Maneklal Agarwal, Hyd, Hyderabad V. ITO, Ward-10(1), Hyderabad, Hyderabad

ITA 727/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2481 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-03-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 17-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: S RAMA RAO
• Keywords: Reopening of assessment
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. AYS. APPELLANT RESPONDENT 726/HYD/16 2001-02 MANEKLAL AGARWAL, HYDERABAD [PAN: ACKPA4767G] INCOME TAX OFFICER, WARD-10(1), HYDERABAD 727/HYD/16 2002-03 728/HYD/16 2003-04 729/HYD/16 2004-05 FOR ASSESSEE : SHRI S. RAMA RAO, AR FOR REVENUE : SHRI B. KURMI NAIDU, DR DATE OF HEARING : 17-10-2017 DATE OF PRONOUNCEMENT : 27-10-2017 O R D E R ALL THESE FOUR APPEALS ARE BY ASSESSEE AGAINST THE CO MMON ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-9, HYDERABAD, DATED 29-02-2016 FOR THE AYS. 2001-02, 2002-03, 2003- 04 & 2004-05. THE ONLY ISSUE FOR CONSIDERATION IS WHETHER THE ASSESSING OFFICER (AO) HAS FOLLOWED THE DIRECTION OF THE ITAT IN EXAMINING THE ISSUES RESTORED TO THE AO. 2. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS OWNER OF FO UR INDUSTRIAL BLOCKS SITUATED AT IDA, AZAMABAD, WHICH WERE LET OUT TO HIS FAMILY MEMBERS. ASSESSEE HAS OFFERED LEASE INC OME FROM THE ABOVE PROPERTIES, BUT THE AO HAS NOTED THAT THOSE PRO PERTIES WERE LEASED OUT FOR HIGHER VALUE BY THOSE FAMILY MEMBERS. PROCEEDINGS U/S. 147 OF THE INCOME TAX ACT [ACT] WERE INITIATED IN TH E CASE OF MANEKLAL AGARWAL :- 2 - : ASSESSEE AND INCOMES AS RECEIVED BY THE FAMILY MEMBE RS WERE CONSIDERED AS FAIR RENT AND INCOME FROM HOUSE PRO PERTY WAS RE- COMPUTED. THE SAID ORDER WAS CONFIRMED BY THE THEN C IT(A). ASSESSEE THEN PREFERRED AN APPEAL BEFORE THE ITAT, HY DERABAD AND HAS RAISED A LEGAL ISSUE THAT THE ASSESSMENTS WERE COMP LETED WITHOUT ISSUANCE OF NOTICE U/S. 143(2), IN THE ABSENC E OF ANY RETURN FILED BY THE ASSESSEE. THE HON'BLE ITAT IN ITS ORDER IN ITA NOS. 892 TO 894/HYD/2008, DT. 30-04-2010 HAS SET ASIDE ORIGINALLY FOR THREE ASSESSMENT YEARS I.E., AYS. 2001-02 TO 2003 -04 BY DIRECTING AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. THE FIRST CONTENTION OF THE ASS ESSEE IS THAT THE NOTICE U/S 143(2) COULD BE ISSUED ONLY IN CASE THE ASSESSE E FILED THE RETURN OF INCOME IN PURSUANCE OF NOTICE ISSUED U/S.148. SINCE THE RETURN WAS NOT FILED THE ASSESSING OFFICER HAS NO JURISDICTION FOR ISSUING THE NOTICE U/S. 143(2) AND FRAMING THE ASSESSMENT U/S 143(3). AS RI GHTLY POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, THIS ISSUE WAS NOT RAISED BEFORE THE LOWER AUTHORITIES. THIS ISSUE BEING A LEGAL ISS UE GOES TO THE VERY ROOT OF THE MATTER. THEREFORE, AS FOUND BY THE MADHYA PRADE SH HIGH COURT IN THE CASE OF TOLLARAM HASSOMAL, THE ASSESSING OFFICER HA S TO CONSIDER THE SAME AT THE FIRST INSTANCE. ACCORDINGLY, WE REMAND THE M ATTER TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL CON SIDER THE ISSUE OF NOTICE U/S 143(2) FOR FRAMING THE ASSESSMENT U/S 143(3) IN THE ABSENCE OF ANY RETURN FILED BY THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW. WE ALSO MAKE IT C1EAR SINCE THE APPEAL I S REMANDED TO FILE OF THE ASSESSING OFFICER ON THE TECHNICAL ISSUE OF NOT ICE U/S 143(2), THE ISSUES ON MERIT ALSO REMANDED TO THE ASSESSING OFFICER TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OP PORTUNITY TO THE ASSESSEE. 3. IN THE RE-ASSESSMENT PROCEEDINGS, AO, HOWEVER, ISS UED A FRESH NOTICE U/S. 143(2) AND COMPLETED THE ASSESSMENT , INSTEAD OF EXAMINING WHETHER A NOTICE(S) WAS ISSUED BEFORE COMPU TING THE ASSESSMENT ORIGINALLY AS DIRECTED BY THE ITAT. LD.CI T(A) CONFIRMED THE ORDER OF THE AO, INTERPRETING THE ORDER OF THE ITAT IN A DIFFERENT MANNER. MANEKLAL AGARWAL :- 3 - : 4. IT WAS THE CONTENTION OF ASSESSEES LD. COUNSEL THAT TH E DIRECTION GIVEN TO THE AO WAS TO EXAMINE WHETHER A NOTIC E U/S. 143(2) WAS ISSUED BEFORE FRAMING THE ASSESSMENT U/S. 143(3) ORIGINALLY, IN THE ABSENCE OF ANY RETURN FILED BY ASS ESSEE. HOWEVER, THE AO ISSUED A FRESH NOTICE NOW AND COMPLETED THE AS SESSMENT WITHOUT EXAMINING THE LEGAL ISSUE. 5. LD.DR, HOWEVER, SUBMITTED THAT ASSESSEE HAS FILED A RETURN IN RESPONSE AND ACCORDINGLY AS PER THE DIRECTIONS OF ITA T, AO HAS ISSUED NOTICES AND COMPLETED THE ASSESSMENT. 6. LD. COUNSEL IN REPLY SUBMITTED THAT ASSESSEE HAS NO T FILED RETURN IN RESPONSE TO NOTICE U/S. 148, NOR FILED ANY F RESH RETURN IN RE-ASSESSMENT PROCEEDINGS. HE POINTED OUT THAT ONLY A LETTER WAS ADDRESSED TO THE AO ENCLOSING A COPY OF THE ORIGINAL R ETURN FILED ON WHICH RE-ASSESSMENT PROCEEDINGS WERE INITIATED EARLIER . IT WAS SUBMITTED THAT THE ISSUE WHICH WAS REMANDED BY THE ITAT W AS NOT EXAMINED BY THE AO AT ALL. 7. CONSIDERING THE RIVAL CONTENTIONS AND PERUSING THE ORDER OF THE ITAT, I AM OF THE OPINION THAT BOTH THE AO AND CIT(A) HAVE NOT CONSIDERED THE ORDER OF THE ITAT IN ITS CORRECT PERSPE CTIVE. AS CAN BE SEEN FROM THE ORDER, IT IS VERY CLEAR THAT THE AO WA S DIRECTED TO CONSIDER THE LEGAL ISSUE ABOUT ISSUANCE OR NON-ISSUAN CE OF NOTICE U/S. 143(2) FOR FRAMING THE ASSESSMENT U/S. 143(3), I N THE ABSENCE OF ANY RETURN FILED BY ASSESSEE IN RESPONSE TO NOTICE U/S. 148. THIS ISSUE HAS NOT BEEN EXAMINED EITHER BY THE AO OR BY THE CIT(A). THE SUBSEQUENT ISSUANCE OF NOTICES U/S. 143(2) SHOULD NOT HAVE BEEN CONSIDERED BY THE AO AT ALL, AS THE ISSUE RESTORED IS ONLY TO EXAMINE WHETHER THE ASSESSMENT WHICH WAS COMPLETED IS AS PER MANEKLAL AGARWAL :- 4 - : THE PROVISIONS OF THE ACT. IF AO HAS ISSUED NOTICES BE FORE COMPLETION OF ASSESSMENT, CONSEQUENT TO REOPENING OF ASSESSMENT U/S. 148, THEN THE ASSESSMENT WOULD BECOME LEGAL. OTHE RWISE, IT WILL BECOME INVALID. IN THE ABSENCE OF ANY FINDING WHETHER ANY NOTICE(S) HAVE BEEN ISSUED TO ASSESSEE IN THE RE-ASSE SSMENT PROCEEDINGS, THIS FORUM CANNOT GIVE A FINDING WHETHER ASSESSMENTS COMPLETED WERE VALID OR NOT? HENCE, THE ITAT IN TH E ABOVE REFERRED ORDER AND ALSO IN ITA NO. 1173/HYD/2008, DT. 03-06-2 011 FOR AY. 2004-05 HAS RESTORED THE ISSUE TO THE FILE OF AO. 8. SINCE THE ISSUE ON MERITS WAS CONTESTED BEFORE THE HON'BLE SUPREME COURT IN OTHER YEARS NOW STAND CRYSTALISED AGA INST ASSESSEE, THE ADDITION MADE PER SE CANNOT BE UNDER DISPUTE BUT WHETHER THE ASSESSMENT HAS BEEN COMPLETED VALIDLY OR N OT, IS THE ONLY THING WHICH IS TO BE EXAMINED BY THE AO. SINCE TH E DIRECTIONS OF THE ITAT HAVE NOT BEEN FOLLOWED, I HAVE NO OPTION THAN TO SET ASIDE THE IMPUGNED ASSESSMENT ORDER AND THE ORDER OF TH E CIT(A) AND RESTORE THE ISSUE TO THE FILE OF AO TO CONSIDER IN ACCORDANCE WITH THE DIRECTIONS OF ITAT AS STATED ABOVE. 9. IN THE RESULT, ALL THE APPEALS ARE ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 27 TH OCTOBER, 2017 TNMM MANEKLAL AGARWAL :- 5 - : COPY TO : 1. MANEKLAL AGARWAL, C/O. SRI S. RAMA RAO, ADVOCATE , FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO. 9, HIMAYAT NAGAR, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-10(1), HYDERABAD. 3. COMMISSIONER OF INCOME TAX(APPEALS)-9, HYDERABAD . 4. THE PR. COMMISSIONER OF INCOME TAX-6, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.