Mr. S. C. Saha, Advocate v. The Commissioner Of Income Tax

IN THE HIGHCOURT OF TRIPURAAGARTALA W. P.(C) No.444 of 2010 Petitioner Snri Ashutosh Bandopadhnyay,S/o. Late Rajendra Chandra Bandopadhyay, _Joynagar, H. G. Basak Road, Agartala, —District — West Tripura. S/o. Late Rajendra Chandra Bandopadhyay, _ BY ADVOCATE: Mr. S. C. Saha, Advocate. — Versus — Respondents 1The Commissioner of Income Tax, Shillong, M. G. Road, Meghalaya, Pin-793001. 2 _The Deputy Commissioner of Income Tax,Agartala Circle, Agartala,West Tripura, Pin-799001.Agartala Circle, Agartala,West Tripura, Pin-799001. 3.The Assistant Commissioner of Income Tax,Agartala Circle, Agartala,Agartala Circle, Agartala, West Tripura, Pin-799001 BY ADVOCATE: | None.| B-E-F-O-R-E.THE HON’BLE CHIEF JUSTICE MR. DEEPAK GUPTA.THE HON’BLE MR.JUSTICE S. TALAPATRA Date of hearing and delivery : 25.02.2014of judgment and order. Whether it is fit for reporting : YES JUDGMENT & ORDER (ORAL) fDeepak Gupta, CJ) By means of this writ petition the petitioner has laid challenge|to the revisional order dated 12.05.2010 passed by the Commissioner of)Income Tax, Shillong under Section 263 of the Income Tax Act, 1961. O02.Briefly stated, the facts of the case are that the assessee is a.contractor by profession. He had undertaken various contracts during thefinancial year 2006-07 corresponding to the assessment year 2007-08. He|filed his returns and the Assessing Officer scrutinized the returns in terms of|Section 143(3) of the Income Tax Act. During scrutiny of the returns, theAssessing Officer found that tne petitioner nad, in his initial return, not|disclosed the existence of a Bank Account No.30044/789261 maintained withthe State Bank of India, Bazar Branch, Agartala. At the end of the financialyear a sum of Rs.15,365/- stood in the credit of the assessee in the said|Dank account and this amount was added to the income of the assessee as|undisclosed income. Penalty proceeding was initiated separately. 03.According to the assessee, he did not want to contest this.matter and, therefore, deposited the amount assessed by the AssessingOfficer. | O04,The Commissioner sent a communication dated 16/18.11.2009|under Section 263 of the Income Tax Act to the petitioner for the|assessment year 2007-08. The heading of the said communication reads as.TOIlOWS :"SUB: Proposal for Revision u/s 263 of IT Act, 1961 for the AY2007-08 — reg.”“Though tne neading stated that it is a proposal for revisionunder Section 263 of the IT Act, 1961 but in the communication the|following line was mentioned. "In view of the above facts, the AO’s order is erroneousand prejudicial to the interest of revenue and Isaccordingly set aside u/s 263 ofthe ITAct, 1961.” W. P.(C) No.444 of 2010 Page 2 of 6 05,Mr. Saha, learned counsel for the assessee contends, and|rigntly so, that this notice was totally illegal since the Commissioner ot Income Tax had actually set aside the order of the Assessing Officer even.before giving notice to the assessee. — 06. |There is no manner of doubt that this communication is not at)all legal and valid. Though in the opening portion, it is mentioned that it is a|proposal for revising the order under Section 263 of the IT Act, in the secondquoted portion, it is clearly mentioned that the order of the A.O. was_erroneous and prejudicial to the interest of revenue and was therefore beingset aside. No order under Section 263 of the IT Act can be passed witnout|giving the assessee an opportunity of being heard and putting forth his case. Therefore, we are clearly of the view that this notice was not in fact a propernotice. 06. |There is no manner of doubt that this communication is not at)all legal and valid. Though in the opening portion, it is mentioned that it is a|proposal for revising the order under Section 263 of the IT Act, in the secondquoted portion, it is clearly mentioned that the order of the A.O. was_erroneous and prejudicial to the interest of revenue and was therefore beingset aside. No order under Section 263 of the IT Act can be passed witnout|giving the assessee an opportunity of being heard and putting forth his case. Therefore, we are clearly of the view that this notice was not in fact a propernotice. O07.Tne normal natural consequence would nave been to Nave.quashed this notice but in the present case certain subsequent developmentshave taken place which clearly indicates that the intention of the|Commissioner of Income Tax was not to set aside the order but to express|nis.prima facie'view tnat the order was wrong. Tne assessee in response to this communication appeared before the Commissioner of Income Tax who|gave the assessee a number of opportunities of being heard. Written.submissions were filed by the assessee and finally the Commissioner of Income Tax passed a detailed reasoned order on 12[th]May, 2010. os.Assuming that the notice was bad, the issue that arises is.whether the order under Section 263 of the IT Act should be set aside at this W. P.(C) No.444 of 2010 Page 3 of6 stage because now hearing nas admittedly been given to the assessee. IT theassessee had approached this Court or any other authority, immediately afterthe first order had been passed, normally the only order which would have|been passed would be to set aside the communication dated 16/18.11.2009|witn liberty reserved to the Income Tax Authorities to take fresn action after|giving reasonable opportunity to the assessee to put forth his case. Here that.reasonable opportunity has already been given to the assessee and,therefore, in the peculiar facts and circumstances of the case, though the|notice was not properly worded, we are unable to accept the contention otShri Saha that the consequent order under Section 263 of the IT Act shouldpe set aside. 09. «|The second contention of Mr. Saha, learned counsel Is that no doubt the assessee nad not disclosed the bank account number and tne)amount of Rs.15,365/- in his return but all the transactions which form part|of the credits and debits which took place in the bank account in question|are refiected in the Dooks of account of the assessee. He submits tnat the|Assessing Officer nad gone through the entire books of account and,|therefore, only the amount of Rs.15,365/- standing to the credit of the.assessee of the end of the financial year was neld to be undisclosed. The|Commissioner of Income Tax nas held as follows: "As the bank account No,30044/789261 with SBI had notbeen disclosed in the accounts and Dalance sheet, the|account will necessarily have to take the character of anundisclosed bank account despite the fact that in theearlier AY 2006-07 it has been disclosed, Non disclosure [$sconcealment and the non disclosure of the bank account|had also undermined the correctness of the accounts and|also the correctness of the Dalance sheet of the assesséeé.In this view of the matter, there is no reason why all the|credits that had gone into the bank account cannotpartake the character of undisclosed income. The W. P.(C) No.444 of 2010 Page 4 of6 "As the bank account No,30044/789261 with SBI had notbeen disclosed in the accounts and Dalance sheet, the|account will necessarily have to take the character of anundisclosed bank account despite the fact that in theearlier AY 2006-07 it has been disclosed, Non disclosure [$sconcealment and the non disclosure of the bank account|had also undermined the correctness of the accounts and|also the correctness of the Dalance sheet of the assesséeé.In this view of the matter, there is no reason why all the|credits that had gone into the bank account cannotpartake the character of undisclosed income. The W. P.(C) No.444 of 2010 Page 4 of6 assessee had submitted in his written submission that the|bank balance of the said account has been voluntarilyoffered for taxation but has however remained silent onthe issue of credits into the bank account which totals toRs.1.06 crores. As no proper explanation has beensubmitted, it appears that the assessee has no reasonable|explanation in respect of this issue. Accordingly, on theIssue of undisclosed bank account, the assessment of the|AO is therefore set aside to the file of the AO for fresh|hearing and to pass a speaking order on the issue. The AO|Is directed to look into the issue as to where the credits|have come from and where the debits had gone andWhether they have been accounted in the books ofaccount and Ifso or otherwise to decide on the taxability|ofthe undisclosed bank account asper law and rules.” 10. 10.We in writ jurisdiction cannot come to a final conclusion as to.whether it is the assessee who is right or whether it is the version of theCommissioner of Income Tax which is correct. It will be for the Assessing|Officer to decide wnethner the amounts which nave been credited and debitedin Bank Account No.30044789761 of SBI are reflected in the books of account or not. If they are reflected in the books of account then the only|non-disclosure is about the final amount of Rs.15,365/- lying in the bank|account in the return. But in case these transactions of the bank account arenot reflected in the books of account then the order of the Commissioner of Income Tax would be right and all the transactions in the bank account|wnicn were not reflected in the Dooks of account would nave to be treated asundisclosed income. 11.Therefore, while disposing of the writ petition, we would only.like to issue tne following Clarification that tne Assessing Officer wnile lookinginto the issue as to where the credits have come from and where the debitshave gone, shall also look into the issue as to whether these credits and.debits have been reflected in the books of account of the assessee which| W. P.(C) No.444 of 2010 Page 5 of6 were produced before nim even at the earlier stage. If those credits and|debits are reflected in the books of account tnen they shall not be treated tobe undisclosed income.| 12. With this observation the writ petition is disposed of. No costs. JUDGECHIEF JUSTICE. MB W. P.(C) No.444 of 2010 Page 6 of6