Myung Hwan Lee, Dehradun V. ADIT (International Taxation), Dehradun

ITA 2101/DEL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5957 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-07-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 18-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURINDER PAL SENIOR
• Assessee Lawyers: S D KAPILA SHRI R R MAURYA
• Keywords: Salary income; Assessment record; Reassessment proceedings
• Section: 147; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE HONBLE PRESIDENT, SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2100/DEL./2016 (ASSESSMENT YEAR : 2005-06) ITA NO.2101/DEL./2016 (ASSESSMENT YEAR : 2006-07) MYUNG HWAN LEE, VS. ADIT, EMPLOYEE OF HYUNDAI HEAVY INDUSTRIES CO. LTD., INT ERNATIONAL TAXATION, C/O HEMANT ARORA & CO. CAS, DEHRADUN. 1, TYAGI ROAD, DEHRADUN 248 001. (PAN : ACAPL0036H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.D. KAPILA, ADVOCATE SHRI R.R. MAURYA, ADVOCATE REVENUE BY : SHRI SURINDER PAL, SENIOR DR DATE OF HEARING : 15.05.2018 DATE OF ORDER : 25.05.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : SINCE COMMON QUESTIONS OF FACTS AND LAW HAVE BEEN R AISED IN BOTH THE AFORESAID APPEALS, THE SAME ARE BEING D ISPOSED OF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DI SCUSSION. 2. THE APPELLANT, MYUNG HWAN LEE (HEREINAFTER REFER RED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL, SOUGH T TO SET ASIDE THE ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 2 IMPUGNED ORDERS BOTH DATED 15.02.2016 PASSED BY LD. CIT (APPEALS)-2, NOIDA ON THE GROUNDS INTER ALIA THAT : - ITA NO.2100/DEL/2065 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE REASSESSMENT ORDER PASSED U/S 147 R.W .S. 148 BY THE LD. ASSESSING OFFICER {'LD. AD ,}, INTER ALI A, BECAUSE: 1.1. THE RE-ASSESSMENT PROCEEDINGS WERE WITHOUT JURISDICTION, THERE BEING, UNDISPUTEDLY, NO SERVICE OF NOTICE U/S 148 OF THE ACT ON THE APPELLANT. 1.2. THAT A MERE OPPORTUNITY TO INSPECT THE ASSESSM ENT RECORD PROVIDED BY THE LD. AO TO THE COUNSEL OF THE APPELLANT DOES NOT MEET THE REQUIREMENTS OF SECTION 148 IN SO FAR AS A VALID SERVICE OF NOTICE IS CONCERNED. 1.3. THAT IN THE ABSENCE OF ANY SERVICE OF NOTICE U /S 148 THERE WAS NO JURISDICTION WITH THE LD. AO TO INITIA TE, PROCEED WITH AND COMPLETE RE-ASSESSMENT PROCEEDINGS. 3. THAT WITHOUT PREJUDICE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE C IT(A) HAS ERRED IN UPHOLDING THAT THE LD. AO AT DEHRADUN HAD THE JURISDICTION TO MAKE A REASSESSMENT U/S 147 OF THE ACT INTER ALIA BECAUSE: 2.1. IT IS AN UNDISPUTED FACT THAT THE JURISDICTION AL AO I.E. ACIT INTERNATIONAL TAXATION, DEHRADUN NEVER ISSUED ANY NOTICE U/S 148, LEAVE ALONE THE FACT WHETHER OR NOT ANY NOTICE WAS EVER SERVED ON THE APPELLANT. 2.2. THE VERY FOUNDATION OF THE JURISDICTION TO MA KE A REASSESSMENT IS THE ISSUE AND SERVICE ON THE ASSESS EE OF A VALID NOTICE U/S 148 READ WITH SECTION 147 AND IN T HE PRESENT CASE THE ALLEGED NOTICE DATED 28.3.12 ISSUED U/S 14 8 BY ITO 16(2) MUMBAI DOES NOT SATISFY THE TEST OF VALID ISS UANCE OF A NOTICE BY JURISDICTIONAL AO. 2.3. THE ITO 16(2) MUMBAI HAD NO JURISDICTION 111 THE MATTER A FACT THAT REMAINS UNCONTROVERTED BY THE RE VENUE. ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 3 2.4. THAT THE ALLEGED NOTICE DATED 28.3.12 ISSUED U/S 148 HAS NOT BEEN SERVED ON THE APPELLANT AT ANY STATE A ND REMAINS ON THE FILE OF THE REVENUE TILL DATE. 3. THAT THE HON'BLE CIT(A) HAS ERRED IN LAW AND OF FACTS BY NOT APPRECIATING THE FACT THAT THE LD. AO DID NOT FOLLOW THE APEX COURT LAID DOWN PROCEDURE WITH REGA RDS TO RE-OPENING OF ASSESSMENT IN SO FAR AS NEITHER WERE THE REASONS FOR RE-OPENING FURNISHED TO THE APPELLANT N OR WERE THE APPELLANT'S OBJECTIONS AGAINST NON-SERVICE OF A NY NOTICE U/S 148 MET WITH BY THE LD. AO. THE LD. AO HAS CLEA RLY VIOLATED THE PROCEDURE LAID DOWN BY THE HON'BLE SUP REME COURT IN GKN DRIVESHAFT'S CASE IN 259 ITR 19 (SC) A ND ON THIS SCORE ALONE THE RE-ASSESSMENT ORDER DESERVES T O BE CANCELLED. 4. THAT WITHOUT PREJUDICE, THE LD. AO HAS ERRED IN NOT APPRECIATING THE FACTS THAT THE APPELLANT WAS A NON -RESIDENT FOREIGN EXPATRIATE WORKING AS A GENERAL MANAGER WIT H THE INDIAN LIAISON OFFICE OF HYUNDAI HEAVY INDUSTRIES COMPANY LIMITED AND WAS A MAN WITH SUFFICIENT MEANS , THE MERE FACT THAT IN ONE PARTICULAR YEAR HIS TAXABLE S ALARY INCOME WAS LESSER THAN THE TOTAL FEE PAID BY HIM TO THE SCHOOL THAT BY ITSELF COULD NOT BE A REASON TO BELI EVE THAT THERE WAS AN ESCAPEMENT OF INCOME CHARGEABLE TO TAX WITHIN THE MEANING OF SECTION 147 OF THE ACT. ITA NO.2101/DEL/2016 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. AO HAS ERRED IN MAKING AN ADDITION OF RS.33,63, 559/- ON ACCOUNT OF SCHOOL FEE PAID BY THE APPELLANT FOR HIS SON AS AGAINST THE ACTUAL AMOUNT OF THE SCHOOL FEE OF RS.8 ,22,213/-. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE REASSESSMENT ORDER PASSED U/S 147 R.W .S. 148 BY THE LD. ASSESSING OFFICER {'LD. AO '}, INTER ALI A, BECAUSE: 2.1. THE RE-ASSESSMENT PROCEEDINGS WERE WITHOUT JURISDICTION, THERE BEING, UNDISPUTEDLY, NO SERVICE OF NOTICE U/S 148 OF THE ACT ON THE APPELLANT. 2.2. THAT A MERE OPPORTUNITY TO INSPECT THE ASSESS MENT RECORD PROVIDED BY THE LD. AO TO THE COUNSEL OF THE ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 4 APPELLANT DOES NOT MEET THE REQUIREMENTS OF SECTION 148 IN SO FAR AS A VALID SERVICE OF NOTICE IS CONCERNED. 2.3. THAT IN THE ABSENCE OF ANY SERVICE OF NOTICE U /S 148 THERE WAS NO JURISDICTION WITH THE LD. AO TO INITIA TE, PROCEED WITH AND COMPLETE RE-ASSESSMENT PROCEEDINGS. 3. THAT WITHOUT PREJUDICE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE C IT(A) HAS ERRED IN UPHOLDING THAT THE LD. AO AT DEHRADUN HAD THE JURISDICTION TO MAKE A REASSESSMENT U/S 147 OF THE ACT INTER ALIA BECAUSE: 3.1. IT IS AN UNDISPUTED FACT THAT THE JURISDICTION AL AO I.E. ACIT INTERNATIONAL TAXATION, DEHRADUN NEVER ISSUED ANY NOTICE U/S 148, LEAVE ALONE THE FACT WHETHER OR NOT ANY NOTICE WAS EVER SERVED ON THE APPELLANT. 3.2. THE VERY FOUNDATION OF THE JURISDICTION TO MA KE A REASSESSMENT IS THE ISSUE AND SERVICE ON THE ASSESS EE OF A VALID NOTICE U/S 148 READ WITH SECTION 147 AND IN T HE PRESENT CASE THE ALLEGED NOTICE DATED 28.3.12 ISSUED U/S 14 8 BY ITO 16(2) MUMBAI DOES NOT SATISFY THE TEST OF VALID ISS UANCE OF A NOTICE BY JURISDICTIONAL AO. 3.3. THE ITO 16(2) MUMBAI HAD NO JURISDICTION IN T HE MATTER A FACT THAT REMAINS UNCONTROVERTED BY THE REVENUE. 3.4. THAT THE ALLEGED NOTICE DATED 28.3.12 ISSUED U/S 148 HAS NOT BEEN SERVED ON THE APPELLANT AT ANY STATE A ND REMAINS ON THE FILE OF THE REVENUE TILL DATE. 4. THAT THE HON'BLE CIT(A) HAS ERRED IN LAW AND OF FACTS BY NOT APPRECIATING THE FACT THAT THE LD. AO DID NOT FOLLOW THE APEX COURT LAID DOWN PROCEDURE WITH REGA RDS TO RE-OPENING OF ASSESSMENT IN SO FAR AS NEITHER WERE THE REASONS FOR RE-OPENING FURNISHED TO THE APPELLANT N OR WERE THE APPELLANT'S OBJECTIONS AGAINST NON-SERVICE OF A NY NOTICE U/S 148 MET WITH BY THE LD. AO. THE LD. AO HAS CLEA RLY VIOLATED THE PROCEDURE LAID DOWN BY THE HON'BLE SUP REME COURT IN GKN DRIVESHAFT'S CASE IN 259 ITR 19 (SC) A ND ON THIS SCORE ALONE THE RE-ASSESSMENT ORDER DESERVES T O BE CANCELLED. ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 5 5. THAT WITHOUT PREJUDICE, THE LD. AO HAS ERRED IN NOT APPRECIATING THE FACTS THAT THE APPELLANT WAS A NON -RESIDENT FOREIGN EXPATRIATE WORKING AS A GENERAL MANAGER WIT H THE INDIAN LIAISON OFFICE OF HYUNDAI HEAVY INDUSTRIES COMPANY LIMITED AND WAS A MAN WITH SUFFICIENT MEANS , AND THAT IN THE FINANCIAL YEAR 2005-06 RELEVANT TO AY 2006- 07, THE APPELLANT HAS EARNED AND OFFERED TO TAX SAL ARY INCOME OF RS.17,79,500/- IN INDIA, AND THAT THE PAY MENT OF TUITION FEE OF RS.8,22,213/- FOR HIS SON, MASTER JI WON, COULD HAVE BEEN EASILY COVERED BY HIS SALARY INCOME ALONE. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : ASSESSEE IS AN EMPLOYEE O F HYUNDAI HEAVY INDUSTRIES CO. LTD.. FROM THE AIR INFORMATIO N, ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PAID AN AMOUN T OF RS.8,22,213 AS SCHOOL FEE OF HIS WARD (JI WON) AND HAS FURTHER MADE PAYMENT OF RS.33,63,559/- AS SCHOOL FEE DURING AYS 2005-06 & AY 2006- 07 RESPECTIVELY. HENCE, CASE WAS REOPENED UNDER SE CTION 147 OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) FOR BOTH THE ASSESSMENT YEARS 2005-06 AND 2006-07. ASSESSEE HAS NOT FILED FRESH RETURN IN COMPLIANCE TO THE NOTICE U/S 148 OF THE ACT. AO PROCEEDED TO HOLD THAT IN AY 2005-06, ASSESSEE FILE D RETURN DECLARING INCOME OF RS.17,74,900/- (SALARY INCOME) WHICH WAS FILED BY NON-RESIDENT COMPANY AS AN AGENT OF MR. M. H. LEE. OUT OF THE SALARY INCOME OF RS.17,74,900/-, AMOUNT OF R S.6,12,000/- WAS OFFERED AS PERQUISITES LEAVING AN AMOUNT OF RS. 11,62,900/- AS SALARY IN THE HANDS OF ASSESSEE ON WHICH HE HAS PAI D AN AMOUNT OF RS.5,68,259/- AS INCOME-TAX. SO, AFTER MAKING PAYM ENT OF ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 6 RS.5,68,259/-, AN AMOUNT OF RS.5,94,641/- WAS LEFT WITH THE ASSESSEE DURING AY 2005-06 TO MEET WITH ITS HOUSEHO LD AND OTHER EXPENSES WHEREAS HE HAS PAID AN AMOUNT OF RS.8,22,2 13/- AS SCHOOL FEE DURING THE YEAR. ON FAILURE OF THE ASSESSEE TO BRING ON RECORD, THE EVIDENCE FOR AVAILABILITY OF FUNDS, ADDITION OF RS.8,22,213/- IS MADE U/S 68 OF THE ACT FOR AY 2005-06. 3. SIMILARLY, ASSESSEES RETURN OF INCOME OF RS.17, 79,500/- FOR AY 2006-07 WAS FILED BY NON-RESIDENT COMPANY OUT OF WHICH AMOUNT OF RS.4,62,000/- WAS OFFERED AS PREREQUISITE S AND ON THE REMAINING AMOUNT OF RS.13,17,500/-, ASSESSEE PAID T AX OF RS.5,42,880/- AS INCOME-TAX AND HAS LEFT WITH AN AM OUNT OF RS.7,74,620/-. HOWEVER, THE ASSESSEE HAS PAID AN A MOUNT OF RS.33,63,559/- AS SCHOOL FEE. AO PROCEEDED TO CONC LUDE THAT IT IS MOST UNLIKELY THAT THE ASSESSEE HAS FUNDS TO MAKE T HIS INVESTMENT FOR WHICH NO EVIDENCE HAS BEEN BROUGHT ON RECORD AN D CONSEQUENTLY ADDITION OF RS.33,63,559/- IS MADE U/S 68 OF THE ACT FOR AY 2006-07. 4. ASSESSEE CARRIED THE MATTER BY WAY OF APPEALS BE FORE THE LD. CIT (A) WHO HAS CONFIRMED THE ADDITIONS BY DISMISSI NG THE APPEALS. FEELING AGGRIEVED, THE ASSESSEE HAS COME U P BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEALS. ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 7 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. UNDISPUTEDLY, THE ASSESSEE IS A KOREAN NATIONAL WORKING WITH HYUNDAI HEAVY INDUSTRIES CO. LTD.. IT IS ALSO NOT IN DISPUTE THAT ASSESSMENT WAS REOPENED ON THE BASIS OF INFORM ATION GATHERED FROM AIR BY THE AO. IT IS ALSO NOT IN DISPUTE THAT NOTICE U/S 148 WAS ISSUED BY ITO 16 (2), MUMBAI. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS FILED RETURN OF INCOME AT RS.17,74 ,900/- AND RS.17,79,500/- FOR AY 2005-06 & 2006-07 RESPECTIVEL Y AND HAS NOT PREFERRED TO FILE THE RETURN AFTER ISSUANCE OF THE NOTICE U/S 148 OF THE ACT. 7. THE FIRST CONTENTION RAISED BY THE LD. AR FOR TH E ASSESSEE CHALLENGING THE ADDITIONS MADE BY AO FOR AYS 2005-0 6 & 2006- 07 AND CONFIRMED BY LD. CIT (A) IS THAT NO VALID NO TICE U/S 148 OF THE ACT HAS BEEN ISSUED OR SERVED UPON THE ASSESSEE AND AS SUCH, THE AO WAS HAVING NO JURISDICTION TO INITIATE AND C OMPLETE THE REASSESSMENT PROCEEDINGS. 8. UNDISPUTEDLY, THE ASSESSEE IS A KOREAN CITIZEN W ORKING WITH HYUNDAI HEAVY INDUSTRIES CO. LTD. (HHI), KOREAN WAS ON DEPUTATION WITH HHI LIAISON OFFICE, MUMBAI DURING T HE PERIOD ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 8 DECEMBER 2004 TO DECEMBER 2007. IT IS ALSO NOT IN DISPUTE THAT FIRST NOTICE UNDER SECTION 148 WAS ISSUED BY INCOME -TAX OFFICER - 16(2), MUMBAI ON 28.03.2012 BY REGISTERED POST AT T HE ADDRESS FLAT NO.2, 4 TH FLOOR, SURAJ APARTMENTS, 71, BHULABHAI DESAI ROAD, MUMBAI WHICH WAS RETURNED WITH POSTAL REMARKS LEFT . IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS FILED HIS RETU RN OF INCOME FOR AYS 2005-06 AND 2006-07 WITH AO, DEHRADUN HAVING BE EN PROCESSED U/S 143(1). IT IS ALSO NOT IN DISPUTE TH AT A NOTICE DATED 25.10.2012 U/S 142 (1) OF THE ACT WAS SERVED UPON O N MR. LAXMAN DAGA WHO WAS THE EARLIER LANDLORD OF ASSESSEE WHO H AS FORWARDED THE SAME TO HHI ON 12.11.2012 INTIMATING ITO, WARD NO.16 (2) VIDE LETTER DATED 03.12.2012 THAT THE ASSESSEE IS A SSESSED TO TAX WITH ADIT, INTERNATIONAL TAXATION, DEHRADUN U/S 2 (7A) O F THE ACT. IT IS ALSO NOT IN DISPUTE THAT THE THEN ITO, MUMBAI TRANS FERRED ASSESSEES CASE TO AO, DEHRADUN WHO HAS ISSUED THE NOTICE DATED 05.03.2013 U/S 142 (1) WHICH WAS SERVED UPON M/S. H EMANT ARORA AND COMPANY, COUNSEL OF HHI. 9. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCU MSTANCES OF THE CASE, ORDER PASSED BY LD. REVENUE AUTHORITIES B ELOW, ARGUMENTS ADVANCED BY LD. AR FOR THE PARTIES, THE SOLE QUESTI ON ARISES FOR DETERMINATION IN THIS CASE IS :- ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 9 AS TO WHETHER A VALID NOTICE WAS ISSUED TO THE ASS ESSEE U/S 148 OF THE ACT FOR REOPENING OF THE ASSESSMENT FOR AYS 2005-06 AND 2006-07? 10. THE LD. AR FOR THE ASSESSEE BROUGHT ON RECORD V IDE NOTIFICATION NO.9579 DATED 05.08.1994 CONFERRING JU RISDICTION IN RESPECT OF FOREIGN COMPANIES AND EMPLOYEES OF NON-R ESIDENT COMPANIES WHICH IS EXTRACTED FOR READY PERUSAL AS U NDER :- SECTION 120 IN EXERCISE OF THE POWERS CONFERRED UNDER SECTION 1 20 OF THE INCOME-TAX ACT, 1961 (43 OF 1961) AND OF ALL OTHER POWERS ENABLING IT IN THIS BEHALF, THE CENTRAL BOARD OF DI RECT TAXES MAKES THE FOLLOWING AMENDMENT TO ITS NOTIFICATION N O. 6587 (F. NO. 187/1/86-ITA-I) DT. 6 TH FEBRUARY, 1986 : THE OFFICERS MENTIONED IN COLS. 3, 4 AND 5 SHALL EX ERCISE JURISDICTION IN RESPECT OF PERSONS AS SPECIFIED IN COL. 2 AGAINST SI. NOS. 1 AND 2. SL. NO. PERSONS DY.CIT CIT(A) CIT 1. F OREIGN COMPANIES/ CON C ERNS /JOINT VENTURES WHICH ARE E NGAGED BY THE OIL & NATURAL GAS CORPORATION LTD., THEIR SUB- CONTRACTORS AND ASSIGNEES FOR THE PURPOSE OF RENDERING INDUSTRIAL / COMMERCIAL WORKS INCLUDING TECHNICAL OR OTHER SERVICES, ROYALTY, ETC., IN RELATION TO ITS OPERATIONS AT VARIOUS PLACES IN INDIA OR IN RELATION TO ITS OFFSHORE OPERATIONS IN ACCORDANCE WITH THE AGREEMENT/WORK ORDERS, ETC., BETWEEN ONGC LT D. AND SUCH FOREIGN COMPANIES/ CONCERNS/JOINT VENTURES/SUB-CONTRACTORS/ ASSIGNEES, ETC. DY.CIT SPL. RANGE-I DEHRADUN U.P. CIT (A) DEHRADUN CIT MEERUT ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 10 2. EMPLOYEES OF NON- RESIDENT COMPANIES/ CONCERNS INCLUDING EMPLOYEES OF THE NON- RESIDENT, AFFILIATES AND SUB- CO TRACTORS OF U. P. SUCH ON-RESIDENT COMPANIES/ CONCERNS WHICH ARE ENGAGED MAINLY BY THE OIL & NATURAL GAS CORPN. LTD. FOR THE PURPOSE OF RENDERING INDUSTRIAL / COMMERCIAL WORKS, IN CL UDING TECHNICAL OR OTHER SERVICES, ROYALTY ETC. IN RELATION TO ITS OPERATIONS AT VARIOUS PLACES IN INDIA OR IN RELATION TO ITS OFFSHORE OPERATIONS IN ACCORDANCE WITH THE AGREEMENT BETWEEN ONGC LTD. AND SUCH NON-RESIDENT COMPANIES/ CONCERNS/SUB- CONTRACTORS/ASSIGNEES/JOINT VENTURES, ETC. DY.CIT SPL. RANGE-I DEHRADUN U.P. CIT (A) DEHRADUN CIT MEERUT THIS NOTIFICATION SHALL TAKE EFFECT FROM 1ST FEBRUA RY, 1994. 11. BARE PERUSAL OF NOTIFICATION (SUPRA) GOES TO PR OVE THAT DEPUTY CIT, SPECIAL RANGE 1, DEHRADUN, UP ONLY HAS THE JURISDICTION FOR ASSESSMENT UNDER THE ACT IN CASE O F ASSESSEE WHO IS EMPLOYEE OF NON-RESIDENT COMPANY I.E. HYUNDAI HEAVY INDUSTRIES CO. LTD.. 12. FIRST OF ALL, NOTICE U/S 148 DATED 28.03.2012, AVAILABLE AT PAGE 37 OF THE PAPER BOOK, WAS ISSUED TO THE ASSESS EE AT ADDRESS I.E. FLAT NO.2, 4 TH FLOOR, SURAJ APARTMETS, 71, B.D. ROAD, MUMBAI-26 WHICH WAS RECEIVED BACK UNSERVED AS PER POSTAL REPO RT, AVAILABLE AT ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 11 PAGES 38 & 39 OF THE PAPER BOOK WITH THE REMARKS L EFT. ASSESSEE HAD FILED RETURN OF INCOME FOR AY 2005-06 ON 26.09. 2005 AND NOTICE DATED 28.03.2012 ISSUED U/S 148 OF THE ACT W AS RETURNED BY THE POSTAL AUTHORITIES WITH REMARKS LEFT WHEREAS LIMITATION FOR ISSUANCE OF THE NOTICE U/S 148 OF THE ACT EXPIRES O N 31.03.2012 U/S 149 OF THE ACT. SO, NOTICE ISSUED U/S 148 IS NOT A VALID NOTICE FOR REOPENING. 13. FURTHERMORE NOTICE DATED 25.10.2012 ISSUED U/S 142 (1) WAS HANDED OVER TO LANDLORD OF THE ASSESSEE WHO HAS FUR THER HANDED OVER THE SAME TO HYUNDAI HEAVY INDUSTRIES CO. LTD., EMPLOYER OF THE ASSESSEE ON 12.11.2012 WHO HAS INTIMATED ON 03. 12.2012 TO ITO, MUMBAI THAT ASSESSEE WAS ON DEPUTATION WITH HH I, MUMBAI AS LIAISON OFFICER FROM 2004 TO DECEMBER 2007, THUS PERMANENTLY LEFT INDIA. THEREAFTER, ADIT, INTERNATIONAL TAXATI ON, DEHRADUN (AO) ISSUED THE NOTICE DATED 05.03.2013 U/S 142 (1) WHICH WAS SERVED UPON THE ASSESSEE. 14. DESPITE THE FACT THAT THE AO HAS BEEN DULY INTI MATED BY THE COUNSEL FOR ASSESSEE THAT SERVE OF NOTICE U/S 148 O F THE ACT HAS NEVER BEEN EFFECTED ON THE ASSESSEE, THE AO PROCEED ED TO PASS THE ASSESSMENT ORDER U/S 144 OF THE ACT. FURTHERMORE, NO ORDER U/S 127 OF THE ACT WAS PASSED TO TRANSFER THE CASE FROM MUM BAI TO DEHRADUN. RATHER ON THE BASIS OF INTIMATION GIVEN BY THE LANDLORD ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 12 OF THE ASSESSEE, AO SUO MOTU TRANSFERRED THE FILE T O AO, DEHRADUN WHO HAS NO POWER. WHEN IT IS UNDISPUTED FACT ON RE CORD THAT NOTICE U/S 148 WAS ISSUED WHICH WAS THOUGH NOT SERVED UPON THE ASSESSEE BY THE ITO, MUMBAI AND ASSESSMENT HAS BEEN COMPLETE D BY ITO, DEHRADUN WITHOUT PASSING ORDER BY THE HIGHER REVENU E AUTHORITIES U/S 127 OF THE ACT, ASSESSMENT ORDERS ARE NOT SUST AINABLE IN THE EYES OF LAW AS TWO ITOS CANNOT HAVE THE JURISDICTIO N TO MAKE ASSESSMENT. 15. UNDER SECTION 2(71) OF THE ACT, AO HAVING JURIS DICTION CAN ONLY ASSESS OR REASSESS ANY ESCAPED ASSESSMENT. WH EREAS, IN THE PRESENT CASE, REOPENING HAS BEEN INITIATED BY AO, M UMBAI HAVING NO JURISDICTION BY ISSUING THE NOTICE U/S 148 OF TH E ACT WHICH HAS NEVER BEEN SERVED UPON THE ASSESSEE WITHIN THE PERI OD OF LIMITATION, SO THE NOTICE U/S 148 OF THE ACT IS NO NOTICE WITHI N THE MEANING OF SECTION 148 (1) OF THE ACT. 16. HONBLE SUPREME COURT IN CASE CITED AS CIT, GUJARAT - II VS. KURBAN HUSSAIN IBRAHIMJI MITHIBORWALA 82 ITR 821 (SC) WHILE DECIDING THE IDENTICAL ISSUE AS TO A VALID NO TICE FOR REOPENING HELD THAT IN CASE NOTICE ISSUED TO THE ASSESSEE IS INVALID FOR ANY REASON, THE ENTIRE PROCEEDINGS TAKEN BY HIM WOULD B ECOME VOID FOR WANT OF JURISDICTION. BUT, IN THIS CASE, NOTICE U/ S 148 OF THE ACT HAS NEVER BEEN ISSUED BY THE AO RATHER NOTICE ISSUED U/ S 148 BY THE ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 13 AO, MUMBAI WAS NEVER SERVED UPON THE ASSESSEE NOR H E HAS ANY SUCH JURISDICTION TO REOPEN THE ASSESSMENT. SO, TH E ENTIRE REOPENING PROCEEDINGS AS WELL AS ASSESSMENT ARE NOT SUSTAINABLE. 18. COORDINATE BENCH OF THE TRIBUNAL IN CASE CITED AS ITO VS. NASEMAN FARMS (P.) LTD. (2011) 45 SOT 99 (DELHI)( URO) ALSO DEALT WITH THE IDENTICAL ISSUE IN WHICH REASSESSMEN T NOTICE WAS ISSUED BY ITO, AGRA WHO WAS HAVING NO JURISDICTION AND ASSESSMENT WAS MADE BY AO, DEHRADUN AND HELD THE SA ME TO BE VOID AB INITIO AND QUASHED THE ASSESSMENT. THE OPE RATIVE PART OF THE ORDER IS REPRODUCED AS UNDER :- SECTION 2(7 A), READ WITH SECTIONS 148, 120 AND 14 7 OF THE INCOME-TAX ACT, 1961 - ASSESSING OFFICER - MEAN ING OF - ASSESSMENT YEAR 2001-02 - ASSESSING OFFICER COMPLETED ASSESSMENT OF ASSESSEE-COMPANY - SUBSEQUENTLY, ON BASIS OF AN ENQUIRY CONDUCTED BY INVESTIGATION WING OF INCOME-TAX DEPARTMENT ASSESSI NG OFFICER AT AGRA ISSUED A NOTICE UNDER SECTION 148 - ON APPEAL, COMMISSIONER (APPEALS) OBSERVED, INTER ALIA , THAT ASSESSEE WAS REGISTERED WITH ROC, DELHI, AND I TS REGISTERED OFFICE WAS AT UTTAM NAGAR, DELHI; THAT ASSESSEE HAD FILED ITS TAX RETURN FOR ASSESSMENT YE ARS 1998-99 TO 2000-01 AT DELHI; AND THAT THIS SHOWED T HAT REASSESSMENT NOTICE ISSUED FROM AGRA WAS WITHOUT AN Y JURISDICTION AND, ACCORDINGLY, HE ANNULLED REASSESS MENT PROCEEDINGS - WHETHER IT IS ONLY AN ASSESSING OFFIC ER WITHIN MEANING OF SECTION 2(7 A) WHO CAN ASSESS OR REASSESS ANY ESCAPED INCOME OF AN ASSESSEE UNDER SECTION 147 - HELD, YES - WHETHER SINCE ASSESSING OFFICER AT AGRA NOT BEING ASSESSING OFFICER QUA ASSESSEE, AS ABOVE, HE COULD NOT HAVE ASSESSED OR REASSESSED ANY ESCAPED INCOME OF ASSESSEE FOR YEAR UNDER CONSIDERATION UNDER SECTION 147 AND HE COULD NOT HAVE SERVED ASSESSEE WITH A NOTICE UNDER SECTION 14 8 FOR ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 14 YEAR UNDER CONSIDERATION AND, HENCE, IMPUGNED ORDER COULD NOT BE FOUND FAULT WITH AT ALL - HELD, YES SECTION 29288 OF THE INCOME-TAX ACT, 1961 - NOTICE DEEMED TO BE VALID IN CERTAIN CIRCUMSTANCES - ASSESSMENT YEAR 2001-02 - WHETHER SECTION 292BB DOE S NOT CURE JURISDICTIONAL DEFECT IN NOTICE - HELD, YE S - WHETHER SECTION 292BB IS APPLICABLE WITH EFFECT FRO M 1- 4-2008 AND IT DOES NOT APPLY TO YEAR UNDER CONSIDERATION, I.E., ASSESSMENT YEAR 2001-02 - HELD , YES - WHETHER SECTION 292BB DOES NOT LAY DOWN THAT EVEN WHERE A NOTICE IS VOID AB INITIO FOR WANT OF JURISD ICTION, SUCH A NOTICE SHALL STILL BE DEEMED TO HAVE BEEN DU LY SERVED ON AN ASSESSEE IN ACCORDANCE WITH PROVISIONS OF ACT - HELD, YES 19. HONBLE JURISDICTIONAL HIGH COURT IN CASE CITED AS CIT VS. SMT. ANJALI DUA (2008) 174 TAXMAN 72 (DELHI) ALSO DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDIN G AS UNDER :- SECTION 124 OF THE INCOME-TAX ACT, 1961 - ASSESSIN G OFFICER - JURISDICTION OF - ASSESSMENT YEAR 1996-97 - ASSESSING OFFICER, LUDHIANA HAD ISSUED A NOTICE TO ASSESSEE UNDER SECTION 148 ON 28-3-2003 - ON APPEAL , ASSESSEE CONTENDED THAT SAID NOTICE WAS WITHOUT JURISDICTION INASMUCH AS SHE HAD SHIFTED FROM LUDHIANA TO NEW DELHI IN JULY, 1997 - REVENUE, ON OTHER HAND, CONTENDED THAT NOTICE PERTAINED TO ASSESSMENT YEAR 1996-97, WHICH RELATED TO A PERIOD WHEN ASSESSEE WAS RESIDING AT LUDHIANA - TRIBUNAL FOUND THAT ASSESSEE HAD PLACED SUFFICIENT MATERIAL ON RECORD TO SHOW THAT AS EARLY AS IN SEPTEMBER, 1997, IT HAD BEEN BROUGHT TO NOTICE OF AUTHORITIES AT LUDHIA NA THAT ASSESSEE HAD SHIFTED HER RESIDENCE FROM LUDHIA NA TO NEW DELHI; THAT LETTERS EXCHANGED BETWEEN ITOS A T LUDHIANA AND NEW DELHI CLEARLY INDICATED THAT ALL C ASES AND RECORDS WITH REGARD TO ASSESSMENT AND RETURNS F ILED IN LUDHIANA BY ASSESSEE WERE SOUGHT TO BE TRANSFERR ED BY HER AND ITO AT LUDHIANA AND NEW DELHI HAD NO OBJECTION TO SUCH TRANSFER - TRIBUNAL, THEREFORE, H ELD THAT AFTER SAID TRANSFER, IT WAS ONLY REVENUE AUTHO RITIES ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 15 AT NEW DELHI WHO HAD JURISDICTION OVER ASSESSEE'S C ASE AND WERE COMPETENT TO ISSUE A NOTICE IN TERMS OF SE CTION 148 - WHETHER ORDER OF TRIBUNAL WAS JUSTIFIED - HEL D, YES 20. HONBLE HIGH COURT OF CALCUTTA IN CASE CITED AS SMT. SMRITI KEDIA VS, UOI & ORS. (2012) 250 CTR (CAL) 221 ALSO DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE BY HO LDING AS UNDER:- IT IS EVIDENT THAT THE DEPARTMENT IN ITS AFFIDAVIT IN OPPOSITION HAS NOT DENIED THE FACT THAT ALL ALONG T HE PETITIONER WAS ASSESSED AT KOLKATA. THAT APART, THE RE IS NOTHING ON RECORD TO SHOW THAT PURSUANT TO AN ORDER UNDER S. 127, THE ASSESSMENT RECORDS OF THE PETITIO NER WERE TRANSFERRED EITHER FROM KOLKATA TO NEW DELHI O R FROM NEW DELHI TO KOLKATA. THEREFORE, UNLESS RECORD S WERE VALIDLY TRANSFERRED FROM KOLKATA TO NEW DELHI, THE SAID RESPONDENT HAD NO JURISDICTION TO ISSUE NOTICE UNDER S. 148 FOR THE ASSESSMENT YEAR IN QUESTION. HENCE, THE IMPUGNED NOTICE DATED 28 TH MARCH, 2006 UNDER S. 148 ISSUED BY THE AO IS ARBITRARY, WITHOUT JURISDICTION AND ILLEGAL. SO FAR AS THE OTHER IMPUG NED NOTICES ARE CONCERNED, SINCE IT IS EVIDENT FROM THE NOTICE DATED 13 TH NOVEMBER, 2006 ISSUED BY THE RESPONDENT NO.3, THAT IT WAS PURSUANT TO THE NOTICE UNDER S. 1 48, THE SAME IS ALSO WITHOUT JURISDICTION AND ILLEGAL. THE NOTICE UNDER S. 142 OF THE ACT DATED 20 TH NOVEMBER, 2006 ISSUED BY THE RESPONDENT NO.3, IS ALSO WITHOUT JURISDICTION AND ILLEGAL AS EVIDENTLY IT WAS CONSEQ UENT TO THE NOTICE UNDER S. 148, IT BEING OBVIOUS FROM THE 'REQUISITIONS' APPENDED TO THE SAID NOTICE THAT THE PETITIONER WAS INTIMATED THAT 'IN RESPONSE TO NOTIC E U/S S. 148, YOU HAVE NOT YET FILED YOUR RETURN OF INCOM E'. SO FAR AS THE NOTICE UNDER S. 143(2) DATED 7 TH DECEMBER, 2006 ISSUED BY THE RESPONDENT NO.3 IS CONCERNED, SI NCE IT WAS ENCLOSED ALONG WITH THE NOTICE DATED 7 TH DECEMBER, 2006 WITH REGARD TO THE ASSESSMENT PROCEEDINGS UNDER S. 147 INITIATED BY THE RESPONDEN T NO.2 FOR THE SAID ASSESSMENT YEAR, THAT TOO, IS ARB ITRARY AND ILLEGAL. THEREFORE, THE NOTICES DATED 13 TH NOVEMBER, ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 16 2006, 20 TH NOVEMBER, 2006, 7 TH DECEMBER, 2006 AND THE OTHER NOTICE DATED 7 TH DECEMBER, 2006, ALL ISSUED BY THE RESPONDENT NO.3 ARE SET ASIDE AND QUASHED. 21. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT FIRSTLY, NO NOTICE U/S 148 OF THE ACT ALONG WITH REASONS FOR REOPENING WAS EVER SERVED UPON THE ASSE SSEE; THAT THE AO, MUMBAI WHO HAS ISSUED THE NOTICE U/S 148 WAS NO T HAVING JURISDICTION AS ONLY AO, DEHRADUN WAS HAVING THE JU RISDICTION AS PER NOTIFICATION (SUPRA); THAT EVEN THE NOTICE ISSU ED BY AO, MUMBAI WAS NEVER SERVED UPON THE ASSESSEE AND AS SU CH, THE ENTIRE REOPENING PROCEEDINGS AND CONSEQUENT REASSESSMENT I S VOID AB INITIO AND AS SUCH LIABLE TO BE QUASHED. SO, WITHO UT ENTERING INTO THE MERITS OF THE CASE, WE HEREBY QUASH THE ASSESSM ENT ORDERS PASSED BY AO AND CONFIRMED BY LD. CIT (A) FOR AYS 2 005-06 AND 2006-07. CONSEQUENTLY, BOTH THE APPEALS FILED BY T HE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 25 TH DAY OF MAY, 2018. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH ) PRESIDENT JUDICIAL MEMBER DATED THE 25 TH DAY OF MAY, 2018 TS ITA NO.2100/DEL./2016 ITA NO.2101/DEL./2016 17 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-2, NOIDA. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.