Sh. Mohinder Kumar Chhabra, New Delhi V. ITO, New Delhi

ITA 3523/DEL/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4788 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 1999-2000
• Appeal Filed On: 03-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J S KOCHAR; UDAIBIR SINGH KOCHAR
• Keywords: Opportunity of being heard; Validity of assessment; Block assessment; Reassessment proceedings
• Section: 142(1); 153A; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH E EE E : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI A.D. JAIN A.D. JAIN A.D. JAIN A.D. JAIN, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO. .. .3523/DEL/2013 3523/DEL/2013 3523/DEL/2013 3523/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 1999 1999 1999 1999- -- -2000 2000 2000 2000 SHRI MOHINDER KUMAR SHRI MOHINDER KUMAR SHRI MOHINDER KUMAR SHRI MOHINDER KUMAR CHHABRA, CHHABRA, CHHABRA, CHHABRA, CB CBCB CB- -- -69, RING ROAD, 69, RING ROAD, 69, RING ROAD, 69, RING ROAD, NARAINA, NARAINA, NARAINA, NARAINA, NEW NEW NEW NEW DELHI DELHI DELHI DELHI 110 028. 110 028. 110 028. 110 028. PAN : AAAPC1181E. PAN : AAAPC1181E. PAN : AAAPC1181E. PAN : AAAPC1181E. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -27(4), 27(4), 27(4), 27(4), CIVIC CENTRE, MINTO ROAD, CIVIC CENTRE, MINTO ROAD, CIVIC CENTRE, MINTO ROAD, CIVIC CENTRE, MINTO ROAD, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 002. 110 002. 110 002. 110 002. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.S. KOCHAR, FCA AND SHRI UDAIBIR SINGH KOCHAR, ADVOCATE. RESPONDENT BY : SHRI KEYUR PATEL, SR.DR. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XVII, NEW DELHI DATED 26 TH APRIL, 2013 FOR THE AY 1999- 2000. 2. THE ASSESSEE HAS RAISED AS MANY AS NINE GROUNDS. HOWEVER , THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT FIRST GROUND NO.2 OF HIS APPEAL SHOULD BE CONSIDERED WHICH GOES TO THE ROOT OF THE MATTER AND IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF H ON'BLE JURISDICTIONAL HIGH COURT. 3. GROUND NO.2 OF THE ASSESSEES APPEAL READS AS UNDER:- ITA-3523/DEL/2013 2 THAT THE LEARNED CIT(APPEALS) ERRED IN UPHOLDING TH E VALIDITY OF ASSESSMENT ORDER PASSED U/S 147/143(3) OF THE ACT, AFTER RECORDING THE ADMISSION OF THE AO THAT NO NOTICE U/S 143(2) WAS ISSUED IN THE CASE, IGNORING THE JUDGMENT S OF THE JURISDICTIONAL HIGH COURT, COPIES OF WHICH HAD BEEN FILED BEFORE HIM, AND THUS COMMITTING CONTEMPT OF CO URT. 4. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTED B Y THE LEARNED COUNSEL THAT ADMITTEDLY IN THIS CASE, NO NOTICE UNDER SECTION 143(2) WAS SERVED. IN THE REMAND REPORT DATED 20 TH MARCH, 2007, THE ASSESSING OFFICER ADMITTED THIS FACT. HE FURTHER SUBMITT ED THAT THE ISSUE RELATING TO VALIDITY OF ASSESSMENT ORDER IN THE ABSE NCE OF NOTICE UNDER SECTION 143(2) IS COVERED IN FAVOUR OF THE ASSESSE E BY THE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ALPINE ELECTRONICS ASIA PTE. LTD. VS. DIRECTOR GENERAL OF INC OME-TAX AND OTHERS [2012] 341 ITR 247 (DELHI) AND DIRECTOR OF INCOME -TAX VS. V.R. EDUCATIONAL TRUST ORDER DATED 10 TH FEBRUARY, 2012 IN ITA NO.510/2011. 5. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF LEARNED CIT(A) AND HE STATED THAT IN THIS CASE, NOTICE UNDER S ECTION 142(1) WAS DULY ISSUED, THEREFORE, OPPORTUNITY OF BEING HEARD HA D ALREADY BEEN ALLOWED TO THE ASSESSEE. HE FURTHER STATED THAT THE ISS UE IS IN FACT COVERED IN FAVOUR OF THE REVENUE BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ASHOK CHADDHA VS. ITO [2011] 337 ITR 399 (DELHI). HE, THEREFORE, SUBMITTED THAT THE ORDER OF LEARNED CIT(A) SHOULD BE SUSTAINED AND THUS, GROUND NO.2 OF TH E ASSESSEES APPEAL SHOULD BE REJECTED. 6. IN THE REJOINDER, IT IS STATED BY THE LEARNED COUN SEL THAT THE ISSUE BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ASHOK CHADDHA (SUPRA) WAS WITH REGARD TO NOTICE UNDER SECT ION 143(2) WHERE THE ASSESSMENT WAS TO BE COMPLETED UNDER SECTION 153A OF THE ITA-3523/DEL/2013 3 INCOME-TAX ACT. THUS, THE ISSUE OF NOTICE UNDER SECTI ON 143(2) IN THE CASE OF REASSESSMENT UNDER SECTION 148 WAS NOT BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ASHOK CHADDHA (SUPRA) WHILE IN THE CASE OF V.R. EDUCATIONAL TRUST (SUPRA), IT WAS THE SAME ISSUE. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. AFTER CON SIDERING THE ARGUMENTS OF BOTH THE SIDES AND THE FACTS OF THE CASE, W E FIND THE CONTENTION OF THE LEARNED COUNSEL TO BE JUSTIFIED. T HE ISSUE BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ASHO K CHADDHA (SUPRA) WAS WHETHER THE ISSUE OF NOTICE UNDER SECTION 143(2) I S NECESSARY WHEN THE NOTICE HAS BEEN SENT IN A SEARCH CASE UNDER SE CTION 153A. HON'BLE JURISDICTIONAL HIGH COURT IN THE SAID CASE HEL D AS UNDER:- HELD, DISMISSING THE APPEAL, THAT (I) NO SPECIFIC NOTI CE WAS REQUIRED UNDER SECTION 143(2) OF THE ACT WHEN THE NO TICE AS REQUIRED UNDER SECTION 153A(1)(A) OF THE ACT WAS ALREADY GIVEN. IN ADDITION, THE TWO QUESTIONNAIRES I SSUED TO THE ASSESSEE WERE SUFFICIENT SO AS TO GIVE NOTICE TO TH E ASSESSEE, ASKING HIM TO ATTEND THE OFFICE OF THE ASSESSING OFFICER IN PERSON OR THROUGH A REPRESENTATIVE DULY AUTHORIZED IN WRITING OR PRODUCE OR CAUSE TO BE PROD UCED AT THE GIVEN TIME ANY DOCUMENTS, ACCOUNTS, AND ANY OTHER EVIDENCE ON WHICH HE MAY RELY IN SUPPORT OF THE RET URN FILED BY HIM. 8. HOWEVER, IN THE CASE OF V.R. EDUCATIONAL TRUST (SU PRA), THE ISSUE BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT WAS IDEN TICAL TO THE ISSUE IN THE PRESENT APPEAL BECAUSE THERE ALSO, THE DISPUTE WAS R EGARD TO ISSUE OF NOTICE UNDER SECTION 143(2) WHERE THE ASSESSMENT WA S REOPENED UNDER SECTION 147/148. THE CONTENTION OF THE DEPAR TMENT WAS THAT THE NOTICE HAD ALREADY BEEN ISSUED UNDER SECTION 142(1). HOWEVER, HON'BLE JURISDICTIONAL HIGH COURT DID NOT AGREE WITH THE REVENUES CONTENTION AND HELD AS UNDER:- ITA-3523/DEL/2013 4 EVEN OTHERWISE, IT IS DIFFICULT TO ACCEPT THE CONTEN TION OF THE APPELLANT THAT NOTICE UNDER SECTION 142(1) CAN BE REGARDED AS A NOTICE ISSUED UNDER SECTION 143(2) OF TH E ACT. THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VERSUS LUNAR DIAMONDS LTD. [2008] 281 ITR 1 (DEL.) HAS HELD THAT SERVICE OF NOTICE UNDER SECTION 143(2) IS MANDATORY. IT IS NOT DISPUTED THAT IN RESPECT OF THE PROCEEDINGS UNDER SECTION 147 OF THE ACT, NOTICE UND ER SECTION 143(2) IS REQUIRED AND IS MANDATED EXCEPT IN CASES COVERED BY THE FIRST AND SECOND PROVISO TO SECTION 1 48 OF THE ACT. THE PRESENT CASE IS NOT COVERED BY THE EXCEP TIONS CARVED OUT IN THE TWO PROVISOS AS THE RETURN IN THE PR ESENT CASE FILED ON OR AFTER 1 ST OCTOBER, 2005. IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME TAX AND ANOTHER VS. HOTEL BLUE MOON (2010) 321 ITR 362 (SC), THE SUPREM E COURT HAD EXAMINED THE QUESTION OF MANDATE AND NECESSITY TO ISSUE NOTICE UNDER SECTION 143(2) OF THE A CT, IN THE CASE OF BLOCK ASSESSMENT PROCEEDINGS AND IT WAS OBSERVED AS UNDER:- 23. THE OTHER IMPORTANT FEATURE THAT REQUIRES TO BE NOTICED IS THAT SECTION 158-BC(B) SPECIFICALLY REFERS TO SOME OF THE PROVISIONS OF THE ACT WHICH REQUIRES TO BE FOLLOWED BY THE ASSESSING OFFICER WHILE COMPLETING THE BLOCK ASSESSMENTS UNDER CHAPTER XIV-B OF THE ACT. THIS LEGISLATION IS BY INCORPORATION. THIS SECTION EVEN SPEA KS OF SUB-SECTIONS WHICH ARE TO BE FOLLOWED BY THE ASSESSING OFFICER. HAD THE INTENTION OF THE LEGISLATURE WAS TO EXCLUDE THE PROVISIONS OF CHAPTER XIV OF THE ACT, THE LEGISLAT URE WOULD HAVE OR COULD HAVE INDICATED THAT ALSO. A REA DING OF THE PROVISION WOULD CLEARLY INDICATE, IN OUR OPINION , IF THE ASSESSING OFFICER, IF FOR ANY REASON, REPUDIATES THE RET URN FILED BY THE ASSESSEE IN RESPONSE TO NOTICE UNDER SECTIO N 158-BC(A), THE ASSESSING OFFICER MUST NECESSARILY ISSUE NOTICE UNDER SECTION 143(2) OF THE ACT WITHIN THE T IME PRESCRIBED IN THE PROVISO TO SECTION 143(2) OF THE AC T. WHERE THE LEGISLATURE INTENDED TO EXCLUDE CERTAIN PROVISIONS FROM THE AMBIT OF SECTION 158-BC(B) IT HAS DONE SO SPECIFICALLY. THUS, WHEN SECTION 158-BC(B) SPECIFIC ALLY REFERS TO APPLICABILITY OF THE PROVISO THERETO CANNOT BE EXCLUDED. 24. WE MAY ALSO NOTICE HERE ITSELF THAT THE CLARIFICA TION GIVEN BY CBDT IN ITS CIRCULAR NO.717 DATED 14-8-1995 , HAS ITA-3523/DEL/2013 5 A BINDING EFFECT ON THE DEPARTMENT, BUT NOT ON THE COURT. THIS CIRCULAR CLARIFIES THE REQUIREMENT OF LAW IN RESP ECT OF SERVICE OF NOTICE UNDER SUB-SECTION (2) OF SECTION 143 OF THE ACT. ACCORDINGLY, WE CONCLUDE EVEN FOR THE PUR POSE OF CHAPTER XIV-B OF THE ACT, FOR THE DETERMINATION OF UNDISCLOSED INCOME FOR A BLOCK PERIOD UNDER THE PROVI SIONS OF SECTION 158-BC, THE PROVISIONS OF SECTION 142 AND SUB- SECTIONS (2) AND (3) OF SECTION 143 ARE APPLICABLE AN D NO ASSESSMENT COULD BE MADE WITHOUT ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT. (EMPHASIS SUPPLIED) 4. THE AFORESAID REASONING WILL EQUALLY APPLY TO PROCEEDINGS INITIATED UNDER SECTION 147 OF THE ACT. 9. THAT EVEN IN THE CASE OF ALPINE ELECTRONICS ASIA PT E. LTD. (SUPRA) ALSO, THE HON'BLE JURISDICTIONAL HIGH COURT QUASHED T HE ASSESSMENT PROCEEDINGS BECAUSE OF NON-ISSUE OF NOTICE UNDER SECTIO N 143(2) WITHIN TIME. IN THE SAID CASE ALSO, THE ASSESSMENT WAS REO PENED UNDER SECTION 147/148. IN THE AFORESAID CASE, THEIR LORDSHI PS OF HON'BLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- ADMITTEDLY THE PETITIONER HAD FILED RETURNS OF INCO ME PURSUANT TO THE NOTICE UNDER SECTION 147/148 BY LETTE R DATED NOVEMBER 19, 2009 ADOPTING ITS EARLIER RETURNS UNDER SECTION 139(1) OF THE ACT AND THE NOTICE UNDER SECTION 143(2) WAS ISSUED ONLY ON NOVEMBER 23, 2010. THE FINAL ASSESSMENT ORDER HAD NOT BEEN PASSED AND ONLY A DRAFT ASSESSMENT ORDER HAD BEEN PASSED. THE PROVISO TO SECTION 292BB WAS APPLICABLE. THE PRINCIPLE OF ESTOP PEL UNDER SECTION 292BB WOULD THEREFORE, NOT APPLY. IN THESE CIRCUMSTANCES, THE ASSISTANT DIRECTOR COULD NOT RELY UPO N THE MAIN SECTION 292BB AND CLAIM THAT NOTICE UNDER SECTION 143(2) WAS DEEMED TO BE SERVED WITHIN THE STIPULATED TIME. IN VIEW OF THIS POSITION, THERE WAS N O REASON WHY REASSESSMENT PROCEEDINGS SHOULD CONTINUE AS NO NOTICE UNDER SECTION 143(2) OF THE ACT WAS SERVED O N THE ASSESSEE WITHIN THE STIPULATED TIME. THE ASSESSMENT PROCEEDINGS PURSUANT TO THE NOTICES UNDER SECTION 148 O F THE ACT WERE TO BE QUASHED AND THE ASSISTANT DIRECTOR WAS TO ISSUE A NO OBJECTION CERTIFICATE TO THE PETITIO NER AS REQUIRED BY THE RESERVE BANK OF INDIA. ITA-3523/DEL/2013 6 10. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THA T ON THE FACTS OF THE ASSESSEES CASE, THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ALPINE ELECTRONICS ASIA PTE. LTD. (SUPRA) A ND V.R. EDUCATIONAL TRUST (SUPRA) WOULD BE APPLICABLE. RESPEC TFULLY FOLLOWING THE SAME, WE HOLD THAT THE ASSESSMENT COMPLETED WITHOUT ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT WAS INVALID. THE SAME IS QUASHED AND CONSEQUENTIALLY, THE ASSESSMENT ORDER PASSED I N PURSUANCE THERETO IS ALSO CANCELLED. 11. ONCE WE HAVE QUASHED THE ASSESSMENT ORDER, THE OTHE R GROUNDS RAISED BY THE ASSESSEE AGAINST THE ADDITION MADE BY THE A SSESSING OFFICER IN THE ASSESSMENT ORDER DO NOT SURVIVE FOR ADJ UDICATION. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 13 TH DECEMBER, 2013. SD/- SD/- ( (( (A.D. JAIN A.D. JAIN A.D. JAIN A.D. JAIN) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 13.12.2013 VK. COPY FORWARDED TO: - 1. APPELLANT : SHRI MOHINDER KUMAR CHHABRA, SHRI MOHINDER KUMAR CHHABRA, SHRI MOHINDER KUMAR CHHABRA, SHRI MOHINDER KUMAR CHHABRA, CB CBCB CB- -- -69, RING ROAD, 69, RING ROAD, 69, RING ROAD, 69, RING ROAD, NARAINA, NEW DELHI NARAINA, NEW DELHI NARAINA, NEW DELHI NARAINA, NEW DELHI 110 028. 110 028. 110 028. 110 028. 2. RESPONDENT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -27(4), 27(4), 27(4), 27(4), CIVIC CENTRE, MINTO ROAD, CIVIC CENTRE, MINTO ROAD, CIVIC CENTRE, MINTO ROAD, CIVIC CENTRE, MINTO ROAD, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 002. 110 002. 110 002. 110 002. 3. CIT 4. CIT(A) 5. DR, ITAT ITA-3523/DEL/2013 7 ASSISTANT REGISTRAR