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Facts
The assessee's appeal is against an order concerning AY 2011-12. The primary contention is that the assessment was framed without proper service of notice under section 143(2) of the Income-tax Act, 1961, and that the notice was issued by an officer without jurisdiction. The assessee also disputes additions made on account of unexplained investments and sale of land.
Held
The Tribunal held that the notice under section 143(2) was issued in line with the CASS procedure and served on the correct PAN jurisdiction. It was also held that the addition of Rs. 80.80 lakhs was not to be made in the hands of the assessee as the purchase was made by a firm in which the assessee was a Director, and the AO himself accepted this. The issue of addition on account of sale of land was restored to the AO for fresh adjudication.
Key Issues
Whether the assessment was validly framed without proper service of notice under section 143(2) and whether the additions made are justified.
Sections Cited
143(2), 144, 69, 234A, 234B, 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & SHRI SUNIL KUMAR SINGH, HONBLEDr. P. Daniel
O R D E R PER NARENDRA KUMAR BILLAIYA (AM)
This appeal filed by the assessee is preferred against the order dated 20.09.2023 by National Faceless Appeal Centre, Delhi [hereinafter in short “Ld. CIT(A)”] pertaining to A.Y.2011-12.
(A.Y: 2011-12) Manoj Ramsakal Rai 2. The grievance of the assessee read as under: - “1. The Learned A.O. and Learned CIT(A) erred in passing the orders without following the Principles of Natural Justice.
The Learned Assessing Officer erred in issuing the notice u/s. 143(2) without jurisdiction and the Learned CIT(A) erred in not considering the submissions with proof in proper perspective, and therefore, the order passed on such notice is void ab initio.
3. The Learned CIT(A) erred in stating that even though Notice of Demand is unsigned, the order is valid as the intent is clear.
The Learned CIT(A) erred in confirming the addition u/s. 69 of the 1. T. Act, an amount of Rs. 80,80,000/- as unexplained investment disregarding the Remand Report.
5. The Learned CIT(A) erred in adding an amount of Rs. 1,09,00,000/- as unexplained investment u/s. 69 of the Income tax Act, 1961.
6. The Learned CIT(A) erred in not considering giving relief against the interest u/s. 234A, 234B & 234C of the Income tax Act.
It is prayed that the assessment may be cancelled or in the alternative the additions made may please be deleted.”
At the very outset, the counsel vehemently contended that the Assessing Officer has framed the assessment under section 144 of Income-tax Act, 1961 (in short “Act”) without properly serving the notice under section 143(2) of the Act. It is the say of the counsel that the mandate of the CBDT Circular which conferred the jurisdiction has been completely ignored as per the information collected by the assessee under RTI Act.
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(A.Y: 2011-12) Manoj Ramsakal Rai 4. The counsel pointed out that the assessment has been framed by ACIT, Circle -3, Kalyan; whereas the notice under section 143(2) has been issued by Income Tax Officer, Ward - 1(3), Kalyan. The counsel placed heavy reliance on the decision of the Hon’ble Supreme Court in the case of ACIT v. Hotel Blue Moon [(2010) 321 ITR 362 (SC)], S.K. Industries v. ACIT [(SC) 141 taxmann.com 569, ITAT Kolkata Bench in the case of Shri Sukumar Ch. Sahoo v. ACIT in dated 27.09.2017 and ITAT Mumbai Bench in the case of Monarch & Quresh Builders v. ACIT in ITA No. 2026/MUM/2023 dated 21.12.2023.
Per contra, supporting the assessment order, the Ld. DR pointed out that the notice under section 143(2) was served on the basis of PAN jurisdiction and therefore it is incorrect to say that no notice was served.
We have given a thoughtful consideration to the orders of authorities below and have considered the judicial decisions relied by the counsel in the light of Rule 18(6) of the ITAT Rules. As per the information collected by the assessee under RTI, which is as under: -
Page No. 3 (A.Y: 2011-12) Manoj Ramsakal Rai Page No. 4 (A.Y: 2011-12) Manoj Ramsakal Rai Page No. 5
(A.Y: 2011-12) Manoj Ramsakal Rai 7. A perusal of the assessment order read with the aforementioned show that the return was selected for scrutiny through CASS. It would be pertinent to understand this procedure of scrutiny selection. Computer assisted scrutiny selection of the return of income is done by Central Processing Centre, Bangalore. Certain Parameters are notified beforehand by the CBDT for scrutiny selection through CASS. Once the return is selected for scrutiny through CASS, notice is automatically generated under section 143(2) of the Act as per address given in the PAN data base and the Assessing Officer in whose jurisdiction the PAN lies has to only serve the notice generated through CASS.
In the present case also the return was selected for scrutiny through CASS and the Assessing Officer, Ward - 1(3), Kalyan, served the notice on the address as per PAN data base. Once the assessment proceedings started it was realized that the return of income of the assessee is more than ₹.30 lakhs and therefore, the jurisdiction lies with ACIT, Circle -3, Kalyan. The return of income along with the notice served under section 143(2) of the Act was transmitted to ACIT, Circle-3, Kalyan. Thereafter the assessee participated in the assessment proceedings. This fact clearly show that it is not a case where notice has not been issued and served under section 143(2) of the Act and it
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(A.Y: 2011-12) Manoj Ramsakal Rai cannot be said that the notice was issued by a different Assessing Officer and assessment has been made by a different Assessing Officer. This is in line with the CASS selection of return for scrutiny and generation of notice without any human interference. All the decisions relied upon by the Counsel are devoid of any mention of the new procedure for selection of return for scrutiny assessment under CASS. What the Hon’ble Supreme Court has held in the case of ACIT v. Hotel Blue Moon (supra) is that issue of notice is mandatory under section 143(2) of the Act and the notice has been issued in the present case. The decision of the Hon’ble Jurisdictional High Court of Bombay in the case of Ashok Devichand Jain v. UOI [(2023) 452 ITR 43 (Bom)] is dealt on different facts and in that case the Income Tax Officer in his affidavit has stated that since the assessment was getting barred by limitation the time available with the Income Tax Officer was too short to migrate the Permanent account number after obtaining administrative approval from the higher authorities, which means that PAN jurisdiction must have been changed.
In the case in hand, on the facts discussed hereinabove, it cannot be said that the notice has been issued by an officer who had no jurisdiction over the petitioner as mentioned elsewhere, the return was Page No. 7
(A.Y: 2011-12) Manoj Ramsakal Rai selected for scrutiny through CASS and the notice was generated simultaneously Officer having PAN jurisdiction issued and served notice under section 143(2) of the Act. The decision of the Coordinate Bench relied upon by the counsel are again devoid of the fact of any mention of scrutiny selection through CASS and the procedure laid down therein and have followed the decision of Hon’ble Bombay High Court (supra) which is itself is not applicable.
Considering the peculiar facts of the case in hand, we do not find any merit in the challenge to the issue and service of notice under section 143(2) of the Act. The grounds related to this issue are dismissed.
Coming to the merits of the case, we find that addition of ₹.80.80 lakhs has been made on the basis of AIR information available in the ITD System though. In his remand report the Assessing Officer has admitted that this purchase was made by the firm M/s. Rai Residency Pvt., Ltd., in which the assessee is a Director and PAN number of the assessee has been mentioned therein. The remand report is clear where it states that name of purchaser is M/s. Rai Residency Pvt., Ltd., since the assessee is not the purchaser of the impugned property as Page No. 8
(A.Y: 2011-12) Manoj Ramsakal Rai accepted by the Assessing Officer himself, we do not find any reason of making the impugned addition in the hands of the assessee. The Assessing Officer is directed to delete the addition of ₹.80.80 lakhs. This ground is allowed.
The next addition is of ₹.1.09 Crores, on account of sale of land as per AIR information available in ITD system.
Before us, the counsel stated that firstly the Assessing Officer has not deducted the cost while computing the gains and secondly and most importantly the assessee is only 1/3rd owner of the said property.
Perusal of the assessment order shows that these facts are missing from the order. Therefore, in the interest of justice and fair play we restore this issue to the file of the Assessing Officer. The assessee is directed to furnish necessary evidences to demonstrate that he is 1/3rd owner of the impugned property. Assessee is also directed to furnish the details of cost and the Assessing Officer is directed to examine the same and decide this issue afresh, after affording a reasonable and adequate opportunity of being heard to the assessee.
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(A.Y: 2011-12) Manoj Ramsakal Rai 15. In the result, appeal filed by the assessee is allowed in part for statistical purposes.
Order pronounced in the open court on 24th April, 2024.