Smt. Muni Devi, Rohtak V. ITO, Rohtak

ITA 4151/DEL/2011

• Counselvise Citation: 415120114 RSA 2011
• Duration Of Justice: 1 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-10-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 15-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y S KAKK
• Assessee Lawyers: K L GUGLANI
• Keywords: Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `SMC: NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER I.T. A. NO.4150/DEL/2011 ASSESSMENT YEAR : 2005-06 SHRI RAM SARUP, INCOME-TAX OFFICER, H.NO.224, WARD NO.28, VS. WARD-1, ROHTAK (HARYANA ). SUBHASH NAGAR, ROHTAK. PAN: BAFPS1398H & I.T.A. NO. 4151/DEL/2011 ASSESSMENT YEAR : 2005-06 SMT. MUNI DEVI INCOME-TAX OFFICER, L/H OF LATE SH. RAM KARAN, VS. WARD-1, ROHTAK (HAR YANA). H.NO.273 WARD 28, SUBHASH NAGAR, ROHTAK. PAN: AOCPK2394B (APPELLANTS) (RESPONDE NT) APPELLANTS BY: SHRI K.L. GUGLANI, ADVOCATE. RESPONDENT BY: SMT. Y.S. KAKK AR, SR. DR. O R D E R PER I.C. SUDHIR, JUDICIAL MEMBER: IN THESE APPEALS THE ASSESSEES HAVE QUESTIONED COMM ON FIRST APPELLATE ORDER ON THE FOLLOWING COMMON GROUNDS:- 2 1. ON FACTS & IN LAW, THE LEARNED AO/CIT(A) ERRED IN JUSTIFYING ACTION TAKEN U/S 148 AGAINST PROVISIONS OF LAW. 2. ON FACTS & IN LAW, THE LEARNED AO/CIT(A) ERRED I N IGNORING RATIO OF RELEVANT JUDGMENTS AND IN RELYING ON A WRO NG INTERPRETATION OF A JUDGMENT GIVEN IN DIFFERENT CON TEXT. 3. ON FACTS & IN LAW, THE LEARNED AO/CIT(A) HAVE ER RED IN PRESUMING THAT THE LAW DOES NOT ALLOW DETERMINATION OF TAX BY SPREADING YEARWISE INTEREST TO THE RELEVANT PERIODS , ONLY FOR A SPECIFIC PURPOSE, THOUGH THE ENTIRE INTEREST HAS BE EN SHOWN IN THE RETURN AS INCOME OF THE YEAR IN WHICH IT WAS RE CEIVED. 2. AT THE OUTSET OF HEARING THE LEARNED AR POINTED OUT THAT THE ASSESSEES HAD QUESTIONED THE VALIDITY OF NOTICES ISSUED UNDER SECTION 148 OF THE ACT, SINCE THESE WERE NOT SERVED AS PER THE LAW UPON THE ASSESSEES OR THE PERSONS AUTHORIZED TO RECEIVE THESE NOTICES ON BEHALF OF TH E APPELLANTS, BEFORE THE ASSESSING OFFICER BUT THE AO DID NOT BOTHER TO DISP OSE OF THIS OBJECTION. IN SUPPORT, HE REFERRED TO PAGE NO.23 OF THE PAPER BOO K I.E. A COPY OF LETTER DATED 20.10.2010 BY THE ASSESSEES TO THE AO CONTEND ING THAT NOTICES U/S 148 HAD NOT BEEN SERVED ON THE ASSESSEES IN ACCORDANCE WITH LAW. HE SUBMITTED THAT THE VALIDITY OF THE REOPENING OF THE ASSESSMEN T WAS ALSO QUESTIONED ON OTHER GROUNDS. HE SUBMITTED THAT SIMILAR OBJECTION WAS RAISED VIDE GROUND NO.1 OF THE FIRST APPELLATE ORDER THAT THE AO HAS E RRED IN ISSUING NOTICE UNDER SEC. 148 AND FRAMING THE ASSESSMENT U/S 143(3) OF T HE ACT. THE LEARNED CIT(A) HAS ALSO NOT CONSIDERED THE SUBMISSIONS OF T HE ASSESSEES WHILE DISPOSING OF THE SAID GROUND. HE HAS SIMPLY UPHELD THE VALIDITY OF INITIATION 3 OF REOPENING PROCEEDINGS AND THE ASSESSMENT MADE IN FURTHERANCE THERETO. IN SUPPORT THE LEARNED AR REFERRED TO THE WRITTEN S UBMISSIONS MADE BY THE ASSESSEES BEFORE THE CIT(A), A COPY WHEREOF HAS BEE N MADE AVAILABLE AT PAGE NO.8 OF THE PAPER BOOK. IN THE SUBMISSIONS UN DER THE HEAD LEGAL GROUNDS IN PARA NO.3 THE VALIDITY OF NOTICE U/S 14 8 OF THE ACT HAS BEEN QUESTIONED ALSO ON THE BASIS THAT THE NOTICE WAS NO T SERVED IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS 148 TO 151 OF THE A CT. HE SUBMITTED FURTHER THAT NOTICE ISSUED U/S 148 OF THE ACT SHOULD HAVE B EEN SERVED UPON THE LEGAL HEIRS OF THE DECEASED ASSESSEE. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS:- (I) CIT VS. HARISH J. PUNJABI (2008) 297 ITR 424 (DELHI ); (II) CIT VS. SURESH CHANDRA JAISWAL (2010) 325 ITR 363 ( ALL.); & (III) ASIAN PAINTS LTD. VS. DCIT (2008) 296 ITR 90 (BOM.) . 3. THE LEARNED DR ON THE OTHER HAND, SUBMITTED THAT NO SPECIFIC OBJECTION REGARDING THE VALIDITY OF SERVICE OF NOTI CE ISSUED U/S 148 OF THE ACT UPON THE ASSESSEES WAS RAISED BEFORE THE AUTHORITIE S BELOW NOR ANY ADDITIONAL GROUND IN THIS REGARD HAS BEEN RAISED BEFORE THE TR IBUNAL. HENCE, THE ABOVE OBJECTION OF THE LEARNED AR COULD NOT BE ENTERTAINE D BY THE TRIBUNAL AT THIS STAGE. SHE SUBMITTED THAT UNDISPUTEDLY THE ASSESSE ES HAVE PARTICIPATED IN THE ASSESSMENT PROCEEDINGS AND FIRST APPELLATE PROCEEDI NGS, HENCE, NO GRIEVANCE 4 TO THIS EFFECT SURVIVES WITH THE ASSESSEES. IN SUP PORT SHE CITED FOLLOWING DECISIONS:- (1) LATHA CHANDY VS. CIT (2003) 260 ITR 385 (KER.); (2) CIT VS. SMT. KANTI DEVI GUPTA (2005) 274 ITR 526 (M P); (3) CIT VS. UTTAM CHAND NAHAR (2007) 295 ITR 403 (RAJ.) ; (4) DCIT VS. KHODAY ESHWARSA & SONS (2005) 272 ITR 448 (KAR.); (5) YOGESH KUMAR & SONS (HUF) VS. AO (2008) 115 TTJ 696 (AMRITSAR). (6) ITO VS. SHRI LAL CHAND AGGARWAL, 2012-TIOL-107-ITAT - AGRAQ-T.M.; & (7) CIT VS. M/S. PANCHVATI MOTORS PVT. LTD., 2011-TIOL- 592-HC- P&H-IT. 4. THE LEARNED AR SUBMITTED FURTHER THAT EVEN ON ME RITS THE ASSESSEES ARE HAVING GOOD CASE BUT THE ISSUE RAISED ON THE VA LIDITY OF SERVICE OF NOTICE UNDER SEC. 148 IS A LEGAL ISSUE WHICH GOES TO THE R OOT OF THE MATER, THE ASSESSEES HAVE PREFERRED TO PRESS IT SERIOUSLY AND IF THE ASSESSEES DO NOT SUCCEED ON THIS LEGAL ISSUE, THE ASSESSEES MAY BE H EARD ALSO ON MERITS BEFORE DISPOSAL OF THE APPEALS. 5. AFTER HAVING GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW AND IN VIEW OF THE ABOVE SUBMISSIONS ON THE LEGAL ISSUE RE GARDING VALIDITY OF SERVICE OF NOTICES UNDER SEC. 148 OF THE ACT ON THE ASSESSEES, WE FIND THAT SIMILAR OBJECTION WAS RAISED BEFORE THE AO BY THE A SSESSEES VIDE THEIR LETTER DATED 20.10.2010, A COPY WHEREOF HAS BEEN MADE AVAI LABLE AT PAGE NOS. 23 TO 28 OF THE PAPER BOOK. AT PAGE NO.23 ITSELF IN P ARA 2 OF THE LETTER THE 5 ASSESSEES HAD CONTENDED THAT NOTICE UNDER SEC. 148 HAD NOT BEEN SERVED ON THE ASSESSEES IN ACCORDANCE WITH LAW. THE ASSESS MENTS IN QUESTION HAVE BEEN FRAMED ON 28.10.2010 BUT UNFORTUNATELY THE AO HAS NOT ADDRESSED THE SAID OBJECTION REGARDING THE PROPER SERVICE OF NOTI CE ISSUED UNDER SEC. 148 RAISED BEFORE HIM BY THE ASSESSEES. OF COURSE, THE ASSESSEES HAD PARTICIPATED IN THE ASSESSMENT PROCEEDINGS BUT THAT IS NOT ENOUG H TO DRAW AN INFERENCE THAT THEY HAD WAIVED THEIR OBJECTION REGARDING THE VALIDITY OF SERVICE OF NOTICE ISSUED U/S 148 UPON THEM. SERVICE OF NOTICE U/S 148 IN OUR VIEW IS SINE QUO NON TO ACQUIRE JURISDICTION U/S 147 OF THE ACT TO FRAME THE ASSESSMENT UNDER THE SAID PROVISIONS READ WITH SEC. 143(3) OF THE ACT. WHEN OBJECTION IS RAISED ON THE VALIDITY OF SERVICE OF SUCH NOTICES WHICH IS ULTIMATELY GOING TO AFFECT THE VERY JURISDICTION OF AN AUTHORITY TO PROCEED IN FURTHERANCE TO THE ALLEGED DEFECTIVE SERVICE OF THE NOTICE, IT IS DUTY OF AN AUTHORITY TO DISPOSE OF SUCH PRELIMINARY OBJECTION FIRST BEFORE PROCEEDING FURTHER. THE AO IN THE PRESENT CASE HAS FAILED ON SUCH DUTY WHILE KEEPING HIMSELF SILENT ON SUCH OBJECTION. THE AGGRIEVED AS SESSEES HAVE AGAIN RAISED THIS OBJECTION REGARDING THE VALIDITY OF SERVICE OF NOTICE ISSUED UNDER SEC. 148 OF THE ACT WITH THIS CONTENTION THAT SERVICE WA S NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS 148 TO 151 OF THE ACT. THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. PANCHVATI MOTORS PVT. 6 LTD. (SUPRA) ON WHICH THE LEARNED DR HAS HEAVILY RE LIED UPON WHILE OBJECTING TO THE CONTENTION OF THE LEARNED AR REGAR DING THE VALIDITY OF SERVICE IS NOT HELPFUL TO THE REVENUE AS DISTINGUIS HABLE FACTS AND ISSUES WERE INVOLVED THEREIN. IN THAT CASE BEFORE THEIR LORDSH IPS OF THE HONBLE HIGH COURT NO OBJECTION WAS RAISED BY THE ASSESSEE FOR T HE VALIDITY OF THE SERVICE OF NOTICE AND HAD PARTICIPATED IN THE REASSESSMENT PROCEEDINGS. ON THESE FACTS THE HONBLE HIGH COURT WAS PLEASE TO HOLD THA T AN ASSESSMENT CANNOT BE ANNULLED. HOWEVER, IN THE PRESENT CASE AS DISCU SSED ABOVE, THE VALIDITY OF SERVICE OF NOTICE ISSUED UNDER SEC. 148 WAS RAISED BY THE ASSESSEES BEFORE THE AO AND LEARNED CIT(A) BOTH AND BOTH THE AUTHORITIES BELOW HAVE NOT BOTHERED TO DISPOSE OF SUCH LEGAL OBJECTION BEFORE PROCEEDING FURTHER ON MERITS OF THE CASE. THE AO HAS NOT WHISPERED A WOR D ON THE ISSUE WHEREAS THE LEARNED CIT(A) HAS DISPOSED OF THE ISSUE IN SIN GLE LINE AS THE ISSUE REGARDING OBJECTION BY THE APPELLANT FOR ISSUING NO TICE U/S 148 IS DEEMED TO HAVE BEEN MET BY THE AO IN VIEW OF THE ASSESSMENT O RDER PASSED. UNDER THESE CIRCUMSTANCES AND TO MEET OUT THE END OF JUST ICE, WE FIND IT FIT TO SET ASIDE THE MATTER BACK TO THE FILE OF THE LEARNED CI T(A) TO DECIDE THE ISSUE AFRESH AFTER CONSIDERING THE SUBMISSIONS OF THE ASS ESSEES AND VERIFYING THE MATERIAL AVAILABLE ON RECORD BEFORE THE AO. THE IS SUE RAISED IN GROUND NO.1 7 BEFORE US REGARDING THE VALIDITY OF ACTION TAKEN UN DER SEC. 148 OF THE ACT IS THUS ALLOWED FOR STATISTICAL PURPOSE. 6. IN THEIR SUBMISSIONS THE ASSESSEES HAVE ALSO TRI ED TO ESTABLISH THAT THEY HAVE GOOD CASE ON MERITS ON THE ISSUE RAISED IN GRO UND NO.3. SINCE WE ARE SETTING ASIDE THE MATTER TO THE LD. CIT(A), HE/SHE IS DIRECTED TO CONSIDER IT AFRESH AFTER HEARING THE PARTIES. 7. IN THE RESULT, THE APPEALS ARE ALLOWED FOR STATI STICAL PURPOSE. 8. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 1 ST OCTOBER, 2012. SD/- SD/- (A.N. PAHUJA) (I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 ST OCTOBER, 2012. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.