CHHOTELAL J YADAV,MUMBAI vs. ITO WD 21(2)(1), MUMBAI

This appeal by the assessee is directed against the order dated 12.10.2010 of Commissioner of Income Tax (Appeals)- 32, Mumbai (Hereinafter called as the CIT(A) for assessment year 1997-98.

The grievances raised in the ground no 1 to 4 relate to approval taken by AO from JCIT u/s 151 of the Act after four years in respect of of a different person and not the assessee, non application of mind while recording reasons for issuing notice u/s 148 , non service of notice u/s 148 on the assessee and finally service of order passed u/s 144 r.w.s. 147 of the Act on 05.10.2005 which was beyond the period off limitation as provided under the Act. The issue raised in the ground no.5 is against the confirmation of the addition made by the AO u/s 69A of the Act of Rs.5,80,500/- by the ld.CIT(A).

Since a common issue is involved in all the grounds and therefore they are being disposed of together. The facts of the case are that the assessee was employed in M/s Brijwasi Sweets , Mumbai and never had any taxable income as his monthly salary income was Rs.3000/- per month and therefore never filed any return of income. The assessee neither received any notice for filing of return of income nor any re-assessment notice under section 148 of the Act. For the first time the assessee received notice from the office of the TRO 21(2) for the assessment year 1997-98 showing demand of Rs.11,83,359/- without mentioning anything about the order of assessment or the year of assessment. The assessee enquired from the office of TRO and came to know that the demand for assessment year 1997-98 was created against him and he was told that the copy of the assessment order and notice of demand would be provided in due course. On 4.10.2005, the Inspector from the office of ITO 21(1)(2) visited the residence and pasted a copy of the assessment order and notice of demand on the main door of the assessee in the presence of family members of the assessee. The assessee was employed with M/s Brijwasi Sweets , Mumbai. A search was conducted u/s 132 of the Act in the Brijwasi Group and during the course of block assessment proceedings u/s 158BD in the case of M/s Brijwasi Food Products Ltd it was found that Mr. Chhotelal J Yadav an employee of the company had deposited cash in of Rs.5,80,500/- in Union Bank of India, Cumballa Hill branch Mumbai. The AO thereafter recorded reasons u/s 148(2) of the Act and obtained approval from JCIT u/s 151 of the Act and notice was issued u/s 148 on the address available with the AO as mentioned para 1 of the assessment order. It is also stated by the AO that the notice u/s 148 was serve by way affixture as the assessee was not available. The notices issued u/s 143(2) and 142(1) were also returned unserved on the assessee. A different Chottelal J Yadav of Bhardya Kamla Nagar , Hanuman Mandir, Antop Hill Mmbai who was assessed to tax under PAN AAUPY3812E was summoned and his statement was also recorded which was incorporated in assessment order para 4. Notice u/s 133(6) was also issued to bank manager of Union Bank of India, Cumballa Hill branch and the address available in the bank was Room No 10 Building No P7, P &T Colony, Santacruz (East Mumbai) 400029 however as per inspector report on the address a different person Mr Sanjay Deoba Nangare was residing for the last 8 years. Thereafter the AO completed the assessment vide order dated 18.03.2005 passed u/s 144 r/w/s 147 of the Act. The matter was appealed by the assessee after receiving the assessment order the notice of demand before the ld. CIT(A) who also confirmed the order of the AO. Thereafter the assessee challenged the order of CIT(A) before the Tribunal and on merit thereafter the Tribunal restored the matter to the file of the ld.CIT(A) vide order dated 20.8.2008. The ld. CIT(A) again decided the matter against the assessee dismissing the appeal on legal issue and on merits.

We have considered the rival contentions and perused the relevant record placed before us. The ld. AR has brought to our notice that the “reasons recorded” by the AO for issuing notice u/s 148 was in the name of some different person named as Chottell J Yadav. The permanent account number and address were also not of the assessee. In support he drew our attention to page no 67 & 68 of the paper book. The PAN and address as mentioned in the “reasons recorded” were AAUPY3812E and “Chotelal J Yadav Bhartiya Kamla Nagar, Near Hanuman Mandir, Antophil- 37”, whereas the correct PAN of the assessee was ABRPY893B and correct address was “Laxmi Baug, Behind Guljari Mohamadi Hoel, Sion (W), Mumbai-400022”. The ld AR also submitted before us that the assessee was not having any permanent account number previously and it was only taken recently. In support, the assessee had also filed his averments on oath by way of an affidavit dated 01.9.2015 wherein the assessee had deposed that he was residing at 13/16, Laxmi Baug, Behind Guljari Mohamadi Hoel, Sion (W), Mumbai-400022 since 1981 and did not had any other residence in Mumbai. The assessee further stated that his PAN is ABRPY9803B which was registered on address as mentioned above. The assessee had further stated that he was never having any taxable income and it was for the first time he had received a notice from the office of Tax Recovery Officer ward 21(2), Mumbai on the above address in the month of June, 2005 demanding him to pay outstanding demand of Rs.11,83,959/- of which he was never aware. From the records , it is quite clear that the PAN and address of the assessee in the “reasons recorded” u/s 148 of the Act and as approved by JCIT were in the name of some other person and not that of the assessee and therefore there had been wrong assumption of jurisdiction. Even the mandatory requirement of service of the notice under section 148 of the Act not met and also communication of reasons were also not made available to the assessee. Further we find from the page 52 of the paper book that one Mr. Chotelal Yadav represented himself through the Chartered Accountant M M Dubey and Co who was different person from Chotelal J Yadav, the assessee before us. In the said letter dated 1.7.2003 addressed to the ITO 21(2)(1), Bandra, Mumbai different PAN being AAUPY3812E was mentioned and a self assessment tax challan of Rs. 4076/- was filed for the assessment year 2003-04 , which is different from the assessee . Besides the assessee was never assessed to tax ever before. We also find that the assessee was earning meagre salary income per month of Rs.3000/- and we are not in agreement with the observations of ld. CIT(A) as made in para 4.3.3 that notices were duly served, the order u/s 144 r.w.s 147 was passed on 18.3.2005 within one year from the end of the financial year on which notice u/s 148 was issued i.e. 26.3.2004 and due entries was made in the Dispatch register and that the order was served upon the assessee on 24.3.2005 by registered post. Further page no.21 of the paper book reveals that the department sent notice on wrong address i.e. at Jiyropur, Post Sukhipur, Tal. Phulapur, Dist, Azamgad (UP State. Similarly, the notice u/s 131 of the Act dated 1.12.2004 was issued to the assessee on wrong address in UP. Thus in this background the entire proceedings u/s 147 r.w.s. 148 which were initiated and concluded on a different person with different PAN is bad in law as the notice u/s 148 was not served and the statutory requirement is not complied with. In view of these facts and circumstances the whole assessment proceedings and the resultant assessment made by the AO cannot be sustained as it suffers from serious defects and infirmities and we, therefore, have no option but to quash the assessment proceedings. Accordingly we quash the proceedings u/s 147 r.w.s. 148 of the Act by allowing the appeal of the assessee on technical ground without going into the merits of the case. The AO is directed accordingly.