Sheela Chopra, Kolkata V. ITO, Ward - 22(1), Kolkata, Kolkata

ITA 84/KOL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62127 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2012
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 16-01-2012
• Court: TRIBUNAL
• Department Lawyers: SUJIT KUMAR
• Assessee Lawyers: R P AGARWALLA
• Keywords: Procedural lapse; Block assessment; Revised return
• Section: 147; 148; 144; 154; 2; 143(3); 142(1)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH B, KOLKATA () BEFORE , ,, , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. .!' !'!' !'. .. . , #$ SHRI C.D.RAO, ACCOUNTANT MEMBER % % % % / ITA NO . 84/KOL/2012 &' ()/ ASSESSMENT YEAR : 2005-06 (+, / APPELLANT ) SHEELA CHOPRA, KOLKATA (PAN:ABWPC 6131 D) (-.+,/ RESPONDENT ) I.T.O.WD.22(1),KOLKATA +, / 0 #/ FOR THE APPELLANT: SHRI R.P.AGARWALLA -.+, / 0 #/ FOR THE RESPONDENT: SHRI SUJIT KUMAR 1&2 / '$ /DATE OF HEARING : 21.06.2012. 3( / '$ /DATE OF PRONOUNCEMENT : 21.06.2012. #4 / ORDER . .. . , , , , PER SHRI MAHAVIR SINGH, JM THIS APPEAL BY THE ASSESSEE IS ARISI NG OUT OF THE ORDER OF CIT(A)-XIV, KOLKATA IN APPEAL NO.341/CIT(A)-XIV/08-09 ORDER DAT ED 31.10.2011. ASSESSMENT ORDER WAS FRAMED BY INCOME TAX OFFICER, WARD-22(1), KOLKATA U/S 144 R.W.S. 147 OF THE IT ACT 1961 (HEREINAFTER REFERRED TO AS THE AC T) FOR A.Y 2005-06 VIDE ITS ORDER DATED 31.12.2008. 2. AT THE OUTSET, THE LEARNED COUNSEL FOR ASSESSEE DRAWS OUR ATTENTION TO THE ADDITIONAL GROUND RAISED VIDE APPLICATION DATED 04. 06.2012 WHICH READS AS UNDER :- FOR THAT THE LD.AO ERRED IN PASSING ORDER U/S 147/ 144 OF INCOME TAX ACT WITHOUT ISSUING NOTICE U/S 143(2) OF INCOME TAX ACT, AND HE NCE THE ASSESSMENT ORDER SO PASSED IN VOID AND LIABLE TO BE QUASHED. 3. THE LEGAL ISSUE RAISED IS THAT NO NOTICE U/S 14 3(2) OF THE ACT WAS EVER ISSUED EITHER WITHIN 12 MONTHS FROM THE DATE OF FILING OF RETURN OF INCOME IN RESPONSE TO 2 NOTICE U/S 148 OF THE ACT OR EVER ISSUED. THE BRIE F FACTS LEADING TO THE ABOVE ISSUE ARE THAT ORIGINAL RETURN OF INCOME DECLARING TOTAL INCO ME OF RS.3,90,330/- WHICH WAS PROCESSED U/S 143(1) OF THE ACT ON 11.01.2007 AND S UBSEQUENTLY WHICH WAS RECTIFIED U/S 154 OF THE ACT ON 28.06.2007. SUBSEQUENTLY AO N OTICED THAT CERTAIN INCOMES HAS ESCAPED ASSESSMENT, HENCE, HE INITIATED ACTION U/S 147 OF THE ACT BY ISSUING NOTICE U/S 148 OF THE ACT ON 23.01.2008. IN RESPONSE TO THE NO TICE U/S 148 OF THE ACT DATED 23.01.2008 ASSESSEE FILED REPLY DATED 22.04.2008 RE QUESTING THE AO TO TREAT THE ORIGINAL RETURN FILED ON 28.03.2006 AS FILED IN COM PLIANCE TO NOTICE U/S 148 OF THE ACT ALSO. COPY OF THE REPLY DATED 22.04.2008 IS PLACED ON RECORDS. HOWEVER, AO HAS ALSO FILED SUBMISSIONS THAT THERE IS NO REQUIREMENT OF I SSUING OF NOTICE U/S 143(2) OF THE ACT AS NO RETURN IN RESPONSE TO NOTICE U/S 148 OF T HE ACT WAS FILED. ITO-WARD-22(1), KOLKATAS LETTER NO.ITO/WD-22(1)/KOL/ITAT/2012-13/4 23 DATED 08.06.2012 STATES AS UNDER :- 1. IN THE CASE OF SMT.SHEELA CHOPRA, PAN:ABWPC613 1D,A.YR.2005-06, NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 WAS ISSUED ON 2 3/01/2008 AND SERVED ON 29/01/2008. THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME IN RESPONSE TO THE NOTICE ISSUED U/S 148 OF THE I.T.ACT. 2. THE ASSESSEE DID NOT FURNISH ANY RETURN OR WRI TTEN SUBMISSION IN RESPONSE TO NOTICE U/S 148 WITHIN 30 DAYS OF RECEIPT OF SAID NO TICE. THEREFORE, THE QUESTION OF ISSUING NOTICE U/S 143(2) DOES NOT ARISE IN THIS CA SE. 3. IT IS TO BE MENTIONED HERE THAT THE REQUEST FO R CONSIDERATION MENTIONED AT POINT NO.(4) OF THE PETITION OF THE ASSESSEE DATED 22/04/ 2008 WAS NOT ACCEPTED WHILE PASSING OF ASSESSMENT ORDER FOR THE A.YR. 2005-2006 ON 31/1 2/2008 BECAUSE OF THE FOLLOWING REASONS : I) THE TOTAL INCOME SHOWN IN THE RETURN FILED U/S 1 39(4) OF THE I.T.ACT, 1961 ON 28/03/2006 WAS RS.3,90,330/-. II) THE REVISED COMPUTATION FILED ALONG WITH THE PE TITION OF THE ASSESSEE DATED 22/04/2008 CLAIMING REVISED TOTAL INCOME OF RS.5,75 ,000/- WAS NOT CONSIDERED AS A RETURN/REVISED RETURN/RETURN IN RESPONSE TO NOTICE U/S 148 DATED 23/01/2008. III) IT IS MANDATORY TO PUT SIGNATURE ON THE RETURN OF INCOME FILED BY THE ASSESSEE FOR ANY ASSESSMENT YEAR FOR TREATING IT AS A VALID RETU RN AS PER PROVISIONS OF SECTION 140 OF THE I.T.ACT, 1961. IN THE INSTANT CASE, EVEN THE RE VISED COMPUTATION FILED BY THE ASSESSEE ON 24/04/2008 WAS NOT SIGNED BY THE ASSESSEE OR HER AUTHORIZED PERSON (COPY OF PETITION DATED 22/04/2008 ALONG WITH ITS ENCLOSURE IS ATTACH ED HEREWITH). 4. ACCORDINGLY, THE ASSESSMENT WAS COMPLETED U/S 1 44/147 OF THE I.T.ACT, 1961 EVEN AFTER PROVIDING REASONABLE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE AND COMPLIANCE TO THE NOTICE U/S 142(1) OF THE I.T.ACT BY THE ASSESSEE. THEREFORE, THE QUESTION OF FURNISHING EVIDENCE IN F ORM OF NOTICE U/S 143(2) OF THE I.T.ACT, 1961 DOES NOT ARISE AT ALL IN THE INSTANT CASE. 3 4. WHEN THE SR.DR SHRI SUJIT KUMAR WAS CONFRONTED T HE LETTER OF THE ASSESSEE DATED 22.04.2008 WHICH IS PLACED IN THE FILE AND WA S EVEN FILED BY THE AO WHICH CLEARLY STATES THAT THE ASSESSEE HAS REQUESTED AO T O TREAT THE ORIGINAL RETURN FILED ON 28.03.2006 FILED IN COMPLIANCE TO THE NOTICE U/S 14 8 OF THE ACT WHICH NEEDS TO BE CONSIDERED. THE LD. SR.DR STATED THAT THIS REPLY WA S FILED AFTER THE EXPIRY OF 30 DAYS AND NOT WITHIN 30 DAYS AS STIPULATED IN NOTICE U/S 148 OF THE ACT. ACCORDINGLY, HE ARGUED THAT THERE IS NO NEED TO ISSUE NOTICE U/S 14 3(2) OF THE ACT, AS THIS REPLY, IF AT ALL CONSIDERED AS RETURN FILED IN RESPONSE TO NOTICE U/ S 148 OF THE ACT, AO HAS RIGHTLY ISSUED NOTICE U/S 142(1) OF THE ACT. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH FACTS AND CIRCUMSTANCES OF THE CASE. FIRST OF ALL WE FIND FROM THE ASSESSME NT ORDER THAT AO HAS CONSIDERED THE REPLY DATED 22.04.2008 AND WHEREBY ASSESSEE VIDE PO INT NO.4 HAS STATED AS UNDER :- 4.THAT MY ORIGINAL RETURN FILED ON 28/03/2006 WHIC H WAS REVISED BY COMPUTATION RS.575,000/- MAY KINDLY BE TREATED AS RETURN FILED DISCLOSING INCOME RA. 575,000/- IN COMPLIANCE TO YOUR NOTICE U/S. 148 OF THE ACT. HOWE VER, YOUR HONOUR IS REQUESTED TO GIVE THE REASONS RECORDED WHICH PROMPTED YOU FOR IS SUING THE NOTICE U/S 148 AT YOUR EARLIEST. FROM THE ASSESSMENT ORDER, IT IS CLEAR THAT AO HAS ACTED UPON THE REVISED COMPUTATION AS FILED IN THE RETURN OF INCOME ALONG WITH LETTER DATED 22.04.2008 AND PASSED ASSESSMENT ORDER ACCORDINGLY. ONCE AO HAS ACTED UPO N THE RETURN FILED BY ASSESSEE HE HAS ACTUALLY CONDONED THE DELAY IN FILING OF RETURN IN RESPONSE TO NOTICE U/S 148 OF THE ACT, WHICH STIPULATES THE TIME LIMIT OF 30 DAYS AND EVEN THE REPLY IS BEYOND THAT PERIOD. ONCE AO HAS ACTED UPON THE RETURN THERE IS NO OPTION EXCEPT TO ISSUE NOTICE U/S 143(2) OF THE ACT FOR FRAMING ASSESSMENT EVEN THOUG H THIS IS A RE-ASSESSMENT U/S 147 R.W.S. 148 OF THE ACT. WE FIND THAT IN THE CASE OF VIPAN KHANNA VS CIT (2002) 255 ITR 220 THE HONBLE PUNJAB AND HARYANA HIGH COURT H AS EXPLAINED THE IMPORTANT PRINCIPLE OF LAW IN RELATION TO POWERS OF AO U/S 14 7 OF THE ACT AND TIME LIMIT SET OUT THEREIN AS WELL AS U/S 143(2) OF THE ACT. THE HONB LE HIGH COURT HAS TAKEN NOTE THAT NOTICE FOR SCRUTINY U/S 143(2) OF THE ACT HAS TO BE ISSUED WITHIN 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN IS FILED AND IF IT IS NOT SO ISSUED THE AO CANNOT, NO DOUBT, EXERCISE HIS POWER U/S 147 OF THE ACT. BUT I T CANNOT BE DONE MERELY FOR SCRUTINIZING THE RETURN. WHERE THE AO HAS ISSUED NO TICE U/S 147 OF THE ACT 4 ACCOMPANIED BY LETTER, INDICATING THAT HE WANTS TO VERIFY THE CLAIM OF CARRIAGE EXPENSES AND INCOME IN EACH OF THE TRUCK, BESIDES C HECKING OF OVERDRAFT ACCOUNT APART FROM SUCH OTHER DETAILS, THERE WAS NO ABSOLUTE INFE RENCE OF ANY ESCAPEMENT OF INCOME. IN SUCH CASE NOTICE HAS TO BE ISSUED ONLY U/S 143(2 ) OF THE ACT AND SECTION 147 IS NOT AN EXTENSION OF RIGHT TO FRAME ASSESSMENT U/S 143(3 ) OF THE ACT AS OTHERWISE PROVIDED THAT THERE WOULD HAVE BEEN NO PURPOSE IN LAYING DOI NG THE TIME LIMIT OF ONE YEAR. EVEN THE HONBLE HIGH COURT HAS CONSIDERED THE BOARD CIR CULAR NO.549 OF 31.10.1989 REPORTED IN [1990] 182 ITR STATUTE 1 EXPLAINING THE NEW PROCEDURE W.E.F. 1.4.1989, WHEREIN THE BOARD HAS IN UNMISTAKABLE TERMS ADVISED ITS OFFICERS THAT, IF THE ASSESSEE HAS NOT BEEN SERVED WITH A NOTICE U/S 143(2) OF THE ACT WITHIN THE STIPULATED TIME HE CAN TAKE IT THAT HIS RETURN OF INCOME HAS BECOME FI NAL AND NO SCRUTINY PROCEEDINGS CAN BE STARTED AFTER THAT. IN RESPONSE TO THE PROCEDURE FOR COMPLIANCE OF ASSESSMENT U/S 143(3) OF THE ACT R.W.S. 147 OF THE ACT, WE FIND HO NBLE SUPREME COURT IN THE CASE OF ACIT VS HOTEL BLUE MOON (2010) 321 ITR 362 (SC) HAS HELD THAT THE PROCEDURE OF ISSUANCE OF NOTICE U/S 143(2) OF THE ACT IS MANDATO RY AND HAS TO BE FOLLOWED FOR FRAMING THE ASSESSMENT. THE HONBLE APEX COURT HAS EMPHASIZED AS UNDER :- (1) WHILE NOTICE U/S 143 (2) IS NOR NECESSARY IF TH E AO ACCEPTS THE RETURN AS FILED, THE NOTICE WITHIN THE PRESCRIBED TIME IS MANDATORY IF THE AO P ROPOSES TO MAKE AN ASSESSMENT U/S 158BC R.W.S143 (3). OMISSION TO ISSUE NOTICE U/S 143(2) I S NOT A PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE AND, THE REQUIREMENT OF NOTICE U/S 143( 2) CANNOT BE DISPENSED WITH. IF THE INTENTION OF THE LEGISLATURE WAS TO EXCLUDE THE PROVISIONS OF S. 143 (2). THE LEGISLATURE WOULD HAVE INDICATED THAT. (II) IN CIRCULAR NO.717 DATED 14.8.1995 THE CBDT HA S DIRECTED THAT THE AO SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCOME OF THE BLOCK PERIO D AND THE PROVISIONS OF S. 142. SUB-S (2) AND (3) OF S. 143 AND S. 144 SHALL APPLY ACCORDINGLY. THIS CIRCULAR CLARIFIES THE REQUIREMENT OF LAW IN RESPECT OF SERVICE OF NOTICE U/S 143 (2). THE CI RCULAR IS BINDING ON THE DEPARTMENT THOUGH NOT ON THE COURT. (III) A SEARCH IS THE SINE QUA NON FOR A BLOCK ASSE SSMENT UNDER CH.. X1V-B. A BLOCK ASSESSMENT IS IN ADDITION TO REGULAR ASSESSMENTS PROCEEDINGS A ND NOT IN SUBSTITUTION THEREOF. THE SCOPE AND AMBIT OF A BLOCK ASSESSMENT IS LIMITED TO MATERIALS UNEARTHED DURING SEARCH AND CAN ONLY BE DONE ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION. 5.1. FURTHER THE HONBLE MADRAS HIGH COURT IN THE C ASE OF CIT VS C. PALANIAPPAN (2006) 284 ITR 257 (MAD)WHILE CONSIDERING THE REOPE NING OF ASSESSMENT U/S 147 R.W.S. 148 OF THE ACT QUA THE ISSUANCE OF NOTICE U/ S 143(2) THE ACT HAS HELD AS UNDER :- WE HEARD LEARNED COUNSEL FOR THE PARTIES. LEARNED COUNSEL APPEARING FOR THE REVENUE SUBMITTED THAT THE APPELLATE TRIBUNAL FAILED TO APP RECIATE THE FACT THAT THE ASSESSMENT WAS COMPLETED ONLY UNDER SECTION 143(1) OF THE ACT AND HENCE THE REOPENING OF 5 ASSESSMENT UNDER SECTION 147 OF THE ACT TO CONSIDER THE CORRECT QUANTUM OF INTEREST ALLOWABLE AS DEDUCTION IN COMPUTING THE INCOME FROM HOUSE PROPERTY WAS CORRECT AS THE ASSESSEE HAD NOR FURNISHED RELEVANT FACTS AND EVIDE NCE ALONG WITH THE RETURN. LEARNED COUNSEL FURTHER SUBMITTED THAT THE APPELLATE TRIBUN AL ERRED IN ITS CONCLUSION THAT IN THE CASE IF REOPENED ASSESSMENT, ISSUE OF NOTICE UNDER SECTION 143 (2) OF THE ACT WITHIN 12 MONTHS IS STATUTORY AND THE TRIBUNAL WAS ALSO WRONG IN DELETING THE ISSUE ON TECHNICAL GROUNDS WITHOUT GOING INTO THE MERITS OF THE CASE IN RESPECT OF QUESTION NO. 1, WE FIND THAT ON A SIM ILAR ISSUE WHICH CAME UP FOR CONSIDERATION IN CIT V. M. CHELLAPPAN [2006] 281 1T R 444, A DIVISION BENCH OF THIS COURT, IN WHICH ONE OF US WAS A PARTY (P. D. DINAKA RAN J.) APPLYING THE RATIO LAID DOWN BY THE PUNJAB AND HARYANA HIGH COURT IN VIPAN KHANN A V. CIT [2002] 255 JTR 220 (P & H), HELD AS FOLLOWS (PAGE 445): ....ADMITTEDLY, NO NOTICES UNDER SECTION 143(2) OF THE ACT WERE SERVED ON THE ASSESSEES WITHIN THE STIPULATED PERIOD OF TWELVE MO NTHS AND, THEREFORE, THE PROCEEDINGS UNDER SECTION 143 OF THE ACT COME TO AN END AND THE MATTER BECOMES FINAL IN VIEW OF THE ABOVE, THE FIRST QUESTION NOW RAISED , THEREFORE, STANDS CONCLUDED IN FAVOUR OF THE ASSESSEE. 5.2. IN VIEW OF THE ABOVE ADMITTED FACTS, AS WELL A S RATIO LAID IN THE CASE OF ACIT VS HOTEL BLUE MOON (SUPRA) AND CIT VS C.PALANIAPPAN (S UPRA), THAT NO NOTICE U/S 143(2) OF THE ACT WAS ISSUED IN THE PRESENT CASE DURING TH E PROCEEDINGS PENDING U/S 148 OF THE ACT, WE ARE OF THE CONSIDERED VIEW THAT RE-ASSE SSMENT FRAMED WITHOUT ISSUANCE OF NOTICE U/S 143(2) OF THE ACT IS WITHOUT JURISDICTIO N AND HENCE QUASHED. 5.2. AS WE HAVE ALREADY DECIDED THE JURISDICTIONAL ISSUE THAT THE ASSESSMENT FRAMED IS WITHOUT JURISDICTION WE NEED NOT CONSIDER THE OT HER JURISDICTIONAL ISSUE AS WELL AS MERITS OF THE CASE. 6. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.06.2012. SD/- SD/- .!'., #$ , C.D.RAO, ACCOUNTANT MEMBER MAHAVIR SINGH, JUDICIA L MEMBER ('$) DATE : 21.06.2012. R.G.(P.S.) 6 #4 / -5 6#5(7- COPY OF THE ORDER FORWARDED TO: 1. SHEELA CHOPRA, CHHAPRIA & ASSOCIATES, SHANTINIKETA N BUILDING, 8, CAMAC STREET, 5 TH FLOOR, SUITE-2, KOLKATA-700017. 2 I.T.O., WARD-22(1), KOLKATA. 3. THE C.I.T. 4. CIT(A)-XIV, KOLKATA. 5. THE CIT(DR), KOLKATA BENCHES, KOLKATA .5 -/ TRUE COPY, #4&1/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES