Raju Verma, Dehradun V. DCIT, Dehradun

ITA 1804/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4215 (ITAT-DEHRADUN)
• Duration Of Justice: 4 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 24-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N C UPADHYAYA
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Period of limitation; Notional interest; Set aside
• Section: 194C; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH, DEHRADUN BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 1798/DEL/2017 : ASSTT. YEAR : 1999-00 ITA NO. 1799/DEL/2017 : ASSTT. YEAR : 2000-01 ITA NO. 1800/DEL/2017 : ASSTT. YEAR : 2001-02 ITA NO. 1801/DEL/2017 : ASSTT. YEAR : 2002-03 ITA NO. 1802/DEL/2017 : ASSTT. YEAR : 2003-04 ITA NO. 1803/DEL/2017 : ASSTT. YEAR : 2004-05 ITA NO. 1804/DEL/2017 : ASSTT. YEAR : 2005-06 RAJU VERMA, 17/1, CURZON ROAD, DEHRADUN-248001 VS DCIT, CENTRAL CIRCLE, DEHRADUN (APPELLANT) (RESPONDENT) PAN NO. A BIPV8176F ASSESSEE BY : SH. RAKESH GUPTA, ADV. REVENUE BY : SH. N. C. UPADHYAYA, SR. DR DATE OF HEAR ING: 12 . 0 7 .20 2 1 DATE OF PRONOUNCEMENT: 06 .10 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEALS HAVE BEEN FILED BY THE ASSESSE E AGAINST THE ORDERS OF LD. CIT(A)-IV, KANPUR DATED 1 7.02.2017. AS ALL THE APPEALS DEAL WITH IDENTICAL ISSUE, WE PR OCEEDED TO DECIDE THE APPEALS BY A CONSOLIDATED ORDER FOR CONV ENIENCE AND TO AVOID REPETITION OF FACTS. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS AN INDIVIDUAL, DERIVES INCOME FROM OTHER SOURCES. FOR ALL THE YEARS UNDER CONSIDERATION, PROCEEDINGS U/S 147 OF THE INC OME-TAX ITA NOS. 1798 TO 1804/DEL/2017 RAJU VERMA 2 ACT, 1961 WERE COMMENCED BY WAY OF ISSUE OF NOTICE U/S 148 OF THE ACT ON 12.06.2014. IN THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT, THE ASSESSING OFFICER RECORDED THAT ASSESSEE WAS HOLDING BANK ACCOUNT IN FOREIGN BANK I.E. HSBC GENEVA AND THE SAID ACCOUNT WAS NOT DISCLOSED TO THE INCOME-TA X DEPARTMENT. THE DETAILED REASONS RECORDED BY THE AS SESSING OFFICER HAVE BEEN REPRODUCED BY THE ASSESSING OFFIC ER IN ASSESSMENT ORDERS DATED 30.01.2015. 3. THE AMOUNT INVOLVED IN THE VARIOUS ASSESSMENT YE ARS IS AS UNDER: ASSESSMENT YEAR AMOUNT 1999-2000 RS.33,053 2000-2001 RS.44,625 2001-2002 RS.24,220 2002-2003 RS.17,455 2003-2004 RS.24,331 2004-2005 RS.71,216 2005-2006 RS.35,214 4. THE NOTICE U/S 148 OF THE ACT HAS BEEN ISSUED ON 12.6.2014. THE ISSUE TO BE ADJUDICATED IS IDENTIFIE D AS TO WHETHER INVOKING THE PROVISIONS OF SECTION 194C FO R THE YEARS IN CONSIDERATION WAS LEGALLY TENABLE OR NOT AS THE PROVISION WAS INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01.07.2012 AND THUS WHETHER IT CAN BE TREATED TO HAVE RETROSPECTIVE EFF ECT OR NOT? 5. THE LD. COUNSEL IN SUPPORT OF HIS CONTENTION REL IED ON THE DECISION OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF BRAHMA DATT VS ACIT REPORTED IN 100 TAXMANN.COM 324 . 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE R OF THE LD. CIT(A). THE LD. DR ALSO RELIED ON THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF RAYMOND WOOLLEN MILLS LTD. VS. ITA NOS. 1798 TO 1804/DEL/2017 RAJU VERMA 3 ITO REPORTED IN 236 ITR 34 (SC) AND THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF SONIA GANDHI VS. ACIT, CIRCLE- 52(1), REPORTED IN (2018) 97 TAXMANN.COM 150. ON TH E ISSUE OF DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF BRAHM DATT (SUPRA), THE LD. COUNSEL SUBMITTED THAT IN THE SAID CASE THE ACCOUNT WAS NOT HELD IN THE PERSONAL CAPACITY AND I T WAS HELD AS SETTLER OF THE TRUST AND FACTS OF PRESENT CASE BEIN G DIFFERENT, RATIO OF THE SAID JUDGMENT CANNOT BE APPLIED OVER T HE FACTS OF THE INSTANT CASE. 7. IT IS ALSO A FACT ON RECORD THAT IN ASSESSMENT Y EAR 2012- 13, THE ASSESSEE DECLARED OUTSTANDING BALANCE IN TH E HSBC, GENEVA ACCOUNT WHICH INCLUDES PRINCIPAL AMOUNT AND INTEREST COMPONENT ACCUMULATED TILL DATE EXCLUDING THE WITHD RAWAL MADE FROM TIME TO TIME. THIS ACCOUNT WAS INITIALLY OPENE D IN THE BRITISH BANK OF MIDDLE EAST, GENEVA IN FINANCIAL Y EAR 1996-97 AND FUNDS WERE DEPOSITED IN THAT. THE BRITISH BANK OF MIDDLE EAST WAS LATER ON MERGED WITH HSBC BANK, GENEVA IN FINANCIAL YEAR 1998. THE ISSUE IS INVOLVED FROM THE SIDE OF R EVENUE WAS TAXATION OF THE NOTIONAL INTEREST AND THE EXPENSES DEBITED WHICH WERE IN THE NATURE OF GENERAL MAINTENANCE FEE AND C HARGES LEVIED BY THE BANK AS MENTIONED IN THE ABOVE TABLE. 8. WE FIND THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF BRAHM DATT (SUPRA), NOTICE U/S 148 OF THE ACT WAS I SSUED FOR ASSESSMENT YEAR 1998-99 INVOKING LIMITATION OF 16 Y EARS PROVIDED IN SECTION 149(C) OF THE ACT FOR HOLDING B ANK ACCOUNT IN HSBC, GENEVA. IN THE SAID DECISION, THE HONBLE DELHI HIGH COURT HAS RELIED ON THE DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF K.M. SHARMA VS. ITO 254 ITR 772(SC), WHEREIN ITA NOS. 1798 TO 1804/DEL/2017 RAJU VERMA 4 THE HONBLE SUPREME COURT HAS HELD THAT LAW OF LIMI TATION WAS INTENDED TO GIVE CERTAINTY AND FINALITY TO LEGAL PR OCEEDINGS AND THEREFORE, PROCEEDINGS WHICH HAD ATTAINED FINALITY UNDER THE EXISTING LAW DUE TO BAR OF LIMITATION, COULD NOT BE HELD TO BE OPEN FOR REVIVAL UNLESS THE AMENDED PROVISION IS CL EARLY GIVEN RETROSPECTIVE OPERATION SO AS TO ALLOW UPSETTING PR OCEEDINGS, WHICH HAS ALREADY BEEN COMPLETED AND ATTAINED FINAL ITY. THE CO- ORDINATE BENCH OF ITAT IN ITA NOS. 1796 & 1797/DEL/ 2017 VIDE ORDER DATED 09.04.2019 IN ASSESSEES OWN CASE, RELY ING ON THE JUDGMENT OF THE HONBLE JURISDICTION HIGH COURT IN THE CASE OF BRAHMA DATT VS. ACIT (SUPRA) HELD THAT THE NOTICE C ANNOT BE ISSUED BY INVOKING THE PROVISIONS THAT HAVE COME IN TO FORCE W.E.F. 01.07.2012. 9. THE HONBLE DELHI HIGH COURT IN THE CASE OF BRAH MA DATT VS. ACIT (SUPRA) QUASHED THE REASSESSMENT OBSERVING AS UNDER: 14. THE RATIO OF K.M SHARMA AND S.S. GADGIL, IN TH E OPINION OF THIS COURT COVERS THE FACTS OF THIS CASE . REASSESSMENT FOR 1998-99 COULD NOT BE REOPENED BEYO ND 31.03.2005 IN TERMS OF PROVISIONS OF SECTION 149 OF THE ACT AS APPLICABLE AT THE RELEVANT TIME. THE PETITIO NERS RETURN FOR ASSESSMENT YEAR 1998-99 BECAME BARRED BY LIMITATION ON 31.03.2005. THE QUESTION OF REVIVAL O F THE PERIOD OF LIMITATION FOR REOPENING ASSESSMENT FOR A Y 1998-99 BY TAKING RECOURSE TO THE SUBSEQUENT AMENDMENT MADE IN SECTION 149 OF THE ACT IN THE YEA R 2012, I.E., MORE THAN 8 YEARS AFTER EXPIRATION OF LIMITATION ON 31.03.2005, HAS BEEN DEALT WITH BY TH E SUPREME COURT IN K.M. SHARMA (SUPRA). ITA NOS. 1798 TO 1804/DEL/2017 RAJU VERMA 5 15. THE AO HAS CONCEDED IN THE ORDER REJECTING THE PETITIONERS OBJECTION THAT 'IT IS ALSO FOUND THAT THE ASSESSEE WAS A NON-RESIDENT AS CONTENDED BY HIM, IN THE AY 1998-99.' IN THE CIRCUMSTANCES, THERE CAN BE NO QUESTION ABOUT THE APPLICABILITY OF THE THEN EXISTI NG PROVISION- SECTION 149 (B), WHICH STATED THAT THE N ORMAL TIME LIMIT FOR REOPENING ASSESSMENT WAS FOUR YEARS, 'BUT NOT MORE THAN SIX YEARS, HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AMOUNTS TO OR IS LIKELY TO AMOUNT TO ONE LAKH RUPEE S OR MORE FOR THAT YEAR.' 16. IT HAS BEEN SAID THAT 'THE GOVERNMENT IN ALL IT S ACTIONS IS BOUND BY RULES FIXED AND ANNOUNCED BEFOREHAND--RULES WHICH MAKE IT POSSIBLE TO FORESEE WITH FAIR CERTAINTY HOW THE AUTHORITY WILL USE ITS COERC IVE POWERS IN GIVEN CIRCUMSTANCES, AND TO PLAN ONE'S AF FAIRS ON THE BASIS OF THIS KNOWLEDGE' (REF. FA HAYEK, 'RO AD TO SERFDOM', 1944). IN THIS CASE, THE INTERPRETATION PROPOSED BY THE REVENUE HAS THE POTENTIAL OF ARMING ITS AUTHORITIES TO RE-OPEN SETTLED MATTERS, IN RESPECT OF ISSUES WHERE THE CITIZEN COULD GENUINELY BE SANGUIN E AND HAD NO OBLIGATION OF THE KIND WHICH THE REVENUE SEE KS TO IMPOSE BY THE PRESENT AMENDMENT. ALL THE MORE SIGNIFICANT, IS THE FACT THAT ABSENT A CLEAR INDICA TION, EVERY STATUTE IS PRESUMED TO BE PROSPECTIVE. THE REVENUE HAD SOUGHT TO CONTEND THAT THE AMENDMENT (T O SECTION 149) IS MERELY PROCEDURAL AND NO ONE HAS A ITA NOS. 1798 TO 1804/DEL/2017 RAJU VERMA 6 VESTED RIGHT TO PROCEDURE; AND THAT PROCEDURAL AMENDMENTS CAN BE GIVEN EFFECT ANY TIME, EVEN IN ONGOING PROCEEDINGS. 17. THIS COURT IS OF THE OPINION THAT THERE IS NO M ERIT IN THE REVENUES CONTENTION. IN SRI PRITHVI COTTON MIL LS VS BROACH BOROUGH MUNICIPALITY, AIR 1970 SC 192, EXAMINED THE VALIDITY OF THE RETROSPECTIVE AMENDMEN T OF A STATUTE IN LIGHT OF ARTICLE 19(1)(G) OF THE CONST ITUTION OF INDIA, I.E. A FUNDAMENTAL RIGHT TO PRACTICE ANY PROFESSION, OR TO CARRY ON ANY OCCUPATION, TRADE OR BUSINESS. THE COURT SAID: 'IN TESTING WHETHER A RETROSPECTIVE IMPOSITION OF A TAX OPERATES SO HARSHLY AS TO VIOLATE FUNDAMENTAL RIGHT S UNDER ARTICLE 19(1)(G), THE FACTORS CONSIDERED RELE VANT INCLUDE THE CONTEXT IN WHICH RETROACTIVITY WAS CONTEMPLATED SUCH AS WHETHER THE LAW IS ONE OF VALIDATION OF TAXING STATUTE STRUCK-DOWN BY COURTS FOR CERTAIN DEFECTS; THE PERIOD OF SUCH RETROACTIVITY, AND THE DECREE AND EXTENT OF ANY UNFORESEEN OR UNFORESEEABLE FINANCIAL BURDEN IMPOSED FOR THE PAST PERIOD ETC.' 18. IN GOVINDDAS V INCOME TAX OFFICER AIR 1977 SC 5 52 THE SUPREME COURT HELD THAT SECTION 171 (6) OF THE INCOME TAX ACT WAS PROSPECTIVE AND INAPPLICABLE FOR ANY ASSESSMENT YEAR PRIOR TO 1ST APRIL, 1962, THE DATE ON WHICH THE ACT CAME INTO FORCE AND OBSERVED THAT: ITA NOS. 1798 TO 1804/DEL/2017 RAJU VERMA 7 '11. NOW IT IS A WELL SETTLED RULE OF INTERPRETATIO N HALLOWED BY TIME AND SANCTIFIED BY JUDICIAL DECISIO NS THAT, UNLESS THE TERMS OF A STATUTE EXPRESSLY SO PROVIDE OR NECESSARILY REQUIRE IT, RETROSPECTIVE OPERATION SHOULD NOT BE GIVEN TO A STATUTE SO AS TO TAKE AWAY OR IMPAIR AN EXISTING RIGHT OR CREATE A N EW OBLIGATION OR IMPOSE A NEW LIABILITY OTHERWISE THAN AS REGARDS MATTERS OF PROCEDURE. THE GENERAL RULE AS STATED BY HALSBURY IN VOL. 36 OF THE LAWS OF ENGLAN D (3RD EDN.) AND REITERATED IN SEVERAL DECISIONS OF T HIS COURT AS WELL AS ENGLISH COURTS IS THAT ALL STATUTE S OTHER THAN THOSE WHICH ARE MERELY DECLARATORY OR WHICH RELATE ONLY TO MATTERS OF PROCEDURE OR OF EVIDENCE ARE PRIMA FACIE PROSPECTIVELY AND RETROSPECTIVE OPERATION SHOULD NOT BE GIVEN TO A STATUTE SO AS TO AFFECT, ALTER OR DESTROY AN EXISTI NG RIGHT OR CREATE A NEW LIABILITY OR OBLIGATION UNLES S THAT EFFECT CANNOT BE AVOIDED WITHOUT DOING VIOLENCE TO THE LANGUAGE OF THE ENACTMENT. IF THE ENACTMENT IS EXPRESSED IN LANGUAGE WHICH IS FAIRLY CAPABLE OF EI THER INTERPRETATION, IT OUGHT TO BE CONSTRUED AS PROSPEC TIVE ONLY.' IN COMMISSIONER OF INCOME TAX V SCINDIA STEAM NAVIGATION CO. LTD AIR 1961 SC 1633, IT WAS HELD TH AT AS THE LIABILITY TO PAY TAX IS COMPUTED ACCORDING TO T HE LAW IN FORCE AT THE BEGINNING OF THE ASSESSMENT YEAR, I .E., THE FIRST DAY OF APRIL, ANY CHANGE IN LAW UPSETTING THE POSITION AND IMPOSING TAX LIABILITY AFTER THAT DATE , EVEN IF MADE DURING THE CURRENCY OF THE ASSESSMENT YEAR, UN LESS ITA NOS. 1798 TO 1804/DEL/2017 RAJU VERMA 8 SPECIFICALLY MADE RETROSPECTIVE, DOES NOT APPLY TO THE ASSESSMENT FOR THAT YEAR. THESE PRINCIPLES WERE REITERATED IN COMMISSIONER OF INCOME TAX V VATIKA TOWNSHIP (P) LTD [2014] 367 ITR 466. 19. IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THA T THE PETITION HAS TO SUCCEED; THE IMPUGNED REASSESSMENT NOTICE AND ALL CONSEQUENT PROCEEDINGS ARE HEREBY QUASHED AND SET ASIDE. THE WRIT PETITION IS ALLOWED ; HOWEVER WITHOUT ORDER ON COSTS. 10. IN VIEW OF THE FACTS OF THE INSTANT CASE BEING IDENTICAL TO FACTS IN THE CASE OF BRAHMA DATT (SUPRA), RESPECTFU LLY FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT, THE N OTICE ISSUED UNDER SECTION 148 OF THE ACT IS HELD TO BE BARRED B Y LIMITATION AND THE REASSESSMENT PROCEEDING ARE ACCORDINGLY QU ASHED. 11. SINCE, WE HAVE ALREADY QUASHED THE REASSESSMENT PROCEEDING ON THE GROUND OF THE LIMITATION OF NOTIC E U/S 148 OF THE ACT, WE HOLD THAT THE MERITS OF THE CASE ARE NO T REQUIRED TO BE DEALT UPON. 12. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 06/10/2021. SD/- SD/- (AMIT SHUKLA) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 06/10/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS)