The ITO, Ward-1, Rajahmundry V. Shri M Raghava Reddy, Rajahmundry

ITA 186/VIZ/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7299 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-12-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 17-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Assessee Lawyers: A V RAGHURAM
• Keywords: Retrospective amendment
• Section: 142(1); 144; 139

Judgement Text

ITA NO.186 OF 09 M RAGHAVA REDDY RAJAHMUNDRY U-S 142 (1) PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 186 /VIZAG/20 09 ASSESSMENT YEAR: 2005 - 06 ITO WARD - 1, RAJAHMU NDRY VS. M. RAGHAVA REDDY, RAJAHMUNDRY (APPELLANT) (RESPONDENT) PAN NO:AVXPM 0767 R APPELLANT BY: SHRI D.S. SUNDER SINGH, DR RESPONDENT BY: SHRI A.V. RAGHU RAM, ADVOCATE ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 07.01.2009 PASSED BY LEARNED CIT(A), RAJAHMUNDRY AN D IT RELATES TO THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSMENT ORDER PASSED IN PURSUANCE OF NOTI CE ISSUED UNDER SECTION 142(1) HAVING BEEN ANNULLED BY LEARNE D CIT (A) ON THE GROUND THAT THE ISSUE OF NOTICE UNDER SECTION 142(1 ) IS BARRED BY LIMITATION, THE REVENUE IS IN APPEAL BEFORE US. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSING OFFICER NOTICED FROM THE AIR DATA THAT THE ASSESSEE HAD PURCHASED A PROPERTY FOR RS.42.12 LAKHS DURING THE FINANCIAL YE AR RELEVANT TO THE ASSESSMENT YEAR 2005-06. SINCE THE ASSESSEE HAD NO T FILED HIS RETURN OF INCOME VOLUNTARILY, THE ASSESSING OFFICER ISSUED A NOTICE TO THE ASSESSEE UNDER SECTION 142(1) OF THE ACT, CALLING F OR THE RETURN OF INCOME FOR THAT YEAR. THE SAID NOTICE WAS SERVED O N THE ASSESSEE ON ITA NO.186 OF 09 M RAGHAVA REDDY RAJAHMUNDRY U-S 142 (1) PAGE 2 OF 5 05-09-2007. SINCE THE ASSESSEE FAILED TO FURNISH T HE RETURN OF INCOME, THE ASSESSING OFFICER COMPLETED THE ASSESSM ENT TO THE BEST OF HIS JUDGMENT UNDER SECTION 144 OF THE ACT TREATI NG THE ABOVE SAID AMOUNT OF RS.42.12 LAKHS AS THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LEARNED CIT (A), INTER ALIA, ON THE GROUND THAT THE NOTICE ISSUED UN DER SECTION 142(1) AFTER THE EXPIRY OF ONE YEAR FROM THE END OF THE RE LEVANT ASSESSMENT YEAR IS BAD IN LAW. THE LEARNED CIT (A), ON A COMB INED READING OF THE PROVISIONS OF SEC. 139, 143, 144, 147 AND 153, ACCE PTED THE CONTENTIONS OF THE ASSESSEE AND ACCORDINGLY HELD TH AT THE NOTICE SERVED ON 05-09-2007 CALLING FOR THE RETURN OF INCO ME FOR THE ASSESSMENT YEAR 2005-06 WAS BAD IN LAW AND THEREFOR E ANNULLED THE ASSESSMENT FRAMED ON THAT BASIS. AGGRIEVED BY THE O RDER OF THE LEARNED CIT (A), THE REVENUE IS IN APPEAL BEFORE US . 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTE D THAT THE IMPUGNED NOTICE ISSUED UNDER SEC.142 (1) CANNOT BE HELD TO BE BAD IN LAW IN VIEW OF THE PROVISO TO SECTION 142(1). T HE SAID PROVISO STATES THAT THE NOTICE SERVED UPON THE ASSESSEE AFT ER THE END OF THE RELEVANT ASSESSMENT YEAR SHALL BE DEEMED TO HAVE BE EN SERVED IN ACCORDANCE WITH THE PROVISIONS OF SEC. 142(1). HAV ING REGARD TO THIS PROVISO, THE HON'BLE DELHI HIGH COURT, IN THE CASE OF DIRECTOR OF INCOME TAX VS. KLM ROYAL DUTCH AIRLINES, (2007) 165 TAXMANN 34 (DEL), HAS HELD THAT THE NOTICE ISSUED AFTER ONE YE AR FROM THE END OF RELEVANT PREVIOUS YEAR IS NOT BARRED BY LIMITATION. 5. ON THE CONTRARY, THE LEARNED AUTHORISED REPRESEN TATIVE SUBMITTED THAT THE DECISION OF THE DELHI HIGH COURT HAS NOT BEEN RENDERED ON MERITS, SINCE BOTH THE COUNSEL AGREED B EFORE THE COURT THAT THE NOTICE ISSUED UNDER SECTION 142(1) BEYOND A PERIOD OF ONE ITA NO.186 OF 09 M RAGHAVA REDDY RAJAHMUNDRY U-S 142 (1) PAGE 3 OF 5 YEAR FROM THE END OF THE RELEVANT PREVIOUS YEAR CAN NOT BE TAKEN AS BARRED BY LIMITATION IN VIEW OF THE PROVISO INSERTE D IN SEC.142(1). HE FURTHER SUBMITTED THAT THE RATIO OF DECISION OF HON 'BLE SPECIAL BENCH OF THE I.T.A.T. IN MOTOROLA INC. VS. D.CIT (2005) 9 5 ITD 269 (DEL) STILL HOLD GOOD EVEN AFTER THE INSERTION OF THE PROVISO I N SEC.142(1). HE DREW OUR SPECIFIC ATTENTION TO PARAGRAPH NOS. 31-37 OF THE SAID DECISION WHEREIN, THE SPECIAL BENCH HAD HELD THAT A NOTICE UNDER SEC. SECTION 142(1) CANNOT BE ISSUED AFTER THE END OF TH E RELEVANT ASSESSMENT YEAR. ACCORDING TO LEARNED A.R, THOUGH T HE DECISION IN THE MOTOROLA CASE, (SUPRA) WAS RENDERED PRIOR TO TH E INSERTION OF THE PROVISO TO SEC. 142(1), THE INTERPRETATION GIVEN BY THE SPECIAL BENCH IN THE ABOVE SAID CASE STILL HOLDS GOOD EVEN AFTER THE INSERTION OF THE SAID PROVISO. THE LEARNED AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE VARIOUS PROVISIONS OF INCOME TAX ACT HAVE TO BE CONSTRUED IN A HARMONIOUS MANNER IN ORDER TO HAVE COHERENT APPLI CATION OF THE PROVISIONS AND IN THAT REGARD THE LEARNED AUTHORISE D REPRESENTATIVE RELIED UPON THE FOLLOWING DECISIONS: I) A.C.I.T VS. SURAT ART SILK CLOTH MANUFACTURERS , 121 ITR 1(S.C) II) CIT VS. B.R. CONSTRUCTIONS, 202 ITR 222 (A.P) III) BISHAMBAR DAYAL SRINIVAS VS. CIT, 162 ITR 5( RAJ.) 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. THE LEARNED A.R HAS PLACED HEAVY RELIANCE ON THE DECISION OF THE SPECIAL BENCH IN THE CASE OF MOTOROLA INC., (SU PRA) WHICH HAS BEEN RENDERED PRIOR TO THE INSERTION OF PROVISO TO SEC. 142(1). THE SAID PROVISO WAS INSERTED BY FINANCE ACT, 2006 WITH RETROSPECTIVE EFFECT FROM 1-4-1990. THERE IS ALSO NO DISPUTE THE PROVISIONS OF SEC. 142(1) DO NOT SPECIFY ANY PARTICULAR TIME LIMIT FOR ISSUING NOTICE UNDER THAT SECTION. HENCE, THE SPECIAL BENCH IN THE CASE OF MOTOROLA INC ITA NO.186 OF 09 M RAGHAVA REDDY RAJAHMUNDRY U-S 142 (1) PAGE 4 OF 5 (SUPRA), ON A CONSIDERATION OF SEC. 142(1) VIS--VI S SEC. 148, HELD THAT A NOTICE UNDER SECTION 142(1)(I) CANNOT BE ISSUED A FTER THE END OF THE RELEVANT ASSESSMENT YEAR. AS STATED EARLIER, THE P ROVISO TO SEC. 142(1) WAS NOT AVAILABLE IN THE STATUTE WHEN THE DE CISION OF THE SPECIAL BENCH WAS RENDERED. SUBSEQUENTLY, THE FINA NCE ACT, 2006 HAS INSERTED THE SAID PROVISO WITH RETROSPECTIVE EFFECT FROM 1.4.1990. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE SAID PROVISO. PROVIDED THAT WHERE ANY NOTICE HAS BEEN SERVED UND ER THIS SUB SECTION FOR THE PURPOSES OF THIS CLAUSE AF TER THE END OF THE RELEVANT ASSESSMENT YEAR COMMENCING ON O R AFTER THE 1 ST DAY APRIL, 1990 TO A PERSON WHO HAS NOT MADE A RETURN WITHIN THE TIME ALLOWED UNDER SUB-SECTION (1) OF SECTION 139 OR BEFORE THE END OF THE RELEVANT ASSES SMENT YEAR, ANY SUCH NOTICE ISSUED TO HIM SHALL BE DEEMED TO HAVE BEEN SERVED IN ACCORDANCE WITH THE PROVISIONS OF THIS SUB-SECTION. ON A PLAIN READING OF THE ABOVE SAID PROVISO, ONE C AN NOTICE THAT A NOTICE SERVED UNDER SECTION 142(1) AFTER THE END OF THE RELEVANT ASSESSMENT YEAR SHALL BE DEEMED TO HAVE BEEN SERVED IN ACCORDANCE WITH THE PROVISIONS OF SEC. 142(1). THUS THE DECIS ION RENDERED BY THE SPECIAL BENCH IN THE CASE OF MOTOROLA INC., (SUPRA) HAS BEEN NULLIFIED BY THE INSERTION OF THE PROVISO. IN THE INSTANT CAS E, THE IMPUGNED NOTICE UNDER SECTION 142(1) HAS BEEN SERVED UPON TH E ASSESSEE ON 05-09-2007, I.E. AFTER THE INSERTION OF THE PROVISO CITED ABOVE. HENCE, IN OUR VIEW, THE SAID NOTICE SHALL BE DEEMED TO HAV E BEEN VALIDLY SERVED IN ACCORDANCE WITH THE PROVISIONS OF SEC. 14 2(1). IN VIEW OF THE PROVISO, WHICH VALIDATES THE TYPE OF NOTICE SPE CIFIED THEREIN BY A DEEMING PROVISION, WE ARE UNABLE TO AGREE WITH THE VIEWS EXPRESSED BY THE LEARNED CIT(A) ON THIS LEGAL ISSUE AND ACCOR DINGLY SET ASIDE THE SAME. ITA NO.186 OF 09 M RAGHAVA REDDY RAJAHMUNDRY U-S 142 (1) PAGE 5 OF 5 7. WE NOTICE FROM THE ORDER OF LEARNED CIT(A) T HAT THE FIRST APPELLATE AUTHORITY DID NOT ADJUDICATE ANY OTHER GR OUNDS THAT WERE RAISED BEFORE HIM, SINCE SHE HAD DECIDED THE LEGAL ISSUE DISCUSSED ABOVE IN FAVOUR OF THE ASSESSEE. SINCE WE HAVE REV ERSED THE SAID DECISION, THE OTHER GROUNDS RAISED BEFORE THE LEARN ED CIT(A) NEED TO BE ADJUDICATED. ACCORDINGLY WE SET ASIDE THE CASE T O THE FILE OF LEARNED CIT(A) IN ORDER TO ENABLE HER TO ADJUDICATE OTHER GROUNDS. 8. IN THE RESULT, THE APPEAL OF THE APPEAL OF THE R EVENUE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 4 TH JANUARY, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT M EMBER PVV/SPS VISAKHAPATNAM, DATE: 04-01-2011 COPY TO 1 THE INCOME TAX OFFICER, WARD-1, AAYKAR BHAVAN, KA MBALA CHERUVU,RAJAHUNDRY 2 SRI M. RAGHAVA REDDY, 36 - 28/1 INNISPET, RAJAHMUNDRY 533101 3 4. THE CIT RAJAHMUNDRY THE CIT(A)RAJAHMUNDRY, 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM