Income-tax Officer, V. Shri Bhagwan Eknath Kandge, Pune

ITA 886/PUN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0587 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 20-10-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 09-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Assessee Lawyers: HARI KRISHAN
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . . , BEFORE SHRI R.K. PANDA, AM . / ITA NO.886/PN/2015 / ASSESSMENT YEAR : 2005-06 ITO, WARD - 8(5), PUNE . / APPELLANT V/S SHRI BHAGWAN EKNATH KANDGE, NEAR ASWHIAVINAYAK NAGARI MARKET YARD, CHAKAN, TAL. KHED, PUNE PAN : AYIPK0192M . / RESPONDENT / APPELLANT BY : SHRI HITENDRA NINAWE / RESPONDENT BY : SHRI HARIKRISHAN / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 13-03-2015 OF THE CIT(A)-12, PUNE RELATING T O ASSESSMENT YEAR 2005-06. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT ON THE BASIS OF AI R DATA NOTICE U/S.142(1) WAS ISSUED TO THE ASSESSEE ON THE GROU ND THAT THE ASSESSEE AND 7 OTHERS HAD SOLD LAND SITUATED AT NE W GUT NO.2501 (OLD GUT NO.4621) ADMEASURING 4.57 HECTARES. IN RESPONSE TO THE ABOVE NOTICE THE ASSESSEE FILED RETURN OF INCOME IN INDIVIDUAL STATUS SHOWING AGRICULTURAL INCOME OF RS.20,051/-. NO OTHER INCOME WAS SHOWN IN THE RETURN FROM ANY OTHER SO URCE. ALONG WITH RETURN THE ASSESSEE ALSO FILED XEROX OF THE SA LE DEED AND XEROX COPY OF POWER OF ATTORNEY HELD BY THE ASSESS EE. AN / DATE OF HEARING :20.10.2016 / DATE OF PRONOUNCEMENT:21.10.2016 2 ITA NO.886/PN/2015 AFFIDAVIT DULY NOTARISED WAS ALSO FILED STATING THAT THE ASSE SSEE HAS NO OTHER INCOME EXCEPT AGRICULTURAL INCOME AND WAS N EVER LIABLE TO INCOME TAX EARLIER. SINCE THERE WAS NO COMPLIANCE TO THE NOTICE ISSUED U/S.143(2) THE AO PROCEEDED TO COMPLETE THE ASSESSMENT U/S.144 OF THE I.T. ACT. HE OBSERVED FROM TH E POWER OF ATTORNEY THAT THE SAME HAS BEEN EXECUTED IN THE NA ME OF THE ASSESSEE BY THE FOLLOWING PERSONS : 1. SHRI VASANT EKNATH KANDGE 2. SHRI SURESH EKNATH KANDGE 3. SHRI ANKUSH EKNATH KANDGE 4. SMT. TARABAI KISAN BIRDWADE 5. SMT. CHANDRABHGA WAVHAL 6. SMT. ALKA SUDAM WAGHULE 7. SMT. YAMUNA MADHUKAR BIRDWADE 3. ACCORDING TO HIM, ALL THE ABOVE PERSONS ARE FAMILY MEMBERS/CLOSE RELATIVES OF THE ASSESSEE. ON GOING THROUG H THE COPY OF THE SALE DEED THE AO OBSERVED THAT THERE IS NO MENTION AS TO THE RATIO IN WHICH THE SALE CONSIDERATION IS RECEIVED BY THE CO- OWNERS OF THE PROPERTY. IT IS ALSO NOT MENTIONED IN WHOS E NAME THE CHEQUES HAVE BEEN ISSUED AND DEPOSITED. THE SAME IS THE CASE WITH THE AMOUNT OF RS.11,10,000/- RECEIVED IN CASH. H E FURTHER OBSERVED THAT IN RESPECT OF EVERY PAYMENT IT IS MENTIONED THAT ALL THE VENDORS MENTIONED IN THE DEED HAVE FULL CONSE NT FOR PAYMENT. HE THEREFORE WAS OF THE OPINION THAT IT IS DIFFICU LT TO ARRIVE AT THE DEFINITE SHARES IN RESPECT OF EACH VENDOR, A ND THE ASSESSEE THOUGH THE POWER OF ATTORNEY HOLDER FOR THE CO-OWNERS IS A CO-OWNER HIMSELF. HE, THEREFORE, FELT IT APPROPRIATE TO TAK E THE STATUS OF THE ASSESSEE AS AOP AS AGAINST INDIVIDUAL SHOWN IN THE RETURN. THE AO REJECTED THE CLAIM OF THE ASSESSEE THAT THE LAND IN QUESTION IS AGRICULTURAL LAND ON THE GROUND THAT THE 4 PLO TS SURROUNDING THE ASSESSEES OWN LAND HAVE BEEN GIVEN FOR 3 ITA NO.886/PN/2015 DEVELOPMENT TO M/S. RUDRA BUILDERS. FURTHER, THE SAID LAND FALLS IN THE GRAM PANCHAYAT LIMITS OF CHAKAN, A FAST DEVELOPING AR EA WITH A SIZEABLE POPULATION. IN VIEW OF THESE FACTS THE AO H ELD THAT THE LAND FALLS WITHIN THE DEFINITION OF PROVISO (II) TO SECTION 2(1A )(C) OF THE I.T. ACT. FURTHER, IT IS ALSO NOT KNOWN IF THE SALE CONSIDERATION HAS BEEN INVESTED IN ANY ASSETS EXEMPT UN DER THE ACT. IN VIEW OF THE ABOVE, THE AO COMPLETED THE ASSESS MENT U/S.144 R.W.S. 143(3) OF THE ACT AT RS.34,10,000/- IN THE ST ATUS OF AOP. 4. BEFORE CIT(A) IT WAS SUBMITTED THAT THE LAND SOLD BY T HEM IS AN ANCESTRAL LAND. SHRI BHAGWAN KANDGES FATHER SHRI EKN ATH KANDGE DIED INTESTATE ON 30-04-1989 AND HENCE SHRI BHA GWAN KANDGE, HIS 3 BROTHERS, 4 MARRIED SISTERS ALONG WITH THEIR MOTHER INHERITED THE IMPUGNED AGRICULTURAL LAND. AFTER DEATH OF SM T. CHANGUNABAI KANDGE ON 27-09-2002, SHRI BHAGWAN KANDGE AND HIS 3 BROTHERS AND 4 MARRIED SISTERS INHERITED UNDIVIDED 1/8 TH SHARE IN THE SAID PROPERTY. THE ASSESSEE ARGUED THAT THEIR SHARE WAS DETERMINED ACCORDING TO THE SECTION 19 OF THE HINDU SUCCESSION ACT, 1956 AS SMT. CHANDUNABAI KANDGE DIED INTESTATE. ACCORDINGLY, ALL THE PERSONS WERE TENANTS IN C OMMON. IN SUPPORT OF THIS ARGUMENT, THE ASSESSEE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CGT VS. R. VALSA LA AMMA REPORTED IN 82 ITR 828 (SC). THE ASSESSEE THEREFO RE CONTENDED THAT THE CAPITAL GAIN, IF ANY, OUGHT TO HAVE BE EN ASSESSED IN THE HANDS OF EACH INDIVIDUAL AND NOT IN THE ST ATUS OF THE AOP AS DONE BY THE AO. DETAILED WRITTEN SUBMISSION W AS ALSO FILED. 4 ITA NO.886/PN/2015 5. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) HELD THAT THE ASSESSMENT MADE BY THE AO IN THE STATUS OF AOP IS INVALID SINCE THE INCOME WAS ASSESSABLE IN THE ST ATUS OF HUF. THE RELEVANT OBSERVATION OF THE CIT(A) READS AS UNDER : 2.1.6 I HAVE CONSIDERED THE ARGUMENTS OF THE APPELLA NT. THE APPELLANT HAS STATED THAT LEARNED AO HAS ISSUED THE NOTI CE U/S.142(1) ON THE ALL THE PERSONS IN THE STATUS OF THE INDIVIDUALS AND NOT IN THE STATUS OF AOP. FURTHER, ACCORDING TO THE PROVISIONS OF THE SECTION 19 OF THE HINDU SUCCESSION ACT, THE APPELLANT AND HIS BRO THER AND SISTERS ARE TENANTS-IN-COMMON IN THE PROPERTY. THE APPELLA NT HAS RELIED ON THE DECISION IN THE CASE OF CGT VS. R. VALSALA AMMA 82 ITR 828 (SC). 2.1.7 DURING THE APPELLANT PROCEEDINGS, THE REMAND R EPORT WAS CALLED FORM THE AO FOR THE FACTUAL VERIFICATION OF THE APPELLANTS CONTENTIONS. THE LEARNED AO SUBMITTED THE REMAND R EPORT VIDE LETTER DATED 17-09-2014 IN WHICH, IT WAS SUBMITTED THAT NAME S OF ALL 8 INDIVIDUALS ARE APPEARING IN REVENUE RECORDS INCLUDIN G IN THE ORDER OF HAKKACHE PATRA, I.E. LETTER OF DELEGATION OF RIG HTS. 2.1.8 I HAVE CONSIDERED THE ARGUMENTS OF THE APPELLAN T. I DO NOT AGREE WITH HIM. I FIND THAT IN THE CASE OF VALSALA AMMA DECIDED BY THE HONOURABLE SUPREME COURT, CINEMA THEATRE WAS SELF -ACQUIRED PROPERTY OF THE MOTHER, WHICH WAS RECEIVED BY THE ASSE SSEE AND HER SISTER BY WAY OF THE WILL DRAWN BY THEIR MOTHER. IN THESE FACTS, HONOURABLE SUPREME COURT HELD THAT BOTH THE SISTERS HA D THEIR OWN HALF SHARE IN THE CINEMA THEATRE AND THEY HELD THE P ROPERTY AS TENANTS-IN-COMMON AND NOT AS JOINT TENANTS. 2.1.9. THE FACTS ARE DIFFERENT HERE. THE LAND, WHIC H WAS SOLD WAS NOT SELF-ACQUIRED BY SHRI BHAGWAN KANDGES FATHER, SHRI EKNATH KANDGE. THE LAND IS UNDISPUTEDLY AN ANCESTRAL LAND. IT IS SETT LED THAT ANCESTRAL LAND WILL BELONG TO HUF AND EVEN KARTA CANNOT MAKE A WILL WITH RESPECT TO THE HUF PROPERTY AS ACT OF MAKING WILL AMO UNTS TO TREATING THE HUF PROPERTY AS A SELF-ACQUIRED PROPERTY. IT IS A LSO SETTLED THAT ACCORDING TO THE HINDU LAW, HUF CANNOT BE TREATED B Y THE ACT OF PARTIES BUT IT COMES INTO BEING ON BIRTH OF SON UNDER MITAKSHARA SCHOOL HELD BY THE SUPREME COURT IN THE CASE OF T.S. SRINIVASAN VS. CIT (1965) 60 ITR 36 (SC). 2.1.10 NOW, LAND IS INHERITED BY SHRI BHAGWAN KANDGE AND HIS BROTHERS AND SISTERS. IT FOLLOWS THAT THE APPELLANTS BR OTHERS AND SISTERS ARE ALSO JOINT OWNERS OF THE INHERITED PROPERTY. HENCE, THE PROPERTY BELONG TO THE HUF NOT TO AN AOP CONSTITUTIN G THE BROTHERS AND SISTERS AS TREATED BY THE LEARNED AO NOR DOES IT BEL ONG TO SHRI BHAGWAN KANDGE AND HIS BROTHERS AND SISTERS IN THEIR IND IVIDUAL CAPACITY AS CONTENDED BY THE APPELLANT. 2.1.11 FURTHER, THE LEARNED AO HAS ISSUED THE NOTICE U /S.142(1) TO SHRI BHAGWAN KANDGE AND OTHERS IN THEIR INDIVIDUAL C APACITY IN THE STATUS OF INDIVIDUAL, HOWEVER, HE HAS PASSED THE ASSESSMENT ORDER IN THE STATUS OF AOP. AS DISCUSSED, THE LEARNED AO OUGHT TO HAVE ASSESSED THE INCOME RECEIVED FROM SALE OF LAND IN THE STA TUS OF HUF BY ISSUING THE NOTICE IN THE STATUS OF HUF. THE ASSESSMENT ASSESSING 5 ITA NO.886/PN/2015 THE INCOME IN THE INCORRECT STATUS BASED ON THE NOTICE ISSUED IN INCORRECT STATUS CANNOT BE SUSTAINED. ACCORDINGLY, I H OLD THAT THE ASSESSMENT IS LEGALLY INVALID AND HENCE QUASH THE ASSESSMENT ORDER. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE & IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN HOLDING THE ASSESSME NT MADE BY THE AO IN THE STATUS OF AOP AS INVALID BECAUSE AS PER LD . CIT(A) THE INCOME WAS ASSESSABLE IN THE STATUS OF HUF BASED ON MATERIA LS AND ARGUMENTS MADE BEFORE HIM EVEN WHEN THE AO WAS FORCED TO COMPLETE THE ASSESSMENT EX PARTE DUE TO NON CO-OPERATIO N OF THE ASSESSEE AND THE AO HAD NO OCCASION TO COME TO THE SAME C ONCLUSION DURING ASSESSMENT PROCEEDING? 2 . WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN HOLDING THAT THE INCOME SHO ULD BE ASSESSED IN THE STATUS OF HUF WHEN THE ASSESSMENT WAS MADE EX-PARTE BASED ON MATERIAL AVAILABLE ON RECORD DUE TO NON CO-OPERA TION OF THE ASSESSEE AND THEREFORE THE STATUS TAKEN BY AO I.E. AOP C ANNOT BE FAULTED TO DECLARE THE ASSESSMENT AS INVALID? 3 . WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) FAILED TO EXERCISE HIS CO-TERMINUS POWERS ENJ OYED WITH AO IN CORRECTING THE ASSESSMENT IN RESPECT OF STATUS WHEN T HE AO HAD NO OCCASION TO EXAMINE THE SAID ISSUE PROPERLY DUE TO NON CO-OPERATION DURING ASSESSMENT PROCEEDING? 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 7. THE LD. DEPARTMENTAL REPRESENTATIVE REFERRING TO THE GROUNDS RAISED BY THE REVENUE SUBMITTED THAT THE SAME IS SELF EXPLANATORY. HE SUBMITTED THAT THE ASSESSEE DID NOT CO MPLY TO THE STATUTORY NOTICES DURING ASSESSMENT PROCEEDINGS FOR WHICH THE AO WAS CONSTRAINED TO PASS AN ORDER U/S.144R.W.S. 143(3). UNDER THESE CIRCUMSTANCES, THE STATUS TAKEN BY THE AO AS AO P WAS FULLY JUSTIFIED. HE SUBMITTED THAT ALTHOUGH THE POWERS OF THE C IT(A) ARE COTERMINOUS WITH THAT OF THE AO, HOWEVER, HE FAILED TO EXER CISE SUCH POWERS. UNDER THESE CIRCUMSTANCES, THE ORDER OF T HE CIT(A) SHOULD BE REVERSED AND THAT OF THE AO BE RESTORED. 6 ITA NO.886/PN/2015 8. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). REFERRING TO THE DECISI ON OF HONBLE BOMBAY HIGH COURT (NAGPUR BENCH) IN THE CASE OF C IT VS. ASSOCIATED CEMENT AND STEEL AGENCIES REPORTED IN147 ITR 776 HE SUBMITTED THAT UNDER THE SCHEME OF INCOME TAX ACT, 196 1 A FIRM AND AN AOP ARE TWO DIFFERENT PERSONS AND ARE INDEPENDEN T UNITS OF ASSESSMENT, THE MODES OF ASSESSMENT OF FIRM AND AN AOP ARE ALSO DIFFERENT. EVEN IF THE IDENTITY OF THE MEMBERS OF A FIRM A ND AN AOP IS ESTABLISHED THERE CANNOT BE A VALID ASSESSMENT ALTERING THE STATUS DECLARED IN THE RETURN. MANDATORY REQUIREME NT OF ISSUING NOTICE U/S.143(2) OF THE I.T. ACT, 1961 BEFORE MAKING ASSESSMENT U/S.143(3) CANNOT BE LOST SIGHT OF. SINCE IN THE INSTANT CASE THE NOTICE WAS ISSUED IN THE STATUS OF INDIVID UAL AND THE ASSESSMENT WAS COMPLETED IN THE STATUS OF AOP, THER EFORE, IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT CITED (SUPRA) THE ASSESSMENT MADE BY THE AO IN THE STATUS O F AOP IS NOT PERMISSIBLE. 9. REFERRING TO THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. RIDHKARAN REPORTED IN 84 IT R 705 HE DREW THE ATTENTION OF THE BENCH TO THE FOLLOWING HEADNOT ES WHICH READ AS UNDER : SECTION 16 READ WITH SECTION 14 OF THE WEALTH-TAX A CT, 1957 - ASSESSMENT - ASSESSMENT YEAR 1957-58 - WTO ISSUED NOTICES IN INDIVIDUAL NAMES OF KARTAS OF HUF TO ME THEIR RETURNS OF WEALTH TAX WITHOUT SPECIFYING WHETHER THEY WERE TO SUBMIT WEALTH TAX RETURN IN RESPECT OF PROPERTIES BELONGING TO THEIR INDIVIDU ALS OR BELONGING TO HUF - ASSESSEE TILED THEIR RETURNS IN STATUS OF HUF. WT O COMPLETED ASSESSMENTS IS STATUS OF 'INDIVIDUALS' - WHETHER A S NOTICE ISSUED UNDER SECTION 14(2) DID NOT SPECIFY STATUS OF RETURNS TO BE TILED, IT COULD BE SAID THAT WTO HAD EXCEEDED HIS JURISDICTION TO COMPLETE ASSESSMENT OF ASSESSEE IN THEIR INDIVIDUAL STATU S UNDER SECTION 16(3) - HELD, YES. 7 ITA NO.886/PN/2015 HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) IN THE INSTANT CASE IS FULLY JUSTIFIED AND THE GROUNDS RAISED BY T HE REVENUE SHOULD BE DISMISSED. 10. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDE RED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND THE AO IN THE INST ANT CASE ON THE BASIS OF AIR DATA ISSUED NOTICE U/S.142(1) TO THE ASSESSEE AS THE ASSESSEE AND 7 OTHERS SOLD LAND SITUAT ED AT NEW GUT NO.2501 ADMEASURING 4.57 HECTARES FOR A TOTAL CONSIDE RATION OF RS.34,10,000/-. SINCE THERE WAS NON-COMPLIANCE TO THE STATUTORY NOTICES ISSUED U/S.143(2) THE AO COMPLETED THE ASSESSMENT U/S.144 R.W.S. 143(3) DETERMINING THE TOTAL INCOM E AT RS.34,10,000/- IN THE STATUS OF AOP. I FIND THE LD.CIT(A) IN HIS ELABORATE ORDER PASSED HELD THAT THE ORDER PASSED BY THE AO IN THE STATUS OF AOP IS INVALID AND HE SHOULD HAVE ASSESSED THE INCOME RECEIVED FROM SALE OF LAND IN THE STATUS OF HUF BY G IVING THE NOTICE IN THE STATUS OF THE HUF. ACCORDING TO HIM AS SESSMENT ASSESSING THE INCOME IN THE INCORRECT STATUS BASED ON T HE NOTICE ISSUED IN INCORRECT STATUS CANNOT BE SUSTAINED. 11. I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE. ADMITTEDLY, THE AO HAS ISSUED NOTICE TO THE ASSES SEE IN INDIVIDUAL STATUS. HOWEVER, WHILE COMPLETING THE ASSESSMENT HE HAS CHANGED THE STATUS TO THE AOP. I FIND SIMILAR ISSUE H AD COME UP BEFORE THE HONBLE BOMBAY HIGH COURT (NAGPUR BENCH) IN THE CASE OF ASSOCIATED CEMENT AND STEEL AGENCIES (SUPRA). IN THAT CASE, I.E. M/S. ASSOCIATED CEMENT AND STEEL AGENCIES, WAS A 8 ITA NO.886/PN/2015 PARTNERSHIP FIRM CONSISTING OF 4 PARTNERS WHO ARE CLOSELY RELATED TO PARTNERS OF ANOTHER FIRM M/S. S.K. FIDA ALI AND SULTAN ALI. THE ASSESSEE FILED THE RETURN OF INCOME FOR A.Y. 1972-73 IN THE STATUS OF A FIRM AND SUBMITTED A DEED OF PARTNERSHIP FOR REGISTRAT ION U/S.185 OF THE I.T. ACT. THE ITO DID NOT ACCEPT THE GENU INENESS OF THE FIRM AND THEREFORE REFUSED TO GRANT REGISTRATION. AT THE SAME TIME, HE MADE A PROTECTIVE ASSESSMENT TAXING THE INCOME OF THE BUSINESS IN THE STATUS OF AN AOP. THE ASSESSEE PREFERR ED AN APPEAL BEFORE THE AAC WHO ALLOWED THE ORDER U/S.185. ON APPEAL FILED BY THE REVENUE, THE TRIBUNAL REMANDED THE MATTER TO THE AAC FOR FRESH HEARING. THE AAC PASSED THE ORDER CONFIRMIN G THE REGISTRATION GRANTED EARLIER. THE TRIBUNAL UPHELD THE ORD ER OF THE AAC. FOR THE A.Y. 1973-74 AND 1974-75 ALSO THE ASSESSE E FILED RETURN IN THE STATUS OF THE FIRM. SIMILAR ORDERS WERE PASS ED BY THE AO. THE AAC ALLOWED THE APPEAL OF THE ASSESSEE. WH EN THE DEPARTMENT FILED AN APPEAL BEFORE THE TRIBUNAL, THE TRIBUNA L HELD THAT IF THE RETURN WAS SUBMITTED IN THE STATUS OF A FIRM, T HE ASSESSMENT IN THE STATUS OF AN AOP WAS IMPERMISSIBLE. AGA INST THE ORDER OF THE TRIBUNAL, THE REVENUE FILED AN APPEAL BEFO RE THE HONBLE HIGH COURT WHO HELD THAT THE TRIBUNAL WAS CORREC T IN QUASHING THE ASSESSMENT MADE BY THE AO, I.E. ITO IN THE S TATUS OF AN AOP UNDER THE CIRCUMSTANCES. THE RELEVANT OBSERVA TION OF THE HONBLE HIGH COURT READS AS UNDER : THAT A ' FIRM ' AND AN ' ASSOCIATION OF PERSONS ' ARE TWO DIFFERENT 'PERSONS ', AND, INDEED, INDEPENDENT UNITS OF ASSESSMENT, CANNOT BE DISPUTED, CONSIDERING THE WHOLE SCHEME OF THE I.T. ACT , 1961. THE MODE OF THEIR TAXING AND PROCESS (SIC) OF LIABILITY AR E ALSO DIFFERENT. THUS, EVEN IF THE IDENTITY OF THE MEMBERS OF THE ALLE GED FIRM AND THE ASSOCIATION OF PERSONS IS ESTABLISHED, THERE CANNOT BE A V ALID ASSESSMENT ALTERING THE STATUS DECLARED IN THE RETURN. MA NDATORY REQUIREMENT OF ISSUING OF A NOTICE UNDER S. 143(2) BEF ORE MAKING ASSESSMENT UNDER S. 143(3) CANNOT BE LOST SIGHT OF. IN THI S CASE, NOTICE WAS GIVEN TO THE FIRM IN RELATION TO THE RETURN FILE D AS FIRM, AND NO 9 ITA NO.886/PN/2015 NOTICE TO THE ASSOCIATION OF PERSONS WAS ISSUED. THEREFORE , EVEN IF IT IS CORRECT TO MAKE ASSESSMENT IN CERTAIN STATUS, SUCH ASSESSMENT CANNOT BE MADE IN RELATION TO PROCEEDINGS IN AN INCORRECT ST ATUS. THIS, IN OUR VIEW, IS THE ROOT OF THE CONTROVERSY. OUR OPINION, TH EREFORE, IS THAT THE TRIBUNAL WAS CORRECT IN QUASHING THE ASSESSMENT MADE BY THE ITO IN THE STATUS OF AN ASSOCIATION OF PERSONS UNDER THE CIRCUM STANCES. 12. I FURTHER FIND HONBLE RAJASTHAN HIGH COURT IN THE C ASE OF CWT VS. RIDHKARAN (SUPRA) WHILE DECIDING A WEALTH TAX APPEA L HAS ALSO HELD SIMILAR PROPOSITION WHICH READS AS UNDER : ACCORDING TO SECTION 3, INDIVIDUAL, HINDU UNDIVIDED FAMILY AND COMPANY WERE TREATED AS SEPARATE UNITS FOR PURPOSES OF A SSESSING WEALTH-TAX. IT MIGHT BE NOTICED HERE THAT FROM 1-4- 1960, A COMPANY IS NOT A UNIT FOR ASSESSING WEALTH-TAX. FROM THE SCRUTINY OF SECTION 16, IT IS ABUNDANTLY CLEAR THAT THE ASSESSMENT UNDER SECT ION 16(1) AND 16(3) ENVISAGES A RETURN HAVING BEEN FILED BY THE ASSESSEE. THERE CAN BE NO ASSESSMENT UNDER THESE SUB-SECTIONS IF THE ASSESSEE HAS NOT FILED A RETURN. WHERE THE ASSESSEE DOES NOT FILE A RETURN, THE ONLY SECTION AVAILABLE TO THE WEALTH-TAX OFFICER TO ASSESS THE NET WEALTH IS SUB-SECTION (5) OF SECTION 16 WHERE H E CAN ESTIMATE HIS NET WEALTH TO THE BEST OF HIS JUDGMENT AN D DETERMINE THE AMOUNT OF WEALTH-TAX PAYABLE BY HIM. IN THE INST ANT CASE, NOTICES WERE ISSUED UNDER SECTION 14(2). THE NOTICE DID NOT SPECIFY THE STATUS UNDER WHICH THE ASSESSEE WAS REQUIRED TO FILE T HE RETURN. HOWEVER, IT DID ENTITLE THE ASSESSEE TO FILE THE RETURN EITHER AS 'INDIVIDUAL' OR AS 'KARTA' OF THE HINDU UNDIVIDED FA MILY. THE RETURNS WERE ADMITTEDLY FILED AS THE KARTAS REPRESENTIN G THEIR HINDU UNDIVIDED FAMILIES. THE RETURNS BEFORE THE WEAL TH-TAX OFFICER WERE ON BEHALF OF THE HINDU UNDIVIDED FAMILY AND TH ERE WAS NO RETURN BY THEM IN THE STATUS OF 'INDIVIDUAL'. IT WAS N OT THEREFORE OPEN TO THE WEALTH-TAX OFFICER TO COMPLETE THE ASSESSME NT UNDER SECTION 16(3) OF THE KARTAS REPRESENTING THEIR HINDU U NDIVIDED FAMILIES IN THE STATUS OF 'INDIVIDUAL'. ASSESSMENT UNDER SE CTION 16(3) CONTEMPLATES FILING OF THE RETURN BY THE ASSESSEE. THE STATUS OF 'INDIVIDUAL' AND 'HINDU UNDIVIDED FAMILY' ARE SEP ARATE UNITS. THEREFORE, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT IN COMPLETING THE ASSESSMENTS AGAINST THE KARTAS IN THEIR 'INDIVIDUAL' ST ATUS WITHOUT ISSUING AFRESH NOTICE TO THEM UNDER SECTION 14( 2) TO FILE THE RETURNS, THE WEALTH-TAX OFFICER EXCEEDED HIS JURISDIC TION UNDER SECTION 16. THE WEALTH-TAX OFFICER HAD, IN ASSESSING THE KARTAS IN THEIR 'INDIVIDUAL' STATUS WHILE THEY HAD FILED THE RE TURNS AS 'HINDU UNDIVIDED FAMILY', ACTED CONTRARY TO SECTION 16(3) A S IT WAS TO ASSESS THEM AS A DIFFERENT UNIT AND WITHOUT THE RETURN IN THE STATUS AS 'INDIVIDUAL'. 13. IN VIEW OF THE DETAILED REASONING GIVEN BY THE CIT(A) AND IN THE LIGHT OF THE DECISIONS CITED ABOVE, I HOLD THAT THE AO WAS NOT JUSTIFIED IN COMPLETING THE ASSESSMENT IN THE STATUS OF AN AOP 10 ITA NO.886/PN/2015 WHEN THE NOTICE WAS ISSUED TO THE ASSESSEE IN HIS INDIVID UAL CAPACITY. THE LD.CIT(A) HAS GIVEN VALID REASONS THAT THE AO SHOULD HAVE ASSESSED THE INCOME RECEIVED FROM SALE OF LAND IN THE STATUS OF HUF BY ISSUING THE NOTICE IN THE STATUS OF THE HUF. THE ASSESSMENT ASSESSING THE INCOME IN THE INCORRECT STATU S BASED ON THE NOTICE ISSUED IN THE INCORRECT STATUS CANNOT BE SUS TAINED. I THEREFORE UPHOLD THE ORDER OF CIT(A) AND THE GROUNDS RA ISED BY THE REVENUE ARE DISMISSED. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21-10-2016. SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER PUNE ; DATED : 21 ST OCTOBER, 2016. '# $# / COPY OF THE ORDER FORWARDED TO : / BY ORDER , /// // $ % / TRUE COPY // // TRUE COPY // &' % * / SR. PRIVATE SECRETARY *, / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) - 1 2, PUN E 4. THE CIT- 1 2, PUNE 5. $ %%* , * , SMC BENCH / DR, ITAT, SMC BENCH PUNE; 6. 2 / GUARD FILE.