ITO Ward-31 (2), New Delhi V. Mehta Brothers, New Delhi

ITA 2861/DEL/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3644 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 24-06-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 05-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRENDRA KUMAR
• Assessee Lawyers: V C GAUTAM
• Keywords: Wrong claim; Assessment record
• Section: 142(1); 80HHC; 80IB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E: NEW DELHI BEFORE SHRI C.L.SETHI, JM & SHRI B.C. MEENA, AM I.T. A. NO.2822/DEL OF 2008 ASSESSMENT YEAR: 2002-03 MEHTA BROTHERS, VS INCOME-TAX OFFICER, 804, ROHIT HOUSE, WARD 31(2), NEW DELHI. 3-TOLSTOY MARG, NEW DELHI. I.T. A. NO.2861/DEL OF 2008 ASSESSMENT YEAR: 2002-03 INCOME-TAX OFFICER, MEHTA BROTHERS, WARD 31(2), NEW DELHI. VS 804, ROHIT HOUSE, 3-TOLSTOY MARG, NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY: SHRI V.C. GAUTAM DEPARTMENT BY: SHRI AMRENDRA KUMAR, SR. DR ORDER PER C.L. SETHI, JM: THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AS WE LL AS BY REVENUE AGAINST THE ORDER DATED 30.6.2008 PASSED BY THE LEA RNED CIT(A) IN THE MATTER OF AN ASSESSMENT MADE U/S 143(3)/147 OF THE INCOME- TAX ACT, 1961 (THE ACT) FOR THE ASSESSMENT YEAR 2002-03. I.T.A. NO.2822/DEL/2008: 2. WE SHALL FIRST TAKE THE APPEAL FILED BY THE ASSE SSEE. 2 3. THE FIRST GROUND RAISED BY THE ASSESSEE IS AS UN DER: THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE ACTION OF ASSESSING OFFICER WHO HAS WRONGLY ISSUED THE QUESTIONNAIRE DATED 3.10.2007 WHICH IS BAD IN LAW AND AGAINST THE REASONS RECORDED U/S 148 OF THE I.T. ACT, 1961. 4. IN THIS CASE, THE ASSESSEE FILED ITS RETURN OF I NCOME ON 29.10.2002 DECLARING TOTAL INCOME AT RS.2,80,736/-. THEREAFTER , THE AO, JAMMU RECEIVED AN INFORMATION THAT ASSESSEE HAD RECEIVED INTEREST SUBSIDY IN RESPECT OF WHICH DEDUCTION WAS CLAIMED. IN THIS LIGHT OF THIS INFORMATION, THE AO, JAMMU, ISSUED NOTICE U/S 148 ON 21.3.2007. THEREAF TER, THE AO, JAMMU HAD ISSUED NOTICE U/S 142(1) OF THE ACT REQUIRING THE A SSESSEE TO FILE PROOF OF FILING OF RETURN OF INCOME, DETAILS OF INTEREST SUB SIDY ACCOUNT, AND TO PRODUCE BOOKS OF ACCOUNTS. IN RESPONSE THERETO, ASSESSEE F ILED LETTER DATED 19.4.2007 FILING THEREWITH COPY OF INCOME-TAX RETURN, AND COP Y OF INTEREST SUBSIDY ACCOUNT. SINCE THE ASSESSEE WAS FILING THE RETURN OF INCOME AT DELHI, THE AO AT JAMMU HAD TRANSFERRED THE ASSESSMENT RECORD TO A O, DELHI. THE AO, DELHI THEN ISSUED NOTICE U/S 143(2) ON 30.8.2007 IN RESPONSE TO WHICH SHRI V.C. GAUTAM, CA HAD APPEARED BEFORE THE AO FROM TIM E TO TIME, AND THE CASE WAS DISCUSSED WITH HIM. 5. DURING THE YEAR, THE ASSESSEE HAD SHOWN EXPORT S ALES AND LOCAL SALES ALSO. IN THE REASONS RECORDED BY THE AO, THE AO RE FERRED TO INFORMATION IN 3 HIS POSSESSION THAT ASSESSEE HAD RECEIVED INTEREST SUBSIDY FROM JAMMU, WHICH COULD NOT BE CONSIDERED TO BE AN INCOME DERIV ED FROM THE INDUSTRIAL UNDERTAKING SO AS TO ALLOW DEDUCTION U/S 80IB OF TH E ACT. IN RESPONSE TO THE QUERY, THE ASSESSEE SUBMITTED THAT ASSESSEE HAD REC EIVED INTEREST SUBSIDY FROM J&K GOVERNMENT, AND ASSESSEE HAS CLAIMED DEDUC TION U/S 80HHC OF THE ACT, AND NOT U/S 80IB. THE DETAILS FURNISHED B Y THE ASSESSEE REVEALED THAT THE ASSESSEE HAD CREDITED A SUM OF RS.10 LACS IN THE ASSTT. YEAR 2000-01 AND RS.20 LACS IN THE ASSTT. YEAR 2002-03 ON ACCRUA L BASIS. SINCE THE ASSESSEE HAD ALREADY ACCOUNTED FOR THE RECEIPTS ON ACCRUAL BASIS, THE AMOUNT OF RS.1,50,000/- RECEIVED DURING THE YEAR WERE NOT TO BE TAXED ON RECEIPT BASIS. HOWEVER, SINCE INTEREST SUBSIDY CREDITED IN THE ACCOUNT IS NOT DERIVED FROM EXPORT BUSINESS, THE SAME IS NOT QUALIFIED, IN VIEW OF THE AO, FOR DEDUCTION U/S 80HHC OF THE ACT. THE AO, THEREFORE, DISALLOWED THE DEDUCTION U/S 80HHC OF THE ACT WITH REFERENCE TO TH E AMOUNT OF RS.20 LACS CREDITED BY THE ASSESSEE IN THE PROFIT ON ACCRUAL B ASIS AGAINST INTEREST SUBSIDY. 6. IN THE LIGHT OF THE ABOVE FACTS, THE ASSESSEE HA D TAKEN A GROUND BEFORE THE CIT(A) THAT THE AO HAD WRONGLY ISSUED THE QUEST IONNAIRE DATED 3.10.2007, WHICH IS BAD IN LAW AND AGAINST THE REAS ONS RECORDED U/S 148 OF 4 THE ACT. THIS GROUND RAISED BY THE ASSESSEE BEFORE THE CIT(A) HAS BEEN DECIDED AGAINST THE ASSESSEE BY CIT(A) BY OBSERVING AS UNDER: WITH REGARD TO FIRST GROUND OF APPEAL IT IS OBSERVED THAT REASONS HAVE BEEN DULY RECORDED BY THE AO BEFORE THE ISSUE OF NOTICE U/S 148. THE FACTS OF THE CASE ARE THAT INFORMATION WAS RECEIVED FROM ITO, WARD 2(1), JAMMU THAT THE ASSESSEE HAS RECEIVED INTEREST SUBSIDY ON WHICH A CLAIM OF DEDUCTION U/S 80HHC HAS BEEN MADE. IT IS SEEN THAT IN THE REASONS RECORDED THE ITO, WARD 2(1), JAMMU HAD INADVERTENTLY MENTIONED THE DEDUCTION CLAIMED AS U/S 80IB INSTEAD OF U/S 80HHC. HOWEVER, AS PER THE REMAND REPORT DATED 3.4.2008 IT HAS BEEN CLARIFIED BY THE AO THAT IN THE COMMUNICATION SENT BY ITO, WARD 291), JAMMU TO THE AOS OFFICE IN THIS REGARD, HE HAS CORRECTLY MENTIONED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80HHC ON INTEREST SUBSIDY WHICH IS NOT PERMISSIBLE UNDER THE PROVISIONS OF THE ACT. FROM THE ABOVE, IT IS SEEN THAT THE ITO, JAMMU HAD CORRECTLY INTIMATED TO THE PRESENT AO THAT THE ASSESSEE HAD MADE A WRONG CLAIM OF DEDUCTION U/S 80HHC ON INTEREST SUBSIDY ALTHOUGH INADVERTENTLY IN THE REASONS RECORDED THE DEDUCTION WAS MENTIONED AS U/S 80-IB INSTEAD OF U/S 80HHC. THE AO HAS STATED IN THE REMAND REPORT THAT IN VIEW OF THE PROVISIONS OF SECTION 292B OF THE I.T. ACT, THE INADVERTENT MISTAKE WOULD NOT RENDER THE NOTICE U/S 148 AS INVALID. THE ABOVE FACTS AND CIRCUMSTANCES HAVE BEEN CAREFULLY CONSIDERED. IT IS SEEN THAT A CORRECT INTIMATION WAS SENT TO THE PRESENT AO BY THE ITO, JAMMU AND THE INADVERTENT MISTAKE WOULD NOT RENDER THE PROCEEDINGS AS INVALID. HENCE, IT IS HELD THAT THE NOTICE U/S 148 IS VALID AND SO IS THE QUESTIONNAIRE DATED 3.10.2007. THIS DISPOSED OF GROUND NO.1 5 7. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US. 8. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTEND ED THAT AO HAD ISSUED QUESTIONNAIRE DATED 3.10.2007 ASKING THE ASS ESSEE TO JUSTIFY CLAIM OF DEDUCTION U/S 80HHC, WHICH IS AGAINST THE REASONS R ECORDED FOR ISSUING THE NOTICE U/S 148 OF THE ACT, AS IN THE REASONS RECORD ED THE AO HAS STATED THAT THE ASSESSEE HAS WRONGLY CLAIMED THE DEDUCTION U/S 80-IB OF THE ACT. HE, THEREFORE, SUBMITTED THAT THE REASONS RECORDED BY T HE AO ARE NOT IN CONSONANCE WITH THE QUESTIONNAIRE ISSUED BY THE AO SUBSEQUENTLY. 9. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T THERE IS NO IRREGULARITY OR ILLEGALITY IN THE NOTICE ISSUED U/S 148 OF THE ACT INASMUCH AS THE SAME HAVE BEEN ISSUED AFTER RECORDING THE REASO NS THAT INCOME IN THE NATURE OF INTEREST SUBSIDY HAS BEEN WRONGLY CLAIMED AS DEDUCTION. 10. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFUL LY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 11. IN THIS CASE, IT IS SEEN THAT THE ITO, WARD 1(2 ), AAYAKAR BHAVAN, PANAMA CHOWK, JAMMU HAD RECORDED REASONS FOR ISSUIN G NOTICE U/S 148 OF THE ACT, AND AFTER RECORDING THE REASONS, HE ISSUED NOTICE U/S 148 OF THE ACT ON 14.5.2007, WHICH WAS DULY SERVED UPON THE ASSESS EE ON 18.5.2007. IN RESPONSE TO THE ABOVE NOTICE ISSUED U/S 148 BY THE ITO,WARD-1, JAMMU, THE 6 ASSESSEE REPLIED THAT THE ASSESSEE WAS BEING ASSESS ED IN WARD 6(3), COMPANY WARD AT NEW DELHI. SINCE THE ASSESSEE WAS FILING THE RETURN OF INCOME AT DELHI, ITO, JAMMU HAD TRANSFERRED THE ASS ESSMENT RECORD WITH NOTICE U/S 148 TO ITO, WARD 31(2), NEW DELHI. THER EAFTER, ITO, WARD 31(2), NEW DELHI ISSUED NOTICE U/S 143(2) ON 30.8.2 007. THIS MAKES IT CLEAR THAT THE NOTICE ASSUMING JURISDICTION U/S 147 OF TH E ACT WAS ISSUED BY ITO, WARD 1(2), JAMMU, WHO HAD NO JURISDICTION OVER THE ASSESEES CASE. THE ITO, WARD 1, JAMMU HAD ACCEPTED THE OBJECTION OF TH E ASSESSEE ABOUT THE ASSESSEE BEING ASSESSED AT NEW DELHI, AND, THEN, HE TRANSFERRED THE ASSESSMENT RECORD TO ITO, DELHI. HAVING RECEIVED T HE RECORD FROM ITO, JAMMU ITO, DELHI, THEN ISSUED NOTICE U/S 143(2) TO THE ASSESSEE WITHOUT ISSUING A FRESH NOTICE U/S 148 BY HIM. THE ITO, DE LHI THEREAFTER COMPUTED THE ASSESSMENT U/S 143(3)/147 OF THE ACT, WHICH IS UNDOUBTEDLY IN PURSUANCE TO THE ASSUMING JURISDICTION BY ISSUING NOTICE U/S 148 OF THE ACT BY ITO, JAMMU. SINCE, IN THE PRESENT CASE, THE JURISDICTIO N OVER THE ASSESSEE WAS LYING WITH ITO, DELHI, HE SHOULD HAVE ISSUED A FRES H NOTICE U/S 148 OF THE ACT AFTER RECEIVING THE INFORMATION FROM ITO, JAMMU INSTEAD OF PROCEEDING DIRECTLY TO COMPLETE THE ASSESSMENT BY ISSUING NOTI CE U/S 143(2) ON 30.8.2007. SINCE THE NOTICE U/S 148 ISSUED BY ITO, JAMMU IS WITHOUT JURISDICTION INASMUCH AS ITO, JAMMU HAD NO JURISDIC TION TO ASSESS THE 7 PRESENT ASSESSEE, THE VERY ASSESSMENT COMPLETED BY THE AO, NEW DELHI, ON THE BASIS OF THE NOTICE ISSUED U/S 148 BY THE AO, J AMMU WOULD INVARIABLY BE WITHOUT JURISDICTION INASMUCH AS NO VALID PROCEEDIN GS U/S 148 HAS BEEN ISSUED BY THE AO, DELHI HAVING JURISDICTION OVER TH E PRESENT ASSESSEE. THEREFORE, ON THIS LEGAL GROUND, ASSESSMENT MADE BY THE AO, NEW DELHI, IS VOID AB INITIO AND WITHOUT JURISDICTION. WE, THERE FORE, CANCEL THE ASSESSMENT. FURTHER, THE AO, NEW DELHI SHALL BE AT LIBERTY TO I NITIATE FRESH ASSESSMENT PROCEEDINGS U/S 147OF THE ACT AS PER LAW. WE ORDER ACCORDINGLY. 12. SINCE THE ASSESSMENT MADE BY THE AO HAS BEEN HE LD TO BE ILLEGAL, AND VOID AB INITIO, THE OTHER GROUNDS RAISED BY THE ASS ESSEE, IN ITS APPEAL, NEED NO ADJUDICATION BY US. ITA NO.2861/DEL/2008 13. COMING TO THE APPEAL FILED BY THE REVENUE, WE A RE OF THE VIEW THAT THE APPEAL FILED BY THE REVENUE IN RESPECT OF CERTAIN A DDITIONS DELETED BY THE LD. CIT(A) HAS BECOME REDUNDANT IN THE LIGHT OF OUR VIE W TAKEN IN ASSESSES APPEAL THAT THE VERY ASSESSMENT FRAMED BY THE AO U/ S 147 OF THE ACT IS WITHOUT JURISDICTION. THEREFORE, THE APPEAL FILED BY THE REVENUE IS DISMISSED AS INFRUCTUOUS. 8 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN THE MANNER AS INDICATED ABOVE, AND THE APPEAL FILED BY THE REV ENUE IS DISMISSED AS INFRUCTIOUS. 15. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 30TH 2010. (B.C. MEENA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH JUNE, 2010 VIJAY COPY TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A)-XXVI, NEW DELHI 5. DR ASSISTANT REGISTRAR