Ashok Lal Chandani, Kanpur V. Income Tax Officer-3(1), Kanpur

ITA 261/LKW/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4014 (ITAT-LUCKNOW)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-07-2016
• Assessment Year: 2000-2001
• Appeal Filed On: 12-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Unexplained cash credit; Competent authority
• Section: 143(3); 142(1); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO.261/LKW/2016 ASSESSMENT YEAR : 2000-01 SHRI ASHOK LAL CHANDANI, FLAT NO.301, GANGOTRI APARTMENT, 7/216, SWAROOP NAGAR, KANPUR. PAN: AEAPC 4590D VS. THE INCOME TAX OFFICER, 3(1), KANPUR. APPELLANT RESPONDENT APPELLANT BY : SHRI RAKESH GARG, ADVOCATE RESPONDENT BY : SHRI AMIT NIGAM, DR DATE OF HEARING : 14.07.2016 DATE OF PRONOUNCEMENT : 31.08.2016 O R D E R THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 01.03.2016 OF THE CIT(APPEALS)-I, KANPUR INTER ALIA ON THE FOLLOWING GROUNDS:- 1. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LA W IN HOLDING THAT THE PROCEEDINGS INITIATED UNDER SECTIO N 147 OF THE I.T. ACT, 1961 AND THE ASSESSMENT FRAMED UNDER SECT ION 144 OF THE ACT IS VALID, WHICH FINDING OF THE CIT(A) IS CO NTRARY TO FACTS, BAD IN LAW BE QUASHED. 2. BECAUSE THE NOTICE ISSUED UNDER SECTION 148 OF T HE ACT, 1961 DATED 25.03.2013 AND THE RE-ASSESSMENT FRAMED THEREAFTER BEING WITHOUT JURISDICTION, BAD IN LAW BE QUASHED. ITA NO.261/LKW/2016 PAGE 2 OF 7 3. BECAUSE THERE BEING NO ISSUE AND SERVICE OF NOTI CE UNDER SECTION 148 OF THE ACT; 1961 AS REQUIRED BY LAW THE ENTIRE RE- ASSESSMENT PROCEEDINGS INITIATED AND RE-ASSESSMENT FRAMED ARE BAD IN LAW AND BE QUASHED. 4. BECAUSE THE NOTICE UNDER SECTION 148 HAVING NOT BEEN SERVED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT , AND THERE BEING NO REASONS TO FORM BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT, THE NOTICE ISSUED UNDER SECTION 148 AND THE RE-ASSESSMENT FRAMED IS BAD IN LAW AND BE QUASHED. 5. BECAUSE THE CIT (A) HAS ERRED ON FACTS AND IN LA W IN HOLDING THAT THE ASSESSEE HAS NOT COMPLIED WITH THE NOTICES ISSUED ON 28.08.2013 ONWARDS AND HENCE, THE NOTICE BEING' SERVED THROUGH AFFIXTURE WAS PROPER IS TOTALLY MISPLACED A ND MISCONCEIVED, IN AS MUCH AS, THE NOTICE UNDER SECTI ON 148 DT. 25.03.2013 ISSUED BY THE AO WAS NEITHER ISSUED NOR SERVED IN ACCORDANCE WITH THE PROVISIONS OF LAW, THE WHOLE PR EMISE ON WHICH THE CIT(A) HAS MOVED, IS TOTALLY OUT OF THE C ONTEXT, THE RE- ASSESSMENT FRAMED BE QUASHED. 6. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION OF RS. 15,00,000/ - AS UNEXPLAINED CASH CREDITS IN THE BANK ACCOUNT, WHICH ADDITION IS CONT RARY TO FACTS, BAD IN LAW AND BE DELETED. 7. BECAUSE THE CIT(A) HAS OVERLOOKED THE PAPER BOO K FILED, CONTAINING NECESSARY EVIDENCES AND SUBMISSIONS, THE ORDER PASSED BY THE CIT(A) IS BAD IN LAW AND BE QUASHED. 8. BECAUSE IN ANY CASE AND IN ALL CIRCUMSTANCES OF THE CASE AND WITHOUT PREJUDICE TO THE GROUND OF RE-ASSESSMEN T, THE ADDITION OF RS.15,00,000/- IS WITHOUT ANY BASIS, CO NTRARY TO FACTS BE DELETED. 2. THROUGH GROUNDS NO.1 TO 4, THE LD. COUNSEL FOR THE ASSESSEE HAS QUESTIONED THE VALIDITY OF THE REOPENING OF THE ASS ESSMENT ON THE GROUND THAT NOTICE U/S. 148 OF THE ACT WAS NEVER SERVED UP ON THE ASSESSEE. IN SUPPORT OF THIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED MY ITA NO.261/LKW/2016 PAGE 3 OF 7 ATTENTION TO THE REASONS RECORDED FOR REOPENING OF ASSESSMENT WHICH ARE AVAILABLE AT PAGES NO.20 TO 21 OF THE COMPILATION O F THE ASSESSEE. REASONS WERE RECORDED ON 19.3.2013 AND THEREAFTER A NOTICE U/S. 148 DATED 25.3.2013 WAS ISSUED THROUGH SPEED POST ON 26 .3.2013. ON 25.3.2013 NOTICE WAS ALSO SERVED BY AFFIXTURE ACCOR DING TO AO. THEREAFTER, OTHER NOTICES U/S. 142(1) AND 143(2) WERE ALSO ISSU ED ON DIFFERENT DATES. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS OBJECTED TO THE SERVICE OF NOTICE U/S. 148 OF THE A CT. VIDE LETTER DATED 13.1.2014, THE ASSESSEE HAS RAISED A CATEGORICAL OB JECTION WITH REGARD TO SERVICE OF NOTICE U/S. 148. IN THE LETTER, THE AS SESSEE HAS STATED THAT IT MADE EFFORTS TO VERIFY FROM THE POSTAL AUTHORITIES WITH REGARD TO SERVICE OF NOTICE U/S. 148 UPON THE ASSESSEE, BUT HE DID NOT R ECEIVE ANY RESPONSE FROM THE POSTAL AUTHORITIES, RATHER IT WAS MADE TO UNDERSTAND THAT THEY WILL GIVE A REPLY WITH REGARD TO SERVICE OF LETTER TO TH E SENDER ONLY. THROUGH LETTER, THE ASSESSEE HAS SPECIFICALLY ASKED THE AO TO SHOW THE EVIDENCE OF SERVICE OF NOTICE U/S. 148 OF THE ACT. MY ATTENTIO N WAS ALSO INVITED TO LETTER WRITTEN TO THE POSTAL AUTHORITIES WHICH IS APPEARIN G AT PAGE 17 OF THE COMPILATION. THE OBJECTION WITH REGARD TO SERVICE OF NOTICE WAS AGAIN RAISED BEFORE THE AO DURING THE ASSESSMENT PROCEEDI NGS AND COPY OF THE SAME IS AVAILABLE AT PAGES 10 TO 12 OF THE COMPILAT ION OF ASSESSEE. AGAIN ON 3.3.2014, SIMILAR OBJECTION WITH REGARD TO SERVI CE OF NOTICE U/S. 148 WAS RAISED. DESPITE REPEATED REQUESTS, THE AO HAS NOT BROUGHT ANYTHING ON RECORD WITH REGARD TO SERVICE OF NOTICE U/S. 148 OF THE ACT UPON THE ITA NO.261/LKW/2016 PAGE 4 OF 7 ASSESSEE. HE, HOWEVER, FRAMED THE ASSESSMENT U/S. 147 R.W.S. 144 OF THE ACT AGAINST THE ASSESSEE. 4. IN THE ASSESSMENT ORDER, THE AO HAS RECORDED THA T NOTICE WAS SENT TO THE ASSESSEE THROUGH SPEED POST AS WELL AS THROU GH THE INCOME TAX INSPECTOR (ITI) AND WHEN THE ASSESSEE DENIED TO REC EIVE THE SAME, THE ITI WAS LEFT WITH NO OPTION, BUT TO SERVE THE NOTICE TH ROUGH AFFIXTURE IN THE PRESENCE OF SHRI HARI KUMAR SRIVASTAVA, NOTICE SERV ER OF OFFICE. BUT NOTHING WAS STATED WITH REGARD TO SERVICE OF NOTICE THROUGH SPEED POST. 5. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(APP EALS), BUT THE CIT(APPEALS) HAS REJECTED THE LEGAL OBJECTION OF TH E ASSESSEE. 6. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L AND REITERATED ITS CONTENTIONS. THE LD. DR, ON THE OTHER HAND, HAS SU BMITTED THAT ASSESSMENT WAS FRAMED CONSEQUENT TO DIRECTIONS OF T HE CIT(APPEALS) VIDE ORDER DATED 10.5.2011, THEREFORE THE AO WAS NOT UND ER OBLIGATION TO RECORD PROOF OF SERVICE OF NOTICE U/S. 148 IN THE ASSESSME NT ORDER. MOREOVER, THE ASSESSEE HAS JOINED THE ASSESSMENT PROCEEDINGS. TH EREFORE, THE LAPSES ON ACCOUNT OF SERVICE OF NOTICE U/S. 148 OF THE ACT WERE COVERED BY THE PROVISIONS OF SECTION 292BB OF THE ACT. 7. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWE R AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS AND THE RELEVANT PROVISI ONS OF THE ACT, I FIND THAT ASSESSMENT WAS REOPENED PURSUANT TO THE DIRECTIONS OF THE CIT(APPEALS) ITA NO.261/LKW/2016 PAGE 5 OF 7 THROUGH HIS ORDER DATED 10.5.2011. THROUGH THAT OR DER THE CIT(A) HAS ISSUED DIRECTIONS TO THE AO U/S. 150 OF THE ACT TO REINITIATE THE PROCEEDINGS U/S. 148 OF THE ACT FOR THE YEAR UNDER REFERENCE BY RECORDING PROPER REASONS AND AFTER SEEKING PROPER APPROVAL OF THE SU PERIOR AUTHORITIES AS PER LAW. CONSEQUENTLY, REASONS WERE RECORDED AND APPRO VAL OBTAINED FROM THE COMPETENT AUTHORITY. BUT, WHILE ISSUING NOTICE U/S . 148 OF THE ACT, THE AO HAS ISSUED A NOTICE ON 25.3.2013 BY SPEED POST. BE SIDES, HE ALSO ISSUED NOTICE THROUGH ITI AND ACCORDING TO THE DEPARTMENT, THE SAID ITI AND THE PROCESS SERVER HAS SERVED THE NOTICE BY AFFIXTURE. COPY OF THE SERVICE OF NOTICE BY AFFIXTURE IS AVAILABLE AT PAGES 18 TO 19 OF THE COMPILATION OF THE ASSESSEE. 8. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS REPEATEDLY CHALLENGED THE VALIDITY OF REOPENING OF THE ASSESSM ENT ON THE GROUND THAT NOTICE U/S. 148 OF THE ACT WAS NEVER SERVED UPON TH E ASSESSEE. THIS REPEATED OBJECTIONS WERE NOT PROPERLY DISPOSED OF B Y THE AO. THE ASSESSEE HAS ALSO MADE FURTHER ENQUIRY WITH THE POS TAL AUTHORITIES TO VERIFY WITH REGARD TO SERVICE OF NOTICE U/S. 148 UPON THE ASSESSEE, BUT HE COULD NOT SUCCEED IN GETTING PROPER RESPONSE FROM THE POS TAL AUTHORITIES. WHEREAS, THE DEPARTMENT DID NOT MAKE ANY EFFORTS TO GET THIS EVIDENCE OR THE CERTIFICATE FROM THE POSTAL AUTHORITIES WITH RE GARD TO SERVICE OF NOTICE U/S. 148 OF THE ACT. WHEN THE ASSESSEE HAS RAISED THE OBJECTION WITH REGARD TO VALID SERVICE OF NOTICE U/S. 148 OF THE A CT UPON THE ASSESSEE, THE ONUS IS UPON THE AO TO ESTABLISH THAT NOTICE WAS DU LY SERVED UPON THE ITA NO.261/LKW/2016 PAGE 6 OF 7 ASSESSEE. BUT HE DID NOT DISCHARGE HIS ONUS. THE AO HAS TAKEN COGNIZANCE OF SERVICE OF NOTICE BY AFFIXTURE. 9. IN THIS REGARD, I AM OF THE VIEW THAT BY ISSUING DIRECTIONS FOR SERVICE BY AFFIXTURE, THE AO HAS LOST SIGHT OF THE PROVISIO NS OF ORDER 5 RULE 20 OF THE CIVIL PROCEDURE CODE (CPC), BECAUSE THE MODE OF SUBSTITUTED SERVICE CAN ONLY BE ADOPTED, WHEN THE AUTHORITIES FAIL TO G ET THE NOTICE SERVED UPON THE PERSON BY ORDINARY MEANS. THE ORDINARY MEANS T O SERVE THE NOTICE ARE EITHER THROUGH THE PROCESS SERVER OR THROUGH POSTAL AUTHORITIES. IN THE INSTANT CASE, ON THE VERY FIRST DAY, A NOTICE WAS I SSUED THROUGH PROCESS SERVER AND THE PROCESS SERVER WITHOUT GETTING ANY A UTHORITY FROM THE AO FOR THE SERVICE OF NOTICE BY AFFIXTURE, HAS SERVED THE NOTICE BY AFFIXTURE. AS PER THE PROVISIONS OF ORDER 5 RULE 20 OF THE CPC, S PECIFIC ORDERS ARE TO BE PASSED FOR SERVICE OF NOTICE BY SUBSTITUTED MEANS. BUT IN THE INSTANT CASE, NO SUCH ORDER WAS PASSED BY THE AO. ON THE FIRST D ATE OF NOTICE I.E., 25.3.2013, A NOTICE WAS STATED TO BE SERVED BY AFFI XTURE UPON THE ASSESSEE. THOUGH THE ASSESSEE HAS RAISED OBJECTION WITH REGARD TO VALID SERVICE OF NOTICE, BUT THE AO HAS NOT BROUGHT ANYTH ING ON RECORD OR SPECIFICALLY DEALT WITH IT IN THE ASSESSMENT ORDER. SIMILAR OBJECTION WAS ALSO RAISED BEFORE THE CIT(APPEALS) AND THE CIT(A) HAS A LSO FAILED TO DEAL WITH THE ISSUE WITH REGARD TO SERVICE OF NOTICE U/S. 148 OF THE ACT. SINCE THE ONUS IS UPON THE AO TO ESTABLISH VALID SERVICE OF N OTICE U/S. 148 OF THE ACT AND HE FAILED TO DO SO, HE CANNOT ASSUME VALID JURI SDICTION TO FRAME THE ASSESSMENT U/S. 147 R.W.S. 143(3) OF THE ACT AND ON CE THE REOPENING IS NOT ITA NO.261/LKW/2016 PAGE 7 OF 7 VALID, THE ASSESSMENT FRAMED CONSEQUENT THERETO DES ERVES TO BE ANNULLED. IN THE INSTANT CASE, SINCE A PROPER NOTICE U/S. 148 OF THE ACT WAS NOT SERVED UPON THE ASSESSEE, THE AO COULD NOT ASSUME JURISDIC TION TO FRAME THE ASSESSMENT. THEREFORE, THE ASSESSMENT FRAMED BY HI M IS BAD IN LAW AND I ACCORDINGLY ANNUL THE SAME, AFTER SETTING ASIDE THE ORDER OF CIT(APPEALS). SINCE THE ASSESSMENT ORDER IS ANNULLED, I FIND NO J USTIFICATION TO DEAL WITH THE APPEAL ON MERITS. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF AUGUST, 2016. SD/- (SUNIL KUMAR YADAV ) JUDICIAL MEMBER LUCKNOW, DATED, THE 31 ST AUGUST, 2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT. BY ORDER ASSISTANT REGISTRAR.