WG. CDR. Sucha Singh, New Delhi V. ITO, New Delhi

ITA 1605/DEL/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3401 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 04-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: UMESH CHAND DUBEY
• Keywords: Unexplained investment
• Section: 148; 144

Judgement Text

I.T.A. NO. 1605/DEL/2012 ASSESSMENT YEAR 2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER I.T.A .NO. 1605/DEL/2012 ASSESSMENT YEAR-2008-09 WG. CDR. SUCHA SINGH, C/O MANOJ KUMAR KANTH, ADVOCATE, B-136, LAJPAT NAGAR-I, NEW DELHI-110024 (APPELLANT) VS ITO, WARD-35(4), NEW DELHI. (RESPONDENT) APPELLANT BY SHRI UMESH CHAND DUBEY, SR. DR RESPONDENT BY SHRI RAJ KUMAR GUPTA, CA ORDER PER SUDHANSHU SRIVASTAVA, JM THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST ORDER DATED 17/01/2012 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- XXVII, NEW DELHI AND PERTAINS TO ASS ESSMENT YEAR 2008-2009. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED DECLARING AN INCOME OF RS. 3,58,130/-. THE AS SESSMENT WAS COMPLETED UNDER SECTION 144 OF THE INCOME TAX ACT, 1961 I.T.A. NO. 1605/DEL/2012 ASSESSMENT YEAR 2008-09 2 (HEREINAFTER CALLED THE ACT) AT AN INCOME OF RS. 59,65,340/-. THE AO HAS NOTED IN THE ASSESSMENT ORDER THAT NOTICE UN DER SECTION 143 (2) OF THE ACT WAS ISSUED AND SERVED UPON THE A SSESSEE WITHIN THE STIPULATED PERIOD. HE HAS ALSO MENTIONED THAT VARIOUS NOTICES WERE ISSUED FROM TIME TO TIME ALONG WITH TH E QUESTIONNAIRE BUT ALL OF THEM REMAINED UN-COMPLIED WITH. THE AO FURTHER MENTIONS THAT FINALLY A NOTICE UNDER SEC TION 143 (2) OF THE ACT WAS ISSUED ALONG WITH THE DETAILED LETTER D ATED 25 TH OF NOVEMBER 2010 WHICH WAS SERVED BY AFFIXTURE ON THE LAST KNOWN ADDRESS OF THE ASSESSEE ON 29/11/2010 PROVIDING THE ASSESSEE A FINAL OPPORTUNITY TO FILE THE DETAILS BY 06/12/2010 . SINCE NO REPLY WAS FORTHCOMING FROM THE ASSESSEE AND THE CASE WAS GETTING TIME-BARRED ON 31/12/2010, THE ASSESSMENT WAS COMPL ETED UNDER SECTION 144 OF THE ACT. 2.1 THE ASSESSEE CARRIED THE MATTER IN APPEAL TO TH E LD. COMMISSIONER OF INCOME TAX (APPEALS) AND AGITATED T HAT THE ASSESSEE HAD NOT RECEIVED A SINGLE NOTICE FROM THE DEPARTMENT IN RESPECT OF THE ASSESSMENT PROCEEDINGS. THE ADDITION S WERE ALSO CHALLENGED ON MERITS. THE LD. CIT (APPEALS) DISMISS ED THE ASSESSEES GROUND AGITATING THE SERVICE OF NOTICE A ND PARTLY I.T.A. NO. 1605/DEL/2012 ASSESSMENT YEAR 2008-09 3 ALLOWED THE ASSESSEES APPEAL ON MERITS. NOW THE AS SESSEE HAS APPROACHED THE ITAT AND HAS RAISED THE FOLLOWING GR OUNDS OF APPEAL 1. THAT THE LD. CIT(A) HAS ERRED IN DISMISSING TH E GROUNDS OF APPEAL RAISED BEFORE HIM WITH REGARD TO NON-SERVICE OF NOTICE AND OF PROPER OPPORTUNITY IN AS MUCH THE ASSESSEE WAS NEVER GIVEN ANY OPPORTUNITY TO REPLY TO THE REMAND REPORT OF THE ASSESSING OFFI CER. 2. THAT THE LD. CIT (A) HAS ONCE AGAIN ERRED IN CONFIRMING THE ADDITION OF RS. 13,44,500/- ON ACCOU NT OF UNEXPLAINED DEPOSITS WITHOUT APPRECIATING THE % SOURCE OF CASH DEPOSIT FILED BEFORE HIM. 3. THAT THE LD. CIT HAS FURTHER ERRED IN MAKING TH E ADDITION OF RS.8,67,900/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PURCHASE OF MOHALI PROPERTY IN AS MUCH AS THE ISSUE BEFORE THE CIT (A) WAS WITH REGAR D TO THE LONG TERM CAPITAL ARISEN ON ACCOUNT OF SALE OF PROPERTY AT DELHI. NOR THE CIT (A) HAD EVER ASKED F OR DETAILS OF SOURCE OF INVESTMENT IN MOHALI PROPERTY. 3. THE LD. AR SUBMITTED THAT THE RETURN OF INCOME WAS FILED ON 12/11/2008 AND AS SUCH THE NOTICE UNDER SECTION 143 (2) OF THE ACT WAS TO BE SERVED ON OR BEFORE 30 OF SEPTEMB ER 2009 WHEREAS THE 1 ST NOTICE WAS ISSUED ON 14/09/2009 AND SERVED BY AFFIXTURE ON 24/09/2009 AT 123 HARGOBIND ENCLAVE, DELHI 110092. THE LD. AR SUBMITTED THAT THIS PROPERTY HAD ALREADY BEEN SOLD ON 04/02/2008 AND THE CAPITAL GAIN HAD BE EN DECLARED IN THE RETURN FOR ASSESSMENT YEAR 2008-2009 AND AS SUCH THE I.T.A. NO. 1605/DEL/2012 ASSESSMENT YEAR 2008-09 4 SAID PROPERTY WAS NOT IN THE OWNERSHIP OF THE ASSES SEE ON 24/09/2009 WHEN THE AFFIXTURE WAS MADE. IT WAS FURT HER SUBMITTED THAT THE INCOME TAX RETURN FOR ASSESSMENT YEAR 2009- 10 WAS FILED ON 04/09/2009 IN WHICH THE ADDRESS WAS GIVEN AS H 234, NARAINA VIHAR, NARAINA NEW DELHI. THE LD . AR SUBMITTED THAT THE SERVICE OF THE NOTICE WAS NOT MA DE AT THE LAST KNOWN ADDRESS BY THE DEPARTMENT AND THAT THE SERVIC E OF THE NOTICE AT THE ADDRESS WHICH DID NOT BELONG TO THE A SSESSEE CANNOT BE TAKEN AS A SERVICE OF NOTICE. IT WAS FURTHER SUB MITTED THAT SINCE THE RETURN FOR ASSESSMENT YEAR 2008-2009 DID MENTION THE SALE OF PROPERTY AT 123, HARGOBIND ENCLAVE, NEW DEL HI, IT WAS WELL WITHIN THE KNOWLEDGE OF THE AO THAT THE SAID P ROPERTY WAS NOT OWNED BY THE ASSESSEE ON 24 TH OF SEPTEMBER 2009, THAT IS, WHEN THE NOTICE UNDER SECTION 143 (2) WAS AFFIXED O N THE SAID PREMISES. IT WAS FURTHER SUBMITTED THAT WHEN THE OF FICIALS WOULD HAVE VISITED THE PREMISES AT 123, HARI GOBIND ENCLA VE, NEW DELHI FOR A AFFIXTURE OF NOTICE, IT WOULD HAVE BEEN APPAR ENT THAT THE ASSESSEE DID NOT RESIDE AT THE SAID ADDRESS AT THE TIME WHEN THE NOTICE WAS AFFIXED. IT WAS SUBMITTED THAT THE AFFIX TURE OF NOTICE AT AN ADDRESS NOT BELONGING TO THE ASSESSEE CANNOT BE IS TAKEN AS A VALID SERVICE OF NOTICE. THE LD. AR SUBMITTED THAT EVEN IN THE I.T.A. NO. 1605/DEL/2012 ASSESSMENT YEAR 2008-09 5 REMAND REPORT, THE AO HAS ADMITTED THAT ALL THE NOT ICES ISSUED UNDER SECTION 143 (2) REMAINED UN-SERVED. IT WAS FU RTHER SUBMITTED THAT THERE WAS NO WITNESS AT THE TIME OF AFFIXTURE AND THE SAME WAS EVIDENT FROM THE AFFIXTURE REPORT PLAC ED AT PAGE NO. 23 OF THE PAPER BOOK. 4. IN RESPONSE, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ONUS WAS ON THE ASSESSEE TO PROVIDE THE CO RRECT ADDRESS AND THE AO WAS PATENTLY RIGHT IN ISSUING THE NOTICE AND GETTING IT AFFIXED AT THE ADDRESS MENTIONED IN THE RETURN OF I NCOME FOR ASSESSMENT YEAR 2008-2009. THE LD. DEPARTMENTAL REPRESENTATIVE ALSO SUBMITTED THAT THE AO HAS MENTI ONED IN PAGES 1 AND 2 OF THE ASSESSMENT ORDER THAT THE IMPU GNED NOTICES WERE DULY SERVED. THE LD. DEPARTMENTAL REPRESENTATI VE RELIED ON THE FINDINGS OF THE AO AND SUBMITTED THAT THE SERVI CE OF NOTICE WAS A VALID ONE AND THE DISPUTE WAS BEING CREATED B Y THE ASSESSEE TO AVOID CONFIRMATION ON MERITS OF THE CAS E. 5. THE RIVAL SUBMISSIONS HAVE BEEN HEARD AND THE RE LEVANT MATERIAL ON RECORD HAS BEEN PERUSED. THE LD. CIT (A ) HAS MENTIONED IN PARA 6 OF THE IMPUGNED ORDER THAT THE ASSESSEE HAD NOT OFFERED ANY COMMENTS ON THE AOS REMAND REPORT AS TO WHY I.T.A. NO. 1605/DEL/2012 ASSESSMENT YEAR 2008-09 6 THE ADDRESS MENTIONED IN THE RETURN OF INCOME WAS T HAT OF THE PROPERTY WHICH THE ASSESSEE HAD ALREADY SOLD. HE HA S FURTHER NOTED THAT THE ASSESSEE DID NOT PRESS THE GROUNDS R ELATING TO ISSUE/SERVICE OF NOTICE AND LACK OF PROPER OPPORTUN ITY. THE LD. AUTHORISED REPRESENTATIVE, ON THE OTHER HAND, HAS S UBMITTED THAT THE GROUND WAS PRESSED BEFORE THE LD. CIT (APP EALS). 5.1 ON A CAREFUL CONSIDERATION OF FACTS WE FIND THA T, ADMITTEDLY, THE ISSUE INVOLVED IS LEGAL ISSUE AND IT IS A SETTL ED POSITION OF LAW THAT A LEGAL ISSUE CAN BE RAISED BEFORE THE TRIBUNA L EVEN FOR THE FIRST TIME EVEN IF IT WAS NOT RAISED BEFORE THE AUT HORITIES BELOW. IN OUR CONSIDERED OPINION, THE POSITION DOES NOT CHANG E IN RAISING THE LEGAL ISSUE BEFORE THE TRIBUNAL EVEN IF SUCH LE GAL ISSUE WAS RAISED BEFORE THE CIT (APPEALS) BUT WAS NOT PRESSED . THEREFORE, WE PROCEED TO ADJUDICATE ON THIS ISSUE. 5.2 IT IS NOW WELL SETTLED BY VARIOUS COURTS, INCLU DING THE JURISDICTIONAL HIGH COURT AND THE APEX COURT, THAT FOR PROPER ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER , A VALID SERVICE OF NOTICE IN TERMS OF SECTION 282 (1) OF THE ACT IS A MANDATORY LEGAL REQUIREMENT. THE HONBLE DELHI HIGH COURT IN THE CASE OF HOTLINE INTERNATIONAL 296 ITR 333 HAS HELD AS UNDER I.T.A. NO. 1605/DEL/2012 ASSESSMENT YEAR 2008-09 7 22. AS PER ORDER V, R.12 OF THE CPC REFERRED TO AB OVE, WHEREVER IT IS PRACTICABLE, THE SERVICE HAS TO BE EFFECTED ON D EFENDANT IN PERSON OR ON HIS AGENT. ADMITTEDLY, IN THE PRESENT CASE, NOTICE UNDER S. 148 OF THE ACT WAS NOT TENDERED TO THE ASS ESSEE NOR THE SAME WAS REFUSED AT ALL BY THE ASSESSEE. IT IS AN A DMITTED CASE OF THE REVENUE THAT WHEN THE OFFICIALS OF THE IT DEPAR TMENT WENT TO SERVE THE NOTICE UNDER S.148 FOR THE ASSESSMENT YEA R 1995 96, THE SECURITY GUARD INFORMED THEM THAT THE COMPANY W AS CLOSED FOR HOLI FESTIVAL HOLIDAYS. THE SECURITY GUARD BY NO ST RETCH OF IMAGINATION CAN BE SAID TO BE THE AGENT OF THE ASSE SSEE AND ADMITTEDLY NO NOTICE WAS TENDERED EITHER TO THE ASS ESSEE OR HIS AGENT NOR THE SAME WAS REFUSED EITHER BY THE ASSESS EE OR HIS AGENT. 23. UNDER ORDER V, R.17 OF THE CPC, THE FIXATION CA N BE DONE ONLY WHEN THE ASSESSEE OR HIS AGENT REFUSES TO SIGN THE ACKNOWLEDGEMENT OR COULD NOT BE FOUND. HERE, IN THE PRESENT CASE, NO EFFORT WAS MADE BY THE IT DEPARTMENT TO SERVE TH E NOTICE UPON THE ASSESSEE, SINCE THE COMPANY OF THE ASSESSEE WAS CLOSED DUE TO HOLI FESTIVAL HOLIDAYS, AND ADMITTEDLY NO EFFORT WAS MADE BY THE SERVING OFFICER TO LOCATE THE ASSESSEE. 24. EVEN OTHERWISE, AS PER ORDER V, R.19A OF THE CP C, THE NOTICE SENT BY REGISTERED POST OUGHT TO HAVE BEEN SENT ALO NG WITH ACKNOWLEDGEMENT DUE BUT ADMITTEDLY IT WAS NOT SENT ALONG WITH ACKNOWLEDGEMENT DUE. 25. SO, FROM THE ENTIRE MATERIAL AVAILABLE ON RECOR D WE HAVE NO HESITATION IN HOLDING THAT THERE HAS BEEN NO VALID SERVICE OF NOTICE I.T.A. NO. 1605/DEL/2012 ASSESSMENT YEAR 2008-09 8 UNDER S. 148 OF THE ACT UPON THE ASSESSEE AS THE SA ME WAS NEITHER TENDERED TO THE ASSESSEE OR HIS AGENT, NOR THE SAME WAS REFUSED BY EITHER OF THEM. 5.3 COMING TO THE FACTS OF THE CASE, IT IS UNDISPUT ED THAT THE PROPERTY LOCATED AT 123, HARGOBIND ENCLAVE, DELHI W AS SOLD BY THE ASSESSEE DURING ASSESSMENT YEAR 2008-2009. IT I S ALSO UNDISPUTED THAT THE RETURN OF INCOME FOR ASSESSMENT YEAR 2009- 2010 WAS FILED BY THE ASSESSEE ON 04/09/2009 WHEREA S THE NOTICE UNDER SECTION 143 (2) WAS DATED 14/09/2009 A ND WAS SERVED BY AFFIXTURE ON 24/09/2009 AND, THUS, THE LA ST KNOWN ADDRESS BEFORE THE ISSUE OF SERVICE OF NOTICE WAS H 234, NARAINA VIHAR, NARAINA, NEW DELHI I.E. THE ADDRESS MENTIONE D IN THE RETURN OF INCOME FOR ASSESSMENT YEAR 2009-2010. THE REMAND REPORT OF THE AO ALSO ADMITS THAT ALL THE NOTICES U NDER SECTION 143 (2) REMAINED UN-SERVED. THUS, THE SERVICE OF TH E VERY FIRST NOTICE HAS, UNDISPUTEDLY, BEEN DONE BY WAY OF AFFIX TURE WHEREAS ORDER V, RULE 12 OF CPC PROVIDES THAT WHEREVER IT I S PRACTICABLE, SERVICE HAS TO BE EFFECTED ON THE DEFENDANT IN PERS ON OR ON HIS AGENT. ORDER V, RULE 17 OF CPC FURTHER PROVIDES THA T THE AFFIXTURE CAN BE DONE ONLY WHEN THE ASSESSEE OR HIS AGENT REF USES TO SIGN THE ACKNOWLEDGEMENT OR CANNOT BE FOUND. THUS, FOR R ESORTING TO I.T.A. NO. 1605/DEL/2012 ASSESSMENT YEAR 2008-09 9 AFFIXTURE, EFFORTS HAVE TO BE MADE TO SERVE THE NOT ICE UPON THE ASSESSEE AND ONLY AFTER REACHING A FINDING THAT THE NOTICE CANNOT BE SERVED UPON THE ASSESSEE, THE MODE OF AFFIXTURE CAN BE RESORTED TO. FURTHER RULE 17 OF ORDER V OF CPC MAND ATES THAT AN INDEPENDENT LOCAL PERSON BE THE WITNESS OF SERVICE THROUGH AFFIXTURE AND FOR THE PURPOSE OF HAVING BEEN ASSOCI ATED WITH THE IDENTIFICATION OF THE PLACE. HOWEVER A PERUSAL OF T HE AFFIXTURE REPORT SHOWS THAT THERE WAS NO INDEPENDENT LOCAL PE RSON AS A WITNESS AND THERE IS NO EVIDENCE THAT ANYONE IDENTI FIED THE PLACE AS BELONGING TO THE ASSESSEE BEFORE SUCH AFFIXTURE. IT IS SEEN THAT THE INCOME TAX INSPECTOR HAS SIGNED AS THE LOCAL IN DEPENDENT PERSON BUT SUCH WITNESS CANNOT BE CONSIDERED TO BE A LOCAL INDEPENDENT PERSON FOR THE PURPOSES OF RULE 17 OF O RDER V OF CPC. THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CA SE OF CIT VERSUS NAVEEN CHANDER REPORTED IN 323 ITR 49 HAS HE LD THAT THE FIXATION IS REQUIRED TO BE DONE IN ACCORDANCE WITH THE PROCEDURE LAID DOWN IN THE CODE OF CIVIL PROCEDURE, AND WHERE IN THE REPORT OF THE INSPECTOR/NOTICE SERVER, WHO CLAIMED TO HAVE AFFIXED THE NOTICE, THERE WAS NO EVIDENCE OF ANY INDEPENDENT LO CAL PERSON HAVING BEEN ASSOCIATED WITH THE IDENTIFICATION OF T HE PLACE OF BUSINESS OF THE ASSESSEE, IT WAS A CLEAR VIOLATION OF THE MANDATE I.T.A. NO. 1605/DEL/2012 ASSESSMENT YEAR 2008-09 10 OF RULE 17 OF ORDER V OF CODE OF CIVIL PROCEDURE, W HICH LAID DOWN THE PROCEDURE TO SERVE NOTICE BY AFFIXTURE. SINCE T HERE WAS NO VALID SERVICE OF NOTICE, THE ASSESSMENT PROCEEDINGS WERE HELD AS INVALID. THEREFORE, IN VIEW OF THE FACTUAL MATRIX O F THE CASE, IT IS OUR CONSIDERED OPINION THAT THE DEPARTMENT HAS FAIL ED TO PROVE A VALID SERVICE OF NOTICE ON THE ASSESSEE BEFORE EMBA RKING UPON THE ASSESSMENT PROCEEDINGS. SINCE THE ENTIRE REASSESSME NT PROCEEDINGS WERE BASED ON ASSUMPTION OF JURISDICTIO N THROUGH THE ISSUE OF NOTICE UNDER SECTION 143 (2) OF THE AC T, WHICH WAS NOT VALIDLY SERVED ON THE ASSESSEE, WE HOLD THAT TH E ASSESSING OFFICER WAS PATENTLY WRONG IN COMPLETING THE ASSESS MENT WITHOUT EFFECTING THE SERVICE OF NOTICE IN ACCORDANCE WITH SECTION 282 (1) OF THE INCOME TAX ACT, 1961 READ WITH ORDER V RULE 12 AND ORDER V RULE 17 OF THE CPC. THEREFORE, ON THE FACTS AND C IRCUMSTANCES OF THE CASE, WE HAVE NO OPTION BUT TO QUASH THE ENT IRE ASSESSMENT PROCEEDINGS. ACCORDINGLY, WE QUASH THE A SSESSMENT PROCEEDINGS AND ALLOW THE APPEAL OF THE ASSESSEE ON THE LEGAL ISSUE. IN VIEW OF OUR ADJUDICATION IN FAVOUR OF THE ASSESSEE ON THE LEGAL ISSUE, THE OTHER GROUNDS BECOME ACADEMIC IN N ATURE AND ARE NOT BEING ADJUDICATED UPON. I.T.A. NO. 1605/DEL/2012 ASSESSMENT YEAR 2008-09 11 6. IN THE FINAL RESULT THE APPEAL OF THE ASSESSEE S TANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH APRIL, 2017. SD/- SD/- (N. K. SAINI) (SUDHANSHU SRIVAST AVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11TH APRIL 2017 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSTT. REGISTRAR ITAT NEW DELHI