ITO, New Delhi V. M/s. JRD Stock Brokers Pvt. Ltd., New Delhi

ITA 4399/DEL/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87198 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 20-01-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 01-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAMKAUNJM A
• Keywords: Unexplained cash credit; Block assessment; Reassessment proceedings
• Section: 143(3); 147; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI. PRAMOD KUMAR ITA NO. 4399/DEL/2010 ASST. YR: 2002-03 INCOME-TAX OFFICER, VS. JRD STOCK BROKERS PVT. LT D., WARD 4(2), 4852/24, IST FLOOR, ANSARI ROAD NEW DELHI. DARYAGANJ, NEW DELHI-1100 02 (PAN: AABCJ0701D) (APPELLANT) (RESPONDENT) ITA NO. 4357/DEL/2010 ASST. YR: 2002-03 JRD STOCK BROKERS PVT. LTD., VS. INCOME-TAX OFFIC ER, 4852/24, IST FLOOR, ANSARI ROAD WARD 4(2), DARYAGANJ, NEW DELHI-1100 02 NEW DELHI. (PAN: AABCJ0701D) (APPELLANT) (RESPONDENT) REVENUE BY: SHRI P. DAMKAUNJM A, SR. DR ASSESSEE BY: SHRI R.S. SINGHVI, CA DATE OF HEARING : 29.01.2015 DATE OF PRONOUNCEMENT: 31.03.2015 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER THE LEARNED CIT(APPEALS) HAS GIVEN PART RELIEF TO T HE ASSESSEE, HENCE, PARTIES ARE IN CROSS-APPEALS. 1.1 THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORD ER ON THE ISSUE OF VALIDITY OF NOTICE ISSUED UNDER SEC. 148 OF THE INC OME-TAX ACT, 1961 AND THE ASSESSMENT FRAMED IN FURTHERANCE THERETO ON THE BAS IS THAT NOTICE UNDER SEC. 148 OF THE ACT WAS NOT SERVED UPON THE ASSESSEE, TH E NOTICE WAS ISSUED AFTER FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR , HENCE, IT WAS BARRED BY LIMITATION AND THAT THE PRESUMPTION ABOUT UNDISCLOS ED INCOME WAS MERELY ON 2 THE BASIS OF INFORMATION FROM INVESTIGATION WING ( GROUND NOS. 1, 2(I) AND (II). THE FURTHER ISSUE RAISED IN GROUND NO.3 IS AB OUT THE UPHOLDING THE ESTIMATED COMMISSION INCOME @ 7.5% IGNORING THE ASS ESSEES OWN CASE FOR BLOCK ASSESSMENT PROCEEDINGS. 2. THE REVENUE ON THE OTHER HAND HAS QUESTIONED FIR ST APPELLATE ORDER WHEREBY THE LEARNED CIT(APPEALS) HAS DIRECTED THE A SSESSING OFFICER TO COMMUTE THE RATE OF COMMISSION AT 7.5% OF THE CASH CREDITS APPEARING IN THE UNDECLARED BANK ACCOUNT OF THE ASSESSEE IGNORING TH E FACT THAT THE ADDITION OF RS.2,15,42,300 WAS CORRECTLY MADE BY THE ASSESSING OFFICER UNDER SEC. 69 OF THE ACT BEING THE UNEXPLAINED CASH CREDITS. 3. SINCE THE ISSUE RAISED IN GROUND NO.1 AND 2(I) A ND (II) OF THE APPEAL PREFERRED BY THE ASSESSEE IS LEGAL IN NATURE AND GO ING TO THE ROOT OF THE MATTER HENCE WE PREFERRED TO ADJUDICATE IT FIRSTLY. 4. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY T HE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILA BLE ON RECORD AND THE DECISIONS RELIED UPON. 5. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT UNDER SEC. 143(3) OF THE ACT WAS FRAMED ON 29.12.2004 AT THE TOTAL LOSS OF RS.3, 18,160. SUBSEQUENTLY, THE 3 CASE WAS REOPENED UNDER SEC. 147 ON THE BASIS OF IN FORMATION FROM INVESTIGATION WING AND NOTICE UNDER SEC. 148 WAS IS SUED ON 27.3.2009. THE ORDER UNDER SEC. 147/143(3) OF THE ACT WAS FRAMED B Y MAKING DISALLOWANCE TO THE EXTENT OF RS.2,15,42,300 UNDER SEC. 69A OF T HE ACT. THE ASSESSEE HAS DISPUTED REASSESSMENT PROCEEDINGS ON THE GROUND THA T NOTICE UNDER SEC. 148 WAS NOT SERVED AND EVEN OTHERWISE THE NOTICE UNDER SEC. 148 WAS ILLEGAL AND WITHOUT JURISDICTION AS THE SAME WAS BARRED BY LIMI TATION AND THERE WAS NO PROPER RECORDING OF SATISFACTION. THE ISSUE WAS ALS O RAISED BEFORE THE LEARNED CIT(APPEALS) BUT THE ASSESSEE COULD NOT SUC CEED THERE. 6. IN SUPPORT OF THE GROUNDS INVOLVING THE ISSUE, T HE LEARNED AR SUBMITTED THAT NOTICE UNDER SEC. 148 WAS ISSUED AT THE ADDRESS 4866/24, SHEEL TARA HOUSE, ANSARI ROAD, DARYAGANJ, NEW DELHI WHEREAS THE CORRECT ADDRESS AS PER THE RETURN OF INCOME AND ORIGINAL AS SESSMENT ORDER IS 4852/24, FIRST FLOOR, ANSARI ROAD, DARYAGANJ, NEW DELHI. IN SUPPORT IN REFERRED PARA NOS. 1 TO 3 OF THE PAPER BOOK OF THE ASSESSEE FILED ON 23.02.2011 WHICH ARE COPIES OF THE ACKNOWLEDGEMENT OF RETURN OF THE INCOME FILED FOR THE ASSESSMENT YEAR UNDER CONSIDER ATION AND ORIGINAL ASSESSMENT ORDER DATED 29.12.2004 UNDER SEC. 143(3) FOR THE YEAR SHOWING THE ADDRESS OF THE ASSESSEE AT 4852/24, FIRST FLOO R, ANSARI ROAD, DARYAGANJ, 4 NEW DELHI. AT PAGE NOS. 4 TO 14 OF THE SAID PAPER BOOK HAVE BEEN MADE AVAILABLE COPIES OF RECEIPT DATED 24.09.2009 FOR IN SPECTION OF ITO FILE; LETTERS DATED 29.9.2009 (WITH AFFIDAVIT) FILED BEFORE THE A SSESSING OFFICER OBJECTING SERVICE OF NOTICE UNDER SEC. 148; PETITION UNDER SE C. 144A FILED BEFORE THE ADDL. CIT, HIS ORDER DATED 20.11.2009 PASSED THEREO N; REASONS RECORDED BEFORE ISSUE OF NOTICE UNDER SEC. 148; LETTERS DATE D 07.12.2009 AND 14.12.2009 FILED BEFORE THE ASSESSING OFFICER; ASSE SSMENT ORDER DATED 23.12.2009 PASSED UNDER SEC. 147/143(3); WRITTEN SU BMISSIONS BEFORE THE LEARNED CIT(APPEALS); FIRST APPELLATE ORDER AND ORD ER OF THE ITAT FOR THE BLOCK PERIOD. THESE DOCUMENTS HAVE BEEN FILED SHOWI NG THE CORRECT ADDRESS OF THE ASSESSEE. HE REFERRED PAGE NOS. 1 TO 10 OF THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE ON 16.06.2011 UNDER THE CERT IFICATE THAT THESE DOCUMENTS WERE MADE AVAILABLE BEFORE THE AUTHORITIE S BELOW. THESE DOCUMENTS ARE COPIES OF INCOME-TAX RETURNS ACKNOWLE DGEMENT FOR THE ASSESSMENT YEAR 2003-04, 2004-05 AND 2005-06 FILED WITH PRESENT ADDRESS BUT BEFORE THE ISSUE OF NOTICE UNDER SEC. 148; VARI OUS INCOME-TAX NOTICES AND LETTERS ISSUED BY ACIT, CENTRAL CIRCLE-19, NEW DELH I FOR THE ASSESSMENT YEAR 2002-03 ALL AT THE ASSESSEES PRESENT ADDRESS; AND NOTICE UNDER SEC. 148 DATED 27.3.2009 FOR ASSESSMENT YEAR 2002-03 ISSUED BY THE ITO AT TOTALLY 5 INCORRECT ADDRESS. HE ALSO PLACED RELIANCE ON SEVER AL DECISIONS INCLUDING THE FOLLOWING DECISIONS: I) CIT VS. HARISH J. PUNJABI (2008) 297 ITR 424 (DEL.); II) CIT VS. ESHAAN PVT. LTD. (2012) 344 ITR 541 (DEL.); III) CIT VS. SILVER STREAK TRADING P. LTD. (2010) 326 ITR 418 (DEL.); IV) ACIT VS. HOTEL BLUE MOON (2010) 321 ITR 362 (S.C) ; & V ) CHETAN GUPTA VS. ACIT (2014) 98 DTR(DELHI)(T RIB.) 209. 7. THE LEARNED SR. DR ON THE OTHER HAND TRIED TO JU STIFY THE FIRST APPELLATE ORDER ON THE ISSUE. 8. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW, WE FIND THAT THE ASSESSING OFFICER HAS MENTIONED THAT NOTICE UND ER SEC. 148 ISSUED ON 27.3.2009 WAS DULY SERVED UPON THE ASSESSEE ON 30.3 .2009. HE HAS MENTIONED FURTHER THAT THE ASSESSEE DID NOT MAKE CO MPLIANCE OF THE SAID NOTICE. EVEN BEFORE THE ASSESSING OFFICER, THE ASSE SSEE HAD CONTENDED THAT NOTICE UNDER SEC. 148 ISSUED FOR THE ASSESSMENT YEA R WAS NOT RECEIVED BY THE ASSESSEE. THE ASSESSING OFFICER CALLED FOR THE REPO RT FROM THE POSTAL AUTHORITY WHO CONFIRMED THE SERVICE OF THE SAID NOT ICE ON 30.3.2009. THE ASSESSEE CONTENDED THAT THE NOTICE DATED 27.3.2009 WAS ISSUED ON THE PREVIOUS ADDRESS WHICH HAS BEEN LEFT BY THE ASSESSE E SEVERAL YEARS AGO. THUS, SERVICE OF A NOTICE ON A WRONG ADDRESS IS INV ALID. IT WAS CONTENDED THAT 6 SINCE THE NOTICE WAS ADDRESSED TO AN INCORRECT ADDR ESS AND NEVER REACHED THE ASSESSEE HENCE PROCEEDINGS INITIATED UNDER SEC. 148 FOR THE YEAR BE CLOSED. THE ASSESSING OFFICER DID NOT AGREE. HE ALSO IGNORE D THE LETTER DATED 26.10.2009 FILED BY THE ASSESSEE ALONG WITH AFFIDAV IT STATING THAT A NOTICE UNDER SEC. 148 ISSUED ON WRONG ADDRESS WAS NEVER SE RVED OR RECEIVED BY THE ASSESSEE. 9. THE ASSESSEE THEREAFTER FILED PETITION UNDER SEC . 144A OF THE ACT BEFORE THE ADDL. CIT, RANGE-4, NEW DELHI ON 09.011. 2009 WITH COPY TO THE ITO, WARD 4(2),NEW DELHI. THE SAID ADDITIONAL CIT D ISPOSED OF THE SAID PETITION OF THE ASSESSEE VIDE ORDER DATED 20.11.200 9 WITH THE OBSERVATION AS THE NOTICE UNDER SEC. 148 DATED 27.3.2009 WAS SERV ED THROUGH SPEED POST AT THE ADDRESS AT 4866/24, SHEELTARA HOUSE, IST FLOOR, ANSARI ROAD, DARYAGANJ, NEW DELHI. EVEN THOUGH THE SERVICE OF NOTICE IS BEI NG CHALLENGED DUE TO CHANGE IN ADDRESS, IT IS A FACT THAT THE SERVICE OF NOTICE HAD TAKEN PLACE. THE ASSESSING OFFICER WAS DIRECTED TO PROCEED AS PER LA W TO COMPLETE THE APPELLATE PROCEEDINGS. 10. THE LEARNED CIT(APPEALS) HAS DISPOSED OF THE OB JECTION REGARDING NON-SERVICE OF NOTICE UNDER SEC. 148 OF THE ACT WIT H THIS FINDING THAT THE NOTICE WAS SENT AND SERVED UPON THE ASSESSEE ON 30. 3.2009 AT THE CORRECT 7 ADDRESS. IN PARA NO.3.2 OF THE FIRST APPELLATE ORDE R, HE HAS NOTED FURTHER THAT IT IS NOT IN DISPUTE THAT THE NOTICES UNDER SEC. 14 8 AND 143(2) OF THE INCOME- TAX ACT, 1961 HAVE NOT BEEN RECEIVED BACK UNSERVED IN THE OFFICE OF THE A.O. WITHIN THE PERIOD OF 30 DAYS OF ISSUANCE. HENCE, IT COULD BE SAFELY PRESUMED THAT IT HAD REACHED THE ASSESSEE. 11. HAVING GONE THROUGH THE COPY OF THE NOTICE UNDE R SEC. 148 ISSUED ON 27.3.2009 FOR THE ASSESSMENT YEAR 2002-03 UNDER CON SIDERATION, A COPY OF WHEREOF HAS BEEN MADE AVAILABLE ON RECORD, WE FIND THAT IT IS ADDRESSED TO THE ASSESSEE ON 4866/24- SHEETLA HOUSE, ANSARI ROA D, DARYAGNAJ, NEW DELHI. THE ADDL.CIT, RANGE-4, NEW DELHI WHILE DIS POSING OF THE PETITION UNDER SEC. 144A FILED BY THE ASSESSEE HAS ALSO AFFI RMED THIS FACT THAT THE NOTICE UNDER SEC.148 DATED 27.3.2009 WAS SERVED THR OUGH SPEED POST AT THE SAID ADDRESS OF 4866/24, SHEEL TARA HOUSE, IST FLOO R, ANSARI ROAD, DARYAGANJ, NEW DELHI. THE CORRECT ADDRESS OF THE AS SESSEE WHEREAS IS 4852/24, FIRST FLOOR, ANSARI ROAD, DARYAGANJ, NEW DELHI AS IT IS EVIDENT FROM THE INCOME-TAX RETURN ACKNOWLEDGEMENT FOR THE ASSESSMENT YEARS 2002-03 (UNDER CONSIDERATION), 2003-04, 2004-05 AND 2005-06, COPIES WHEREOF HAS BEEN MADE AVAILABLE AT PAGE NOS. 1 OF T HE PAPER BOOK FILED ON 24.02.2011 AND 1 TO 3 OF THE PAPER BOOK FILED ON 16.06.2011, WHICH ARE 8 DATED BEFORE THE ISSUE OF NOTICE UNDER SEC. 148 AND COPIES OF VARIOUS INCOME- TAX NOTICES AND RETURNS ISSUED BY THE LEARNED ACIT, CENTRAL CIRCLE-19, NEW DELHI FOR THE ASSESSMENT YEAR 2002-03 AND OTHER COR RESPONDENCES AT THE PRESENT ADDRESS OF THE ASSESSEE MADE AVAILABLE AT P AGE NO. 4 TO 9 OF THE PAPER BOOK FILED ON 16.06.2011 AND PAGE NOS. 2 TO 1 44 OF THE PAPER BOOK FILED ON 24.02.2011. THUS IT IS EMERGING FROM RECOR D THAT THE NOTICE UNDER SEC. 148 WAS ISSUED TO THE ASSESSEE ON A WRONG ADDR ESS, HENCE, A PRESUMPTION OF SERVICE OF NOTICE UNDER ORDER-V RULE 9(5) PROVISO OF THE CIVIL PROCEDURE CODE, 2002 CANNOT BE TAKEN IN CASE OF NON-RETURNING OF THE NOTICE SENT THROUGH SPEED POST TO THE DEPARTMENT WI THIN 30 DAYS FROM THE DATE OF POSTING OF THE SAME. IN THIS REGARD, WE FIN D STRENGTH FROM THE RATIOS LAID DOWN IN THE ABOVE CITED DECISIONS. IN A RECENT DECISION OF CO-ORDINATE BENCH OF THE ITAT AT NEW DELHI IN THE CASE OF CHETA N GUPTA VS. ACIT (SUPRA), IT HAS BEEN HELD THAT NOTICE UNDER SEC. 14 8 SENT ON A WRONG ADDRESS AND SERVED ON A PERSON WHO WAS NEITHER EMPLOYEE NOR AUTHORISED AGENT OF THE ASSESSEE COULD NOT BE SAID TO HAVE BEEN VALIDLY SERVED. IT WAS HELD THAT SERVICE OF NOTICE BEING INVALID, MANDATORY REQUIREM ENT OF EXEMPTION OF REASSESSMENT JURISDICTION WAS ABSENT, HENCE, CONSEQ UENT REASSESSMENT WAS LIABLE TO BE SET ASIDE. IN THE CASE OF CIT VS. HARI SH J. PUNJABI (SUPRA), THE HON'BLE JURISDICTIONAL DELHI HIGH COURT HAS BEEN PL EASED TO HOLD THAT WHERE 9 THE ASSESSEE WAS NOT SERVED WITH THE NOTICE UNDER S EC. 147 AND 148 OF THE INCOME-TAX ACT, 1961, THE PROCEEDINGS FOR ASSESSMEN T YEAR 1996-97 WERE VOID. SIMILAR VIEW HAS BEEN EXPRESSED BY THE HON'BL E DELHI HIGH COURT IN THE CASE OF CIT VS. ESHAAN HOLDING PVT. LTD. (SUPRA ) WHEREIN THE NOTICE UNDER SEC. 148 WAS NOT ISSUED ON THE ADDRESS GIVEN ON THE RETURN OF INCOME BY THE ASSESSEE. IT WAS HELD THAT BEFORE ISSUING NO TICE UNDER SEC. 148, IT WAS EXPECTED OF THE ASSESSING OFFICER TO HAVE CHECKED U P IF THERE WAS ANY CHANGE OF ADDRESS, BECAUSE VALID SERVICE OF A NOTIC E OF REOPENING THE ASSESSMENT IS A JURISDICTIONAL MATTER AND THIS IS A CONDITION PRECEDENTS FOR A VALID REASSESSMENT. RESPECTFULLY FOLLOWING THE RATI OS LAID DOWN IN THESE DECISIONS, WE ARE OF THE VIEW THAT NOTICE UNDER SEC . 148 OF THE ACT ISSUED ON 27.3.2009 TO THE ASSESSEE ON A WRONG ADDRESS WAS NO T SERVED UPON THE ASSESSEE, HENCE, SERVICE OF NOTICE BEING INVALID, MANDATORY REQUIREMENT OF ASSUMPTION OF REASSESSMENT JURISDICTION IN THE PRES ENT CASE WAS ABSENT, HENCE, CONSEQUENTIAL REASSESSMENT IS LIABLE TO BE S ET ASIDE AS VOID AB INITIO. IT IS ORDERED ACCORDINGLY. THE ISSUE RAISED IN GROUND NOS. 1 AND 2(I) AND (II) ARE DECIDED IN FAVOUR OF THE ASSESSEE. THESE GROUND S ARE THUS ALLOWED. 10 12. IN VIEW OF THE ABOVE FINDINGS HOLDING THAT THE VERY ASSESSMENT ORDER WAS INVALID, THE REMAINING GROUNDS ON THE MERIT OF ADDITION RAISED BY THE ASSESSEE AND THE REVENUE DO NOT STAND. 13. IN RESULT, APPEAL PREFERRED BY THE ASSESSEE IS ALLOWED AND THAT PREFERRED BY THE REVENUE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 31/03/2015. SD/- SD/- ( PRAMOD KUMAR ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31/03/2015 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR 11 DATE DRAFT DICTATED ON COMPUTER 17.03.2015 DRAFT PLACED BEFORE AUTHOR 17.03.2015 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 27.03.20 15 APPROVED DRAFT COMES TO THE SR.PS/PS 31.3.2015 KEPT FOR PRONOUNCEMENT ON 31.03.2015 FILE SENT TO THE BENCH CLERK 31.03.2015 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.