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Income Tax Appellate Tribunal, DELHI BENCH “C” NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. No.3642/DEL/2016 Assessment Year: 2006-07
Shri Harneet Singh Chandhoke, Vs. Asst. Commissioner of 5-A, Factory Road, Krishna Income Tax, Nagar, Circle-20(1), Opposite B-4/187C, New Delhi. Safdarjung Enclave, New Delhi. TAN/PAN: AAKCS4913P (Appellant) (Respondent)
Appellant by: Shri Saksham Singhal, Adv. Respondent by: Shri Avikal Manu, Sr.D.R. Date of hearing: 24 06 2021 Date of pronouncement: 30 07 2021 O R D E R PER AMIT SHUKLA, JM: The aforesaid appeal has been filed by the assessee against the impugned order dated 31.03.2016, passed by ld. CIT(A)-XII, New Delhi for the quantum of assessment passed u/s.143(3)/147 for the Assessment Year 2006-07. The assessee has challenged the validity of proceedings u/s.147 and notice u/s.148 on various grounds that notice u/s.148 dated 30.03.2013 was issued in the name of Ms. Jyotika Chandhoke, the minor daughter of the assessee and not in the name of the assessee. Secondly, the notice u/s.148 was not issued by the jurisdictional Assessing Officer having jurisdiction over the assessee / appellant. On merits, the assessee has challenged the addition and alleged cash payment of Rs.19,93,560/-.
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The facts in brief are that the assessee is an individual and proprietor of M/s. Luthra and Luthra. He has filed his return of income at Rs.12,43,050/- on 310.3.2007 and same was duly processed u/s.143(1) on 12.07.2007. On 30th March, 2013 a notice u/s.148 was issued in the name of minor daughter of the assessee Ms. Jyotika Chandhoke. The copy of which is reproduced hereunder:
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The reasons recorded by the Assessing Officer read as under:
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The relevant observation of the Assessing Officer in the assessment order for taking the action for framing the assessment in the hands of the assessee is as under: “A search operation was carried out on 17.08.2011 by the Investigation Wing, New Delhi in the case of AEZ Group (Parts of Aerens Group) engaged in the business of real estate. During the search operation certain documents, hard disk and lap tops containing details of undisclosed consideration for the sale constructed/booked areas relating to various projects undertaken by this group were seized. The same have been co- related party-wise and further searches were conducted in respect of 7 groups of cases who made substantial investments in cash in the projects of the Aerens Groups. The searches were successful and the persons concerned admitted the undisclosed investments in cash in the projects of Aerens Group. There were many other persons who had invested substantial amounts in cash. In view of these facts information in the case of Ms. Jyotika Chandhoke who was one of those persons who also made substantial investment in cash and having PAN AAHMP7976L were sent to the AO who was having jurisdiction over the Ms. Jyotika Chandhok according to PAN for the assessment year 2006-07. The perusal of documents and hard disk seized from the corporate office of AEZ Group at Bakshi House, Nehru Place, New Delhi (Copy of which have been provided to the assesse during the course of assessment proceedings) reveals that there was investment in the name of Ms. Jyotika Chandhoke for ground floor (Commercial) in Indirapuram Habitat Centre Project, Ghaziabad for a total consideration of Rs.33,43,560/-, out of
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which a sum of Rs. 13,50,000/- were paid through banking channel, which is admitted fact by the assessee and Rs. 1993560/- in cash, which has been denied by the assessee. Balance amount of Rs. One lac was payable through cheque. The Investigation Wing, New Delhi analyzed the details seized during search operation and found that Ms. Jyotika Chandhoke was having PAN AHMPC7976L which was in the jurisdiction of Ward-T(3), New Delhi. In view of these facts the Investigation Wing sent information to the AO of Ward-1(3), New Delhi. After receiving such information the AO, Ward-1(3), New Delhi found that no ITR has been filed on the said PAN. Keeping in view all facts the AO had reason to believe that transactions had escaped the tax and accordingly he issued notice on 30/03/2013 u/s 148 of the I. T. Act, 1961 by speed post which was duly served upon Ms. Jyotika Chandhoke. In response to notice/reply was received vide letter dt. 05/04/2013 giving information and copy of ITR of Sh. Harneet Singh Chandhoke, father of Ms. Jyotika Chandhoke, in whose ITR income of Ms. Jyotika Chandhoke is clubbed u/s 64(1A) of the I. T. Act, 1961. In this manner it was stated that for all transactions in the name Ms. Jyotika Chandhoke Sh. Harneet Singh Chandhoke is the assessee i.e. representative assessee and case was adjourned to 18.05.2013. ……………. ………… As mentioned above that it was brought to the notice of the department that Ms. Jyotika Chandhoke is minor and her income is clubbed in the income of her father Sh. Harneet Singh Chandhoke u/s 64(1A) of the I. T. Act, 1961. Under such
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circumstances Sh. Harneet Singh Chandhoke, father of Ms. Jyotika Chandhoke, automatically and due to provisions of law steps into the shoes of Ms. Jyotika Chandhoke i.e. he is the assessee. In view of these facts the case was transferred to the undersigned where sh. Harneet Singh Chandhoke is assessed. Hence the undersigned issued notice on 10.01.2014 u/s 142(1) of the I. T. Act, 1961 seeking details and information with regard to transactions of commercial property in the said project entered into in the name of his daughter and by using her PAN.
The assessee has raised the objection before the Assessing Officer. However, the same was rejected after observing as under: Here, it is pertinent to mention the points of rejection of the objection raised by the assessee are as under: - 1. Why the assessee got PAN allotted in the name of his minor child in the absence of income from her own specified knowledge/skills/ability and used that for transactions of the property under question. 2. Since, investment has been made in the said property in her name and by using her PAN for which he was solely responsible. The AO, Ward-1(3), New Delhi was having jurisdiction according to PAN. Why the assessee had not given his PAN. In view of these facts notice issued u/s 148 is valid ab- initio. 3. The department came to know the status of the assessee being minor child for which assessee, father of the minor child, is representative assessee u/s 160(ii) of the Income Tax Act,
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1961. Moreover, for minor child in this case Sh. Harneet Singh Chandhoke Is assessee as he steps into the shoes of her minor child until unless the minor child has any income from her own specified knowledge/skills/ability. In the instant case minor has no specified knowledge/skills/ability. Hence, notice u/s 148 issued on 30.03.2013 is valid. 4. The department was requested through new PAN application to allot PAN to his minor daughter under the direction/guidance of Sh. Harneet Singh Chandkoke and the same has been used while investing money in the property in her name. In this manner it appears that the assesse had concealed the facts and misled the department. 5. As per provisions of section 120 of the I.T. Act, 1961 objection in respect pi jurisdiction could be made within 30 days of receipt of notice whereas in the case of the assessee objections were raised after 30 days which is not sustainable in the eyes of law.
Accordingly, Assessing Officer proceeded to frame the assessment in the case of the assessee and thereby making the addition of Rs.90,93,560/- u/s.69 holding that same has been made in cash.
Ld. CIT (A) has confirmed the said action of the Assessing Officer and held that in view of the provision of Section 292B, the notice is deemed to be valid. The relevant observation reads as under: 9.4 I have carefully considered the observations of the Assessing Officer, submissions of the Appellant and case laws relied on by him. Appellant has agitated that no notice
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u/s 148 was issued in the name of Sh. Hameet Singh Chandhoke. Instead, the notice was issued in the name of his minor daughter Ms. Jyotika Chandhoke. From the perusal of the reasons recorded for reopening the case, it is seen that Assessing Officer had information that Ms. Jyotika Chandhoke had made an agreement for ground floor commercial 500 sq. ft. with Indirapuram Habitat Centre Project, Ghaziabad and total sum of this was Rs.34,43,560/- out of which Rs. 13,50,000/- was paid in cheque and Rs. 19,93,560/- was paid in cash. ITO, Ward-1(3), New Delhi who was having jurisdiction of Ms. Jyotika Chandhoke issued the notice u/s 148 for reopening the case as no return of income was filed by her and Assessing Officer had the reasons to believe that income had escaped assessment and accordingly, case was reopened u/s 147. From perusal of the reasons recorded, it is seen that Assessing Officer had the reasons to believe that there was escapement of income in the case of Ms. Jyotika Chandoke as she had not filed any return of income. Therefore, the twins conditions for reopening the case are satisfied. Appellant has claimed that notice issued under Section 148 is beyond the statutory time limit, it is seen that Assessing Officer had issued the notice u/s 148 in the case of Ms. Jyotika Chandoke within the prescribed time limit. From perusal of the document seized, it is seen that name of purchaser is mentioned as Jyotika Chandoke and not Appellant for purchase of 500 sq. ft. Appellant claims to have booked the space in his name whereas he has made the payments from the bank account of his daughter Ms. Jyotika Chandoke. From the seized documents, it is seen that booking
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is in the name of Ms. Jyotika Chandoke d/o Sh. H.S. Chandoke and in the search documents, the details of payment in cash and cheque are mentioned which Assessing Officer examined and after examining the case of his jurisdiction, he arrived at the finding that Ms. Jyotika Chandoke had not filed the return. Appellant had further claimed that notice has not been issued by the jurisdictional Assessing Officer and, therefore, is ab-initio void, is beyond statutory time limit. It is seen that notice u/s 148 was issued on 30.03.2013. Hon’ble Supreme Court in the case of R.K. Upadhyaya vs. Shanabhai P. Patel, 166 ITR 163 have held that assessment is valid if notice u/s 148 was issued within the limitation period. Appellant had challenged the validity of notice u/s 148 on 20.05.2013. Assessing Officer has disposed off the objection of reopening vide order dated 26.12.2013. She held that challenge to jurisdiction was not made within 30 days of receipt of notice and, therefore, objection to jurisdiction was not maintainable. Appellant has not anything stated on the finding of Assessing Officer. It is seen that Appellant claims to have made booking in his name whereas all the payments have been made from the bank account of his daughter. Further, it is seen that though Appellant was clubbing the income of his daughter in his return of income, he had taken separate PAN in the name of her daughter and has used the same while making investment from bank account of his daughter. Therefore, it is seen that Appellant has not disclosed the entire facts in his ITR filed. Further, from perusal of the seized material, it is seen that Appellant had booked a space in the ground floor commercial of 500 sq. ft. for which
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payment has been made in both cash and cheque. The payment by cheque is Rs.13,50,000/- whereas payment in cash ie Rs. 19,93,560/- total amounting to Rs.33,43,560/- and balance Rs. 1,00,000/- was left to be paid. Therefore, it is apparent that the Space Buyers Agreement dated 26.04.2011 which Appellant has filed is a separate agreement in which Appellant has purchased an area 770 sq. ft. bearing UB-20 on Upper Basement Floor. Further, it is seen that notice u/s 148 was issued by the jurisdictional Assessing Officer of Ms. Jyotika Chandoke. The jurisdictional Assessing Officer has the inherent jurisdiction in view of Section 124(5) of the Act and, therefore, notice issued u/s 148 is valid. Appellant has deliberately used the PAN of his minor daughter for making investment in the space at Indirapuram Habitat Centre Project, Ghaziabad and, therefore, he has willfully not disclosed his PAN so that the investments even if made in his daughter’s name or from daughter’s account was not fully and truly disclosed. Therefore, Assessing Officer is correct in holding that notice u/s 148 issue to Ms. Jyotika Chandoke was valid as there was failure on account of Appellant to disclose fully and truly all material facts in his case. The case ( laws relied on by the Appellant was on different facts as in those cases, there was no separate PAN in the- name of minor. Further, in view of the provisions of Section 292B notice u/s 148 is deemed to valid as Appellant has not disclosed the entire information in his ITR which he is filing his ITR through his PAN whereas he has also taken a PAN of his minor daughter Miss Jyotika Chandoke. Therefore, in the case of Appellant, Section 292B will be applicable which is
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reproduced as under 292B. No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. 9.5 Therefore, notice u/s 148 issued in the name of Miss Jyotika Chandoke minor daughter of Appellant is not invalid as became of two PAN’ s of Appellant one in the name of Appellant and one in the name of his minor daughter, Assessing Officer had committed the mistake in issuing the notice in the name of Miss Jyotika Chandoke which is on account of two PANs taken by Appellant one in his own name and one in the name of his minor daughter Miss Jyotika Chandoke. Further, it may be stated that while verifying the jurisdiction of any Assessee from PAN Database of Department Website incometaxindiaefiling.gov.in, there is no mention of Date of Birth of Assessee. As a result, the Assessing Officer will not know the fact that an Assessee is a minor beforehand and, therefore, issue of notice in substance and effect is in conformity with the intent and purpose of the Income Tax Act. Therefore, Grounds No. 2 to 9 are dismissed.
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After considering the rival submissions and on perusal of the material placed on record, we find that it is an undisputed fact that the notice has been issued in the name of Ms. Jyotika Chandhoke daughter of Shri Harneet Singh Chandhoke and even in the reasons recorded, the reason to believe for income escaping assessment has been entertained in the case of Ms. Jyotika Chandhoke only. Even the PAN mentioned in the reasons recorded is different whereas the PAN of the assessee is AAAPC2258C. Once no valid notice has been issued in the name of the assessee in whose case assessment has sought to be made u/s. 143(3)/147, the entire proceedings u/s.148 and thereby framing of the assessment in the hands of the assessee has become void abinitio. It is a trite law that the jurisdiction can be acquired by the Assessing Officer for reopening the assessment u/s.147 only by serving the valid notice in the name of the assessee and after recording the reasons that income chargeable to tax has escaped assessment in the case of the assessee. In case, the Assessing Officer sought to make the assessee as representative assessee u/s. 160 (ii), then it was incumbent upon him to issue a notice u/s.148 in the case of the assessee as a representative assessee. Notice cannot be validated even if a notice has been issued in a different name with different PAN and at the same time the income can be assessed in the hands of different assessee, because, Shri Harneet Singh Chandhoke is otherwise an independent assessee assessable to tax. It is not a case of rectifiable mistake u/s.292B, because even in the reasons recorded the Assessing Officer has entertained reasons to believe that it
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was the escapement of income in the hands of Ms. Jyotika Chandhoke and not the assessee. The action of the Assessing Officer itself shows that there is no application of mind on the material coming into his possesion as to whether income escaping assessment belongs to the assessee and not to the assessee’s minor daughter. The right course under the law should have been that the assessee’s case, should have been reopened and notice u/s.148, should have been issued in the name of Shri Harneet Singh Chandhoke and if there is any undisclosed income belonging to the minor, then same ought to have been taxed in the hands of the assessee. Thus, the assessment order passed u/s.147/143 (3) which has been framed on the basis of notice issued in the name of minor daughter, Ms. Jyotika Chandhoke and a different PAN cannot validate the proceedings. Hence, the same is quashed as void abinitio. Accordingly, the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 30th July, 2021.
Sd/- Sd/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30th July, 2021 pkk