Surendra Kumar Gupta , Lucknow V. Income Tax Officer-IV(4) , Lucknow

ITA 577/LKW/2012

• Counselvise Citation: 57723714 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 26-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Invalid notice; Period of limitation; Non compliance; Assessment record
• Section: 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.577/LKW/2012 ASSESSMENT YEAR:2008 - 09 & I.T.A. NOS.58,59&60/LKW/2013 ASSESSMENT YEAR:2008 - 09 SHRI SURENDRA KUMAR GUPTA, PROP. SHIVA ENTERPRISES, PLOT NO. 2, MALVIYA NAGAR, AISHBAGH, LUCKNOW. PAN:AEZPG4640M VS. INCOME TAX OFFICER - IV(4), LUCKNOW. (APPELLANT) (RESPONDENT) O R D E R PER SUNIL KUMAR YADAV: THESE APPEALS ARE PREFERRED BY THE ASSESSEE AGAINST THE RESPECTIVE ORDERS OF CIT(A). SINCE THESE APPEALS WERE HEARD TOGETHER, THE SAME ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. WE HOWEVER, PREFER TO ADJUDICATE THEM ONE AFTER THE OTHER. I.T.A. NO.577/LKW/2012 2. IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE ASSESSMENT ORDER BY RAISING VARIOUS GROUN DS, WHICH ARE AS UNDER: APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY SHRI Y. P. SRIVASTAVA, D.R. DATE OF HEARING 03/03/2014 DATE OF PRONOUNCEMENT 1 1 / 0 4 / 2 0 1 4 2 1. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE NOTICE U/S 143(2)(II) READ WITH THE PROVISO ISSUED ON 29/09/2009 SENT BY SPEED POST WAS DULY SERVED ON OR BEFORE 30/09/2009, WHICH ON VERIFICATION OF FACTS IS INCORRECT FOR THE REASON THAT THE NOTICE SHOULD NOT MERELY BE ISSUED BEFORE 30/09/2009 BUT SHOULD ALSO BE SERVED BEFORE 30/09/2009, HENCE THE ASSESSMENT FRAMED IS BAD IN LAW. 2. BECAUSE NOTICE U/S 143(2)(II) DATED 29.09,2009 HAVING NOT BEEN SERVED UPON T HE ASSESSEE BEFORE 30.09.2009, THE SERVICE OF WHICH HAS BEEN DENIED BY THE ASSESSEE, THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT MERE ISSUE OF NOTICE WOULD SUFFICE, WHICH IS AGAINST THE PROVISIONS OF SECTION 143(2)(II) OF THE ACT. 3. BECAUSE ON A PROPER READING OF THE PROVISIONS OF SEC. 143(2)(II), NOTICE U/S 143(2) HAS TO BE SERVED ON THE ASSESSEE BEFORE THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED AND ON READING OF SEC. 292BB WITH I TS PROVISO, PURSUANT TO THE OBJECTIONS RAISED BY THE ASSESSEE, THE AO WAS DUTY BOUND TO DEMONSTRATE THAT THE NOTICE ISSUED U/S 143(2)(II) HAS BEEN DULY ' SERVED ' ON THE ASSESSEE BEFORE THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR. THE ASSESSM ENT FRAMED ON THE BASIS OF AN INVALID NOTICE IS INVALID. 4. BECAUSE THERE BEING NEITHER ANY REFUSAL NOR DENIAL BY THE ASSESSEE TO ACCEPT ANY STATUTORY NOTICE, THE RECOURSE TO SERVE THE NOTICE THRU AFFIXTURE IN THE PRESENT CIRCUMSTANCES IS BOT H ILLEGAL UNWARRANTED AND AGAINST THE PROVISIONS OF LAW. 5. BECAUSE THE LD. CIT(A) HAS FAILED TO APPRECIATE AND CONSIDER THE WRITTEN SUBMISSIONS AS FILED AND HAS ARBITRARILY HELD THAT THE NOTICE U/S. 1 43(2)(II) HAD BEEN SERVED, WITHOUT BRINGING NECESSARY EVIDENCE ON RECORD, AS CONTENTED BY THE APPELLANT. 6. BECAUSE THE ASSESSMENT FRAMED U/S 144 OF THE I .T. ACT IS CONTRARY TO FACTS, BAD IN LAW, FOR THE REASONS THAT WITHOUT PREJUDICE, THE NOTICE U/S 143(2) (II) HAS BEEN ISSUED AT THE BEHEST OF THE LD. CHIEF COMMISSIONER OF INCOME - TAX AND NOT WHERE THE AO HAS FELT IT WAS 3 ''NECESSARY' OR 'EXPEDIENT' TO DO SO. THE ISSUE OF NOTICE AT THE BEHEST OF HIGHER AUTHORITY IS CONTRARY TO THE PROVISIONS OF L AW BEING ILLEGAL. 7. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE CASE OF THE ASSESSEE HAD BEEN SELECTED FOR SCRUTINY MANUALLY WHEREIN THE RECORDING OF THE REASONS FOR SELECTION OF RETURN IS SINE - QUA - NON AND WHICH REASONS SHOULD OUGHT TO BE PROVIDED TO THE APPELLANT, INCORPORATED IN THE ORDER, SPEAKING REASONS SPECIFICALLY POINTING TO THE ESCAPEMENT/ UNDERASSESSMENT OF INCOME. 8. BECAUSE WITHOUT PREJUDICE, THE REASONS FOR WHICH THE CASE HAS BEEN SELECTED DO NOT SUGGEST UNDERASSESSMENT OF INCOME, FOR THE REASONS IF PURCHASES HAVE NOT BEEN FULLY DISCLOSED BY THE APPELLANT WHEN INCLUDED THE TRADING ACCOUNT WOULD HAVE TO BE RECASTED WHICH WOULD RESULT IN NET LOSS, AND THERE WOULD BE NO CASE OF UNDERASSESSMENT. 9. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING ADDITION OF RS.3,48,189 / - ON ACCOUNT OF UNDISCLOSED PURCHASES AND RS.9,059/ - ON ACCOUNT OF GROSS PROFIT ON THE SAME, WITHOUT APPRECIATING THAT THE ENTIRE SALES HAVING BEING INCORPORATED IN THE BOOKS THERE WOULD BE NO CASE O F UNDERASSESSMENT RATHER WHEN THE TRADING ACCOUNT IS RECASTED THERE WOULD BE LOSS, OR THE EFFECT OF THE SAME WOULD BE TAX NEUTRAL. 10. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE DISALLOWANCE AND THE ADDITIONS MADE BY THE AO AS UNDE R: (A) SUNDRY CREDITORS @20% RS.47,337 / - (B) EXPENSES ON ADHOC BASIS RS.22,806 / - WHICH ALL EXPENSES HAVING BEING INCURRED FOR THE PURPOSES OF BUSINESS AND BEING ALLOWABLE, THERE WAS NEITHER ANY JUSTIFICATION NOR ANY CAUSE FOR MAKING ADHOC DISALLOWANCES, E SPECIALLY WHEN THE ACCOUNTS WERE TAX AUDITED AND THERE WAS NO QUALIFYING REMARKS F ROM THE AUDITORS. 4 11. BECAUSE CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT ALLOWING DEDUCTION/REBATE OF RS.1,00,000 / - UNDER CHAPTER VIA AS CLAIMED BY THE APPELLANT. 3. THE MAIN THRUST OF THE ARGUMENT OF THE ASSESSEE IS THAT NOTICE U/S 143(2) OF THE ACT W AS NOT AT ALL SERVED UPON THE ASSESSEE, THEREFORE, THE ASSESSMENT IS ILLEGAL, INVALID AND DESERVES TO BE QUASHED. THE LEARNED COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE ASSESSMENT ORDER IN WHICH THE ASSESSING OFFICER HAS MENTIONED THAT NOTI CE U/S 143(2) WAS ISSUED ON 29/09/2009 THROUGH SPEED POST AND IT WAS SERVED BY AFFIXTURE ALSO ON 30/09/2009 WHEREAS THE FACTS ARE OTHERWISE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE FACT THAT THE ASSESSEE HAS APPLIED TO THE PO STAL AUTHORITIES TO VERIFY THE ISSUANCE OF NOTICE THROUGH SPEED POST BUT THE POSTAL AUTHORITIES DID NOT CONFIRM THE ISSUANCE OF NOTICE THROUGH SPEED POST TO THE ASSESSEE AS THE REQUEST WAS MADE AFTER 18 MONTHS. THE LEARNED COUNSEL FOR THE ASSESSEE HAS FIL ED A COPY OF THE ORDER SHEET ALONG WITH ITS TRANSCRIPTED COPY WITH THE SUBMISSION THAT THE ORDER SHEET DATED 29/09/2010 SPEAKS THAT THE CASE WAS SELECTED FOR SCRUTINY WITH THE APPROVAL OF CCIT AND NOTICE U/S 143(2) WAS ISSUED FOR 07/10/2010 WHEREAS IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS MENTIONED THAT NOTICE WAS ISSUED ON 29/09/2009. THE RETURN WAS FILED ON 29/09/2008, AS SUCH THE NOTICE U/S 143(2) WAS TO BE SERVED UPON THE ASSESSEE ON OR BEFORE 30/09/2009. BUT THE ORDER SHEET SPEAKS THAT THE D IRECTIONS FOR ISSUANCE OF NOTICE WERE ISSUED ONLY ON 29/09/2010 WHEN THE CASE WAS SELECTED FOR SCRUTINY WITH THE APPROVAL OF CCIT. THESE FACTS CLEARLY SPEAK THAT THE ASSESSING OFFICER HAS RECORDED INCORRECT FACTS IN THE ASSESSMENT ORDER AND THE NOTICE U/S 143(2) WAS ISSUED AFTER THE PERIOD OF LIMITATION PRESCRIBED U/S 143(2) OF THE ACT. SINCE THE NOTICE WA S TIME BARRED AS IT WAS NOT ISSUED WITHIN THE PERIOD PRESCRIBED IN SECTION 143(2) OF THE ACT , THE ASSESSMENT FRAMED CONSEQUENT THERETO, IS ILLEGAL, BAD AND DESERVES TO BE QUASHED. 5 4. THE LEARNED D.R., ON THE OTHER HAND, HAS PLACED HEAVY RELIANCE UPON THE ORDERS OF THE LOWER AUTHORITIES WITH THE SUBMISSION THAT THE NOTICE WAS ALSO SERVED THROUGH AFFIXTURE ON 30/09/2009. 5. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF RECORD, WE FIND THAT THE ASSESSEE HAS TA KEN A STAND OVER THE VALIDITY OF THE ASSESSMENT ON THE GROUND THAT NOTICE U/S 143(2) WAS NOT SERVED WITHIN THE PRESCRIBED PERIOD. DURING THE COURSE OF HEARING OF THE APPEAL, THE DEPARTMENT WAS ALSO DIRECTED TO PRODUCE THE ASSESSMENT RECORD BUT ASSESSMENT RECORD WAS NOT PRODUCED. THE COPIES OF THE ORDER SHEETS WERE PROVIDED TO THE DEPARTMENT BY THE LEARNED COUNSEL FOR THE ASSESSEE AND LEARNED D.R. WAS ASKED TO MAKE COMMENTS THEREON. FROM A CAREFUL PERUSAL OF THE ORDER SHEET, WE FIND THAT THE ASSESSMENT PR OCEEDINGS WERE INITIATED ON 29/09/2010 AS THE CASE WAS SELECTED FOR SCRUTINY WITH THE APPROVAL OF CCIT AND DIRECTION WAS GIVEN TO ISSUE NOTICE U/S 143(2) OF THE ACT FOR 07/10/2010. BUT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS MENTIONED THAT NOTI CE U/S 143(2) WAS SERVED ON 29/09/2009 THROUGH SPEED POST. IN ORDER TO ESTABLISH THE FACTS RECORDED IN THE ASSESSMENT ORDER, NOTHING IS PRODUCED BY THE DEPARTMENT, THEREFORE, THE PHOTOCOPY OF THE ORDER SHEET PRODUCED BEFORE US APPEARS TO BE CORRECT AND RE LIABLE. AS PER THE ORDER SHEET ENTRIES, THE NOTICE WAS ISSUED ON 29/09/2010 WHICH IS ALMOST A YEAR AFTER THE EXPIRY OF THE PERIOD OF LIMITATION. FOR THE SAKE OF REFERENCE, WE EXTRACT THE ENTRIES DATED 29/09/2010 AS UNDER: CASE SELECTED WITH THE APPROVAL OF CCIT, LUCKNOW. ISSUE NOTICE U/S 143(2) FOR 07/10/2010. 5.1 IN THE LIGHT OF THE AFORESAID ORDER SHEET ENTRY, WE ARE SURPRISED TO NOTE THAT WHEN THE CASE WAS SELECTED FOR SCRUTINY WITH THE APPROVAL OF CCIT ON 29/09/2010, HOW THE NOTICE U/S 143(2) COULD BE ISSUED ON 29/09/2009, ONE YEAR BEFORE, AS RECORDED BY THE ASSESSING OFFICER IN THE 6 ASSESSMENT ORDER. THEREFORE, WE ARE OF THE VIEW THA T THE FACTS RECORDED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ARE INCORRECT AND CONTRARY TO THE ORDER SHEET RECORDED BY HIM. THIS ACTION OF THE ASSESSING OFFICER IS CONDEMNABLE AND WE CANNOT APPRECIATE IT. 5.2 SINCE THE NOTICE U/S 143(2) WAS IS SUED AFTER THE PERIOD OF LIMITATION, THE ASSESSMENT FRAMED CONSEQUENT THERETO IS BAD IN LAW AND DESERVES TO BE QUASHED. WE ACCORDINGLY QUASH THE ASSESSMENT AFTER SETTING ASIDE THE ORDER OF CIT(A). I.T.A. NOS.58,59, & 60/LKW/2013 6. IN THESE APPEALS THE P ENALTY U/S 271 (1)(B) OF THE ACT WAS LEVIED FOR NON COMPLIANCE OF THE DIRECTIONS OF THE ASSESSING OFFICER. SINCE WE HAVE ALREADY QUASHED THE ASSESSMENT IN FOR FOREGOING APPEALS, THE PENALTY U/S 271(1)(B) CANNOT BE LEVIED AS THE NOTICES ISSUED BY THE ASSESS ING OFFICER TO THE ASSESSEE ARE NOT VALID. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) IN THESE APPEALS AND DELETE THE PENALTY LEVIED U/S 271(1)(B) OF THE ACT IN ALL THE APPEALS. 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. (ORDER WAS P RONOUNCED IN THE OPEN COURT ON 1 1 / 0 4 / 2 0 1 4 ) SD/. SD/. ( A. K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 1 / 0 4 / 2 0 1 4 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR