Smt Mamidi Bhavani, Visakhapatnam V. THE ITO, WARD - 4(2), Visakhapatnam

ITA 58/VIZ/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6867 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 21-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRID MANOJ KUMAR
• Keywords: Unexplained investment; Block assessment
• Section: 142(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH , VISAKHAPATNAM BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER SL.NO. ITA NO. AY APPELLANT RESPONDENT 1 58/V/14 2007-08 MAMIDI BHAVANI, VISAKHAPATNAM PAN AJHPM4800C INCOME TAX OFFICER, WARD 4(2), VISAKHAPATNAM 2 59/V/14 2008-09 -DO- -DO- 3 60/V/14 2007-08 MAMIDI VENKATRARAMANA, VISAKHAPATNAM PAN AMUPM4120H -DO- 4 61/V/14 2008-09 -DO- -DO- 5 62/V/14 2008-09 MAMIDI CHAKRADHAR -DO- ASSESSEE BY SHRI I. KAMA SASTRY REVENUE BY SHRID. MANOJ KUMAR DATE OF HEARING 07-07-2014 DATE OF PRONOUNCEMENT 07-07-2014 O R D E R PER BENCH.: ALL THESE APPEALS FILED BY DIFFERENT ASSESSEES ARE DIRECTED AGAINST IDENTICAL ORDERS OF THE CIT(A), VISAKHAPATNAM ARE DATED 20/01/2014 EXCEPT THE ORDER DATED 31/01/2014 IN CASE OF MAMIDI CHAKRADHAR FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09. AS IDENTIC AL ISSUES ARE INVOLVED IN THESE APPEALS, THEY WERE CLUBBED AND HE ARD TOGETHER AND, THEREFORE, THESE APPEALS ARE DISPOSED OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NOS. 58, 59, 60, 61 & 62/VIZ/13 MAMIDI BHAVANI AND OTHERS 2. THE GROUNDS RAISED IN THESE APPEALS ARE COMMON I N ALL THESE APPEALS, EXCEPT THE AMOUNT OF ADDITION, WHICH ARE A S FOLLOWS: 1. THE LD. CIT(A) IS NOT CORRECT IN REJECTING THE P LEA OF THE ASSESSEE THAT SINCE NO NOTICE UNDER SECTION 143(2) HAS BEEN ISSUED BY THE AO, THE ENTIRE ASSESSMENT IS VOID AB INITIO. 2. THE LD. CIT(A) IS NOT CORRECT IN REJECTING THE P LEA OF THE ASSESSEE THAT SINCE THE NOTICE ISSUED U/S 148 IS VAGUE, ALL THE PROCEEDINGS AS WELL AS ORDER PASSED IN CONSEQUENCE OF SUCH AN INVA LID NOTICE ARE BAD IN LAW AND INVALID. 3. THE LD. CIT(A) IS NOT CORRECT IN UPHOLDING THE A DDITION OF RS. 1,77,805/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT IN FLAT NO. A-502. 3. TO DISPOSE OFF THESE APPEALS, WE REFER TO THE FA CTS FROM ITA NO. 58/V/14 IN CASE OF MAMIDI BHAVANI. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI I. KAM A SASTRY, REFERRING TO THE FIRST GROUND RAISED IN THE GROUNDS OF APPEAL , SUBMITTED THAT THE PRELIMINARY ISSUE IS THAT THE ASSESSMENT IS BAD IN LAW FOR THE REASON THAT NO NOTICE U/S 143(2) WAS ISSUED BY THE AO. 5. THE LEARNED DR SHRI D. MANOJ KUMAR OPPOSED THE C ONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 6. WE HAVE HEARD BOTH THE PARTIES ON THE PRELIMINAR Y ISSUE AND WE HOLD AS FOLLOWS: 7. THE UNDISPUTED FACT IN THIS CASE IS THAT THE ASS ESSEE HAS ORIGINALLY FILED RETURN OF INCOME FOR AY 2007-08 ON 31/03/2008 . THE RETURN WAS PROCESSED U/S 143(1). THEREAFTER, NOTICE U/S 148 WA S ISSUED ON 21/09/2010. THE ASSESSEE, IN RESPONSE THERETO, FILE D A LETTER DATED 25/10/2010 STATING THAT THE RETURN FILED FOR THE AY 2007-08 ON 31/03/2008 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTIC E U/S 148. ADMITTEDLY, THE AO HAS NOT ISSUED THE NOTICE U/S 143(2) OF THE ACT. THIS IS CLEAR FROM THE LETTER OF THE ITO, WHICH IS EXTRACTED BELOW FOR THE SAKE OF CLARITY: 3 ITA NOS. 58, 59, 60, 61 & 62/VIZ/13 MAMIDI BHAVANI AND OTHERS OFFICE OF THE INCOME TAX OFFICER, WARD 4(2) RANGE 4, 3 RD FLOOR, PRATYAKSHAKAR BHAVAN MVP COLONY, VISAKHAPATNAM DATED 5 TH OCTOBER, 2012 NO. AJHPM4800C/2007-08 TO SMT MAMIDI BHAVANI, DOOR NO; A-104, PAVANI BLOCK,, SAMPATH ENCLAVE, NAD KOTHA ROAD,, VISAKHJAPTNAM. MEDAM, SUB:- INCOME TAX ASSESSMENT - ASST YEAR 2007-08 - REGARDNG. REF:- 1. NOTICE U/S. 148 OF THE INCOME TAX ACT, 1961 . 2. YOUR LETTER DATED 1ST OCTOBER 2012. : NOTICE U/S.143(2) OF THE INCOME TAX ACT, 1961, HAS NOT BEEN ISUED IN YOUR CASE AS IT IS NOT MANDATED UNDER THE PROVIS IONS OF SECTION 147 OF THE INCOME TAX ACT, 1961. YOURS FAITHFULLY, (C V V SATYANARAYANA) INCOME TAX OFFICER, WARD-4(2), VISAKHAPTNAM 8. THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. VR EDUCATIONAL TRUST VIDE ITA NO. 510/2011 ORDER DATED 10/12/2012 AT PARA 3 HELD AS FOLLOWS: 3. THE ABOVE CONTENTION HAS NO MERIT. THE NOTICE U/ S 142(1) DATED 14 TH AUGUST, 2008 WAS ISSUED AND SERVED BEYOND THE PERI OD OF ONE YEAR FROM THE DATE OF FILING OF RETURN I.E. 15 TH JUNE, 2007. IT WAS BARRED BY LIMITATION. THE ISSUE OF NOTICE U/S 142(1 ) DATED 14 TH AUGUST, 2008, THEREFORE, DOES NOT HELP THE REVENUE. EVEN OTHERWISE, IT IS DIFFICULT TO ACCEPT THE CONTENTION OF THE APP ELLANT THAT NOTICE U/S 142(1) CAN BE REGARDED AS A NOTICE ISSUED U/S 143(2 ) OF THE ACT. THIS COURT IN THE CASE OF CIT VS. LUNAR DIAMONDS LT D. [2008] 281 ITR 1 (DEL.) HAS HELD THAT SERVICE OF NOTICE U/S 14 3(2) OF THE ACT IS MANDATORY. IT IS NOT DISPUTED THAT IN RESPECT OF TH E PROCEEDINGS U/S 147 OF THE ACT, NOTICE U/S 143(2) IS REQUIRED AND I S MANDATED EXCEPT IN CASES COVERED BY THE FIRST AND SECOND PROVISO TO SECTION 148 OF THE ACT. THE PRESENT CASE IS NOT COVERED BY THE EXC EPTIONS CARVED OUT IN THE TWO PROVISIONS AS THE RETURN IN THE PRES ENT CASE FILED ON OR 4 ITA NOS. 58, 59, 60, 61 & 62/VIZ/13 MAMIDI BHAVANI AND OTHERS AFTER 1 ST OCTOBER, 2005. IN THE CASE OF ACIT AND ANR. VS. HO TEL BLUE MOON [2010] 321 ITR 362 (SC), THE SUPREME COURT HAD EXAMINED THE QUESTION OF MANDATE AND NECESSITY TO ISSUE NOTI CE U/S 143(2) OF THE ACT, IN THE CASE OF BLOCK ASSESSMENT PROCEEDINGS AND IT WAS OBSERVED AS UNDER:- 23. THE OTHER IMPORTANT FEATURE THAT REQUIRES TO BE NOTICED IS THAT SECTION 158-BC(B) SPECIFICALLY REFERS TO SO ME OF THE PROVISIONS OF THE ACT WHICH REQUIRES TO BE FOLLOWED BY THE ASSESSING OFFICER WHILE COMPLETING THE BLOCK ASSESS MENTS UNDER CHAPTER XIV-B OF THE ACT. THIS LEGISLATION IS BY INCORPORATION. THIS SECTION EVEN SPEAKS OF SUB-SECT IONS WHICH ARE TO BE FOLLOWED BY THE ASSESSING OFFICER. HAD THE INTENTION OF THE LEGISLATURE WAS TO EXCLUDE THE PRO VISIONS OF CHAPTER XIV OF THE ACT, THE LEGISLATURE WOULD HAVE OR COULD HAVE INDICATED THAT ALSO. A READING OF THE PROVISIO N WOULD CLEARLY INDICATE, IN OUR OPINION, IF THE ASSESSING OFFICER, IF FOR ANY REASON, REPUDIATES THE RETURN FILED BY THE ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 158-BC(A), THE ASSESSING OFFICER MUST NECESSARILY ISSUE NOTICE UND ER SECTION 143(2) OF THE ACT WITHIN THE TIME PRESCRIBED IN THE PROVISO TO SECTION 143(2) OF THE ACT. WHERE THE LEG ISLATURE INTENDED TO EXCLUDE CERTAIN PROVISIONS FROM THE AMB IT OF SECTION 158-BC(B) IT HAS DONE SO SPECIFICALLY. THUS , WHEN SECTION. 158-BC(B) SPECIFICALLY REFERS TO APPLICABI LITY OF THE PROVISO THERETO CANNOT BE EXCLUDED. 24. WE MAY ALSO NOTICE HERE ITSELF THAT THE CLARIFI CATION GIVEN BY CBDT IN ITS CIRCULAR NO. 717 DATED 14-8-19952, H AS A BINDING EFFECT ON THE DEPARTMENT, BUT NOT ON THE CO URT. THIS CIRCULAR CLARIFIES THE REQUIREMENT OF LAW IN RESPEC T OF SERVICE OF NOTICE UNDER SUB-SECTION (2) OF SECTION 143 OF T HE ACT. ACCORDINGLY, WE CONCLUDE EVEN FOR THE PURPOSE OF CH APTER XIV-B OF THE ACT, FOR THE DETERMINATION OF UNDISCLO SED INCOME FOR A BLOCK PERIOD UNDER THE PROVISIONS OF S ECTION 158-BC, THE PROVISIONS OF SECTION 142 AND SUB-SECTI ONS (2) AND (3) OF SECTION 143 ARE APPLICABLE AND NO ASSESS MENT COULD BE MADE WITHOUT ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT. 9. THE HONBLE MADRAS HIGH COURT IN THE CASE OF SAP THAGIRI FINANCE & INVESTMENTS VS. ITO, [2012] 25 TAXMANN.COM 341 (MAD .) AT PARA 13 HELD AS FOLLOWS: 13. AS FAR AS THE PRESENT CASE IS CONCERNED, THE P ROVISIONS OF SECTION 148 ALSO USES THE EXPRESSION 'SO FAR AS MAY BE APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRE D TO BE FURNISHED UNDER SECTION 139'. THUS, UNDERSTANDING THIS PROVIS IONS IN THE 5 ITA NOS. 58, 59, 60, 61 & 62/VIZ/13 MAMIDI BHAVANI AND OTHERS BACKGROUND OF THE DECISION OF THE APEX COURT, ON TH E FACTS AVAILABLE, WE ARE OF THE VIEW THAT IN COMPLETING THE ASSESSMEN T UNDER SECTION 148 OF THE ACT, COMPLIANCE OF THE PROCEDURE LAID DO WN UNDER SECTIONS 142 AND 143(2) IS MANDATORY. ON THE ADMITT ED FACT THAT BEYOND NOTICE UNDER SECTION 142(1), THERE WAS NO NO TICE ISSUED UNDER SECTION 143(2), AND IN THE LIGHT OF THE FACT THAT THE VERY BASIS OF THE REASSESSMENT WAS THE FAILURE ON THE PART OF THE ASSESSEE IN NOT DISCLOSING THE CAPITAL GAINS ARISING ON THE TRA NSFER OF PROPERTY FOR ASSESSMENT AND THAT ADMITTEDLY THE ASSESSEE HAD REQ UESTED THE OFFICER TO ACCEPT THE ORIGINAL RETURN AS A RETURN F ILED IN RESPONSE TO SECTION 148 OF THE ACT. WE HOLD THAT THERE WAS TOTA L FAILURE ON THE PART OF THE REVENUE FROM COMPLYING WITH THE PROCEDU RE LAID DOWN UNDER SECTION 143(2) OF THE ACT, WHICH IS MANDATORY ONE AS HELD BY THE APEX COURT. 10. THE LEARNED DR RELIED ON THE ORDER OF THE ITAT, JODHPUR IN THE CASE OF HARI SING & ASSOCIATES VS. ITO, [2008] 117 TTJ 0 101, 10 DTR 208 FOR THE PROPOSITION THAT NON-SERVICE OF NOTICE U/S 143( 2) WAS MERELY AN IRREGULARITY. THIS DECISION OF THE COORDINATE BENC H HAS BEEN GIVEN PRIOR TO 14/09/2007, WHICH IS MUCH BEFORE THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF ACIT AND ANR. VS. HOTEL BLUE MOON [2010] 321 ITR 362 (SC), HENCE, THIS CASE LAW CANNOT BE FOLLOWED. 11. IN VIEW OF THE ABOVE DISCUSSION, WE RESPECTFULL Y APPLY THE DECISION HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. VR EDUCATIONAL TRUST (SUPRA) AND HONBLE MADRAS HIGH COURT IN THE CASE O F SAPTHAGIRI FINANCE & INVESTMENTS VS. ITO (SUPRA) AND HOLD THAT NON-ISS UE OF NOTICE U/S 143(2) IN THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CA SE, RENDERS THE ASSESSMENT BAD IN LAW. THUS, ALL THE ASSESSMENTS AR E HEREBY QUASHED. 12. IN THE RESULT, ALL THE APPEALS UNDER CONSIDERAT ION ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 07/07/2014. SD/- SD/- (SAKTIJIT DEY) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM, DATED: 7 TH JULY, 2014 KV 6 ITA NOS. 58, 59, 60, 61 & 62/VIZ/13 MAMIDI BHAVANI AND OTHERS COPY TO:- 1) SMT. MAMIDI BHAVANI, 2) MAMIDI VENKATARAMANA AND 3) MAMIDI CHAKRADHAR, FLAT NO. A-104, PAVANI BLOCK, SAMPATH E NCLAVE, NAD KOTHA ROAD, VISAKHAPATNAM.. 2) ITO, WARD 4(2), 3 ND FLOOR, PRATYAKSHAKAR BHAVAN, MVP COLONY, DOUBLE ROAD, VISAKHAPATNAM. 3) CIT(A), VISAKHAPATNAM 4) CIT-2, VISAKHAPATNAM 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., VIZAG.