Smt. Karamjeet Kaur, Ludhiana V. ITO, W-III(4), Ludhiana

ITA 697/CHANDI/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9758 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 15-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: ADITYA KUMAR CAS
• Keywords: Unexplained investment; Validity of assessment; Assessment record; Reassessment proceedings
• Section: 147; 131; 69; 148

Judgement Text

, ' ' , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH SMD, CHANDIGARH ! , '# $ % & ' ( , )*# BEFORE: SMT. DIVA SINGH, JM & SMT. ANNAPURNA GUPTA, AM ./ ITA NO : 697/CHD/2018 / ASSESSMENT YEAR : 2009-10 SMT. KARAMJEET KAUR, LUDHIANA ITO W-III(4) ,LUDHIANA ./ PAN NO: -- / APPELLANT / RESPONDENT /ASSESSEE BY : SHRI ASHWANI KUMAR & SHRI ADITYA KUMAR, CAS ! / REVENUE BY : SHRI MANJIT SINGH ,SR. DR '# $ /DATE OF HEARING : 04.09.2018 %&'(# /DATE OF PRONOUNCEMENT : 25.09.2018 )+ / ORDER PER ANNAPURNA GUPTA, AM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (AP PEALS)- I, LUDHIANA [IN SHORT REFERRED TO AS CIT(A)], U/S 250(6) OF THE INCOME TAX ACT,1961 (IN SHORT REFERRED TO AS A CT)DATED 15-03-2018, RELATING TO A.Y. 2009-10. 2. BRIEF FACTS RELATING TO THE CASE ARE THAT THE AS SESSING OFFICER HAD INFORMATION IN HIS POSSESSION THAT CASH EXCEEDING RS.10 LAKHS STOOD DEPOSITED IN THE SAVING S BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH PUNJAB NATIONAL ITA NO.697/CHD/2018 A.Y.2009-10 2 BANK DURING THE PERIOD COVERED BY THE ASSESSMENT YE AR UNDER CONSIDERATION. ACTING UPON THIS INFORMATION, THE AO, EXERCISING THE POWER VESTED IN HIM TO CALL FOR ANY INFORMATION UNDER THE PROVISIONS OF SECTION 133 (6) OF THE INCOME TAX ACT, 1961 [HENCEFORTH, 'THE ACT'], REQUI SITIONED THE ACCOUNT STATEMENT FROM THE AFORESAID BANK TO FI ND THAT THERE HAD BEEN A DEPOSIT OF CASH ON VARIOUS DATES, AGGREGATING TO RS.36,71,000/-. SINCE THE ASSESSEE W AS STATED TO HAVE NOT RESPONDED TO NOTICES UNDER SECTION 148/ 142 (1) OF THE ACT, THE AO WAS CONSTRAINED TO PASS AN EX PA RTE ORDER UNDER THE PROVISIONS OF SECTION 144/148 OF THE ACT, ASSESSING THE AFORESAID DEPOSIT OF CASH OF RS.36,71 ,000/- AS UNEXPLAINED INVESTMENTS UNDER THE PROVISIONS OF SEC TION 69 OF THE ACT. THE SAID ACCOUNT STATEMENT ALSO HAD CRE DIT OF INTEREST AMOUNTING TO RS.14,205/-, WHICH AMOUNT WAS ALSO TREATED AS INCOME OF THE ASSESSEE. THE ASSESSEE WAS THUS FASTENED WITH THE LIABILITY OF TAX AND INTEREST AMO UNTING TO RS. 24,73, 110/-. 3. BEFORE THE LD. CIT(A), THE ASSESSEE CHALLENGED THE JURISDICTION ASSUMED U/S 148 OF THE ACT FOR REASSES SING THE INCOME OF THE ASSESSEE AND ALSO THE ADDITION MADE TO THE INCOME OF THE ASSESSEE ON MERITS. THE LD. CIT(A) DI SMISSED THE LEGAL GROUND RAISED BY THE ASSESSEE AND PARTLY DELETED THE ADDITIONS MADE ,RESTRICTING IT TO RS.21,71,000 AS AGAINST RS.36,71,000 MADE BY THE ASSESSING OFFICER. AGGRIEV ED BY ITA NO.697/CHD/2018 A.Y.2009-10 3 THE SAME, THE ASSESSEE HAS COME UP AN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961BYTHELD.COMMISSIONER OF INCOME TAX (APPEALS)-L, LUDHIANA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED TO UPHOLD THE ACTION OF THE LD. ASSESSING OFFICER IN INITIATING PROCEEDINGS U/S 148 OF THE INCOME-TAX, 1961. 2. THAT THE LD. CIT(A) WAS NOT JUSTIFIED TO HOLD THAT THE ASSESSMENT FRAMED BY THE LD.ASSESSING OFFICER WAS NOT NULL AND VOID DESPITE THE FACT THAT THERE WERE VARIOUS INFIRMITIES IN THE INITIATION AND SERVICE OF NOTICE. 3. THAT HE WAS FURTHER NOT JUSTIFIED TO ARBITRARIL Y UPHOLD AN ADDITION OF RS.21,71,000/- ON ACCOUNT OF DEPOSITS IN THE BANK ACCOUNT BY RESORT TO PROVISIONS OF SEC. 69 OF THE INCOME TAX ACT, 1961. 4. TAKING UP GROUND NO. 1&2 FIRST, CHALLENGING THE VALIDITY OF ASSESSMENT PROCEEDINGS U/S 148 OF THE ACT, LD. C OUNSEL FOR THE ASSESSEE STATED THAT THE NOTICE U/S 148 WAS NOT SERVED ON THE ASSESSEE, THEREFORE MAKING THE PROCEE DINGS THEREUNDER INVALID ,SINCE SERVICE OF THE NOTICE WAS A MANDATORY REQUIREMENT OF LAW FOR INITIATING PROCEED INGS U/S 147 OF THE ACT. LD. COUNSEL FOR THE ASSESSEE STATED THAT THIS ARGUMENT HAS BEEN RAISED BEFORE THE CIT(A) ALSO WHO HAD NOT GIVEN ANY FINDINGS ON THE SAME .OUR ATTENTION WAS D RAWN TO THE ORDER OF THE CIT(A) AT PARA 6 WHEREIN IT WAS POINTED OUT THAT THE CIT(A) HAD SUMMARISED THE CONTENTIONS OF THE ASSESSEE ON THIS ISSUE WHICH INCLUDED THE ABOVE CO NTENTION OF NON-SERVICE OF NOTICE U/S 148 OF THE ACT AS UNDE R: ITA NO.697/CHD/2018 A.Y.2009-10 4 6.IT HAS FURTHER BEEN ALLEGED THAT THE IMPUGNED NOTICE UNDER SECTION 148 DATED 28/05/2012 WAS NOT SERVED ON THE APPELLANT, MAKING THE ASSESSMENT PURSUANT NOTICE INVALID IN THE EYES OF LAW. ATTENTION IN THIS REGARD WAS INVITED, 'INTERAL IA, TO THE JUDGEMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. CHETAN GUPTA, REPORTED IN 126 DTR 0401. THE CONCLUSION OF THE SAID JUDGEMENT WAS EXTRACTED IN THE WRITTEN SUBMISSIONS OF THE APPELLANT TO CHALLENGE THE VALIDITY OF THE IMPUGNED ASSESSMENT ORDER. THE SAME IS EXTRACTED HEREINBELOW: ' 46. TO SUMMARIZE THE CONCLUSION: (I) UNDER SECTION 148 OF THE ACT, THE ISSUE OF NOTICE TO THE ASSESSEE AND SERVICE OF SUCH NOTICE UPON THE ASSESSEE ARE JURISDICTIONAL REQUIREMENTS THAT MUST BE MANDATORILY COMPLIED WITH. THEY ARE NOT MERE PROCEDURAL REQUIREMENTS. (II) FOR THE AO TO EXERCISE JURISDICTION TO REOPEN AN ASSESSMENT, NOTICE UNDER SECTION 148 (1) HAS TO BE MANDATORILY ISSUED TO THE ASSESSEE. FURTHER THE AO CANNOT COMPLETE THE REASSESSMENT WITHOUT SERVICE OF THE NOTICE SO ISSUED UPON THE ASSESSEE IN ACCORDANCE WITH SECTION 282(1) OF THE ACT READ WITH ORDER V RULE 12 CPC AND ORDER III RULE 6 CPC. (III) ALTHOUGH THERE IS CHANGE IN THE SCHEME OF SECTIONS 147, 148 AND 149 OF THE ACT FROM THE CORRESPONDING SECTION 34 OF THE 1922 ACT, THE LEGAL REQUIREMENT OF SERVICE OF NOTICE UPON THE ASSESSEE IN TERMS OF SECTION 148 READ WITH SECTION 282(1) AND SECTION 153(2) OF THE ACT IS A JURISDICTIONAL PRE-CONDITION TO FINALIZING THE REASSESSMENT. (IV) THE ONUS IS ON THE REVENUE TO SHOW THAT PROPER SERVICE OF NOTICE HAS BEEN EFFECTED UNDER SECTION 148 OF THE ACT ON THE ASSESSEE OR AN AGENT DULY EMPOWERED BY HIM TO ACCEPT NOTICES ON HIS BEHALF. IN THE PRESENT CASE, THE REVENUE HAS FAILED TO DISCHARGE THAT ONUS.' (V) THE MERE FACT THAT AN ASSESSEE OR SOME OTHER PERSON ON HIS BEHALF NOT DULY AUTHORIZED PARTICIPATED IN THE REASSESSMENT PROCEEDINGS AFTER COMING TO KNOW OF IT WILL NOT CONSTITUTE A WAIVER OF THE REQUIREMENT OF EFFECTING PROPER SERVICE OF NOTICE ON THE ASSESSEE UNDER SECTION 148 OF THE ACT.' ITA NO.697/CHD/2018 A.Y.2009-10 5 (VI) REASSESSMENT PROCEEDINGS FINALIZED BY AN AO WITHOUT EFFECTING PROPER SERVICE OF NOTICE ON THE ASSESSEE UNDER SECTION 148 (1) OF THE ACT ARE INVALID AND LIABLE TO BE QUASHED.' (VII) SECTION 292 BB IS PROSPECTIVE. IN ANY EVENT THE ASSESSEE IN THE PRESENT CASE, HAVING RAISED AN OBJECTION REGARDING THE FAILURE BY THE REVENUE TO EFFECT SERVICE OF NOTICE UPON HIM, THE MAIN PART OF SECTION 292 BB IS NOT ATTRACTED.' '47. ON THE FACTS OF THE PRESENT CASE, THE COURT FINDS THAT THE ITAT WAS RIGHT IN ITS CONCLUSION THA T SINCE NO PROPER SERVICE OF NOTICE HAD BEEN EFFECTED UNDER SECTION 148(1) OF THE ACT ON THE ASSESSEE, THE REASSESSMENT PROCEEDINGS WERE LIABLE TO BE QUASHED. CONSEQUENTLY, THE QUESTION FRAMED IS ANSWERED IN THE AFFIRMATIVE, I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE.' 5. THEREAFTER, OUR ATTENTION WAS DRAWN TO THE FINDI NGS OF THE LD.CIT(A) AT PARA 8 OF THE ORDER AS UNDER: 8. THE SUBMISSIONS OF THE APPELLANT HAVE BEEN CONSIDERED. FROM THE VERSION OF THE ' AO BY WAY OF THE REMAND REPORT, IT IS GATHERED THAT THE THEN JURISDICTIONAL AO, ON HAVING RECEIVED INFORMATION B Y WAY OF ANNUAL INFORMATION RETURN OF NON-PAN DEPOSITORS OF CASH, ISSUED A VERIFICATION LETTER DATED 07/03/2012 TO THE APPELLANT, WHICH WAS DULY SERVED UPON HER THROUGH HER HUSBAND, SH. SWARAN SINGH ON 15/03/2012, SEEKING THEREIN INFORMATION REGARDING THE SOURCES OF CASH DEPOSIT BY 19/03/2012. SINCE NO FURTHER INFORMATION WAS PROVIDED TO THE AO, HE FORMED A BELIEF OF ESCAPEMENT OF INCOME TO THE EXTENT OF SUBSTANTIAL CASH DEPOSITS OF RS.36,71,000/- AND AFTER DULY RECORDING THE REASONS, ISSUED THE 28/05/2012, WHICH WAS FOLLOWED BY NOTICE UNDER SECTION 142 (1) OF THE ACT. HE ASSESSMENT RECORDS, IT IS NOTICED TH AT A SUMMONS UNDER THE PROVISION QUISITE NOTICE OF ESCAPEMENT OF INCOME UNDER THE PROVISIONS OF SECTION 148 ON OF SECTION 131 OF THE ACT WAS ALSO ISSUED TO THE APPELLANT BY AFFIXTURE ON THE LAST KNOWN ADDRESS, WHICH ALSO REMAINED UN COMPLIED, FORCING THE AO TO FRAME THE EX PARTE ASSESSMENT. FROM THE FACTUAL RECORDS, IT CANNOT BE SAID THAT TH E APPELLANT WAS NOT SERVED WITH THE REQUISITE NOTICE UNDER SECTION 148 OF THE ACT AND THAT THE JURISDICTIONAL AO'S ASSUMPTION OF JURISDICTION TO ASSESS THE ESCAPED INCOME WAS WITHOUT ADHERENCE TO THE PROVISIONS AND PROCEDURE IN THIS REGARD. ONCE THE VERIFICATION LETTER REGARDING THE SOURCES OF ITA NO.697/CHD/2018 A.Y.2009-10 6 CASH DEPOSIT IN THE BANK ACCOUNT MAINTAINED BY THE APPELLANT WAS NOT ATTENDED TO, THE AO RIGHTLY FORMED A BELIEF OF ESCAPEMENT OF INCOME TO THAT EXTENT AND, THEREFORE, ASSUMPTION OF JURISDICTION T O ASSESS THE INCOME ESCAPING TAXATION, UNDER THE PROVISIONS OF SECTION 148 WAS NOT WITHOUT EITHER AUTHORITY OR COMPLIANCE TO THE PROCEDURAL REQUIREMENTS. CONSIDERED IN THIS BACKGROUND, THE GROUNDS OF APPEAL PERTAINING TO THE ALLEGATION OF REASSESSMENT NOTICE BEING INVALID OR NOT HAVING BEEN SERVED ON THE APPELLANT, STAND REJECTED. 6. REFERRING TO THE SAME, IT WAS POINTED OUT THAT T HE CIT(A) HAD TAKEN NO COGNIZANCE OF THIS CONTENTION O F THE ASSESSEE WHILE DISMISSING THE LEGAL GROUND RAISED B Y THE ASSESSEE. 7. LD. DR WAS UNABLE TO CONTROVERT THE CONTENTIONS OF THE LD. COUNCIL FOR THE ASSESSEE. LD.DR COULD NOT POINT OUT ANY FINDINGS OF THE CIT(A) ON THE ISSUE OF NON-SERVICE OF THE NOTICE U/S 148 OF THE ACT RAISED BY THE ASSESSEE. 8. BOTH THE PARTIES THEREAFTER CONCEDED THAT INT EREST OF JUSTICE WOULD BE SERVED IF THE ISSUE WAS RESTORED B ACK TO THE CIT(A) TO CONSIDER THIS CONTENTION OF THE ASSESSEE, VIS-A-VIS NON SERVICE OF THE NOTICE U/S 148 OF THE ACT AND AD JUDICATE THE SAME AFTER DULY VERIFYING ALL NECESSARY FACTS R ELATING TO THE SAME. 9. IN VIEW OF THE ABOVE WE RESTORE THE ENTIRE APPEA L BACK TO THE CIT(A) AND DIRECT HIM TO FIRST ADJUDICATE THE LEGAL GROUND RAISED ,AFTER DEALING WITH ALL THE CONTENT IONS RAISED BY THE ASSESSEE AND AFTER DULY VERIFYING ALL FACTS NECESSARY FOR THE SAME. THE GROUNDS RAISED ON MERITS OF THE C ASE MAY THEREAFTER BE DEALT WITH BY THE CIT(A). ITA NO.697/CHD/2018 A.Y.2009-10 7 10. IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ! $ % & ' ( (DIVA SINGH) (ANNAPURNA GUPTA) '# / JUDICIAL MEMBER )* # / ACCOUNTANT MEMBER $ / DATED: 25 TH SEPTEMBER, 2018 * * &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. - $ / CIT 4. - $ ( )/ THE CIT(A) 5. +./ 0 , #0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35' / GUARD FILE &) $ / BY ORDER, 6 ! / ASSISTANT REGISTRAR