Shri Gaurav Kumar C/o- O.P. Batheja, D-18, Anand Vihar Railway Colony, Jagatpura, Jaipur-332017, Bharatpur V. ITO Ward-2, Bharatpur, Bharatpur

ITA 804/JPR/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6263 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 29-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK SHARMA CIT DHK
• Assessee Lawyers: O P BATHEJA
• Keywords: Gift; Block assessment; Reassessment proceedings
• Section: 44AD; 143(3); 142(1); 292BB; 143(2); 69A; 139(1); 148; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH SMC, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; DS LE{K BEFORE: SHRI SHRI VIJAY PAL RAO, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 804/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. SHRI GAURAV KUMAR S/O SHRI GIRRAJ PRASAD, NAI SADAK, DEEG, BHARATPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 2, BHARATPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ASEPK 5286 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI O.P. BATHEJA, A/R JKTLO DH VKSJ LS@ REVENUE BY : SHRI ABHISHEK SHARMA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01.10.2019. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 10/10/2019. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 29.03.2019 OF LD. CIT (APPEALS), ALWAR FOR THE ASSESSMENT YEAR 20 10-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING ADDITION OF RS. 14,64,000/-, OUT OF ADDITION OF RS. 17,64,000/- MADE BY THE AO U/S 69A, THROUGH A NON SPEAKING ORDE R, WITHOUT APPRECIATING THE FACTS OF THE CASE AND THE SUBMISSI ONS OF THE APPELLANT. 2. THE LD. CIT (A) HAS GROSSLY ERRED ON FACTS AND N LAW IN UPHOLDING THE ORDER OF THE AO U/S 143(3)/147 AND IN CONFIRMIN G THE ADDITION OF RS. 14,64,000/-, OVERLOOKING THE GROUND OF APPEAL OF THE APPELLANT THAT THE AO PASSED ORDER U/S 143(3)/1 47 WITHOUT ISSUING AND SERVING ANY NOTICE U/S 143(2) WHICH IS A MANDATORY REQUIREMENT OF LAW. THE ORDER PASSED U/S 143(3)/147 WITHOUT 2 ITA NO. 804/JP/2019 SHRI GAURAV KUMAR, DEEG. ISSUANCE AND SERVICE OF NOTICE U/S 143(2) IS PATENT LY BAD IN LAW AND DESERVES TO BE QUASHED. IN GROUND NO. 2, THE ASSESSEE HAS RAISED THE QUESTI ON OF VALIDITY OF REASSESSMENT FRAMED BY THE AO WITHOUT ISSUING AND S ERVICE NOTICE UNDER SECTION 143(2) OF THE IT ACT. 2. THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF BUILDING MATERIAL DURING THE YEAR UNDER CONSIDERATION. HOWEVER, UPTO THE ASSESSMENT YEAR 20 09-10 HE WAS ALSO HAVING LIQUOR CONTRACT BUSINESS HAVING A PARTNERSHIP CONCE RN AND 50% PARTNER IN M/S. GAURAV KUMAR POHAP SINGH. DURING THE YEAR UNDER CO NSIDERATION, THE ASSESSEE MADE CASH DEPOSIT OF RS. 17,84,500/- IN THE SAVINGS BANK WITH UNION BANK OF INDIA. THE AO REOPENED THE ASSESSMENT ON THE BASIS OF THE AIR INFORMATION REGARDING THE DEPOSIT OF CASH BY ISSUING A NOTICE UNDER SECTION 1 48 OF THE IT ACT ON 29.03.2017. THE ASSESSEE FILED THE RETURN OF INCOME THROUGH E-F ILING ON 08.12.2017 DECLARING TOTAL INCOME AT RS. 1,38,240/-. THE REASSESSMENT WAS COMPLETED BY THE AO BY MAKING AN ADDITION OF RS. 17,84,000/- ON ACCOUNT OF CASH DEPOSIT IN THE BANK ACCOUNT UNDER SECTION 69A OF THE IT ACT. THE LD. A /R HAS THUS CONTENDED THAT THE REASSESSMENT WAS COMPLETED BY THE AO WITHOUT ISSUIN G NOTICE UNDER SECTION 143(2) OF THE IT ACT. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE FOLLOWING DECISION :- ITO VS. SHRI HANS RAJ SHARMA ITA NO. 504/JP/2016 & C.O. NO. 20/JP/2016 DATED 0 9.04.2019. 3. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME UNDER 3 ITA NO. 804/JP/2019 SHRI GAURAV KUMAR, DEEG. SECTION 139(1) OF THE IT ACT. EVEN THE RETURN OF I NCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 148 WAS BELATED ONE AND THE AO HAS IS SUED A NOTICE UNDER SECTION 143(2) ON 11.02.2017, A COPY OF THE SAME HAS BEEN P RODUCED DURING THE COURSE OF HEARING. THUS THE LD. D/R HAS SUBMITTED THAT WHEN A NOTICE WAS ISSUED UNDER SECTION 143(2) AND ASSESSEE HAS PARTICIPATED IN THE PROCEEDINGS, THEN THE ASSESSEE CANNOT RAISE THIS OBJECTION AT THIS STAGE. HE HAS R EFERRED TO THE PROVISIONS OF SECTION 292BB OF THE IT ACT. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS RAISED THIS OBJECTION EVE N BEFORE THE LD. CIT (A) AS GROUND NO. 4 REPRODUCED AT PAGE 2 OF THE LD. CIT (A)S ORD ER. HOWEVER, THE LD.CIT (A) HAS NOT ADJUDICATED GROUND NO. 4 SEPARATELY BUT THE ENT IRE MATTER WAS DECIDED ON THE MERITS IN PARA 5.3 AND 5.4 AS UNDER :- 5.3. I HAVE PERUSED THE ASSESSMENT ORDER AS WELL AS SUBMISSIONS FILED BY THE APPELLANT. FOLLOWING FACTS HAVE EMERGE D :- 1. THAT THE APPELLANT IS ENGAGED IN THE SALE/PURCHASE OF BUILDING MATERIALS DURING THE YEAR UNDER CONSIDERATION. 2. THAT THE APPELLANT DID NOT FILE REGULAR RETURN OF I NCOME FOR THE YEAR UNDER CONSIDERATION. 3. THAT ON THE BASIS OF NMS DETAILS, THE A.O. HAS ISSU ED NOTICE U/S 148 OF THE ACT ON 29.03.2017. HOWEVER, STILL NO RET URN OF INCOME WAS FILED WITHIN STIPULATED DATES. FINALLY, THE APP ELLANT FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 08.12.2017 DECLARING INCOME OF RS. 1,38,240/- DECLARING INCOME U/S 44AD OF THE ACT. 4. THAT THE A.O. HAS FOUND CASH DEPOSITS OF RS. 17,84, 000/- IN HIS BANK ACCOUNTS. 4 ITA NO. 804/JP/2019 SHRI GAURAV KUMAR, DEEG. 5. THAT THE APPELLANT HAD SUBMITTED THAT IT WAS OUT OF PAYMENTS RECEIVED FROM PREVIOUS CREDITORS WHEN DURING PRECED ING YEARS THE APPELLANT WAS RUNNING LIQUOR BUSINESS WHICH HAS BEEN CLOSED AND ALSO SOME GIFT RECEIVED DURING THE YEAR. HOWEV ER, NO EVIDENCES WERE PRODUCED BEFORE THE A.O. ACCORDINGL Y, THE A.O. HAS ADDED THE CASH CREDIT OF RS. 17,84,000/- IN HIS HAND. 5.4. I HAVE CONSIDERED THE ABOVE MENTIONED FACTS OF THE CASE. THE APPELLANT HAS DECLARED INCOME OF RS. 1,38,240/- AND CONSIDERING THE PAST BUSINESS OF DISTRIBUTORSHIP IN LIQUOR TRADE AND CURRENT BUSINESS OF THE ASSESSEE AND GIFT S RECEIVED, IN MY CONSIDERED VIEW IT WOULD BE REASONA BLE TO GIVE CREDIT OF RS. 3 LAKHS FOR PAST YEAR SAVINGS AN D RECEIPTS TOWARDS THE CASH CREDIT. ACCORDINGLY, THE ADDITION TO THE EXTENT OF RS. 14,64,000/- IS SUSTAINED AND THE APPE LLANTS GROUND OF APPEAL ON THE ISSUE IS PARTLY ALLOWED. THUS IT IS CLEAR THAT DESPITE BEING SPECIFICALLY RA ISED THIS GROUND AND TAKEN UP FOR ADJUDICATION BY THE LD. CIT (A), IT IS NOT DEALT W ITH BY THE LD. CIT (A). SINCE THIS IS A LEGAL ISSUE AND GOES TO THE ROOT OF THE MATTER, THE REFORE, THE SAME IS TAKEN UP FOR ADJUDICATION. 5. THE AO IN THE REASSESSMENT ORDER HAS ACCEPTED TH IS FACT THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 08.12.2017 VIDE A CKNOWLEDGEMENT NO. 328210000081217 AS GIVEN IN THE ASSESSMENT ORDER. THE FACT OF FILING THE RETURN OF INCOME IS NOT IN DISPUTE. THE REASSESSMENT ORDER I S ALSO FRAMED ON THE RETURN OF INCOME FILED BY THE ASSESSEE. THE AO HAS NOT TREAT ED THE RETURN OF INCOME AS NON EST BUT THE ASSESSMENT WAS FRAMED BY TAKING THE RET URN OF INCOME AND THEN MAKING 5 ITA NO. 804/JP/2019 SHRI GAURAV KUMAR, DEEG. THE ADDITION. THE FINAL COMPUTATION OF TOTAL INCOME OF THE ASSESSEE BY THE AO IS AS UNDER :- RETURN INCOME OF RS. 1,38,240/ - ADDITION ON ACCOUNT OF UNEXPLAINED MONEY U/S 69A 17,84,000/ - TOTAL INCOME OF RS. 19,22,240/ - ONCE THE ASSESSEE FILED THE RETURN OF INCOME AND WH ICH WAS TAKEN UP FOR SCRUTINY ASSESSMENT IN THE REASSESSMENT PROCEEDINGS, THEN IT IS A CONDITION PRECEDENT FOR ASSUMING THE JURISDICTION THAT NOTICE UNDER SECTION 143(2) IS ISSUED. THOUGH A NOTICE DATED 11.12.2017 STATED TO BE ISSUED BY THE AO UNDER SECTION 143(2), HOWEVER, FROM THE NOTE SHEET IT IS APPARENT THAT TH E ENTRIES REGARDING THE SAID NOTICE UNDER SECTION 143(2) IS MADE IN A SPACE WHIC H WAS AVAILABLE AFTER THE PROCEEDINGS ON 19.12.2017. HOW THE PROCEEDINGS ON 11.12.2017 CAN BE RECORDED AFTER THE PROCEEDINGS ON 19.12.2017. THIS FACT CLE ARLY MANIFEST THAT THIS IS ONLY AN AFTER-THOUGHT INTERPOLATION MADE BY THE AO IN BETWE EN TWO PROCEEDINGS DATED 19.12.2017 AND 27.12.2017. EVEN THE STYLE OF THE NO TINGS MAKES IT CLEAR THAT DUE TO PAUCITY OF SPACE IN BETWEEN, THE AO HAS SQUEEZED TH E NARRATION AND NOT IN THE NORMAL FONT AND SPACE AS IN RESPECT OF ALL OTHER EN TRIES/PROCEEDINGS RECORDED ON THE SAME PAGE. THEREFORE, IT IS CLEAR THAT THE ALLEGED NOTICE DATED 11.12.2017 WAS NOT ISSUED AND EVEN NOT SERVED ON THE ASSESSEE. THE AL LEGED PROCEEDINGS INTERJECTED IN BETWEEN TWO OTHER PROCEEDINGS THAT TOO SUBSEQUENT P ROCEEDINGS CLEARLY REVEALS THIS FACT. ACCORDINGLY, IT BECOMES MANIFEST AND CLEAR T HAT THE REASSESSMENT WAS COMPLETED WITHOUT ISSUING THE MANDATORY NOTICE UNDE R SECTION 143(2) OF THE IT ACT AND CONSEQUENTLY THE ASSESSMENT WAS FRAMED WITHOUT ASSUMING THE JURISDICTION AS 6 ITA NO. 804/JP/2019 SHRI GAURAV KUMAR, DEEG. CONFERRED BY SECTION 143(2). AN IDENTICAL ISSUE HA S BEEN CONSIDERED BY THIS TRIBUNAL IN CASE OF ITO VS. SHRI HANS RAJ SHARMA (SUPRA) IN PARA 14 TO 16 AS UNDER :- 14. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FO UND FROM THE RECORD THAT THE ASSESSEE FILED ITS RETURN OF INCOME IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT ON 13.03.2015. THE AO HAD CONCLUDED THE ASSESSMENT WIT HOUT ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT AFTER THE RETURN WAS FILE D BY THE ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. THE AO AFTER R ECEIVING THE RETURN OF THE APPELLANT FILED IN PURSUANCE TO NOTICE U/S 148 OF T HE INCOME TAX ACT, 1961 DID NOT ISSUE NOTICE U/S 143(2) OF THE ACT WHICH IS SINE QU A NON FOR ASSUMING JURISDICTION TO ASSESS THE CASE. THIS IS A GRAVE ERROR WHICH IS EVE N NOT RECTIFIABLE U/S 292BB OF THE ACT AND HENCE ORDER SO PASSED LACKS PROPER AUTHORIT Y WITH THE AO AND HENCE THE ORDER SO PASSED DESERVES TO BE DECLARED VOID AB INI TIO. IN CASE OF REASSESSMENT PROCEEDINGS ALSO ONCE THE ASSESSEE FURNISHES HIS RE TURN, SAME IS CONSIDERED AS A RETURN REQUIRED TO BE FURNISHED U/S 139 AND FOR PRO CEEDING FURTHER IN A CASE OF RETURN FILED U/S 139 THE AO IS SUPPOSED TO ISSUE NO TICE U/S 143(2) FOR ASSUMING JURISDICTION TO ASSESS THE CASE. IN CASE OF NON-ISS UANCE OF SUCH VITAL NOTICE NO ASSESSMENT CAN BE FRAMED BY THE AO AS THE SAME LACK S AUTHORITY FOR THE SAME. FURTHER SUCH VITAL DEFECT CANNOT BE CURED EVEN BY R ESORTING TO THE PROVISIONS OF SECTION 292BB AS THE PROVISIONS OF SECTION 292BB AR E APPLICABLE IN THOSE CASES WHERE NOTICE WAS ISSUED BUT NOT SERVED. IN THE PRES ENT CASE SINCE NO NOTICE WAS EVER ISSUED AND HENCE SUCH DEFECT CANNOT BE CURED. 15. THUS, IT IS CLEAR THAT THE AO HAD CONCLUDED THE REASSESSMENT CONSIDERING THE RETURN OF INCOME FILED BY THE ASSESSEE ON 13.03.201 5 BUT FAILED TO ISSUED NOTICE U/ S 143(2) OF THE ACT IN ORDER TO PROCESS THE SAID RETU RN. THE DEPARTMENT WAS PRECISELY ASKED BY THE BENCH ON 16/10/2017, 19/09/2018 AND 15 /11/2018 TO SUBSTANTIATE THE ISSUE AND SERVICE OF NOTICE U/S 143(2) OF THE ACT, BUT THE SAME COULD NOT BE PRODUCED EVEN ON THE SPECIFIC QUERY BY THE BENCH. W ITHOUT ISSUE OF NOTICE U/S 143(2) COMPLETING THE REASSESSMENT PROCEEDINGS ARE LIABLE TO BE QUASHED IN VIEW OF THE FOLLOWING JUDICIAL PRONOUNCEMENTS: (I) ACIT V/S HOTEL BLUE MOON 321 ITR 362 (SC) WHERE IN IT WAS HELD BY THE HON'BLE SC THAT ISSUANCE OF NOTICE U/S 143(2) IS MA NDATORY EVEN IN BLOCK ASSESSMENTS. 7 ITA NO. 804/JP/2019 SHRI GAURAV KUMAR, DEEG. (II) CIT V/S SALARPUR COLD STORAGE 50 TAXMANN.COM 1 05 (ALL. HC): FOR FRAMING ORDER U/ S 143(3) IT IS NECESSARY TO ISSUE A NOTICE U/ S 143(2) OF THE ACT, AND IN ABSENCE OF NOTICE U/S 143(2) THE ASSUMPTION OF J URISDICTION ITSELF WOULD BE INVALID. (III) TRAVANCORE DIAGNOSTICS P LTD. V/S ACIT 390 IT R 167 (KERELA HC): OMISSION TO ISSUE NOTICE U/S 143(2) IS INCURABLE DEFECT EVEN U/S 292BB OF THE INCOME TAX ACT, 1961. (IV) PCIT - 08 V/S JAI SHIV SHANKAR TRADERS P LTD. 383 ITR 448 (DELHI): ISSUE OF NOTICE U/S 143(2) IS NOT A PROCED URAL REQUIREMENT AND IS MANDATORY AND COMPLETION OF ASSESSMENT WITHOUT ISSU E OF NOTICE U/S 143(2) IS FATAL TO THE ASSESSMENT. IN THIS CASE RETURN WAS FILED AFTER ISSUANCE OF NOTICE U/S 142(1) AND SINCE NO NOTICE WAS ISSUED U/ S 143(2) THE ASSESSMENT WAS HELD TO BE INVALID. (V) ITO V/S NEERAJ GOEL (ITAT DELHI BENCH SMC) : AS SUMPTION OF JURISDICTION TO FRAME AN ASSESSMENT OR NONASSUMPTION OF JURISDIC TION TO FRAME AN ASSESSMENT GOES TO THE ROOT OF THE JUDICIAL ACT OF FRAMING AN ASSESSMENT ORDER AND IN EVENT OF NON-ASSUMPTION OF JURISDICTIO N U/S 143(2) OF THE ACT TO FRAME AN ASSESSMENT THE ACT OF THE ASSESSING OFFICE R IN FRAMING AN ASSESSMENT ORDER WITHOUT ISSUING NOTICE U/S 143(2) CANNOT BE SAVED UNDER THE PROVISIONS OF SECTION 292B OF THE IT ACT, 1961 OR UNDER SECTION 292BB OF THE IT ACT, 1961 AND THEREFORE THE ASSESSMENT ORDER SO FRAMED WILL BE VOID AB INITIO. (VI) KAMLA DEVI SHARMA V/S ITO (ITAT, JAIPUR BENCH) : IN THIS CASE DECIDED ON 06.02.2018 THIS HON'BLE BENCH DISCUSSED ALL THE ABO VE ORDERS AND REACHED ON THE CONCLUSION THAT NONISSUE OF NOTICE U/S 143(2 ) IN REASSESSMENT PROCEEDINGS, PRIOR TO FINALIZING REASSESSMENT ORDER CANNOT BE CONDONED BY REFERRING TO SECTION 292BB AND IS FATAL TO THE ORDE R OF REASSESSMENT. 16. APPLYING THE PROPOSITION OF LAW LAID DOWN IN TH E ABOVE JUDICIAL PRONOUNCEMENTS, WE DO NOT FIND ANY MERIT IN THE ASSESSMENT SO FRAME D U/S 143(3) WITHOUT ISSUE OF NOTICE U/S 143(2) OF THE ACT. 8 ITA NO. 804/JP/2019 SHRI GAURAV KUMAR, DEEG. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE EARLIER DECISION OF THIS TRIBUNAL, THE REASSESSMENT FRAMED BY THE AO WITHOUT ISSUING NOTICE UNDER SECTION 143(2) IS BAD IN LAW AND SAME IS QUAS HED. 6. SINCE THE REASSESSMENT IS QUASHED FOR WANT OF NO TICE ISSUED UNDER SECTION 143(2) OF THE IT ACT, THEREFORE, THE OTHER GROUND R AISED BY THE ASSESSEE BECOMES INFRUCTUOUS AND NOT TAKEN UP FOR ADJUDICATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 10/10/20 19. SD/- ( FOT; IKY JKWO (VIJAY PAL RAO) U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 10/10/2019. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI GAURAV KUMAR, DEEG. 2. THE RESPONDENT THE ITO WARD 2, BHARATPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 804/JP/2019) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 9 ITA NO. 804/JP/2019 SHRI GAURAV KUMAR, DEEG.