PARVINDER KAUR SAWHNEY,GURGAON V. PR, CIT, DELHI -12, NEW DELHI

ITA 626/DEL/2021

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31537 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2011-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAPNA BHATIA
• Assessee Lawyers: V. K. SABHARWAL
• Keywords: Set aside; Reassessment proceedings; Capital Gains; Principle of natural justice; Assessment record; Transactions in derivatives; Revision of order; Recovery proceedings
• Section: 147; 148; 144; 142(1); 263; 54; 54F; 13; 2

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘H’, NEW DELHI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT and SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.626/Del/2021 (Assessment Year : 2011-12) Parvinder Kaur Sawhney, vs. Pr.CIT, Delhi – 12, A-39, Rose Wood City, New Delhi. Grad Mansion, Sector 49-50, Gurgaon – 122 002 (Haryana). (PAN : AAOPS3422N) ASSESSEE BY : Shri V.K. Sabharwal, Advocate REVENUE BY : Ms. Sapna Bhatia, CIT DR Date of Hearing : 09.10.2024 Date of Order : 06.01.2025 O R D E R PER S. RIFAUR RAHMAN, AM : 1. This appeal has been filed by the assessee against the order of ld. Pr. Commissioner of Income-tax, Delhi-12 (hereinafter referred to as ‘ld. PCIT’) dated 26.03.2021 for the Assessment Year 2011-12. 2. Brief facts of the case are, a notice under section 148 of the Income-tax Act, 1961 (for short ‘the Act’) was issued and served on the assessee dated 30.03.2018. However, none appeared and no submissions were filed. Further notices were issued to the assessee, still no response from the assessee and final notice u/s 2 ITA No.626/Del/2021 142(1) of the Act dated 05.10.2018 was issued for completing the assessment u/s 144 of the Act. In response, ld. AR for the assessee only submitted adjournment letter seeking more time for preparation of details. Thereafter, no submissions were made or none appeared on behalf of the assessee. Accordingly, assessment was completed u/s 144 read with section 147 of the Act by making following additions :- S.No. Particulars (Amount in Rs.) No return filed by the assessee Nil I. Addition on account of Share transaction on STCG @ 15% 20,96,414/- II. Addition on account of commodity Transaction 4,86,533/- III. Addition on account of Rent Receipt appearing in 26AS 19,65,600/- IV. Addition on account of Cash Deposits 13,00,000/- V. Addition on account of Commission 60,98,062/- Total disallowance 1,19,46,609/- Total Income 1,19,46,609/- Rounded off 1,19,46,610/- 3. While verifying the assessment records, ld. PCIT, Delhi 12, Delhi observed that there was information on NMS that assessee had made cash deposit in his bank account and also made share transactions but no return of income was filed. Accordingly, the case was reopened but the assessee has not filed any return of income in response to notice issued u/s 148 of the Act. Accordingly, the assessment was completed with taxable income of Rs.1,19,46,610/- and tax demand of Rs.90,63,830/- was raised. He observed that during the recovery proceedings, it was observed that assessee had sold immovable properties and the 3 ITA No.626/Del/2021 income/gain arising from the sale of properties was not disclosed by the assessee nor being assessed by the AO. It was also found that the assessee has sold immovable properties at value less than the value assessed by stamp valuation authority for the purpose of stamp duty. Further it was observed that assessee has given property in Gurgaon for lease for Rs.8 lakhs per month and the same was not offered to tax. Considering the above facts on record, ld. PCIT observed that the assessment order under consideration is erroneous and prejudicial to the interest of the Revenue and notice u/s 263 of the Act dated 22.02.2021 was issued. In response, ld. AR for the assessee appeared and sought adjournment and accordingly the case was adjourned to 08.03.2021. On 08.03.2021, assessee herself submitted a letter dated 08.03.2021 stating as under :- “I hereby offer to payment of tax on capital gain as mentioned in section 263 notice dated 22.02.2021 subject to my right to seek legal remedies available if any adverse order is passed against me. This is being done by me as being a law abiding citizen and with a hope supported by doctorine of legitimate expectations that the state will collect tax which are only legitimate under the law.” The assessee has also computed tax on gain on properties mentioned in the notice as under :- S.No. Nature of income Amoun t 1. STCG as per Notice 3,256,119 2. LTCG as per Notice Date of Sale (A) 17.02.2011 12,300,000 Date of Purchase 30.11.2007 10,000,000 Indexed Cost (167/129)*10000000 12,945,736 4 ITA No.626/Del/2021 of Purchase (B) Long Term Capital Loss (A – B) -645,736 -645,736 Total Taxable Income 3,256,119 Income Tax on this amount 976,835 EC & SHEC 28,305 Tax Payable 1,006,140 4. Further notice dated 10.03.2021 was issued. In response, ld. AR for the assessee submitted a letter dated 15.03.2021 and for the sake of clarity, the same are reproduced below :- \"It is submitted that within the short period Assessee is unable to lay his hands on the required information inspite of best efforts. The Assessee's records are kept in the company office of Kouton Retail India in which husband of assessee was a director, since, the company has been sealed by High Court , appointed liquidator and the assessee is not able to access the records and thus assessee needs more time of one week to comply with the impugned Notice. In the mean time in view of principle of natural justice, your goodself is requested to provide with relied upon documents on the basis of which your goodself had issued the Notice. Assessee is ready to pay the required fee if any or at least till that time inspection of the entire file be allowed so that Assessee could file the reply. It is once again pressed upon that time asked be allowed and case be adjourned for any other date as Assessee is handicap for want of information. In view of the records of the assessee are stuck up in the hand of liquidator and time is needed for procuring information from liquidator as well as sub-Registrar, Gurugram. Assessee is informed if any fee if the same is required under the provision of the law. It is prayed that case may please be adjourned for next date of hearing as per your convenience.” 5. After considering the submissions of the assessee, ld. PCIT observed that assessee in her letter dated 08.03.2021 furnished the computation of short term/long term capital gain in respect of three properties. Now, ld. AR of the 5 ITA No.626/Del/2021 assessee states that assessee does not have records of the sale of properties. Therefore, ld. PCIT observed that the conduct of the assessee is not reliable and not accepted and he observed that the assessee wants to just linger on the proceedings which is time barring on 31.03.2021. Accordingly, based on the information available on record, ld. PCIT treated the assessment order passed u/s 144 read with section 147 of the Act both erroneous and prejudicial to the interest of Revenue and sustained the additions made by the AO in the earlier order as well as new findings based on the own submissions of the assessee, directed the AO to enhance the income as under :- Amount in Rs. Income as computed u/s 147/144 vide order dt. 28.12.2018 1,19,46,609/- Income from House property Rent receivable as per agreement 3200000 Less deduction u/s 24(a) of the Act @ 30% 960000 Income from house property 2240000 Less income from house property already added in the income by AO 1965600 2,74,400/- Add Short Term Capital Gain as discussed above 32,37,765/- Add Long Term Capital Gain as discussed above 36,77,132/- Total Income 1,91,35,906/- 6. Aggrieved with the above order, assessee is in appeal before us raising concise grounds of appeal :- 6 ITA No.626/Del/2021 “1. That the order passed by the Pr. CIT-12 u/s 263 of the Income Tax Act, 1961 on 26.03.2021 for the Assessment Year 2011-12 becomes non est, because of wrongly assuming her jurisdiction to pass such order on the recommendation of ACIT who has passed the assessment order on 28.12.2018 u/s 144 r.w.s. 147 of the Income Tax Act, 1961 2. That the order so passed u/s 263 further becomes non est, because against the order passed u/s 144 r.w.s. 147 of the Income Tax Act, 1961 for the A.Y. 2011-12, which is subject matter of Section 263 of the Income Tax Act, 1961, the appellant has already filed an appeal before the First Appellate Authority and the same is still pending for adjudication. 3. That the order passed by the PCIT -12 u/s 263 of the Income Tax Act, 1961 on 26.03.2021 as further perverse to the law and to the facts of the case, because the Assessing Officer who has pass the assessment order u/s 144/147 of the I. Tax Act, 1961 on 28.12.2018 confirmed in Para-2 that the same was passed based upon to the information and records as available and gathered by her, which includes the information available in Foml-26AS of any of her transactions relating to the F.Y. 2010-11. 4. That on the facts and circumstances of the case, the order passed was further wrong and not tenable because of not ever confronting the relevant material which the Pr. CIT collected on the back of the appellant and used the same against the appellant, while passing such orders, despite of the specific requests of the appellant to the Pr. CIT to provide the copies of such material for its necessary reply and rebuttal thereof, as per law. 5. That the order passed u/s 263 of the Act is further not valid as legal under the law and to the facts of the case while directing the AO to hold such illegal and impugned additions under LTCG & STCG because the same are only required to be calculated and to have been made by the AO independently as per the provisions of law contained u/s 45 r.w.s. 54 and 54F of the Income Tax Act, 1961, which cannot directed to be taxed immediately on its sale thereof. 7 ITA No.626/Del/2021 6. That the order passed is unconstitutional under the law and to the facts of the case, because of not covered under Explanation-2 of Section 263 of the Income Tax Act, 1961, as has been referred at Page No.7 of Para-13.2 of such order and the appellant assails her rights to amend, alter or change any grounds of appeal of any time even during the course of hearing of instant appeal. It is therefore, prayed: PRAYER: 1. That the order passed u/s 263 on 26.03.2021 may please be quashed its illegality and infirmity appearing therein, under the law and to the facts of the case, which its consequential directions also given to the AO to pass further order having its effect thereof. 2. That any other relief which this Hon'ble Court may please be deems fit and proper on the facts and in the circumstances of the case. It is prayed accordingly.” 7. At the time of hearing, ld. AR for the assessee filed application for placing on record copy of proposal addressed to PCIT for revision u/s 263 of the Act by the AO and the relevant application was placed on record dated 10.10.2024. He brought to our notice the assessment order passed u/s 144 read with section 147 of the Act dated 28.12.2018 and he agreed that the order passed is ex-parte and submitted that relevant appeal against the abovesaid order is pending before the ld. CIT (A). He submitted that during such stage, the AO has filed proposal u/s 263 of the Act in the case of the assessee before PCIT to initiate the proceedings u/s 263 of the Act and he placed on record the relevant proposal submitted by the AO dated 23.05.2019. He submitted that the above proposal is against the 8 ITA No.626/Del/2021 provisions of section 263 of the Act. Further, he submitted that the notice u/s 263 of the Act was issued by ld. PCIT-12. Further the order u/s 144 read with section 147 was approved by ld. PCIT-21 to initiate proceedings u/s 147 of the Act. He submitted that the proper jurisdiction falls with PCIT-21 and not with the present ld. PCIT and he vehemently submitted that the order passed u/s 263 is against the law deserves to be set aside. 8. On the other hand, ld. DR for the Revenue submitted that assessee has not filed any return of income and based on the information available with the Revenue, notice u/s 148 was issued to the assessee and there was no compliance from the assessee in response to notice u/s 148 of the Act. Further he submitted that during reassessment proceedings, assessee has sought adjournment only once and not complied subsequently. In response to the submissions of the ld. AR that the appeal is pending before ld. CIT(A) and 263 proceedings cannot be initiated, in this regard he submitted that issue raised by the PCIT is not the issue which is under appeal before the ld. CIT (A). During 263 proceedings, assessee herself appeared and agreed to offer the income to tax to settle the present issue. Therefore, the proceedings initiated u/s 263 is just and proper and relied on the findings u/s 263 of the Act. 9. In the rejoinder, ld. AR for the assessee submitted that no doubt, assessee has submitted the above workings and agreed to settle. However, he insisted that 9 ITA No.626/Del/2021 assessee’s jurisdiction lies with PCIT-21. With regard to not filing return of income, he submitted that due to sealing of factory premises, the assessee was not in a position to file the return of income. 10. Considered the rival submissions and material placed on record. We observed that assessee is a non-filer of income tax return and notice was issued u/s 148 of the Act requiring the assessee to file the return of income, however assessee has not filed any return of income and due to non-compliance, the assessment was completed u/s 144 read with section 147 of the Act. Subsequently, in the recovery proceedings, the AO came to know that assessee has also sold three properties and not declared the same for tax and also leased out a property at Gurgaon with monthly rent of Rs.8 lakhs. Based on the above information, he brought to the notice of the ld. PCIT by filing a letter even though the letter was captioned as a proposal u/s 263 of the Act. Considering the fact on record and conduct of the assessee who was not complying for any of the notices issued by the Revenue, the AO has rightly brought to the notice of the ld. PCIT for direction and based on the above information, notice u/s 263 of the Act was issued to the assessee and in response to the above, assessee herself appeared before the ld. PCIT and agreed to offer the same. Subsequently, assessee has not cooperated with the Revenue and since the date of completion of the proceedings ends on 31.03.2021 still assessee was not in a position to submit the relevant 10 ITA No.626/Del/2021 information to complete the proceedings. Due to non-cooperative behavior of the assessee, ld. PCIT also completed the proceedings directing the AO to complete the assessment based on the information and statement of tax dues submitted by the assessee herself vide letter dated 08.03.2021. 11. Now before us, ld. AR for the assessee made two prayers , one raising the issue of initiating the proceedings u/s 263 of the Act based on the proposal received from the AO. After careful consideration of the fact on record, we observed that the assessee is found to be non-cooperative and non-complying to any notice issued by the Revenue and adopts different tactics to avoid the assessment as well as revision proceedings. Considering the behavior of the assessee and also the relevant facts on record, we observed that the AO stumbled upon the information during the course of recovery and subsequently on verification, the assessee herself accepted the fact that the relevant transaction was in fact carried on by the assessee and failed to offer the same and agreed to offer the same in due course. Therefore, the information stumbled upon by the AO is found to be correct and the information submitted by the AO even though captioned as proposal u/s 263, however in actual, the same was the information brought to the notice of the ld. PCIT for further course of action. After considering the overall facts on record, we do not see any reason to disturb the findings of ld. PCIT in this regard and the proceedings u/s 263 is properly initiated and concluded. Accordingly, the 11 ITA No.626/Del/2021 submissions made by the ld. AR on the validity of the 263 based on the information supplied by the AO are found to be defective and accordingly the above submission is dismissed. 12. Coming to the next prayer of the assessee that the initiation of proceedings u/s 147 of the Act was sanctioned by the ld. PCIT-21 whereas the present proceedings were initiated by ld. PCIT-12. We observed that from the order passed by the ld. PCIT and the proposal was submitted by the Assessing Officer before present ld. PCIT-12, it shows that the ld. PCIT has initiated proceedings u/s 263 with the clear observation that during recovery proceedings, the AO found that the assessee had sold immovable properties and also leased out the property at Gurgaon. The abovesaid facts were found to be correct and also the same was accepted by the assessee before the authorities. It shows that the AO has brought to the notice of ld. PCIT-12 and accordingly, the proceedings initiated show that the jurisdiction of the AO lies with ld. PCIT-12. The relevant assessment order was passed on 28.12.2018 and at that point of time, jurisdiction may be with ld. PCIT-21 and accordingly the same was approved and now the present proceedings were initiated on 22.02.2021. We observed that the AO has approached ld. PCIT-12 to initiate the proceedings shows that the jurisdiction of the AO lies with ld. PCIT-12, therefore, the proceedings were initiated by the ld. PCIT-12. Therefore, now the assessee cannot raise this issue as critical and 12 ITA No.626/Del/2021 seeking for cancellation of the proceedings u/s 263 of the Act, in our view, is not justified and also we observed that even before ld. PCIT, the assessee has agreed to settle the dispute and still failed to submit any proper documents within the time frame allowed by the authorities and even before ld. PCIT, assessee has herself submitted a calculation determining the tax liability and failed to substantiate by filing the relevant documents. Therefore, considering the factual matrix on record, we do not see any reason to disturb the findings of the ld. PCIT u/s 263 of the Act. In our view, the non-cooperative assessee and non-abiding person cannot take advantage of jurisdictional flaws, it is available only to the abiding citizens/assessee. 13. Further we observed that ld. DR for the Revenue submitted copy of order giving effect of order u/s 263 dated 31.03.2021 and also order u/s 154/263 of the Act. In this regard, assessee has raised ground no.5 wherein order u/s 263 is not valid for the reasons that additions under LTCG and STCG are need to be calculated considering the provisions u/s 45 read with section 54 & 54F of the Act. Considering the factual matrix on record, we observed that the assessee is in appeal before us against the order passed u/s 263 of the Act and we held that the order passed u/s 263 is proper, therefore, any grievance with respect to determination of capital gains u/s 45 read with section 54 & 54F, the assessee 13 ITA No.626/Del/2021 may file appeal against the said OGE at the appropriate forum and seek the required remedies. 14. In view of above discussion, all the issues raised by the assessee in the grounds of appeal against the initiation of proceedings u/s 263 of the Act are dismissed. 15. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on 06.01.2025 sd/- sd/- (SAKTIJIT DEY) (S.RIFAUR RAHMAN) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 06.01.2025 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "