RADHA MITTAL,LUDHIANA vs. ITO- WARD 7(3), LUDHIANA

आदेश/ORDER

Per Vikram Singh Yadav, Accountant Member:

This is an appeal filed by the assessee against the order of

Learned Commissioner of Income Tax (Appeals)-3, Ludhiana, [in

short the ‘Ld.CIT(A)’] dated 01.05.2019 pertaining to

assessment year 2011-12 wherein the assessee has taken the

following revised grounds of appeal:

“1.That on the facts and in the circumstances of the case and in law, ld. CIT-A erred in sustaining the order passed by Ld AO u/s 147/143(3) without appreciating that assumption of jurisdiction u/s 148 by Ld AO was in violation of mandatory jurisdictional conditions stipulated under the Act.

2 ITA No. 1140/Chd/2019 Radha Mittal vs. ITO, Ludhiana

that assessment has been made without following law of natural justice.

filed her return of income declaring total income of

Rs. 7,01,407/- which was processed u/s 143(1) of the Act.

Thereafter, notice u/s 148 was issued by ITO, Ward 6(2),

Ludhiana on 30.03.2018 which was duly served upon the

assessee. In response to notice u/s 148, the assessee filed her

return of income on 23.04.2018 declaring gross total income of

Rs. 7,01,407/- as originally declared, thereafter notices u/s

143(2) and 142(1) were issued and reassessment was completed

u/s 143(3) read with section 147 of the Act by ITO, Ward 7(3),

Ludhiana dated 26.12.2018 wherein addition of Rs 12,26,948/-

was made under section 68 of the Act.

appeal before the ld. CIT(A) wherein the assessment

proceedings were challenged both on the legality as well as

merits of the case. However, the appeal of the assessee was

dismissed and against the said findings and order of the ld.

CIT(A), the assessee is in appeal before us.

3 ITA No. 1140/Chd/2019 Radha Mittal vs. ITO, Ludhiana 4. During the course of hearing, the ld. AR submitted that

the basic requirement of section 147 is that the jurisdictional

Assessing Officer must have reason to believe that any income

chargeable to tax has escaped assessment and such belief must

be of the jurisdictional Assessing Officer and not any other

Assessing Officer. It was submitted that the jurisdiction of

Assessing Officer to reopen the assessment u/s 147 depends

upon issuance of a valid notice and in absence of the same, the

entire proceedings initiated by him would become void for want

of jurisdiction. It was submitted that in the instant case, the

notice u/s 148 was issued by ITO, Ward 6(2), Ludhiana wherein

the assessment was completed by ITO, Ward 7(3), Ludhiana

which cannot be sustained in the eyes of law and in support,

reliance was placed on the following decisions:

• ACIT vs. Resham Petrotech Ltd. (2012) 136 ITD 185 (Ahd.) (Trib.) • Smriti Kedia (Smt.) v. UOI (2012) 71 DTR 245/250 CTR 221 (Cal.) • ITO v. Rajender Prasad Gupta (2010) 48 DTR 489 (JD) (Trib.)

issued on the ground that the assessee has not disclosed the

amount of long term capital gains on sale of shares whereas in

the computation of income as per the original return of income

as well as in the return filed in response to notice u/s 148 of

the Act, the income of long term capital gains has been duly

4 ITA No. 1140/Chd/2019 Radha Mittal vs. ITO, Ludhiana disclosed in the return of income and therefore, the question of

escapement of income does not arise and the notice u/s 148 is

therefore issued in absence of any reasons to believe that the

income has escaped assessment and therefore, the same

deserves to be set aside. It was further submitted that despite

being such glaring mistake that income disclosed in the return

of income has been stated to be not disclosed in the reasons

recorded, the ld. Pr. CIT granted approval u/s 151 concurring

with the observations of the Assessing Officer which clearly

shows the approval granted by the ld. Pr.CIT was mechanical

without application of mind and in support, reliance was

placed on the following decisions as under:-

• Kumar Chatterjee v. ITO [1974] 93 ITR 130 (Calcutta) • Lakhmani Mewal. Chhugamal Rajput v. Chaliha [1971] 79 ITR 603 (SC) • Chanchal Das v. ITO [1975] 99 ITR 296 (Calcutta) • Arjun Singh v. CIT [2000] 246 Taxman 363 (M.P) • United Electrical Co. (P) Ltd. v. CIT [2002] 125 Taxman 775 (Delhi) 6. Per contra, the ld. Sr DR submitted that notice u/s 148

was issued to the assessee on 30.03.2018 which was duly

served upon her and in response to the said notice, the

assessee has filed her return of income and therefore has duly

complied to the said notice and thereafter, the jurisdiction has

been transferred from ITO, Ward 6(2), Ludhiana to ITO, Ward

7(3), Ludhiana and the assessment was accordingly be

5 ITA No. 1140/Chd/2019 Radha Mittal vs. ITO, Ludhiana

completed by ITO, Ward 7(3), Ludhiana. It was submitted that

where the assessee has duly participated in the reassessment

proceedings and has not objected to the jurisdiction of the

Assessing Officer, the assessee cannot be permitted to raise the

jurisdiction issue during appellate proceedings before the

Tribunal for the first time.

long term capital gains has been duly disclosed in the return of

income, it was submitted that it is not clear from the return of

income that the income from sale of shares which is the

subject matter of u/s 148 has been duly disclosed in the return

of income and it is only in the computation of income which

has been subsequently filed by the assessee during the course

of re-assessment proceedings that it has come to the notice of

the AO that the assessee has shown income from long terms

capital gains and which has also been claimed as exempt u/s

10(38), it cannot be seen that income has been duly declared in

the return of income. It was submitted that basis the return of

income so filed by the assessee, it cannot be conclusive held

that income from sale of shares which is the subject matter of

dispute has been duly disclosed. It was further submitted that

the approval has been duly granted by the ld. Pr. CIT after due

application of mind. It was accordingly submitted that the

contentions advanced by the ld. AR challenging the legality of

proceedings deserves to be dismissed.

6 ITA No. 1140/Chd/2019 Radha Mittal vs. ITO, Ludhiana

material available on record. In the reasons so recorded by the

Assessing officer prior to issuance of notice u/s 148 of the Act,

the Assessing officer has stated that he has independently

examined the records and information of the assessee and after

verification, he has reasons to believe that income of Rs

12,28,920/- has escaped assessment within the meaning of

section 147 of the Act. The basis for arriving at such a

reasoning by the Assessing officer is that the assessee is

beneficiary of long term capital gains on sale of shares and

there is a failure on part of the assessee to disclose his income

on account of long term capital gains on sale of shares in her

return of income and there is thus a failure on part of the

assessee to disclose his income truly and fully. In this

regard, we refer to the original return of income filed by the

assessee on 5.08.2011 wherein under the column “capital

gains”, no amount has been shown and thereafter, under the

column “details of exempt income which is not included in the

total income” under the heading “long term capital gains from

transactions on which securities Transaction tax is paid”, the

assessee has shown a figure of Rs 11,81,723/-. On perusal of

the computation of income, it is noted that the said figure of

Rs 11,81,723 is nothing but a figure of Rs 12,26,948 being the

sale proceeds on sale of shares less indexed cost of acquisition

of Rs 45,225/- resulting in long term capital gains of

7 ITA No. 1140/Chd/2019 Radha Mittal vs. ITO, Ludhiana

Rs 11,81,723/- which has been claimed exempt under section

10(38) of the Act. Therefore, we find that the assessee has

duly reported the transaction of sale of shares in her return of

income. Further, where the assessee is of the belief that she

fulfills the conditions of exemption and has gone ahead and

claimed exemption under section 10(38), she is well within her

rights to claim exemption under section 10(38) of the Act. The

reporting of sale transaction and claiming exemption under

section 10(38) cannot be equated with non-furnishing of

particulars of income. There cannot be different yardsticks to

determine whether the assessee has reported the transaction in

her return of income in cases where the assessee has not

claimed the exemption and in another case, where the assessee

has claimed the exemption. The Revenue is well within its

right to examine the claim of the exemption and whether the

same has been rightly claimed or not and take appropriate

action as per law however, as far as reporting of transaction is

concerned, the same has been duly complied with by the

assessee. Had the Assessing officer carried out basic enquiry

and verification of the return of income before recording the

reasons, in all likelihood, he himself would have found the

basis so stated as not emerging from the material on the

record. Therefore, the belief and the reasoning so arrived at by

the Assessing officer that the income has escaped assessment

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

8 ITA No. 1140/Chd/2019 Radha Mittal vs. ITO, Ludhiana disclose the transaction has no material basis and cannot be

sustained. The nexus between formation of belief and material

basis which such belief is formed is clearly absent in the

instant case and therefore, we are of the considered view that the notice issued under section 148 has no legal sanctity and

cannot be sustained in the eyes of law and the same is hereby

quashed and the consequent reassessment proceedings are

thus set-aside.

AR have become academic and the same has been left open and

not been adjudicated upon.

of aforesaid directions.

Order pronounced on 18.10.2022.

Sd/- Sd/- (VIKRAM SINGH YADAV) (SANJAY GARG) �या�यक सद�य/Judicial Member लेखा सद�य/Accountant Member Dated: 18.10.2022 *AG* आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar