DCIT, Bangalore V. M/s Sigma Oxygen Ltd., Chennai

ITA 1539/BANG/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7598 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-06-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 02-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C P RAMASWAMY SHRI N BAL
• Keywords: Unexplained investment; Reason to believe
• Section: 143(3); 147; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI A RUN KUMAR GARODIA , ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO , JUDICIAL MEMBER I.T. A. NO. 1539 /BANG/201 4 (ASSESSMENT YEAR : 20 0 4 - 05 ) DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1( 1 ), BANGALORE. VS. M/S. SIGMA OXYGEN LTD. (NOW MERGED WITH KEALAWN TECHNOLOGIES PVT. LTD.) NO.S - 19, TNHB COMPLEX, D.NO.4, LUZ CHURCH ROAD, MYLAPORE, CHENNAI - 600 004 APPELLANT RESPONDENT. C.O. NO. 215 /BANG/2015 (IN I.T. A. NO. 1 539 /BANG/201 4 ) (ASSESS MENT YEAR : 20 04 - 05 ) (BY ASSESSEE) ASSESSEE /C.O BY : SHRI C.P. RAMASWAMY , ADVOCATE. RE VENUE BY : SHRI N. BALAKRISHNAN, ADDL. CIT (DR). DATE OF H EARING : 0 6 .09.2017. DATE OF P RONOUNCEMENT : 08 .09. 201 7 . O R D E R PER SHRI VIJAY P AL RAO, J. M. : THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DT. 18.06.2014 OF COMMISSIONER OF INCOME TAX (APPEALS) - II , CHENNAI FOR THE ASSESSMENT YEAR 20 04 - 05. 2 ITA NO. 1 539 /BANG/ 201 4 & C.O. NO.215 /BANG/2015 2. THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 30.09.2004 DECLARING INCOME OF RS.7,520. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). SUBSEQUENTLY, THE ASSESSING OFFICER REOPENED THE ASSESSMENT UNDER SECTION 147 BY ISSUING A NOTICE UNDER SECTION 148 ON 21.3.2011. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT ASSESSED THE TOTAL INCOME AT RS.1,93,96,550 BY MAKING VARIOUS ADDITIONS / DISALLOWANCES INCLUDING THE ADDITION UNDER SECTION 69 OF THE ACT OF RS.;1,32,03,350 AS UNEXPLAINED INVESTMENT AND AN ADDITION ON ACCOUNT OF INTE REST INCOME OF RS.55,87,327. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE CIT (APPEALS) AND ALSO CHALLENGED THE VALIDITY OF REOPENING BY TAKING VARIOUS GROUNDS. THE CIT (APPEALS) THOUGH REJECTED THE GROUND OF CHALLENGING THE VA LIDITY HOWEVER GRANTED RELIEF IN RESPECT OF THE ADDITION MADE UNDER SECTION 69 OF THE ACT. THUS BOTH THE ASSESSEE AS WELL AS REVENUE ARE AGGRIEVED BY THE IMPUGNED ORDER OF THE CIT (APPEALS) AND RAISED RESPECTIVE GROUNDS IN THE APPEAL AND CROSS OBJECTIONS AS UNDER : 3 ITA NO. 1 539 /BANG/ 201 4 & C.O. NO.215 /BANG/2015 REVENUE S GROUNDS ASSESSEE'S C.O. GROUNDS 4 ITA NO. 1 539 /BANG/ 201 4 & C.O. NO.215 /BANG/2015 5 ITA NO. 1 539 /BANG/ 201 4 & C.O. NO.215 /BANG/2015 3. THE ASSESSEE IN THE C.O. RAISED A LEGAL ISSUE OF VALIDITY OF SERVICE OF NOTICE ISSUED UNDER SECTION 148 OF THE ACT WITHIN THE STIPULATED TIME LIMIT AND CONSEQUENTLY THE VALIDITY OF R EASSESSMENT UNDER SECTION 147 OF THE ACT. SINCE THE ISSUE OF VALIDITY OF SERVICE OF NOTICE UNDER SECTION 148 A ND CONSEQUENTIAL VALIDITY OF REASSESSMENT IS A PURELY A LEGAL ISSUE AND GOES TO THE ROOT OF THE MATTER THEREFORE FIRST WE TAKE UP THE ISSUE RAISE D BY THE ASSESSEE IN THE CROSS OBJECTION. 4. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSING OFFICER HAS NOT SERVED THE NOTICE UNDER SECTION 148 AS PER THE MEANS AND METHOD PROVIDED UNDER SECTION 282 OF THE ACT B UT WITHOUT EXHAUSTING THE ORDINARY METHODS OF SERVICE THE ASSESSING OFFICER HAS ADOPTED THE MODE OF THE SERVICE OF NOTICE UNDER SECTION 148 BY AFFIXATION. THUS HE HAS CONTENDED THAT THE SUBSTITUTED SERVICE BY WAY OF AFFIXATION CAN BE RESORTED ONLY WHEN T HE SERVICE UNDER THE ORDINARY PROCESS IS NOT EFFECTED ON THE ASSESSEE. HE HAS FURTHER CONTENDED THAT THE ASSESSEE HAS SPECIFICALLY RAISED THIS ISSUE IN GROUND NO.2 BEFORE THE CIT (APPEALS) HOWEVER THE CIT (APPEALS) HAS FAILED TO ADJUDICATE THIS ISSUE/GR OUND RAISED BY THE ASSESSEE. HENCE THE LEARNED AUTHORISED REPRESENTATIVE HAS CONTENDED THAT REASSESSMENT IS NOT VALID WHEN THE ASSESSING OFFICER HAS NOT SERVED THE NOTICE UNDER SECTION 148 6 ITA NO. 1 539 /BANG/ 201 4 & C.O. NO.215 /BANG/2015 WITHIN THE TIME PERIOD PRESCRIBED UNDER THE ACT. HE HAS ALSO POIN TED OUT THAT THE ASSESSEE RAISED OBJECTION BEFORE THE ASSESSING OFFICER AND PARTICIPATED IN THE PROCEEDINGS UNDER PROTEST. HE HAS PLEADED THAT THE NOTICE ISSUED UNDER SECTION 148 HAS NOT BEEN SERVED ON THE ASSESSEE AND THE SERVICE BY WAY OF AFFIXATION IS N OT A VALID SERVICE WHEN THE ASSESSING OFFICER HAS FAILED TO EXHAUST THE NORMAL COURSE OF SERVICE PROVIDED UNDER SECTION 282 OF THE ACT. 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE ASSESSEE HAS NOT DISPUTED THE SE RVICE OF NOTICE UNDER SECTION 148 BY WAY OF AFFIXATION THEREFORE ONCE THE SERVICE OF NOTICE IS NOT IN DISPUTE THE METHOD OF SERVICE CANNOT BE CHALLENGED BY THE ASSESSEE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED T HE RIVAL SUBMISSIONS AND RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT THE ASSESSEE HAS RAISED A SPECIFIC GROUND NO.2 BEFORE THE CIT (APPEALS) WHICH HAS BEEN REPRODUCED BY THE CIT (APPEALS) IN PARA 3 OF THE IMPUGNED ORDER AS UNDER : 7 ITA NO. 1 539 /BANG/ 201 4 & C.O. NO.215 /BANG/2015 8 ITA NO. 1 539 /BANG/ 201 4 & C.O. NO.215 /BANG/2015 T HOUGH THE CIT (APPEALS) HAS DEALT WITH THE ISSUE OF VALIDITY OF REOPENING FOR WANT OF ANY REASON TO BELIEVE THAT THE INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT A S THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT FOR THE YEAR UNDER CONSIDERATION HOWEVER, THE QUESTION OF VALIDITY OF SERVICE OF NOTICE UNDER SECTION 148 HAS NOT BEEN CONSIDERED AND ADJUDICATED BY THE CIT (APPEALS) DESPITE A SPECIFIC GROUND NO.2 RAISED BY THE ASSESSEE. SINCE THIS ISSUE HAS NOT BEEN ADJUDICATED BY THE CIT (APPEALS) AND THE ASSESSING OFFICER IS ALSO REQUIRED TO SUBMIT COMMENTS ON THIS ISSUE THEREFORE , WE SET ASIDE THIS ISSUE TO THE RECORD OF THE CIT (APPEALS) FOR ADJUDICATION OF THE SAME AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE AS WELL AS ASSESSING OFFICER. 7. THE ISSUE OF VALIDITY OF SERVICE OF NOTICE UNDER SECTION 148 AND CONSEQUENTIAL REASSESSMENT GOES TO THE ROOT OF THE MATTER AND THEREFORE WHEN THIS ISSUE IS SET ASIDE TO THE RECORD OF THE CIT (APPEALS) THEN THE OTHER ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS ALSO SET ASIDE TO THE RECORD OF THE CIT (APPEALS) FOR FRESH ADJUDICATION. NEEDLESS TO SAY THE PARTIES SHALL BE GIVEN AN OPPORTUNITY OF HEARING BEFORE DECIDING THE ISSUE AFRESH. 9 ITA NO. 1 539 /BANG/ 201 4 & C.O. NO.215 /BANG/2015 8. IN THE RESULT, THE REVENUE S APPEAL AS WELL AS C.O. OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH SEPT., 201 7 . SD/ - (A RUN KUMAR GARODIA ) ACCOUNT ANT MEMBER SD/ - (VIJAY PAL RAO) JUDICIAL MEMBER BANGALORE, DT. 08 .09. 2017. *REDDY GP COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE SE NIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL BANGALORE.