Income Tax Appellate Tribunal - Jaipur
Mujeeb Khan, Jaipur vs Ito, Jaipur on 27 February, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL,
JAIPUR BENCHES (SMC), JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JUDICIAL MEMBER
vk;dj vihy la-@ITA No. 421/JP/2017
fu/kZkj.k o"kZ@Assessment Year : 2007-08
Mujeeb Khan cuke Income Tax Officer,
Prop. M/s M.K. Repair Center Vs. Ward 6(5),
Near Railway Phatak, Jagatpura, Jaipur.
Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AHTPK 2174 K
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Shri Tanuj Agrawal (C.A.)
jktLo dh vksj ls@ Revenue by : Shri R.A. Verma (Addl. CIT)
lquokbZ dh rkjh[k@ Date of Hearing : 20/12/2017
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 27/02/2018
vkns'k@ ORDER
PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 12.04.2017 of CIT(A), Jaipur for the assessment year 2007-08. The Assessee has raised the following grounds:-
"1. That on the facts and circumstances of the case and in law, the learned commissioner of Income Tax (Appeals) grossly erred in not quashing the reopening of assessment under section 147 of the income-tax Act, 1961, and also erred in not treating the 2 ITA 421/JP/17_ Mujeeb Khan vs. ITO reassessment order passed as illegally, unjustified and void-ad-inito thereby ignoring the following facts:-
a) Non-receipt of notice u/s 148 by the assessee within statutory time limit.
b) Non-issuance of notice u/s 134(2) of the Income-tax Act, 1961;
and
c) Non-disposal of objections raised by the appellant by the ld. A.O. by way of a speaking order as provided by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. ITO 259 ITR 19 (SC).
2. That on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) grossly erred in sustaining an addition of Rs. 22,20,000/- as unexplained investment in immovable property.
3. That on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) grossly erred in not considering the contention raised by the appellant that no opportunity of cross-examination of witness Shri Sitaram Gurjar was provided to the appellant before finalization of the assessment proceedings against him.
4. That the humble appellant craves leave to add, amend, alter, modify, substitute or delete any ground or grounds of appeal on or before the hearing of the appeal."
2. The assessee is an individual and filed its return of income on 16.11.2007. Subsequently on the basis of information received from ADIT Investigation-II, Jaipur the AO proposed to reopen the assessment by issuing a notice u/s 148 of the Act dated 25.03.2014. The AO proposed to 3 ITA 421/JP/17_ Mujeeb Khan vs. ITO assessee the income of Rs. 22,20,000/- being escaped assessment based on an agreement for purchase of 10 Bighas of land. The reassessment was framed vide order dated 27.03.2015 whereby the AO made an addition of Rs. 22,20,000/- u/s 69 of the Act being unexplained investment. The assessee challenged the order of the AO before the ld. CIT(A) and raised various grounds including validity of reopening as well as validity of reassessment. The ld. CIT(A) was not impressed with the contentions of the assessee and upheld the addition made by the AO as well as reopening of the assessment.
3. Before the Tribunal the ld. AR of the assessee has assailed the order of the authorities below mainly on three grounds firstly the reopening on the basis of the alleged agreement is not valid as the said document is a dum document not revealing any income assessable to tax has escaped assessment. The ld. AR of the assessee forcibly contended that this is not an agreement showing any transaction of purchase or sale of the land but it is only a document containing mode of sharing of the sale consideration in the event of sale of the land. He has further contended that merely because a property was purchase it does not automatically lead to inference that income has escaped assessment as the assessee might have used his disclosed income for investment in the asset purchased. The AO 4 ITA 421/JP/17_ Mujeeb Khan vs. ITO cannot reopen the assessment for verification of source of purchase and therefore, there is no reason to believe that income has escaped assessment. The Second contention of ld. AR is that the reassessment has been framed without issuing any mandatory notice u/s 143(2) of the Act and therefore, the impugned reassessment order is illegal and valid and deserves to be quashed. In support of his contention he has relied upon the decision of Hon'ble Supreme Court in case of ACIT vs. Hotel Blue Moon 321 ITR 362. The third contention of the ld. AR of the assessee is that the addition has been made by the AO on the basis of dumb document and statement of one Shri Sitaram Gurjar a witness to the alleged agreement dated 31.07.2006 without providing an opportunity of cross examination to the assessee. Thus, the ld. AR of the assessee has submitted that the statement of Shri Sitaram Gurjar cannot be the basis of assessment without giving an opportunity of cross examination to the assessee. In support of his contention he has relied upon the decision of Hon'ble Supreme Court in case of Andaman Timber Industries vs. CCE 127 DTR 241.
4. On the other hand, ld. DR has submitted that the agreement in question clearly reveals the transaction of land wherein the assessee being executor of the document has admitted the transfer of Rs. 37,00,000/- in 5 ITA 421/JP/17_ Mujeeb Khan vs. ITO which the shares of the assessee is 3/5. Therefore, the AO has rightly formed to belief that the income assessable to tax to the extent of Rs. 22,20,000/- has escaped assessment as the same was not disclosed by the assessee in the return of income. He has supported the orders of the authorities below.
5. Having considered the rival submissions as well as relevant material on record it is noted that the assessee raised various legal objections before the ld CIT(A) against the reopening of the assessment validity of the reassessment as well as the addition made by the AO without giving an opportunity of cross examination to the assessee as the AO has made the addition based on the statement of Shri Sitaram Gurjar attesting witness of the agreement in question. It is pertinent to note that the assessee raised specific objection before the ld. CIT(A) regarding no notice u/s 143(2) was issued by the AO before the reassessment was completed u/s 143(3) r.w.s. 147 as well as the objection of not giving an opportunity of cross examination of Shri Sitaram Gurjar. The ld. CIT(A) while passing the impugned order has not dealt with and adjudicated these specific objections raised by the assessee. There is no quarrel on the point that the objections raised by the assessee are legal in nature and go to the root of the matter. The notice u/s 143(2) gives the jurisdiction to the Assessing 6 ITA 421/JP/17_ Mujeeb Khan vs. ITO Officer to proceed with the assessment and in the absence of the notice u/s 143(2) of the Act the assessment framed by the AO will be nullity for want of jurisdiction. Further, if the assessment is merely based on statement recorded by the AO without giving an opportunity of cross examination to the assessee then the same would amount to violation of principle of natural justice and the order passed without giving an opportunity of cross examination would suffer from a serious flow which renders the orders a nullity. Thus, both these issues raised by the assessee go to the root of the matter and required to be decided prior to the issue of addition on merits. Hence, in the facts and circumstance of the case where the ld. CIT(A) has not adjudicated these two issue the matter is set aside to the record of the ld. CIT(A) for fresh adjudication and specifically adjudication of the legal objections raised by the assessee.
In the result, the appeal filed by the Revenue is allowed for statistical purposes.
Order pronounced in the open court on 27/02/2018.
Sd/-
¼ fot; iky jko ½ (VIJAY PAL RAO) U;kf;d lnL; @Judicial Member Tk;iqj@Jaipur 7 ITA 421/JP/17_ Mujeeb Khan vs. ITO fnukad@Dated:- 27/02/2018 *Santosh vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Mujeeb Khan, Jaipur.
2. izR;Fkh@ The Respondent- The ITO, Ward 6(5), Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 421/JP/17) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar