Gomti Textiles Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 1520/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3567 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 01-06-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 29-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BINITA DEVI
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH DELHI BENCH DELHI BENCH DELHI BENCH I II I : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.E.VEERABHADRAPPA, VICE PRESIDENT AND BEFORE SHRI G.E.VEERABHADRAPPA, VICE PRESIDENT AND BEFORE SHRI G.E.VEERABHADRAPPA, VICE PRESIDENT AND BEFORE SHRI G.E.VEERABHADRAPPA, VICE PRESIDENT AND SMT.DIVA SINGH SMT.DIVA SINGH SMT.DIVA SINGH SMT.DIVA SINGH, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO. 1520/DEL/2011 1520/DEL/2011 1520/DEL/2011 1520/DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2000 2000 2000 2000 - -- - 01 0101 01 M/S GOMTI TEXTILES PVT.LTD., M/S GOMTI TEXTILES PVT.LTD., M/S GOMTI TEXTILES PVT.LTD., M/S GOMTI TEXTILES PVT.LTD., 5C/44, NEW ROHTAK ROAD, 5C/44, NEW ROHTAK ROAD, 5C/44, NEW ROHTAK ROAD, 5C/44, NEW ROHTAK ROAD, N NN NEW DELHI EW DELHI EW DELHI EW DELHI 110 005. 110 005. 110 005. 110 005. PAN NO. PAN NO. PAN NO. PAN NO.AABCG7996F. AABCG7996F. AABCG7996F. AABCG7996F. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -12(2), 12(2), 12(2), 12(2), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.V.S.R.KRISHNA, CA. RESPONDENT BY : SMT.BINITA DEVI, DR. ORDER ORDER ORDER ORDER PER G.E.VEERABHADRAPPA, VP PER G.E.VEERABHADRAPPA, VP PER G.E.VEERABHADRAPPA, VP PER G.E.VEERABHADRAPPA, VP : :: : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R DATED 21.1.2011 OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XV, NEW DELHI FOR THE AY 2000-01. 2. ALTHOUGH THE ASSESSEE HAS TAKEN SEVERAL GROUNDS, HE HAS ADDRESSED US ON THE VALIDITY OF THE PROCEEDINGS UNDER SECTION 148 O F THE INCOME-TAX ACT, 1961. HE HAS FILED A PAPER BOOK WHEREIN HE HAS ENCLOSED THE NOTICE ISSUED U/S 148 OF THE INCOME-TAX ACT, 1961. ALTHOUGH THE NOTICE WAS ISSU ED ON 28.3.2007, BUT THE DEPARTMENT HAS NOT DISCLOSED THE REASONS FOR REOPEN ING THE ASSESSMENT AND SUCH REASONS WERE SUPPLIED TO HIM ONLY ON 26.4.2007 ON T HE BASIS OF APPLICATION FILED, SEEKING SUCH REASONS. THE SHORT SUBMISSION OF THE ASSESSEE IS THAT THE PROCEEDINGS ITA NO.1520/DEL/2011 2 TAKEN FOR ASSESSMENT UNDER SECTION 148 ARE BAD IN L AW AND, IT IS PRAYED THAT THE ORDER PASSED IN PURSUANCE OF SUCH PROCEEDINGS BE AN NULLED. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF THE HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF HARYANA ACRYLIC MANUFACTURING CO. VS. CIT & ANOTHER 308 ITR 38 (DELHI). RELIANCE WAS ALSO PLACED ON THE DECISION OF THE TRI BUNAL DELHI BENCH A IN THE CASE OF SHRI BALWANT RAI WADHWA IN ITA NO.4806/DEL/2010 DATED 14 TH JANUARY, 2011, WHERE IDENTICAL ISSUE CAME UP FOR CONSIDERATION. 3. THE LEARNED DR WAS ALSO HEARD ON THE ISSUE, WHO, DURING THE COURSE OF HEARING, TRIED TO DISTINGUISH THE RATIO OF THE DECI SION OF HON'BLE DELHI HIGH COURT IN THE CASE OF HARYANA ACRYLIC MANUFACTURING CO. (SUPR A). IN THAT CASE, IT WAS POINTED OUT, THERE WAS AN INORDINATE DELAY IN SUPPLYING THE REASONS ON THE PART OF THE DEPARTMENT WHEREAS, IN THE FACTS OF THIS CASE, THE LEARNED DR CONTENDED THAT THE REASONS WERE SUPPLIED IMMEDIATELY UPON REQUEST MADE BY THE ASSESSEE. 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND GONE THROUGH THE RECORDS. THE FACTS DISCUSSED ABOVE ARE NOT IN SERI OUS DISPUTE. THE ASSESSMENT IN THIS CASE IS FOR THE AY 2000-01. THE ASSESSEE FILE D A RETURN FOR AY 2000-01 ON 24 TH NOVEMBER, 2000 DECLARING INCOME OF `17,375/- UNDER THE MAT PROVISIONS. THE TIME LIMIT FOR ISSUANCE OF NOTICE UNDER SECTION 149 (1) IS AS UNDER:- 149. 149. 149. 149. [(1) (1)(1) (1) NO NOTICE UNDER SECTION 148 SHALL BE ISSUED FOR THE RELEVANT ASSESSMENT YEAR,- [(A) (A)(A) (A) IF FOUR YEARS HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE CASE FALLS UNDER CLAUSE (B); (B) (B)(B) (B) IF FOUR YEARS, BUT NOT MORE THAN SIX YEARS, HAV E ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AMOUNTS TO OR I S LIKELY TO AMOUNT TO ONE LAKH RUPEES OR MORE FOR THAT YEAR.]. ITA NO.1520/DEL/2011 3 5. THE CASE OF THE ASSESSEE FALLS UNDER THE PROVISI ONS OF SECTION 149(1)(B) WHERE THE TIME LIMIT EXPIRED ON 31.3.2007. THE ASSESSING OFFICER IN THIS CASE HAS ADMITTEDLY ISSUED NOTICE U/S 148 ON 28.3.2007. NO REASONS WERE MADE AVAILABLE TO THE ASSESSEE WHICH IS A MANDATE REQUIRED U/S 148 (2) OF THE ACT UPON THE ASSESSING OFFICER. THE REASONS WERE MADE AVAILABLE ONLY SUBSEQUENTLY ON 26.4.2007 AFTER AN APPLICATION IN THIS REGARD WAS E NTERTAINED BY THE AO. IDENTICAL SITUATION WAS THE SUBJECT MATTER OF CONSIDERATION B EFORE THE HON'BLE DELHI HIGH COURT IN THE CASE OF HARYANA ACRYLIC MANUFACTURING CO. (SUPRA). HON'BLE DELHI HIGH COURT AT PAGES 60 & 61 OF THE SAID DECISION HA S MADE THE FOLLOWING OBSERVATION:- APART FROM THIS, WE MUST NOT FORGET THE PROVISIONS OF SECTION 149 WHICH PRESCRIBES THE TIME LIMIT FOR A NOTICE UNDER SECTION 148. SECTION 149(1)(B) STIPULATES THE OUTER LIMIT OF SIX YEARS F ROM THE END OF THE RELEVANT ASSESSMENT YEAR WHERE THE INCOME CHARGEABL E TO TAX WHICH HAS ESCAPED ASSESSMENT AMOUNTS TO OR IS LIKELY TO A MOUNT TO RUPEES ONE LAKH OR MORE FOR THAT YEAR. THIS MEANS THAT A NOTICE UNDER SECTION 148, IN THE PRESENT CASE, COULD NOT, IN ANY EVENT, HAVE BEEN ISSUED AFTER SIX YEARS FROM THE END OF THE ASSESSMENT YEAR 1998-99, I.E., AFTER MARCH 31, 2005. IN WHICHEVER WAY WE LOOK AT IT, A NOTICE UNDER SECTION 148 WITHOUT THE COMMUNICATION OF THE REASON S THEREFOR IS MEANINGLESS INASMUCH AS THE ASSESSING OFFICER IS BO UND TO FURNISH THE REASONS WITHIN A REASONABLE TIME. IN A CASE, WHERE THE NOTICE HAS BEEN ISSUED WITHIN THE SAID PERIOD OF SIX YEARS, BU T THE REASONS HAVE NOT BEEN FURNISHED WITHIN THAT PERIOD, IN OUR VIEW, ANY PROCEEDINGS PURSUANT THERETO WOULD BE HIT BY THE BAR OF LIMITAT ION INASMUCH AS THE ISSUANCE OF THE NOTICE AND THE COMMUNICATION AND FU RNISHING OF REASONS GO HAND-IN-HAND. THE EXPRESSION WITHIN A REASONABLE PERIOD OF TIME AS USED BY THE SUPREME COURT IN G.K .N.DRIVESHAFTS [2003] 259 ITR 19 CANNOT BE STRETCHED TO SUCH AN EX TENT THAT IT EXTENDS EVEN BEYOND THE SIX YEARS STIPULATED IN SEC TION 149. FOR THIS REASON ALSO, EVEN ASSUMING THAT WE OVERLOOK ALL THA T HAS HAPPENED BETWEEN MAY 11, 2004, WHEN THE PETITIONER SOUGHT TH E REASONS, AND NOVEMBER 5, 2007, WHEN THE SAID FORM ANNEXED TO THE COUNTER- ITA NO.1520/DEL/2011 4 AFFIDAVIT WAS FILED IN THIS COURT, THE VALIDITY OF THE NOTICES UNDER SECTION 148 ISSUED ON MARCH 29, 2004, AND ANY PROCEEDINGS P URSUANT THERETO CANNOT BE UPHELD. 6. THE PRINCIPLE OF THIS CASE WAS FOLLOWED BY THE T RIBUNAL IN THE CASE OF SHRI BALWANT RAI WADHWA (SUPRA) WHERE THE TRIBUNAL APPRE CIATED THE HON'BLE DELHI HIGH COURTS DECISION AND CAME TO A CONCLUSION THAT THE PLAIN READING OF THE EXPOSITION OF LAW BY THE JURISDICTIONAL HIGH COURT MADE IT VERY CLEAR THAT THE ISSUANCE OF NOTICE AND COMMUNICATION AND FURNISHING OF REASONS WOULD GO HAND-IN- HAND. THE REASONS FOR REOPENING AN ASSESSMENT ARE TO BE SUPPLIED TO THE ASSESSEE BEFORE THE EXPIRY OF SIX YEARS IN TERMS OF THE PROV ISIONS OF SECTION 149(1)(B) OF THE ACT. SINCE THAT HAS NOT BEEN DONE, THE VALIDITY OF THE DEPARTMENTAL ACTION U/S 148 COULD NOT BE UPHELD. IF THE AO HAS REASONS TO BELI EVE THAT INCOME HAS ESCAPED ASSESSMENT BUT SUCH REASONS ARE NOT COMMUNICATED TO THE ASSESSEE BEFORE THE EXPIRY OF THE LIMITATION, THE VALIDITY OF SUCH NOTI CE COULD NOT BE SUSTAINED. THE TRIBUNAL IN THAT CASE WAS ALSO AWARE OF THE SITUATI ON THAT BEING A SUBORDINATE AUTHORITY TO THE HONBLE HIGH COURT, THE TRIBUNAL I S BOUND TO FOLLOW THE AUTHORITATIVE EXPOSITION OF LAW BY THE JURISDICTIONAL HIGH COURT. IN THE LIGHT OF THE ABOVE PRINCIPLE, THE REASSESSMENT WAS HELD TO BE NOT SUST AINABLE. APPLYING THE SAME PRINCIPLE TO THE FACTS BEFORE US, WE VACATE THE ORD ER OF THE ASSESSING OFFICER UNDER SECTION 148. IN OUR VIEW, LEARNED DRS SUBMISSION THAT SUCH REASONS WERE IMMEDIATELY SUPPLIED UPON REQUEST MADE BY THE ASSES SEE CANNOT BE ACCEPTED AS SUFFICIENT COMPLIANCE TO THE REQUIREMENT OF LAW U/S 149(1)(B) AS INTERPRETED BY THE JURISDICTIONAL HIGH COURT. THE ASSESSMENT ORDER, I N OUR VIEW, SUFFERS FROM LACK OF VALIDITY OF THE PROCEEDINGS. THE SAME, AS DISCUSSE D EARLIER, IS VACATED. 7. AS WE HAVE ACCEPTED THE ASSESSEES APPEAL ON THE JURISDICTION ISSUE, WE DO NOT FEEL IT NECESSARY TO GO INTO THE MERITS OF THE DISPUTES RAISED IN THE GROUNDS OF THE MEMORANDUM OF APPEAL. ITA NO.1520/DEL/2011 5 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 8 TH JULY, 2011. SD/- SD/- (DIVA SINGH (DIVA SINGH (DIVA SINGH (DIVA SINGH ) )) ) (G.E.VEERABHADRAPPA (G.E.VEERABHADRAPPA (G.E.VEERABHADRAPPA (G.E.VEERABHADRAPPA ) )) ) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 08.07.2011. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR