Glosil Leasing & Finance (P) Ltd., Ghaziabad V. ITO, New Delhi

ITA 4912/DEL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8073 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 13-04-2016
• Assessment Year: 2000-2001
• Appeal Filed On: 17-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Accommodation entries; Reassessment proceedings
• Section: 142(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 4912/DEL/2012 AY: 20 00-2001 GLOSIL LEASING & FINANCE (P) LTD., VS INC OME TAX OFFICER, C/O AKHILESH KUMAR, ADVOCATE, WARD 12(1), CHAMBER NO. 206-207, ANSAL, NEW DELHI. SATYAM, RDC RAJ NAGAR, GHAZIABAD. (PAN: AAACG3210F) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH KUMAR, ADV. RESPONDENT BY : SHRI T. VASANTHAN, SR. DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THE PRESENT APPEAL ARISES FROM THE ORDER OF THE LD. CIT (A)- XVIII, NEW DELHI PASSED ON 22.06.2012 FOR ASSESSMEN T YEAR 2000-01. THE ASSESSEE HAS PREFERRED AS MANY AS FIV E GROUNDS OF APPEAL BUT THE MAIN GRIEVANCE OF THE ASSESSEE IS CO NTAINED IN GROUND NO. 2 WHICH READS AS UNDER:- BECAUSE THE LD. CIT (A) ERRED IN UPHOLDING THE VALIDITY OF SERVICE OF NOTICE U/S 148 WHICH WAS NEV ER SERVED UPON THE ASSESSEE, HENCE PROCEEDINGS OF REASSESSMENT ARE VOID AB INITIO. 2. THE MAIN CONTROVERSY INVOLVED IN THE PRESENT APP EAL RELATES TO THE SERVICE OF NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 I.T.A. NO. 4912/DEL/2012 ASSESSMENT YEAR 2000-2001 2 (HEREINAFTER CALLED THE ACT). IT IS SEEN THAT TH E RETURN OF INCOME WAS FILED ON 9.11.2000 AND THE SAME WAS PROCESSED U /S 143(1) OF THE ACT AT THE RETURNED INCOME. SUBSEQUENTLY, REAS SESSMENT PROCEEDINGS WERE INITIATED IN 2007 ON RECEIPT OF IN FORMATION FROM DIT (INV), NEW DELHI THAT THE ASSESSEE COMPANY WAS IN RECEIPT OF ACCOMMODATION ENTRIES TOTALLING TO RS. 5.00 LACS. THE CHRONOLOGY OF EVENTS HAS BEEN NARRATED IN PAGE 1 AND 2 OF THE ASSESSMENT ORDER AND THE SAME IS BEING REPRODUCED FOR READY RE FERENCE AS UNDER:- THE ASSESSEE FILED RETURN DECLARING AN INCOME OF RS.5,250/- ON 9.11.2000 WHICH WAS PROCESSED U/S 143(1) OF THE ACT. AN INFORMATION WAS RECEIVED FROM DIT (LNV.), NEW DELHI VIDE LETTERS NO, DIT (LNV.)-1/200 6- 07/AE/1322 & 1536 DATED 31.01.2007 AND 5.2.2007 RESPECTIVELY THAT THE ASSESSEE COMPANY IS IN RECEIP T OF ACCOMMODATION ENTRIES TOTALING TO RS.5,00,000/-. ACCORDINGLY, NOTICE U/S 148 OF THE ACT DATED 28,03. 2007 WAS ISSUED AND SENT THROUGH REGD. POST ON 29 03.200 7 AS WELL AS SERVED PERSONALLY ON THE ADDRESS MENTION ED IN THE RETURN OF INCOME VIZ. 82-D, DDA FLATS. JHILM IL COLONY, VIVEK VIHAR, DELHI AND E-73, JASWANT MARG, SANGAM VIHAR, DELHI. IN COMPLIANCE THERETO, NEITHER ANY RETURN OF INCOME HAD BEEN FILED NOR ANY REPLY MADE. A QUESTIONNAIRE ALONG WITH NOTICE U/S 142(1) & 143(2) OF THE ACT DATED 10.8.2007 WAS ISSUED FIXING THE CASE FOR HEARING ON 20.8.2007 BUT THE SAME WERE RECEIVED BAC K UNSERVED WITH THE POSTAL REMARKS NO SUCH FIRM AT T HE GIVEN ADDRESS. A LETTER DATED 14.9.07 WAS ISSUED F IXING THE NEXT DATE OF HEARING ON 21.09.2007 BUT THE SAME ALSO REMAINED UNCOMPLIED WITH. UPON QUERY THROUGH AST, IT WAS GATHERED THAT THE ASSESSEES LATEST ADD RESS IS G-11, PALIKA PALACE, PANCHKUIAN ROAD, NEW DELHI. I.T.A. NO. 4912/DEL/2012 ASSESSMENT YEAR 2000-2001 3 ACCORDINGLY, A SHOW CAUSE LETTER DATED 12.10.07 WAS ISSUED AND SENT TO THE LATEST ADDRESS, FIXING THE C ASE FOR HEARING ON 24.10.07 BUT THE SAME ALSO REMAINED UNCOMPLIED WITH. A FINAL OPPORTUNITY WAS PROVIDED T O THE ASSESSEE VIDE THIS OFFICE LETTER DATED 13.11.2007 T HEREBY FIXING THE CASE FOR HEARING ON 22.11.07 WHICH WAS SERVED THROUGH AFFIXTURE AT THE LAST KNOWN ADDRESS AS PER INCOME TAX RETURN. ON 22.11.07 AGAIN NEITHER ANYBODY ATTENDED NOR ANY WRITTEN REPLY HAS BEEN FIL ED. SINCE MORE THAN SUFFICIENT OPPORTUNITIES HAVE BEEN PROVIDED AND THE ASSESSEE WAS ALSO AWARE OF THE PROCEEDINGS AND THE ASSESSEE HAS CHOSEN NOT TO COMP LY WITH THE PROCEEDINGS, I AM LEFT WITH NO OTHER ALTER NATIVE BUT TO COMPLETE THE PROCEEDINGS EX-PARTE ON MERITS TO THE BEST OF MY JUDGMENT ON THE BASIS OF THE INFORMATION AVAILABLE ON RECORD. 3. IT IS THE ASSESSEES CONTENTION THAT THE NOTICE DATED 28.03.2007 ISSUED U/S 148 OF THE ACT (PLACED AT PAG E 5 OF THE PAPER BOOK) WAS NOT THE CORRECT ADDRESS OF THE ASSE SSEE. THE LD. AR SUBMITTED THAT THE SAID NOTICE HAS BEEN ISSUED A T THE ADDRESS E-73, JASWANT MARG, SANGAM VIHAR, NEW DELHI AND IS ALLEGED TO HAVE BEEN RECEIVED BY ONE MS. SUMAN LATA. HE SUBMI TTED THAT THE CORRECT ADDRESS OF THE ASSESSEE COMPANY WAS G-1 1, PALIKA PALACE, PANCHKUIAN ROAD, NEW DELHI WHICH WAS VERY M UCH AVAILABLE ON THE RECORD OF THE DEPARTMENT AS WAS EV IDENT FROM THE ADDRESS PROVIDED IN THE RETURNS OF INCOME FOR ASSES SMENT YEAR 2003-04 FILED ON 30.10.2003, ASSESSMENT YEAR 2004-0 5 FILED ON 30.07.2004, ASSESSMENT YEAR 2005-06 FILED ON 26.10. 2005 AND ASSESSMENT YEAR 2006-07 FILED ON 07.11.2006 I.E. ON DATES WELL I.T.A. NO. 4912/DEL/2012 ASSESSMENT YEAR 2000-2001 4 BEFORE THE ISSUE OF NOTICE U/S 148 OF THE ACT. THE LD. AR FURTHER SUBMITTED THAT MS. SUMAN LATA WAS A PERSON UNKNOWN TO THE ASSESSEE COMPANY AS SHE WAS NEITHER AN EMPLOYEE NOR ANY MANAGER/DIRECTOR OF THE COMPANY NOR A PERSON KNOWN TO ANY DIRECTOR ETC. OF THE COMPANY AND, THEREFORE, THE SE RVICE OF NOTICE TO HER, AS CLAIMED BY THE DEPARTMENT, WAS NOT A VAL ID SERVICE OF NOTICE ON THE ASSESSEE COMPANY. THE LD. AR RELIED ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CAS E OF PR.CIT-1 VS ATLANTA CAPITAL PVT. LTD. IN I.T.A. NO. 665/2015 FO R THE PROPOSITION THAT REASSESSMENT PROCEEDINGS WITHOUT P ROPER SERVICE OF NOTICE U/S 148 OF THE ACT WOULD BE VOID AB INITIO AND SUBMITTED THAT THE ENTIRE RE-ASSESSSMENT PROCEEDINGS IN THE A SSESSEES CASE WERE INVALID AND LIABLE TO BE QUASHED. 4. THE LD. DR, IN RESPONSE, SUBMITTED THAT THE DEPA RTMENT HAD ISSUED NOTICE AT THE ADDRESS PROVIDED IN THE RE TURN OF INCOME FOR THE YEAR UNDER APPEAL AND, THEREFORE, THE ISSUA NCE OF NOTICE WAS AT THE CORRECT ADDRESS. HE ALSO SUBMITTED THAT SINCE THE ASSESSEE HAD NOT EFFECTED ANY CHANGE IN THE PAN DAT A BASE, THE ADDRESS PROVIDED IN THE RETURN OF INCOME SHOULD BE TAKEN AS THE CORRECT ADDRESS AND HENCE THE SERVICE OF NOTICE WAS VALID AND SO WERE THE PROCEEDINGS U/S 148 OF THE ACT. HE ALSO S UBMITTED THAT I.T.A. NO. 4912/DEL/2012 ASSESSMENT YEAR 2000-2001 5 THIS KIND OF DEFECT, IF AT ALL, CANNOT BE USED TO V ITIATE THE ENTIRE REASSESSMENT PROCEEDINGS AND SUBMITTED THAT THE ORD ER OF THE LD. CIT (A) DOES NOT CALL FOR ANY INTERFERENCE. 5. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO P ERUSED THE RECORDS. IT IS MENTIONED IN THE ASSESSMENT ORDER TH AT NOTICE U/S 148 WAS ISSUED AND SERVED PERSONALLY ON THE ADDRESS MENTIONED IN THE RETURN OF INCOME VIZ. 82-D, DDA FLATS, JHILM IL COLONY, VIVEK VIHAR, NEW DELHI AND E-73, JASWANT MARG, SANG AM VIHAR, DELHI. HOWEVER, IT IS NOT BORNE OUT FROM THE RECOR DS AS TO WHOM AND WHEN THE SAID NOTICE WAS SERVED. THE DEPARTMENT HAS CLAIMED THAT THE NOTICE WAS SERVED TO MS. SUMAN LAT A BUT HOW THE SAID MS. SUMAN LATA HAD THE AUTHORITY TO RECEIV E NOTICES ON BEHALF OF THE ASSESSEE COMPANY COULD NOT BE SUBSTAN TIATED BY THE DEPARTMENT. IT IS OUR CONSIDERED VIEW THAT WHENEVER A RE- ASSESSMENT IS SOUGHT TO BE MADE U/S 147, ISSUING AN D SERVING OF A VALID NOTICE U/S 148 IS A MANDATORY PRECONDITION. THE ONUS LIES ON THE REVENUE AUTHORITIES TO PROVE THAT THE NOTICE WAS SERVED ON THE ASSESSEE WITHIN THE STIPULATED PERIOD. IT IS ON LY IF THE SAID NOTICE IS SERVED ON THE ASSESSEE THAT THE ASSESSING OFFICER WOULD BE JUSTIFIED IN TAKING UP PROCEEDINGS AGAINST THE A SSESSEE. IF NO NOTICE IS ISSUED, OR IF THE NOTICE ISSUED IS SHOWN TO BE INVALID, I.T.A. NO. 4912/DEL/2012 ASSESSMENT YEAR 2000-2001 6 THEN THE PROCEEDINGS TAKEN UP BY THE ASSESSING OFFI CER WOULD BE ILLEGAL AND VOID. IN THIS CASE, IT IS VERY MUCH APP ARENT THAT THE NOTICE U/S 148 HAD NOT BEEN SERVED ON THE ASSESSEE. THE ASSESSING OFFICER CAN ASSUME JURISDICTION TO COMPLE TE THE ASSESSMENT ONLY AFTER VALID AND LEGAL SERVICE OF TH E NOTICE IN ACCORDANCE WITH LAW. UNLESS SUCH NOTICE HAS DULY BE EN SERVED, THE ASSESSING OFFICER CANNOT BE SAID TO HAVE BEEN C LOTHED WITH THE JURISDICTION TO PASS THE ASSESSMENT ORDER. THE MANDATE OF SECTION 148 IS THAT NOTICE SHOULD BE SERVED ON THE ASSESSEE, BY PRESCRIBED MODE OF SERVICE, WHICH HAS UNDENIABLY NO T BEEN CARRIED OUT IN THIS CASE. IN THE ABSENCE OF A VALID SERVICE OF NOTICE U/S 148, THE REASSESSMENT ORDER PASSED BY THE ASSES SING OFFICER IS ILLEGAL AND VOID AB INITIO . THE HON'BLE DELHI HIGH COURT IN CIT VS CHETAN GUPTA (I.T.A. NO. 72 OF 2014) HAS DISCUSS ED THE ENTIRE LAW AND SUMMARISED THE LEGAL POSITION IN ITS JUDGEM ENT DATED 15 TH SEPTEMBER, 2015 AS UNDER:- (I) UNDER SECTION 148 OF THE ACT, THE ISSUE OF NOT ICE TO THE ASSESSEE AND SERVICE OF SUCH NOTICE UPON THE ASSESS EE ARE JURISDICTIONAL REQUIREMENTS THAT MUST BE MANDAT ORILY COMPLIED WITH. THEY ARE NOT MERE PROCEDURAL REQUIREMENTS. (II) FOR THE AO TO EXERCISE JURISDICTION TO REOPEN AN ASSESSMENT, NOTICE UNDER SECTION 148 (1) HAS TO BE MANDATORILY ISSUED TO THE ASSESSEE. FURTHER THE AO CANNOT COMPLETE THE REASSESSMENT WITHOUT SERVICE OF THE I.T.A. NO. 4912/DEL/2012 ASSESSMENT YEAR 2000-2001 7 NOTICE SO ISSUED UPON THE ASSESSEE IN ACCORDANCE WI TH SECTION 282 (1) OF THE ACT READ WITH ORDER V RULE 1 2 CPC AND ORDER III RULE 6 CPC. (III) ALTHOUGH THERE IS A CHANGE IN THE SCHEME OF S ECTIONS 147, 148 AND 149 OF THE ACT FROM THE CORRESPONDING SECTION 34 OF THE 1922 ACT, THE LEGAL REQUIREMENT O F SERVICE OF NOTICE UPON THE ASSESSEE IN TERMS OF SEC TION 148 READ WITH SECTION 282 (1) AND SECTION 153 (2) O F THE ACT IS A JURISDICTIONAL PRE-CONDITION TO FINALIZING THE REASSESSMENT. (IV) THE ONUS IS ON THE REVENUE TO SHOW THAT PROPER SERVICE OF NOTICE HAS BEEN EFFECTED UNDER SECTION 1 48 OF THE ACT ON THE ASSESSEE OR AN AGENT DULY EMPOWERED BY HIM TO ACCEPT NOTICES ON HIS BEHALF. IN THE PRESENT CASE, THE REVENUE HAS FAILED TO DISCHARGE THAT ONUS. (V) THE MERE FACT THAT AN ASSESSEE OR SOME OTHER PE RSON ON HIS BEHALF NOT DULY AUTHORISED PARTICIPATED IN T HE REASSESSMENT PROCEEDINGS AFTER COMING TO KNOW OF IT WILL NOT CONSTITUTE A WAIVER OF THE REQUIREMENT OF EFFEC TING PROPER SERVICE OF NOTICE ON THE ASSESSEE UNDER SECT ION 148 OF THE ACT. (VI) REASSESSMENT PROCEEDINGS FINALISED BY AN AO WI THOUT EFFECTING PROPER SERVICE OF NOTICE ON THE ASSESSEE UNDER SECTION 148 (1) OF THE ACT ARE INVALID AND LIABLE T O BE QUASHED. (VII) SECTION 292 BB IS PROSPECTIVE. IN ANY EVENT T HE ASSESSEE IN THE PRESENT CASE, HAVING RAISED AN OBJE CTION REGARDING THE FAILURE BY THE REVENUE TO EFFECT SERV ICE OF NOTICE UPON HIM, THE MAIN PART OF SECTION 292 BB IS NOT ATTRACTED. 6. ON FACTS OF THE CASE AND RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN CIT VS CHET AN GUPTA (SUPRA), WE HOLD THAT IN ABSENCE OF VALID SERVICE O F NOTICE U/S 148 OF THE ACT, THE RE-ASSESSMENT PROCEEDINGS ARE VOID AB INITIO . I.T.A. NO. 4912/DEL/2012 ASSESSMENT YEAR 2000-2001 8 GROUND NO. 2 IS ALLOWED AND OTHER GROUNDS ARE DISMI SSED AS BEING IN FRUCTUOUS. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL 2016. SD/- SD/- (J.S. REDDY) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: THE 27 TH OF APRIL, 2016 GS COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR