Sh. Jaspal Singh S/O Sh. Swaran Singh, Amritsar. V. The Income Tax Officer, Amritsar.

ITA 445/ASR/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4082 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-02-2019
• Assessment Year: 2004-2005
• Appeal Filed On: 29-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PADAM BAHL
• Keywords: Rectification of order; Principle of natural justice; Source of fund; Reason to believe; Set aside
• Section: 142(1); 5(2); 133(6); 147; 148; 144; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A. NO. 445/ASR/2016 AS SESSMENT YEAR: 2004-05 JASPAL SINGH S/O SWARAN SINGH, 45 GF, B-BLOCK, RANJIT AVENUE FLATS, AMRITSAR [PAN: ABQPS 7190G] VS. INCOME TAX OFFICER, WARD-5(2), AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. PADAM BAHL (C .A.) RESPONDENT BY: SH. CHARAN DASS (D.R.) DATE OF HEARING: 07.02.2019 DATE OF PRONOUNCEMENT: 08.05.2019 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE ORD ER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AMRITSAR ('CIT(A)' FOR S HORT) DATED 28.2.2016, DISMISSING THE ASSESSEES APPEAL CONTESTING HIS ASS ESSMENT U/S. 144 R/W S. 147 OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) VI DE ORDER DATED 21.12.2011 FOR THE ASSESSMENT YEAR (AY) 2004-05. 2. THE APPEAL IS DELAYED BY A PERIOD OF 87 DAYS, HA VING BEEN FILED ON 29.08.2016 AS AGAINST THE DUE DATE OF 03.06.2016. T HE CONDONATION APPLICATION DATED 11.10.2016 EXPLAINS THE DELAY AS ON ACCOUNT O F THE ASSESSEE HAVING MOVED AN APPLICATION U/S. 154 BEFORE THE LD. CIT(A) IMMEDIAT ELY ON THE RECEIPT OF THE IMPUGNED ORDER ON 04.04.2016, PRAYING THAT THE ADDI TION COULD NOT BE AT RS.14.20 ITA NO. 445/ASR/2016 (AY 2004-05) JASPAL SINGH V. ITO 2 LACS, AS CONFIRMED, AS THE SAME, REPRESENTING THE P RICE OF THE SHOP ALLOTTED TO THE ASSESSEE DURING THE YEAR, WAS HOWEVER PAID FOR ONLY AT RS.2.70 LACS DURING THE YEAR, HAVING BEEN ACQUIRED ON INSTALMENT BASIS. AS SUCH, THE ADDITION, EVEN IF SUSTAINED IN PRINCIPLE, AS IT WAS, COULD NOT EXCEED THE AMOUNT ACTUALLY PAID (RS.2.70 LACS), A GRIEVANCE PROJECTED PER GROUND 10 OF THE ASSESSEES APPEAL BEFORE THE LD. CIT(A), WHO THOUGH HAD FAILED TO CONSIDER T HE SAME WHILE CONFIRMING THE ADDITION EFFECTED IN ASSESSMENT, I.E., FOR RS. 14.2 0 LACS. THE ASSESSEE, IT WAS SUBMITTED BY THE LD. COUNSEL, SH. BAHL, WAS AWAITIN G THE RECTIFICATION ORDER IN-AS- MUCH AS, IF FAVORABLY CONSIDERED, AS INDEED IT OUGH T TO HAVE BEEN, THE ASSESSEE WOULD NOT BE REQUIRED TO RAISE THIS ISSUE IN FURTHE R APPEAL, WHICH WOULD THEN BE RESTRICTED, AS IS THE CASE, ONLY TO THE LEGAL GROUN D/S, ALSO RAISED IN FIRST APPEAL. THE LD. CIT(A) DISPOSED THE ASSESSEES APPLICATION VIDE ORDER DATED 30.5.2016, WHICH WAS RECEIVED IN THE FIRST WEEK OF JULY, 2016, AND T HE INSTANT APPEAL, ASSUMING ONLY THE LEGAL GROUND/S, FILED ON 29.8.2016, I.E., WITHI N 60 DAYS OF THE RECEIPT OF THE ORDER U/S. 154 DATED 30.5.2016. THIS, THEREFORE, IT WAS AVERRED BY HIM, CONSTITUTED A REASONABLE GROUND FOR THE DELAY. THE LD. DEPARTMENT AL REPRESENTATIVE (DR), SH. CHARAN DASS, WOULD OBJECT. THE ASSESSEES GRIEVANCE WITH THE IMPUGNED ORDER IS IN RESPECT OF THE LEGAL GROUNDS CHALLENGING THE ASSESS MENT. AS SUCH, THE SAME COULD BE PREFERRED INDEPENDENT OF THE RECTIFICATION APPLI CATION WHICH WAS IN RESPECT OF THE QUANTIFICATION OF THE ADDITION MADE, BEING, RAT HER, AS CONTENDED, IN VIEW OF A MISTAKE APPARENT FROM RECORD, I.E., THE EXTENT OF T HE ACTUAL PAYMENT MADE BY THE ASSESSEE DURING THE RELEVANT YEAR TOWARD THE PURCHA SE PRICE OF THE SHOP ACQUIRED BY HIM DURING THE YEAR. THE ASSESSEE HAD, HE CONTINUED , IT WAS APPARENT, ACCEPTED THE ORDER OF THE FIRST APPELLATE AUTHORITY, ADOPTING TH E LEGAL RECOURSE AVAILABLE QUA THE MISTAKE APPARENT FROM THE RECORD INFLICTING THE SAM E. THE DECISION TO APPEAL THERE- AGAINST ON THE LEGAL GROUND IS ONLY AN AFTER-THOUGH T, WHICH IS SOUGHT TO BE CAMOUFLAGED OR IMPRESSED WITH A GENUINE REASON BY T AKING ADVANTAGE OF THE ITA NO. 445/ASR/2016 (AY 2004-05) JASPAL SINGH V. ITO 3 RECTIFICATION PROVISION WHICH THE ASSESSEE HAD INVO KED. THAT IS, NOTHING PREVENTED THE ASSESSEE FROM FILING THE APPEAL ASSUMING THE LE GAL GROUND/S, WHICH HE FINALLY DOES, IN TIME, IN-AS-MUCH AS THE ASSESSEES GRIEVAN CE QUA THE IMPUGNED ORDER IS CONFINED THERETO. SH. PADAM BAHL WOULD, IN REJOINDE R, OBJECT. THE ASSESSEE HAD TO, IT WAS EXPLAINED, NECESSARILY AWAIT THE ORDER U/S. 154, AS IT COULD WELL BE THAT THE LD. CIT(A) DID NOT ACCEPT THE ASSESSEES CLAIM FOR THE RESTRICTION OF THE IMPUGNED ADDITION TO RS.2.70 LACS, I.E., THE PRICE OF THE SH OP (RS. 14.20 LACS) ACQUIRED ON AN EASY INSTALLMENT PLAN, TO THE EXTENT ACTUALLY PAID FOR DURING THE RELEVANT PREVIOUS YEAR, IN WHICH CASE THE ASSESSEE WOULD HAVE TO ASSU ME A GROUND IN ITS RESPECT. ASSUMING SUCH A GROUND, IT WAS EXPLAINED, IN AN APP EAL FILED IN TIME WOULD HAVE PRECLUDED HIM, AS ALSO PRE-EMPT HIS APPLICATION U/S . 154, AS THE LD. CIT(A) WOULD, AS IS THE NORMAL DISPOSITION OF AN ADJUDICATING AUT HORITY, DISMISS THE ASSESSEES SAID APPLICATION STATING THAT THE SAME IS NOT MAINTAINAB LE IN VIEW OF THE ASSESSEE HAVING FILED AN APPEAL BEFORE A HIGHER FORUM. THE BONA FIDES OF THE ASSESSEES CONDUCT ARE APPARENT. 3. I HAVE HEARD THE PARTIES, AND GIVEN MY CAREFUL C ONSIDERATION TO THE MATTER. VIDE THE IMPUGNED ORDER THE LD. CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER (AO) IN BRINGING THE ASSESSEES INVESTMENT IN A SHOP ACQUIRED DURING THE YEAR TO TAX. THE ASSESSEES LEGAL PLEA/S CHALLENGIN G THE ASSESSMENT WAS REJECTED. HIS OBJECTION ON THE QUANTUM OF THE ADDITION, IN-AS -MUCH AS ONLY A PART OF THE BARGAIN PRICE WAS PAID DURING THE YEAR, RAISED PER GROUND 10 OF HIS APPEAL BEFORE HIM, WAS NOT CONSIDERED BY THE LD. CIT(A). IT WAS T HIS THAT FORMED THE SUBJECT MATTER OF THE ASSESSEES RECTIFICATION APPLICATION TO HIM. THERE WAS, ACCORDINGLY, NO NEED, BOTH IN LAW AND ON FACTS, FOR THE ASSESSEE TO HAVE AWAITED THE OUTCOME OF THE SAID APPLICATION IN FILING AN APPEAL CHALLENGING HI S ORDER ON THE LEGAL ASPECT/S. WHY, EVEN IF THE ASSESSEE WISHED TO, AT THE SAME TI ME, SAFEGUARD HIS INTEREST ON THE ITA NO. 445/ASR/2016 (AY 2004-05) JASPAL SINGH V. ITO 4 QUANTUM OF THE ADDITION, ALL THAT HE WAS REQUIRED T O DO WAS TO RAISE A GRIEVANCE QUA THE NON-ADJUDICATION OF GD. 10 OF THE APPEAL BY THE FIRST APPELLATE AUTHORITY. IF, THEREFORE, THE ASSESSEE, AS A MATTER OF STRATEGY TH OUGHT IT FIT TO SEEK RECTIFICATION A SEPARATE MATTER ALTOGETHER ENTAILING ONLY A MISTAKE /S APPARENT FROM RECORD, IT CANNOT BE SAID THAT THERE WAS SUFFICIENT CAUSE FOR THE THREE MONTH DELAY IN FILING THE APPEAL. WHY, FOR ALL WE KNOW, THE SAID RECTIFICATIO N APPLICATION MAY HAVE REMAINED UNDISPOSED BY THE LD. CIT(A) FOR MONTHS, AS IN FACT IS USUALLY THE CASE. THE ASSESSEES EXPLANATION DEFEATS HIS CASE IN-AS-MUCH AS IT CLARIFIES THAT THE REASON FOR THE DELAYED FILING OF THE APPEAL BEFORE THE TRIBUNA L, RATHER THAN EXTRANEOUS, BEYOND THE ASSESSEES CONTROL, WAS ON ACCOUNT OF A DELIBER ATE THOUGHT OF ACTION PLAN BY HIM. THAT THE FILING OF APPEAL WAS AN AFTER-THOUGHT , I.E., AFTER OBTAINING THE SECTION 154 ORDER FROM THE LD. CIT(A), AS APPREHENDED BY TH E LD. DR, ALSO CANNOT BE RULED OUT. BE THAT AS IT MAY, I AM INCLINED TO ADMIT THE APPEA L. THE REASON IS TWO-FOLD. THE EXPLANATION, WHATEVER ITS MERITS, IS BONA FIDE . THE LD. CIT(A) WAS APPEALED BOTH ON THE LEGAL GROUND/S, SINCE REJECTED, AS ALSO ON MERITS (OF THE ADDITION). WHILE, THE ASSESSEE LOST ON BOTH, HIS CHALLENGE TO THE QUANTIFICATION, MADE SEPARATELY, WAS LOST SIGHT OF BY THE LD. CIT(A) WHI LE DECIDING THE APPEAL ON THE MERITS OF THE ADDITION. AS A MATTER ABUNDANT CAUTIO N, AS IT WOULD APPEAR, THE ASSESSEE SOUGHT RECTIFICATION PRIOR TO PREFERRING A N APPEAL, WHICH OTHERWISE COULD BE RAISED DURING THE HEARING OF THE APPEAL, CHALLEN GING THE QUANTIFICATION OF THE ADDITION SUSTAINED, OR IN APPEAL AGAINST THE SECTIO N 154 ORDER, I.E., WERE THE ASSESSEE TO BE UNSUCCESSFUL IN OBTAINING THE RECTIF ICATION SOUGHT. THE CHARGE OF MALA FIDES BY THE REVENUE IS BASED ON SUSPICION, PERHAPS CONS IDERING THAT THE ASSESSEE ADMITS TO HAVE ADOPTED, ON OWN VIOLATION, A PARTICULAR COURSE OF ACTION. THE SECOND REASON IS THAT THE SAID COURSE WHATEVE R BE ITS MERITS, IS, WITHOUT DOUBT, ONLY AS PER THE ADVICE OF THE ASSESSEES LEG AL COUNSEL. THE SAME SHOULD NOT ITA NO. 445/ASR/2016 (AY 2004-05) JASPAL SINGH V. ITO 5 THEREFORE OPERATE TO THE DETRIMENT OF THE ASSESSEE (REFER: CONCORD OF INDIA INSURANCE CO. LTD. V. NIRMALA DEVI AND ORS . [1979] 118 ITR 507 (SC)). THE APPEAL WAS ACCORDINGLY ADMITTED, AND THE HEARING IN THE MATTER PROCEEDED WITH. 4. ON THE MERITS, THOUGH THE APPEAL RAISES THREE GR OUNDS, AS UNDER, THE SAME, AS PER SH. BAHL, PROJECT A SINGLE GRIEVANCE: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEAL)-2 AMRITSAR HAS GROSSLY ERRED IN CONFIRMING THE ORDER PASSED BY INCOME TAX OFFICER W ARD 5(2) AMRITSAR U/S. 148 OF INCOME TAX ACT. 2. THAT BOTH LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)-2 AMRITSAR AND THE LEARNED ASSESSING OFFICER HAVE FAILED TO APPRECIATE THAT TH E REASONS RECORDED BY THE ASSESSING OFFICER AND THE REOPENING OF THE CASE WAS ILLEGAL. 3. THAT BOTH LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)-2 AMRITSAR AND THE AO HAS GROSSLY ERRED IN NOT APPRECIATING THAT THE NOTICE U /S. 133(6), 147/148 AND NOTICE U/S. 142(1), 143(2) AND ASSESSMENT ORDER WERE NEVER VALIDLY SERV ED ON THE ASSESSEE. 4.1 EXPLAINING HIS CASE, SH. BAHL WOULD SUBMIT THAT THE AO IS WRONG IN STATING, IN THE REASONS RECORDED, WHICH FINDS STATEMENT IN T HE ASSESSMENT ORDER, THAT THE ASSESSEE DID NOT FILE HIS RETURN OF INCOME FOR THE RELEVANT YEAR AND, ON THAT BASIS, INFERRING THAT THE IMPUGNED INVESTMENT BY THE ASSES SEE, WHICH HE INCORRECTLY CLAIMS AT RS.14.20 LACS, IS UNEXPLAINED. THE ASSESS EE HAD IN FACT, FILED HIS RETURN OF INCOME FOR THE YEAR ON 26/5/2004. HOW COULD, THEN, HE WOULD ARGUE, THE AO HAVE A REASON TO BELIEVE THAT THE IMPUGNED SUM HAD NOT BEE N DISCLOSED, I.E., WITHOUT REFERENCE TO THE ASSESSEES RETURN, AND HAD THEREFO RE ESCAPED ASSESSMENT? A PERUSAL OF THE ASSESSMENT ORDER, STATING THE REAS ONS RECORDED U/S. 148(2), SHOWS THAT THE AO, PRIOR TO FORMING HIS BELIEF AS T O THE ESCAPEMENT OF INCOME, SOUGHT INFORMATION FROM THE ASSESSEE U/S. 133(6) OF THE ACT, INCLUDING ABOUT THE FILING OF THE RETURN FOR THE RELEVANT YEAR. THE SAM E BEING NOT RESPONDED TO, HE INFERRED THE ASSESSEE TO HAVE NOT FILED ANY RETURN OF INCOME FOR THE YEAR. THE SAID NOTICE U/S. 133(6), SH. BAHL WOULD EXPLAIN, WAS NOT RECEIVED BY THE ASSESSEE, WHO ITA NO. 445/ASR/2016 (AY 2004-05) JASPAL SINGH V. ITO 6 HAD SINCE LEFT THE SAID ADDRESS. TOWARD THIS, HE WO ULD POINT TO THE ASSESSEES RETURN FOR THE SUBSEQUENT YEARS, BEGINNING AY 2005-06, FIL ED WITH THE SAME RANGE (RANGE-V, AMRITSAR). IN FACT, EVEN THE RETURN FOR A Y 2004-05, THE RELEVANT YEAR, WAS FILED STATING THE SAME ADDRESS, DIFFERENT FROM THAT ON WHICH THE NOTICE U/S. 133(6) WAS SENT BY THE AO. HIS ATTENTION WAS AT THI S STAGE WAS DRAWN BY THE BENCH TO SECTION 139A(5)(D) OF THE ACT. UPON ENQUIRY AS T O IF THE ASSESSEE HAD INTIMATED THE CHANGE IN ADDRESS, AS OBLIGED TO U/S. 139A(5)(D ), HE REPLIED IN NEGATIVE, THOUGH SOUGHT TIME TO RESPOND ON THE LEGAL IMPORT OF THE S AID NON-COMPLIANCE. IT WAS EXPLAINED TO HIM THAT THE AO, IN COMMUNICATING WITH THE ASSESSEE, WOULD ONLY BE ACTING ON THE BASIS OF THE INFORMATION ON HIS SYSTE M, I.E., THE ADDRESS SPECIFIED UNDER THE ASSESSEES PERMANENT ACCOUNT NUMBER (PAN) , WHICH STANDS TO BE CHANGED ONLY UPON THE SAID INTIMATION, WHICH ALSO E XPLAINS THE PLACEMENT OF THE REQUIREMENT TO COMMUNICATE THE CHANGE IN ADDRESS IN SECTION 139A, WHICH SECTION CONCERNS PAN. THE ASSESSEE, ON THE NEXT DATE OF HEARING, SOUGHT T O RAISE A NEW GROUND, I.E., AS TO THE NON SERVICE OF NOTICE U/S. 148(1), IN-AS- MUCH AS THE SERVICE OF THE SAID NOTICE, CLAIMED TO BE PER AFFIXTURE, WAS NOT DONE B Y OBSERVING THE REQUIRED PROCEDURE IN ITS RESPECT. AS REGARDS THE ADDRESS S TATED IN THE PAN CARD, THE SAME WAS NOT, IT WAS SUBMITTED, THE SAME ADDRESS AS STAT ED IN THE ASSESSMENT ORDER AS WELL THE NOTICES U/SS. 133(6), 142(1), 148, AND AT WHICH ADDRESS THE SAME WERE ACCORDINGLY SENT, I.E., 16, CHAND AVENUE, AMRITSAR . THE ADDRESS AS PER PAN IS: 45B, GF, RANJIT AVENUE, AMRITSAR. THE ADMISSION O F THE NEW GROUND WAS DENIED AS THE SAME WOULD INCREASE THE SCOPE OF THE CONTROV ERSY ATTENDING THE APPEAL, WITH THE RELEVANT FACTS NOT ON RECORD. THE ASSESSEE HAD IN FACT ALREADY RAISED THE ISSUE OF THE SERVICE OF NOTICES U/SS. 133(6) 142(1) AND 148( 1), AND ON THAT BASIS, CHALLENGED THE LEGAL VALIDITY OF THE ASSESSMENT (GD. 3). ITA NO. 445/ASR/2016 (AY 2004-05) JASPAL SINGH V. ITO 7 4.2 AS REGARDS THE ASPECT OF THE SERVICE, THE SAME HAS ALREADY BEEN EXAMINED BY THE LD. CIT(A), WHO FOUND THAT THE NOTICES U/SS. 13 3(6) 148(1) AND 142(1), ADDRESSED TO 16 CHAND AVENUE, AMRITSAR, AS VALIDL Y SERVED IN-AS-MUCH AS IT WAS NOT SHOWN, AS CLAIMED, TO BE THE ASSESSEES OLD ADD RESS, DISMISSING THE ASSESSEES GD. 5 BEFORE HIM. THE ADDRESS MENTIONED IN THE ASSE SSEES RETURN FOR AY 2004-05, AS WELL AS THE RETURNS (AND THE ASSESSMENT ORDERS) FOR AYS 2005-06 TO 2011-12, IS SHOP NO. 1, NEHRU SHOPPING COMPLEX, LAWRENCE ROAD, AMRITSAR (PB PGS. 11- 16). IT IS FURTHER CLEAR THAT THE ADDRESSES AT WHIC H THESE NOTICES WERE SENT BY THE AO IS NEITHER THE ADDRESS AS PER THE RETURN FOR THE RE LEVANT YEAR NOR THAT AS PER PAN. THERE IS, AT THE SAME TIME, NOTHING TO SHOW THAT TH E ADDRESS AT WHICH THESE NOTICES WERE SENT IS NO LONGER THE ASSESSEES ADDRESS, I.E. , OF HE HAVING LEFT IT, WITH NOTHING TO THAT EFFECT BROUGHT ON RECORD EVEN AT THE APPELL ATE STAGE. FOR ALL ONE MAY KNOW, THE SAID ADDRESS MAY BE THE ASSESSEES ADDRESS AS P ER THE RETURN FOR AY 2003-04, THE IMMEDIATELY PRECEDING YEAR. THE CLAIM OF THE AS SESSEE OF HAVING LEFT THAT ADDRESS LONG AGO, AS CLAIMED, CANNOT THEREFORE BE A CCEPTED AND, ACCORDINGLY, THE LD. CIT(A) CANNOT BE SAID TO HAVE FAULTED IN THIS REGAR D. THE QUESTION OF THE VALIDITY OF THE SERVICE APART, IT IS, HOWEVER, CLEAR THAT THE A SSESSEE DID NOT RECEIVE THE NOTICE U/S. 133(6) OR THE SUBSEQUENT NOTICE U/S. 148(1). T HE ASSESSEE HAS ALSO NOT INTIMATED THE CHANGE IN HIS ADDRESS, I.E., FROM THA T AS STATED IN HIS PAN, AS REQUIRED U/S. 139A(5)(D); HE HAVING SHIFTED HIS RESIDENCE TO 82B, GF, RANJIT AVENUE, AMRITSAR IN DECEMBER, 2008 (PB PGS. 20-21), SO THAT A NOTICE AT THE ADDRESS STATED IN THE PAN WOULD ALSO NOT HAVE BEEN RECEIVED BY THE ASSESSEE. THE QUESTION, HOWEVER, IS, WOULD THE ASSESSEE BE BETTER PLACED TH AN HE IS NOW HAD HE HAD RECEIVED THE SAID NOTICES ? THE ALLOTMENT OF THE SHOP, WHICH IS BY AMRITSAR IMPROVEMENT TRUST, AMRITSAR FOR RS.14.20 LACS, UNDE R AN INSTALLMENT SCHEME, OF WHICH RS.2.70 LACS HAS BEEN PAID DURING THE CURRENT YEAR WHICH THOUGH IS A MATTER OF QUANTIFICATION AND, BESIDES, SUBSEQUENT, IN CONTRADISTINCTION TO THE ITA NO. 445/ASR/2016 (AY 2004-05) JASPAL SINGH V. ITO 8 REASON TO BELIEVE, IS NOT DENIED, NOR THE FACT TH AT THE SAME IS NOT PER THE DISCLOSED SOURCES OF INCOME. THE ASSESSEES NOT FILING THE RE TURN AT THE ADDRESS SPECIFIED IN PAN IS PERHAPS ALSO THE REASON FOR THE AO TO BE ABL E TO NOT LOCATE HIS RETURN ON HIS SYSTEM, INFERRING HIM TO HAVE, ACCORDINGLY, NOT FIL ED HIS RETURN FOR THE RELEVANT YEAR. THERE WAS, THEREFORE, FROM THE STANDPOINT OF THE AO, PROPER COMMUNICATION TO THE ASSESSEE, WHO HAD FAILED TO REPLY. AN ADVERS E INFERENCE IN LAW WOULD THEREFORE FOLLOW ( UNION OF INDIA V. RAI SINGH DEB SINGH BIST & ANR . [1973] 88 ITR 200 (SC)). HOW COULD, THEN, THE REASONS RECORDED BE ASSAILED, AT WHICH STAGE ALL THAT IS RELEVANT IS A HONEST, PRIMA FACIE , OPINION, OF THE INCOME CHARGEABLE TO TAX ESCAPING ASSESSMENT (REFER, INTER ALIA, ASST. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD . [2007] 291 ITR 500 (SC); RAYMOND WOOLLEN MILLS LTD. V. ITO [1999] 236 ITR 34 (SC)). NEITHER THE REASON/S RECORDED NOR T HE ISSUE OF NOTICE U/S. 148(1), CONFERRING JURISDICTION FOR REASSESSMENT, IS THUS I NVALID. 4.3 FURTHER, THE JURISDICTION TO ASSESS STANDS THUS VALIDLY ASSUMED IN THE INSTANT CASE UPON ISSUE OF NOTICE U/S. 148(1) ON 24/3/2011 ( UPADHYAYA (R.K.) V. SHANABHAI P. PATEL [1987] 166 ITR 163 (SC)), REFERRED TO DURING HEARIN G, AS ALSO EXPLAINED EARLIER IN JAI HANUMAN TRADING CO. V. CIT [1977] 110 ITR 36 (P&H)(FB); CIT V. SHEO KUMARI DEBI [1986] 157 ITR 13 (PATNA)(FB), TO CITE TWO. PER THE LATTER OF THE TWO, RENDERED FOLLOWING JAI HANUMAN TRADING CO . (SUPRA), THE DEPARTURE FROM THE 1922 ACT WAS NOTED BY THE HONBL E PATNA HIGH COURT. ALLUDING TO THE PRINCIPLES OF INTERPRETATION OF STATUTES, IT NOTED THE CLEAR DISTINCTION BETWEEN THE WORDS ISSUE AND SERVICE, DISTINCTLY USED BY THE LEGISLATURE, AS WELL AS THE ANOMALY THAT MAY ARISE IF THE WORD ISSUE WAS TO B E READ AS SERVICE. READING THE TWO AS SYNONYMOUS, IT EXPLAINED, WOULD BE TO RENDER NUGATORY THE EVIL SOUGHT TO BE REMEDIED BY SECTION 149 OF THE ACT. THE USE OF SEPA RATE AND DISTINCT WORDS IN THE STATUTE, IT OBSERVED, WAS WITH A VIEW TO REMEDY THE EVIL PERPETRATED BY THE LONG ITA NO. 445/ASR/2016 (AY 2004-05) JASPAL SINGH V. ITO 9 DELAYED AND STUDIED AVOIDANCE OF THE SERVICE OF THE NOTICES BY THE ASSESSEES WHOSE INCOME HAD ESCAPED ASSESSMENT. HERE ONE CANNOT HELP BUT REFER TO THE SIMILAR SENTIMENT EXPRESSED BY THE HONBLE JURISDICTIONAL H IGH COURT IN JASBIR SINGH (INFRA) AND V.R.A. COTTON MILLS (P.) LTD. V. UNION OF INDIA [2013] 359 ITR 495 (P&H). BOTH THE HONBLE JURISDICTIONAL AND THE PATN A HIGH COURT DISSENTED FROM THE DECISION IN SHANABHAI P. PATEL V. UPADHYAYA [1974] 96 ITR 141 (GUJ), WHICH WAS SUBSEQUENTLY REVERSED BY THE APEX COURT. SERVIC E UNDER THE ACT (REFERRED TO AS A NEW ACT), IT HELD, IS NOT A CONDITION PRECEDENT T O CONFER JURISDICTION TO THE INCOME-TAX OFFICER (ITO), THOUGH IS ONE FOR MAKING THE ORDER OF ASSESSMENT. THIS WOULD ALSO MEET THE ASSESSEES RELIANCE ON CIT V. RAMENDRA NATH GHOSH [1971] 82 ITR 888 (SC). 4.4 IT WAS AT THIS STAGE ENQUIRED WITH THE ASSESSEE S COUNSEL, SH. BAHL, AS TO THE PREJUDICE, IF ANY, CAUSED TO THE ASSESSEE ON ACCOUN T OF THE NON-SERVICE OF THE AFORESAID NOTICES. THE REASON IS SIMPLE. THE FUNCTI ON OF A NOTICE IS TO PUT THE NOTICEE TO NOTICE THAT THE PROCEEDINGS IN HIS CASE HAVE BEEN INITIATED, AFFORDING HIM AN OPPORTUNITY TO COMPLY WITH THE SAID NOTICE AS WE LL AS TO PRESENT HIS CASE IN THE MATTER. LACK OF NOTICE, AS EXPLAINED IN ESTATE OF LATE RANGALAL JAJODIA V. CIT [1971] 79 ITR 505 (SC), NOTED WITH APPROVAL IN CIT V. JAI PRAKASH SINGH [1996] 219 ITR 737 (SC), TO WHICH REFERENCE WAS MADE BY TH E BENCH DURING HEARING, RENDERED AFTER A REVIEW OF THE JUDICIAL PRECEDENTS, INCLUDING MAHARAJA OF PATIALA VS. CIT (1943) 11 ITR 202 (BOM), ALSO QUOTING THEREFROM, W OULD NOT ANNUL THE PROCEEDINGS BUT RENDER THE SAME PROCEDURALLY INFIRM , I.E., A CURABLE DEFECT, SO THAT THE PROCEEDINGS WOULD HAVE TO BE RESTORED TO THE ST AGE AT WHICH THE IRREGULARITY HAD OCCURRED, EVEN AS EXPLAINED BY THE APEX COURT PER T HE DECISIONS BY ITS LARGER BENCHES, AS IN GUDUTHUR BROS. V. ITO [1960] 40 ITR 298 (SC) AND SUPDT., CENTRAL EXCISE V. PRATAP RAI [1978] 114 ITR 231 (SC). WHERE THE NOTICE REMAINED ITA NO. 445/ASR/2016 (AY 2004-05) JASPAL SINGH V. ITO 10 UNDISPOSED, IT WAS EXPLAINED IN GUDUTHUR BROS. (SUPRA), IT DID NOT CEASE TO BE OPERATIVE. THE PROCEEDINGS, LAWFULLY INITIATED, SHA LL TRAVEL TO THE POINT WHERE THE ILLEGALITY SUPERVENED. THE ITO HAD THE JURISDICTION TO CONTINUE THE PROCEEDINGS FROM THAT STAGE. FURTHER, AS EXPLAINED IN THE LATTE R CASE, WHENEVER AN ORDER IS STRUCK DOWN AS INVALID BEING IN VIOLATION OF THE PRINCIPLE S OF NATURAL JUSTICE THERE IS NO FINAL DECISION OF THE CAUSE AND FRESH PROCEEDINGS A RE LEFT OPEN. ALL THAT IS DONE IS THAT THE ORDER ASSAILED BY VIRTUE OF ITS INHERENT D EFECT IS VACATED BUT THE PROCEEDINGS ARE NOT TERMINATED. NO PREJUDICE COULD BE EXPLAINED AS CAUSED TO THE ASSESSEE BY SH. BAHL. IT WAS SPECIFICALLY CLARIFIED WITH HIM AS TO IF THE PROCEEDINGS BE RESTORED BACK TO THE AO FOR EXTENDING AN OPPORTUNITY OF HEAR ING TO THE ASSESSEE? THIS IS AS EVEN ASSUMING (WITHOUT ADMITTING THE SAME BEING E VEN OTHERWISE OUTSIDE THE SCOPE OF THE APPEAL) THE AFFIXTURE AS NOT PROPER, S O THAT THERE HAD BEEN NO PROPER SERVICE OF NOTICE U/S. 148(1), IT WOULD ONLY IMPLY THAT THE PROCEEDINGS HAD TO BE RESTORED BACK TO THE FILE OF THE AO TO CAUSE SERVIC E THEREOF AND PROCEED FROM THAT STAGE ONWARDS. THERE IS, IT WAS EXPLAINED, NO TIME LIMIT UNDER THE ACT FOR THE SERVICE OF NOTICE AFTER ITS ISSUE IN TIME, WITH, FU RTHER, THE TIME LIMIT FOR FRAMING THE ASSESSMENT BEING RECKONED FROM THE DATE OF ITS SERV ICE (153(2); ALSO SEE PRAKASH ELECTRIC COMPANY V. ITO [2008] 118 TTJ 539 (BANG)). AS SUCH, THE LOGICAL CONSEQUENCE OF NON-SERVICE, WOULD BE TO CAUSE ITS SERVICE, THE WHOLE PURPORT OF WHICH IS TO GRANT OPPORTUNITY TO THE ASSESSEE TO ST ATE HIS CASE. SH. BAHL WOULD ANSWER IN THE NEGATIVE. THIS IS UNDERSTANDABLE AS THE ASSESSEE HAS ALREADY AVAILED SUFFICIENT OPPORTUNITY TO EXPLAIN HIS CASE, WITH, I N FACT, THE ADDITION RESTRICTED TO THE AMOUNT ADMITTEDLY PAID DURING THE CURRENT YEAR (RS. 2.70 LACS), WHICH ASPECT OF ASSESSMENT, I.E., ADDITION ON QUANTUM AS SUSTAINED, HAS NOT EVEN BEEN AGITATED IN APPEAL. RESTORATION, ENTAIL AS IT DOES TIME AND EFF ORT, IS NOT AN EMPTY FORMALITY, AND MUST ACHIEVE SOME SUBSTANTIVE PURPOSE. ITA NO. 445/ASR/2016 (AY 2004-05) JASPAL SINGH V. ITO 11 REFERENCE IN THIS CONTEXT MAY ALSO BE MADE TO THE D ECISION IN CIT V. JASBIR SINGH [2014] 103 DTR 427 (P&H), REFERRED TO BY THE LD. S R. DR DURING HEARING. IN THE FACTS OF THAT CASE, THE AO COULD NOT GET THE CU RRENT RESIDENTIAL ADDRESS OF THE ASSESSEE AND, ACCORDINGLY, THE NOTICE WAS SERVED TH ROUGH AFFIXTURE AT THE DHARMSHALA OF THE VILLAGE, WHICH HAD, ON ACCOUNT OF THE ACQUISITION OF THE VILLAGE LAND BY PUDA, BEEN CONVERTED INTO A RESIDENTIAL COL ONY. THE ASSESSMENT WAS, ACCORDINGLY, FRAMED U/S. 144 IN VIEW OF THE NON REP RESENTATION BY THE ASSESSEE. THE MATTER WAS IN APPEAL SET ASIDE TO THE AO FOR FRAMIN G THE ASSESSMENT AFRESH AFTER HEARING THE ASSESSEE. AND WHEREUPON; THE ASSESSEE B EING ADMITTEDLY IN RECEIPT OF COMPENSATION (ON COMPULSORY ACQUISITION OF THE LAND IN THE SAID VILLAGE), WAS ASSESSED BY WAY OF LONG TERM CAPITAL GAINS. THE TRI BUNAL QUASHED THE PROCEEDINGS IN FURTHER APPEAL ON THE BASIS THAT THE NOTICES U/S . 148 AND SECTION 143(2) HAD NOT BEEN SERVED ON THE ASSESSEE OR HIS AGENT. THE HONB LE HIGH COURT, IN FURTHER APPEAL BY THE REVENUE, REVERSED THE ORDER BY THE TR IBUNAL. IT OPINED THAT, TRUE, THERE HAD BEEN NO PROPER SERVICE OF NOTICES. THAT WOULD N OT HOWEVER MEAN THAT THE WHOLE PROCEEDINGS WOULD GET QUASHED AND THE ASSESSE E ESCAPE HIS LIABILITY TO THE CAPITAL GAINS TAX. THAT IS, MERELY BECAUSE OF SOME ERROR IN THE SERVICE OF NOTICE, THE STATUTORY LIABILITY OF THE ASSESSEE TO PAY TAX WOUL D NOT GET OVER. SERVICE, A PROCEDURAL MATTER, WOULD NOT OPERATE TO CAUSE OR EN ABLE THE ASSESSEE TO ESCAPE HIS STATUTORY LIABILITY TO TAX, WHICH HAD INDUBITABLY A CCRUED AGAINST HIM ON THE RECEIPT OF THE COMPENSATION. THE MATTER WAS ACCORDINGLY RES TORED BACK TO THE FILE OF THE AO TO START THE PROCEEDINGS AFRESH AFTER SEEKING AP PEARANCE OF THE ASSESSEE EITHER IN PERSON OR THROUGH A POWER OF ATTORNEY. THAT IS, TO TAKE UP THE PROCEEDINGS FROM THE STAGE OF ISSUANCE OF A NOTICE U/S. 148(1) . THE SAID DECISION, IT SHALL BE NOTED, IS IN SYNC WITH THE LAW IN THE MATTER PER THE DECISION S BY THE APEX COURT CITED SUPRA. ITA NO. 445/ASR/2016 (AY 2004-05) JASPAL SINGH V. ITO 12 4.5 COMING BACK TO THE ISSUE OF SERVICE OF NOTICE U /S. 148(1), A QUESTION OF FACT, THE SAME ASSUMES RELEVANCE AS, IN ITS ABSENCE, THE MATTER WOULD NECESSARILY HAVE TO TRAVEL BACK TO THE FILE OF THE AO TO ENABLE HIM TO PROVIDE OPPORTUNITY TO THE ASSESSEE TO JOIN THE PROCEEDINGS AND STATE HIS CASE , AND FRAME THE ASSESSMENT ACCORDINGLY PER A SPEAKING ORDER. IN THIS REGARD, T HE REVENUE, ON ITS PART, HAS ALSO NOT SHOWN THAT THE ADDRESS AT WHICH THE SAID NOTICE WAS SENT WAS THE ASSESSEES CURRENT ADDRESS AT THE RELEVANT TIME, THE DATE OF I TS ISSUE, I.E., AS PER ITS RECORD. THE SAME IS CLEARLY NOT EITHER THE ASSESSEES BUSINESS OR RESIDENTIAL ADDRESS, NOR AS THAT STATED IN THE PAN. THE SERVICE OF NOTICE U/S. 148(1 ) CANNOT, ACCORDINGLY, BE REGARDED AS PROPER. EVEN AS NO PREJUDICE SURVIVES O R IS EVEN CLAIMED, THE NOTICE U/S. 148(1) REMAINS UNCOMPLIED WITH IN CONSEQUENCE. NEEDLESS TO ADD, THE AO SHALL ALSO TAKE INTO ACCOUNT THE INCOME AS ALREADY RETURNED BY THE ASSESSEE. 4.6 IN VIEW OF THE FOREGOING, THE MATTER, SETTING A SIDE THE ASSESSMENT, IS RESTORED BACK TO THE FILE OF THE AO FOR THE PURPOSE. THAT IS , TO PROCEED FROM THE STAGE OF THE ISSUE OF NOTICE U/S. 148(1), WHICH IS UNDISPOSED. T HE DECISIONS BY THE HONBLE APEX COURT AND THE JURISDICTIONAL HIGH COURT, CITED SUPRA, COMPLETELY ANSWER THE QUESTIONS ARISING IN THIS CASE, INCLUDING THAT QUA THE VALIDITY OF THE REASONS RECORDED. I DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 08, 2019 SD/- (SANJAY ARORA) ACCOUNTANT MEMBER DATE: 08.05.2019 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: JASPAL SINGH S/O SWARAN SING H, 45 GF, B-BLOCK RANJIT AVENUE FLATS, AMRITS AR ITA NO. 445/ASR/2016 (AY 2004-05) JASPAL SINGH V. ITO 13 (2) THE RESPONDENT: INCOME TAX OFFICER, WARD-5( 2), AMRITSAR (3) THE CIT(APPEALS)-2, AMRITSAR (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER