SHALUBAI A ARKERI,MUMBAI vs. ITO 21(3)(2), MUMBAI

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ITA 2848/MUM/2014Status: DisposedITAT Mumbai11 September 2017AY 2009-105 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment order was invalid because mandatory notices under Section 143(2) and 142(1) were not properly served on the assessee. The notices were sent to an incorrect address, and the Revenue failed to provide evidence of proper service.

What were the facts?

The assessee's assessment was completed under Section 143(3) of the Income Tax Act. The Assessing Officer made additions to the income from undisclosed sources, including loans and bank deposits. The assessee appealed the additions confirmed by the CIT(A).

What were the issues?

Whether the assessment order is invalid due to non-service of mandatory notices under Section 143(2) and 142(1) on the assessee.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 142(1),Section 143(2)

AI-generated summary — verify with the full judgment below

Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee under section 253 of the Income-tax Act (the Act) is directed against the order of ld. CIT(A)-32, Mumbai dated 12.02.2014 for the Assessment Year (AY) 2009-10. The assessee has raised the following grounds of appeal.

1. On the facts and circumstance of the case, the Learned CIT(A) erred in confirming assessment made u/s 143(3) instead of the sec. 144, since mandatory conditions as stipulated by sec. 143(2) and 142(1) have not been complied with and therefore order so framed in contravention of mandatory provisions would be illegal and void ab-inito and therefore deserves to be annulled.

2. On the facts and circumstance of the case the Learned CIT(A) erred in holding that since assessment is a scrutiny assessment, no prior permission needs to be taken from the Jt.CIT as it is a case selected under CASS.

- Smt. Shalubai A Arkeri

3. On the facts and circumstance of the case the Learned CIT(A) erred in holding that during remand proceedings that the assessee was unable to clarify most of the discrepancies which is factually incorrect and can be borne out by the detailed paper book filed and has failed to pass the speaking order in respect of the same.

4. The Learned CIT(A) erred in confirming opening balance is Rs.4,22,275/ - as income of A.Y.09-10 and failed to appreciate that the opening balance cannot be taxed in the relevant Assessment Year. 5. The Learned CIT(A) failed to appreciate that since assessee is not maintaining books of account and deposits made in bank account cannot be taxed under income from other source. Therefore the addition of Rs 4,22,275/- 6 (A) On the facts & circumstance of the case the Learned CIT(A) erred in confirming addition of Rs.7,45,000/ - being income from undisclosed sources introduced by way of loans, by totally ignoring the fact that the loans were taken from two daughters, who are income tax assessee and have confirmed the granting of loans from their accumulated savings. 6(B) Without prejudice to the aforementioned the Learned CIT(A) failed to appreciate that both the daughters of the assessee have also taken loans from various parties who have confirmed the granting of the loan fund were produced before the Learned Assessing Officer during remand proceedings but he failed to record their statement The Learned CIT(A) has erred in confirming addition of Rs.7,45,000/- being income from undisclosed sources the details of which are under ;- (a) Loan from daughter Ms. Shobha Arkeri Rs.3,72,000/- (b) Loan from daughter Ms. Pooja Arkeri Rs.3,73,000/- The Learned CIT(A) failed to appreciate that the daughters have already disclosed their source of funds and the Learned CIT(A) has erred in taxing the source of source while confirming the said addition of Rs.7,45,000/-.

2.

Brief facts of the case are that the assessee filed her return of income for relevant AY on 10.07.2009 declaring total income at Rs. 1,43,980/-. The assessment was completed u/s 143(3) of the Act on 30.11.2011. The Smt. Shalubai A Arkeri Assessing Officer (AO) while framing the assessment order made the addition of Rs. 12,18,700/- as Income from Undisclosed Sources, Rs. 7,45,000/- on account of undisclosed source introduced by way of loans and further addition of Rs. 63,000/- on account of deposit in the Saving Bank Account from undisclosed source. On appeal before the ld. CIT(A), all the addition were confirmed. Thus, further aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us.

3.

We have heard the ld. Authorized Representative (AR) for the assessee and ld. Departmental Representative (DR) for the Revenue and perused the material available on record. Ground No. 1 & 2 related to validity of assessment order. The ld. AR of the assessee argued that no notice u/s 143(2) and 142(1) served upon the assessee. The assessment order is bad-in- law and invalid in absence of service of notice u/s 143(2) and 142(1) of the Act. It was further argued that the AO passed the assessment order in gross violation of Principle of Natural Justice. The assessee was not served with the notice, the notice was sent on some different address. The assessee was not residing on such addresses. The notice dated 14.09.2010 u/s 143(2), notice dated 02.02.2011 dated 14.07.2011 and noticed dated 02.08.2011 u/s 142(1) were allegedly sent on different address. The assessee has no knowledge about the issuance of such notice, the copies of such notices is paced on record. The assessee obtained the copies of the said notices from 3 Smt. Shalubai A Arkeri the official record with the permission. The assessment order passed without service of mandatory notices u/s 142(1) and 143(2) is invalid. On the other hand, the ld. DR for the Revenue supported the order of authorities below and argued that the assessee has not raised such issue before the First Appellate Authority (FAA).

4.

We have considered the rival submission of the parties and have gone through the orders of authorities below. The AO has recorded that notice u/s 143(2) was issued and served upon the assessee and subsequently the notice u/s 142(1) dated 14.07.2011 along with detailed questionnaire was issued and served upon the assessee. The assessee has placed on record the copy of notice dated 14.09.2010 u/s 143(2). The said notice is addressed at the address of Room No. 1, Chawl No.4, Arkeri Chawl Paspoli Saki Vihar Road, Post Nitie, Powai, Mumbai. Further, perusal of notice dated 02.02.2011, 14.07.2011 and 02.08.2011 allegedly issued by AO contains the address at Room No. 01, Chawl No. 04, Arkeri Chawl, Paspoli, Sakivihar Road, Post Nitie, Powai, Mumbai-400076. The AO while passing the assessment order has referred the addresses of assessee at Smt. Shalubai Appasaheb Arkeri, Room No.7, Hanuman Chawl, Aarey Road, Powai, and Mumbai-87. The ld. DR for the Revenue failed to give any satisfactory explanation as to why the notices u/s 143(2) and 142(1) was sent at the different address. The perusal of the notice u/s 143(2) and 142(1) reveals that the notice was not properly addressed. Thus, there is no occasion for 4 ITA No.2848/M/2014- Smt. Shalubai A Arkeri service on such notice. The Revenue has not placed on record any material to substantiate their contention that notices u/s 143(2) and 142(1) was properly served upon the assessee. As no notice u/s 143(2) and 142(1) was served, we hold that the assessment order was passed without service of

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