Sh. Dilbagh Singh, Ludhiana V. ITO, Ludhiana

CO 12/CHANDI/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7152 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 2 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-05-2012
• Assessment Year: 1998-1999
• Appeal Filed On: 09-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: H O ARORA
• Keywords: Recovery proceedings; Search and seizure; Assessment record; Condonation of delay
• Section: 142(1); 147; 27; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI H.L. KARWA, V.P. AND SHRI T.R. SOOD, AM ITA NO. 175/CHD/2010 ASSESSMENT YEAR 1998-99 ITO , WARD III(2) V. DILBAGH SINGH LUDHIANA S/O BHAJAN SINGH, VILLAGE DHANDRA LUDHIANA PAN; BLTPS 1012 F CROSS OBJECTIONS NO. 12/CHD/2010 ARISING OUT OF IT A NO. 175/CHD/2010 ASSESSMENT YEAR 1998-99 DILBAGH SINGH, LUDHIANA V. I.T.O. WARD III(2), L UDHIANA ITA NO. 334/CHD/2010 ASSESSMENT YEAR 1998-99 ITO , WARD III(2) V. DILBAGH SINGH LUDHIANA S/O BHAJAN SINGH, VILLAGE DHANDRA LUDHIANA PAN; BLTPS 1012 F (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI N.K. SAINI ASSESSEE BY: SHRI H.O. ARORA DATE OF HEARING: 07.05.2012 DATE OF PRONOUNCEMENT: 11.05.2012 ORDER PER T.R. SOOD, A.M ITA NO. 175/CHD/201 0 REVENUES APPEAL - IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS. 2 THAT THE LD. CIT(A) ERRED IN LAW AND FACTS IN CA NCELING THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER U/S 144 OF THE INCO ME-TAX ACT, 1961 BY OBSERVING THAT THE ASSESSING OFFICER DID NOT ASSUME JURISDICTION PROPERLY FOR FRAMING THE ASSESSMENT U/S 147 OF THE INCOME-TAX AC T, 1961. 3. THAT THE LD. CIT(A) ERRED IN LAW AND FACTS IN IG NORING THE FACT THAT NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE AND SENT BY POST VIDE DISPATCH NO.1574 DATED 21.7.2004 AT THE SAME ADDRESS WHERE VARIOUS N OTICES AND ORDERS ETC. WERE SENT SUBSEQUENTLY AND THE SAME WERE DELIBERATE LY REFUSED TO ACCEPT AS PER THE POSTAL REMARKS, WHICH SHOWS ABOUT THE NON-C OOPERATIVE ATTITUDE OF THE ASSESSEE AND DELIBERATE AVOIDANCE IN ACCEPTING THE NOTICES ETC. ISSUED BY THE DEPARTMENT. 2 2. AFTER HEARING BOTH THE PARTIES WE FIND THAT THE ASSESSMENT HAD BEEN COMPLETED U/S 144 AND APPEAL WAS FIELD LATE BEFORE THE LD. CIT(A) FOR MORE THAN A YEAR. THE ASSESSEE HAD MOVED CONDONATION APPLICA TION BEFORE THE LD. CIT(A). THE LD. CIT(A) AFTER CONSIDERING THE SUBMI SSIONS, DECLINED TO ACCEPT THE CONDONATION PETITION. HOWEVER, IN PARA 3.2 AND 3.3 BY FOLLOWING THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. AVTAR SINGH, 304 ITR 333, QUASHED THE ASSESSMENT FOR NON-SERVICE OF NOTI CE. 3. BEFORE US, THE LD. DR FOR THE REVENUE REFERRED T O PARAS 2 AND 2.1 OF THE APPELLATE ORDER AND SUBMITTED THAT EVEN THE LD. CIT (A) HAS RECORDED THAT THE ASSESSEE HAS REFUSED TO RECEIVE THE NOTICE. HE ALS O POINTED OUT THAT NOTICE WAS SERVED U/S 143(2) ON 16.12.2005. HE MAINLY CON TENDED THAT THIS WAS THE CASE OF REFUSAL OF NOTICE, THEREFORE, IT CANNOT BE SAID THAT THE NOTICE HAS BEEN SERVED BY AFFIXTURE. IN ANY CASE, ONCE THE LD. CIT (A) HAS REFUSED TO CONDONE THE DELAY WHICH MEANS THAT THE APPEAL WAS NOT ADMIT TED THEN NO FURTHER RELIEF COULD HAVE BEEN GIVEN BY HIM. 4. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE MAINLY SUBMITTED THAT THERE WERE SOME CONFUSION IN THE NAMES AND NOT ICE HAS BEEN SENT TO A WRONG ADDRESS. IN FACT, IT WAS CLEARLY A CASE OF F AILURE TO SERVE THE NOTICE AND THEREFORE, THE LD. CIT(A) HAS RIGHTLY FOLLOWED THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND SOME FORCE IN THE SUBMISSIONS OF THE LD. DR FOR THE REVENUE. PARAS 2 AND 2.1 OF THE ORDER READS AS UNDER: 2 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLA NT CAREFULLY AND HAVE ALSO PERUSED THE ASSESSMENT RECORD SHOWS THAT THE A SSESSING OFFICER RECORDED REASONS FOR ISSUE OF NOTICE U/S 148 ON 14.7.2004. THE REASONS WERE THAT IN A SEARCH AND SEIZURE OPERATION CONDUCTED AT THE BUSIN ESS PREMISES OF M/S DAMINI RESORTS AND BUILDERS (P) LTD. LUDHIANA AND A T THE RESIDENTIAL PREMISES OF THE DIRECTORS, CERTAIN REGISTRATION DEEDS WERE F OUND. PERUSAL OF AGREEMENTS AND THEIR CORRESPONDING REGISTERED DEEDS SHOWED THA T THE VALUE OF THE LAND HAD BEEN UNDERSTATED IN THE REGISTERED DEEDS. AS PER ON CE SUCH DEED, SHRI DILBAG SINGH SOLD THE LAND @ RS. 20 LAC PER ACRE FOR TOTAL VALUE OF RS. 20.02 LACS WHEREAS THE SALE VALUE AS PER THE REGISTRATION DEED WAS RS. 5.20 LACS. THE ASSESSING OFFICER CAME TO THE BELIEF THAT INCOME OF THE ASSESSEE HAS ESCAPED 3 ASSESSMENT. THE ASSESSMENT RECORD CONTAINS A NOTIC E U/S 148 DATED 20.4.2004 ADDRESSED TO THE ASSESSEE AS S. DILBAG S INGH S/O S. BHAJAN SINGH, VILL. DHANDRA, DISTT. LUDHIANA, WHICH IS THE CORRE CT ADDRESSES OF THE APPELLANT. THE NOTICE IS SIGNED AND BEARS THE SEAL OF THE ASSE SSING OFFICER. IT BEARS A NUMBER 1574/21/7/2004 WHICH IS APPARENTLY THE DIS PATCH NUMBER OF THE NOTICE ISSUED ON 20.4.2004. HOWEVER, THERE IS NOTHING IN THE ASSESSMENT RECORD TO SHOW THE MODE OF THE ISSUE OF THIS NOTICE OR OF ITS SERVICE. THE NOTICE HAS NOT BEEN SERVED IN PERSON SINCE THERE IS NO RECEIPT OR SIGNATURE ON THE NOTICE OF THE ADDRESSEE OR OF ANY OTHER PERSON. IT HAS APPARENTL Y BEEN ISSUED BY POST. HOWEVER, IT IS NOT CLEAR IF THE NOTICE HAS BEEN ISS UED THROUGH REGISTERED POST OR NOT SINCE NO POSTAL RECEIPTS IS AVAILABLE ON RECORD . THE SUBSEQUENT NOTICES U/S 142(1) HAVE BEEN ISSUED THROUGH SPEED POST AND HAVE BEEN RETURNED BACK WITH THE REMARKS NOTED ABOVE. THE ASSESSMENT ORDER HAS BEEN PASSED U/S 144. THOUGH THERE IS NO DATE ON THE ASSESSMENT ORDER THE CORRESPONDING INCOME TAX COMPUTATION FORM IS DATED AND SIGNED ON 28.12.2005 AND THE NOTICE OF DEMAND IS ALSO DATED 28.12.2005. THE ASSESSMENT ORDER AND NOTICE OF DEMAND HAVE BEEN ISSUED THROUGH SPEED POST ON 17.1.2006 BUT HAS COME BACK WITH THE REMARKS REFUSED TO ACCEPT-RETURN. THE ASSESSING OFFICER HAS THEREAFTER DIRECTED FOR SERVICE OF THE DOCUMENTS THROUGH AFFIX TURE AFTER PASSING AN ORDER THAT SERVICE OF NOTICE IN THIS CASE WAS NOT POSSIBL E IN THE ORDINARY WAY. THE NOTICE HAS BEEN SERVED BY AFFIXTURE BY THE INSPECTO R AND THE NOTICE SERVER. A SUBSEQUENT NOTICE DATED 8.6.2006 FOR THE PENALTY PR OCEEDINGS HAS ALSO BEEN SERVED BY AFFIXTURE IN THE PRESENCE OF TWO WITNESSE S AFTER THE NOTICE SENT THROUGH SPEED POST WAS RETURNED BACK UNSERVED WITH THE REMARKS REFUSED TO ACCEPT. 2.1 SECTION 282 OF THE INCOME-TAX ACT REQUIRES SERV ICE OF NOTICE ETC. BY POST OR AS PROVIDE IN THE MODES SPECIFIED IN THE CODE OF CIVIL PROCEDURE, 1908. SERVICE BY POST IMPLIES SERVICE BY REGISTERED POST. BY REASON OF SECTION 27 OF THE GENERAL CLAUSES ACT, 1897 SERVICE WOULD BE DEEM ED TO BE SUFFICIENTLY EFFECTED BY PROPERLY ADDRESSING, PREPAYING AND POST ING BY REGISTERED POST A LETTER CONTAINING A DOCUMENT AND THE SECTION PROCEE DS TO STATE THAT, UNLESS THE CONTRARY IS PROVED, THE SERVICE WOULD BE DEEMED TO HAVE BEEN EFFECTED AT THE TIME AT WHICH THE LETTER WOULD BE DELIVERED IN THE ORDINARY COURSE OF POST. WHEN THE ASSESSEE OR A MEMBER OF HIS FAMILY AUTHORIZED T O RECEIVE NOTICES HAS REFUSE ACCEPT SERVICE BY POST AND THE REGISTERED NO TICE IS RETURNED, THE ASSESSEE CANNOT TAKE ADVANTAGE OF HIS OWN REFUSAL. RULE 5(5) OF ORDER V OF THE CIVIL PROCEDURAL CODE 1908 PROVIDES THAT WHERE A POSTAL ARTICLE IS RECEIVED BACK WITHIN AN ENDORSEMENT BY A POSTAL EMPLOYEE TO THE EFFECT THAT THE DEFENDANT HAS REFUSED TO TAKE DELIVERY OF THE POSTA L ARTICLE OR HAD REFUSED TO ACCEPT THE SUMMONS, THE COURT ISSUING THE SUMMON SH ALL DECLARE THAT THE SUMMONS HAS DULY BEEN SERVED ON THE DEFENDANT. IT IS CLEAR FROM THE RECORDS IN THIS CASE THAT THERE IS AN ENDORSEMENT BY THE PO STAL EMPLOYEES THAT THE ASSESSEE HAD REFUSED TO ACCEPT THE ASSESSMENT ORDER SENT THROUGH SPEED POST. EVEN EARLIER, THE ASSESSEE HAD REFUSED TO ACCEPT TH E NOTICE U/S 142(1) AS ENDORSED BY THE POSTAL EMPLOYEES. UNDER THESE CIRC UMSTANCES, THE APPELLANTS CONTENTION THAT THE ASSESSMENT ORDER WAS NOT RECEIV ED BY HIM DOES NOT CARRY MUCH WEIGHT. IT IS THE APPELLANT TO WHOM A PROPERL Y ADDRESSED LETTER CONTAINING THE ASSESSMENT ORDER AND DEMAND NOTICE WAS ISSUED, WHO REFUSED TO ACCEPT THE ASSESSMENT ORDER. IT WAS ONLY AFTER THE TAX RE COVERY OFFICER STARTED RECOVERY PROCEEDINGS THAT THE ASSESSEE DECIDED TO A TTEND BEFORE THE AUTHORITIES AND OBTAINED A COPY OF ASSESSMENT ORDER AND OF THE DEMAND NOTICE AND FILED THE PRESENT APPEAL. THE DELIBERATE ACTIO N OF THE APPELLANT IN REFUSING TO ACCEPT NOTICES AND ORDERS SENT BY THE ASSESSING OFFICER THROUGH THE POSTAL AUTHORITIES SHOWS THAT THE ASSESSEE WAS DELIBERATEL Y AVOIDING ATTENDANCE BEFORE THE INCOME TAX AUTHORITIES. UNDER THE CIRCU MSTANCES, THE CONTENTION REGARDING INCORRECT MODE OF SUBSTITUTED SERVICE DOE S NOT CARRY MUCH FORCE, EVEN THOUGH THE NOTICES HAVE BEEN SERVED THROUGH SU BSTITUTED SERVICE AFTER PASSING APPROPRIATE ORDER OF THE ASSESSING OFFICER ABOUT DIFFICULTY IN SERVING NOTICE THROUGH ORDINARY MEANS. I AM, THEREFORE, O F THE OPINION THAT SINCE THE ASSESSEE HAS DELIBERATELY AVOIDED RECEIPT OF ASSESS MENT ORDER, HIS PETITION FOR CONDONATION OF DELAY DOES NOT DESERVE TO BE ACCEPTE D. 4 6. THE ABOVE PARAS CLEARLY SHOW THAT SOME DOUBTS WE RE THERE REGARDING SERVICE OF NOTICE. HOWEVER, THE LD. CIT(A) HAD REF USED TO CONDONE THE DELAY WHICH MEANS THE APPEAL NOT ADMITTED. IN THAT SITUA TION, THE LD. CIT(A) COULD NOT POSSIBLY ACCEPT THE PLEA OF THE ASSESSEE THAT IT WA S A CASE OF NON-SERVICE OF NOTICE. THEREFORE, WE SET ASIDE THE ORDER OF THE L D. CIT(A) WITH A DIRECTION TO FIRST EXAMINE THE ISSUE OF CONDONATION OF DELAY AND IF THE APPEAL IS ADMITTED THEN RECORD SHOULD BE VERIFIED WHETHER THE NOTICE H AS BEEN SERVED OR NOT OR REFUSED AND THEN ONLY THE ISSUE SHOULD BE ADJUDICAT ED ON MERIT. 7. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. CROSS-OBJECTIONS NO. 12/CHD/2010 (ITA NO.175/CHD/20 10) BY THE ASSESSEE 8. IN THE CROSS-OBJECTIONS, THE ASSESSEE HAS MAINLY CHALLENGED THE ACTION OF THE LD. CIT(A) FOR NOT CONDONING DELAY. SINCE T HIS ISSUE HAS BEEN REMANDED BACK BY US TO THE FILE OF LD. CIT(A) WHILE ADJUDICA TING REVENUES APPEAL IN THE ABOVE NOTED PARAS, THIS ISSUE NEEDS TO GO BACK TO T HE FILE OF THE LD. CIT(A) FOR ADJUDICATION IN VIEW OF THE DIRECTIONS CONTAINED IN REVENUES APPEAL. 9. IN THE RESULT, CROSS-OBJECTIONS FILED BY THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 334/CHD/2010 : REVENUE APPEAL 10. THIS APPEAL BY THE REVENUE IS REGARDING LEVY OF PENALTY WHICH WOULD DEPEND UPON THE QUANTUM. SINCE THESE ISSUES HAVE BE EN SET ASIDE BY US WHILE ADJUDICATING THE REVENUES APPEAL AS WELL AS THE CR OSS-OBJECTIONS IN ABOVE NOTED PARAS, THIS ISSUE SHOULD ALSO GO BACK TO THE FILE OF LD. CIT(A) WITH A DIRECTION TO RE-EXAMINE THE ISSUE AFTER DECIDING TH E QUANTUM APPEAL. 11. IN THE RESULT, APPEAL FILED BY THE REVENUE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 11.05.2012 SD/- SD/- (H.L. KARWA) (T.R. SOOD) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 11.05.2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/ THE DR 5