Parminder Kaur Bedi , vs Assessee

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 908/JP/2012 fu/kZkj.k o"kZ@Assessment Year : 2008-09

Smt. Parminder Kaur Bedi cuke Commissioner of Income Prop. M/s CAP-A PIE (Beauty Vs. Tax, Kota. Salon) Sunny Enclave, Above Honey Zim, Mohali (Punjab) (Earlier at 1-D-8A (SFS) Talwani, Kota.

LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AFYPB 2873 B vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : Shri Siddarth Ranka & Shri M. Iqbal (Adv.)

jktLo dh vksj ls@ Revenue by : Smt. Rolee Agarwal (CIT)

lquokbZ dh rkjh[k@ Date of Hearing : 03/03/2015 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 20/03/2015

vkns'k@ ORDER

PER: T.R. MEENA, A.M.

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

07/03/2012 by the learned Commissioner of Income Tax, Kota for A.Y. 2 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

2008-09 passed U/s 263 of the Income Tax Act, 1961 (hereinafter

referred to as the Act).

2. In this case, notice U/s 148 of the Act was issued on 06/01/2010

as the assessee sold a plot on 07/1/2008 but no capital gain was

declared in the original return of income. The assessee filed return in

response to the notice U/s 148 of the Act and working of capital gain

was given in computation of total income. The assessee has shown

construction in the sold house property in the F.Y. 2002-03 to 2006-07

and claimed it in the cost of house property. The assessee also claimed

investment in the new house property U/s 54 of the Act for Rs.

18,50,000/-. After claiming these deductions, the capital gain was

declared at NIL in the return of income. The Assessing Officer vide his

ordersheet entry dated 09/3/2010 had dropped the proceeding initiated

U/s 148 of the Act. The learned CIT issued notice U/s 263 of the Act to

the assessee on 03/2/2012. The contents of the notice is as under:-

"The assessment proceedings initiated under section 148 of the I.T. Act 1961 dated 06.01.2010 by the Income Tax Officer, Ward 1(2), Kota in your case for the Assessment Year 2008-09 is dropped by the Income Tax Officer, Ward 1(2), Kota on order sheet entry dated 09.03.2010 without verifying

3 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

the return filed by you on 04.03.2010 in response to notice u/s 148 of I.T. Act. The A.O. should have make assessment on the return filed by you therefore, dropping proceedings on order sheet is found to be erroneous in so far as it is prejudicial to the interest of revenue."

The assessee did not appear before the learned CIT nor filed any

written submission, therefore, case was decided on the basis of facts of

the case and material available on the record. It is found that the

assessee filed return against the notice issued U/s 148 of the Act on

04/3/2010 in which the income originally returned at Rs. 1,56,700/- was

reduced to Rs. 1,34,720/-. The LIC commission receipt, which was

shown at Rs. 30,670/- in the original return was reduced to NIL. The

interest income, which was declared at Rs. 529/- was enhanced to Rs.

9,326/- in this return. The details regarding working of the capital gain

has also been furnished in this return. As per these details, the assessee

sold its residential house at Talwandi on 07/1/2008 for Rs. 36,51,000/-

but as per Section 50-C, the value adopted at Rs. 42,26,622/-. After

reducing the indexed cost of the said property taken at Rs. 25,08,274,

the capital gain was shown at Rs. 17,18,348/-. Even this capital gain

was claimed as fully exempt by asking for deduction of Rs. 17,18,348/-

U/s 54 of the Act. As per records available, the assessee had purchased 4 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

a plot of land near Chandigarh on 04/2/2008 for Rs. 10 lacs. Then she

claimed that she entered into a contract with one Shri Milkha Singh, son

of Shri Hari Singh, resident of Jalandhar to construct a house on this

plot and claimed to have paid Rs. 7,50,000/- to him towards

construction. In support of cost of purchase of the said plot, the

assessee filed a copy of the registered purchase deed, on the basis of

these two documents, the deduction was claimed U/s 54 of the Act in

the fresh return of income of Rs. 17,18,348/-. However, in the

agreement dated 08/02/2008, the copy of demand made to Shri Milkha

Singh, contractor of Rs. 7,50,000/- for construction of house is not

mentioned and the complete address of the contractor Shri Milkha

Singh has also not been given. The agreement appears to be concocted

under the facts and circumstances of the case. No details of

construction as per the contract have been provided and the payments

made to the contractor is also not substantiated. Contractor Shri Milkha

Singh is from district Jalandhar whereas land is situated near

Chandigarh. The learned CIT observed that the learned Assessing

Officer should have examined these details before accepting the revised

return of the assessee and dropping the proceeding initiated U/s 148 of

the Act. He is not even examined the bank account of the assessee. In 5 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

spite of the fact that the sale consideration of the property of the

assessee at Talwandi, Kota has been mainly received through cheque

except an amount of Rs. 51,000/- received in cash. Hence the order of

the Assessing Officer dropping the proceeding initiated U/s 148 of the

Act dated 09/3/2010 merely after five days of filing of revised return, is

both erroneous and prejudicial to the interest of the revenue. As the

Assessing Officer had failed to make necessary inquiry which were

called for under the circumstances of the case. The Assessing Officer

has simply accepted what the assessee had stated in return filed on

04/3/2010. He, however, relied on the case of Rampyari Devi Saraogi

Vs. CIT 67 ITR 84 (S.C.). The meaning of erroneous U/s 263 includes

cases where there has been failure to make the necessary inquiry,

which is incumbent on the Assessing Officer to investigate the fact

stated in the return when circumstances would make such an inquiry

prudent and the word "erroneous" in Section 263 includes the failure

to make such an inquiry. He further relied upon the decision of the

Hon'ble Apex Court in the case of Smt. Taradevi Agarwal Vs. CIT (1973)

88 ITR 232 (SC) and Malabar Industrial Company Ltd. Vs. CIT (2000)

243 ITR 323 (SC). This order is also prejudicial to the interest of the

revenue. He also relied on the decision of the Hon'ble Kerala High Court 6 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

in the case of Bismillah Trading Co. Vs. Intelligence Officer 248 ITR 292

(Ker.). As per provisions of Section 148 of the Act once a notice is

issued U/s 148 of the Act by any Assessing Officer, he can make an

assessment U/s 143(3) or 144 of the Act or reassessment or

re-computation of income only. He is not empowered to drop the

proceeding otherwise than initiation where the notice issued is

technically invalid or void ab initio. In this case, when the assessee filed

a fresh return in response to the notice U/s 148 of the Act, the

Assessing Officer was legally bound only to complete the reassessment

either U/s 143(3) or 144 of the Act. For this reason also, the order of

the Assessing Officer is erroneous as well as prejudicial to the interest

of the revenue and is thus, liable to be cancelled. Therefore, the

learned CIT has held the dropping the proceeding on ordersheet

erroneous and prejudicial to the interest of the revenue. Accordingly,

notice issued U/s 148 dated 06/1/2010 was held to be valid. However,

since the time limit for completing the assessment in pursuance of that

notice U/s 148 of the Act was over on 31/12/2010 as per the provisions

of Section 153(2) Proviso-2 below it, the Assessing Officer was directed

to issue fresh notice U/s 148 of the Act to reassess the income offered 7 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

by the assessee in the return filed by her originally and then in response

to notice U/s 148 of the Act on 04/3/2010.

3. The assessee challenged 263 order in following grounds:

1. That on the facts and in the circumstances of the case, the learned Commissioner of Income Tax, Kota grossly erred in passing an order u/s 163 dated 07.03.2012 and in holding that the re-assessment made by the learned Assessing Officer is found to be erroneous in so far as it is prejudicial to the interest of the revenue.

1.1 That the assessee-appellant having shifted to Mohali (Punjab) long back, no notice having been

received/served on the assessee therefore the very initiation of proceeding is illegal, is bad in law is in violation of Principles of Natural Justice and deserves to be quashed.

2. That on the facts and in the circumstances of the case, the learned Commissioner of Income Tax, Kota only on this basis that "dropping proceedings on order sheet is found to be erroneous in so far as it is prejudicial to the interest of revenue" is wholly unjustified, bad in law and such an order being bad in law deserves to be quashed.

8 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

2.1 That the learned Assessing Officer acting on the return in pursuance to notice u/s 148 having been satisfied as to correctness and completeness of the return of income, dropped the proceedings which was just and proper and under the Act there is no requirement of passing of an order therefore the initiation of proceedings u/s 263 only on this premise is unjustified, bad in law and therefore the initiation, as well as proceedings as well as the order deserves to be quashed.

2.2 That the learned Commissioner of Income Tax, Kota has not assigned any reason except that the learned Assessing Officer was not empowered to drop the proceedings therefore such an action is neither erroneous nor is prejudicial to the interest of the revenue and such dropping of the proceeding was just and proper and therefore he ought not to have been quashed and redirected to issue notice u/s 148 which is impermissible in law.

2.3 That the notice as well as order having not been properly served is in violation of principles of natural justice and deserves to be quashed/cancelled.

9 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

2.4 That the learned CIT has gone on assumptions, presumptions, conjecture and surmises which is bad in law.

3. That the assessee craves leave to add, alter and modify any of the grounds of appeal on or before the date of hearing."

The appeal filed by the assessee is belated by more than 215 days. The

assessee filed condonation of delay petition and filed an affidavit of Shri

R.S. Ageshwar, Advocate for the assessee. The contents of the affidavit

is reproduced as under:-

I, R.S. Ageshwar, aged about 65 years, S/o Late Shri Madan Lalji Ageshwar, resident of 2-C, Ballabh Bari, Gumanpura, Kota (Raiasthan) PIN: 324007 do hereby declare on solemn affirmation as under:-

1. That I am an Advocate practicing on Taxation Laws since last more than 40 years.

2. That I had an occasion of handling the case of Smt. Parminder Kaunr Bedi, W/o- Shri Surendra Singh Bedi, who was residing at 1-D-8A (SFS) Talwandi, Kota.

3. That I had furnished Smt. Parminder kaur Bedi's Return of Income for the Assessment Year upto 2010-11 which was last submitted on 15.03.2011. At the time of furnishing of her Return for the Assessment Year 2010-11 it was conveyed to me by Smt. 10 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

Parminder Kaur Bedi and her husband that since they have sold their property at Kota and as the business was not doing well therefore they have shifted to Mohali (Punjab) where they have constructed a residential house and started living there. No matter was pending after furnishing of this Return for the Assessment Year 2010-11.

4. That somewhere in the first week of February, 2012, Inspector/Notice Server from the office of the Commissioner of Income Tax, Kota came with a notice u/s 263 of the Income Tax Act dated 07.03.2012 for the assessment year 2008-2009. I informed the notice server that I am not the competent person on whom this notice is to be served as I am not in touch with Smt. Parminder Kaur Bedi for the past more than a year and that I have handed over all the files & records to Smt. Parminder Kaur Bedi and that she has shifted over to somewhere in Mohali. However the Inspector/Notice Server insisted upon taking the notice, which I received on 04/02/2012.

5. That since I had no authority and competence to appear on behalf of Smt. Parminder Kaur Bedi and the contact details of Smt. Parminder Kaur Bedi were also lost, therefore the notice was lying with me as I had no address of Smt. Parminder Kaur Bedi. Therefore I did not attend to the date of hearing mentioned in the notice.

6. That again after a week I received telephonic call from the office of Commissioner of Income Tax, Kota that I should attend 11 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

the hearing of matter of Smt. Parminder Kaur Bedi. I informed the concerned person on the telephone itself that l have no authority and competence to appeal on behalf of Smt. Parminder Kaur Bedi, she has left Kota, her Income-tax files have been handed over to her, she is not in touch for past more than 1 year and that the contact details of Smt. Parminder Kaur Bedi were also lost, hence I will not appear.

7. That again somewhere in the second week of March, 2012, the Inspector/Notice Server came from the office of the Commissioner of Income Tax, Kota to my office with an order passed u/s 263 of the Income Tax Act dated 07.03.2012 of Smt. Parminder Kaur Bedi to which I had replied that since the family had shifted to Mohali, I am not aware of her latest address. All papers after furnishing of Return for the Assessment Year 2010- 11 were handed over to the assessee and since then they are not in touch with me which is also at least 1 year back, but the Inspector/Notice Server insisted upon taking the order which I received on 14.03.2012. Since the whereabouts of Smt. Parminder Kaur Bedi were not known, therefore the order was lying with me as I had no updated address of Smt. Parminder Kaur Bedi .

8. That it is somewhere in October, 2012 that Smt. Parminder Kaur Bedi talked to me and conveyed that some notices have been received at her Mohali (Punjab) address bearing notices u/s 142(1), 143(2) and 143(3) and enquired as to reasons for the same. That I was not aware so I conveyed to send the same for 12 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

my perusal and simultaneously I recollected and conveyed to her that one order u/s 263 dated 07.03.2012 has been sent to me and appropriate action needs to be taken. I conveyed h her that the notices appear to be fallout of the said order. Accordingly I sent the original order to her in the second week of October, 20l2 for taking appropriate action. Thereafter she sent back the order to me requesting me to prefer an appeal before the Hon'ble Income Tax Appellate Tribunal. Accordingly I got the appeal prepared on her behalf.

9. That since I was not aware of the latest address of Smt. Parminder Kaur Bedi of Mohali (Punjab) therefore the order was lying with me for the last about 7 months for want of her address. Immediately when she conveyed her address it was sent to her.

3.1 The learned A.R. of the assessee also filed written reply on

condonation of delay, which is reproduced as under:-

Assessee had shifted to Mohali (Punjab) in October 2010 and she filed her return of income for A.Y. 2010-11 on 15.03.2011 declaring her address of Mohali (Punjab). She took all the income-tax files from her Advocate Shri R.s. Ageswar after shifting to Mohali (Punjab) as no Income-tax proceedings were pending.

CIT directly served notice u/s 263 on assessee's erstwhile A.R. and also served the order u/s 263 on her erstwhile A.R. 13 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

who also refused to appeal before CIT and objected to servicing of notice on him stating that he has no record of the assessee as assessee has taken all her files and he is not competent to appeal as he holds no brief on assessee's behalf.

Orders and notices are kept with the erstwhile A.R. of the assessee.

Subsequent to order passed by the CIT u/s 263, when the A.O. issued notices u/s 148, 142(1), 143(2) dated 01.10.2012 of the Income-tax Act at assessee's Mohali address, which she received on 09.10.2012, she again contacted her erstwhile A.R., who immediately sent the notices and order lying with him which she received on 12.10.2012 and within 2 months thereof, she has filed this appeal alongwith condonation application. Delay if any was not at the end of the assessee, nor was it deliberate.

Courts have consistently held that while granting condonation, a liberal approach should be adopted rather than a pedantic or hyper technical approach, which would defeat the legitimate claims of tax payers. Reliance is placed upon:

a. Bhartiya Engineering Corporation Private Limited Vs. R.G. Deshpande 130 ITR 442 (Bom.) b. B.M. Malani Vs. CIT 306 ITR 196 (SC).

c. R. Seshammal Vs. ITO & Anr 237 ITR 185 (Mad).

d. Sitaldas K. Motwani Vs. DGIT & Anr. 323 ITR 223 (Bom) 14 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

e. Bombay Mercantile Cooperative Bank Limited Vs. CBDT & Ors. 332 ITR 87 (Bom).

4. At the outset, the learned Sr.D.R. argued that in this case, notice

U/s 148 of the Act was issued by the Assessing Officer and dropped the

assessment proceedings on ordersheet without giving detail findings. It

is fact that no inquiry/investigation has been conducted by the

Assessing Officer to decide the case. The learned CIT, Kota has given

detailed findings and directed the Assessing Officer to reissue notice U/s

148 to the assessee vide order dated 07/03/2012. The appellant had

filed appeal in this case on 10/12/2012, which is more than 215 days.

The assessee filed condonation application alongwith affidavit of Shri

R.S. Ageshwar, erstwhile Advocate of the assessee dated 04/12/2014.

The assessee left Kota in October, 2010 as claimed by her and shifted

to Mohali (Punjab) but there is no evidence on record that she has

shifted Mohali (Punjab). Further, even these facts considered correct

then it is a duty of assessee to keep in contact with A.R. and also A.R.

should have informed the assessee regarding income tax proceedings.

She further claimed that she applied for change of address for which no

documentary evidence has been submitted and also has not come out

from the office record that she applied for change of address. She 15 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

further claimed that return for A.Y. 2010-11 was filed on 15/03/2011

and address on which was shown at Mohali in Range-1(2), Kota, which

proved that the assessee was in contact with A.R. of the assessee. The

learned erstwhile A.R. Shri R.S. Ageshwar was also helping the assessee

to file the return in Kota up to 15/3/2011, therefore, affidavit filed by

Shri R.S. Ageshwar, erstwhile Advocate of the assessee is not

acceptable. When she got the notice from the Assessing Officer U/s

143(2) of the Act in October, 2012, she contacted to Shri R.S.

Ageshwar, erstwhile Advocate of the assessee. The A.R. is to inform the

assessee when he served the order U/s 163 of the Act on him. The

reason behind not informing the assessee is best known to the

Advocate as well as party. Therefore, the delay in filing the appeal may

not be condoned.

5. We have heard the rival contentions of both the parties and

perused the material available on the record. It is undisputed fact that

there was a delay in filing of appeal about more than 215 days. The

A.R. of the assessee was also aware of this fact that the proceeding U/s

263 of the Act has been initiated against the assessee. The

circumstances explained by Shri R.S. Ageshwar, erstwhile Advocate of

the assessee has not been supported with any evidence. There is no 16 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

evidence on record that the assessee has left Kota in October, 2010

even she has filed return for A.Y. 2010-11 on 15/03/2011 from Mohali

in Kota office. Therefore, this fact is not acceptable when she got the

notice from the Assessing Officer in the month of October, 2012 (no

assessment year has been given). She immediately contacted to Shri

R.S. Ageshwar, erstwhile Advocate of the assessee. The facts

mentioned by Shri R.S. Ageshwar, erstwhile Advocate of the assessee in

his affidavit dated 04/12/2014 are contradictory in factual as well as in

sequences of events. When 263 of the Act order has been served on

the advocate, it is his duty to inform the assessee immediately but he in

connivance with the assessee had not filed appeal in time, which was

primary obligation on part of both them. The learned the then A.R. also

admitted in his affidavit that return for A.Y. 2010-11 was submitted on

15/3/2011. At the time of furnishing of her return for A.Y. 2010-11, he

came to know that they have sold the house at Kota. When return for

A.Y. 2010-11 was filed on 15/3/2011 on what basis he presumed that

no matter was pending after furnishing of the return, which was belated

return. It is automatic on the part of the Assessing Officer to issue

notice in this case to scrutinize the case being return filed late. Even

scrutiny notice U/s 143(2) for A.Y. 2010-11 could be issued by the 17 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

Assessing Officer up to September, 2011 as per law. The learned CIT

issued in this case show notice on 03/2/2012 for A.Y. 2008-09. Thus,

the depositions in affidavit remain vague, unsubstantiated and do not

amount to explaining the sufficient cause. The affidavit and cavalier

conduct of Shri R.S. Ageshwar, the then Advocate of the assessee

raises serious questions on his professional competence and work ethics

in giving such an affidavit which hides more than it explains. The

burden is on the assessee to reasonably explain day to day delay and

establish that there existed reasonable and sufficient cause in delaying

the filing of appeals for about more than 215 days. If the proper dates

or occasions are not mentioned with proper facts then the delay cannot

be condoned. In this behalf, we rely on the decision of the Hon'ble

Madras High Court in the case of Madhu Dadha Vs. ACIT (2009) 317

ITR 458 (Mad). The Hon'ble High Court has held as under:-

"Held, dismissing the appeal, that it was clear that the assessee had not explained the cause of delay in filing the appeal, especially when the authorized representative who was given charge to file the appeal had died exactly one year after the last date for filing of the appeal. Even after the death of the authorized representative the assessee had taken more than six months to file the appeal. The assessee had neither given any particular or details in the affidavit as to the date on which the

18 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

papers were handed over to the counsel for preparing the appeal and on what occasion the assessee enquired about the progress in preparing the appeal and filing it. The assessee had not taken a proper plea to show sufficient cause giving evidence and proof beyond reasonable doubt for the delay. There was no need to interfere with the order of the Tribunal."

In this judgment, the Hon'ble Supreme Court citation i.e. Collector,

Land Acquisition Vs. Mst. Katiji (supra) has also been considered. We

find merit in the contentions of ld. DR that law helps diligent and not

the indolent as well as the axiomatic delay defeats equity.

In our considered view that the condonation petition filed by the

assessee and material available on the record, fail to invoke any

confidence, fail to explain reasonable and sufficient cause for

condonation of long delay of more than 215 days in filing this appeal.

The assessee has to come clean with all the relevant facts, which

happened in the period of more than 215 days. The assessee has to

explain all the events and be specific in the dates. The depositions

made in the then Advocate's affidavit remain uncorroborated. Thus, the

vague affidavit given by Shri R.S. Ageshwar, the then Advocate of the

assessee remains uncorroborated and unreliable. In the entirety of 19 ITA 908/JP/2012_ Smt. Parminder Kaur Bedi Vs. CIT

facts and circumstances of the case, we decline to condone the delay of

more than 215 days in filing this appeal.

As we dismiss this appeal on condonation of delay

application, we have not given any finding on merit of the case.

11. In the result, the assessee appeal is dismissed.

Order pronounced in the open court on 20/03/2015.

Sd/- Sd/- ¼vkj-ih-rksykuh½ ¼Vh-vkj-ehuk½ (R.P.Tolani) (T.R. Meena) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur

fnukad@Dated:- 20th March, 2015

*Ranjan

vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- Smt. Parminder Kaur Bedi, Mohali (Punjab).

2. izR;FkhZ@ The Respondent- Commissioner of Income Tax, Kota.

3. vk;dj vk;qDr@ CIT

4. vk;dj vk;qDr¼vihy½@The CIT(A)

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No. 908/JP/2012)

vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar