Income Tax Appellate Tribunal - Chandigarh
The Khushian Co-Op Group Housing ... vs Ito, W-5, Panchkula on 7 September, 2020
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "ए" , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH "A", CHANDIGARH ी एन.के.सैनी, उपा य एवं ी संजय गग$, या%यक सद'य BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, JM आयकर अपील सं./ ITA NO. 1149/Chd/2019 नधा रण वष / Assessment Year : 2010-11 The Khushian Co-operative Group बनाम The ITO Housing Society Ltd. Ward-5, Panchkula #303, GHS 7A, Sector 24, Panchkula थायी लेखा सं./PAN NO: AABTT3479M अपीलाथ /Appellant यथ /Respondent नधा रती क! ओर से/Assessee by : Shri Tej Mohan Singh, Advocate राज व क! ओर से/ Revenue by : Shri Daya Inder Singh Sidhu, Addl. CIT सन ु वाई क! तार&ख/Date of Hearing : 07/09/2020 उदघोषणा क! तार&ख/Date of Pronouncement : 07/09/2020 आदे श/Order PER N.K. SAINI, VICE PRESIDENT This is an appeal by the assessee against the order dt. 18/06/2019 of Ld. CIT(A)-4, Ludhiana.
2. Following grounds have been raised in this appeal:
1. That the Ld. Commissioner of Income Tax(Appeals) has erred in law in upholding the framing of ex-parte assessment framed u/s 148 in the absence of service of any notice upon the assessee which is against the Principals of Natural Justice and as such the order passed is illegal, arbitrary and unjustified.
2. That the Ld. Commissioner of Income Tax(Appeals) has erred in law in upholding the reopening the assessment by issuance of notice u/s 148 in as much as there has been no escapement of income and order passed is illegal, arbitrary and unjustified.
3. That the entire reassessment has been framed without there being a reason to believe that the income has escaped assessment but only under the realm of suspicion and making of roving and fishing enquiries which is not permissible and as such the reassessment framed is illegal, arbitrary and unjustified.2
4. That the Ld. Commissioner of Income Tax(Appeals) has erred in upholding of the assessment framed u/s 148 on the basis of mechanical approval given by the Pr.CIT, Panchkula which is not permissible and as such the order passed is illegal, arbitrary and unjustified.
5. Without prejudice to the above, the Ld. Commissioner of Income Tax(Appeals) has erred in upholding the addition of Rs.48,82,699/- on account of cash deposits in the bank account in utter disregard of the explanations rendered during the course of appellate proceedings alongwith evidence placed on record in the shape of list of members/affidavits and as such the order passed is illegal, arbitrary and unjustified.
6. That the Ld. Commissioner of Income tax(Appeals) has further erred in holding that the Principal of Mutuality is not attracted in the case of the assessee which is arbitrary and unjustified.
7. That the order of the Ld. Commissioner of Income Tax (Appeals) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable.
3. The main grievance of the assessee relates to the sustenance of addition of Rs. 48,82,699/- made by the A.O. on account of cash deposited in the bank account.
4. Facts of the case in brief are that the A.O. on the basis of information that the assessee had made cash deposits of Rs. 48,82,699/- in its saving bank account during the year under consideration, reopened the case of the assessee under section 147 of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). The A.O. issued the notice under section 148 of the Act which was served upon the assessee through affixture. The A.O. also issued notice under section 142(1) of the Act. According to the A.O. nobody complied the notices, he therefore framed the assessment under section 144 of the Act and made the addition of Rs. 48,82,699/-.
5. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and furnished the written submission which has been incorporated in para 3 of the impugned order, for the cost of repetition the same is not reproduced herein.
6. The Ld. CIT(A) after considering the submissions of the assessee sustained the action of the A.O. in reopening of the assessment under section 147 of the Act by observing that the formation of belief by the A.O. was within the realm of 3 the subjective satisfaction and that the A.O. had formed reasons to believe regarding escapement of income on the basis of information received, further examined the case report of the assessee and on the basis of information that the primafacie income has escaped assessment, the reasons were recorded and assessment of the assessee's income which had escaped income was reopened. Reliance was placed on the judgment of the Hon'ble Supreme Court in the case of ACIT Vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. reported at 291 ITR
500. 6.1 The Ld. CIT(A) also sustained the addition made by the A.O. by observing that the assessee although explained the concept of mutuality at length, however, the copy of Memorandum of Association, Article of Association of the assessee society and the mere facts that the assessee was a registered society, did not prove the nature of activity of the society. She also observed that the assessee society had made payments to HUDA towards the construction of society in the land allotted by the HUDA which failed to prove that how it was a mutual benefit organization.
7. Now the assessee is in appeal.
8. Ld. Counsel for the Assessee reiterated the submissions made before the authorities below and submitted an application for admission of the additional evidence which read as under:
The abovementioned appeal is fixed for hearing on the 7th of September, 2020. The Assessing Officer during the course of assessment proceedings made an addition of Rs. 48,82,699/- on account of deposits in the bank account of the assessee-society. The notices for the instant year were issued at the earlier address of the office bearer # G-303, Rail Vihar, Sector 4, MDC, Panchkula Sh. Rajesh Shoeran. He had sold this place in the year 2010-11. Thus, the assessee-society was not in a position to appear before the Assessing Officer and place on record the explanation in respect of cash deposits in the bank account. The fact of not having received any notice of hearing issued by the Assessing Officer was brought to the notice of the Commissioner of Income Tax (Appeals). It was further submitted that the amount represented contributions received from its members. List of members alongwith a few affidavits were placed on record as is evident from the submissions of the assessee reproduced in the appellate order. The assessee has since received affidavits from all the members, copies of the receipts issued, cash book, ledger 4 as well as assessment orders for the subsequent two years, etc. which are placed as additional evidence.
As such it is, therefore, respectfully prayed that the additional evidence may please be admitted and adjudicated upon which goes to the root of the additions made and upheld by the Commissioner of Income Tax (Appeals).
The Assessee also furnished following documents alongwith the aforesaid application :
Sr. No. Description Pages
1. Details of amount deposited in cash by the members of the Society 1-52
alongwith their affidavits and receipts.
2. Copy of the Cash-book for the period of 01.04.2009 to 31.03.2010 53-57
of the Society.
3. Copy of the Ledger Account for the period of 01.04.2009 to 31.03.2020 of 58-68
the Society.
4. Copy of the Ledger account of Bank maintained with Vijaya Bank. 69-70
5. Copy of the Assessment Order dated 27.12.2018 for the 71-72
assessment year 2010-11.
6. Copy of the Assessment Order dated 27.11.2019 for the 73-74
assessment year 2011-12.
7. Copy of Form - L dated 31.01.2008 approved by the Asstt. Registrar, Co- 75-76
operative Societies, Naraingarh
8. Copy of Form - L dated 18.03.2010 approved by the Asstt. Registrar, Co- 77-78
operative Societies, Naraingarh
9. Copy of the PAN card of the Society. 79
10. Copy of the Registration certificate of the Society dated 04.02.2006 issued 80-81
by the Asstt. Registrar, Co-operative Societies, Naraingarh.
11. Copy of the letter dated 08.01.2009 addressed to the Asstt. Registrar Co-op 82-85 Societies, Naraingarh for change of Registered Office of the Society alongwith extract of minutes of general body meeting of t h e society held on 06.06.2008.
12. Copy of the letter dated 08.01.2008 addressed to the Manager, Vijay Bank, 86 Sector 11, Panchkula
13. Copy of the letter dated 22.06.2017 addressed to the Manager, Vijay Bank, 87 Sector 11, Panchkula.
9. It was contended that the aforesaid documents in the form of affidavits and receipts go to the root of the matter which could not be produced earlier, since the assessee was not able to procure the same from all the members of the assessee society. It was contended that the A.O. passed the assessment order exparte without serving any notice upon the assessee and the Ld. CIT(A) had also not appreciated the facts in right perspective. He requested that the 5 matter may be set aside to the A.O. for a fresh adjudication after considering the additional evidence now produced by the assessee.
10. In his rival submissions the Ld. DR although supported the orders of the authorities below but could not controvert the aforesaid contention of the Ld. Counsel for the assessee.
11. We have considered the submissions of both the parties and perused the material available on the record. In the present case it is an admitted fact that the A.O. passed the assessment order exparte, and even the notice under section 148 was claimed to have been served upon the assessee through affixture. However, it is not clear as to whether the affixture was in the presence of independent witnesses and at the right place because the A.O. himself admitted in the assessment order dt. 10/10/2017 that the postal authority returned the notice under section 142(1) of the Act with the remarks that the "assessee was not located at the address". Therefore, it is not clear as to whether the notices under section 148 of the Act or 142(1) of the Act were served upon the assessee by the A.O. before passing the assessment order under section 144 of the Act. It is also noticed that the Ld. CIT(A) sustained the addition by observing that the assessee had not brought on record how its income was exempt and had failed to prove, how it was a mutual benefit organization.
On the contrary the assessee in its written submission reproduced by the Ld. CIT(A) at para 3 of the impugned order explained that it was a Co-operative Society of ex service men having its main object to acquire either through outright purchase or on lease land for development and construction of residential house / flats for the members of the society and worked on the principles of mutuality. In the present case the assessee furnished the affidavits of its members alongwith receipt to prove the genuineness of the transaction 6 relating to cash deposited in the bank account. The said documents were not furnished before the authorities below for the reasons that the assessee was not in a position earlier to have the affidavits of all the members. In our opinion the new evidences now furnished by the assessee go to the root of the matter and are very relevant to resolve the present controversy. We therefore by keeping in view the principles of natural justice, deem it appropriate to remand this case back to the file of the A.O. to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee and by considering the new evidences now furnished by the assessee.
12. In the result, appeal of the assessee is allowed for statistical purposes.
(Order pronounced in the open Court on 07/09/2020 ) Sd/- Sd/-
संजय गग$ एन.के.सैनी,
(SANJAY GARG ) ( N.K. SAINI)
या%यक सद'य/ Judicial Member उपा य / VICE PRESIDENT
AG
Date: 07/09/2020
आदे श क! त,ल-प अ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आय/ ु त/ CIT
4. आयकर आय/ ु त (अपील)/ The CIT(A)
5. -वभागीय त न4ध, आयकर अपील&य आ4धकरण, च7डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File