Smt. Nasseema W/o V.P.Mohammed, Cochin V. DCIT, Ernakulam

ITA 757/COCH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77481 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 23-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 22-11-2013
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: SAMUEL THOMAS
• Keywords: Search and seizure; Assessment record; Revised return
• Section: 54F; 142(1); 147; 148; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND CHANDRA POOJ ARI, AM I.T.A. NO.757/COCH/2014 ASSESSMENT YEAR : 2008-09 SMT. NASEEMA, W/O V.P. MOHAMMAD, VELUTHEDATHU HOUSE, HMT COLONY, KALAMASSERY, KOCHI-683 503. [PAN: AJLPN 8669F] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, ERNAKULAM. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY SHRI SAMUEL THOMAS, ADV. REVENUE BY SHRI K.K. JOHN, SR. DR DATE OF HEARING 23/07/2014 DATE OF PRONOUNCEMENT 25/07/2014 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THE APPEAL FILE BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 07-08- 2013 PASSED BY THE LD. CIT(A)-III, KOCHI FOR THE AS SESSMENT YEAR 2008-09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE CIT(A) HAS GROSSLY ERRED IN HOLDING THAT THE RE WAS PROPER SERVICE OF NOTICE U/S. 148 TO THE ASSESSEE, IGNORING THE FACT THAT THE ASSESSING OFFICER WAS NOT IN POSSESSION OF ANY EVIDENCE FOR SUCH SERV ICE OF NOTICE, EXCEPT THE SPEED POST RECEIPT DATED 02/02/2012 ISSUED BY ERNAKU LAM NORTH SPEED POST OFFICE (THIS EVIDENCE WAS PROCURED UNDER RIGHT TO INFORMATION ACT). THE POSTAL INDEX NUMBER GIVEN IN THE POSTED RECEIPT IS 683104 WHILE PIN IN RESPECT OF THE ASSESSEES ADDRESS IS 683503 AN D, THE SAID NOTICE MIGHT HAVE BEEN RETURNED TO THE SENDER,AS NORMALLY DONE B Y SPEED POST I.T.A. NO.757 /COCH/2013 2 AUTHORITIES. THE ADDRESS GIVEN IN THE ALLEGED NOTIC E U/S. 148 DOES NOT CONTAIN ANY PIN, BUT MARKED RPAD 2. THE CIT(A) OUGHT TO HAVE TAKEN COGNIZANCE OF STA TEMENTS OF FACTS AND THE WRITTEN ARGUMENTS THAT NO NOTICE U/S. 148 WAS S ERVED ON THE ASSESSEE; THAT THE NOTICE U/S. 142(1)(A) DATED 24-09-2012 AND U/S. 143(2) DATED 18- 10-2012 WERE BARRED BY LIMITATION. THERE WAS ALREAD Y A RETURN FILED U/S. 139(4) ON 15-12-2009 BEFORE THE INCOME TAX OFFICER, WARD-2(3), KOCHI SHOWING THE CAPITAL GAINS ARISING OUT OF SALE OF IM MOVABLE PROPERTY. 3. THE CIT(A) FAILED TO APPRECIATE THAT SERVICE OF NOTICE U/S. 148 IS MANDATORY AND IT IS ONLY IF THE NOTICE IS SERVED ON THAT ASSESSEE, THE ASSESSING OFFICER WOULD BE JUSTIFIED IN TAKING PROC EEDINGS AGAINST THE ASSESSEE PURSUANT TO SUCH NOTICE. THE CIT(A) DID N OT APPLY HIS MIND JUDICIOUSLY AND ACTED ARBITRARILY. 4. THE CIT(A) ERRED IN NOT CONSIDERING AND ADJUDIC ATING THE GROUNDS NO. 4,5,6 AND 7 THAT WERE RAISED IN THE APPEAL BEFORE H IM, WITHOUT ASSIGNING ANY VALID REASON, OBSERVING THAT THERE IS NO JUSTIF ICATION TO INTERFERE IN THE ORDER OF THE ASSESSING OFFICER; 5. THE CIT(A) FAILED TO GO THROUGH THE REASONS RE CORDED U/S. 148(2) WHICH IS NECESSARY BEFORE ISSUE OF A NOTICE U/S. 148 OF T HE I.T. ACT. THE REASON FOR BELIEF THAT INCOME ESCAPED ASSESSMENT, AS PER T HE INFORMATION SOUGHT UNDER THE RTI ACT 2005, IS THAT NO CAPITAL GAIN WA S RETURNED BY THE ASSESSEE WHICH IS CONTRARY TO THE FACTS. A RETURN WAS ALREADY FILED ON 14- 12-2009 U/S. 139(4) OF THE I.T. ACT. THE CIT(A) OU GHT TO HAVE APPRECIATED THAT RECORDING OF REASONS U/S. 148(2) IS NOT AN IDL E FORMALITY, BUT A MANDATORY REQUIREMENT, BASED ON FACTS BORNE ON RECO RDS. 6. THE CIT(A) OUGHT TO HAVE UNDERSTOOD THAT BELIEF AS TO ESCAPEMENT OF INCOME SHOULD NOT BE ARBITRARY OR IRRATIONAL AND TH E REASONS OUGHT TO BE RELEVANT AND HAVE A BEARING ON THE MATTERS IN REGAR D TO WHICH ASSESSING OFFICER IS REQUIRED TO ENTERTAIN BELIEF BEFORE HE C AN ISSUE NOTICE INVOKING PROVISIONS OF SECTION 147. THE CIT(A) INCORRECTLY PRESUMED THAT A VALID NOTICE WAS ISSUED AND THAT HE ALLEGED OF NON-COOPER ATION, WITHOUT VERIFYING THE RECORDS. 7. THE CIT(A) OVERLOOKED THE FACT THAT AT THE TIME OF RECORDING REASONS U/S. 148(2), THERE WAS NO INFORMATION AVAILABLE TO THE P RESENT ASSESSING OFFICER THAT THE ASSESSEE HAD ALREADY FILED THE RETURN ELSE WHERE AND THIS FACT IS EVIDENCED FROM THE NOTIFICATION OF THE COMMISSIONER OF INCOME-TAX-II, KOCHI DATED 04-10-2011 TRANSFERRING THE JURISDICTIO N OVER THE CASE TO CENTRAL CIRCLE-2, ERNAKULAM VIDE NO. 1(A)/GL/CENT/CIT-II/13/1 1-12, WHEREIN THE I.T.A. NO.757 /COCH/2013 3 PARTICULARS OF PAN AND ADDRESS OF THE PRESENT ASSES SING OFFICER WERE GIVEN AS NO PAN AND NOT ASSESSED RESPECTIVELY. THE R ECORDS WERE TRANSFERRED BY INCOME TAX OFFICER, WARD-2(3), KOCHI ONLY ON 04- 04-2012, I.E., AFTER INITIATION OF PROCEEDINGS U/S. 147. 8. THE CIT(A) WRONGLY OBSERVED THAT NO OBJECTION W AS RAISED AGAINST THE ASSESSMENT PROCEEDING U/S. 147 BEFORE THE ASSESSING OFFICER AND HE OUGHT TO HAVE APPRECIATED THAT POWERS U/S. 147 ARE MEANT TO BRING TO TAX INCOME OMITTED TO BE EITHER DISCLOSED IN THE RETURN OR IN THE ORIGINAL ASSESSMENT. IN THE ABSENCE OF DEFINITE INFORMATION AS TO ESCAPEMEN T OF INCOME OR FAILURE TO RETURN THE CAPITAL GAINS, THE REASONS RECORDED U/S. 148(2) ARE INFRUCTUOUS BECAUSE THE ASSESSEE HAD ALREADY FILED THE RETURN W ITHIN THE TIME U/S. 139(4) SHOWING CAPITAL GAINS. THE ASSESSING OFFICE R HAD NO AUTHORITY TO INSIST THE ASSESSEE IN HIS PRE-ASSESSMENT NOTICE TO FILE REVISED RETURN, OR A LETTER TO TREAT THE ORIGINAL RETURN AS ONE IN COMPL IANCE TO NOTICE U/S. 148. THE OBJECTIONS TO PROCEEDINGS U/S. 147 AND TO OTHER NOTICES WRONGLY ISSUED WERE NOT CONSIDERED BY THE ASSESSING OFFICER IN HIS EXPARTE ORDER. 9. THE CIT(A) WENT WRONG IN HIS OBSERVATION THAT TH E REPLY FILED BY THE ASSESSEE ON THE DATE GIVEN BY THE ASSESSING OFFICER AS WAS FILED SURREPTITIOUSLY ON 28-02-2013, THE DATE ON WHICH THE HEARING WAS POSTED BY THE ASSESSING OFFICER AND ALSO IN HIS ALLEGATION OF MISCHIEVOUS INTENTIONS. THESE DEROGATORY REMARKS WERE TOTALLY UNCALLED FOR AND ARE REQUIRED TO BE EXPUNGED; 10. THE ADDITIONS MADE IN THE ORDER U/S. 144 THAT W ERE UPHELD IN APPEAL ARE NOT SUSTAINABLE. THE DEDUCTION CLAIMED U/S. 54F WA S CORRECTLY MADE IN THE RETURN FILED U/S. 139(4). 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2008-09, THE ASSESSEE HAD SOLD AGRICULTURAL LA ND ADMEASURING 87 CENTS JOINTLY HELD WITH HER HUSBAND TO DR. HAFEEZ RAHMAN, FOR A DOCUMENTED CONSIDERATION OF RS.26,25,000/-. THE ASSESSEE HAD ALSO FILED RETURN OF INCOME FOR A.Y. 2008-09 ON 18-12-2009 DECLARING CAPITAL GA IN OF RS.4,51,005/- ON SALE OF THIS PROPERTY. THERE WAS A SEARCH AND SEIZURE OPER ATION U/S. 132 OF THE ACT IN AUGUST 2009 ON DR. HAFEEZ RAHMAN. CONSEQUENTLY, A LONG WITH THE CASE OF DR. I.T.A. NO.757 /COCH/2013 4 HAFEEZ RAHMAN, THE ASSESSEES CASE WAS ALSO CENTRAL IZED WITH DCIT, CENTRAL CIRCLE-2, ERNAKULAM. IN THE SWORN STATEMENT RECORDE D DURING THE COURSE OF SEARCH, IT WAS STATED BY DR. HAFEEZ RAHMAN THAT HE HAD PAID RS. 63,00,000/- AS SALE CONSIDERATION OF THE SAID PROPERTY AS AGAINST DOCUMENTED VALUE OF RS.26,25,000/-. HOWEVER, SHRI V.P. MOHAMMAD, THE H USBAND OF THE ASSESSEE, ACCEPTED THE SALE CONSIDERATION TO BE RS.50,00,000/ -. THE JURISDICTIONAL ASSESSING OFFICER, NAMELY ITO, WARD-3(2), KOCHI ACC EPTED THE CLAIM OF SHRI V.P. MOHAMMED, HUSBAND OF THE ASSESSEE, AND COMPLETED TH E ASSESSMENT ACCORDINGLY. OUT OF THE 87 CENTS OF LAND SOLD, 30 C ENTS BELONGED TO THE ASSESSEE, WHO IS THE WIFE OF SHRI V.P. MOHAMMED, AND SINCE TH E ASSESSEE HAS NOT DISCLOSED THE FULL AND CORRECT AMOUNT OF CAPITAL GA IN, THE ASSESSING OFFICER ISSUED NOTICE U/S. 148 TO THE ASSESSEE ON 19-0-2012. SINCE THERE WAS NO COMPLIANCE, THE ASSESSING OFFICER ISSUED NOTICE U/S. 142(1) ON 24-09-2012. SINCE THERE WAS NO COMPLIANCE TO THIS NOTICE ALSO, THE ASSESSING OF FICER ISSUED ANOTHER LETTER ON 25-01-2013, IN RESPONSE TO WHICH THE ASSESSEE FILED A LETTER BEFORE THE ASSESSING OFFICER PLEADING IGNORANCE ABOUT PENDING ASSESSMENT PROCEEDINGS. SINCE THE ASSESSEE HAS NOT CO-OPERATED WITH THE DEPARTMENT NO R FURNISHED THE DETAILS CALLED FOR, THE ASSESSING OFFICER COMPLETED THE BES T JUDGMENT ASSESSMENT U/S. 144 OF THE ACT FIXING LTCG AT RS.17,14,290/-. 4. ON APPEAL, THE CIT(A) OBSERVED THAT THE ASSESSEE HAS NOT CO-OPERATED WITH THE DEPARTMENT NOR FURNISHED THE DETAILS CALLE D FOR BY THE ASSESSING OFFICE. I.T.A. NO.757 /COCH/2013 5 THE ARGUMENT OF THE LD. AR THAT THE NOTICE ISSUED U /S. 148 HAS NOT BEEN SERVED ON THE ASSESSEE CANNOT BE A VALID REASON FOR DROPPI NG THE PROCEEDINGS INITIATED U/S. 147. ACCORDING TO THE LD. CIT(A), THE LD. CO UNSEL DID NOT RAISE OBJECTION THAT NOTICE WAS NOT SERVED ON THE ASSESSEE. MOREOVE R, THE ASSESSING OFFICER HAS SUO MOTO COMMUNICATED TO THE ASSESSEE THE REASONS F OR RE-OPENING THE ASSESSMENT VIDE LETTER DATED 25-01-2013. THE CIT(A ) OBSERVED THAT WHEN THE ASSESSMENT WAS COMPLETED ON 28-02-2013, THE LD. COU NSEL FILED A LETTER DATED 27-02-2013 SURREPTITIOUSLY BEFORE THE ASSESSING OFF ICER ON 28-02-2013 ITSELF STATING THAT THE NOTICE U/S. 148 WAS NOT SERVED ON THE ASSESSEE. ACCORDING TO THE CIT(A), THE RAISING OF THIS ISSUE DURING THE RE ASSESSMENT PROCEEDINGS AND AFTER THE COMPLETION OF THE ASSESSMENT INDICATED TH E MISCHIEVOUS INTENTIONS OF THE ASSESSEES COUNSEL, GOES TO PROVE THAT THE ASSE SSEES COUNSEL WAS DELIBERATELY TRYING TO EVADE TAX BY GIVING TECHNICA L ARGUMENTS DURING THE ASSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS. I N VIEW OF THIS, THE CIT(A) HELD THAT THERE WAS PROPER SERVICE OF NOTICE U/S. 1 48 TO THE ASSESSEE AS PER RECORDS AND THE SUCH OBJECTION WAS NOT RAISED IN TI ME. THUS, THE CIT(A) HELD THAT THERE WAS NO JUSTIFICATION TO INTERFERE WITH T HE ORDER OF THE ASSESSING OFFICER AND THEREFORE UPHELD THE SAME. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . THE MAIN CONTENTION OF THE ASSESSEE WAS THAT NOTICE U/S. 148 WAS NOT SE RVED ON THE ASSESSEE. TO VERIFY THE SAME, THE BENCH CALLED UPON THE LD. DR T O SUBMIT ASSESSMENT RECORD I.T.A. NO.757 /COCH/2013 6 TO SHOW EVIDENCE TO SUGGEST SERVICE OF NOTICE ISSUE D U/S. 148 OF THE ACT. HOWEVER, THE ASSESSMENT RECORD SUBMITTED BY THE LD. DR DOES NOT CONTAIN EVIDENCE OF SERVICE OF NOTICE ISSUED U/S. 148 OF TH E ACT. IN THE ABSENCE OF VALID SERVICE OF NOTICE ISSUED U/S. 148, WE ARE NOT IN A POSITION TO UPHOLD THE ORDER PASSED BY THE LOWER AUTHORITIES. THE ASSESSMENT PR OCEEDINGS WERE VOID AS NO NOTICE U/S. 147/148 WAS SERVED ON THE ASSESSEE. 6. THE LD. DR SUBMITTED THAT SINCE THE ASSESSEE REGULARLY PARTICIPATED IN THE ASSESSMENT PROCEEDINGS, IT IS TO BE HELD VALID. IN OUR OPINION, THE NON SERVICE OF VALID NOTICE U/S. 148 WAS NOT A CURABLE MISTAKE UND ER THE PROVISIONS OF SECTION 292B OF THE I.T. ACT WHICH LEADS TO LEGAL INFIRMITY . THE ASSESSMENT FRAMED THEREAFTER IS VOID. IN THE ABOVE CIRCUMSTANCES, WE CANCEL THE ASSESSMENT ORDER. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS ALLOWED. PRONOUNCED ACCORDINGLY ON 25-07-2014. SD/- SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 25TH JULY, 2014 GJ COPY TO: 1. SMT. NASEEMA, W/O V.P. MOHAMMAD, VELUTHEDATHU HO USE, HMT COLONY, KALAMASSERY, KOCHI-683 503. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-III, KOC HI. I.T.A. NO.757 /COCH/2013 7 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T. C OCHIN