Ricky Construction (P) Ltd., Hooghly V. ITO, WD-3(3), KOLKATA, Kolkata

ITA 1286/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1582 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-06-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 07-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SINHA
• Keywords: Reassessment proceedings
• Section: 143(3); 147; 148; 6; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SRI A.T.VARKEY, JM & SHRI M.BALAG ANESH, AM ] I.T.A NO. 1286/KOL/20 16 ASSESSMENT YEAR : 2004-0 5 RICKY CONSTRUCTION (P)LTD. -VS.- I.T.O., WARD-3(3), KOLKATA KOLKATA [PAN : AACCR 1789 A] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SOMNATH GHOSH , ADVOCATE FOR THE RESPONDENT : SHRI A.K.SINHA, ADDL. C IT DATE OF HEARING : 08.06.2017. DATE OF PRONOUNCEMENT : 07.07.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED CIT(A)-5, KOLKATA IN APPEAL NO. 31/CIT(A)-5/WD-3(3)/-8-09/1 4-15 DATED 22.03.2016 AGAINST THE ORDER OF ASSESSMENT FRAMED FOR THE ASST YEAR 20 04-05 U/S 144 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. AT THE OUTSET, WE FIND THAT THERE IS A DELAY IN FILING THE APPEAL BY THE ASSESSEE BEFORE US BY 8 DAYS. WE FIND THAT THE REASON STATED BY THE ASSESSEE FOR THE DELAY IS CONVINCING AND ACCORDINGLY WE DEEM IT FIT TO CONDONE THE DELAY AND APPEAL OF THE ASSESSEE IS ADMITTED FOR ADJUDICATION. 3. THE ASSESSE HAS CHALLENGED THE VALIDITY OF ASSUM PTION OF JURISDICTION U/S 147 OF THE ACT. IT HAS ALSO CHALLENGED VIDE GROUND NO. 3 THAT NOTICE US 143(2) OF THE ACT WAS NOT ISSUED AND SERVED ON THE ASSESSEE BEFORE THE COMPLE TION OF REASSESSMENT PROCEEDINGS. FIRSTLY WE WOULD LIKE TO ADDRESS THIS PRELIMINARY G ROUND OF NON-ISSUANCE OF NOTICE U/S 143(2) OF THE ACT. 2 ITA NO.1286/KOL/2016 RICKY CONSTRUCTION (P)LTD. A.YR.2004-05 2 4. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS A PRIVATE LIMITED COMPANY WITH THE MAIN OBJECT TO WORK AS CIVIL CONTRACTORS. THE RETU RN OF INCOME U/S 139(1) OF THE ACT WAS FILED BY THE ASSESSEE ON 19.10.2004 DISCLOSING TOTA L INCOME OF RS 84,510/- WHICH WAS PROCESSED U/S 143(1) OF THE ACT ON 6.7.2005. SUBSE QUENTLY THE LD AO ASSUMED JURISDICTION BY ISSUANCE OF NOTICE U/S 148 OF THE A CT. IN RESPONSE TO THE SAID NOTICE U/S 148 OF THE ACT, THE ASSESSEE FILED A REPLY ON 4.10. 2007 PRAYING TO TREAT THE ORIGINAL RETURN FILED U/S 139(1) OF THE ACT AS RETURN FILED IN COMPLIANCE THERETO. IT IS WELL SETTLED THAT THE ASSESSEE IS ENTITLED TO STATE THAT A RETUR N ALREADY FILED BY HIM MIGHT BE DEEMED TO BE A RETURN FILED IN RESPONSE TO NOTICE ISSUED U/S 148 OF THE ACT. RELIANCE IN THIS REGARD WAS PLACED ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF IQBAL SI NGH ATWAL VS CIT REPORTED IN (1984) 147 ITR 599 (CAL) . THE LD AO DID NOT ISSUE ANY NOTICE U/S 143(2) OF THE ACT THEREAFTER, WHICH WAS CHALLEN GED BY THE ASSESSEE BEFORE THE LD CITA. THE LD CITA HELD AS UNDER :- NOTICE U/S.143(2) THE APPELLANT HAS CHALLENGED THE ASSESSMENT ORDER U /S.144/147 ON THE GROUND THAT THE NOTICE U/S.143(2) WAS NOT ISSUED BEFORE COMPLET ION OF ASSESSMENT U/S.144 AND AFTER FILING OF LETTER BY THE APPELLANT TO THE A. O . IN RESPONSE TO NOTICE U/S.148 REQUESTING THE EARLIER RETURN TO BE TREATED AS THE RETURN FILED IN RESPONSE TO THE NOTICE U/S.148. FROM THE ASSESSMENT FOLDER, IT IS S EEN THAT THE A.O. HAD ISSUED A LETTER DATED 03.09.08 (NO.ITOWD-3(3)/KOI/08-09/309) ASKING THE APPELLANT TO EXPLAIN THE ALLEGATION THAT AGAINST RS.98 LACS OF T HE GROSS RECEIPTS ONLY RS.80 LACS WAS DISCLOSED WHEREAS TAX CREDIT WAS CLAIMED FOR TH E ENTIRE OF RS.2,00,900/-. THE A.O.'S SAID LETTER HAS GRANTED AN OPPORTUNITY TO TH E A.O. TO EXPLAIN THE ABOVE SAID DIFFERENCE. THE CONTENT OF THE LETTER IS REPRODUCED AS UNDER :- 'PLEASE REFER TO NOTICE U/S.148 DATED 09.08.2007 AN D YOUR COMPLIANCE LETTER SUBMITTED ON 04.10.2007. IT IS APPARENT FROM TDS CE RTIFICATES PRESENT WITH YOUR RETURN OF ASSESSMENT YEAR 2004-05 THAT YOU HAD GROS S RECEIPTS OF RS.98,00,000/- FROM WHICH TAX WAS DEDUCTED U/ S.194C FOR SUM OF RS .2,00, 900/ - AT THE TIME OF CREDIT OF GROSS AMOUNT TO YOUR ACCOUNT. WHEREAS IN THE P&L ACCOUNT YOU HAD SHOWN A GROSS RECEIPT OF ONLY RS.80,00,000/-. YOU ARE GIVEN A OPPORTUNITY TO SATISFACTORILY EXPLA IN THIS UNDER STATEMENT OF INCOME WITHIN 5 DAYS, FAILING WHICH THE INCOME & TAX OF AS SESSMENT YEAR 2004-05 SHALL BE RE-COMPUTED U/ S.144 OF THE 1. T. ACT, 1961. 3 ITA NO.1286/KOL/2016 RICKY CONSTRUCTION (P)LTD. A.YR.2004-05 3 THIS LETTER MAY BE TREATED AS A NOTICE U/ S.142(1) THOUGH THIS LETTER DOES NOT MENTION SECTION 143(2), ITS EFFECT AMOUNTS TO AFFORDING AN OPPORTUNITY TO PRODUCE EVIDENCES AT WHICH THE AP PELLANT COULD HAVE RELIED IN SUPPORT OF THE RETURN. IT IS THUS NOT A CASE WHERE NO NOTICE WAS ISSUED TO THE A.O. THIS GROUND, THEREFORE, IS NOT ALLOWED. 5. THE LD CITA AFTER VERIFYING THE ASSESSMENT RECOR DS AGREED TO THE FACT THAT NO NOTICE U/S 143(2) OF THE ACT WAS ISSUED BY THE LD AO IN TH E INSTANT CASE, BUT OPPORTUNITY OF HEARING WAS GIVEN TO THE ASSESSEE. AGGRIEVED, TH E ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 3. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (A PPEALS)-5, KOLKATA WAS WHOLLY IN ERROR IN UPHOLDING THE VALIDITY OF THE RE -ASSESSMENT ORDER FRAMED U/S 144 OF THE ACT ON ACCOUNT OF FAILURE OF THE LD. INCOME TAX OFFICER, WARD 3 (3), KOLKATA TO ISSUE NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1 961 PRIOR TO FRAMING OF SUCH ORDER AND THE SPECIOUS ORDER SO PASSED ON 26-09-200 8 IS THEREFORE ARBITRARY, UNREASONABLE AND PERVERSE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD DR CONFIRMED THAT NOTICE U/S 143(2) OF THE ACT WAS NOT ISSUED IN THE INSTANT CASE AS RIGHT LY POINTED OUT BY THE LD CITA. WE FIND THAT ISSUANCE OF NOTICE U/S 143(2) OF THE ACT IS A SINE QUA NON FOR COMMENCEMENT OF THE ASSESSMENT PROCEEDINGS AND ONLY THEREAFTER THE LD AO IS ENTITLED TO CALL FOR FURTHER DETAILS FROM THE ASSESSEE. THE LAW DOES NOT DIFFER ENTIATE THIS PRIMARY REQUIREMENT FOR ASSUMPTION OF JURISDICTION BETWEEN AN ASSESSMENT OR A REASSESSMENT. WE FIND THAT THE HONBLE APEX COURT IN THE CASE OF CIT VS HOTEL BLUE MOON REPORTED IN (2010) 321 ITR 362(SC) HAD HELD THAT IF NOTICE U/S 143(2) OF THE ACT WAS NOT ISSUED TO THE ASSESSEE BEFORE THE COMPLETION OF REASSESSMENT WITHIN THE ST IPULATED TIME , THEN SUCH REASSESSMENT WAS NOT SUSTAINABLE IN LAW. WE ALSO F IND THAT THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF ACIT VS GREATER NOIDA INDUSTRI AL DEVELOPMENT AUTHORITY REPORTED IN (2015) 379 ITR 14 (ALL) HAD HELD AS UNDER :- THE JURISDICTION OF THE ASSESSING OFFICER TO MAKE AN ASSESSMENT UNDER SECTION 143(3)(II) OF THE INCOME-TAX ACT, 1961, IS BASED ON THE ISSUANCE OF A NOTICE UNDER SECTION 143(2)( II) OF THE ACT. THE PROVISO TO CLAU SE (II) OF SUB-SECTION (2) OF SECTION 4 ITA NO.1286/KOL/2016 RICKY CONSTRUCTION (P)LTD. A.YR.2004-05 4 143 CLEARLY STIPULATES THAT A NOTICE MUST BE SERVED ON THE ASSESSEE. SECTION 292BB OF THE ACT WAS INSERTED BY THE FINANCE ACT, 2008, W ITH EFFECT FROM APRIL 1, 2008. SECTION 292BB OF THE ACT PROVIDES A DEEMING FICTION . THE DEEMING FICTION IS TO THE EFFECT THAT ONCE THE ASSESSEE HAS APPEARED IN ANY P ROCEEDING OR CO-OPERATED IN ANY ENQUIRY RELATING TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UNDER THE PROVISIONS OF THE ACT, WHICH IS RE QUIRED TO BE SERVED ON THE ASSESSEE, HAS BEEN DULY SERVED UPON HIM IN TIME IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. THERE IS A DIFFERENCE BETWEEN ISSUE AND SERVICE OF NOTICE. THE ESSENTIAL REQUIREMENT IS 'ISSUANCE OF NOTICE' UNDER SECTION 1 43(2) OF THE .ACT. THE DEEMING FICTION UNDER SECTION 292BB OF THE ACT IS WITH REGA RD TO 'SERVICE OF NOTICE'. SECTION 292BB CANNOT OBVIATE THE REQUIREMENT OF COMPLYING W ITH A JURISDICTIONAL CONDITION. FOR THE ASSESSING OFFICER TO MAKE AN ORD ER OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT, IT IS NECESSARY TO ISSUE A NOTIC E UNDER SECTION 143(2) OF THE ACT AND IN THE ABSENCE OF A NOTICE UNDER SECTION 143(2) OF THE ACT, THE ASSUMPTION OF JURIS-DICTION ITSELF WOULD BE INVALID. HELD, DISMISSING THE APPEAL, THAT SINCE THE ASSESSING OFFICER FAILED TO ISSUE NOTICE WITHIN THE SPECIFIED PERIOD UNDER SECTION 14 3(2) OF THE ACT, THE ASSESSING OFFICER HAD NO JURISDICTION TO ASSUME JURISDICTION UNDER SECTION 143(2) OF THE ACT AND THIS DEFECT COULD NOT BE CURED BY RECOURSE TO T HE DEEMING FICTION PROVIDED UNDER SECTION 292BB OF THE ACT. CONSEQUENTLY, THE T RIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE ORDER OF THE APPELLATE AUTHORITY FOR THE ASSESSMENT YEARS 2007-08, 2008-09 , 2009-10,2010-11 AND 2011- 12. 7. WE ALSO FIND THAT THE HONBLE DELHI HIGH COURT I N THE CASE OF PRINCIPAL CIT VS SHRI JAI SHIV SHANKAR TRADERS PVT LTD REPORTED IN (2016) 383 ITR 448 (DEL) HAD ALSO ENDORSED THE SAME VIEW. THE HEAD NOTES OF THE SAID JUDGMENT IS REPRODUCED HEREUNDER:- REASSESSMENT CONDITION PRECEDENT ISSUANCE OF N OTICE ASSESSEES STATEMENT BEFORE ASSESSING OFFICER TO TR EAT ORIGINAL RETURN FILED AS RETURN PURSUANT TO NOTICE UNDER SECTION 148 FAILURE TO ISSUE NOTICE THEREAFRTER U NDER SECTION 143(2)- REASSESSMENT ORDER UNSUSTAINABLE INCOME-TAX ACT, 1961, SS.143(2), 148. 8. HENCE RESPECTFULLY FOLLOWING THE AFORESAID DECIS IONS AND IN VIEW OF THE FACT THAT NOTICE U/S 143(2) OF THE ACT WAS NOT ISSUED TO THE ASSESSEE IN THE INSTANT CASE WITHIN THE STIPULATED TIME BEFORE THE COMPLETION OF REASSESSME NT PROCEEDINGS, WE HOLD THAT THE 5 ITA NO.1286/KOL/2016 RICKY CONSTRUCTION (P)LTD. A.YR.2004-05 5 REASSESSMENT FRAMED ON THE ASSESSEE DESERVES TO BE QUASHED AND DECLARED VOID ABINITIO. ACCORDINGLY THE GROUND NO. 3 RAISED BY THE ASSESSEE IS ALLOWED. 9. SINCE THE ENTIRE REASSESSMENT IS QUASHED, THE OT HER GROUNDS RAISED BY THE ASSESSEE ON CHALLENGING THE REASSESSMENT AND ON MERITS, ARE LEF T OPEN, WHICH IN OUR OPINION DOES NOT REQUIRE ANY ADJUDICATION. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 07.07.2017 SD/- SD/- [A.T.VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.07.2017 [RG PS] COPY OF THE ORDER FORWARDED TO: 1.RICKY CONSTRUCTION (P)LTD., C/O S.N.GHOSH & ASSOC IATES, ADVOCATES, SEBEN BROHTERSLODGE, P.O.BUROSHIBTALA, P.S.CHINSURAH, D IST. HOOGHLY, PIN-712 105. 2. I.T.O., WARD-3(3), KOLKATA. . 3..C.I.T.(A)-5, KOLKATA 4. C.I.T.-5, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S 6 ITA NO.1286/KOL/2016 RICKY CONSTRUCTION (P)LTD. A.YR.2004-05 6