ANIL PANWAR,HISAR V. ITO WARD-1, JIND

ITA 136/DEL/2024

AI Insights

The case involves Anil Panwar, the appellant, who contested the reassessment of his income for the assessment year 2011-12, which was determined by the Income Tax Officer (ITO), Ward-1, Jind, at Rs.16,44,030. The reassessment was upheld by the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre (NFAC), Delhi. The primary contention was the improper service of notices under sections 148 and 142(1) of the Income Tax Act, 1961, which the appellant argued rendered the reassessment invalid. The Tribunal, after reviewing the submissions and the remand report from the ITO, agreed with the appellant, noting that the notices were not served correctly, and thus, the reassessment was quashed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312248 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Other Referred Cases: R.K. Upadhyaya Vs. Shanabhai P. Patel [166 ITR 163], CIT Vs. Eshaan Holdings (P) Ltd. [344 ITR 541] (Del.), CIT Vs. Chetan Gupta [382 ITR 613] (Del.), Pr. CIT Vs. Atlanta Capital Pvt. Ltd. [464 ITR 341] (Del.), Ardent Steel Ltd. Vs. ACIT [405 ITR 422] (Chattisgarh), Shri Charanjit Singh Vs. ITO (ITA No.4395/Del/2016) dated 09/08/2024, CIT Vs. Ramendra Nath Ghosh, 82 ITR 888, B. Johar Forest Works Vs. CIT, 107 ITR 409 (J&K), CIT Vs. Dey Brothers, 3 ITR 213 (Rang), DCIT Vs. Chetan Gupta on 15th September, 2015 (Delhi High Court), Civil Appeal No. 8132 of 2019 (Arising out of SLP (C) No.3530/2019) dated October 18, 2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: OM PARKASH
• Assessee Lawyers: PARTH SINGHAL
• Keywords: Reassessment proceedings; Principle of natural justice; Reason to believe; Tangible material
• Section: 147; 148; 144; 142(1)

Judgement Text

"I.T.A.No.136/Del/2024 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC” NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER आ.अ.सं/.I.T.A No.136/Del/2024 िनधा रणवष /Assessment Year: 2011-12 Anil Panwar, H.No.29, Sector 1-4, Hisar, Haryana. बनाम Vs. ITO, Ward-1, Jind, Haryana. PAN No.BZEPP2128L अपीलाथ\u0012 Appellant \u0014\u0015यथ\u0012/Respondent िनधा\u0007\bरतीक ओरसे /Assessee by Shri Parth Singhal, Adv. राज\u0012वक ओरसे /Revenue by Shri Om Parkash, Sr. DR सुनवाईक तारीख/ Date of hearing: 25.04.2025 उ\u0018ोषणाक तारीख/Pronouncement on 28.04.2025 आदेश /O R D E R This appeal is filed by the Assessee against the order of the Ld. CIT(Appeals)-NFAC, Delhi dated 14/12/2023 for the AY 2011-12. Assessee raised the following grounds: - 1. “That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred both in law and, on facts in upholding the determination of income made by the Ld. Income Tax Officer, Ward-1, Jind of the appellant at Rs.16,44,030/- in an order of assessment dated 4.12.2018 u/s 147/144 of the Act. 2. That the Ld. Commissioner of Income Tax (Appeals) has grossly erred both in law and on fats in upholding the initiation of proceedings under section 147 of the Act and, completion of assessment under section 147/144 of I.T.A.No.136/Del/2024 2 the Act without appreciating that the same were without jurisdiction and hence deserved to be quashed as such. 2.1 That the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that there was no specific relevant, reliable and tangible material on record to forma “reason to believe” that income of the appellant had escaped assessment and in view thereof the proceedings initiated are illegal, untenable and therefore unsustainable. 2.2 That the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that reasons recorded mechanically without application of mind do not constitute valid reasons to believe for assumption of jurisdiction u/s 147 of the Act. 2.3 That in absence of any valid approval obtained under section 151 of the Act, initiation of proceedings u/s 147 of the Act and assessment framed u/s 147/144 of the Act are invalid and deserves to be quashed as such. 2.4 That the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that since no valid notices u/s 148, u/s 142(1) and u/s 144 of the Act has been served on the appellant; the impugned order of assessment dated 4.12.2018 u/s144 read with section 147 of the Act was without jurisdiction and deserves to be quashed as such. 3. That the Ld. Commissioner of Income Tax (Appeals) has further erred both in law and on facts in confirming an addition f Rs.16,44,030/- representing alleged unexplained cash deposits in the bank account of the appellant as unexplained source. 3.1 That while confirming the above addition, the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate the factual substratum of the case, statutory provisions of law and as such, addition so made and sustained is highly misconceived, totally arbitrary, wholly unjustified and therefore, unsustainable. I.T.A.No.136/Del/2024 3 3.2 That various adverse findings recorded by the Ld. Commissioner of Income Tax (Appeals) are factually incorrect, legally misconceived and wholly untenable. 4. That even otherwise the Ld. Commissioner of Income Tax (Appeals) passed the order without granting proper opportunity to the appellant and therefore the same is contrary to principle of natural justice and hence vitiated.” 2. Ld. Counsel for the Assessee, at the outset, referring to ground No. 2.4 of grounds of appeal submits that there was no valid service of notice u/s 148, 142(1) and therefore the assessment made u/s 144 r.w.s. 147 of the Act is void ab initio and deserves to be quashed. Ld. Counsel for the Assessee submits that it is an admitted position by the Ld. Assessing Officer in his remand report that the notice issued u/s 148 and 142(1) returned un-served with the postal remarks “left without address”. Ld. Counsel for the Assessee submits that the notices were sent to the address namely 1533, Patal Nagar, Patila Chowk, Jind, Haryana instead of 153/3, Patel Nagar, Patiala, Jind. Therefore, since admittedly there was no service of notice u/s 148 and 141 the consequential assessment made u/s 144 r.w.s. 148 of the Act is without jurisdiction and bad in law. Reliance was placed on the following decisions: • R.K. Upadhyaya Vs. Shanabhai P. Patel [166 ITR 163]; • CIT Vs. Eshaan Holdings (P) Ltd. [344 ITR 541] (Del.); I.T.A.No.136/Del/2024 4 • CIT Vs. Chetan Gupta [382 ITR 613] (Del.) • Pr. CIT Vs. Atlanta Capital Pvt. Ltd. [464 ITR 341] (Del.); • Ardent Steel Ltd. Vs. ACIT [405 ITR 422] (Chattisgarh); • Shri Charanjit Singh Vs. ITO (ITA No.4395/Del/2016) dated 09/08/2024. 3. On the other hand, Ld. DR strongly supported the orders of the Ld. CIT(Appeals). 4. Heard rival submissions, perused the orders of the authorities below. The comments of the Assessing Officer in the remand proceedings before the Ld. CIT(Appeals) as extracted by the Ld. CIT(Appeals) in his order at page 4 are as under: - “The comments of the AO as per the remand report on this issue is as follows: 4. Notice under section 148 was issued to the assessee on 26.03.2018 after obtaining the necessary satisfaction of the Worthy Principal Commissioner of Income- tax, Hisar Notice u/s 148 was issued on 26.03.2018 by Speed Post at the address available with this office.In this regard, it is also pertinent to mention here that the assessee is an employee of Haryana Government and present posting is in Hisar i.e. H.No.29, Sector 1 & 4, Hisar and also residing in Hisar and address on the ITR of his father, Sh. Ram Kumar is of village & Post Office: Pariihari, Distt. Hisar and the assessee whereas as per Income-tax record, the assessee of the assessee was # 153/3, Patel Nagar, Patilala Chowk, Jind on which all notices under section 148 and 142(1) were sent. Inspector was also deputed for service of notice u/s 142(1), but she has gathered that the assessee was not residing at the I.T.A.No.136/Del/2024 5 given address now. Notice send on the said address was also received back with the post remarks “Left without address” The undersigned was left with no alternative but to complete the assessment on the basis of information available on records. In view of all these facts, it is submitted that judgments relied upon by the assessee i.e. Apex Court in the case of CIT Vs. Ramendra Nath Ghosh, 82 ITR 888, B. Johar Forest Works Vs. CIT, 107 ITR 409 (J&K), CIT Vs. Dey Brothers, 3 ITR 213 (Rang), DCIT Vs. Chetan Gupta on 15th September, 2015 (Delhi High Court) are not applicable in the case of the assessee being distinguishable of facts. Regarding the service of notices, in this regard, Reliance is also placed on the judgment of the Hon’ble Supreme Court of Indi of Civil Appeal No. 8132 of 2019 (Arising out of SLP (C) No.3530/2019) dated October 18, 2019.” 5. Reading of the above comments of the Assessing Officer would clearly show that the notices sent to the Assessee on the address could not be served and received back with the remarks by the postal authorities “left without address”. Therefore, since the notice issued u/s 148 was never served on the Assessee and consequently the assessment made u/s144 r.w.s. 147 of the Act is bad in law and void ab initio. 6. The Hon’ble Jurisdictional High Court in the case of CIT Vs. Chetan Gupta (supra) held as under: “Service of notice a jurisdictional requirement 24. The Court first would like to deal with the question whether notice under Section 148 of the Act is a I.T.A.No.136/Del/2024 6 jurisdictional requirement. The relevant portion of Section 148 (1) reads as under: \"148. Issue of notice where income has escaped assessment.— (1) Before making the assessment, reassessment or re-computation under Section 147, the Income-tax Officer shall serve on the Assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of Section 139; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section.\" 25. The Supreme Court in R.K. Upadhyaya {supra), explained that there was a distinct shift in the scheme of the provisions of the 1961 Act in comparison with the corresponding provision i.e. Section 34 under the 1922 Act under which the mandatory requirement was that both the issuance and service of notice had to be completed within the prescribed period.. …. Conclusions 46. To summarize the conclusions: (i) Under Section 148 of the Act, the issue of notice to the Assessee and service of such notice upon the Assessee are jurisdictional requirements that must be mandatorily complied with. They are not mere procedural requirements. (ii) For the AO to exercise jurisdiction to reopen an assessment, notice under Section 148 (1) has to be mandatorily issued to the Assessee. Further the AO cannot complete the reassessment without service of the notice so issued upon the Assessee in accordance with Section 282 (1) of the Act read with Order V Rule 12 CPC and Order III Rule 6 CPC. (iii) Although there is change in the scheme of Sections 147, 148 and 149 of the Act from the corresponding Section 34 of the 1922 Act, the legal requirement of service of notice upon the Assessee in terms of Section 148 read with Section 282 (1) and I.T.A.No.136/Del/2024 7 Section 153 (2) of the Act is a jurisdictional pre- condition to finalizing the reassessment. (iv) The onus is on the Revenue to show that proper service of notice has been affected under Section 148 of the Act on the Assessee or an agent duly empowered by him to accept notices on his behalf. In the present case, the Revenue has failed to discharge that onus. (v) The mere fact that an Assessee or some other person on his behalf not duly authorized participated in the reassessment proceedings after coming to know of it will not constitute a waiver of the requirement of effecting proper service of notice on the Assessee under Section 148 of the Act. (vi) Reassessment proceedings finalized by an AO without effecting proper service of notice on the Assessee under Section 148 (1) of the Act are invalid and liable to be quashed. (vii) Section 292 BB is prospective. In any event the Assessee in the present case, having raised an objection regarding the failure by the Revenue to effect service of notice upon him, the main part of Section 292 BB is not attracted. 47. On the facts of the present case, the Court finds that the ITAT was right in its conclusion that since no proper service of notice had been effected under Section 148 (1) of the Act on the Assessee, the reassessment proceedings were liable to be quashed. Consequently, the question framed is answered in the affirmative, i.e., in favour of the Assessee and against the Revenue. 48. The appeal is dismissed but, in the facts and circumstances of the case, with no order as to costs.” 7. Ratio of the above decision squarely applies to the facts of the Assessee’s case. The Revenue could not prove that there was service of notice u/s 148 of the Act before completion of the I.T.A.No.136/Del/2024 8 reassessment u/s 144 r.w.s. 148 of the Act. As a matter of fact the Assessing Officer in the remand proceedings admitted that notice issued u/s 148/142(1) of the Act had returned by the authorities and therefore it can be safely concluded that there was never been any service of notice to the Assessee. Thus, the reassessment made u/s 144 r.w.s. 148 of the Act is hereby quashed. Ground no.2.4 of grounds of appeal of the Assessee is allowed. 8. Since the assessment is quashed on the point of law, all other grounds raised by the Assessee either technical or on merits are not adjudicated since adjudication becomes only an academic at this stage. 9. In the result, appeal of the Assessee is partly allowed. Order pronounced in the open court on 28/04/2025 Sd/- (C.N. PRASAD) JUDICIAL MEMBER Dated: 28.04.2025 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi "