Ajay Kumar Ghaziabad v. Ito Ward 1 5 Ghaziabad

In The Income Tax Appellate Tribunal Delhi Bench Smc New Delhi Before Shri R K Panda Accountant Member Ita No 3883 Del 2017 Assessment Year 2009 10 Ajay Kumar Akhilesh Kumar Advocate Chamber No 206 207 Ansal Satyam Rdc Raj Nagar Ghaziabad Uttar Pradesh Vs Ito Ward 1 5 Ghaziabad Pan Bgepp 7483 B Appellant Respondent Assessee By Shri Akhilesh Kumar Adv Department By Shri Amit Jain Sr Dr Date Of Hearing 04 12 2017 Date Of Pronouncement 26 12 2017 O R D E R Per R K Panda Am This Appeal Filed By The Assessee Is Directed Again St The Order Dated 01 03 2017 Of Cit A Ghaziabad Relating To Assessm Ent Year 2009 10 2 Facts Of The Case In Brief Are That On The Bas Is Of Air Information That The Assessee Has Purchased Immovable Property Value D At Rs 76 44 000 On 18 12 2008 The Assessing Officer Issued A Verifica Tion Letter Fixing The Date For Compliance On Or Before 30 11 2012 Since There Wa S No Compliance From The Side Of The Assessee To The Said Letter The Assess Ing Officer Issued Reminders Which Were Duly Served On The Assessee However A Gain There Was No Compliance Thereafter The Assessing Officer Issu Ed Notice U S 148 Fixing The 2 Ita No 3883 Del 2017 Date For Compliance Within 30 Days From The Date Of Service Of Notice Again There Was No Compliance To The Said Notice U S 148 The Assessing Officer Thereafter Issued Notice U S 142 1 Dated 30 08 201 3 Along With Questionnaire Fixing The Date For Compliance On 11 09 2013 Agai N The Same Remained Uncomplied Thereafter Several Notices U S 142 1 Were Issued In Response To Which The Authorized Representative Of The Assessee Appeared Before The Assessing Officer And Filed Certain Details As Requ Ired By The Assessing Officer It Was Explained That The Assessee Has Invested Onl Y An Amount Of Rs 28 78 000 Plus Rs 2 09 370 Towards Stamp Duty The Source Was Explained As Under I Rs 6 00 000 From Own Sources Ii Rs 6 00 000 As Gift From Smt Mithlesh W O Sh Ajay Kumar Iii Rs 5 00 000 As Gift From Shri Satpal Brot Her Of Sh Ajay Kumar Iv Rs 15 00 000 Received From Sh Vijay Kumar A S Advance Money Against Agreement To Sale Of Agricultural Land 3 Since No Documentary Evidence Was Furnished In S Upport Of Above Contentions The Assessing Officer Asked The Assess Ee To Furnish The Bank Statement And Gift Deed Of Smt Mithlesh And Shri S Atpal Copy Of Income Tax Return Bank Statement And Balance Sheet Of The Ass Essee Copy Of Sale Deed Along With Calculation Of Capital Gain Of The Land Sold And Explain The Source Of Rs 6 00 000 With Documentary Evidence 3 Ita No 3883 Del 2017 4 The Counsel For The Assessee Produced Smt Mithl Esh Wife Of The Assessee Whose Statement Was Recorded In The Said Statement She Refused To Have Given Any Type Of Gift In Any Year To Her Husb And However She Stated To Have Possessed About 1 Kg Of Gold Upto 2008 Which W As Sold By Her Husband For About Rs 4 00 000 And The Same Was Invested In Th E Purchase Of Land However The Assessing Officer Did Not Believe The Veracity Of The Same On The Ground That She Was Working As Anganwari Karyakarta On Salary Of Rs 750 Per Month And Appearance Was Very Simple W Ithout Wearing Any Kind Of Jewellery He Therefore Disbelieved The Credi Tworthiness Smt Mithlesh Which Is Further Substantiated According To Him For Non Filing Of Her Income Tax Return The Assessing Officer Therefore Added Th E Amount Of Rs 6 00 000 Received From The Wife Of The Assessee As Gift As U Nexplained Investment In Property U S 69 Of The I T Act He Further Observ Ed That There Was No Response To The Notice Issued U S 133 6 To V S Jewells Of Meerut To Whom The Alleged Gold Was Sold 5 So Far As The Gift Obtained From Shri Satpal Sin Gh Is Concerned The Assessing Officer Observed That His Statement Was R Ecorded On 04 02 2014 Wherein He Had Stated To Have Made Cash Gift Of Rs 5 00 000 To Shri Ajay Kumar But Failed To Prove The Source Of Gift Made T O Shri Ajay Kumar He Also Failed To Recollect The Occasion On The Eve Of Whic H Gift Was Made Since He Was Not Assessed To Tax And Did Not File Any Evidence T O Explain The Source Of 4 Ita No 3883 Del 2017 Rs 5 00 000 The Assessing Officer Disbelieved Th E Creditworthiness Of Shri Satpal Singh Brother Of The Assessee And Made Addit Ion Of Rs 5 00 000 U S 69 To The Total Income Of The Assessee 6 So Far As Rs 15 00 000 Received From Shri Vija Y Kumar As Earnest Money Against Agreement To Sale Of Agricultural Lan D Is Concerned The Assessing Officer Observed That The Assessee Furnished Only P An Of Shri Vijay Kumar And Copy Of Agreement To Sale Deed But Failed To Produc E Shri Vijay Kumar And Copy Of Bank Statement Of Shri Vijay Kumar The As Sessing Officer Therefore Disbelieved Creditworthiness Of Shri Vijay Kumar An D Made Addition U S 69 Of The I T Act Similarly In Absence Of Any Documen Tary Evidence Filed To Explain The Availability Of Rs 6 00 000 With The Assessee The Assessing Officer Made Addition Of Rs 6 00 000 U S 69 Of The I T Act Thus The Assessing Officer Made Addition Of Rs 32 00 000 To The Returned Inc Ome Against Income Of Rs 74 Filed By The Assessee He Accordingly Dete Rmined The Total Income At Rs 32 00 074 7 In Appeal Ld Cit A Upheld The Addition Made B Y The Assessing Officer 8 Aggrieved With Such Order Of The Ld Cit A The Assessee Is In Appeal Before The Tribunal By Raising The Following Ground S 1 Because Notice U S 148 Of The Act Is Without J Urisdiction Being Issued Without Any Application Of Mind And Satisfaction About The Escapement Of Income In As Much As Ld Ao Has Not Even Verified The Informatio N 2 Because In Addition To Above Entire Assessment Proceedings Are Void Ab Initio And Order Of Assessment Is Illegal In Terms Of Law Pronounced By 5 Ita No 3883 Del 2017 Jurisdictional Court Other Courts Being Framed With Out Issuing Any Notice U S 143 2 Of The It Act 1961 After Filing Return In C Ompliance To Notice U S 148 3 Because Without Prejudice To Above And Only In Alternative On Merits The Id Cit A Illegally Upheld The Addition Of Rs 15 00 000 Even After Ao Accepting The Said Advance As Genuine After Enquiry In Remand And Further Accepted So By Ao Of Party On Further Direct Enquir Y By Id Cit A Herself 4 Because Ld Cit A Illegally Upheld The Additi On Of Rs 15 00 000 Even After Ao Accepting The Said Advance As Genuine After Enqu Iry In Remand And Further Accepted So By Ao Of Party On Further Direct Enquir Y By Id Cit A Herself 5 Because The Ld Cit A Erred Upholding The Follo Wing Additions Without Considering Material On Record Without Appreciatin G Conducting Enquiry On The Evidence Etc And Against The Settled Law A Assessees Own Source 6 00 000 B Gift From Wife 6 00 000 C Gift From Brother 5 00 000 6 Because The Ld Cit A Erred In Upholding The T Otal Addition Of Rs 32 00 000 Merely On The Basis Of Surmises And Conjectures And Even Without Appreciating That Total Investment Made By Assessee Is Rs 30 87 Lakhs Against Total Addition Of Rs 32 Lakhs 9 The Assessee Has Also Raised The Following Addit Ional Grounds 1 Because Notice U S 148 Of The Act Is Without J Urisdiction Being Issued Without Any Application Of Mind And Satisfaction About The Escapement Of Income In As Much As Ld Ao Has Not Even Verified The Information 2 Because In Addition To Above Entire Assessment Proceedings Are Void Ab Initio And Order Of Assessment Is Illegal In Terms Of Law Pronounced By Jurisdictional Court Other Courts Being Framed Without Issuing Any Notice U S 143 2 Of The It Act 1961 After Filing Return In Compliance To Notice U S 148 10 Relying On The Following Decisions He Submitte D That The Additional Grounds Being Purely Legal Grounds Raising Jurisdic Tional Issues Which Go To The Root Of The Matter Should Be Admitted I Cit Vs Sinhgad Technocal Ed Society Ca No 1 1080 Of 2017 Order Dated 29 08 2017 Ii Ntpc Vs Cit 229 Itr 383 Sc Iii Pcit Vs Silver Line 383 Itr 455 Del Iv Amarjeet Singh Rainu Vs Ito Ita No 1445 2014 Order Dated 16 06 2016 6 Ita No 3883 Del 2017 11 After Hearing Both The Sides The Additional Gr Ounds Raised By The Assessee Are Admitted For Adjudication 12 Ld Counsel For The Assessee At The Outset Subm Itted That No Notice U S 143 2 Has Been Issued To The Assessee Referring To Page 2 To 4 Of The Paper Book Ld Counsel For The Assessee Submitted That T He Assessee Has Filed The Return Of Income On 16 01 2014 Referring To The Copy Of The Order Sheet Entries Filed From Page 5 To 10 Of The Paper Book Ld Counsel Fo R The Assessee Submitted That The Order Sheet Entries Clearly Shows That No Notic E U S 143 2 Was Ever Issued And Served On The Assessee Referring To The Decis Ion Of The Honble Allahabad High Court In The Case Of Cit Vs Parikalpana Estat E Development P Ltd Reported In 220 Taxman 39 He Submitted That The Ho Nble High Court In The Said Decision Has Held That Notice U S 143 2 Is Ne Cessary Where For Any Reason Assessing Officer Repudiates Return Filed By Assess Ee In Response To Notice U S 158 Bc Relating To Block Assessment 13 Referring To The Decision Of The Honble Gujara T High Court In The Case Of Pr Cit Vs Devendranath G Chaturvedi Reported In 8 3 Taxmann Com 141 He Submitted That The Honble High Court In The Said D Ecision Has Held That Where The Assessee In Response To Notice Issued U S 158 B C Filed A Return After Long Delay However Said Return Was Not Discarded As In Valid In Such A Case If The Assessing Officer Wanted To Frame Assessment At Hig Her Income He Was Bound To Issue A Notice U S 143 2 7 Ita No 3883 Del 2017 14 Referring To The Decision Of The Honble Delhi High Court In The Case Of Pr Cit Vs Silver Line Reported In 383 Itr 455 He Submitted That The Honble High Court In The Said Decision Has Held That The F Ailure Of The Assessing Officer In Re Assessment Proceedings To Issue Not Ice U S 143 2 Prior To Finalizing The Re Assessment Order Cannot Be Condo Ned By Referring To Section 292 Bb Of The I T Act He Submitted That Since The Assessee In Instant Case Has Filed The Return Of Income Though Belatedly Decla Ring Total Income Of Rs 74 Which Has Been Mentioned In The Body Of The Assessm Ent Order As Returned Income Therefore In Absence Of Issue Of Notice U S 143 2 The Entire Re Assessment Proceedings Have To Be Quashed 15 So Far As Merit Of The Case Is Concerned He Su Bmitted That The Assessee Has Discharged The Onus Cast On It By Filing The Re Quisite Details Merely Because The Face Of The Wife Of The Assessee Is Very Simple And She Has Not Worn Any Jewellery The Same Cannot Be A Ground To Disbelieve Her Capacity To Own 1 Kg Of Gold Further When The Assessee Produced The Brot Her Of The Assessee Before The Assessing Officer Who Had Confirmed To Have Given G Ift Of Rs 5 00 000 To The Assessee The Same Should Not Have Been Disbelieved So Far As The Amount Received From Shri Vijay Kumar Is Concerned He Sub Mitted That Shri Vijay Kumar Is A Regular Taxpayer Having Income Of Rs 11 63 289 During Assessment Year 2008 09 And Therefore His Capacity Go Give A Dvance For Purchase Of Land Should Not Have Been Doubted 8 Ita No 3883 Del 2017 16 Referring To The Order Of The Ld Cit A At Par A 8 3 1 He Submitted That The Ld Cit A Has Given A Finding That Shri Vijay Kumar Has Withdrawn A Sum Of Rs 22 93 462 From His Capital Account Theref Ore Merely By Stating This Cash Withdrawal Can Be Used For Any Other Purpose O Ther Than The Above Stated Purpose By The Assessee He Could Not Have Rejected The Claim Of The Assessee In Absence Of Any Adverse Material With The Revenue So Far As Investment Of Rs 6 00 000 Out Of Own Source Is Concerned He Su Bmitted That The Same Is Out Of Accumulated Savings Out Of Agricultural Income O F The Assessee He Accordingly Submitted That The Addition Made By The Assessing Officer U S 69 Is Uncalled For And The Ld Cit A Without Appreciatin G The Facts Properly Has Upheld The Addition And Therefore The Same Should Be Deleted 17 Ld Dr On The Other Hand Relied On The Order Of The Ld Cit A He Submitted That The Assessee Has Not Satisfactory Ex Plained The Source Of Investment Of Rs 32 00 000 Towards Purchase Of La Nd Merely Producing The Persons Before The Assessing Officer In Two Cases W Ithout Substantiating With Evidence Regarding Their Creditworthiness Is Not Su Fficient To Prove The Availability Of So Much Funds With Them So Far As Amount Received As Advance Towards Sale Of Agricultural Land Is Concerned He Submitted That The Assessee Miserably Failed To Substantiate With Evidence To T He Satisfaction Of The Lower Authorities Regarding Such Advance So Far As Avai Lability Of Cash Of Rs 6 00 000 With The Assessee Is Concerned He Su Bmitted That When The 9 Ita No 3883 Del 2017 Assessee Is Maintaining Bank Account It Is Unbelie Vable To Hold Such Huge Cash With Him Further The Wife Of The Assessee Has De Nied To Have Given Any Gift To Her Husband The Jewellery Has Been Sold In Cash A Nd Purchaser Did Not Respond To The Notice U S 133 6 Under These Circumstance S The Order Of The Ld Cit A Should Be Upheld And The Grounds Raised By The Asse Ssee Should Be Dismissed 18 So Far As The Argument Of The Assessee Regardin G Issue Of Notice U S 143 2 Is Concerned He Submitted That The Assessee Has No T Filed The Return In Time In Response To The Notice U S 148 Therefore The Ass Essee Now Cannot Raise A Ground Challenging The Validity Of The Re Assessmen T Proceedings In The Absence Of Notice Issued U S 143 2 Of The I T Act 19 Ld Counsel For The Assessee In His Rejoinder S Ubmitted That None Of The Earlier Notices Were Received By The Assessee Whose Name Is Ajay Pal As Mentioned In Pan Card Aadhar Card Though In The Sa Le Deed The Name Ajay Kumar Is Mentioned In Response To Notice Dated 17 12 2013 The Ar Of The Assessee Appeared Before The Assessing Officer On 0 6 01 2014 And Intimated The Assessing Officer Orally About The Above Facts And On The Same Date The Assessing Officer Allowed Last Opportunity For Comp Liance And Copies Of The Said Notice U S 148 Along With Notice U S 142 1 Qu Estionnaire Dated 30 08 2013 Were Given To Assessee He Submitted That On 16 01 2014 The Assessee Filed The Return In Compliance To Notice U S 148 Before The A Ssessing Officer Specifically Mentioning About Filing Of Return With Its Copy In Response To Notice U S 148 10 Ita No 3883 Del 2017 Besides Compliance To Questionnaire U S 142 1 As A Bove The Assessing Officer Had Considered The Return And Referred To The Same On Page 3 For Additions Computation No Further Notice U S 148 142 1 Or U S 143 2 Was Issued Thereafter He Accordingly Submitted That I N Absence Of Notice U S 143 2 The Assessment Completed By The Assessing Officer E Nhancing The Income Of The Assessee Has To Be Set Aside 20 I Have Considered The Rival Arguments Made By B Oth The Sides Perused The Orders Of The Assessing Officer And The Ld Cit A And The Paper Book Filed On Behalf Of The Assessee A Perusal Of The Order She Et Entries Shows That Although The Assessing Officer Has Issued Notice U S 148 By Recording The Reasons On 11 02 2013 However There Is No Mention Of Any Not Ice Issued U S 143 2 In The Order Sheet Entries Copies Of Which Are Filed In T He Paper Book From Page 5 To 10 Of The Paper Book The Order Sheet Entries Furt Her Show That On 06 01 2014 When The Ar Of The Assessee Appeared Before The Ass Essing Officer And Filed Certain Details The Assessing Officer Issued Copy Of Notice U S 148 And Copy Of Notice U S 142 1 Dated 30 08 2013 Along With Quest Ionnaire A Perusal Of The Paper Book Further Shows That The Assessee Has File D Return Of Income On 16 01 2014 Declaring Total Income Of Rs 74 And Th E Assessing Officer Has Mentioned The Same In The Assessment Order As Rs 74 Thus The Return Filed By The Assessee Has Been Considered By The Assessing O Fficer However As Mentioned Earlier There Is No Issue Of Notice U S 143 2 Which Appears From The 11 Ita No 3883 Del 2017 Order Sheet Entries Under These Circumstances It Has To Be Decided As To Whether The Assessment Completed By The Assessing O Fficer Is Valid Or Not 21 The Honble Delhi High Court In The Case Of Pr Cit Vs Silver Line Supra Has Held That The Reassessment Order Cannot Be Made Without Compliance With The Mandatory Requirement Of Notice Being Issu Ed By The Assessing Officer To The Assessee U S 143 2 The Honble Allahabad High Court In The Case Of Cit Vs Rajeev Sharma Reported In 336 Itr 678 Has H Eld That Where Return Is Filed By The Assessee In Response To Notice U S 148 Before Proceeding To Deicide The Controversy With Regard To Escapement Of Assess Ment A Notice U S 143 2 Must Be Issued As Provisions Contained In Section 1 43 2 Is Mandatory The Honble Gujarat High Court In The Case Of Devendran Ath G Chaturvedi Supra Has Held That Where The Assessee In Response To Not Ice U S 158 Bc Filed A Return After Long Delay And The Said Return Was Not Discar Ded As Invalid In Such A Case If The Assessing Officer Wanted To Frame Assessment At Higher Income He Was Bound To Issue A Notice U S 143 2 Which Is Necessa Ry If For Any Reason The Assessing Officer Repudiates The Return Filed By Th E Assessee In Response To Notice U S 158 Bc Relating To Block Assessment Sin Ce The Assessee In The Instant Case Has Filed The Return Of Income In Response To Notice U S 148 Though Belatedly And Since The Return Has Not Been Discard Ed By The Assessing Officer And The Assessing Officer In The Assessment Order H As Mentioned The Return Of Income Of Rs 74 While Making Further Addition Th Erefore In Absence Of Any 12 Ita No 3883 Del 2017 Issuance Of Mandatory Notice U S 143 2 The Re Ass Essment Order Passed By The Assessing Officer Has To Be Held Is Invalid The A Dditional Ground Raised By The Assessee On This Issue Is Therefore Allowed Since The Assessee Succeeds On This Legal Ground The Grounds Raised By The Assessee On Merit Are Not Being Adjudicated Being Academic In Nature 22 In The Result The Appeal Filed By The Assessee Is Allowed Order Pronounced In The Open Court On This 26 Th Day Of December 2017 Sd R K Panda Accountant Member Dated 26 12 2017 Sujeet Copy Of Order To 1 The Appellant 2 The Respondent 3 The Cit 4 The Cit A 5 The Dr I T A T New Delhi By Order True Copy Assistant Registrar Itat New Delhi