DCIT, Bangalore V. Sri. Srinivasa Ramachandran, Bangalore

ITA 596/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57525 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Invalid notice; Cost of acquisition; Fair market value
• Section: 143(3); 147; 148

Judgement Text

PAGE 1 OF 7 ITA NO.59 6/BANG/2011 1 INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES B BEFORE SHRI N K SAINI, ACCOUNANT MEMBER AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.596/BANG/2011 (ASST. YEAR 2007-08) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-5(1), BANGALORE VS SRI SRINIVASA RAMACHANDRAN, BY P.A. HOLDER SRI KRV SUBRAMANIAN, C/O SHRI RAVINDRA SHETTY, NO.1105, OTC ROAD. DHARMARAYA SWAMY TEMPLE STREET, BANGALORE-560002. PA NO. AHXPR 0162 N. (APPELLANT) (RESPONDENT) DATE OF HEARING : 06.03.20 12 DATE OF PRONOUNCEMENT : 09.03.2012 APPELLANT BY : SMT. SUSAN THOMAS JOSE, JCIT RESPONDENT BY : SHRI G MANJUNATH, C.A. O R D E R PER GEORGE GEORGE K : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LEARNED CIT(A)-II, BANGALORE, DATED 27/1/2011. THE RELEVANT ASSESSMENT YEAR IS 2007-08. 2. THE SOLITARY ISSUE THAT ARISES FOR OUR CONSIDERA TION IS WHETHER THE CIT(A) IS JUSTIFIED IN QUASHING THE ASSESSMENT ORDER DATED 22/12/2009, PAGE 2 OF 7 ITA NO.59 6/BANG/2011 2 FOR THE REASON THAT THE NOTICE UNDER SECTION 143(2) WAS NOT ISSUED/SERVED ON THE ASSESSEE WITHIN THE STATUTORY TIME LIMIT. 3. BRIEFLY STATED THE FACTS ARE AS FOLLOWS:- THE ASSESSEE IS A NON-RESIDENT INDIAN. FOR THE CONCERNED ASSESSMENT YEAR, RETURN OF INCOME WAS FILE D ON 22.06.2007 DECLARING RS.40,19,234/-. THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR HAD SOLD A PROPERTY M EASURING 6513 SQ FT FOR A SUM OF RS.76 LAKHS. WHILE COMPUTING TH E CAPITAL GAINS, THE ASSESSEE OFFERED FOR TAXATION A SUM OF RS.40,19,234 /- AFTER DEDUCTING INDEX COST OF ACQUISITION OF RS.33,80,766 /- AND COMMISSION OF RS.2 LAKHS. THE ASSESSING OFFICER WHILE COMPLET ING THE SCRUTINY ASSESSMENT RECALCULATED THE CAPITAL GAINS. THE ASS ESSING OFFICER ADOPTED THE MARKET VALUE AS ON 3/12/1998 AT RS.175/ - PER SQ FT AND ACCORDINGLY, COMPUTED THE COST OF ACQUISITION AT RS. 16,85,308/-. THE CAPITAL GAINS THEREBY WAS COMPUTED AT RS.59,14,691/- . 4. AGGRIEVED BY THE RE-COMPUTATION OF CAPITAL GAINS , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY. 5. IT WAS CONTENDED BEFORE THE FIRST APPELLATE AUT HORITY THAT THE ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE ACT I S BAD IN LAW AND LIABLE TO BE QUASHED, AS THE STATUTORY NOTICE UNDER SECTIO N 143(2) WAS NOT ISSUED WITHIN THE PRESCRIBED TIME. ON MERITS, IT WAS CONT ENDED THAT THE ASSESSING OFFICER ERRED IN ADOPTING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 3/12/1998 INSTEAD OF AS ON 1/4/1981. IT WAS FURTHE R SUBMITTED THAT THE NET PAGE 3 OF 7 ITA NO.59 6/BANG/2011 3 SALE CONSIDERATION SHOULD BE RS.74,00,000/-, INSTEA D OF RS.76,00,000/- ADOPTED BY THE ASSESSING OFFICER. 6. THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE B Y HOLDING THAT THE ASSESSMENT IS INVALID, SINCE NOTICE UNDER SECTI ON 143(2) OF THE ACT WAS NOT ISSUED WITHIN THE PRESCRIBED TIME LIMIT. 7. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL:- I) THE ORDER OF THE CIT(A) IS CONTRARY TO THE FACTS OF THE CASE. II) THE CIT(A) IS NOT CORRECT IN ANNULLING THE ORDER UN DER SECTION 143(3) OF THE ACT. THE CIT(A) HAS FAILED T O APPRECIATE THAT THE ASSESSEE PARTICIPATED IN THE PROCEEDINGS BEFORE THE ASSESSING OFFICER IN RESPONS E TO NOTICES ISSUED. III) THE CIT(A) DECISION IN ACCEPTING THE CLAIM OF THE ASSESSEE THAT HE FILED A LETTER ON 14/12/2009 BEFOR E THE ASSESSING OFFICER RAISING OBJECTION FOR NON-SERVICE OF NOTICE IS NOT CORRECT. THE ASSESSEE HAS NOT RAISED ANY OBJECTION BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT. IV) THE DECISION OF THE CIT(A) HAT SEC.292BB IS NOT APPLICABLE IN THE PRESENT CASE AS THE ASSESSMENT YEA R INVOLVED IS 2007-08 AND SECTION 292BB WAS INSERTED W.E.F. 1/4/2008 AND HENCE APPLICABLE FROM ASSESSMEN T YEAR 2008-09 ONWARDS IS NOT CORRECT AS SEC.292BB IS IN THE AMBIT OF PROCEDURAL LAW AND HENCE IS APPLICABLE TO ALL PROCEEDINGS PENDING AS ON 1/4/2008 AND HENCE APPLIC ABLE TO THE PRESENT CASE. V) THE CIT(A) ERRED BY NOT ADJUDICATING ON THE FACTS OF THE CASE. THE CIT(A) HAS FAILED TO APPRECIATE THE ACTI ON OF THE ASSESSING OFFICER IN ARRIVING AT THE FAIR MARKE T VALUE PAGE 4 OF 7 ITA NO.59 6/BANG/2011 4 OF THE INHERITED PROPERTY AND THE INDEXED COST OF ACQUISITION. THE CIT(A) ERRED IN NOT CONSIDERING T HE SUBMISSION OF THE ASSESSING OFFICER BASED ON THE ASSESSEES REQUEST OF VALUATION AS ON 1/4/1981 WHIC H WOULD RESULT IN AN ENHANCEMENT OF CAPITAL GAINS. 8. THE LEARNED DR WAS DULY HEARD. SHE PLACED STRON G RELIANCE ON THE GROUNDS OF APPEAL. 9. THE LEARNED AR ON THE OTHER HAND SUPPORTED THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS ON RECORD AND CAREFULLY CONSIDERED THE CASE LAWS REL IED ON BY BOTH THE PARTIES. THE ASSESSEE HAS FILED RETURN ON 22.6.20 07. AS PER THE PROVISIONS OF THE ACT, THE STATUTORY NOTICE UNDER SECTION 143(2 ) SHOULD HAVE BEEN SERVED ON THE ASSESSEE WITHIN 12 MONTHS FROM THE EN D OF THE MONTH IN WHICH RETURN IS FURNISHED I.E. 30.06.2008. THE FIRST NOT ICE DATED 15.7.2009 WAS SERVED ON THE ASSESSEE. THE ASSESSEE HAS APPEARED ON 14/12/2009 AND FILED LETTER OBJECTING THE NON-SERVICE OF NOTICE VIDE HIS LETTER DATED 14/12/2009 WHICH IS MARKED AS ANNEXURE A IN THE PAPER BOOK FIL ED BY THE ASSESSEE. THE ASSESSING OFFICER IS INCORRECT TO STATE THAT THE AS SESSEE HAS NOT RAISED OBJECTION TO THE NON-SERVICE OF NOTICE AND PARTICIP ATED IN THE ASSESSMENT PROCEEDINGS. APPEARANCE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER FOR THE PROCEEDINGS WOULD BE OF NO CONSEQUENCES. THE A SSESSING OFFICER IS INCORRECT TO STATE THAT IT IS UP THE ASSESSEE TO PR OVE TO THE SATISFACTION OF THE AUTHORITIES THAT THERE WAS NO SERVICE OF NOTICE . THE ASSESSING OFFICER HIMSELF ADMITTED IN HIS LETTER DATED 17/01/2011 THA T THERE WAS NO PAGE 5 OF 7 ITA NO.59 6/BANG/2011 5 ACKNOWLEDGEMENT AVAILABLE IN THE FILE FOR SERVICE O F NOTICE BEFORE THE TIME LIMIT, WHICH ITSELF A PROOF OF NON-SERVICE OF NOTIC E WITHIN THE PRESCRIBED TIME. THE ASSESSEE HAS ALSO FILED AN AFFIDAVIT BEF ORE THE CIT(A) FOR NON- SERVICE OF NOTICE. 10.1 THE FACTS OF THE CASES MENTIONED BY THE ASSESS ING OFFICER ARE NOT APPLICABLE TO THE FACTS OF THIS CASE, AS THOSE CASES ARE DIFFERENT FROM THE PRESENT CASES. THE FACTS OF THE CASES REFERRED BY THE ASSESSING OFFICER BEING THAT IN ALL THE CASES THERE WAS PROOF OF SERVICE OF NOTICE BY RPAD IN THE FILE AND THE ASSESSEE HAS NOT RAISED AN Y OBJECTION BEFORE THE ASSESSING OFFICER FOR NON SERVICE OF NOTICE AND THE Y HAVE PARTICIPATED IN THE ASSESSMENT PROCEEDINGS. IN THE PRESENT CASE, A S ADMITTED BY THE ASSESSING OFFICER HIMSELF, THERE WAS NO PROOF OF HA VING ISSUED THE NOTICE BEFORE THE DUE DATE IN THE FILE AND THE ASSESSEE HA S OBJECTED FOR NON SERVICE OF NOTICE BEFORE THE ASSESSING OFFICER. TH EREFORE, THE FACTS WERE ALTOGETHER DIFFERENT AND NOT APPLICABLE TO THE CASE . 10.2 SECTION 292BB IS NOT APPLICABLE IN THIS CASE, AS THE ASSESSMENT YEAR INVOLVED IS 2007-08 AND THIS SECTION WAS INSERT ED WITH EFFECT FROM 01/04/2008 AND HENCE, APPLICABLE ONLY FROM ASSESSME NT YEAR 2008-09. MOREOVER, THE ASSESSEE HAS OBJECTED TO THE PROCEEDI NGS BY FILING LETTER DATED 14/12/2009. WHEN THE ASSESSEE IS OBJECTED TO THE PROCEEDINGS FOR NON SERVICE OF NOTICE UNDER SECTION 143(2) DURING T HE ASSESSMENT PROCEEDINGS, THE PROVISION OF SECTION 292BB HAS NO APPLICATION. EVEN OTHERWISE, IN THE PRESENT CASE THE PROVISION OF SEC TION 292BB IS NOT APPLICABLE AS HELD BY THE TRIBUNAL IN THE CASE OF (I ) KUBER TOBACCO PRODUCTS PAGE 6 OF 7 ITA NO.59 6/BANG/2011 6 (P) LTD. V DCIT (310 ITR (AT) 300 (DEL.) (SB) AND ( II) CIT V MANI KAKAR (2009) 18 DTR (DEL.) 145. 10.2.1 THE TRIBUNAL IN THE CASE OF (I) KUBER TOBAC CO PRODUCTS (P) LTD. V DCIT (310 ITR (AT) 300 (DEL.) (SB) HELD THAT THE ASSESSEE HAS A RIGHT OF BEING SERVED WITH THE NOTICE IN CASE PROCEEDINGS AR E TAKEN AGAINST HIM AND IN CASE OF INVALID NOTICE, THE WHOLE PROCEEDINGS TAKEN PURSUANT TO THAT NOTICE WOULD BE VOID AB INITIO (SUBJECT TO PROVISIONS OF S ECTION 292BB) AND WILL HAVE NO LEGAL CONSEQUENCES. TO OVERCOME SOME OF SUCH SI TUATION, SECTION 292BB HAS BEEN BROUGHT ON THE STATUTE. IF PROVISIONS OF SECTION 292BB ARE HELD TO BE APPLICABLE TO THE CASE OF THE ASSESSEE, THEN THE QUESTION OF CONSIDERING THE ISSUANCE OF NOTICE SEPARATELY WILL BECOME IRRELE VANT ACCORDING TO WELL ESTABLISHED RULE OF INTERPRETATION. WHERE THE STAT UTE UNDER SECTION 292BB DEEMS SERVICE OF NOTICE, IT WILL ALWAYS INCLUDE ISSU E OF NOTICE AS SERVICE CANNOT BE EFFECTED WITHOUT ISSUANCE THEREOF. THUS, THE ARGUMENT OF AUTHORIZED REPRESENTATIVE THAT UNLESS THERE EXISTS ISSUANCE OF NOTICE, SERVICE THEREOF CANNOT BE PRESUMED OR DEEMED AND SE CTION 292BB WILL NOT BE APPLICABLE, CANNOT BE ACCEPTED AND HAS TO BE REJ ECTED. 10.2.2 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V MANI KAKAR (2009) 18 DTR (DEL.) 145 HELD THAT NO NOTICE UNDER SECTION 148 HAVING BEEN SERVED ON THE ASSESSEE PRIOR TO REOPENING OF ASSESS MENT, ASSESSMENT MADE UNDER SECTION 147 WAS BAD IN LAW, ARGUMENT BASED ON SECTION 292BB WAS NOT SUSTAINABLE ON THE FACTS OF THE CASE. PAGE 7 OF 7 ITA NO.59 6/BANG/2011 7 10.2.3 THE HONBLE SUPREME COURT IN THE CASE OF AC IT & ANR. V HOTEL BLUE MOON (2010) 321 ITR 362 (SC) HELD THAT THE SER VICE OF NOTICE UNDER SECTION 143(2) WITHIN THE DUE DATE IS MANDATORY IN L AW. THE NON SERVICE OF NOTICE IS NOT PROCEDURAL DEFECT AND WHICH CANNOT BE CURED AND ASSESSMENT FRAMED WITHOUT SERVICING NOTICE UNDER SECTION 143(2 ) WITHIN THE STIPULATED TIME IS VOID AND UNSUSTAINABLE UNDER THE LAW. 10.3 IN THE LIGHT OF THE AFORESAID JUDGEMENTS OF T HE HONBLE SUPREME COURT AND THE HONBLE DELHI HIGH COURT AND THE ORDER OF THE TRIBUNAL, WE ARE OF THE VIEW THAT THE CIT(A) IS JUS TIFIED IN QUASHING THE ASSESSMENT, SINCE NO NOTICE UNDER SECTION 143(2) WA S ISSUED WITHIN THE PRESCRIBED TIME LIMIT. SINCE WE HAVE CANCELLED THE ASSESSMENT, GROUND NO.5 RAISED WITH REFERENCE TO THE ASSESSMENT ON MERITS, IS NOT ADJUDICATED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH DAY OF MARCH, 2012 SD/- SD/- (N K SAINI) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO:- 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR 6. GF MSP/- BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.