ITO, Kolar v. Sri M.P. Kumar, Gowribidanur

ITA 582/BANG/2009 | 2005-2006
Pronouncement Date: 12-02-2010 | Result: Allowed

Appeal Details

RSA Number 58221114 RSA 2009
Assessee PAN OFTHE1922A
Bench Bangalore
Appeal Number ITA 582/BANG/2009
Duration Of Justice 8 month(s) 3 day(s)
Appellant ITO, Kolar
Respondent Sri M.P. Kumar, Gowribidanur
Appeal Type Income Tax Appeal
Pronouncement Date 12-02-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 12-02-2010
Date Of Final Hearing 31-12-2009
Next Hearing Date 31-12-2009
Assessment Year 2005-2006
Appeal Filed On 08-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO.582/BANG/2009 ASSESSMENT YEAR : 2005-06 THE INCOME TAX OFFICER WARD-2 KOLAR. : APPELLANT VS. SHRI M.P. KUMAR NO.1 MAIN ROAD HOSUR GOWRIBIDANUR 561 208. : RESPONDENT APPELLANT BY : SMT. V.S. SREELEKHA RESPONDENT BY : SHRI R. CHANDRASHEKAR O R D E R PER GEORGE GEORGE K. JUDICIAL MEMBER THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF THE CIT(APPEALS) DATED 18.3.09 FOR THE A.Y. 2005-06. 2. THE SOLITARY ISSUE RAISED IN THIS APPEAL IS WHET HER THE CIT(APPEALS) IS JUSTIFIED IN NULLIFYING THE ASSESSMENT ORDER ON THE GROUND OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 3. THE FACTS IN BRIEF ARE AS FOLLOWS. BASED ON AI R INFORMATION THAT THE ASSESSEE HAD DEPOSITED A SUM OF RS.11 12 500/- IN H IS BANK ACCOUNT A ITA NO.582/BANG/09 PAGE 2 OF 5 NOTICE U/S. 142(1) OF THE ACT WAS ISSUED BY THE AO. SINCE THE ASSESSEE DID NOT RESPOND TO THE NOTICE THE AO ISSUED A LETTER D ATED 6.12.2007 INTIMATING THE PROPOSED LINES OF ASSESSMENT. THEREAFTER ASSES SEE FILED HIS RETURN OF INCOME ON 17.12.07 DECLARING AN INCOME OF RS.64 486 . NOTICES U/S. 143(2) AND 142(1) WERE ISSUED ON 17.12.07 AND SINCE THERE WAS NO RESPONSE TO THE SAME THE ASSESSMENT WAS COMPLETED U/S. 144 OF THE ACT BY BRINGING TO TAX THE AMOUNT OF RS.11 12 500/- CREDITED IN THE BA NK ACCOUNT UNDER THE HEAD INCOME FROM OTHER SOURCES. 4. ON APPEAL BEFORE THE CIT(APPEALS) IT WAS SUBMIT TED THAT THE ASSESSEE COULD NOT COMPLY WITH THE NOTICE U/S. 142( 1) FOR THE REASONS BEYOND HIS CONTROL. IT WAS SUBMITTED THAT ASSESSEE IS DOING BUSINESS IN AGRICULTURE PRODUCE AND SAME WERE PROCURED FROM THE FARMERS DIRECTLY AND SOLD IN THE OPEN MARKET. IT WAS SUBMITTED THAT SAL E PROCEEDS ARE DEPOSITED IN THE BANK AND PAYMENT TO THE FARMERS WERE MADE IN CASH BY WITHDRAWING FROM THE ABOVE BANK ACCOUNT. IT WAS FURTHER CONTEN DED THAT INCOME DECLARED IS BASED ON TURNOVER OF THE ASSESSEE @ 5% BY APPLYING THE PROVISIONS OF SECTION 44AF. THE OTHER CONTENTION O F THE ASSESSEE WAS THAT BANK ACCOUNT WHICH IS EXAMINED BY THE AO IS THE JO INT ACCOUNT OF THE ASSESSEE WITH SRI H.C. BASAVARAJU. THEREFORE IT WA S SUBMITTED THAT THE AMOUNTS DEPOSITED IN THE BANK SHOULD BE ASSESSED IN THE JOINT NAMES OF THE ASSESSEE AND SHRI H.C. BASAVARAJU. IT WAS ALSO SUBMITTED THAT THE ASSESSMENT WAS COMPLETED VIOLATING THE PRINCIPLES O F NATURAL JUSTICE. IT WAS CONTENDED THAT THE CASE WAS POSTED FOR HEARING ON 1 9.12.07 AND ASSESSMENT ORDER WAS PASSED ON 18.12.07. THE LD. C IT(APPEALS) FOR THE REASONS MENTIONED IN PARA 7 OF HIS ORDER ALLOWED TH E APPEAL OF THE ITA NO.582/BANG/09 PAGE 3 OF 5 ASSESSEE AND ANNULLED THE ASSESSMENT BY HOLDING THE RE IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THEREFORE THE ASS ESSMENT COMPLETED IS ARBITRARY UNLAWFUL AND UNJUSTIFIED. 5. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE RAISIN G THE FOLLOWING GROUNDS: 1. THE CIT(A) ERRED IN ALLOWING THE ASSESSEES AP PEAL ON THE GROUND THAT SUFFICIENT OPPORTUNITY WAS NOT AFFORDED TO THE ASSESSEE BEFORE COMPLETING THE ASSESSMENT U/S. 144 IS CONTRARY TO THE TRUTH SINCE INSPITE OF AFFORDING SEVERAL OPPOR TUNITIES BY ISSUE OF LETTERS AND SUMMONS TO THE ASSESSEE HE HAS FAIL ED TO RESPOND. 2. THE LD. CIT(A) ERRED IN ACCEPTING THE PARTICULAR S FILED BY THE ASSESSEE BEFORE THE CIT(A) WHICH WERE HITHERTO NOT PRODUCED BEFORE THE ASSESSING OFFICER. 3. THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.11 12 500/- WITHOUT PROPER VERIFICATION OF ANY D OCUMENTARY EVIDENCE/PARTICULARS OF THE BANK STATEMENT AND ALLO WED THE APPEAL MERELY ON THE WRITTEN SUBMISSIONS OF THE ASSESSEE B EFORE THE CIT(A). 6. THE LD. DR HAS FILED AN AFFIDAVIT OF THE ASSESSI NG OFFICER STATING THE ORDER OF ASSESSMENT U/S. 144 WAS PASSED ON 19.12.07 AND BY INADVERTENT MISTAKE THE DATE IS MENTIONED AS 18.12.07. SHE HAS ALSO STATED THAT IF THERE IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE THE ASSESSMENT CANNOT BE SET ASIDE AS NULL AND VOID AND OPPORTUNITY SHOULD B E PROVIDED TO THE ASSESSEE RATHER THAN SETTING ASIDE THE ASSESSMENT A S VOID AB INITIO. THE LD. AR ON THE OTHER HAND REITERATED THE SUBMISSIO NS MADE BEFORE THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE ARE OF THE FIRM VIEW THAT THE CIT(APPEA LS) IS NOT JUSTIFIED IN NULLIFYING THE ASSESSMENT AS VOID AB INITIO FOR THE REASON THERE IS A VIOLATION ITA NO.582/BANG/09 PAGE 4 OF 5 OF PRINCIPLES OF NATURAL JUSTICE. WE ARE OF THE VI EW WHEN ASSESSEE IS NOT PROVIDED WITH AN OPPORTUNITY OF BEING HEARD THE PR OCEEDINGS OUGHT TO CONTINUE FROM THE STAGE WHERE THE ILLEGALITY SUPERV ENED. THE HONBLE SUPREME COURT IN THE CASE OF GUDUTHUR BROS. V. ITO 40 ITR 298 WAS CONSIDERING A CASE WHERE PENALTY U/S. 28(1)(A) OF T HE 1922 ACT WAS LEVIED. IN THAT CASE PENALTY WAS IMPOSED WITHOUT GRANTING O F OPPORTUNITY OF BEING HEARD. THE HONBLE SUPREME COURT HELD AS FOLLOWS: HELD THAT AS THE APPELLATE ASSISTANT COMMISSIONER POINTED OUT ONLY TO AN ILLEGALITY WHICH VITIATED THE PROCEEDING S AFTER THEY WERE LAWFULLY INITIATED THE NOTICE ISSUED UNDER SU B SECTION 28(1)(A) DID NOT CEASE TO BE OPERATIVE AND IT WAS O PEN TO THE INCOME-TAX OFFICER TO TAKE UP THE MATTER AT THE POI NT AT WHICH THE ILLEGALITY SUPERVENED AND TO CORRECT HIS PROCEEDING S. THE NOTICE UNDER SECTION 28(1)(A) HAVING REMAINED STILL TO BE DISPOSED OF THE PROCEEDINGS STARTED AFTER THE ORDER PASSED BY T HE APPELLATE ASSISTANT COMMISSIONER COULD BE DESCRIBED AS DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS BECAUSE THE ACTION W OULD RELATE BACK TO THE TIME WHEN THE FIRST NOTICE WAS ISSUED. THE INCOME-TAX OFFICER HAD JURISDICTION TO CONTINUE THE PROCEEDING S FROM THE STAGE AT WHICH THE ILLEGALITY HAD OCCURRED. MORE OVER THE AO HAS FILED AN AFFIDAVIT STATING TH E CORRECT DATE OF PASSING THE ASSESSMENT ORDER U/S. 144 IS 19.12.07 AND NOT 1 8.12.07. NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW MENTIONING OF DATE O F ASSESSMENT ORDER AS 18.12.07 IS NOT AN INADVERTENT MISTAKE. IN THE LIG HT OF THE DICTUM LAID DOWN BY THE HONBLE SUPREME COURT CITED SUPRA EVEN ASSU MING THERE IS A VIOLATION OF PRINCIPLES OF NATURAL JUSTICE THE SAM E HAS TO BE CURED FROM THE POINT OF SUPERVENING ILLEGALITY. THEREFORE THE MA TTER IS RESTORED TO THE FILE OF THE AO FOR FRESH CONSIDERATION. THE AO SHALL CO NSIDER ALL THE MATERIALS PLACED BY THE ASSESSEE BEFORE FRESH ASSESSMENT ORDE RS ARE DRAWN UP BY HIM. ITA NO.582/BANG/09 PAGE 5 OF 5 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF FEBRUARY 2010. SD/- SD/- (A. MOHAN ALANKAMONY ) ( GEORGE GEORGE K. ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED THE 12 TH FEBRUARY 2010. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT BANGALO RE.