SH. RAGHBIR SINGH, PHAGWARA V. INCOME TAX OFFICER, WARD - 3, PHAGWARA

ITA 599/ASR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3324 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 20-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-01-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 20-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAKIL AHMAD
• Assessee Lawyers: Y K SUD
• Keywords: Invalid notice; Business income
• Section: 143(3); 143(1); 147; 148

Judgement Text

P A G E | 1 ITA NO. 599/ASR/2017, A.Y. 2009-10 RAGHBIR SINGH VS. ITO IN THE INCOME TAX APPELLATE TRIBUNAL CAMP BENCH AT JALANDHAR BEFORE SHRI N.K SAINI, VICE PRESIDENT AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 599/ASR/2017 ASSESSMENT YEAR: 2009-10 RAGHBIR SINGH, NEAR ST. SOLDIER COLLEGE, HADIABAD, PHAGWARA. VS. INCOME TAX OFFICER, WARD 3, PHAGWARA. PAN BHSPS5515E (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI Y.K. SUD, A.R REVENUE BY: SHRI. SHAKIL AHMAD, D.R DATE OF HEARING: 17.01.2019 DATE OF PRONOUNCEMENT: 11.03.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER PASSED BY THE CIT(APPEALS)-2, JALANDHAR, DATE D 11.07.2017, WHICH IN TURN ARISES FROM THE ASSESSMENT ORDER PASS ED BY THE A.O UNDER SEC. 147/143(3) OF THE INCOME TAX ACT, 1961(F OR SHORT IT ACT) FOR A.Y. 2009-10, DATED 29.03.2016. THE ASSESSEE AS SAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GR OUNDS OF APPEAL:- 1 THAT THE CIT(A) HAS WRONGLY UPHELD THE ACTION OF THE AO IN RE-OPENING THE ASSESSMENT U/S 147/148 OF THE INCOME TAX ACT, 1961. 2. THAT THE CIT(A) HAS SHOWN A GROSS JUDICIAL INDIS CIPLINE BY NOT FOLLOWING THE ORDERS OF THE JURISDICTIONAL TRIBUNAL WHILE UPHOLDI NG THE ACTION OF AO OF RE OPENING OF THE ASSESSMENT U/S 147/148 OF THE INCOME TAX ACT, 1961. 3. THAT THE CIT(A) FAILED TO APPRECIATE THAT THE RE ASSESSMENT PROCEEDINGS WERE REQUIRED TO BE QUASHED SINCE THE NOTICE U/S 14 8 WAS ISSUED BY THE ITO WHO HAD NO JURISDICTION. P A G E | 2 ITA NO. 599/ASR/2017, A.Y. 2009-10 RAGHBIR SINGH VS. ITO 4. THAT THE CIT(A) WRONGLY SUSTAINED THE ADDITION O F RS. 199598/- OUT OF ADDITION OF RS. 400394/- MADE BY THE AO AND WHILE S USTAINING THE ADDITION HE NOT ONLY IGNORED THE FACTS BUT ALSO THE JUDGMENTS RELIED UPON BY THE ASSESSEE. 5. THAT THE ORDERS OF THE CIT(A) AND ITO ARE AGAINS T THE LAW AND FACTS OF THE CASE 2. BRIEFLY STATED, THE ASSESSEE HAD FILED HIS RETUR N OF INCOME FOR A.Y. 2009-10 ON 30.07.2010, DECLARING TOTAL INCOME AT RS. 1,44,950/- AND AGRICULTURE INCOME OF RS. 3,65,050/- (FOR RATE PURPOSE). THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSE D AS SUCH UNDER SEC. 143(1) OF THE IT ACT. SUBSEQUENTLY, ON THE BAS IS OF INFORMATION RECEIVED THAT THE ASSESSEE HAD DEPOSITED CASH OF RS . 33,26,620/- IN HIS SB A/C NO. 038000100740233 WITH PUNJAB NATIONAL BANK, G.T. ROAD, PHAGWARA, HIS CASE WAS REOPENED UNDER SEC. 14 7 OF THE IT ACT BY THE INCOME TAX OFFICER, WARD-4, PHAGWARA. ACCORD INGLY, A NOTICE UNDER SEC. 148 OF THE IT ACT WAS ISSUED AND SERVED UPON THE ASSESSEE BY THE INCOME TAX OFFICER, WARD-4, PHAGWARA. AS IS DISCERNIBLE FROM THE ASSESSMENT ORDER, THE CASE WAS THEREAFTER TRANS FERRED BY THE ITO WARD-4, PHAGWARA, VIDE HIS OFFICE LETTER NO. 3868, DATED 29.12.2015 TO THE INCOME TAX OFFICER, WARD-3, PHAGWARA, FOR THE R EASON THAT THE JURISDICTION OVER THE CASE OF THE ASSESSEE WAS VEST ED WITH THE LATTER I.E. ITO, WARD-3, PHAGWARA. 3. THE ASSESSEE IN RESPONSE TO THE NOTICE ISSUED UN DER SEC. 148 HAD FILED HIS RETURN OF INCOME, DECLARING AN INCOME OF RS. 1,44,912/- AND AGRICULTURE INCOME OF RS. 2,45,149/- (FOR RATE PURPOSE). IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O CALLED UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF TH E CASH DEPOSITS OF RS. 33,26,620/- APPEARING IN HIS SB A/C NO. 03800010074 0233 WITH PUNJAB NATIONAL BANK, G.T. ROAD, PHAGWARA. THE ASSE SSEE IN HIS REPLY TRIED TO IMPRESS UPON THE A.O THAT THE THE AFORESAI D DEPOSITS WERE OUT OF THE CASH GENERATED FROM THE SALES OF HIS POULTRY FARM BUSINESS AND P A G E | 3 ITA NO. 599/ASR/2017, A.Y. 2009-10 RAGHBIR SINGH VS. ITO THE AGRICULTURAL ACTIVITIES CARRIED OUT BY HIM. IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE WAS SHOWING HIS INCOME FROM T HE POULTRY FARM BUSINESS AS PER HIS CONVENIENCE. IT WAS NOTICED BY HIM THAT WHILE FOR THE ASSESSEE HAD IN HIS ORIGINAL RETURN OF INCOME S HOWN A NET PROFIT OF RS. 1,44,951/- ON GROSS RECEIPTS OF RS. 7,82,900/-, WHEREAS IN THE RETURN FILED IN COMPLIANCE TO NOTICE UNDER SEC. 148 HE HAD SHOWN A NET PROFIT OF RS. 1,44,912/- ON THE GROSS RECEIPTS OF RS. 24,15,200/-. IN THE BACKDROP OF HIS AFORESAID OBSERVATIONS THE A .O HELD A CONVICTION THAT THE DEPOSITS AMOUNTING TO RS. 33,26,620/- WERE INFACT THE UNDISCLOSED BUSINESS RECEIPTS OF THE ASSESSEE WHICH HE HAD FAILED TO ACCOUNT FOR IN HIS RETURN OF INCOME FOR THE YEAR UN DER CONSIDERATION. ON THE BASIS OF HIS AFORESAID DELIBERATIONS THE A.O WORKED OUT THE SUPPRESSED PROFIT @ 12% ON THE AFORESAID UNDISCLOSE D TURNOVER OF RS. 33,26,620/- AND MADE AN ADDITION OF RS. 4,00,394/- IN THE HANDS OF THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). THE ASSESSEE ASSAILED THE ASSESSMENT ON THE GROUND OF WANT OF JURISDICTION BY THE A.O WHO HAD REOPENED THE CASE O F THE ASSESSEE BY ISSUING NOTICE UNDER SEC. 148 OF THE IT ACT. APART THEREFROM, THE ASSESSEE ALSO CHALLENGED THE ADDITIONS MADE BY THE A.O ON MERITS. THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS ADVANC ED BY THE ASSESSEE WAS HOWEVER NOT PERSUADED TO SUBSCRIBE TO HIS CLAIM THAT THE A.O HAD ERRED IN ASSUMING JURISDICTION FOR REOPENING THE AS SESSMENT UNDER SEC. 147/148 OF THE IT ACT. IN SO FAR THE MERITS OF THE ADDITION WAS CONCERNED, THE CIT(A) BEING OF THE VIEW THAT THE PR OFIT RATE OF 12% ADOPTED BY THE A.O WAS ON THE HIGHER SIDE, THUS SUB STITUTED THE SAME BY A PROFIT RATE OF 6% AND RESULTANTLY RESTRICTED T HE ADDITION TO AN AMOUNT OF RS. 1,99,598/-. P A G E | 4 ITA NO. 599/ASR/2017, A.Y. 2009-10 RAGHBIR SINGH VS. ITO 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LEARNED AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE A T THE VERY OUTSET OF THE HEARING OF THE APPEAL SUBMITTED THAT THE ASSESS MENT UNDER SEC. 147 R.W.S. 143(3) HAD BEEN FRAMED DEHORS ISSUANCE OF ANY NOTICE UNDER SEC. 148 OF THE IT ACT BY THE A.O HAVING JURI SDICTION OVER THE CASE OF THE ASSESSEE. IT WAS SUBMITTED BY THE LD. A .R THAT WHILE FOR THE JURISDICTION IN THE CASE OF THE ASSESSEE WAS ADMITT EDLY VESTED WITH THE ITO, WARD-3, PHAGWARA, HOWEVER THE NOTICE UNDER SEC . 148 OF THE IT ACT WAS ISSUED BY THE ITO, WARD-4, PHAGWARA, WHO WA S NOT VESTED WITH ANY JURISDICTION OVER THE CASE OF THE ASSESSEE . IN SUM AND SUBSTANCE, IT WAS AVERRED BY THE LD. A.R THAT THE A SSESSMENT FRAMED UNDER SEC. 147 R.W.S. 143(3) SAN ANY NOTICE HAVING BEEN ISSUED BY THE JURISDICTIONAL A.O COULD NOT BE SUSTAINED AND WAS L IABLE TO BE STRUCK DOWN ON THE SAID COUNT ITSELF. IN ORDER TO FORTIFY HIS AFORESAID CONTENTION THE LD. A.R TOOK US THROUGH THE ASSESSME NT ORDER WHEREIN IT WAS CLEARLY STATED THAT AFTER THE NOTICE UNDER S EC. 148, DATED 27.03.2015 WAS ISSUED BY THE ITO, WARD-4, PHAGWARA, THE CASE WAS THEREAFTER TRANSFERRED TO THE ITO, WARD-3, PHAGWARA , AS THE JURISDICTION OVER THE CASE OF THE ASSESSEE WAS VEST ED WITH THE LATTER. IN THE BACKDROP OF HIS AFORESAID CONTENTION THE LD. A. R SUBMITTED THAT AS THE ASSESSMENT UNDER SEC. 147 R.W.S. 143(3) WAS BAS ED ON THE NOTICE ISSUED UNDER SEC. 148 BY A NON JURISDICTIONAL A.O I .E. ITO, WARD-4, PHAGWARA, THEREFORE, THE ASSESSMENT FRAMED WAS LIAB LE TO BE QUASHED FOR WANT OF JURISDICTION. 6. PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTAT IVE (FOR SHORT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIE S. 7. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIE S AND THE MATERIAL P A G E | 5 ITA NO. 599/ASR/2017, A.Y. 2009-10 RAGHBIR SINGH VS. ITO AVAILABLE ON RECORD. ADMITTEDLY, AS IS DISCERNIBLE FROM THE ASSESSMENT ORDER THE NOTICE UNDER SEC. 148, DATED 27.03.2015 W AS ISSUED BY THE ITO, WARD-4, PHAGWARA. AS THE JURISDICTION OVER THE CASE OF THE ASSESSEE REMAINED WITH THE ITO, WARD-3, PHAGWARA, T HEREFORE, THE CASE RECORDS OF THE ASSESSEE WERE TRANSFERRED BY TH E ITO, WARD-4, PHAGWARA, AFTER ISSUING THE NOTICE UNDER SEC. 148, VIDE HIS OFFICE LETTER NO. 3868, DATED 29.12.2015 TO THE ITO, WARD-3, PHAG WARA. WE FIND THAT THE ASSESSMENT FRAMED BY THE ITO, WARD-3, PHAG WARA UNDER SEC. 147 R.W.S. 143(3) OF THE IT ACT, DATED 29.03.2016 I S BASED ON A NOTICE ISSUED UNDER SEC. 148 AS ON 27.03.2015 BY THE ITO, WARD-4, PHAGWARA. APART THEREFROM, WE FIND THAT THE AFORESA ID NOTICE UNDER SEC. 148 HAD BEEN ISSUED BY THE ITO, WARD-4, PHAGWA RA AFTER OBTAINING THE APPROVAL FROM THE JOINT CIT, PHAGWARA RANGE, PHAGWARA, CONVEYED VIDE THE LATTERS OFFICE LETTER N O. 1257, DATED 27.03.2015. IN SUM AND SUBSTANCE, THE NOTICE UNDER SEC. 148, DATED 27.03.2015 WAS ISSUED BY THE ITO, WARD-4, PHAGWARA, WHO ADMITTEDLY HAD NO JURISDICTION OVER THE CASE OF THE ASSESSEE. INFACT, THE ITO, WARD-3, PHAGWARA WHO WAS VESTED WITH THE JURISDICTI ON OVER THE CASE OF THE ASSESSEE HAD AFTER RECEIVING THE CASE RECORD S CONTINUED WITH THE PROCEEDINGS AND ISSUED NOTICES UNDER SEC. 143(2)/14 2(1) TO THE ASSESSEE. WE ARE OF THE CONSIDERED VIEW THAT THE AS SESSMENT FRAMED BY THE ITO, WARD-3, PHAGWARA UNDER SEC. 147 R.W.S. 143(3), DATED 29.03.2016 IN THE ABSENCE OF A VALID NOTICE ISSUED UNDER SEC. 148 BY HIM CANNOT BE SUSTAINED. IN OUR CONSIDERED VIEW A N OTICE ISSUED UNDER SEC. 148 BY AN A.O HAVING NO JURISDICTION OVER THE CASE OF THE ASSESSEE WOULD HAVE NO SANCTION OF LAW AND AN ASSESSMENT FRA MED ON THE BASIS OF SUCH INVALID NOTICE CANNOT BE SUSTAINED AND IS L IABLE TO BE QUASHED. WE MAY HEREIN OBSERVE THAT THE TERM ASSESSING OFFI CER USED IN SEC. 147 OF THE IT ACT CANNOT BE ACCORDED ANY OTHER MEAN ING EXCEPT THAT ENVISAGED IN SEC. 2(7A) OF THE IT ACT, AS PER WHICH THE SAME HAS TO BE P A G E | 6 ITA NO. 599/ASR/2017, A.Y. 2009-10 RAGHBIR SINGH VS. ITO CONSTRUED AS THE ASSESSING OFFICER VESTED WITH THE RELEVANT JURISDICTION BY VIRTUE OF DIRECTIONS OR ORDERS ISSUED UNDER SUB- SECTION (1) OF SUB- SECTION (2) OF SEC. 120 OR ANY OTHER PROVISION OF T HE IT ACT. THERE IS NEITHER ANYTHING BORNE FROM THE RECORDS NOR ANY MAT ERIAL HAS BEEN PRODUCED BEFORE US DURING THE COURSE OF HEARING OF THE APPEAL, WHICH WOULD REVEAL THAT THE ITO, WARD-4, PHAGWARA WAS AT THE TIME OF ISSUING THE NOTICE UNDER SEC. 148 OF THE IT ACT WAS EXERCISING EITHER EXCLUSIVE OR CONCURRENT JURISDICTION OVER THE CASE OF THE ASSESSEE. ON THE BASIS OF OUR AFORESAID OBSERVATIONS, IT CAN SAF ELY BE CONCLUDED THAT THE NOTICE ISSUED UNDER SEC. 148, DATED 27.03.2015 BY THE ITO, WARD- 4, PHAGWARA WHO WAS NOT VESTED ANY JURISDICTION OVE R THE CASE OF THE ASSESSEE WOULD HAVE NO EXISTENCE IN THE EYES OF LAW . WE THUS IN THE BACKDROP OF THE AFORESAID FACTS ARE CONSTRAINED TO OBSERVE THAT THE ASSESSMENT FRAMED BY THE ITO, WARD-3, PHAGWARA UNDE R SEC. 147 R.W.S 143(3) OF THE IT ACT, DATED 29.03.2016 IN THE ABSENCE OF A VALID NOTICE ISSUED UNDER SEC. 148 CANNOT BE SUSTAINED AN D IS LIABLE TO BE QUASHED. 8. AS WE HAVE QUASHED THE ASSESSMENT FRAMED BY THE A.O UNDER SEC. 147 R.W.S. 143(3), DATED 29.03.2016 FOR WANT O F JURISDICTION, THEREFORE, WE REFRAIN FROM ADVERTING TO AND THEREIN ADJUDICATING THE MERITS OF THE ADDITION MADE IN THE HANDS OF THE ASS ESSEE. 9. THE APPEAL OF THE ASSESSEE IS ALLOWED IN TERMS O F OUR AFORESAID OBSERVATIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 11/03/2019 SD/- SD/- ( N.K. SAINI) (RAVISH SOOD) VICE PRESIDENT JUDICIAL ME MBER PLACE :CHANDIGARH; DATED 11.03.2019 PS. ROHIT P A G E | 7 ITA NO. 599/ASR/2017, A.Y. 2009-10 RAGHBIR SINGH VS. ITO / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. DR, ITAT, CAMP BENCH, JALANDHAR 6. / GUARD FILE. //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) /ITAT, CAMP. BENCH, JALANDHAR