CHETNA SANJAY PATIL, PALGHAR V. ITO, WARD, 1 PALGHAR, PALGHAR

ITA 6103/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9746 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 27-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Assessee Lawyers: SUBODH RATNAPARAKHI
• Keywords: Reopening of assessment; Search and seizure; Procedural lapse
• Section: 142(1); 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER ITA NO. 6103 /MUM/2019 ASSESSMENT Y EAR: 2011 - 12 CHETNA SANJAY PATIL, C - 1, INDRAPRASTH BUILDING, BHIM NAG AR, TRAPUR ROAD, BOISAR (W), DIST. PALGHAR - 401501 PAN: AHGPP8098N VS. ITO - WARD 1, AAYAKAR BHAVAN, INCOME TAX OFFICE, BIDCO ROAD, TAL. & DIST. PALGHAR 401404 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUBODH RATNAP ARAKHI (A R) REVENUE BY : M S. SMITA VERMA (DR) DATE OF HEARING: 28 /06 /20 21 DATE OF PRONOUNCEMENT: 20 / 07 /202 1 O R D E R PER SAKTIJIT DEY , JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST ORDER DATED 05.07.2019 OF LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) 3 , THANE FOR THE ASSESSMENT YEAR 2011 - 12 . 2. IN THIS APPEAL, THE ASSESSEE HAS CALLED INTO QUESTION THE VALIDITY OF THE ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) R.W.S. 147 OF THE INCOME TAX ACT , 1961 . 3. WE HAVE HEARD THE LEARNED COUNSEL AP PEARING FOR THE ASSESSEE AND LEARNED DEPARTMENTAL REPRESENTATIVE. IT I S THE SPECIFIC CONTENTION OF LEARNED COUNSEL FOR THE ASSESSEE THAT THE IMPUGNED ASSESSMENT ORDER PASSED IS VOID - AB - INITIO AS BEF ORE COMPLETING THE ASSESSMENT, T HE A SSESSING OFFICER (AO) HAS NOT COMMUNICA TED THE REASONS FOR REOPENING THE ASSESSMENT, T HOUGH, THE ASSESSEE HAD SPECIFICALLY ASKED FOR IT. WHEREAS, LEARNED DEPARTMENTAL 2 ITA NO. 6103 / MUM/2019 ASSESSMENT YEAR: 20 11 - 1 2 REPRESENTATIVE SUBMITTED , THOUGH , THE AO MAY NOT HAVE FORMALLY COMMUNICATED THE REASONS R ECORDED FOR REOPENING OF ASSESSM ENT, HOWEVER, IN THE NOTICES ISSUED UNDER SECTION 142(1) AND 143 (2) OF THE ACT, THE AO HAD MENTIONED THE SPECIFIC CHARGE RELATING TO THE ESCAPED INCOME. THUS , THE ASSESSEE WAS MADE AWARE OF THE REASON S FOR REOPENING OF ASSES SMENT. SHE SUBMITTED , THE ASSESSEE HAS FULLY PARTICIPATED IN THE ASSESSMENT PROCEEDINGS AND WAS CONFRO NTED THE ADVERSE MATERIAL. T HEREFORE , NO PREJUDICE IS CAUSED TO THE ASSESSEE. FURTHER, SHE SUBMITTED , NO N - C OMMUNICATION OF REASONS RECORDED FOR REOPENING OF ASSESSMENT IS ONLY A PROCEDURAL IRR EGULARITY WHICH CAN BE RECTIFIED BY RESTORIN G THE MATTER TO THE AO FOR CURING THE DEFECT. IN SUPPORT OF THEIR RESPECTIVE SUBMISSIONS, LEARNED REPRESENTATIVE APPEARING FOR THE PARTIES CITED CERTAIN JUDICIAL PRECEDENTS. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS IN THE LIGHT OF THE DECISIONS RELIED UPON AND PERUSED THE MATERIAL ON RECORD. AT THIS STAGE, IT IS NECESSARY TO BRIEFLY NARRATE THE RELEVANT FACT S. T HE ASSESSEE IS AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER DISPUTE , ASSESSEE FILED HER RETURN OF INCOME ON 06.09.2011 DECLARING TOTAL INCOME OF RS. 7,83,290/ - . SUBSEQUENTLY, A SEARCH AND SEIZURE OPERATION U NDER SECTION 132 OF THE AC T WAS CARRIED OUT IN CASE OF M/ S AMEYA BUILDER AND PROPERTY DEVELOPERS ON 31.07.2014. IN C OURSE OF SUCH SEARCH AND SEIZURE OPERATION, IT WAS FOUND THAT THE ASSESSEE HAS MADE ACTUAL PAYMENT OF RS. 25 LACS TOWARDS ON MONEY FOR PURCHASING A FLAT. BASED ON SUCH INFORMATION, THE AO REOPEN ED THE ASSESSMENT UNDER SECTION 147 OF THE ACT AND ULTIMATELY PASSED ASSESSMENT ORDER BY ADDING BACK THE AMOUNT OF RS. 25 LACS. LEARNED COMMISSIONER (APPEALS) ALSO SUSTAINED THE ADDITION SO MADE. ON PERUSAL OF FACTS ON RECORD, WE FIND THAT AFTER RECEIVING THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT, THE ASSESSEE ON 28.12.2015 HAS FILED A LETTER BEFORE THE AO REQUESTING FOR COMMUNICATION OF REASONS RECORDED FOR REOPENING OF ASSESSMENT. THE AO VIDE LETTER DATED 01.01.2016 COMMUNICATED THAT THE REASONS RECORDED WOULD BE SUPPL IED ONCE THE ASSESSEE COMPLIES TO THE NOTI CE ISSUED UNDER SECTION 148 OF THE ACT VIDE LETTER DATED 09.01.2016. THE ASSESSEE COMPLIED WITH THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT AND AGAIN 3 ITA NO. 6103 / MUM/2019 ASSESSMENT YEAR: 20 11 - 1 2 REQUESTED FOR COMMUNICATION OF REASONS RECORDED FOR REOPENING OF ASSESSMENT. HOWEVER, THE AO DI D NOT CO MMUNICATE THE REASONS FOR REOPENING OF ASSESSMENT BEFORE COMPLETING THE ASSESSMENT. THE AFORESAID FACTUAL POSITION HAS BEEN ADMITTED BY THE AO IN THE REMAND REPORT FURNISHED IN COURSE OF APPE LLATE PROCEEDINGS BEFORE LEARNED COMMISSIONER (APPEALS). HOWEVER, THE AO HAS STATED THAT NO N - COMMUNICATION OF REASONS F OR REOPENING OF ASSESSMENT IS A MERE PROCEDURAL IRREGULARITY AND NOT A STATUTORY REQUIREM ENT. LEARNED COMMISSIONER (APPEALS) HAS ALSO ACCEPTED THE AFORESAID VIEW EXPRESSED BY THE AO . T HESE ARE THE ADMIT TED FACTUAL POSITION. 5. THUS, THE ISSUE ARISING FOR CONSIDERATION IS , W HAT IS THE IMPACT/EFFECT OF NON - COMMUNICATION OF REASONS RECORDED FOR REOPENING THE ASSESSMENT. THE HON BLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS VIDESH SNACHAR NIGAM LTD. [2021 2] 340 ITR 66 (BOM) HAS HELD THAT NON COMMUNICATION OF REASONS RECORDED FOR RE - OPENING OF ASSES SMENT IS A JURISDICTIONAL ERROR, HENCE , MAKE THE ASSESSMENT BAD IN LAW . THEREFORE, NO SECOND CHANCE CAN BE GIVEN TO THE AO FOR RECTIFYING SUCH DEFECT. THE SAME V IEW HAS ALSO BEEN EXPRESSED IN CAS E OF CIT VS. TREND ELECTRONICS (2015) 61 TAXMANN.C OM 308 (BOM ). THOUGH, LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELIED UPON SOME NON JURISDICTIONAL HIGH COURT DECISIONS , H OWEVER, SINCE , THE DECISION S OF THE HONBLE JURISDI CTIONAL HIGH COURT ARE BINDING ON US , RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THESE DECISIONS, WE HOLD THAT T HE IMPUGNED ASSESSMENT ORDER IS BAD IN LAW AS THE AO BEFORE COMPLETING THE ASSESSMENT HAS NOT COMMUNICATED THE REASONS FOR REOPENING OF ASSE SSMENT TO THE ASSESSEE. THEREFORE, THE ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) R.W.S. 147 IS QUASHED. GROUNDS ARE ALLOWED. 6. IN THE RESULT, APPEAL IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY , 2021 . SD/ - SD / - ( RAJESH KUMAR ) ACCOUNTANT MEMBER ( SAKTIJIT DEY ) JUDICIAL MEMBER MUMBAI ; DATED: 20 / 07 /2021 ALINDRA, PS 4 ITA NO. 6103 / MUM/2019 ASSESSMENT YEAR: 20 11 - 1 2 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI