Income Tax Appellate Tribunal - Kolkata
Somnath Saha, Kolkata vs Ito Ward-38(4), Paschim Medinipur on 22 January, 2020
I.T.A. No. 2339/KOL/2019
Assessment Year: 2012-2013
Somnath Saha
IN THE INCOME TAX APPELLATE TRIBUNAL,
KOLKATA 'B' BENCH, KOLKATA
Before Shri P.M. Jagtap, Vice-President
and Shri Satbeer Singh Godara, Judicial Member
I.T .A. No. 2339/KOL/2019
Assessment Year: 2012-2013
Somnath Saha,.......... ..................................................................Appellant
C/o. Mahadev Ghos h, Advocate,
BF-199, Salt lake Ci ty,
Sector-1, Kolkata-700064
[PAN:ASDPS9918G]
-Vs.-
Income Tax Officer,.....................................................................Respondent
Ward-38(4 ), Midnap ore,
Amrabati,Kerani tola,
Paschim Medinipur-721101
Appearances by:
Shri Mahadev Ghosh, Advocate and Shri K.N. Kundu, Advocate, for the
Appella nt
Smt . Ranu Biswas, Addl. C IT, for the Responde nt
Date of concluding th e hearing : December 10, 2019
Date of pronouncing the order : January 22, 2020
O R D E R
Per Shri P.M. Jagtap, Vice-President:
This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)-11, Kolkata dated 30 t h September, 2019.
2. The relevant facts of the case giving rise to this appeal are that the assessee is an individual, who was earlier residing in Cuttack. He filed his returns of income regularly up to A.Y. 2010-11 with the ITO, Ward-2(3), Cuttack. He did not file his returns of income for A.Y. 2011-12 to 2015-16 and the return of income for A.Y. 2016-17 was filed by him with the address of Midnapore. During his stay in Cuttack, the assessee had purchased a land in Cuttack from one Ms. Rabiya Khanum of Buxi Bazar 1 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha on 30.04.2008 for a total consideration of Rs.29,30,000/-. As per the information received by ITO, Ward-2(3), Cuttack from the Investigation Wing of Bhubaneswar, the said land was sold by the assessee on 16.08.2011 to one Shri Pawan Kumar Jajodia, Purighat, Cuttack for a total consideration of Rs.1,37,00,000/-. Since the said sale of land gave rise to a long-term capital gain liable to tax in the hands of the assessee for the year under consideration i.e. A.Y. 2012-13 and no return of income for the said year was filed by the assessee declaring the said long-term capital gain, the ITO, Ward-2(3), Cuttack had reason to believe that income chargeable to tax in the hands of the assesese was escaped assessment within the meaning of section 147 of the Income Tax Act, 1961. He accordingly reopened the assessment for the year under consideration after recording the reason and a notice under section 148 was issued by him on 30.03.2018. Meanwhile the return of income for A.Y. 2016-17 was filed by the assessee with the address of Midnapore and taking note of the same, the PAN Jurisdiction of the assessee was transferred to the ITO, Ward-38(4), Midnapore on 15.09.2018. The assessment record of the assessee was also transferred by the ITO, Ward- 2(3), Cuttack to the ITO, Ward-38(4), Midnapore on 24.09.2018. Keepin g in view that there was no return of income filed by the assessee for the year under consideration in response to the notice issued by the ITO, Ward-2(3), Cuttack under section 148 on 30.03.2018, a reminder was issued by the ITO, Ward-38(4), Midnapore seeking compliance to the notice under section 148. There was, however, no response to the said reminder by the assessee. Thereafter a notice under section 142(1) was issued by the ITO, Ward-38(4), Midnapore on 12.11.2018 fixing the case of the assessee for hearing on 29.11.2018. The said notice also remained un-complied with by the assessee. Another letter dated 03.12.2018, therefore, was issued by the Assessing Officer, in response to which a letter was filed through Speed Post on 14.12.2018 by Shri Gour Chandra Saha, father of the assessee making the following submission:-
"I, Sri Gour Chandra Sah a, am a resident o f Vill-Nischindipur, Ghatal, Ward-04, Paschim Medinipur, My younger son 2 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha Somnath Sah a was workman of Gold wo rkman at Cuttack and had been suppl ying order of the customers. In 2010 he had bought a land in th e lane of Chunavati at C uttack town. Within o ne year fro m the purchasing of land th e people of that area began to tyrannize o ver us. We are puzzled for th eir tyranny, They pressed us to leave Cuttack and also threatened to make us murder. I also h ad been living with my sons resident two years. I had seen th eir violence in my own eyes. I had been disappoint ed for their oppression & pressure. In 2013 we were co mpelled to leave the place, closing o ur business and leaving my l anded property with dwelling house of Cuttack . This reaso n I h ad to face a great loss of my money. Due to this circumst ances my so n had lost his ment al bal ance. My son is now under the treat ment of physician of Calcutt a. The treat ment had been going on for five years. For the god's sake he is somewh at better than befo re.
Respected Sir, you have sent a notice of T axes, I h ave already received it . As far I know at the end of the year 2008 he bought a plot of land at Chunabhat i, But what was the value of the land was quite unknown to me. But when th e discussio n of selling the land h ad been co ntinuing aft er tort uring I was present there. It was settled Rs. 50 lakh (Fifty l akh onl y) by Malay Sankar Ro y Chowdhury. The set tlement was do ne between Malay Sankar Roy Chowdhury and Paban Kumar. But according to Govt . Rate in th at area it was one cro re and thirty seven lakh. Sir aft er buying the land my so n h ad spent about Eight lakh and more fo r boundary wall and suitable fo r living of a family. But at the time selling t he cost of the l and with building was fixed only Rs. Fift y l akh. The purch aser forced my son to say before the Regist rar t hat he had got the said Govt. Rate as value. After sale deed regist ere d the purchaser gave only Rs. Fifteen lakh only and Malay Sankar Roy Chowdhury had taken th at rest amount. After th at he gave us in eight inst al ment s in th ree years.
Now we are in such a position that we can not start a business within six years. We have lost everything for maint aining my famil y I cm bagging from door to door. No w it is my earnest prayer to you how shall I serve o urselves from this hard situat ion.
I th erefore request yo u to release me fo rm this pressure, Now we have been living with much difficulty. We are un educated so we have no means of earnings. Now we have been living only by the grace of G od".
3. Keeping in view the above submission made on behalf of the assesese, a letter was issued by the Assessing Officer on 14.12.2008 requiring the assessee to appear and furnish the details of expenses 3 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha claimed to have been incurred in connection with boundary wall and building on the next date of hearing fixed on 19.12.2018. The assessee, however, failed to comply with the said requirement. Meanwhile a letter was issued by the Assessing Officer on 05.11.2018 to Shri Pawan Kumar Jajodia for furnishing the information regarding the transaction of the property in question with the assessee. In response thereto, the Assessing Officer received a letter through Speed Post from Shri Pawan Kumar Jajodia stating that the entire sale consideration for the property was paid by him to the assessee in cash out of the cash available with him Along with the said letter, Shri Pawan Kumar Jajodia filed the statement of computation of his total income for A.Y. 2012-13 and also furnished the photo copies of the relevant sale deed dated 16.08.2011.
4. Keeping in view the reply received from Shri Pawan Kumar Jajodia and the failure of the assessee to comply with his requirement, the submission made on behalf of the assessee vide letter dated 14.12.2018 was not found acceptable by the Assessing Officer. He accordingly proceeded to compute the long-term capital gain arising from the sale of the land by the assesese at Rs.97,48,024/- (sale consideration of Rs.1,37,00,000/- minus indexed cost of acquisition Rs.39,51,975/-) and the long-term capital gain so computed was brought to tax by him in the hands of the assessee in the assessment completed under section 144/147 of the Act vide an order dated 20.12.2018.
5. Against the order passed by the Assessing Officer under section 144/147 of the Act, an appeal was preferred by the assessee before the ld. CIT(Appeals) challenging mainly the validity of the assessment made by the Assessing Officer on various grounds. One of the grounds raised by the assessee was that the ITO, Ward-2(3), Cuttack had issued a notice under section 148 mechanically without applying his mind to the material available on record and he had simply relied on the information supplied by the Directorate of Income Tax (Investigation) to form the reason to 4 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha believe that income of the assessee had escaped assessment for the year under consideration. The contentions raised on behalf of the assessee in support of this ground were not found acceptable by the ld. CIT(Appeals) and rejecting the same, he dismissed this ground for the following reason given in paragraph no. 8.1 to 8.3 of his impugned order:-
"8.1 A close look at the reaso ns reco rded by th e ld. AO for reopening the case cl earl y mentio ns the verifications made by him. Once he h ad th e information in h is possession, he went through th e details and cross-checked the facts with the appellant's return of income. He fo und that the appellant h ad not furnished his return of income fo r the AY 2012-13. He also found that the appel lant had not filed his return of income right fro m the AY 2011-12 till the AY 2015-16. He filed his return fo r the AY 2016-17 with his address at Midnapore. I find that the l d. AO also comput ed th e LTCG involved in this case by calculating th e indexed cost of acquisitio n. Since he al ready had the det ails of th e transaction undert ak en by the appellant along with the sale deed, and since the ret urn of i ncome fo r the same h ad not been filed, there remained no furth er fact to be ascertained in this case. All these fact s show that the Id. AO had applied his mind to the fact s of th e case and h ad made due diligence as was required of him. These facts also reveal th at there was sufficient t angible material with the ITO Ward 2(3), Cuttack, on the basis of which h e could have fo rmed sufficient reasons to believe th at inco me had escaped assessment in this case.
8.2 At the st age of reopening a case, the assessing officer is not always required to co nduct a th rough investigation. In fact , the kind of fact finding that the assessing officer is required to make depends upon t he qualit y of facts at hand. In this case, the sale deed and ot her related det ails left no doubt th at the appellant had t ransacted in land. Furth er, since he had not filed a return of inco me, there remained no doubt that income in the fo rm of LTCG had escaped assessment. Suffice it to say that the ITO Wd. 2 (3), C uttack had t angible material befo re him and h e had made verifications to arrive at a conclusion that income had escaped assessment in this case. Therefo re, it would not be co rrect to state th at the ld. AO did not apply h is independent mind before concluding that income had escaped assessment on this case, or th at there was no material of any subst ance base o n which he could h ave formed his reasons to believe that inco me h ad escaped assessment in this case.
8.2.1 On th is aspect of the case, I refer t o, and d raw suppo rt from, the following decisions:
The Hon'ble Apex Court in th e case of Raymond Wollen Mills Ltd. vs. ITO and others [1999] 236 IT R 34 (SC) [1999] 152 CTR 418 (SC) held that in det ermining wheth er co mmencement of 5 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha reassessment proceedings was valid it has o nly to be seen whether there was prima facie some mat erial on the basis of which the depart ment could reopen the case. The sufficiency o r correct ness of the material is not a thing to be considered at this stage. At the st age of 'considering' the infor matio n, the AO is not required to 'prove' th at the fact s are correct . It is the AO's satisfactio n that is necessary and this satisfaction must be based on a 'tangible material' and not o n a vague informatio n or a subjective perception or o pinion. All that is required for reopening of a case is that there should be a 'tangible mat erial' on record and th at t his 'tangible material' should constit ute 'new fact' . Th e Hon'ble Delhi High Court in the cas e of Pr. ClT vs. Paramount Const ruction (P) Ltd. [2017] 79 taxmann.co m 409 (Delhi) [2017] 3 29 ITR 444 (Delhi) h eld th at information regarding bogus purchase by assessee received by the DRI from CCE which was passed on to Revenue Auth orities was 'tangible material outside record' to initiate valid reassessment proceedings. SLP filed against this decision was dismissed by the Hon'ble Supreme Court. Simil arl y, in this case too, informatio n supplied by the Directo rate of Inco me Tax (Investigat ion), Bhubaneshwar, was 'tangible material out side record' and the Ld. AO validl y reopened the proceedings u/s
148. 8.2.2 Further, in th e case of Pushpak Bullion Pvt . Ltd. vs. DC IT the Gujarat High Court held th at where investigation wing of depart ment h ad during course of investigation in case of a third party found that he h ad indulged in providing accommodatio n ent ries and bogus bills, and assessee had made sizeable purch ases from him, reopening no tice against assessee was justified.
8.3 In view of the above referred facts and decisions, this argument is reject ed and the gro und of appeal is dismissed" .
6. Another ground raised by the assessee while challenging the validity of the order passed by the Assessing Officer under section 144/147 of the Act was that the ITO, Ward-2(3), Cuttack, who issued the notice under section 148 never had the jurisdiction to do so because at the material point of time when the notice under section 148 was issued, the assessee's address had changed from Cuttack to Midnapore and it was the ITO, Ward-38(4), Midnapore, who had Jurisdiction over him. It was contended on behalf of the assessee that the notice under section 148 thus was issued by the Assessing Officer, who did not have jurisdiction over his case and the entire proceedings under section 147/148 was ab-
6I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha initio void. In order to appreciate the stand of the assessee and decide this issue, the ld. CIT(Appeals) culled out the relevant facts of the assessee's case as under:-
"(a) The appellant of Cuttack and had been filing h is Return of Income with th e IT O Ward 2 (3), Cutt ack.
(b) After the AY 2010-11, he did not file his Return of Inco me.
(c) His next Return of Inco me (aft er the AY 2010-11) was filed fo r th e AY 2016-17 with the address of Midnapore.
(d) During his st ay in Cuttack, he had purch ased a land there and later on sold it th ere itself.
(e) The resultant long term capital gains were not declared by him as he did not file his Ret urn of Income.
(f) As he h ad not fil ed h is Ret urn of Income either for the AYs, 2011-12, 2012-13 or the later AYs, t he ITO Ward 2(3 ) did not have any information about the appellant's change of address. The appellant did not info rm the ITO Ward 2(3), nor did he move any applicatio n for t ransfer of his case to Midnapo re.
(g) At th e mat erial t ime when the ITO Ward 2(3), Cuttack received info rmation about the long term capital gains earned by the appell ant , he continued to hold jurisdiction over the PAN of the appell ant as the PAN h ad the appellant's address at Cuttack which was under his territo rial jurisdiction.
(h) The jurisdiction was t ransferred to th e ITO Ward 38(4) Midnapo re onl y when the Pr. C IT passed an order u/s 127 of the Act to this effect. After the jurisdictio n was t ransferred to the ITO ward 38 (4), Midnapore, the case records were transferred to h im by the ITO Ward 2(3) Cuttack and the proceedings were t ak en ahead from there by the IT O Ward 38(4), Midnapo re" .
7. After summarizing the relevant facts of the assessee's case as above and extracting the relevant provisions of section 120 and section 124 of the Income Tax Act, 1961 in his impugned order, the ld. CIT(Appeals) proceeded to discuss and decide this issue vide paragraph no. 9.3 to 9.11 of his impugned order as under:-
"9.3. As is evident from the above referred sections and their pro visions, the Income Tax Act does not specify the jurisdict ion of the Assessing Officer. It leaves it to the CBDT to assign the 7 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha same to the assessing officers either own its own motion or through delegation of this power to the Ch ief Commissioner or Director General or t he Commissioner of Income Tax. Th us, th e issue of jurisdiction is a matter of administrative decision and is not borne out of the stat ute. The stat ue only pro vides a broader out line in section 120(3). Jurisdiction over a case cannot be assumed suo-moto by th e assessing officer. It is conferred o n him by an order by the Ch ief Commissioner of Income T ax o r the Directo r General of Income Tax o r, as the case may be, by the Commissioner of Income Tax. In each Region or Ch arge in the Depart ment of Income Tax, there are clear o rders related to jurisdictio n of t he assessi ng officer manning each and every Ward/ Circle or Range. It is this jurisdiction assigned to the assessing officer th at he assumes. This fact is further clear if the following expressions in the above referred sectio ns are referred to:
-124. (1) Income-tax Officers sh all perform their functions in respect o f such areas or of such perso ns or classes of perso ns or of such inco mes or classes of income as the Commissioner may direct.
124 (3) within the limits of th e area assigned to him (Emph asis Supplied) 9.4. As per the sch eme of the Act, one needs to underst and as to when and how does the AO assume jurisdiction over a case when the appell ant shifts from o ne territ orial juri sdictio n to another. N aturally, jurisdictio n in such case is not assumed suo-moto by th e assessing officer. There is an admi nist rative procedure l aid down for it . Acco rding to t he procedure, if an assessee mo ves fro m one territorial jurisdiction to another, ideally, he should inform the assessing officer who originally held jurisdiction o ver his case, to t ake necessary st eps and to transfer his case to the AO in the new jurisdict ion. If th e assessee does not inform th e assessing officer, the later can, own his own acco rd, move a proposal before the Pr. C IT fo r transferring the case to the new jurisdictio n. The Pr. C IT offers oppo rtunit y to the assessee and also to the assessing officer to whose jurisdiction th e case is proposed t o be transferred, to raise objections, if any. In a no rmal sit uat ion, when there is no objection, the Pr. C IT passes an o rder u/s 127 transferring the case fro m the AO in his jurisdiction to the AO in another jurisdiction.
9.5. Therefore, in the present case, it cannot be said, as is being urged by the ld. AR, th at the ITO at Midnapore automatically h ad become the assessing officer even befo re the order u/s 127 was passed and the jurisdiction over the PAN was transferred by the IT O Ward 2 (3), Cutt ack .
9.6. Every taxpayer is assigned a jurisdictional A O based on the address mentioned by the taxpayer in his Permanent 8 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha Account Number (PAN) record and his income, to enable carrying o ut the assessment in a smooth and efficie nt manner.
Any communication fro m income tax department to th e taxpayer and fro m th e taxpayer to the AO happens o nly through jurisdictional AO. Th e Jurisdictional AO h as jurisdiction over the PAN of the assessee and for executing any functio n, an access to PAN is required.
9.7. Having discussed th e pro visio ns of the Act and th e administrative issues related to jurisdict ion, some mo re facts related to PAN and jurisdiction need to be discusse d. Since the Id. AR h ad raised serious questions about jurisdictio n, in order to bring more facts on reco rd, the ld. AO was directed to conduct further fact findings and send a report in respect of history of returns filed by the appellant and the histo ry of jurisdiction over h is PAN. The ld. AO h as reported that:
The ld. AO' s report:
9.7.a. Jurisdiction over PAN: Aft er t ransferring PAN on 15.09.2018,vide o rder u/s 127(2) of th e IT Act, 1961 dated 14th September 2018 passed by Pr. C IT, Cutt ack , ITO Ward 38(4), Midnapo re holds the Jurisdiction o ver the assessee fro m 15.09.2018 onwards. Befo re 15.09.2018, the jurisdiction over the assessee was lying with ITO, Wd. 2(3), Cutt ack .
9.7.b. As per ITBA PAN Jurisdiction history details, it is revealed that PAN jurisdiction over t he assessee before 15.09.2018 had been lying with ITO, Ward 2(3), Cuttack. Consequent upon the order u/s 127 (1) of th e IT Act , 1961 dated 14 th Sept . 2018 to ITO Ward 38(4), Midnapo re, it h as been lying with IT O ward 38 (4 ), Midnapo re.
9.7.c. Ret urn of Inco me: Ret urns of Inco me for the AY 2011-12 and 2012-13 had not been -fil ed by th e assessee. The return of inco me fo r AY 20 09-10 and 2010-11.have been filed by the assessee on 30.03.2010 and 30.0 7.2010 respectively mentio ning the address as, 'G angamandir, Basak Bh awan, PO:
Buxi Bazar, Dist. C ut tack (Orissa) PIN 75 3001 with ITO, Ward 2 (3 ), Cutt ack.
9.8. Thus, the appellant had h is address at C uttack because of which the ITO Ward 2(3 ) was holding jurisdiction over his case. He mo ved a pro posal to t ransfer the case to the ITO Ward 38(4) Midnapore the moment h e realised that the appellant's address had ch anged. The appellant h ad not info rmed the ITO Ward 2 (3), Cuttack about the ch ange of his address, nor did he request for transfer o f jurisdiction o ver his case. Therefore, the earliest time when th e change of his address came before the ITO Ward 2(3) C uttack, was when he was verifying the facts incorporated in th e info rmation he received fro m the 9 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha investigation wing. Thereafter, he moved the propos al for transfer of this case. But till such time as the jurisdict ion over the appellant's case was 'assigned' to th e ITO Ward 38( 4 ), Midnapo re by th e Pr. C IT, Cuttack , the jurisdictio n over the case remained with t he ITO ward 2(3), Cuttack. Therefo re, at the material point of time when the reaso n for reopening the case was reco rded and the notice u/s 148 was issued it was the ITO Ward 2 (3), Cuttack who held jurisdiction over the appellant's case.
9.9. I am not in agreement with th e Id. AR when he argues that th e ITO Ward 2 (3) Cutt ack did not have jurisdiction over the appellant' s case at the time when he issued a notice u/s 148 of the Act. I may also add h ere th at t he CIT (A) is not a competent authority to adjudicate upon t he action of the Pr.
CIT, yet on the fact s and in the circumstances of this particul ar, since it is found that till such time as the order u/s 127 was passed, the ITO, Ward 2(3), Cuttack held jurisdiction over the appellant's case, as a corollary, it may also be inferred that the Pr. C IT, Cutt ack was very much within his jurisdiction to h ave passed the order u/s 127 of the Act .
9.10. There is yet another pro vision u/s 124 (5) which I shall advert to now. Th is section st ates as under:
124 (5) No person sh all be entitled to call in question the jurisdiction of an Income-t ax Officer -
(a) after th e expiry of one mo nth from t he dat e on which he has made a return under sub-sect ion (1) of section 139 or after the completion of the assessment , wh ichever is earlier;
(b) where h e has made no such ret urn, after the expiry of th e time all owed by the notice under sub-
section (2) of section 139 or under sectio n 148 fo r the making of th e ret urn.
9.11 In this case, th e appellant did not file his ret urn of income in response to the notice u/s 148 of the Act . There fore, his oppo rtunit y to raise an objection on th e issue of jurisdict ion lapsed after the time allowed to file a return u/s 148 got over. I, thus find, the appellant's case is squarely cove red by the pro visions of sect ion u/s 124(5) (b) of the Act. In view of this fact, the argument s raised by the Id. AR on behalf of the appellant are rejected".
7.1. The ld. CIT(Appeals) thus held that the ITO, Ward-2(3), Cuttack was holding jurisdiction over the assessee's case when the notice under section 148 was issued by him and the jurisdiction over the assessee's case remained with the ITO, Ward-2(3), Cuttack till such time it was 10 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha assigned to the ITO, Ward-38(4), Midnapore by the Principal CIT. He accordingly rejected the contentions raised on behalf of the assessee in support of this issue and upheld the validity of assessment made by the Assessing Officer under section 144/147 of the Act. The ld. CIT(Appeals) also did not find merit in the other grounds raised in the appeal of the assessee and dismissed the appeal of the assessee vide his appellate order dated 30.09.2019. Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.
8. Although as many as nine grounds are raised by the assessee in the present appeal challenging the validity of the assessment made by the Assessing Officer under section 144/147 of the Act, the ld. Counsel for the assessee has pressed and argued two issues, which relate to the validity of the assessment.
9. The first issue raised by the ld. Counsel for the assessee while challenging the validity of the order passed by the Assessing Officer under section 144/147 of the Ac is that the ITO, Ward-2(3), Cuttack, who issued the notice under section 148 on 30.03.2018 had no jurisdiction over the assessee's case as the assessee had already shifted to Midnapore, West Bengal by the time the notice under section 148 was issued and the ITO, Ward-2(3), Cuttack was well aware of this change of address of the assessee. He contended that ITO, Ward-38(4), Midnapore had a jurisdiction over the assessee's case on 30.03.2018 and since the notice under section 148 was issued by the ITO, Ward-2(3), Cuttack who was not having jurisdiction over the assessee's case on 30.03.2018 and not by the ITO, Ward-38(4), Midnapore, there was no issuance of valid notice under section 148 and the proceedings initiated under section 147/148 were invalid ab initio. He invited our attention to the copy of notice issued under section 148 placed at page 40 of the paper book to point out that the said notice was issued by the ITO, Ward-2(3), Cuttack at the address of the assesese in Midnapore, West Bengal. He contended that if the 11 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha jurisdiction over the assessee's case was with ITO, Ward-2(3), Cuttack as held by the ld. CIT(Appeals) in his impugned order, how the notice was issued by him to the address of the assessee in Midnapore, West Bengal. He contended that when the assessee had already shifted from Cuttack to Midnapore, West Bengal and the ITO, Ward-2(3), Cuttack was aware of the same when the notice under section 148 was issued by him, the territorial jurisdiction over the assessee's case was not with ITO, Ward- 2(3), Cuttack and the notice issued by him under section 148 to the assessee was invalid in the eyes of law. He contended that the return for assessment year 2016-17 was filed by the asseessee online giving the address at Midnapore, West Bengal and thus the intimation of new address was duly given by the assessee, which was duly acknowledged even by the ITO, Ward-2(3), Cuttack by mentioning the same in the notice issued under section 148. He contended that the notice issued by the ITO, Ward-2(3), Cuttack under section 148 on 30.03.2018 having no jurisdiction over the assessee's case was invalid and there being no notice issued under section 148 by the ITO, Ward-38(4), Midnapore, who had jurisdiction over the assessee's case at the relevant time and who finally completed the assessment under section 144/147, the entire proceedings under section 147/148 were bad-in-law and the assessment made in the case of the assessee under section 144/147 is liable to be cancelled being invalid.
10. The ld. D.R., on the other hand, strongly supported the impugned order of the ld. CIT(Appeals) on this issue upholding the validity of the notice issued by the ITO, Ward-2(3), Cuttack under section 148 to the assessee on 30.03.2018. She read out and relied on the observations/findings recorded by the ld. CIT(Appeals) in his impugned order in paragraph no. 9.3 to 9.11 in support of the revenue's case. She submitted that the assessee was earlier residing in Cuttack and not only the returns of income up to 2010-11 were filed by the assessee with ITO, Ward-2(3), Cuttack, but even address of the assessee as given in PAN was 12 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha that of Cuttack in Orissa. She submitted that the returns of income for A.Y. 2011-12, 2012-13 and 2013-14 were not filed by the assessee and the intimation of change of address was not given by the assessee to the ITO, Ward-2(3), Cuttack. She submitted that even the address given for the purpose of PAN was not got changed by the assessee and the Assessing Officer came to know about the change of address of the assessee from the return of income filed by the assessee online for A.Y. 2016-17 when he issued the notice under section 148. She contended that the jurisdiction over the assessee's case thereafter was transferred by the concerned Principal CIT, Cuttack from ITO, Ward-2(3), Cuttack to ITO, Ward-38(4), Midnapore vide an order dated 14.09.2018 passed under section 127(1) of the Act and the PAN jurisdiction was also transferred on 15.09.2018. She contended that the jurisdiction over the assessee's case as on 30.03.2018 thus was with ITO, Ward-2(3), Cuttack when notice under section 148 was issued by him and the said notice thus was valid in the eyes of law as rightly held by the ld. CIT(Appeals) in his impugned order. In support of this contention, the ld. D.R. relied on the decision of the Hon'ble Supreme Court in the case of Principal CIT -vs.- M/s. I-Ven Interactive Limited (Civil Appeal No. 8132 of 2019 dated October 18, 2019), wherein it was held that mere mentioning of new address in the return of income without specifically intimating the Assessing Officer with respect to change of address and without getting PAN database changed is not enough and sufficient. It was held that in the absence of any specific intimation to the Assessing Officer with respect to change in address of the assessee, the Assessing Officer would be justified in sending the notice at the available address mentioned in the PAN database of the assessee, more particularly when the return has been filed under 'E-Module Scheme'.
11. In the rejoinder, the ld. Counsel for the assessee submitted that since the notice under section 148 was generated in the new address of the assessee at Midnapore, West Bengal, address in the PAN data must 13 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha have been changed by the time the notice under section 148 came to be issued. He contended that the address of the assessee in PAN database thus was already changed by the time notice under section 148 was issued and consequently the jurisdiction over the assessee's case was also transferred from ITO, Ward-2(3), Cuttack to the ITO, Ward-38(4), Midnapore.
12. We have considered the rival submissions and also perused the relevant material available on record. The ld. Counsel for the assessee has challenged the jurisdiction of the ITO, Ward-2(3), Cuttack to issue notice under section 148 on the ground that the address of the assessee having been changed to Midnapore, West Bengal before the issuance of notice under section 148 on 30.03.2018, the ITO, Ward-2(3), Cuttack had no jurisdiction over the assessee's case and the notice issued by him under section 148 to the assessee was invalid. He has contended that the proceedings initiated in the assessee's case under section 147/148, therefore, were invalid ab initio and the assessment made under section 144/147 is liable to be cancelled being bad-in-law. In this regard, it is observed that the assessee was residing in Cuttack earlier and his returns of income for A.Y. 2009-10 and 2010-11 were filed by him with ITO, Ward-2(3), Cuttack on 30.03.2010 and 30.07.2010 respectively mentioning the address of Cuttack. Thereafter the assessee did not file his returns of income for A.Y. 2011-12 to 2015-16 and although he is stated to be shifted to Midnapore, West Bengal, the intimation of change of address was not given by the assessee to the ITO, Ward-2(3), Cuttack. Even the address of Cuttack given in PAN Card remained unchanged by the assessee and as rightly observed by the ld. CIT(Appeals) in his impugned order, the PAN jurisdiction over the assessee's case continued to lie with ITO, Ward-2(3), Cuttack. Meanwhile the property purchased in Cuttack by the assessee on 30.04.2008 for Rs.29,30,000/- came to be sold by the assesee on 16.08.2011 for Rs.1,37,00,000/- and on the basis of the information received regarding the said transactions, the Assessing 14 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha Officer entertained a belief that the income of the assessee representing long-term capital gain had escaped assessment as there was no return of income filed by the assessee for A.Y. 2012-13. He accordingly recorded the reasons and issued a notice under section 148 on 30.03.2018. In between, his return of income for A.Y. 2016-17 was filed by the assessee on line giving the address of Midnapore, West Bengal and taking note of the same, a notice under section 148 was issued by the ITO, Ward-2(3), Cuttack on 30.03.2018 to the said address of the assessee. Thereafter order under section 127(1) of the Act was also passed by the Principal CIT, Cuttack on 14.09.2018 transferring the jurisdiction over the assessee's case from ITO, Ward-2(3), Cuttack to ITO, Ward-38(4), Midnapore and PAN jurisdiction was also transferred on 15.09.2018. It is thus clear that his change of address from Cuttack to Midnapore was never intimated by the assessee to the ITO, Ward-2(3), Cuttack and there was no efforts made by the assessee to change his PAN jurisdiction or to transfer his case from Ward-2(3), Cuttack to Ward-38(4), Midnapore.
13. At the time of hearing before us, much emphasis has been laid by the ld. Counsel for the assessee on the fact that his change of address from Cuttack to Midnapore was duly informed by the assessee by way of the return of income filed for A.Y. 2016-17 wherein the address of Midnapore was clearly given and the ITO, Ward-2(3), Cuttack while issuing notice under section 148 on 30.03.2018 was well aware of the new address of the assessee. In this regard, the ld. D.R. has relied on the judgment of the Hon'ble Supreme Court in the case of Principal CIT -vs.- M/s. I-Ven Interactive Limited, Mumbai (supra), wherein Their Lordships have clearly held that a mere mentioning of the new address in the return of income without specifically intimating the Assessing Officer with respect to change of address and without getting PAN database changed, is not enough and sufficient. Elaborating further Hon'ble Supreme Court has observed that in the absence of any specific intimation to the Assessing Officer with respect to the change in address, the Assessing 15 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha Officer would be justified in sending the notice at the available address mentioned in PAN database of the assessee, more particularly when the return has been filed under 'E-Module Scheme'. Keeping in view this proposition propounded by the Hon'ble Apex Court, we are unable to accept the contention raised on behalf of the assessee that a mere mentioning of the new address in the return of income filed subsequently for A.Y. 2016-17 was enough and sufficient to transfer jurisdiction over his case from ITO, Ward-2(3), Cuttack from ITO, Ward-38(4), Midnapore, especially when there was no specific intimation given by the assessee to the ITO, Ward-2(3), Cuttack with respect to change of his address and even the PAN database had remained unchanged. The jurisdiction over the assessee's case was transferred from ITO, Ward-2(3), Cuttack to Ward-38(4), Midnapore only subsequently when order under section 127(1) of the Act was passed by the ld. Principal CIT, Cuttack on 14.09.2018 and PAN database was also changed on 15.09.2018. Prior to that, the jurisdiction over the assessee's case continued to lie with ITO, Ward-2(3), Cuttack and the notice issued by the ITO, Ward-2(3), Cuttack to the assessee on 30.03.2018 was a valid notice. In support of the assessee's case on this issue, the ld. Counsel for the assessee has relied on certain judicial pronouncements. It is, however, observed that the facts involved in none of the said cases are similar to the facts of the assessee's case and the same, therefore, are distinguishable on facts. On the other hand, we find that the ratio of the decision of the Hon'ble Supreme Court in the case of M/s. I-Ven Interactive Limited (supra) is directly applicable in the facts of the assessee's case.
14. It is also pertinent to note that no return of income was filed by the assessee in response to the notice issued by the ITO under section 148 on 30.03.2018. As rightly held by the ld. CIT(Appeals) in his impugned order by relying on the provisions of sub-section (3) of section 124, the assessee was not entitled to call in question the jurisdiction of an Assessing Officer, where he had filed no return, after the expiry of the 16 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha time allowed by the notice issued under section 148 for filing such return. Moreover, as per sub-section (5) of section 124, the provisions of which override other provisions of section 124 as well as any direction or order issued under section 120 of the Act, every Assessing Officer has all the powers conferred by or under the Act on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been wasted his jurisdiction by virtue of the directions or orders issued under sub-section (1) or sub-section (2) of section 120.
15. In view of the above discussion, we are of the view that the ITO, Ward-2(3), Cuttack was having jurisdiction over the assessee's case on 30.03.2018 when the notice under section 148 was issued to the assessee and the said notice issued by the Assessing Officer having jurisdiction over the assessee's case at the relevant time was a valid notice as rightly held by the ld. CIT(Appeals).
16. The second contention raised by the ld. Counsel for the assessee while challenging the reopening of assessment as made by the ITO, Ward- 2(3), Cuttack is that the assessment was reopened by the Assessing Officer by issuing a notice under section 148 mechanically without applying his mind to the material available on record. He contended that the Assessing Officer simply relied on the information supplied by the Directorate of Income Tax (Investigation) and formed the reasons to believe that the income of the assessee had escaped assessment for the year under consideration. He contended that the belief of the Assessing Officer regarding the escapement of income of the assessee was based on imaginary story and not on facts as is evident from the reasons recorded by him. He contended that the Assessing Officer did not apply his mind properly and independently while arriving at the satisfaction about the escapement of the income of the assessee. He simply jumped to the conclusion about the escapement of the income of the assessee on the 17 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha basis of investigation report of Directorate of income Tax (Investigation) and reopening of assessment thus was based on the borrowed satisfaction without independent application of mind. He contended that the reasons recorded by the Assessing Officer do not stand to the test of jurisdictional requirements and, therefore, the very assumption of jurisdiction to reassess the assessee on the basis of reasons recorded by him completely fails.
17. The ld. D.R., on the other hand, strongly relied on the impugned order of the ld. CIT(Appeals) in support of the revenue's case on this issue. She contended that the information received from the Investigation Wing was cross-checked by the Assessing Officer and after having found that the return of income for the year under consideration showing the long-term capital gain arising from the sale of his immovable property had not been filed by the assessee, there remained no doubt that income in the form of long-term capital gain chargeable to tax in the hands of the assessee had escaped assessment. She contended that the Assessing Officer thus had tangible material before him and necessary verification was done by him to arrive at a conclusion that income of the assessee had escaped assessment for the year under consideration. She contended that the Assessing Officer thus had applied his mind to the relevant facts of the case and after making due diligence as was required in the facts of the case, belief was formed by the Assessing Officer that income of the assessee had escaped assessment. Relying on the decision of the Hon'ble Supreme Court in the case of Raymond Woollen Mills Limited -vs.- ITO (236 ITR 34), she contended that for the purpose of determining whether commencement of assessment proceedings is valid, it has only to be seen whether there is prima facie some material on the basis of which the Assessing Officer could reopen the assessment. She contended that all that is required for reopening of the assessment is that there should be a tangible material on record on the basis of which a prima facie belief about the escapement of income can be entertained.
18I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha
18. We have considered the rival submissions on this issue and also perused the relevant material available on record. In order to appreciate the stand of both the sides on this issue, it would be relevant to refer to the reasons recorded by the Assessing Officer for reopening the assessment, which are extracted below:-
".........Information received from the Investigation wing, Bhubaneswar shows t hat th e assessee, Sh ri Saha h ad purch ased an immovable pro perty on 30.04.2008 fo r Rs.29 ,30,000/- and sold the same on 16.0 8.2011 for Rs.1,37,00 ,000/-and as such, he is liable to pay long term capit al gain towards the said transaction.
Analysis of info rmation collected/ received: On going th rough the sale deeds of the both th e t ransaction, it is found that the assessee purchased th e land fro m one Ms Rabiya Kh anum of Buxi Bazar on a cost of Rs.29,30,000/- in the year 2008-09 and sold the pro perty to Sri Pawan Kumar J ajo dia, Purigh at , C uttack with Rs.1 ,37,00,000/- in t he year 2011-12. Furthermo re, it was seen that one account in Bank of India, Nayasarak, Cuttack was opened only for the purpose of the buying the prope rt y and the same was closed aft er the t ransaction.
Enquiries made by the AO as sequel to info rmation collected/received: The above info rmat ion has been cross- verified with the return of inco me filed by the assessee in ITBA/AST/e-filing portal . The income sho wn in the last ret urn i.e AY 2010-11 was Rs.2,37,570/-. As per t he dat a of his l atest return i.e for AY 2016-17, the assessee is showing his address as Paschim Medinipur, Kolkata.
Findings of the A.O : The impugned t ransaction of selling the immo vable propert y was made by th e assessee in the F.Y 2011-1 2 to the tune of Rs.1 ,37,00,000/-. As per the purchase deed, it was revealed that the assessee has purch ased the immo vabl e pro perty during the F. Y 2008-09 on dated 30.04.2008 of Rs.29 ,30,000/- and t he same immovable pro perty was sold o n 16.08.2011 i,e F.Y 2011-12 of Rs.1 ,37,00,0 00/-. This t ransactio n of immovable pro perty involves long term capital gain and attracts capit al gain accordingl y. The capit al gain in this instant case would be as follows:-
The total sale consideratio n - Rs. 1,37,00,0 00/-. Less index cost of acquisition- Rs. 39,51,9 75/-
Total capital gain Rs. 97,48 ,025/-
(As per the index cost of acquisition t he purch ased co st o f acquisition co mes to Rs.39 ,51,975/-). Out of th e abo ve 19 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha transaction and it o ught to h ave been shown in the return of income for the AY 2012-13 under the head o f LTCG.
On the basis of calculation the purch ased immovable pro pert y indexed cost of acquisition co mes to Rs.39,51,975/- So there is a difference of Rs.97 ,48,025/- under LT CG (sale price Rs (1,37,00,000--39 ,51,975)has to be shown in the ret urn of income. But, the assessee h as not filed income t ax return fo r th e A. Y 2011-12 and A Y 2012-13.
Basis of forming reason to believe and det ails of escapement of income: The assessee has ent ered into a financial transaction of selling an immovable propert y with Rs.1,3 7,00,000/- in the F. Y 2011-12 having cost price of Rs.29,30,000/-. As per the capital gain calculatio n, th ere was a long term capit al gain of Rs.97 ,48,025/-out of the above t ransaction and it ought to h ave been furnished in the return of income fo r the AY 2012-13 but the assessee h as not filed the ret urn and as such the amount has escaped assessment . In this context , I h ave the reason to believe that income of Rs.9 7,48,025/- ch argeable to tax has escaped assessment within t he meaning of sect ion 147 of the I.T . Act......." .
19. A perusal of the reasons recorded by the Assessing Officer clearly shows that specific information was received by him from the Investigation Wing, Bhubaneswar that the assessee had purchased a immovable property for Rs.29,30,000/- on 30.04.2008 and the same was sold on 16.08.2011 for Rs.1,37,00,000/-. The said information received by the Assessing Officer was duly supported by the documentary evidence in the form of sale deeds of both the transactions and after going through the same, it was noted by the Assessing Officer that the sale of immovable property of the assessee had given rise to a long-term capital gain, which was chargeable to tax in the hands of the assessee for the year under consideration, i.e. A.Y. 2012-13. The Assessing Officer also computed such long-term capital gain chargeable to tax in the hands of the assessee for the year under consideration at Rs.97,48,025/- and when he sought to cross-verify the same with the return of income filed by the assessee, it was found that the assessee had not filed his return of income for the year under consideration. It is thus clear that the specific information received by the Assessing Officer, which constituted tangible material, was analysed, verified and cross-checked by the Assessing Officer and after such analysis and cross verification, a belief was formed by him that 20 I.T.A. No. 2339/KOL/2019 Assessment Year: 2012-2013 Somnath Saha this substantial long-term capital gain chargeable to tax in the hands of the assessee for the year under consideration had escaped assessment. He accordingly recorded the reasons giving the details of specific information received by him, analysis and inquiries made by him to cross- verify the said information and findings of fact arrived at on the basis of such analysis and cross-verification, which ultimately formed the basis or reason to believe that the income of the assessee in the form of long-term capital had escaped assessment for the year under consideration. In our opinion, the tangible material coming to his possession thus was properly and adequately analysed and cross verified by the Assessing Officer and after arriving at the satisfaction by applying his mind to the relevant facts of the case as emerging from the analysis and cross verification of the tangible material, a belief was formed by the Assessing Officer about the escapement of income of the assessee from the assessment for the year under consideration. The assessment of the assessee for the year under consideration thus was reopened by the Assessing Officer after arriving at his own satisfaction by analysing and cross-verifying the information received by him and since the same is clearly evident from the reasons recorded by him, we are of the view that the reopening of assessment by the Assessing Officer is in accordance with law and there is no legal infirmity as alleged on behalf of the assessee. We, therefore, find no merit in the case of the assessee on this issue and reject the same.
20. In the result, the appeal of the assessee fails and it is dismissed.
Order pronounced in the open Court on January 22, 2020.
Sd/- Sd/-
(Satbeer Singh Godara) (P.M. Jagtap)
Judicial Member Vice-President
Kolkata, the 22 n d day of January, 2020
21
I.T.A. No. 2339/KOL/2019
Assessment Year: 2012-2013
Somnath Saha
Copies to : (1) Somnath Saha,
C/o. Mahadev Ghos h, Advocate,
BF-199, Salt lake Ci ty,
Sector-1, Kolkata-700064
(2) Income Tax Officer,
Ward-38(4 ), Midnap ore,
Amrabati,Kerani tola, Paschim Medinipu r-721101 (3) Commissioner of Income Tax (Appeals)-11, Kolkata;
(4) Commissioner of Income T ax- , Ko lkata,
(5) The Depart ment al Represent ative
(6) Guard File
By order
Assistant Registrar,
Income Tax Appellate Tribunal,
Kolkata Benches, Kolkata
Laha/Sr. P.S.
22