Case Law Details
Late Sh. Ravinder Mohan Kalia Vs DCIT (ITAT Chandigarh)
ITAT Chandigarh held that as additional evidence submitted are essential and critical for determination of issue under consideration, matter remanded back to ld. CIT(A).
Facts- The assessment in the case of the assessee was completed u/s. 147 r.w.s 144 of the Income Tax Act, 1961. In the assessment order so passed, the AO has brought to tax, a sum of Rs. 1,00,00,000/- as income from undisclosed sources u/s. 69 of the Act in absence of any supporting documents furnished by the assessee during the course of assessment proceedings.
Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A). The Ld. CIT(A) has dismissed the appeal of the assessee holding that the additional evidence submitted in the form of copy of sale deed, copy of Form 15CB/CA and Form 26AS were sent to the AO for verification and a remand report was called. However, the assessee has not availed the opportunity before the AO and has failed to provide certain additional documents as required by the AO to establish the genuineness of the transaction and in absence of the requisite documentation, it can be concluded that the assessee has not been able to provide these documents to justify the transaction and the additions made by the AO was confirmed. Against the said findings and the order of the CIT(A), the assessee is in appeal before us.
Conclusion- We find that the additional evidence submitted by the assessee especially given that the assessment was completed u/s 144 as well as additional documentation required by the AO are essential and critical for determination of issue under consideration. We therefore deem it appropriate that the matter is set-aside to the file of the ld CIT(A) to consider the additional evidences and decide the same as per law after providing reasonable opportunity to the assessee.
Both the parties have fairly submitted that even though the assessee has raised this ground of appeal before the ld CIT(A), there is no adjudication and finding recorded by the ld CIT(A). In view of the same and also given that on other grounds of appeal, we have set-aside the matter to the file of ld CIT(A), we deem it appropriate to set-aside this ground of appeal as well as to the file of the ld CIT(A) to decide the same as per law after providing reasonable opportunity to the assessee. The assessee shall be at liberty to raise the aforesaid contentions as so advised before the ld CIT(A) and thus, the contentions so raised have been left open and not examined by us.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
This is an appeal filed by the Assessee against the order of Learned Commissioner of Income Tax (Appeals)-43, New Delhi [in short the ‘Ld. CIT(A) ‘1 dated 13/07/2021 pertaining to assessment year 2011-12. The assessee has since expired on 04/09/2019 and legal heir, Mrs. Poonam Kalia has been brought on record and hence the present proceedings are in respect of Late Shri Ravinder Mohan Kalia through his legal heir, Mrs. Poonam Kalia.
2. At the outset, it is noted that there is delay in filing the present appeal by 36 days. After hearing both the parties and considering the material available on record, we find that there was reasonable cause in delayed filing of the present appeal by the assessee and the delay is hereby condoned and the appeal is admitted for adjudication.
3. Briefly the facts of the case are that the assessment in the case of the assessee was completed under section 147 r.w.s 144 of the Income Tax Act, 1961 (in short ‘the Act’) vide order dt. 14/12/2018. In the assessment order so passed, the AO has brought to tax, a sum of Rs. 1,00,00,000/- as income from undisclosed sources under section 69 of the Act in absence of any supporting documents furnished by the assessee during the course of assessment proceedings.
4. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A). The Ld. CIT(A) has dismissed the appeal of the assessee holding that the additional evidence submitted in the form of copy of sale deed, copy of Form 15CB/CA and Form 26AS were sent to the AO for verification and a remand report was called. However, the assessee has not availed the opportunity before the AO and has failed to provide certain additional documents as required by the AO to establish the genuineness of the transaction and in absence of the requisite documentation, it can be concluded that the assessee has not been able to provide these documents to justify the transaction and the additions made by the AO was confirmed. Against the said findings and the order of the CIT(A), the assessee is in appeal before us.
5. In the first ground of appeal, the assessee has assailed the order passed by the AO in absence of any service of notice under section 148 of the Act. It was submitted that the notice under section 148 was never received by the assessee as after the sale of the house on 22/06/2010, the assessee had no premises in India. It was further submitted that the overseas address of the assessee was available in the Form No. 1 5CA which was uploaded on the site of the Income Tax Department and even on the said address, there was no valid service of the notice. It was accordingly submitted that in absence of valid service of notice under section 148 of the Act, the whole of the proceedings are vitiated and bad in law and thus, deserve to be quashed.
6. Per contra, the Ld. DR submitted that notice u/s 148 have been issued at assessee’s last known Indian address at 2308, Sector 35C, Chandigarh as well as USA address at 5010, Brighton Lane Plan Field 1 L60586, USA and however there has been no compliance on the part of the assessee and therefore, the AO, left with no option, passed the order under section 144 r.w.s 147 of the Act.
7. We have heard the rival contentions and purused the material available on record. The ld DR has submitted that the notice has been issued at the assessee’s last known Indian and USA address. Where the assessee challenges the service of notice u/s 148, the onus is on the Revenue to demonstrate through appropriate documentation that the notice has been duly served on the We also find that the assessee has raised this ground before the ld CIT(A) as well, however, there is no adjudication and no finding recorded by the ld CIT(A). Therefore, in absence of findings of the ld CIT(A) and in absence of any material available on record basis which we can take an informed decision, we deem it appropriate to set-aside the said ground of appeal to the file of the ld CIT(A) to decide the same as per law and the ground is thus allowed for statistical purposes.
8. In ground no. 3 read with ground no. 6, the assessee has challenged the order passed by the AO without issuance of notice under section 143(2) of theAct. It was submitted that the assessee had originally filed his return of income on 16/06/2015 declaring total income of Rs. 105,650/-. Thereafter, in response to the notice issued under section 148 of the Act, the assessee has submitted the return of income on 16/05/2018 and the said return of income was also uploaded on the e-filing portal of the Department. It was submitted that the observation of the Revenue that no return of income in response to notice under section 148 has been filed is therefore factually incorrect and it was accordingly submitted that in absence of notice under section 143(2) of the Act, the entire proceedings u/s 147 are again vitiated and are bad in law. In support, reliance was placed on the decision of Hon’ble Supreme Court in case of ACIT and Another Vs. Hotel Blue Moon which was further reiterated by the Hon’ble Supreme Court in case of CIT Vs. Laxman Das Khandelwal in Civil Appeal Nos. 6261-6262 of 2019. Further reliance was placed on the Coordinate Chandigarh Benches decision in case of H.P. Singh and Ors. Vs. ITO (ITA No. 1163/Chd/2018).
9. Per contra, the Ld. DR drawn our reference to the assessment order and submitted that the AO has clearly mentioned that the assessee has not filed the return of income in response to notice u/s 148. It was further submitted that subsequently, the AO has also issued notices u/s 142(1) asking the assessee to file return of income and there has been non-compliance to said notices as Without prejudice, it was submitted that even where the claim of the assessee is accepted that the return has been filed by the assessee on 16/05/2018 in response to notice under section 148 of the Act, the said return was not filed within the stipulated period of one month as so required under section 148 of the Act and it was therefore a case of belated return and in such a scenario, the AO was not require to take cognizance of the said return and issue notice under section 143(2) of the Act. It was accordingly submitted that in the present case, there was no requirement to issuance of notice under section 143(2) of the Act and therefore merely basis the said fact, the assessment proceedings cannot be vitiated and in support, reliance was placed on the decision of Coordinate Delhi Benches in case of Rakesh Aggarwal Vs. ITO (in M.A. No. 249/Del/2020 arising out of ITA No. 2461/Del/2019 dt. 15/12/2020). Further, he relied on the order passed by the AO and the ld CIT(A).
10. In his rejoinder the ld AR submitted that there are decisions of the other Coordinate Jaipur Benches in case of M/s Bhaval Synthetics (India) Ltd. Vs. DCIT in ITA No. 1043/JP/2019 dt. 28/10/2020, Lucknow Benches in case of ITO Vs. M/s Shri Krishna Dutta Academy in ITA Nos. 565, 566 and 568/LKW/201 1 dt. 28/05/2013 and Ahmedabad Benches in case of Janak K. Kansara Vs. DCII [20181116 TFJ 415 (Ahmedabad) dt 28/03/208 wherein it has been consistently held that even where, there is a delay in filing the return of income in response to notice under section 148 of the Act, the AO is still required to issue notice under section 143(2) of the Act before he proceed further and conclude the assessment proceedings. It was accordingly submitted that even where the decisions cited by the Ld. Sr. DR is taken into consideration, there are other decisions which are in favour of the assessee, and therefore the view favourable to the assessee should be considered.
11. We have heard the rival contentions and purused the material available on record. the ld AR has submitted that in response to the notice issued under section 148 of the Act, the assessee has submitted the return of income on 16/05/2018 and the said return of income was also uploaded on the e-filing portal of the Department. Where the Revenue challenges the filing of return of income, the onus is on the assessee to demonstrate that the return of income has been duly filed which require uploading the return of income on the e-filing portal as well as verification thereof through either online or physical mode. Only where the return has been uploaded and duly verified, it can be said that the return of income has been filed with the department. In the instant case, though the assessee has submitted a copy of IIR V with e-filing acknowledgement number with date of filing as 16/05/2018, it is unclear whether after e-filing, the return of income has been duly verified by the assessee or not. Only where it is established that the assessee has duly filed the return of income in response to notice u/s 148 which is e-filed and verified in the mode and manner as prescribed, the question of issuance or non-issuance of notice u/s 143(2) arises for consideration and in absence thereof, it would be pre-mature to decide the necessity and legality of issuance of such notice. We also find that the assessee has raised this ground before the ld CII(A) as well, however, there is no adjudication and finding recorded by the ld CIT(A). Therefore, we deem it appropriate to set-aside the said ground of appeal to the file of the ld CIT(A) to decide the same as per law and the ground is thus allowed for statistical purposes.
12. In ground nos. 7 & 8, the assessee has challenged the observation of the CIT(A) that the assessee did not avail of opportunity during the remand proceedings. It was submitted that no notice was even served on the assessee by the AO to appear before him during the remand proceedings therefore the said findings so recorded by the Ld. CIT(A) is not factually correct. It was further submitted that even the remand report received by the Ld. CIT(A) has not been confronted to the assessee and therefore the assessee was prevented by sufficient cause and the dismissal of the appeal by the Ld. CIT(A) is therefore against the principal of natural justice.
13. Per contra, the ld DR submitted that the ld CIT(A) has called for the remand report from the AO in respect of certain additional evidences submitted by the assessee during the course of appellate proceedings. In order to verify the said additional evidences, the AO has required certain additional documentation from the assessee as per letter dated 9/11/2020 and since the assessee has failed to avail such opportunity, the ld CIT(A) had decided the matter without considering the additional evidence.
14.We have heard the rival contentions and purused the material available on record. It is noted that during the course of appellate proceedings, the assessee had moved an application for submitting additional evidence in form of copy of sale deed, copy of Form 15CB/CA and Form 26AS and these documents were then sent to the AO for verification and a remand report was called. The AO thereafter vide letter dated 9/11/2020 has sought certain additional documentation from the assessee in form of working of capital gains, copy of purchase deed and copy of bank statement with ICICI Bank. The ld AR has submitted that the assessee never received the said communication and even the remand report was not confronted to the assessee. We find that the additional evidence submitted by the assessee especially given that the assessment was completed u/s 144 as well as additional documentation required by the AO are essential and critical for determination of issue under consideration. We therefore deem it appropriate that the matter is set-aside to the file of the ld CIT(A) to consider the additional evidences and decide the same as per law after providing reasonable opportunity to the assessee.
15. In ground no. 2, 4 & 9, the assessee has challenged the reopening of assessment under section 148 of the Act and the mechanical grant of approval under section 151 of the Act. In this regard, our reference was drawn to the reasons recorded by the AO, it was submitted that the reasons for reopening of the assessment was that the assessee had made foreign remittance of Rs. 1,00,00,000/- to his own account during the Financial Year relevant to the impugned Assessment Year and the source of such remittance could not be verified, in view of the same, the income has escaped assessment. In this regard, it was submitted that the assessee was a Non Resident and an American Citizen and during the Financial Year relevant to the impugned Assessment Year, he had sold his House No. 2308, Sector 35-C, Chandigarh for a sale consideration of Rs. 1,30,00,000/- on 22/06/2010 and out of the sale proceeds, the assessee had purchased REC bonds of Rs. 32,00,000/- as provided under section 54EC of the Act and as such there was no capital gains liability during the year under consideration in respect of such transaction. It was further submitted that the assessee wanted to remit the amount of Rs. 1,00,00,000/- to his bank account in USA and for the purposes, he got certificate in Form No. 15CA and 15CB issued by the Chartered Accountant and the probable date of remittance was mentioned as 06/07/2010 and the source of such amount was clearly mentioned as long term capital gains on sale of property. However the assessee could not remit the amount due to some unavoidable reasons and there was thus no remittance during the year under consideration as wrongly mentioned by the AO and which had formed the basis of formation of belief that income in the hands of the assessee has escaped assessment. It was submitted that the reopening is simply based on information on the ITBA portal and without any further verification carried out by the AO from the assessee’s bank whose details were also clearly mentioned in Form No. 15CA and 15CB. In this regard, our reference was drawn to copy of the SBI bank pass book which clearly shows the receipts of sale consideration of Rs 1,30,00,000/-, purchase of REC bonds of Rs. 32,00,000/- and also a fact that no remittance has been made by the assessee during the year under consideration. It was accordingly submitted that there is no nexus between the information and the formation of belief that the income has escaped assessment and therefore the very issuance of notice under section 148 is bad in law. It was accordingly submitted that even the sanction granted by the Ld. PCIT before issuance of notice under section 148 is a mechanical approval without application of mind and without taking into consideration the relevant material on record. It was further submitted that even the Ld. CIT(A) has not appreciated the aforesaid facts in correct perspective and has dismissed the appeal of the assessee without any findings recorded by him.
16. Per contra, the ld DR supported the initiation of proceedings u/s 148 of the Act. It was submitted that the AO had credible and tangible material based on which he prima facie recorded the findings that the income has escaped assessment and thereafter, notice u/s 147 was issued after seeking requisite approval from the Competent authority. It was submitted that there is clear nexus between the material and formation of belief that the income has escaped assessment. Further, the ld DR fairly submitted that there are no findings recorded by the ld CIT(A) and the matter may be set-aside to the file of the ld CIT(A) to decide the same as per law.
17. We have heard the rival contentions and purused the material available on record. Both the parties have fairly submitted that even though the assessee has raised this ground of appeal before the ld CIT(A), there is no adjudication and finding recorded by the ld CIT(A). In view of the same and also given that on other grounds of appeal, we have set-aside the matter to the file of ld CIT(A), we deem it appropriate to set-aside this ground of appeal as well as to the file of the ld CIT(A) to decide the same as per law after providing reasonable opportunity to the assessee. The assessee shall be at liberty to raise the aforesaid contentions as so advised before the ld CIT(A) and thus, the contentions so raised have been left open and not examined by us.
18. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 09/02/2023.
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