Income Tax Appellate Tribunal - Nagpur
Shri Ajaysingh Gajanansingh Gour, ... vs Income Tax Officer, Ward-1, Gondia on 26 October, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
NAGPUR BENCH, NAGPUR
BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND
SHRI G. MANJUNATHA, ACCOUNTANT MEMBER
ITA no.398/Nag./2017
(Assessment Year : 2010-11)
Shri Ajaysingh Gajanansingh Gour
11, Govindpura, Kila Ward
............... Appellant
Tirora, Dist. Gondia
PAN - AJKPG4029N
v/s
Income Tax Officer
................... Respondent
Ward-1, Gondia
Assessee by : Shri Jayant M. Rande
Revenue by : Shri R.K. Baral
Date of Hearing - 24.10.2018 Date of Order - 26.10.2018
ORDER
PER G. MANJUNATHA, A.M.
This appeal filed by the assessee is directed against order dated 18th September 2017, passed by the learned Commissioner (Appeals)- I, Nagpur, for the assessment year 2010-11. The assessee has raised the following grounds of appeal:-
"1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming addition of ` 23,11,000 made by the Assessing Officer.
2. The learned CIT(A) erred in not appreciating the fact that notice u/s 143(2) of the Act was not issued by the Assessing 2 Shri Ajaysingh Gajanansingh Gour Officer in re-assessment proceedings which is fatal to the order of re-assessment.
3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not considering the merits of the case."
2. Brief facts of the case are that the assessee is an individual filed his return of income for the assessment year 2010-11 on 17th March 2011, declaring total income of ` 4,97,190. The return of income was processed under section 143(1) of the Income Tax Act, 1961 (for short "the Act"). Thereafter, the case has been re-opened under section 147 of the Act. On the basis of assessment proceedings of Gurudas Sukrit Barde, wherein it was found that the assessee has purchased agricultural land on 5th June 2009, from Gurudas Sukrit Barde, and three other family members for an amount of ` 5,34,600. It was, therefore, noticed that Shri Gurudas Sukrit Barde, in his assessment, stated that the source for cash deposits in the bank account is out of sale proceeds received from Shri Ajay Singh, Shri Gajanand Singh Gaur. Accordingly, notice under section 148 of the Act, was served on the assessee. In response to the notice, the assessee filed his return of income on 3rd October 2013, declaring total income of ` 4,97,190, by making additions towards difference in amount paid for purchase of land of ` 23,11,500. The relevant observations of the Assessing Officer are extracted below:-
"9. The assessee was asked to submit the details and nature of 3 Shri Ajaysingh Gajanansingh Gour payment of cash against the purchase of land. The assessee has submitted that, he has received a gift of Rs.6 lac from his wife Smt. Manisha Ajaysingh Gour in cash and out of this gift he has made payment to Shri Barde against the purchase of agncultural land. It is found that the assessee has made payment of Rs. 2 lac in the F.Y. 2008-09 hence the remaining Rs.3,89,0001- is used in the F.Y. 2009-10 relevant to A.Y.2010-11. He has produced copy of gift deed and submitted Xerox copy of the same. Vide letter F.No.ITO Wd.lIGND/142(1)/Asstt.Proc.147 r.w.s. 43(3) / A.Y. 10-11/2013-14 dated 25.02.2014 but assessee has not submit any details of remaining cash payments of Rs.21 lac to Shri Barde but denied the same. -He has further giving opportunity to cross examination of Shri Barde but he has not attended in response to summon u/s 131 giving opportunity for cross examination. Considering the facts of the case, statement of oath of Shri Barde, sequence of events such as date of sale deed and date of cash deposits of Shri Barde in saving bank account, it is clear that the assessee has made cash payments of Rs. 27 lac to Shri Barde against the purchase of agricultural land. The assessee has further failed to submit details of sources of cash available with him but submitted only details of Rs.3,89,0001- only of F.Y.2009-10 thus, hence remaining cash of Rs. 23,11,000/- is treated as assessee undisclosed cash and concealed income and same is added to the total income of assessee. The assessee has not shown his true and correct income and concealed the income, the penalty proceedings Vis 271(1)(c) of the IT Act, 1961 is initiated separately."
Aggrieved by the assessment order so passed by the Assessing Officer, the assessee preferred appeal before the first appellate authority.
3. The assessee, before the learned Commissioner (Appeals), filed additional grounds of appeal taking a legal plea challenging re- assessment order passed by the Assessing Officer on the ground that the re-assessment order passed by the Assessing Officer is bad-in-law as statutory notice required to be issued under section 143(2) of the Act was not issued by the Assessing Officer. The learned Commissioner (Appeals), during the course of appellate proceedings forwarded 4 Shri Ajaysingh Gajanansingh Gour additional grounds of appeal along with submissions of the assessee to the Assessing Officer for his comments. The Assessing Officer, vide his remand report dated 6th January 2017, admitted the fact that notice under section 143(2) of the Act was not issued to the assessee. However, he further commented on the issue by stating that as per the provisions of section 148 of the Act, the requirement of issue of notice under section 143(2) of the Act is not mandatory when the assessee has not filed his return of income within the time allowed under notice issued under section 148 of the Act and when the assessee has actively participated in the assessment proceedings in response to various show cause notices. The learned Commissioner (Appeals) confronted the remand report of the Assessing Officer to the assessee for his comments for which the assessee has vehemently argued that non-issuance of notice under section 143(2) of the Act cannot be cured by provisions of section 292BB of the Act, as the issuance of notice is mandatory before taking up a case for assessment when the Assessing Officer is not satisfied with the income declared by the assessee in his return of income. In this regard, he relied upon the decision of the Hon'ble Delhi High Court in PCIT v/s Jai Shiv Shankar Traders Pvt. Ltd. [2016] 282 CTR 435 (Del.). The learned Commissioner (Appeals), after considering relevant submissions of the assessee and also by following the decisions of the 5 Shri Ajaysingh Gajanansingh Gour Hon'ble Delhi High Court in CIT v/s Madhya Bharat India Corporation Ltd., [2012] 20 taxmann.com 557 (Del.) rejected the additional grounds raised by the assessee challenging the validity of assessment proceedings in the absence of notice under section 143(2) of the Act by holding that when the assessee has participated in the assessment proceedings, there has been no violation of principles of natural justice in giving adequate opportunity to the assessee to file evidences / details in support of his return of income as required by way of notice under section 143(2) of the Act to make the re-assessment proceedings void particularly so when the assessee himself has consciously and intentionally waived-off his rights to object to these procedural irregularities. The relevant observations of the learned Commissioner (Appeals) are extracted herein below:-
"6.0 Appellant's submissions along with assessment order and remand report of the A.O. have been considered carefully. Decision of the Hon'ble Delhi High Court in case of Pr.CIT i.e., Jai Shiv Shankar Traders Pvt. Ltd. (supra) has also been perused. There is no denying the fact that notice u/s 143(2) has not been issued by the A.O. in the appellant's case till passing of assessment order on 18.03.2014 for the year under consideration. Having said this, it is noticed that the impugned assessment order has been passed in response to notice u/s 148 of the Act where the appellant has not filed return within prescribed period of 30 days from date of first notice i.e., 7.11.2012. The return, declaring same original income of ` 4,97,190, been filed after a lapse of more than one year on 03.12.2013. Even the original return filed on 17.03.2012 is beyond due date u/s 139(1). On similar facts of non issue of notice u/s 143(2) where notice u/s 148 been issue, Hon'ble Delhi High Court in case of CIT v/s Madhya Bharat Energy Corporation Ltd., [2012] 20 taxman.com 557 has mentioned as under:-6
Shri Ajaysingh Gajanansingh Gour "12. It is noticed that the impugned assessment is in response to notice u/s 148 of the Act and the Act does not specifically provide that the assessment made u/s 147 of the Act will be after issue of the notice u/s 143(2) of the Act. In fact, the Assessing Officer has the basic jurisdiction to assess the income in terms of section 147 & section 148 of the Act where he has reason to belief that the income has escaped assessment. On the submissions of non-
issuance of notice u/s 143(2) of the Act, we are of the view that the findings of the Tribunal in this regard are not as per the scheme of the provisions of sections 147 and 148 of the Act.
13. Though no specific notice was required u/s 143(2) of the Act, as noted above, the questionnaire dated November 11, 2003 and January 21, 2004, provided the assessee specific opportunity to support his return by seeking documentary evidence and details in regard to the following query:-
"As per the return, interest of ` 93,81,222 was received by you during the year, which is adjusted against pre-operative expenses. The interest income should be charged."
6.1 In the instant appeal, facts of above mentioned decision of Hon'ble Delhi High Court are found squarely applicable. The appellant has been issued various notices u/s 142(1) & letters asking him to give details and source of cash payment made against the purchase of land along with supporting evidences thereof after issue of first notice u/s 148. In fact, vide notice dated 19.11.2013, the A.O. has also enclosed copy of show cause notice and draft assessment order since the appellant has not made any compliance whatsoever either personally or through his A.R. nor filed the return or made any submissions since 07.11.2012. It is to be noted that the appellant has filed return as late as on 03.12.2013, declaring same income as declared in the original return filed on 17.03.2011. Thereafter, the appellant has appeared before A.O. on several occasions and has filed various details on the basis of which impugned assessment order has been passed on 18.03.2014 without there being any objection to AO's jurisdiction or validity of the proceedings in any manner. Thus the appellant having submitted to the jurisdiction of the Assessing Officer and when on appearing before him, participating in the proceedings on each date of hearing which lasted for about four months and raising all possible pleas on the merits of the case with the assistance of CA but not raising any objection as to irregularity in proceedings for non issue / receipt of notice on the appellant, the issue of notice cannot be decided in favour of the appellant now. Thereafter, even in appeal filed on 21.04.2014 challenging the assessment order, the appellant has not raised any ground of illegality of proceedings on non issue of notice but 7 Shri Ajaysingh Gajanansingh Gour raised all grounds on the merits in the memo of appeal. The ground relating to the notice has sought to be raised as additional ground of appeal as late as on 03.03.2016 i.e. after 2 years of filing of appeal. In the instant case, there is valid issue of notice u/s 148 of the Act for initiation of reassessment proceedings and issue of such notice is not in dispute. It is also not the case of the appellant that no proper opportunity has been given by the AO. Also original return as well as subsequently return filed in response to notice u/s 148 is same; there is no difference in the contents of both the returns and the appellant has participated in all the proceedings before AO."
4. The learned Authorised Representative submitted that the learned Commissioner (Appeals) erred in not appreciating the fact that notice under section 143(2) of the Act was necessarily to be issued before taking up the case for assessment and such lapse cannot be cured in view of the provisions of section 292BB of the Act. The learned Authorised Representative further submitted that the learned Commissioner (Appeals) having accepted the fact that no notice under section 143(2) of the Act has been issued, failed to appreciate the fact that the assessment order passed by the Assessing Officer is bad in law. when the assessee has filed return of income in response to notice under section 148 of the Act. In this regard, he relied upon the decision of the Hon'ble Supreme Court in ACIT v/s Hotel Blue Moon, [2018] 169 DTR 179 (SC).
5. Learned Departmental Representative strongly supporting the order of the learned Commissioner (Appeals) submitted that when the assessee has consciously and intentionally forgone his rights of 8 Shri Ajaysingh Gajanansingh Gour challenging the notice before the Assessing Officer by actively participating in the assessment proceedings, then, non-service of notice or non-issuance of notice cannot be questioned at the appellate stages. Learned Departmental Representative further submitted that the learned Commissioner (Appeals) has elaborately discussed the issue in the light of the decision of the Hon'ble Delhi High Court in the case of Madhya Bharat India Corporation Ltd. (supra), wherein it was held that the requirement of issue of notice under section 143 of the Act is not necessary when the Assessing Officer has basic jurisdiction to assess the income in terms of section 147 and section 148 of the Act.
6. We have carefully considered the rival contentions, perused the orders of the authorities below and the material placed on record. There is no dispute with regard to the fact that non-issuance of notice under section 143(2) of the Act before taking up the case for assessment. The authorities below have accepted the fact that the notice under section 143(2) of the Act has not been issued to the assessee. The learned Commissioner (Appeals) rejected the additional grounds raised by the assessee on the ground that when the assessee is consciously and intentionally waived-off his right to object procedural irregularities before the Assessing Officer by participating in the assessment proceedings, then, the said procedural lapse cannot be 9 Shri Ajaysingh Gajanansingh Gour called into question in appellate stage, more particularly, when the assessee has been given adequate opportunity to file evidences / details in support of his return of income. The learned Commissioner (Appeals) has not disputed the fact that the law mandates issuance of notice under section 143(2) of the Act when the return of income is taken up for scrutiny assessment. When the law is very clear on the aspect of issuance of notice under section 143(2) of the Act, if the Assessing Officer seeks not to accept any part of the return of income as furnished by the assessee or makes an assessment order contrary thereto and even in the course of re-assessment proceedings, such notices are required to be issued. This legal position has been clarified by the Hon'ble Supreme Court in Hotel Blue Moon (supra) wherein it was held that if the Assessing Officer, for any reason, repudiate the return of income filed by the assessee in response to the notice under section 158BC(a) of the Act, he must necessarily issue notice within the time prescribed proviso under section 143(2) of the Act. The omission on the part of the Assessing Officer to issue notice under section 143(2) cannot be a mere procedural irregularities and the same is not curable. This legal position has been reiterated by the Hon'ble High Court of Calcutta in the case of Oberoi _____________________, wherein it was held that issuance of notice under section 143(2) of the Act is mandatory, if the Assessing Officer 10 Shri Ajaysingh Gajanansingh Gour seeks not to accept any or part of the return of income as furnished by the assessee or makes an assessment order contrary thereto and even in the course of re-assessment proceedings, such notices cannot be dispensed with. Provisions of section 292BB of the Act must be understood to cure any defect in the service of the notice and not authorized to dispensation of notice. In this case, the authorities below have accepted the fact that no notice under section 143(2) of the Act has been issued, therefore, we are of the considered view that the re- assessment order passed 147 of the Act without issuance of notice under section 143(2) of the Act is void ab initio and liable to be quashed. Consequently, we hereby quash the re-assessment order passed by the Assessing Officer.
7. In the result, assessee's appeal is allowed.
Order pronounced in the open Court on 26.10.2018 Sd/- Sd/-
SANDEEP GOSAIN G. MANJUNATHA
JUDICIAL MEMBER ACCOUNTANT MEMBER
NAGPUR, DATED: 26.10.2018
11
Shri Ajaysingh
Gajanansingh Gour
Copy of the order forwarded to:
(1) The Assessee;
(2) The Revenue;
(3) The CIT(A);
(4) The CIT, Nagpur City concerned;
(5) The DR, ITAT, Nagpur;
(6) Guard file.
True Copy
By Order
Pradeep J. Chowdhury
Sr. Private Secretary
(A.R./Sr. P.S./P.S.)
ITAT, Nagpur