ITO, Ludhiana V. M/s JRB Strips Private Limited, Ludhiana

ITA 442/CHANDI/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7369 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 08-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ZENIA HANDA SR DR
• Keywords: Bogus Share capital; Set aside
• Section: 143(3); 142(1); 5(2); 68; 148; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH !, ' # , . %.. . & , '( # BEFORE: SMT. DIVA SINGH, JM & DR. B.R.R. KUMAR , A M ./ ITA NO. 442 / CHD/2017 / ASSESSMENT YEAR :2009-10 THE ITO WARD 5(2) LUDHIANA JRB STRIPS PRIVATE LIMITED 12518/10, VISHKARMA COLONY STREET NO. 0. LUDHIANA ./ PAN NO: AABCJ1125F / APPELLANT / RESPONDENT ! ' / ASSESSEE BY : SHRI. SUDHIR SEHGAL # ! ' / REVENUE BY : SMT ZENIA HANDA, SR. DR $ % ! &/ DATE OF HEARING : 18/03/2019 '()* ! &/ DATE OF PRONOUNCEMENT : 30/04/2019 ')/ ORDER PER DR. B.R.R. KUMAR: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF THE LD. CIT(A), LUDHIANA DT. 26/12/2016. 2. IN THE PRESENT APPEAL REVENUE HAS RAISED THE FOL LOWING GROUNDS: 1. THAT THE WORTHY CIT (A)-2, LUDHIANA HAS ERRED ON FA CTS AS WELL AS IN LAW IN DELETING THE ADDITION OF RS. 1,00,00,000/- MADE ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL U/S 68 BY HOLDING THAT THE ISSUANCE O F NOTICE U/S 148 IS NOT VALID AS THE ASSESSING OFFICER, CIRCLE-VII, LUDHIANA DID NOT HAVE THE JURISDICTION OVER THE CASE OF THE ASSESSEE. 2. THAT THE WORTHY CIT(A)-2 HAS NOT APPRECIATED THE FA CT THAT AS PER SECTION 124(3) (A) OF THE INCOME TAX ACT, 1961, NO PERSON S HALL BE ENTITLED TO CALL IN QUESTION THE JURISDICTION OF AN AO, WHERE HE HAS MA DE A RETURN UNDER SUB SECTION (1) OF SECTION 139, AFTER THE EXPIRY OF ONE MONTH FROM THE DATE ON WHICH HE WAS SERVED WITH A NOTICE UNDER SUB-SECTION (1) O F THE SECTION 142 OR SUB SECTION (2) OF SECTION 143. WHEREAS, IN THE CASE OF THE ASSESSEE, NOTICES U/S 142(1 )/143(2) WERE ISSUED ON 02.05.2014, THE DAY T HE ASSESSEE FILED RETURN OF INCOME IN RESPONSE TO NOTICE U/S 148 SERVED ON 31.0 3.2014. THE OBJECTIONS TO THE ISSUANCE OF NOTICE U/S 148 WERE FILED ON 25.06.2014 WELL AFTER THE PERIOD OF ONE MONTH ALLOWED U/S 124. 3. THAT THE APPELLANT CRAVES TO ADD OR AMEND THE GROUN DS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOSED OFF. 2 3. BRIEF FACTS OF THE CASE ARE THAT THE NOTICE UNDE R SECTION 148 WAS ISSUED BY THE ACIT, CIRCLE -7 LUDHIANA ON 28/03/2004 FOR THE A.Y. 2009-10. IN RESPONSE TO THE SAID NOTICE THE ASSESSEE HAS SUBMITTED A LETTER DT. 29/04/2014 TO TREAT THE RETURN FILED UNDER SECTION 139 ON 18/09/2009 AS THE RETURN FILED UNDER SECTION 148. ANOTHER NOTICE UNDER SECTION 142(1) WAS ISSUED ON 2 1/05/2014 BY THE ACIT, CIRCLE-7, LUDHIANA. THE ASSESSEE HAS FILED THE REGU LAR RETURN FOR THE A.Y 2009-10 BEFORE THE ASSESSING OFFICER , CIRCLE-5, LUDHIANA. ON 25/06/2014 THE ASSESSEE HAS FILED OBJECTIONS TO THE ISSUE OF NOTICE UNDER SECTI ON 148 AND INTIMATED TO THE ACIT, CIRCLE-7, THAT THE JURISDICTION FALLS UNDER R ANGE 5, CIRCLE-5 NOT IN RANGE 7. THE ASSESSEE HAS FILED THE COPIES OF THE ASSESSMENT S COMPLETED UNDER SECTION 143(3) FOR THE A.Y. 2004-05 AND 2011-12 WHICH WERE COMPLETED BY THE ACIT , CIRCLE 5. 4. DURING THE HEARING BEFORE US, THE LD. AR REITERA TED THE ABOVE FACTS AND ARGUED THAT SINCE THE NOTICE HAS BEEN ISSUED BY THE OFFICER IS NOT HAVING A JURISDICTION OVER THE ASSESSEE, THE NOTICE OUGHT TO HAVE BEEN TREATED AS VOID AB INITIO AND THE PROCEEDINGS UNDERTAKEN THEREAFTER BE TREAT ED AS NULL AND VOID. 4.1 AGAINST THESE ARGUMENTS, THE LD. DR HAS ALSO SU BMITTED THE COPY OF THE ORDER IN THE CASE OF ABHISHEK JAIN VS. ITO -55 (HIG H COURT NEW DELHI) DT. 01/06/2018 WHEREIN THE HONBLE HIGH COURT HAS UPHEL D THE ISSUE OF NOTICE BY THE OFFICER WHO IS HAVING CONCURRING JURISDICTION WITH ANOTHER ITO. IN THIS CASE THE ASSESSEE HAS AVOIDED FILING OBJECTION FOR ISSUING O F NOTICE TILL THE TIME LIMIT FOR THE ISSUE OF FRESH NOTICE HAS BEEN EXPIRED, CREATING A SITUATION WHERE NO FRESH NOTICE COULD HAVE BEEN ISSUED UNDER SECTION 148. THE LD. DR HAS ALSO ARGUED THAT UNDER SECTION 124(3)(A), THE ASSESSEE OUGHT TO HAVE FILE OBJECTIONS WHICH THE ASSESSEE FAILED TO DO SO AND THE OBJECTIONS CANNOT BE TAKEN AT THIS JUNCTURE OWING TO THE JUDGMENT CITED ABOVE. 5. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. WE FI ND THAT WHILE THE NOTICE UNDER SECTION 148 HAS BEEN ISSUED BY THE ACIT, CIRC LE-7 ON 28/03/2014, THE ASSESSMENTS IN THE CASE OF THE ASSESSEE FOR THE A.Y . 2005-06 HAVE BEEN COMPLETED BY THE ACIT, CIRCLE-5, LUDHIANA 06/11/200 7 UNDER SECTION 143(3). FURTHER WE ALSO FIND THAT FOR THE A.Y. 2011-12 THE ASSESSMENTS UNDER SECTION 143(3) WAS COMPLETED ON 24/12/2013. WE ALSO FIND TH AT THE NOTICE AND THE QUESTIONNAIRE ISSUED BY ACIT, CIRCLE-7 FOR THE A.Y. 2011-12 HAVE ALSO STANDS TRANSFERRED TO ACIT, CIRCLE-5 ON 31/07/2013. IT IS A MATTER OF FACTS ON RECORD THAT THE NOTICES UNDER SECTION 143(2) / 148 ISSUED FOR T HE A.Y. 2012-13 AND 2009-10 HAVE BEEN TRANSFERRED TO ACIT, CIRCLE-5 ON 17/07/20 14. 3 FROM THE ABOVE IT TRANSPIRES THAT : I. THE REASONS FOR ISSUE OF NOTICE HAVE BEEN EXAMINED BY THE ACIT, CIRCLE-7 AND CONSEQUENTLY ISSUED NOTICE UNDER SECTION 148 ON 28/03/2014 FOR THE A.Y. 2009-10. II. THE ASSESSMENTS FOR A.YS 2005-06 AND 2011-12 WERE COMPLETED BY ACIT, CIRCLE-5 ON 06/11/2007 AND 24/12/2013. III. AFTER ISSUE OF THE NOTICE, THE MATTER WAS BROUGHT T O THE NOTICE OF ACIT, CIRCLE-5 WHO EXERCISES THE CORRECT JURISDICTION OVE R THE ASSESSEE. IV. THE ASSESSEE HAS ALSO FILED THE REGULAR RETURN OF I NCOME ON THE JURISDICTION OF ACIT, CIRCLE-5 AS PER THE COPY OF THE RETURN SUB MITTED. V. THE ACIT, CIRCLE-5 AFTER RECEIVING THE NOTICES / IN FORMATION FOR HIS COUNTERPART HAS NOT ISSUED ANY NOTICE UNDER SECTION 148, WHICH EFFECTIVELY MEANS THAT THE PROCEEDINGS BY THE ACIT-5 ARE IN CON TINUATION TO THE NOTICE ISSUED BY THE OFFICER NOT HAVING THE JURISDI CTION OVER THE CASE. VI. THE ASSESSEE HAS DULY FILED HIS OBJECTIONS BEFORE T HE ASSESSING OFFICER REGARDING THE OBJECTION ON THE ISSUE OF JURISDICTIO N. VII. THE CASE LAW REFERRED BY THE LD. DR IS TOTALLY ON A DIFFERENT SET OF FACTS WHEREIN THE HONBLE HIGH COURT ACCORDED CONCURRENCE JURISDICTION TO TWO DIFFERENT OFFICERS WHICH IS NOT THE ISSUE IN THE IN STANT CASE. VIII. THERE IS NO ORDER OF THE JURISDICTION FROM ACIT, CI RCLE-5 TO ACIT, CIRCLE 7 SO AS TO ENABLE TO ISSUE NOTICE UNDER SECTION 148. KEEPING IN VIEW THE FACTS MENTIONED ABOVE, WE HOLD THAT ISSUE OF NOTICE UNDER SECTION 148 IS A PRE-REQUISITE FOR COMPLETION OF AS SESSMENT UNDER SECTION 147. AS PER SECTION 148 THE ASSESSING OFFICER MEANS THE AO VESTED WITH JURISDICTION OVER THE ASSESSEE AS STIPULATED UNDER SECTION 120 SUB SE CTION 1 & 2. THUS, THE NOTICE UNDER SECTION 148 IS REQUIRED TO BE ISSUED BY THE A SSESSING OFFICER WHO IS VESTED WITH THE JURISDICTION OVER THE ASSESSEE ON THE BASI S OF THE CRITERIA OF TERRITORIAL OR CLASS OF PERSONS MENTIONED IN SUB SECTION 3 OF SECT ION 120 OF THE INCOME TAX ACT, 1961. THIS IS NOT THE CASE OF REVENUE WHERE TH E ASSESSING OFFICER WHO ISSUED THE NOTICE UNDER SECTION 148 WAS VESTED WITH THE JU RISDICTION BY THE VIRTUE OF ANY ORDER OR DIRECTION ISSUED UNDER SUB SECTION 1 OR 2 OF THE SECTION 120. SINCE THE NOTICE HAS BEEN ISSUED BY ACIT, CIRCLE 7 INSTEAD OF ACIT, CIRCLE-5, WHO IS NOT VESTED WITH THE JURISDICTION, THE NOTICE ISSUED UND ER SECTION 148 BY THE ACIT, CIRCLE -7 IS TREATED AS VOID AB INITIO AND LIABLE TO BE SET ASIDE. CONSEQUENTLY THE REASSESSMENT MADE ON SUCH NOTICE IS NOT SUSTAINABLE . 4 SINCE THE MATTER HAS BEEN ADJUDICATED ON THE GROUND S OF JURISDICTION AND HENCE VENTURING INTO THE MERITS OF THE CASE WOULD B E ONLY ACADEMIC IN NATURE AND HENCE WE REFRAIN FROM DOING SO. 6. AS A RESULT, THE APPEAL OF THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ! . %.. . & , (DIVA SINGH) (DR. B.R.R. KUMAR) ' #/ JUDICIAL MEMBER '( #/ ACCOUNTANT MEMBER AG DATE: 30/04/2019 (+ ! ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ / / CIT 4. $ / ()/ THE CIT(A) 5. -23 4, & 4, 67839/ DR, ITAT, CHANDIGARH 6. 38 :%/ GUARD FILE