DIASTAR IMPEX P.LTD, MUMBAI V. ITO 5(1)(3), MUMBAI

ITA 1026/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1904 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2002-2003
• Appeal Filed On: 14-02-2014
• Court: TRIBUNAL
• Department Lawyers: DR DARSI S RATNAM
• Assessee Lawyers: JITENDRA LALA
• Keywords: Period of limitation; Assessment record; Time period of passing order
• Section: 143(3)

Judgement Text

, , D , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI , , , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.1026/MUM/2014 ASSESSMENT YEAR: 2002-03 DIASTAR IMPEX P. LTD. PRIVIN KUMAR JAIN, DIRECTOR, DIASTAR P. LTD. FLAT NO.5, KALPATARU APARTMENTS, 39 PEDDAR ROAD KEMPS CORNER, MUMBAI -400026 / VS. ITO 5(1)(3) AAYAKAR BHAVAN MUMBAI (ASSESSEE ) (REVENUE) P.A. NO. AAACJ1079P / ASSESSEE BY SHRI JITENDRA LALA (AR) / REVENUE BY DR. DARSI S. RATNAM (DR) ! ' / DATE OF HEARING : 23/11/2015 ! ' / DATE OF ORDER: 18/12/2015 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S)-9, DIASTAR IMPEX P. LTD. 2 MUMBAI {(IN SHORT CIT(A)}, DATED 18.12.2013 FOR T HE ASSESSMENT YEAR 2002-03, DECIDED AGAINST THE ASSESS MENT ORDER PASSED BY THE ASSESSING OFFICER (IN SHORT AO ) U/S 143(3) OF THE ACT, ON THE FOLLOWING GROUNDS: 1.IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSME NT IS INVALID ON THE GROUND THAT THE NOTICE U/S.143(2) WA S SERVED BEYOND THE STATUTORY TIME LIMIT. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) OUGHT TO HAVE ALLOWED THE CLAIM OF T HE APPELLANT IN COMPUTATION OF LONG TERM CAPITAL GAINS . 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI JITENDRA LALA, AUTHORISED REPRESENTATIVE (AR) ON BEHALF OF THE ASSESSEE AND BY SHRI DARSI S. RATNAM, DEPARTMEN TAL REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. 3. IN THIS APPEAL, FIRST ISSUE RAISED BY THE ASSESSEE IS THAT IN THIS CASE MANDATORY NOTICE U/S 143(2) WAS NOT SERVE D DURING THE STATUTORY PERIOD, AND THEREFORE, AO DID NOT ASS UME JURISDICTION AS PER LAW TO FRAME IMPUGNED ASSESSMEN T ORDER, AND THEREFORE, SAME WAS INVALID IN THE EYES OF LAW, AND THEREFORE IT SHOULD BE QUASHED. IT WAS ALSO SUBMITT ED BY THE LD. COUNSEL THAT THIS IS SECOND ROUND OF APPEAL. IN THE FIRST ROUND THIS ISSUE WAS RAISED BEFORE HONBLE TRIBUNAL WHEREIN THIS ISSUE WAS ADMITTED BY THE TRIBUNAL AND WAS SEN T BACK TO THE FILE OF THE LD. CIT(A) FOR TAKING A DECISION AF TER VERIFICATION OF REQUISITE FACTS. DIASTAR IMPEX P. LTD. 3 3.1. ON THE OTHER HAND, LD. DR HAS SUPPORTED THE ORDER OF LD. CIT(A) AND SUBMITTED THAT BURDEN SHOULD BE ON SHOUL DERS OF THE ASSESSEE TO PROVE THAT NOTICE WAS NOT SERVED AS PER LAW. 3.2. WE HAVE GONE THROUGH THE SUBMISSIONS MADE BY BOTH SIDES AS WELL AS MATERIAL PLACED BEFORE US AND ORDE RS OF LOWER AUTHORITIES AND JUDGMENTS RELIED UPON BEFORE US. AT THE OUTSET, IT IS NOTED THAT IN THE FIRST ROUND THE TRI BUNAL VIDE ITS ORDER DATED 21.01.2008 (ITA NO.4781/MUM/2005) MADE FOLLOWING OBSERVATIONS: WE HAVE HEARD THE LEARNED REPRESENTATIVE OF THE PA RTIES AND RECORD PERUSED. IN THE INTEREST OF JUSTICE, THE ABOVE GROUND RAISED BY THE ASSESSEE IS ADMITTED. HOWEVER, WE FIND FORCE IN THE SUBMISSION OF THE LEARNED DR THAT THE RELEVANT FACTS ARE REQUIRED TO BE VERIFIED FROM THE RECORD. UNDER THE CIRCUMSTANCES, WE DEEM IT FIT AND PROPER TO SEND BACK THIS ISSUE TO THE FILE OF THE CIT(A) WITH A DIRECTION TO DECIDE THE ISSUE IN ACCORDANCE WITH LA W AFTER VERIFYING THE RELEVANT FACTS AND FIGURES AFTER PROV IDING OPPORTUNITY OF HEARING BOTH THE SIDES. 3.3. IN THE SECOND ROUND OF LD. CIT(A), THE ASSESSEE PL ACED ALL THE EVIDENCES IN SUPPORT OF HIS SUBMISSIONS THAT TH E NOTICE U/S 143(2) WAS NOT SERVED UPON HIM IN TIME. LD. CIT (A) CALLED FOR REMAND REPORT FROM THE AO, THE AO SENT THE REMA ND REPORT WHEREIN THE AO WAS NOT ABLE TO NEGATE THE CLAIM OF THE ASSESSEE ON THE GROUND FOR THE REASON THAT THE CASE RECORDS DIASTAR IMPEX P. LTD. 4 WERE NOT AVAILABLE. THE RELEVANT PARA OF THE REMAND REPORT DATED 21.05.2012 IS REPRODUCED BELOW: YOUR GOODSELF IN THE REMAND REPORT DATED 27.02.201 2 HAD CALLED FOR THE RELEVANT ASSESSMENT RECORDS FOR VERI FICATION. IN RESPONSE TO THE SAME, THE UNDERSIGNED, VIDE LETT ER DATED 7/3/2012 HAS SUBMITTED THAT THE CASE RECORDS WERE N OT TRACEABLE AND HAS SOUGHT FOR SOME TIME OF PRODUCE T HE SAME. IT IS MOST REGRETFULLY SUBMITTED THAT THE OFF ICE HAS NOT BEEN ABLE TO TRACE THE RELEVANT CASE RECORDS. S INCE THE CASE RECORDS PERTAIN TO A.Y. 2002-03, THE SAME BEIN G TOO OLD, THEY MIGHT HAVE BEEN WEEDED OUT. 3.4. IN RESPONSE TO THE REMAND REPORT, LD. COUNSEL OF T HE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) EVIDENCES SHOWING THAT NOTICE U/S 143(2) WAS SERVED UPON THE ASSESSEE BEYOND THE STATUTORY TIME LIMIT. BUT LD. CIT(A) DID NOT AG REE WITH THE SUBMISSIONS OF THE ASSESSEE AND HELD THAT DEPARTMEN T HAS HANDED OVER THE NOTICE TO THE POSTAL AUTHORITIES ON 31.10.2003, AND THEREFORE ANY DELAY ON THE PART OF THE POSTAL AUTHORITY SHOULD NOT BE CONSIDERED AND NOTICE DEEME D TO BE SERVED ON 31.03.2003. 3.5. BEFORE US, LD. COUNSEL HAS DRAWN OUR ATTENTION UPO N VARIOUS EVIDENCES FILED BEFORE LD. CIT(A) SHOWING T HAT NOTICE WAS DISPATCHED ON 31.10.2003 AND WAS RECEIVED BY TH E GIRGAON POST OFFICE ON 01.11.2003 AND RECEIVED BY T HE ASSESSEE ON 03.11.2003. IT WAS SUBMITTED THAT NOTIC E WAS SERVED OSTENSIBLY BEYOND THE STATUTORY PERIOD, AND THUS, DIASTAR IMPEX P. LTD. 5 MANDATORY JURISDICTIONAL CONDITIONS HAVE NOT BEEN C OMPLIED WITH BY THE AO FOR FRAMING THE ASSESSMENT ORDER AND THEREFORE THE ASSESSMENT ORDER IS NULLITY IN EYES OF LAW. HE HAS PLACED RELIANCE UPON THE FOLLOWING JUDGMENTS: (I) CIT VS. HOTEL BLUE MOON 321 ITR 362 (SC) (II) CIT VS. BHAN TEXTILES (P) LTD. 287 ITR 370 (DEL) (III) CIT VS. DEVAN KRAFT SYSTEM P. LTD., 165 ITR 139 (DE L) (IV) CIT VS. VARDHAMAN ESTATE PVT. LTD. 287 ITR 368 (DEL ) (V) CIT VS. CEBON INDIA LTD. 347 ITR 583 (P&H) (VI) CIT VS. VISHNU & CO. LTD., 319 ITR 151 (VII) VIRENDRA DEV DIXIT VS. ACIT 331 ITR 0483 (VIII) CIT VS. SUNIL K. CHHABRA 250 CTR (P&H) 195 (IX) PAL VINOD VS. DCIT (2013) 353 ITR 622 3.6. WE FIND FORCE IN THE SUBMISSION OF LD. COUNSEL. IT IS NOTED BY US THAT THE TRIBUNAL HAD ADMITTED THIS GROUND IN ITS ORDER AND THEREAFTER SENT THE MATTER BACK TO LD. CIT(A) F OR THE LIMITED PURPOSE OF VERIFICATION OF FACTS. THE ORDER OF THE TRIBUNAL HAS NOT BEEN CONTESTED BY THE REVENUE BEFO RE HONBLE HIGH COURT, AND THEREFORE, THE SAME HAD ATT AINED FINALITY. UNDER THESE CIRCUMSTANCES LD. CIT(A) COUL D NOT HAVE DILUTED THIS ISSUE BY OBSERVING THAT THIS GROUND CO ULD NOT HAVE BEEN TAKEN BY THE ASSESSEE BEFORE THE TRIBUNAL FOR THE FIRST TIME. HIS JURISDICTION WAS LIMITED TO VERIFICATION OF FACTS. IT IS FURTHER NOTED THAT THE ASSESSEE SUBMITTED REQUISITE EVIDENCES TO SHOW THAT SERVICE OF THE IMPUGNED NOTICE WAS DON E BEYOND STATUTORY PERIOD. AS PER ASSESSMENT ORDER, THE RETU RN OF INCOME WAS FILED ON 30.10.2002. THUS, NOTICE U/S 14 3(2) WAS DIASTAR IMPEX P. LTD. 6 REQUIRED TO BE SERVED UPON THE ASSESSEE ON OR BEFOR E 31.10.2003. THE LEGISLATURE HAS USED THE WORD SERV E IN SECTION 143(2). IN SOME OTHER SECTIONS WORD ISSUE HAS BEEN USED. THUS, LEGISLATURE IS CONSCIOUS OF THE REQUIRE MENT OF THE LAW ABOUT SERVICE AND ISSUANCE OF THE NOTICES. SERVICE OF THE MANDATORY NOTICE U/S 143(2) IS JURISDICTIONAL REQUI REMENT. IT IS WELL SETTLED LAW THAT THE JURISDICTIONAL CONDITIONS HAVE TO BE COMPLIED WITH STRICTLY, LITERALLY AND ON AS IT IS BASIS, OTHERWISE IT SHALL BE DEEMED THAT THESE HAVE NOT BEEN COMPLIE D WITH. 3.7. IT IS NOTED FROM THE EVIDENCES PLACED BEFORE US TH AT IMPUGNED NOTICE WAS DISPATCHED ON 31.10.2003 WHICH WAS RECEIVED IN GIRGAON POST OFFICE ON 01.11.2003 AND R ECEIVED BY THE ASSESSEE ON 03.11.2003, WHEREAS THE LAST DATE F OR SERVICE OF NOTICE AS PER LAW WAS 31.10.2003. THUS, A NOTICE WHICH HAS BEEN HANDED OVER TO THE POSTAL OFFICE AND DISPATCHE D BY IT ON 31.10.2003, IT CANNOT BE EXPECTED TO BE SERVED BY A NY STANDARDS ON OR BEFORE 31.10.2003. THUS, CONTENTION OF LD. CIT(A) TO TREAT THE DELAY ON THE PART OF THE POST O FFICE IS FACTUALLY AND LOGICALLY INCORRECT AND WHOLLY ERRONE OUS. NOTHING HAS BEEN SHOWN BY THE REVENUE INDICATING THAT WHETH ER ANY EFFORTS WERE MADE TO SERVE THE NOTICE ON OR BEFORE 31.10.2003. THUS, IT IS CLEAR CASE OF SERVICE OF MANDATORY NOTI CE BEYOND STATUTORY ALLOWABLE PERIOD. UNDER THESE FACTS LET U S ANALYSE THE LEGAL POSITION. 3.8. IT HAS BEEN HELD BY THE HONBLE SUPREME COURT IN T HE CASE OF CIT VS. HOTEL BLUE MOON (SUPRA) THAT SERVIC E OF NOTICE DIASTAR IMPEX P. LTD. 7 WITHIN THE PRESCRIBED TIME LIMIT IS SINE QUA NON FOR VALID ASSUMPTION OF JURISDICTION TO FRAME THE ASSESSMENT ORDER. 3.9. IT HAS BEEN HELD BY HONBLE DELHI HIGH COURT IN TH E CASE OF CIT VS. VARDHAMAN ESTATE PVT. LTD. (SUPRA) THAT DATE OF DISPATCH OF NOTICE CANNOT BE DEEMED TO BE DATE OF S ERVICE AND IT WAS FURTHER HELD THAT NOTICE U/S 143(2) HAVING B EEN SERVED ON THE ASSESSEE THROUGH SPEED POST AFTER EXPIRY OF TIME LIMIT AND THERE BEING NO RELEVANT DOCUMENTS BEFORE THE TR IBUNAL TO SHOW THAT THE SAME WAS SERVED WITHIN THE PRESCRIBED TIME THROUGH PROCESS SERVER, THE SERVICE OF NOTICE WAS N OT EFFECTED IN TIME. 3.10. IN CIT VS. DEVAN KRAFT SYSTEM P. LTD., (SUPRA), IT WAS HELD THAT IF NOTICE U/S 143(2) WAS ISSUED AT THE FA G END OF THE LIMITATION PERIOD AND THE SAME COULD NOT BE SERVED BY THE POSTAL DEPARTMENT CANNOT, THEN REVENUE CANNOT BE GI VEN BENEFIT OF ITS OWN WRONG FOR NOT SERVING THE NOTICE IN TIME. 3.11. IN THE CASE OF CIT VS. BHAN TEXTILES (P) LTD. IT H AS BEEN HELD THAT U/S 143(2) MUST BE SERVED UPON THE ASSESS EE WITHIN THE PRESCRIBED TIME LIMIT, AND SERVICE OF NOTICE AF TER THE PRESCRIBED TIME LIMIT WOULD NOT RELATE BACK TO THE DATE OF ISSUE OF NOTICE. 3.12. IN THE CASE OF CIT VS. CEBON INDIA LTD. (SUPRA) IT WAS HELD THAT IF NOTICE U/S 143(2) WAS NOT SERVED UPON THE ASSESSEE WITHIN THE STIPULATED TIME THEN THE IMPUGN ED DIASTAR IMPEX P. LTD. 8 ASSESSMENT WAS NOT VALID AND ABSENCE OF SERVICE OF MANDATORY NOTICE WAS NOT CURABLE U/S 292BB. 3.13. IN THE CASE OF CIT VS. VISHNU & CO. LTD., SUPRA, I T WAS HELD THAT NOTICE SERVED BY AFFIXTURE ON LAST DATE A FTER OFFICE HOURS IS NOT VALID SERVICE AND ASSESSMENT FRAMED IN PURSUANCE OF SUCH NOTICE IS NOT VALID; IT IS IMMATE RIAL THAT THE ASSESSEE APPEARED IN THE ASSESSMENT PROCEEDINGS. 3.14. THUS, KEEPING IN VIEW, THE FACTS OF THE CASE AND AFORESAID LEGAL DISCUSSION, IT IS CLEAR THAT SINCE THE MANDATORY NOTICE U/S 143(2) WAS NOT SERVED WITHIN THE PRESCRI BED TIME LIMIT BY THE AO, AND THEREFORE, HE COULD NOT ASSUME JURISDICTION TO FRAME THE IMPUGNED ASSESSMENT ORDER , AND THEREFORE THE ASSESSMENT ORDER IS NULLITY IN THE EY ES OF LAW AND THEREFORE, SAME IS HEREBY QUASHED. THUS, GROUND NO. 1 IS ALLOWED. 3.15. SINCE, THE APPEAL HAS BEEN ALLOWED ON THE LEGAL GR OUND, WE REFRAIN OURSELVES FROM DECIDING THE GROUNDS ON M ERITS. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2015. SD/- (SANJAY GARG ) SD/- (ASHWANI TANEJA) '# / JUDICIAL MEMBER $# / ACCOUNTANT MEMBER MUMBAI; $ DATED : 18/12/2015 CTX? P.S/. .. DIASTAR IMPEX P. LTD. 9 %'&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. & '( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. + + , ( & ) / THE CIT, MUMBAI. 4. + + , / CIT(A)- , MUMBAI 5. /0 ) 1 , + &' 12 , / DR, ITAT, MUMBAI 6. 3 4 / GUARD FILE. / BY ORDER, * /& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI