Vishnu Kumar Bhargava , Jaipur 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. 629/JP/2011 fu/kZkj.k o"kZ@Assessment Year : 2006-07

Vishnu Kumar Bhargava, cuke The I.T.O., D-16, Meera Marg, Bani Park, Vs. Ward 7(3), Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABPPB 2688 B vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : Shri T.C. Jain, (C.A.) jktLo dh vksj ls@ Revenue by : Shri Ajay Malik (Addl.CIT)

lquokbZ dh rkjh[k@ Date of Hearing : 27/11/2014 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 13/02/2015

vkns'k@ ORDER

PER: R.P. TOLANI, J.M.

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

31/03/2011 by the learned CIT(A)-III, Jaipur for A.Y. 2006-07.

Respective grounds of appeal are as under:

"1. The learned CIT(A) has grossly erred in facts as well as in law in confirming the order passed by the A.O. U/s 144 2 ITA 629/JP/2011_ Vishnu Kr. Bhargava Vs. ITO

ignoring the facts that the statutory notice U/s 143(2) was not served on the assessee within the time limit prescribed under that section.

2. the learned CIT(A) has grossly erred I fact as well as in law in confirming the order passed by the A.O. U/s 144 without serving notice U/s 143(2) within the time limit prescribed under the law.

3. The learned CIT(A) has grossly erred in fact as well as in law in confirming that the notice U/s 143(2) has been served within the time prescribed under that section without adducing evidences of service of notice as alleged.

4. The learned CIT(A) has also grossly erred in confirming addition of Rs. 15,25,000.00 on account of alleged unexplained cash deposit in the Bank account in the facts and circumstances of the case.

5. The learned CIT(A) has also grossly erred in confirming addition of Rs. 65,80,000.00 on account of unexplained bank deposit through cheques in the facts and circumstances of the case.

The appellant prays leave to add to, alter and/or amend the aforesaid grounds of appeal at or before the time of hearing of appeal."

2 Brief facts as recorded by the Assessing Officer are as under:-

"Return of income was filed on 26/07/2006 declaring income of Rs. 1,39,837/-. The case was transferred to this office by ITO Ward 3(2) Jaipur vide his letter No. ITO/W-3(2)/JPR/2007- 08/832 dated 19/07/2007. As per his letter selected for scrutiny

3 ITA 629/JP/2011_ Vishnu Kr. Bhargava Vs. ITO

by CASS. According, notice u/s 143(2) dated 24/07/2007 was issued by the then ITO (this office) fixing the case for 31/07/2007 and was sent vide No. 1573 dated 24/07/2007 through registered post. (Postal Receipt No. 589 dated 24/07/2007). Another notice u/s 143(2) was issued by me on 21/05/2008 fixing the case on 28/05/2008. On 28/05/2008 on behalf of assessee, Shri Ashwani Chaturvedi attended. He was given detailed questionnaire dated 22/05/2008 and the case was adjourned to 27/06/2008. On 27/06/2008, no compliance was made, letter dated 01/07/2008 was issued fixing the case for 09/07/2008. On 09/07/2008, assessee filed letter stating that the notice u/s 143(2) dated 24/07/2007 was served on 03/08/2007 (without submitting any evidence) and the notice was served beyond the time limit and, therefore, it was bad in law. He requested to drop the proceedings.

2.1 The Assessing Officer, however, held that the service of notice

U/s 143(2) was proper; assessee, except objecting to service of notice

did not effectively cooperate in the assessment, the same was framed

ex parte U/s 144 by following observations:

"Section 27 of the General Clauses Act provides that notice is to be treated as served legally if transmission is through registered post (CIT) Vs. Shankar Lal Ved Prakash (2007) 212 ITR (Delhi). Therefore, your claim that notices u/s 143(2) was not served within time is not acceptable. You are requested to make 4 ITA 629/JP/2011_ Vishnu Kr. Bhargava Vs. ITO

compliance to avoid ex parte assessment. On 12/09/2009, you did not make any compliance.

From the above facts, it is seen that despite giving several opportunities after proper service of notice U/s 143(2) dated 24/07/2007, you have not furnished details as per questionnaire dated 22/05/2008. In the circumstances, I am compelled to complete the assessment u/s 144 of the I.T. Act. However, before doing so, you are hereby required to show cause by 06/10/2008 why assessment u/s 144 be not completed to the best of my judgment inter alia assessing following income:"

2.2 Thereafter, learned Assessing Officer informed the assessee

about his proposed ex parte assessment u/s 144 and show cause why

the items and amounts listed therein should not be added to assessee's

income, these items are mentioned in detail in the assessment order.

Since the assessee did not properly reply the show cause notice, the

assessment was concluded U/s 144 by making following additions.

Income from salary as shown Rs. 1,38,000/- Pension as shown Rs. 14,940/- Royalty as above Rs. 1,00,000/- Interest as shown Rs. 5,091/- Addition U/s 69 on account of Unexplained cash deposit in bank as above Rs. 15,25,000/- Addition u/s 69 on account of Unexplained bank deposit through 5 ITA 629/JP/2011_ Vishnu Kr. Bhargava Vs. ITO

Cheques as above Rs. 65,80,000/-

Gross total income Rs. 83,63,001/- Less: Deduction u/s 80C as above Rs. 60,000/- Total Income Rs. 83,03,001/- R/s Rs. 83,03,000/-

3. Aggrieved, the assessee preferred first appeal before the learned

CIT(A), who upheld the service of notice U/s 143(2) of the Income Tax

Act, 1961 on the assessee and upheld the action of framing the

assessment U/s 144 of the Act by following observations:-

02-3 eSua s nksuksa ikfVZ;ksa ds rdksZ dk voyksdu fd;k ,oa ik;k fd fu-v- us fnukad 24-07-2007 dks /kkjk 143¼2½ ds rgr uksfVl tfj, Øekad 1573 tkjh dj Mkd foHkkx }kjk vihykFkhZ d is rs ij HkstkA fu-v- ds fjdkMZ esa bl ckr ds lk{; ekStnw gS fd mDr uksfVl fnukad 24-07-2007 dks iathd`r Mkd }kjk Hkstk x;kA blfy, uksfVl Hksts tkus dh frfFk ij dksbZ fookn ugha gSAa vc iz'u uksfVl rkehy dk gSAa vihykFkhZ ds ikl ,slk dksbZ lcwr ugha gS]a ftlls ;g fl) gks lds fd mDr uksfVl fnukad 03-06-2007 dks rkehy gqvk A ;gka rd fdl laca/k esa vko';d lk{; izLrqr djus dk volj vihy dh lquokbZ ds nkSjku fn;k x;kA t;iqj 'kgj esa lkekU;r;k Mkd foHkkx nwljs ;k rhljs fnu Mkd lqiqnZ dj nsrk gSAa pwfa d mDr uksfVl fnukad 24-07-2007 dks tkjh fd;k x;k] rFkk fnukad 24-07-2007 dks gh Mkd foHkkx dks fn;k x;k] blfy, bl fglkc ls lkekU;r;k mDr uksfVl vf/kdre 26-07-2007 ;k 27-07-2007 rd vihykFkhZ dks fey tkuk pkfg,A blds vfrfjDr ;g Hkh ,d rF; gS fd vihykFkhZ us fnukad 24-07-2007 dks tkjh fd, x, uksfVl dh ikyuk esa 6 ITA 629/JP/2011_ Vishnu Kr. Bhargava Vs. ITO

dksbZ tokc ugha fn;kA blds vfrfjDr vihykFkhZ dk ekeyk nqckjk lquokbZ gsrq fy, tkus ij fnukad 28-05-2008 dks vihykFkhZ dh vksj ls Jh vf'ouh prqosZnh mifLFkr gq,] rc Hkh uksfVl dh oS/kkfudrk ij dksbZ vkifRr ntZ ugha dh xbZ cfYd fu-v- }kjk cSd a esa tekvksa ds laca/k esa iwNus ds ckn bl izdkj dh vkifRr ntZ dh xbZ gS]a tks fuf'pr :ils ckn dk fopkj gSA pwfa d vihykFkhZ fnukad 03-08-2007 dks gh uksfVl vihykFkhZ ij rkfey gqvk] bl ckjs esa dksbZ lk{; izLrqr ugha dj ldk rFkk fu-v- }kjk fnukad 24-07-2007 dks uksfVl Hkst fn, x;k] bldk lcwr fjdkMZ ij ekStnw gS] ,slh fLFkfr esa vihykFkhZ dk rdZ Lohdkj djus ;ksX; ugha gSAa vr% vihy ds bu eqn~nksa dks fujLr fd;k tkrk gS rFkk fu- v- }kjk tkjh fd, x, uksfVl dks fof/klEer ekuk tkrk gS rFkk /kkjk 144 ds rgr vkns'k mfpr :iesa ikfjr fd;k x;k gS]a bldh iqf"V dh tkrh gSAa

3.1 On merits, the assessee also filed application for admission of

additional evidence. The learned CIT(A) declined to admit the additional

evidence by following observations:-

fo-v- us vihy dh lquokbZ ds nkSjku cSda [kkrs dh izfr] mDr O;fDr;ksa ls fnukad 19-10-1993 dks fd, x, bdjkjukesa dh izfr is'k dh rFkk vuqjks/k fd;k fd mDr nLrkostksa dks vk;dj fu;e 1962 ds fu;e 46, ds rgr vfrfjDr lk{; ds :iesa Lohdkj fd, tk,A vihykFkhZ }kjk mDr nLrkost fu-v- ds le{k izLrqr ugha fd, x, Fks] blfy, fu-v- dh fVIi.kh gsrq i= Øekad 462 fnukad 10-09-2010 tkjh fd;k x;kA ftldh ikyuk esa fu-v- us viuh fjiksVZ Øekad 4418 fnukad 22-02-2011 is'k dh ,oa crk;k fd laoh{kk dk;Zokgh ds nkSjku fu/kkZfjrh dks ckj&ckj volj 7 ITA 629/JP/2011_ Vishnu Kr. Bhargava Vs. ITO

iznku fd;k x;k Fkk] ijUrq fu/kkZfjrh us tekdrkZvksa ds lac/a k esa dksbZ foxr izLrqr ugha dh Fkh] blfy, vihyh; Lrj ij is'k fd, x, vfrfjDr lk{;ksa dks Lohdkj ugha fd;k tkuk pkfg,A fu-v- us vkxs crk;k fd fQj Hkh fcuk iwokZxzgksa ds fu/kkZfjrh dks vihyh; Lrj ij is'k fd, x, nLrkostksa ds laca/k esa Li"Vhdj.k is'k djus gsrq fnukad 10-01-

2011 dks i= tkjh dj fnukad 24-01-2011 dh lquokbZ fuf'pr dj volj iznku fd;k x;k] ftldh ikyuk esa vihykFkhZ us LFkxu pkgk] tks fnukad 01-02-2011 ds fy, fd;k x;kA ijUrq fnukad 01-02-2011 dks ogh Li"Vhdj.k tks vihyh; Lrj ij is'k fd;k x;k Fkk] iqu% is'k fd;k x;kA fu/kkZfjrh ls tekdrkZvksa dks mifLFkr djus rFkk nLrkostksa ds lac/a k esa vko';d lgk;d lk{; izLrqr djus gsrq dgk x;kA ijUrq fu/kkZfjrh us u rks tekdrkZvksa dks mifLFkr fd;k ,oa u gh nLrkostksa ds lac/a k esa vko';d lgk;d lk{; izLrqr fd,A blfy, vihyh; Lrj ij is'k fd, x, vfrfjDr nLrkostksa dks Lohdkj ugha fd;k tkuk pkfg,A

03-3 eSua s nksuksa ikfVZ;ksa ds rdksZ dk voyksdu fd;k ,oa ik;k fd fu-v- ds rdZ mfpr gSAa fu-v- us vihykFkhZ ndks fu/kkZj.k dk;Zokgh ds nkSjku ckj&ckj volj iznku fd;k] ijUrq vihykFkhZ }kjk bl lac/a k esa dksbZ nLrkost fu-v- ds le{k izLrqr ugha fd, x;sA blds vfrfjDr vihyh; Lrj ij fu-v- ls fjiksVZ pkgus ij fu-v- }kjk iqu% vihykFkhZ dks volj iznku fd, x,] ijUrq vihykFkhZ us os gh rF; tks vihyh; Lrj ij Li"V fd, Fks] fu-v- ds le{k izdV fd,] ijUrq fu-v- ds le{k mDr nLrkostksa ds leFkZu esa dksbZ lgk;d lk{; izLrqr ugha fd, ,oa u gh tekdrkZvksa dks mifLFkr fd;kA bl izdkj vihykFkhZ dks fu-v- ds le{k vius dFku dks fl) djus dk ckj&ckj volj iznku fd;k tkrk jgk gS]a ijUrq 8 ITA 629/JP/2011_ Vishnu Kr. Bhargava Vs. ITO

vihykFkhZ vius dFku dks fl) dj ikus esa vlQy jgk gSAa vr% vihyh; Lrj ij vihykFkhZ }kjk fn, x, vfrfjDr lk{;ksa dks vk;dj fu;e 1962 ds fu;e 46, ds rgr Lohdkj fd;k tkuk laHko ugha gSAa vr% vihykFkhZ }kjk fu;e 46, ds rgr is'k fd, x, nLrkostksa dks vLohdkj fd;k tkrk gS rFkk vihykFkhZ dh vihy bl eqn~ns ij fujLr dh tkrh gSAa

One of the assessee's ground in respect of Section 80C of the Act was

allowed, however, all other grounds were dismissed by the learned

CIT(A). Thus, the first appeal was partly allowed.

4. Aggrieved, assessee is in further appeal before us.

5. The learned counsel for the assessee contends that for valid

assessment U/s 143(2) of the Act, it is mandatory on the part of the

department to demonstrate that notice U/s 143(2) of the Act was validly

served in statutory time on the assessee. The observations of Assessing

Officer merely indicate that a notice within time was issued on the

assessee. It has been held by various courts that the issuance of notice

does not amount to service of the notice. Thus, in assessee's case, the

mandatory condition of service of notice U/s 143(2) of the Act in time

on the assessee remains uncomplied with. Therefore, the assessment in

question was ab-initio void for want of jurisdiction. Reliance is placed on

the decision of Hon'ble Supreme Court in the case of ACIT Vs. Hotel 9 ITA 629/JP/2011_ Vishnu Kr. Bhargava Vs. ITO

Blue Moon 321 ITR 362 which mandates a proper service of notice u/s

143(2) for a proper assessment. It is pleaded that though Hotel Blue

Moon's case refers to Section 158BC of the Act, however, all other

provisions of I T Act including section 143(2) of the Act are similar in

the case of assessments u/ss 143, 144 and 158BC of the Act. Since the

lower authorities have failed to demonstrate that the notice u/s 143(2)

was actually served on the assessee, the assessment is ab-initio void.

Therefore, the same should be quashed. On merits reference is made to

paper book i.e. additional evidence filed before ld. CIT(A), it is pleaded

that on merits also the additions are unwarranted.

6. Learned D.R. on the other hand, vehemently opposes the

reference to additional evidence which is declined by ld. CIT(A) against

which assessee is not in appeal. It is contended that the learned

Assessing Officer and learned CIT(A) both have demonstrably proved

that the notice U/s 143(2) of the Act for this assessment was validly

served on the assessee, inasmuch as the notice was sent on 24/7/2007

by registered post, which is within time. The assessee has not given any

evidence to prove that the said notice was not received by him. All the

time, the assessee took a vague plea that notice U/s 143(2) of the Act 10 ITA 629/JP/2011_ Vishnu Kr. Bhargava Vs. ITO

is not served on him, therefore, assessment proceedings should be

dropped.

6.1 Reference is made to the provisions of Section 27 of the General

Clauses Act that transmission of notice by registered post is a valid

service as the postal authority act as an agent of the assessee. The

Assessing Officer communicated to the assessee about his reliance on

the case of CIT Vs. Shankar Lal Ved Prakash (supra), which upholds

this view. The assessee never cared to controvert the\is proposition of

ld. AO as laid down by the Hon'ble Delhi High Court. The assessee's

reliance on Hotel Blue Moon's case is of no avail inasmuch as it supports

the case of revenue as it refers only to issuance of notice U/s 143(2) of

the Act in time by following observations:

"Section 158BC provides for enquiry and assessment. After the return is filed, clause (b) of section 158BC provides that the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and "the provisions of section 142, sub-sections (2) and (3) of section 143, section 144 and section 145 shall, so far as may be, apply". This indicates that this clause enables the Assessing Officer, after the return is filed, to complete the assessment under section 143(2) by following the procedure like issue of notice under section 143(2)/142. This does not provide 11 ITA 629/JP/2011_ Vishnu Kr. Bhargava Vs. ITO

accepting the return as provided under section 143(1)(a): the officer has to complete the assessment under section 143(3) only. If an assessment is to be completed under section 143(3) read with section 158BC, notice under section 143(2) should be issued within one year from the date of filing of the block return.

Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and is not curable. Therefore, the requirement of notice under section 143(2) cannot be dispensed with. Decisions of the Gauhati High Court and of the Delhi High Court in CIT v. Pawan Gupta (2009) 318 ITR 322 affirmed."

It is pleaded that there is no merit in the grounds and pleadings of the

assessee in this behalf.

6.2 On merits, the learned DR contends that except objecting to

notice no compliance was made before the Assessing Officer which

resulted in ex parte assessment after due intimation to assessee. Ld. AO

by pertinent observations passed the impugned speaking order making

appropriate additions. Thus, as far as, the assessee's explanation on

merits is concerned, there is nothing on the record in this behalf.

6.3 Before learned CIT(A), the assessee for the first time filed

additional evidence under Rule 46A of the Income Tax Rules, 1962 (in

short the Rules), along with application for admission thereof. In

exercise of his powers u/r 46A learned CIT(A) declined to accept the 12 ITA 629/JP/2011_ Vishnu Kr. Bhargava Vs. ITO

same after holding that the assessee was given sufficient opportunity by

Assessing Officer and no case has been made out by the assessee that

he was prevented by a sufficient cause in not filing the evidence before

the Assessing Officer. The assessee's application for admission of

additional evidence has been dismissed by the learned CIT(A) by

elaborate observations and findings. The assessee has not raised any

ground challenging the refusal of admission of additional evidence by

the learned CIT(A) u/r 46A. In these circumstances, there is no material

on record on which, now the assessee is attempting to rely on merit of

the case. As nothing was filed before the Assessing Officer, despite final

144 notice the assessee's contentions on quantum additions lack merit

in this behalf.

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

perused the material available on the record. Both the authorities below

have given elaborate reasons to demonstrate that as per record, the

notice u/s 143(2) was duly issued on the assessee which is deemed to

be served on the assessee as held by the decision of Hon'ble Delhi High

Court in the case of CIT Vs. Shankar Lal Ved Prakash (supra). The

assessee was non-cooperative in assessment proceedings taking only

specious plea that no valid notice U/s 143(2) of the Act was 13 ITA 629/JP/2011_ Vishnu Kr. Bhargava Vs. ITO

issued/served on him. The assessee claims that it is the burden of the

department to show that the notice was served on the assessee. The

department has discharged its burden by referring to the record, which

confirms the proper transmission of notice by registered post, reliance

on Section 27 of the General Clauses Act and reliance of the decision of

Hon'ble Delhi High Court in the case of CIT Vs. Shankar Lal Ved Prakash

(supra). In our considered view, the department has discharged its

burden in this behalf.

7.1 Apropos the assessee's vehement reliance on the case of Hotel

Blue Moon (supra), in the given it is rather supports the case of the

revenue, inasmuch as the Hon'ble Supreme Court has referred to

issuance of notice u/s 143(2) within time limit, which has been amply

demonstrated by the department. In these circumstances, we see no

merit in the grounds of assessee that the assessment in question was

ab-initio void for want of proper issuance/service of notice. Thus, the

orders of lower authorities upholding the service of impugned notice U/s

143(2) on the assessee are upheld. Their orders are in conformity with

the decision of Hon'ble Delhi High Court in the case of CIT Vs. Shankar

Lal Ved Prakash (supra) and Hon'ble Supreme Court judgment in the

case of Hotel Blue Moon (supra) is upheld.

14 ITA 629/JP/2011_ Vishnu Kr. Bhargava Vs. ITO

7.2 Apropos the merits of the case, the assessee has not raised any

ground before us challenging the non-admission of additional evidence

by the learned CIT(A) under Rule 46A. In the absence of any ground

challenging this order, we are unable to entertain any plea on merits

taking the basis of additional evidence which legally is not a part of the

record. Since on merits of the quantum additions, there is nothing on

record no interference can be made in the order of ld. CTIT(A). In view

thereof, the quantum additions are upheld assessee's grounds in this

behalf are dismissed.

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

Order pronounced in the open court on 13/02/2015.

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

Tk;iqj@Jaipur fnukad@Dated:- 13th February, 2015

*Ranjan

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

1. vihykFkhZ@The Appellant- Shri Vishnu Kumar Bhargava, Jaipur.

2. izR;FkhZ@ The Respondent- The ITO, Ward 7(3), Jaipur.

3. vk;dj vk;qDr¼vihy½@The CIT(A)-III, Jaipur.

15 ITA 629/JP/2011_ Vishnu Kr. Bhargava Vs. ITO

4. vk;dj vk;qDr@ CIT, Jaipur

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

6. xkMZ QkbZy@ Guard File (ITA No. 629/JP/2011)

vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar