Sunit Katyal, New Delhi V. ITO, New Delhi

ITA 4206/DEL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3365 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 09-02-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 10-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHNA PAUL
• Keywords: Period of limitation; Wrong claim; Reassessment proceedings
• Section: 147; 148

Judgement Text

PAGE 1 OF 12 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC: NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 4206/DEL/2013 A.Y.: 2003-04 SUNIT KATYAL, VS. INCOME TAX OFFICER, A-28, NIRMAN VIHAR, WARD 19(2), DELHI 110 092 VIKAS BHAWAN, NEW DELHI (PAN: AAFPK7285A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. YUDHISTER MEHTANI, CA DEPARTMENT BY : MS. ASHNA PAUL, SR. DR O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 28.3.2013 OF THE LD. CIT(A)-XXII, NEW DELHI RE LEVANT TO ASSESSMENT YEAR 2003-04 ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS LEGALLY ERRED BY DIRECTING ITO WARD 38(3) TO MAKE FRESH ORDER U/S. 147 INSPITE OF THE FACTS THE NOTICE U/S. 148 WAS VALIDLY ISSUED ONLY AFTER EXPIRY OF TIME LIMIT PROVIDED U/S. 149 OF THE INCOME TAX ACT. PAGE 2 OF 12 2. THAT THE LD. CIT(A) HAS EXCEEDED HIS POWERS AS PROVIDED U/S. 251(1)(A) OF THE INCOME TAX ACT, 1961 BY ORDERING FOR THE FRESH ASSESSMENT TO BE MADE U/S. 147 OF THE ACT. 3. THE APPELLANT CRAVES TO RIGHT TO ADD, ALTER OR CHANGE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT WA S COMPLETED VIDE ORDER U/S. 144/148 OF THE I.T. ACT, 1961 DATED 29. 12.2010 BY THE ITO, WARD 19(2), NEW DELHI, AT AN INCOME OF RS. 6,40 ,830/- AS AGAINST THE RETURNED INCOME OF RS. 2,05,320/- AFTER M AKING ADDITIONS AMOUNTING TO A TOTAL OF RS. 4,35,506/-. AGAINST TH E SAID ASSESSMENT ORDER, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A), WH O VIDE HIS IMPUGNED ORDER DATED 28.3.2013 HAS OBSERVED THAT THE ASSESSMENT ORDER PASSED U/S. 144/148 OF THE ACT DATED 29.12.2010 F OR AY 2003- 04 BY THE ITO, WARD 19(2), NEW DELHI, BEING WITHOUT JURISDICTION CANNOT BE SUSTAINED AND WAS ANNULLED; BUT IN VIEW O F THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, HE HELD THAT THE INC OME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION I.E. AY 2003- 04 HAS TO BE ASSESSED U/S. 147 BY THE AO HAVING JURISDICTION OVER THE CASE I.E. ITO, PAGE 3 OF 12 WARD 38(3), NEW DELHI AS PER THE PROVISIONS OF SECTION 147 READ WITH SECTION 150(1) OF THE INCOME TAX ACT, 1961 AND ALL OWED THE ASSESSEES APPEAL FOR STATISTICAL PURPOSES. AGGRIEVED WITH THE ORDER DATED 28.3.2013 OF THE LD. CIT(A), ASSESSEE IS IN A PPEAL BEFORE THE TRIBUNAL. 3. LD. COUNSEL OF THE ASSESSEE HAS STATED THAT LD. CI T(A) HAS LEGALLY ERRED BY DIRECTING THE ITO, WARD 38(3) TO MAKE FRESH ORDER U/S. 147 IN SPITE OF THE FACTS OF THE NOTICE U/S. 148 OF THE ACT WAS VALIDLY ISSUED ONLY AFTER EXPIRY OF TIME LIMIT PROVIDE D U/S. 149 OF THE INCOME TAX ACT, 1961. HE FURTHER STATED THAT LD. CI T(A) HAS ALSO EXCEEDED HIS POWERS AS PROVIDED U/S. 251(1)(A) OF THE INCOME TAX ACT, BY ORDERING FOR THE FRESH ASSESSMENT TO BE MADE U/S . 147 OF THE ACT. HE FURTHER STATED THAT THE ASSESSMENT ORDER WAS PA SSED BY THE ITO ON 29.12.2010, AND ON THAT DATE THE TIME LIMIT FOR ISSUANCE OF NOTICE U/S. 148 OF THE ACT HAD ALREADY EXPIRED BY RE ASON OF PROVISION OF SECTION 149 LIMITING THE TIME LIMIT TO SIX YEARS FROM THE ENDS OF THE RELEVANT ASSESSMENT YEAR I.E. 31.3.2010. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE FOLLOWING CASES LAWS:- - HONBLE SUPREME COURT OF INDIA DECISION DATED 11.4.2002 PASSED IN CIVIL APPEAL NO. 7742 OF 1997 PAGE 4 OF 12 REPORTED (2002) 122 TAXMAN 0426) IN THE CASE OF K.M. SHARMA VS. ITO. - HONBLE KARNATAKA HIGH COURT AT BENGALURU JUDGEMENT DATED 14.8.2015 PASSED IN ITA NO. 751 OF 2009 IN THE CASE OF MRS. MAINA SHETTY VS. DCIT - ITAT, C BENCH, CHENNAI DECISION IN THE CASE OF M/S EMGEEYAR PICTURES P. LTD. VS. DCIT PASSED IN ITA NO. 992/MDS./2015. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER OF THE A UTHORITIES BELOW AND STATED THAT THE CONDUCT OF THE ASSESSEE WAS NOT ABOVE BOARD AS DESPITE BEING A REGULAR ASSESSEE OF WARD-38(3) , AS CLAIMED REPEATEDLY BY THE ASSESSEE, HE STATED THAT THE RETURN FOR THE RELEVANT YEAR I.E. A.Y. 2003-04 WAS NOT FILED IN WARD-38(3) B UT WAS FILED IN WARD-39(4). THIS SHOWS THAT THE ASSESSEE, PERHAPS BE ING AWARE OF THE SUPPRESSION OF THE INCOME IN THE RETURN FOR THIS Y EAR AND IN VIEW OF THE ACCOMMODATION ENTRY TAKEN BY HIM; DELIBERATELY AVOIDED FILING THE RETURN IN THE REGULAR WARD HAVING THE JURISDICTION OVER HIS CASE, I.E. WARD-38(3) AND INSTEAD FILED IN A DIFFERENT WAR D I.E. WARD-39(4). HOWEVER, THE LD. COUNSEL OF THE ASSESSEE HAS CLAIMED THAT THIS WAS AN ERROR. HE FURTHER STATED THAT THERE IS NO EVIDENCE O R MATERIAL TO PAGE 5 OF 12 SHOW THAT SUCH CLAIMED ERROR WAS A BONA FIDE MISTAKE, AND LOOKING INTO THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS APPARENT THAT THE ASSESSEE DELIBERATELY FILED THE RETURN IN ANOTHER W ARD SO AS TO ESCAPE SCRUTINY OF THE CASE; AND FURTHER IF THE CASE WAS SCRUTINIZED, TO BE ABLE TO DENY THE JURISDICTION. HE FURTHER STATED T HAT THOUGH THE ASSESSEE CLAIMS THAT A LETTER WAS FILED BEFORE THE IT O, WARD-19(2) INFORMING THAT THE JURISDICTION IS WITH WARD-38(3), B UT THERE IS NOTHING TO SHOW THAT ANY SUCH LETTER WAS ACTUALLY FILED AND THIS CLAIM OF THE ASSESSEE WAS RIGHTLY REJECTED AS FALSE CLAIM. IN FACT , IF THE ITO, WARD- 19(2) HAD BEEN MADE AWARE THAT THE JURISDICTION WAS WITH ITO, WARD- 38(3), THEN THE CASE WOULD HAVE BEEN SENT TO THE IT O HAVING THE JURISDICTION, AND THEN THE ASSESSMENT MADE WOULD HAV E BEEN PERFECTLY VALID. IT WAS FURTHER STATED THAT NO SUCH INFORMATION WAS GIVEN TO THE ITO, WARD-19(2) DURING THE ASSESSMENT PROCEEDINGS BEFO RE HIM WHICH SHOWS THE CONDUCT OF THE ASSESSEE AS NOT BEING ONE OF A PERSON WHO APPEARED WITH CLEAN HANDS. IN VIEW OF THE ABOVE, HE REQUESTED THAT THE APPEAL OF THE ASSESSEE MAY BE DISMISSED. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. I F IND THAT AN EX-PARTE ASSESSMENT ORDER U/S 144/148 OF THE I.T. ACT, 1961 FOR AY PAGE 6 OF 12 2003-04 WAS PASSED BY THE INCOME TAX OFFICER, WARD 1 9(2) ON 29/12/2010. HOWEVER, THE JURISDICTION WAS WITH ITO,WARD - 38(3) AS THE ASSESSEE IS REGULAR INCOME TAX ASSESSEE, ASSESSED WITH WARD 38(3). AGAINST THE AFORESAID ASSESSMENT ORDER, THE AS SESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER D ATED 28.3.2013 HAS ANNULLED THE ASSESSMENT ORDER PASSED BY AO BY ST ATING IN PARA 8.3 OF THE ORDER THAT THE ITO, WARD -19(2) DID NOT HAVE JURISDICTION OVER THE CASE THE ASSESSMENT ORDER U/S 144/148 OF THE AC T AND THE SAME CANNOT BE SUSTAINED. HOWEVER AFTER ANNULLING THE ASSESSMENT ORDER THE LD CIT (A) IN PARA 8.5 OF THE ORDER HAS GIVEN DIRECTIONS BY STATING THAT THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAS TO BE ASSESSED U/S 147 OF THE ACT BY THE ASSESSING OFFICER HAVING JURISDICTION OVER THE CASE I.E. ITO, WARD -38(3), NEW DELHI, AS PER THE PROVISIONS OF SECTION 147 READ WITH SECTION 150(1) OF THE INCOME TAX ACT,1961. FOR THE SAKE OF CLARITY, I AM REPRODUCING THE PROVISIONS OF SECTION 150 AS UNDER:- 150. PROVISION FOR CASES WHERE ASSESSMENT IS IN PURSUANCE OF AN ORDER ON APPEAL, ETC. - (1) NOTWITHSTANDING ANYTHING CONTAINED IN S. 149, THE NOTICE UNDER S, 148 MAY BE ISSUED AT ANY TIME FOR TH E PAGE 7 OF 12 PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT OR RECOMPUTATION IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN AN ORDER PASSED BY ANY AUTHORITY IN ANY PROCEEDING UNDER THIS ACT BY WAY OF APPEAL, REFERENCE OR REVISION. (2) THE PROVISIONS OF SUB-S (1) SHALL NOT APPLY IN ANY CASE WHERE ANY SUCH ASSESSMENT, REASSESSMENT OR RECOMPUTATION AS IS REFERRED TO IN THAT SUB-SECTION RELATES TO AN ASSESSMENT YEAR IN RESPECT OF WHICH AN ASSESSMENT, REASSESSMENT OR RECOMPUTATION COULD NOT HAVE BEEN MADE AT THE TIME THE ORDER WHICH WAS THE SUBJECT-MATTER OF THE APPEAL, REFERENCE OR REVISION, AS THE CASE MAY BE, WAS MADE BY REASON OF ANY OTHER PROVISION LIMITING THE TIME WITHIN WHICH ANY ACTION FOR ASSESSMENT, REASSESSMENT OR RECOMPUTATION MAY BE TAKEN. 5.1 AFTER PERUSING THE ABOVE SAID PROVISIONS, I NOTE T HAT SUB-S (2) OF S. 150 LAYS DOWN AN EXCEPTION AND, WHERE SUCH AN EXCEPTION EXISTS, THE PROVISIONS OF SUB-SO (1) WOULD NOT BE AP PLICABLE. SUB-S. (1) OF S. 150 SHALL NOT APPLY WHERE THE NOTICE FOR R EASSESSMENT FOR AN PAGE 8 OF 12 ASSESSMENT YEAR HAD BECOME BARRED BY LIMITATION AT T HE TIME WHEN THE ORDER, WHICH WAS THE SUBJECT-MATTER OF APPEAL, REV ISION OR REFERENCE, WAS PASSED. GENERALLY, THE TIME LIMITS PRESC RIBED IN S. 149 SHALL NOT APPLY WHERE REASSESSMENT PROCEEDINGS ARE I NITIATED BY A NOTICE TO GIVE EFFECT TO ANY FINDING OR DIRECTION, UN DER SUB-S. (1) OF S. 150 OF THE ACT. BUT, UNDER SUB-SO (2) OF S. 1,50, TH E PERIOD OF LIMITATION AS LAID DOWN IN S. 149 SHALL COME INTO P LAY. IF THE ACTION FOR ASSESSMENT OR REASSESSMENT CANNOT BE INITIATED FOR AN ASSESSMENT YEAR ON THE DATE OF THE ORDER, WHICH WAS A SUBJECT-MAT TER OF APPEAL, REFERENCE OR REVISION, THAT WOULD PREVENT THE AO FROM P ROCEEDING UNDER S, 148 OF THE ACT. IT IS ALSO NOTED THAT ACCO RDING TO SUB-S (2) OF S. 150, THE PROVISIONS OF SUB-SO (1) OF THAT SECTION SHALL NOT APPLY WHERE, BY VIRTUE OF ANY OTHER PROVISION LIMITING THE TIME WITHIN WHICH ACTION FOR ASSESSMENT OR REASSESSMENT MAY BE INITIATE D, ISSUANCE OF NOTICE FOR SUCH ASSESSMENT OR REASSESSMENT IS BARRED O N THE DATE OF THE ORDER, WHICH IS THE SUBJECT-MATTER OF APPEAL, REFE RENCE OR REVISION, IN WHICH THE FINDING OR DIRECTION IS CONTAINED. IT WOULD, THUS, MEAN THAT AN APPELLATE OR REVISIONAL AUTHORITY CANNOT GIVE A DIRECTION FOR ASSESSMENT OR REASSESSMENT WHICH GOES TO THE EXTENT OF CONFERRING JURISDICTION UPON THE AO IF HIS JURISDICTION HAD CEAS ED DUE TO THE BAR OF LIMITATION. IF THE ISSUING OF A NOTICE FOR ASSES SMENT OR REASSESSMENT PAGE 9 OF 12 FOR A PARTICULAR ASSESSMENT YEAR HAD BECOME TIME-BARRED AT THE TIME OF THE ORDER, WHICH WAS THE SUBJECT-MATTER OF THE AP PEAL, THE PROVISIONS OF S. 150(1) CANNOT BE INVOKED TO THE AID OF THE REVENUE FOR MAKING AN ASSESSMENT OR REASSESSMENT. IN MY VIEW T HE RATIONALE BEHIND THIS PROVISIONS IS NOT TO CONFER UPON THE A.O THE JURISDICTION TO REOPEN AN ASSESSMENT WHICH THE ACT DID NOT OTHERWISE POSSESS. IT SAYS THAT WHERE THE ASSESSMENT PROCEEDINGS WOULD HA VE BEEN BARRED BY TIME EVEN AT THE POINT OF TIME WHEN THE ORDER WHI CH BECAME SUBJECT MATTER OF THE APPEAL WAS PASSED, RESORT CANNO T BE MADE TO SUB-SEC (1) OF SEC 150. 5.2 I FURTHER NOTE THAT AS PER FOLLOWING PROVISIONS OF SECTION 149(1) - NO NOTICE U/S 148 SHALL BE ISSUED FOR THE RELEVANT ASSESSMENT YEAR. A) IF FOUR YEARS HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE CASE FALLS UNDER CLAUSE (B) OR CLAUSE (C) D) IF FOUR YEARS, BUT NOT MORE THAN SIX YEARS, HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AMOUNTS TO OR IS LIKELY TO AMOUNT TO ONE LAKH RUPEES OR MORE FOR THAT YEAR. PAGE 10 OF 12 5.3 THEREFORE, IF THERE IS ANY SPECIFIC DIRECTION CO NTAINED IN AN ORDER PASSED BY THE AUTHORITY IN ANY PROCEEDING UNDER ACT B Y WAY OF APPEAL REVISION OR BY A COURT. IN THAT SITUATION TIME LIMIT FOR ISSUANCE OF NOTICE IS INDEFINITE PERIOD. BUT, IF AT THE TIME WHE N THE ORDER WHICH WAS SUBJECT MATTER OF APPEAL OR REVISION WAS PASSED, THE TIME-LIMIT FOR ISSUANCE OF NOTICE U/S 148 OF THE ACT HAD ALREAD Y EXPIRED, THE TIME LIMIT OF INDEFINITE PERIOD WILL NOT APPLY. HENC E, THE ASSESSMENT ORDER WHICH IS THE SUBJECT-MATTER OF APPEAL WAS PASSE D BY THE LD ITO ON 29/12/2010, AND ON THAT DATE THE TIME LIMIT FOR ISS UANCE OF NOTICE ULS 148 HAD ALREADY EXPIRED BY REASON OF PROVISION OF SECTION 149 LIMITING THE TIME LIMIT TO SIX YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR I.E 31/03/2010. IN VIEW OF THE ABOVE, IN OUR CONSIDERED OPINION, THE ACTION OF THE LD. CIT(A) IN DIRECTING THE ITO, WARD 38(3) TO MAKE FRESH ORDER U/S. 147 INSPITE OF THE FACTS THE NOTICE U/S. 148 WAS VALIDLY ISSUED ONLY AFTER EXPIRY O F TIME LIMIT PROVIDED U/S. 149 OF THE INCOME TAX ACT IS NOT VALID, HENCE, THE SAME IS CANCELLED AND APPEAL OF THE ASSESSEE IS ACC ORDINGLY ALLOWED. MY AFORESAID VIEW IS FORTIFIED BY THE FOLLOWING CASE LAW:- - HONBLE SUPREME COURT OF INDIA DECISION DATED 11.4.2002 PASSED IN CIVIL APPEAL NO. 7742 OF 1997 PAGE 11 OF 12 REPORTED (2002) 122 TAXMAN 0426) IN THE CASE OF K.M. SHARMA VS. ITO. WHEREIN THE HONBLE SUPREME COURT HAS OBSERVED AS UNDER:- REASSESSMENT-LIMITATION-APPLICABILITY OF AMENDED S. 150(1) AMENDMENT MADE TO S.150(1) WHICH INTENDS TO LIFT EMBARGO OF PERIOD OF LIMITATION UNDER S. 149 TO ENABLE THE AUTHORITIES TO REOPEN ASSESSMENT NOT ONLY ON THE BASIS OF ORDERS PASSED IN PROCEEDINGS UNDER THE I.T. ACT BUT ALSO ON THE BASIS OF ORDER OF A COURT IN ANY PROCEEDINGS UNDER ANY LAW HAS TO BE APPLIED PROSPECTIVELY ON OR AFTER 1 ST APRIL, 1989, WHEN THE AMENDMENT WAS INTRODUCED SUB-S. (2) OF S. 150 CANNOT BE HELD APPLICABLE ONLY TO REASSESSMENT BASED ON ORDERS IN PROCEEDINGS UNDER THE ACT AND NOT TO ORDERS OF COURT IN PROCEEDINGS UNDER ANY OTHER LAW- SUB-S. (2) INTENDS TO INSULATE ALL PROCEEDINGS OF ASSESSMENT WHICH ATTAINED FINALITY THUS, ONLY THOSE ASSESSMENT CAN BE REOPENED WHICH HAVE PAGE 12 OF 12 NOT ALREADY ATTAINED FINALITY DUE TO BAR OF LIMITATION UNDER S. 149 AND THIS POSITION IS APPLICABLE EQUALLY TO REASSESSMENTS PROPOSED ON THE BASIS OF ORDERS PASSED UNDER THE ACT OR UNDER ANY OTHER LAW. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON 20-11-2017. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE:20/11/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR , ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES