SHRI RAMESH RAO NANARAO MARATHA, Neemuch V. THE ITO, Neemuch

ITA 638/IND/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2297 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 1997-1998
• Appeal Filed On: 13-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MOURYA
• Assessee Lawyers: S S DESHPANDE
• Keywords: Difference of opinion; Change of opinion
• Section: 147; 148; 263; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.638/IND/2014 ASSESSMENT YEAR: 1997-98 SHRI RAMESH RAO NANARAO MARATH B-TIT, COLONY, NEEMUCH M.P. / VS. ITO, AYAKAR BHAVAN, NEAR GOMABAI HOSPITAL NEEMUCH ( APPELLANT ) ( REVENUE ) P.A. NO. ALKPM7331D APPELLANT BY SHRI S.S. DESHPANDE , CA REVENUE BY SHRI R.P. MOURYA SR. DR DATE OF HEARING: 15.02.2018 DATE OF PRONOUNCEMENT: 09.03.2018 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), UJJAIN, (IN S HORT CIT(A)), DATED 03.07.2014 PERTAINING TO THE A.Y. 1997-98. TH E ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE TIME BARRED ASSESSMENT AS THE CAPTIONED NOTICE U/S 148 WAS NOT SERVED RAMESH RAO NANARAO MARATH 2 UPON THE ASSESSEE WITHIN THE TIME PRESCRIBED UNDER THE IT ACT., 1961. 2. THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTI ON OF THE LD. AO FOR REOPENING THE ASSESSMENT U/S 147 ON THE GROU ND THAT THE LD. CIT(A) IN PROCEEDINGS U/S. 263 IN THE CASE OF SHRI PARASMAL GOPAWAT HAS HELD THAT HE IS A NAME LENDER. 3. NO SUCH DIRECTION OR CONCLUSION WERE ARRIVED AT BY THE LD. CIT(A) IN ACTION U/S 263. HE MERELY SET ASIDE THE A SSESSMENT FOR INVESTIGATION IN THE MATTER ABOUT GENUINENESS O F ENTRIES, WHICH DOES NOT MEAN THAT HE WAS PROVED TO BE NAME L ENDER. 4. THE ASSESSMENT IN THE CASE OF SHRI PARASMAL GOPA WAT WAS MADE U/S 263 WITHOUT MAKING ANY ENQUIRY. THE ASSESS MENT WAS MADE ON PROTECTIVE BASIS. 5. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTIO N OF THE LD. AO FOR REOPENING OF THE REASSESSMENT IS BAD IN LAW SINCE THE ASSESSEE HAS FILED ALL THE MATERIAL REQUIRED FOR TH E PURPOSE OF ASSESSMENT. THE ASSESSMENT FRAMED SINCE BAD IN LAW BE SET ASIDE/ANNULLED. 6. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDIT ION OF RS.4,00,000/- KNOWING THE FACTS THAT LOAN WAS TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND ALSO PAID THROUGH ACCOUNT PAYEE CHEQUE. AND FURTHER ERRED IN CONFIRMING THE INTERES T PAID THEREON AT RS.60,000/-. 2. BRIEFLY STATED THE FACTS ARE THAT THE CASE OF TH E ASSESSEE WAS REOPENED AND THE ASSESSMENT U/S 143(3)/147 OF THE I NCOME TAX ACT, 1961(HEREINAFTER CALLED AS THE ACT) WAS FRAM ED VIDE ORDER DATED 31.03.2005. THE AO MADE ADDITION ON ACCOUNT O F CASH CREDIT INCLUDING INTEREST AT RS.5,75,000/- AND RS.23,000/- ON ACCOUNT OF LOW WITHDRAWAL FOR HOUSE HOLD EXPENSES. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS PA RTLY ALLOWED THE APPEAL. THEREBY, THE LD. CIT(A) CONFIRMED THE ADDIT ION OF RS.4,75,000/- MADE ON ACCOUNT OF CASH CREDIT AND RE STRICTED THE RAMESH RAO NANARAO MARATH 3 ADDITION ON ACCOUNT OF LOW WITHDRAWALS FOR HOUSEHOL D AT RS.23,000/-.AGGRIEVED BY THIS THE ASSESSEE IS IN PR ESENT APPEAL. 3. GROUND NO. 1 IS AGAINST THE VALIDITY AND LEGALIT Y OF THE REASSESSMENT MADE BY THE AO. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS AS MADE BEFORE THE LD. CIT(A). LD. DR OPPOSED THE SUBM ISSIONS AND SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE CONTENTION OF THE ASSESSEE ARE TWO FOLD, FIRST THE ASSESSEE HAS STATED THAT THE NOTICE U/S 148 WAS NOT SERVED U PON THE ASSESSEE WITHIN THE TIME PRESCRIBED UNDER THE ACT. THE ASSESSMENT YEAR INVOLVED IS 1997-98, AS PER THE ASSESSMENT OR DER NOTICE U/S 148 DATED 31.03.2004 WAS SENT BY SPEED POST ON 31.0 3.2004, WHICH WAS RETURNED UN-SERVED. THE NOTICE WAS FINAL LY SERVED ON 23.11.2004 BY WAY OF AFFIXTURE. THE ASSESSMENT WAS CONCLUDED ON 31.03.2005, THE REASON FOR REOPENING OF THE ASSESSM ENT WAS THAT THE ASSESSEE HAD CLAIMED LOAN OF RS.2,00,000/- FROM SHRI PARASMAL GOPAWAT ON 01.07.1996. IT IS OBSERVED BY AO THAT SH RI PARASMAL GOPAWAT WAS MERELY A NAME LENDER AND REAL BENEFICIA RY WAS THE ASSESSEE. IT IS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE ENTIRE MATERIAL WAS FURNISHED BEFORE THE ASSESSING OFFICER DURING THE ORIGINAL PROCEEDINGS. HENCE, THE RE-OPENING IS MERE LY ON THE BASIS OF CHANGE OF OPINION THAT IS NOT PERMISSIBLE UNDER LAW . PRELIMINARY, ISSUE IS WHETHER THE ASSESSMENT WAS REOPENED U/S 14 7 WITHIN THE RAMESH RAO NANARAO MARATH 4 TIME AS PRESCRIBED UNDER THE ACT. FOR THE SAKE OF C LARITY SECTION 148 IS REPRODUCED AS UNDER: BEFORE MAKING THE ASSESSMENT REASSESSMENT OR RE-CO MPUTATION NOTICE REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE A RETURN OF HIS INCOME OR T HE INCOME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSAB LE UNDER THIS ACT DURING THE PREVIOUS YEAR CORRESPONDING PRE SCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL SO FAR AS MAY BE APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN R EQUIRED TO BE FURNISHED UNDER SECTION 139 PROVIDED THAT IN CASE- A WHERE A RETURN HAS BEEN FURNISHED DURING THE PERI OD COMMENCING ON THE 1 ST DAY OF OCTOBER, 1991 AND ENDING ON THE 30 TH DAY OF SEPTEMBER, 2005 IN RESPONSE TO A NOTICE SER VED UNDER THIS SECTION, AND B) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER SUB- SECTION (2)N OF SECTION 143 AFTER THE EXPIRY OF TWELVE MONTHS SP ECIFIED IN THE PROVISO TO SUB-SECTION (2) OF SECTION 143, AS IT ST OOD IMMEDIATELY BEFORE THE AMENDMENT OF SAID SUB-SECTION BY THE FIN ANCE ACT, 2002 (20 OF 2002) BUT BEFORE THE EXPIRY OF THE TIME LIMIT FOR MAKING THE ASSESSMENT, REASSESSMENT OR RE-COMPUTATI ON AS SPECIFIED IN SUB-SECTION (2) OF SECTION 153, EVERY SUCH NOTICE REFERRED TO IN THIS CLAUSE SHALL BE DEEMED TO BE A VALID NOTICE: PROVIDED FURTHER THAT IN A CASE- A) WHERE A RETURN HAS BEEN FURNISHED DURING THE PERIOD COMMENCING ON 2005, IN RESPONSE TO A NOTICE SERVED UNDER THIS SECTION AND B) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER CLAUSE (II) OF SUB-SECTION (2) OF SECTION 143 AFTER THE EXPIRY OF TWELVE MONTHS SPECIFIED IN THE PROVISO TO CLAUSE(II) OF SU B-SECTION 143, BUT BEFORE THE EXPIRY OF THE TIME LIMIT FOR MA KING THE ASSESSMENT, REASSESSMENT OR RE-COMPUTATION AS SPECI FIED IN SUB-SECTION (2) OF SECTION 153, EVERY SUCH NOTICE R EFERRED TO IN THIS CLAUSE SHALL BE DEEMED TO BE A VALID NOTICE. EXPLANATION-FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THE FIRST PROVISO OR THE SECOND PROVISO SHALL APPLY TO ANY RETURN WHICH HAS BEEN FU RNISHED RAMESH RAO NANARAO MARATH 5 ON OR AFTER THE 1 ST DAY OF OCTOBER, 2005 IN RESPONSES TO A NOTICE SERVED UNDER THIS SECTION. {(2) THE ASSESSING OFFICER SHALL, BEFORE ISSUING AN Y NOTICE UNDER THIS SECTION, RECORD HIS REASONS FOR DOING SO . FURTHER SECTION 149 OF THE ACT PRESCRIBES TIME LIMI T OF ISSUANCE OF SUCH NOTICE WHICH IS REPRODUCED AS UNDER: (1) NO NOTICE UNDER SECTION 148 SHALL BE ISSUED FO R THE RELEVANT ASSESSMENT YEAR_ A) IF FOUR YEARS HAVE ELAPSED FROM THE END OF THE RELE VANT ASSESSMENT YEAR, UNLESS THE CASE FALLS UNDER CLAUSE (B) [FOR CLAUSE(C)} B) IF FOUR YEAR, BUT NOT MORE THAN SIX YEARS, HAVE ELA PSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSME NT AMOUNTS TO OR IS LIKELY TO AMOUNT TO ONE LAKH RUPEE S OR MORE FOR THAT YEAR] C) IF FOUR YEARS, BUT NOT MORE THAN SIXTEEN YEARS, HAV E ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEA R UNLESS THE INCOME IN RELATION TO ANY ASSET (INCLUDI NG FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE I NDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT. EXPLANATION- IN DETERMINING INCOME CHARGEABLE TO TA X WHICH HAS ESCAPED ASSESSMENT FOR THE PURPOSES OF THIS SUB -SECTION, THE PROVISIONS OF EXPLANATION 2 OF SECTION 147 SHAL L APPLY AS THEY APPLY FOR THE PURPOSES OF THAT SECTION. (2) THE PROVISIONS OF SUB-SECTION (1) AS TO THE IS SUE OF NOTICE SHALL BE SUBJECT TO THE PROVISIONS OF SECTION 151. (3) IF THE PERSON ON WHOM A NOTICE UNDER SECTION 14 8 IS TO BE SERVED IS A PERSON TREATED AS THE AGENT OF A NON-RE SIDENT UNDER SECTION 163 AND THE ASSESSMENT, REASSESSMENT OR RE- COMPUTATION TO BE MADE IN PURSUANCE OF THE NOTICE I S TO BE MADE ON HIM AS THE AGENT OF SUCH NON-RESIDENT, THE NOTICE SHALL NOT BE ISSUED AFTER THE EXPIRY OF A PERIOD OF (SIX) YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEARS. EXPLANATION_ FOR THE REMOVAL OF DOUBTS, IT IS HEREB Y CLARIFIED THAT THE PROVISIONS OF SUB-SECTION (1) AND (3) AS A MENDED BY RAMESH RAO NANARAO MARATH 6 THE FINANCE ACT, 2012, SHALL ALSO BE APPLICABLE FOR ANY ASSESSMENT YEAR BEGINNING ON OR BEFORE THE 1 ST DAY OF APRIL, 2012.} 5. THE LD. CIT(A) HAS DECIDED THIS ISSUE OF LIMITAT ION IN PARA 4.1 AS UNDER: THROUGH THESE GROUNDS THE APPELLANT HAS CHALLENGE D THE NOTICE ISSUED U/S 148 OF THE I.T. ACT. IN THE ASSES SMENT ORDER IT HAS BEEN MENTIONED BY THE AO THAT THE NOTICE U/S 14 8 HAS BEEN ISSUED ON 31.03.2004. THE NOTICE RETURNED UNSERVED WITH THE REMARK FROM THE POSTAL AUTHORITIES. THE AO HAS SENT THE NOTICE BY SPEED POST ON 31.03.2004. AS PER THE POSTAL ACT THE SAME IS CONSIDERED SERVED ON 31.03.2004. THEREFORE THE NOTI CE U/S 148 IS NOT TIME BARRED. THE PROCEEDINGS U/S 263 OF THE I.T. ACT IN THE CASE OF SHRI PARASMAL KUMAWAT IS WITHIN THE POWER O F CIT AND SAME IS NOT REQUIRES ANY ADJUDICATION HERE. THE AO CAN ISSUE THE NOTICE U/S 148 OF THE I.T. ACT IF SOMETHING ADV ERSE COMES TO HIS KNOWLEDGE WHEN THE INFORMATION IS GATHERED FROM OTHER ASSESSEE. THEREFORE, ACTION OF THE AO IS CONFIRMED. THE APPEAL OF THESE GROUND IS DISMISSED. 6. A BARE READING OF SECTION 149, IT IS EVIDENT THA T THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE LAST DATE OF ISSUING OF NOTICE U/S 148 IN RESPECT OF THE ASSESSMENT ORDER UNDER CO NSIDERATION WAS 31.03.2004. THE AO HAS NOTED IN THE ASSESSMENT ORDER THAT THE NOTICE WAS SENT BY WAY OF SPEED POST ON 31.03.2 004 WHICH REMAINED UNSERVED. THE LD. CIT(A) HAS HELD THAT THE NOTICE WAS SENT BY SPEED POST ON 31.03.2004 AND AS PER POSTAL ACT SAME IS CONSIDERED SERVED ON 31.03.2004. UNDER THE IDENTICA L FACTS, THE SIMILAR PLEA WAS TAKEN BY THE REVENUE BEFORE THE HO N'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. VARDHMAN ESTATE P. LTD . 287 ITR 368. THE HON'BLE HIGH COURT HELD AS UNDER: RAMESH RAO NANARAO MARATH 7 4. IN THE PRESENT CASE, THE RETURN WAS FILED ON OC TOBER 31, 2001, AND IN TERMS OF SECTION 143(2) THE NOTICE HAD TO BE SERVED ON THE ASSESSEE ON OR BEFORE OCTOBER 31, 2002. THE ARGUMENT IS THAT THERE WERE TWO MODES OF SERVICE, I.E., BY SPEE D POST AS WELL AS BY A PROCESS SERVER. THE DATE OF SERVICE, SO FAR AS SPEED POST IS CONCERNED, IS SAID TO BE NOVEMBER 1, 2002, BUT S O FAR AS THE PROCESS SERVER IS CONCERNED IT IS STATED TO HAVE BE EN AFFECTED ON OCTOBER 31,2002. THE TRIBUNAL HAS ACCEPTED THE CONT ENTION OF THE ASSESSEE THAT THE DATE OF SERVICE THROUGH SPEED POST WAS NOVEMBER 1,2002. EVEN BEFORE US, THE APPELLANT HAS NOT PRODUCED ANY MATERIAL TO SUGGEST THAT THE NOTICE SE NT BY SPEED POST WAS SERVED ON ANY EARLIER DATE. ON THE OTHER H AND, IT IS SOUGHT TO BE CONTENDED THAT SINCE THE NOTICE WAS DI SPATCHED BY SPEED POST ON OCTOBER 30, 2002, THAT SHOULD BE THE DEEMED DATE OF SERVICE. WE ARE UNABLE TO AGREE. SO FAR AS SERVICE BY SPEED POST IS CONCERNED, ONE POINT STANDS COVERED A GAINST THE REVENUE IN CIT V. LUNAR DIAMONDS LTD. (2006) 281 IT R 1(DELHI). 7. THE AO HAS NOT MENTIONED THE ACTUAL DATE WHEN TH E NOTICE ISSUED ON 31.3.2004 U/S 148 OF THE ACT, WAS RETURNE D BY THE POSTAL AUTHORITY. THEREFORE, RESPECTFULLY FOLLOWING THE JU DGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE CIT VS. VARDHMAN ESTAT E P. LTD. (SUPRA) WE HOLD THAT THE NOTICE U/S 148 OF THE ACT WAS NOT SERVED ON ASSESSEE WITHIN TIME PRESCRIBED BY LAW. HENCE THE A SSESSMENT SO FRAMED IS BARRED BY TIME AS PRESCRIBED UNDER THE LA W. WE THEREFORE, QUASH THE IMPUGNED ASSESSMENT ORDER BEING BARRED BY TIME. AS WE HAVE QUASHED THE ASSESSMENT ORDER BEING BARRED BY T IME, WE ARE NOT EXPRESSING OUR VIEW ON THE OTHER GROUNDS RAISED BY THE ASSESSEE. HENCE GROUND NO.1 OF THE ASSESSEES APPEA L IS ALLOWED. RAMESH RAO NANARAO MARATH 8 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA N O.638/IND/2014 IS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 09 .03.2 018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 09/ 03/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE