TaxTMI 
TaxTMI 
2024 (10) TMI 302
X X X X Extracts X X X X
X X X X Extracts X X X X
....aw, the Id. CIT(A)/NFAC was justified in deleting the addition of Rs. 21,57,000/- made by the AO on account of cash deposit in savings bank account of assessee as unexplained investment u/s - 69 of the IT Act, 1961? 2. Whether on the facts and in the circumstances of the case and in law, the Id. CIT(A) was justified in deleting the addition made by AO of Rs.2,41,86,217/-being interest on securities as unexplained investment u/s - 69 of the Income Tax Act, 1961? 3. Whether on the facts and in the circumstances of the case the Id. CIT(A) was justified in directing the AO to recomputed total income by calculating the business income at the rate of 5 % of total sales of appellant in liquor b business of Rs. 7,13,53,669/-? 4. Any other ground which may be adduced at the time of hearing. Grounds of Cross Objections: 1. The Ld. ACIT observed in his Assessment Order dated 10th December, 2018 reading as under:- "As per information available with the department, the assessee had made cash deposits amounting to Rs.21,57,000/- in Punjab & Sind Bank savings bank account and received interest on securities amounting to Rs.2,14,86,217/- and TDS was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... view in the absence of any order of transfer of the case by the competent authority in exercise of jurisdiction u/s.127, assessment proceedings initiated u/s.147 by ITO1(3), Raipur and reassessment concluded by ACIT without issuing any fresh notice u/s.148 is without jurisdiction more so when there is absence of an order u/s.127. 6. The Ld. CIT(A) erred in directing the Ld. A.O. to re-compute the total income at five percent of the total sales based on Hon'ble Andhra Pradesh High Court judgement in the case of CIT vs Mekala Bal Reddy instead of applying judgements of the same locality and the parties where the assessee is residing. The Hon'ble Jurisdictional Raipur Tribunal in the case of Smt. Leela Bal Yadav and Shri. Vednarayan Patel - ITA No.224/BLPR/2011 & No.225/BLPR/2011 respectively residing in the same locality where the assessee is residing had directed the A.O.to recompute the business income, on identical facts, at two percent of the total sales as against five percent levied by Ld. CIT(A). The Appellant craves leave to add, to amend, alter or vary the Grounds of Cross Objections either before or at the time of hearing of the Appeal. 3. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the appeal of the assessee accordingly, partly allowed. 5. Aggrieved by the aforesaid order of Ld. CIT(A) on account of relief given to the assessee, department has carried this matter before us in the present appeal which is cross objected by the assessee. Departments appeal and cross objection of the assessee is under adjudication in the present order. 6. At the outset, Ld. Authorized Representative, Shri N. M. Porwal, Adv. (in short "Ld. AR"), had submitted that there are certain legal issues involved in the present appeal, and therefore, he requested to first adjudicate the legal issues raised by the assessee in her cross objections filed against the appeal of the department. Such request of the Ld AR has been acceded to. 7. The legal conflicts assailed by the Ld. AR challenging the validity of the jurisdiction assumed by the Ld. AO i.e. ACIT-1(1)., who had culminated the assessment proceedings by passing the order u/s 147 of the Act, inter alia have following twofold contentions: (i) that the notice u/s 148 of the Act was issued to the assessee after the stipulated time period, therefore, the consequential assessment framed by the Ld. AO could not be sustaine....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he facts and in the circumstances of the case, the Ld. ACIT erred in issuing reassessment notice u/s. 148 just to examine/verify the above available information with the ITO. The A.O. has reason to suspect and not reason to believe that income chargeable to tax has escaped assessment and, therefore, the assumption of jurisdiction by Ld. A.O. is invalid and, as such, action u/s.148 is not sustainable and has to be quashed. 4th GROUND OF CROSS OBJECTION The Ld. A.O. while making additions u/s. 147/148 had only 'reason to suspect' and not 'reason to believe'. There was no reason between material and Revenue's belief on income escapement, The assessment Order shows that the A.O. was not aware of even the nature of transaction. There is no reference to how A.O. had, at that juncture, formed a view that interest on securities of Rs. 2,14,86,217/- and amount deposited in bank count of Rs.21,57,000/- escaped assessment, Therefore, it has to be held that A.O. proceeded in a mechanical manner as had based his decision to reopen the assessment on available formation and there was absence of Independent application of mind by the A.O. Both th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1.3 The Ld.ACIT-1(1), Bhilai observed in his assessment order dated 10th December, 2018 reading as under:- "As per information available with the department, the assessee had made cash deposits amounting to in Punjab & Sind Bank savings bank account and received interest on securities amounting to Rs.2,14,86,217/- and TDS was also made on it at during E Y, 2010-11. For examining the above issues, proceedings were initiated u/s,147 of the Act and notice u/s 148 was issued on 26.03-2018 by ITO-1(3), Raipur. Besides, the Ld. ACIT has also confirmed, to this effect, in his Assessment Order on page-I -e para-2, reading as under:- "Under these circumstances and considering the limitation involved, there is no other alternative left with the undersigned except to complete the assessment ex- parte u/s,144 of the Act as per the material available on record. As per information available with the Department, the assessee had made cash deposits amounting to Rs.21,57,000/- in Punjab & Sind Bank Savings Bank A/c and received interest on securities amounting to Rs.2,14,86,217/- and TDS during FY 2010-11, For examining the above issues, proceedings were initiated u/s.147....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mber, 2018 mentioning therein as 'final opportunity' through an inspector after affixing the same at the last-known-address of the assessee on 23rd November, 2018, which was beyond the limitation period of six years after the end of A. Y. 2011-12. 1.3 Thus, the assessee never participated in the assessment proceedings during the period when The ITO1(3), Raipur/ACIT-1(1), Bhilai acted as assessee rs assessing officers from 26th March, 2018 to the date of passing of assessment order on 10th December, 2018. Since the assessee never participated in the assessment proceedings and there is no service of notice u/s.148, order passed by the ACIT- I(I), Bhilai dated 10th December, 2018 is invalid and bad in law. 1.4 Therefore, Hon'ble Supreme judgement in the case of DCIT(Exemptions) vs Kalinga Institute of Industrial Technology - 454 ITR 582 dated 1st May, 2023 is not applicable to the facts of the assessee's case, reading as under:- "INCOME TAX : Where High Court set aside notice issued under section 143(2) in case of assessee on ground that jurisdictional officer had not adjudicated upon returns as jurisdiction had been changed after returns were fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n(4) of that section to exercise or perform al/ or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act." 2.3 In this case, there is no transfer order u/s.127 from ITO-1(3), Raipur to ITO-1(2) Bhilai. ITO-1(2), Bhilai was divested of his jurisdiction on 12th September, 2018 vide PCIT-2, Raipur Order dated 12th September, 2018 and jurisdiction was vested with ACIT-I(I), Bhilai on the same date, who finally exercised his jurisdiction by passing the assessment order dated 10th December, 2018. 2.4 On perusal of Section-2(7A) of the Income-tax Act, 1961 which gives definition of "Assessing Officer", assessing officer is the one who is vested with the relevant jurisdiction on a particular date and not the one who is divested of his jurisdiction. In this case, The ITO-1(3), Raipur was vested with the jurisdiction upto 26th March, 2018 when he issued notice u/s.148. There is no Transfer Order u/sg 127 from ITO-1(3) Raipur to ITO-1(2), Bhilai Thereafter, jurisdiction was vested with ACIT-I(I), Bhilai from 12th September, 2018 which continued upto the date of passing the assessment order i.e. 10th December, 2018, 2.5 The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....................................................................................................... ............................................................................................................... .................................Explanation 4. -For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the I St day of April, 2012. " From the discussion, it may be seen that the words used in section-147 of the Act are "The AO" and which clearly means a particular officer who has the jurisdiction, over the case of a particular assessee It is not the case that the statute has mandated every A.O. to exercise jurisdiction, as per his own sweet will. GROUND NO.6 OF CROSS OBJECTION: The Ld. CIT(A) erred in directing the Ld. A.O. to re-compute the total income at five percent of the total sales based on Hon'ble Andhra Pradesh High Court judgement in the case of CIT vs Meka/a Bal Reddy instead of applying judgements of the same locality and the parties where the assessee is residing. The Hon&....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3(3), Raipur (C.G.) 2 Kusum Bai Sahu, Salehabhatha, Baghbahara, Mahasamund. 12-13 6.83 10.16 1.48% ITO, ward, Mahasamund. 3 Sevak Ram, Khursiparr Mahasamund 12-13 17.68 23.27 1.35% ITO-3(3), Raipur (C.G.) 4 Aaditya Banerjee, Rajeev Nagar, Rai urg 13-14 21.37 31.80 1.48% DCIT-2(1), Raipur (C,G.) 5 Aaditya Tiwari, Raja Talab, Raipur 12-13 7.75 10.05 1.29% ITO, Kanker, Camp at Raipur It is, therefore, the average rate of net profit of all these five assessees who belongs to the same locality and almost same period may be applied in the case of the assessee, Smt. Pankojani Walter. Thanking You, Yours Faithfully (N. M. PORWAL) 12. Based on written submissions, it was the prayer of Ld. AR that the department had failed to substantiate that the reassessment order passed u/s 144 r.w.s. 147 dated 10.12.2018 was a lawful order, as the Ld AO i.e. ACIT- 1(1), Bhilai was lacking valid assumption of jurisdiction while passing the assessment order, thus such order itself is at nullity in the eyes of law, therefore, the same deserves to quash and accordingly the order of Ld. CIT(A) passed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e for reopening u/s 148 dated 26.03.2018 was issued by ITO-1(3). The fact emanating from assessment order asserts that the case was transferred from ITO-1(3) (originator of reopening by issue of notice u/s 148) to the ACIT-1(1), Bhilai (who finally had completed the assessment), whereas the order of transfer u/s 127(1) dated was 12.09.2018 issue by Ld. PCIT-2, Raipur was for transfer of the assessee's case from ITO W 1(2), Bhilai to ACIT-1(1), Bhilai (entry No 74). Now the question arises as to how the jurisdiction has been transferred from ITO,W-1(3) to ITO -1(2), which has further been transferred to ACIT 1(1). There was defense by the revenue against, the allegation of the Ld. AR that even after checking of the assessment record during the hearing before the tribunal no transfer order from ITO-1(3) to ITO-1(2) was found. Such fact strengthens the contentions of the Ld AR that ITO-1(3), Raipur, who had initiated the reassessment issue notice/s 148 dated 26.03.2018 have never transfer the case to ITO-1(2), Bhilai or no reference or nexus could be brought on record by the revenue regarding transfer of case ITO-1(3) to ACIT,1(1), Bhilai. In such situation, the transfer order u/s 127....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the Ld. ACIT-1(1) within stipulated time as mandated by the Law, therefore, he was devoid of valid assumption of jurisdiction to frame the assessment in the present case u/s 144 r.w.s. 147 of the Act, thus, in terms of aforesaid observations, the assessment framed by Ld. ACIT, Circle- 1(1), dehors valid assumption of jurisdiction is liable to be quashed, thus, we direct to do so. 18. As we have quashed the assessment framed by the Ld. ACIT, Circle-1(1) framed u/s 144 r.w.s. 147 of the Act dated 10.12.2018 for want of valid assumption of jurisdiction, therefore, we refrain from adverting to and to dealing with the other grounds of appeal raised before us by the assessee, challenging the additions / disallowances made by Ld. AO and to the extent sustained by the Ld. CIT(A), which therefore are left open. 19. Resultantly, appeal of the department in ITA No. 379/RPR/2023 is dismissed and CO No. 01/RPR/2024 of the assessee is allowed in terms of our aforesaid observations. Order pronounced in the open court on 04/07/2024. ============= Document 1 Govt. of India Ministry of Finance :Deptt. Of Revenue OFFICE OF THE JT. COMMISSIONER OF INCOME TAX, ITAT B&C Wing, 5t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Raipur on 26.03.2018. As per the records, it found that the notice u/s 148 was send through Registered post at the address of the appellant available on record.(copy enclosed). Also perusal of the record i.e.envelope received back ,reveals that the envelope was duly served upon the assessee, however the assessee refused to take/receive the notice (envelope) as is evident from the comments 2. Regarding the issue that the re-assessment proceedings was completed by the AO(ACIT-1(1),Bhilai on 10.12.2018 without jurisdiction order u/s 127 of the Act or in the absence of any order of transfer and that the order itself needs to be quashed, is totally baseless and without verification of the facts. In this case an order u/s 127(1) of the Act was passed by the competant authority i.e. Pr.CIT-2,Raipur on 12.09.2018 thereby transferring the case from ITO- 1(3), Ralpur to ACIT-1(1), Bhilai.A copy of the same is enclosed herewith for ready reference. 3. Regarding the additions of Rs.2,36,43,217/-(Rs.21,57,000/- as cash deposits and Rs.2,14,86,217/- as interest on securities received) by the AO,the matter was considered by the Ld.CIT(A) vide order NOC....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ALOD 28 , Chhattisgen மாஙà¯à®•à®¾à®¯à¯ 1(3), (15) शà¥à¤°à¤µà¤²à¤¿à¤¯ 3. कारी वारà¥à¤¡ 1 (3) पà¥à¤° (छ.व. n9 APR 2019 | किया हसà¥à¤¤à¤¾à¤•à¥à¤·à¤° 750 31-+-2 1374 Notice 4/5 148 ACKNOWLEDGEMENT 1714-11-12 Received a Registered Letter/Post Card / Packet Parcel No. ABBPW50972D Pankojani walter Addressed to Name. Balod Durg Date Of Delivery 20 Signature Of Addressee INDIA €25,00 P850520 Document 4 117 छाया संयà¥à¤•à¥à¤¤ आयकर आयà¥à¤•à¥à¤¤ ! परिकà¥à¤·à¥‡à¤¤à¥à¤°-1 मिलाई 18 SEP 2018 Document 5 Government of India Ministry of Finance: Department of Revenue Office of the Income Tax Officer-1(3), AayakarBhawan, New Civic Center, Bhilai, Distt.Durg (Chhattisgarh) e-mail :[email protected] F.No.:ITO-1(3)/BHI/ITAT/PW/Report/20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tal sales i.e. 5% of Rs. 7,13,53,659/-. As per the cirection of .d. CIT(A)in the above mentioned order, the income of the appellant was re-computed. 4. Form for recording the reasons along with escaped income for taking action u/s 148 of the Act, signed by Specified Authority and Insight Information as found in records is also attached herewith for further necessary action. The form of recording reason Form and reasons for opening both are in the Fer itself. Submitted, En d.As above. Yours Faithfully (Indhu Abhilash) IncometaxOfficer-1(3), Bhilai) Document 6 Form for recording the reasons for initiating proceeding under section 148 of the Income Tax Act, 1961 and for obtaining the approval of the Joint Commissioner of Income Tax/ Principal Commissioner of Income Tax 1. Name and address of the assessee 2. PAN 3. Status 4. Assessment year in respect of which it is proposed to issue notice u/s 148. PANKOJANI WALTER, ADARSH CHOWK, KUSUMKASA, BALOD ABBPW0972D Individual 2011-12 assessment. 5. District/circle/Range 6. The quantum of income which has escaped 7. 8. 9....