Ashok Kumar Jain, New Delhi V. ITO, New Delhi

ITA 3062/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4871 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K P GANGULI
• Keywords: Procedural lapse
• Section: 143(3); 142(1); 131; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A , NEW DELHI BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI L. P. SAHU , ACCOUNTANT MEMBER I.T .A. NO. 3062/DEL/2014 ASSESSMENT YEAR: 2008 - 09 ASHOK KUMAR JAIN B - 4/158, SAFDARJUNG ENCLAVE NEW DELHI V. ITO WARD 24(1) NEW DELHI TAN/PAN: AAHPJ6589L (APP LIC ANT) (RESPONDENT) APP LIC ANT BY: SHRI K.P. GANGULI, ADVOCATE RESPONDENT BY: SHRI ARUN KUMAR YADAV, D.R. DATE OF HEARING: 07 08 201 7 DATE OF PRONOUNCEMENT: 30 08 201 7 O R D E R PER : AMIT SHUK LA J.M .: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 26/2/2014 , PASSED BY THE LD. CIT (A PPEALS ) - XXVIII , NEW DELHI FOR QUANTUM OF ASSESSMENT PASSED U/S. 14 4 OF THE INCOME TAX ACT, 1961 FOR ASSESSMENT YEAR 2008 - 09. 2. T HE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE COMMISSIONER OF INCOME TAX (APPEAL) XXVIII WAS NOT JUSTIFIED IN CONFIRMING THE ORDER PASSED BY ITO WARD 24(1) WAS NOT JUSTIFIED IN PASSING O RDER U/S 144 OF THE ACT WITHOUT SERVING NOTICE U/S 143(2) OF THE I.T. ACT WITH IN TIME. I.T.A. NO.3062/DEL/2014 2 2. THAT, ON FACTS AND IN THE CIRCUMSTANCE OF THE CASE, I. T.O. WARD 24(1) WITHOUT PREJUDICE THE STAND TAKEN IN THE GROUND NO.1 ABOVE THE COMMISSIONER OF INCOME TAX (APP EAL) XXVIII WAS NOT JUSTIFIED IN CONFIRMING THE ADDI TION OF RS.62,16,927/ - MADE BY I. T.O. AS SALE PROCEEDS OF THE SHARE OBTAINED FROM ALANKIT ASSIGNMENT LTD. 3. THE BRIEF FACTS QUA THE ISSUE OF VALIDITY OF SERVICE OF NOTICE U/S. 143(2) OF THE ACT , AS RAISED I N GROUND NO. 1 ARE THAT THE ASSESSEE IS AN INDIVIDUAL , WHO HAD FILED HIS RETURN OF INCOME ON 30/7/2008. IN THE RETURN OF INCOME, THE ASSESSEE HAD MENTIONED THE ADDRESS OF B - 4/158, SAFDARJUNG E NCLAVE, NEW DELHI 110029 . LATER ON , THE CASE OF THE ASSESSE E WAS SELECTED FOR SCRUTINY THROUGH CASS SYSTEM AND ON THE BASIS OF AIR INFORMATION , FIRST NOTICE U/S. 143(2) WAS ISSUED BY THE ASSESSING OFFICER ON 14/9/2009 , WHICH WAS SENT THROUGH REGISTERED POST. AS PER THE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER , IN RESPONSE TO SUCH NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR WERE ANY SUBMISSIONS WERE FILED. THEREAFTER , OTHER NOTICES U/S. 142(1) WERE SENT TO THE ASSESSEE, HOWEVER, ON NONE OF THE OCCASION S , ASSESSEE ATTENDED THE PROCEE DINGS OR FILED ANY REPLY OR GAVE ANY RESPONSE TO SUCH NOTICES . IT HAS BEEN FURTHER MENTIONED BY TH E ASSESSING OFFICER THAT SUMMON U/S. 131 WAS ALSO ISSUED AND WAS SERVED AT THE ADDRESS GIVEN IN THE INCOME TAX RETURN ON THE DAUGHTER OF THE ASSESSEE AND A LSO ON THE WIFE OF THE ASSESSEE. BUT AGAIN NO RESPONSE CAME FROM THE ASSESSEE S SIDE . SINCE THE ASSESSMENT WAS GETTING BARRED BY LIMITATION, THE REFORE, THE ASSESSING OFFICER HAD NO OPTION BUT TO COMPLETE THE ASSESSMENT U/S. 144 ON THE BASIS OF MATERIAL AVAILA BLE ON RECORD. FINALLY , THE ASSESSMENT WAS I.T.A. NO.3062/DEL/2014 3 COMPLETED AFTER MAKING AN ADDITION OF RS.62,19,927/ - ON ACCOUNT OF SALE OF SHARES , WHICH WAS TREATED AS INCOME OF THE ASSESSEE. 4. BEFORE THE LD. CIT (A), THE ASSESSEE CHALLENGED THE NON - SERVICE OF NOTICE U/S. 143(2) ON THE GROUND THAT THE ASSESSEE WAS NOT SERVED UPON THE NOTICE IN ACCORDANCE WITH THE LAW AND WITHIN THE STATUTORY TIME LIMIT PRESCRIBED IN TERMS OF PROVISO TO SECTION 143(2). I T WAS SUBMITTED BEFORE THE LD. CIT (A) THAT NOTICE DATED 14/9/2009 AS MENTIONE D IN THE ASSESSMENT ORDER WAS LATER ON FOUND FROM THE RECORDS TO BE ISSUED ON THE ADDRESS MENTIONED AS K - 7, GREEN PARK EXTN., NEW DELHI - 110016 , WHEREAS THE ASSESSEE S ADDRESS HAD CHANGED TO B - 4/158, SAFDARJUNG E NCLAVE, NEW DELHI 110029 F OR THE LAST S EVERAL YEARS AND IN THE RETURN OF INCOME , THE ASSESSEE HAD BEEN REGULARLY SHOWING THE ADDRESS OF SAFDARJUNG ENCLAVE ONLY. THE LD. CIT(A) RAISED THE FOLLOWING QUERIES SO AS TO CONFIRM THE CORRECT ADDRESS OF THE ASSESSEE: - ADDRESS AS PER PAN DATE O F SHIF TING TO NEW ADDRESS I.E. B - 4, 158, SAFDARJUNG ENCLAVE, NEW DELHI WHETHER ANY INTIMATION GIVEN TO THE DEPARTMENT FOR CHANGE IN ADDRESS COPY OF THE INTIMATION GIVEN. COPY OF RETURN FILED FOR ASSESSMENT YEAR 2008 - 09 COPY OF D - MAT ACCOUNT FROM WHERE THE SH ARE TRANSACTIONS HAVE BEEN MADE SOURCE OF INVESTMENT IN THE PURCHASE OF SHARES WHEN WERE THE SHARES PURCHASED WHICH WERE SOLD DURING THE YEAR. I.T.A. NO.3062/DEL/2014 4 5. IN RESPONSE, THE ASSESSEE GAVE POINT WISE REPLY A S UNDER: - WHAT IS ADDRESS OF YOUR PAN? MY PAN AAHPJ6589L HAS BEEN ISSUED ON ADDRESS K - 7 GREEN PARK EXTENSION NEW DELHI. WHEN DID YOU SHIFT TO THE NEW ADDRESS? I SHIFTED TO NEW ADDRESS B - 4/158 SAFDARJUNG ENCLA VE, NEW DELHI IN 2004, SINCE THE N MY ADDRESS IS B - 4/158 SAFDARJUNG ENCLAVE NEW DELHI WHETHER THE CHANGE O F ADDRESS HAS BEEN INFORMED TO IT OFFICE? YES, IT HAS BEEN DONE. SINCE F. Y 2005 - 06 ALL THE INCOME TAX RETURNS SUBMITTED ARE MY ADDRESS B - 4/158 SAFDARJUNG ENCLAVE, NEW DELHI INCLUDING THE INCOME TAX RETURN FOR THE A. Y. 2008 - 09. DO YOU HAVE DEMAT A /C? YES, I HAVE DEMAT A / CS., DETAILS ARE AS UNDER: - - RELIGARE SECURITIES LTD. CLIENT 10 10001348 - ALANKIT ASSIGNMENTS LTD. CLIENT 10 11041372 BOTH THE ABOVE D EMAT A / CS. BECAME DORMANT AS SINCE LAST SIX YEARS NO TRANSACTION HAS BEEN DONE, FEE IS NOT PAID AND KYC NOT SUBMITTED REQUEST TO ACTIVATE THE D EMAT A / CS. AND FORMALITIES ARE COMPLETED. DETAILS OF THE SALE OR PURCHASE OF THE SHARES DURING THE A.Y 2008 - 09, ALSO FILE D DETAIL OF SOURCE OF INCOME FROM WHERE P URCHASE AND INVESTMENT IN SHARE HAS BEEN MADE WHICH WERE SOLD DURING THE YEAR? PRESENTLY, MY CONSUL / TAX CONSULTANT IS HOSPITALIZED THEREFORE UNABLE TO GET ACCESS TO MY CASE FILE AND AT THIS POINT OF TIME UNABLE TO FURNISH THIS INFORMATION. YOU ARE REQUESTED TO GRANT ME SOME MORE TIME TO FURNI SH THIS INFORMATION. [ EMPHASIS ADDED IS OURS ] I.T.A. NO.3062/DEL/2014 5 6. HOWEVER, THE LD. CIT (A) HELD THAT , SINCE NOTICE HAS BEEN ISSUED ON THE ADDRESS OF THE ASSESSEE AS PER PAN DATA, THEREFORE, THE NOTICE HAS BEEN SENT ON THE CORRECT ADDRESS AND T HEREFORE , VALID NOTICE HAVE BEEN SERVED UPON THE ASSESSEE IN ACCORDANCE WITH THE LAW AND WITHIN STATUTORY TIME LIMIT . 7. THE LD. COUNSEL FOR THE ASSESSEE , BEFORE US SUBMITTED THAT , ONCE THE CORRECT ADDRESS HAS BEEN GIVEN IN THE INCOME TAX RETURN, THEN IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO ISSUE AND SERVE THE NOTICE ON THE ADDRESS MENTIONED IN THE RET URN OF INCOME AND NOT ON THE PAN ADDRESS , EVEN THOUGH PAN DATA BASE HAS EARLIER ADDRESS . H OWEVER, THE FACT REMAINS THAT THE ASSESSEE FOR A LONG TIME HAS BE EN SHOWING HIS ADDRESS AT B - 4/158, SAFDARJUNG ENCLAVE, NEW DELHI 110029 IN HIS INCOME TAX RETURN AND IS IN THE RECORDS OF THE DEPARTMENT SINCE ASSESSMENT YEAR 2005 - 06 , T HEREFORE, THERE WAS NO REASON TO SEND NOTICE ON THE PAN ADDRESS. ONCE NOTICE U/S. 1 43(2) HAS NOT BEEN SERVED UPON THE ASSESSEE, THEN ANY ADDITION/ ASSESSMENT MADE/ PASSED BY THE ASSESSING OFFICER VARYING THE RETURNED INCOME IS BAD IN LAW. IN SUPPORT OF HIS SUBMISSION, THE LD. COUNSEL FOR THE ASSESSEE STRONGLY RELIED UPON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF ACIT VS. HOTEL BLUE MOON [2010] 321 ITR 362 (SC) . 8. ON THE OTHER HAND, THE LD. D.R., STRONGLY RELYING UPON THE ORDER OF THE LD. CIT (A), SUBMITTED THAT THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS SYSTEM AND ACCORDI NGLY , NOTICE U/S 143(2) WAS SENT O N THE ADDRESS GIVEN IN PAN DATA BASE. N OWHERE FROM THE RECORD IT IS BORNE OUT THAT THE ASSESSEE HAS INTIMATED TO THE DEPARTMENT THAT THE ADDRESS GIVEN IN THE PAN HAS BEEN CHANGED. WHAT IS RELEVANT IS THE ADDRESS MENTIONED I N THE PAN I.T.A. NO.3062/DEL/2014 6 DATABASE AND NOT IN THE RETURN OF INCOME, THEREFORE, THE NOTICE U/S. 143(2) SENT ON THE PAN ADDRESS IS A VALID SERVICE OF NOTICE. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER AS WELL AS THE MATERI AL PLACED ON RECORD QUA THE ISSUE OF VALIDITY OF SERVICE OF NOTICE U/S 143(2) . ADMITTEDLY , THE ASSESSEE HAS FILED RETURN OF INCOME ON 30/7/2008 AND IN THE SAID RETURN OF INCOME; THE ASSESSEE HAS MENTIONED THE ADDRESS AS B - 4/158, SAFDARJUNG ENCLAVE, NEW DE LHI 110029 . NOTICE U/S. 143(2) HAS BEEN SENT BY THE ASSESSING OFFICER THROUGH SPEED POST AT THE ADDRESS K - 7, GREEN PARK EXTN., NEW DELHI - 110016 WHICH IS THE ADDRESS MENTIONED IN PAN DATABASE . T HE SAID NOTICE SENT THROUGH SPEED POST, H AS BEEN STATED BY THE ASSESSEE THAT IT HAS NOT BEEN SERVED UPON HIM , BECAUSE HE HAS BEEN STAYING IN THE ADDRESS MENTIONED IN THE RETURN OF INCOME FOR LAST SEVERAL YEARS RIGHT FROM ASSESSMENT YEAR 2006 - 07 ONWARDS AND NOT ON THE ADDRESS WHERE NOTICE WAS SENT . NOW I T IS TRIT E LAW IN WAKE OF SEVERAL JUDGMENTS OF HON BLE HIGH COURT AND THE HON BLE SUPREME COURT IN THE CASE OF HOTEL BLUE MOON (SUPRA), THAT THE ISSUANCE AND SERVICE OF NOTICE U/S. 143(2) UPON THE ASSESSEE WITHIN THE STATUTORY TIME LIMIT IS MANDATORY REQUIREMENT WH ERE THE RETURN HAS BEEN FURNISHED BY THE ASSESSEE AND THE ASSESSING OFFICER , IF CONSIDERS IT NECESSARY OR EXPEDIENT , TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDER - PAID THE TAX IN ANY MANNER. IT IS SINE QUA NON THAT IF THE ASSESSING OFFICER WANTS TO VARY THE RETURNED INCOME, THEN HE HAS TO SERVE A NOTICE U/S. 143(2) UPON THE ASSESSEE WHEN PASSING THE ASSESSMENT ORDER U/S 143(3) OR 144 OR ANY REGULAR ASSESSMENT WHICH IS BASED UPON THE I.T.A. NO.3062/DEL/2014 7 FURNISHING OF RETURN OF INCOME . THE PROVISO TO SECTION 143(2) FURTHER LAYS DOWN THE STATUTORY TIME LIMIT FOR THE SERVICE OF SUCH NOTICE WHICH PROVIDES THAT , NO NOTICE SHALL BE SERVED UPON THE ASSESSEE AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED . THIS EMBARGO OF TIME LIMIT MAKES THE SERVICE OF THE NOTICE UNDER THIS SECTION AS A JURISDICTIONAL ISSUE AND POINT OF LIMITATION . IN OTHER WORDS, THE EMBARGO OF TIME LIMIT ENSHRINED UNDER THE PROVISO MAKES THE ISSUANCE AN D SERVICE OF NOTICE U/S. 143(2) ALL THE MORE MANDATORY, IF THE ASSESSING OFFICER WANTS TO VARY THE RETURN OF INCOME AND ABSENCE OF SUCH ADHERENCE IS NOT MERE IRREGULARITY BUT GOES TO THE LEGALITY OF LIMITATION WHICH IS FATAL TO THE PASSING OF THE ASSESSMENT ORDER. 10. THE JURISDICTION TO ISSUE NOTICE U/S 143(2) IS SOLELY UPON THE ASSESSING OFFICER WHO HAS TO TAKE NOTE OF THE INCOME DECLARED IN THE RETURN OF INCO ME AND ANY OTHER INFORMATION GIVEN IN THE RETURN OF INCOME AND ONLY IF HE CONSIDERS IT NECESSARY OR E XPEDIENT THAT THE INCOME OR CLAIM ETC., HAS NOT BEEN PROPERLY STATED, HE SHALL SERVE NOTICE TO CALL UPON THE ASSESSEE TO PRODUCE ANY EVIDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF HIS RETURN OF INCOM E. TH US, THE ENTIRE INFORMATION FOR SELE CTION OF R ETURN FOR SCRUTINY U/S. 143(2) FLOWS FROM THE RETURN OF INCOME. EVEN IF A CASE HAS BEEN SELECTED FOR SCRUTINY UNDER CASS SYSTEM AND AIR INFORMATION IS SENT TO THE CONCERNED ASSESSING OFFICER, THEN THE ASSESSING OFFICER HAS TO APPLY HIS MIND ON THE RETURN O F INCOME AND ACCORDINGLY , ISSUE NOTICE UNDER SECTION 143(2) TO THE ASSESSEE. OSTENSIBLY, T HE ADDRESS MENTIONED IN THE RETURN OF INCOME HAS TO BE TAKEN AS THE ADDRESS ON WHICH NOTICE HAS TO BE SERVED AND NOT ON THE ADDRESS MENTIONED IN SOME PAN DATABASE , I.T.A. NO.3062/DEL/2014 8 BE CAUSE ASSESSEE IN THE RETURN OF INCOME MAKES THE DECLARATION AND VERIFI ES ALL THE INFORMATION GIVEN TO DEPARTMENT INCLUDING HIS ADDRESS TO THE DEPARTMENT. THOUGH IT IS REQUIRED FROM AN ASSESSEE THAT ADDRESS GIVEN IN THE PAN AND ADDRESS MENTIONED IN THE RET URN OF INCOME SHOULD BE THE SAME, HOWEVER, ONCE THE RETURN OF INCOME IS SELECTED FOR SCRUTINY, THEN THE INFORMATION FLOWING FROM THE RETURN OF INCOME ALONE HAS TO BE TAKEN INTO COGNIZANCE BY THE ASSESSING OFFICER. THEREFORE, IN THE PRESENT CASE ALSO IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO SEND AND SERVE THE NOTICE U/S 143(2) ON THE ADDRESS MENTIONED IN THE RETURN OF INCOME. HERE IN THIS CASE, IT IS NOT THE CASE THAT THE ADDRESS OF SAFDU RJANG ENCLAVE , THAT IS, ADDRESS PROVIDED IN THE RETURN OF INCOME HAS BEEN GIVEN FOR THE FIRST TIME , ALBEIT THE SAID ADDRESS IS BEING MENTIONED IN THE RETURN OF INCOME REGULARLY FILED TO THE DEPARTMENT IN THE EARLIER YEARS ALSO. ADMITTEDLY, IN THE PRESENT CASE AS CULLED OUT FROM THE IMPUGNED APPELLATE ORDER DISCUSSED ABO VE , THE NOTICE U/S 143(2) HAS NOT BEEN SEN T ON THE CORRECT ADDRESS AND THUS , NO NOTICE CAN BE SAID TO HAVE BEEN SERVED UPON THE ASSESSEE . ONCE NOTICE U/S 143(2) HAS NOT BEEN SERVED UPON THE ASSESSEE THEN , NEEDLESS TO SAY THAT THE ASSESSING OFFICER CANNOT M AKE ANY ASSESSMENT VARY ING THE RETURN OF INCOME. THIS PROPOSITION OF LAW HAS BEEN WELL SETTLED BY THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. HOTEL BLUE MOON (SUPRA) , WHEREIN THE APEX COURT HAS HELD THAT IF THE ASSESSING OFFICER, FOR ANY REASON, REPU DIATES THE RETURN FILED BY THE ASSESSEE, THEN HE MAY NECESSARILY ISSUE NOTICE U/S. 143(2) WITHIN THE PRESCRIBED TIME LIMIT AS GIVEN IN THE PROVISO TO SECTION 143(2). FURTHER O MISSION ON THE PART OF THE ASSESSING OFFICER TO ISSUE NOTICE U/S. 143(2) CANNOT B E MERE PROCEDURAL IRREGULARITY AND IS NOT CURABLE. HERE IN THIS CASE, IT HAS NOT BEEN PROVED BY I.T.A. NO.3062/DEL/2014 9 THE REVENUE THAT THE NOTICE U/S 143(2) HAS BEEN SERVED UPON THE ASSESSEE WITHIN THE STATUTORY TIME LIMIT. THUS , FOLLOWING THE LAW UPHELD BY THE HON BLE SUPREME COURT, WE HOLD THAT THE IMPUGNED ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER CANNOT BE SUSTAINED BECAUSE MANDATORY REQUIREMENT OF SERVICE OF NOTICE U/S. 143(2) WITHIN THE STATUTORY TIME LIMIT AS PRESCRIBED UNDER THE PROVISO THERETO HAS NOT BEEN COMPLI ED WITH AND, CONSEQUENTLY , THE SAID ASSESSMENT ORDER VARYING THE RETURN OF INCOME CANNOT BE SUSTAINED IN THE EYES OF LAW AND THE SAME IS QUASHED. ON THIS GROUND ALONE ASSESSEE S APPEAL IS ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRO NOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2017. SD/ - SD/ - [ L.P. SAHU ] [ AMIT SHUKLA ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH AUGUST , 2017 JJ: 0808 COPY FORWARDED TO: 1. APP ELLA NT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR