Gulabben M. Jain, v. ITO,

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 299 /PN/200 9 ( ASSTT. YEAR : 200 5 - 06 ) GULABBEN MADANLAL JAIN 1692 TILAK ROAD NANDURBAR 425412 MAHARASHTRA PAN : NOT PROVIDE D .. APPELLANT V. INCOME TAX OFFICER WARD 3(4) DHULE . RESPONDENT APPELLANT BY : SHRI SUNIL GANOO RESPONDENT BY : SHRI ABHAY DAMLE ORDER PER I.C. SUDHIR J M THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER ON SEVE RAL GROUNDS WHICH HAS BEEN SUBSTITUTED BY MODIFIED GROUNDS OF APPEAL. IN THIS MODIFIED GROUNDS OF APPEAL THE ASSESSEE HAS NOT RAISED THE GROUND QUESTINING ADHOC DISALLOWANCE OF RS. 50 000/ - MADE BY TH A.O. IN THE MODIFIED GROUND THE ASSESSEE HAS QUE STIONED FIRST APPELLATE ORDER ON THE TWO GROUNDS WHICH ARE READ AS UNDER : 1 . THE ORDER PASSED BY THE LEARNED C.I.T.[A] MAY PLEASE BE MODIFIED AND THE INTEREST OF RS.5 56 526.00 PAID ON LOAN OF HASTI COOP BANK NANDURBAR BE ALLOWED IN FULL AS BUSINESS EXP ENDITURE FROM THE BUSINESS INCOME OF THE APPELLANT. 2. THE AMOUNT OF ADVANCES RECEIVED BY THE APPELLANT ON AGREEMENT TO SELL THE PLOTS OF LAND BE HELD AS GENUINE AND THE ADDITION OF RS.2 37 000.00 [OUT OF THE TOTAL ADVANCES AS APPEARING IN THE BALANCE SH EET] AS SUSTAINED BY THE LEARNED C.I.T[A] ON THE ALLEGED GROUND OF BOGUS / UNEXPLAINED ADVANCES BE DELETED. ITA NO 299 /PN/2009 GULABBEN MADANLAL JAIN A .Y. 2005 - 06 PAGE OF 6 2 BESIDES THE ABOVE THE ASSESSEE HAS ALSO SOUGHT PERMISSION TO RAISE FOLLOWING ADDITIONAL GROUND ON THE BASIS THAT THE ISSUE RAISED THEREIN GOES TO THE VERY ROOT OF THE VALIDITY AND LEGALITY AND PROPRIETY OF THE IMPUGNED ASSESSMENT ORDER AND ADJUDICATION OF WHICH DOES NOT REQUIRE CONSIDERATION OF FRESH MATERIAL OUTSIDE THE RECORD : IN THE ABSENCE OF CONDITIONS PRECEDENT FOR THE ISSUANCE OF NOTICE U /S 148 OF THE I.T. ACT 1961 THE IMPUGNED REASSESSMENT FRAMED BY THE LEARNED ASSESSING OFFICER IS BAD IN LAW NULL AND VOID AB INITIO AND WITHOUT JURISDICTION AND HENCE THE SAME MAY PLEASE BE VACATED. 2. SINCE THERE IS NO DEVIATION FROM THE ISSUE RAISED IN THE ORIGINAL GROUNDS IN THE MODIFIED GROUNDS WE ALLOW THE SUBSTITUTION OF THE ABOVE STATED MODIFIED GROUND TO BE READ IN PLACE OF ORIGINAL GROUNDS OF APPEAL. 3. THE LD. D.R. HAS HOWEVER OBJECTED THE PROPOSED ADDITIONAL GROUND WITH THE SUBMISSION S THAT IT HAS BEEN RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL. WE HOWEVER FIND THAT THE SSUE RAISED THEREIN IS LEGAL IN NATURE WHICH DOES NOT REQUIRE CONSIDERATION OF ANY FRESH MATERIAL OUTSIDE THE RECORD AND THE ISSUE RAISED IN ADDITINAL GROUND GOE S TO VERY ROOT OF THE MATTER WHICH NEEDS ADJUDICATION. WE ACCORDINGLY ALLOW ED THE ADJUDICATION OF ADDITIONAL GROUND . PARTIES WERE DIRECTED TO ADVANCE THEIR ARGUMENTS ON THE ISSUE RAISED IN THE ADDITIONAL GROUND. 4. THE LD. A.R SUBMITTED THAT THE ASSES SEE IS IN THE BUSINESS OF SALE AND PURCHASE OF PLOTS. DURING THE YEAR IT HA D FILED RETURN OF INCOME ON 31.3.2006 DECLARING TOTAL INCOME AT RS. 1 48 780/ - AND AGRICULTURAL INCOME AT RS. 1 80 350/ - ITA NO 299 /PN/2009 GULABBEN MADANLAL JAIN A .Y. 2005 - 06 PAGE OF 6 3 . ON 21ST MARCH 2006 A NOTICE U/S. 139( 9 ) OF THE I.T. AC T 1961 WAS ISSUED BY THE DEPARTMENT TO THE ASSESSEE. SINCE THE ASSESSEE WAS NOT MAINTAINING BOOKS OF ACCOUNT REGULARLY THE DEFECT POINTED OUT BY THE DEPARTMENT ABOUT NON - FILING OF PROOF OF SALE AND PURCHASES OF PLOTS BALANCE - SHEET CHALLAN OF TAX PAID WERE NOT MAINTAINABLE IN THE CASE OF ASSESSEE WITHIN THE MEANING OF SEC. 139(9) EXPLANATION( F ). THE ASSESSEE HAD HOWEVER FILED RETURN OF INCOME ON 31.3.2006 ALONG WITH THE COMPUTATION OF INCOME AND OTHER RELEVANT ENCLOSURES. BEING SATISFIED WITH THIS SUBMISSION OF THE ASSESSEE THE A.O DROPPED THE DEFECT NOTICE AND PROCESSED THE RETURN U/S. 143(1) ON 6.6.2005. SUBSEQUENTLY DEMAND NOTICE U/S. 221(1) OF THE ACT WAS ALSO ISSUED TO THE ASSESSEE BY THE A.O ON 01.12.2006. IN SUPPORT THE LD. A.R. REFERR ED PAGE NO. 18 TO 25 OF THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE WHEREIN ORDER SHEET S WRITTEN BY THE ITO REGARDING THE PROCEEDINGS HAVE BEEN MADE AVAILABLE. PHOTO COPY OF NOTICE DT. 01.12.2006 ISSUED U/S. 221(1) HAS ALSO BEEN FURNISHED BEFORE US. WITH ASSISTANCE OF THESE MATERIAL FACTS THE LD. A.R ASSERTED THAT THE DEPARTMENT LATER ON CANCELLED THE INTIMATION ISSUED U/S. 143(1) TO INITIATE SCRUTINY U/S. 143 (3) READ WITH S. 147 OF THE ACT ON THE BASIS THAT THE ASSESSEE HAS NOT SHOWN TRUE AND CORR ECT INCOME AS ALSO NOT COMPLIED TO THE NOTICE ISSUED U/S. 139(9). REGARDING THE ORDER SHEET MADE AVAILABLE AT PAGE NO. 18 THE LD. A.R. ALSO SUBMITTED THAT IT IS ONLY ANTE DATED AS AFTER RECORDING THE PROCEEDING ON 06.6.2006 THAT RETURN HAS BEEN PROCE SSED U/S. 143(1) WITH DIRECTION TO ISSUE DEMAND NOTICE THE ITO HAS NOTED PROCEEDING D A T ED 07.6.2006 ABOUT NON - COMPLIANCE OF NOTICE ISSUED U/S. 139(9) NOT SHOWING TRUE AND CORRECT INCOME AND A BOUT PROPOSAL TO SELECT THE CASE FOR SCRUTINY THE ITO HAS AGA IN NOTED FURTHER PROCEEDING BY PUTTING DATE 06.6.2006 WHICH IS NOT POSSIBLE. THEREAFTER ON 27.7.2006 REASONS TO BELIEVE FOR ISSUANCE OF NOTICE U/S. 148 HAS BEEN RECORDED WITH DIRECTION TO ISSUE NOTICE U/S. 148 OF THE ACT. THE LD. A.R. ALSO PLACED RELIA NCE ON THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT ITA NO 299 /PN/2009 GULABBEN MADANLAL JAIN A .Y. 2005 - 06 PAGE OF 6 4 V/S. MAYAWATI (2010) 42 SOT 59 (DELHI) HOLDING THAT ORDER - SHEET CONSTITUTES A VERY IMPORTANT RECORD. 5. THE LD. D.R. ON THE OTHER HAND OPPOSED THE ABOVE ALLEGATIONS WITH THIS SUBMISS ION THAT DESPITE OPPORTUNITIES THE ASSESSEE FAILED TO REMOVE THE DEFECTS SHOWN IN THE NOTICE ISSUED U/S. 139(9) OF THE ACT HENCE DEFECTIVE RETURN OF INCOME FILED ON 31.3.2006 WAS TREATED AS INVALID. SINCE THE ASSESSEE HAD TAXABLE INCOME OF RS. 4 55 458/ - FROM PLOTTING BUSINESS INTEREST FROM BANK AND PRIVATE PARTIES BESIDES THE AGRICULTURAL INCOME OF RS. 1 80 750/ - I.E. MUCH MORE THAN THE TAXABLE LIMIT THE ITO WAS HAVING REASON TO BELIEVE THAT INCOME CHARGEABLE TO T A X HAS ESCAPED ASSESSMENT FOR THE ASS ESSMENT YEAR UNDER CONSIDERATION. ACCORDINGLY NOTICE U/S. 148 WAS VALIDLY ISSUED. 6. CONSIDERING THE ABOVE SUBMISSIN IN VIEW OF THE ORDERS OF THE AUTHORITIES BELOW MATERIAL AVAILABLE ON RECORD AND THE PROVISIONS LAID DOWN U/S. 139(9) AND OTHERS WE FIND NO REASON TO DOUBT THE ABOVE SUBMISSION OF THE LD. A.R. THAT RETURN OF INCOME FILED ON 31.3.2006 WAS PROCESSED U/S. 143(1) ON 06.6.2006 AND DEMAND NOTICE DT. 01.12.2006 U/S. 221(1) OF THE ACT (COPY SUPPLIED) WAS ISSUED IN CONSEQUENCE THEROF. THUS B Y IMPLICATION WE FIND SUBSTANCE IN THE SUBMISSION OF THE LD. A.R. THAT ON BEING SATISFIED WITH THIS SUBMISSION OF THE ASSESSEE THAT THE STATED DEFECTS POINTED OUT IN THE NOTICE ISSUED U/S. 139(9) ARE NOT MAINTAINABLE IN THE CASE OF THE ASSESSEE THE ITO H AD WITHDRAWN THE NOTICE ISSUED U/S. 139(9) OF THE ACT AND PROCESSED THE RETURN OF INCOME FILED ON 31.3.2006 U/S. 143(1) OF THE ACT. THE ITO HAS MENTIONED NOTHING ABOUT HIS ACTION OF CANCELLING OF INTIMA TION ISSUED U/S. 143(1) OF THE ACT NOR ANY REASON HA S BEEN MENTIONED IN THE ORDER SHEET FOR THE SAME IN SUPPORT. EVEN BEFORE US THE LD. D.R. HAS FAILED TO SUBMIT ANY SATISFACTORY EXPLANATION AS TO HOW AFTER NOTING PROCEEDINGS ON ORDER SHEET D A T ED 07.6.2006 THE ITO HAS NOTED HIS EARLIER P ROCEEDING D A T ED 06.6.2006 IN THE ORDER SHEET. FOR A READY REFERENCE ITA NO 299 /PN/2009 GULABBEN MADANLAL JAIN A .Y. 2005 - 06 PAGE OF 6 5 THE RELEVANT EXTRACT APPLICABLE IN THE CASE OF ASSESSEE IN THE PROVISIONS U/S. 139(9) IS BEING REPRODUCED HEREUNDER : 139(9) . EXPLANATION FOR THE PURPOSE OF THIS SUB - SECTION RETURN OF I NCOME SHALL BE REGARDED AS DEFECTIVE UNLESS ALL THE FOLLOWING CONDITIONS ARE FULFILLED NAMELY : A) TO E) .. F) WHERE REGULAR BOOKS OF ACCOUNT ARE NOT MAINTAINED BY THE ASSESSEE THE RETURN IS ACCOMPANIED BY A STATEMENT INDICATING THE AMOUNTS OF TURNOVER OR AS THE CASE MAY BE GROSS RECEIPTS GROSS PROFIT EXPENSES AND NET PROFIT OF THE BUSINESS OR PROFESSION AND THE BASIS ON WHICH SUCH AMOUNTS HAVE BEEN COMPUTED AND ALSO DISCLOSING THE AMOUNTS OF TOTAL SUNDRY DEBTORS SUNDRY CREDITORS STOC K - IN - TRADE AND CASH BALANCE AS AT THE END OF THE PREVIOUS YEAR. THE VERY READING OF THE ABOVE PROVISION ALSO SUPPORTS THE CONTENTION OF THE LD. A.R. THAT IN CASE OF THE ASSESSE WHO DOES NOT MAINTAIN THE REQU LAR BOOKS OF ACCOUNTS THE ASSESSEE WAS NOT SUPPOSED TO MAINTAIN BALANCE SHEET ETC. AS SHOWN IN THE DEFECT NOTICE U/S. 139(9) OF THE ACT. UNDER THESE CIRCUMSTANCES WE FIND THAT IN THE PRESENT CASE THERE WAS NO OCCASION TO INITIATE THE PROCEEDINGS U/S. 147 OF THE ACT TREATING THE RETURN OF INCO ME FILED ON 31.3.2006 AS NONEST ESPECIALLY WHEN IT WAS PROCESSED ON 06.6.2006 AND IN PURSUANCE OF WHICH NOTICE U/S. 221(1) WAS ALSO ISSUED ON 01.12.2006. THE NOTICE ISSUED U/S. 148 IN THE PRESENT CASE IS THUS HELD AS INVALID AND ASSESSMENT IN QUESTI ON FRAMED ON THE BASIS OF THE SAID NOTICE IS NULL AND VOID AND IS QUASHED IN CONSEQUENCE. THE ISSUE RAISED IN THE ADDITIONAL GROUND IS ALLOWED IN FAVOUR OF THE ASSESSEE. 7. IN VIEW OF ABOVE FINDING THE ISSUES RAISED IN THE GROUNDS HAVE BECOME INFRUCT UOUS. THESE GROUNDS THUS DO NOT NEED ADJUDICATION. THE SAME ARE DISMISSED AS SUCH. ITA NO 299 /PN/2009 GULABBEN MADANLAL JAIN A .Y. 2005 - 06 PAGE OF 6 6 8 . IN THE RESULT THE APPEAL IS PARTLY ALLOWED THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28TH FEBRUARY 201 1 . SD/ - SD/ - ( D. KARUNAK ARA RAO ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE DATED THE 28 TH FEBRUARY 20 1 1 US COPY OF THE ORDER IS FORWARDED TO : 1. THE A PPELLANT 2. THE RESPONDENT 3. THE CIT I NASHIK 4. THE CIT(A) - I NASHIK 5. THE D.R. A BENCH PUNE 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE