Smt. Praveen Sewak Nayyar, Pune V. Income-tax Officer, Ward - 5 (1), Pune

ITA 977/PUN/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0235 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-06-2020
• Assessment Year: 2009-2010
• Appeal Filed On: 05-07-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M HARI KRISHAN
• Keywords: Unexplained investment; Gift; Tangible material; Capital Gains
• Section: 143(3); 48; 148; 139; 54

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.977/PUN/2019 / ASSESSMENT YEAR : 2009-10 SMT. PARVEEN SEWAK NAYYAR, 801-802, A2A, MANIKCHAND MALABAR HILLS, LULLANAGAR, PUNE 411040. PAN : ABWPN8238Q. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 5(1), PUNE. . / RESPONDENT ASSESSEE BY : SHRI M. HARI KRISHAN. REVENUE BY : SHRI PRASHANT MAHAJAN. / ORDER PER SHRI D. KARUNAKARA RAO THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) 9, PUNE DATED 10.05.2 019 FOR THE ASSESSMENT YEAR 2009-10. 2. ASSESSEE IS AN INDIVIDUAL WHO FILED HER RETURN OF INCOME FOR A.Y. 2009-10 DECLARING TOTAL INCOME AT RS.2,28,780/- ON 06.06.201 1. ORIGINALLY, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. T HE CASE WAS / DATE OF HEARING : 23.06.2020 / DATE OF PRONOUNCEMENT : 24 .06.2020 2 REOPENED BY ISSUING NOTICE U/S 148 OF THE ACT DATED 29. 03.2012. IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT, ASSESSEE F ILED RETURN ON 06.06.2011 AND ALSO FILED VARIOUS DOCUMENTS AS REQUIRED BY THE AO. THEREAFTER, THE RE-ASSESSMENT WAS FRAMED U/S 143(3) R.W .S. 147 OF THE ACT RE-COMPUTING THE TOTAL INCOME OF THE ASSESSEE AT RS.48 ,27,360/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD.CIT(A) WHO VIDE ORDER DT.10.05.2019 DISMISSED THE APPEAL OF ASSES SEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL B EFORE ME AND HAS R AISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW , T H E R E- OPENIN G OF THE ASSESSMENT BY ISSUE OF NOT I CE U/S 148 OF THE INCOME TA X A CT IN THI S CASE , IS AB-INITIO-VOID AND UNSUSTAINABLE IN LAW . THE ASSESSMENT HAS BEEN RE-OPENED TO VERIFY THE GENUINENESS OF THE LOA N OF RS.26,00,000/- GIVEN BY THE ASSESSEE TO MR. VISHAL KEDARI. THE NOTICE U/ S 148 ISSUED FOR RE- OPENING THE ASSESSMENT ORDER PASSED BY THE ASSESSIN G OFFICER U/W 143(3) R.W.S. 147 OF THE INCOME TAX ACT MAY ALSO BE QUASHE D. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DISMISSING THE ADDITIONAL GROUND NO.1 RAISED BEFORE HIM CHALLENGIN G THE RE-OPENING OF THE ASSESSMENT, BY SIMPLY HOLDING THAT THERE IS NO MERI T IN THE CLAIM OF THE ASSESSEE AS, SHE IS RELYING ONLY ON THE TECHNICALIT IES . 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE ADDITION OF RS.26,00,000/- MADE BY THE ASSESSING O FFICER TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED INVESTMENT IN LOAN OF R S.26,00,000/- GIVEN TO MR. VISHAL KEDARI. 4. THE LD. ASSESSING OFFICER HAS WRONGLY ASSUMED JU RISDICTION IN THE RE- ASSESSMENT PROCEEDINGS TO REJECT ASSESSEE'S CLAIM OF EXEMPTION OF RS. 15,00,000/- CLAIMED U/S 54 OF THE INCOME-TAX ACT FR OM LONG TERM CAPITAL GAINS. 5. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN DISMISSING THE ADDITIONAL GROUND NO. 2 RAISED BEFORE HIM CHALL ENGING THE JURISDICTION OF THE ASSESSING OFFICER TO MAKE DISALLOWANCE OF THE D EDUCTION CLAIMED U/S 54 OF THE INCOME TAX ACT FROM LONG TERM CAPITAL GAINS OF RS.15,00,000/-, BY SIMPLY HOLDING THAT THERE IS NO MERIT IN THE CLAIM OF THE ASSESSEE AS, SHE IS RELYING ONLY ON THE TECHNICALITIES. 6. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN DENYING THE DEDUCTION OF RS.15,00,000/- CLAIM U/S 54 OF THE INCOME TAX ACT FROM LONG TERM CAPITAL GAINS. 3 3. THE LD.A.R. SUBSEQUENTLY, FILED THE FOLLOWING ADDITIONAL GROUNDS : 1. AS PER SUB-SECTION (4) OF SECTION 139 OF THE IN COME TAX ACT THE RETURN OF INCOME COULD HAVE BEEN FILED ONLY UPTO 31-03-2010. THE ASSESSEE HOWEVER FILED HER RETURN OF INCOME ON 06-06-2011. A CCORDINGLY THE RETURN OF INCOME FILED AFTER 31-03-2010 IS AN INVAL ID RETURN. 2. THE ASSESSMENT IN . THIS CASE HAS BEEN MADE U/S 143(3) R.W.S. 147 OF TH E INCOME TAX ACT. THE HON'BLE PUNE BENCH OF THE INCOME TAX APPELLATE TRIBUNAL IN ITS RECENT JUDGMENT DATED 06-09-2019, IN THE CASE O F GULAB 8ADGUJAR (HUF) ITA NO. 1663/PUN/2014 AND THE HON'BLE MUMBAI BENCH OF THE INCOME TAX APPELLATE TRIBUNAL IN ITS JUDGMENT IN THE CASE OF S. KUMAR ENTERPRISES (SYNFABS) LTD. (2005) 4 SOT 412 (MUMBAI) HAVE HELD THAT IN A CASE WHERE THERE IS NO VALID RETURN OF INCOME, THE ASSESSMENT COMPLETED U/S 143(3) OF TH E INCOME TAX ACT IS NOT VALID. 3. IN VIEW OF THE ABOVE, THE ASSESSMENT ORDER DATED 28-03-2013 PASSED U/S 143(3) OF THE INCOME TAX ACT IS INVALID AND IS REQU IRED TO BE QUASHED. 4. IN THE ORIGINAL GROUNDS OF APPEAL FILED BY THE A SSESSEE HOWEVER THE ASSESSMENT ORDER HAS REMAINED TO BE CHALLENGED ON T HE ABOVE GROUND. ASSESSEE THEREFORE WANTS TO FILE THE FOLLOWING ADDI TIONAL GROUND OF APPEAL. ADDITIONAL GROUND OF APPEAL THE ASSESSMENT ORDER DATED 28-03-2013 PASSED IN THI S CASE U/S 143{3) OF THE INCOME TAX ACT IS INVALID AND UNSUSTAINABLE IN LAW. THE ASSESSMENT ORDER THEREFOR E MAY BE QUASHED. 5. IT IS RESPECTFULLY SUBMITTED THAT THE ABOVE MENT IONED ADDITIONAL GROUND OF APPEAL IS PURELY LEGAL GROUND AND ALL THE RELEVA NT FACTS FOR ADJUDICATING THE GROUND IS ALREADY AVAILABLE ON RECORD AND NO NE W FACTS ARE REQUIRED TO BE INVESTIGATED. THE ADDITIONAL GROUND COULD NOT BE TAKEN AT THE TIME OF FILING THE APPEAL FOR BONAFIDE REASONS AS THE JU DGMENT OF THE HON'BLE PUNE BENCH OF THE INCOME TAX APPELLATE TRIBUNAL DAT ED 06-09-2019, IN THE CASE OF GULAB 8ADGUJAR (HUF) ITA NO. 1663/PUN/2 014 HAS COME AFTER FILLING THE APPEAL 6. IN THIS REGARD RELIANCE IS PLACED ON THE FOLLOWI NG JUDGMENTS WHEREIN IT HAS BEEN HELD THAT PURELY LEGAL ADDITIONAL GROUNDS WHICH DO NOT REQUIRE ANY FURTHER INVESTIGATION INTO THE FACTS MAY BE ADM ITTED. (I) JUTE CORPORATION OF INDIA LTD. 53 TAXMAN 85 (SC) (II) NTPC LTD. 88 TAXMANN.COM 561 (SC) (III) AHMEDABAD ELECTRICITY COMPANY LTD 66 TAXMAN 27 (BOM BAY) 4 4. AT THE OUTSET, BEFORE ME, THE LD.A.R. BROUGHT MY ATTEN TION TO THE ADDITIONAL GROUNDS AND SUBMITTED THAT THE SAME ARE LEGAL IN NATURE. IN THIS CASE, AS PER LD.A.R. THE AO ASSUMED JURISDICTION U/S 1 48 OF THE ACT MERELY FOR VERIFICATION OF THE TRANSACTION BY THE ASSESSE E WITH ONE SHRI VISHAL KEDARI. AO DESIRES TO CONDUCT THE VERIFICATION OF T HE SAID TRANSACTIONS. THE LD.A.R. FOR THE ASSESSEE VEHEMENTLY A RGUED STATING THAT IN THE ABSENCE OF ANY TANGIBLE MATERIAL TO DEMONSTRATE OR LEADING TO THE DISCOVERY OF THE ESCAPEMENT OF INCOME, THE OPENING OF A C OMPLETED ASSESSMENT IS BAD-IN-LAW. THUS, THE ASSESSEE IS AGGRIEV ED WITH THE DECISION OF AO, WHO ASSUMED JURISDICTION U/S 147 OF THE AC T MERELY FOR CONDUCTING / ROVING ENQUIRIES IN THE NAME OF MERE VERIFICATIO N INTO THE TRANSACTIONS. AS PER THE LD.A.R., SUCH ATTEMPTS OF THE AO ARE NOT APPROVED BY A SERIES OF JUDGMENTS OF VARIOUS HIGH COURTS AS WELL AS THE TRIBUNALS. 5. IN THIS REGARD, THE LD.A.R. BROUGHT MY ATTENTION TO THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF NIVI TRADING L IMITED VS. UNION OF INDIA REPORTED IN (2015) 375 ITR 308 (BOM) - WHETHER MERE FACT THAT MORE DETAILS WERE SOUGHT OR SOME VERIFICATION WAS SO UGHT WITH REGARD TO VALUE OF THESE SHARES IN TERMS OF SEC.47(III), WOULD N OT ENABLE REVENUE TO RESORT TO SEC.147 OF THE ACT AND IT IS ALSO HELD YES. DISCUSSION GIVEN IN PARA 26 OF THE JUDGMENT IS RELEVANT AND THE SAME IS THOROU GHLY RELIED UPON BY THE LD.A.R SUBSEQUENTLY, LD.A.R. BROUGHT MY ATTENTION T O THE DECISION OF THE PUNE TRIBUNAL IN THE CASE OF MR. LALCHAND MEHRUMAL JA GWANI VS. ITO (ITA NO.1241/PUN/2019 ORDER DATED 16.10.2019) WHEREIN THE TRIB UNAL DID NOT ALLOW THE RE-OPENING OF THE ASSESSMENT MERELY FOR VE RIFICATION OF CASH 5 TRANSACTIONS. RELIANCE HAS BEEN PLACED BY THE TRIBUNAL O N THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF INDUCTOTHERM ( INDIA) PVT. LTD. VS. M. GOPALAN, DCIT REPORTED IN 356 ITR 481. THIS JUDGME NT IS RELIABLE FOR THE PROPOSITION THAT FOR MERE VERIFICATION OF THE CLAIM, PO WER OF RE-OPENING OF THE ASSESSMENT COULD NOT BE EXERCISED. 6. ON THE OTHER HAND, LD. D.R. FOR THE REVENUE INFORMED TH AT THE TRANSACTIONS OF PAYMENTS OF MONEY TO SHRI VISHAL KEDAR INV OLVES THE ROLE OF ADARSH COOPERATIVE HOUSING SOCIETY LIMITED WHICH IS THE S UBJECT MATTER OF THE LEGAL SCRUTINY. OTHERWISE, LD. D.R. HEAVILY RELIED ON THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 7. HEARING ON BOTH SIDES, I FIND THAT LEGAL ISSUE FOR ADJUD ICATION RELATES TO THE VALIDITY OF THE RE-OPENING OF THE COMPLETED ASSESSM ENT. THERE IS NO TANGIBLE MATERIAL IN THIS CASE. ADMITTEDLY, RE-OPENING IS DON E FOR MERE VERIFICATION OF CERTAIN TRANSACTIONS. I WILL NOT DIG INTO THE MERITS OF THE ISSUE AND CORRECTNESS OF THE ADDITION AT THIS STAGE WITHO UT DECIDING ON THE LEGAL ISSUE. 8. HERE, I PROCEED TO EXTRACT THE RELEVANT LINES FROM PA RA 1 OF THE ASSESSMENT ORDER AS UNDER : TO VERIFY THE GENUINENESS OF THE LOAN TRANSACTION, THE NOTICE U/S 148 OF THE ACT FOR RE-OPENING THE CASE HAS BEEN ISSUED TO THE ASSESSEE. FROM THE ABOVE EXTRACTION, UNDOUBTEDLY, RE-OPENING IS DO NE FOR MERE VERIFICATION ONLY. IN OUR VIEW, SUCH ATTEMPTS OF THE AO ARE NOT APPROV ED BY THE DECISIONS OF HIGHER JUDICIAL AUTHORITIES AS WELL AS THE CO -ORDINATE BENCH 6 OF THE TRIBUNALS. RELEVANT CASE LAWS ARE CITED ABOVE. FOR THE SAKE OF READY REFERENCE, THE ABOVE MENTIONED LEGAL PROPOSITIONS ARE DISC USSED HEREUNDER : (A) PARA 26 OF THE JUDGMENT IN THE CASE OF NIVI TRADING LIMIT ED VS. UNION OF INDIA REPORTED IN (2015) 375 ITR 308 (BOM). 26. THIS IS A STAND TAKEN IN THE AFFIDAVIT IN REPLY BUT WHAT WE FIND IS THAT THE GIFT WITHOUT ANY CONSIDERATION AND AS NOTED IN THE REASONS RECORDED AND SUPPLIED HAS NOT BEEN TERMED AS ONE WHICH ATTRACTS ANY TAX OR WHICH IS CHARGEABLE TO TAX AND THEREFORE THERE IS ANY INCOME WHICH HAS ESCAPED ASSESSMENT. IN OTHER WORDS, THE AMOUNT OF RS.1,21,3 3,429/- SHOWN AS GIFT HAS NOT BEEN TERMED AS AN INCOME AND WHICH IS CHARG EABLE TO TAX AND WHICH HAS ESCAPED ASSESSMENT. ALL THAT IS REQUIRED FROM T HE ASSESSEE IS A VERIFICATION AND IN TERMS OF SECTION 47(III) OF THE IT ACT AND FOR ENABLING IT, THE ASSESSEE WAS CALLED UPON TO APPEAR BEFORE THE ASSES SING OFFICER. THUS, IT IS FOR VERIFICATION OF THE VALUE OF THESE SHARES AND WHETHER THE COMPUTATION IS ON THE MARKET RATE ON THE DATE OF SU CH TRANSFER. THIS, TO OUR MIND, WOULD NOT IN ANY J.V.SALUNKE,PA WP.2314.2015. ORAL JUDGMENT.DOC MANNER ENABLE THE REVENUE/RESPONDENTS TO RESORT TO SECTION 147 OF THE IT ACT. IN THE VIEW THAT WE HAVE TAKEN ABOVE, IT IS NO T NECESSARY TO REFER TO OTHER JUDGMENTS RELIED UPON BY MR. PARDIWALLA AND WHICH A LSO REITERATE THE SETTLED PRINCIPLE THAT THE REASONS OUGHT TO BE RECORDED ON THE DATE OF THE ISSUANCE OF THE NOTICE AND WHICH MUST DISCLOSE THE REQUISITE SA TISFACTION. THE REASONS AS RECORDED CANNOT THEN BE SUBSTITUTED OR SUPPLEMENTED BY FILING AN AFFIDAVIT IN THE COURT. THUS, ADDITIONAL REASONS CANNOT BE SUPPL IED AND ON AFFIDAVIT. WE ARE OF THE VIEW THAT IT IS NOT NECESSARY TO REFER T O THIS PRINCIPLE ANY FURTHER IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. (B) PARA 5 OF THE ORDER IN THE CASE OF MR. LALCHAND MEHRUMA L JAGWANI IN ITA NO.1241/PUN.2019. 5..I FIND THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF INDUCTOTHERM (INDIA) P. LTD. VS. M. GOPALAN , REPORTED IN 2013 356 ITR 481 HAS OBSERVED THAT FOR A MERE VERIFICATION OF THE CLAIM, THE POWER OF RE-OPENING OF THE ASSESSMENT COULD NOT BE EXERCISED AND IT FURTHER OBSERVED THAT AO UNDER THE GUISE OF POWER TO RE-OPEN THE ASSESSMENT CANNOT SEE K TO UNDERTAKE AN UNDERTAKING A FISHING OR ROVING INQUIRY OR SEEK T O VERIFY THE CLAIM AS IF HE IS THE SCRUTINY OFFICER. 9. CONSIDERING THE ABOVE FACTS, THE REFERRED DECISIONS / JUDGMENTS AND IN THE ABSENCE OF ANY TANGIBLE MATERIAL, AOS REASON OF MER E VERIFICATION FOR RE-OPENING THE ASSESSMENT, I AM OF THE OPINION, THE JU RISDICTION ASSUMED 7 BY THE AO IN THIS CASE IS NOT VALID. ACCORDINGLY, RELEVANT GROUND / ADDITIONAL GROUNDS ARE ALLOWED IN FAVOUR OF THE ASSESSEE. 10. CONSIDERING THE RELIEF GIVEN ON THE LEGAL ISSUE, IN MY VIEW, THE ADJUDICATION OF THE OTHER GROUNDS ON MERITS BECOME ACAD EMIC EXERCISE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ON MER ITS STANDS DISMISSED. THUS, THE GROUND NO.1 READ WITH ADDITIONAL GRO UND NO.1 ARE ALLOWED AND THE OTHER GROUNDS ARE DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 24 TH DAY OF JUNE, 2020. SD/- ( D. KARNUKARA RAO) ACCOUNTANT MEMBER PUNE; DATED : 24 TH JUNE, 2020. YAMINI ' #$%& '& $ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5. 6. CIT(A)-9, PUNE. CIT-5, PUNE. '#$ %%&', &', + / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER , // / TRUE COPY / / // TRUE COPY // 012%3&4 / SR. PRIVATE SECRETARY &', / ITAT, PUNE.