NEERAJ KUMAR, GHAZIABAD V. ITO, BAROT, BAROT

ITA 3067/DEL/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 1616 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 30-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Reassessment proceedings
• Section: 147; 148; 144; 143(3); 234B; 292BB; 143(2); 64

Judgement Text

I.T.A.No.3067/Del/2018 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “E” NEW DELHI BEFORE SHRI G.S. PANNU, HON’BLE PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER आ.अ.स ं /.I.T.A No.3067/Del/2018 /Assessment Year: 2010-11 Neeraj Kumar House No. 5, Rana Farm House, Manshi Vihar, Sector-23, Ghaziabad, Uttar Pradesh. ब म Vs. ITO Barot. PAN No. DMTPK8828J अ Appellant /Respondent िनधा रतीक ओरसे /Assessee by Shri Somil Aggarwal, Adv. राज वक ओरसे /Revenue by Ms. Garima Sharma, Sr. DR स ु नवाईक तारीख/ Date of hearing: 07.06.2022 उ ोषणाक तारीख/Pronouncement on 29.08.2022 आदेश /O R D E R PER C.N. PRASAD, J.M. This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), Merut dated 19.02.2018 for the AY 2010-11. The assessee in his appeal raised the following revised grounds of appeal: - 1. “That having regard to the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in not quashing the impugned reassessment order passed by Ld. AO on the ground that the jurisdictional and mandatory conditions u/s 147 to 151 of the Income Tax Act, 1961 have not been met. I.T.A.No.3067/Del/2018 2 2. That in any case and in any view of the matter, action of Ld. CIT(A) in not quashing the impugned reassessment order passed by Ld. AO u/s 144/147, is bad in law and against the facts and circumstances of the case and is not sustainable on various legal and factual grounds. 3. That having regard to the facts and circumstances of the case, assumption of jurisdictional in passing the impugned reassessment order dated 30.12.2016 is bad and nullity in the eyes of law as all the legal heirs have not been impleaded in accordance with law. 4. That having regard to the facts and circumstances of the case, the Ld. CIT(A) ought to have quashed the impugned reassessment order on the ground that statutory and mandatory notice u/s 143(2) has not been issued upon the assessee. 5. That having regard to the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs.1,79,81,682/- on account of alleged long term capital gain, more so when there was no transfer of any capital asset and further erred in not appreciating the fact that it was rural agricultural land therefore, nothing is chargeable to capital gain tax and impugned addition has been made by recording incorrect facts and findings and without observing the principles of natural justice. 6. That in any case and in any view of the matter, action of Ld.CIT(A) in confirming the action of Ld.AO in making addition of Rs.1,79,81,682/- on account of alleged long term capital gain, is bad in law and against the facts and circumstances of the case and is not sustainable on various legal and factual grounds. I.T.A.No.3067/Del/2018 3 7. Without prejudice, that in any case and in any view of the matter, Ld.AO has erred in law and on facts in making the calculation error while computing the capital gain tax. 8. That having regard to the facts and circumstances of the case, Ld.AO has erred in law and on facts in charging interest u/s 234A and 234B of the Income Tax Act, 1961.” 2. The Ld. Counsel for the assessee, at the outset, referring to ground no. 4 of revised grounds of appeal submits that the impugned reassessment order passed by the Assessing Officer u/s 144 read with Section 147 of the Act dated 30.12.2016 is bad in law as the statutory and mandatory notice u/s 143(2) of the Act has not been issued before completion of assessment. The Ld. Counsel referring to intimation dated 23.12.2021 issued by Income Tax Department, Office of the Income Tax Officer, Ward 1(5), Meerut submits that on a RTI application made by the assessee on 07.12.2021 seeking information as to whether any notice u/s 143(2) was issued/served during the course of entire reassessment proceedings in the case of the assessee, if yes, a certified copy of the same along with evidence of service of the said notice be provided the Ld. Counsel for the assessee submits that in reply to the RTI application the Officer intimated the assessee that notice u/s 143(2) of the Income Tax Act was not issued in the case of the assessee. Therefore, the Ld. Counsel for the assessee submits that in the absence of issue of mandatory, statutory notice u/s 143(2) of the Act before completion of the reassessment the reassessment made u/s 144/147 of the Act is bad in I.T.A.No.3067/Del/2018 4 law. Ld. Counsel placed reliance on the decision of the Hon’ble Supreme Court in the case of CIT Vs. Laxman Das Khandelwal (417 ITR 325). 3. On the other hand, the Ld. DR submits that issue of notice u/s 143(2) is only procedural in nature and non issue of such notice will not render the reassessment order bad in law. 4. Heard rival submissions, perused the orders of the authorities below and the record placed before us. On perusal of the intimation issued by Income Tax Officer, Ward 1(5), Meerut dated 23.12.2021 on an application filed under RTI by the assessee on 07.12.2021 the following reply was furnished: To, NEERAJ KUMAR H.NO. 5, RANA FARM HOUSE, SECTOR-23, SNAJAY NAGAR, MANSI VIHAR, GHAZIABAD, UTTAR PRADESH 201002, INDIA ASK ACK NO. : 272132110002 Dated: 23/12/2021 DIN & Letter No.: ITBA/ASK/F/73/2021- 22/10380682909(1) Sir/Madam/ M/s, Subject: Request for information & copies in respect of Sh. Neeraj Kumar for AY 2010-11 under Right to Information Act-2005 PAN:DMTPK8828J – regarding – Kindly refer to your application filed under RTI Act-2005 which was received in this office on 07.12.2021. The information sought (pertaining to this ward) is being provided as following: I.T.A.No.3067/Del/2018 5 Information Sought Remarks 1. “Whether any notice u/s 143(2) was issued/served during the course of entire reassessment proceeding in the above said case, if yes, please provide the certified copy of same along with evidence of service of the said notice. Notice u/s 143(2) of the Income Tax Act, 1961 was not issued in the above said case. If you are not satisfied with the information provided, you may file appeal under section 19(1) of the RTI Act-2005 before the first appellate authority i.e. the Addl./Joint Commissioner of Income Tax, Range-1(1), Meerut. RAM KUMAR SAHNI WARD 1(5), MEERUT AT BARAUT 5. As could be seen from the above intimation issued by the Income Tax Officer, Ward 1(5), Meerut notice u/s 143(2) of the Act was not issued for the AY 2010-11 in the case of the assessee. 6. The issue as to whether the assessment is valid in the absence of issue of notice u/s 143(2) of the Act came up for consideration before the Hon’ble Delhi High Court in the case of Pr. CIT vs. M/s Consortium Nussli Comfort Net (supra) and the Hon’ble Delhi High Court considering the decision of the Hon’ble Supreme Court in the case of CIT Vs. Laxman Das Khandelwal (417 ITR 325) and also various other decisions held that since notice u/s 143(2) was not issued within the period prescribed for the purpose jurisdiction assumed by the Assessing Officer u/s 143(3) of the Act was erroneous. While holding so the Hon’ble Delhi High Court held as under: - I.T.A.No.3067/Del/2018 6 “2. Ld. Counsel for the appellant states that the respondent-assessee had appeared and cooperated in the assessment proceedings and had not raised any objection about non-service of notice under section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) during the entire assessment proceedings and, therefore, the assessee was precluded from taking any objection that the notice was not issued in time in accordance with Section 292BB of the Act. 3. Ld. Counsel for the appellant states that the Tribunal has erred in ignoring Section 124(3) of the Act which mandates that issue regarding jurisdiction of Assessing Officer cannot be challenged after one month from issuance of notice under section 143(2) of the Act or after completion of assessment proceedings, whichever is earlier. 4. He also submits that Section 292BB has been interpreted by the Apex Court recently in Commissioner of Income-Tax Vs. Laxman Das Khandelwal, (2019) 417 ITR 325 (SC) wherein it has been held as under: - “9. According to section 292BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in the said section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on the part of the assessee. It is, however, to be noted that the section does not save complete absence of notice. For Section I.T.A.No.3067/Del/2018 7 292BB to apply, the notice must have emanated from the Department. It is only the infirmities in the manner of service of notice that the section seeks to cure. The section is not intended to cure complete absence of notice itself.” 5. Since the present appeal primarily deals with interpretation of Section 292BB of the Act, the same is reproduced herein below: - “292BB. Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was- a) not served upon him; or b) not served upon him in time; or c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.” 6. This Court is in agreement with the Tribunal that Section 292BB does not give the power to condone the failure or delay in issuing the statutory notice required to be issued under Section 143(2) of the Act. Section 292BB I.T.A.No.3067/Del/2018 8 deals with failure of service of notice and not with regard to failure to issue notice. (CIT vs. Rajeev Sharma, (2011) 336 ITR 678 (All. HC), CIT vs. Ponorama Builders (P) Ltd., (2014) 224 Taxman 203 (Gujarat) (MAG.) and CIT vs. Salarpur Cold Storage (P) Ltd. (2014) 50 taxman.com 105 (Allahabad). 7. The Supreme Court in Commissioner of Income Tax vs. Laxman Das Khandelwal (supra) has clearly stated that the scope of Section 292BB is to make service of notice having certain infirmities to be proper and valid. However, the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the Department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. In fact, a Division Bench of this Court in Pr. Commissioner of Income tax Vs. Shri Jai Shiv Shankar Traders (P) Ltd. (2015) 64 taxmann.com 220 (Delhi) has categorically held that the failure of the AO, in reassessment proceedings, to issue notice under Section 143(2) of the Act, prior to finalizing the reassessment order, cannot be condoned by referring to Section 292BB of the Act. The relevant portion of the said judgment reads as under: “....Section 292BB would apply insofar as failure of “service” of notice was concerned and not with regard to failure to “issue” notice....The resultant position is that as far as the present case is concerned the failure by the AO to issue a notice to the Assessee under section 143(2) of the Act subsequent to 16 th December 2010 when the Assessee made a statement before the AO to the I.T.A.No.3067/Del/2018 9 effect that the original return filed should be treated as a return pursuant to a notice under Section 148 of the Act, is fatal to the order of reassessment.” 8. Therefore, on the basis of admitted fact that notice under Section 143(2) of the Act was not issued within the period of six months prescribed for the purpose, jurisdiction assumed by the Assessing Officer under Section 143(3) of the Act was assumed erroneously. 9. Further, it is settled law that the issue of jurisdiction goes to the roots of the cause and such an issue can be raised at any belated stage of the proceeding including appeal. (Kanwar Singh Saini vs. High Court of Delhi, (2012) 4 SCC 307 and M/s Mavany Brothers vs. CIT, 2015 SCC Online Bom 1686. 10. Consequently, this Court is of the view that no substantial question of law arises for consideration in the present appeal. Accordingly, the present appeal is dismissed.” 7. Ratio of the decision of the Hon’ble Supreme Court and the decision of the Delhi High Court (supra) squarely applies to the facts of the assessee’s case. Thus, respectfully following the above decision, we hold that the reassessment order passed by the Assessing Officer u/s 144 read with Section 147 is void ab initio and bad in law. Accordingly, we quash the reassessment order passed by the Assessing Officer. Ground no. 4 of revised grounds of appeal of the assessee is allowed. I.T.A.No.3067/Del/2018 10 8. Since, we have decided ground no. 4 in favour of the assessee, we are not inclined to decide other grounds on merits as they become only academic at this stage. 9. In the result, appeal of the assessee is allowed as indicated above. Order pronounced in the open court on 29/08/2022 Sd/- Sd/- (G.S. PANNU) (C.N. PRASAD) PRESIDENT JUDICIAL MEMBER Dated: 29.08.2022 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi