Surat Lalitha Devi , Saroornagar V. Income Tax Officer, Ward-9(1), Hyderabad

ITA 1757/Hyd/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 9128 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-01-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 03-12-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SITARAMA RAO
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Sale consideration of property below Jantri Value; Recovery proceedings; Capital Gains
• Section: 48; 9(1); 9(1); 9(1); 148; 15

Judgement Text

ITA NO 1757 OF 2019 SURAT LALITHA DEVI HYDERABAD PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD SMC BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1757/HYD/2019 ASSESSMENT YEAR: 2011-12 SMT.SURAT LALITHA DEVI HYDERABAD PAN:BALPL0921R VS. INCOME TAX OFFICER WARD 9(1) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K.A. SAI PRASAD REVENUE BY : SRI SITARAMA RAO, DR DATE OF HEARING: 07/01/2021 DATE OF PRONOUNCEMENT: 08/01/2021 ORDER THIS IS ASSESSEES APPEAL FOR THE A.Y 2011-12 AGAIN ST THE ORDER OF THE CIT (A)-7, HYDERABAD, DATED 7.10.2 019. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL ALONG WITH SIX OTHER FAMILY MEMBERS, HAD SOLD AN IMMOVABLE PROPERTY THROUGH REGISTERED SALE DEED DOC UMENT NO.1051/2010 DATED 19.04.2010 FOR AN AMOUNT OF RS.8 0.00 LAKHS AS AGAINST THE MARKET VALUE FIXED BY THE STAMP DUTY AUTHORITY AT RS.1,02,05,740/-. SINCE THE VALUE OF THE PROPERTY I S MORE THAN THE SALE CONSIDERATION, THE AO VERIFIED THE REGISTERED SALE DEED AND FOUND THAT THE DIFFERENCE OF STAMP DUTY WAS PAID BY THE ASSESSEES GROUP I.E. VENDORS. THEREFORE, HE WAS OF THE OPINIO N THAT AS PER THE PROVISIONS OF SECTION 50C, THE MARKET VALUE OF THE PROPERTY IS TO BE ADOPTED AS CONSIDERATION FOR THE PURPOSE OF C OMPUTING AT THE CAPITAL GAINS. SINCE THE ASSESSEE DID NOT FILE HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION AND HAS NOT OFFERED THE ITA NO 1757 OF 2019 SURAT LALITHA DEVI HYDERABAD PAGE 2 OF 7 CAPITAL GAINS TO TAX, THE AO ISSUED A NOTICE U/S 14 8 OF THE ACT ON 23.3.2018 WHICH WAS SERVED ON THE ASSESSEES WIFE O N 27.03.2013. SUBSEQUENTLY, ASSESSEES WIFE APPEARED BEFORE THE AO AND SUBMITTED A LETTER STATING THAT THE ASSESSEE HAS EXPIRED ON 9.8.2018 AND THAT SHE DOES NOT HAVE ANY INFORMAT ION REGARDING THE SAID NOTICE. SHE ALSO SUBMITTED THAT SHE HAS NO KNOWLEDGE ABOUT ANY PROPERTY IN THE NAME OF HER HUS BAND AND THAT THEY DO NOT HAVE ANY ASSET EITHER IN HER NAME OR IN THE NAME OF HER DAUGHTER. THE AO, HOWEVER, DID NOT ACCEPT TH E ASSESSEES CONTENTION AND BY APPLYING THE PROVISIONS OF SECTIO N 50C, HE ADOPTED THE MARKET VALUE OF RS.1,02,05,740/- AS SAL E CONSIDERATION AND COMPUTED THE LONG TERM CAPITAL GA IN AND BROUGHT THE ASSESSEES SHARE TO TAX. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A) STATING THAT THE NOTICE U/S 148 SHOULD HAVE BEEN SERVED ON THE ASSESSEE AND NOT ON THE ASSESSEES WIFE AND ALSO THAT THE NOTICES HAVE NOT BEEN ISSUED TO THE ASSESSEE. HE AL SO QUESTIONED THE ADDITION MADE BY THE AO. THE CIT (A) HOWEVER, H ELD THAT THE NOTICE HAS BEEN PROPERLY SERVED ON THE ASSESSEES W IFE AND THAT THE LEGAL HEIRS HAVE BEEN BROUGHT ON RECORD AS PER THE INFORMATION GIVEN BY THE ASSESSEE. AGAINST THIS ORDER OF THE CI T (A), THE ASSESSEE IS IN APPEAL BY RAISING THE FOLLOWING GROU NDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT (A) IS ERRONEOUS B OTH ON FACTS AND IN LAW. 2. THE ORDER OF THE LEARNED CIT (A) IS NOT JUSTIFIE D IN SUSTAINING THE ADDITION OF RS.19,82,494 UNDER THE H EAD CAPITAL GAINS. 3. THE ORDER OF THE LEARNED CIT (A), IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IS NOT JUSTIFIED IN HOLD ING THAT THE SERVICE OF NOTICE U/S 148 IS PROPER. 4. THE ORDER OF THE LEARNED CIT (A) IS NOT JUSTIFIE D IN NOT APPRECIATING THE CLAIMS THAT: ITA NO 1757 OF 2019 SURAT LALITHA DEVI HYDERABAD PAGE 3 OF 7 (I) THE AOS SHOW CAUSE NOTICE DT. 29.11.2018 WAS INVALID SINCE IT WAS ADDRESSED TO SRI SURAT MANOHAR , WHO DIED ON 9.8.2018 ITSELF AND THE FACT OF HIS DEA TH WAS INTIMATED BY HIS WIFE TO THE AO IMMEDIATELY ON RECEIPT OF THE SAME BY HER; (II) NO ACTION WAS TAKEN BY THE AO TO BRING ON RECO RD THE LEGAL HEIRS ON RECORD AND MAKE THE ASSESSMENT ON LE GAL HEIRS; AND (III) THEREFORE, THE CONSEQUENT ASSESSMENT ORDER IS BAD IN LAW. 5. THE LEARNED AO IS NOT JUSTIFIED IN NOT TAKING IN TO CONSIDERATION THE FACT THAT THE ASSESSMENT ORDER PA SSED IN THE NAME OF THE SMT. SURAT LALITHA DEVI, WITHOUT SERVING ANY NOTICE ADDRESSED TO HER, AS A LEGAL REPRESENTATIVE, AND THEREFORE, THE CONSEQUENT ASSESSMENT ORDER IS BAD IN LAW. 6. THE LEARNED CIT (A) IS NOT JUSTIFIED IN HOLDING THAT THE PROVISIONS OF SUB-SECTION (4) AND (6) OF SECTION 15 9 ARE TO BE CONSIDERED ONLY DURING THE COURSE OF RECOVERY PROCEEDINGS. 7. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, DELETE OR SUBSTITUTE ANY GROUND OR GROUNDS DURING THE COURSE OF APPELLANT PROCEEDINGS. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE REQUIREMENT OF THE LAW IS TO SERVE THE NOTICE U /S 148 ON THE ASSESSEE HIMSELF AND NOT ON THE ASSESSEES WIFE. IN SUPPORT OF THIS CONTENTION, HE PLACED RELIANCE UPON THE DECISION OF THE SINGLE BENCH OF THE ITAT AT AGRA IN THE CASE OF SHRIPAL SI NGH GULATI VS. ITO REPORTED IN (2008) 9 DTR (A.T)564 (ITAT AGRA), DATED 30 TH APRIL, 2008 WHEREIN IT HAS BEEN HELD THAT NOTICE SE RVED ON THE ASSESSEES WIFE WITHOUT FIRST FULFILLING THE CONDIT IONS FOR SUCH SERVICE OR ANY OTHER PERSON OTHER THAN THE ASSESSEE IS NOT PROPER NOTICE. THE LEARNED COUNSEL FURTHER RELIED UPON THE JUDGMENT OF HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CI T VS. DALUMAL SHYAMUMAL REPORTED IN (2005) 276 ITR 62 (MP ) WHEREIN IT WAS HELD THAT IN CASES WHERE THE ASSESSEE DIES P ENDING ANY ITA NO 1757 OF 2019 SURAT LALITHA DEVI HYDERABAD PAGE 4 OF 7 ASSESSMENT PROCEEDINGS, IT IS THE DUTY OF THE AO TO ENSURE COMPLIANCE WITH SECTION 159(2) OF THE I.T. ACT BEFO RE ANY ORDERS ARE PASSED AND THEREFORE, SUCH ASSESSMENT HAS TO BE NULLIFIED. AS REGARDS THE MERITS OF THE CASE ALSO, THE LEARNED CO UNSEL REITERATED THE ASSESSEES SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW. 5. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT THE AO IN THE ASSESSMENT ORD ER FOR THE RELEVANT A.Y HAS RECORDED THAT THE NOTICE U/S 148 H AS BEEN SERVED ON THE ASSESSEES WIFE. THE ASSESSMENT WAS COMPLETE D ON THE L.R OF THE ASSESSEE SHRI SURAT MANOHAR VIDE ORDERS DATE D 10.12.18 AS THE ASSESSEES HUSBAND HAD EXPIRED ON 9.8.2018 AND THE SAME WAS BROUGHT TO THE NOTICE OF THE AO. WE FIND THAT S IMILAR FACTS EXISTED IN THE CASE OF SHRIPAL SINGH GULATI VS. ITO (CITED SUPRA) AND FOR READY REFERENCE, THE RELEVANT PARAGRAPHS AR E REPRODUCED HEREUNDER: 11. THE THIRD PRONG OF LEGAL CONTENTION OF THE APP ELLANT IS WITH REGARD TO SERVICE OF NOTICE ON HIS WIFE INSTEA D ON HIMSELF. THIS IS A FACT THAT THE NOTICE WAS SERVED ON ASSESSEE'S WIFE. THE AO RECORDED REASON ON 28TH MAR CH, 2002 AND SENT NOTICE TO THE ASSESSEE UNDER S. 148 O N 28TH MARCH, 2002 WHICH WAS SERVED ON THE SAME DAY. THE EXPLANATION OF THE DEPARTMENT IS THAT THE SERVI CE ON ASSESSEE'S WIFE WAS MADE BECAUSE THE TIME FOR MAKIN G ASSESSMENT WAS GETTING BARRED. 12. AFTER HEARING RIVAL SUBMISSIONS THE CLEAR-CUT F ACTS WHICH EMERGE ARE THAT DUE TO SHORT TIME LEFT FOR MA KING ASSESSMENT THE AO WAS IN A HURRY TO SERVE THE NOTIC E. THE LEARNED CIT(A) HAS MENTIONED IN HIS ORDER THAT THE NOTICE WAS SERVED ON THE LAST DAY OF THE LIMITATION . BUT ACTUALLY IT WAS SERVED ON 28TH MARCH, 2002 AND COUP LE OF DAYS WERE LEFT BEHIND. SEC. 149 OF THE ACT ENVIS AGES TIME PERIOD WITHIN WHICH ASSESSMENT HAS TO BE COMPLETED. THE WORDS USED IN THE SECTION REFER TO T HE LIMITATION FOR 'ISSUANCE' OF NOTICE AND NOT FOR 'SE RVICE' OF ITA NO 1757 OF 2019 SURAT LALITHA DEVI HYDERABAD PAGE 5 OF 7 NOTICE. IT WAS SO HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF R.K. UPADHYAYA VS. SHANABHAI P. PATEL (1987) 62 CTR (SC) 17: (1987) 166 ITR 163(SC). IT H AS BEEN ARGUED THAT THE INFORMATION FROM THE DY. DIREC TOR OF IT (INV.), GURGOAN WAS RECEIVED BY THE AO ON 28TH M ARCH, 2002 AND ON THE SAME DAY REASON FOR TAKING ACTION UNDER S. 148 WAS RECORDED. THE PROPOSAL FOR SANCTIO N WAS SUBMITTED TO THE HIGHER AUTHORITIES ON THE SAME DATE AND AFTER RECEIPT OF THE SANCTION NOTICE UNDER S. 1 48 WAS ALSO SERVED ON SMT. SWARANJEET KAUR ON THE SAME DAT E LE' ON 28TH MARCH, 2002. THE PLEA TAKEN BY THE LEAR NED AUTHORISED REPRESENTATIVE IS THAT UNDER S. 282 A NO TICE OR REQUISITION UNDER THIS ACT MAY BE SERVED ON THE PERSON THEREIN NAMED EITHER BY POST OR AS IF IT WERE SUMMO NS ISSUED BY A COURT UNDER THE CPC, 1908. INSOFAR AS L EGAL POSITION WITH REGARD TO SERVICE OF NOTICE IS CONCER NED, THERE IS NO DISPUTE AND I AGREE WITH THE LEARNED AUTHORISED REPRESENTATIVE IN THIS REGARD. RULE 15 O F ORDER 5 OF THE CPC ORDAINS THAT WHERE SERVICE CAN B E ON AN ADULT MEMBER OF DEFENDANT'S FAMILY WHERE IN ANY SUIT THE DEFENDANT IS ABSENT FROM HIS RESIDENCE AT THE T IME WHEN THE SERVICE OF SUMMONS IS SOUGHT TO BE EFFECTE D ON HIM AT HIS RESIDENCE AND THERE IS NO LIKELIHOOD OF HIS BEING FOUND AT THE RESIDENCE WITHIN A REASONABLE TI ME AND HE HAS NO AGENT EMPOWERED TO ACCEPT SERVICE OF NOTICE ON HIS BEHALF, SERVICE MAY BE MADE ON ANY AD ULT MEMBER OF THE FAMILY, WHETHER MALE OR FEMALE, WHO I S RESIDING WITH HIM. THEREFORE, UNDER THIS RULE TOO CONDITIONS HAVE TO BE IN EXISTENCE TO MAKE A SERVIC E ON ADULT MEMBER OF THE FAMILY WHO IS RESIDING WITH THE ASSESSEE. BAT BEFORE THAT FOLLOWING CONDITIONS HAVE TO BE FULFILLED: (1) THAT THE ASSESSEE MUST BE ABSENT FROM HIS RESID ENCE; (2) THERE SHOULD BE NO LIKELIHOOD OF HIS BEING FOUN D AT HIS RESIDENCE WITHIN A REASONABLE TIME; AND (3) THAT HE HAS NO AGENT EMPOWERED TO ACCEPT SERVIC E ON HIS BEHALF. 13. IN THIS CASE, ALL THE THREE REQUIREMENTS OF R.1 5 OF ORDER 5 OF CPC WERE NOT EVEN LOOKED INTO BECAUSE TH E AO WAS IN A HURRY AND TO FINALISE EVERYTHING ON A SING LE DAY I.E., 28TH MARCH, 2002 AS MENTIONED IN THE ABOVE PA RA. A NOTICE WAS SIMPLY SENT TO THE HOUSE OF THE ASSESSEE AND WAS SERVED ON ASSESSEE'S WIFE WITHOUT ENQUIRING AS TO WHETHER THE ASSESSEE WAS PRESENT OR NOT OR WAS HE LIKELY TO BE AVAILABLE OR HAD HE ANY AGENT EMPOWERE D. IN THIS REGARD, ALL THESE FACTS ARE MISSING TO SATISFY ALL THE THREE ABOVE-MENTIONED CONDITIONS WHICH ARE SINE QUA NON FOR SERVICE OF NOTICE ON AN ADULT MEMBER OF THE FAM ILY LIVING WITH THE ASSESSEE. NO DOUBT THAT FAMILY OF T HE ASSESSEE WAS LIVING WITH HIM AND ADULT ONE TO (SIC) , ALL THE THREE CONDITIONS SHOULD COEXIST. THE SERVICE OF NOTICE ITA NO 1757 OF 2019 SURAT LALITHA DEVI HYDERABAD PAGE 6 OF 7 IS TO BE MADE ON THE ASSESSEE AND NOT ON ANY ADULT MEMBER OF THE FAMILY OF THE ASSESSEE AS PER THE DIRECTIONS OF CPC. IT IS TRUE THAT THE ASSESSEE APP EARED BEFORE THE AO ON 8TH OCT., 2002 AFTER SERVICE OF NO TICE UNDER S. 148 ON HIS WIFE. NOW IT HAS TO BE SEEN AS TO WHETHER THE MERE APPEARANCE OF THE ASSESSEE AFTER IMPROPER SERVICE OF NOTICE WOULD ABSOLVE THE REQUIR EMENT OF LAW OR NOT. THE HON'BLE ALLAHABAD HIGH COURT IN FULL BENCH MENTIONED IN THE CASE OF LAXMI NARAIN ANAND PRAKASH VS. CST 46 STC 71(AII)(FB) HAS HELD THAT 'N OTICE UNDER S, 21 OF THE UP SALES-TAX ACT, 1948, WAS SERV ED ON A, WHO HAD NO CONCERN WITH THE ASSESSEE'S FIRM. THE ASSESSEE, HOWEVER, APPEARED ON THE DATE OF HEARING IN THE PROCEEDINGS. THE QUESTION WAS WHETHER THE SERVI CE OF NOTICE ON A BECAME IMMATERIAL BECAUSE OF THE ASSESS EE'S APPEARANCE AND THE PROCEEDING UNDER S, 21 COULD NOT , THEREFORE, BE SAID TO BE INVALID. HELD, THAT THE NO TICE UNDER S. 21 HAVING BEEN IMPROPERLY SERVED, THE INIT IATION OF PROCEEDINGS WAS WITHOUT JURISDICTION AND IT COUL D NOT BE VALIDATED BY PARTICIPATION OF THE ASSESSEE IN TH E PROCEEDINGS'. IT HAS BEEN CONTENDED THAT S, 21 OF T HE UP SALES-TAX ACT IS EQUAL TO S. 148 OF THE IT ACT. I H AVE EXAMINED THE RATIO OF THE ABOVE DECISION AND THE PROVISIONS OF S. 21 OF THE SALES-TAX ACT. SEC. 148 OF THE IT ACT (SIC) IN MY OPINION, THE RATIO OF THE ABOVE DEC ISION OF HON'BLE ALLAHABAD HIGH COURT FULL BENCH IS ALSO APPLICABLE TO THE CASE IN HAND AND THUS THE PROCEED INGS INITIATED U/S. 148 ARE WITHOUT SERVICE OF PROPER NO TICE AND AS SUCH ARE ILLEGAL. THE ENTIRE PROCEEDINGS THU S BECOME VOID AB INITIO AND ARE LIABLE TO BE QUASHED. AS A RESULT, I QUASH THE PROCEEDINGS BEING WITHOUT JURIS DICTION AND AS A RESULT OF INVALID SERVICE OF NOTICE. THERE FORE, THE ASSESSEE SUCCEEDS ON THIS LIMB OF ARGUMENT. NOTICE WAS SERVED DIRECTLY ON ASSESSEE'S WIFE WITHOUT THERE BE ING ANY EFFORT WHICH MAY BE EVIDENT FROM ANY NOTING ON THE NOTICE THAT ANY REASONABLE EFFORT/ATTEMPT WAS MADE AS REQUIRED BY LAW, BEFORE SERVICE OF THE NOTICE TO TH E ASSESSEES WIFE. THERE IS NO EVIDENCE ON RECORD NOR THE WIFE OF THE ASSESSEE IS LEGALLY AUTHORISED BY THE ASSESSEE TO RECEIVE THE NOTICE. THE LEARNED CIT(A) HAS TRIED TO JUSTIFY THE ACTION OF THE AO BY IGNORING T HAT THE DATE ON WHICH IT WAS SERVED WAS THE LAST DAY OF LIMITATION. SO IT IS MANIFESTLY CLEAR THAT THE NOTI CE WAS IMPROPERLY SERVED ON ASSESSEE'S WIFE DUE TO LACK OF TIME. 7. THUS, IT CAN BE SEEN THAT THE FACTS IN THIS CASE ARE SIMILAR TO THE FACTS IN THE CASE OF SHRIPAL SINGH G ULATI VS. ITO (SUPRA) AND IN THE CASE BEFORE ME, IT IS ALSO NOT T HE CASE OF THE REVENUE THAT THE ASSESSEE HAD PARTICIPATED IN THE A SSESSMENT ITA NO 1757 OF 2019 SURAT LALITHA DEVI HYDERABAD PAGE 7 OF 7 PROCEEDINGS SUBSEQUENT TO THE NOTICE U/S 148 OF THE ACT. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE COORDINATE BENCH AT AGRA, I HOLD THAT THE ASSESSMENT ORDER U/S 147, WITHOUT SERVING A PROPER AND VALID NOTICE U/S 148 OF THE AC T TO THE ASSESSEE IS BAD IN LAW. SINCE THE ASSESSMENT ORDER ITSELF IS HELD AS NOT VALID, I DO NOT SEE ANY REASON TO ADJUDICATE TH E OTHER GROUNDS/ARGUMENTS OF THE ASSESSEE AT THIS STAGE AS IT WOULD ONLY RESULT IN AN ACADEMIC EXERCISE. THEREFORE, THE APPE AL OF THE ASSESSEE IS PARTLY ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JANUARY, 2021. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 8 TH JANUARY, 2021. VINODAN/SPS COPY TO: 1 SMT. SURAT LALITHA DEVI L/R OF LATE SRI SURAT MAN OHAR C/O KATRAPATI & ASSOCIATES, 1-1-298/2/B/3, 1 ST FLOOR, ASHOKNAGAR, HYDERABAD 500020 2 ITO WARD 9(1) 2 ND FLOOR, D BLOCK, IT TOWERS, AC GUARDS, HYDERABAD 500004 3 CIT (A)-7 HYDERABAD 4 PR. CIT 7 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER