Income Tax Appellate Tribunal - Mumbai
M.H. Patel, Mumbai vs Assessee on 2 April, 2013
ITA No.5429 of 2006 MH Patel Mumbai
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" Bench, Mumbai
Before Shri B. Ramakotaiah, Accountant Member
And Dr. S.T.M. Pavalan, Judicial Member
ITA No.5429/Mum/2006
(Assessment year: 2000-01)
Shri M.H. Patel, Vs. ACIT 24(2),
5 Shreepal Industrial Premises, Pratyakshakar Bhavan,
Pawanbag Road, Malad (W) Bandra Kurla Complex,
Mumbai 400064 Mumbai
PAN: AAJPP 1885 D
(Appellant) (Respondent)
ITA No.6359/Mum/2006
(Assessment Year: 2000-01)
ACIT 24(2), Vs. Shri M.H. Patel,
Pratyakshakar Bhavan, 5 Shreepal Industrial
Bandra Kurla Complex, Premises, Pawanbag Road,
Mumbai Malad (W) Mumbai 400064
PAN: AAJPP 1885 D
(Appellant) (Respondent)
Assessee by: Shri M.H. Patel
Department by: Shri Mohit Jain, DR
Date of Hearing: 02/04/2013
Date of Pronouncement: 05/06/2013
ORDER
Per B. Ramakotaiah, A.M.
These cross appeals are by assessee and Revenue against the order of the CIT (A)-24 Mumbai, dated 18.09.2006.
2. Assessee is a contractor and was awarded contracts by the Maharashtra Jeevan Pradhikaran, at Alibaugh, Kalyan etc. and in the relevant AY, assessee filed declaring a total income of `.28,04,990. This return for AY 2000-01 was filed on 12.12.2001 belatedly after delay of more than a year from the due date which was 31.10.2000. The reasons for the delay as can be seen from the record, seems to be that assessee Page 1 of 20 ITA No.5429 of 2006 MH Patel Mumbai seems to have some business related disputes and was kept as a trial prisoner from 30.06.2000 to 20.06.2001. These facts were available on record in the submissions by assessee before AO as under:
"vii) I repeat reiterate and confirm that the labour contract given to Lalit Construction goes in my favour. Any error or omission in the contract does not make whole contract void. I am enclosing a table of transaction between Lalit Construction and myself for your perusal and consideration. The word "Loan" may please be read as "advance". It is the discretion of contractor how to make payment to the sub-contractor. The LT.
authority has no jurisdiction to look into the condition of contract, you have only authority to check P & L account only. Hence, I request you to restrict yourself to the issues related to taxable income only. I had taken security deposit of `7,50,000 from Lalit Construction, which was returned under the threat of Shri Bala Nadgoankar sitting M.L.A. and Ex. M.o.S. Home (Rural) Government of Maharashtra. I state that Mr. Ashok Munot who is related to Vasundhara Construction had furnished my financial detail to one Mr.D.K. a gangster of Gavli gang who was killed in police encounter, who delivered threat to my life. This Ashok Munot is an associate of Lalit Construction. One attempt was made on my life where I fired in self defence. I was falsely implicated u/ s.307 of LP.C. by Kashi Mira police and as a result of this I was kept in prison as an under trial prisoner from 30-6-2000 to 20-6-200l. Hon'ble Thane Session Court acquitted me from al the charges. I hope that you will understand the mental state of affair under which I had gone. It is very true that I have serious disputes with Lalit Construction and hence I had filed various Civil/Criminal cases against Lalit Construction and others. I further state that Lalit Construction had fabricated the labour bills. It is incorrect to say that the payment made to Lalit Construction was not for business purpose. In order to entitle for deduction "Business Loss" the assessee should show the nexus with the business, which I had proved beyond reasonable doubt".
3. As can be seen from the above submissions, at the relevant point of time assessee was not in a position to file the return and filed the return belatedly on 12.12.2001. This return was accompanied by the audit report dated 25.11.2001. Assessee received a notice under section Page 2 of 20 ITA No.5429 of 2006 MH Patel Mumbai 143(2) dated 21.10.2002 issued statutorily by AO for selection of scrutiny. Subsequently, the assessment was completed by the then Asstt. Commissioner of Income Tax determining the total income at `.1,09,06,260 by making various additions of `.90,50,608 under the head business income and an amount of `.44,664 under the head income from other sources. The details of the additions are as under:
i) Bad debt disallowed `.67,75,000
ii) Provision for contingent liability `.5,71,385
iii) Retention money claimed as `.4,98,799
deduction
iv) Out of labour charges wages on `.1,00,000
adhoc basis
v) Excess depreciation on air `.1,14,424
conditioner & car
v) Interest accrued on NSC `.44,664
`81,04,272
4. The assessment order was passed on 28.03.2003 and while completing the assessment, direction of Jt. Commissioner of Income Tax, Range-24(2) were also obtained under the provisions of section 144A of the Act. This order was the subject matter of appeal before the learned CIT (A) and the learned CIT (A) dismissed the appeal vide order dated 8.1.2004. Aggrieved by the order assessee preferred an appeal before the ITAT. The ITAT vide order in ITA No.2301/ Mum/04 dated 18.12.2005 restored the matter to the file of AO for fresh adjudication. In the reassessment proceedings, after the orders in various writ petitions by assessee and considering the various contentions, AO repeated the same additions in the re-assessment proceedings. However, before the ITAT could set aside the assessment vide order dated 18.2.2005, assessee filed a revised return on 11.02.2005 making certain more claims which were not accepted by AO, as this is not a valid revised return. Thereafter assessee requested AO to consider the same under section 154 vide letter dated 10.08.2005. These requests were also not considered as AO Page 3 of 20 ITA No.5429 of 2006 MH Patel Mumbai felt that there are no mistakes in the order. Various contentions were raised which were not accepted by AO, therefore, the matter was again preferred before the CIT (A). Before the CIT (A) the main contention was that AO has not followed the Board instructions in selection of scrutiny and so the jurisdiction to issue notice itself is bad in law. Further on various claims assessee has detailed submissions before the CIT (A). In the meantime, assessee also filed various criminal complaints against AO, Jt. Commissioner and the CIT (A) who passed the orders in the first round of assessment. The grounds raised before the CIT (A) were considered in detail by the CIT(A). While not accepting the issues on jurisdiction, he considered the issues on merits and gave partial relief by deleting the additions made with reference to Vasundhara Construction of `.10.00 lakhs, addition of `.1.00 lakhs out of labour charges which were contested by the Revenue in their appeal. With reference to the claim of loss of payment to M/s Lalith Constructions, the learned CIT (A) directed AO to allow the loss in the year of crystallization of loss. Accordingly, the Revenue is also aggrieved on that direction.
5. In assessee's appeal, assessee raised detailed submissions as grounds. The original grounds of appeal run to six pages on various issues having 12 paras with sub paras. Subsequently, revised grounds of appeal were filed which has three pages with 23 paras. Later, re-revised grounds were filed which has 25 paras running to 4 pages. After some police investigations in assessee allegations, fresh grounds in the light of findings of police investigation in addition to earlier grounds were also raised vide Paras F1 to F8 and prayer in paras A,B,C,D,E. Assessee also filed written arguments, along with paper book running to pages 165. The indexation of the paper book is as under:
Page 4 of 20ITA No.5429 of 2006 MH Patel Mumbai INDEX S.No Particulars Exhibit Page No. No. 1 Grounds of Appeals A A-I-6 2 Revised Grounds of Appeals B B-I-3 3 Re-Revised Grounds Revised Grounds C C-I-4 4 Fresh Ground in light of Police Investigation D D-I-2 in addition to earlier grounds 5 Written Arguments E E-I-3 6 Written Argument in continuation of above F F-l 7 Xerox copy of I. T. A. T. order dated 18th 1 1-4 February 2005 8 Xerox copy of A. C. I. T.' s revised order 2 5-34 9 Xerox copy of C. I. T. (Appeals) revised Order 3 35-64 Xerox copy of order on M. A. no.
10 4 65-67 411/Mum/2005 11 Xerox copy of order on M. A. 166/Mum/2005 5 68-76 (the year of M. A. may be 2006) 12 Xerox copy of order passed in Writ Petition 6 77-78 No. 13 Xerox copy of order passed after order of H.C 7 79-80 In M. A. no. 411/Mum/2005 14 Xerox copy of order passed after order of H. C 8 81-82.
In M.A. no. 166/Mum/2005 15 Xerox copy of Notice dated 21-10-2002 9 83 16 Xerox copy of Writ Petition no. 3624/08 10 84-85 17 Xerox copy of letter dated 21-10-2002 11 86-91 Xerox copy of J. C. I. T.'s letter dated 23-10- 18 12 92-95 2002 Xerox copy of Additional C. I. T.' s letter dated 19 13 96-97 13-05-2009 Page 5 of 20 ITA No.5429 of 2006 MH Patel Mumbai Xerox copy of A. C. T.'s letter dated 11-06- 20 14 98 2009 Xerox copy of [2005] 277 ITR 239 (MP) 99- 21 15 Arihant Builder v. ITAT 103 Xerox copy of Instruction no. 1851 dated 8-8- 104- 22 16 1990- Guide line in respect of limited 105 Scrutiny UNDER SECTION 143 (2)(i) Xerox copy of [2001] 115 TAXMAN 575 (MP) 106- 23 17 C.I. T. v. Ladharam Lakhimal (Prior Approval) 108 Xerox copy of Deepchand Kothari v.c. I. T. 109- 24 18 (Jurisdiction) 111 Xerox copy of (2007) 295 ITR 256 (Del) C. I. T. 25 v. Best Plastic (P) Ltd (Circulars are binding 19 112 on officers of I. T.) 26 Xerox copy of CIT v. Best Plastic Ltd. (295 ITR 20 113-
256) (Circulars are binding on officers of I. T.) 113A 27 Xerox copy of CIT v. Kurban Hussain 21 114- Ibrahimji (1972) 4 SCC 394 (Validity of notice 114A Xerox copy ofUco Bank v. CIT (1999) 237 ITR 115- 28 889 (SC) (Circulars are binding on officers of 22 128 I.T. Xerox copy of Uco Bank v. CIT [1999] 237 ITR 129- 29 889 (SC) (Instruction & Circulars are binding 23 136 on officers of I. T.) Xerox copy of CIT v. IOCL Ltd. (2004) 267 ITR 137- 30 272 (SC) (Circulars are binding on officers of 24 150 I. T) Xerox copy of Tanna & Modi v. CIT Mumbai 151- 31 25 XXV and Ors on 17 May, 2007 (Fraud) 156 Xerox copy of 2002 AIR SCW 4939 157- 32 (Interpretation of Statutes -only in case of 26 159 ambiguity, inconsistency or obscurity.) 160- 33 Xerox copy of Police Report 27 165"
6. The chronology of events as given by assessee are as under:
"The appeal was heard on 2-04-2013 and as per instruction given by Honorable Bench, I herewith submit Synopsis and translation in Page 6 of 20 ITA No.5429 of 2006 MH Patel Mumbai English of Marathi report of relevant Para herein below:
S.No Date Description of Event Remark 1 12-12-01 Return of income filed 2 21.10.02 ACIT issued notice without prior approval under section 143(2) 3 21.10.02 ACIT sought permission for scrutiny Record of returns which contains neither my fabricated name nor AY 2000-01 4 23.10.02 JCIT gave approval for scrutiny of Record returns which contains neither my fabricated name nor AY 2000-01 5 5.3.03 JCIT gave direction to disallow By certain amounts to ACIT under suppressing section 144A documents 6 28.03.03 ACIT passed order By suppressing documents 7 28.04.03 Appeal filed against order of ACIT 8 27.06.03 Delay in filing return condon by CCIT XIII 9 8.01.04 CIT Appeal passed fabricated order Order fabricated 10 11.02.05 Revised return filed 11 18.02.05 ITAT set aside ACIT and CIT(A) orders on the basis of fabrication and order for fresh 12 26.8.05 ITAT rejected MA No.411/M/05 in ITA No.2301/Mum/04 file to expunge remark of fabrication 13 13.12.05 Revised order passed by ACIT Without fully heard 14 18.8.06 In W.P. No.3168/2006 Hon'ble High Court ordered CIT (A) to decide appeal without being influenced and released attachment on bank accounts 15 10.01.06 Revised appeal filed before CIT A) 16 21.09.06 ITAT allowed MA No.166/Mum/ Without any 2006 in ITA No.2301/Mum/04 file to change in expunge remark of fabrication ground condition/ facts.Page 7 of 20
ITA No.5429 of 2006 MH Patel Mumbai 17 25.9.06 In W.P. No.6262/06 Hon'ble Bombay High Court directed CIT (A) to accept all documents 18 18.09.06 CIT (A) passed order on 2nd appeal 19 17.10.06 2nd appeal filed before ITAT 20 7.4.07 In W.P. No.1289 of 2007 Hon'ble Bombay High Court set aside order on MA and formed special bench to hear afresh 21 11.6.07 MA No.166/Mum/06 to expunge the remark of fabrication dismissed by ITAT 22 24.7.07 MA No.411/Mum/05 to expunge the remark of fabrication dismissed by ITAT 23 24.06.08 In W.P. No.3624/2008 Hon'ble Bombay High Court gave liberty to challenge notice dated 21.10.02 under section 143(2) 24 13.05.09 Office Supdt. Letter shows that the approval records were fabricated 25 11.06.09 ACIT letter shows that neither my name nor AY 2000-2001 contain in correspondences for approval 26 8.10.09 Police filed interim report in learned 24th A.C.M.M. Court stating ACIT -
A.K. Gowada, JCIT A.B. Joshi and CIT (A) Pomela Prasad Committed offences under various sections of IPC.
27 8.8.11 Accused A.K. Gowada filed criminal application to squash criminal proceedings in learned A.C.M.M. Court. The Hon'ble High Court dismissed the application and ordered learned Magistrate to proceed in accordance with law.
28 2.4.13 Departmental Representative Shri The date is Mohit Jain shown office copy of changed after notice under section 143(2) dated thought and 21.10.2002 also have insertion of part of criminal date as "23". This proves the conspiracy. intention to show that the notice was issued after approval but in fact insertion of date fall under criminal conspiracy Page 8 of 20 ITA No.5429 of 2006 MH Patel Mumbai Proceedings before the ITAT
7. The proceedings before the ITAT also has a chequred history. The appeals were filed in FY 2007 and after many adjournments, the case was heard on 31.10.2008 before the Bench consisting of Shri M.A. Bakshi, Vice President( then) and Shri V.K. Gupta, Accountant Member. Later in the light of frivolous assertions of the applicant, these appeals were kept pending for two months as assessee preferred a writ petition before the Hon'ble High Court. Later on the cases were posted and the hearings were adjourned from time to time either at the request of the parties or as assessee expressed no trust in the Bench. On 25.05.2010 since assessee expressed no trust in the Bench, the members declined to hear the case vide order sheet dated 25.05.2010 and assessee's endorsement that "we express no faith" has been recorded in the order sheet. Later on, when the cases were taken up assessee was not present on some dates of hearing or the Bench did not function on some dates. There was also insistence by assessee and the Bench was asked to decide the petition dated 14.11.2011 complaining against the learned Sr. Departmental Representative, delaying the proceedings. The bench recorded the following note in the order sheet dt 21-03-12:
"Order Sheet ITA No.5429/Mum/2006, ITA No.6359/Mum/2006, ITA No. 6360/Mum/2006,ITANo.5636/Mum/2006,ITA o.5429/Mum/ 2006 and CO No.185/Mum/2008.
The assessee appeared in person. He submitted that the petition filed on 14th November 2011, has to be disposed off prior to taking up the appeals for hearing. He also stated that if the Bench wants to dispose off his petition dated 11th November 2011, together with all the appeal and cross objection, he would not mind arguing them together. After hearing, we were of the opinion that it would be advisable to dispose off the petition dated 14th November 2011, prior to taking up the matter for hearing of the appeals and cross objection on merit.Page 9 of 20
ITA No.5429 of 2006 MH Patel Mumbai The sum and substance of the petition dated 14th November 2011, of Mr. M.H. Patel, is that the Sr. Departmental Representative, Mr. P.C. Mourya, has obstructed administration of justice, which would amount to criminal contempt within the meaning of Contempt of Courts Act, 1971, for the reason that he filed an application dated 25th October 2011, seeking adjournment on the ground that he is proceeding on leave and that he would be back on 21st November 2011. It is argued that the Sr. D.R. is trying to drag the hearing.
The Sr. D.R., Mr. P.C. Mourya, submitted that for hearing on 14th November 2011, be requested for adjournment well in advance on 25th October 2011, as he had to proceed on leave. He further submitted that going on leave which has been sanctioned to him, cannot be considered obstruction of administration of justice.
After hearing rival contentions, we find that the learned Departmental Representative has applied for adjournment well in advance, as leave has been sanctioned to him. The Vice President, Mumbai Zone, directed that the case be fixed for hearing on 29th November 2011, in view of the request. In other words, the request for adjournment was granted and the case was posted within 15 days. Under these circumstances, we do not find any merit in the petition dated 14th November 2011, filed by Mr. M.K. Patel.
In the result, petition dated 14th November 2011, filed by Mr. M.H. Patal, is dismissed.
The Registry is directed to issue copy of this order sheet to both the parties.
Appeals and the cross objection are adjourned to 9th April 2012. This date of hearing is announced in the open Court in the presence of both the parties.
Sd/- Sd/-
(Satbir Singh Godara) (J. Sudhakar Reddy)
Judicial Member Accountant Member"
8. Subsequently, the Bench felt that there should be a consolidated paper book containing all orders so as to get a fair view of the matter. Accordingly, assessee filed a paper book on 13.6.2012 and after adjournments the case was finally posted before this bench on 01.04.2013. After hearing the preliminary Page 10 of 20 ITA No.5429 of 2006 MH Patel Mumbai issue of the objections of assessee, in order to understand the issues and the contention of the rival parties, the case was adjourned to 02.04.2013. The Bench heard the learned assessee in person and the learned DR. Assessee at the outset submitted that the issue on jurisdiction alone is to be decided and he did not arise any arguments on the merits and confined himself to the issue on jurisdiction alone.
9. It is very difficult to extract the grounds as raised by assessee in a series of papers. The sum and substance can be summarised as under:
a) AO has no jurisdiction to initiate the scrutiny proceedings.
b) Without prejudice to the above:
i) The loss/bad debts claim of M/s. Lalith Constructions is a genuine claim.
ii) Further claim made before AO with reference to forfeiture of security deposits/retention money is a genuine claim.
iii) Assessee has not earned the interest added in the income, therefore, these should be excluded.
10. These are the main contentions for adjudication and the rest of the issues are assessee's contentions on how various Officers suppressed the record, forged the documents, threatened assessee, complaints of criminal nature, fictitious events recorded by AOs, not giving proper opportunity, not allowing the claims as contended etc which is not possible to extract in this order, but were kept in mind while deciding the appeals.
The issue of jurisdiction
11. Assessee's main contention on this issue was that the original notice issued under section 143(2) dated 21.10.2001 issued by the ACIT-24(2) was bad in law and was issued without prior approval of Page 11 of 20 ITA No.5429 of 2006 MH Patel Mumbai the JCIT and was not accompanied by the notice under section 142(1) and is a mechanical exercise of power by AO, which is legally bad in law, void and beyond jurisdiction and is violative of the Board circular on the issue. The written submissions on the issue placed in the paper book by assessee are as under:
Written submission by assessee:
"1] Please refer to page 3 to 8. The ACIT vide letter dated 21-10-2002 sought approval of additional list of cases proposed to be scrutinized from JCIT. This list contains 101names of assessees. This list neither contains my name nor A. Y. 2000-01.
2] Please refer to page 9 to 12. The JCIT vide letter dated 23-10-2002 approved additional list of cases as proposed by ACIT. It is surprisingly noted by applicant that this list contains 51 names of assessee whereas the letter clearly state that the list proposed by ACIT is approved. No reason/s was/were given by JCIT. This list neither contains my name nor A. Y. 2000- 01. From this inferences can be drawn that the ACIT Mr. A. K. Gowada and Mr. A. B. Joshi as a part of criminal conspiracy and as a part of corrupt extortion practice extorted money from 50 assessee and dropped their name at the cost of revenue.
3] Please refer to page no. 13 and 14. This is a letter issued by office Superintendent of Additional CIT. In column 2, 3 and 6 he stated that no inward/outward register are maintained. In column 7 he enclosed copy of pages of inward register which has no entry of letter dated 23-10-2002. It also states that the approval letter was directly served to ACIT. This clearly proves that no such letter was in existence on that date. After extorting money from 50-assessee balance list was corruptly approved and date was fraudulently fabricated as per convenience.
4] Please refer to page no. 15. This is a letter dated 11- 06-2009 from ACIT to The Senior Inspector of Police. In Para no. 3, she stated that in letter dated 21-10-2002 along with list forwarded by then ACIT in case of Mr. M. H. Patel at serial no. 73 in place of A. Y. 2001-02 the A. Y. 2000-01 shall be read and in place of Manbhai Patel it shall be read as Manubhai Patel. She also repeated Page 12 of 20 ITA No.5429 of 2006 MH Patel Mumbai same thing in approval letter dated 23-10-2002 given by then JCIT. It is surprising and shocking under which section of I. T. Act she exercise such power? It is further surprising and shocking under which section of I. T. Act she exercises power of J CIT? The I. T. Authority tried their level best to hide these facts and Mr. J. K. Garg influenced/bribed Central Information Commissioner in concealing this fact. Above all Mr. C. Usha Mohan made correction after a lapse of7 years.
5] In issuing notice 21-10-2002 the I. T. officers fabricated record and adopted corrupt practices hence the said notice is a product of crime and law never endorses product of crime. In support of this argument I rely the decision in ITA no2301IMumJ2004 in assessee' own case and same A. Y. Further the tribunal cannot pass different verdict on same fact and law as held in [2005] 277 ITR 239 (MP) in case of Arihant Builder v. ITAT.
6] Without prejudice to forgoing and other issues stated else where in appeal without admitting genuineness of record, I state that the ACIT sought approval vide his letter dated 21-10-2002 and the approval was given on 23-10-2002. The ACIT issued notice dated 21-10-2002 without prior approval of JCIT/Additional CIT which is without jurisdiction and illegal and deserves to be squash and set aside. In support of this I rely on Instruction no. 1851, dated 8-08-1990. The instruction(s) of C. B. D. T. are binding on I. T. officers. Further in support of this argument I rely on (2000) 164 CTR 341: (2001)115 Taxman 575: (2000) 245 ITR 340 (MP) in case of CIT v. Ladharam Lakhimal.
7] In Writ Petition no. 3624 of 2008 the Hon'ble Bombay High Court gave liberty to raise issuance of notice without prior approval in the pending appeal before ITAT Appeal no. 6359/M/06.
8] It appears that the ACIT 24 (2) has not filed this appeal under the direction of CIT Range 24 as required U/s 253 (2) of Income Tax Act 1961. The entire record in this connection be called for looking into criminal back grounds of I.T. Officers being mastermind in fabricating the records. The appeal is filed without jurisdiction. The appeal be dismissed with cost being not maintainable. In this connection I rely on 2002 AIR SCW 4939.Page 13 of 20
ITA No.5429 of 2006 MH Patel Mumbai 2] The CIT (Appeals) XXIV passed appellate order on 18- 09-2006 and it appears that the appeal is filed on 30-11- 2006. The actual date of filing the appeal be verified as it may be filed even on latter date. It also appears that no application for condonation of delay is filed. The appeal is bar by the law of limitation of thirty days U/s 253 (3) hence the same be dismissed at cost.
In light of above argument I am not interested to go into the merit of case and humbly pray to deliver verdict on above issue and further prays as under:
Prayers A] The notice dated 21-10-2002 be squash and set aside being a product of crime.
B] The notice dated 21-10-2002 be squash and set aside being issued without prior approval.
C] The appeal no. 6359/M/06 be dismissed being not maintainable.
D] Any other and further order in favour of Appellant in appeal no. 5429/M/06 and defendant in appeal no. 6359/M/06.
E] The cost be awarded and recovered from personal account of concerned officers.
Shri M. H. Patel Appellant/Defendant Place: Mumbai Date: 30-09-2009"
12. We have heard the learned assessee in person and the learned Counsel in this regard. Looking dispassionately without getting prejudice by various events, contentions, complaints, if one looks at the facts of the case, they are as under:
a) Assessee had filed return of income belatedly on 12.12.2001for AY 2000-01.
b) AO alongwith the returns of 2001-02 of other assessees, included assessee's return filed for AY 2000-01 in the list sent to Page 14 of 20 ITA No.5429 of 2006 MH Patel Mumbai JCIT for approval but mentioned the AY as 2001-02, not AY 2000-01.
c) AO got approval vide letter dated 23.10.2002 from the JCIT.
d) The notice under section 143(2) was issued on 21.10.2002, where as JCIT approval approving selection of scrutiny in the name of Manbhai Patel for AY 2001-02 was issued on 23.10.2002.
e) The notice under section 143(2) was served on assessee on 29.10.2002.
13. In the light of the above facts, it is to be examined whether the notice is correctly issued and AO has jurisdiction to scrutinize the assessment.
14. It is relevant to extract the order of the CIT (A) on this issue which is as under:
"5.1. Ground No.1 & 2:
The grounds of appeal are reproduced as under :-
"1) The Original notice u/s.143(2) dated 21-10-2002 issued by AC.I.T.24(2) to me, without serving notice u/s.142(1). The said notice was a mere notice which do not contains any details of accounts and or particulars to be produced as required u/s. 143(2)(i) and 143(2)(ii), which are obligatory on the part of AO., thus said notice is a mechanical exercise of power by A 0., illegal, and beyond jurisdiction. No other notice/notices were served to me within twelve months as provided u/s.143(2)(ii), thus the return furnished by me become final and binding on I. T. Authority.
2) The notice u/s.143(2) dated 21-10-2002 was issued without prior approval of J. C.I. T. and hence bad in law, ultra virus and not tenable in law.
5.2 During the course of appellate proceeding, the appellant has made following submissions on these Page 15 of 20 ITA No.5429 of 2006 MH Patel Mumbai grounds :-
"1] The Original notice u/s.143(2) dated 21-10-2002 issued by AC.I.T.24(2) to me, without serving notice u/s.142(1). The notice u/s.143(2) dated 21-10-2002 issued by AC.I. T.24(2) is annexed and marked as Exhibit 3. The notice u/s.142(1) dated 7-7-2005 (which has hand written remarks which shows that he was pre- determined) issued by AC.I. T.24(2) to me, without serving notice u/s.142(1). The notice u/s.142(1) dated 7-7-2005) is annexed and marked as Exhibit 4. Both the notices were mere notices which do not contains any details of accounts and or particulars to be produced as required u/s.143(2)(i) and 143(2)(ii), which are obligatory on the part of AO., under law, thus said notice is a mechanical exercise of power by A. 0., which is illegal, bad in law, void and beyond jurisdiction. No other notice/notices were served to me within twelve months as provided u/s.143(2)(ii), thus the return furnished by me become final and binding on I. T. Authority. In this context I will rely on following judgments
i) Grindlays Bank Ltd. v. ITO & others ITR (1978) 779
ii) Berium Chemicals v. AJ. Rana, AIR 1972 SC 591; (1972) 42
iii) C.M. Jaffer Khan V. CIT (1966) 62 ITR 199 (Mys) affirmed in CIT V. C.M. Jaffer Khan (1972) 4 SCC 298;
(1972) 83 ITR 339 (SC).
iv) Mohini Debi Malpani v. ITO (1970) Vol. 77 (Cal.)
2) The said notice Uls.143(2) dated 21-10-
2002, was issued without prior written approval of JCIT/Addl. CIT as per requirement of C.B.D.T. instruction dated 28-6-2002 containing guidelines in respect of limited scrutiny. The C.B.D. T. instruction dated 28-6- 2002 is annexed and marked as Exhibit
9.These instructions are binding on ACIT 24(2), thus ACIT 24(2) acted beyond his power and jurisdiction. The ACT 24(2) be directed to produce such approval of his competent authority in this respect. This ground was not raised during hearing before Hon'ble ITAT as Hon'ble ITAT set aside orders on the basis of fabrication and suppression Page 16 of 20 ITA No.5429 of 2006 MH Patel Mumbai of documents only. I would like to rely upon the following judgments
i) CIT v. Ladharam Lakhimal (2000) 164 CTR 341: (2001) 115 Taxman 575(2000) 2451TR 340 (MP) No other notices were served upon me within period of one year. The entire proceeding is illegal, bad in law, void and beyond jurisdiction hence liable to be quashed and set aside on this point only. Thus the return furnished by me becomes final and binding on I. T Authority. Law bars assessment under section 143(3) or any other Sections of I. T Act."
5.3 I have considered the facts of the case and the submissions of the appellant. The necessary and sufficient condition for taking up a return of· income for scrutiny assessment is that the notice u/s.143(2) should be served on the person within 12 months from the end of the month in which the return is furnished. It is seen from the assessment record that the return of income was furnished by the appellant on 12/12/2001 and the notice u/s.143(2) was served on 29/10/2002. As such, the notice u/s.143(2) was duly served on the appellant within the aforesaid statutory period. The appellant was required by the said notice either to attend the office of the Assessing Officer or to produce or cause to be produced any evidence on which the appellant might rely in support of the return. This was perfectly worded in accordance with the provisions of section 143(2). There is no provisions u/s.143(2) to call for specific details or particulars. The powers to call for specific details and particulars are given u/s.142(1) of the Income-tax Act, 1961. It is not necessary that the notice u/s.142(1) calling for specific details and particulars should also be served along with notice under section 143(2). The validity of an assessment will not be vitiated even if no notice under section 142(1) is issued during the course of assessment proceedings. Further, there is no requirement of law that the notice u/s.143(2) should be issued only after the prior approval of the Jt.CIT. Sometimes, such approvals are obtained only for administrative reasons. The CBOT Instruction dated 28/06/2002 relied upon by the appellant is applicable to limited scrutiny u/s.143(2)(i). This Instruction is not applicable to the case of the appellant as it was not a case of limited scrutiny. Moreover, it is seen from the order sheet of the assessment record that the Page 17 of 20 ITA No.5429 of 2006 MH Patel Mumbai notice u/s.143(2) was issued in this case with the approval of the Jt.CIT, Range-24(2), communicated vide his letter No.Jt.CIT/Range-
24(2)1 Scrutiny/2002-03 dated 23/10/2002.Considering all these facts and provisions of law, it is found that the proceeding for scrutiny assessment was initiated as per law and was valid. The grounds taken in this regard are dismissed". ( emphasis supplied)
15. Even though, the learned CIT (A) decided the issue in relation to contention that a notice u/s 142(1) was not issued along with notice u/s 143(2), the fact that the notice was issued on 21.10.2002 and served on assessee later do indicate that at the time of issuance of notice, there is no valid approval by the JCIT as it came afterwards. Shorn of all complaints and counter arguments, the simple fact is that the notice under section 143(2) was prepared and issued along with the proposal for approval of scrutiny made to the JCIT by AO. As contended by assessee the Assessment Year selected by AO and approved by the JCIT is not AY 2000-01, but AY 2001-02. Even though the Asstt. Commissioner subsequently gave the report to authorities that it is a typographical error, the fact is that the record indicates that the proposal was sent for AY 2001-02 but notice was issued for AY 2000-01. One factor which support the contention of the Revenue authorities that it is typographical error is that the total income stated against that column is the income returned by assessee for AY 2000-01. So there seems to be some mistake on the part of AO which was compounded by the approval letter of the JCIT for the same AY but when assessee is challenging the same in various proceedings including the writ petitions before the Hon'ble High Court, one cannot ignore the fact that the year of the assessment was mentioned as AY 2001-02 and not AY 2000-01. Therefore, two reasons i.e. the year of selection was wrong and the notice served on assessee was issued prior to the actual approval by the JCIT are to be taken into consideration. Even though the names mentioned in the report was also wrongly spelt at various places, it Page 18 of 20 ITA No.5429 of 2006 MH Patel Mumbai is not material for deciding the issue as the notice was issued to assessee on 21.10.2002 i.e. before getting approval from the JCIT. On this reason alone the issuance of notice has to be held bad in law. Assessee has relied on various case law which are as under:
a) CIT vs. Kurban Hussain Ibrahimji Mithiborwala, 82 ITR 821 (S.C) (1971)
b) Deepchand Kothari vs. CIT 171 ITR 381 (Raj.) (1988)
c) UCO Bank vs. CIT 237 ITR 889 (S.C) (1999)
d) CIT vs. IOL 272 ITR 261 (S.C) (2004)
e) S.C. Tanna and Modi & Others vs CIT (2007)
f) Tamil Nadu Industrial Corporation Ltd.
g) CIT vs. T.S. Thakur 295 ITR 256 (Del.) (2007).
We do not propose to discuss legal propositions here in this order.
16. The above findings are given, without prejudice to the contentions raised by assessee and the arguments raised against the Department/ officers in various other proceedings. This order is not to be taken as the basis for or against the rival parties in any other proceedings as this issue was decided only for the Income Tax proceedings for adjudicating the matter before us. As reported briefly, there are various criminal complaints filed by assessee not only against the Departmental Officers but also against other parties. Therefore, we make it clear that this order should not be taken as a basis for deciding any other issues other than the matter placed before us for adjudication. With these observations, we hold that selection of the case by AO suffers from procedural lapses and accordingly the notices issued under section 143(2) dated 21.10.2002 is considered as bad in law. Consequently the proceedings initiated and completed also become bad in law and ab-initio void. Various other contentions raised regarding the merits of the issue need not be adjudicated. Accordingly AO is directed to accept the return of income filed originally. Consideration of other claims by assessee in the form of revised return (filed when no Page 19 of 20 ITA No.5429 of 2006 MH Patel Mumbai proceedings are pending) etc, also does not arise in the given circumstances.
17. Since assessee's contentions on jurisdiction are accepted, there is no need to adjudicate the Revenue appeal on the relief granted by the CIT (A) in the order. Therefore, without going into the relevant contentions, we treat the Revenue grounds as dismissed, for the reasons stated above.
18. In the result, appeal filed by assessee is allowed and the Revenue appeal is dismissed.
Order pronounced in the open court on 5th June, 2013 Sd/- Sd/-
(Dr. S.T.M. Pavalan) (B. Ramakotaiah)
Judicial Member Accountant Member
Mumbai, dated 5th June, 2013.
Vnodan/sps
Copy to:
1. The Appellant
2. The Respondent
3. The concerned CIT(A)
4. The concerned CIT
5. The DR, " B " Bench, ITAT, Mumbai
By Order
Assistant Registrar
Income Tax Appellate Tribunal,
Mumbai Benches, MUMBAI
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