MUJEEB KHAN,JAIPUR vs. ITO, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR Jh fot; iky jko] U;kf;d lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JUDICIAL MEMBER vk;dj vihy la-@ITA No. 421/JP/2017 fu/kZkj.k o"kZ@Assessment Year : 2007-08 cuke Mujeeb Khan Income Tax Officer, Vs. Prop. M/s M.K. Repair Center Ward 6(5), Near Railway Phatak, Jagatpura, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AHTPK 2174 K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Tanuj Agrawal (C.A.) jktLo dh vksj ls@ Revenue by : Shri R.A. Verma (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing : 20/12/2017 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 27/02/2018 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 12.04.2017 of CIT(A), Jaipur for the assessment year 2007-08. The Assessee has raised the following grounds:-

“1. That on the facts and circumstances of the case and in law, the learned commissioner of Income Tax (Appeals) grossly erred in not quashing the reopening of assessment under section 147 of the income-tax Act, 1961, and also erred in not treating the

2 ITA 421/JP/17_ Mujeeb Khan vs. ITO

reassessment order passed as illegally, unjustified and void-ad-inito thereby ignoring the following facts:- a) Non-receipt of notice u/s 148 by the assessee within statutory time limit. b) Non-issuance of notice u/s 134(2) of the Income-tax Act, 1961; and c) Non-disposal of objections raised by the appellant by the ld. A.O. by way of a speaking order as provided by the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. ITO 259 ITR 19 (SC). 2. That on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) grossly erred in sustaining an addition of Rs. 22,20,000/- as unexplained investment in immovable property. 3. That on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) grossly erred in not considering the contention raised by the appellant that no opportunity of cross-examination of witness Shri Sitaram Gurjar was provided to the appellant before finalization of the assessment proceedings against him. 4. That the humble appellant craves leave to add, amend, alter, modify, substitute or delete any ground or grounds of appeal on or before the hearing of the appeal.”

16.11.2007. Subsequently on the basis of information received from ADIT

Investigation-II, Jaipur the AO proposed to reopen the assessment by

issuing a notice u/s 148 of the Act dated 25.03.2014. The AO proposed to

3 ITA 421/JP/17_ Mujeeb Khan vs. ITO

assessee the income of Rs. 22,20,000/- being escaped assessment based

on an agreement for purchase of 10 Bighas of land. The reassessment was

framed vide order dated 27.03.2015 whereby the AO made an addition of

Rs. 22,20,000/- u/s 69 of the Act being unexplained investment. The

assessee challenged the order of the AO before the ld. CIT(A) and raised

various grounds including validity of reopening as well as validity of

reassessment. The ld. CIT(A) was not impressed with the contentions of

the assessee and upheld the addition made by the AO as well as reopening

of the assessment.

of the authorities below mainly on three grounds firstly the reopening on

the basis of the alleged agreement is not valid as the said document is a

dum document not revealing any income assessable to tax has escaped

assessment. The ld. AR of the assessee forcibly contended that this is not

an agreement showing any transaction of purchase or sale of the land but

it is only a document containing mode of sharing of the sale consideration

in the event of sale of the land. He has further contended that merely

because a property was purchase it does not automatically lead to

inference that income has escaped assessment as the assessee might have

used his disclosed income for investment in the asset purchased. The AO

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cannot reopen the assessment for verification of source of purchase and

therefore, there is no reason to believe that income has escaped

assessment. The Second contention of ld. AR is that the reassessment

has been framed without issuing any mandatory notice u/s 143(2) of the

Act and therefore, the impugned reassessment order is illegal and valid

and deserves to be quashed. In support of his contention he has relied

upon the decision of Hon’ble Supreme Court in case of ACIT vs. Hotel

Blue Moon 321 ITR 362. The third contention of the ld. AR of the

assessee is that the addition has been made by the AO on the basis of

dumb document and statement of one Shri Sitaram Gurjar a witness to the

alleged agreement dated 31.07.2006 without providing an opportunity of

cross examination to the assessee. Thus, the ld. AR of the assessee has

submitted that the statement of Shri Sitaram Gurjar cannot be the basis of

assessment without giving an opportunity of cross examination to the

assessee. In support of his contention he has relied upon the decision of

Hon’ble Supreme Court in case of Andaman Timber Industries vs. CCE

127 DTR 241.

question clearly reveals the transaction of land wherein the assessee being

executor of the document has admitted the transfer of Rs. 37,00,000/- in

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which the shares of the assessee is 3/5. Therefore, the AO has rightly

formed to belief that the income assessable to tax to the extent of Rs.

22,20,000/- has escaped assessment as the same was not disclosed by the

assessee in the return of income. He has supported the orders of the

authorities below.

on record it is noted that the assessee raised various legal objections

before the ld CIT(A) against the reopening of the assessment validity of

the reassessment as well as the addition made by the AO without giving

an opportunity of cross examination to the assessee as the AO has made

the addition based on the statement of Shri Sitaram Gurjar attesting

witness of the agreement in question. It is pertinent to note that the

assessee raised specific objection before the ld. CIT(A) regarding no notice

u/s 143(2) was issued by the AO before the reassessment was completed

u/s 143(3) r.w.s. 147 as well as the objection of not giving an opportunity

of cross examination of Shri Sitaram Gurjar. The ld. CIT(A) while passing

the impugned order has not dealt with and adjudicated these specific

objections raised by the assessee. There is no quarrel on the point that the

objections raised by the assessee are legal in nature and go to the root of

the matter. The notice u/s 143(2) gives the jurisdiction to the Assessing

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Officer to proceed with the assessment and in the absence of the notice

u/s 143(2) of the Act the assessment framed by the AO will be nullity for

want of jurisdiction. Further, if the assessment is merely based on

statement recorded by the AO without giving an opportunity of cross

examination to the assessee then the same would amount to violation of

principle of natural justice and the order passed without giving an

opportunity of cross examination would suffer from a serious flow which

renders the orders a nullity. Thus, both these issues raised by the assessee

go to the root of the matter and required to be decided prior to the issue

of addition on merits. Hence, in the facts and circumstance of the case

where the ld. CIT(A) has not adjudicated these two issue the matter is set

aside to the record of the ld. CIT(A) for fresh adjudication and specifically

adjudication of the legal objections raised by the assessee.

In the result, the appeal filed by the Revenue is allowed for

statistical purposes.

Order pronounced in the open court on 27/02/2018.

Sd/- ¼ fot; iky jko ½ (VIJAY PAL RAO) U;kf;d lnL; @Judicial Member Tk;iqj@Jaipur

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सहायक पंजीकार@Aेेज. त्महपेजतंत