Shri Dhaval R. Chellani, Surat V. The ACIT., Circle-5, Surat

ITA 2651/AHD/2005

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6406 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-05-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 19-12-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: NIMESH VAYAWALA
• Keywords: Period of limitation; Question of law; Validity of assessment; Assessment record; Block assessment; Set aside
• Section: 143(3); 143(2); 27; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND N. S. SAINI, AM) ITA NO.2651/AHD/2005 A. Y.: 2002-03 SHRI DHAVAL R. CHELLANI, B-37, SHAKTI NAGAR, GANDHIDHAM KUTCH, GUJARAT PA NO. ACOPC 1726F VS THE A. C. I. T., CIRCLE-5, SURAT ROOM NO.217, AAYAKAR BHAVAN, MAJURA GATE SURAT (APPELLANT) (RESPONDENT) APPELLANT BY SHRI NIMESH VAYAWALA, AR RESPONDENT BY SHRI C. K. MISHRA, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-IV, SURAT DATED 20- 10-2005 FOR ASSESSMENT YEARS 2002-03. 2. THIS APPEAL WAS EARLIER DISPOSED OF BY THE TRIBU NAL VIDE ORDER DATED 24-10-2008, HOWEVER, THE SAME WAS RECALLED IN MA NO.48/AHD/2009 VIDE ORDER DATED 09-10-2009. REGISTR Y, THEREFORE, FIXED THE APPEAL FOR HEARING IN ACCORDANCE WITH LAW. 3. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRE SS GROUNDS NO. 2 TO 8 OF THE APPEAL. THESE ARE DISMISSED AS WITHDRAW N. 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL AVAILABLE ON RECORD. 5. THE ONLY GROUND OF APPEAL IS REGARDING CHALLENGI NG THE VALIDITY OF ASSESSMENT ORDER ON THE GROUND THAT NOTICE U/S 143( 2) OF THE IT ACT HAS NOT BEEN SERVED UPON THE ASSESSEE BEFORE THE EXPIRY OF 12 MONTHS FROM ITA NO.2651/AHD/2005 SHRI DHAVAL R. CHELLANI 2 THE END OF THE MONTH IN WHICH THE RETURN IS FURNISH ED. THE RETURN OF INCOME IN THIS CASE WAS FURNISHED ON 24-10-2002 AND IN TERMS OF PROVISO TO SECTION 143(2) (II) OF THE IT ACT, NOTIC E U/S 143(2) OF THE IT ACT SHOULD HAVE BEEN SERVED BEFORE 31-10-2003 I.E. BEF ORE EXPIRY OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN WA S FURNISHED. THE ASSESSEE DENIED HAVING RECEIVED ANY SUCH NOTICE PRI OR TO THIS PERIOD. THE LEARNED CIT(A) ON PERUSAL OF THE ASSESSMENT RECORDS NOTICED THAT NOTICE U/S 143(2) OF THE IT ACT WAS ISSUED ON 31-03-2003 T HROUGH REGISTERED POST AT THE ADDRESS MENTIONED IN THE RETURN OF INCO ME. THE ASSESSEE RELIED UPON THE LETTER DATED 16-03-2005 ISSUED BY T HE AO, WHEREIN IT WAS STATED THAT NO NOTICE COULD BE SERVED AT THE GIVEN ADDRESS AND AS SUCH NOTICE COULD BE SERVED ON 25-10-2004 AND THE ASSESS EE WAS DUTY BOUND TO INTIMATE CHANGE OF ADDRESS TO THE DEPARTMENT. TH E LEARNED CIT(A) NOTED THAT THE AO ISSUED THE NOTICE U/S 143(3) OF T HE IT ACT BY REGISTERED POST AT THE GIVEN ADDRESS AND HAS CONSIDERED AS VA LID SERVICE OF NOTICE BECAUSE THE NOTICE IS HANDED OVER TO THE POSTAL DEP ARTMENT BEFORE THE END OF THE STATUTORY PERIOD ESPECIALLY WHEN THE NOT ICE WAS ISSUED AT THE ADDRESS GIVEN BY THE ASSESSEE HIMSELF. THE LEARNED CIT(A) ALSO NOTED THAT THE CHANGE OF ADDRESS SHOULD BE INTIMATED TO THE DE PARTMENT. THE OBJECTION OF THE ASSESSEE WAS ACCORDINGLY REJECTED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) AND SUBM ITTED THAT THE NOTICE DATED 31-03-2003 WAS NOT POSTED THROUGH REGI STERED POST. THE ASSESSEE WAS NOT SERVED OF ANY NOTICE DATED 31-03-2 003. HE HAS SUBMITTED THAT NOTICE U/S 143(2) (II) OF THE IT ACT IS DATED 25-10-2004. HE HAS REFERRED TO LETTER OF THE AO DATED 16-03-200 5 (PB -9) IN WHICH THE AO ADMITTED THAT THE NOTICE COULD NOT BE SERVED AT THE GIVEN ADDRESS AND THE NOTICE U/S 143(2) OF THE IT ACT COULD BE SERVED UPON THE ASSESSEE ON 25-10-2004. HE HAS REFERRED TO PB-18 WHICH IS AFFID AVIT OF THE ASSESSEE FILED BEFORE THE LEARNED CIT(A) IN WHICH THE ASSESS EE DENIED TO HAVE ITA NO.2651/AHD/2005 SHRI DHAVAL R. CHELLANI 3 RECEIVED ANY NOTICE PRIOR TO THE MONTH OF OCTOBER, 2003. HE HAS SUBMITTED THAT SINCE THE AFFIDAVIT OF THE ASSESSEE HAS NOT BEEN DISPUTED, THEREFORE, PROCEEDINGS ARE LIABLE TO BE QUASHED. HE HAS RELIED UPON THE DECISIONS REPORTED IN 281 ITR 1 (DELHI), 242 ITR 14 1, 122 TTJ 256, 169 TAXMAN 16 (DELHI), 287 ITR 368 (DELHI), 193 ITR 213 (KERALA), 287 ITR 360 (GUJ), 315 ITR 110, 37 DTR (INDORE BENCH) 371, 19 DTR 15 (LUCKNOW), 229 CTR 188 (P & H), 319 ITR 151, 120 TT J (SB) 577 AND 197 ELT 160(GUJARAT). THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THERE WAS NO CHANGE OF ADDRESS; THEREFORE, THE ASSESSEE NEVER INTIMATED CHANGE OF ADDRESS. HE HAS ACCORDINGLY SU BMITTED THAT ASSESSMENT ORDER MAY BE QUASHED BECAUSE THERE IS NO SERVICE OF NOTICE U/S 143(2) OF THE IT ACT UPON THE ASSESSEE BEFORE 3 1-10-2003. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS O F THE AUTHORITIES BELOW. THE LEARNED DR PRODUCED THE ASSESSMENT RECOR DS AT THE TIME OF HEARING AND FILED COPIES OF THE ORDER SHEET OF THE AO STARTING FROM 07-05-2004 UP TO 28-03-2005, COPY OF THE NOTICE DAT ED 31-03-2003, COPY OF THE NOTICE DATED 25-10-2004 U/S 143(2) (II) OF T HE IT ACT ALONG WITH SERVICE REPORT OF THE NOTICE 25-10-2004. THE LEARNE D DR HOWEVER, ADMITTED THAT THERE IS NO POSTAL RECEIPT OR A/D CAR D AVAILABLE IN THE ASSESSMENT RECORD TO SHOW THAT THE NOTICE DATED 31- 03-2003 WAS DISPATCHED THROUGH REGISTERED POST OR SERVED UPON T HE ASSESSEE. THE LEARNED DR SUBMITTED THAT IN THE NOTICE DATED 31-03 -2003 THE AO HAS MENTIONED THAT HE ISSUED THE SAME BY RPAD. THE LE ARNED DR, THEREFORE, SUBMITTED THAT THERE IS A PRESUMPTION UN DER THE LAW THAT THE ASSESSEE IS SERVED WITH THE NOTICE BECAUSE THE REGI STERED COVER DID NOT RETURN BACK TO THE AO. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. THE PROVISO TO SECTION 143(2) (II) OF THE I T ACT PROVIDES THAT PROVIDED THAT NO NOTICE UNDER CLAUSE (II) SHALL BE SERVED ON THE ASSESSEE AFTER EXPIRY OF TWELVE MONTHS FROM THE END OF THE M ONTH IN WHICH RETURN ITA NO.2651/AHD/2005 SHRI DHAVAL R. CHELLANI 4 IS FURNISHED. IN THIS CASE, ADMITTEDLY RETURN OF I NCOME WAS FILED ON 24-10-2002. THEREFORE, IN TERMS OF THE PROVISO TO S ECTION 143(2) (II) OF THE IT ACT, THE NOTICE U/S 143(2) OF THE IT ACT SHOULD HAVE BEEN SERVED UPON THE ASSESSEE BEFORE 31-10-2003 I.E. BEFORE EXPIRY O F 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FURNISHED . THE HONBLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS MAHI VAL LEY HOTELS AND RESORTS 387 ITR 360 HELD ASSESSMENT ASSESSMENT UNDER SECTION 143(3) NOTICE UNDER SECTION 143(2) ISSUED AFTER E XPIRY OF PERIOD OF LIMITATION ASSESSMENT VOID AB INITIO INCOME-TAX ACT, 1961, S. 143. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS VARD HMAN ESTATE P. LTD. 287 ITR 368 HELD THAT HELD, DISMISSING THE APPEAL, THAT IN THE PRESENT CASE THE NOTICE UNDER SECTION 143(2) OF THE INCOME-TAX ACT, 1961, HAD TO BE SERVED ON THE ASSESSEE ON OR B EFORE OCTOBER 31, 2002. NOTICE BY SPEED POST WAS SERVED ON NOVEMB ER 1, 2002. THERE WAS NO MATERIAL TO SUGGEST THAT THE NOTICE SE NT BY SPEED POST WAS SERVED ON ANY EARLIER DATE. THE CONTENTION THAT SINCE THE NOTICE WAS DISPATCHED BY SPEED POST ON OCTOBER 30, 2002, THAT SHOULD BE DEEMED DATE OF -SERVICE, COULD NOT BE ACC EPTED. SO FAR AS THE SERVICE THROUGH THE PROCESS SERVER WAS CONCERNE D THE DOCUMENTS SOUGHT TO BE RELIED ON OR BEFORE THE COUR T, WERE NOT FILED BEFORE THE TRIBUNAL WHEN THE TRIBUNAL PASSED THE FI RST ORDER DATED MARCH 15, 2005, AND THE TRIBUNAL WAS NOT IN ERROR I N REJECTING THE RECTIFICATION APPLICATION FILED BY THE REVENUE ON T HE GROUNDS THAT THE DOCUMENT RELATING TO PROCESS SERVER DID NOT FOR M PART OF RECORD OF THE CASE. THERE WAS NO RULE OR REGULATION MANDAT ING THAT THE TRIBUNAL CALL FOR ASSESSMENT RECORDS WHILE CONSIDER ING AN APPEAL. THEREFORE, THE ASSESSMENT WAS NOT VALID. NO SUBSTAN TIAL QUESTION OF LAW AROSE. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS BHAN TEXTILES P. LTD. 287 ITR 370 HELD HELD, DISMISSING THE APPEAL, THAT THE ASSESSEE HAD FILED THE RETURN ON NOVEMBER 20, 1 996, AND THE TIME STIPULATED UNDER THE PROVISO TO SECTION 143(2) (II) OF THE ITA NO.2651/AHD/2005 SHRI DHAVAL R. CHELLANI 5 INCOME-TAX ACT, 1961, FOR SERVICE OF NOTICE EXPIRED ON NOVEMBER 30, 1997. NOTICE UNDER SECTION 143(2) THOUGH ISSUED ON NOVEMBER 27, 1997 AND DISPATCHED ON NOVEMBER 28, 1997, WAS ACTUA LLY RECEIVED BY THE ASSESSEE ONLY ON DECEMBER 1, 1997. ACCORDING TO THIS PROVISION, THE NOTICE MUST BE SERVED ON THE ASSESSE E. THEREFORE, THE ASSESSMENT WAS NOT VALID. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS CEBON INDIA LTD. 229 CTR 188 HELD THAT CIT(A) AS WELL AS THE TRIBUNAL HAVING RECORDED CONCURRENT FIN DING THAT THE NOTICE UNDER S. 143(2) WAS NOT SERVED ON THE ASSESS EE WITHIN THE STIPULATED TIME, IMPUGNED ASSESSMENT WAS NOT VALID; ABSENCE OF NOTICE IS NOT A CURABLE DEFECT UNDER S. 292BB. ITAT INDORE BENCH IN THE CASE OF SERVITE SISTERS SOCIETY VS ACIT 37 DTR 371 HELD THAT NOTICE UNDER S. 143(2) THOUGH ISSUED WITHIN 12 MONTHS BUT SERVED AFTER THE EXPIRY OF 12 MONTHS FROM THE END OF THE MONTH I N WHICH THE RETURN WAS FURNISHED IS INVALID AND THE ASSESSMENT COMPLETED ON THE BASIS OF SUCH NOTICE CANNOT BE SUSTAINED. THE HONBLE DELHI HIGH COURT IN THE RECENT DECISION IN THE CASE OF CI T VS EQBAL SINGH SINDHANA 304 ITR 177 HELD AS UNDER: SECTION 282 OF THE INCOME-TAX ACT, 1961, PROVIDES HOW NOTICES UNDER THE ACT ARE TO BE SERVED. ANY NOT ICE UNDER THE INCOME-TAX ACT HAS TO BE SERVED ON THE PE RSON NAMED THEREIN EITHER BY POST OR AS IF IT WERE A SUM MONS ISSUED BY COURT UNDER THE CODE OF CIVIL PROCEDURE. UNDER ORDER V, RULE 19A OF THE CODE, THE NOTICE SEN T BY REGISTERED POST MUST BE SENT ALONG WITH ACKNOWLEDGEMENT DUE. HELD THAT THE NOTICE UNDER SECTION 143(2) WAS SENT BY REGISTERED POST, WHICH WAS RECEIVED BACK UNDELIVERED. THE NOTICE OUGHT TO HAVE BEEN SENT ALO NG WITH ACKNOWLEDGEMENT DUE BUT, ADMITTEDLY THE REGISTERED ENVELOPE WAS NOT SENT ALONG WITH ACKNOWLEDGEMENT DUE. HENCE, NO NOTICE UNDER SECTION 143(2) OF THE ACT HAD BEEN SERVED UPON THE ASSESSEE WITHIN THE PRESCRIBED PERIOD AND THEREFORE THE ASSESSMENT WAS INVALID. ITA NO.2651/AHD/2005 SHRI DHAVAL R. CHELLANI 6 HONBLE SUPREME COURT IN THE CASE OF ACIT VS HOTEL BLUE MOON 321 ITR 362 HELD THAT ISSUE OF NOTICE U/S 143(2) IS MANDATORY FOR BLOCK ASSESSMENT AND SHOULD HAVE BEEN ISSUED WITHIN THE P RESCRIBED PERIOD. 8. IN THIS CASE, ACCORDING TO THE LEARNED DR NOTICE DATED 31-03-2003 WAS ISSUED BY THE AO U/S 143(2) (II) OF THE IT ACT DIRECTING THE ASSESSEE TO APPEAR BEFORE HIM ON 22-04-2003. ACCORDING TO TH E LEARNED DR THE AO HAS MENTIONED IN THIS NOTICE THAT IT IS SENT TO THE ASSESSEE BY RPAD. ACCORDING TO THE LEARNED DR ONCE THIS NOTICE IS ISS UED TO THE ASSESSEE PRIOR TO 31-10-2003 THROUGH REGISTERED POST, THEREF ORE, THERE IS A PRESUMPTION THAT IT IS SERVED UPON THE ASSESSEE IN ORDINARY COURSE OF BUSINESS. ACCORDING TO THE LEARNED DR THERE IS SUFF ICIENT COMPLIANCE OF SERVICE OF NOTICE UPON THE ASSESSEE PRIOR TO 31-10- 2003. HOWEVER, WE DO NOT AGREE WITH THE SUBMISSIONS OF THE LEARNED DR. T HE LEARNED DR ADMITTED THAT THERE IS NO POSTAL RECEIPT AVAILABLE ON RECORD TO SHOW THAT NOTICE DATED 31-03-2003 WAS SENT TO THE ASSESSEE TH ROUGH REGISTERED POST. THERE IS ALSO NO EVIDENCE ON RECORD THAT AO D ISPATCHED THE ABOVE NOTICE THROUGH REGISTERED POST BY PRE PAYING THE PO STAL CHARGES AT THE GIVEN ADDRESS OF THE ASSESSEE. NO A/D CARD IS ALSO AVAILABLE ON RECORD TO SHOW THAT THE AFORESAID NOTICE WAS SERVED UPON THE ASSESSEE. THE LEARNED DR ALSO FILED COPY OF THE ORDER SHEET START ING FROM 07-05-2004 TO 28-03-2005. THERE IS NO ORDER SHEET RECORDED BY THE AO PRIOR TO 07-05-2004. IN THE ABSENCE OF ANY ORDER SHEET PRIOR TO 07-05-2004, IT IS HIGHLY DOUBTFUL IF THE AO HAS ISSUED ANY NOTICE U/S 143(2) OF THE IT ACT DATED 31-03-2003 TO THE ASSESSEE. IN THE ORDER SHEE T DATED 07-05-2004 THE AO HAS MENTIONED THAT THE CASE IS SELECTED FOR SCRUTINY, THEREFORE, NOTICE U/S 143(2) IS ISSUED UPON THE ASSESSEE FOR 2 8-05-2004. IT IS THE SAME NOTICE WHICH WAS LATER ON ISSUED TO THE ASSESS EE ON 25-10-2004 IN WHICH SERVICED REPORT IS ALSO FILED ON RECORD. IN T HE ABSENCE OF ANY ITA NO.2651/AHD/2005 SHRI DHAVAL R. CHELLANI 7 ADEQUATE MATERIAL ON RECORD OF THE REVENUE DEPARTME NT AND CONSIDERING THE SUBMISSIONS OF THE LEARNED DR, IT IS CLEAR THAT THE AO HAS NO EVIDENCE TO SHOW THAT THE NOTICE DATED 31-03-2003 W AS EVER ISSUED THROUGH REGISTERED POST. THE PRESUMPTION U/S 27 OF THE GENERAL CLAUSES ACT WOULD BE APPLICABLE IF THE REGISTERED COVER IS PROPERLY ADDRESSED, POSTAL CHARGES PROPERLY PAID AND THE ENVELOPE/LETTE R IS POSTED BY REGISTERED POST. IN THE ABSENCE OF AVAILABILITY OF ANY POSTAL RECEIPT, IT IS DOUBTFUL THAT THE NOTICE DATED 31-03-2003 WAS POSTE D THROUGH REGISTERED POST. THEREFORE, SUCH PRESUMPTION IN THIS CASE WOUL D NOT ARISE AGAINST THE ASSESSEE. WE MAY ALSO MENTION THAT THE ASSESSEE HAS FILED COPY OF THE LETTER OF THE AO DATED 16-03-2005 (PB-9) IN WHI CH THE AO MENTIONED THAT NO NOTICE COULD BE SERVED AT THE GIVEN ADDRESS AND NOTICE U/S 143(2) OF THE IT ACT COULD BE SERVED ON 25-10-2004. THIS L ETTER OF THE AO SUPPORTS THE CONTENTION OF THE ASSESSEE THAT THE NO TICE DATED 31-03-2003 WAS NEVER SERVED UPON THE ASSESSEE WITHIN THE STATU TORY PERIOD. THE ASSESSEE ALSO FILED AFFIDAVIT TO THIS EFFECT BEFORE THE LEARNED CIT(A) DENYING SERVICE OF THE NOTICE WITHIN THE STATUTORY PERIOD WHICH IS NOT REBUTTED THROUGH ANY MATERIAL ON RECORD. IT WOULD, THEREFORE, PROVE THAT THE NOTICE DATED 31-03-2003 WAS NOT ISSUED TO THE A SSESSEE AS WELL AS NOT SERVED UPON THE ASSESSEE WITHIN THE STATUTORY P ERIOD. THE SERVICE OF NOTICE DATED 25-10-2004 BEYOND THE STATUTORY PERIOD IS OF NO CONSEQUENCE. THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF EQBAL SINGH SINDHANA (SUPRA) CLEARLY SUPPORTS THE A BOVE FINDING THAT NO NOTICE U/S 143 (2) OF THE IT ACT HAD BEEN SERVED UP ON THE ASSESSEE WITHIN THE PRESCRIBED PERIOD. THEREFORE, ASSESSMENT SHOULD HAVE BEEN DECLARED INVALID AND VOID IN LAW. IN VIEW OF THE ABOVE FINDI NG, THERE IS NO NEED TO DISCUSS THE REMAINING DECISIONS CITED BY THE LEARNE D COUNSEL FOR THE ASSESSEE. CONSIDERING THE ABOVE DISCUSSION, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND QUASH THE ASSESSMENT ORDE R U/S 143(3) OF THE IT ACT DATED 30-03-2005. ITA NO.2651/AHD/2005 SHRI DHAVAL R. CHELLANI 8 9. AS A RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED ON 07-05-2010 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : - 05-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD