Smt. Babaljit Kaur, Jagaron vs Department Of Income Tax

The Income Tax Officer-III, Vs. Smt.Babaljit Kaur, Moga, Hq. Jagraon. W/o Shri Harpal Singh, 352/45-A, Gurdip Nagar, 6-Right Saheed Karnail Singh Gate, Jagraon, Ludhiana.

PAN No. AHTPK4643 H

(Appellant) (Respondent)

Appellant by : Shri S.K.Mittal, DR Respondent by : Shri Tej Mohan Singh

Date of hearing : 25.06.2015 Date of Pronouncement : 26.06.2015

PER H.L.KARWA, VP :

This appeal filed by the Revenue is directed against

the order of the learned Commissioner of Income Tax

(Appeals)-II, Ludhiana dated 28.12.2012 relating to

assessment year 2008-09.

2. In this appeal, the assessee has raised following 2

grounds :

1. Whether on the fact & in the circumstances of the case, the Ld. CIT(A) is justified in annulling the assessment made by the AO u/s 143 (3) by ignoring that notices were issued and sent to the assessee well within the prescribed time limit.

2. Whether on the fact & in the circumstances of the case, the Ld. CIT(A) is right in rendering service of the notice through affixture irregular by ignoring the fact that the AO was left with no practical option of service the notice except through fixation as the whole family of the assessee went abroad without giving there whereabouts .

3. Whether on the fact & in the circumstances of the case, the Ld. CIT(A) is right in deleting the addition of Rs.11,64,000/-

made by the AO on account of unexplained cash deposits by ignoring the fact that cash withdrawal on different dates where deposited in bank on subsequent dates is not verifiable.

3. As regards ground No.1 and 2 of the appeal, the

relevant facts are that the assessee is an individual. She

derives income from salary as a teacher employed with the

Government Senior Secondary School, Galib Kalan (Complex),

Government Girls School, Galib Ran Singh (Ludhiana). For

the assessment year 2008-09, she filed her return of income

on 24.6.2008 declaring total income at Rs.1,38,064/-. The

return was processed under section 143(1) of the Income Tax

Act, 1961 (in short 'the Act') on 5.3.2010. The case of the

assessee was taken up for scrutiny as per norms.

Accordingly, the assessment proceedings were taken up by

issuing statutory notices under section 143(2) of the Act

dated 7.9.2009, which was sent through registered post on

9.9.2009 for 18.9.2009. The Assessing Officer has noted that 3

the said notice was received back with the remarks of the

postal authorities "Left India return to the sender".

Thereafter, the Assessing Officer issued a detailed

questionnaire dated 12.7.2010 to the assessee alongwith

notice under sections 142(1) and 143(2) of the Act fixing the

case on 26.8.2010. On the said date, nobody appeared on

behalf of the assessee. The Assessing Officer further

observed that as per the AIR (Annual Information Return) the

assessee has made cash deposits of Rs.11,64,000/- in AXIS

Bank, Jagraon bearing account No.31073. The Assessing

Officer required the assessee to explain these cash deposits

by allowing her final opportunity vide letter dated 30.11.2010

alongwith notice under section 142(1) of the Act for

6.12.2010. According to the Assessing Officer, the said letter

was served through affixture under Rule 20 Order V of Civil

Procedure Code, 1908 on 2.12.2010 through Shri Rattan

Singh, Inspector of the Department. The Assessing Officer

further observed that local enquiries made, revealed that the

assessee Smt.Babaljit Kaur had left India and presently

residing in Canada with her family. Since this was a time

barring assessment, the Assessing Officer completed the

assessment ex-parte to the best of his judgment under section

144 of the Act.

4. Aggrieved by the order of the Assessing Officer, the

assessee filed an appeal before the learned CIT (Appeals) on

31.11.2011 and the learned CIT (Appeals) after condoning the 4

delay in filing the appeal annulled the assessment order

observing as under :

"3.3 I have carefully considered the appellant's submissions. I have also perused the assessment folder. As per the assessment records the first notice u/s 143(2) was issued on 07.09.2009. This notice was sent by registered post. The notice was received back with the comments "Receiver gone on somewhere without given address."

Thereafter another notice dated 23.09.2009 was sent probably through ordinary post. There is no evidence to show whether this notice was served on the appellant. As the notice was probably sent through the ordinary post, the same was not received back.

Apparently, when the 1st notice was received back it was in knowledge of AO that the appellant had gone somewhere and was not available at the address. No effect was made by the AO to serve the notice through affixture. There is nothing on record to show that there was a valid service of notice within the period of limitation prescribed under I.T. Act. Valid service of notice within the period of limitation is an essential requirement for assessment proceedings. In the instant case as discussed above there was no service of notice u/s 143(2) within period of limitation."

5. I have heard Shri S.K.Mittal, learned D.R for the

Revenue and Shri Tej Mohan Singh, learned counsel for

assessee at length and have also perused the materials

available on record. It is observed that notice under section

143(2) of the Act dated 7.9.2009 for attendance on 18.9.2009

was never served upon the assessee and so also the

subsequent notices were returned with the postal remarks

"Left India return to the sender". The fact of the assessee

having left India was, thus, in the knowledge of the Assessing 5

Officer. For the reasons best known to the Assessing Officer,

the provisions of Rule 25 of Order V of the Civil Procedure

Code, 1908, were never followed by him. The notice issued

under section 143(2) of the Act was never served upon the

assessee and thus, the assessment framed would be nullity

and void ab initio. Recently, the I.T.A.T. Mumbai Bench in

the case of Abacus Distribution Systems (India) Pvt. Ltd. Vs.

DCIT (2014) 159 TTJ 156 (Mum.) held that issuance and

s e r v i c e o f n o t i c e u n d e r s e c t i o n 1 4 3 ( 2 ) o f t h e A c t wi t h i n t i m e

period prescribed in second proviso to section 143(2) of the Act

is mandatory and not me r e l y procedural formality and,

theref ore, if such r e q u i r e me n t of service of notice is not

fulf illed then consequent a s s e s s me n t order passed by the

A s s e s s i n g O f f i c e r wo u l d b e n u l l a n d v o i d . Considering the

entire facts of the present case, I am of the opinion that the

learned CIT (Appeals) was fully justified in holding that in

this case, there was no service of notice under section 143(2)

of the Act within the period of limitation, which is mandatory

under the law. Therefore, I decline to interfere with the

findings of the learned CIT (Appeals) on this issue and

accordingly, I uphold the same and dismiss ground Nos.2 and

3 of the appeal.

6. As regards ground No.3 of appeal, the learned CIT

(Appeals) held as under :

6

"4.5 I have carefully considered the rival submissions. As per the AO's report, amount of Rs. 6 Lacs was withdrawn from the bank account on 10.11.2007. This explains the deposits of Rs.6 Lacs in the bank account on 14.11.2007. Out of the remaining cash withdrawals, the AO has confirmed total withdrawals of Rs. 3,33,986/-. The appellant has submitted that in addition to the withdrawals confirmed by the appellant, the following amounts were also withdrawn from the banks.

1. Withdrawal of Rs. 1 Lac on 07.11.2007 from bank account in PNB.

2. Withdrawal of Rs.1,18,000/- on 08.11.2007 from bank account in SBI.

3. Withdrawal of Rs. 50,000/- on 24.10.2007.

The evidences pertaining to these withdrawals were also submitted. If these withdrawals are added up to the withdrawal of Rs. 3,33,986/- which as per AOs report is already explained, the total amount withdrawn works to Rs.6,01,986/-. Thus the appellant had sufficient cash withdrawals to explain the cash deposits totaling Rs.5,64,000/-. All the cash deposits in bank accounts stand fully explained. The addition made by the AO is accordingly deleted. This ground of appeal is accordingly allowed."

7. It is observed that while framing the ex-parte order,

the Assessing Officer made an addition of Rs.11,64,000/- on

account of cash deposits. The Assessing Officer has made

this addition without affording any opportunity of being heard

to the assessee. In my considered opinion, the learned CIT

(Appeals) has correctly appreciated the facts and also the

explanation put-forth by the assessee regarding the deposits

and withdrawals made in the bank account. There is no

material on record to controvert the findings of the learned

CIT (Appeals) on this issue. Shri S.K.Mittal, learned D.R for

the Revenue also could not controvert the findings given by

the learned CI T (Appeals) on this issue. Even on merits also, t h e 7

appeal of the Revenue deserves to be dismissed. The order of

the learned CIT (Appeals) requires no interference at this

stage. Consequently, I reject ground No.3 of the appeal.

8. In the result, Revenue's appeal is dismissed.

Order pronounced in the open court on this 26th

day of June, 2015.

Sd/-

(H.L.KARWA) VICE PRESIDENT

Dated : 26 t h June, 2015

*Rati*

Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.

Assistant Registrar, ITAT, Chandigarh