Income Tax Appellate Tribunal - Chandigarh
Smt. Jawinderwant Kaur Bains,, ... vs Assessee on 27 February, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH 'A', CHANDIGARH
BEFORE Ms. SUSHMA CHOWLA, JUDICIAL MEMBER
AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER
ITA No.344/Chd/2003
(Assessment Year : 1997-98)
Smt.Jaswinderwant Kaur Bains, Vs. The J.C.I.T.,
# 86, Sector 8-A,now resident of Special Range II,
House No.3068,Sector 21-D, Chandigarh.
Chandigarh.
ITA No.194/Chd/2008
(Assessment Year : 1997-98)
Smt.Jaswinderwant Kaur Bains, Vs. The A.C.I.T.,
# 3068, Sector 21-D, Circle 3(1),
Chandigarh. Chandigarh.
AND
ITA Nos.840 & 841/Chd/2009
(Assessment Year : 1997-98)
Smt.Jaswinderwant Kaur Bains, Vs. The A.C.I.T.,
# 3068, Sector 21-D, Circle 1(1),
Chandigarh. Chandigarh.
PAN: AINPB5712H
(Appellant) (Respondent)
Appellant by : Shri Tej Mohan Singh
Respondent by : Shri N.K.Saini, DR
Date of hearing : 27.02.2012
Date of Pronouncement : 09.03.2012
ORDER
PER SUSHMA CHOWLA, J.M, :
Out of these four appeals filed by the assessee, one appeal is against the order of Commissioner of Income Tax passed under section 263 of the Income Tax Act and the balance appeals are against the different orders of CIT (Appeals) passed against the order under section 144 r./w.s.263 of the Income Tax Act, 1961, penalty levied u/s 271(1)(c) of the Act and order of rectification under section 154 of the Act. All t h e a b o v e s a i d a p p e a l s r e l a t e t o a s s e s s m e n t ye a r 1 9 9 7 - 9 8 . 2
2. All these four appeals relating to the same assessee were heard together and are being disposed off by this consolidated or for the sake of convenience.
3. In ITA No.344/Chd/2003, the assessee has raised the following grounds of appeal:
1. That the Learned Commissioner of Income Tax-I, Chandigarh has erred both on facts and law while passing the order u/s 263 of the Income Tax Act, 1961.
2. That the Learned Commissioner of Income Tax-I, Chandigarh has erred in not allowing opportunity of being heard to the appellant which is against the principles of natural justice hence void and illegal.
3. That the Learned Commissioner of Income Tax-I, Chandigarh has erred in passing of the order u/s 263 without proper service of notice.
4. That the Learned Commissioner of Income Tax-I, Chandigarh has erred in both in facts & in law by setting aside the order passed by the Assessing Officer U/s 144.
5. That the Learned Commissioner of Income Tax-I, has erred by considering the records relating to other assessment year for setting aside the orders of learned Assessing Officer treating them as records for the concerned assessment year.
6. That the Learned Commissioner of Income Tax-I, has erred by treating the capital appreciation by sale of agricultural land, as Interest on deposits.
7. That the Learned Commissioner of Income Tax-I, has erred in relying on the assessment order in relation to assessment year 1998-99, which is itself based on wrong grounds & made without appreciating the facts of the case, against which the assessee has gone in appeal."
4. The learned A.R. for the assessee at the outset pointed out that the issue raised in the present appeal is identical to the issue raised in the case of husband of the assessee Shri Harmail Singh Bains Vs. JCIT in ITA No.345/CHANDI/2003 (order dated 30.3.2005). 3
5. The learned D.R. for the Revenue placed reliance on the order passed b y the Commissioner of Income Tax under section 263 of the Act and different orders of CIT (Appeals)..
6. We have heard the rival contentions and perused the record. The Commissioner of Income Tax while ex ercising the jurisdiction under section 263 of the Act noted that the order passed by the Assessing Officer under section 144 of the Act was erroneous and prejudicial to the interest of the Revenue on account of non-inclusion of interest of two deposits of Rs.50 lacs each for the period 26.7.1996 to 31.3.1997 in the i n c o m e o f t h e a s s e s s e e f o r t h e f i n a n c i a l ye a r r e l e v a n t t o t h e a s s e s s m e n t year 1997-98. Further the source of investment of Rs.1 crore made by the assessee with M.s Goldent Forest India Ltd. on 26.7.1996 also needed verification. In view thereof, the order of the Assessing Officer was set aside and the Assessing Officer was directed to pass a fresh assessment order after conducting proper enquiries and investigations. We find from the perusal of the order of the Tribunal in the case of the husband of the assessee Shri Harmail Singh Bains, which was against the order of Commissioner of Income Tax passed under section 263 of the Act, the power was exercised by the Commissioner of Income Tax on account of similar deposits with M/s Golden Forest India Ltd. and the i n t e r e s t a c c r u i n g t h e r e o n f o r t h e f i n a n c i a l ye a r 1 9 9 6 - 9 7 . The Tribunal vide para 4 noted the facts in the case of Shri Harmail Singh Bains (supra) as under:
4. On examination of income-tax record, it was noticed by the CIT that the order passed u./s 144 by the AO was erroneous and prejudicial to the interests of the revenue within the meaning of section 263 and noted the following discrepancies on the basis of material available on record:
a) The assessee has received Rs. 2574000/- on 26.4.1997 on account of maturity payment with regard to investment of Rs. 22000000/- made with M/s Golden Forest India Ltd (GFIL) jointly with Mrs. Jaswinderwant Kaur Bains. Out of this, Rs. 12000000/- was invested by 4 the assessee on which interest of Rs. 2040000/- was received by the assessee for the period from 26.7.1996 to 26.7.1997. Interest of Rs. 680000/- relating to period from 1.4.1997 to 31.7.1997 was taxed by the AO in assessment order for AY 98-99. However, similar addition was not made for the interest income earned for the period prior to this, i.e. 26.7.1996 to 31.3.1997 which comes to Rs. 136000/-. The CIT was of the view that the same was required to be added back in the assessee's income.
b) The source of investment of Rs. 12000000/- made by the assessee with GFIL on 26.7.1996 also needed verification.
Based on above two discrepancies in the order framed by the AO, the CIT issued show cause notice u/s 263 dated 21.3.2003 to the assessee fixing the case f or 26.3.2003."
7. The Tribunal further on consideration of the issue raised before it held as under:
"7.6 Coming to the last legal aspect raised by the assessee in dropping re-assessment proceedings on 7.11.2000 observing that the reasons for reopening only arise during next financial year 98-99 while making entry in the order sheet, the same has been taken into consideration while dealing with the ground of the assessee on merits.
7.7 Coming to the merits of the appeal, we find that so far as investment part by the assessee with GFIL is concerned, it was well explainable as the assessee had sold his land to GFIL on 26.1.1996 which was converted into FDR by the purchaser as such information had duly been conveyed to the ACIT during assessment proceedings for AY 96-97 as evident from page 7 of the paper book filed by the assessee.
7.8 So far as interest amount of such investment is concerned, the same was also not taxable in the hands of the assessee during the year and was taxable only in subsequent year as observed by the AO.
7.9 We also find that the above information regarding investment and interest thereon was duly conveyed to JCIT while completing the assessment and since investment was duly explained and interest income was taxable only in subsequent year and therefore there was no harm or loss to the revenue in this year and order passed by the AO could not be held as prejudicial to the interests of the revenue calling for assumption of jurisdiction by CIT u/s 263. Provisions u/s 263 only empowers the CIT to call and reexamine the record of order of the AO for verifying the fact as to whether such order is prejudicial to the interests of the revenue or not. Since in the present case, the order of the AO was not prejudicial to the interests of the revenue, in our considered opinion, the CIT was not justified in exercising his revisionary powers u/s 263. We, therefore, set aside the order of the CIT framed u/s 263.5
8. Before parting with the matter, we may observe that he CIT while assuming jurisdiction u/s 263 initiated proceedings on 21.3.2003, fixing the hearing for 26.3.2003 and completed the same on 27.3.2003, thereby completing the proceedings u/s 263 within a period of seven days, which is against the principles of natural justice as the essence of natural justice is doing justice. In the present case, since the assessee was a NRI residing in Tanzania, the CIT was not justified in completing such proceedings u/s 263 within seven days without observing the principles of natural justice, which also strengthens our view while quashing the proceedings framed by the CIT u/s 263.
8.1 We, therefore, keeping in view our above discussion and considering the facts and circumstances of the present case, set aside the order framed by the CIT u/s 263 and accept the grounds raised by the assessee in appeal."
8. From the perusal of the order of the Tribunal (supra) we find that the assessee alongwith her husband had made a joint deposit with Golden Forest India Ltd which fact was noted b y the Tribunal vide para 4 (a) of its order, which is reproduced by us in the para hereinabove. The issue raised in the present appeal is identical to the issue before the Tribunal in the case of husband of the assessee Shri Harmail Singh Bains where the order passed by the Commissioner of Income Tax under section 263 of the Act was set aside by holding that there was no justification in exercise of revisionary power under section 263 of the Act. The facts of the present case being identical to the facts before the Tribunal in the case of Shri Harmail Singh Bains, husband of the assessee, following the parity of reasoning advanced by the Tribunal vide order dated 30.3.2005, we set aside the order passed by the Commissioner of Income Tax under section 263 of the Act holding that there was no justification in exercise of the revisionary power under section 263 of the Act, in view of the observation of the Tribunal (supra) vide paras 7.6 to 8.1 of order dated 30.3.2005. The grounds of appeal raised by the assessee are thus allowed.
6
9. The appeal vide ITA No.840/Chd/2009 is against the order of CIT (Appeals) upholding the order of the Assessing Officer passed under section 144/263 of the Act. The Assessing Officer in compliance to the directions of the Commissioner of In come Tax under section 263 of the Act vide order dated 27.2.2004 had made certain additions, which were upheld b y the CIT (Appeals) and the assessee is in appeal against the same. The basis for making the aforesaid additions was the order passed b y the Commissioner of Income Tax under section 263 of the Act. While deciding the appeal in ITA No.344/Chd/2003 in paras above we have set aside the order of the Commissioner of Income Tax passed under section 263 of the Act and consequently the present assessment framed pursuant to the directions of the Commissioner of Income Tax under section 263 of the Act do not stand. We strike down the order passed by the Assessing Officer under section 144 r.w.s. 263 of the Act dated 27.2.2004. The grounds of appeal raised by the assessee are allowed.
10. The appeal in ITA No.841/Chd/2009 is against the penalty levied u/s 271(1)(c) of the Act vide order dated 31.8.2004, which in turn is pursuant to the fresh assessment framed under section 144 r.w.s. 263 of the Act. In view of our striking down the order of assessment framed under section 144 r.w.s.263 of the Act, there is no merit in the levy of penalty u/s 271(1)(c) of the Act as the very basis on which the said penalty was levied has been cancelled. In view thereof, we delete the penalty levied u/s 271(1)(c). The grounds of appeal raised by the assessee are thus allowed.
11. The appeal in ITA No.194/Chd/2008 filed by the assessee is against the order under section 154 of the Income Tax Act. Pursuant to the order passed under section 144 r.w.s. 263 of the Act, the assessee moved an application for rectification under section 154 of the Act 7 which was rejected and consequent thereto the order of the Assessing Officer was upheld by the CIT (Appeals). The assessee is in appeal against the aforesaid order rejecting his application under section 154 of the Act. In view of our annulling the assessment framed under section 144 r.w.s.263 of the Act there is no merit in the order passed under section 154 of the Act. The same is cancelled.
12. In the result, all the four appeals filed b y the assessee are allowed.
Order Pronounced in the Open Court on 9th day of March, 2012.
Sd/- Sd/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 9th March, 2012 *Rati*
Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.
True Copy By Order Assistant Registrar, ITAT, Chandigarh