Shri Badiga Subramanyam, Hyderabad V. Income Tax Officer, Ward-6(3), Hyderabad

ITA 952/HYD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69906 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 15-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K HAITHA
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Unexplained investment; Opportunity of being heard
• Section: 142(1); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A ', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.952/HYD/12 : ASSESSMENT YEAR 2005 - 06 SRI BADIGA SUBRAHMANYAM, HYDERABAD (PAN AABCV 9967 F) V/S. INCOME TAX OFFICER WARD 6(3), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.MURALI MOHAN RAO RESPONDENT BY : SMT. K.HAITHA DR DATE OF HEARING 25 .1 1 .2013 DATE OF PRONOUNCEMENT 25.11.2013 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) GUNTUR DATED 28.2.2012 FOR THE ASSESSMENT YEAR 2005 - 06. 2. FIR S T GROUND IS THAT THE CIT(A) ERRED IN C ON F IR M IN G THE O R DER OF ASSESSING OFFICER PASSED UNDER S.144 OF THE ACT, MORE SO , W HEN NOTICE UNDER S.142(1) HAS BEEN ISSUED ON 30.8.2007 , WHICH IS AFTER TH E EXPIRY OF STATUTORILY PRESCRIBED TIME OF MORE THAN ON E YEAR FROM THE END O F THE ASSESSMENT YEAR, I.E.31.3.2007 WHICH IS THE TIME AVAILABLE FOR FILING THE RETURN OF IN C OM E THE UNDER PROVISION S O F S.139(4) OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT BASED ON THE INFORMATION RECEIVED BY THE DEPARTMENT THAT THE ASSESSEE HAS MADE DEPOSITS OF RS .15,15,444 AND RS.28,78,3300 IN SAVINGS BANK ACCOUNT WITH UNION BANK OF INDIA, SINCE ASSESSEE HAS NOT BEEN ASSESSED TO TAX, NOTICE HAS BEEN ISSUED UNDER S.142(1) TO FILE THE RETURN OF IN C OM E . SUBSEQUENTLY, AS THERE WA S NO RESPONSE FROM THE ASSESSEE, THE ASSESSING OFFICER ITA NO. 9 5 2 / HYD/201 2 SRI BADIGA SUBRAHMANYAM, HYDERABAD 2 COMPLETE D THE ASSESSMENT EX - PARTE UNDER S.144, TR E ATING THE ENTIRE DEPO S I T S MADE IN TH E UNION BANK OF INDIA, MUMBAI, AMOUN T IN G TO R S .43,93,744 AS UNEXPLAINED INVESTMENT UNDER S.69 OF THE ACT , WHICH R E SULTED IN A TAX DEMAND OF RS.23,48,612. 4. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE QUESTIONED NOT ONLY THE LEGALITY AND VALIDITY O F THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER S.144 OF THE ACT, BY GIVING NOTICE UNDER S.142(1) OF THE ACT, AFTER THE TIME PRESCRIBED IN THE STATUTE AS TO THE TIME AVAILABLE FOR ISSUANCE OF SUCH NOTICE OF THE LAST DATE OF THE RELEVANT ASSESSMENT YEAR, BUT ALSO ON THE MERITS TH E REOF. THE CIT(A), BY THE IMPUGNED ORDER, THOUGH REJECTED THE GROUNDS OF THE ASSESSEE ON THE LEGALITY AND VALIDITY OF THE ASSESSMENT MADE AND APPROVED THE RECOURSE MADE BY THE ASSESSING OFFICER TO THE PROVI S ION S OF S.144 OF THE ACT, ON THE MERITS OF THE ADDITION MADE UNDER S.69 OF THE ACT, CONSI D ERIN G THE FACT THAT NO PROPER OPPORTUNITY WAS G IVEN TO THE ASSESSEE, DIRECTED THE ASSESSING OFFICER TO AFFORD AN OPPORTUNITY TO THE ASSESSEE AND CONCLUDE THE DECISION IN A SPEAKING MANNER. 5. AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEFORE US. 6. WE HA VE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL ON RECORD. AS FOR THE GRIEVANCE OF THE ASSESSEE WITH REGARD TO THE ISSUANCE OF NOTICE UNDER S.142(1) AFTER THE END OF THE LAST DAY OF ASSESSMENT YEAR, VIZ . 31.3.20 - 07 WHICH IS THE TIME AVAILABLE FOR FILING THE RETURN UNDER S.139(4) OF THE ACT, WE FIND THAT THIS ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN THE CASE OF DY. DIRECTOR OF IT(INTL. TAXATION) V/S. SMT. KAUSARI BEGUM WHEREIN THE TRIBUNAL VIDE ITS ORDER DATED 18.5.2012 IN ITA NO .532/HYD/2010 FOR ASSESSMENT YEAR 2005 - 06 , HAS DECIDED THE MATTER IN FAVOUR OF THE REVENUE IN THE FOLLOWING MANNER - ITA NO. 9 5 2 / HYD/201 2 SRI BADIGA SUBRAHMANYAM, HYDERABAD 3 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ONLY IS SUE TO BE DECIDED IN THIS APPEAL IS WHETHER NOTICE U/S 142(1) ISSUED AFTER END OF ONE YEAR FROM THE RELEVANT ASSESSMENT YEAR IS BARRED BY LIMITATION OR NOT. AT THIS STAGE, IT IS NECESSARY TO LOOK INTO THE PROVISIONS CONTAINED U/S 142(1) OF THE ACT. '142 (1 ) FOR THE PURPOSE OF MAKING AN ASSESSMENT UNDER THIS ACT, THE AO MAY SERVE ON ANY PERSON WHO HAS MADE A RETURN (UNDER SECTION 115WD OR SECTION 139 (OR IN WHOSE CASWE THE TIME ALLOWED UNDER SUB - SECTION (1) OF SECTION 139] FOR FURNISHING THE RETURN HAS EXPIR ED] A NOTICE REQUIRING, ON A DATE TO BE THEREIN SPECIFIED - (I) WHERE SUCH PERSON HAS NOT MADE A RETURN (WITHIN THE TIME ALLOWED UNDER SUB - SECTION (1) OF SECTION 139 (OR BEFORE THE END OF THE RELEVANT ASSESSMENT YEAR] TO FURNISH A RETURN OF HIS INCOME OR TH E INCOME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT, IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED, OR [PROVIDED THAT WHERE ANY NOTICE HAS BEEN SERVED UNDER THIS SUB - SECTION FOR THE PURPOSES OF THIS CLAUSE AFTER THE END OF THE RELEVANT ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 1990 TO A PERSON WHO HAS NOT MADE A RETURN WITHIN THE TIME ALLOWED UNDER SUB - SECTION (1) OF SECTION 139 OR BE FORE THE END OF THE RELEVANT ASSESSMENT YEAR, ANY SUCH NOTICE ISSUED TO HIM SHALL BE DEEMED TO HAVE BEEN SERVED IN ACCORDANCE WITH THE PROVISIONS OF THIS SUB - SECTION' THE PROVISO TO SECTION 142(1) WAS INTRODUCED BY FINANCE ACT, 2006 WITH RETROSPECTIVE EFFE CT FROM 1 - 4 - 1990. THE AFORESAID AMENDMENT AS EXPLAINED IN THE NOTES ON CLAUSES TO THE FINANCE BILL, 2006 IS REPRODUCED BELOW: - 'CLAUSE 35 OF THE BILL SEEKS TO AMEND SECTION 142 OF THE INCOME - TAX ACT RELATING TO INQUIRY BEFORE ASSESSMENT. THE EXISTING PROV ISIONS CONTAINED IN CLAUSE (I) OF SUB - SECTION (1) OF SAID SECTION PROVIDE THAT WHERE A PERSON HAS NOT MADE A RETURN OF INCOME WITHIN THE TIME ALLOWED UNDER SUB - SECTION (1) OF SECTION 139, THE AO MAY SERVE A NOTICE ON HIM REQUIRING HIM TO FURNISH THE RETUR N OF INCOME. IT IS PROPOSED TO AMEND THE SAID CLAUSE (I) SO AS TO PROVIDE THAT WHERE A PERSON HAS NOT MADE A RETURN OF INCOME BEFORE HT END OF THE RELEVANT ASSESSMENT YEAR, THE AO MAY SERVE A NOTICE UNDER THIS SUB - SECTION ON HIM AFTER THE END OF THE RELEVA NT ASSESSMENT YEAR, REQUIRING HIM TO FURNISH RETURN OF INCOME. ITA NO. 9 5 2 / HYD/201 2 SRI BADIGA SUBRAHMANYAM, HYDERABAD 4 THIS AMENDMENT WILL TAKE EFFECT FROM 1ST APRIL, 2006. IT IS FURTHER PROPOSED TO PROVIDE THAT THE NOTICE REFERRED TO IN SAID SUB - SECTION FOR THE PURPOSES OF SAID CLAUSE SERVED AFTER THE END OF THE RELEVANT ASSESSMENT YEAR COMMENCING ON OR AFTER 1ST APRIL, 1990 SHALL BE DEEMED TO BE A NOTICE SERVED IN ACCORDANCE WITH THE PROVISIONS OF THE AFORESAID SUB - SECTION. THIS AMENDMENT WILL TAKE EFFECT RETROSPECTIVELY FROM 1ST APRIL, 1990.' A PLAIN READING OF SECTION 142(1) ALONG WITH ITS PROVISO AND EXPLANATIONS TO NOTES MAKES IT CLEAR THAT IN A CASE WHERE NO RETURN OF INCOME HAS BEEN FILED WITHIN THE TIME ALLOWED U/S 139(1) OF THE ACT, THE AO IS VESTED WITH POWER TO ISSUE NOTICE U/S 142(1) EVEN AFTER THE END OF THE RELEVANT ASSESSMENT YEAR. WHEN THERE IS NO EXPRESS PROVISION LIMITING ISSUANCE OF NOTICE U/S 142(1) WITHIN THE PERIOD OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR, NO SUCH LIMITATION CAN BE READ INTO THE PROVISION. IN VIEW OF THE ABO VE, WE DO NOT FIND ANY SUBSTANTIAL FORCE IN THE ARGUMENT OF THE LEARNED AR OF THE ASSESSEE THAT NOTICES U/S 142(1) CANNOT BE ISSUED WHEN NO RETURN OF INCOME WAS FILED. THE PROVISION U/S 142(1) IS VERY MUCH CLEAR IN THIS RESPECT. THE DECISION OF ITAT, CALCU TTA BENCH IN THE CASE OF SHAW WALLACE & CO. LTD. VS. DCIT (2006) 101 TTJ 258 RELIED UPON BY THE LEARNED AR IS OF NO HELP TO THE ASSESSEE AS IT WAS RENDERED PRIOR TO THE INSERTION OF PROVISO TO SECTION 142(1) OF THE ACT. WE ARE THEREFORE OF THE VIEW THAT TH E CIT (A) WAS NOT CORRECT IN HOLDING THE ISSUANCE OF NOTICE U/S 142(1) TO BE AB INITIO VOID. SINCE THE CIT (A) HAS DECIDED THE APPEAL ON TECHNICAL ISSUE WITHOUT GOING INTO MERITS OF THE CASE, WE THINK IT PROPER TO SET ASIDE THE MATTER TO THE FILE OF THE CI T (A) AND DIRECT HIM TO DISPOSE OF THE APPEAL ON MERITS IN ACCORDANCE WITH LAW AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THIS VIEW OF THE MATTER, WE FIND NO MERIT IN THE GROUNDS OF THE ASSESSEE IN THIS APPEAL ON TH E LEGAL ASPECT. 7. AS FOR THE MERITS OF THE ADDITION MADE BY THE ASSESSING OFFICER, THE CIT(A) HAS ALREADY DIRECTED THE ASSESSING OFFICER TO REDECIDE THE ISSUE AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ONLY ADD THAT WHILE PASSING THE CONSEQUENTIAL ORDER, THE ASSESSING OFFICER SHALL CONSIDER THE PENDING RETURN FIELD BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, VIZ. ITO 6(3), HYDERABAD, ON 4 TH AUGUST, 2005. THE ASSESSING OFFICER SHALL THUS ACCORDINGLY REFRAME THE ASSESSMENT, TAKING ON TO ACCOUNT, THE RETURN FILED BY THE ASSESSEE ON 4.8.2005, IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO. 9 5 2 / HYD/201 2 SRI BADIGA SUBRAHMANYAM, HYDERABAD 5 5. IN THE RESULT, ASSESSEES APPEAL IS TREATED A PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT AT THE CONCLUSION OF HEARING ON 25.11.2013 SD/ - SD/ - ( ASHA VIJAYARAGHAVAN ) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED/ - 25 TH NOVEMBER, 2013 COPY FORWARDED TO: 1 SRI BADIGA SUBRAHMANYAM, C/O. M/S.P.MURALI & CO.,CHARTERED ACCOUNTANTS, 6 - 3 - 655/2/3, 1ST FLOOR, SOMAJIGUDA, HYDERABAD - 82 2 INCOME TAX OFFICER WARD 6 (3), HYDERABAD 3 COMMISSIONER OF INCOME - TAX(A) IV, GUNTUR 4 COMMISSIONER OF INCOME - TAX, GUNTUR 5 DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S