M/s. Shail Garg Shiksha Sansthan, Ghaziabad V. JCIT, Ghaziabad

CO 124/DEL/2013

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1419 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 20-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 14-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Valuation report; Condonation of delay
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH G NEW DELHI BEFORE : SHRI C.M. GARG , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO S . 58 & 59/DEL./2013 ASSTT. YEAR : 2004 - 05 & 2005 - 06 J.C.I.T., RANGE 2, VS. SHAIL GARG SHIKSHA SANSTHAN, GHAZIABAD. 63, SITE - IV, INDL. AREA, SAHIBABAD, GHAZIABAD. [PAN: AAETS4668J] C.O. NOS.124 & 123/DEL./2013 (IN ITA NO S . 58 & 59/DEL./2013) ASSTT. YEAR : 2004 - 05 & 2005 - 06 SHAIL GARG SH IKSHA SANSTHAN, VS. J.C.I.T., RANGE 2, 63, SITE - IV, INDL. AREA, GHAZIABAD. SAHIBABAD, GHAZIABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SUJIT KUMAR, SR. DR ASSESSEE BY : SHRI RAJ KUMAR GUPTA, ADV. DATE OF HEARING : 21.10.2015 DATE OF PRONOUNCEMENT : 23 .11.2015 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: BOTH THE APPEALS BY THE REVENUE AND CROSS - OBJECTIONS OF THE ASSESSEE, ARISE OUT OF A COMMON ORDER DATED 12.10.2012 FOR THE ASSESSMENT YEARS 2003 - 04, 2004 - 05 AND 2005 - 06. THE IMPUGNED ORDER FOR A.Y. 2004 - 05 AND 2005 - 06 IS UNDER CHALLENGE BEFORE US IN THESE APPEALS. SINCE THE COMMON QUESTIONS OF ITA NO. 58 59 & CO 124 & 123/DEL./2013 2 LAW AND FACTS ARE INVOLVED IN ALL THESE CASES, THE SAME ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE BRIEF FACTS OF THE CASES UNDER APPEAL ARE THAT THE ASSESSEE FILED ITS RETURNS OF INCOME FOR THE ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 ON 31.10.2004 AND 31.10.2005 RESPECTIVELY , DECLARING NIL INCOME. AFTER PROCESSING THE RETURNS U/S. 143(1), THE CASES WERE SELECTED FOR SCRUTINY . THE ASSESSMENT FOR A.Y. 2004 - 05 WAS COMPLETED U/S. 143(3) OF THE ACT AT NIL INCOME. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2005 - 06, THE AO NOTICED THAT THE ASSESSEE MADE SUBS TANTIAL INVESTMENT IN CONSTRUCTION OF COLLEGE BUILDING. ACCORDING TO ASSESS EE , SUCH INVESTMENT WAS OF RS.21,14,180/ - IN F.Y. 2002 - 03 , RS.3,43,44,289/ - IN F.Y. 2003 - 04 AND RS.2,27,22,603/ - IN F.Y. 2004 - 05. THE ASSESSMENT FOR A.Y. 2005 - 06 WAS ALSO COMPLETED U/S. 143(3) ON 18.12.2007 AT NIL INCOME DECLARED BY THE ASSESSEE, BUT WITH THE FOLLOWING REMARKS : IT PROVES THAT WHATEVER INVESTMENT HAS BEEN DECLARED BY THE ASSESSEE AS PER THE BOOKS OF ACCOUNTS, IS NOT CORRECT AND THEREFORE MATTER NEEDS TO BE REFERRED TO A TECHNICAL EXPERT OF THE DEPARTMENT FOR ESTIMATING THE COST OF CONSTRUCTION OF THE BUILDINGS BE CAUSE THE AMOUNT OF INVESTMENT IS QUITE SUBSTANTIAL. SINCE THE ASSESSMENT PROCEEDINGS FOR A.Y. 2005 - 06 ARE GOING TO BE BARRED BY LIMITATION ON 31.12.2007, THEREFORE, WHATEVER INVESTMENT HAS BEEN DECLARED BY THE ASSESSEE IS TAKEN AS SUCH WITH THE CONDITION THAT AFTER RECEIPT OF THE REPORT OF THE VALUATION OFFICER OF THE DEPARTMENT EXCESS INVESTMENT IF FOUND TO BE MADE IN CONSTRUCTION OF THE BUILDING DURING THE ITA NO. 58 59 & CO 124 & 123/DEL./2013 3 PERIOD RELEVANT TO A.Y. 2005 - 06, NECESSARY ACTION AS PER THE LAW WOULD BE TAKEN TO ASSESS THE SAME. 3. IN VIEW OF ABOVE FACTS AND REMARK, THE LD. ASSESSING OFFICER REFERRED THE MATTER OF INVESTMENT IN CONSTRUCTION OF BUILDING TO THE DVO ON 24.12.2007 AND AFTER RECEIPT OF DVO S REPORT DATED 07.08.2008, THE ASSESSING OFFICER ISSUED NOTICES TO THE ASSESS EE U/S. 148 ON 27.03.2009 FOR REOPENING OF ASSESSMENTS FOR A.Y. 2004 - 05 AND 2005 - 06 . THE DVO ESTIMATED THE INVESTMENT IN THE CONSTRUCTION OF PROPERTY AT RS.23,82,976/ - , RS.3,87,10,808/ - AND RS. 2,56,11,545/ - , ACCORDING TO WHICH THE DIFFERENCE IN INVESTMENT COMES TO RS.2,68,796/ - , RS.43,66,519/ - AND RS.28,88,942/ - RESPECTIVELY FOR THE F. YRS. 2002 - 03, 2003 - 04 AND 2004 - 05 RESPECTIVELY. AFTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE ON THE VALUATION ESTIMATED BY THE DVO, THE ASSESSING OFFICER ESTIM ATED THE I NVESTMENT OUT OF UNDISCLOSED SOURCES AT RS.21,83,260/ - AND RS.14,14,471/ - FOR THE A.Y. 2004 - 05 AND 2005 - 06 RESPECTIVELY AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE FIRST APPEALS FILED AGAINST THESE ASSESSMENTS U/S. 147/143(3) OF THE ACT STOOD ALL OWED VIDE THE IMPUGNED ORDER, THEREBY DELETING THE IMPUGNED ADDITIONS. BEING AGGRIEVED, THE REVENUE HAS COME UP IN THESE APPEALS BEFORE THE TRIBUNAL . THE SUM AND SUBSTANCE OF THE GROUNDS RAISED BY REVENUE IS THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN ACCEPT ING THE VERSION OF ASSESSEE THAT PWD RATES SHOULD HAVE BEEN APPLIED BY ITA NO. 58 59 & CO 124 & 123/DEL./2013 4 THE DVO IN PLACE OF CPWD RATES AND THAT THE DIFFERENCE IN THE COST OF CONSTRUCTION WAS WITHIN THE PERMISSIBLE LIMIT IGNORING THE FACT THAT THE ASSESSEE DID NOT CHALLENGE THE DVO S REPOR T ON THE QUALITY OF CONSTRUCTION . 4. THE ASSESSEE HAS ALSO FILED CROSS OBJECTIONS IN SUPPORT OF THE IMPUGNED ORDER WITH THE ADDITIONAL GROUND THAT IN ABSENCE OF NOTICE ISSUED U/S. 143(2), THE ASSESSMENT PROCEEDINGS AND CONSEQUENTIAL ASSESSMENT ORDER S ARE WITHOUT JURISDICTION. HOWEVER, THE CROSS OBJECTIONS HAVE BEEN FILED WITH A DELAY OF 176 DAYS. THE ASSESSEE HAS ALSO FILED APPLICATIONS FOR CONDONATION OF DELAY WITH THE AVERMENTS THAT THE ASSESSEE HAD NO KNOWLEDGE THAT ANY CROSS OBJECTION SHOULD ALSO BE F ILED AND IT WAS ONLY WHEN THE COUNSEL OF ASSESSEE SUGGESTED HIM TO FILE THE CROSS OBJECTIONS, THE ASSESSEE FILED THE SAME WITH SOME DELAY. THUS, THIS BEING A BONAFIDE CAUSE FOR NOT FILING THE C.OS. WITHIN TIME , THE DELAY HAS TO BE CONDONED . AN AFFIDAVIT HA S ALSO BEEN FILED IN SUPPORT WHICH STANDS UNCONTROVERTED BY THE DEPARTMENT. WE, THEREFORE, CONDONE THE DELAY OCCURRED IN FILING THE CROSS OBJECTIONS. 5. IN THE CROSS OBJECTIONS, THE ASSESSEE HAS SUPPORTED THE IMPUGNED ORDER, INTER ALIA, ON SOME ADDITIONA L GROUND THAT THE ASSESSMENT ORDERS PASSED WITHOUT ISSUING NOTICES U/S. 143(2) ARE LIABLE TO BE QUASHED. FOR THIS AN ITA NO. 58 59 & CO 124 & 123/DEL./2013 5 APPLICATION FOR ADMISSION OF ADDITIONAL GROUNDS IS ALSO FILED. WE HAVE GONE THROUGH THE SAME AND WE FIND THAT THE ADDITIONAL GROUNDS RAISED ARE PURELY LEGAL IN NATURE AND GO TO THE ROOT OF THE MATTER FOR WHICH NO NEW FACTS ARE TO BE INVESTIGATED. THEREFORE, IN VIEW OF THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER COMPANY LTD., 229 ITR 383 (SC) AND OF HON BLE DELH I COURT IN THE CASE OF GEDORE TOOLS PVT. LTD. 238 ITR (DEL.), RELIED UPON BY THE ASSESSEE, THE ADDITIONAL GROUNDS RAISED ARE ADMITTED FOR ADJUDICATION , PARTICULARLY WHEN THE LD. DR DID NOT ADDUCE ANY MATERIAL ON RECORD TO TAKE A CONTRARY VIEW . 6. NOW FOR THE SAKE OF CONVENIENCE, WE FIRST DECIDE THE CROSS - OBJECTIONS OF THE ASSESSEE. THE PLANKS OF ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE MAINLY REST ON THE QUESTION WHETHER THE ASSESSMENTS MADE U/S. 147 CAN LEGALLY BE SUSTAINED WITHOUT I SSUANCE OF NOTICE U/S. 143(2). THE LD. DR CONTENDED THAT THE ASSESSEE HAD PARTICIPATED IN THE ASSESSMENT PROCEEDINGS, FILED ITS REPLY AND OBJECTIONS TO THE VALUATION REPORT. THEREFORE, ASSESSMENT PROCEEDINGS CANNOT BE HELD TO BE WITHOUT JURISDICTION ON THI S COUNT. WE FIND SUBSTANCE IN THE CONTENTION OF THE ASSESSEE THAT MERE PARTICIPATION OF ASSESSEE IN THE PROCEEDINGS DOES NOT ABSOLVE THE AO TO CARRY OUT HIS STATUTORY OBLIGATIONS BEFORE PASSING THE ASSESSMENT S . ACCORDINGLY, THE ASSESSMENT ITA NO. 58 59 & CO 124 & 123/DEL./2013 6 PROCEEDINGS COMPL ETED WITHOUT COMPLYING WITH THE STATUTORY PROVISIONS , I.E. WITHOUT ISSUANCE OF NOTICE U/S. 143(2) , CANNOT BE SUSTAINED AT ALL. OUR FINDING STANDS FORTIFIED BY THE DECISION OF ITAT, DELHI (SPECIAL BENCH) IN THE CASE OF RAJ KUMAR CHAWLA & ORS. VS. ITO (200 5) 94 ITD 1 (SB), WHEREIN THE HON BLE BENCH HELD AS UNDER : IN VIEW OF THE LEGAL FICTION CREATED BY S. 148 THAT A RETURN FILED UNDER THAT SECTION IS TO BE TREATED AS ONE UNDER S. 139, PROVISO TO S. 143(2) ALSO APPLIES TO A RETURN FILED IN RESPONSE TO NOTI CE UNDER S. 148 AND NO ASSESSMENT CAN BE MADE IF THE NOTICE UNDER S. 143(2) IS NOT SERVED WITHIN THE TIME PRESCRIBED BYTHE PROVISO UNDER S. 143(2). SIMILARLY, ITAT, DELHI BENCH G IN THE CASE OF ITO VS. R.K. GUPTA (2009) 122 TTJ 256 HAS HELD AS UNDER : SEC. 292B HAS BEEN RIGHTLY DISTINGUISHED ON BEHALF OF THE ASSESSEE AND IT CANNOT COME TO THE RESCUE OF THE DEPARTMENT SINCE NO NOTICE WAS ISSUED AT ALL. THE SECTION DOES NOT HAVE THE EFFECT OF DEEMING THAT SUCH A NOTICE WAS ISSUED WHEN IN FACT IT WAS NOT ISSUED. IT ONLY SAYS THAT IF THE NOTICE ISSUED CONTAINS SOME INNOCUOUS MISTAKES OR OMISSIONS, THE NOTICE CANNOT BE CONSIDERED TO BE CONSIDERED TO BE INVALID FOR THAT REASON. AS FAR AS THE OBJECTION OF THE DEPARTMENT THAT THE ASSESSEE PARTICIPATED IN THE P ROCEEDINGS IS CONCERNED, THE ASSESSEE DID PARTICIPATE IN THE PROCEEDINGS BY VIRTUE OF THE NOTICES ISSUED UNDER S. 142(1); IN ANY CASE, THE ASSESSEE S PARTICIPATION DOES NOT ABSOLVE THE AO TO THE STATUTORY DUTY OF ISSUING AND SERVING THE NOTICE UNDER S. 143 (2) WITHIN THE STIPULATED TIME. THE NON - ISSUE OF NOTICE IS A FETTER ON THE AO FROM COMPLETING THE ASSESSMENT UNDER S. 143(3). HE CAN ONLY ACCEPT THE RETURN AS SUCH. 7. IN THE INSTANT CASE, THE RECORD AND EVEN THE ORDERS OF THE AUTHORITIES BELOW NOWHERE WHISPER OR DEPICT THAT ANY NOTICE WAS ISSUED BY THE ASSESSING ITA NO. 58 59 & CO 124 & 123/DEL./2013 7 OFFICER U/S. 143(2) OF THE ACT BEFORE COMPLETING THE RE - ASSESSMENT PROCEEDINGS . THEREFORE, IN VIEW OF THE AFORESAID DECISIONS, THE ASSESSMENT PROCEEDINGS INITIATED U/S. 148/147 AND CONSEQUENTIAL RE - ASSESSMENT ORDERS CANNOT BE SUSTAINED AT ALL. THE SAME ARE ACCORDINGLY QUASHED. 8. BEFORE PARTING WITH THE ORDER, WE ADD HERE THAT ONC E THE RE - ASSESSMENT ORDERS HAVE BEEN QUASHED ON THE LEGAL ASPECT OF THE CASE, WE NEED NOT TO ENTER INTO THE MERITS OF ADDITIONS CHALLENGED BY THE REVENUE IN ITS APPEALS. 9. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISMISSED AND THE CROSS - OBJECTIONS OF THE ASSESSEE ARE ALLOWED. SD/ - SD/ - ( C.M. GARG ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23.11.2015 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI