Income Tax Appellate Tribunal - Jaipur
Shri Manoj Dubey, Jaipur vs Income Tax Officer, Ward-5-5, Jaipur on 28 February, 2020
vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,"A" JAIPUR
Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k
BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA. No. 332 to 334/JP/2019
fu/kZkj.k o"kZ@Assessment Year : 2010-11 to 2012-13
Shri Manoj Dubey cuke The ITO,
SB-112, Dubey Bhawan, Vs. Ward-5(5),
Lal Kothi, Tonk Road, Jaipur.
Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAYPD 6862 D
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Shri Ashok Kumar Gupta (Adv) &
Shri S.L. Jain (Adv.)
jktLo dh vksj ls@ Revenue by : Miss Chanchal Meena (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 26/02/2020
mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 28/02/2020
vkns'k@ ORDER
PER BENCH:
These are three appeals filed by the assessee against the respective orders of ld. CIT(A)-II, Jaipur dated 21.01.2019 for the assessment year 2010-11 and dated 24.01.2019 for the assessment years 2011-12 & 2012-13 respectively. Since common issues are involved, all these appeals were heard together and are disposed off by this consolidated order.2 ITA No. 332 to 334/JP2019
Shri Manoj Dubey vs. ITO
2. For the sake of present discussion, with the consent of both the parties, assessee's appeal in ITA No. 332/JP/2019 for the assessment year 2010-11 has been taken as a lead case wherein the assessee has taken the following grounds as appeal:-
1. Assumption of jurisdiction on Presumption That on the facts and in the circumstances of the case Ld. CIT(A) II has grossly erred in law and facts by confirming upholding the assumption of jurisdiction for re-assessment. The re-assessment proceedings in this case were only based on presumption/ suspicion and were thus not validly initiated.
2. Action u/s 148 on the basis of cash deposit in Saving Bank Account :-
That on the facts and in the circumstances of the case Ld. CIT(A) II has grossly erred in law and facts by confirming recording reasons and issuing notice u/s 148 on the basis of cash deposit Rs. 2,97,000/- in bank account for which source is found unverifiable.
3. Re-assessment is based on borrowed satisfaction :-
That on the facts and in the circumstances of the case Ld. CIT(A) II has grossly erred in law and facts by confirming issuing notice u/s 148 on the basis of AIR information in respect of cash deposit in bank accounts and without verifying the correctness of the information and therefore re- assessment proceeding is absolutely bad in law and without jurisdiction and further AO not recorded his satisfaction and reassessment is based on borrowed satisfaction which was not sufficient to confer power on the AO to initiate reassessment proceedings against the assessee.
4. Objection Not Disposed by Order :-
That on the facts and in the circumstances of the case Ld. CIT(A) II has grossly erred in law and facts by confirming not disposing of 3 ITA No. 332 to 334/JP2019 Shri Manoj Dubey vs. ITO objection in regard to reassessment by speaking order and therefore order is illegal.
5. Re-assessment can be by the Original AO :-
That on the facts and in the circumstances of the case Ld. CIT(A) II has grossly erred in law and facts by confirming the reassessment u/s 147/148 without jurisdiction because reassessment Can be made by the assessing officer who made the original assessment.
6. No Show Cause Notice :-
That on the facts and in the circumstances of the case Ld. CIT(A) II has grossly erred in law and facts by confirming addition of Rs. 2,97,000/- as unexplained cash deposit without serving show cause notice which is mandatory as per CBDT circular.
7. Cash deposit in Bank Fully Explained :-
That on the facts and in the circumstances of the case Ld. CIT(A) II has grossly erred in law and facts in not appreciating evidence of purchased bill of gold Jewellers, valuation report of Kakariya Jewllers (Approved Valuer) and sale invoice of gold Jewellery of Rs.3,49,000/- filled during assessment proceeding. This cash ( Sale Proceeds ) was available with the assessee for making subsequent deposit in bank.
8. Interest levied u/s 234A, 234B and 234C That on the facts and in the circumstances of the case Ld. CIT(A) II has grossly erred in law and facts by confirming in charging interest u/s, 234(A), 234(B) & 234(C)."
3. Briefly, the facts of the case are that the assessee has filed his original return of income on 30.07.2011 declaring total income of Rs. 1,06,440/-. Subsequently, notice U/s 148 of the Act was issued on 03.03.2017 after recording reasons and receiving approval from the 4 ITA No. 332 to 334/JP2019 Shri Manoj Dubey vs. ITO appropriate authority. In the assessment order passed U/s 143(3) r.w.s. 147 of the Act, the Assessing Officer has made addition of Rs. 2,97,000/- towards unexplained cash deposits in the bank account maintained by the assessee and income was accordingly assessed at Rs. 4,03,440/- which, on appeal, has been sustained by the ld. CIT(A). Against the said findings, the assessee is in appeal before us.
4. In grounds no. 1 to 5, the assessee has basically challenged the assumption of jurisdiction by the Assessing Officer by issuance of notice U/s 148 of the IT Act.
5. During the course of hearing, the ld. AR submitted that the assessee in his business of purchase and sale of fish aquariums and allied products and has originally filed his return of income on 30.07.2011 wherein the assessee has disclosed his gross income from business amounting to Rs. 1,74,510/-. It was submitted that for the assumption of jurisdiction U/s 147 of the Act, the AO should have reasons to believe and not made suspicion that the income has escaped assessment. In this regard, our reference was drawn to the reasons recorded by the Assessing Officer which reads as under:-
"The assessee has filed his return of income for year under consideration on 30.07.2011 declaring total income of Rs. 1,06,440/-. The ITO Investigation, Jaipur conducted enquiry in this case. It is gathered that the assessee has deposited cash in his bank account amounting to Rs. 2,97,000/- source of which was found unverifiable. In view of the above and on the basis of 5 ITA No. 332 to 334/JP2019 Shri Manoj Dubey vs. ITO material available on record, I have reason to believe that income of Rs. 2,97,000/- has escaped assessment within the meaning of section 147 of the IT Act 1961."
6. It was submitted by the ld AR that the reassessment has been initiated for verification of cash deposit in the bank account of the assessee. It was submitted that there is no material in position of the Assessing officer to hold that cash so deposited represent the income of the assessee over and above what has been disclosed in the return of income already filed where he has already disclosed profits from his business. In support, reliance was placed on the Coordinate Bench decision in case of Amrik Singh vs. ITO 70 taxmann.com 26 and decision in case of Bir Bahadur Singh Sijwali vs. ITO 53 taxmann.com
366. It was further submitted that there is no enquiry which has been conducted by the Assessing Officer and the reasons have been recorded based on borrowed satisfaction and the enquiry done by the Investigation Wing. In support, reliance was placed on the decision of Hon'ble Rajasthan High Court in case of CIT vs. Shree Rajasthan Syntex Ltd. 313 ITR 231. It was further submitted that during the course of assessment proceeding, the assessee had raised an objection regarding reasons recorded by the AO for initiation of assessment proceedings through its submissions dated 24.08.2017, however, without disposing of the said objection and passing speaking order, the Assessing Officer has made addition and passed the impugned order which is an illegality and not in accordance with the order passed by the Hon'ble Supreme Court in case of GKN Driveshafts (India) Ltd vs ITO 259 ITR 19. Further, reliance was placed on the decision of Hon'ble Rajasthan High 6 ITA No. 332 to 334/JP2019 Shri Manoj Dubey vs. ITO Court in case of M/s K.C. Mercantile vs. CIT (in D.B. Appeal No. 292/2016). It was accordingly submitted that the order so passed by the AO cannot be sustained for want of jurisdiction and should be set- aside.
7. Per contra, the ld. DR submitted that the Assessing Officer has received information from the Investigation Wing that the assessee has deposited cash of Rs. 2,97,000/- in his bank account and has reportedly not responded to the summons issued by the Investigation Wing, therefore, basis such information in his position, the Assessing Officer after recording reasons has issued notice to the assessee. It was submitted that as long as there is nexus between material and formation of belief that income has escaped assessment, the sufficiency of material may not be relevant for assumption of jurisdiction U/s 147 of the Act. In support, reliance was placed on the decision of Hon'ble Rajasthan High Court in case of Uttam Chand Jain. It was further submitted that information received from the Investigation Wing constitute a tangible material and after considering the same where the AO formed a belief that the income has escaped assessment, the reopening cannot be quashed. Regarding the contention so advance by the ld. AR regarding borrowed satisfaction, it was submitted that the AO has duly recorded his satisfaction in the instant case and therefore, the contention so advance by the assessee cannot be accepted. Regarding non disposal of objections raised by the assessee against the reasons recorded by the AO, it was submitted that it is a mere technicality which cannot be fatal in terms of making the whole proceeding as bad in law. In support, reliance was placed on the decision of Hon'ble Madras High 7 ITA No. 332 to 334/JP2019 Shri Manoj Dubey vs. ITO Court in case of Home Finders Housing limited vs ITO and the SLP against the said decision has been dismissed by the Hon'ble Supreme Court as reported in 94 Taxamann.com 84.
8. We have heard the rival contentions and perused the material available on record. In this case, notice U/s 148 of the Act was issued by the Assessing officer on 03.03.2017 which was duly served on the assessee on 04.03.2017. In response, the assessee submitted that return of income filed by the assessee on 19.05.2017 may be treated as return of income filed in response to the notice U/s 148 of the Act. The assessee further requested for the reasons on the basis of which the matter has been reopened by the AO. Thereafter the reasons were supplied to the assessee and thereafter the assessee filed a letter dated 24.08.2017 with the Assessing officer objecting to the reasons so recorded by him and the contents of the said letter reads as under:-
"The assessee is dealing in the business of purchase and sale of fish aquariums & allied products.
The assessee filed its return of income for assessment year 2010-2011 on 30/07/2011 declaring an income of Rs. 1,06,435/- along with its return of income. The assessee also filed a statement of computation of income.
The assesseee received a notice dt. 04/03/2017 issued under section 148 of the Act. Inter alia, stating that the AO had reason to believe that income chargeable to tax for the assessment year 2010-11 had escaped assessment within the meaning of Section 8 ITA No. 332 to 334/JP2019 Shri Manoj Dubey vs. ITO 147 of the Act and consequently, he proposed to reassess the assessee's income for the said year.
The assessee filed a return on dt. 19/05/2017 acknowledgment number 777637460190517 in response to your above referred notice u/s 148.
The assessee requested for the reasons for reopening and pursuant to its request, your honour provided the reasons as recorded.
The assessee wants to object the reasons which were recorded for reopening of assessment. The reason are as under :-
"The assessee has filed his return of income for the year under consideration on 30/07/2011 declaring total income of Rs. 106440/-. The ITO, Jaipur conducted enquiry in this case. It is gathered that the assessee has deposited cash in his bank account amounting to Rs. 297000/-.
Source of which was found unverifiable. In view of the above and on the basis of material available on record I have reason to believe that, income of Rs. 2,97,000/- has escaped assessment within the meaning of section 147 of the IT Act 1961".
In the present case, the petitioner questions the assumption of jurisdiction to reopen the assessment principally on the ground 9 ITA No. 332 to 334/JP2019 Shri Manoj Dubey vs. ITO that there has been no failure on the part of the petitioner to fully and truly disclose all material facts necessary for its assessment. The petitioner has not failed to disclose fully and truly all material facts necessary for its assessment and that the reopening of assessment has been occasioned by change in opinion, which is impermissible.
The assessee has deposited cash in bank account amounting to Rs. 2,97,000/. Source of which was sale proceeds of 22 Kt plain gold jewellery amounting of Rs. 3,49,000/-.
The source of bank deposited is verifiable and fully explained.
In view above facts your honour is requested to drop reassessment proceeding and decide objection by speaking order."
9. We therefore find that the undisputed facts which are emerging from the records are that in response to notice u/s 148, the assessee filed his return of income, the reasons were requested to be supplied to him which were duly supplied by the Assessing officer and thereafter, the assessee filed his objections on 24.08.2017 to the said reasons giving detail justification of source of cash deposits in his bank account. On the same date, the notice U/s 143(2) was issued and the matter was fixed for hearing on 12.09.2017, thereafter after consideration of the submissions of the assessee, the assessment was completed U/s 143(3) r.w.s. 147 of the Act vide order dated 22.12.2017. Further, from 10 ITA No. 332 to 334/JP2019 Shri Manoj Dubey vs. ITO perusal of the records as well as the assessment order, we find that the Assessing Officer has proceeded with the assessment proceedings and passed the order U/s 143(3) r.w.s. 147 without disposing off the objections so raised by the assessee through a separate order. Further, there is no narration even in the assessment order that before completing the assessment proceedings, the objections were disposed off. Disposing off the objections raised by the assessee against the reasons recorded before issuance of notice u/s 148 though not part of statutory requirement as prescribed under the Income Tax Act, however, the same is guided by the directions issued by the Hon'ble Supreme Court in case of GKN Driveshafts (India) Ltd (supra). There is thus a clear violation of the directions issued by the Hon'ble Supreme Court. The question that arises for consideration is whether such violation of the directions issued by the Hon'ble Supreme Court is a mere technicality and breach of such technicality can be made good by remanding the matter back to the file of the Assessing officer. Alternatively, whether the same is in nature of an illegality which has prejudiced the interest of the assessee to challenge the same before the Courts as the Assessing officer has already passed the reassessment order and thus cannot be cured and will result in quashing of the reassessment order. In this regard, we find that similar issue has come up for consideration before the Hon'ble Rajasthan High Court in case of M/s K.C. Mercantile vs. CIT (supra) wherein the Tribunal has remanded the matter back to the file of the Assessing officer for disposing off the objections and in that context, the following substantial question of law was framed by the Hon'ble High Court which reads as under:
11 ITA No. 332 to 334/JP2019Shri Manoj Dubey vs. ITO "whether under the facts and circumstances of the case, the ld Tribunal was justified in not declaring the reassessment proceedings and consequential assessment order passed thereto as nullity?"
And the relevant facts and findings are contained in Para 4, 4.1 and 8 which reads as under:-
"4. Counsel for the appellant has contended that the present appeal is arising out of the judgment and order of the tribunal whereby tribunal has upheld the contention of the appellant and remitted back the matter for reassessment which will give a second inning to the Assessing Officer who has to do reassessment within a period of 9 months and he will get extended time of limitation which is not the object of the Income Tax Act. When the Court has already fixed the period, it is to be construed in a very strict sense and has to be applied.
4.1 In support of his contention, he has relied upon the following decisions:
1. KSS Petron Private ltd. vs. ACIT, ITA No. 227/2014, 03.10.2016 holding as under:-12 ITA No. 332 to 334/JP2019
Shri Manoj Dubey vs. ITO "7. On further Appeal, the Tribunal passed the impugned order. By the impugned order it held that the Assessing Officer was not justified in finalizing the Assessment, without having first disposed of the objections of the appellant. This impugned order holds the Assessing Officer is obliged to do in terms of the Apex Court's decision in GKN Driveshafts (India) Ltd., v/s ITO 259 ITR
19. In the aforesaid circumstances, the order of the CIT(A) and the Assessing Officer were quashed and set aside. However, after having set aside the orders, it restored the Assessment to the Assessing Officer to pass fresh order after disposing of the objections to reopening notice dated 28th March, 2008, in accordance with law.
8. We note that once the impugned order finds the Assessment Order is without jurisdiction as the law laid down by the Apex Court in GKN Driveshafts (supra) has not been followed, then there is no reason to restore the issue to the Assessing Officer to pass a further/fresh order. If this is permitted, it would give a licence to the Assessing Officer to pass orders on reopening notice, without jurisdiction (without compliance of the law in accordance with the procedure), yet the only consequence, would be that in appeal, it would be restored to the Assessing Officer for fresh adjudication after following the due procedure. This would lead to unnecessary harassment of the Assessee by reviving stale/ old matters. 9 In fact, to ensure that reopening notices are disposed of, expeditiously the parliament itself has provided in Section 153(2) of the Act a period of limitation within which the Assessing Officer must 13 ITA No. 332 to 334/JP2019 Shri Manoj Dubey vs. ITO pass an order on the notice of reopening i.e. within one year from the end of the financial year in which the notice was issued. In fact, Section 153 (2A) of the Act as in force at the relevant time itself provides that an order of fresh assessment, consequent to the order of Tribunal under Section 254 of the Act, would have to be passed within one year from the end of the financial year in which the order under section 254 of the Act, was passed by the Tribunal and received by the Commissioner of Income tax."
The Hon'ble Rajasthan High Court, thereafter, has given its findings as under:
"8. Before proceeding with the matter, it is not out of place to mention that the law declared by the Supreme Court in GKM Driveshafts (supra) clearly held that the preliminary objection is to be decided as the first, it cannot be decided subsequently. The argument which has been canvassed by the assessee is required to be considered very seriously more particularly in view of the observations made by the Supreme Court in the case of KS Petron Private Ltd. (supra) which is followed in Hotel Blue Moon (supra), the law declared by the Supreme Court is taken in true spirit whether it will open a second inning in how own. Section 153(3) is to be read very cautiously as 153 powers are given to the Department, the Court has to look into whether the law declared by the Supreme Court is given away or protected. In the present case, as the Assessing Officer has clearly ignored the law declared by the Supreme Court, in that view of the matter, the issues which are raised in the matter, the Tribunal ought not to 14 ITA No. 332 to 334/JP2019 Shri Manoj Dubey vs. ITO have remitted back for reassessment since period of limitation has already expired as the authority will get extended time of limitation beyond 9 months which is not the object of Income Tax Act.
9. In that view of the matter, on issue No. 1 and 2, the order of reassessment passed by the Tribunal is declared null and void.
The questions are answered in favour of assessee and against the Department.
10. The appeal of the assessee is allowed."
10. We find that in the aforesaid decision, the Hon'ble High Court has considered the decision of Hon'ble Madras High Court in case of Home Finders Housing limited vs ITO(supra) as relied upon by the ld DR and has followed the decision of the Hon'ble Supreme Court in case of KSS Petron Private ltd. vs. ACIT (supra). In light of above and respectfully following the decision of the Hon'ble Jurisdictional High Court which is binding on this Tribunal, the reassessment proceedings completed without disposing off the objection raised by the assessee cannot be sustained and consequent reassessment order u/s 147 r/w 143(3) is hereby quashed and set aside.
11. Therefore, the other contentions advanced by both parties as well as grounds on merit have become academic, are not adjudicated upon and are left open. In the result, the appeal of the assessee is allowed.
12. In ITA No. 333/JP/2019 and 334/JP/2019, both the parties fairly submitted that the facts and circumstances of the case are exactly 15 ITA No. 332 to 334/JP2019 Shri Manoj Dubey vs. ITO identical as in ITA No. 332/JP/2019 wherein the order has been passed u/s 147 r/w 143(3) without disposing off the objections raised by the assessee against the reasons recorded by the Assessing officer u/s 148 of the Act. Therefore, following our findings and directions contained in ITA No. 332/JP/2019, the reassessment order passed for these two years are also quashed and set-aside.
In the result, all three appeals of the assessee are allowed.
Order pronounced in the open Court on 28/02/2020.
Sd/- Sd/-
¼fot; iky jko½ ¼foØe flag ;kno½
(Vijay Pal Rao) (Vikram Singh Yadav)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 28/02/2020.
*Santosh
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Shri Manoj Dubey, Jaipur.
2. izR;FkhZ@ The Respondent- ITO, Ward-5(5), Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.
6. xkMZ QkbZy@ Guard File { ITA No. 332 to 334/JP/2019} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar.