M/s. Monica Sehgal, New Delhi V. DCIT, New Delhi

CO 465/DEL/2012

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3762 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 5 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 22-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 27-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI SENIOR
• Keywords: Charitable institution; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.4802/DEL./2012 (ASSESSMENT YEAR : 2008-09) DCIT, CIRCLE 1(1), VS. MS. MONICA SEHGAL, NEW DELHI. B 3, GEETANJALI ENCLAVE, NEW DELHI 110 017. (PAN : ACEPS5935N) CO NO.465/DEL/2012 (IN ITA NO.4802/DEL./2012) (ASSESSMENT YEAR : 2008-09) MS. MONICA SEHGAL, VS. DCIT, CIRCLE 1(1), B 3, GEETANJALI ENCLAVE, NEW DELHI. NEW DELHI 110 017. (PAN : ACEPS5935N) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHWANI TANEJA, ADVOCATE SHRI SHAANTANU JAIN, ADVOCATE REVENUE BY : SHRI S.R. SENAPATI, SENIOR DR DATE OF HEARING : 04.04.2018 DATE OF ORDER : 16.05.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 2 THE AFORESAID APPEAL FILED BY THE REVENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE BEING DISPOSED OF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DISCUSSIO N. 2. THE APPELLANT, DEPUTY COMMISSIONER OF INCOME-TAX , CIRCLE 1 (1), NEW DELHI (HEREINAFTER REFERRED TO AS THE R EVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE I MPUGNED ORDER DATED 11.06.2012 PASSED BY THE COMMISSIONER OF INCO ME-TAX (APPEALS)-IV, NEW DELHI QUA THE ASSESSMENT YEAR 200 8-09 ON THE GROUND THAT :- 1. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW O N DELETING OF DEEMED DIVIDEND U/S 2(22)(E) AMOUNTING TO RS.1,2 8,52,217/-. 3. THE OBJECTOR, MS. MONICA SEHGAL, BY FILING THE P RESENT CROSS OBJECTIONS CHALLENGED THE IMPUGNED ORDER DATED 11.0 6.2012 PASSED BY THE ASSESSING OFFICER QUA THE ASSESSMENT YEAR 20 08-09 ON THE GROUNDS INTER ALIA THAT :- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN FRAMING THE IMPUGNED ASSESSMENT ORDER WITHOUT ASSUMING JURISDICTION AS PER LAW AND WITHOU T ISSUING AND SERVING THE MANDATORY NOTICES U/S 143 (2) OF THE IN COME TAX ACT, 1961. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT (A) IN NOT QUASHING THE IMPUGNED ASSESSMENT ORDER FRAMED BY LD. AO BEING VOID AB INITIO, BEING BEYOND JURISDICTION AND IS CONTRARY TO LAW AND FACTS. ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 3 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : DURING ASSESSMENT PROCEED INGS, ASSESSING OFFICER NOTICED THAT THE ASSESSEE IS A SHAREHOLDER AND DIRECTOR OF M/S. ALPEX EXPORTS PVT. LTD. & M/S. KARISHMA MACHIN E TOOLS TO THE TUNE OF 24.81% AND 39.2% SHARES RESPECTIVELY. AO NOTICED FROM THE BOOKS OF ACCOUNT OF M/S. ALPEX EXPORTS PVT . LTD. THAT AN AMOUNT OF RS.97,52,217/- WAS SHOWN AS RECEIVABLE AM OUNT OUTSTANDING AS ON 31.03.2008 WHICH WAS REFLECTED IN SUNDRY DEBTORS AND FROM THE AUDITED ACCOUNT OF M/S. KARISH MA MACHINE TOOLS, IT WAS NOTICED BY THE AO FROM ANNEXURE-1 TO BALANCE SHEET THAT LOAN GIVEN TO THE ASSESSEE, MRS. MONICA SEHGAL FOR RS.31,00,000/- AND THE BALANCE SHEET OF M/S. KARISH MA MACHINE TOOLS ALSO SHOWS RESERVE OF RS.3,42,23,672.26. AF TER ISSUING A SHOW-CAUSE NOTICE AND BEING DIS-SATISFIED WITH THE REPLY FILED BY THE ASSESSEE DATED 06.12.2010, AO PROCEEDED TO INVO KE THE PROVISIONS CONTAINED UNDER SECTION 2(22)(E) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) AND TREATED THE AMOUNT O F RS.97,52,217/- AND RS.31,00,000/- (TOTALING RS.1,28,52,217/-) TAK EN AS ADVANCE FROM M/S. ALPEX EXPORTS PVT. LTD. & M/S. KARISHMA M ACHINE TOOLS RESPECTIVELY AS DEEMED DIVIDEND AND THEREBY M ADE AN ADDITION TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 4 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF AN APPEAL WHO HAS DELETED THE ADDITION ON MERIT BUT DECIDED THE GROUND OF LACK OF JURISDICTION WITH AO TO PASS ASSE SSMENT ORDER AGAINST THE ASSESSEE, BY PARTLY ALLOWING THE APPEAL . FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBU NAL BY FILING THE PRESENT APPEAL AND THE ASSESSEE HAS COME UP BEF ORE THE TRIBUNAL BY WAY OF FILING THE CROSS OBJECTION RAISI NG LEGAL ISSUE THAT THE AO HAS NO JURISDICTION TO PASS THE ASSESSMENT O RDER WITHOUT ISSUING THE NOTICE U/S 143 (2) OF THE ACT. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. REVENUES APPEAL GROUND NO.1 7. UNDISPUTEDLY, THE ASSESSEE IS A SHAREHOLDER AND DIRECTOR IN M/S. ALPEX EXPORTS PVT. LTD. & M/S. KARISHMA MACHIN E TOOLS TO THE EXTENT OF 24.81% AND 39.2% SHARES RESPECTIVELY. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS, IN THE BOOKS OF A CCOUNT OF M/S. ALPEX EXPORTS PVT. LTD. AND NOTES FORMING PART OF T HE ACCOUNT, AN AMOUNT OF RS.97,52,217/- WHICH WAS SHOWN AS RECEIV ABLE OUTSTANDING AS ON 31.03.2008 HAVING BEEN GIVEN TO T HE ASSESSEE AS ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 5 AN ADVANCE. IT IS ALSO NOT IN DISPUTE THAT AS PER AUDITED ACCOUNTS OF M/S. KARISHMA MACHINE TOOLS, A LOAN OF RS.31,00,000 /- IS SHOWN TO HAVE BEEN GIVEN TO ASSESSEE AS AN ADVANCE. IT I S ALSO NOT IN DISPUTE THAT RESERVE OF RS.7,84,08,895/- AND SURPLU S OF RS.2,28,75,534/- WERE AVAILABLE WITH M/S. ALPEX EXP ORTS PVT. LTD. DURING THE YEAR UNDER ASSESSMENT. IT IS ALSO NOT I N DISPUTE THAT RESERVE OF RS.3,42,23,672.26/- WAS AVAILABLE WITH M /S. KARISHMA MACHINE TOOLS DURING THE YEAR UNDER ASSESSMENT. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS INVESTED AN AMOUNT OF RS.115.5 LAKHS WITH RRB MASTER SECURITIES LIMITED AFTER TAKING ADV ANCES FROM TIME TO TIME FROM M/S. ALPEX EXPORTS PVT. LTD. & M/ S. KARISHMA MACHINE TOOLS, THE DETAILS OF WHICH ARE EXTRACTED A S UNDER :- DATE OF DEPOSIT WITH STOCK BROKING FIRM AMOUNT REMARKS 20.12.2007 RS.31 LACS ADVANCE FROM M/S. KARISHMA MACHINE TO OLS 20.12.2007 RS.19 LACS ADVANCE FROM M/S. ALPEX EXPORTS 31.12.2007 RS.5.5 LACS ADVANCE FROM M/S. ALPEX EXPORTS 14.01.2008 RS.21 LACS ADVANCE FROM M/S. ALPEX EXPORTS 21.01.2008 RS.19 LACS ADVANCE FROM M/S. ALPEX EXPORTS 24.01.2008 RS.20 LACS ADVANCE FROM M/S. ALPEX EXPORTS TOTAL RS.115.5 LACS TOTAL ADVANCE RECEIVED IS RS.128 LACS ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 6 8. IT IS ALSO NOT IN DISPUTE THAT ASSESSEE CLAIMED TO HAVE TAKEN AN AMOUNT OF RS.97,52,217/- AND RS.31,00,000/- FROM M/S. ALPEX EXPORTS PVT. LTD. & M/S. KARISHMA MACHINE TOOLS RES PECTIVELY AS EARNEST MONEY FOR SALE OF THE BUILD-UP PORTION MEAS URING 192 SQ.MTRS. AND FIRST FLOOR, B-79, SHIVALIK, NEAR MALV IYA NAGAR, NEW DELHI, HOWEVER THIS CONTENTION HAS NOT BEEN ACCEPTE D BY THE AO WHO HAS TREATED THE AFORESAID ADVANCES TAKEN BY THE ASSESSEE FROM M/S. ALPEX EXPORTS PVT. LTD. & M/S. KARISHMA MACHIN E TOOLS AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. 9. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCU MSTANCES OF THE CASE, ORDER PASSED BY THE REVENUE AUTHORITIES B ELOW AND ARGUMENTS ADDRESSED BY THE LD. AR TO THE PARTIES, T HE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS:- AS TO WHETHER AMOUNT OF RS.1,28,52,217/- WAS ACTUA LLY TAKEN AS EARNEST MONEY BY THE ASSESSEE FOR SALE OF BUILT UP PROPERTY SITUATED AT B-79, SHIVALIK, NEAR MALVIYA NAGAR, NEW DELHI FROM M/S. ALPEX EXPORTS PVT. LTD. & M/S. KARISHMA MACHIN E TOOLS OR IT WAS TAKEN AS ADVANCE FOR THE PURPOSE OF INVESTME NT WITH RRB MASTER SECURITIES LIMITED? 10. THE ASSESSEE HAS COME UP WITH A SPECIFIC PLEA T HAT SHE HAS TAKEN AN AMOUNT OF RS.1,28,52,217/- FROM M/S. ALPEX EXPORTS PVT. LTD. & M/S. KARISHMA MACHINE TOOLS AS EARNEST MONEY FOR SALE OF HER BUILD UP PROPERTY TO M/S. ALPEX EXPORTS PVT. LT D. & M/S. KARISHMA MACHINE TOOLS IN WHICH SHE HAS SUBSTANTIVE SHARES BY ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 7 VIRTUE OF THE AGREEMENTS TO SELL DATED 10.12.2007. HOWEVER, AO HAS HELD AGREEMENT TO SELL DATED 20.12.2007 AS A SH AM TRANSACTION. PERUSAL OF THE AGREEMENT TO SELL IN QUESTION SHOWS THAT ONE BUILT UP PROPERTY IS AGREED TO BE SOLD AT RS.1.25 LAKHS A ND ANOTHER BUILT UP PROPERTY IS SHOWN TO HAVE BEEN SOLD FOR RS.50,00 ,000/-. 11. NO DOUBT, PARTIES TO THE AGREEMENT MAKE THE LAW FOR THEMSELVES AND ANY AMOUNT MAY BE GIVEN BY THE PURCH ASER TO THE SELLER AS EARNEST MONEY, BUT WHEN THIS FACT IS EXAM INE IN THE LIGHT OF THE FACT THAT THERE IS AN ESTABLISHED MARKET PRA CTICE FOR SALE OF IMMOVABLE PROPERTY THAT EARNEST MONEY OF MORE THAN 20% IS NOT GIVEN, BUT IN THIS CASE, WHEN MORE THAN 75% OF THE TOTAL SALE PROCEEDS HAVE BEEN PAID BY THE COMPANIES TO THE ASS ESSEE THEN WHAT WAS THE HITCH TO WAIT FOR THREE YEARS TO RETUR N THE MONEY AFTER CANCELLING THE AGREEMENT TO SELL. 12. ASSESSEES CASE IS THAT THE SALE WAS NOT CONCLU DED BECAUSE OF DEMOLITION AND CEILING DRIVES INITIATED BY THE GOVE RNMENT WITH OBJECTION NOT TO USE THE BASEMENT AT RESIDENTIAL PR EMISES FOR OFFICE PURPOSES. WHEN THIS CONTENTION IS EXAMINED IN THE LIGHT OF THE FACT THAT AGREEMENT TO SELL IS DATED 20.12.2007 AND WAS STATED TO BE CANCELLED SOMEWHERE IN DECEMBER/JANUARY 2010 AS IS EVIDENT FROM THE CORRESPONDENCE BETWEEN THE ASSESSEE AND M/S. AL PEX EXPORTS PVT. LTD. & M/S. KARISHMA MACHINE TOOLS, AVAILABLE AT PAGES 19 TO ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 8 39 OF THE PAPER BOOK, WHEREAS THE SAID DEMOLITION A ND CEILING DRIVE WAS INITIATED BY THE GOVERNMENT IN 2005-06 FOR WHIC H EXPERT COMMITTEE UNDER THE CHAIRMAN OF SHRI TEJINDER KHANN A WAS CONSTITUTED ON 19.05.2006, AS HAS BEEN HIGHLIGHTED BY THE AO, WHICH FACT HAS NOT BEEN CONTROVERTED BY THE ASSESSE E. 13. WHEN THE FACTUM OF DEMOLITION AND CEILING DRIVE OBJECTING USE OF BASEMENT AT RESIDENTIAL PREMISES FOR OFFICE PURPOSES WAS VERY MUCH IN THE NOTICE OF THE ASSESSEE, IT MAKES T HE ENTIRE TRANSACTION BY VIRTUE OF THE AGREEMENT TO SELL DATE D 20.12.2007 BETWEEN ASSESSEE AND M/S. ALPEX EXPORTS PVT. LTD. & M/S. KARISHMA MACHINE TOOLS BY MAKING PAYMENT OF 75% OF THE SALE PROCEEDS FOR SALE OF THE PROPERTY IN QUESTION BECOM E SHAM. BECAUSE IT IS ADMITTED CASE OF THE ASSESSEE BEING S HAREHOLDER AND DIRECTOR OF M/S. ALPEX EXPORTS PVT. LTD. & M/S. KAR ISHMA MACHINE TOOLS THAT THE PROPERTY IN QUESTION WAS REQ UIRED FOR OFFICE USE AND ACTUALLY IT WAS IN USE FOR THIS PURPOSE WHE N AGREEMENT TO SELL DATED 20.12.2007 WAS EXECUTED BETWEEN THE PART IES. 14. FURTHERMORE, CASE SET UP BY THE ASSESSEE THAT T HE ADVANCES WERE TAKEN AS EARNEST MONEY FOR THE SALE OF OFFICE PREMISES TO M/S. ALPEX EXPORTS PVT. LTD. & M/S. KARISHMA MACHINE TOO LS FELL FLAT WHEN BOTH THE AFORESAID COMPANIES HAVE NOT SHOWN TH E AMOUNT OF RS.1,28,52,217/- HAVING BEEN PAID TO THE ASSESSEE A S ADVANCE ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 9 GIVEN AS EARNEST MONEY FOR PURCHASE OF OFFICE PREM ISES BY VIRTUE OF THE AGREEMENT TO SELL DATED 20.12.2007. RATHER THESE LOANS HAVE BEEN SHOWN AS OTHER LIABILITIES. HAD THERE BE EN ANY BONAFIDE ON THE PART OF ASSESSEE TO SELL THE PROPERTY IN QUE STION BY MAKING USE OF THE ADVANCE OF RS.1,28,52,217/- AS EARNEST M ONEY THE BOOKS OF ACCOUNT OF BOTH THE COMPANIES WOULD HAVE CONTAIN ED ENTRIES SHOWING ACTUAL PURPOSE OF THE ADVANCE. 15. FURTHERMORE, PERUSAL OF THE AGREEMENT TO SELL I N QUESTION DATED 20.12.2007 SHOWS THAT A COMMON CLAUSE THAT IN CASE, SECOND PARTY, M/S. ALPEX EXPORTS PVT. LTD. & M/S. K ARISHMA MACHINE TOOLS FAILED TO GET THE SALE DEED EXECUTED, EARNEST MONEY PAID TO THE ASSESSEE SHALL BE FORFEITED WHEREAS FIR ST PARTY, THE ASSESSEE IN QUESTION, HAS BEEN GIVEN GENERAL RIGHT TO GET THE TRANSACTION COMPLETED THROUGH COURT OF LAW , IS MISSING. HAD THERE BEEN A BONAFIDE INTENTION ON THE PART OF ASSESSEE A ND M/S. ALPEX EXPORTS PVT. LTD. & M/S. KARISHMA MACHINE TOOLS FOR SALE AND PURCHASE OF PROPERTY IN QUESTION, THERE WOULD HAVE BEEN COMMON PENAL CLAUSE BENEFICIAL TO BOTH THE PARTIES. THIS FACT SHOWS THAT THE AGREEMENT TO SELL IS A SHAM AND COLLUSIVE TRANSACTI ON. 16. FURTHERMORE, WHEN WE EXAMINE THE INVESTMENT MAD E BY ASSESSEE WITH RRB MASTER SECURITIES LIMITED DURING THE PERIOD 20.12.2007 TO 24.02.2008, THE ASSESSEE HAS NOT COME UP WITH ANY ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 10 EXPLANATION THAT ASSESSEE HAS TAKEN THE ADVANCE FOR SPECIFIC INVESTMENT AND NOT AS AN EARNEST MONEY WITH INTENTI ON TO SELL THE PROPERTY IN QUESTION AS DISCUSSED IN THE PRECEDING PARAS. 17. PERUSAL OF THE CORRESPONDENCE BETWEEN ASSESSEE AND DIRECTOR OF M/S. ALPEX EXPORTS PVT. LTD. & M/S. KARISHMA MAC HINE TOOLS, AVAILABLE AT PAGES 19 TO 39 OF THE PAPER BOOK, APP ARENTLY SHOWS THAT THE HUGE AMOUNT OF RS.1,28,52,217/- ALLEGED TO HAVE BEEN TAKEN AS EARNEST MONEY BY THE ASSESSEE HAS BEEN DEM ANDED BY THE DIRECTORS OF THE COMPANIES AND PAID BY THE ASSESSEE LEISURELY IN INSTALLMENTS AT WILL UNDER THE GARB OF AGREEMENT TO SELL WHICH HAS BEEN RIGHTLY TREATED AS SHAM AND COLLUSIVE TRANSACT ION BETWEEN THE ASSESSEE AND BOTH THE COMPANIES BY THE AO. 18. THE LD. CIT (A) FOR THE REASON BEST KNOWN TO HI M HAS RELIED UPON THE LEDGER ACCOUNT OF M/S. ALPEX EXPORTS PVT. LTD. SHOWING THE ADVANCE OF RS.97,25,000/- AS ADVANCE AGAINST PR OPERTY NO.B-79 WHEREAS NO SUCH NARRATION IS THERE IN THE BALANCE S HEET WHEREIN THE SAID AMOUNT IS SHOWN UNDER THE HEAD DEBTOR. 19. THE CONTENTION OF THE ASSESSEE THAT THE PROPERT Y IN QUESTION WAS BEING SOLD TO THE COMPANIES BY THE ASSESSEE AS THE BANK WAS INSISTING UPON THAT THE SAME BE TRANSFERRED IN THE NAME OF THE COMPANY AS IT WAS GIVEN AS A COLLATERAL SECURITY AT THE TIME OF TAKING LOAN FOR RUNNING THE BUSINESS OF THE COMPANI ES IS PRIMA ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 11 FACIE NOT SUSTAINABLE BECAUSE WHEN THE PROPERTY IN QUESTION WAS ALREADY PLEDGED WITH THE BANK AS COLLATERAL SECURIT Y BY THE DIRECTOR IN HER INDIVIDUAL CAPACITY, THERE IS NO LEGAL GROUN D WITH THE BANK TO INSIST UPON FOR TRANSFERRING THE PROPERTY IN THE NA ME OF THE COMPANIES. RATHER COLLATERAL SECURITY GIVEN BY THE DIRECTOR OF THE COMPANY IN INDIVIDUAL CAPACITY IS A POTENT SECURITY WITH THE BANK THAN THE PROPERLY IN THE NAME OF THE COMPANY. SO, THIS PLEA ALSO IS AN AFTER-THOUGHT AND AS SUCH, THE ENTIRE ARRANGEMEN T BETWEEN THE ASSESSEE AND BOTH THE COMPANIES FALLS WITHIN THE MI SCHIEF OF PROVISIONS CONTAINED U/S 2(22)(E) OF THE ACT. SO, THE ASSESSEE HAS CLEARLY DEPRIVED THE COMPANY FROM THE BENEFITS OF F UNDS OF RS.1,28,52,217/- TAKEN FROM BOTH THE COMPANIES WHIC H HAVE BEEN USED FOR THE PURPOSE OF INVESTMENT IN THE MUTUAL FU ND. 20. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT THE LD. CIT (A) HAS ERRED IN D ELETING THE ADDITION OF RS.1,28,52,217/-. CONSEQUENTLY, IMPUGN ED ORDER PASSED BY THE LD. CIT (A) IS NOT SUSTAINABLE IN THE EYES OF LAW HENCE REVERSED AND ASSESSMENT ORDER PASSED BY THE A O IS HEREBY RESTORED. SO, GROUND NO.1 OF THE REVENUE IS DETERM INED IN FAVOUR OF THE REVENUE. ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 12 CROSS OBJECTION FILED BY THE ASSESSEE GROUNDS NO.1 & 2 21. THE LD. AR FOR THE ASSESSEE CHALLENGING THE IMP UGNED ORDER CONTENDED INTER ALIA THAT THE AO HAD NO JURISDICTIO N TO PASS THE ASSESSMENT ORDER FOR WANT OF ISSUANCE OF VALID NOTI CE U/S 143 (2) OF THE ACT; THAT MERE PROVING OF DISPATCH IS NOT ENOUG H TO PROVE THE SERVICE OF NOTICE ON THE ASSESSEE WHICH IS A MANDAT ORY REQUIREMENT; THAT NOTICE DATED 12.08.2009 ISSUED BY THE AO HAS NO JURISDICTION TO ISSUE SUCH NOTICE AND RELIED UPON T HE FOLLOWING CASE LAWS :- (I) ACIT VS. HOTEL BLUE MOON IN 321 ITR 362 (SC) (C LC 126- 130) (II) ALPINE ELECTRONICS ASIA PTE LTD. VS. DGIT IN 3 41 ITR 247 (DEL) CLC 131-140) (III) CIT VS. PAWAN GUPTA IN 318 ITR 322 (DEL) (IV) ITO VS. R. K. GUPTA IN 308 ITR 49 (DEL) (AT) (V) RAJAN GUPTA VS. CIT IN 233 CTR 230 (DEL) (VI) SHRI KULDEEP KUMAR VS. ITO IN ITA 2243/D/2011 (VII) ITO VS. NASEMAN FARMS PVT. LTD. IN ITA 1175/D /2011 DATED 08.04.2015 (VIII) CIT VS. MUKESH KUMAR AGGARWAL IN 345 ITR 002 9, HIGH COURT OF ALLAHABAD (PARA 5 AND 7-8) (IX) CIT VS. LUNAR DIAMOND LTD. IN 281 ITR 1 (DEL) (CLC 141- 143) (X) SHYAM GOPAL CHARITABLE TRUST VS. DIT IN 290 ITR 99 (DEL) (XII) R.L. NARANG VS. CIT IN 136 ITR 108 (DEL) ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 13 (XIII) CIT VS. RAJESH SHARMA IN 311 ITR 235 (DEL) (XIV) CIT VS. VARDHMAN ESTATE (P) LTD. IN 287 ITR 3 68(DEL) (XV) SPRINGER VERLAG GMBH VS. DDIT IN 97 TTJ 269 (D EL) (XVI) CIT VS. CEBON INDIA LTD. IN 347 ITR 583 (P&H) (CLC 144- 145) (XVII) ALF FAHEEM MEATEX PVT. LTD. VS. ACIT ITA N O.6122 & 6123/DEL/2015 ORDER DATED 09.06.2017 OF THE TRIBUNA L (XVIII) SHRI YOGESH YADAV VS.ITO ITA NO.1757/DEL/ 2016 ORDER DATED 09.10.2017 OF THE TRIBUNAL 22. HOWEVER, ON THE OTHER HAND, TO REPEL THE ARGUME NTS ADDRESSED BY THE LD. AR FOR THE ASSESSEE, THE LD. S ENIOR DR CONTENDED INTER ALIA THAT THE STATUTORY NOTICE U/S 143 (2) DATED 12.08.2009 WAS ISSUED WELL WITHIN THE STIPULATED PE RIOD THROUGH SPEED POST; THAT THE ASSESSEE HAS NOT DISPUTED THE SERVICE OF NOTICE DURING THE ASSESSMENT PROCEEDINGS RATHER HAS DULY C OOPERATED WITH THE AO AND RELIED UPON THE CASE OF HONBLE DELHI HI GH COURT IN CASE OF PR. CIT-06 VS. MEGA CORPORATION LTD. IN ITA 128/201 6 ORDER DATED 213.02.2017 . 23. UNDISPUTEDLY, FIRST STATUTORY NOTICE U/S 143 (2 ) WAS ISSUED BY THE ACIT, CIRCLE 46 (1), NEW DELHI WHEREAS THE ASSE SSEE HAS FILED ITS RETURN DATED 29.09.2008 BEFORE ACIT, CIRCLE 1 ( 1), NEW DELHI. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSMENT RECOR D WAS TRANSFERRED TO THE AO/ACIT, CIRCLE 1 (1) ON 04.08.2010 BEING TH E JURISDICTIONAL AO. IT IS ALSO NOT IN DISPUTE THAT THE SECOND NOTICE ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 14 WAS ISSUED ON 06.08.2010. IT IS ALSO NOT IN DISPUT E THAT FIRST STATUTORY NOTICE DATED 12.08.2009 WAS ISSUED BY THE ACIT, CIRCLE 46 (1), NEW DELHI AND THE SECOND NOTICE DATED 06.08 .2010 WAS ISSUED BY THE ACIT, CIRCLE 1 (1), NEW DELHI. 24. PERUSAL OF THE COPY OF THE NOTICE ISSUED U/S 14 3 (2) OF THE ACT DATED 12.08.2009 PLACED ON FILE BY THE LD. DR SUPPO RTED WITH COPY OF REGISTER SHOWING SPEED POST BOOKING LIST SHOWS T HAT THE NOTICE WAS ISSUED TO THE ASSESSEE ON 12.08.2009 BY ACIT, C IRCLE 46 (1), NEW DELHI. JURISDICTIONAL AO OF COMPANIES OF ASSES SEE IS ACIT, CIRCLE 46 (1) AND JURISDICTIONAL AO OF ASSESSEE IN INDIVIDUAL CAPACITY, WHO IS ALSO DIRECTOR OF THE TWO COMPANIES , IS ACIT, CIRCLE 1 (1), NEW DELHI. IT IS THE CASE OF THE ASS ESSEE THAT SINCE ACIT, CIRCLE 46 (1) HAS NO JURISDICTION WHEREAS THE SECOND NOTICE DATED 06.08.2010 ISSUED BY THE JURISDICTIONAL ACIT WAS BEYOND STATUTORY PERIOD, THE ASSESSMENT ORDER IS LIABLE TO BE QUASHED. 25. HOWEVER, WHEN WE EXAMINE THE PROVISIONS CONTAIN ED U/S 124 (3)(A) THE ASSESSEE IS NOT ENTITLED TO QUESTION THE JURISDICTION OF THE AO AFTER AN EXPIRY OF ONE MONTH FROM THE DATE O N WHICH SHE WAS SERVED WITH NOTICE U/S 142 (1), 142 (2) AND 143 (2) ORDER AFTER THE COMPLETION OF THE ASSESSMENT, WHICHEVER IS EARL IER. FOR FACILITY OF REFERENCE, PROVISIONS CONTAINED U/S 124(3)(A) AR E REPRODUCED AS UNDER :- ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 15 124 . (3) NO PERSON SHALL BE ENTITLED TO CALL IN QUESTION THE JURISDICTION OF AN ASSESSING OFFICER (A) WHERE HE HAS MADE A RETURN UNDER SUB-SECTION ( 1) OF SECTION 115WD OR UNDER SUB-SECTION (1) OF SECTIO N 139, AFTER THE EXPIRY OF ONE MONTH FROM THE DATE ON WHICH HE WAS SERVED WITH A NOTICE UNDER SUB-SECTION (1) OF SECTION 142 OR SUB-SECTION (2) OF SECTION 115WE OR SUB-SECTION (2) OF SECTION 143 OR AFTER THE COMPLET ION OF THE ASSESSMENT, WHICHEVER IS EARLIER; 26. IT IS UNDISPUTED FACT ON RECORD THAT THE ASSESS EE HAS FIRST TIME QUESTIONED THE ASSESSMENT ORDER ON THE BASIS OF JUR ISDICTIONAL ERROR FOR WANT OF ISSUANCE OF THE STATUTORY NOTICE BEFORE FIRST APPELLATE AUTHORITY, COMMISSIONER (APPEALS). IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE CONTINUED TO ATTEND THE ASSESSMENT PRO CEEDINGS AFTER RECEIPT OF THE NOTICE ISSUED U/S 143 (2) AND HAS FA ILED TO BRING ON RECORD IF ANY PREJUDICE WAS CAUSED TO HER. 27. HONBLE ALLAHABAD HIGH COURT IN CASE CITED AS CIT VS. BRITISH INDIA CORPORATION LIMITED 337 ITR 64 WHILE DECIDING THE IDENTICAL ISSUED HELD THAT THE QUESTION OF JURI SDICTION OF THE ASSESSING AUTHORITY CANNOT BE DISPUTED AFTER COMPLE TION OF THE ASSESSMENT PROCEEDINGS WHICH CAN ONLY BE ADDRESSED BY THE COMMISSIONER OR THE BOARD, AS THE CASE MAY BE, AS P ER PROVISIONS CONTAINED UNDER SECTION 124 (4) WHICH EXCLUDES THE JURISDICTION OF FIRST APPELLATE AUTHORITY OR THE COURT. ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 16 28. HONBLE ALLAHABAD HIGH COURT REFERRED TO A CASE DECIDED BY HONBLE APEX COURT CITED AS KIRAN SINGH VS. CHAMAN PASWAN (1954) AIR 1954 SC 340 WHEREIN JURISDICTIONAL ISSUE HAS BEEN DECIDED BY THE HONBLE APEX COURT AS UNDER :- WHEREIN A DISTINCTION HAS BEEN DRAWN BETWEEN A JUR ISDICTION WITH REGARD TO THE SUBJECT-MATTER OF THE SUIT AND T HAT OF TERRITORIAL AND PECUNIARY JURISDICTION. IT HAS BEEN HELD THAT A DECREE OR JUDGMENT PASSED BY A COURT HAVING NO TERRITORIAL OR PECUNIARY JURISDICTION IS NOT A NULLITY BUT AT THE MOST IT IS AN IRREGULARITY AND SUCH A JUDGMENT AND DECREE CANNOT BE SET ASIDE BY HIGHER COURT WHILE EXERCISING APPELLATE OR REVISIONAL JURI SDICTION UNLESS A PREJUDICE WHICH HAS BEEN CAUSED TO THE APPELLANT IS ESTABLISHED. PREJUDICE CAN BE A GROUND FOR RELIEF ONLY WHEN IT I S DUE TO THE ACTION OF ANOTHER PARTY AND NOT WHEN IT RESULTS FRO M ONES OWN ACT. COURTS CANNOT RECOGNIZE THAT AS PREJUDICE WHI CH FLOWS FROM THE ACTION OF THE VERY PARTY WHO COMPLAINS ABOUT IT . (KIRAN SINGH V. CHAMAN PASWAN, AIR 1954 SC 340) 29. SO, IN THIS CASE, IT IS NOT THE CASE OF THE ASS ESSEE THAT THE ACIT WHO HAS PASSED THE ASSESSMENT ORDER WAS HAVING NO JURISDICTION OVER THE SUBJECT MATTER OF THE CASE RA THER HE HAS QUESTIONED THE TERRITORIAL JURISDICTION FOR WANT OF ISSUANCE OF A NOTICE ISSUED U/S 143 (2) WHICH IS A MERE IRREGULAR ITY AND THE ASSESSMENT CANNOT BE SET ASIDE ON THIS GROUND AS HA S BEEN HELD BY HONBLE APEX COURT IN KIRAN SINGH VS. CHAMAN PASWAN (SUPRA). MOREOVER, NO PREJUDICE IS SHOWN TO HAVE BEEN CAUSED BY THE ASSESSEE FOR WANT OF ISSUANCE OF STATUTORY NOTICE I SSUED BY ACIT HAVING NO TERRITORIAL JURISDICTION RATHER DEFENDED THE PROCEEDINGS BEFORE AO WITHOUT RAISING ANY OBJECTION. ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 17 30. MOREOVER, THE ASSESSEE HAS NOT BROUGHT ON RECOR D IOTA OF MATERIAL TO PROVE IF ANY PREJUDICE HAS BEEN CAUSED TO HER DUE TO ISSUANCE OF THE NOTICE U/S 143 (2) BY ACIT, CIRCLE 46(1) HAVING NO JURISDICTION. MOREOVER, JURISDICTIONAL ERROR IN TH IS CASE IS DUE TO THE FACT THAT THE ASSESSEE BEING A DIRECTOR OF A COMPAN Y IS HAVING A SEPARATE JURISDICTION AND THE ASSESSEE AS AN INDIVI DUAL TAX PAYEE IS A SEPARATE JURISDICTION BELIEVING NO PREJUDICE IS BEI NG CAUSED TO THE ASSESSEE, SHE HAS NOT RAISED ANY OBJECTION AS REQUI RED U/S 124 (3)(A) OF THE ACT. 31. EVEN OTHERWISE, WHEN THE NOTICE IS ISSUED THROU GH A REGISTERED POST WELL WITHIN TIME AND HAS NOT RECEIV ED BACK, SERVED OR UNSERVED, THE SAME IS PRESUMED TO HAVE BEEN SERV ED UPON THE ASSESSEE THOUGH ISSUED BY ACIT HAVING NO JURISDICTI ON WHO HAD SUBSEQUENTLY TRANSFERRED THE ASSESSMENT PROCEEDINGS TO THE ACIT CONCERNED. MORE SO, PURSUANT TO THE SAID NOTICE, A SSESSEE DEFENDED HER CASE BEFORE AO AND HAS NEVER RAISED JURISDICTIO NAL ISSUE BEFORE AO WITHIN STATUTORY PERIOD AS REQUIRED U/S 124 (3)( A) OF THE ACT. 32. IDENTICAL ISSUE HAS ALSO BEEN DECIDED BY HONBL E JURISDICTIONAL HIGH COURT IN CASE CITED AS MEGA CORPORATION LIMITED (SUPRA) WHEREIN ISSUE OF JURISDICTION HAS BEEN DEC IDED IN FAVOUR OF THE REVENUE IN ACCORDANCE WITH THE PROVIS IONS CONTAINED U/S 124 (3)(A) WHICH RAISED A BAR FOR THE ASSESSEE TO QUESTION THE ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 18 JURISDICTIONAL ISSUE AFTER THE EXPIRY OF ONE MONTH FROM THE DATE OF NOTICE U/S 142 (2) OR AFTER COMPLETION OF THE ASSES SMENT, WHICHEVER IS EARLIER. IN THE INSTANT CASE, NO DOUBT, THE ACI T, CIRCLE 46 (1) WHO HAS ISSUED THE NOTICE U/S 143 (2) DATED 12.08.2 009 HAS NO JURISDICTION AND SUBSEQUENTLY, THE CASE WAS TRANSFE RRED TO ACIT, CIRCLE 1 (1), NEW DELHI BEFORE WHOM THE ASSESSEE CO NTINUED TO ATTEND THE PROCEEDINGS AND GET THE ASSESSMENT COMPL ETED WITHOUT RAISING ANY OBJECTIONS. SO, IN VIEW OF THE JUDGMEN T IN CASE OF MEGA CORPORATION LTD. (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT NOW THE ASSESSEE IS NOT ENTITLED TO QUESTION THE JU RISDICTIONAL ISSUE. 31. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT THE LD. CIT (A) HAS RIGHTLY DE CIDED THE ISSUE AS TO THE SERVICE OF NOTICE U/S 143(2) AS A JURISDI CTIONAL ERROR AGAINST THE ASSESSEE. HENCE, GROUNDS NO.1 & 2 RAIS ED BY THE ASSESSEE IN HER CROSS OBJECTION ARE DETERMINED AGAI NST THE ASSESSEE. 32. CONSEQUENTLY, APPEAL FILED BY THE REVENUE IS HE REBY ALLOWED AND CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 16 TH DAY OF MAY, 2018. SD/- SD/- (R.S. SYAL) (KULDIP SINGH) VICE PRESIDENT JUDICIAL MEMBER DATED THE 16 TH DAY OF MAY, 2018 TS ITA NO.4802/DEL./2012 CO NO.465/DEL/2012 19 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-IV, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.