MAS Metals & Components Pvt. Ltd., New Delhi V. ITO, Ward- 2(2), Noida

ITA 4263/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3189 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Opportunity of being heard; Cost of acquisition
• Section: 142(1); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.4263/DEL/2018 ASSESSMENT YEAR: 2009-10 MAS METALS & COMPONENTS PVT. LTD., A-4, SOUTH EXTENSION PART I, NEW DELHI. PAN: AADCM6451F VS. ITO, WARD-2(2), NOIDA. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ARUN KUMAR JAIN, CA REVENUE BY : SHRI S.L. ANURAGI, SR.DR DATE OF HEARING : 21.02.2019 DATE OF PRONOUNCEMENT : 26.02.2019 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 30 TH JUNE, 2017 OF THE CIT(A)-1, NOIDA, RELATING TO ASSESSMENT YEAR 20 09-10. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: - 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE SER VICE OF VARIOUS NOTICES ISSUED U/S 148, 142(1), 143(2) AS VALID SERVICE INSPITE OF THE FACT THAT NONE OF NOTICES WERE ISSUED IN ACCORDANCE WITH SECTION 282 OF THE I .T ACT READ WITH RULE 127 OF THE I.T RULES, 1962 AND THEREFORE ASSESSMENT MADE C ONSEQUENT THERETO WAS WITHOUT JURISDICTION AND LIABLE TO BE QUASHED. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE VALIDITY OF SERVICES OF VARIOUS NOTICE(S) ISSUED U/S 148, 144, 142(1) OF I.T. ACT AS VALID SE RVICE AT B-94, SECTOR-10, NOIDA WITHOUT APPRECIATING THAT THE REGISTERED OFFICE OF THE APPELLANT IS SITUATED AT A- 4, SOUTH EXTENSION, NEW DELHI WHICH IS EASILY AVAILABL E FROM THE ITR, PAN DATA BASE OF THE APPELLANT AND/OR MCA WEBSITE. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND O N FACTS IN ISSUING DIRECTIONS U/S 150 OF I.T ACT TO THE ITO WARD 16(3), NEW DELHI FOR ISSUE OF FRESH NOTICE AND PASSING THE ASSESSMENT ORDER U/S 148 FOR A.Y. 2009- 10. 4. THAT THE IMPUGNED ASSESSMENT ORDER IS BARRED BY LIM ITATION THEREFORE INVALID AND BAD IN LAW AND MAY PLEASE BE ANNULLED. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE VAL IDITY OF INITIATION OF REASSESSMENT PROCEEDING WHICH WAS WITHOUT RECOURSE TO THE PROVISION OF SECTION 147/148 OF THE INCOME TAX ACT, 1961 AND FAILING TO APPRECIATE THAT THERE WERE NO MATERIAL ON RECORD TO BELIEVE THAT INCOME OF A SSESSEE HAS ESCAPED ASSESSMENT FOR THE A.Y. 2009-10. 6. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLD ING THE INITIATION OF PROCEEDING U/S 148 WHICH WAS WITHOUT COMPLYING WITH THE MANDATORY CONDITIONS OF SECTION 147 TO 153 OF THE INCOME TAX ACT, 1961 A ND REOPENING OF THE CASE IS BAD IN LAW AND MAY PLEASE BE ANNULLED. 7. THAT THERE WAS NO MATERIAL HAVING LIVE NEXUS WITH T HE FOUNDATION OF BELIEF, THEREFORE, INITIATION OF RE-ASSESSMENT PROC EEDING IS BAD IN LAW AND MAY PLEASE BE ANNULLED. 8. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN NOT DELETING THE ADDITION OF RS. 32,99,000/- MADE U/S 45 OF THE I.T ACT, 1961 BEING LONG TERM CA PITAL GAIN ON SALE OF PLOT OF LAND. 9. THE APPELLANT CRAVES IN THE RIGHT TO ADD, AMEND, M ODIFY, DELETE ANY GROUNDS OR GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY. ON THE BASIS OF NON-PAN AIR INFORMATION RECEIVED BY TH E ASSESSING OFFICER THAT THE ASSESSEE HAS SOLD IMMOVABLE PROPERTY OF RS.40,99,00 0/- DURING THE FINANCIAL YEAR 2008-09 RELEVANT TO THE IMPUGNED ASSESSMENT YEAR AN D SINCE THE ASSESSEE HAS NOT QUOTED THE PAN IN THIS HIGH VALUE TRANSACTION AS RE QUIRED U/S 139A(5) OF THE ACT READ WITH RULE 114B OF THE IT RULES, 1962, THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 147 BY RECORDING THE REASONS AND ISSUED NOT ICE U/S 148 OF THE IT ACT ON 28 TH MARCH, 2016. HOWEVER, THERE WAS NO COMPLIANCE TO T HE NOTICE ISSUED U/S 148 OF THE IT ACT WITHIN THE PRESCRIBED TIME. THE ASSESSING OFFI CER, THEREFORE, ISSUED NOTICE U/S 142(1) ON 5 TH AUGUST, 2016 TO MAKE COMPLIANCE OF NOTICE U/S 148 OF THE ACT ON 22 ND AUGUST, 2016. AGAIN, THERE WAS NO COMPLIANCE TO TH E ABOVE NOTICE. THEREAFTER, ANOTHER NOTICE U/S 142(1) OF THE IT ACT ALONG WITH A QUESTIONNAIRE WAS ISSUED BY THE ASSESSING OFFICER ON 4 TH AUGUST, 2016, REQUIRING THE ASSESSEE TO EXPLAIN TH E SOURCE OF HIGH VALUE TRANSACTIONS ALONG WITH DOCUMENTARY EVID ENCE. AGAIN, THERE WAS NO COMPLIANCE TO SUCH NOTICE. THE ASSESSING OFFICER T HEREAFTER ISSUED A SHOW CAUSE NOTICE U/S 144 TO THE ASSESSEE ON 03.11.2016. AGAI N, THERE WAS NO COMPLIANCE. THEREFORE, THE ASSESSING OFFICER PROCEEDED TO COMPL ETE THE ASSESSMENT U/S 144 ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD AND DETER MINED THE TOTAL INCOME AT RS.32,99,000/- AFTER DEDUCTING THE AMOUNT OF RS.8 L AKHS TOWARDS INDEXED COST OF ACQUISITION ON ESTIMATE BASIS FROM THE SALE CONSIDE RATION OF RS.40,99,000/-. THE ASSESSING OFFICER, ACCORDINGLY MADE ADDITION OF RS. 32,99,000/- AS LONG-TERM CAPITAL GAIN. ITA NO.4263/DEL/2018 4 4. BEFORE THE CIT(A), THE ASSESSEE CHALLENGED THE VALI DITY OF THE ORDER PASSED BY SUCH NON-JURISDICTIONAL ASSESSING OFFICER OF NOIDA WHEN THE ASSESSEE IS REGULARLY ASSESSED AT NEW DELHI. THE LD.CIT(A) OBSERVED THAT , ADMITTEDLY, THE ASSESSEE IS AN EXISTING ASSESSEE IN DELHI AND, THEREFORE, THE ASSE SSING OFFICER, NOIDA, COULD NOT HAVE ASSUMED JURISDICTION AGAINST THE ASSESSEE OTHERWISE THAN THE DUE PROCEDURE IN LAW WHICH ACTION IS ADMITTEDLY NOT TO HAVE TAKEN RECOUR SE TO. THEREFORE, THE IMPUGNED ASSESSMENT ORDER IS BAD IN LAW BEING PASSED WITHOUT JURISDICTION. HOWEVER, HE HELD THAT WHILE THE NOTICE IN THE CASE OF A COMPANY IS R EQUIRED TO BE SERVED ON ITS PRINCIPAL OFFICER AT ITS REGISTERED OFFICE, THE SAME IS ONLY DIRECTORY AND NOT MANDATORY AND THE NOTICE CAN BE SERVED IN VARIOUS OTHER MANNERS INCLU DING UPON THE EMPLOYEES OR REPRESENTATIVES OF THE COMPANY AND AT OTHER ADDRESS ES. THE CONCEPT OF REGISTERED OFFICE WILL INCLUDE VARIOUS OTHER ADDRESSES OF THE COMPANY FOR THE PURPOSE OF STATUTORY CORRESPONDENCE AS WELL AS THE EMPLOYEES AND REPRESE NTATIVES OF THE ASSESSEE WOULD BE INCLUDED IN THE STATUS APPELLANT. IN THIS VIEW OF THE MATTER, HE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORD ER BUT GAVE A DIRECTION TO THE SUCCESSOR ASSESSING OFFICER OF THE ITO, WARD 6(3), DELHI TO ISSUE NOTICE U/S 148 ONCE AGAIN TO THE ASSESSEE AND FRAME NECESSARY ASSESSMEN T ORDER AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD IN ACCORDANCE WITH LAW. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL. ITA NO.4263/DEL/2018 5 6. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, SU BMITTED THAT THE REGISTERED OFFICE OF THE ASSESSEE IS SITUATED AT DELHI AT A-4, SOUTH EXTENSION PART I, NEW DELHI AND THE ASSESSEE IS REGULARLY FILING ITS RETURN OF INCOME WITH THE ASSESSING OFFICER HAVING JURISDICTION OVER THE ASSESSEE AT NEW DELHI. HE SUBMITTED THAT THE RETURN FOR ASSESSMENT YEAR 2009-10 WAS FILED ON 23 RD OCTOBER, 2009 AND THE RETURN FOR ASSESSMENT YEAR 2015-16 WAS FILED ON 28 TH SEPTEMBER, 2015 WITH THE ASSESSING OFFICER AT WARD 16(3), NEW DELHI. THE RETURN FOR ASSESSMENT YEAR 2 016-17 WAS FILED ON 30 TH SEPTEMBER, 2016. THE ORDER FOR ASSESSMENT YEAR 200 6-07, COPY OF WHICH IS PLACED AT PAGE 48 OF THE PAPER BOOK SHOWS THAT THE SAME WAS I SSUED BY INCOME-TAX OFFICER, WARD 6(3), NEW DELHI ON 28 TH NOVEMBER, 2006. HE SUBMITTED THAT WHEN THE ASSESSING OFFICER, NOIDA DOES NOT HAVE JURISDICTION OVER THE ASSESSEE, HE CANNOT ISSUE A NOTICE U/S 148. THE LD.CIT(A) IS ACCEPTING THE S AME AND THEREBY HOLDING THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTI FIED. HOWEVER, BY DIRECTING THE ASSESSING OFFICER HAVING JURISDICTION OVER THE ASSE SSEE TO ISSUE NOTICE U/S 148, HE HAS EXCEEDED HIS JURISDICTION. HE ACCORDINGLY SUBMITTE D THAT THE ORDER OF THE CIT(A) TO THIS EXTENT SHOULD BE SET ASIDE. HE ALSO RELIED ON THE FOLLOWING DECISIONS:- ITAT, NEW DELHI IN THE CASE OF ZAKIA BEGUM NEW DELH I V ITO (2017) (ITA NO.3002/DEL/2016) HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. ESHA AN HOLDING (P) LTD (2012) 344 ITR 541 ITAT NEW DELHI, IN THE CASE OF AURAM JEWELLERY EXPO RTS (P) LTD. VS ACIT (2017) (ITA NO. 1653/DEL/2011) ITAT, NEW DELHI IN THE CASE OF ARYAN CORPORATE SOLU TION (P) VS. ITO (2016) [ITA NO. 4565/DEL/2012) ITA NO.4263/DEL/2018 6 ITAT, NEW DELHI IN THE CASE OF DEEPAK GUPTA VS. ACI T (ITA NO. 1708 TO 1713/DEL/11) HONBLE DELHI HIGH COURT IN THE CASE OF SUNWORLD IN FRASTRUCTURE PVT. LTD. VS. ITO (W.P ( C ) 1741/2015 & CM NO. 3112/2015) HONBLE SUPREME COURT OF INDIA IN THE CASE OF Y. NA RAYANA CHETTY & ANOTHER VS. ITO [(1959) 35 ITR 388 (SC)] ITAT, CHANDIGARH IN THE CASE OF SH. OM PARKASH KUKR EJA VS. ITO (ITA NO. 335 & 336/CHD/2015 ITAT, NEW DELHI IN THE CASE OF JAGDISH MALHOTRA VS. ITO (ITA NO.3652-53/DEL/13) ITAT, MUMBAI IN THE CASE OF ASHOK B. BAFNA VS. DCIT (2012) [18 ITR (TRIB) 43 (ITAT MUMB.) HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. ADARSH TRAVEL BUS SERVICE [2012] (204 TAXMAN 114 (ALL) HONBLE GUJARAT HIGH COURT IN THE CASE OF KANUBHAI M. PATEL HUF VS. HIREN BHATT OR HIS SUCCESSORS TO OFFICE & 4 (2010). 7. THE LD. DR, ON THE OTHER HAND, SUBMITTED THAT TH E DEPARTMENT HAS NOT FILED ANY APPEAL AGAINST THE FINDINGS GIVEN BY THE CIT(A) THA T THE ASSESSING OFFICER, NOIDA COULD NOT HAVE ASSUMED JURISDICTION AGAINST THE ASS ESSEE OTHER WISE THAN THE DUE PROCEDURE OF LAW, THEREFORE, THE ASSESSEE SHOULD NO T HAVE ANY GRIEVANCE. SO FAR AS THE DIRECTION OF THE CIT(A) TO THE CONCERNED ASSESSING OFFICER TO ISSUE NOTICE U/S 148 ONCE AGAIN UPON THE ASSESSEE AND FRAME NECESSARY AS SESSMENT ORDER AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE IS CONCERNED, THE SAME IS IN ACCORDANCE WITH LAW SINCE THE INTEREST OF REVENUE I S PROTECTED UNDER THE PROVISIONS OF SECTION 150 OF THE ACT. THEREFORE, THE ASSESSEE SH OULD NOT HAVE ANY GRIEVANCE. ITA NO.4263/DEL/2018 7 8. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. I HAVE ALSO CONSID ERED THE VARIOUS DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE WHICH ARE PLACE D ON THE PAPER BOOK. ADMITTEDLY, THE ASSESSEE IN THE INSTANT CASE IS REGULARLY ASSES SED TO TAX AT NEW DELHI AND THEREFORE, ITO WARD 2(2), NOIDA DOES NOT HAVE JURISDICTION OF THE ASSESSEE. THEREFORE, HE COULD NOT HAVE ISSUED NOTICE U/S 148 OF THE ACT TO THE AS SESSEE AND SUCH ACTION OF THE ASSESSING OFFICER BEING IN EXCESS OF HIS JURISDICTI ON, THE ENTIRE ORDER IS LIABLE TO BE QUASHED. THE LD.CIT(A) HAS RIGHTLY QUASHED THE ORD ER SO PASSED BY THE ASSESSING OFFICER OF NOIDA. HOWEVER, WHILE DOING SO, THE LD. CIT(A) HAS GIVEN A DIRECTION TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THE ASSE SSEE TO ISSUE NOTICE U/S 148 WHICH, IN MY OPINION, IN THE FACTS AND CIRCUMSTANCES OF TH E CASE IS NOT PROPER. IT IS FOR THE ASSESSING OFFICER HAVING JURISDICTION OVER THE ASSE SSEE TO ISSUE NOTICE U/S 148 AFTER RECORDING REASONS. THE LD.CIT(A) COULD HAVE AT BES T FORWARDED THE INFORMATION TO THE ASSESSING OFFICER OR THE CONCERNED CIT BUT COULD NO T HAVE DIRECTED THE ASSESSING OFFICER TO ISSUE NOTICE U/S 148 OF THE ACT. SINCE THE ASSESSING OFFICER, BEING A SUBORDINATE OFFICER OF THE CIT(A), IS BOUND TO FOLL OW THE DIRECTION OF HIS SUPERIOR AUTHORITY, THEREFORE, IT WILL CAUSE UNDUE HARDSHIP TO THE ASSESSEE FOR NO FAULT COMMITTED BY IT. IF THE PROPOSITION LAID DOWN BY CIT(A) IS A CCEPTED, IT WILL CREATE HAVOC AND ANY OFFICER SITTING ANYWHERE IN THE COUNTRY CAN PASS AN ORDER AGAINST ANY ASSESSEE AND THE CIT(A) WILL DIRECT THE ASSESSING OFFICER HAVING JUR ISDICTION OVER THE ASSESSEE TO REOPEN THE CASE. THIS IS DEFINITELY NOT THE INTENT ION OF THE STATUTE AND THE LAW DOES NOT PERMIT THE OFFICER TO DO SOMETHING INDIRECTLY WHICH HE CANNOT DO DIRECTLY. IN THIS VIEW ITA NO.4263/DEL/2018 8 OF THE MATTER, THE DIRECTION OF THE CIT(A) TO THE A SSESSING OFFICER FOR ISSUE OF NOTICE U/S 148 OF THE ACT BEING NOT IN ACCORDANCE WITH THE LAW IS LIABLE TO BE QUASHED. ACCORDINGLY, THE DIRECTION OF THE CIT(A) TO THE ASS ESSING OFFICER TO ISSUE NOTICE U/S 148 IS QUASHED. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASS ESSEE IS ALLOWED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 6.02.2019. SD/- ( R.K. PANDA) ACCOUNTANT MEMFBE R DATED: 26 TH FEBRUARY, 2019 DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI