GUNDU BHARATHI ,NALGONDA vs. INCOME TAX OFFICER, WARD-1, NALGONDA

Brief facts of the case are, assessee filed her return of income for AY 2003-04 on 01/12/2003 admitting total income of Rs. 1,20,000/- and income from agriculture of Rs. 40,000/-. The return was processed u/s 143(1) of the Income-tax Act, 1961 (in short ‘the Act’). Based on the information found during the course of survey u/s 133A in the case of M/s Manasa Estates, Hyderabad, notice u/s 148 was issued on 02/03/2009 by the ITO, Ward – 6(4), Hyderabad and served by affixture on 12/03/2009. Another notice u/s 142(1) was issued on 14/10/2009 and again served by affixture on 16/10/2009. In response, vide her letter dated 11/11/2009 requested to transfer the case to ITO, Nalgonda since assessee filed her return of income for the current AY with ITO, Nalgonda. Accordingly, the case was transferred to ITO, Nalgonda and case was taken up for scrutiny.

Aggrieved with the above order, assessee preferred an appeal before the CIT(A). Before the CIT(A), assessee has raised jurisdictional issue of reopening of the assessment u/s 147 and service of notices u/s 148. Apart from contesting on merits, it was submitted that assessee has already declared the above payment in her original return of income filed for this AY.

After considering the submissions of the assessee, CIT(A) called for a remand report on jurisdictional issue of reopening u/s 147 vis-à-vis 148. After considering the remand report and objections of the assessee, the CIT(A) dismissed the appeal of the assessee with the following observations: “8.2 The assessment order clearly refers to the evidences found and the fact of recording a statement of the appellant. On perusal of the assessment record, it is seen that statement of the appellant was recorded on 24.12.2009. In the statement, the appellant confirmed the fact of purchase of said properties. The appellant was shown copy of statement reflecting the details of payments, both, in cash and through cheque. However, the appellant denied making any payment in cash. Based on the evidences, discovered in the course of survey operation, the AO proceeded to add the amount of cash payment of Rs.9,45,000/-. The appellant has not sought cross examination of the person concerned before the AO. Therefore, the appellant cannot now say that cross examination opportunity was not provided by the AO. The necessary details and statement were shown to the appellant when statement of the appellant was recorded. The

Aggrieved with the above order of CIT(A), the assessee is in appeal before us raising the following grounds of appeal: “1. On the facts and in the circumstances of the case, the order of the learned Commissioner of Income Tax (Appeals)-10, Hyderabad is erroneous and bad in law. 2. On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals}-10, Hyderabad erred in upholding the action of the learned AO in reopening the assessment by wrongly invoking the provisions of Sec. 147/148. 3. On the facts and in the circumstances of the case, the order passed by learned Commissioner of Income Tax (Appeals}-10, Hyderabad is not valid and bad in law as the assessment was made by the learned Assessing Officer u/s. 143 LW.S. 147 on the strength of an invalid notice u/s. 148 which was issued without proper jurisdiction. 4. On the facts and in the circumstances of the case, the order passed by the Commissioner of Income Tax (Appeals)-10, Hyderabad is bad in law as the notice U/s.148 did not specifically mention the reasons for reopening the appellant's case by invoking provisions of Sec. 147. 5. On the facts and in the circumstances of the case, the notice issued U/s. 142(1) is barred by limitation of time. 6. On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals}-10, Hyderabad erred in upholding the addition of Rs. 9,45,000/- made by the learned AO towards unexplained u/s. 69 of the IT Act, 1961 which was made by him based on certain unconfirmed information and unverifiable allegations to the income already admitted in the return filed for assessment year 2003-2004. 7. LEAVE'· The Appellant craves leave to alter, amend or delete any of the above grounds of appeal and / or to add any fresh ground(s) of appeal at or before the hearing of the appeal.”

Before us, ld. AR of the assessee submitted that AO has no jurisdiction to initiate proceedings u/s 147 since ITO, Nalgonda has

On the other hand, ld. DR brought to our notice that assessee himself has not pressed the ground of not serving of notice before the CIT(A), which the CIT(A) has recorded in para 6.1 of his order. However, he submitted that original notice u/s 148 was issued by ITO, Ward – 6(4), Hyderabad and notices were brought to the notice of the assessee and the assessee has information about the notice and based on the assessee’s request only, the case was transferred to ITO, Nalgonda. Further, he submitted that, if required, the matter can go back to the AO for proper action and he submitted that the conduct of the assessee is important and information was very much available with the assessee for reopening of the assessment and it is not necessary to issue another notice to the assessee.

In the rejoinder, ld. AR submitted that issue recorded in para 6.1 of CIT(A)’s order, in which assessee has not pressed ground No. 3, serving of notice was contested and assessee has always pressed the ground of jurisdictional issue i.e. Ground No. 4.

Considered the rival submissions and material on record. We notice that assessee has filed her return of income on 01/12/2003 with the jurisdictional officer i.e., ITO, Nalgonda and the return was

In the result, appeal of the assessee is allowed. Pronounced in the open Court on 31st July, 2019.