DCIT, CIR-8, KOLKATA, Kolkata V. M/s Ansal Hotels Limited, Kolkata

ITA 1382/KOL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1531 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-06-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 17-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SITAL CHANDRA DAS CITSR
• Assessee Lawyers: BIKASH CHANDA LD
• Keywords: Invalid notice; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

1 ITA NOS. 1382/K/14 & 2112/K/16 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUD ICIAL MEMBER I.T.A NO. 1382/K OL/2014 A.Y: 2002- 03 D.C.I.T., CIR-8, KOLKATA VS. M/S. ANSAL HOTELS LT D. PAN: AAACA 7705K [APPELLANT] [RESPONDENT] I.T.A NO. 2112/K OL/2016 A.Y: 2002- 03 D.C.I.T., CIR-8(1), KOLKATA VS. M/S. ITC LTD (ERSTWHILE M/S.ANSAL HOTELS LTD. PAN: AAACA 7705K [APPELLANT] [RESPONDENT] FOR THE APPELLANT/DEPARTMENT : SHRI SITAL CHANDRA DAS, ADDL. CIT(SR.DR) FOR THE RESPONDENT/ASSESSEE : SHRI BIKASH CHANDA, LD.AR DATE OF HEARING : 15-06-2017 DATE OF PRONOUNCEMENT : 13-09-2017 ORDER SHRI S.S.VISWANETHRA RAVI, JM: BOTH THE ABOVE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE CIT-A, VI, NEW DELHI AND CIT -A, 3, KOLKATA DATED 31-01-2014 AND 16-08-2016 PASSED IN THE CASE S OF M/S. ANSAL HOTELS LTD (MERGED WITH M/S. ITC LIMITED) AND M/S. ITC LTD( FORMERLY KNOWN AS M/S. ANSAL HOTELS LTD) FOR THE A.Y 2002-03 . 2. FIRST, WE SHALL TAKE UP THE APPEAL IN ITA NO.138 2/KOL/2014 FOR THE A.Y 2002-03 FILED BY THE REVENUE. 3. IN THIS APPEAL THE ONLY ISSUE IS TO BE DECIDED I S AS TO WHETHER THE APPEAL IS MAINTAINABLE BEING THE NOTICE ISSUED ON NON-EXISTENT ENTITY IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. IT IS NOTICED THAT IN THIS CASE THE ASSESSMENT W AS COMPLETED BY ACCEPTING THE RETURNED LOSS OF RS.49,03,49,779/- VI DE ORDER PASSED 2 ITA NOS. 1382/K/14 & 2112/K/16 U/S. 143(3) OF THE ACT ON 29-03-2005. THEREAFTER, T HE AO ISSUED NOTICE U/S. 148 OF THE ACT DT. 31-03-09 AND IN SUCH REOPENING PROCEEDINGS THE AO MADE CERTAIN ADDITIONS VIDE HIS ORDER DT. 31-12- 2009 PASSED U/S. 147/143(3) OF THE ACT. THE LD.AR S UBMITS THAT THE ASSESSEE WAS MERGED WITH M/S. ITC LTD W.E.F 1-4-04 BY ORDERS OF HONBLE HIGH COURTS OF DELHI AND CALCUTTA. THE AO I NITIATED REOPENING PROCEEDING BY ISSUING NOTICE U/S. 148 OF THE ACT O N NON-EXISTING ASSESSEE AND AS SUCH THE ASSESSMENT COMPLETED U/S. 147 OF THE ACT MAKING ADDITION(S) IS INVALID IN THE EYES OF LAW, W HICH IS NOT MAINTAINABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE CIT-A AFTER CONSIDERING SUCH SUBMISSIONS OF ASSESSEE HELD THAT ISSUANCE OF NOTICE U/S. 148 ON NON-EXISTENT EN TITY OF ASSESSEE IS INVALID, WHICH IS REPRODUCED HEREUNDER:- THE CASE OF THE APPELLANT, IT IS RESPECTFULLY SUBM ITTED IS NOT ONLY SQUARELY COVERED BY THE AFORESAID DECISION BUT STANDS ON A M UCH BETTER FOOTING. IN THE CASE OF THE APPELLANT, THE JURISDICTIONAL NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED IN THE NAME OF A NON-EXISTENT ENTITY, DESPITE THE FACTUM OF AMA LGAMATION OF THE SAID ASSESSEE BEING ALREADY AVAILABLE ON RECORD OF THE INCOME TAX DEPAR TMENT. THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT WAS, THEREFORE, CLEARLY INVA LID IN THE EYES OF LAW. NO VALID NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED/SERVED BY T HE ASSESSING OFFICER LEAVE ASIDE THE ISSUANCE/SERVICE OF SUCH NOTICE WITHIN THE LIMITATI ON PERIOD OF SIX YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IT IS SETTLED LAW THA T ISSUANCE AND SERVICE OF A VALID NOTICE ISSUED UNDER SECTION 148 IS A PRECONDITION FOR ASSU MING JURISDICTION UNDER SECTION 147 OF THE ACT. IN VIEW OF THE SAME, IT IS SUBMITTED THAT THE IMPUGNED REASSESSMENT ORDER PASSED PURSUANT TO ISSUANCE OF AN INVALID NOTICE UN DER SECTION 148 OF THE ACT IS WITHOUT JURISDICTION, ILLEGAL AND BAD IN LAW AND, THEREFORE , CALLS FOR BEING QUASHED ON THIS PRELIMINARY GROUND ITSELF. 6. IN VIEW OF ABOVE, WE DO NOT FIND ANY INFIRMITY I N THE IMPUGNED ORDER OF THE CIT-A. WE UPHOLD THE SAME. THEREFORE, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. THE ABOVE APPEAL OF REVENUE IN ITA NO. 1382/KOL/ 2014 FOR THE A.Y 2002-03 IS DISMISSED. 8. NOW, WE SHALL TAKE UP THE APPEAL IN ITA NO. 2112 /KOL/2016 FOR THE A.Y 2002-03(BY THE ASSESSEE). ITA NO. 2112/KOL/2016 A.Y 2002-03 FILED BY THE REVE NUE 9. IT IS NOTICED THAT IN THIS CASE ALSO THE ASSESSM ENT WAS COMPLETED BY ACCEPTING THE RETURNED LOSS OF RS.49,0 3,49,779/- VIDE 3 ITA NOS. 1382/K/14 & 2112/K/16 ORDER PASSED U/S. 143(3) OF THE ACT ON 29-03-2005. THEREAFTER, THE AO ISSUED NOTICE U/S. 148 OF THE ACT DT. 31-03-09 F OR INITIATION OF RE- ASSESSMENT PROCEEDINGS AND MADE ADDITIONS VIDE HIS ORDER PASSED U/S. 147/143(3) OF THE ACT ON 31-12-2009. 10. THE ASSESSEE CHALLENGED THE SAME BEFORE THE CIT -A. BUT, THE CIT-A DID NOT CONSIDER THE GROUNDS RAISED BY THE AS SESSEE CHALLENGING THE ISSUANCE OF NOTICE U/S. 148 OF THE ACT ON NON-EXISTENT ENTITY OF ASSESSEE. 11. THE ASSESSEE CHALLENGED THE ORDER OF THE CIT-A IN NOT ADJUDICATING THE GROUND BEFORE THE ITAT, WHEREIN TH E ITAT HAS RESTORED THE ISSUE TO THE FILE OF THE CIT-A FOR DEC IDING THE SAME. THE CIT-A DISCUSSED THE JURISDICTION OF THE AO AND ISSU ANCE OF NOTICE U/S. 148 OF THE ACT ON NON-EXISTENT ENTITY OF ASSESSEE W HETHER THE SAME IS VALID OR NOT. 12. THE CIT-A BY PLACING HIS RELIANCE ON THE DECISI ONS OF THE HONBLE HIGH COURT OF CALCUTTA IN THE CASES OF I.K AGENCIES (P) LTD, GESTETNER (I) LTD AND SPICE ENTERTAINMENT LTD OF HO NBLE HIGH COURT OF DELHI HELD THAT SERVICE OF NOTICE ON THE CORRECT ASSESSEE U/S. 148 IS A STATUTORY MANDATORY REQUIREMENT, WHICH WAS NOT FU LFILLED IN THIS CASE AS THE IMPUGNED NOTICE WAS SERVED ON ANSAL HOT ELS LTD, WHICH HAD CEASED TO EXIST BY THE AMALGAMATION ORDER OF T HE HIGH COURT. ACCORDINGLY, THE REASSESSMENT MADE U/S. 147 OF THE ACT IN THE PRESENT CASE WAS ANNULLED. RELEVANT FINDING OF THE CIT-A IS REPRODUCED HEREIN BELOW:- 4. CONCLUSION ON GOING THROUGH THE DECISIONS IN THE CASE OF I.K . AGENCIES (SUPRA), GESTETNER (INDIA) LTD (SUPRA), AND IN THE CASE OF SPICE ENTER TAINMENT LTD IN ITA 475 OF 2011 BY DELHI HIGH COURT ORDER DATED 3 RD AUGUST, 2011 IT IS SEEN THAT THE SERVICE OF NOTICE ON ANSAL HOTELS LTD., A NON EXISTING ENTITY, IS A JURI SDICTIONAL DEFECT AS THERE CANNOT BE ANY VALID ASSESSMENT MADE ON A DEAD PERSON. THE SAID DE FECT IS NOT A CURATIVE DEFECT WITHIN THE PROVISIONS OF SECTION 292BB AS THE ASSESSEE HAD RAISED SPECIFIC OBJECTION IN THIS REGARD DURING REASSESSMENT PROCEEDINGS. SERVICE OF NOTICE, ON THE CORRECT ASSESSEE, U/S. 148 IS A STATUTORY MANDATORY REQUIREMENT WHICH HAS NOT BEEN FULFILLED IN THIS CASE AS THE IMPUGNED NOTICE WAS SERVED ON ANSAL HOTELS LTD, WHI CH HAD CEASED TO EXIST BY THE AMALGAMATION ORDER OF THE HIGH COURT. ACCORDINGLY T HE REASSESSMENT MADE U/S. 147 IN THIS CASE IS HEREBY ANNULLED ON THE GROUND OF ISSUA NCE OF NOTICE U/S. 148 ON A NON- EXISTING ENTITY. IN THE RESULT THE APPEAL OF THE AS SESSEE IS TREATED AS ALLOWED. 4 ITA NOS. 1382/K/14 & 2112/K/16 13. THE LD.DR RELIED ON THE ORDER OF THE AO. 14. ON THE OTHER HAND, THE LD.AR OF THE ASSESSEE RE LIED ON THE ORDER OF THIS TRIBUNAL DT. 17-02-2016 IN THE CASE OF GEST ETNER (INDIA) LTD SUPRA IN ITA NOS. 275,148,595 & 783/KOL/08 FOR THE A.YS 2003-04 & 2004-05 AND REFERRED TO PARA 4 OF THE SAID ORDER IN SUPPORT OF THE CONTENTION. 15. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE RECORD. WE FIND THAT THIS TRIBUNAL IN THE CASE OF GESTETNER(I) LTD SUPRA VIDE PARA 4 OF THE SAID ORDER DT. 15-03-2006 HELD THAT ASSESS MENT FRAMED U/S. 143(3) ON A NON-EXISTENT COMPANY INSPITE OF HAVING INFORMATION OF AMALGAMATION IS NOT MAINTAINABLE AND BY PLACING REL IANCE ON THE DECISION OF HONBLE HIGH COURT DELHI IN THE CASE OF SPICE ENTERTAINMENT LTD SUPRA. IN VIEW OF THE SAME, WE ARE OF THE VIEW THAT THE CIT-A WAS JUSTIFIED IN ANNULLING THE SAME. WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE CIT-A. WE UP HOLD THE SAME ON THIS ISSUE AND IT IS JUSTIFIED IN ACCORDANCE WITH L AW AND IN THE EYES OF LAW. THEREFORE, THE GROUNDS RAISED BY THE REVENUE A RE DISMISSED. 16. THE ABOVE APPEAL OF REVENUE IN ITA NO. 2112/KOL /2016 FOR THE A.Y 2002-03 IS DISMISSED. 17. IN THE RESULT, BOTH THE ABOVE APPEALS OF THE R EVENUE IN ITA NOS. 1382/KOL/2014 & 2112/KOL/2016 FILED FOR THE A. Y 2002-03 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 -09-2017 SD/- SD/- J. SUDHAKAR REDDY S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13-09-2017 5 ITA NOS. 1382/K/14 & 2112/K/16 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT/REVENUE: THE DCIT, CIR-8/CIR-8(1), KOLKAT A AAYKAR BHAWAN, 5 TH FL.,P-7 CHOWRINGHEE SQ., KOL-69. 2 RESPONDENT/ASSESSEE:M/S. ITC LTD ( ERSTWHILE M/S. A NSAL HOTELS LTD) C/O M/S. ITC LIMITED 37 J.L NEHRU ROAD, KOLKATA-71. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BEN CHES, KOLKATA / TRUE COPY, BY ORDER, SR.PS/H.O.O ITAT KOLKATA