M/s. Swarn Kanta Wadhwa, New Delhi V. ITO, New Delhi

ITA 4193/DEL/2011

• Counselvise Citation: 419320114 RSA 2011
• Duration Of Justice: 2 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-08-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 19-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS RENUKA JAIN GU PTA
• Keywords: Principle of natural justice; Reason to believe
• Section: 142(1); 147; 148; 28; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC: NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER ITA NO.4193 /DEL/ 2011 (ASSESSMENT YEAR :2001-02) SWARN KANTA WADHWA VS. ITO C/O M/S. GARG MANOJ & ASSOCIATES. WARD-26(4) B-71, F. F. FLATTED FACTORY COMPLEX, NEW DELHI OKHLA-III NEW DELHI AAOPW5028N (APPELLANT) (RESPONDENT) ASSESSEE BY :SH. ASHWIN TANEJA, ADV, WITH SH . SOMIL AGGRAWAL REVENUE BY : MRS. RENUKA JAIN GUPTA, SR. DR ORDER THE ASSESSEE HAS QUESTIONED FIRST APP ELLATE ORDER ON SEVERAL GROUNDS:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW A ND ON FACTS IN CONFIRMING THE ACTION OF LD. A.O IN FRAMING THE IMPUGNED ASSESSMENT ORDER WITHOUT SERVING THE MANDATORY NOTICE U/S 143(2) AND WITHOUT ASSUMING JURISDICTION AS PER LAW TO FRAME THE ASSESSMENT. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ACTION OF LD. A.O IN PASSING AN EX-PARTE ASSESSMENT ORDER AND THAT TOO WITHOUT GIVING ANY OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ACTION OF LD. A.O IN FRAMING IMPUGNED ASSESSMENT OR DER ITA NO. 4193.DEL.11 2 WITHOUT COMPLYING WITH MANDATORY CONDITIONS OF SECT ION 147 TO 151 OF THE INCOME TAX ACT, 1961 AND REOPENING OF TH E CASE IS BAD IN LAW AND BEYOND THE JURISDICTION OF THE LD. A .O. 4. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ACTION OF LD. A.O IN FRAMING THE IMPUGNED ASSESSMEN T ORDER IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, WITHOUT GRANTING ADEQUATE OPPORTUNITY, WITHOUT CONFRONTING THE ADVE RSE MATERIAL AND WITHOUT PROVIDING THE PROPER OPPORTUNITY OF CRO SS- EXAMINATION OF THE WITNESS(ES) OF LD. A.O 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ACTION OF LD. A.O IN MAKING ADDITION OF RS.1,00,000 /- BEING AMOUNT ALLEGEDLY RECEIVED FROM SHRI SUSHIL GOYAL. 6. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN MA KING ADDITION OF RS.10000/- AND IN FRAMING THE IMPUGNED ORDER IS BAD IN LAW, ILLEGAL, UNJUSTIFIED AND CONTRARY TO FACTS AND LAW, BEYOND JUSTIFICATION AND THE SAME DESERVES TO BE QUASHED. 7. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT REV ERSING THE ACTION OF LD. A.O IN CHARGING INTEREST. GROUND NOS. 1 & 3 2. IN THESE GROUNDS THE VALIDITY OF ASSESS MENT FRAMED U/S 144/148 HAS BEEN QUESTIONED ON THE BASIS THAT NO NOTICE U/S 143 (2) OR U/S 148 OF THE ACT WERE ISSUED AND SERVED. 3. IN SUPPORT OF THE GROUND NO. 1 REGARD ING NON-ISSUANCE OF NOTICE U/S 143(2) OF THE ACT THE LD. AR REITERATED THE SUBMISS IONS MADE BEFORE THE LD. CIT(A) THAT NO NOTICE U/S 143(2) OF THE ACT WAS ISS UED AND SERVED UPON THE ITA NO. 4193.DEL.11 3 ASSESSEE DURING FRAMING THE ASSESSMENT IN QUESTION. HE SUBMITTED THAT ISSUANCE AND SERVICE OF NOTICE U/S 143(2) WITHIN A TIME PRESCRIBED LIMIT IS A CONDITION PRECEDENT FOR FRAMING ASSESSMENT U/S 147 OF THE ACT. IN VIOLATION OF SUCH MANDATORY CONDITION, THE ASSESSMENT IN THE PRE SENT CASE IS INVALID AND THE SAME MAY BE QUASHED. HE POINTED OUT THAT EVEN IN THE REMAND REPORT CALLED BY THE LD. CIT(A) DURING FIRST APPELLATE PRO CEEDINGS, THE A.O WAS NOT ABLE TO FURNISH ANY PROOF OF SERVICE OF NOTICE U/S 143(2) DATED 28/3/2007. THE A.O HAS STATED THAT NOTICE U/S 143(2) DATED 28/3/20 07 WAS ENCLOSED WITH THE NOTICE ISSUED U/S 148, IS ALLEGED TO HAVE BEEN SERV ED ON THE ASSESSEE BY THE SPEED POST STICKER DATED 30/3/2007. HE SUBMITTED T HAT AS SEEN FROM THE IMPUGNED ASSESSMENT ORDER NOTICE U/S 148 APPEARS TO HAVE BEEN ISSUED ON 28/3/2007 AND NO NOTICE U/S 143(2) IS STATED TO HAV E BEEN ISSUED OR SERVED. THE LD. A R SUBMITTED THAT A NOTICE U/S 143 (2) CAN NOT BE ISSUED ALONG WITH NOTICE U/S 148, WHEN NO RETURN WAS FILED BY THE ASS ESSEE BY ISSUANCE OF NOTICE U/S 148. IT SHOWS THAT THE REMAND REPORT PREPARED BY THE A.O WAS NOT BASED ON CORRECT FACTS. HE CONTENDED THAT NO NOTICE CAN B E ISSUED WHEN NO RETURN U/S 148 WAS AVAILABLE BEFORE THE A.O. THE LD. AR SUBMIT TED THAT BEFORE THE LD. CIT(A) VIDE HER LETTER DATED 17/2/2011 THE ASSESSEE HAD FURNISHED HER REPLY TO THE REMAND REPORT, IT WAS AGAIN POINTED OUT THAT EV EN IN THE ORDER SHEET NOWHERE, IT IS MENTIONED THAT NOTICE U/S 143(2) WAS ISSUED BY THE A.O DURING ITA NO. 4193.DEL.11 4 THE ENTIRE ASSESSMENT PROCEEDINGS. IN SUPPORT, THE LD. A.R PLACED RELIANCE ON THE FOLLOWING DECISIONS:- CENTRAL INDIA ELECTRIC SUPPLY COMPANY LTD VS. ITO (2011) 333 ITR 237 (DELHI). DCIT VS. MS. MAYAWATI, ITA NOS. 3157 & 3158/DEL/ 20 10, ORDER DATED 22/10/2010. RISHI BUILD COM (P) LTD. VS. ITO, ITA NO. 407/AGRA/ 2012 (A.Y 2004-05), ORDER DATED 21/6/2013. CIT VS. VEGA AUTO ACCESSORIES (P) LTD, ITA NO. 5014 /2011 DATED 8/8/2012(KARN) ITO, WARD 11(2), AHMEDABAD VS. SMT. SUKHINI P. MO DI (2008)112 ITD 1 (AHMEDABAD). DCIT VS. INDIAN SYNTANS INVESTMENTS (P) LTD (2007 ) 106 TTJ 388 (CHENNAI) ITO VS. R. K. GUPTA (2009) 122 TTJ 256 (DEL) CIT VS. RAJEEV SHARMA (2010) 232 CTR 303 (ALLAHAB AD) CIT VS. PAWAN GUPTA 318 ITR 322 (DELHI) ALPINE ELECTRONICS ASIA P.T.E. LTD VS. D.G OF INCOM E TAX 341 ITR 247 (DELHI) 4. IN SUPPORT OF GROUND NO-3, THE L D. AR SUBMITTED THAT NO NOTICE U/S 148 WAS SERVED UPON THE ASSESSEE AND IN RESPONS E TO NOTICE RECEIVED U/S 142(1), THE ASSESSEE VIDE HER REPLY DATED 13/9/2007 HAD FURNISHED PHOTO COPY OF THE RETURN AND REQUESTED THAT THE SAME MAY KINDL Y BE CONSIDERED IN RESPONSE TO NOTICE ISSUED U/E 148 OF THE ACT. HE R EITERATED THE SUBMISSIONS ITA NO. 4193.DEL.11 5 MADE BEFORE THE LD. CIT(A) VIDE LETTER DATED 17/12/ 2011 IN REPLY TO THE REMAND REPORT, THAT IT WAS POINTED OUT THAT EVEN OR DER SHEET CONFIRMS THIS CONTENTION OF THE ASSESSEE THAT NO NOTICE U/S 148 W AS SERVED ON THE ASSESSEE. THE RETURN WAS FILED BY THE ASSESSEE ONLY IN RESPON SE TO NOTICE ISSUED U/S 142(1) DATED 30/8/2007, HE CONTENDED THAT THE ASSES SMENT FRAMED WITHOUT SERVICE OF NOTICE U/S 148 AND REASONS WITH THE SAID NOTICE, IS BAD IN LAW. IN THIS REGARD, HE PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF HARYANA ACRYLIC MANUFACTURING COMPANY V S. CIT 308 ITR 38 (DELHI). 5. IN SUPPORT OF GROUND NO-1 THE LD. D R TRIED TO JUSTIFY ORDERS OF THE AUTHORITIES BELOW. SHE SUBMITTED THAT SERVICE OF N OTICE U/S 143(2) AS PER THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MADHYA BHARAT ENERGY CORPORATION LTD (2011) 337 ITR 389 (DELHI), IS NOT NECESARY AS THE HONBLE HIGH COURT HAS HELD THAT THE I.T ACT DOES N OT SPECIFICALLY PROVIDE THAT THE ASSESSMENT MADE U/S 147 OF THE ACT WILL BE AFTE R ISSUANCE OF NOTICE U/S 143(2) OF THE ACT. IT HAS BEEN HELD THEREIN THAT T HE A.O HAS THE BASIC JURISDICTION TO ASSESS INCOME AFTER ISSUANCE OF NOT ICE U/S 148 AND 147 OF THE ACT, WHERE HE HAS REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. THE LD. DR ALSO REFERRED THE PROVISIONS LAID DOWN U /S 292 BB OF THE ACT TO SUPPORT HER ARGUMENT THAT WHERE THE ASSESSEE HAS PA RTICIPATED IN THE ITA NO. 4193.DEL.11 6 PROCEEDING BEFORE THE A.O WITHOUT RAISING ANY OBJEC TION REGARDING NON- ISSUANCE OF NOTICE U/S 143(2), SHE HAS NO RIGHT TO RAISE THIS OBJECTION BEFORE APPELLATE FORUM. 6. IN SUPPORT OF GROUND NO-3 THE LD. D R POINTED OUT THAT NOTICE U/S 148 WAS ISSUED AND SERVED UPON THE ASSESSEE AND IN RESPONSE THERETO THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SHIR BIPI N BIHARI, ADVOCATE HAD APPEARED BEFORE THE AO ON 13/9/2007 AND HAD FILED A LETTER ON BEHALF OF THE ASSESSEE ACKNOWLEDGING THAT NOTICE U/S 148 DATED 28 /3/2007 WAS RECEIVED BY THE ASSESSEE. IT WAS SUBMITTED FURTHER THAT RETURN FILED U/S 139 (1) OF THE ACT MAY BE TREATED AS A RETURN FILED IN RESPONSE TO NOT ICE U/S 148 OF THE ACT. SHE POINTED OUT FURTHER THAT IN HER LETTER, THE ASSESSE E HAD ALSO REQUESTED FOR A COPY OF REASONS RECORDED BY THE A.O FOR THE RE-OPENING O F THE ASSESSMENT. 7. IN REJOINDER TO THE REPLY OF THE LD. D R IN GROUND NO. 1, THE LD. AR SUBMITTED THAT IN REVIEW PETITION NO. 441/2011 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MADHYA BHARAT ENERGY CORPORA TION LTD (SUPRA) HAS NOT CONSIDERED THE QUESTION NO. (A) AND IN ITS ORDER DA TED 17/8/2011 IN REVIEW PETITION THE HONBLE DELHI HIGH COURT HAS MADE IT C LEAR THAT QUESTION NO. (A) (WHETHER THE TRIBUNAL WAS CORRECT IN LAW IN HOLDIN G THAT THE REASSESSMENT ORDER WAS INVALIDLY MADE FOR ASSESSMENT YEARS 1999- 2000 AND 2000-2001 NO NOTICE U/S 143(2) WAS ISSUED?), THE APPEAL WAS NOT ADMITTED QUA THAT QUESTION ITA NO. 4193.DEL.11 7 AND THE APPEAL WAS ADMITTED ONLY ON QUESTION NO. (B ) I.E. WHETHER THE TRIBUNAL WAS CORRECT IN LAW IN HOLDING THAT THE INT EREST INCOME ON FDRS IS NOT TO BE TREATED AS INCOME FROM OTHER SOURCES AND IS REQUIRED TO BE REDUCED FROM PRE-PRODUCTION EXPENSES?. 8. HAVING GONE THROUGH THE DECISIONS REL IED UPON BY THE PARTIES ON THE ISSUE AS TO WHETHER ISSUANCE OF NOTICE U/S 143(2) A ND SERVICE THEREOF UPON THE ASSESSEE IS MANDATORY TO BE COMPLIED WITH IN AN ASS ESSMENT FRAMED U/S 147 OF THE ACT, WE FIND THAT THE HONBLE JURISDICTIONAL DE LHI HIGH COURT IN ITS LATER DECISION (DATED 24/1/2012) IN THE CASE OF ALPINE EL ECTRONICS ASIA PTE. LTD VS. DIRECTOR GENERAL OF INCOME TAX (SUPRA) HAS BEEN PLEASED TO HOLD THAT SECTION 143(2) OF THE INCOME TAX ACT 1961 IS APPLIC ABLE TO THE PROCEEDINGS U/S 147/148 OF THE ACT. THE PROVISO TO SECTION 148 OF THE ACT GRANTS LIBERTY TO THE REVENUE TO SERVE NOTICE U/S 143(2) OF THE ACT B EFORE PASSING THE ASSESSMENT ORDER FOR RETURNS FURNISHED ON OR BEFORE 1/10/2005. IN RESPECT OF RETURNS FILED PURSUANT TO NOTICE U/S 148 OF THE ACT AFTER 1/10/2005, IT IS MANDATORY TO SERVE NOTICE U/S 143(2) OF THE ACT, WI THIN THE STIPULATED TIME LIMIT. THIS DECISION OF THE HONBLE HIGH COURT HAS BEEN PRONOUNCED ON 24/1/2012 WHICH IS ON A LATER DATE THAN THE DATE ON 1/7/2011 ON WHICH THE DECISION IN THE CASE OF CIT VS. MADHYA BHARAT ENERG Y CORPORATION LTD (SUPRA) RELIED UPON THE LD. DR WAS PRONOUNCED BY TH E SAME HIGH COURT. ITA NO. 4193.DEL.11 8 RESPECTFULLY FOLLOWING THIS DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ALPINE ELECTRONICS ASIA PTE LTD VS. DIRECTO R GENERAL OF INCOME TAX (SUPRA) I HOLD THAT IN ABSENCE OF ISSUANCE OF NOTIC E U/S 143(2) OF THE ACT IN THE PRESENT CASE, THE ASSESSMENT FRAMED U/S 147/148 IS AN INVALID ASSESSMENT.. THE PROVISIONS LAID DOWN U/S 292 BB OF THE ACT INCO RPORATED IN THE I.T ACT 1961 BY FINANCE ACT 2008 W.E.F 1/4/2008 ARE NOT APP LICABLE IN THE PRESENT CASE AS THE CASE UNDER CONSIDERATION IS RELATING TO ASSESSMENT YEAR 2001-02. IT IS ALSO NOTED THAT THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. MS. MAYAWATI (2011) 135 TTJ 274 (DELHI) WHICH ALSO PERT AINS TO THE ASSESSMENT YEAR 2001-02, AFTER DISCUSSING THE ISSUE IN DETAIL HAS COME TO THE FINDING THAT WHERE NOTICE U/S 143(2) IS NOT ISSUED TO THE ASSESS EE, ASSESSMENT PASSED U/S 144 WAS INVALID AND VOID AB INITIO. IN THE PRESENT CASE BEFORE US ALSO THE ASSESSMENT HAS BEEN PASSED U/S 144/147 OF THE ACT A ND THERE IS NOTHING ON RECORD AND IN ASSESSMENT ORDER TO SHOW THAT NOTICE U/S 143(2) WAS ISSUED. RESPECTFULLY FOLLOWING ABOVE DECISIONS, THE ISSUE R AISED IN GROUND NO. 1 IS DECIDED IN FAVOUR OF THE ASSESSEE AND IN RESULT THE ASSESSMENT ORDER IN QUESTION IS HELD AS NULL AND VOID AND ACCORDINGLY I T IS QUASHED. THE GROUND NO. 1 IS THUS ALLOWED. 8. IN VIEW OF THE ABOVE DECISION ON THE ISS UE RAISED IN GROUND NO. 1 REGARDING NON-ISSUANCE AND NON-SERVICE OF NOTICE U/ S 143(2) OF THE ACT ITA NO. 4193.DEL.11 9 HOLDING THE ASSESSMENT AS INVALID IN ABSENCE OF ISS UANCE OF SUCH NOTICE, THE ISSUES RAISED IN THE REMAINING GROUND NOS 2 AND 4 TO 7 BECOME INFRUCTUOUS AND THESE GROUNDS ARE BEING DISPOSED OF ACCORDINGLY . 9. IN RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 06/11/2013. SD/- (I.C. SUDHIR) (JUDICIAL MEMBER) DATED THE 6 TH DAY OF NOVEMBER , 2013 R. NAHEED COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT(ITAT), NEW DELHI. AR,ITAT NEW DELHI.