SAARA Homes, Hyd, Secunderabad V. ACIT, Circle-8(1), Hyd, Hyderabad

ITA 308/HYD/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5931 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 26-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV BENJWAL
• Keywords: Period of limitation; Procedural lapse; Assessment record; Time period of passing order
• Section: 28; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B BENCH: HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA. NO.308/HYD/2015 ASSESSMENT YEAR: 2009 - 2010 M/S. SAARA HOMES, 9 - 8 - 21, CHOTA BAZAR LANE, GOLCONDA, HYDERABAD - 008. PAN: AAYFS 3662 G VS. ACIT, CIRCLE - 8(1), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI K.C. DEVDAS FOR REVENUE : SHRI RAJEEV BENJWAL, DR DATE OF HEARING : 24.05.2018 DATE OF PRONOUNCEMENT : 24 .05.2018 ORDER PER D. MANMOHAN , VP. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY CIT (A) - 2, HYDERABAD AND IT PERTAINS TO ASSESSMENT YEAR 2009 - 2010. 2. THE ASSESSEES MAIN CONTENTION BEFORE THE TRIBUNAL WAS THAT THE ORDER PASSED BY THE ASSESSING OFFICER, WITHOUT PROPER SERVICE OF NOTICE U/S 143(2) OF THE ACT, IS BAD IN LAW AND THEREFORE LIABLE TO BE QUASHED . BRIEF FACTS IN THIS REGARD ARE AS UNDER. 3. ASSESSEE - FIRM I S A BUILDER. FOR THE YEAR UNDER CONSIDERATION, IT DECLARED TAXABLE INCOME OF RS. 23,90,040/ - , WHICH WAS PROCESSED ACCORDINGLY U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER WANTED TO CONVERT THE CASE INTO SCRUTINY CASE AND , ACCORDINGLY , CLAIM S TO HAVE ISSUED A NOTICE U/S 143(2) OF THE ACT ON 29.09.2010 WHEREAS THE LAST DATE FOR CONVERTING THE CASE TO SCRUTINY WAS 30.09.2010. ACCORDING TO THE ASSESSING OFFICER A NOTICE WAS SERVED BY AFFIXTURE ON 29.09.2010 2 AND SINCE THE ASSESSEE HAS NOT REPRES ENTED DESPITE NUMBER OF OPPORTUNITIES, FURTHER NOTICES WERE ALSO SERVED BY AFFIXTURE AND THEREAFTER COMPLETED THE ASSESSMENT TO THE BEST OF HIS JUDGMENT U/S 144 OF THE ACT. VIDE ORDER DATED 30.12.2011 THE TAXABLE INCOME WAS DETERMINED AT RS. 58,04,230/ - . THIS ORDER WAS SERVED PERSONALLY UPON THE AGENT OF THE ASSESSEE ON 16.02.2012, WHEREIN AGAIN THE OLD ADDRESS WAS MENTIONED AND THE NAME OF THE ASSESSING OFFICER WAS SHOWN AS ACIT, WARD - 8(1), HYDERABAD. 4. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE LD. CIT( A) THAT THE ORDER PASSED U/S 144 OF THE ACT IS BAD IN LAW SINCE THERE WAS NO VALID SERVICE OF NOTICE. IT WAS ALSO CONTENDED THAT EVEN THE NOTICE ISSUED U/S 143(2) WAS NOT SERVED IN ACCORDANCE WITH RULE - 17 OF ORDER V OF CPC AND THEREFORE IT IS BAD IN LAW. IT WAS STATED THAT THE ASSESSEE HAS COMMUNICATED THE CHANGE OF ADDRESS VIDE LETTER DATED 16.11.2010 BUT THE SERVICE BY AFFIXTURE WAS MADE AT THE OLD ADDRESS. IN OTHERWORDS, THE PLEA OF THE ASSESSEE APPEARS TO BE THAT THERE IS NO ACTUAL SERVICE OF NOTICE ; SINCE 30.09.2010 IS THE LAST DATE FOR SERVICE OF NOTICE U/S 143(2), THE DATE WAS MENTIONED AS 29.09.2010 BUT THERE IS NO ACTUAL SERVICE OF NOTICE. 5. IT WAS ALSO CONTENDED THAT THE ORDER ITSELF IS BARED BY LIMITATION SINCE THERE WAS INORDINATE DELAY BETW EEN THE DATE OF ORDER AND DATE OF ITS SERVICE AND THEREFORE A STRONG PRESUMPTION CAN BE RAISED THAT THE ORDER WAS NOT PASSED O N THE DATE SPECIFIED IN THE NOTICE. THE DISALLOWANCE OF EXPENDITURE WAS ALSO ONE OF THE ISSUES CONTESTED BEFORE THE LD. CIT(A). 6. THE PRIMARY CONTENTION OF THE ASSESSEE WAS THAT THE ASSESSING OFFICER H AS NOT INDICATED THE CIRCUMSTANCES UNDER WHICH THE NOTICE U/S 3 143(2) WAS SERVICED BY AFFIXTURE WHEN THE CORRECT ADDRESS OF THE APPELLANT WAS COMMUNICATED TO THE A.O. VIDE LETTER DATE D 16.09.2010. 7. LD. CIT(A) HAS NOT DISPUTED THE FACTS. IN FACT THERE IS NOTHING ON RECORD TO SUGGEST THAT THE FACTUAL MATRIX OF THE CASE WAS LOOKED INTO BY THE COMMISSIONER. HE MERELY RELIED UPON SOME CASE - LAW AND REFERRED TO SECTION 292B OF THE ACT TO CONCLUDE THAT ASSESSMENT MADE ON MERITS NEED NOT BE QUASHED MERELY ON THE GROUND THAT THERE WAS NO PROPER SERVICE OF NOTICE. IN OTHER WORDS, ONE SHOULD NOT TAKE A NARROW VIEW / HYPER TECHNICAL VIEW. HE THUS CONFIRMED THE ORDER OF THE ASSESSING OFFICER. FURTHER AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 8. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT(A) HAS NOT GIVEN ANY REASONS WHATSOEVER WITH REGARD TO THE MAIN PLEA RAISED BY THE ASSESSEE AND THEREFORE IT HAS TO BE ASSUMED TH AT THERE WAS NO PROPER SERVICE OF NOTICE U/S 143(2) , IN WHICH EVENT THE ASSESSMENT MADE CONSEQUENT TO THE SERVICE OF NOTICE, WHICH IS THE BASIS FOR ASSUMING JURISDICTION, DESERVES TO BE QUASHED. IN THIS REGARD, HE RELIED UPON THE FOLLOWING DECISIONS: (I) ACIT VS. HOTEL BLUE MOON (321 ITR 362) (SC) ISSUE OF NOTICE U/S 143(2) WITHIN PRESCRIBED TIME IS MANDATORY AND IT IS NOT A PROCEDURAL IRREGULARITY AND HENCE NOT CURABLE. REQUIREMENT OF NOTICE U/S 143(2) CANNOT BE DISPENSED WITH. (II) CIT VS. GUJARAT FOILS LTD (37 7 ITR 324) (GUJ.) SERVICE OF NOTICE U/S 143(2) IS MANDATORY TO ASSUME JURISDICTION. (III) ITO VS. RAJESH AGARWAL (42 ITR (TRIB.) 39) NOTICE ISSUED ON LAST DAY OF LIMITATION BY SPEED POST NO LIKELIHOOD OF SERVICE OF NOTICE BY MIDNIGHT ON SAME DAY SERVICE OF NOTICE BY AFFIXTURE WITH INTENTION TO CREATE EVIDENCE REGARDING SERVICE IT IS NOT A VALID SERVICE. 8.1. LEARNED COUNSEL FOR THE ASSESSEE ALSO RELIED UP ON A RECENT DECISION OF ITAT HYDERABAD BENCH IN THE CASE OF SRI ANTHI REDDY YAMIREDDY VS. DCIT (ITA NO.96/HYD/2017, DATED 23.05.2017) WHEREIN THE BENCH OBSERVED THAT SERVICE OF NOTICE IS MANDATORY AND THE PROCEDURE FOR SERVICE OF NOTICE HAS TO BE MANDATORILY FOLLOWED IN ORDER 4 TO VALIDATE ASSESSMENT PROCEEDINGS. IN THE SAID CASE THERE WAS NO ATTEMPT TO SERVE NOTICE ON THE ASSESSEE EVEN BY POST AND THERE WAS NO REPORT ON RECORD THAT ANY OF THE METHODS PRESCRIBED FOR SERVICE OF NOTICE BY AFFIXTURE WAS FOLLOWED BY THE A.O. / ITI. IN SUCH AN EVENT, THE BENCH CONCLUDED THAT PROCEEDINGS INITIATE D BY THE REVISIONAL AUTHORITY DESERVES TO BE QUASHED. A RECENT DECISION OF THE ITAT HYDERABAD B BENCH IN THE CASE OF SHOBAREDDY TIKKAVARAPU VS. ITO (ITA NO.1445/HYD/2016, DATED 18.04.2018) WAS ALSO ON THE SAME ISSUE WHEREIN THE BENCH OBSERVED THAT THERE IS NO PROOF OF SERVICE OF NOTICE BY REGISTERED POST AND THERE WAS NO RECORDING IN THE ORDER SHEET NOTING WITH REGARD TO THE ISSUANCE OF NOTICE. EVEN WITH REGARD TO THE SERVICE OF NOTICE BY AFFIXTURE, IT WAS STATED THAT THE PROCEDURE PRESCRIBED U/S CPC WAS NOT FOLLOWED BY ITI. SECTION 282 OF THE INCOME TAX ACT, 1961 PRESCRIBED THE MODES OF SERVICE WHEREIN THERE IS A REFERENCE TO PROCEDURE PRESCRIBED IN CPC WHEREBY A DUTY IS CAST UPON THE ASSESSING OFFICER TO MAKE A REAL AND SUBSTANTIAL EFFORT TO FIND OUT THE PERSON ON WHOM NOTICE HAS TO BE SERVED AND AFTER USING DUE DILIGENCE, IF THE NOTICE COULD NOT BE SERVED ON THE PERSON CONCERNED HE HAS TO OPT FOR THE ALTERNATIVE MODE I.E., SERVICE BY AFFIXTURE AND IN SUCH AN EVENT SERVING OFFICER HAS TO SPECIFY THE N AME AND ADDRESS OF THE PERSON BY WHOM THE HOUSE OR PREMISES WAS IDENTIFIED AND IN WHOSE PRESENCE THE COPY OF THE SUMMON WAS AFFIXED AS OTHERWISE IT CANNOT BE TREATED AS A VALID SERVICE OF NOTICE. 9. BY PLACING RELIED UPON THE AFORESAID DECISION, LEARNED CO UNSEL FOR THE ASSESSEE SUBMITTED THAT ONUS IS UPON THE REVENUE TO PROVE THAT THERE IS A VALID SERVICE OF NOTICE WHEREAS IN THE INSTANT CASE, DESPITE NUMBER OF ADJOURNMENTS WERE GRA N TED TO REVENUE TO OBTAIN ASSESSMENT RECORD, TILL DATE NOTHING HAS BEEN PLACE D ON RECORD TO SHOW THAT THERE IS PROPER SERVICE OF NOTICE . LEARNED COUNSEL FOR THE ASSESSEE ADVERTED OUR ATTENTION TO PAGE 5 OF THE PAPER BOOK TO SUBMIT THAT A LETTER WAS 5 ADDRESSED TO THE ITO, WARD - 8(2), HYDERABAD WITH A COPY TO ITO, WARD - 6(4), HYDERABA D INFORMING THE CHANGE OF ADDRESS FOR THE FIRMS OFFICE BUT THE ASSESSING OFFICER MENTIONED THE OLD ADDRESS IN THE ASSESSMENT ORDER WHICH INDICATES THAT THERE WAS NO PROPER SERVICE OF NOTICE. 10. WHEN THE LEARNED DEPARTMENTAL REPRESENTATIVE POINTED OUT THA T THE ASSESSMENT ORDER WAS ACTUALLY SERVED UPON THE ASSESSEE WHEREIN THE OLD ADDRESS WAS MENTIONED, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS NO SERVICE AT ALL BUT THE OFFICE OF THE ASSESSING OFFICER PERSONALLY DIRECTED ONE OF THE PERSONS F ROM THE OFFICE OF SAARA HOMES AND SERVED A COPY OF THE ASSESSMENT ORDER ON HIM. THE TIME WAS ALSO MENTIONED I.E., 3 PM WHICH SHOWS THAT IT WAS NOT A SERVICE BY POST OR AT THE ADDRESS MENTIONED THEREIN. AT ANY RATE, THE PLEA OF ASSESSEES COUNSEL W ITH REGARD TO THE SERVICE OF NOTICE BY AFFIXTURE , TO E NABLE THE ASSESSING OFFICER TO TAKE UP THE CASE FOR SCRUTINY - WAS NOT TAKEN NOTE OF BY THE LD. CIT(A) AND HE SUB MITTED THAT HE IS UNABLE TO UNDERSTAND THE REASONS GIVEN BY THE COMMISSIONER WHICH ARE AT TANGENT FROM THE MAIN CLAIM OF THE ASSESSEE. 11. ON THE OTHER HAND, LD DR ADMITTED THAT THE REASONS GIVEN BY CIT(A) ARE AT VARIANCE FROM THE MAIN CLAIM OF THE ASSESSEE. AT THIS STAGE, WE MAY ADMIT THAT EVEN WE ARE UNABLE TO UNDERSTAND AS TO WHY THE LD. CIT(A) HAS MENTIONED ABOUT THE OBSERVATIONS OF JUSTICE ROWLATT ETC., - BY SIDELINING THE MAIN ISSUE AS TO WHETHER THERE WAS FACTUALLY ANY SERVICE OF NOTICE OR NOT - IN CONNECTION WITH ASSUMPTION OF JURISDICTION FOR MAKING ASSESSMENT U/S 143( 3) OF THE ACT. 12. WE HAVE ALSO CAREFULLY HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. THE MAIN CONTENTION OF THE ASSESSEE IS THAT THE ASSESSING OFFICER HAS NOT SERVED THE NOTICE AT THE PROPER ADDRESS AND EVEN THE SO CALLED SERVI CE BY AFFIXTURE IS NOT AS PER THE PROCEDURE PRESCRIBED U/S 28 2 OF THE ACT. IT WAS ALSO CLAIMED THAT 6 IN ORDER TO SELECT THE CASE FOR SCRUTINY ORDINARILY A NOTICE SHOULD HAVE BEEN SENT BY SPEED POST / REGISTERED POST WHEREAS THE ALLEGED CLAIM OF THE ASSESSI NG OFFICER THAT IT WAS SERVED BY AFFIXTURE ON ALMOST LAST DAY OF LIMITATION PERIOD SHOWS THAT THE INITIATION OF PROCEEDINGS WERE SUBSEQUENT TO THE DATE OF LIMITATION PERIOD AND IN FACT THERE WAS NO SERVICE OF NOTICE BY AFFIXTURE. IN FACT ASSESSMENT CAME T O BE MADE U/S 144 WITHOUT PROPER PROOF OF SERVICE OF NOTICE AT ANY POINT OF TIME. 13. THOUGH THE CASE WAS ADJOURNED FROM TIME TO TIME, ON NUMBER OF OCCASIONS , NO EVIDENCE WAS PLACED BY THE LD DR TO CONTRADICT THE CLAIM OF THE ASSESSEE. UNDER THESE CIRCUMSTANCES AND RESPECTFULLY FOLLOWING THE DECISIONS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE, MORE PARTICULARLY THE LATEST DECISION OF THE ITAT HYDERABAD BENCH IN THE CASE OF SHOBHAREDDY TIK KAVARAPU (SUPRA), WE ARE OF THE VIEW THAT THERE IS NO PROOF OF SERVICE BY AFFIXTURE AS PER THE PROCEDURE PRESCRIBED U/S 282 , WHICH IN TURN REFERS TO THE PROCEDURE PRESCRIBED UNDER CPC , AND HENCE THERE IS NO VALID SERVICE OF NOTICE IN WHICH EVENT THE ASSESS MENT MADE CONSEQUENT THERETO DO NOT STAND IN THE EYE OF LAW. CASE LAW RELIED UPON BY THE LD. CIT(A) ARE NOT ON THE ISSUE ON HAND AND HENCE, DISTINGUISHABLE. 14. THE ASSESSMENT MADE IN THIS CASE IS HEREBY QUASHED AND WE ALLOW THE APPEAL OF THE ASSESSEE, AS PRONOUNCED IN THE OPEN COURT ON 24 TH MAY, 2018. SD/ - SD/ - (S. RIFAUR RAHMAN) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED: 24 TH MAY, 2018. 7 OKK, SR.PS COPY TO 1. SEKHAR & CO., 133/4, R.P.ROAD, SECUNDERABAD 500003. 2. ACIT, CIRCLE - 8(1), I T TOWERS, MASAB TANK, HYDERABAD. 3. CIT (A) - 2, HYDERABAD. 4. PR. CIT - 2, HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE