Sehgal Televisions Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 4067/DEL/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1216 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 09-08-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 01-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURJANI MOHANTY
• Assessee Lawyers: C L SHARMA
• Keywords: Unexplained cash credit; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 142(1); 147; 68; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G : NEW DELHI BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUN TANT MEMBER ITA NO. 4067/DEL/2010 ASSESSMENT YEAR: 2002- 2003 SEHGAL TELEVISIONS PVT. LTD. VS . ITO 1004 A, CHIRANJIV TOWER WARD-8 (1) 43, NEHRU PLACE, NEW DELHI C.R. BUILDING ,I.P. ESTATE NEW DELHI. (APPELLANT) (RE SPONDENT) APPELLANT BY : SHRI C.L. S HARMA. ADVOCATE, RESPONDENT BY : SMT. SURJANI MOHANTY, SR. DR ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE ASSESSEE HAS IMPUGNED FIRST APPELLATE ORDER O N THE FOLLOWING GROUNDS :- 1. THAT THE ORDERS OF ASSESSMENT PASSED U/S 148 /143(3) OF THE INCOME TAX ACT, 1961 ARE AGAINST FACTS AND L AW AND DESERVE TO BE CANCELLED. 2. THAT ASSUMPTION OF JURISDIC TION U/S 148 IS ERRONEOUS AND ILLEGAL. 3. THAT NO NOTICE U/S 148 OF T HE INCOME TAX ACT, 1961 WAS SERVED UPON THE ASSESSEE. 4. THAT THE ADDITION OF RS. 17,00,000/- HAS BEEN WRONGLY AND ILLEGALLY MADE BY APPLYING SECTION 68 OF THE INCOME TAX ACT, 1961. 2. THE RELEVANT FACTS ARE THAT ASSESSEE, A COMPA NY WAS ENGAGED IN THE BUSINESS OF TRANSACTION OF SHARES AND SECURITIES BO TH AS INVESTMENT AND STOCK IN ITA NO. 4067/DEL/2010 2 TRADE. DURING THE YEAR IT FILED ITS RETURN OF INCOM E ON 25.7.2002 DECLARING TOTAL INCOME AT RS. 3,037/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY ON THE BASIS OF INFORMATION RECEIVED F ROM THE INVESTMENT WING OF THE DEPARTMENT THAT THE ASSESSEE WAS A BENEFICIARY OF A SUM OF RS. 17,00,000/- RECEIVED FROM TWO PARTIES, THE AO RECORDED HIS REAS ONS TO BELIEVE AND INITIATED PROCEEDINGS U/S 147 OF THE ACT BY ISSUING NOTICE U/ S 148 THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE ASSESSMENT WAS F RAMED U/S 147 READ WITH SECTION 143 (3) OF THE ACT MAKING ADDITION / DISALL OWANCE CONSISTING OF ADDITION OF RS. 17,00,000/- U/S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED CASH CREDIT. BEFORE THE LD. CIT(A) THE ASSESSEE QUESTIONED THE V ALIDITY OF INITIATION OF REOPENING PROCEEDINGS AND THE ADDITION OF RS. 17,00 ,000/- MADE U/S 68 OF THE ACT BUT IT COULD NOT SUCCEED. 3. WE HAVE HEARD AND CONSIDERED THE ARGUMENT S ADVANCED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL A VAILABLE ON RECORD AND THE DECISIONS RELIED UPON. GROUND NO. 1 TO 3 4. THE ISSUE RAISED IN THESE GROUNDS IS REGA RDING THE VALIDITY OF NOTICE ISSUED U/S 148 OF THE ACT AND THE ASSESSMENT FRAMED IN FURTHERANCE THERETO U/S 147 READ WITH SECTION 143 (3) OF THE ACT. IN SUPPOR T OF THESE GROUNDS THE LD. AR ITA NO. 4067/DEL/2010 3 SUBMITTED THAT THE AO HAD WRONGLY AND ILLEGALLY ASS UMED JURISDICTION U/S 148 OF THE ACT. THE AO INITIATED THE REOPENING PROCEEDINGS ON THE BASIS OF MERE VAGUE INFORMATION RECEIVED FROM INVESTIGATION WING AND WI THOUT INDEPENDENTLY APPLYING HIS MIND AND WITHOUT FRAMING REASON TO BELIEVE BY T HE AO. HE HAS IN A MECHANICAL MANNER PROCEEDED TO FRAME ASSESSMENT. TH E AO IS NOT EMPOWERED UNDER THE ACT TO INITIATE SUCH PROCEEDINGS WITHOUT SEEKING APPROVAL FROM THE HIGHER AUTHORITIES. IN THE PRESENT CASE THE AO HAD GIVEN WRONG INFORMATION TO THE HIGHER AUTHORITIES BY MENTIONING THAT NO VOLUNT ARY RETURN HAD BEEN FILED. WHILE SEEKING APPROVAL OF HIGHER AUTHORITY THE AO I N THE PRESENT CASE WRITES THE CASE OF THE ASSESSEE WRONGLY AS OF UNDER ASSESSMEN T. THUS IT IS APPARENT THAT THE AO HAD SUCH APPROVAL BY SUPPLYING ERRONEOUS IN FORMATION TO THE ADDITIONAL CIT. THE LD. AR SUBMITTED FURTHER THAT NO RETURN WA S FILED IN RESPONSE TO NOTICE ISSUED U/S 148 OF THE ACT, THEREFORE THE ONLY COURS E FOR COMPLETING THE ASSESSMENT WAS A BEST JUDGMENT ASSESSMENT AS PRESCR IBED U/S 144 OF THE ACT. THUS THE ASSESSMENT ORDER PASSED U/S 148 / 143 (3) IS VOID AB INITIO. HE SUBMITTED FURTHER THAT NO NOTICE U/S 148 WAS SERVED UPON THE ASSESSEE. IT IS EVIDENT FROM THE CONTENTS OF PARA NO. 2 OF THE ASSE SSMENT ORDER WHEREIN THE AO HAS PRESUMED THE SERVICE ON THE BASIS OF THOSE OTHE R SUBSEQUENT NOTICE U/S 148 ALLEGEDLY HAVING BEEN ISSUED ON 23.3.2009. THE SUB SEQUENT NOTICES WERE SINCE RECEIVED AND RESPONDED BY THE ASSESSEE, THEREFORE T HE AO PRESUMED THAT NOTICE ISSUED U/S 148 WOULD HAVE ALSO BEEN SERVED. HE SUBM ITTED THAT BEFORE THE AO THE ASSESSEE HAD RAISED OBJECTION REGARDING NON SER VICE OF NOTICE U/S 148 STATED ITA NO. 4067/DEL/2010 4 TO BE ISSUED ON 23.3.2009 BUT THE AO REJECTED THE O BJECTION ON THE BASIS THAT SUBSEQUENT NOTICE U/S 148 WAS ISSUED TO THE ASSESSE E. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS :- CIT VS. SFIL STOCK BROKING LTD. (20 10) 325 ITR 285 (DELHI) CIT VS. ATUL JAIN (2008) 299 ITR 38 3 (DELHI) , CIT VS. S.M. AGGARWAL (22007) 293 I TR 43 (DELHI) , CIT VS. RAJESH KUMAR (2008) 306 ITR 27 (DELHI), CIT VS. ASHWANI GUPTA (2010) 322 IT R 396 (DELHI), CHHUGAMAL RAJPAL VS.S.P. CHALIHA AND OTHERS(1971)79 ITR 603 (SC), SIGNATURE HOTELS (P) LTD. VS. ITO (2011) 338 ITR 5 1 (DELHI), SARTHAK SECURITIES CO. PVT. LTD. VS. ITO (2010) 3 29 ITR 110 (DELHI) CIT VS. KRISHNA TEXTILES (2009) 315 ITR 271 (ALLAH ABAD), ACIT VS. HOTEL BLUE MOON (2010) 321 ITR 362 (SC). R.K. UPADHYAYA VS. SHANATHAI P. PATEL, AIR 1987 SC 1378 CIT VS. RAJESH KR. SHARMA, ITA NO. 1547/2006, DATED 13.8.2007 (DELHI HIGH COURT) 5. LD. DR ON THE OTHER HAND TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE OF VALIDITY OF NOTICE ISSUED U/S 148 OF THE ACT AND THE ASSESSMENT FRAMED IN FURTHERANCE THERETO. HE POINTE D OUT THAT NOTICE U/S 148 WAS SENT BY SPEED POST ON 23.3.2009 ON THE AVAILABL E ADDRESS OF THE ASSESSEE. THE OTHER NOTICES ISSUED ON THE SAME ADDRESS WERE D ULY RECEIVED AND ACKNOWLEDGED BY THE ASSESSEE. THESE NOTICES WERE AL SO SENT BY POST. HE ITA NO. 4067/DEL/2010 5 SUBMITTED THAT NOTICES U/S 143(2) WERE ALSO ISSUED IN RESPONSE THERETO SHRI C.L. SHARMA, LD. COUNSEL FOR THE ASSESSEE ATTENDED AND F ILED WRITTEN SUBMISSION BEFORE THE AO. HE PLACED RELIANCE ON THE DECISION O F DELHI BENCH OF THE TRIBUNAL IN THE CASE OF CAPITAL GEM OVERSEAS (P) LTD. VS. IT O 101 ITD 117 (DELHI) ON THE ISSUE OF SERVICE OF NOTICE UPON THE ASSESSEE. 6. LD. DR SUBMITTED FURTHER THAT NO ASSESSMEN T U/S 143 (3) OF THE ACT WAS FRAMED EARLIER, HENCE THE REASSESSMENT PROCEEDINGS WERE INITIATED NOT ON THE BASIS OF CHANGE OF OPINION BUT ON THE BASIS OF SUFF ICIENT MATERIAL AVAILABLE ON RECORD. INFORMATION FROM INVESTIGATION WING OF THE DEPARTMENT IS ALSO SUFFICIENT MATERIAL TO PROCEED TO INITIATE REOPENING PROCEEDIN GS IF THERE IS ESCAPEMENT OF ASSESSMENT OF TAXABLE INCOME. LD. DR PLACED RELIANC E ON THE FOLLOWING DECISIONS :- 1. ASSISTANT COMMISSIONER OF INCOME-TAX V. RAJ ESH JHAVERI STOCK BROKERS (P) LTD. [2007] 291 ITR 500 (SC) 2. AGR INVESTMENT LTD. VS. ACIT 333 ITR 146 (D EL) 3. INCOME TAX OFFICER. V. PURUSHOTTAM DAS BAN GUR AND ANOTHER. 224 ITR 362 (SC) 7. CONSIDERING THE ABOVE SUBMISSIONS WE FIND FR OM THE ORDERS OF THE AUTHORITIES BELOW THAT THERE IS NO POSITIVE ASSERTI ON EITHER BY THE AO OR LD. CIT(A) THAT NOTICE ISSUED U/S 148 OF THE ACT ON 23. 3.2009 BY SPEED POST WAS SERVED UPON THE ASSESSEE. AN OBJECTION REGARDING NO N SERVICE OF THE SAID NOTICE UPON THE ASSESSEE WAS RAISED EVEN BEFORE THE AO DUR ING THE ASSESSMENT ITA NO. 4067/DEL/2010 6 PROCEEDINGS AND THE AO HAS REJECTED THE OBJECTION O N THE BASIS THAT ALL OTHER NOTICES ISSUED AT THE SAME ADDRESS WERE DULY RECE IVED AND ACKNOWLEDGED BY THE ASSESSEE WHICH WERE ALSO SENT BY POST. THUS IT APPEARS THAT THE AO HAS PRESUMED THE SERVICE ON THE BASIS OF THOSE OTHER SU BSEQUENT NOTICES TO THE NOTICE U/S 148 CLAIMED TO HAVE BEEN ISSUED ON 23.3. 2009 SINCE SUBSEQUENT NOTICES WERE RECEIVED AND RESPONDED BY THE ASSESSEE . AS PER THE PROVISIONS LAID DOWN U/S 148 OF THE ACT, SERVICE OF NOTICE THEREUND ER IS MANDATORY TO PRESUME THE JURISDICTION THEREUNDER BY THE AO TO PROCEED WI TH ASSESSMENT UNDER SECTION 147 OF THE ACT. IN ABSENCE OF COMPLIANCE OF SUCH MA NDATORY REQUIREMENT, WE FIND SUBSTANCE IN THE CONTENTION OF THE LD. AR THAT NOTICE ISSUED U/S 148 WAS NOT VALID AND THE ASSESSMENT MADE IN FURTHERANCE THERET O WAS ALSO NOT VALID. THE HONBLE SUPREME COURT IN THE CASE OF R.K. UPADHYAYA VS. SHANABHAI P PATEL, (SUPRA) HAS BEEN PLEASED TO HOLD THAT THERE IS DIST INCTION BETWEEN ISSUE OF NOTICE AND SERVICE OF NOTICE UNDER THE I.T. ACT 1961. IT HAS BEEN HELD THAT SECTION 148 (1) PROVIDES FOR SERVICE OF NOTICE AS A CONDITION PRECEDENT TO MAKE THE ORDER OF ASSESSMENT AND THE MANDATE OF S. 148 ( 1) IS THAT REASSESSMENT SHALL NOT BE MADE UNTIL THERE HAS BEEN SERVICE. IT HAS BEEN HELD FURTHER THAT SERVICE UNDER THE NEW ACT IS NOT A CONDITION PRECED ENT TO CONFERMENT OF JURISDICTION IN THE ITO TO DEAL WITH THE MATTER BUT IT IS A CONDITION PRECEDENT TO MAKING OF THE ORDER OF REASSESSMENT. LIKEWISE THE H ONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. RAJESH KUMAR SHARMA, ITA NO. 15 47/2006 JUDGMENT DATED 13.8.2007 (COPY SUPPLIED), THE ASSESSEE HAD SHOWN H IS UNAWARENESS OF ANY ITA NO. 4067/DEL/2010 7 NOTICE HAVING BEEN ISSUED U/S 147/148 OF THE ACT BE FORE THE AO AND IT WAS CONTENDED THAT HE HAD APPEARED BEFORE THE AO IN RES PONSE TO THE NOTICE ISSUED U/S 142(1) OF THE ACT. THE HONBLE HIGH COURT OBSER VED THAT NOTICE WAS RECEIVED BY ONE LALMANI WHO WAS NOT AUTHORIZED TO RECEIVE TH E NOTICE ON BEHALF OF THE ASSESSEE AND THE POSTAL RECEIPT ISSUED AGAINST THE SPEED POST WAS NOT SHOWING THE CORRECT AND COMPLETE ADDRESS OF THE ASSESSEE. I T WAS HELD THAT THE BURDEN WAS ENTIRELY UPON THE REVENUE TO SHOW THAT THE NOTI CE WAS DISPATCHED TO THE CORRECT ADDRESS. IN THE PRESENT CASE BEFORE US THE REVENUE HAS NOT BEEN ABLE TO SHOW THAT NOTICE WAS SENT TO THE ASSESSEE ON THE CO RRECT ADDRESS. THE SAME COULD HAVE BEEN ESTABLISHED WITH THE ASSISTANCE OF POSTAL RECEIPT OR RECORD. THUS PRESUMPTION OF SERVICE CANNOT BE DRAWN. IT IS AN ES TABLISHED LAW THAT WHEN SERVICE OF NOTICE IS QUESTIONED, ONUS LIES HEAVILY UPON THE PARTY WHO CLAIMS THAT NOTICE WAS DULY SERVED. THE REVENUE IN THE PRESENT CASE HAS FAILED TO DISCHARGE SUCH ONUS. IT IS ALSO AN ESTABLISHED PROPOSITION O F LAW THAT WHEN NO RETURN OF INCOME WAS FILED BY THE ASSESSEE IN RESPONSE TO NOT ICE ISSUED U/S 148 OR IN RESPONSE TO NOTICE ISSUED U/S 142 (1), THE ONLY COU RSE AVAILABLE WITH THE AO IS TO FRAME THE ASSESSMENT AS A BEST JUDGMENT ASSESSMENT AS PRESCRIBED U/S 144 OF THE ACT. WE THUS HOLD THAT IN ABSENCE OF SERVICE OF NOTICE U/S 148 OF THE ACT UPON THE ASSESSEE THE INITIATION OF REOPENING PROCE EDINGS BY THE AO BY ISSUING NOTICE U/S 148 OF THE ACT IS NOT VALID NOR THE ASSE SSMENT FRAMED IN FURTHERANCE THERETO AND HENCE THE ASSESSMENT ORDER FRAMED U/S 1 47 READ WITH 143 (3) OF THE ACT IS QUASHED. IN VIEW OF THIS FINDING THE OTHER C ONTENTIONS REGARDING THE ITA NO. 4067/DEL/2010 8 VAGUENESS OF REASONS ETC. AND THE QUESTIONING OF TH E VALIDITY OF ADDITION MADE U/S 68 OF THE ACT HAVE BECOME INFRUCTUOUS. THE GROU ND NO. 3 QUESTIONING THE VALIDITY OF NOTICE ISSUED U/S 148 OF THE ACT ON THE BASIS THAT IT WAS NEVER SERVED UPON THE ASSESSEE IS ACCORDINGLY ALLOWED. IN GROUND NO. 2 THE ASSESSEE HAS QUESTIONED THE ASSUMPTION OF JURISDICTION U/S 148 B Y THE AO IS THUS ALSO ALLOWED. IN GROUND NO. 4 THE ASSESSEE HAS QUESTIONED ADDITIO N OF RS. 17 LACS MADE U/S 68 OF THE ACT, WHICH HAS BECOME INFRUCTUOUS IN VIEW OF THE ABOVE FINDING OF GROUND NO. 2 & 3 AND DOES NOT NEED SEPARATE ADJUDICATION. GROUND NO. 1 IS GENERAL IN NATURE. 8. IN THE RESULT APPEAL IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 5. 3.2013. SD/- SD/- (T.S. KAPOOR) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE : 5 TH MARCH, 2013 *VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT