Vishal Madnani, Kanpur V. ITO, Kanpur

ITA 669/LKW/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78603 (ITAT-LUCKNOW)
• Duration Of Justice: 3 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-07-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 10-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P SRIVASTA VA
• Keywords: Unexplained cash credit; Gift
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 669/LKW/2010 ASSESSMENT YEAR: 2004 - 05 VISHAL MADNANI 117/H - 1/293, PANDU NAGAR KANPUR V . INCOME TAX OFFICER 5(1) KANPUR PAN: AGYPM6330K (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI. Y. P. SRIVASTAVA, D.R. DATE OF HEARING: 09 0 7 2014 DATE OF PRONOUNCEMENT: 15 0 7 2014 O R D E R PER SUNIL K UMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS: - 1 . BECAUSE THE COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.3, 17,935/ - U/S. 68 OF THE ACT, 1961, WHICH ADDITION IS CONTRARY TO THE PROVISIONS OF LAW. 2 . BECAUSE THE PROVISIONS OF SECTION 68 ARE NOT APPLICABLE, THE ADDITION OF RS.3,17,935/ - MADE ON ACCOUNT OF UNEXPLAINED CREDIT IN THE BANK ACCOUNT BE DELETED. 3 . BECAUSE WIT HOUT PREJUDICE TO THE ABOVE, THE IDENTITY, GENUINENESS AND THE CREDITWORTHINESS OF THE DONORS HAVING BEING ESTABLISHED/PROVED THE CIT(A) HAS WRONGLY TREATED THE GIFT OF RS.3,17,935/ - RECEIVED, AS UNEXPLAINED. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : 4 . BECAUSE COMPLETE EVIDENCES HAVING BEING FURNISH ED/FILED IN RESPECT OF THE GIFTS RECEIVED, THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN DISBELIEVING THE SAME AND THEREBY UPHOLDING THE ADDITION MADE. 5 . BECAUSE THE EXPLANATION AND THE EVIDENCES FILED AND FURNISHED BY THE APPELLANT BOTH BEFORE CIT(A) AND AO H AVING NOT BEEN FOUND TO BE FALSE OR UNTRUE, THE C1T(A) WAS NOT JUSTIFIED IN DISBELIEVING THE SAME AND MAKING THE ADDITION. 2 . DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. COUNSEL FOR THE ASSESSEE HAS MOVED AN APPLICATION FOR ADMISSION OF ADDITIONAL GR OUND. THE ADDITIONAL GROUND SOUGHT TO BE ADMITTED IS REPRODUCED HEREUNDER: - 01. BECAUSE THE ASSESSMENT FRAMED UNDER SECTION 143(3) IS CONTRARY TO THE PROVISIONS OF SECTION 143(2)(III), IS ILLEGAL, BAD IN LAW, WITHOUT JURISDICTION AND BE QUASHED. 3 . DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ADDITIONAL GROUND IS PURELY A LEGAL GROUND AND IT DID NOT REQUIRE ANY INVESTIGATION OR ENQUIRY AND GOES TO THE ROOT OF THE CASE, THEREFORE, THE SAME MAY BE ADMITTE D. FIND ING FORCE IN THE CONTENTIONS OF THE LD. COUNSEL FOR THE ASSESSEE, WE ADMIT THE ADDITIONAL GROUND , AS IT GOES TO THE ROOT OF THE CASE AND WE PREFER TO ADJUDICATE IT AT THE THRESHOLD. A CCORDINGLY, THE ARGUMENT ON THE ADDITIONAL GROUND WAS HEARD. 4 . THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE ASSESSMENT ORDER WITH THE SUBMISSION THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 1.11.2004 DECLARING INCOME AT RS.90,000/ - AND IT WAS PROCESSED UNDER SECTION 143(1) OF THE ACT VIDE ORDE R DATED 28.3.2006. THEREAFTER ASSESSEES CASE WAS TAKEN UP FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 20.9.2005. THE LD. COUNSEL FOR THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : ASSESSEE HAS INVITED OUR ATTENTION TO THE INSTRUCTION NO.10/2004 DATED 20.9.2004 ISSUED BY THE BOARD WITH REGARD TO SCRUTINY OF ASSESSMENT AND IN CASE OF SCRUTINY ASSESSMENT, THE PROCESS OF SELECTION FOR SCRUTINY FOR RETURNS FILED UPTO 31.3.2004 MUST BE COMPLETED BY 15.10.2004 AND FOR THE RETURNS FILED DURING THE CURRENT FINANCIAL YEAR I.E. 200 4 - 05 , SELECTION OF CASE FOR SCRUTINY WILL HAVE TO BE COMPLETED WITHIN THREE MONTHS FROM THE DATE OF FILING OF THE RETURN. IN THE INSTANT CASE, UNDISPUTEDLY RETURN WAS FILED ON 1 . 11 . 2004 AND AS PER INSTRUCTION, IT CAN ONLY BE SELECTED FOR SCRUTINY WITHIN A PERIOD OF THREE MONTHS FROM FILING OF THE RETURN I.E. UPTO 31.1.2005, WHEREAS IT WAS SELECTED FOR SCRUTINY AND NOTICE WAS ISSUED ON 20.9.2005 AFTER THE PERIOD PRESCRIBED UNDER THE INSTRUCTION. THEREFORE, ASSESSMENT FRAMED IS NOT IN ACCORDANCE WITH THE IN STRUCTIONS ISSUED BY THE BOARD VIDE INSTRUCTION NO.10 / 2004 DATED 20.9.2004. IN SUPPORT OF HIS CONTENTION THAT SELECTION FOR SCRUTINY WAS NOT WITHIN THE PRESCRIBED PERIOD AND THE ASSESSMENT FRAMED CONSEQUENT THERETO IS NOT VALID, THE LD. COUNSEL FOR THE AS SESSEE HAS PLACED RELIANCE UPON THE JUDGMENT S OF THE HON'BLE CHHATTISGARH HIGH COURT IN THE CASE OF DCIT VS. SUNITA FINLEASE LTD., [2011] 330 ITR 491 AND HON'BLE CALCUTTA HIGH COURT IN THE CASE OF AMAL KUMAR GHOSH VS. ACIT AND OTHERS [2014] 361 ITR 458 (CA L). 5 . THE LD. D.R., ON THE OTHER HAND, HAS CONTENDED THAT NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AS PER TIME AVAILABLE UNDER THE ACT, THOUGH IT MAY NOT BE WITHIN THE PERIOD PRESCRIBED UNDER INSTRUCTION NO.10/2004. THEREFORE, FOR THIS REASON, THE ASSESSMENT CANNOT BE HELD TO BE BAD. 6 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW AND THE JUDGMENTS REFERRED TO BY THE ASSESSEE, WE FIND THAT THIS ISSUE WAS EXAMINED BY T HE HON'BLE CHHATTISGARH HIGH COURT AND HON'BLE CALCUTTA HIGH COURT. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : 7 . IN THE CASE OF DCIT VS. SUNITA FINLEASE LTD. (SUPRA), THE HON'BLE CHHATTISGARH HIGH COURT HAS CATEGORICALLY HELD THAT INSTRUCTION NO.9/2004 ARE BINDING ON THE INCOME - TAX AUTHORITIES AND IF THE ASSESSMENT IS FRAMED CONSEQUENT TO THE SELECTION OF SCRUTINY OF A CASE AFTER THE PRESCRIBED PERIOD, THE SAID ASSESSMENT IS BAD IN LAW. THE RELEVANT OBSERVATIONS OF THE HON'BLE CHHATTISGARH HIGH COURT ARE EXTRACTED HEREUNDER: - SECTION 119 OF THE I NCOME - TAX ACT, 1961, EMPOWERS THE CENTRAL BOARD OF DIRECT TAXES TO ISSUE ORDERS, INSTRUCTIONS OR DIRECTIONS FOR THE PROPER ADMINISTRATION OF THE ACT OR FOR SUCH OTHER PURPOSES SPECIFIED IN SUB - SECTION (2) OF THE SECTION. SUCH AN ORDER, INSTRUCTION OR DIREC TION CANNOT OVERRIDE THE PROVISIONS OF THE ACT. DIRECTION BY ISSUING INSTRUCTIONS TO THE OFFICERS FOR THE PROCESS OF SELECTION OF CASES FOR SCRUTINY FOR RETURNS FOR A PARTICULAR FINANCIAL YEAR AND ALLOWING TIME OF THREE MONTHS FOR COMPLETION OF THE SAME CA NNOT BE CONSIDERED TO OVERRIDE OR DETRACT FROM THE PROVISIONS OF THE ACT. IT ONLY DIRECTS THAT THE ABOVE EXERCISE SHOULD BE COMPLETED WITHIN THREE MONTHS OF THE DATE OF FILING OF RETURN BY THE ASSESSEE, WHICH AMOUNTS TO AN ASSURANCE TO THE ASSESSEE THAT TH E RETURN FILED BY HIM CAN BE SCRUTINISED BY THE ASSESSING OFFICER WITHIN THREE MONTHS OF FILING OF THE RETURN. HELD, DISMISSING THE APPEAL, THAT INSTRUCTION NO. 9 OF 2004 DATED SEPTEMBER 20, 2004, WAS APPLICABLE IN THE PRESENT CASE, IN VIEW OF THE SPECIFI C STIPULATION IN THE CIRCULAR THAT 'FOR RETURNS FILED DURING THE CURRENT FINANCIAL YEAR 2004 - 05, THE SELECTION OF CASES FOR SCRUTINY WILL HAVE TO BE COMPLETED WITHIN THREE MONTHS OF THE DATE OF FILING THE RETURNS' AND CONSIDERING THAT THE RETURN HAD ADMITT EDLY, BEEN FILED BY THE ASSESSEE ON OCTOBER 29, 2004, I.E., DURING THE CURRENT FINANCIAL YEAR 2004 - 05. THE SELECTION FOR SCRUTINY OF THE ASSESSEE'S CASE AND COMPLETION OF THE ASSESSMENT WAS NOT VALID. 8 . IN THE CASE OF AMAL KUMAR GHOSH VS. ACIT AND OTHERS ( SUPRA), THE ISSUE WAS EXAMINED BY THE HON'BLE CALCUTTA HIGH COURT AND THEIR LORDSHIPS HAVE ALSO MADE SIMILAR OBSERVATIONS. RELEVANT OBSERVATIONS OF THEIR LORDSHIPS ARE EXTRACTED HEREUNDER: - PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : HELD, ALLOWING THE APPEAL, (I) THAT EVEN ASSUMING THAT THE INTE NTION OF THE CENTRAL BOARD OF DIRECT TAXES WAS TO RESTRICT THE TIME FOR SELECTION OF THE CASES FOR SCRUTINY TO A PERIOD OF THREE MONTHS, IT COULD NOT BE SAID THAT THE SELECTION IN THE CASE OF THE ASSESSEE WAS MADE WITHIN THE PERIOD. THE RETURN WAS FILED ON OCTOBER 29, 2004, AND THE CASE WAS SELECTED FOR SCRUTINY ON JULY 6, 2005. BY ANY PROCESS OF REASONING, IT WAS NOT OPEN TO THE TRIBUNAL TO COME TO A FINDING THAT THE DEPARTMENT ACTED WITHIN THE FOUR CORNERS OF CIRCULARS NOS. 9 AND 10 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES. THE CIRCULARS WERE EVIDENTLY VIOLATED. THE CIRCULARS WERE BINDING UPON THE DEPARTMENT UNDER SECTION 119. (II) THAT EVEN ASSUMING THAT THE CIRCULARS WERE NOT MEANT FOR THE PURPOSE OF PERMITTING UNSCRUPULOUS ASSESSEES FROM EVADING TA X, IT COULD NOT BE SAID THAT THE DEPARTMENT, WHICH IS THE STATE, CAN BE PERMITTED TO SELECTIVELY APPLY THE STANDARDS SET BY ITSELF FOR ITS OWN CONDUCT. WHEN THE DEPARTMENT HAS SET DOWN A STANDARD FOR ITSELF, THE DEPARTMENT IS BOUND BY THAT STANDARD AND CAN NOT ACT WITH DISCRIMINATION. IF IT DOES THAT, THE ACT OF THE DEPARTMENT IS BOUND TO BE STRUCK DOWN UNDER ARTICLE 14 OF THE CONSTITUTION. IN THE FACTS OF THE CASE, IT WAS NOT NECESSARY TO DECIDE WHETHER THE INTENTION OF THE CENTRAL BOARD OF DIRECT TAXES WAS TO RESTRICT THE PERIOD OF ISSUANCE OF NOTICE FROM THE DATE OF FILING THE RETURN LAID DOWN UNDER SECTION 143(2). THUS, THE NOTICE UNDER SECTION 143(2) WAS NOT IN LEGAL EXERCISE OF JURISDICTION. 9 . T HE IMPUGNED ISSUE HAS ALREADY BEEN EXAMINED BY THE HON'BLE HIGH COURTS BY GIVING A CATEGORICAL FINDING THAT THE INSTRUCTIONS ISSUED BY THE BOARD ARE BINDING ON THE DEPARTMENT AND ITS CIRCULARS ARE TO BE STRICTLY COMPLIED WITH AND IF IT IS NOT FOLLOWED IN LETTER AND SPIRIT, THE ASSESSMENT FRAMED CONSEQUENT THERETO IS NOT VALID. IN THE INSTANT CASE, SINCE THE CASE WAS SELECTED FOR SCRUTINY AFTER THE PERIOD PRESCRIBED AS PER INSTRUCTION, THE SELECTION IS NOT PROPER. THEREFORE, THE ASSESSMENT FRAMED CONSEQUENT THERETO IS NOT VALID. WE A CCORDINGLY ANNUL THE ASSESSMEN T AND SET ASIDE THE ORDER OF THE LD. CIT(A). PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : 10 . SINCE WE HAVE ANNULLED THE ASSESSMENT, WE FIND NO JUSTIFICATION TO DEAL THE APPEAL ON MERIT. ACCORDINGLY, APPEAL OF THE ASSESSEE STANDS ALLOWED. 11 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOU NCED IN THE OPEN COURT ON 15.7.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 TH JU LY , 2014 JJ: 0907 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )