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Order passed under Sec 144 is void ab initio in the absence of service of notice as mention under sec 282 and penalty will not survive if the case restored in the AO file

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Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
ITA No. 3871/Mum/2008 filed by the assessee is directed against the order dated 8.2.2008 of the Commissioner of Income Tax (A)- XXII, Mumbai relating to Assessment Year 2004-05. ITA No. 87/Mum/2010 filed by the assessee is directed against the order dated 14.10.2009 of the Commissioner of Income Tax (A)- 33, Mumbai relating to Assessment Year 2003-04 confirming the penalty u/s 271(1)(c) of the Act. ITA No.88/Mum/2010 filed by the assessee is directed against the order dated 12.10.2009 of the Commissioner of Income Tax (A)- 33, Mumbai relating to Assessment Year 2003-04 in partly allowing the addition made by the A.O. ITA No. 89/Mum2010 filed by the assessee is directed against the order dated 12.10.2009 of the Commissioner of Income Tax (A)- 33, Mumbai relating to Assessment Year 2004-05 confirming the levy of penalty u/s 271(1)(c) of the Act. All these appeals were heard together and are being disposed of by this common order for the sake of convenience.

Citation :
Mrs. Sujata Rajendra Nikalje,L3/17 Vrindavan,Tilak Nagar,Chembur,Mumbai 400 071.(Appellant)Vs I.T.O. 22(2),Navi Mumbai. (Respondent)

IN THE INCOME TAX APPELLATE TRIBUNAL

MUMBAI ‘E’ BENCH

MUMBAI BENCHES, MUMBAI

BEFORE SHRI N.V. VASUDEVAN, J.M. AND SHRI R.K. PANDA, A.M.

ITA No. 87 & 88/Mum/2010

(Asst Year 2003-04)

ITA No. 3871/Mum/2008

(Asst Year 2004-05)

ITA No. 89/Mum/2010

(Asst Year 2004-05)

Mrs. Sujata Rajendra Nikalje,

L3/17 Vrindavan,

Tilak Nagar,

Chembur,

Mumbai 400 071.

(Appellant)

Vs

I.T.O. 22(2),

Navi Mumbai.

 (Respondent)

PAN NO. AAKPDN 2366D

Appellant by Shri Prakash Pandit

Respondent by Shri P.K.B. Menon

Date of hearing 7.12.2011

Date of pronouncement 14.12.11

ORDER

PER BENCH.

ITA No. 3871/Mum/2008 filed by the assessee is directed against the order dated 8.2.2008 of the Commissioner of Income Tax (A)- XXII, Mumbai relating to Assessment Year 2004-05. ITA No. 87/Mum/2010 filed by the assessee is directed against the order dated 14.10.2009 of the Commissioner of Income Tax (A)- 33, Mumbai relating to Assessment Year 2003-04 confirming the penalty u/s 271(1)(c) of the Act. ITA No.88/Mum/2010 filed by the assessee is directed against the order dated 12.10.2009 of the Commissioner of Income Tax (A)- 33, Mumbai relating to Assessment Year 2003-04 in partly allowing the addition made by the A.O. ITA No. 89/Mum2010 filed by the assessee is directed against the order dated 12.10.2009 of the Commissioner of Income Tax (A)- 33, Mumbai relating to Assessment Year 2004-05 confirming the levy of penalty u/s 271(1)(c) of the Act. All these appeals were heard together and are being disposed of by this common order for the sake of convenience.

2. ITA No. 3871/Mum/2008 was earlier dismissed by the Tribunal for non-appearance. Subsequently, the Tribunal vide M.A. 600/Mum/2009 order dated 21.1.2010 recalled its earlier order. Thus, ITA No. 3871/Mum/2008 is a recalled matter.

3. There is a delay of 20 days in filing of the appeal in ITA No. 3871/Mum/2008. The assessee has filed a condonation petition explaining the reasons for delay in filing of the appeal. After considering the reasons for delay in filing of this appeal and after hearing both the sides, the delay in filing of the appeal is condoned.

4. Facts of the case in brief are that the assessee filed her return of income on 26.3.2003 for A.Y. 2003-04 declaring total income of Rs. 3,23,700/-. Similarly, for A.Y. 2004-05, the assessee filed her return of income on 27.1.2009 declaring total income of Rs. 2,86,040/-. The A.O. in the order passed u/s 144 determined the income at Rs. 11,99,960/- for the A.Y. 2003-04. In the said order, the A.O. made addition of Rs. 2,75,310/- on account of income from house property and Rs. 6,00,953/- as unexplained cash credit u/s 68 of the Act. In appeal, the ld. CIT(A) directed the A.O. to compute the income from house property following the provisions of section 22 to 24 of the Act. However, he sustained the addition of Rs. 6,00,953/- added by the A.O. u/s 68 of the Act.

4.1 Similarly, for A.Y. 2004-05, the A.O. made an addition of Rs. 2,75,310/- on account of income from house property and Rs. 44 lacs on account of unexplained cash credit u/s 68 of the Act being gifts received by the assessee. In appeal, the ld. CIT(A) upheld the action of the A.O. in making the addition of Rs. 44 lacs u/s 68 of the Act. In absence of any further submission by the assessee, he also sustained the addition made by the A.O. on account of income from house property. Aggrieved with such order of the ld. CIT(A), the assessee is in appeal before us.

5. The ld. counsel for the assesse referring to the grounds of appeal for A.Y. 2003-04 and 2004-05 submitted that the order passed u/s 144 of the Act for A.Y. 2003-04 and u/s 143(3) for A.Y. 2004-05 are void ab initio in the absence of service of notice as contemplated by provisions of section 282 of the Act. He submitted that the assessee was arrested and was in custody during 26th December, 2005 till 17th September, 2007 due to which proper details could not be furnished before the A.O. who passed the order on 30th December, 2005 for A.Y. 2003-04 and on 22nd December, 2006 for A.Y. 2004-05. He submitted that although certain details were filed during the remand proceedings, due to depressed mental state of the assessee, she was not in a position to file sufficient details to substantiate her case. He submitted that the assessment orders are void ab initio since no notice u/s 143(2) was issued and served on the assessee within the stipulated time as prescribed under the Act. In his alternate contention, he submitted that the matter may be restored to the file of the A.O. with a direction to give one more opportunity to the assessee to substantiate with evidence to the satisfaction of the A.O. regarding income from house property and the gifts received.

6. The ld. D.R., on the other hand, produced the case records and submitted that somebody has received the notice on behalf of the assessee as per the signature in the notice issued u/s 143(2) for A.Y. 2003-04. Similarly, for A.Y. 2004-05, the records show that the notice has been issued by post. He, however, submitted that neither the postal receipt nor the acknowledgement is available for A.Y. 2004-05 for issue of such notice. He submitted that the assessee was given adequate opportunity of being heard during remand proceedings and the assessee was unable to produce sufficient details to justify the gifts received and the income from house property so declared. Therefore, the order of the ld. CIT(A) being in accordance with law should be upheld for both the years.

7. We have considered the rival arguments made by both the sides, pursued the orders of the Assessing Officer and the CIT(A) and the paper book filed on behalf of the assessee. After considering the arguments of the ld. counsel for the assessee and the alternate contention that the matter may be restored to the file of the A.O., we find force in the alternate contention of the assesee. Admittedly, the assessee was in custody from 25th December, 2005 till 17th September, 2007 during which the assessment for A.Y. 2003-04 and 2004-05 were framed. Although the assessee was given opportunity during remand proceedings, we find merit in the submission of the ld. counsel for the assessee that due to her depressed mental state of affairs for being behind bars for above 2 years, the assessee was not in a  position to substantiate her case and, therefore, one more opportunity may be given to the assessee. Considering the totality of the facts of the case and in the interests of justice, we deem it proper to restore the issues for both the assessment years to the file of the A.O. for denovo assessment. The A.O. shall give adequate opportunity of being heard to the assessee and decide the issue as per law. We hold and direct accordingly. The grounds raised by the assessee for both the assessment years are accordingly allowed for statistical purposes.

ITA 87/Mum/2010 for A.Y. 2003-04 & ITA 89/Mum/2010 for A.Y. 2004-05 (By assessee).

8. The assessee in both the appeals has challenged the order of the ld. CIT(A) in confirming the levy of penalty u/s 271(1)(c) for A.Y. 2003-04 and 2004-05 respectively. Since the quantum appeals have been restored to the file of the A.O. for fresh adjudication, therefore, the penalty levied u/s 271(1)(c) for both the assessment years, which has been upheld by the ld. CIT(A), does not survive. However, the A.O. is at liberty to initiate penalty proceedings as per law if required after completion of the assessments for A.Y. 2003-04 & 2004-05 respectively. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical

purpose.

9. In the result, all the appeals filed by the assessee are allowed for statistical purpose.

Order pronounced in the open court on 14.12.2011.

                           Sd                                                                           Sd/-

            ( N.V. VASUDEVAN )                                              ( R K PANDA )

                  Judicial Member                                                 Accountant Member

Place: Mumbai : Dated: 14.12.2011

RK

Copy forwarded to:

1 Appellant

2 Respondent

3 CIT, Concerned, Mumbai

4 CIT(A) - Concerned, Mumbai

5 DR Bench E

6 Master File

/TRUE COPY/

                                                                    BY ORDER

Dy /AR, ITAT, Mumbai

 

Ayush
on 28 December 2011
Published in Income Tax
Views : 3301
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