SHRI MAHESH K. DHIRMALANI, MUMBAI V. THE ADDL CIT CEN RG, THANE, THANE

ITA 1918/MUM/2007

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3685 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 31-12-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 05-03-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Invalid notice; Period of limitation; Capital receipt; Time period of passing order
• Section: 142(1); 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUM BAI . . , , !' #$, % , & BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.1918 /MUM/2007 ( %' ( / ASSESSMENT YEAR: 2002-03) MAHESH K. DHIRMALANI FLAT NO.1103 & 1104, ASCONA, A- WING, RAHEJA GARDEN, TEEN HATH NAKA THANE (W) - 400604 ' / VS. ADDL. CIT, CENTRAL RANGE, THANE, INCOME TAX OFFICE, PAWAR COMPOUND, CHARAI THANE (W) ./ ./ PAN/GIR NO. : ADKPD5616N ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 10.05.2016 !' /DATE OF PRONOUNCEMENT: 12.08.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 23.01.2007 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) I, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE A.Y.2002-03. ASSESSEE BY: SHRI SUBODH RATNAPARKHI DEPARTMENT BY: SHRI B.C.S.NAIK (CIT-DR) ITA NO.1918/M/2007 A.Y. 2002-03 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD. CIT(APPEALS) ERRED IN NOT APPRECIATING THAT AS THE NOTICE U/S.143(2) HAD BEEN SERVED ON THE APPELLANT BEYOND THE TIME LIMIT PRESCRIBED UNDER THE PROVISO TO SE. 143(2)(II), THE SAME WAS BAD-IN-LAW AND HENCE THE ASSESSMENT FR AMED U/S.143(3) R.W.S. 153A OF THE I.T.ACT IN PURSUANCE OF SUCH INVALID NOTICE WAS ALSO BAD IN LAW BEING VOID-AB-IN ITO AND WAS THEREFORE REQUIRED TO BE QUASHED ON THAT COUNT. THE APPELLANT PRAYS THAT THE ASSESSMENT MAY BE HELD TO BE NULL AND VOID. 2. THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE ADD ITION OF RS.15,00,000/- MADE ON ACCOUNT OF THE APPELLANT REC EIVING THE SAID AMOUNT ON SURRENDER OF RIGHT TO CARRY ON T HE PROFESSION OF INCOME TAX/SALES TAX CONSULTANCY AS W ELL AS FOR NON-COMPETE CONVENANT, BY HOLDING THAT THE SAME WAS A TRANSACTION OF SLUMP SALE LIABLE TO TAX UNDER THE PROVISION OF SECTION 50B OF THE I.T.ACT. THE ADDIT ION CONFIRMED ON THE ABOVE COUNT MAY PLEASE BE DELETED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E SHRI MAHESH K. DHIRMALAN WAS DERIVING INCOME FROM HOUSE PROPERTY A ND FROM BUSINESS. ORIGINAL RETURN OF INCOME FOR A.Y.2002-0 3 WAS FILED BY THE ASSESSEE ON 31.10.2002 BY DECLARING INCOME TO THE TUNE OF RS.3,73,894/-. THE RETURN WAS ACCEPTED. THE ASSESS EES RESIDENTIAL PREMISES WERE SEARCHED U/S.132 OF THE INCOME TAX AC T, 1961 ( IN SHORT THE ACT) ON 31.10.2003 ALONG WITH OTHER GRO UP CASES. THE ASSESSEE WAS ASSESSED TO INCOME TAX BY ITO, WARD 3( 2), THANE. THE CASE WAS ASSESSED TO INCOME TAX BY ITO, WARD 3(2), THANE. THE CASE WAS ASSIGNED TO ACIT, CENTRAL CIRCLE 3, THANE VIDE CIT-III, THANES ORDER NO.THN/CIT-II/ASSIGN/2003-04/2263 DATED 30.01 .2004. ITA NO.1918/M/2007 A.Y. 2002-03 3 FURTHER, THE CASE WAS TRANSFERRED TO THE ADDL. CIT, CENTRAL RANGE, THANE, VIDE CIT(C), PUNES ORDER NO. PN/CIT(C)/ASSI GN JURIS/ 2005- 06/ 1454 DATED 08.12.2005. NOTICE U/S.153A(A) OF T HE ACT WAS ISSUED BY ACIT, CENTRAL CIRCLE 3, THANE ON 12.04.2004 WH ICH WAS SERVED ON 27.04.2004 .IT WAS REQUESTED THAT THE ASSESSEE S HOULD PREPARE A TRUE AND CORRECT RETURN OF HIS TOTAL INCOME INCLUDI NG UNDISCLOSED INCOME FOR THE A.Y. WITHIN 30 DAYS OF THE RECEIPT. IN RESPONSE TO THIS NOTICE, THE ASSESSEE HAS FILED RETURN OF INCOME OF RS.3,73,890/- IN FORM NO.2D ON 23.07.2004. THEREAFTER, NOTICES U/S. 143(2) AND 142(1) ALONG WITH QUESTIONNAIRE WERE ISSUED AND SE RVED UPON THE ASSESSEE. THEREAFTER THE INCOME OF THE ASSESSEE WA S ASSESSED TO THE TUNE OF RS.18,79,519/-. THE ASSESSEE WAS NOT SATIS FIED WITH THE ADDITION, THEREFORE FILED THE APPEAL BEFORE THE CIT (A) WHO DISMISSED THE APPEAL OF THE ASSESSEE, THEREFORE THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE BEFORE US. ISSUE NO.1:- 4. UNDER THIS ISSUE THE LEARNED REPRESENTATIVE OF T HE ASSESSEE HAS RAISED THE CONTENTION THAT NOTICE U/S.143(2) OF THE ACT WAS SERVED UPON THE ASSESSEE BEYOND THE TIME LIMIT PRESCRIBED UNDER THE PROVISO TO SECTION 143(2)(II) OF THE ACT, THEREFORE THE NOTIC E U/S.143(3) R.W.S. 153A OF THE ACT IS WRONG AGAINST LAW AND FACTS. I N SUPPORT OF THIS CONTENTION THE LEARNED REPRESENTATIVE OF THE ASSESS EE HAS PLACED RELIANCE UPON THE LAW SETTLED BY HONBLE HIGH COURT OF GAUHATI IN ITA NO.1918/M/2007 A.Y. 2002-03 4 SMT. BANDANA GOGOI VS. COMMISSIONER OF INCOME TAX & ANR. (2007) 289 ITR 28 (GAU). 5. HOWEVER, ON THE OTHER HAND THE LEARNED REPRESENT ATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION AND ARGU ED THAT THE NOTICE U/S.143(2) OF THE ACT IS DIRECTORY IN NATURE AND IS NOT MANDATORY, THEREFORE THE ASSESSMENT IS NOT BAD IN LAW IN VIEW OF THE LAW SETTLED IN INCOME TAX APPELLATE TRIBUNAL, THIRD MEMBER IN CASE OF SMT. SUMANLATA BANSAL IN ITA NOS.525 TO 530/MUM/2008 FOR THE A.Y.1999-2000 TO 2005-06. BY GIVING THE CAREFUL TH OUGHTS TO THE CONTENTION RAISED BY THE LD REPRESENTATIVE OF THE P ARTIES AND PERUSING THE RECORD CAREFULLY IT CAME INTO NOTICE THAT MATTE R OF CONTROVERSY HAS DULY BEEN SETTLED BY THE INCOME TAX APPELLATE TRIBU NAL, MUMBAI THIRD MEMBER CASE OF SMT. SUMANLATA BANSAL (SUPRA) WHICH SPEAKS THAT THE ASSESSMENT PROCEEDING U/S.153A CANNOT BE H ELD AS NULL AND VOID FOR NON-ISSUANCE OF NOTICE U/S.143(2) OF THE A CT AS NOT ATTRACTED TO PROCEEDINGS U/S.153A OF THE ACT. 6. SINCE IN THIS ISSUE THE ASSESSEE HAS CHALLENGED THE ORDER IN QUESTION ON ACCOUNT OF NON-ISSUANCE OF NOTICE U/S.1 43(2) OF THE ACT WITHIN THE LIMITATION PERIOD, THEREFORE, IN THE SAI D CIRCUMSTANCES AND BY RELYING UPON THE ABOVE SAID LAW, WE ARE OF THE VIEW THAT THE ASSESSMENT IS NOT BAD ON ACCOUNT OF NON-ISSUANCE OF NOTICE U/S.143(2) OF THE ACT. HENCE THIS ISSUE IS DECIDED IN FAVOUR OF THE REVENUE AGAINST THE ASSESSEE. ITA NO.1918/M/2007 A.Y. 2002-03 5 ISSUE NO.2:- 7. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.15,00,000/- MADE ON ACCOUNT OF THE APPELLANT REC EIVING THE SAID AMOUNT ON SURRENDER OF RIGHT TO CARRY ON THE PROFES SION OF INCOME TAX/SALES TAX CONSULTANCY AS WELL AS FROM NON-COMPE TE CONVENANT, BY HOLDING THAT THE SAME WAS A TRANSACTION OF SLUMP S ALE LIABLE TO TAX UNDER THE PROVISION OF SECTION 50B OF THE ACT. BUT THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THIS ISSUE IS SQUARELY COVERED IN CASE DECIDED BY THE INCOME TAX APPELLATE TRIBUNAL, DELHI SPECIAL BENCH CASE OF SHRI SAURABH SRIVASTAVA VS. D Y. COMMISSIONER OF INCOME TAX CIRCLE 46(1) WHERE IT IS HELD THAT T HE NON-COMPETE FEES RECEIVED BY THE ASSESSEE FROM F.I.PL. UK BEING IN T HE NATURE OF A CAPITAL RECEIPT IS NOT LIABLE TO TAX. THEREFORE, I N VIEW OF THE SAID CIRCUMSTANCES AND SPECIFICALLY IN VIEW OF THE ABOVE MENTIONED LAW, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSU E AND THEREFORE DIRECT THE ASSESSING OFFICER TO RE-ASSESS THE TAX O N THIS ISSUE. IN VIEW OF THE FINDING IN CASE DECIDED BY THE INCOME TAX AP PELLATE TRIBUNAL IN CASE OF SHRI SAURABH SRIVASTAVA (SUPRA). ACCORD INGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVEN UE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY PARTLY ALLOWED . ITA NO.1918/M/2007 A.Y. 2002-03 6 ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST , 2016. SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 12 TH AUGUST, 2016 MP MP MP MP * +%'#, -,(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ' / BY ORDER, - & //TRUE COPY// ./$ ! /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI