NO.531/DEL/2010 2 2. THE FACTS OF THE CASE ARE THAT THE RETURN WAS FI LED ON 30.11.2003 DECLARING INCOME AT RS.5,300/-. THE SAME WAS PROCESSED U/S 143(1) O F THE INCOME-TAX ACT. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S 144/145(3) OF THE INCOME-TAX ACT AT TOTAL INCOME OF RS.33,62,300/-. IN APPEAL, THE CIT (A) ANNULLED THE ASSESSMENT MADE U/S 144/145(3) BY HOLDING THAT THE NOTICE U/S 143(2 ) WAS NOT SERVED UPON THE ASSESSEE WITHIN THE STIPULATED PERIOD. THEREAFTER THE PROC EEDINGS U/S 147 WERE INITIATED BY ISSUING NOTICE U/S 148 ON THE GROUND THAT WHILE DOING THE O RIGINAL ASSESSMENT, A SUM OF RS.75,000/- SHOWN AS INCOME FROM OTHER SOURCES HAS ESCAPED ASSESSMENT. THE ASSESSEE COMPANY CHALLENGED THE INITIATION OF PROCEEDINGS U/ S 147. HOWEVER, THE ASSESSMENT WAS COMPLETED AT TOTAL INCOME OF RS.15,52,595/-. 3. IN APPEAL, THE CIT (A) HELD THAT THE NOTICE U/S 148 IS INVALID AND ON THAT BASIS, THE ASSESSMENT WAS ANNULLED. THE OTHER GROUNDS RAISED BY THE ASSESSEE BEFORE THE CIT (A) HAS BEEN DECIDED BY HIM ONLY FOR ACADEMIC PURPOSES. NOW REVENUE HAD COME BEFORE US BY TAKING FOUR GROUNDS AS ENUMERATED IN PARA 1. SI NCE CIT (A) HAD ANNULLED THE ASSESSMENT ON THE BASIS OF HOLDING NOTICE U/S 148 A S INVALID WE WILL DECIDE IN THIS ORDER ONLY GROUND NO.1 RAISED BY REVENUE. 4. WHILE PLEADING ON BEHALF OF THE REVENUE ON GROUN D NO.1 THE LEARNED DR SUBMITTED THAT THERE WAS AN ESCAPEMENT OF INCOME OF RS.75,000 /- IN ORIGINAL ASSESSMENT WHICH WAS TO BE ASSESSED AS INCOME FROM OTHER SOURCES AND ON THAT BASIS THE NOTICE U/S 148 WAS ISSUED. THEREFORE, THE CIT (A) WAS NOT JUSTIFIED I N ANNULLING THE ASSESSMENT AND DECLARING THE NOTICE U/S 148 INVALID. HE PLEADED T HAT THE ORDER OF CIT (A) MAY BE SET ASIDE. ITA NO.531/DEL/2010 3 5. ON THE OTHER HAND, THE LEARNED AR RELIED ON THE ORDER OF CIT (A) AND SUBMITTED THAT THERE WAS NO MATERIAL BEFORE THE ASSESSING OFF ICER ON WHICH HE COULD FORM A REASONABLE BELIEF AS REQUIRED BY LAW FOR ISSUING TH E NOTICE U/S 148. THE ASSESSEE HAD OFFERED THE INCOME OF RS.75,000/- IN THE RETURN OF INCOME. THE SAME WAS PROCESSED U/S 143(1) OF INCOME-TAX ACT. THEREAFTER, ASSESSMENT WAS FRAMED U/S 144/145(3) WHICH HAD BEEN QUASHED DUE TO JURISDICTIONAL DEFECT AS NOTICE U/S 143(2) WAS NOT SERVED IN TIME. ASSESSING OFFICER HAD NO MATERIAL BEFORE HIM WHICH COULD MAKE HIM TO BELIEVE THAT INCOME ESCAPED ASSESSMENT. THEREFORE, THE CIT (A) W AS JUSTIFIED IN DECLARING THE NOTICE U/S 148 AS INVALID. HE RELIED ON THE ORDER OF CIT (A) AND PLEADED TO SUSTAIN THE SAME. 6. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE A SSESSING OFFICER RECORDED THE REASONS AS BELOW :- WHILE DOING THE ORIGINAL ASSESSMENT A SUM OF RS.75 ,000/- SHOWN AS INCOME FROM OTHER SOURCES HAS ESCAPED ASSESSMENT. THE REASONS RECORDED DO NOT SHOW WHICH INCOME FROM WHICH SOURCE HAS ESCAPED THE ASSESSMENT. THIS WAS ALSO ENQUIRED FROM THE LEARNE D DR DURING THE PLEADINGS TO SHOW WHICH INCOME FROM WHICH SOURCE ESCAPED THE INCOME F OR WHICH THE NOTICE U/S 148 WAS ISSUED. ASSESSEE HAD SHOWN INCOME OF RS.75,000/- I N HIS RETURN OF INCOME WHICH WAS PROCESSED U/S 143(1) OF INCOME-TAX ACT. THEREAFTER , REGULAR ASSESSMENT WAS MADE U/S 144/145(3) OF INCOME-TAX ACT AND THIS ASSESSMENT WA S ANNULLED FOR THE LACK OF JURISDICTION. THE REVENUE HAS NOT SPECIFIED FROM W HICH SOURCE THE INCOME OF RS.75,000/-, WHICH WAS EXIGIBLE TO TAX, HAS ESCAPED THE ASSESSME NT. REASONS RECORDED BY ASSESSING OFFICER ARE VERY SKETCHY AND DOES NOT SHOW THAT THE RE WAS SOME MATERIAL WHICH COULD LEAD TO FOR A REASONABLE BELIEF THAT INCOME HAS ESC APED. THUS, THESE FACTS SHOW THAT THERE WAS NO MATERIAL IN THE RECORD ON THAT BASIS T HE ASSESSING OFFICER CAN FORM A ITA NO.531/DEL/2010 4 REASONABLE BELIEF FOR INITIATING THE PROCEEDINGS U/ S 147 BY ISSUING A NOTICE U/S 148 OF THE INCOME-TAX ACT. THE REASONS RECORDED ITSELF SHOWS THAT INCOME OF RS.75,000/- HAS BEEN SHOWN BY THE ASSESSEE. IN VIEW OF THESE FACTS, WE DO NOT FIND ANY FAULT IN THE ORDER OF CIT (A) IN HOLDING THE NOTICE ISSUED U/S 148 IS INV ALID. WE SUSTAIN THE ANNULMENT OF THE ORDER. SINCE WE HAVE CONFIRMED THE ORDER OF CIT (A ) FOR ANNULLING THE ASSESSMENT, THERE IS NO NEED TO DECIDE THE OTHER GROUNDS OF APPEAL WH ICH THE CIT(A) HIMSELF HAS DECIDED FOR ACADEMIC ONLY. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THE 30 TH DAY OF JULY 2010. SD/- SD/- (C.L. SETHI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : THE 30 TH DAY OF JULY, 2010 TS COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT 4. CIT(A)-X, NEW DELHI. 5. DR, ITAT. ASSTT.REGISTRAR ITAT, NEW DELHI.