DCIT CC 7(3), MUMBAI V. RAJMAL R. VANIGOTA, MUMBAI

ITA 3862/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5894 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 26-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR RAJEEV HARIT
• Keywords: Search and seizure; Procedural lapse; Set aside
• Section: 153A; 201; 143(2); 147; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE S HRI G.S. PANNU (VP ) AND SHRI RAM LAL NEGI (JM) ITA NO. 3862/MUM/2017 ASSESSMENT Y EAR: 2011 - 12 THE DCIT CC 7(3), ROOM NO. 655, AAYAKAR BHAVAN, M.K. ROAD, NEW MARINE LINES, MUMBAI - 4 00020 VS. SHRI RAJMAL R VANIGOTA, 1205, SUMER TOWERS, 108 MOTISHA LANE, MAZGAON, MUMBAI - 400010 PAN: AACPV5786E (APPELLANT) (RESPONDENT) REVENUE BY : DR. RAJEEV HARI T ( D R ) ASSESSEE BY : SHRI RAJEEV KHANDELWAL (A R ) DATE OF HEARING: 26 /09 /201 8 DATE OF PRONOUNCEMENT: 21 / 12 /201 8 O R D E R PER RAM LAL NEGI, JM THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 03.03.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 48 ( FOR SHORT THE CIT(A) , MUMBAI, FOR THE ASSESSMENT YEAR 2011 - 12 , WHEREBY THE LD. CIT(A) HAS PARTLY ALLOWED T HE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED U/S 147 R.W.S. 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRI EF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE ACTION U/S 132 (1) OF THE ACT WAS CARRIED OUT IN THE LODHA GROUP OF CASES OF BY INVESTIGATION WING ON 10.01.2011. THE ASSESSEE BEING AN ENTITY BELONGING TO TH E LODHA GROUP WAS ALSO COVERED IN THE SEARCH AN D SEIZURE ACTION. ACCORDINGLY NOTICE U/S 153A (1) (A) WAS ISSUED AND THE ASSESSEE WAS DIRECTED TO FURNISH RETURN OF INCOME FOR THE VARIOUS ASSESSMENT YEARS INCLUDING THE ASSESSMENT YEAR UNDER CONSIDERATION. IN RESPONSE THEREOF , THE ASSESSEE FILED HER RETUR N OF INCOME 2 ITA NO . 3862/MUM/2017 ASSESSMENT YEAR: 2011 - 12 DECLARING THE TOTAL INCOME OF RS. 1,43,97,770/ - . THE RETURN WAS PROCESSED U/S 143 (1) OF THE ACT. SUBSEQUENTLY, THE ASSESSMENT WAS RE - OPENED BY ISSUING NOTICE U/S 148 OF THE ACT O N THE GROUND THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT . THE COPY OF REASONS RECORDED WAS PROVIDED TO THE ASSESSEE. THE ASSESSEE FILED OBJECTION AGAINST THE REOPENING OF THE ASSESSMENT. HOWEVER, T HE AO REJECTING THE CONTENTIONS OF THE ASSESSEE COMPLETED THE ASSESSMENT U/S 147 R.W.S. 143 (3) OF THE ACT WITHOUT ISSUING NOTICE U/S 143(2) OF THE ACT AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 39,52,20,840/ - AFTER MAKING VARIOUS ADDITIONS AND DISALLOWANCES. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A). THE LD. CIT (A) AFTER HEARING THE ASSESSEE DECIDED THE LEGAL GROUND IN FAVOUR OF THE ASSESSEE AND QUASHED THE ASSESSMENT ORDER PASSED BY THE AO HOLDING THAT ASSESSMENT ORDER PASSED WITHOUT ISSUING NOTICE U/S 143 (2) IS INVALID AND BAD IN LAW . 3 . AGGRIEVED BY THE ORDER OF LD. CIT (APPE AL S ), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUNDS : - 1. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN HOLDING THE ASSESSMENT MADE BY THE AO U/S 147 R.W.S. 143 (3) TO BE INVALID ON THE GROUND THAT NOTICE U/S 143 (2 ) WAS NOT ISSUED BY THE ASSESSING OFFICER. 1. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) FAILED TO APPRECIATE THAT NO RETURN OF INCOME WAS FILED BY THE ASSESSEE IN RES PONSE TO THE NOTICE U/S 148 AND ONLY A LETTER WAS FILED STATING THAT THE ORIGINAL RETURN FILED ON 29.09.2011 BE TREATED AS A RETURN FILED IN RESPONSE TO THE NOTICE U/S 148. 1. (C) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A ) FAILED TO APPRECIATE THAT A NOTICE U/S 143 (2) CAN BE ISSUED ONLY WITHIN SIX MONTHS FROM THE END OF FINANCIAL YEAR IN WHICH THE RETURN OF INCOME IS FILED BY THE 3 ITA NO . 3862/MUM/2017 ASSESSMENT YEAR: 2011 - 12 ASSESSEE AND THE NOTICE U/S 143 (20 COULD NOT HAVE BEEN ISSUED IN 2013 ON A RETURN OF INCOME FILED ON 29.09.2011 4. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE LD.CIT (A) HAS WRONGLY QUASHED THE ASSESSMENT ORDER PASSED U/S 147 R.W.S 143 (3) OF THE ACT , HOLDING THE SAME TO BE INVALID ON THE GROUND THAT THE AO HAS NOT I SSUED NOTICE U/S 143 (2) TO THE ASSESSEE , IGNORING THE FACT THAT THE ASSESSEE HAS NOT FILED THE RETURN IN RESPONSE TO THE NOTICE ISSUED U/S 148 OF THE ACT AND FURTHER NOT APPRECIATING THE FACT THAT NOTICE U/S 143 (2) CAN BE ISSUED ONLY WITHIN SIX MONTHS F ROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN OF INCOME IS FILED BY THE ASSESSEE. THE LD. DR FURTHER SUBMITTED THAT SINCE THE FINDINGS OF THE LD. CIT (A) IS ERRONEOUS , THE SAME IS LIABLE TO BE SET ASIDE. THE LD. DR RELIED ON THE DECISION OF THE HON BLE HIGH COURT OF ALLAHABAD, LUCKNOW BENCH IN THE CASE OF CIT VS. SATYANARAYAN KESHAB RAM PVT. LTD. (2008) 173 TAXMANN 402 (ALL), AND THE DECISION OF THE HONBLE HIGH COURT OF PUNJAB & HARYANA (2007) 163 TAXMAN 234 (P&H) IN SUPPORT OF HIS CONTENTION. 5. O N THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE RELYING ON THE FINDINGS OF THE LD. CIT (A) SUBMITTED THAT SINCE THE FINDINGS ARE BASED ON THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. HOTEL BLUE MOON (2010) 188 TAXMAN 113 (SC) , THE HONBLE GUJARATE HIGH COURT IN THE CASE OF CIT VS. KM RAVJI ITA NO 771 OF 2010 , H ONBLE HIGH COURT OF KERALA IN THE CASE OF TRAVANCORE DIAGNOSTICS (P) LTD. VS. ACIT 319 ITR 167 AND HONBLE HIGH COURT OF MADRAS IN THE CASE OF COMMISSIONER OF INCOME TAX, CHENNAI VS. ALSTOM T&D INDIA LTD. (2014) 45 TAXMANN.COM 424 (MADRAS ) THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT (A) TO INTERFERE WITH. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD IN THE LIGHT OF THE RIVAL CONTENTIONS. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT (A) HAS WRONGLY SET ASIDE THE ASSESSMENT ORDER PASSED U/S 147 R.W.S. 143 (3) OF THE ACT , ON THE GROUND THAT THE AO HAS NOT ISSUED NOTICE U/S 143 (2) 4 ITA NO . 3862/MUM/2017 ASSESSMENT YEAR: 2011 - 12 OF THE ACT. THE REVENUE HAS FURTHER CONTENDED THAT SINCE THE ASSESSEE HAS NOT FILED ANY RETURN IN RESPONSE TO THE NOTICE U/S 148 AND ONLY A LETTER WAS FILED STATING THAT THE ORIGINAL RETURN FILED ON 29.09.2011 BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148. MOREOVER, THE NOTICE U/S 143 (2) CAN BE ISSUE D ONLY WITHIN SIX MONTHS FROM THE END OF THE FINANCIAL YEAR . THE FUNDAMENTAL ISSUE RAISED BY THE ASSESSEE IS THAT SINCE THE NOTICE U/S 143 (2) IS MANDATORY, AS PER THE SETTLED LAW, THE AO WAS REQUIRED TO ISSUE NOTICE EVEN IF THE ASSESSEE HA D REQUESTED TO T REAT THE ORIGINAL RETURN AS THE RETURN IN RESPONSE TO THE NOTICE ISSUED U/S 148. THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. ALSTOM T&D INDIA LTD. (SUPRA) HAS HELD THAT WHEN THE ASSESSEE HAD REQUESTED THE AO TO TREAT THE ORIGINAL RETURN FILED A S THE RETURN IN RESPONSE TO NOTICE U/S 148 FURTHER PROCEEDINGS REGARDING COMPLIANCE OF THE PROCEDURE U/S 143 (2) IS MANDATORY IN NATURE. ACCORDINGLY, T HE HONBLE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL AND DISMISSED THE APPEAL OF THE REVENUE. THE HO NBLE SUPREME COURT IN THE CASE OF ACIT VS. HOTEL BLUE MOON (2010) 188 TAXMAN 113 (SC), HAS HELD THAT OMISSION TO ISSUE NOTICE U/S 143 (2) IS NOT A PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE AS THE REQUIREMENT OF NOTICE U/S 143 (2) CANNOT BE DISPE NSED WITH. SIMILARLY, THE HONBLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. KM RAVIJ (SUPRA) HAS TAKEN THE SIMILAR VIEW. ON THE OTHER HAND, THE FACTS OF THE CASES RELIED UPON BY THE LD. DR ARE DIFFERENT FROM THE FACTS OF THE PRESENT CASE AS IN THE CASE OF CIT VS. SATYANARAYAN KESHAB RAM PVT. LTD . (SUPRA), THE HONBLE HIGH COURT OF ALLAHABAD HAS HELD THAT SECTION 148 HAS BEEN AMENDED BY THE FINANCE ACT, 2006 AND THE PERUSAL OF THE SAID PROVISIONS SHOWS THAT THE NOTICE ISSUED U/S 143 (2 ) AFTER EXPIRY OF THE PERIOD OF 12 MONTHS SPECIFIED IN PROVISO TO SUB SECTION (2) OF SECTION 143 OF THE ACT BEFORE MAKING ASSESSMENT, RE - ASSESSMENT OR RE - COMPUTATION AS SPECIFIED IN SUB SECTION (2) OF SECTION 153 OF THE ACT SUCH NOTICE SHALL BE DEEMED TO BE A VALID NOTICE. BUT IN THE PRESENT CASE THE NOTICE WAS NOT AT ALL ISSUED BY THE AO. SIMILARLY, THE FACTS OF THE CASE IN MITTAL ALLOYS 5 ITA NO . 3862/MUM/2017 ASSESSMENT YEAR: 2011 - 12 & STEELS VS. COMMISSIONER OF INCOME TAX (SUPRA) THE FACTS OF THE CASE ARE DIFFERENT. HENCE, IN OUR CONSIDERED VIEW, THE FINDINGS OF THE LD. CIT(A) ARE BASED ON THE PRINCIPLES OF LAW LAID DOWN BY THE HONBLE SUPREME COURT AND HIGH COURTS DISCUSSED IN THE FOREGOING PARAS. WE THEREFORE, UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS ALL THE GROUNDS OF APPEAL OF THE REVENUE. IN THE RESULT, APPEAL FILED BY THE REVENUE FOR ASSESSMENT YEAR 2011 - 2012 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DECEMBER , 2018. SD/ - SD/ - ( G.S. PANNU ) ( RAM LAL NEGI ) VICE PRESIDENT JUDICIAL MEMBER MUMBAI ; DATED: 21 / 12 / 201 8 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A ) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI