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ITA 5751/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6903 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 21-06-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 28-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V R SONBHADRA
• Keywords: Reopening of assessment; Period of limitation; Tangible material; Reassessment proceedings
• Section: 142(1); 153A; 147; 68; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 5751 /DEL /2013 ASSESSMENT YEAR: 2003 - 04 M/S. PRINT - FAB (INDIA) P. LTD., 46/8, 1 ST FLOOR, EAST PATEL NAGAR, NEW DELHI VS. INCOME TAX OFFICER, WARD 14(4), NEW DELHI GIR/PAN : AACCP7299M (APPELLANT) (RESPONDENT) APPELLANT BY SH. SAT Y EN SETHI, ADV. RESPONDENT BY SH. V. R. SONBHADRA, SR.DR DATE OF HEARING 21.06.2016 DATE OF PRONOUNCEMENT 27.07.2016 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 12/08/2013 OF LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) - XVII, NEW DELHI , FOR ASSESSMENT YEAR 2003 - 04 , RAISING FOLLOWING GROUNDS, WHICH ARE REVISED ON 22.02.2016: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME - TAX (APPEALS) - XVII, NEW DELHI [BRIEFLY 'THE CIT(A)'] HAS ERRED IN UPHOLDING THE REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX AC T, 1961 (BRIEFLY 'THE ACT'). 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN NOT APPRECIATING THAT THE ASSESSMENT WAS NOT VALIDLY REOPENED, FOR NO VALID NOTICE 2 ITA NO. 5751/DEL/2013 AY: 2003 - 04 UNDER SECTION 148 DATED 25.3.2010 WAS ISSUED AND NOTICE SERVED THROUGH AFFIXTURE WAS ALSO INVALID. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN NOT APPRECIATING THAT BEFORE REOPENING THE ASSESSMENT , THE ASSESSING OFFICER DID NOT APPLY MIND TO THE INFORMATION RECEIVED FROM INV ESTIGATION WING AND THAT THERE WAS NO TANGIBLE MATERIAL TO REOPEN THE ASSESSMENT. 4. WITHOUT PREJUDICE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE REASSESSMENT DATED 23.12.2010 WAS BAD IN LAW AS NO NOTICE UNDER SECTION 143(2) OF THE ACT WAS IS SUED BEFORE COMPLETING THE ASSESSMENT UNDER SECTION 147 /143(3) OF THE ACT. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN UPHOLDING THE ADDITION OF RS. 17,52,000/ - UNDER SECTION 68 OF THE ACT, AS BOGUS ACCOMMODATION EN TRY. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY ANY OF THE GROUND EITHER AT OR BEFORE THE HEARING OF THE APPEAL. 2. T HE FACTS IN BRIEF OF THE CASE ARE THAT CONSEQUENT TO THE R ECEIPT OF INFORMATION FROM THE DIRECTOR OF INCOME TAX (I NVESTIGATION), NEW DELHI , THAT THE ASSESSEE RECEIVED AN ACCOMMODATION ENTRY OF RS. 17.52 LAKHS IN PREVIOUS YEAR CORRESPONDING TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER AFTER RECORDING REASONS TO BELIEVE THAT INCOME ESCAPED TAXATION, ISSUED N OTICE UNDER SECTION 148 OF THE INCOME T AX ACT, 1961 (FOR SHORT THE ACT ) ON 25/03/2010. THE OBJECTIONS FILED BY LEARNED A UTHORISED R EPRESENTATIVE OF THE ASSESSEE WERE SETTLED BY VIDE LETTER DATED 04/10/2010 OF THE ASSESSING OFFICER. THE ASSESSEE FILED RETURN OF INCOME IN RESPONSE TO THE NOTICE UNDER SECTI ON 148 OF THE ACT ON 09/10/2010 . THE ASSESSING OFFICER NOTED IN THE ASSESSMENT 3 ITA NO. 5751/DEL/2013 AY: 2003 - 04 ORDER THAT THE REASONS TO BELIEVE WERE ALREADY SUPPLIED TO THE ASSESSEE ALONG - WITH NOTICE UNDER SECTION 148 OF THE AC T. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE ATTENDED THE CASE FROM TIME TO TIME AND FILE D THE DETAILS AS REQUIRED. THE ASSESSING OFFICER OBSERVED THAT THE PARTIES FROM WHOM THE SHARE APPLICATION MONEY RECEIVED WERE NOT PROD UCED BEFORE HIM AND, THEREFORE , THE ASSESSEE FAILED TO DISCHARGE ITS ON US IN RESPECT OF IDENTIFICATION, CREDITWORTHINESS OF THE SHARE APPLICANT AND GENUINENESS OF THE TRANSACTION. IN VIEW OF THE OBSERVATIONS, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY MAKING ADDITION O F RS. 17.52 LAKHS IN TERMS OF SECTION 68 OF THE ACT. BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS), THE ASSESSEE CHALLENGED THE JURISDICTION ASSUMED UNDER SECTION 147 OF THE ACT ON THE GROUND THAT NOTICE UNDER SECTION 148 OF THE ACT WAS SERVED BE YOND THE PERIOD OF LIMITATION STIPULATED UNDER THE ACT AND ALSO CHALLENGED THE MERIT OF THE ADDITIO N. THE ASSESSEE ALSO RAISED AN ADDITIONAL GROUND THAT NO NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED BEFORE COMPLETION OF THE RE - ASSESSMENT UNDER SECTI ON 147 OF THE ACT AND , THUS , RE - ASSESSMENT PROCEEDINGS WERE NOT VALID. HOWEVER , THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) OBSERVED THAT FORMATION OF THE BELIEF BY THE ASSESSING OFFICER IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION AND IT WAS NOT NECESSARY FOR THE ASSESSING OFFICER TO CONCLUSIVELY PROVE THE ESCAPEMENT OF INCOME BEFORE INITIATING PROCEEDINGS UNDER SE CTION 147 OF THE ACT AND ACCORDINGLY HE HELD THAT THE ASSESSING OFFICER WAS CLEARLY IN HIS COMPETENCE TO 4 ITA NO. 5751/DEL/2013 AY: 2003 - 04 INVOKE THE POWERS CONTAINED IN SECTION 147 OF THE ACT TO INITIATE REASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE. IN RESPECT OF THE ADDITIONAL GR OUND CHALLENGING THE REASSESSMENT PROCEEDINGS IN ABSENCE OF ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT, THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) HELD THAT NON - IS SUE OF NOTICE UNDER SECTION 143 (2) OF THE ACT, DID NOT RENDER THE REASSESSMENT A S IN VALID. THE LD. COMMISSIONER OF INCOME T AX (A PPEALS) SUSTAINED THE ADDITION ON MERIT AS WELL. AGGRIEVED , THE ASSESSEE IS BEFORE THE TRIBUNAL RAISING THE GROUNDS OF APPEAL A S REPRODUCED ABOVE. 3. IN GROUND NO. 4 , THE ASSESSEE HAS CHALLENGED THE REASSESSME NT PROCEEDINGS ON THE GROUND THAT NO NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED BEFORE EXPIRY OF THE TIME LIMIT FOR MAKING THE REASSESSMENT. 3.1 BEFORE US, THE LEARNED AUTHORIZED R EPRESENTATIVE OF THE ASSESSEE REFERRING TO PARA 7.5 OF THE IMPUGNED ORDER, SUBMITTED THAT LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) HAS CLEARLY ADMITTED THAT NO NOTICE UNDER SECTION 143(2) WAS ISSUED BEFORE COMPLETION OF THE REASSESSMENT PROCEEDINGS. HE DRAWN OUR ATTENTION TOWARDS JUDGMENT DATED 22/ 03/2016 OF H ON BLE J URISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DELHI KALYAN SAMITI IN ITA NO. 696 TO 699/2015 WHEREIN THE REASSESSMENT PROCEEDINGS IN ABSENCE OF ISSUE OF NOTICE UNDER SECTION 143(2) ARE HELD AS INVALID. HE , ACCORDINGLY , SUBMITTED TO QU ASH THE REASSESSMENT PROCEEDINGS. 3.2 ON THE CONTRARY, THE LEARNED SENIOR D EPARTMENTAL REPRESENTATIVE RELIED ON THE AUTHORITIES BELOW. 5 ITA NO. 5751/DEL/2013 AY: 2003 - 04 3.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE CASE , THE ASSESSING OFFICER ISSUED N OTICE UNDER SECTION 148 OF THE ACT ON 25/03/ 2010, DIRECTING THE ASSESS EE TO FILE THE RETURN OF INCOME . IN RESPONSE THEREOF , THE ASSESSEE F ILED RETURN OF INCOME ON 09/10/ 2010. THEREAFTER , THE ASSESSEE ATTENDED THE OFFICE OF THE ASSESSING OFFICER AND THE ASSESSMENT WAS COMPLETED, HOWEVER , FROM THE ASSESSMENT ORDER, IT IS SEEN T HAT NO NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED . THE FACT THAT NO NOTICE UNDER SECTION 143(2) OF THE ACT W AS ISSUED BEFORE COMPLETION OF THE REASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE ACT , HAS BEEN DULY ACCEPTED BY THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS), HOWEVER , HE HELD THAT NON - ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT DID NOT RENDER T HE REASSESSMENT AS INVALID. THUS , IN OUR VIEW , THE FACT T HAT NO NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED BEFORE COMPLETION OF THE REASSESSMENT PROCEEDINGS IS NOT IN DISPUTE BETWEEN THE PARTIES. NOW , THE ONLY ISSUE IS WHETHER THE REASSESSMENT PROCE EDINGS IN ABSE NCE OF NOTICE UNDER SECTION 143 (2) OF THE ACT ARE INVALID. IN THE JUDGMENT OF CIT VS. DELHI KAL YAN SAMITI (SUPRA), THE R EVENUE CHALLENGED THE FINDINGS OF THE TRIBUNAL THAT THE ASS ESSMENT ORDER IN QUESTION HAVING BEEN PASSED WITHOUT ISSUING NO TICE U NDER SECTION 143 (2) OF THE ACT WAS IN VALID . IN THAT CASE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 29/03/2007 , HOWEVER , THE ASSESSEE OBJECTED TO T HE REOPENING OF THE ASSESSMENT . THEREAFTER , THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 142 (1) OF THE ACT TO FILE THE RETURN 6 ITA NO. 5751/DEL/2013 AY: 2003 - 04 OF INCOME AS WELL AS TO FURNISH DETAILS AS PER QUESTIONNAIRE. SUBSEQUENTLY , THE ASSESSEE FILED RETURN OF INCOME ON 19/12/2007 , HOWEVER , THE SAME WAS NOT TAKEN NOTE BY THE ASSESSING OFFICER AND HE PROCEEDED TO PASS ASSES SMENT ORDER UNDER SECTION 144 READ WITH SECTION 147 OF THE ACT , WITHOUT ISSUING ANY NOTICE UNDER SECTION 143(2) O F THE ACT. THE HON BLE J URISDICTIONAL HIGH COURT AFTER CONSIDERING EARLIER JUDGMENTS ON THE ISSUE IN DISPUTE OBSERVED THAT WHENEVER THE RETURN FILED BY THE ASSESSEE IS NOT ACCEPTED AT ITS FACE, IT IS MANDATORY FOR THE ASSESSING OFFICER TO ISSUE NOTICE UNDER SECTION 143(2) OF THE ACT FOR P ROCEEDING FURTHER. THE HON BLE C OURT DID NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE TRIBUNAL AND THE AP PEAL OF THE R EVENUE WAS DISMISSED. THE RELEVANT OBSERVATIONS OF THE HON BLE HIGH COURT ARE AS UNDER: 9. IT IS NOW WELL ESTABLISHED THAT IF THE AO DOES NOT ACCEPT THE RETURN FILED BY THE ASSESSEE ON ITS FACE AND HE IS REQUIRED TO ISSUE A NOTICE UNDER SECTI ON 143(2) OF THE ACT AND PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE NECESSARY MATERIAL IN SUPPORT OF HIS RETURN. MR SHIVPURI HAD ARGUED THAT A NOTICE UNDER SECTION 143(2) WAS REQUIRED TO BE ISSUED ONLY IN CASES WHERE THE AO CONSIDERS IT NECESSAR Y OR EXPEDIENT TO DO SO AND IN CASES WHERE THE ASSESSEE HAD NOT FILED ITS RESPONSE TO THE NOTICE UNDER SECTION 142(1) IT WAS NOT NECESSARY FOR THE AO TO ISSUE SUCH NOTICE UNDER SECTION 143(2). IN OUR VIEW, THIS CONTENTION IS BEREFT OF ANY MERITS AND COMPLE TELY IGNORES THE SCHEME OF THE MACHINERY PROVISIONS FOR ASSESSMENT UNDER THE ACT. IT IS NOW WELL SETTLED BY A NUMBER OF DECISIONS (SEE: PR. CIT SILVER LINE AND 283 CTR 148 (DEL), ACIT V. HOTEL BLUE MOON: 321ITR 362 (SC) AND CIT V. PAWANGUPTA: 318 ITR 322 ( DEL) ) THAT WHENEVER THE RETURN FILED BY AN ASSESSEE IS NOT ACCEPTED AT ITS FACE, IT IS MANDATORY FOR THE AO HAS TO ISSUE A NOTICE UNDER SECTION 143(2) OF THE ACT FOR 7 ITA NO. 5751/DEL/2013 AY: 2003 - 04 PROCEEDING FURTHER. IT IS THUS NOT OPEN FOR THE AO TO NOT ISSUE A NOTICE UNDER SECTION 143 (2) OF THE ACT AND PROCEED DIRECTLY UNDER SECTION 144 OF THE ACT BY REJECTING THE RETURN FILED BY THE ASSESSEE. 10. THE DECISION OF THIS COURT IN ASHOK CHADDHA (SUPRA) WAS RENDERED IN THE CONTEXT OF SECTION 153A OF THE ACT AND IN OUR VIEW, THE SAME IS NOT APPLICABLE IN THE PRESENT CASE. THIS COURT IN SEVERAL CASES PERTAINING TO PROCEEDINGS UNDER SECTION 147 HAS HELD THAT A NOTICE UNDER SECTION 143(2) IS MANDATORY. [SEE: ALPINE ELECTRONICS ASIA (P.) LTD. V. DGIT: 341 ITR 247 (DEL), DIT V. SOCIETY FOR WORLDW IDE INTERBANK FINANCIAL TELECOMMUNICATION: 323 ITR 249 (DEL), PR. CIT V SHRI JAI SHIV SHANKAR TRADERS PVT. LTD.: 282 CTR 435 (DEL) AND CIT V. RAJEEV 336 ITR (ALL) }. IT IS ALSO RELEVANT TO NOTE THAT CLAUSE (B) OF THE PROVISO TO SECTION 148(1) OF THE ACT ALS O SPECIFICALLY EXTENDS THE PERIOD FOR ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT. 3.4 THUS , THE HON BLE HIGH COURT IN THE ABOVE CASE HAS CLEARLY HELD THAT IN REASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE ACT , ISS UING NOTICE UNDER SECTION 143(2 ) OF THE ACT IS MANDATORY AND , THEREFORE , IN ABSENCE OF WHICH , THE REASSESSMENT PROCEEDINGS ARE INVALID. THEREFORE , RESPECTFULLY FOLLOWING THE FINDINGS OF THE HON BLE HIGH COURT IN THE CASE OF CIT VS. DELHI KALYAN SAMITI (SUPRA), WE HOLD THAT IN ABSEN CE OF ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT BEFORE COMPLETION OF THE REASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE, THE REASSESSMENT PROCEEDINGS ARE HELD AS INVALID AND NOT IN ACCORDANCE WITH LAW. ACCORDINGLY, THE GROUND OF THE APPEAL IS A LLOWED. 8 ITA NO. 5751/DEL/2013 AY: 2003 - 04 4. SINCE THE REASSESSMENT PROCEEDINGS ITSELF HAVE BEEN HELD AS INVALID BY US, OTHER GROUNDS OF THE APPEAL CHALLENGING THE JURISDICTION ASSUMED UNDER SECTION 147 OF THE ACT AS WELL AS CHALLENGING THE ADDITIONS ON MERIT ARE RENDERED ACADEMIC ONLY AN D, THEREFORE, SAME ARE NOT ADJUDICATED. 4. IN THE RESULT , THE APPEAL OF THE ASSESSEE IS ALLOWED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 27 TH JULY , 2016 . SD/ - SD/ - ( DIVA SINGH ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 TH JULY , 2016 . LAPTOP / - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI