Assistant Director of Income Tax, Bangalore v. C.R. Rammohan Raju, Bangalore

ITA 613/BANG/2010 | 2005-2006
Pronouncement Date: 28-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 61321114 RSA 2010
Assessee PAN ACZPR8713R
Bench Bangalore
Appeal Number ITA 613/BANG/2010
Duration Of Justice 8 month(s) 25 day(s)
Appellant Assistant Director of Income Tax, Bangalore
Respondent C.R. Rammohan Raju, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 28-01-2011
Date Of Final Hearing 23-11-2010
Next Hearing Date 23-11-2010
Assessment Year 2005-2006
Appeal Filed On 03-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO. 613/BANG/2010 ASSESSMENT YEAR : 2005 - 06 THE ASSISTANT DIRECTOR OF INCOME TAX CIRCLE 17(2) BANGALORE. : APP ELL ANT VS. SHRI C.R. RAMMOHAN RAJU NO.23 IST FLOOR 4 TH CROSS K.R. LAYOUT J.P. NAGAR 6 TH PHASE BANGALORE 560 078. : RESPONDENT C.O. NO.41/BANG/2010 ( IN ITA NO. 613/BANG/2010) ASSESSMENT YEAR : 20 05 - 06 SHRI C.R. RAMMOHAN RAJU NO.23 IST FLOOR 4 TH CROSS K.R. LAYOUT J.P. NAGAR 6 TH PHASE BANGALORE 560 078. : CROSS OBJECTOR VS. THE ASSISTANT DIRECTOR OF INCOME TAX CIRCLE 17(2) BANGALORE. : APPELLANT IN APPEAL ITA NO.613/B/10 & CO 41/B/10 PAGE 2 OF 8 REVENUE BY : SHRI PRABHAKAR REDDY ADDL.CIT(DR) ASSESSEE BY : SHRI V. SRINIVASAN C.A. O R D E R PER A. MOHAN ALANKAMONY ACCOUNTANT MEMBER THESE TWO APPEALS INSTITUTED (I) BY THE REVENUE AND (II) THE CROSS OBJECTION OF THE ASSESSEE - ARE DIRECTED AGAI NST THE ORDER OF THE CIT(A) - II BANGALORE IN ITA NO:72/DD 17(2)/CIT(A) - II/06 - 07 DATED 28.1.2010 IN THE CASE OF C. R. RAM MOHAN RAJU OF BANGALORE FOR THE ASSESSMENT YEAR 2005 - 06 ITA NO: 613/10 (BY THE REVENUE) : 2. THOUGH THE REVENUE HAS RAISED FIVE GROU NDS THE SUBSTANCE OF THE ISSUE WAS CONFINED TO A LONE ISSUE THAT THE CIT (A)OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSEE S STAND ON THE JURISDICTIONAL ISSUE WAS NOT A VALID ONE AND ON THE BASIS OF WHICH THE CIT (A) HAD ERRED IN ANNULLING THE ASSE SSMENT ITSELF. C.O NO: 41/10 (BY THE ASSESSEE) : 3. THE ASSESSEE IN HIS CROSS OBJECTION HAS RAISED FOUR GROUNDS OUT OF WHICH GROUND NOS: 1 AND 4 BEING GENERAL AND NO SPECIFIC ISSUES INVOLVED THEY HAVE BECOME NON - CONSEQUENTIAL. GROUND NO.3 IS NOT MAI NTAINABLE AS CHARGING OF INTEREST U/S 234A AND 234B OF THE ACT IS MANDATORY AND CONSEQUENTIAL IN NATURE. IN EFFECT THE LONE GROUND WHICH ITA NO.613/B/10 & CO 41/B/10 PAGE 3 OF 8 SURVIVED FOR ADJUDICATION IS THAT THE CIT (A) OUGHT TO HAVE HELD THAT THE ADDITION OF RS.63.32 LAKHS MADE BY THE AO FOR ALLEGED UNEXPLAINED INVESTMENT IN PROPERTY WAS UNJUSTIFIED. 4. AS THE ISSUES RAISED BY THE RIVAL PARTIES PERTAINING TO THE SAME ASSESSMENT YEAR BOTH THE APPEALS WERE HEARD CONSIDERED AND DISPOSED OFF FOR THE SAKE OF CONVENIENCE AND CLARITY IN TH IS COMMON ORDER. 5. BRIEFLY STATED AS PER ANNUAL INFORMATION RETURNS (AIR) DATA OF 2004 - 05 THE ASSESSEE HAD MADE INVESTMENT IN PURCHASE OF PROPERTY OF RS.55 LAKHS AND A DEPOSIT OF RS.13.32 LAKHS IN S.B. ACCOUNT IN STATE BANK OF MYSORE. ACCORDING TO THE AO SINCE THE ASSESSEE HAD NOT FURNISHED HIS RETURN OF INCOME AND ASSESSED TO TAX AND ARMED WITH THE NOTIFICATION OF THE CHIEF COMMISSIONER OF INCOME - TAX BANGALORE IN F.NO.CC/ACIT(T)I/4/JURDN/2007 - 08 DATED: 30.8.2007 THE ASSESSEE WAS SLAPPED WITH A NO TICE U/S 142(1) OF THE ACT DATED: 14.9.2007 REQUIRING HIM TO FURNISH A RETURN OF INCOME FOR THE AY 2005 - 06 BY 15.10.07. AS THERE WAS NO COMPLIANCE THE ASSESSEE WAS AGAIN GIVEN ONE MORE OPPORTUNITY VIDE COMMUNICATION DT.28.11.07 REQUIRING HIM TO FURNISH H IS OBJECTION IF ANY TO TREAT THE SAID TRANSACTION AS WELL AS THE BANK DEPOSIT AS UNEXPLAINED INVESTMENT . ACCORDING TO THE AO SINCE THERE WAS A STONY SILENCE ON THE PART OF THE ASSESSEE; THE ASSESSMENT IN QUESTION WAS CONCLUDED U/S 144 OF THE ACT IN BR INGING TO TAX THE INVESTMENT OF RS.68.32 LAKHS AS UNEXPLAINED INVESTMENT . 6. AGGRIEVED THE ASSESSEE TOOK UP THE ISSUE WITH THE CIT (A) FOR SOLACE. HOWEVER IT WAS PERTINENT TO MENTION HERE THAT IN SPITE OF FIXING THE ITA NO.613/B/10 & CO 41/B/10 PAGE 4 OF 8 HEARING AS MANY AS EIGHT TIMES AND THE HEARING NOTICES WERE DULY SERVED ON THE ASSESSEE THE ASSESSEE CHOSE NOT TO COMPLY WITH THE SUCH NOTICES SENT BY THE CIT(A) EXCEPT ON TWO OCCASIONS HIS AUTHORIZED REPRESENTATIVE SOUGHT ADJOURNMENTS OF THE HEARING. 6.1. ON THE BASIS OF MATERIALS AV AILABLE ON RECORD THE LD. CIT (A) WENT AHEAD IN ADJUDICATING THE ISSUES AS UNDER: (I) WITH REGARD TO VALIDITY OF ASSESSMENT: 4.1 IT IS SEEN THAT THE APPELLANT HAD FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005 - 06 ON 30.11.2005 VIDE ACKNOW LEDGEMENT BEARING NO.005835 ISSUED BY THE ITO WARD 4(3) BANGALORE WHEREIN HE HAD DECLARED HIS INCOME FROM BUSINESS AT RS.7 20 312/ - IN SUPPORT OF WHICH HE HAS FILED A COPY OF THE RETURN OF INCOME FILED IN FORM NO.2D (SARAL). THE DDIT (EXEMPTIONS) CIR CLE 17(2) BANGALORE CAME TO PASS THE ASSESSMENT ORDER ON THE STRENGTH OF THE NOTIFICATION MENTIONED ABOVE CONFERRING ON HIM CONCURRENT JURISDICTION TO MAKE THE ASSESSMENT IN THE APPELLANT S CASE. THE DDIT (EXEMPN.) C - 17(2) BANGALORE THEREFORE HAD JU RISDICTION TO MAKE THE ASSESSMENT IN THE APPELLANT S CASE .. (II) IN RESPECT OF COMPUTATION OF INCOME : 5.3. HOWEVER AT THE TIME OF APPEAL HEARING IT WAS FOUND THAT THE APPELLANT HAD ALREADY FILED HIS RETURN OF INCOME FOR THE AY UNDER CONSIDERATION O N 30.11.2005 SHOWING THE TAXABLE INCOME OF RS.7 20 312/ - . HIS PAN IS ACZPR 8713 R WHICH IS ALSO QUOTED IN THE RETURN OF INCOME. SINCE THE APPELLANT HAS ALREADY FILED HIS RETURN OF INCOME FOR THE AY UNDER CONSIDERATION WITH THE JURISDICTIONAL AO THE AO WHO HAS MADE THE ASSESSMENT UNDER APPEAL SHOULD HAVE TAKEN CARE TO ISSUE A NOTICE U/S 148 OF THE ACT IN STEAD OF ISSUING A NOTICE U/S 142(1) IN ORDER TO ASSUME JURISDICTION TO SCRUTINIZE AND PASS AN ASSESSMENT ORDER ACCORDINGLY. 5.4. ON THE FACTS AND IN THE CI RCUMSTANCES OF THE CASE IT IS HELD THAT THE AO HAD COMPLETED THE ASSESSMENT EX - PARTE U/S 144 WITHOUT VALID JURISDICTION. THEREFORE THE SAME IS ANNULLED .. 7. DURING THE COURSE OF HEARING BEFORE US IT WAS VEHEMENTLY ARGUED BY THE LD. D R THAT SINCE T HE ASSESSEE HAD NOT QUOTED THE CORRECT PAN AT THE TIME OF THE TRANSACTION AS REVEALED BY THE AIR AND THUS THE DEPARTMENT WAS NOT IN A POSITION TO TRACE THE FILE OF THE ASSESSEE OR TO LOCATE HIS JURISDICTIONAL AO. AS SUCH THE AO WAS LEFT WITH NO OPTION BUT TO ITA NO.613/B/10 & CO 41/B/10 PAGE 5 OF 8 ISSUE A NOTICE U/S 142(1) OF THE ACT. SINCE THERE WAS NO COMPLIANCE TO THE SAID NOTICE THE AO WAS WITHIN HIS REALM TO CONCLUDE THE ASSESSMENT U/S 144 OF THE ACT. HE HAD FURTHER CONTENDED THAT THE AO HAD JUDICIALLY COMPLIED WITH THE PROCEDURES AS PER LAW AND THEREFORE THE IMPUGNED ORDER OF THE AO REQUIRES TO BE SUSTAINED. 7.1. TO BUTTRESS HIS ARGUMENT THE LD. D R CAME UP WITH A PAPER BOOK CONTAINING 1 13 PAGES WHICH CONSIST OF AMONG OTHERS COPIES OF (I) NOTIFICATION OF CONCURRENT JURISDI CTION; (II) BOARD S INSTRUCTIONS ETC. 7.2. ON THE OTHER HAND THE LD. A R CAME UP WITH A SPIRITED ARGUMENT THAT THE ASSESSEE HAD DUTIFULLY FURNISHED HIS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR UNDER DISPUTE DISCLOSING THE INVESTMENTS MADE IN THE PURCHASE OF PROPERTY AND ALSO THE DEPOSITS MADE IN HIS BANK ACCOUNT. TAX ON THE COMPUTED INCOME WAS ALSO DULY PAID. THE ASSESSEE S RETURN WAS DULY PROCESSED U/S 143(1) OF THE ACT AND THEREFORE IT WAS ARGUED THAT THE REVENUE HAD NO CASE FOR ANY ADDI TION AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. TO DRIVE HOME HIS POINT THE LD. A R HAD FURNISHED A PAPER BOOK WHICH CONSISTS INTER ALIA COPIES OF (I) ASSESSMENT ORDER (II) RETURN OF INCOME ACCOMPANIED BY COMPUTATION OF INCOME BALANCE SHEET SCHE DULE FOR FIXED ASSETS ETC. 8. WE HAVE ATTENTIVELY CONSIDERED THE RIVAL SUBMISSIONS DILIGENTLY PERUSED THE RELEVANT RECORDS AS WELL THE DOCUMENTARY EVIDENCES ADVANCED BY EITHER PARTY TO SUPPORT THEIR CASE. 8.1. IT IS AN UNDISPUTED FACT THAT TWO ASSES SMENT ORDERS CANNOT BE PASSED IN THE CASE OF AN ASSESSEE FOR AN ASSESSMENT YEAR. IN THE CASE OF ITA NO.613/B/10 & CO 41/B/10 PAGE 6 OF 8 THE ASSESSEE THE AO HAD ASSUMED VALID JURISDICTION IN PURSUANCE OF THE NOTIFICATION OF THE CADRE CONTROLLING CCIT CITED SUPRA AND CONCLUDED THE ASSESSMENT PR OCEEDINGS IN A JUDICIOUS MANNER. THE AO WAS JUSTIFIED IN CONCLUDING THE ASSESSMENT U/S 144 OF THE ACT AS COULD BE SEEN FROM THE RECORDS THAT THE ASSESSEE WAS RATHER ADAMANT IN NOT PARTING WITH THE DETAILS AT HIS POSSESSION AT THAT RELEVANT TIME WITH REGA RD TO FURNISHING OF HIS RETURN OF INCOME WITH HIS JURISDICTIONAL AO AND ALSO NOT RESPONDING TO THE NOTICE WHICH WAS FOLLOWED BY A LETTER OF THE AO [THE DDIT(E)]. THE ASSESSEE HAD GROSSLY FAILED TO QUOTE HIS CORRECT PAN WHEN THE PROPERTY TRANSACTION TOOK PLACE AT THE SUB - REGISTRAR S OFFICE. THIS FAUX PAS ON THE PART OF THE ASSESSEE PREVENTED THE AO IN LOCATING THE FILE OF THE ASSESSEE AS WELL AS HIS JURISDICTIONAL ASSESSING OFFICER TO CROSS VERIFY AS TO WHETHER THE TRANSACTIONS EFFECTED BY THE ASSESSEE H AVE BEEN DULY DISCLOSED IN HIS RETURN OF INCOME WITH HIS JURISDICTIONAL AO ETC. 8.2. HOWEVER WE ARE OF THE CONSIDERED VIEW THAT WHEN THE ISSUE HAS COME TO THE KNOWLEDGE OF THE REVENUE THAT TWO DIFFERENT ASSESSING OFFICERS HAVE ASSUMED THE JURISDICTION OF AN ASSESSEE CONCURRENTLY CORRECTIVE STEPS SHOULD HAVE BEEN TAKEN TO PUT THE RECORD STRAIGHT. IN VIEW OF THE ABOVE WE FIND THAT THE LD. CIT (A) WAS FULLY JUSTIFIED IN ANNULLING THE IMPUGNED ORDER OF THE AO UNDER DISPUTE WITH A RIDER THAT THIS DOEST NOT ACT AS A BAR ON THE AO HAVING JURISDICTION OVER THE APPELLANT TO INITIATE PROCEEDINGS AS PER LAW AND BRING TO TAX THE INVESTMENT IF FOUND ASSESSABLE. 8.3. IN AN OVERALL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE AS ANALYZED IN THE PRE CEDING PARAGRAPHS WE ARE OF THE CONSIDERED ITA NO.613/B/10 & CO 41/B/10 PAGE 7 OF 8 VIEW THAT THERE WAS NO INFIRMITY IN THE FINDING OF THE LD. CIT (A) WHICH REQUIRES OUR INTERVENTION AT THIS STAGE. AS SUGGESTED BY THE LD. CIT (A) THE REVENUE IS AT LIBERTY TO DIRECT THE JURISDICTIONAL AO TO INI TIATE FURTHER PROCEEDINGS AS PER LAW TO EXAMINE AS TO WHETHER THE INVESTMENTS MADE BY THE ASSESSEE DURING THE PERIOD UNDER DISPUTE HAS BEEN INCLUDED IN HIS COMPUTATION OF INCOME WHICH WAS FURNISHED ON 30.11.2005 BEFORE THE ITO W 4 - (3) BANGALORE THE ASS ESSEE S JURISDICTIONAL AO AND TO TAKE APPROPRIATE ACTION IF SO WARRANTS. IT IS ORDERED ACCORDINGLY. 9. BEFORE PARTING WITH THE ISSUE WE WOULD LIKE RECORD OUR VIEW THAT - HAD THE ASSESSEE BEING A LAW ABIDING CITIZEN BEEN MAGNANIMOUS IN RESPONDING TO THE CLARIFICATION SOUGHT FOR BY THE REVENUE AT THE INITIAL STAGE ITSELF [NOTICE U/S 142(1) OF THE ACT DT: 15.10.2007] THIS SORDID AFFAIR W OULD NOT HAVE REACHED TO THIS LEVEL? 10. LET US NOW DEAL WITH THE GRIEVANCE OF THE ASSESSEE RAISED IN HIS CROSS OB JECTION. 10.1. THE ASSESSEE S SOLE OBJECTION WAS THAT THE LD. CIT (A) OUGHT TO HAVE HELD THAT THE ADDITION OF RS.63.32 LAKHS MADE BY THE AO IN RESPECT OF THE ALLEGED UNEXPLAINED INVESTMENT IN PROPERTY WAS UNJUSTIFIED. 10.2. AT THE OUT - SET WE WOUL D LIKE TO POINT OUT THAT THE LD. CIT (A) HAD SINCE ANNULLED THE ASSESSMENT ORDER MADE U/S 144 OF THE ACT; THE OBJECTION RAISED BY THE ASSESSEE BECOMES REDUNDANT WHICH REQUIRES NO FURTHER ADJUDICATION. IN A NUT - SHELL THE CROSS OBJECTION OF THE ASSESSEE HA S ITA NO.613/B/10 & CO 41/B/10 PAGE 8 OF 8 BECOME SUPERFLUOUS SINCE WE HAVE SUSTAINED THE FINDING OF THE LD. CIT (A) IN TOTO. 11. IN THE RESULT : (I) THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. (II) THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COUR T ON THIS 28 TH DAY OF JANUARY 2011 . SD/ - SD/ - ( SMT. P. MADHAVI DEVI ) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED THE 28 TH JANUARY 2011 . DS/ - COPY TO: 1. APPELLANT 2. RESPONDENT 3 . CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.