Smt. Kailasben B.Patel, Surat v. The Income tax Officer, Ward-2(3),, Surat

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE S/SHRI T.K. SHARMA JM AND D.C.AGRAWAL AM 1. SMT. KAILASHBEN B. PATEL & 2. SMT. RASHMIBEN B. PATEL 204 JALARAM SOCIETY VED ROAD SURAT. VS. INCOME-TAX OFFICER WARD 2(3) SURAT. (APPELLANTS) .. (RESPONDENT) APPELLANT BY :- SHRI SAKAR SHARMA AR RESPONDENT BY:- SHRI ANAND MOHAN SR.DR O R D E R PER D.C.AGRAWAL ACCOUNTANT MEMBER . THESE TWO APPEALS ARE FILED BY THE TWO DIFFERENT A SSESSEES AGAINST THE ORDERS OF LD. CIT(A) DATED 22.11.2006. SINCE TH E ISSUE INVOLVED IN THESE TWO APPEALS ARE THE SAME AND FACTS ARE ALSO S IMILAR THEY ARE TAKEN UP TOGETHER FOR THE SAKE OF CONVENIENCE. ITA NO.365/AHD/2007 ASST. YEAR 1998-99 2. GROUNDS RAISED IN THIS APPEAL ARE AS UNDER :- ITA ASST. YEAR NO.365/AHD/2007 1998-99 NO.393/AHD/2007 1998-99 2 1. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRM ING THE ACTION OF THE AO INVOKING PROVISIONS OF SECTION 147 OF THE ACT. ON THE FACTS AND CIRCUMSTANCES OF THE CASE HE OUGHT TO HAVE NOT UPHELD THE ACTION OF THE AO. 2. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN UPH OLDING ACTION OF THE AO ASSESSING OPENING CAPITAL OF RS.8 41 66 8/- AS INCOME OF THE APPELLANT FOR THE YEAR UNDER CONSIDERATION . 3 THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN NOT RED UCING THE ASSESSABLE INCOME FROM RS.8 91 075/- TO RS.39 870/- WITHOUT APPRECIATING THE EXPLANATION AND SUBMISSIONS OF THE APPELLANT. 4. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CHAR GING INTEREST U/S234A 234B & 234C OF THE ACT. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND MARRIED WOMAN. HER INCOME TAX WAS TAKEN CARE OF BY ONE SHRI PANKAJ DANAWALA C.A. A SURVEY UNDER SECTION 133A WAS CARR IED OUT AT THE OFFICE PREMISES OF SHRI PANKAJ DANAWALA AND COPY OF THE ACCOUNTS AND FILES OF VARIOUS CLIENTS INCLUDING THAT OF THE ABOV E TWO ASSESSEES WERE SEIZED. THE DOCUMENTS IN THE CASE OF THIS ASSESSEE REVEALED THAT THERE WERE TWO CAPITAL ACCOUNTS AND PROFIT AND LOSS ACCOU NTS AND BALANCE SHEET FOR ASST. YEAR 1997-98. IN ONE BALANCE SHEET THE CL OSING CAPITAL WAS SHOWN AT RS.8 73 075/- AND IN ANOTHER SET IT WAS SH OWN AT RS.17 73 075/-. WHEN THE AO CONFRONTED THE ASSESSEE SHE DISOWNED T HE SECOND SET SHOWING CLOSING CAPITAL AT RS.17 73 075/-. BY FILIN G AN AFFIDAVIT ON 2.3.2006. IT WAS SUBMITTED THAT THE SECOND SET IS F AKE AND PREPARED BY THE CONCERNED C.A. AND SHE DID NOT HAVE SO MUCH OF CAPI TAL. HER CORRECT CAPITAL WAS OF RS.8 73 075/- WHICH WAS CLAIMED TO B E HER SAVINGS FOR LAST SEVERAL YEARS BUT FINALLY ASSESSEE OFFERED THE WHOL E AMOUNT AS INCOME. IN ORDER TO TAX THE ASSESSEE ON THE BASIS OF DOCUMENTS FOUND FROM THE PREMISES OF SHRI PANKAJ DANAWALA NOTICE UNDER SECT ION 148 WAS ISSUED ON HER ON 20/12/2005. IN RESPONSE THERETO RETURN OF INCOME WAS FILED BY 3 HER ON 17.3.2006 DECLARING HER INCOME AT RS.8 91 07 5/- IN WHICH SHE HAD SHOWN SELF ASSESSMENT TAX PAID AT RS.5 67 726/-. TH E AO WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3)/147 HAS SHOWN A TAX PAYABLE AT RS.2 84 096/- AS UNDER :- TOTAL INCOME RS.8 91 075/- INCOME-TAX RS.2 42 324/- ADD: INT. U/S 234A RS.2 81 066/- INT.U/S 234B RS.3 14 991/- INT. U/S 234C RS.13 441/- TOTAL TAX + INT.PAYABLE RS.8 51 822/- LESS: TAX CREDIT GIVEN AS PER ORDER U/S 143(1) RS.5 67 726/- BALANCE TAX PAYABLE RS.2 84 096/- THIS ORDER WAS PASSED ON 24.3.2006. 4. HOWEVER THE ASSESSEE APPEALED AGAINST THIS ORDE R BEFORE THE LD. CIT(A) TAKING GROUNDS AS UNDER :- (1) THE LD. ITO HAS ERRED IN DETERMINING MY PAST SAVING S AND STREEDHAN AS INCOME AND IN LEVYING TAX ON SUCH PAST SAVINGS AND STREEDHAN. (2) THE LD. ITO HAS ERRED IN LEVYING INTEREST U/S 234 O F THE ACT. (3) YOUR HONOURS PETITIONER CRAVES LEAVE TO ADD TO OR AMEND THE GROUND AT THE TIME OF HEARING THE APPEAL. 5. IN THE WRITTEN SUBMISSION DATED 15.11.2006 ASSES SEE CHALLENGED THE INITIATION OF PROCEEDINGS UNDER SECTION 147 AND ISS UANCE OF NOTICE UNDER SECTION 148 BUT LD. CIT(A) DECLINED TO ENTERTAINED THE PLEA AS ASSESSEE HAD NOT TAKEN ANY SPECIFIC GROUND IN THE APPEAL MEM O ABOUT CHALLENGING THE PROCEEDINGS UNDER SECTION 147. ACCORDING TO HIM THERE WAS NO REQUEST 4 FOR ADMISSION OF THE ADDITIONAL GROUND. ON MERITS H E CONFIRMED THE ASSESSMENT ORDER ON THE GROUND THAT ONCE THE ASSESS EE HAS ACCEPTED AND AGREED TO OFFER THE CAPITAL OF RS.8 73 075/- FOR TA XATION THEN SAME CANNOT BE DECIDED IN APPEAL WITHOUT PRODUCING ANY EVIDENCE TO SHOW THAT SUCH INCOME HAS NOT BEEN EARNED BY THE ASSESSEE. 6. BEFORE US LD. AR SUBMITTED THAT INITIATION OF P ROCEEDINGS UNDER SECTION 147 WAS BAD AS ASSESSMENT IS SOUGHT TO BE R EOPENED AFTER SIX YEARS FROM THE END OF ASSESSMENT YEAR WHICH IS ASST . YEAR 1998-99. THE NOTICE UNDER SECTION 148 WAS ISSUED ON 20.12.2005 F OR ASST. YEAR 1998- 99. SUCH NOTICE COULD BE ISSUED ONLY UPTO 31.03.200 5. SECONDLY LD. AR SUBMITTED OPENING CAPITAL COULD NOT BE TREATED AS I NCOME OF THE ASSESSEE FOR CURRENT YEAR WHICH HAS BEEN EARNED DURING SEVE RAL PAST YEARS. ASSESSEE HAS FILED RETURN OF INCOME IN ASST. YEAR 1 992-93 WHEREIN SOME CAPITAL WAS SHOWN. SHE HAD NON-TAXABLE INCOME AND A CCORDINGLY RETURN OF INCOME WAS NOT FILED. THEREFORE ENTIRE CAPITAL OF RS.8 73 075/- COULD NOT BE TAXED IN ASST. YEAR 1998-99. FINALLY LD. AR SUBM ITTED THAT FURTHER TAX FROM THE ASSESSEE AS WORKED OUT BY THE AO IN THE AS SESSMENT ORDER AT RS.2 84 096/- COULD NOT BE RECOVERED IN VIEW OF THE DECISION OF HON. SUPREME COURT IN CIT VS. SHELLEY PRODUCTS (2003) 26 1 ITR 367 (SC). 7. ON THE OTHER HAND LD. DR SUBMITTED THAT ASSESSE E HERSELF HAS FILED THE RETURN OF INCOME ADMITTING THAT SHE HAD CAPITAL OF RS.8 73 075/- WHICH WAS OFFERED FOR TAXATION BY HER. NOW SHE CANNOT GO BACK AND SAY THAT SHE DID NOT HAVE SUCH INCOME. IN FACT IT CANNOT BE SAID THAT SHE IS AGRIEVED BY THE ORDER OF AO. NO GROUND CHALLENGING U/S 148 WAS TAKEN BY HER BEFORE LD. CIT(A). THEREFORE THE GROUND TAKEN BEFORE THE TRIBUNAL REGARDING REOPENING WOULD NOT ARISE FROM THE ORDER OF LD. CIT (A). IN ANY CASE THERE IS NO SPECIFIC GROUND CHALLENGING THE ISSUANCE OF N OTICE U/S 148. 5 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE TAXES PAID ON THE RETURNED INCOME OF RS.5 67 726/- ON THE BASIS OF INCOME RETURNED AT RS.8 91 075/- COULD NOT BE REFUNDED TO THE ASSESSEE AS SHE HAS DECLARED THE INCOME BY FILING THE AFFIDAVIT AS WELL AS BY FILING THE RETURN OF IN COME. WE AGREE WITH THE LD. DR THAT SHE COULD NOT BE AGGRIEVED WITH THE FIN DING AGAINST TREATING THE SUM OF RS.8 73 075/- AS HER INCOME FOR ASST. YE AR 1998-99 AS SHE FILED THE RETURN OF INCOME AT RS.8 91 075/- INCLUDI NG THE SUM OF RS.8 73 075/-. THEREFORE AS SUCH THERE CANNOT BE A GRIEVANCE TO THE ASSESSEE. HOWEVER IN OUR CONSIDERED VIEW REVENUE C ANNOT RECOVER THE BALANCE SUM OF RS.2 84 096/- AS ORDERED IN THE ASSE SSMENT ORDER BECAUSE PROCEEDINGS INITIATED UNDER SECTION 148(1) ARE BELA TED AND BECAUSE ORDER PASSED BY THE AO U/S 143(3)/147 IS NOT A VALID ORDE R. IN VIEW OF THE DECISION OF HON. SUPREME COURT IN THE CASE OF SHELL EY PRODUCTS (SUPRA) ASSESSEE WOULD NOT BE ENTITLED TO REFUND TAXES PAID ON SELF ASSESSMENT. FURTHER THERE IS NO REASON TO HOLD THAT CAPITAL OF RS.8 73 075/- WOULD PERTAIN TO ANY OTHER YEAR AS NO MATERIAL IN SUPPORT OF THE CLAIM HAS BEEN FILED. THEREFORE NO ADJUSTMENT THERE-FROM IS POSSI BLE. ACCORDINGLY INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF IN COME FILED AND TAXES PAID ON SELF ASSESSMENT COULD NOT BE DISTURBED BUT ASSESSMENT BEING NOT VALID THERE CANNOT BE ANY FURTHER RECOVERY FROM THE ASSESSEE. WITH THE ABOVE OBSERVATIONS APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ITA NO.393/AHD/2007 ASST. YEAR 1998-99 9. THE FACTS IN THE CASE PRESENT CASE ARE IDENTICAL TO THE ABOVE CASE. IN THIS CASE NOTICE UNDER SECTION 148 WAS ISSUED ON SA ME DATE RETURN OF INCOME WAS FILED ON 17 TH MARCH 2006 DECLARING INCOME OF RS.8 90 172 6 ON WHICH SELF ASSESSMENT TAX OF RS.5 67 057/- WAS P AID. IN THE ASSESSMENT ORDER PASSED AO DETERMINED ADDITIONAL LIABILITY AT RS.2 77 818/- AS UNDER:- TOTAL INCOME RS.8 90 172/- INCOME-TAX RS.2 42 051/- ADD: INT. U/S 234A RS.2 77 753/- INT.U/S 234B RS.3 11 640/- INT. U/S 234C RS.13 431/- TOTAL TAX + INT.PAYABLE RS. 8 44 875/- LESS: TAX CREDIT GIVEN AS PER ORDER U/S 143(1) RS. 5 67 057/- BALANCE TAX PAYABLE RS.2 77 818/- IN THIS CASE ALSO ASSESSEE HAS FILED AN AFFIDAVIT A DMITTING THE OPENING CAPITAL AS HER INCOME AND ACCORDINGLY THE RETURN OF INCOME WAS FILED. FOLLOWING OUT DECISION IN THE CASE OF SRIMATI KAILA SHBEN B. PATEL WE HOLD THAT INCOME DECLARED BY THE ASSESSEE AND TAXES PAID ON SELF ASSESSMENT CANNOT BE DISTURBED BUT REVENUE CANNOT R ECOVER BALANCE SUM OF RS.2 77 818/- AS ASSESSMENT ORDER SO FRAMED IS N OT VALID. THIS APPEAL IS ALSO PARTLY ALLOWED. 10. IN THE RESULT BOTH THE APPEALS ARE PARTLY ALLOW ED. SD/- SD/- (T.K. SHARMA) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD DATED : 23/4/2010 MAHATA/- ORDER PRONOUNCED IN OPEN COURT ON 23/4/2010 7 COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD