ITO, New Delhi V. Tilak Raj Satija, New Delhi

ITA 391/DEL/2010

• Counselvise Citation: 39120114 RSA 2010
• Duration Of Justice: 3 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 05-08-2013
• Assessment Year: 2000-2001
• Appeal Filed On: 28-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Period of limitation; Assessment record; Reassessment proceedings
• Section: 143(3); 147; 148; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI B.C. MEENA ITA NO. 391/DEL/2010 ASSTT. YR: 2000-01 INCOME-TAX OFFICER, VS. TILAK RAJ SATIJA, WARD 23(4), NEW DELHI. D-235, SARVODAYA ENCLAVE, NEW DELHI. PAN: ALLPS 1726 N ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI SAMEER SHARMA SR. DR RESPONDENT BY : SHRI ASHWANI TANEJA ADV. O R D E R PER R.P. TOLANI, J.M : THIS IS REVENUES APPEAL AGAINST CIT(A)S ORDER DA TED 23-11- 2009 RELATING TO A.Y. 2000-01. SOLE ISSUE RAISED B Y THE REVENUE RELATES TO SERVICE OF NOTICE U/S 143(2) IN REASSESS MENT PROCEEDINGS BY FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING TH E CASE AS VOID AB-INITIO AS NO NOTICE WAS SERVED TO THE ASSES SEE U/S 143(2) OF THE ACT AND THEREBY QUASHING THE ASSESSMENT FRAM ED U/S 143(3) READ WITH SECTION 147 OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPREC IATING THE FACT THAT ISSUE OF NOTICE U/ 143(2) IS IMMATERIAL I N CASE THE PROVISIONS OF SECTION 147/148 OF THE ACT ARE SATISF IED. 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPREC IATING THE FACT THAT THE ASSESSING OFFICER IS FREE TO INITIATE PROCEEDINGS UNDER SECTION 147 AND FAILURE TO TAKE STEPS UNDER S ECTION 143(3) WILL NOT RENDER THE ASSESSING OFFICER POWERLESS TO INITIATE REASSESSMENT PROCEEDINGS. 2. THE FACTS OF THE CASE AND CONTROVERSY IN QUESTIO N, THE ORDERS OF ASSESSING OFFICER AND CIT(A) ARE SUMMED UP BY CIT( A)S OBSERVATIONS AS UNDER: (12). I HAVE GONE THROUGH THE REMAND REPORT FILED BY THE LD. AO. THE WRITTEN SUBMISSIONS, FILED BY THE LD. AR OF THE ASSESSEE HAVE ALSO BEEN CLOSELY PERUSED. THE ASSESSMENT RECO RD, WHICH CONTAINS 117 PAGES ON THE CORRESPONDENCE SIDE AND 3 PAGES OF THE ORDER SHEET (REVERSE SIDE ON EACH OF THE 3 PAGE S ARE BLANK), HAS BEEN VETTED. FROM THE DETAILS FILED BY THE LD. AO, IN THE REMAND REPORT, AND REPRODUCED IN PARA (10) ABOVE, T HERE IS NOT EVEN A WHISPER OF ANY ISSUANCE OF NOTICE U/S 143(2) . THE ORDER SHEET, WHICH RUNS INTO 3 PAGES ALSO DOES NOT MENTIO N ISSUANCE OF NOTICE U/S 143(2). THE CORRESPONDENCE SIDE OF TH E ASSESSMENT RECORD, ALSO DOES NOT CONTAIN ANY NOTICE ISSUED U/S 143(2). IN OTHER WORDS, IT WOULD BE REASONABLE TO DEDUCE THAT NO NOTICE U/S 143(2) WAS ISSUED, AND SERVED WITHIN THE TIME P RESCRIBED IN THE PROVISO TO THE SAID SECTION, AS IT STOOD THEN. (13). IT IS SETTLED LAW THAT WHILE SECTION 147/148 CONFERS JURISDICTION MERELY TO ISSUE NOTICE, ISSUANCE OF NO TICE U/S 143(2) AND SERVICE OF THE SAME WITHIN THE STIPULATED TIME FRAME IS A STATUTORILY MANDATORY. THE SPECIAL BENCH OF THE DE LHI TRIBUNAL IN RAJ KUMAR CHAWLA & ORS. VS. ITO (2005) 94 ITD 1 (DEL)(SB) WAS CONFRONTED WITH SIMILAR/ IDENTICAL FA CTS. THE QUESTIONS REQUIRED TO BE ANSWERED BY THEY SPECIAL BENCH WERE AS UNDER:- 1. WHETHER THE PROVISO TO S. 143(2) OF THE I.T. AC T. 1961, WHICH MANDATES THE SERVICE OF NOTICE WITHIN 1 2 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN IS FILED, 3 ALSO APPLIES TO THE RETURNS FILED PURSUANT TO NOTIC E UNDER S. 148 OF THE I.T. ACT, 1961? 2. IF THE ANSWER TO THE AFORESAID QUESTION IS IN TH E AFFIRMATIVE THEN WHAT IS THE EFFECT OF NON-SERVICE OF NOTICE UNDER THE PROVISO TO S. 143(2) WITHIN THE TIME PRES CRIBED, TO THE RETURN FILED PURSUANT TO S. 148 OF THE I.T> ACT, 1961? {14} THE HON'BLE SPECIAL BENCH, CONCLUDED THAT IN V IEW OF THE LEGAL FICTION CREATED BY SEC. 148 THAT A RETURN FILED UNDER THAT SECTION IS TO BE TREATED AS ONE UNDER SE E. 139, PROVISO TO SEC. 143(2) ALSO APPLIES TO A RETURN FIL ED IN RESPONSE TO NOTICE U/S, 148 AND NO ASSESSMENT CAN BE MADE, IF THE NOTICE U/S. 143(2) IS NOT SERVED WITHI N THE TIME PRESCRIBED BY THE PROVISO U/S. 143(2). IN THE OPERA TIVE PART. THE HON'BLE SPECIAL BENCH, HELD AS UNDER :- '39. IT MAY BE NOTED THAT NO DOUBT, THE FOUNDATION TO ASSESS OR REASSESS IS LAID BY ISSUE OF A VALID NOTICE UNDER S. 148 BUT SUCH JURISDICTION IS SUBJECT TO FURTHER COMPLIANCE WAS HAS BEEN STIPULATED IN THE STATUTE ITSELF. IF COMPLIANCE OF THE PROVISO IS NOT MADE, THE VERY PURPOSE OF CREATING THE PROVISO IS DEFEATED, I.E. UNCERTAINTY OF ASSESSEE WITH RESPECT TO ASSESSMENT SHALL CONTINUE. IT IS AGAIN A SETTLED PRINCIPLE OF INTERPRETATION THAT NO CONSTRUCTION OF A STATUTE SHOULD BE MADE IN A MANNER, WHICH LEAVES A STATUTE REDUNDANT, ON THE CONTRARY LAW REQUIRES A STRICT INTERPRETATION OF THE PROVISO. WE MAY HERE CLARIFY THAT PROVISIONS OF LIMITATION ARE TO BE STRICTLY CONSTRUED. AN ILLUMINATING REFERENCE TO TH IS ASPECT CAN BE FOUND IN THE FOLLOWING OBSERVATION OF THE SUPREME COURT IN THE CASE OF K. M. SHARMA VS. ITO (SUPRA). 'A FISCAL STATUTE MORE PARTICULARLY A PROVISION SUCH AS THE PRESENT ONE REGULATING PERIOD OF LIMITATION MUST RECEIVED STRICT CONSTRUCTION. 4 THE LAW OF LIMITATION IS INTENDED TO GIVE CERTAINTY AND FINALITY TO LEGAL PROCEEDINGS AND TO AVOID EXPOSURE TO RISK OF LITIGATION TO LITIGANTS FOR AN INDEFINITE PERIOD ON FUTURE UNFORESEEN EVENTS. IF LIMITATIONS ARE NOT FOLLOWED STRICTLY, CHAOTIC SITUATION WOULD FOLLOW. 40. IN THE LIGHT OF THE ANALYSIS OF THE RELEVANT PROVISIONS OF LAW AND JUDICIAL PRECEDENTS, WE ARE OF THE CONSIDERED VIEW THAT THE RETURN FILED PURSUANT TO NOTICE UNDER S. 148 OF THE ACT MUST BE ASSUMED AND TREATED TO BE A RETURN FILED UNDER S. 139 OF THE ACT AND THE ASSESSMENT MUST THEREAFTER BE MADE UNDER S. 143 OR 144 OF THE ACT AFTER COMPLYING WITH ALL THE MANDATORY PROVISIONS. ACCORDINGLY, IT IS INCUMBENT UPON THE ASSESSING AUTHORITY TO ISSUE NOTICE UNDER S. 143 (2) OF THE ACT WITHIN THE PERIOD AS STIPULATED IN THE PROVISO THEREUNDER. IN THIS VIEW OF THE MATTER, THE FIRST QUESTION BEFORE THE SPECIAL BENCH IS ANSWERED IN AFFIRMATIVE. 41. SO F AR AS THE ISSUE ON QUESTION NO. 2 IS CONCERNED, WE HOLD THAT NO ASSESSMENT CAN BE MADE IF THE NOTICE UNDER S. 143(2) OF THE ACT IS NOT SERVED WITHIN THE TIME PRESCRIBED BY THE PROVISO UNDER S. 143(2) OF THE ACT AND THUS THE RETURN FILED WILL BE DEEMED AS ACCEPTED. ' (15) THE ABOVE DECISION HAS BEEN FOLLOWED BY THE HON'BLE DELHI TRIBUNAL IN ITO VS. R.K. GUPTA [2009] 308 ITR (AT) 49 (DELHI), WHICH HAS ALSO EXAMINED TH E INSERTION OF PROVISO TO SEE. 148(1), BY THE FINANCE ACT, 2006. GAINFUL REFERENCE MAY ALSO BE MADE TO THE DECISION OF THE DELHI HIGH COURT IN CIT VS. PAWAN GUPTA & ORS. [2009] 223 CTR (DEL) 487. (16) IN THE CASE IN HAND, THE CAUSE OF THE REVENUE IS 5 WORSE OFF. IN THIS CASE, THE MANDATORY NOTICE U/S. 143(2) HAS NOT BEEN ISSUED AT ALL. THUS, THE ISSUE OF SERV ICE OF NOTICE U/S. 143(2) WITHIN THE STIPULATED TIME PERIO D DOES NOT ARISE. AS SUCH, THE ASSESSMENT FRAMED, WITHOUT THE ISSUANCE OF THE MANDATORY NOTICE U/S. 143(2), IS VO ID AB INITIO. THE ASSESSEE SUCCEEDS IN GROUND OF APPEAL N O. L(III) AND 9. (17) SINCE I HAVE HELD THE ASSESSMENT ORDER AS VOI D AB INITIO, I AM NOT ADJUDICATING ON GROUNDS OF APPEAL NO. L(IV) TO L(XII) AND 2. IT IS SETTLED LAW THAT WHEN THE VERY ASSUMPTION OF JURISDICTION HAS BEEN HELD TO BE INVA LID, EVERYTHING THAT FOLLOWS IS ALSO INVALID. FOR PURPOS E OF DISPOSAL OF THIS APPEAL, THE ASSESSEE SUCCEEDS IN G ROUNDS OF APPEAL NO. L(IV) TO L(XII) AND 2. 3. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT CIT(A ) CALLED FOR THE ASSESSMENT RECORD AND AFTER DUE VERIFICATION IT WAS FOUND THAT THERE WAS NOT ANY 143(2) NOTICE ISSUED OR SERVED ON ASSESSEE. BE SIDES, LD. DR HAS ALSO NOT COUNTERED THIS FACT. THEREFORE, IT BECOMES AN ADMIT TED POSITION THAT NOTICE U/S 143(2) NEITHER ISSUED OR SERVED ON THE ASSESSE E BEFORE REOPENING THE PROCEEDINGS U/S 148. RELIANCE IS PLACED ON VARIOUS JUDGMENTS BY CIT(A) AND FURTHER RELIANCE IS PLACED ON HONBLE DELHI HIGH CO URT JUDGMENT IN THE CASE OF ALPINE ELECTRONICS ASIA PVT. LTD. VS. DCIT 341 I TR 247, WHICH HAS LAID DOWN FOLLOWING PROPOSITIONS: (I) IN CASE OF RETURN FILED PURSUANT TO NOTICE U/S 148 IT IS MANDATORY TO SERVE NOTICE U/S 143(2) ON ASSESSEE WITHIN STIPULAT ED TIME LIMIT. (II) MERELY BECAUSE ASSESSEE COOPERATED IN THE PROCEEDIN GS, SECTION 292 BB CANNOT CURE THIS JURISDICTIONAL DEFECT AND S UCH REASSESSMENT IS TO BE QUASHED, BEING INVALID. 4. LD. DR ON THE OTHER HAND RELIED ON THE JUDGMENTS OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MADHYA BHARAT ENE RGY CORPORATION 337 6 ITR 389 (DEL). ON VERIFICATION IT IS FOUND THAT THI S CASE LAW DOES NOT DEAL WITH THE ISSUE OF NOTICE U/S 148. OTHER RELIANCE P LACED IS ON 295 ITR 233. THIS JUDGMENT, RENDERED IN 2006, HOLDS THE VIEW WH ICH IS FAVOURABLE TO THE REVENUE ON THIS ISSUE. 5. BEFORE US THE HONBLE DELHI HIGH COURT JUDGMENT PASSED ON 24-1- 2012 HAS BEEN PRODUCED BY ASSESSEE. THE SAME BEING JURISDICTIONAL HIGH COURT, WE HAVE TO RESPECTFULLY FOLLOW IT. THUS, RES PECTFULLY FOLLOWING HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF AL PINE ELECTRONICS ASIA PVT. LTD. (SUPRA) AND THE ADMITTED FACT THAT 1 43(2) NOTICE WAS NEITHER ISSUED NOR SERVED ON THE ASSESSEE, WE SEE NO INFI RMITY IN THE ORDER OF CIT(A) WHICH IS UPHELD. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 14-08-2013. SD/- SD/- ( B.C. MEENA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14 TH AUGUST 2013. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR