SUNIL KUMAR PATHAK,REWA vs. INCOME TAX OFFICER WARD -1, , REWA

O R D E R

PER PAVAN KUMAR GADALE JM:

1. On the facts and circumstances LD CIT(A) erred in not providing copy of remand report of AO so as to submit re-joinder and hence the order of CIT(A) has been passed was without giving fair opportunity to represent the case and hence is bad in law in lieu of SONA BUILDERS vs. CIT (supra), Rajesh K kaurav

Sunil Kumar Pathak, Jabalpur. - 2 - vs. ITO (ITAT MUMMBAI) MUMMBAI) and BR ENGINEERING CO VS. ACIT (ITAT) and should be quashed or alternatively be restored to CIT (A) on account of natural justice.

2. On the facts and circumstances of the case Id CIT (A) erred in not considering notice under section 148 issued on 22/3/2018 as defective and resulting assessment order as bad in law on reason that AO has recorded reason for reopening in the name of Shri SUNIL KUMAR PATHAK legal hier of late Ram Karan Pathak while has issued notice under section 148 in the name of Sunil kumar pathak only. Further CIT(A) has also passed appeal order in the name of SUNIL PATHAK ONLY and not in the name of SUNIL PATHAK legal Hier of the of late Ram Karan Pathak.

3. On the facts and circumstancesof the case Id CIT (A) erred in not considering the ground of assessee viz AO was not justified in re-opening the assessment of assessee under section 147 and deciding same on merits and submissions.

5.WITH OUT GROUND TO to 4 NUMBER 1 further appeal on ground that on the facts and circumstances of the case ld CIT (A) erred in not considering the fact that assessee (late Ram karan PAthak) was head of family and had huge agricultural land bank in his and his familymember names and this landsbeingcultivated forefathers and were registered in since

Sunil Kumar Pathak, Jabalpur. - 3 - duly government records (including crops name and land size). CIT (A) further erred in not considering the genuine fact that (late Ram karan Pathak) was authorized by his family members to keep all earrings( proof submitted to CIT-A) and making expenses in relevance (proof submitted CIT-A) and to keep net profit/savings after meeting households family expenses. This yearly savings from agriculture activity was saved over years and was more than sufficient to make Investment of Rs 2.50,10,000/- in impugned house. Henceforth addition made of Rs. 2,50,10,000/- towards investment in impugned house. may kindly be deleted.

6. WITHOUT PREJUDICETO GROUND NUMBER 1 to 4 further appeal on ground that on the facts and circumstances of the case ld CIT (A) erred in not considering the fact that assessee (late Ram karan Pathak) legal heir has duly submitted to CIT (A) all bills for agricultural produce saleincluding that to government society and to local traders and expenses proof besides informing him that agricultural lands were being situated at remote and hence agriculture activity has been carried on traditional basis. Accordingly addition of Rs 2.50,10,000/- as investment in impugned house should be deleted as source to acquire same was duly explained to CIT(A) with proofs.

7. WITHOUT PREJUDICE GROUND NUMBER 1 ΤΟ 4 to further appeal on ground that on the facts and circumstances of the case Id CIT (A) erred in confirming AO order on incorrect facts and assumptions viz. a) that assessee has not filled return showing agricultural income without considering the fact and law that If the income earned in the financial is only from agricultural, year then it is not required to file income tax return b) that assessee has not given breakup of the yearly expenses in come from agricultural activity while the fact was that same was duly given in reply filled with CIT(A) along with profit and hence the CIT (A) order may kindly be quashed or addition of Rs

Sunil Kumar Pathak, Jabalpur. - 4 - 2.50,10,000/- as investment in impugned house may kindly be deleted. 8.WITHOUT GROUND PREJUDICE NUMBER 1 ΤΟ to 4 further appeal on ground that on the facts and circumstances of the case Id CIT (A) erred in not deciding the ground number 1 to 7 (in para 5.5.5.6.and5.7 of CIT (A) order) on grounds which were raised in appeal and simply rejected same by making incorrect and general reasons and hence the CIT (A) order be quashed and addition of Rs 2.50,10,000/- as investment in impugned house may kindly be deleted. 9.The appellant craves leave to add or amend any ground of theappeal.

Sunil Kumar Pathak, Jabalpur. - 5 - Ancestral Agriculture Lands along with the family members and was used for Agriculture cultivation purpose. In the course of hearing proceedings, the AO has called for the sources of purchase of property at Bhopal and submit the evidences in support of agriculture income. Since the assessee does not have PAN and the assessee has purchased in auction, the property from Bank of Baroda which was seized by the bank. The assessee has expired and his son Shri Sunil Pathak has filed the affidavit mentioning the facts of death and purchase of the property by his father Late Shri Ram Karan Pathak and the said property was purchased on behalf of family members of the assessee. whereas the A.O has issued notice u/sec 142(1) of the Act to explain the sources of investment in the property, along with the copy of income tax return, computation of income, profit and loss account, audit report and balance sheet, bank statement. Since there was no compliance, the AO has invoked the provisions of best judgment assesseement u/sec 144 of the Act.

Sunil Kumar Pathak, Jabalpur. - 7 - of the purchase of residential property and assessed the total income of Rs 2,50,10,000/- and passed the order u/sec 144 of the Act dated 03.12.2018.

4. Aggrieved by the assesseement order, the assessee has filed an appeal before the CIT(A). The assessee has challenged the validity of reassessment proceedings and the additions by the A.O. Whereas the CIT(A) has considered the grounds of appeal, submissions of the assessee, findings of the AO and remand report and has confirmed the validity of reassessment proceedings and sustained the addition of the Assesseing officer and dismissed the assessee appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal with the Hon’ble Tribunal.

5. At the time of hearing, the Ld. AR submitted that the CIT(A) has erred in overlooking the facts that the Assessing officer has recorded the reasons for reopening in the name of Shri SunilKumar Pathak legal heir of late Ram karan pathak(deceased assessee) and whereas the notice u/sec148 of the Act was issued in the name of Shri Sunil Kimar Pathak only, thus the notice was issued in incorrect name and hence the notice is defective and not a curable defect and reassessment proceedings are bad in law and Sunil Kumar Pathak, Jabalpur. - 8 - liabile to be annulled and relied on the judicial decisions. Further there was full disclosure of information, details and supporting evidences substantiating the sources of acquisition of residential property was filed in the assesseement proceedings. The CIT(A) has erred in sustaining the additions of AO overlooking the material facts and information filed in the course of hearing proceedings and the CIT(A) has erred in not providing the copy of remand report nor the opportunity to the assessee to file the reply to the A.O remand report. Further the Ld.AR emphasized that the deceased assesee was eldest of all the family members and was an agriculturalist and doing combined agricultural activity on behalf of the joint family and the family owned 385.406 Hectors of agricultural lands and was taking care of all the financial transactions and agricultural operations. The Ld. AR substantiated the submissions with supporting material evidences of land holdings, khasara, evidence of agriculture income earned and expenses incurred and other material details in voluminous paper book (Volume 1 to 3) and judicial decisions and prayed for allowing the appeal.

Sunil Kumar Pathak, Jabalpur. - 9 -

Sunil Kumar Pathak, Jabalpur. - 10 -

Sunil Kumar Pathak, Jabalpur. - 11 -

Sunil Kumar Pathak, Jabalpur. - 12 -

“5.4 I have gone through the grounds of appeal

, statement of facts and written submissions filed by the appellant. 5.5 Grounds of Appeal No.1 & 2 are on the reopening of the assessment. The Assessing Officer has got information and on that the Assessing Officer has reasons to believe. Reasons were duly recorded by the Assessing Officer and hence both these grounds are dismissed. 5.6 Grounds of Appeal No.3 & 4 are on the issue whether the assessment can be done in the hands of Shri Sunil Pathak. Since Shri Ram Karan Pathak had died, Mr. Sunil Pathak is his son and hence as legal heir the assessment was done in his hands. Therefore, there is no infirmity in it and hence these two grounds are dismissed.”

10. The Ld. AR submitted that the CIT(A) erred in sustaining the additions without providing proper opportunity and overlooking the facts. The contentions of the Ld. AR that the AO and the CIT(A) has not considered the material evidences. The assessee has filed the all the details before the lower authorities and the CIT(A) has not considered the fact that were supported with the Sunil Kumar Pathak, Jabalpur. - 13 - documentary evidences. The Ld.AR also emphasized that the deceased assesee was eldest of all the family members and was an agriculturalist and doing combined agricultural activity on behalf of the joint family and the family owned 385.406 hectors of agricultural lands and was taking care of all the financial transactions and agricultural operations. The Ld. AR substantiated the submissions with supporting material evidences of land holdings, khasara, evidence of agriculture income earned and expenses incurred and other material details documentary evidences were filed before the lower authorities. We find the Assessing Officer has invoked the provisions of Section 148 of the Act by recording the reasons in legal heir name “Sri Sunil Pathak legal heir of Late Ram Karan Pathak” and issued notice in the name as “ Sunil Kumar Pathak Son of Ram karan Pathak” which is not disputed by the revenue. We find Hon'ble High court of Madras relied on the decision of Hon'ble Supreme Court in the case of Narayana Chetty Vs ITO (35 ITR 388) and has observed as under:

"The notice prescribed by Section 34 of the Indian Income Tax Act, 1992, for the purpose of initiating re- assessment proceedings is not a mere procedural requirement, that the service of the notice on the is a condition precedent to the Sunil Kumar Pathak, Jabalpur. - 14 - validity of any re-assessment made under this Section and that if no notice is issued or if the notice issued is shown to be invalid, then the proceedings taken by the Assessing Officer without a notice or in pursuance of an invalid notice would be illegal and void".

“24. Similarly, when the proceeding (issue of notice in this case) is in substance and effect in conformity with or according to the intent and purpose of the Act, the action of the AO cannot be faulted with. Section 292B meant to save only those notices in which there is in advertent error. saves

Sunil Kumar Pathak, Jabalpur. - 15 - those notices which in substance and effect issued according to the interest and purpose of the Act. In present case, there is an in advertent error in the notice issued by the AO reflecting only the PAN column of the notice mentions PAN of the "HUF" instead of the 'individual' whereas the body of the notice and the address shows that the notice is clearly meant for the assessee himself. The provisions of Section 2928 have been further clarified the Circular No. 179 of CBDT dated 30.09.1975 that this provision has been made to provide against purely technical objects without substance coming in the way of validity of the assessment proceedings.”

"under the scheme of the Income-tax Act the "Individual" and the 'Hindu undivided family' are treated as separate units of assessment and if a notice under s. 34 of the Act is wrongly issued to the assessee in the status of an 'individual' and not in the correct status of 'Hindu undivided family', the notice is illegal and ultra-vires and without jurisdiction. [391F-G] The Income-tax Officer was therefore justified in ignoring the first notice under s. 34 of the Act and the return filed by the assessee in response to that notice and consequently the assessment made by the Income-tax Officer pursuant to the second notice was a valid assessment. [391H)

In this case the Hon'ble Supreme Court reversed the judgment of the Hon'ble High Court wherein the Hon'ble High Court held that in reference, the High Court held that the first of the notices under s. 34 was not invalid in law and Sunil Kumar Pathak, Jabalpur. - 17 - consequently the issue of the second notice was illegal and the assessment made in pursuance of it was illegal. Similarly, in Madan Lal Aggarwal vs CIT (1983) 13 Taxmann 120 (ALL): We are, therefore, opinion that the notice under Section 34 issued to September, 1962, was Sri vague Madan Lal Agarwal on 29th and as such invalid. The vagueness of the said notice did not stand cured because the ITO at a later stage informed the assessee that he was to file his return in the status of HUF. The proceedings following such a vague and invalid notice also stand vitiated. In this view of the matter, it is not necessary for us to go into the various other grounds raised by the learned counsel for the assessee for questioning the validity of the proceedings under Section 147 (a) of the I.T. Act, 1961”

Order pronounced under Rule 34(4) of the Income Tax Appellate Tribunal Rules, 1963.