Jodhpur Sahakari Bhoomi Vikas Bank, JODHPUR V. ITO, JODHPUR

ITA 323/JODH/2010

• Counselvise Citation: 32323314 RSA 2010
• Duration Of Justice: 4 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 10-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: N R MERTIA
• Keywords: Invalid notice; General deduction; Reason to believe
• Section: 143(3); 142(1); 139

Judgement Text

IN TH E INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI , ACCOUNTANT MEMBER. ITA NO . 323 /JODH/201 0 (A.Y. 200 7 - 08 ) JODHPUR SAHAKARI BHOOMI VIKAS BANK , VS. THE ITO, WARD - 3(1) , OPP. MAHAMANDIR RLY. STATION, JODHPUR. MANDORE ROAD, JODHPUR (RAJ.) PAN NO. AAALJ 0001 C (APPELLANT) (RESPONDENT) ASSESSEE BY : S HRI N.R. MERTIA. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 15 / 0 7 /201 4 . DATE OF PRONOUNCEMENT : 25 /0 7 /201 4 . O R D E R PER HARI OM MARATHA , J .M THIS APPEAL HAS BEEN FILED BY THE ASSESSEE FOR A.Y 200 7 - 0 8 AGAINST THE ORDER OF THE CIT(A), JODHPUR , DATED 11 .0 3 .201 0 . 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE, A COOPERATIVE SOCIETY, IS ENGAGED IN THE BANKING BUSINESS. FOR A.Y. 2007 - 08, IT FILED ITS RETURN OF INCOME [ROI] ON 31.10.2007 DECLARING NIL INCOME. THE NIL INCOME HAS BEEN COMPUTED AFTER CLAIMING DEDUCTION OF RS. 80,33,713/ - U/S 80P(2)(A)(I) O F THE INCOME - TAX ACT, 1961 ['THE ACT', FOR SHORT .] A S AGAINST WHICH ASSESSMENT ORDER H AS BEEN FRAMED AT A TOTAL INCOME OF RS. 80,55,622/ - ON 21.12.2009. AGGRIEVED, THE ASSESSEE FILED FIRST APPEAL AND THE LD. CIT(A) HAS APPROVED THE COMPUTATION OF TOTAL INCOME. 2.1 BEING FURTHER AGGRIEVED, T HE ASSESSEE HAS FILED SECOND APPEAL IN WHICH IT HAS RAISED VARIOUS GROUNDS . AN ADDITIONAL GROUND HAS BEEN RAISED . THE ADDITIONAL GROUND RAISED BEING A LEGAL GROUND FOR WHICH NO FURTHER INVESTIGATION OF FACTS IS REQUI RED. THE LD. D.R. DID NOT OBJECT TO THE ADMISSION OF THE GROUND BEING LEGAL GROUND. THEREFORE, THIS GROUND WAS ADMITTED . THE APPELLANT HAS FILED A CONCISE LIST OF GROUNDS. THE LEGAL GROUND IS AGAINST THE ORDER THAT IT WAS MADE BEYOND THE TIME PRESCRIBE D IN THE ACT AND THEREFORE, THE ASSESSMENT ORDER ITSELF IS BAD IN LAW. T HE ADDITIONAL LEGAL GROUND GOES TO THE VERY ROOT OF THE MATTER, THEREFORE, WE 3 CHOSE TO HEAR THE PARTIES ON THIS GROUND . I F THIS GROUND IS ALLOWED, THEN THERE WILL NO NEED TO DECIDE OTH ER GROUNDS RAISED ON MERITS OF THE CASE. 2.2 ADDITIONAL LEGAL GROUND IS REGARDING PLEA RAISED BY THE APPELLANT THAT THE ASSESSMENT ORDER DATED 21.2.2009 MADE U/S 143(3) OF THE ACT BY THE INCOME - TAX OFFICER, WARD - 3(1), JODHPUR , IS BARRED BY LIMITATION . TH E REVISED GROUNDS ALONGWITH THE ADDITIONAL GROUND, READ AS UNDER : 1. THAT IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE IMPUGNED ASSESSMENT ORDER DATED 21/02/2009 MADE U/S 143(3) BY THE INCOME TAX OFFICER, WARD - 3(1), JODHPUR AND MAINTAINED [UPHE LD SIC] BY LD. CIT(A) IS BARRED BY LIMITATION BECAUSE OF INVALID AND NON EST NOTICE U/S 143(2) ISSUED BY AN A.O. HAVING NO JURISDICTION, THEREFORE, THE ASSESSMENT ORDER IS BAD IN LAW AND DESERVES TO BE QUASHED AND CANCELLED AS THE SECOND NOTICE [ISSUED] U /S 143(2) BY THE A.O. WHO MADE THE ASSESSMENT WAS PATENTLY BARRED BY LIMITATION. 2. THAT IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN VIEW OF THE APPLICABLE STATUTORY PROVISION, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN MAINTAINING THE DI SALLOWANCE OF DEDUCTION CLAIMED U/S 80P(2)(A)(I) OF THE ACT BY THE APPELLANT WHICH DEDUCTION WAS ALSO ERRONEOUSLY 4 DISALLOWED BY THE A.O. INVOKING INAPPLICABLE PROVISIONS OF SECTION 80P(4) AND ITS OTHER CONNECTED PROVISIONS. 3. THAT THE APPELLANT URGES AND PRAYS AS AN ABUNDANT PRECAUTIONARY MEASURE AND AS AN ALTERNATIVE TO THE MAIN GROUND NO. 1, RELATING TO DENIAL OF CLAIM OF DEDUCTION U/S 80P (2)(A)(I) IF NOT DECIDED IN ITS FAVOUR, THEN IN THAT EVENT, THE LD. A.O. MAY VERY KINDLY BE DIRECTED TO ALLOW TH E DEDUCTIONS TO THE APPELLANT U/S 80P (2)(C) (II) AND 80P (2)(D) WHICH WAS CLEARLY AND UNDISPUTEDLY AVAILABLE TO IT ON THE BASIS OF FACTS ON RECORD AND IN LAW, WHICH THE LD. A.O. OUGHT TO HAVE ALLOWED THE SAME AS THE APPELLANT DID NOT CLAIM THESE DEDUCTION S IN VIEW OF ITS CLAIM OF FULL DEDUCTION OF INCOME U/S 80P(2)(A)(I) OF THE ACT. RS. 50,000/ - U/S 80P (2)(C)(II), AS GENERAL DEDUCTION. RS. 20,36,780/ - U/S 80P (2)(D), INTEREST AND DIVIDEND FROM OTHER COOPERATIVE SOCIETIES AS PER P & L A/C P.B. 102 3. FAC TS APROPOS TH E LEGAL GROUND ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME [ROI] , FOR A.Y. 2007 - 08 IN RANGE - 3, JODHPUR , ON 31.10.2007 AND AFTER THE SELECTION OF THE CASE FOR SCRUTINY, NOTICE U/S 143(2) WAS ISSUED BY THE DCIT, CIRCLE - 3, JODHPUR ON 18.8.20 08 WHICH WAS DULY SERVED ON THE ASSESSEE ON 30.9.2008. SUBSEQUENTLY, ON 26.8.2009, FRESH NOTICE U/S 143(2) OF THE ACT WAS ISSUED BY THE ITO, WARD - 3(1), JODHPUR WHICH WAS 5 ALSO DULY SERVED ON THE ASSESSEE ON 7.9.2009. ACCORDING TO THE LD. A.R., SHRI N.R. M ERTIA, THE ASSESSMENT ORDER IS CLEARLY TIME BARRED , BEING PASSED BEYOND THE TIME PERMITTED U/S 143(3) OF THE ACT. 3.1 PER CONTRA, THE CASE OF THE DEPARTMENT IS THAT THE ASSESSEE NEVER EVER BEFORE THE A.O. AS WELL AS THE LD. CIT(A) TOOK THIS PLEA AND FOR T HE FIRST TIME IT HAS BEEN RAISED BEFORE THE APPELLATE TRIBUNAL AND THEREFORE, THE JURISDICTION OF THE A.O. WHO ISSUED NOTICE CANNOT BE RAKED UP, PARTICULARLY WHEN THE ASSESSEE HAS TAKEN PART IN THE ASSESSMENT PROCEEDINGS. 3.2 BOTH SIDES HAVE PLACE D RELIANCE ON THE DECISION S WHICH ARE FAVOURABLE TO THEM IN PURSUANCE TO THIS LEGAL ISSUE. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE HAVE FOUND THAT IN CASE THE PROVISIONS OF SECTION 143( 2 ) OF THE ACT ARE CONSIDERED, THIS ASSESSMENT ORDER IS FOUND TO BE CLEARLY BEYOND LIMITATION AS PROVIDED U/S 143( 2 ) OF THE ACT WHICH READS AS UNDER: 6 143 ( 2 ) WHERE A RETURN HAS BEEN FURNISHED UNDER SECTION 139 , OR IN RESPONSE TO A NOTICE UNDER SUB - SECTION (1) OF SECTION 142 , THE ASSESSING OFFICER SHALL, (I) WHERE HE HAS REASON TO BELIEVE THAT ANY CLAIM OF LOSS, EXEMPTION, DEDUCTION, ALLOWANCE OR RELIEF MADE IN THE RETURN IS INADMISSIBLE, SERVE ON THE ASSESSEE A NOTICE SPECIFYING PARTICULARS OF SUCH CLAIM OF LOSS, EXEMPTION, DEDUCTION, ALLOWANCE OR RELIEF AND REQUIRE HIM, ON A DATE TO BE SPECIFIED THEREIN TO PRODUCE, OR CAUSE TO BE PRODUCED, ANY EVIDENCE OR PARTICULARS SPECIFIED THEREIN OR ON WHICH THE ASSESSEE MAY RELY, IN SUPPORT OF SUCH CLAIM: PROVIDED THAT NO NOTICE UNDER THIS CLAUSE SHALL BE SERVED ON THE ASSESSEE ON OR AFTER THE 1ST DAY OF JUNE, 2003;] ( II ) NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE ( I ), IF HE 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, SERVE ON THE ASSESSEE A NOTICE REQUIRING HIM, ON A DATE TO BE SPECIFIED THEREIN, EITHER TO ATTEND HIS OFFICE OR TO PRODUCE, OR CAUSE TO BE PRODUCED, ANY EVIDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETURN: 7 (II) [ PROVIDED THAT N O NOTICE UNDER CLAUSE ( II ) SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED.] 4.1 WE HAVE FOUND THAT WHEN THE NOTICE U/S 143( 2 ) OF THE ACT WAS ISSUED BY THE DCIT, CIRCLE - 3, JODHPUR ON 18.8.2008 AND SERVED ON THE ASSESSEE ON 30.9.2008 . A FRESH NOTICE DATED 26.8.2009 WAS A GAIN ISSUED TO THE ASSESSEE . ON THAT DATE THROUGH LETTER DATED 29.9.2009, REQUEST TO ADJOURN THE CASE FOR 15 DAYS WAS MADE ON BEHALF OF THE ASSESSEE - BANK. ON THIS REQUEST, THE CASE WAS ADJOURNED TO 21.10.2009. SUBSEQUENTLY, ON 6.10.2009, LETTER WAS ISSUED TO THE ASSESSEE DIRECTING IT TO FURNISH EXPLANATION ON VARIOUS POINTS RAISED BUT ON THE REQUEST OF ADJOURNMENT AGAIN THE CASE WAS ADJOURNED FOR 7 DAYS. H OWEVER, REPLY WAS FILED ON 30.11.2009 THROUGH THE AUTHORIZED REPRESENTATIVE FOLLOWED BY ANOTHER REPLY DATED 21.12.2009. AFTER CONSIDERING TH EM , THE ASSESSMENT ORDER WAS FRAMED U/S 143(1) ON 21.12.2009. IT IS TRUE THAT DURING ASSESSMENT PROCEEDINGS, AT NO POINT OF TIME, QUESTION OF JURISDICTION WAS RAISED FROM THE ASSESSEES SIDE. IT WAS REASONED BY THE A.O. THAT AFTER EXPIRY OF ONE MONTH FROM THE DATE OF SERVICE OF NOTICE ISSUED U/S 142(1) , OR AFTER COMPLETION OF ASSESSMENT, WHICH ONE IS EARLIER, THE JUR ISDICTION OF THE 8 A.O. CANNOT BE BROUGHT TO QUESTION. FURTHER RELIANCE HAS BEEN PLACED ON THE PROVISIONS OF SECTION 124(2) OF THE ACT BY THE CONCERNED ITO, WARD - 3(1), JODHPUR THROUGH HIS WRITTEN SUBMISSIONS FILED BEFORE US. 4.2 AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE HAVE FOUND THAT THE NOTIFICATION DATED 20.2.2002 SPEAKS ABOUT THE JURISDICTION ASSIGNED WITH REFERENCE TO TERRITORIES. HOWEVER, THE PREVIOUS NOTIFICATION DATED 4.9.1996, THE JURISDICTION WAS ASSIGNED ON THE BASIS OF TERRITORIES AS WELL AS INCOME/CLASSES OF PERSONS, SO ACCORDING TO IT, THE ASSESSEE BEING A COOPERATIVE SOCIETY , WAS ASSESSABLE WITH THE ITO, WARD - 2, JODHPUR. THE NOTIFICATION DATED 20.2.2002 DID NOT PRESCRIBE THE CLASSIFICATION BASED ON CLASS OF PERSONS BUT ON THE BASIS OF TER RITORIES, THE TERRITORIAL JURISDICTION OF THE ITO, WARD - 3(1). THUS THE ACIT, CIRCLE - 3 HAD NO JURISDICTION OVER THE ASSESSEES CASES AND THE NOTICE ISSUED BY HIM/HER BECOMES INVALID AND WITHOUT JURISDICTI ON AND HAS TO BE TREATED AS NON - EST IN THE EYES OF L AW. WE FIND FORCE IN THE SUBMISSIONS OF THE LD. A.R. THAT AFTER REALIZING THAT MISTAKE, THE ACIT, CIRCLE 3 MAY HAVE TRANSFERRED THE FILE TO THE ITO, WARD - 3(1) ON 20.8.2009 . IN THIS REGARD, THE ORDER - SHEET ENTRY NO. 3, COPY OF WHICH IS ENCLOSED AT PAGE 149 OF THE ASSESSEES PAPER BOOK, IS RELEVANT. THUS, WHEN THE ITO, WARD - 3(1) HAD NATURAL AND LAWFUL 9 JURISDICTION OVER THE ASSESSEES CASE AND THIS CANNOT BE TREATED AS VALID TRANSFER OF JURISDICTION THE VALID NOTICE ISSUED BY THE ITO, WARD - 3 (1) IS DATE D 26.8.2009 WHICH IS CLEARLY BEYOND THE PERMITTED TIME, EVEN AFTER THE AMENDED PROVISION OF SECTION 143(2)(II) W.E.F 1.4.2008. THEREFORE, IN ANY CASE, THE NOTICE IN QUESTION ISSUED BY THE ITO, WARD 3 IS CLEARLY BARRED BY LIMITATION. THE ASSESSMENT ORD ER FRAMED CONSEQUENT TO THIS NOTICE WOULD ALSO BECOME INVALID AND HAS BEEN BARRED BY LIMITATION. 4.3 THE LD. D.R. ARGUED THAT THE MISTAKE IN ISSUING NOTICES CAN BE CORRECTED AND RECTIFIED BY RESORTING TO SECTION 292B WHICH WAS REFUTED BY THE LD. A.R. SHR I N.R. MERTIA. HE ARGUED THAT DURING THAT PERIOD THAT SECTION WAS NOT AVAILABLE AS IT WAS INSERTED ON 1.4.2008 AND THIS SECTION SPEAKS ABOUT THE CIRCUMSTANCES RELATING TO NON - SERVICE OF NOTICE OR DELAYED SERVICE OF NOTICE OR IMPROPER SERVICE OF NOTICE WHER EAS THE ISSUE INVOLVED IN ASSESSEES APPEAL IS REGARDING ISSUANCE OF JURISDICTIONAL NOTICE. WE FIND FORCE IN THE SUBMISSIONS OF THE LD. A.R. THAT THIS ASSESSMENT MADE ON THE BASIS OF INVALID AND TIME BARRED NOTICE(S) IS BAD IN LAW AND BARRED BY LIMITATION AND DESERVES TO BE QUASHED AND CANCELLED. WE DO ACCORDINGLY BY DERIVING SUPPORT FROM THE FOLLOWING DECISIONS: 10 1. M/S ARAHAM INTERNATIONAL VS JCIT [2008] 40 TAX WORLD 133 [JD] 2. ITO VS. AMBALAL J AIN [2004] 90 TTJ 1056 [JD] 3. ACIT VS. KEWA L CHAND DAKALIA [2009] 121 TTJ 273 [JD] 4. RAJKUMAR CHAWLA VS. ITO [2005] 94 ITD 1 ACCORDINGLY, WE ALLOW THE LEGAL GROUND RAISED BY THE ASSESSEE AND QUASH THE ASSESSMENT ORDER IN QUESTION. 4.4 SINCE WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE ON THE LEGAL ISSUE, THERE IS NO NEED TO DECIDE THE OTHER ISSUES ON MERITS. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ( ORDER PRONO UNCED IN THE COURT ON 25 TH JULY , 201 4 ) . SD/ - SD/ - (N.K.SAINI) ( HARI OM MARATHA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25 TH JULY , 201 4 . VL/ 11 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR .