ACIT, Gurgaon V. Dr. Vijay Diwakar, Gurgaon

ITA 4317/DEL/2010

• Counselvise Citation: 431720114 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 25-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 21-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Assessee Lawyers: VED JAIN
• Keywords: Reopening of assessment; Period of limitation; Reason to believe
• Section: 147; 148; 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H: NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER I.T. A. NO.4317/DEL/2010 ASSESSMENT YEAR : 2005-06 ASSTT. COMMISSIONER OF INCOME-TAX, DR. VIJAY DIWAK AR, CIRCLE-1, GURGAON. VS. S/O SH. OM PRAKASH, 202/22, HERITAGE CITY, M.G. ROAD, GURGAON. PAN: AGPPD7661R (APPELLANT) (RESPONDEN T) APPELLANT BY: SHRI B.R.R. KUMAR, SR. DR. RESPONDENT BY: SHRI VED JAIN, C A. O R D E R PER K.D. RANJAN, ACCOUNTAT MEMBER: THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 2005 -06 ARISES OUT OF THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APP EALS), PANCHKULA. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE REPRODUCED AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN QUASHING TH E ASSESSMENT FRAMED BY THE ASSESSING OFFICER BEING BA D IN LAW ON THE GROUND OF WRONGLY ASSUMED JURISDICTION BY ISSUI NG NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 WITHOUT APPRECI ATING THE FACT THAT WITH EFFECT FROM 01.04.1989 FOR ISSUE OF NOTICE U/S 148 ONLY CONDITION TO BE SATISFIED IS THAT THE ASSESSIN G OFFICER MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE T O TAX HAS 2 ESCAPED ASSESSMENT AND THE POSITION REGARDING SERVI CE OF NOTICE HAS ALSO UNDERGONE A SEA CHANGE IN THE 1961 ACT AND THE ONLY REQUIREMENT FOR TAKING ACTION U/S 148 OF THE INCOME TAX ACT, 1961, IS THAT THE NOTICE SHOULD BE ISSUED WITHIN TH E PERIOD OF LIMITATION? 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN QUASHING AS SESSMENT FRAMED BY THE ASSESSING OFFICER BEING BAD IN LAW BY ADJUDICATING THE ISSUE WHICH WAS NEVER RAISED BY TH E ASSESSEE AS WELL AS SH. MANOJ JAIN, CA AUTHORIZED REPRESENTA TIVE OF THE ASSESSEE ATTENDED THE PROCEEDINGS BEFORE THE ASSESS ING OFFICER DURING THE ENTIRE ASSESSMENT PROCEEDINGS, THUS AN I SSUE WHICH WAS NOT AVAILABLE IN THE ASSESSMENT ORDER COULD NOT BE TAKEN ON APPEAL AS HELD BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF SOUTHERN FOUNDATION (P) LTD. VS ACIT (2010) 324 ITR 76. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN QUASHING TH E ASSESSMENT FRAMED BY THE ASSESSING OFFICER BEING BA D IN LAW ON THE GROUND OF WRONGLY ASSUMED JURISDICTION BY ISSUI NG NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 WITHOUT APPRECI ATING THE FACT THAT THE ASSESSEE KNOWINGLY FILED ITS RETURN O F INCOME WITH INCOME TAX OFFICER, WARD-4, GURGAON EVEN AFTER A SU RRENDER OF RS.20 LAKHS AND THE ASSESSEE WAS AWARE THAT ITS JUR ISDICTION LIES WITH CIRCLE, GURGAON AS ITS TOTAL INCOME WAS E XCEEDING RS.5 LAKHS. 4. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) IS RIGHT ON FACTS AND IN LAW IN NOT ADJUDICATING THE CASE ON MERITS? 3. THE FIRST ISSUE FOR CONSIDERATION RELATES TO QUA SHING OF THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SEC. 143(3) REA D WITH SEC. 147 OF THE ACT. THE FACTS OF THE CASE STATED IN BRIEF ARE THA T THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR WAS RUNNING KAMLA MEMORIAL H OSPITAL AS PROPRIETOR. 3 A SURVEY UNDER SEC. 133A WAS CONDUCTED ON 23 RD NOVEMBER, 2004 BY THE INCOME-TAX OFFICER, WARD-2, GURGAON. DURING THE CO URSE OF SURVEY, THE ASSESSEE SURRENDERED A SUM OF RS.40,00,000/- FOR AS SESSMENT YEAR 2004-05 AND A SUM OF RS.20,00,000/- FOR ASSESSMENT YEAR 200 5-06. THE CASE WAS SUBSEQUENTLY TRANSFERRED FROM THE INCOME-TAX OFFICE R, WARD-2, GURGAON TO THE ASSTT. COMMISSIONER OF INCOME-TAX, GURGAON CIRC LE, GURGAON. THE ASSTT. COMMISSIONER OF INCOME-TAX ISSUED NOTICE UND ER SEC. 148 ON 04.03.2008. SUBSEQUENTLY, A LETTER WAS RECEIVED FR OM THE ITO WARD-4, GURGAON INTIMATING THAT THE RETURN WAS FILED BY THE ASSESSEE IN WARD-4 ON 1.08.2005. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE RETURN WAS FILED ONLY FOR RS.5,95,988/- AS AGAI NST SURRENDER OF RS.20 LAKHS MADE BY HIM DURING THE COURSE OF SURVEY OPERA TIONS. IT WAS SUBMITTED BY THE ASSESSEE THAT THE INCOME DECLARED BY HIS WIF E AND PROFIT FROM SHIVAM HOSPITAL AT RS.1,84,767/- AND RS.6,10,880/- RESPECT IVELY, SHOULD BE CONSIDERED AS PART OF THE SURRENDERED INCOME. THIS CONTENTION OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER ON T HE GROUND THAT INCOME OF OTHER ASSESSEES COULD NOT BE CONSIDERED AS PART OF SURRENDERED INCOME OF RS.20 LAKHS. HOWEVER, THE AO ALLOWED REDUCTION IN SURRENDERED AMOUNT BY 10% AND TOOK THE SURRENDERED INCOME AT RS.18 LAKHS. THE AO AFTER 4 REDUCING THE INCOME ADMITTED IN THE RETURN OF INCOM E, ADDED THE AMOUNT OF RS.12,04,012/- AND ASSESSED THE TOTAL INCOME AT RS. 18 LAKHS. 4. BEFORE THE LEARNED CIT(A), THE ASSESSMENT ORDER WAS CHALLENGED ON ASSUMPTION OF JURISDICTION UNDER SEC. 147 AND ALSO ISSUE OF NOTICE UNDER SEC. 143(3). IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE HAD FILED RETURN OF INCOME WITH THE ITO, WARD-4 AND THEREFORE, THERE WA S NO JUSTIFICATION ON THE PART OF THE ACIT, GURGAON TO ISSUE NOTICE UNDER SEC . 148 OF THE ACT. IT WAS ALSO SUBMITTED THAT NOTICE UNDER SEC. 143(2) WAS NO T ISSUED FOR ASSESSMENT YEAR 2005-06. THEREFORE, THE ASSESSMENT FRAMED UND ER SEC. 143(3) READ WITH SEC. 147 WAS BAD IN LAW. THE LEARNED CIT(A) O BTAINED THE COMMENTS OF THE AO WHEREIN IT WAS SUBMITTED THAT SINCE THE R ETURNED INCOME WAS MORE THAN RS.5 LAKHS, THE PROPER JURISDICTION LAY WITH T HE CIRCLE AND THE ASSESSEE SHOULD HAVE FILED RETURN IN CIRCLE AND NOT IN ITO, WARD-4. THE AO THUS WAS LEFT WITH NO OPTION BUT TO REOPEN THE CASE UNDER SE C. 147 OF THE ACT. IT WAS ALSO SUBMITTED THAT NOTICES UNDER SEC. 143(2) AND 1 42(1) WERE ISSUED ON 10.12.2008 AND WERE SERVED ON SHRI MANOJ JAIN, CA, WHO WAS THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. IT WAS ALSO REPORTED BY HIM THAT NOTICE UNDER SEC. 148 WAS ISSUED ON 4.03.2008 AND T HERE WAS NO STATUTORY TIME LIMIT FOR ISSUE OF NOTICE UNDER SEC. 143(2) OF THE ACT IN THE CASE OF 5 REOPENING OF ASSESSMENT EXCEPT THAT IT SHOULD BE DO NE BEFORE PASSING OF THE ASSESSMENT ORDER. 5. IN REJOINDER THE COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSEE WAS LIABLE TO FILE THE RETURN OF INCOME IN WARD-4 A ND NOT THE CIRCLE AND THERE WAS NO ORDER PASSED UNDER SEC. 127 OF THE ACT TRANS FERRING THE JURISDICTION OF THE ASSESSEE. THE ARGUMENT OF THE AO THAT THE RETU RN SHOULD HAVE BEEN FILED WITH THE CIRCLE, WAS THEREFORE, BASELESS. IT WAS A LSO ARGUED THAT NO NOTICE UNDER SEC.143(2) WAS SERVED ON THE ASSESSEE FOR ASS ESSMENT YEAR 2005-06 AND THE CONTENTION OF THE ASSESSING OFFICER THAT PR OPER NOTICE WAS SERVED ON THE ASSESSEE, WAS WRONG. THE NOTICE WAS ISSUED FOR ASSESSMENT YEAR 2006- 07 AND NOT FOR ASSESSMENT YEAR 2005-06. ON THE BAS IS OF ABOVE ARGUMENTS, IT WAS ARGUED THAT ASSESSMENT FRAMED BY THE ASSESSI NG OFFICER WAS BAD IN LAW. 6. THE LEARNED CIT(A) AFTER CONSIDERING THE FACTS O F THE CASE AND SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE AO, OBSERVED THAT IT WAS THE DUTY OF THE INCOME-TAX OFFICER, WARD-4, GURGAON TO TRANSFER THE RETURN OF INCOME TO THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE, ON SEEING THAT THE RETURNED INCOME WAS MORE THAN RS.5 LAKHS. THE ASSESSEE COULD NOT BE HELD TO HAVE NOT FILED THE RETURN OF INCOME. HE AL SO OBSERVED THAT THE ACIT, CIRCLE GURGAON SHOULD HAVE ENQUIRED ABOUT THE RETUR N FROM THE ITO, WARD- 6 4, GURGAON. THEN ON RECEIPT OF INFORMATION FROM TH E ITO, WARD-4 SHOULD HAVE FILED THE PROCEEDINGS UNDER SEC.147. HE, THER EFORE, HELD THAT NOTICE ISSUED UNDER SEC. 148 OF THE ACT ON 4.03.2008 FOR T HE REASON OF NON-FILING OF THE RETURN IS BAD IN LAW ON THE GROUND THAT RETURN WAS FILED BY THE ASSESSEE ON 1.08.2005. AS REGARDS SECOND CONTENTION OF THE ASS ESSEE THAT NO NOTICE UNDER SEC.143(2) WAS ISSUED BY THE ASSESSING OFFICE R FOR ASSESSMENT YEAR 2005-06, THE LEARNED CIT(A) NOTED THAT THE NOTICES REFERRED TO BY THE AO IN THE REMAND REPORT WERE IN RESPECT OF ASSESSMENT YEA R 2006-07 AND NOT FOR ASSESSMENT YEAR 2005-06. THEREFORE, THE ARGUMENT O F THE ASSESSEE THAT NO NOTICE UNDER SEC. 143(2) WAS SERVED ON THE ASSESSEE WAS FOUND TO BE CORRECT. AS REGARDS THE THIRD CONTENTION OF THE ASSESSEE THA T SINCE THE RETURN OF INCOME WAS FILED ON 1.08.2005, THE NOTICE UNDER SEC . 143(2) COULD HAVE BEEN ISSUED LATEST BY 1.08.2006 BUT HAS BEEN ISSUED ON 1 0.12.2008, EVEN IF THE CONTENTION OF THE AO WAS ACCEPTED AS CORRECT. THUS , THE NOTICE WAS ISSUED LATE BY MORE THAN 28 MONTHS. THIS CONTENTION OF TH E ASSESSEE WAS ALSO ACCEPTED AS CORRECT BY THE LEARNED CIT(A). IN VIEW OF ABOVE, THE LD. CIT(A) HAS HELD THAT SINCE THE RETURN HAS BEEN FILED ON 1. 08.2005, THE NOTICE ISSUED BY THE AO UNDER SEC.148 OF THE ACT FOR NON-FILING O F THE RETURN, WAS BAD IN LAW. THE LEARNED CIT(A) THUS CONCLUDED THAT THE NO TICE ISSUED UNDER SEC. 148 OF THE ACT WAS BAD IN LAW AND SINCE NO NOTICE U NDER SEC. 143(2) WAS 7 ISSUED, THE ASSESSMENT MADE UNDER SEC. 143(3) READ WITH SEC. 147 WAS BAD IN LAW. HE THEREFORE, ANNULLED THE ASSESSMENT. 7. BEFORE US, THE LEARNED SR. DEPARTMENTAL REPRESEN TATIVE SUBMITTED THAT THE JURISDICTION WAS TRANSFERRED FROM INCOME TAX OF FICER, WARD-4 TO ACIT, CIRCLE GURGAON AND THEREFORE, THE RETURN OF INCOME SHOULD HAVE BEEN FILED BY THE ASSESSEE WITH THE ACIT, CIRCLE GURGAON AND N OT WITH THE ITO, WARD- 4. AS REGARDS REOPENING OF THE ASSESSMENT UNDER SE C. 147, THE REASON FOR ISSUING NOTICE IS THAT RETURN OF INCOME FOR ASSESSM ENT YEAR 2005-06 WAS NOT FILED BY THE ASSESSEE AND THEREFORE, INCOME SURREND ERED AT RS.20,00,000/- HAD ESCAPED ASSESSMENT. THE LEARNED SR. DR SUPPORT ED THE ORDER OF THE AO. ON THE OTHER HAND, THE LEARNED AR OF THE ASSESSEE S UBMITTED THAT THE ASSESSEE FILED ORIGINAL RETURN OF INCOME ON 1.08.20 05 WITH THE ITO, WARD-4, WHERE HE WAS ASSESSED. THE JURISDICTION WAS TRANSF ERRED TO THE ACIT CIRCLE GURGAON WHO ISSUED NOTICE UNDER SEC. 148 ON THE GRO UND THAT NO RETURN OF INCOME WAS FILED WITH HIM. HENCE ISSUE OF NOTICE U /S 148 WAS BAD IN LAW. HE PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. SOCIETY FOR WORLDWIDE INTER BANK FINANCI AL TELECOMMUNICATION, 323 ITR 249. IT WAS ALSO SUBMITTED THAT NOTICE UND ER SEC. 143(2) WAS NOT ISSUED. NOTICES DATED 10.12.2008 ARE IN RESPECT OF ASSESSMENT YEAR 2006- 07 AND NOT IN RESPECT OF ASSESSMENT YEAR 2005-06. THEREFORE, ASSESSMENT 8 FRAMED BY THE AO IS WITHOUT ISSUING NOTICE UNDER SE C. 143(2) OF THE ACT. THUS, THE ASSESSMENT FRAMED IS BAD IN LAW. 9. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE THR OUGH THE MATERIAL AVAILABLE ON RECORD. IT IS A FACT THAT THE ASSESSE E HAD FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06 WITH ITO, WARD-4, GURGA ON. THE JURISDICTION WAS TRANSFERRED TO ACIT, CIRCLE GURGAON BUT THE ITO , WARD-4, GURGAON DID NOT TRANSFER THE RETURN TO THE NEW JURISDICTION. T HE AO REOPENED ASSESSMENT BY ISSUE OF NOTICE UNDER SEC. 148 ON 4.03.2008 ON T HE GROUND THAT NO RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06 WAS FOUND TO HAVE BEEN FILED BY THE ASSESSEE IN ACIT, CIRCLE GURGAON. IN THE REASONS T HE AO HAS ALSO RECORDED THE FACT THAT SURVEY UNDER SEC. 133A WAS CONDUCTED AND THE ASSESSEE SURRENDERED AN AMOUNT OF RS.20,00,000/-, WHICH HAD ESCAPED ASSESSMENT. THEREFORE, SUFFICIENCY OF RASONS CANNOT BE CHALLENG ED. MOREOVER, THE RETURN OF INCOME FILED ON 1.08.2005 COULD NOT BE ACTED UPO N AFTER EXPIRY OF PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH IT WAS FILED. THEREFORE, EVEN IF RETURN OF INCOME FILED ON 1.08.2005 WAS IN POSSESSION OF ACIT, HE COULD NOT HAVE ISSUED NOTICE U/S 143(2) AFTER EXPIR Y OF PERIOD OF ONE YEAR. IT IS ALSO A FACT THAT ASSESSEE HAD SURRENDERED AN AMO UNT OF RS.20,00,000/- U/S 133A. MERELY BECAUSE THERE WAS FAULT ON THE PART O F ASSESSING OFFICER, REOPENING OF ASSESSMENT ON 4.03.2008 CANNOT BE HELD TO BE BAD IN LAW ON THE 9 GROUND OF SUFFICIENCY OF REASONS. WE, THEREFORE, R EVERSE THE ORDER OF CIT(A) ON RE-OPENING OF ASSESSMENT UNDER SEC. 147 OF THE A CT. 10. AS REGARDS ISSUE OF NOTICE UNDER SEC. 143(2), W E FIND THAT NOTICE DATED 10.12.2008 IS IN RESPECT OF A.Y. 2006-07 AND NOT IN RESPECT OF A.Y. 2005-06. THE LEARNED CIT(A) HAS RECORDED A FINDING OF FACT T HAT NO NOTICE UNDER SEC. 148 WAS ISSUED BY THE AO FOR ASSESSMENT YEAR 2005-0 6, WHICH FACT IS ALSO CLEAR ON PERUSAL OF NOTICE DATED 10.12.2008. SINCE THE AO HAS NOT ISSUED NOTICE UNDER SEC. 143(2) FOR THE RELEVANT ASSESSMEN T YEAR, THE ASSESSMENT FRAMED IS BAD IN LAW. HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. SOCIETY FOR WORLDWIDE INTER BANK FINANCIAL TELECOMM UNICATION (SUPRA), HAS HELD THAT ASSESSMENT FRAMED WITHOUT VALID NOTICE UN DER SEC. 143(2) IS BAD IN LAW. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LEARNED CIT(A) QUASHING THE ASSESSMENT FOR ASSESSME NT YEAR 2005-06. 11. NEXT ISSUE FOR CONSIDERATION RELATES TO AS TO W HETHER THE LEARNED CIT(A) WAS JUSTIFIED ON FACTS AND IN LAW IN NOT ADJ UDICATING THE CASE ON MERITS. SINCE THE ASSESSMENT HAS BEEN QUASHED BY T HE LEARNED CIT(A), THE LEARNED CIT(A) IN OUR CONSIDERED OPINION WAS JUSTIF IED IN NOT ADJUDICATING THE APPEAL ON MERITS. ACCORDINGLY, THE GROUND RAIS ED BY THE REVENUE IS ALSO REJECTED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. 13. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 25 TH JANUARY, 2012. SD/- SD/- (A.D. JAIN) (K.D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25 TH JANUARY, 2012. 10 ITA NO.4317/DEL/2010 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.