M/s. Priti Mercantile Company Ltd., Rampur V. ACIT, Moradabad

CO 334/DEL/2010

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 5274 (ITAT-DELHI)
• Duration Of Justice: 30 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2002-2003
• Appeal Filed On: 05-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAOREM
• Assessee Lawyers: SANJAY MEHRA
• Keywords: Unexplained cash credit; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F NEW DELHI BEFORE SHRI C.L.SETHI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO: 3936 /DEL/2010 ASSESSMENT YEAR : 2002-03 ACIT, RANGE I VS. M/S PREETI MERCANTILE CO.LTD. MORADABAD 10 B, VIP COLONY CIVIL LINES, RAMPUR AND C.O. NO. 344/DEL/2010 ( IN ITA NO. 3936/DEL/2010) A.Y. 2002-03 M/S PREETI MERCANTILE CO.LTD. VS. ACIT, RANGE I 10 B, VIP COLONY MORADABAD CIVIL LINES, RAMPUR UTTAR PRADESH 244 901 (APPELLANTS) (RESPONDE NTS ) DEPARTMENT BY : SMT. BANITA DEVI NAOREM, SR.D.R. ASSESSEE BY : SH. SANJAY MEHRA, FCA O R D E R PER SHAMIM YAHYA, AM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD.CIT(A), BAREIL LY DATED 13.4.2010 AND PERTAINS TO A.Y. 2002-03. 2 2. THE FIRST ISSUE RAISED IS THE LD.CIT(A) ERRED I N TREATING THE REASSESSMENT PROCEEDINGS AS INVALID ON THE GROUND THAT THE A.O. HAS NO JURISDICTION ON THE CASE. 3. IN THIS CASE THE A.O. NOTED THAT THE ASSESSEE HA S FILED RETURN OF INCOME IN THE STATUS OF COMPANY ON 31.10.2002. SUB SEQUENTLY NOTICE U/S 148 OF THE ACT WAS ISSUED ON 30.3.2009 WITH IN ITIATION OF PROCEEDINGS AGAINST THE ASSESSEE U/S 147 OF THE ACT . THIS NOTICE WAS ISSUED ON THE BASIS OF INFORMATION THAT REGISTERED OFFICE OF THE ASSESSEE WAS SITUATED AT 15/76, OLD RAJENDRA NAGAR, 2 ND FLOOR, NEW DELHI. IN RESPONSE TO THE NOTICE ASSESSEES COUNSEL APPEARED AND INFORMED THE A.O. THAT THE RETURN HAS BEEN FILED BY THE ASSESSE E BEFORE ITO, WARD 2, RAMPUR ON 31.10.2002 AND ENCLOSED THE COPY OF ACKN OWLEDGE OF ITR, COPY OF AUDIT REPORT AND AUDIT FINANCIAL STATEMENTS FOR THE P.Y. UNDER QUESTION, AND REQUESTED THAT THE PROCEEDINGS MAY BE TRANSFERRED TO ITO, WARD 2, RAMPUR WHERE THE RETURN WAS ORIGINALLY FILE D BY HIM. THEREUPON THE ITO, NEW DELHI HAS TRANSFERRED THIS C ASE TO ITO, WARD 2, RAMPUR. THE ASSESSEE ALSO HAS SUBMITTED BEFORE THE A.O. THAT THE JURISDICTION OF THE ASSESSEE COMPANY FOR THE RELEVA NT A.Y. WAS OF ITO, WARD II, RAMPUR AND LD.ITO, WARD 14(4), NEW DELHI W AS NOT HAVING JURISDICTION OVER ASSESSEE, HENCE NOTICE ISSUED BY THE A.O. NOT HAVING JURISDICTION OVER ASSESSEE WAS NON EST IN THE EYES OF LAW AND CONSEQUENTIAL PROCEEDINGS WITH REFERENCE TO THAT N OTICE WAS ALSO BAD IN LAW AND VOID. IN THIS REGARD ASSESSEE PLACED RELIA NCE UPON THE CASE LAW 3 OF LT.COL. PARAMJEET SINGH VS. CIT 135 CTR 8 AND S MT. ANJALI DUA 219 CTR 183 IN WHICH IT WAS HELD THAT WHEN THE ASSESSME NT HAS BEEN COMPLETED BY ONE OFFICER, ISSUE OF NOTICE U/S 148 B Y ANOTHER OFFICER AT A DIFFERENT PLACE IN ABSENCE OF ORDER U/S 127 WOULD B E INVALID. IT WAS FURTHER CONTENDED THAT THE CASE FOR A.Y. 2008-09 WA S ALSO PENDING BEFORE THE LD.DCIT, CIRCLE, MORADABAD AND AS PER EXPLANAT ION B NOTE NO. (A) OF NOTIFICATION ISSUED BY HONBLE ACIT, RANGE I, MORAD ABAD ON 26.11.2007 REGARDING THE JURISDICTION ON THE OFFICERS, IT IS M ENTIONED THAT WHERE MORE THAN ONE RETURNS OF INCOME ARE PENDING FOR ASSESSME NT, THE RETURN OF INCOME HAVING HIGHER INCOME WILL DETERMINE THE JURI SDICTION. HOWEVER THE A.O. DID NOT FIND THESE ARGUMENTS CONVINCING AN D HE REFERRED TO S.292 B OF THE ACT AND HELD THAT THE SAME MAKES IT CLEAR THAT ALL ARGUMENTS OF THE ASSESSEE REGARDING ANY MISTAKE, DE FECT OR OMISSION FOR ISSUANCE OF NOTICE ISSUED U/S 148 OF THE ACT ARE NO T ACCEPTABLE IN THE EYES OF LAW AS SUBSTANCE OF THIS REASSESSMENT PROCE EDING IS INCONFORMITY WITH THE INTENT AND PURPOSE OF I.T.ACT, 1961. HE F URTHER HELD THERE IS NO NEED TO ISSUE A FRESH NOTICE BY SUCCEEDING A.O. IF NOTICE U/S 148 WAS ALREADY SERVED BY HIS OTHER PREDECESSOR. THE A.O. PROCEEDED TO DISMISS ASSESSEES GRIEVANCE ON JURISDICTION. ON MERITS HE MADE ADDITION OF UNEXPLAINED CASH CREDIT OF RS.8 LAKHS AND UNEXPLAIN ED INVESTMENT OF RS. 9 LAKHS. 4 4. UPON ASSESSEES APPEAL THE LD.CIT(A) CONSIDERED THE ISSUE AND HELD AS UNDER. THE FACTS OF THE CASE, IN BRIEF, ARE THAT ADMITTED LY, THE DCIT, CIRCLE I, MORADABAD WAS HAVING REGULAR JURISDICTION OVER T HE CASE OF THE ASSESSEE. THE ASSESSEE WAS HAVING INCOME MORE THAN THE LIMIT PRESCRIBED BY THE ACIT, R-I, MORADABAD FOR DETERMIN ATION OF JURISDICTION AMONGST THE A.O OF HIS RANGE. THE ASS ESSMENT FOR A.Y. 2007-08 AND A.Y. 2008-09 WERE PENDING FOR ASSESSMEN T BEFORE THE DCIT, CIRCLE I, MORADABAD AT THE TIME OF ASSESS MENT PROCEEDINGS GOING ON BEFORE THE ITO, WARD II, RAMPU R FOR THE A.Y. UNDER CONSIDERATION. THE ASSESSEE OBJECTED BEFORE THE ITO, WARD II, RAMPUR DURING THE ASSESSMENT PROCEEDINGS ITSELF . HE OBJECTED ON THE GROUNDS, AS MENTIONED ABOVE, AND ALSO OBJECT ED ON THE ISSUE OF INITIATION OF REASSESSMENT PROCEEDINGS ON THE BASIS OF NOTICE U/S 148 ISSUED BY THE ITO, WARD 14(4), NEW D ELHI WHO WAS NOT HAVING JURISDICTION OVER THE CASE OF THE ASSESS EE. THEREFORE, THE PROCEEDINGS OF REASSESSMENT WERE MAINLY OBJECTE D ON THESE TWO GROUNDS. IT IS A FACT THAT THE ITO, WARD 14(4), NEW DELHI RE OPENED THE CASE AFTER OBTAINING APPROVAL FROM THE CIT-V, DELHI. IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSMENTS FOR A.Y. 07-08 AND 08-09 WERE PENDING BEFORE THE DCIT, CIRCLE I, MORADABAD B ECAUSE HE WAS HAVING JURISDICTION OVER THE CASE OF THE ASSESS EE AS PER THE 5 ORDER OF ACIT, RANGE I, MORADABAD. THEREFORE, THE ITO, WARD 14(4), NEW DELHI, IN ANY CASE, WAS WITHOUT ANY JURI SDICTION OVER THE CASE OF THE ASSESSEE. THE ITO, WARD 14(4), N EW DELHI, AFTER HAVING RECEIVED OBJECTIONS FROM THE ASSESSEE, TRANS FERRED THE FILE OF THE ASSESSEE TO THE ITO, WARD II, RAMPUR. AS A MAT TER OF FACT, THE ITO, WARD II, RAMPUR PROCEEDED TO REASSESS THE CASE OF THE ASSESSEE BY ISSUING NOTICE U/S 142 OF THE I.T.ACT. HE DID NOT ISSUE ANY FRESH NOTICE U/S 148 AFTER RECORDING REASONS FO R THE SAME. THE ASSESSEE BROUGHT THESE FACTS INTO THE KNOWLEDGE OF THE AO BY RAISING FORMAL OBJECTIONS AGAINST THE ASSUMPTION OF POWER TO REASSESS THE CASE OF THE ASSESSEE WHEN THE DCIT, CI RCLE I, MORADABAD, WAS HAVING PROPER JURISDICTION. THE A.O . REJECTED THE OBJECTIONS OF THE ASSESSEE WITH THE OBSERVATION THA T THE ASSESSEE RAISED OBJECTIONS REGARDING JURISDICTION BEFORE THE ITO, WARD 14(4), NEW DELHI AND ALSO BEFORE THE ITO, WARD II, RAMPUR. THEREFORE, HE FURTHER OBSERVED THAT THE ASSESSEE HIMSELF WAS NOT SURE ABOUT THE JURISDICTION OF HIS A.O. THE ASSESSEE RELIED ON THE DECISIONS IN THE CASE OF PARAMJEET SINGH 135 CTR 8 AND SMT.ANJALI DUA (2008) 219 CTR 1 83 (DELHI). I HAVE PERUSED THE CITATIONS AND REACHED THE CONCLU SION THAT THE RATIO LAID DOWN IN THESE CASES IS FULLY APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION. AS A MATTER OF FACT, JURISDICTION OVER THE CASE OF THE ASSESSEE WAS CORR ECTLY LYING WITH 6 THE DCIT, CIRCLE I, MORADABAD. THE ITO, WARD 14(4) , NEW DELHI UNLAWFULLY ACQUIRED JURISDICTION TO INITIATE PROCEE DINGS OF REASSESSING THE CASE OF THE ASSESSEE. SIMILARLY, T HE ACTION OF THE ITO, WARD II, RAMPUR WAS ALSO WITHOUT HAVING JURISD ICTION OVER THE CASE. IT WAS THE DCIT, CIRCLE I, MORADABAD WHO WAS HAVING JURISDICTION OVER THE CASE OF THE ASSESSEE AT THAT POINT OF TIME. AFTER TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMS TANCES OF THE CASE, THE ORDER OF A.O., SUBMISSION OF THE APPELLAN T AND RESPECTFULLY FOLLOWING THE DECISIONS (SUPRA) AND AL SO THE DECISIONS IN THE CASES OF M.I. BUILDERS P.LTD. (2008) 12 MTC 216 TRIBUNAL, NARESH CHANDRA (2008) 12 MTC 234, TRIBUNAL, HARISH KUMAR (2008) 11 MTC 595 TRIBUNAL, AND MOHAN TALRIGA (2008 ) 11 MTC 599 TRIBUNAL OF THE LUCKNOW BENCH ON THE ISSUE, IT IS MY CONSIDERED VIEW THAT THE ACTION OF REASSESSMENT INI TIATED BY THE ITO, WARD 14(4), NEW DELHI AND FINALIZATION OF ASSE SSMENT BY THE ITO, WARD II, RAMPUR WAS WITHOUT VALID JURISDICTION . THEREFORE, THE REASSESSMENT IS HELD AS INVALID. THE APPEAL OF THE ASSESSEE IS, ACCORDINGLY, ALLOWED. 5. AGAINST THE ABOVE ORDER REVENUE IS IN APPEAL B EFORE US. 6. AS PER THE ADMITTED FACTS OF THE CASE THE NOTICE U/S 148 IN THE CASE WAS ISSUED BY ITO, WARD 14(4), NEW DELHI. WHEN IT WAS BROUGHT TO THE NOTICE OF THE ITO THAT HE DID NOT HAVE JURISDICTION OVER THE ASSESSEE, THE REASSESSMENT WAS COMPLETED BY ITO, WARD-II, RAMPUR. FOR 7 REASSESSMENT ITO, WARD-II, RAMPUR HAS NOT ISSUED AN Y NOTICE U/S 148. UNDER THE CIRCUMSTANCES THE QUESTION ARISES AS TO W HETHER REASSESSMENT FRAMED BY ITO WARD-II, RAMPUR IS SUSTAINABLE IN LAW . 7. IN THE CASE OF C.I.T. VS. SMT. ANJALI DUA (219 CTR 183), HONBLE DELHI HIGH COURT HAS HELD THAT WHEN TRIBUNAL ON A PPRECIATION OF FACTS, HAVING ARRIVED AT A FINDING OF FACT THAT JURISDICT ION OVER THE ASSESSEE STOOD TRANSFERRED FROM LUDHIANA TO NEW DELHI, THE ASSESSING OFFICER AT LUDHIANA HAS NO JURISDICTION TO ISSUE NOTICE OF ASS ESSMENT U/S 148. 8. IN THE CASE OF PARAMJEET SINGH VS. C.I.T. (135 CTR 8) HONBLE PUNJAB & HARYANA HIGH COURT HAD THAT ASSESSMENT CON CLUDED BY ASSESSING OFFICER, PUNE REOPENED BY ASSESSING OFFI CER AT JALLANDHAR IS, WITHOUT JURISDICTION IN ABSENCE OF ORDER U/S 127. EXAMINING THE PRESENT CASE ON TOUCHSTONE OF ABOVE, WE FIND THAT THERE IS NO ORDER OF TRANSFER U/S 127, IN THIS CASE. ITO WARD 14(4), NEW DELHI HAD NO JURISDICTION OVER THE ASSESSEE, BUT HE HAD ISSUED THE NOTICE OF REASSESSMENT U/S 148 TO THE ASSESSEE. SUBSEQUENTLY, THE ASSESSMENT W AS COMPLETED BY ITO WARD-II, RAMPUR. 8.1 HENCE, IT IS CLEAR THAT NOTICE U/S 148 ISSUED IN THIS CASE IS WITHOUT JURISDICTION. IN THE ABSENCE OF PROPER AND VALID NOTICE U/S 148 THE REASSESSMENT FRAMED IS LIABLE TO BE QUASHED. 9. UNDER THE CIRCUMSTANCES, WE DO NOT FIND ANY INFI RMITY OR ILLEGALITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 8 ACCORDINGLY, WE UPHELD THE ORDER OF THE LD. COMMIS SIONER OF INCOME TAX (APPEALS). 10. SINCE WE HAVE UPHELD THE LD. COMMISSIONER OF IN COME TAX (APPEALS)S ORDER HOLDING THE REASSESSMENT INVALI D, THE ISSUE ON MERITS RAISED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE HAVE BECOME REDUNDANT. 11. IN THE RESULT THE APPEAL FILED BY THE REVENUE AND C.O. BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED ON 4-11-2010. SD/- SD/- (C.L.SETHI ) (SHAMIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 4-11-2010 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2. RESPONDENT; 3. CIT; 4. CIT(A); 5. DR; 6. GUARD FILE BY ORDER DY. REGISTRAR // C O P Y //