Sri. Chandra Reddy, Bangalore V. DCIT, Bangalore

ITA 917/BANG/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6933 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-11-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 21-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE JT
• Assessee Lawyers: V SRINIVASAN
• Keywords: Opportunity of being heard
• Section: 143(3); 132; 144; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NOS. 917 TO 923/BANG/2010 ASSESSMENT YEARS : 2001-02 TO 2007-08 SHRI CHANDRA REDDY, ERSTWHILE KARTHA OF SRI CHANDRA REDDY (MINOR HUF), 1 ST CROSS, NEAR RAMA TEMPLE, BEHIND GOVT. PRIMARY SCHOOL, ANNASANDRAPALYA, BANGALORE. PAN : AASHS 6410G VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(4), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI V. SRINIVASAN, C.A. RESPONDENT BY : SMT. SUSAN THOMAS JOSE, JT.CIT(DR) DATE OF HEARING : 24.11.2011 DATE OF PRONOUNCEMENT : 24.11.2011 O R D E R PER N.K. SAINI, ACCOUNTANT MEMBER THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER DATED 25.6.2010 OF THE CIT(APPEALS)-II, BANGA LORE. ITA NOS.917 TO 923/B/10 PAGE 2 OF 6 2. IN ALL THESE APPEALS, COMMON GROUNDS ARE RAISED AND THE APPEALS WERE HEARD TOGETHER, SO THESE ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. COMMON GROUNDS RAISED IN THESE APPEALS READ AS U NDER: (1) THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS IT IS AGAINST THE APPELLANT ARE OPPOSED TO LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. (2) THE LEARNED CIT[A] IS NOT JUSTIFIED IN DISMISS ING THE APPEAL IN-LIMINE AND HOLDING THAT THE APPEAL IS NOT MAINTAINABLE ON ACCOUNT OF NON-PAYMENT OF THE TAX ON THE RETUNED INCOME UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APP ELLANTS CASE. HE OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HAD CONTENDED THAT THE ORDER OF ASSESSMENT PASSED IS BAD IN LAW A S NO ORDER COULD HAVE BEEN PASSED ON THE APPELLANT AFTER THE D ISRUPTION OF THE JOINT FAMILY AND HENCE, THE APPEAL FILED BY THE APPELLANT IS MAINTAINABLE AND OUGHT TO HAVE BEEN ADMITTED AND DI SPOSED OFF ON MERIT. THE REJECTION OF THE APPEAL BY THE LEARNE D CIT[A] IS OPPOSED TO LAW AND HENCE THE ORDER PASSED BY THE LE ARNED CIT[A] REQUIRES TO BE VACATED. (3) THE APPELLANT MINOR JOINT FAMILY DENIES ITSELF LIABLE TO BE ASSESSED BY THE LEARNED A.O IN AS MUCH AS IT HAD CE ASED TO EXIST PURSUANT TO THE FINAL PARTITION ON 16/09/2008, WHIC H FACT IS NOT AT ALL IN DISPUTE, UNDER THE FACTS AND IN THE CIRCUMST ANCES OF THE APPELLANTS CASE AND DESERVES TO BE CANCELLED. (4) THE APPELLANT DENIES ITSELF LIABLE TO BE ASSES SED UNDER THE IMPUGNED ORDER AS THE SEARCH ITSELF IS ILLEGAL AND ULTRA VIRES THE PROVISIONS OF SEC. 132(1)(A)(B) AND (C) OF THE ACT. (4.1) THE AUTHORITIES BELOW FAILED TO APPRECIATE TH AT THERE WAS A SURVEY IN THE RESIDENTIAL PREMISES OF CHANDRA REDDY , ERSTWHILE KARTHA OF THE APPELLANT HEREIN, AND THAT THE ASSETS SEIZED WERE DISCOVERED DURING THE COURSE OF SURVEY AND THEREFOR E, HAVING REGARD TO THE KNOWLEDGE OF THE EXACT LOCATION OF CA SH, FD ETC., THERE WAS NO NECESSITY TO ISSUE A WARRANT AT ALL. C ONSEQUENTLY THE SEARCH ITSELF IS ILLEGAL AND THE ASSESSMENT MADE U/ S 153C RWS 143(3) OF THE ACT ARE ALL ILLEGAL AND LIABLE TO BE CANCELLED. (5) WITHOUT PREJUDICE TO THE ABOVE, THE ORDER OF AS SESSMENT PASSED U/S 153C RWS 144 OF THE ACT IS BAD IN LAW AN D VOID-AB- INITIO IN AS MUCH THERE WAS NO JUSTIFICATION TO ISS UE THE NOTICE U/S ITA NOS.917 TO 923/B/10 PAGE 3 OF 6 153C OF THE ACT AND THEREFORE THE ORDER OF ASSESSME NT PASSED IS OPPOSED TO LAW CONSEQUENTLY THE IMPUGNED ASSESSMENT ORDER DESERVES TO BE CANCELLED. (5.1) WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITT ED THAT THE LEARNED A O OUGHT TO HAVE FURNISHED THE REASONS REC ORDED FOR ISSUING THE NOTICE U/S 153C OF THE ACT, ORDER OF TH E COMMISSIONER OF INCOME TAX CENTRALIZING THE CASE OF THE APPELLAN T, AND THAT THE ASSESSMENT MADE WITHOUT FURNISHING THE REASONS RECO RDED IS LIABLE TO BE CANCELLED. (5.2) WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED A .O. IS NOT JUSTIFIED IN NOT SERVING THE NOTICE U/S 143(2) IN A IMPROPER MANNER, VIZ, GIVING UNREASONABLY SHORT TIME FOR COM PLIANCE AND CONSEQUENTLY, THE ORDER OF ASSESSMENT PASSED EX-PAR TE U/S.144 OF THE ACT IS BAD IN LAW AND LIABLE TO BE CANCELLED. (6) THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN ASSE SSING THE TOTAL INCOME OF THE APPELLANT AT RS.78,142/- UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE AFTER NOT ICING THAT THE APPELLANT JOINT FAMILY HAD CEASED TO EXIST AND COUL D NOT BE ASSESSED UNDER THE ACT. (7) WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER WITH THE HONBLE CCIT/DG, THE APPELLANT DENIES ITSELF LIABLE TO BE CHARGED TO INTEREST U/S 234-A, 234-B AND 234-C OF THE ACT, WHICH UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT S CASE DESERVES TO BE CANCELLED. (8) FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBL Y PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF THE C OSTS. 4. THE MAIN GRIEVANCE OF THE ASSESSEE VIDE GROUND N O.2 IN THESE APPEALS RELATES TO THE ACTION OF THE LD. CIT(APPEAL S) IN DISMISSING THE APPEAL IN LIMINE BY HOLDING THAT THE APPEALS WERE N OT MAINTAINABLE ON ACCOUNT OF NON-PAYMENT OF TAX ON THE RETURNED INCOM E. 5. THE FACTS OF THE CASE RELATING TO THIS ISSUE IN BRIEF ARE THAT A SEARCH ACTION U/S. 132 OF THE INCOME-TAX ACT, 1961 [HEREIN AFTER REFERRED TO AS THE ITA NOS.917 TO 923/B/10 PAGE 4 OF 6 ACT IN SHORT] WAS CARRIED OUT ON 31.8.2006 IN TH E RESIDENTIAL PREMISES OF SHRI CHANDRA REDDY I.E., THE ASSESSEE, LOCATED AT I CROSS, NEAR RAMA TEMPLE, BEHIND GOVERNMENT PRIMARY SCHOOL, ANNASANDR APALYA, BANGALORE. CERTAIN INCRIMINATING DOCUMENTS WERE FO UND AND SEIZED DURING THE COURSE OF SEARCH. THE AO ISSUED NOTICE U/S. 15 3C OF THE ACT TO THE ASSESSEE IN ORDER TO BRING THE UNACCOUNTED INVESTME NTS FOR TAXATION. THE ASSESSING OFFICER COMPLETED THE ASSESSMENTS EX PARTE U/S. 153C R.W. SECTION 144 OF THE ACT ON THE BASIS OF INFORMATION AVAILABLE ON RECORD. THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(APPEALS) AND SUBMITTED THAT THE ERSTWHILE JOINT FAMILY WAS NOT HITHERTO ASSESSED IN AS MUCH AS IT HAD CEASED TO EXIST PURSUANT TO A PARTITION, SO IT WAS LEGALLY INCAPABLE OF BEING ASSESSED AND IN THE ABSENCE OF ANY ASSESSMENT, THER E WAS NO QUESTION OF ANY TAX PAYABLE ON THE RETURNED INCOME. IT WAS ALS O STATED THAT THE APPEALS OF THE ASSESSEE WERE MAINTAINABLE. RELIANC E WAS PLACED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SRI T. GOVINDAPPA SETTY REPORTED IN 231 ITR 892 . THE LD. CIT(A) HOWEVER HELD THAT THE APPEALS BY THE ASSESSEE WERE NOT MAINTAINA BLE SINCE THE DUE TAXES ON THE RETURNED INCOME HAD NOT BEEN PAID BEFO RE FILING THE APPEALS AS REQUIRED UNDER THE PROVISIONS OF SECTION 249(4)( A) OF THE ACT. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE KARNATAKA HIG H COURT IN THE CASE OF D. KOMALAKSHI V. DCIT 292 ITR 99 . NOW THE ASSESSEE IS IN APPEAL. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE, AFTER RECEIVING THE NOTICE FROM THE LD. CIT(A), WHO ASKED EXPLANATION FROM THE ASSESSEE REGARDING THE NON-PAYMENT OF TAXES DUE ON THE RETURNED INCOME, VIDE LETTER DATED 22.6.2010 FILED WRITTEN SUBMISSIO NS AND SUBMITTED THAT THE ITA NOS.917 TO 923/B/10 PAGE 5 OF 6 ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SRI T. GOVINDAPPA SETTY REPORTED IN 231 ITR 892 . IT WAS FURTHER STATED THAT THE LD. CIT(A) RELIED ON THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF D. KOMALAKSHI V. DCIT 292 ITR 99 WHEREIN THE FACTS WERE DIFFERENT FROM THE FACTS OF THE ASSESSEES CASE AND THE SAID JUDGMENT WAS NOT CONFRONTED TO THE ASSESSEE, THEREFORE A PROPER OPPORTUNITY OF BEI NG HEARD WAS NOT AFFORDED TO THE ASSESSEE WHILE DISMISSING THE APPEA L IN LIMINE . 7. IN HER RIVAL SUBMISSIONS, THE LD. DR STRONGLY SU PPORTED THE ORDER OF THE LD. CIT(A) AND FURTHER STATED THAT AS PER THE P ROVISIONS CONTAINED IN SECTION 249(4)(A) OF THE ACT, THE LD. CIT(A) RIGHTL Y CONSIDERED THE IMPUGNED APPEALS FILED BEFORE HIM AS NON-MAINTAINABLE, BECAU SE DUE TAXES ON THE RETURNED INCOME WAS NOT PAID BY THE ASSESSEE. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE THE LD. CIT(A) WHILE DISMISSING THE APPEALS OF THE ASSESSEE IN LIMINE RELIED ON THE JUDGMENT OF THE HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF D. KOMALAKSHI V. DCIT (SUPRA) , BUT IT IS NOT CLEAR AS TO WHETHER THE SAID JUDGMENT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE BEFORE APPLYING IN ASSESSEES CASE. DURING THE COURSE OF HEARING, TH E MAIN CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE WAS THAT THE SAID JUDG MENT HAS BEEN APPLIED BY THE LD. CIT(A) WITHOUT CONFRONTING TO THE ASSESS EE AND THAT THE FACTS IN THE ASSESSEES CASE AND THE CASE OF D. KOMALAKSHI V. DCIT (SUPRA) ARE DIFFERENT. IT IS WELL SETTLED THAT NOBODY SHOULD B E CONDEMNED UNHEARD, BUT IN THE PRESENT CASE IT APPEARS THAT THE DECISION OF THE HONBLE JURISDICTIONAL ITA NOS.917 TO 923/B/10 PAGE 6 OF 6 HIGH COURT WHICH WAS RELIED BY THE LD. CIT(A) WAS N OT CONFRONTED TO THE ASSESSEE AND NO OPPORTUNITY WAS GIVEN TO THE ASSESS EE TO EXPLAIN HOW THE FACTS OF THE PRESENT CASE WERE NOT SIMILAR TO THE F ACTS INVOLVED IN THE CASE OF D. KOMALAKSHI V. DCIT (SUPRA) WHICH HAS BEEN APPLIED WHILE TAKING THE DECISION AGAINST THE ASSESSEE BY HOLDING THAT THE A PPEAL WAS NOT MAINTAINABLE. WE THEREFORE, CONSIDERING THE TOTALI TY OF THE FACTS, DEEM IT APPROPRIATE TO REMAND THIS ISSUE BACK TO THE FILE O F THE LD. CIT(APPEALS), TO BE DECIDED AFRESH IN ACCORDANCE WITH THE LAW, AFTER AFFORDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 9. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF NOVEMBER, 2011. SD/- SD/- ( SMT. P. MADHAVI DEVI ) ( N.K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 24 TH NOVEMBER, 2011. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.