Shankar Lal Goenka, Guwahati V. Dy. Commissioner of Income Tax, Circle-4, Guwahati

ITA 434/GTY/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2671 (ITAT-GUWAHATI)
• Duration Of Justice: 2 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 23-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Period of limitation; Time period of passing order
• Section: 143(3); 142(1); 143(2); 20

Judgement Text

1 ITA NO. 434/GAU/2019 SHANKAR LALL GOENKA ASSESSMENT YEAR: 2015-16 IN THE INCOME TAX APPELLATE TRIBUNAL GAUHATI BENC H: GUWAHATI HEARING AT KOLKATA [BEFORE SHRI P. M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI A. T. VARKEY, JM] I.T.A. NO. 434/GAU/2019 ASSESSMENT YEAR: 2015-16 SHANKAR LALL GOENKA (PAN: ACPPG 9363 H) VS. DCIT, CIRCLE-4, GUWAHATI APPELLANT RESPONDENT DATE OF HEARING (VIRTUAL) 18.10.2021 DATE OF PRONOUNCEMENT 28.10.2021 FOR THE APPELLANT SHRI SOMNATH GHOSH, ADVOCATE SHRI A. K. AGARWAL, FCA FOR THE RESPONDENT SHRI N.T. SHERPA , JCIT, SR. D.R ORDER PER SHRI A.T. VARKEY, JM: THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAIN ST THE ORDER OF LD. CIT(A)-2, GUWAHATI DATED 30.07.2019 FOR ASSESSMENT YEAR 2015- 16. 2. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE SHRI SOMNATH GHOSH DREW OUR ATTENTION TO THE ADDITIONAL GROUND OF APPEAL RAISED BY THE AS SESSEE WHICH ACCORDING TO HIM IS A LEGAL ISSUE WHICH GOES TO THE ROOT OF THE JURISDICTION OF THE AO TO FRAME THE ASSESSMENT ORDER. THEREFORE, THE SAME MAY BE ADJUDICATED FIRST AND FU RTHER CONTENDED THAT SINCE IT IS A LEGAL ISSUE IT CAN BE RAISED FOR THE FIRST TIME AS PER TH E HONBLE SUPREME COURT DECISION IN THE CASE OF NTPC LTD. 229 ITR 383 (SC). 3. THE LEGAL ISSUE THAT HAS BEEN RAISED AS ADDITION AL GROUND READS AS UNDER: FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE INS TANT CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, GUWAHATI ACTED UNLAWFULLY IN NOT APPRE CIATING THAT NONE OF THE CONDITIONS PRECEDENT EXISTED FOR AND/OR WERE FULFILLED BY THE LD. INCOME TAX OFFICER, WARD-4(3), GUWAHATI FOR HIS SPECIOUS ACTION OF ISSUING NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 ON 20.09.2016 IN THE INSTANT CASE AND THE PURPORTED ASSESSMENT ORDER FRA MED U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 27.12.2017 BY THE LD. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-4, GUWAHATI WITHOUT ADHERING TO THE MANDATORY TENETS IS THEREFORE AB INITIO VOID , ULTRA VIRES AND EX-FACIE NULL IN LAW . 2 ITA NO. 434/GAU/2019 SHANKAR LALL GOENKA ASSESSMENT YEAR: 2015-16 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WHEREIN HE DECLARED TOTAL INCOME TO THE TUNE OF RS.20,03,070/-. ON THE LEGAL ISSUE RAISED BY THE AS SESSEE, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT AS PER THE CBDT INSTRUCTION NO. 1/11 (F. NO. 187/12/2010-IT(AT) DATED 31.01.2011 CBDT HAS FIXED NEW MONETARY LIMIT IN MUF ASSIL AREAS, ACCORDING TO WHICH INCOME ABOVE RS. 15 LACS FOR NON CORPORATE ASSESSEE AND RS.20 LACS FOR CORPORATE RETURNS HAS TO BE ASSESSED BY ACIT/DCIT. THUS, ACCORDING TO LD. COUNSEL, SINCE ASSESSEES PRINCIPAL BUSINESS IS IN MOFFUSIL AREA, THE AO SHOULD HAVE ACTED UPON THE INSTRUCTIONS GIVEN BY THE CBDT WHICH IS BINDING ON THE OFFICERS OF THE DEPARTMENT; AND SINCE THE ASSESSEE HAS DECLARED MORE THAN RS. 20 LA CS AS HIS RETURNED INCOME, THEN THE SCRUTINY ASSESSMENT COULD HAVE BEEN DONE BY ONLY TH E ACIT/DCIT AND NOT BY THE ITO WHO DOES NOT HAVE THE PECUNIARY JURISDICTION TO DO SO. HOWEVER, IN THIS CASE IN HAND, EVEN THOUGH THE ASSESSEES RETURN OF INCOME IS MORE THAN RS. 20 LAKH, THE ITO, WARD-4(3) ERRONEOUSLY ASSUMED JURISDICTION AND ISSUED THE MAN DATORY SCRUTINY NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) AND AFTER REALIZING THE MISTAKE HAD TRANSFERRED THE CASE FILE TO THE JURISD ICTION OF DCIT, CIRCLE-4 WHO FRAMED THE ASSESSMENT ORDER U/S 143(3) OF THE ACT, WHICH IS BA D IN LAW BECAUSE THE DCIT HAS NOT ISSUED THE NOTICE U/S 143(2) OF THE ACT. FOR READY REFERENCE, INSTRUCTION NO. 1/2011 IS REPRODUCED BELOW: INSTRUCTION NO. 1/2011 (F. NO. 187/12/2010-IT(A-1) , DATED 31-1-2011 REFERENCES HAVE BEEN RECEIVED BY THE BOARD FROM A L ARGE NUMBER OF TAXPAYERS, ESPECIALLY FROM MOFUSSIL AREAS, THAT THE EXISTING MONETARY LIM ITS FOR ASSIGNING CASES TO ITOS AND DCS/ACS IS CAUSING HARDSHIP TO THE TAXPAYERS, AS IT RESULTS IN TRANSFER OF THEIR CASES TO A DC/AC WHO IS LOCATED IN A DIFFERENT STATION, WHICH INCREASES THEIR COST OF COMPLIANCE. THE BOARD HAD CONSIDERED THE MATTER AND IS OF THE O PINION THAT THE EXISTING LIMITS NEED TO BE REVISED TO REMOVE THE ABOVEMENTIONED HARDSHIP. A N INCREASE IN THE MONETARY LIMITS IS ALSO CONSIDERED DESIRABLE IN VIEW OF THE INCREASE I N THE SCALE OF TRADE AND INDUSTRY SINCE 2001, WHEN THE PRESENT INCOME LIMITS WERE INTRODUCE D. IT HAS THEREFORE BEEN DECIDED TO INCREASE THE MONETARY LIMITS AS UNDER: INCOME DECLARED (MOFUSSIL AREAS) INCOME DECLARED (M ETRO CITIES) ITOS ACS/DCS ITOS DCS/AC CORPORATE RETURNS UPTO RS. 20 LACS ABOVE RS. 20 LACS UPTO RS. 30 LACS ABOVE RS. 30 LACS NON- CORPORATE RETURNS UPTO RS. 15 LACS ABOVE RS. 15 LACS UPTO RS. 20 CRORES ABOVE RS. 20 LACS METRO CHARGES FOR THE PURPOSE OF ABOVE INSTRUCTIONS SHALL BE AHMEDABAD, BANGALORE, CHENNAI, DELHI, KOLKATA, HYDERABAD, MUMBAI AND PUNE . 3 ITA NO. 434/GAU/2019 SHANKAR LALL GOENKA ASSESSMENT YEAR: 2015-16 THE ABOVE INSTRUCTIONS ARE ISSUED IN SUPERSESSION O F THE EARLIER INSTRUCTIONS AND SHALL BE APPLICABLE WITH EFFECT FROM 01-04.2011. 5. FROM A PERUSAL OF THE ABOVE INSTRUCTION OF THE CBDT IT IS EVIDENT THAT THE PECUNIARY JURISDICTION CONFERRED BY THE CBDT ON ITOS IS IN RE SPECT TO THE NON CORPORATE RETURNS FILED WHERE INCOME DECLARED IS ONLY UPTO RS.15 LACS ; AND THE ITO DOESNT HAVE THE PECUNIARY JURISDICTION TO CONDUCT ASSESSMENT IF IT IS ABOVE RS 15 LAKHS. ABOVE RS. 15 LACS INCOME DECLARED BY A NON-CORPORATE PERSON I.E. LIKE ASSESSEE, THE PECUNIARY JURISDICTION LIES BEFORE AC/DC. IN THIS CASE, ADMITTEDLY, THE ASSESSE E AN INDIVIDUAL (NON CORPORATE PERSON) WHO UNDISPUTEDLY DECLARED INCOME OF RS.20,03,070/- IN HIS RETURN OF INCOME CANNOT BE ASSESSED BY THE ITO AS PER THE CBDT CIRCULAR (SUPRA ). FROM A PERUSAL OF THE PAPER BOOK, IT REVEALS THAT THE STATUTORY NOTICE U/S. 143(2) OF TH E ACT WAS ISSUED BY THE THEN ITO, WARD- 4(3), GUWAHATI ON 20.09.2016 ( REFER PAGE 211 OF PB ); AND THE SAME WAS SERVED UPON THE ASSESSEE AS NOTED BY THE AO IN THE ASSESSMENT ORD ER. LATER ON THE ITO TAKING NOTE THAT SINCE THE RETURNED INCOME IS MORE THAN RS. 15 LACS, HE TRANSFERRED THE CASE TO DCIT, CIRCLE- 4, GUWAHATI WHO ISSUED INTERIM NOTICE U/S 142(1) DA TED 03.03.2017 ( REFER PAGE 209 OF PB ) AND FRAMED THE ASSESSMENT ORDER WITHOUT ISSUING N OTICE U/S 143(2) OF THE ACT. FROM THE AFORESAID FACTS THE FOLLOWING FACTS EMERGED: I) THE ASSESSEE HAD FILED RETURN OF INCOME DECLARIN G RS.20,03,070/-. THE ITO ISSUED NOTICE UNDER SECTION 143(2) OF THE ACT ON 20.09.2016. II) THE ITO, WARD-4(3), GUWAHATI TAKING NOTE THAT T HE INCOME RETURNED WAS ABOVE RS. 15 LACS TRANSFERRED THE CASE TO DCIT, CIRCLE-4, GUWAHA TI III) ON 03.03.2017 NOTICE U/S 142(1) WAS ISSUED B Y DCIT, CIRCLE-4, GUWAHATI BUT DID NOT ISSUE NOTICE U/S 143(2) OF THE ACT WITHIN THE PRESC RIBED TIME LIMIT AND BEFORE PASSING THE ASSESSMENT ORDER U/S 143(3) OF THE ACT. 6. WE NOTE THAT THE CBDT INSTRUCTION IS DATED 31.01 .2011; AND THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 30.09.2015 DECLARING TOTAL INCO ME OF RS.20,03,070/-. AS PER THE CBDT INSTRUCTION THE MONETARY LIMITS IN RESPECT TO AN ASSESSEE WHO IS AN INDIVIDUAL WHICH FALLS UNDER THE CATEGORY OF NON CORPORATE RETURNS THE ITOS INCREASED MONETARY LIMIT WAS UPTO RS.15 LACS; AND IF THE RETURNED INCOME IS ABOV E RS. 15 LACS IT WAS THE AC/DC. SO, SINCE THE RETURNED INCOME BY THE ASSESSEE IN THE PR ESENT CASE IS AN INDIVIDUAL IS ABOVE RS.15 LAKH, THEN THE PECUNIARY JURISDICTION TO ASSE SS THE ASSESSEE LIES ONLY BY AC/DC AND 4 ITA NO. 434/GAU/2019 SHANKAR LALL GOENKA ASSESSMENT YEAR: 2015-16 NOT THE ITO. SO, THEREFORE, ONLY THE AC/DC HAD THE JURISDICTION TO ASSESS THE ASSESSEE. IT IS SETTLED LAW THAT SERVING OF NOTICE U/S. 143(2) OF T HE ACT IS A SINE QUA NON FOR AN ASSESSMENT TO BE MADE U/S. 143(3) OF THE ACT. IN THIS CASE, NO TICE U/S. 143(2) OF THE ACT WAS ISSUED ON 20.09.2016 BY ITO, WARD-4(3), GUWAHATI WHEN HE DID NOT HAD THE PECUNIARY JURISDICTION TO ASSUME JURISDICTION AND ISSUE NOTICE. ADMITTEDLY , WHEN THE ITO REALIZED THAT HE DID NOT HAD THE PECUNIARY JURISDICTION TO ISSUE NOTICE, HE DULY TRANSFERRED THE FILE TO THE DCIT, CIRCLE-4, GUWAHATI, WHEN THE DCIT ISSUED NOTICE U/ S 142(1) OF THE ACT AND DID NOT ISSUE NOTICE U/S 143(2) OF THE ACT WITHIN THE TIME LIMIT PRESCRIBED FOR ISSUANCE OF NOTICE U/S. 143(2) OF THE ACT FOR THE ASSESSMENT YEAR 2015-16. WE NOTE THAT THE DCIT BY ASSUMING THE JURISDICTION AFTER THE TIME PRESCRIBED FOR ISSUANCE OF NOTICE U/S. 143(2) OF THE ACT NOTICE BECAME COARUM NON JUDICE AFTER THE LIMITATION PRESCRIBED BY THE STATUTE WAS CROSSED BY HIM. THEREFORE, IN THIS CASE, THE OMISSION/NON-ISSU ANCE OF NOTICE BY THE DCIT, CIRCLE-4, GUWAHATI BEFORE THE LIMITATION PERIOD FOR ISSUANCE OF STATUTORY NOTICE U/S. 143(2) OF THE ACT HAS SET IN, GOES TO THE ROOT OF THE CASE BECAUS E THE DCIT GETS JURISDICTION TO FRAME ASSESSMENT ORDER U/S 143(3) OF THE ACT ONLY THEREAF TER. ERGO, THE ASSESSMENT ORDER PASSED BY THE DCIT, CIRCLE-4 U/S. 143(3) OF THE ACT IS NOT VALID IN THE EYES OF LAW AND, THEREFORE, IS NULL AND VOID IN THE EYES OF LAW, AND CONSEQUENT LY WE QUASH IT. THEREFORE, THE LEGAL ISSUE RAISED BY THE ASSESSEE IS ALLOWED. SINCE WE HAVE QU ASHED THE ASSESSMENT AND THE APPEAL OF ASSESSEE IS ALLOWED ON THE LEGAL ISSUE, THE OTHER G ROUNDS RAISED BY THE ASSESSEE NEED NOT TO BE ADJUDICATED BECAUSE IT IS ONLY ACADEMIC. THEREFO RE, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER, 2021. SD/- SD/- (P. M. JAGTAP) (A. T. VARKEY) VICE-PRESIDENT JUDICIAL MEMBER DATED: 28.10.2021 SB, SR. PS 5 ITA NO. 434/GAU/2019 SHANKAR LALL GOENKA ASSESSMENT YEAR: 2015-16 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT-SHRI SHANKAR LALL GOENKA, KELVIN CINEMA C OMPOUND, S.R.C.B ROAD, FANCY BAZAR, GUWAHATI, ASSAM-781001. 2. RESPONDENT DCIT, CIRCLE-4, GUWAHATI 3. THE CIT(A)- 2, GUWAHATI 4. CIT- , GUWAHATI 5. DR, GAUHATI BENCH, GAUHATI TRUE COPY BY ORDER SR. PRIVATE SECRETARY/DDO ITAT, KOLKATA BENCHES, KOLKATA