Luxmi Naryan Chaudhary, Etawah V. I.T.O., Etawah

ITA 48/AGR/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7047 (ITAT-AGRA)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-04-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 14-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J L VERMA; ANIL VERMA S
• Keywords: Block assessment; Reassessment proceedings
• Section: 143(3); 147; 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA (SMC) BENCH, AGRA BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 48/AGR./2011 ASSTT. YEAR : 2002-03 SHRI LAXMI NARAIN CHAUDHARY, VS. INCOME TAX OFFIC ER, PROP. M/S. RADHIKA COLOUR LAB, ETAWAH. KUNCHA SHEEL CHAND, NEW CITY, ETAWAH. (PAN: ABMPC 2297 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.L. VERMA & SHRI ANIL VERMA, ADVOCATES RESPONDENT BY : SHRI VINOD KUMAR, JR. D.R. ORDER THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 14.12.2010 PASSED BY THE LD. CIT(A)-II, AGRA ON THE FOLLOWING GROUNDS :- 1. THAT THE AUTHORITIES BELOW HAVE ERRED IN LAW AN D ON FACTS IN INVOKING THE PROVISIONS OF SECTION 147/148 WITHOUT PROPERLY APPRECIATING THAT THERE IS NO ESCAPEMENT OF ANY INC OME. A) THAT THE REASON RECORDED FOR ISSUE OF NOTICE U/S 148 ARE NOT REASONS TO BELIEVE BUT SAME ARE REASONS TO SUSPE CT WHICH AMOUNT TO A PRETENCE TO REOPEN THE CASE. B) THAT THE AUTHORITIES BELOW HAVE ERRED IN LAW IN NOT APPRECIATING THAT THERE IS NO FAILURE ON THE PART O F ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NEC ESSARY FOR ASSESSMENT. 2 C) THAT THE LD. CIT(A) HAS ERRED TO SUSTAIN THE ACT ION OF LD. A.O. WHO HAS UNLAWFULLY ASSUMED JURISDICTION U/S. 148. D) THAT THE LD. CIT(A) HAS NOT APPRECIATED THAT THE NOTICE ISSUED BY THE LD. A.O. U/S 148 IS NEITHER ON THE PRESCRIBE D FORM NOR IN THE PRESCRIBED MANNER. THAT IN THE NOTICE U/S 148, THE A.O. HAS PROPOSED T O REASONS THE INCOME OF A.Y. 2005-06 WHEREAS REASSESSMENT HAS BEE N MADE FOR ASSTT. YEAR 2002-03. HENCE, THE FOUNDATIONAL NOTIC E IS INVALID. 2. THAT THE LD. CIT(A) HAS NOT PROPERLY APPRECIATED THAT THE SERVICE OF NOTICE U/S 143(2) IS PRECONDITION FOR FR AMING ASSESSMENT U/S. 143(3). HENCE, THE ASSESSMENT UNDER APPEAL IS AB-INITIO UNLAWFUL. 3. THAT THE LD. CIT(A) HAS NOT APPRECIATED THAT THE LD. A.O. HAS ERRED IN LAW AND ON FACTS IN REJECTING THE BOOKS OF ACCOUNTS WITHOUT POINTING OUT ANY DEFECT AND WITHOUT PROPERLY APPREC IATING THAT SAME ARE CORRECT AND COMPLETE WHICH HAVE BEEN MAINTAINED IN THE ORDINARY COURSE OF BUSINESS. 4. THAT THE LD. CIT(A) HAS NOT APPRECIATED THAT THE LD. A.O. HAS GRAVELY ERRED IN LAW AND ON FACTS IN MAKING ADDITIO N OF ` 242193.00 AS EXCESS REPAYMENT OF TERM LOAN TO THE BANK WITHOU T PROPERLY APPRECIATING THE FACTS OF THE CASE. 5. THAT THE LD. CIT(A) HAS NOT APPRECIATED THAT THE ASSUMPTION OF JURISDICTION BY THE LD. A.O. U/S. 148 AND CONSEQUEN TLY MAKING UNLAWFUL ADDITION OF ` 242193.00 IS HIGHLY UNJUST, IMPROPER, ARBITRARY AND UNLAWFUL. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A MEND OR WITHDRAW ANY GROUND OF APPEAL. 2. AT THE TIME OF HEARING, SHRI J.L. VERMA, ADVOCAT E, LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE MADE A STATEMENT AT THE BAR THAT THE ASSESSMENT IN DISPUTE HAS BEEN FRAMED BY THE ASSESSING OFFICER UN DER SECTION 143(3)/147 OF THE 3 INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) WITHOU T SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT WHICH IS A PRECONDITION F OR FRAMING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT. HE FURTHER STATED THAT NOTICE UNDER SECTION 143(2) OF THE ACT HAS NOT BEEN SERVED UPON THE ASSESSEE AT ALL AN D HENCE ASSESSMENT FRAMED IS UNLAWFUL AND DESERVES TO BE CANCELLED. IN SUPPORT OF HIS CONTENTION, THE LD. AUTHORISED REPRESENTATIVE CITED THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RAJEEV SHARMA (2010) 232 CTR (ALL) 303 : (2010) 40 DTR (ALL) 129 AND VARIOUS DECISIONS OF TRIBUNAL INCLUDI NG THE DECISION OF I.T.A.T., LUCKNOW B BENCH IN THE CASE OF DCIT VS. K.M. SUGA R MILLS LIMITED REPORTED IN (2011) 53 DTR (LUCKNOW) (TRIB.) 172. HE REQUESTED THAT THE LD. FIRST APPELLATE AUTHORITY HAS WRONGLY DECIDED THIS ISSUE AGAINST TH E ASSESSEE BY IGNORING THE DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT AND THE I.T.A.T. BENCH. HE REQUESTED THAT THE ASSESSMENT IN DISPUTE ON THIS LE GAL ISSUE MAY BE CANCELLED. NO OTHER POINT HAS BEEN ARGUED BY THE LD. AUTHORISED R EPRESENTATIVE OF THE ASSESSEE. 3. ON THE CONTRARY, THE LD. DEPARTMENTAL REPRESENTA TIVE HAS NOT CONTROVERTED THE ARGUMENTS ADVANCED BY THE LD. AUTHORISED REPRES ENTATIVE OF THE ASSESSEE. HE HAS RELIED UPON THE IMPUGNED ORDER. 4 4. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE LEVANT RECORDS AVAILABLE WITH ME ALONG WITH THE DECISION RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RAJEEV SHARMA (2010) 232 CTR (A LL) 303 : (2010) 40 DTR (ALL) 129. THE RELEVANT PORTION OF THE SAME ARE RE PRODUCED AS UNDER :- REASSESSMENT VALIDITY ABSENCE OF NOTICE UNDER S. 143(2) AS PER S.148, IT IS INCUMBENT ON THE ASSESSING OFFI CER TO SEND A NOTICE UNDER S.143(2) WITHIN THE STATUTORY PERIOD SPECIFIE D THEREIN PROVISION CONTAINED IN SUB-S.(2) OF S.143 IS MANDAT ORY AND THE LEGISLATURE IN ITS WISDOM BY USING THE WORDS REASO N TO BELIEVE HAS CAST A DUTY ON THE ASSESSING OFFICER TO APPLY MIND TO THE MATERIAL ON RECORD AND SERVE NOTICE AFTER BEING SATISFIED WITH REGARD TO ESCAPED ASSESSMENT THUS, AFTER RECEIPT OF RETURN IN RESPO NSE TO NOTICE UNDER S.148, IT IS MANDATORY FOR THE ASSESSING OFFICER T O SERVE A NOTICE UNDER S.143(2) ASSIGNING REASON THEREIN IN THE AB SENCE OF A NOTICE UNDER S.143(2) AFTER RECEIPT OF FRESH RETURN, THE E NTIRE PROCEDURE ADOPTED FOR ESCAPED ASSESSMENT SHALL BE INVALID I N THE INSTANT CASE, SINCE THE ASSESSEE FILED A FRESH RETURN IN RESPONSE TO NOTICE UNDER S.148 PURSUANT TO THE LETTER OF THE ASSESSING OFFIC ER INFORMING HIM ABOUT THE PENDENCY OF PROCEEDINGS AND REJECTING HIS REQUEST FOR DROPPING THE PROCEEDINGS, THE EARLIER NOTICE CANNOT BE TREATED AS VALID FOR THE PURPOSE OF ESCAPED ASSESSMENT ASSES SING OFFICER HAS TO APPLY HIS MIND TO THE CONTENTS OF FRESH RETURN AND THEN ISSUE A NOTICE UNDER S.143(2). THEREFORE, NON-ISSUANCE OF NOTICE UNDER S.143(2) VITIATED THE REASSESSMENT PROCEEDINGS. 5. I HAVE ALSO PERUSED THE ORDER OF I.T.A.T., LUCKN OW B BENCH IN THE CASE OF DCIT VS. K.M. SUGAR MILLS LIMITED REPORTED IN (2011 ) 53 DTR (LUCKNOW) (TRIB.) 172. THE RELEVANT PORTION OF THE SAME, I.E. PARAGR APH NOS.6 & 7, ARE ALSO REPRODUCED AS UNDER :- 5 WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI VIVEK MISHRA, LEARNED CIT (DEPARTMENTAL REPRESENTATIVE) SUBMITTED THAT THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE HONBLE ALLAHA BAD HIGH COURT LUCKNOW BENCH IN THE CASE OF CIT VS. RAJEEV SHARMA (2010) 232 CTR (ALL) 303 : (2010) 40 DTR (ALL) 129 NEVER INTENDED THAT THE NOTICE UNDER S.143(2) SHOULD BE ISSUED IN ALL THE CASES W HERE ACTION UNDER S. 148 IS CONTEMPLATED. BUT WHAT THE HONBLE HIGH COU RT INTENDED WAS THAT THE NOTICE UNDER S.143(2) SHOULD BE ISSUED IN THOSE CASES ONLY WHERE THE ASSESSEE HAS FILED A FRESH RETURN IN RESP ONSE TO NOTICE UNDER S. 148 OF THE ACT AND NOT IN THOSE CASES WHERE THE RETURN ALREADY FILED IS DEEMED TO HAVE BEEN FILED IN RESPONSE TO NOTICE UNDER S.148 OF THE ACT. ON THE OTHER HAND, SHRI AMIT SHUKLA, ADVOCATE , LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT BEFORE MAKING ASSES SMENT UNDER S.143(3) R/W S. 147 OF THE ACT, THE ASSESSING OFFIC ER WAS OBLIGED UNDER THE LAW TO ISSUE NOTICE UNDER S.143(2) AND SE RVE THE SAME ON THE ASSESSEE WITHIN A STIPULATED PERIOD OF ONE YEAR. A CCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE ISSUE IS NO LONGER RES INTEGRA THAT SUCH A NOTICE IS MANDATORY AND IN THE ABSENCE OF SUCH MANDATORY NOTICE BEING SERVED ON THE ASSESSEE, THE ASSESSING OFFICER DOES NOT GET JURISDICTION TO MAKE AN ASSESSMENT UNDER S.143(3) R /W S.148 OF THE ACT. WE FIND SUBSTANTIAL FORCE IN THE ABOVE SUBMIS SION OF SHRI AMIT SHUKLA, ADVOCATE, LEARNED COUNSEL FOR THE ASSESSEE. IT IS SEEN THAT WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE, THE LEARNED CIT(A) HAS RELIED ON THE DECISIONS OF HONBLE SUPREME COUR T IN THE CASE OF ASSTT. CIT & ANR. VS. HOTEL BLUE MOON (2010) 229 CT R (SC) 219 : (2010) 35 DTR (SC) 1 : (2010) 321 ITR 362 (SC) AND THAT OF THE HONBLE JURISDICTIONAL HIGH COURT LUCKNOW BENCH IN THE CASE OF CIT VS. RAJEEV SHARMA (SUPRA). THE LEARNED CIT(A) HAS REPRODUCED THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF HOTEL BLUE MOON (SUPRA) AND THAT OF HONBLE ALLAHABAD HIGH COU RT LUCKNOW BENCH IN THE CASE OF RAJEEV SHARMA (SUPRA) IN PARA 3.3 OF THE IMPUGNED ORDER. IN OUR VIEW, THE ABOVE DECISIONS A RE SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE AND THE REFORE, THE LEARNED CIT(A) WAS JUSTIFIED IN FOLLOWING THE SAME. IN THE CASE OF RAJEEV SHARMA (SUPRA), THE HONBLE ALLAHABAD HIGH COURT LU CKNOW BENCH HELD THAT THE PROVISION CONTAINED IN S.143(2) IS MA NDATORY IN NATURE AND IT IS OBLIGATORY FOR THE ASSESSING OFFICER TO A PPLY HIS MIND TO THE CONTENTS OF THE RETURN FILED IN RESPONSE TO NOTICE UNDER S.148 AND THEREAFTER ISSUE NOTICE UNDER S.143(2) BEFORE PROCE EDING TO DECIDE THE CONTROVERSY REGARDING ESCAPED ASSESSMENT; NON-ISSUA NCE OF NOTICE 6 UNDER S. 143(2) AFTER FILING OF RETURN BY ASSESSEE VITIATED THE REASSESSMENT PROCEEDINGS. IN THE CASE OF HOTEL BLU E MOON (SUPRA), THE HONBLE SUPREME COURT RULED THAT IF THE ASSESSI NG OFFICER, FOR ANY REASON, REPUDIATES THE RETURN FILED BY AN ASSESSEE IN RESPONSE TO NOTICE UNDER S.158BC(A) OF THE IT ACT, 1961 RELATIN G TO A BLOCK ASSESSMENT, THE ASSESSING OFFICER MUST NECESSARILY ISSUE NOTICE UNDER S.143(2) OF THE ACT WITHIN THE TIME PRESCRIBED IN T HE PROVISO TO S.143(2). IN THE CASE OF VIRENDRA DEV DIXIT VS. AS STT. CIT (2010) 41 DTR (ALL) 43, THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT SERVICE OF NOTICE ON THE ASSESSEE UNDER S.143(2) WI THIN THE PRESCRIBED PERIOD OF TIME IS A PREREQUISITE FOR FRAMING THE BL OCK ASSESSMENT; NON- ISSUANCE OF NOTICE IS NOT A MERE PROCEDURAL IRREGUL ARITY AND THE SAME IS NOT CURABLE. IN VIEW OF THE ABOVE DECISIONS, WE DO NOT FIND ANY MERIT IN THE SUBMISSION OF SHRI VIVEK MISHRA, LEARN ED CIT (DEPARTMENTAL REPRESENTATIVE). KEEPING IN VIEW THE JUDGEMENTS OF THE HONBLE SUPREME COURT IN THE CASE OF HOTEL BLUE MOON (SUPRA) AND THAT OF THE HONBLE JURISDICTIONAL HIGH COURT L UCKNOW BENCH IN THE CASE OF RAJEEV SHARMA (SUPRA), WE UPHOLD THE OR DER OF THE LEARNED CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 7. IN THE RESULT, THE APPEAL IS DISMISSED. 6. KEEPING IN VIEW OF THE STATEMENT MADE BY THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE AND THE DECISION RENDERED BY THE HO NBLE JURISDICTIONAL HIGH COURT AND THE DECISION OF I.T.A.T., LUCKNOW BENCH (SUPRA) , I AM OF THE CONSIDERED OPINION THAT THE ASSESSMENT IN DISPUTE HAS BEEN FRA MED UNDER SECTION 143(3)/147 OF THE ACT WITHOUT SERVICE OF NOTICE UNDER SECTION 143 (2) WHICH IS A PRECONDITION FOR FRAMING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT. BY BELIEVING THE STATEMENT GIVEN AT BAR BY A VERY SR. COUNSEL, WHICH HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT AND RESPECTFULLY FOLLOWING THE AFORE SAID DECISIONS, I CANCEL THE 7 ASSESSMENT IN DISPUTE BY ACCEPTING THE APPEAL FILED BY THE ASSESSEE. BOTH THE PARTIES HAVE NOT ARGUED ON MERIT, THEREFORE, NO NEE D TO COMMENT UPON THE SAME. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 29.04.2011). SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 29 TH APRIL, 2011 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRI BUNAL, AGRA TRUE COPY