Shri Balwant Rai Wadhwa, New Delhi V. ITO, New Delhi

ITA 4806/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0634 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-05-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 03-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Keywords: Gift; Period of limitation
• Section: 143(3); 148; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A NO. 4806/DEL/10 ASSTT. YEAR : 2001-2002 SHRI BALWANT RAI WADHWA, 132, ANAND VIHAR, PITAMPURA, NEW DELHI 110 034. VS. ITO WARD 18 (2), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SALIL AGARWAL, ADVOCATE RESPONDENT BY: MRS. ANUSHA KHURANA, SR. DR ORDER PER RAJPAL YADAV : JM THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 29 TH SEPTEMBER, 2010 PASSED IN ASSTT. YEAR 2001-02. TH E GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH ITA NO. 4806/DEL/10 ASSTT. YEAR 2001-02 2 RULE 8 OF THE ITAT RULES. THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF, ASSESSEE HAS RAISED FOUR FOLDS SU BMISSIONS. IN HIS FIRST FOLD OF SUBMISSION, HE PLEADED THAT SINCE LD. AO FA ILED TO SERVE THE EFFECTIVE NOTICE U/S 148 WITHIN A PERIOD OF 6 YEARS FROM THE END OF THE ASSTT. YEAR AS PROVIDED U/S 149 (1)(B) OF THE INCOM E TAX ACT IS NOT JUSTIFIED TO PASS THE IMPUGNED ASSTT. ORDER. IN HIS SECOND FOLD OF SUBMISSION, HE HAS PLEADED THAT REOPENING OF ASSTT. IS BAD IN THE EYES OF LAW. IN HIS THIRD FOLD OF GRIEVANCE, HE PLEADED THA T AO IS NOT JUSTIFIED IN MAKING AN ADDITION OF ` 49 LACS ON ACCOUNT OF ALLEGED UNEXPLAINED GIFTS RECEIVED BY THE ASSESSEE. THE ASSESSEE FURTHER PLEA DED THAT AO HAS ERRED IN CHARGING THE INTEREST U/S 234 (A) AND 234( B) OF THE INCOME TAX ACT. 2. LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT FIRST PRELIMINARY ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF HARYANA ACRYLIC MFG. CO. VS. CIT 30 8 ITR 38. HE SUBMITTED THAT IN THIS CASE THE ASSESSEE HAS CHALLE NGED REOPENING OF ASSTT. BY WAY OF A WRIT PETITION IN THE HONBLE HIG H COURT. ONE OF THE ISSUES AGITATED BEFORE THE HONBLE HIGH COURT WAS T HAT A NOTICE U/S 148 WAS SERVED UPON THE ASSESSEE THOUGH WITHIN 6 YEARS FROM THE END OF THE ITA NO. 4806/DEL/10 ASSTT. YEAR 2001-02 3 ASSTT. YEAR BUT IT WAS NOT ACCOMPANIED WITH THE COP Y OF THE REASONS RECORDED BY THE AO, THEN IT WOULD NOT BE A VALID SE RVICE. IT WAS ALSO SUBMITTED THAT IF SUCH NOTICE WAS SERVED BEYOND THE PERIOD OF 6 YEARS THEN THE ASSTT. WOULD BE CONSTRUED AS NOT REOPENED WITHIN THE PERIOD OF LIMITATION PROVIDED U/S 149 (1)(B) OF THE INCOME TA X ACT. THE LD. COUNSEL FOR THE ASSESSEE WHILE TAKING US THROUGH PA GE 60-61 OF THE REPORT SUBMITTED THAT HONBLE HIGH COURT HAS HELD T HAT NOTICE U/S 148 IS TO BE SERVED WITHIN 6 YEARS AND THE REASONS RECORDE D BY THE AO WOULD GO HAND IN HAND WITH SUCH NOTICE. IF REASONS ARE NO T SUPPLIED TO THE ASSESSEE WITHIN THE PERIOD OF 6 YEARS THEN IT WOULD BE CONSTRUED THAT ASSTT. HAS NOT BEEN VALIDLY REOPENED. LD. COUNSEL F OR THE ASSESSEE FURTHER CONTENDED THAT IN THE PRESENT CASE, AO SOUG HT TO REOPEN THE ASSTT. JUST TWO DAYS PRIOR OF THE EXPIRY OF THE 6 Y EARS. HE HAS SERVED NOTICE U/S 148 ON 28 TH MARCH, 2008. SUCH NOTICE COULD BE SERVED UPON THE ASSESSEE UPTO 31 ST MARCH, 2008. THE REASONS WERE NOT SUPPLIED TO ASSESSEE BY THE AO BY 31 ST MARCH,. 2008 RATHER THESE WERE SUPPLIED TO THE ASSESSEE VIDE LETTER DATED 15 TH MAY, 2008. FOR BUTTRESSING HIS CONTENTION, HE TOOK US THROUGH THE COPY OF NOTICE A S WELL AS REASONS AVAILABLE ON PAGES NO. 5, 11 AND 12 OF THE PAPER BO OK. ON THE STRENGTH OF HONBLE DELHI HIGH COURTS DECISION, HE CONTENDE D THAT ASSESSMENT HAS TO BE DECLARED AS INVALID. ITA NO. 4806/DEL/10 ASSTT. YEAR 2001-02 4 3. LD. DR ON THE OTHER HAND CONTENDED THAT IN THE C ASE OF HARYANA ACRYLIC A REGULAR ASSTT. U/S 143(3) WAS MADE. IN TH E PRESENT CASE, IT IS ONLY 143(1). THUS THERE IS NO REGULAR ASSESSMENT IN THE PRESENT CASE. SHE FURTHER CONTENDED THAT OBSERVATIONS MADE BY THE HONBLE HIGH COURT WERE IN RESPECT OF THE ISSUE WHETHER AO HAS S UPPLIED THE REASONS OR NOT. THE HONBLE HIGH COURT WAS CONSIDERING THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF GKN DRIVE SHAFT REPORTED IN 259 ITR 19. THE HONBLE HIGH COURT HAS OBSERVED THA T REASONS ARE TO BE GIVEN IN A REASONABLE TIME. APART FROM THIS ONE ASPECT HONBLE HIGH COURT HAS FIND A NUMBER OF OTHER ISSUES AND THEN DE CLARED THE ASSESSMENT INVALID. LD. COUNSEL FOR THE ASSESSEE IN REBUTTAL SUBMITTED THAT NO DOUBT THE HONBLE HIGH COURT HAS EXAMINED T HE DISPUTE IN THAT CASE WITH A NUMBER OF ANGLES BUT ONE OF THE ANGLE WAS IN RESPECT OF NON SUPPLY OF REASONS WITHIN 6 YEARS . 4. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. ADMITTEDLY THE REASONS WERE N OT SUPPLIED TO THE ASSESSEE BY 31 ST MARCH, 2008 I.E. WITHIN A PERIOD OF 6 YEARS FROM T HE END OF THE ASSTT. YEAR. THE QUESTION BEFORE US IS WHETH ER VALID SERVICE OF ITA NO. 4806/DEL/10 ASSTT. YEAR 2001-02 5 NOTICE HAS BEEN SERVED UPON THE ASSESSEE WITHIN THE LIMITATION PROVIDED U/S 149 (1) (B) OF THE ACT. ACCORDING TO THIS SECTI ON THE NOTICE OUGHT TO BE SERVED WITHIN 6 YEARS FROM THE END OF THE ASSTT. YE AR. THE CONTENTION OF THE ASSESSEE IS THAT HONBLE DELHI HIGH COURT HAS H ELD THAT IF THE REASONS RECORDED BY THE AO FOR REOPENING OF ASSESSM ENT HAS NOT BEEN SUPPLIED OR SERVED WITHIN 6 YEARS THEN IT WILL BE CONSTRUED THAT NO VALID NOTICE HAS BEEN SERVED UPON THE ASSESSEE WITHIN 6 Y EARS. THE AUTHORITATIVE OBSERVATION MADE BY THE HONBLE HIGH COURT IN THIS CONNECTION READ AS UNDER :- 24. THIRDLY, IT COULD BE ARGUED THAT THE REASONS SU PPLIED TO THE PETITIONER IN SEPTEMBER, 2004 BE DISREGARDED SO ALS O THE OBJECTIONS FILED BY IT AS ALSO THE IMPUGNED ORDER DATED 2-3-20 05 AND THE REASONS NOTED IN THE SAID FORM BE NOW TAKEN AS THE REASONS FOR THE ISSUANCE OF THE NOTICE UNDER SECTION 148 AND THE PETITIONER MAY NOW PREFER HIS OBJECTIONS, IF ANY, AND THEREUPON THE ASSESSING OFF ICER BE DIRECTED TO PASS A SPEAKING ORDER. IN OTHER WORDS, SUCH AN ARGU MENT REQUIRES US TO SWEEP ALL THE PROCEEDINGS EMANATING FROM THE SUP PLY OF REASONS IN SEPTEMBER 2004 AND CULMINATING IN THE PASSING OF TH E ORDER DATED 2-3- 2005 UNDER THE CARPET, AS IT WERE. AND, STARTING THE PROCESS AS PER THE DIRECTIONS GIVEN IN GKN DRIVESHAFTS (INDIA) LTD.S CASE ( SUPRA ) AFRESH CONSIDERING THE REASONS NOTED IN THE SAID FORM TO B E THE ACTUAL REASONS FOR THE ISSUANCE OF THE NOTICE UNDER SECTION 148. I F WE WERE TO ACCEPT THIS ARGUMENT, WE WOULD HAVE TO IGNORE THE DIRECTIO NS GIVEN BY THE ITA NO. 4806/DEL/10 ASSTT. YEAR 2001-02 6 SUPREME COURT IN GKN DRIVESHAFTS (INDIA) LTD.S CASE ( SUPRA ) THAT THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHI N A REASONABLE TIME. THE NOTICE UNDER SECTION 148 WAS ISSUED ON 29-3-200 4. THE PETITIONER FILED THE RETURN AND SOUGHT REASONS BY ITS LETTER D ATED 11-5-2004. IF THE DATE OF FILING OF THE COUNTER-AFFIDAVIT IN THIS WRI T PETITION IS TAKEN AS THE DATE OF COMMUNICATION OF THE REASONS WHICH FORMS PA RT OF THE SAID FORM, A COPY OF WHICH IS ANNEXURE-A TO THE COUNTER- AFFIDAVIT, THEN THE DATE OF SUPPLY OF REASONS, BASED ON THIS ARGUMENT, WOULD BE 5-11- 2007. THIS IMMEDIATELY MAKES IT CLEAR THAT THE ASSE SSING OFFICER, WHO WAS BOUND TO FURNISH HIS REASONS WITHIN A REASONABL E TIME, DID NOT DO SO. THE PERIOD WHICH ELAPSED BETWEEN 11-5-2004, WHE N THE PETITIONER MADE THE REQUEST FOR COMMUNICATING THE REASONS, AND 5-11-2007, THE DATE WHEN THE COUNTER-AFFIDAVIT WAS FILED, CAN CERT AINLY NOT BE REGARDED AS A REASONABLE PERIOD OF TIME. APART FROM THIS, WE MUST NOT FORGET THE PROVISIONS OF SECTION 149 WHICH PRESCRIBES THE TIME -LIMIT FOR A NOTICE UNDER SECTION 148. SECTION 149(1)( B ) STIPULATES THE OUTER LIMIT OF SIX YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WHERE THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AMOU NTS TO OR IS LIKELY TO AMOUNT TO RUPEES ONE LAKH OR MORE FOR THA T YEAR. THIS MEANS THAT A NOTICE UNDER SECTION 148, IN THE PRESENT CAS E, COULD NOT, IN ANY EVENT, HAVE BEEN ISSUED AFTER SIX YEARS FROM THE EN D OF THE ASSESSMENT YEAR 1998-99, I.E., AFTER 31-3-2005. IN WHICHEVER WAY WE LOOK AT IT, A NOTICE UNDER SECTION 148 WITHOUT THE COMMUNICATION OF THE REASONS THEREFOR IS MEANINGLESS INASMUCH AS THE ASS ESSING OFFICER IS ITA NO. 4806/DEL/10 ASSTT. YEAR 2001-02 7 BOUND TO FURNISH THE REASONS WITHIN A REASONABLE TI ME. IN A CASE, WHERE THE NOTICE HAS BEEN ISSUED WITHIN THE SAID PE RIOD OF SIX YEARS, BUT THE REASONS HAVE NOT BEEN FURNISHED WITHIN THAT PERIOD, IN OUR VIEW, ANY PROCEEDINGS PURSUANT THERETO WOULD BE HIT BY TH E BAR OF LIMITATION INASMUCH AS THE ISSUANCE OF THE NOTICE AND THE COMM UNICATION AND FURNISHING OF REASONS GO HAND-IN-HAND. THE EXPRESSI ON WITHIN A REASONABLE PERIOD OF TIME AS USED BY THE SUPREME C OURT IN GKN DRIVESHAFTS (INDIA) LTD.S CASE ( SUPRA ) CANNOT BE STRETCHED TO SUCH AN EXTENT THAT IT EXTENDS EVEN BEYOND THE SIX YEARS ST IPULATED IN SECTION 149. FOR THIS REASON ALSO, EVEN ASSUMING THAT WE OV ERLOOK ALL THAT HAS HAPPENED BETWEEN 11-5-2004, WHEN THE PETITIONER SOU GHT THE REASONS, AND 5-11-2007, WHEN THE SAID FORM ANNEXED TO THE CO UNTER-AFFIDAVIT WAS FILED IN THIS COURT, THE VALIDITY OF THE NOTICE S UNDER SECTION 148 ISSUED ON 29-3-2004 AND ANY PROCEEDINGS PURSUANT TH ERETO CANNOT BE UPHELD. 5. A PLAIN READING OF THE ABOVE EXPOSITION OF LAW A T THE END OF HONBLE JURISDICTIONAL HIGH COURT MAKE IT CLEAR THAT ISSUAN CE OF THE NOTICE AND THE COMMUNICATION AND FURNISHING OF REASONS WOULD G O HAND IN HAND. THE REASONS ARE TO BE SUPPLIED TO THE ASSESSEE BEFO RE THE EXPIRY OF PERIOD OF 6 YEARS. IF IT HAS NOT BEEN DONE THEN VAL IDITY U/S 148 COULD NOT BE UPHELD. IT IS NOT IN THE INCOME TAX PROCEEDING A LONE. IN ANY PROCEEDING SAY, CIVIL OR CRIMINAL, IF A SUMMON IS I SSUED TO THE DEFENDANT / ITA NO. 4806/DEL/10 ASSTT. YEAR 2001-02 8 RESPONDENT, IS NOT ACCOMPANIED WITH THE COPY OF PLA INT OR COMPLAINT THEN IT IS TO BE CONSTRUED THAT NO VALID SERVICE OF NOTI CE HAS BEEN EFFECTED UPON THE DEFENDANT OR THE RESPONDENTS WHICHEVER MAY BE THE CASE. THE NOTICE COULD BE SERVED AT ANY POINT OF TIME BEFORE THE EXPIRY OF 6 YEARS, IF AO HAS REASONS TO BELIEVE THAT INCOME HAS ESCAPED A SSESSMENT BUT, SUCH REASONS ARE ALSO TO BE COMMUNICATED TO THE ASS ESSEE BEFORE THE EXPIRY OF THE LIMITATION OTHERWISE VALIDITY OF SUCH NOTICE COULD NOT BE SUSTAINABLE. BEING A SUBORDINATE AUTHORITY TO THE H ONBLE HIGH COURT, WE ARE BOUND TO FOLLOW THE AUTHORITATIVE EXPOSITION OF LAW AT THE END OF HONBLE HIGH COURT . IN VIEW OF THE ABOVE DISCUSSIO N, WE ALLOW GROUND NO. 2 OF THE ASSESSEE WHEREIN HE HAS PLEADED THAT N OTICE U/S 148 HAS NOT BEEN SERVED WITHIN THE PERIOD OF LIMITATION UPO N THE ASSESSEE. THE ASSESSMENT IS NOT SUSTAINABLE. IT IS QUASHED. 6. SINCE ON THE STRENGTH OF HONBLE DELHI HIGH COUR TS DECISION, WE HAVE HELD THAT A VALID SERVICE OF NOTICE HAS NOT BE EN EFFECTED UPON THE ASSESSEE AND THE ASSTT. ORDER IS NOT SUSTAINABLE, W E DO NOT DEEM IT NECESSARY TO EXAMINE THE OTHER ISSUES, WHETHER REOP ENING IS JUSTIFIED OR NOT. IN OTHER WORDS WHETHER AO HAS REASONS TO BELI EVE THAT INCOME HAS ESCAPED ASSESSMENT OR NOT. WE ALSO DO NOT DEEM IT N ECESSARY TO EXAMINE WHETHER ASSESSEE HAS ESTABLISHED THAT HE HA S RECEIVED ITA NO. 4806/DEL/10 ASSTT. YEAR 2001-02 9 GENUINE GIFTS OR NOT. BOTH THESE ISSUES ARE ACADEMI C IN VIEW OF OUR FINDING ON GROUND NO. 2 TAKEN BY THE ASSESSEE. 7. IN THE RESULT ,THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JANUARY, 2011. SD/- [SHAMIM YAHYA] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14 TH JANUARY, 2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BEN CHES