DCIT, Circle-13(1), Hyderabad V. Sri M. R.V. Prasad, Hyderabad

ITA 652/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66207 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 03-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V RAMANA RAO
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Search and seizure; Opportunity of being heard; Assessment record
• Section: 143(3); 142(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 652/HYD/2012 ASSESSMENT YEAR : 2006-07 DY. COMMISSIONER OF INCOME-TAX, APPELLANT CIRCLE 13(1), HYDERABAD VS. SHRI M.R.V. PRASAD, RESPONDENT HYDERABAD. (PAN ACQPM1075K) APPELLANT BY : SHRI V.V. RAMANA RAO RESPONDENT BY : SHRI V. RAGHAVENDRA RAO DATE OF HEARING : 08/08/2012 DATE OF PRONOUNCEMENT : 27/08/2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL IS PREFERRED BY THE REVENUE DIRECTED AGAINST THE ORDER OF CIT(A)-II, HYDERABAD, DATED 08/02/2012 FOR THE ASSESSMENT YEAR 2006-07. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED A RETURN OF INCOME ON 31/10/2006 RETURNING A LOSS OF RS. 33,14,971/-. THE ASSESSEE IS A PRODUCER OF F ILM CALLED ALLARI PIDUGU. A SURVEY OPERATION WAS CONDUC TED BY ITO, WARD 2(4), VIJAYAWADA IN THE CASE OF SRI M. SRINADHA RAO, PROPRIETOR, BHARATHI PICTURES, VIJAYA WADA RESULTING IN IMPOUNDING OF CERTAIN INCRIMINATING MA TERIAL. WHEN THE DETAILS WERE CALLED FOR, IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAD SHOWN RS. 1,01,29,747/- AS AMOUNT FROM SALE OF DISTRIBUTION RIGHTS IN RESPECT OF 2 ITA NO. 652HYD/2012 MRV PRASAD GUNTUR AND KRISHNA AREAS AS AGAINST THE CONSIDERATI ON OF RS. 1,85,00,000/-ACKNOWLEDGED BY THE ASSESSEE FROM SRI SRINADHA RAO. THUS, THE AO WAS OF THE VIEW THAT THE RE WAS ESCAPEMENT OF INCOME CHARGEABLE TO TAX TO THE EXTENT OF RS. 83,70,253/-. ACCORDINGLY, A NOTICE WA S ISSUED U/S 148 ON 26/03/2010. THE ASSESSEE VIDE LET TER DATED 04/05/2009, STATED THAT THE RETURN FILED ON 31/01/2006 MIGHT BE TREATED AS COMPLIANCE TO THE NO TICE U/S 148. THE AO STATED THAT NOTICE U/S 143(2) AND 1 42(1) HAD BEEN ISSUED ON 22/11/2010 POSTING THE CASE ON 29/11/2010 AND NONE APPEARED ON BEHALF OF THE ASSES SEE NOR ANYBODY SOUGHT FOR ADJOURNMENT. THEREAFTER, THE ASSESSMENT WAS COMPLETED ON THE INFORMATION AVAILAB LE ON RECORD AND THE AMOUNT OF RS. 83,70,253/- WAS ADD ED TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A) ASSESSEE FILED STATEMENT OF FA CTS WHEREIN IT WAS STATED THAT NO NOTICES U/S 143(2) AN D 142(1) WERE ISSUED TO THE ASSESSEE AND THE AO HAD COMPLETED THE ASSESSMENT WITHOUT GIVING AN OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. IT WAS FURTHER STAT ED THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THAT THE ASSESSEE REQUESTED THE AO VIDE L ETTER DATED 18/07/2011 TO FURNISH THE COPIES OF THE NOTIC ES AND THE COPIES OF ACKNOWLEDGMENT OF SERVICES OF THOSE NOTICES, AND THERE WAS NO RESPONSE FROM THE AO EVEN THOUGH HE PERSONALLY APPROACHED HIM. THEREFORE, IT WAS SUBMITTED THAT THE SERVICE OF NOTICES WHICH FORM TH E 3 ITA NO. 652HYD/2012 MRV PRASAD BASIS OF THE ASSESSMENT GOES TO THE ROOT OF THE MAT TER. ON MERIT, THE ASSESSEE DENIED THAT HE HAD RECEIVED THE AMOUNT OF RS. 83,70,253/- STATED IN THE ASSESSMENT ORDER TO HAVE BEEN RECEIVED BY WAY OF CASH AND THER EFORE THE INCLUSION OF THIS AMOUNT IS NOT JUSTIFIED IN TH E ABSENCE OF ANY EVIDENCE OR OPPORTUNITY TO REBUT THE EVIDENCES IF ANY. 5. THE CIT(A) VIDE LETTER DATED 15/09/2011, REQUEST ED THE AO TO VERIFY THE CONTENTIONS OF THE ASSESSEE THAT N OTICES U/S 143(2) AND 142(1) WERE NOT ISSUED BEFORE PASSIN G THE ORDER U/S 143(3) OF THE ACT. IN THE REMAND REP ORT DATED 03/02/2012, THE AO REPORTED AS UNDER:- THE ASSESSMENT RECORDS IN THE ABOVE MENTIONED CASE FOR AY 2006-07 WERE EXAMINED. COPIES OF NOTICES U/S 142(1) AND 143(2) DATED 22/11/2010 ARE AVAILABLE ON RECORD. HOWEVER, NEITHER FROM THE NOTICES NOR FROM THE ORDER SHEET, EVIDENCE FOR DISPATCH/SERVICE OF THE S AID NOTICES ARE EMANATING. THIS ISSUE WAS ALSO DISCUSSE D WITH THE THEN AO SRI V. SAI PRASAD SASTRY, WHO HAS ALSO EXPRESSED THE SAME OPINION. 6. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPORT OBTAINED FROM THE AO , NOTED THAT WHERE THE RETURN HAS BEEN FILED BY THE A SSESSEE OR WHERE THE ASSESSEE HAS INTIMATED THAT THE ORIGIN AL RETURN MAY BE TREATED AS ONE FILED IN RESPONSE TO NOTICE U /S 147, IT IS THE DUTY OF THE AO TO ISSUE NOTICE U/S 143(2) BE FORE PROCEEDING FURTHER IN THE MATTER. HE FURTHER NOTED THAT PROPER SERVICE OF NOTICES WAS HELD TO BE MANDATORY IN CIT VS. CIT VS. HARISH J. PUNJABI [2008] 297 ITR 424 (D EL.). THE CIT(A) OBSERVED THAT WHERE IT HAS NOT BEEN DONE AND THE ASSESSEE DENIED HAVING RECEIVED SUCH NOTICES AND TH E AO CONFIRMED THAT THERE WAS NO EVIDENCE FOR DISPATCH/S ERVICE OF 4 ITA NO. 652HYD/2012 MRV PRASAD THE SAID NOTICES U/S 143(2) AND 142(1) DATED 22/11/ 2010, IT AMOUNTS TO INVALID ASSESSMENT. THE CIT(A) RELIED UP ON THE SPECIAL DECISION IN THE CASE OF RAJKUMAR CHAWLA VS. ITO, 277 ITR (AT) 255 (DEL.) WHERE IT HAS BEEN HELD THAT THE REQUIREMENT OF ISSUANCE OF NOTICE U/S 143(2) IS APP LICABLE NOT ONLY IN RESPECT OF REGULAR ASSESSMENT BUT ALSO WHERE THE RETURN IS FILED U/S 148. THE CIT(A) POINTED OUT THA T NO NOTICE U/S 143(2)/142(1) WAS SERVED ON THE ASSESSEE THEREBY THERE WAS NO OPPORTUNITY OF BEING HEARD GIV EN TO THE ASSESSEE AND, THEREFORE, THE CIT(A) ANNULLED TH E REASSESSMENT ORDER PASSED BY THE AO. 7. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF A PPEAL:- 1. IN THE INTEREST OF JUSTICE AND AS THE ASSESSEE H AS NOT DISCLOSED HIS RECEIPTS FULLY, THE CIT(A) OUGHT TO HAVE GIVEN AN OPPORTUNITY AND DECIDED THE CASE ON MERITS, RATHER THAN QUASH THE ORDER ON TECHNICAL GROUNDS. 2. IN THE INTEREST OF JUSTICE, IT IS PRAYED THAT TH E MATTER MAY BE REMANDED BACK TO THE AO FOR FRAMING A FRESH ASSESSMENT ORDER AFTER GIVING OPPORTUNITY TO THE ASSESSEE. 8. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SHRI V. RAGHAVENDRA RAO FILED WRITTEN SUBMISSIONS WHEREIN I T WAS STATED THAT THE NOTICES STATED TO HAVE BEEN ISSUED U/S 143(2) AND 142(1) ON THE ASSESSEE WERE NOT PROVED T O HAVE BEEN EITHER DISPATCHED NOR SERVED. THE LEARNED COUN SEL STATED THAT REMAND REPORT OF THE AO BEFORE THE CIT( A) CLEARLY ESTABLISHED THAT THE SAID NOTICES WERE NOT ISSUED TO THE ASSESSEE. THE LEARNED COUNSEL FURTHER STATED TH AT SEVERAL BENCHES OF THE TRIBUNAL AND HIGH COURTS HAV E UNIFORMLY HELD THAT SUCH ASSESSMENTS WITHOUT SERVIC E OF 5 ITA NO. 652HYD/2012 MRV PRASAD NOTICE U/S 143(2) ARE INVALID. HE REFERRED TO THE D ECISION OF HONBLE SUPREME COURT IN THE CASE OF ACIT VS. BLUE MOON HOTEL WHEREIN THE APEX COURT HELD THAT THE PROVISIO NS OF SECTION 143(2) IN REGARD TO SERVICE OF NOTICE THERE UNDER ARE MANDATORY. THE HONBLE SUPREME COURT INTERPRETED TH E PROVISO TO SEC.143(2) OF THE ACT AND HELD IT TO BE APPLICABLE NOT ONLY TO REGULAR ASSESSMENTS BUT ALSO TO THE ASS ESSMENTS IN THE CASE OF SEARCH AND SEIZURE. THE LEARNED COUN SEL FOR THE ASSESSEE RELIED UPON THE FOLLOWING CASE LAWS: 1. CIT VS. LUNAR DIAMONDS LTD., 281 ITR 1 (DEL.) 2. CIT VS. MASCOMPTEL INDIA LTD., 345 ITR 558 (DEL. ) 3. CIT VS. MUKESH KUMAR AGRAWAL, 345 ITR 29 (ALL.) 4. CIT VS. CEBON INDIA LTD., 229 CTR 188 (P&H) 5. CIT VS. CPR CAPITAL SERVICES LTD., 330 ITR 43 (D EL.) 6. CIT VS. H GOWTHAMCHAND, 17 TAXMAN 46 (KER.) 9. THE LEARNED DR RELIED UPON THE ORDER OF THE AO. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF THE AU THORITIES BELOW AND THE DECISIONS CITED. THE CASE LAWS RELIED UPON BY THE ASSESSEE SUPPORTS THE ORDER OF THE CIT(A). IN T HE SAID CASE LAWS RELIED UPON BY THE ASSESSEE, THE HONBLE COURTS UNIFORMLY HELD THAT A MERE ISSUE OF NOTICE WITHOUT ITS COMMUNICATION AND SERVICE TO THE ASSESSEE WOULD NOT MEET THE STATUTORY REQUIREMENT OF SERVICE OF NOTICE U/S 143(2)/142(1). IN THE CASE UNDER CONSIDERATION THE NOTICES STATED TO HAVE BEEN ISSUED U/S 143(2) AND 142(1) ON THE ASSESSEE WERE NOT PROVED TO HAVE BEEN EITHER DISPAT CHED OR SERVED AS PER THE REMAND REPORT OBTAINED FROM THE A O. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) 6 ITA NO. 652HYD/2012 MRV PRASAD ANNULLING THE REASSESSMENT ORDER PASSED BY THE AO A ND, HENCE, THE ORDER OF CIT(A) IS CONFIRMED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON 27/08/2012. SD/- SD/- (D. KARUNAKARA RAO) ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED:27 TH AUGUST, 2012 KV COPY TO:- 1. DCIT, CIRCLE 13(1), HYDERABAD 2. SHRI M.R.V. PRASAD, PROP. M/S P.B. ART PRODUCTIO NS, PLOT NO. 345/A, MLA COLONY, ROAD NO. 12, BANJARA HILLS, HYDERABAD. 3. CIT(A)-II, HYDERABAD 4. CIT-1, HYDERABAD. 5. THE DR, ITAT, HYDERABAD.