SUBHASH CHANDER vs. COMMISSIONER OF INCOME TAX ROHTAK

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ITA/14/2015HC Punjab & HaryanaPHHC01109764201503 August 2015Bench: MR. JUSTICE S.J. VAZIFDAR,MR. JUSTICE GURMEET SINGH SANDHAWALIA6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose from the ITAT's order. Regarding the primary issue of assessment under Section 143(3) versus Section 144, the Court acknowledged that the Assessing Officer could have proceeded under Section 144(1)(b) due to the assessee's failure to comply with Section 142(1) notices. However, the Court noted that the Assessing Officer had, in fact, completed the assessment under Section 143(3) based on the information provided by the assessee. The Court found no infirmity in this action. The judgment implicitly dismisses the other grounds raised by the assessee by stating that no substantial question of law arises, indicating that the Tribunal's findings on these issues were not considered to be legally flawed. The appeal was accordingly dismissed.

What were the facts?

This is an appeal by the assessee, Subhash Chander, against the order of the Income Tax Appellate Tribunal (ITAT) which dismissed the assessee's appeal. The ITAT's order upheld the Commissioner of Income Tax (Appeals) [CIT(A)] order, which in turn confirmed the assessment order. The assessment year in question is 1992-93. The core of the dispute revolves around the validity of the assessment framed under Section 143(3) of the Income Tax Act, 1961, when the assessee allegedly failed to comply with notices issued under Section 142(1). The assessee contended that the assessment should have been framed under Section 144. The High Court noted that the proceedings had been prolonged for several years and detailed the efforts made by the revenue to provide documents and opportunities to the assessee.

What were the issues?

1. Whether the Tribunal was justified in holding that the assessment framed under Section 143(3) of the Act is valid, given the admitted non-compliance by the appellant with notices issued under Section 142(1)(a) and 142(1)(b), and whether the assessment should have been framed under Section 144 instead. 2. Whether the Tribunal was justified in upholding the assessment order under Section 143(3) by recourse to Section 292B of the Act. 3. Whether the Tribunal was justified in upholding the CIT(A)'s order without independently recording its own findings on the grounds of appeal. 4. Whether the Tribunal was justified in confirming the addition of Rs. 53,32,424/- without granting a fair and reasonable opportunity of being heard, thus violating principles of natural justice. 5. Whether the Tribunal was justified in upholding the addition made under Section 68 based on credits not appearing in the regular books of accounts. 6. Whether the Tribunal was justified in upholding the addition of Rs. 30,05,592/- under Section 68 by adopting the peak credit of individual creditors instead of the aggregate peak credit of all creditors. 7. Whether the Tribunal was justified in upholding additions made purely on suspicion, surmises, and conjectures without corroborative material. Assessee's Contentions: The primary contention was that the assessment order under Section 143(3) was invalid as it should have been under Section 144 due to non-compliance with notices. The assessee also argued about not being served with necessary documents and violation of natural justice. Specific arguments were raised regarding additions under Section 68 concerning the method of calculating peak credit and the basis of additions. Revenue's Contentions: The revenue contended that the assessee had been provided with ample opportunities and documents, and the prolonged nature of the proceedings was due to the assessee's actions. The revenue argued that the assessment under Section 143(3) was valid despite potential grounds for Section 144 assessment.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144,Section 142(1),Section 133A,Section 292B,Section 68

AI-generated summary — verify with the full judgment below

ITA No. 14 of 2015 (O & M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 14 of 2015 (O & M) Date of decision: 03.08.2015 Subhash Chander ....Petitioner(s) Versus Commissioner of Income Tax, Rohtak ...Respondent(s) CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE G.S.SANDHAWALIA Present: Mr. Divya Suri, Advocate, for the appellant. Mr. Tajender K. Joshi, Advocate, for the respondent. S.J. VAZIFDAR, A.C.J. (Oral) C.M. No. 1311-CII of 2015 Application for condonation of delay of 18 days in refiling the appeal is allowed. Delay condoned. ITA No. 14 of 2015 1. This is an appeal against the order of the Tribunal dismissing the appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [for short 'CIT (Appeals)'] which, in turn, had upheld the assessment order. The matter pertains to the assessment year 1992-93. 2. The appellants contend that the following substantial questions of law arise:- “I. Whether, the Tribunal was justified in holding that the assessment framed u/s 143(3) of the Act SHIVANI GUPTA 2015.08.05 10:50 I attest to the accuracy and integrity of this document Chandigarh

ITA No. 14 of 2015 (O & M) 2 is valid in law, as admittedly appellant has not complied with the notices issued u/s 142(1)(a) and 142 (1)(b) of the Act, as such assessment should have been framed u/s 144 as against section 143(3) of the Income Tax Act, 1961? II. Whether the Tribunal was justified in law in upholding the order of assessment framed under section 143(3) of the Act by taking recourse of section 292B of the Act? III. Whether, the Tribunal was justified in law in upholding the order of CIT(A) who has merely upheld the assessment order without independently recording its own finding qua various grounds of appeal raised? IV. Whether, the Tribunal was justified in law in confirming the addition made of Rs.53,32,424/- without granting fair, proper & reasonable opportunity of being heard as without adhering to the principles of the natural justice? V. Whether, the Tribunal was justified in law in upholding the addition made u/s 68 of the Act based on the credits which are admittedly not in the regular books of accounts of the assessee? VI. Whether the Tribunal was justified in law in upholding the addition made of Rs.30,05,592/- u/s 68 of the Act by adopting the peak credit of the individual creditor as against the peak credit of the all the creditors together? VII. Whether the Tribunal was justified in law in upholding the additions made in the assessment order which have been made purely on suspicion, surmises and conjectures & without bringing any corroborative material? 3. What was pressed before us essentially was that the assessment SHIVANI GUPTA 2015.08.05 10:50 I attest to the accuracy and integrity of this document Chandigarh

ITA No. 14 of 2015 (O & M) 3 order was made under Section 143(3) of the Income Tax Act, 1961 (for short 'the Act') whereas, it ought to have been made under Section 144 of the Act and not under Section 143(3). It is also contended that the appellants were not served with the necessary documents. 4. The Assessing Officer, CIT (Appeals) and the Tribunal have, in considerable detail, indicated how the appellants have managed to prolong these proceedings for several years. The contention that the documents were not given and that the appellants did not have the benefit of the documents on which the assessment order was made is unfounded. Firstly, there was a survey on 13.02.1992 under Section 133A of the Act. Photocopies of four documents were taken. The documents were not seized. The record remained with the appellants. Four documents were put to the appellants. The appellants had the benefit of the documents including the originals thereof which remained with the appellants. The appellants' books of accounts were also co-related with the returns filed. Discrepancies were found. The appellants were not prejudiced in any manner on the ground of the relevant record not having been brought to their notice. As noted in the impugned orders, the appellants were repeatedly given opportunities. For instance, by a letter dated 23.09.1997, the appellants were informed that the photocopies of the documents could be collected by them from the office on any working day from 10.00 a.m. to 5.00 p.m upto 30.10.1997. Even this letter could not be served through the process server. The Inspector of the Income Tax department was deputed to ascertain the whereabouts of the appellants. The appellants mostly remained in Sirsa (Haryana) and visited Delhi occasionally. Ultimately, the notice was sent through registered post to the appellants' Sirsa address and Delhi address. The appellants never SHIVANI GUPTA 2015.08.05 10:50 I attest to the accuracy and integrity of this document Chandigarh

ITA No. 14 of 2015 (O & M) 4 collected the photocopies. A further letter dated 06.11.1997 was, therefore, sent to the appellants and the appellants were granted further time upto 20.11.1997 to collect documents. 5. Notices were issued and questionnaires were served under Sections 142(1) and 143(2) of the Act on 07.02.1998. Even thereafter, an opportunity was granted to collect the photocopies but the appellants did not avail of the same. Notices under Section 142(1) and 143(2) were again served on 11.03.1998 and the hearing of the case was adjourned. The appellants were informed that if they did not attend, the case would be decided in their absence. 6. The respondents did contend that the appellants did not produce certain documents. In the circumstances, it may well have been open to the appellants to proceed on the basis of Section 144 in view of provisions of Section 144(1)(b). Under Section 144(1)(b), the Assessing Officer is entitled to make a best judgment assessment if the assessee fails to comply with all the terms of a notice issued under Section 142(1). 7. We will assume, therefore, that the Assessing Officer could have done so. However, despite the same, the Assessing Officer completed the assessment under Section 143(3) on the basis of the information provided by the assessee. 8. We see no infirmity in the action taken by the Assessing Officer. No substantial question of law arises. The appeal is accordingly dismissed.

(S.J. VAZIFDAR) ACTING CHIEF JUSTICE

03.08.2015 (G.S. SANDHAWALIA) shivani JUDGE SHIVANI GUPTA 2015.08.05 10:50 I attest to the accuracy and integrity of this document Chandigarh

ITA No. 14 of 2015 (O & M) 5

SHIVANI GUPTA 2015.08.05 10:50 I attest to the accuracy and integrity of this document Chandigarh

ITA No. 14 of 2015 (O & M) 6 SHIVANI GUPTA 2015.08.05 10:50 I attest to the accuracy and integrity of this document Chandigarh

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