ANALA RAM RAO,KORAPUT vs. ITO, JEYPORE

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER

ITA No.413/CTK/2010 Assessment Year : 2005-2006

Anala Rama Rao, L/H of late Vs. Income Tax Officer, Ward-1, 1st Anala Eswar Rao, Karnam Jeypore, P.R.Peta, lane, Street, Jeypore, Dit: Koraput Jeypore. PAN/GIR No.AEHPR 8400 A (Appellant) .. ( Respondent)

Assessee by : Shri P.C.Sethi, AR Revenue by : Shri Subhendu Dutta, DR

Date of Hearing : 15/10/ 2019 Date of Pronouncement : 15 /10/ 2019

O R D E R Per C.M.Garg,JM This is an appeal filed by the assessee against the order of the

CIT(A), Berhampur, dated 2.8.2010 for the assessment year 2005-06.

“1. For that, on the facts and in the circumstances of the case, the assessment should not have been made basing upon I hi' root section 69A of the Income Tax Act, since it is not the out come of a suppression detected while making a surprise visit or taking a list of the wealth of the assessee, in the course of raid.

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3.The assessee/appellant a senior citizen could have easily made a saving of Rs. 10,00,000/- in cash when the total income inclusive of agricultural income in his case and in the case of his wife could have been calculated, leaving no suspicion for any short fall in the peak amount, as determined by the Learned Commissioner of Income Tax (Appeals).”

as under:

“i) That the ld CIT(A) has committed a serious error in not appreciating that the issuance of notice by the AO u/s.148 of the income tax Act, 1961 (hereinafter referred as 'the Act') is per se illegal as the assessment u/s 143(3) of the Act in response to return u/s 142(1) of the Act has not expired and for that matter the assessment order, demand notice and penalty notice on the basis of notice u/s 148 of the Act are liable to be quashed and/or annulled.

(ii) That, the learned CIT (A) has committed a serious error by not appreciating the absence of reasons to believe for issuing notice u/s 148 of the Act and for that matter alleged deficiency u/s 139 (9) of the Act cannot be construed the reason for issuing notice u/s 148 of the Act and for that matter assessment order, demand notice and penalty notice based on such erroneous exercise of power by the learned Assessing Officer is liable to be quashed.

(iii) That, the learned CIT (A) has committed a serious error by confirming the addition u/s 69A of the Act to the extent of Rs. 7,08,158/- which is contrary to the provisions of section 69A of the Act and for that matter the addition is liable to be deleted. “

against (i) issue of notice u/s.148 of the Act (ii) absence of reasons

recorded and (iii) confirming the addition u/s.69A of the Act is purely a legal

ground which goes to the root of the matter and no new facts are required

to be investigated or placed on record for the adjudicating the same. We

find that the Hon'ble Supreme Court in the case of National Thermal Power

Co. Ltd. v. CIT [1998] 229 ITR 383 has held as under :

P a g e 2 | 6 "We do not see any reason to restrict the power of the Tribunal under s. 254 only to decide the grounds which arise from the order of the CIT (A). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier." 5. In view of the above facts, the additional grounds raised by the

assessee are apparently legal in nature which goes to the root of the matter

and no new facts are required to be investigated and, therefore, we admit

the ground and adjudicate the same.

no tangible material was in the hands of the Assessing Officer to issue

notice u/s.148 of the Act on 21.5.2008, when the reasons were recorded.

assessment was initiated by issue of notice u/s.148 of the Act on the basis

of AIR information that cash exceeding Rs.14,22,259/- was deposited in the

bank account of Indian Overseas bank, Jeypore.

which reveals that on receipt of AIR information, the AO issued notice

u/s.142(1) of the Act and the assessee filed return and this AIR information

was already on the record and there was no new tangible material with the

Assessing Officer on 21.5.2008. Ld A.R. of the assessee referred to the

judgment of Hon’ble Supreme Court in the case of CIT Vs. Kelvinator

India Ltd. (2010) 310 ITR 561 (SC), wherein newly substituted

P a g e 3 | 6 provision of section 147 of the Act with effect from 01.04.1989 is

interpreted by observing, that section 147 of the Act, as

substituted w.e.f. 01.04.1989 does not postulates conferment of

power upon the Assessing Officer to initiate reassessment

proceeding upon his mere change of opinion. Further, if 'reason to

believe' of the Assessing Officer is founded on an information

which might have been received by the Assessing Officer after the

completion of assessment, it may be a sound foundation for

exercising the power under section 147 r.w.s. 148 of the Act. It

cannot be accepted that only because in the assessment order,

detailed reasons have not been recorded, an analysis of the

materials on the record by itself may be justifying the Assessing

Officer to initiate a proceeding u/s. 147 of the Act. When a regular

order of assessment is passed u/s 143(3) of the Act, the

presumption can be raised that such an order has been passed on

application of mind.

in the reasons recorded dated 21.5.2008, there was no new

material on record. We decline to accept the contention of the ld

DR that the AIR information was new tangible material as in the

first paragraph in the assessment order, the AO himself noted

that on the basis of AIR information, notice u/s.142(1) of the Act

P a g e 4 | 6 was issued to the assessee and in response to the same, the

assessee filed return declaring income of Rs.82,720/-.

Undisputedly, the AO was empowered to issue notice u/s.143(2)

of the Act before 31.12.2007. Since no such notice was issued to

the assessee, thus, we safely presume that the assessment was

completed u/s.143(1) of the Act. Hence, we also safely presume

that the AIR information was already on the record of the AO

while issuing notice u/s.142(1) of the Act and on receipt of return

of income, it became part of assessment record which was

terminated on 31.12.2007 as assessment u/s.143(1) of the Act.

Therefore, the AIR information does not constitute new tangible

material in the hands of the AO empowering himself for initiating

the reassessment proceedings u/s.147 of the Act. Thus, no

tangible material was in the hands of the Assessing officer at the

time of recording the reasons for initiation of reassessment

proceedings u/s.147 of the Act and issue of notice u/s.148 of the

Act.

Supreme Court in the case of Kelvinator of India Ltd (supra) in the

present case found that the Assessing Officer has initiated

reassessment proceedings on the same facts which were available

before him at the time of making assessment u/s.143(3) of the

P a g e 5 | 6 Act and no new tangible material has come on the basis of which

it could be said that the Assessing Officer has reason to believe

that income chargeable to tax has escaped assessment on account

of failure on the part of the assessee to disclose truly and fully

material of facts in the assessment. Therefore, we are inclined

to set aside the order of the CIT(A) on this ground and quash the

reassessment order dated 29.12.2007. Since we have quashed

the reassessment order allowing the additional grounds, other

grounds taken originally are not taken for adjudication.

order pronounced on 15 /10/2019. Sd/- sd/- (Laxmi Prasad Sahu) (Chandra Mohan Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 15 /10/2019 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Anala Rama Rao, L/H of late Anala Eswar Rao, Karnam Steet, Jeypore, Dit: Koraput

Sr.Pvt.secretary ITAT, Cuttack

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