M/s. Professional Leasing & Capital Services Ltd., New Delhi V. DCIT, New Delhi

ITA 1797/DEL/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1713 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 04-08-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 26-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR ANJULA JAIN
• Assessee Lawyers: MRS SWEETY KOTHARI
• Keywords: Invalid notice; Search and seizure; Opportunity of being heard; Reason to believe
• Section: 143(3); 142(1); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO. - 1797 /DEL/201 4 (ASSESSMENT YEAR - 200 3 - 04 ) PROFESSIONAL LEASING & CAPITAL SERVICES LTD., C/O - M/S VINOD KUMAR BINDAL & CO. CA, SHIV SUSHIL BHAWAN, D - 219, VIVEK VIHAR, PHASE - I, NEW DELHI - 110095. PAN - AAACP7124K ( APPELLANT) VS DCIT, CENTRAL CIRCLE - 23, NEW DELHI (RESPONDENT ) APPELLANT BY MRS. SWEETY KOTHARI, CA RESPONDENT BY DR.ANJULA JAIN, SR.DR ORDER BY THE PRESENT APPEAL, THE ASSESSEE ASSAILS THE CORRECTNESS OF THE ORDER DATED 26.02.2014 OF CIT(A) - XII, NEW DELHI PERTAINING TO 2003 - 04 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS: - 1. THE CIT(A) ERRED IN LAW AND FACTS IN HOLDING THE ISSUANCE OF NOTICE U/S 148 OF THE ACT AS VALID THOUGH THE SAID NOTICE WAS ISSUED WITHOUT OBTAINING SANCTION FROM THE COMMISSIONER OF INCOME - TAX AS REQUIRED BY THE PROVISO TO SECT ION 1151(1) OF THE ACT AS THE ASSESSMENT WAS COMPLETED U/S 143(3). THUS THE NOTICE ISSUED U/S 148 WITHOUT PROPER SANCTION AS PER PROVISIONS OF LAW IS INVALID AND THE ASSESSMENT MADE ON THE BASIS OF SUCH NOTICE SHOULD BE ANNULLED. 2. THE CIT(A) ERRED IN LAW AND ON FACTS IN MAKING AN ADDITION OF RS.2,50,000/ - RECEIVED FROM M/S D.N.KANSAL SECURITIES (P.) LTD. THROUGH BANKING CHANNEL FOR DEALING IN SHARES IGNORING THE FACTS AND EVIDENCES PLACED ON RECORD. THUS THE ADDITION SO MADE SHOULD BE DELETED. 3. THE APPELLA NT CRAVES THE LEAVE TO ADD, SUBSTITUTE, MODIFY, DELETE OR AMEND ALL OR ANY GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING. 2. HOWEVER, AT THE TIME OF HEARING THE PARTIES WERE HEARD ONLY IN REGARD TO GROUND NO. - 1. THE FACTS RELATABLE TO THE SAM E ARE FOUND ADDRESSED AT PAGE 2 WHEREIN THE GROUNDS RAISED BY THE CIT(A) ARE FOUND REPRODUCED. THE FACTUAL SUBMISSIONS IN REGARD TO THIS ASPECT ARE FOUND RECORDED AT PAGES 4 & 5 IN PARAS DATE OF HEARING 04 .0 8 .2015 DATE OF PRONOUNCEMENT 09 . 1 0 .2015 I.T.A .NO. - 1797/ DEL/2014 PAGE 2 OF 5 1.3 TO 1.9 OF THE IMPUGNED ORDER. FOR READY - REFERENCE, THESE ARE RE PRODUCED HEREUNDER: - 1.3. IT HAS BEEN HELD BY THE ITAT IN ITS RECENT DECISION IN THE CASE OF SHRI AMARLAL BAJAJ VS ACIT IN APPEAL NO, 611/MUM/2004 THAT THE REOPENING PROCEEDINGS AS BAD IN LAW AS THE COMMISSIONER HAS SIMPLY MENTIONED 'APPROVED' TO THE REPO RT SUBMITTED BY THE CONCERNED AO AND DID NOT APPLY HIS MIND. HERE IN THE CASE OF THE ASSESSEE, IT APPEARS THAT THE SANCTION HAS NOT BEEN OBTAINED AT ALL THOUGH IT WAS REQUIRED BY LAW. 1.4. THE ASSESSEE MADE REQUEST FOR THE INSPECTION OF THE ASSESSMENT F OLDER VIDE LETTERS DATED 7/5/12 AND REMINDER DATED 31/7/12. PHOTOCOPY OF THE LETTER DATED 7/5/12 ALREADY PACED ON RECORD ON PAGE 42 AND THE COPY OF LETTER DATED 31/7/12 IS ENCLOSED. HOWEVER, THE ASSESSEE HAS NOT BEEN ALLOWED THE INSPECTION OF THE SAID FOLD ER TILL DATE. IT IS THEREFORE REQUESTED THAT THE ASSESSMENT FOLDER MAY KINDLY BE CALLED FOR SO THAT THE FACTS CAN BE VERIFIED FROM THE SAID FILE. THESE FACTS ARE NECESSARY TO BE DETERMINED AS THEY GO TO THE ROOT OF THE JURISDICTION OF THE ASSESSING OFFICER . 1.5 FURTHER, THE NOTICE ISSUED U/S 148 DID NOT CONTAIN THE REASONS RECORDED FOR ISSUING SUCH NOTICE WHICH SHOULD BE A PART AND PARCEL OF THE NOTICE AND THE SAME SHOULD ALSO BE SERVED WITH THE NOTICE. THE NOTICE SHOULD ACCOMPANY THE REASONS RECORDED FOR ISSUE OF NOTICE. THE ASSESSING OFFICER DISCLOSES AND OPENS HIS MIND THROUGH REASONS RECORDED BY HIM. HE HAS TO SPEAK THROUGH HIS REASONS. THE REASONS HAVE NOT BEEN SERVED ON THE ASSESSEE ON TILL DATE. 1.6 IT HAS BEEN HELD BY HON'BLE DELHI HIGH COUR T IN THE CASE OF HARYANA ACRYLIC MANUFACTURING CO. VS C1T (2009) 308 1TR 38 THAT THAT A NOTICE U/S 148 WITHOUT THE COMMUNICATION OF THE REASONS THERE FOR IS MEANINGLESS INASMUCH AS THE AO IS BOUND TO FURNISH THE REASONS WITHIN A REASONABLE TIME. IT WAS HE LD THAT A CASE WHERE THE NOTICE HAS BEEN ISSUED WITHIN THE SAID PERIOD OF SIX YEARS BUT THE REASONS HAVE NOT BEEN FURNISHED WITHIN THAT PERIOD IS HIT BY THE BAR OF BECAUSE THE ISSUANCE OF THE NOTICE AND THE COMMUNICATION AND FURNISHING OF REASONS GO HAND I N HAND. AS THE ISSUANCE OF THE NOTICE UNDER SECTION 148 AND THE COMMUNICATION AND FURNISHING OF REASONS GO HAND IN HAND, THE REASONS HAVE TO BE SUPPLIED TO THE ASSESSEE BEFORE THE EXPIRY OF PERIOD OF 6 YEARS. IF THIS IS NOT DONE, THE VALIDITY OF THE S. 148 NOTICE CANNOT BE UPHELD. 1.7 THE HON'BLE ITAT IN THE CASE OF BALWANT RAI WADHWA, COPY OF THE DECISION ENCLOSED, FOLLOWING THE OBSERVATIONS OF HARYANA ACRYLIC (SUPRA) HELD THAT IF THE REASONS FOR REOPENING WERE NOT SERVED WITHIN SIX YEARS, THE REOP ENING WAS VOID. SINCE IN THIS CASE, THE REASONS HAVE NOT BEEN SUPPLIED TO THE ASSESSEE TILL DATE, THE NOTICE ISSUED IS VOID AND THE ASSESSMENT MADE ON THE BASIS OF SAID NOTICE SHOULD BE CANCELLED. 1.8 IT IS FURTHER SUBMITTED THAT PROVISO TO SECTION 147 PROVIDES THAT WHERE AN ASSESSMENT UNDER SECTION 143(3) HAS BEEN MADE FOR ANY YEAR, THEN NO ACTION SHALL BE TAKEN UNDER SECTION 147 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART, OF THE ASSESSEE TO FILE A RETURN U/S 139 OR IN RESPONSE TO NOTICE ISSUED U/S 142(1) OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. THE AS SESSMENT OF THE ASSESSEE FOR AY 2003 - 04 WAS COMPLETED U/S 143(3) AND THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. THE TRANSACTION OF THE AMOUNT RECEIVED FROM M/S D.N. KA NSAL SECURITIES LTD. HAS BEEN I.T.A .NO. - 1797/ DEL/2014 PAGE 3 OF 5 UNDERTAKEN THROUGH BANK ACCOUNT AND WAS FULLY AND TRULY DISCLOSED IN THE BOOKS OF ACCOUNT AND DURING ASSESSMENT PROCEEDINGS. 1.9 THUS THE NOTICE ISSUED WITHOUT FULFILLING THE CONDITIONS LAID DOWN BY THE LAW IS INVALID AND THE ASSESSMENT MADE ON THE BASIS OF INVALID NOTICE SHOULD BE CANCELLED. 3. IN THE CONTEXT OF THESE SUBMISSIONS, IT WAS SUBMITTED BY THE LD.AR INVITING ATTENTION TO PAGE 23 & 24 OF THE IMPUGNED ORDER WHEREIN FROM PAGES 6 TO 22, THE CIT(A) REPRODUCE THE D ETAILED SUBMISSIONS ON FACTS AND POSITION OF LAW ON MERIT S OF THE ADDITION AND THEREAFTER PROCEEDED TO DECIDE THE ISSUE S. THE RECORD SHOWS THAT THE ASSESSEE HAD ASSAILED THE ASSUMPTION OF JURISDICTION VIDE GROUND NOS. 1 & 2 BEFORE THE CIT(A). THESE ARE R EPRODUCED HEREUNDER : - 1. THAT NOTICE ISSUED U/S 148 DOES NOT MENTION THE AMOUNT INVOLVED. THUS THE NOTICE ISSUED U/S 148 IS VOID AB INITIO AND SHOULD BE QUASHED AND THE ASSESSMENT MADE ON THE BASIS OF SUCH NOTICE SHOULD BE ANNULLED. 2. THE ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN ISSUING THE NOTICE U/S 148 WITHOUT OBTAINING SANCTION FROM THE COMMISSIONER OF INCOME TAX THOUGH THE ASSESSING OFFICER WAS REQUIRED TO TAKE SANCTION AS PER PROVISO TO SECTION 151(1) OF THE ACT BECAUSE THE ASSESSMENT FOR THE A.Y .2003 - 04 WAS COMPLETED U/S 143(3). THUS THE NOTICE U/S 148 ISSUED WITHOUT PROPER SANCTION AS PER PROVISIONS OF LAW IS INVALID AND THEREFORE NEEDS TO BE QUASHED AND THE ASSESSMENT MADE ON THE BASIS OF SUCH NOTICE SHOULD BE ANNULLED. 4. A PERUSAL OF THE FI NDING OF THE CIT(A) SHOWS THAT THE ISSUES HAVE NOT BEEN ADDRESSED BY THE LD.CIT(A) . FOR READY - REFERENCE THE SAME IS REPRODUCED HEREUNDER : - 1.1 I HAVE CONSIDERED THE FACTS STATED BY THE ASSESSES IN HIS SUBMISSION AND THE GROUNDS RAISED IN APPEAL - 1.2. THE APPELLANT HAS RAISED GROUND AGAINST THE ISSUE OF NOTICE STATING THAT THE NOTICE DOES NOT HAVE MENTION THE AMOUNT INVOLVED. FURTHER, THE APPELLANT RAISED GROUND THAT THE NOTICE HAS BEEN ISSUED WITHOUT OBTAINING THE SANCTION OF THE COMMISSIONER OF INCOME TAX AS PER THE PROVISIONS OF SECTION 151(1). I HAVE CONSIDERED THE GROUNDS, IT IS SEEN THAT THE ASSESSMENT OFFICER HAD REASON TO BELIEVE THAT AN INCOME OF RS.2,50.000/ - HAS ESCAPED AND THIS TACT HAS BEEN PUT ON RECORD IN THE ORDER O F ASSESSMENT. FURTHER, THE ASSESSING OFFICER HAS MENTIONED THAT NECESSARY APPROVAL FROM THE COMMISSIONER OF INCOME TAX, CENTRAL - III, NEW DELHI, VIDE OFFICE LETTER NO. 2716, DATED 30.03.2010, WAS TAKEN AND THE CASE WAS REOPENED AND NOTICE U/S 148 WAS ISSUED ON 30.03.2010. THESE FACTS HAVE BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER, HENCE, THERE IS NO BASIS FOR RAISING THE GROUND AGAINST ISSUE OF NOTICE U/S 148 AND APPROVAL TO BE TAKEN FROM CIT AS PER THE PROVISIONS OF SECTION 151(1). BOTH THE GROUNDS AR E REJECTED AND DISMISSED. 5 . IN THE AFORESAID PECULIAR FACTS AND CIRCUMSTANCES LD. AR IN VITING A TTENTION TO THE FINDING ARRIVED AT RELYING ON THE DETAILED ARGUMENTS ADVANCED BEFORE THE CIT(A) WHICH HAVE BEEN REPRODUCED SUBMITTED THAT THE ADDITION MADE DE SERVES TO I.T.A .NO. - 1797/ DEL/2014 PAGE 4 OF 5 BE DELETED ALTERNATIVELY, THE ISSUE MAY BE RESTORED TO THE CIT(A) TO ADDRESS THE SPECIFIC GRIEVANCE OF THE ASSESSEE. 6. THE SR. DR CONSIDERING THE 24 PAGED ORDER PASSED BY THE CIT(A) WHEREIN SPECIFIC OBJECTIONS WERE RAISED ASSAILING THE ASSUMPTIO N OF JURISDICTION AND WAS UNABLE TO DEFEND THE ORDER. ON GOING THROUGH THE ORDER, LD. SR.DR WAS UNABLE TO SHOW WHERE THE ISSUES HAVE BEEN CONSIDERED. IN THESE CIRCUMSTANCES IT WAS HER SUBMISSION THAT THE ISSUE S MAY BE RESTORED TO THE CIT(A HOWEVER QUASHI NG THE ADDITION WAS OPPOSED TO BY THE LD. SR. DR. 7 . HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AS HAS BEEN BROUGHT OUT IN THE EARLIER PART OF THIS ORDER, IT IS SEEN THAT THE ASSESSEE IN THE YEAR UNDER CONSIDERATION DEC LARED A LOSS OF RS.6,58,278/ - AND BY AN ASSESSMENT ORDER PASSED U/S 143(3) IT WAS ACCEPTED . S UBSEQUENTLY AS A RESULT OF SEARCH AND SEIZURE OPERATION IN THE CASE OF SH. MAHENDRA KUMAR GUPTA WHO ACCEPTED THAT HE WAS AN ENTRY OPERATOR, THE ASSESSMENT WAS RE - OPENED. THE ASSESSEE HAS TAKEN SPECIFIC GROUNDS ASSAILING THE RE - OPENING THE SUBMISSION ON FACTS AS ARGUED BEFORE THE CIT(A) HAVE BEEN EXTRACTED IN THE EARLIER PART OF THIS ORDER FROM THE IMPUGNED ORDER AND DO NOT R EQUIRE TO BE REPEATED IT AGAIN. ON A CO NSIDERATION THEREOF, IT IS SEEN THAT ORDER UNDER CHALLENGE DOES NOT MEET THE STATUTORY REQUIREMENTS AS SET OUT IN SECTION 250(6) OF THE INCOME TAX ACT, 1961. IN THE CIRCUMSTANCES THE ORDER IS SET ASIDE BACK TO THE FIL E OF THE CIT(A) TO FIRST DECIDE THE J URISDICTIONAL ISSUE AND THEREAFTER DECIDE IF NEED BE ON MERITS. I T IS NECESSARY TO BRING OUT THE FACT THAT THE L D. AR HAD FIL ED A PAPER BOOK ON RECORD HOWEVER SINCE THE IMPUGNED ORDER DOES NOT MEET THE STATUTORY REQUIREMENTS THE CONTENTS OF THE VARIOUS ISS UES ADDRESSED I N THE PAPER BOOK ARE NOT REQUIRED TO B E ADDRESSED AT THIS STAGE. ACCORDINGLY ON A CONSIDERATION OF THE ABOVE NOTICED SHORTCOMING, THE IMPUGNED ORDER IS SET ASIDE AND THE ISSUES ARE RESTORED BACK TO THE FILE TO THE CIT(A) WITH A DIRECTION TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD . 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 0 9 T H OF OCTOBER , 2015. S D / - (DIVA SINGH) JUDICIAL MEMBER DATED: 0 9 / 1 0 /2015 * AMIT KUMAR * I.T.A .NO. - 1797/ DEL/2014 PAGE 5 OF 5 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI