M/s. Amarjas Shuttering Store, Gurgaon V. ITO, Gurgaon

ITA 688/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3519 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 15-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS PRATIMA KAUSHIK
• Assessee Lawyers: K C SINGHAL
• Keywords: Additional evidence; Assessment record
• Section: 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A NO. 688/DEL/10 ASSTT. YEAR 2006-07 M/S AMARJUS SHUTTERING STONE, GURGAON VS. INCOME TAX OFFICER, WARD-1, GURGAON (APPELLANT) (RESPONDENT) APPELLANT BY: K.C. SINGHAL, ADVOCATE RESPONDENT BY: MRS. PRATIMA KAUSHIK, SR. DR. ORDER PER RAJPAL YADAV, JM: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 27.11.2009 PASSED FOR ASSTT. YEAR 2006 -07. THE ASSESSEE HAS RAISED THREE SUBSTANTIAL GROUNDS OF APPEAL. IN THE FIRST GROUND OF APPEAL IT HAS PLEADED THAT ASSESSMENT ORDER IS VOID AB INITIO BECAUSE IT HAS BEEN PASSED WITHOUT SERVING A NOTICE UPON THE A SSESSEE U/S 143 (2) OF THE ACT WITHIN THE TIME PERIOD PROVIDED IN THE P ROVISO APPENDED TO THIS SECTION. IN THE SECOND GROUND OF APPEAL IT HAS CONT ENDED THAT LD. CIT(A) ITA NO. 688/DEL/2010 ASSTT. YEAR 2006-07 2 HAS ERRED IN NOT PERMITTING THE ASSESSEE TO ADDUCE ADDITIONAL EVIDENCE UNDER RULE 46A OF THE ACT AND ON MERIT IT IS IMPUGN ING THE CONFIRMATION OF AN ADDITION OF RS. 431648/-. IT HAS BEEN ADDED BY T HE AO BY MAKING A DISALLOWANCE OUT OF SHUTTERING EXPENSES CLAIMED BY THE ASSESSEE. 2. THE LD. COUNSEL FOR THE ASSESSEE WHILE TAKING UP GROUND NO.1 HAS APPRISED US WITH THE FACTS OF THE CASE AND CONTENDE D THAT ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF PROVIDI NG SHUTTERING MATERIAL ON HIRE. IT HAS FILED ITS RETURN OF INCOME ON 30 TH OCTOBER, 2006 DECLARING TOTAL INCOME OF RS. 1,51,120/-. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TOWARDS PAGES NO. 1 TO 4 OF THE PAPER BOO K WHEREIN THE ASSESSEE PLACED ON RECORD COPIES OF THE ORDER SHEET ENTRY FROM THE ASSESSMENT RECORD , HE SUBMITTED THAT FIRST ORDER S HEET ENTRY IS 30 TH JUNE, 2008. THE AO, ALLEGED TO HAVE ISSUED NOTICES UNDER SECTIONS 142 (1) AND 143 (2) OF THE INCOME TAX ACT, ALONGWITH QU ESTIONNAIRE VIDE THIS INTERIM ORDER. THE ASSESSEE HAS NOT RECEIVED ANY OT HER NOTICE PRIOR TO THIS. THE COUNSEL OF THE ASSESSEE SHRI GOPAL AGARWA L WAS ATTENDING PROCEEDING IN CONNECTION WITH AN APPLICATION OF ASS ESSEE MOVED U/S 197 OF THE INCOME TAX ACT, HE WAS CONFRONTED WITH QUEST IONNAIRE AND HE THEREAFTER, FILED OBJECTION ON 11 TH AUGUST, 2008. IN THE OBJECTION ASSESSEE HAS CONTENDED THAT NO NOTICE U/S 143(2) WA S EVER ISSUED UPON ITA NO. 688/DEL/2010 ASSTT. YEAR 2006-07 3 IT AND THEREFORE, AO IS PRECLUDED TO SCRUTINISE THE RETURN OF THE ASSESSEE. LD. COUNSEL POINTED OUT THAT OBJECTION OF THE ASSES SEE HAS BEEN REJECTED BY THE AO, BY OBSERVING THAT A NOTICE WAS ISSUED ON 29.10.2007. IT WAS SERVED ON 30 TH OCTOBER, 2007 AND THEREFORE, PROCEEDINGS ARE IN ORDER. THE LD. COUNSEL FOR THE A SSESSEE TOOK US THROUGH COPIES OF THE NOTICE DATED 30 TH JUNE, 2008 QUESTIONNAIRE DATED 30 TH JUNE, 2008 WHICH ARE AVAILABLE AT PAGES NO. 5 TO 8 OF THE PAPER BOOK. HE ALSO TOOK US THROUGH THE OBJECTIONS OF THE ASSESSEE AVAILABLE AT PAGE 10 AND THE COPY OF THE ALLEGED NOTICE DATED 29.10.2007, AVAILABLE AT PAGE 11 OF THE PAPER BOOK. HE POINTED OUT THAT THIS NOTICE ALLEGED TO HAVE BEEN RECEIVED BY ONE SHRI RAMESHWAR . THE ASSESSEE DOES NOT KNOW WHO IS THIS RAMESHWAR. HE IS NEITHER EMPLOYEE NOR PARTNER IN THE FIRM. HE POINTED OUT THAT THERE ARE FOUR PARTNERS IN THE FIRM NAMELY SHRI DARSHPREET SINGH, MRS. HARVINDER KAUR, MRS. NIRMAL SETH, MS. MANEET KAUR. 3. LD. COUNSEL FOR THE ASSESSEE WHILE TAKING US THR OUGH THE PROVISO APPENDED TO 143(2) OF THE ACT, AS PREVALENT AT THE RELEVANT TIME POINTED OUT THAT AO CAN SCRUTINISE THE RETURN OF ASSESSEE, IF A NOTICE UNDER THIS SECTION HAS BEEN SERVED UPON THE ASSESSEE WITHIN 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN IS FURNISHED B Y THE ASSESSEE. ITA NO. 688/DEL/2010 ASSTT. YEAR 2006-07 4 ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE THE M OOT QUESTION BEFORE THE TRIBUNAL IS WHETHER A VALID NOTICE U/S 143(2) W AS SERVED UPON THE ASSESSEE WITHIN 12 MONTHS FROM THE END OF THE MONTH THE ASSESSEE HAS FILED ITS RETURN OF INCOME OR NOT ? HE POINTED OUT THAT THE MODE OF SERVICE OF NOTICE UPON THE ASSESSEE HAS BEEN PROVIDED IN SE CTION 282. IN THIS SECTION IT HAS BEEN PROVIDED THAT SERVICE OF NOTICE OR SUMMONS MAY BE MADE BY DELIVERING A COPY THEREOF TO THE PERSON NA MED THEREIN. COPY OF SUCH NOTICE OR SUMMONS CAN BE DELIVERED BY POST, OR COURIER SERVICE AS MAY BE APPROVED BY THE CBDT. IF THE NOTICE IS ISSUE D OTHERWISE, I.E. NOT BY POST OR COURIER THEN IT HAS TO BE SERVED IN AC CORDANCE THE PROCEDURE PROVIDED IN CODE OF CIVIL PROCEDURE 1908 (CPC). HE FURTHER SUBMITTED THAT IN THE PRESENT CASE IT IS NOT THE CASE OF AO T HAT NOTICE WAS SERVED THROUGH POST. SO CLAUSE A OF SUB SECTION 1 OF SEC TION 282 IS NOT APPLICABLE. THE FACTS OF THE CASE ARE REQUIRED TO B E EXAMINED IN THE LIGHT OF CLAUSE B WHERE MODE OF SERVICE IS TO BE EFFECT ED IN ACCORDANCE WITH THE MECHANISM PROVIDED IN CPC. IN CPC MODE OF SERVI CE HAS BEEN PROVIDED IN ORDER 5 RULE 9 TO 18. HE TOOK US THROUG H RULE 9 TO 18 AND SUBMITTED THAT ACCORDING TO RULE 16 WHERE SERVING O FFICER DELIVERS OR TENDERS A COPY OF THE SUMMONS TO THE DEFENDANT PERS ONALLY OR TO AN AGENT OR OTHER PERSON ON HIS BEHALF, HE SHALL REQU IRE THE SIGNATURE OF THE PERSON TO WHOM THE COPY IS SO DELIVERED OR TENDERED TO AN ITA NO. 688/DEL/2010 ASSTT. YEAR 2006-07 5 ACKNOWLEDGMENT OF SERVICE ENDORSED ON THE ORIGINAL SUMMONS. LD. COUNSEL FURTHER REFERRING TO RULE 12 SUBMITTED THAT SERVICE UPON THE DEFENDANT SHALL BE MADE IN PERSON UNLESS HE HAS AN AGENT EMPOWERED TO ACCEPT SERVICE, IN WHICH CASE SERVICE ON SUCH AG ENT SHALL BE SUFFICIENT. TAKING UP THROUGH PAGE 11 OF THE PAPER BOOK WHERE COPY OF THE ALLEGED SERVICE OF NOTICE IS AVAILABLE HE CONTE NDED THAT FROM THIS NOTICE IT NOWHERE REVEALED WHO IS RAMESHWER AND IN WHAT CAPACITY HE HAS RECEIVED THE SUMMON. THERE IS NO ENDORSEMENT OF THE PROCESS SERVER. IN THIS WAY LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT ASSESSMENT ORDER DESERVES TO BE QUASHED. 4. LD. DR ON THE OTHER HAND CONTENDED THAT NOTICE WAS SERVED UPON THE ASSESSEE ON 30 TH OCTOBER, 2007. ONE SHRI RAMESHWAR HAS RECEIVED THE NOTICE ON BEHALF OF THE ASSESSEE. THE COUNSEL F OR THE ASSESSEE WHEN FILED OBJECTION BEFORE THE AO, THE AO VIDE LET TER DATED 19 TH AUGUST, 2008 DULY CONVEYED TO THE ASSESSEE THAT NOTICE WAS SERVED UPON THE ASSESSEE ON 30 TH OCTOBER, 2007. A FRESH NOTICE WAS SERVED UPON THE ASSESSEE ON 30 TH JUNE, 2008 BECAUSE AO WAS CHANGED. THE NEW OFFICER HAD ISSUED THE FRESH NOTICE. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. THERE IS NO DISPUTE WITH REGA RD TO THE PREPOSITION ITA NO. 688/DEL/2010 ASSTT. YEAR 2006-07 6 THAT IF AO WANTS TO SCRUTINIZE THE RETURN OF ASSESS EE THEN HE HAS TO SERVE A NOTICE U/S 143(2) UPON THE ASSESSEE WITHIN 12 MON THS FROM THE END OF THE MONTH IN WHICH RETURN WAS FILED BY THE ASSESSEE . THE AREA OF DISPUTE BETWEEN THE APPELLANT AND THE RESPONDENT IS WHETHER THIS NOTICE WAS SERVED UPON THE ASSESSEE WITHIN 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN WAS FILED BY THE ASSESSEE. ACCORDIN G TO THE REVENUE NOTICE WAS SERVED UPON THE ASSESSEE ON 30 TH JULY, 2007 WHICH WAS SERVED WITHIN 12 MONTHS FROM THE END OF THE MONTH I N WHICH THE RETURN WAS FURNISHED. WHEREAS ACCORDING TO THE ASSESSEE T HIS NOTICE WAS ALLEGED TO HAVE BEEN SERVED UPON ONE SHRI RAMESHWAR WHO IS NEITHER A PARTNER NOR AN EMPLOYEE OF THE ASSESSEE FIRM. 6. SECTION 282 OF INCOME TAX ACT PROVIDES THE MODE OF SERVICE OF NOTICES AND SUMMONS UPON THE ASSESSEE. A BARE PERU SAL OF THIS SECTION WOULD REVEAL THAT SERVICE OF NOTICE CAN BE EFFECTED EITHER BY POST OR AS IF IT WAS A SUMMON UNDER THE CODE OF CIVIL PROCEDURE 1908. ADMITTEDLY IN THE PRESENT CASE NOTICE WAS NOT CLAIMED TO HAVE BEE N SERVED BY THE AO BY POST, MEANING THEREBY THE ISSUE REQUIRED TO BE E XAMINED WHETHER SERVICE HAS BEEN PROPERLY EFFECTED AS PER THE RULES PROVIDED IN THE CPC. ORDER 5 RULES 9 TO 18 PROVIDES THE MODE OF SERVICE OF SUMMONS UPON A DEFENDANT UNDER RULE 9 PROCEDURE FOR EFFECTING SERV ICE BY POST IS PROVIDED. UNDER RULE 9A PROCEDURE FOR EFFECTING SER VICE IS PROVIDED IN ITA NO. 688/DEL/2010 ASSTT. YEAR 2006-07 7 CASE SUMMONS WERE GIVEN TO THE PLAINTIFF FOR SERVIC E. RULE 10,12 AND 16 ARE THE RELEVANT RULES FOR THE PRESENT CONTROVERSY. THEREFORE WE DEEM IT APPROPRIATE TO TAKE NOTE OF THESE RULES. 10. MODE OF SERVICE SERVICE OF THE SUMMONS SHALL BE MADE BY DELIVERING OR TENDERING A COPY THEREOF SIGN ED BY THE JUDGE OR SUCH OFFICER AS HE APPOINTS IN THIS BEHALF, AND SEALED WITH THE SEAL OF THE COURT. 11. SERVICE ON SEVERAL DEFENDANTS SAVE AS OTHERWI SE PRESCRIBED, WHERE THERE ARE MORE DEFENDANTS THAN ON E, SERVICE OF THE SUMMONS SHALL BE MADE ON EACH DEFENDANT. 12. SERVICE TO BE ON DEFENDANT IN PERSON WHEN PRACT ICABLE, OR ON HIS AGENT WHEREEVER IT IS PRACTICABLE, SERV ICE SHALL BE MADE ON THE DEFENDANT IN PERSON, UNLESS HE HAS AN AGENT EMPOWERED TO ACCEPT SERVICE, IN WHICH CASE SERVICE ON SUCH AGENT SHALL BE SUFFICIENT. 13. XXXXXXX 14. XXXXXXX 15. XXXXXXX 16. PERSON SERVED TO SIGN ACKNOWLEDGMENT WHERE TH E SERVING OFFICER DELIVERS OR TENDERS A COPY OF THE SUMMONS TO THE DEFENDANT PERSONALLY OR TO AN AGENT OR OTHER PERSON ON HIS BEHALF, HE SHALL REQUIRE THE SIGNATURE OF THE PERSON TO WHOM THE COPY IS SO DELIVERED OR TENDERED TO AN ACKNOWLEDGMENT OF SERVI CE ENDORSED ON THE ORIGINAL SUMMONS. 17. XXXXX 18. XXXXX ITA NO. 688/DEL/2010 ASSTT. YEAR 2006-07 8 7. ON A PLAIN READING OF THESE RULES IT WOULD REVEA L THAT SERVICE OF SUMMONS SHALL BE MADE BY DELIVERING OR TENDERING A COPY THEREOF SIGNED BY THE PRESIDING OFFICER WITH THE SEAL OF THE COURT . THE SERVICE HAS TO BE EFFECTED UPON THE DEFENDANT IN PERSON WHEREVER IT I S PRACTICABLE, OR ON HIS AGENT EMPOWERED TO ACCEPT SERVICE. WHERE THE PR OCESS SERVERS DELIVERS OR TENDERS A COPY OF THE SUMMONS TO THE DE FENDANT PERSONALLY OR TO AN AGENT OR OTHER PERSON ON HIS BEHALF THEN H E SHALL REQUIRE THE SIGNATURE OF THAT PERSON WHO RECEIVE THE COPY OF SU MMONS, ACKNOWLEDGING THE EFFECTING OF SERVICE. IN THE PRES ENT CASE NO SUCH PROCEDURE HAS BEEN FOLLOWED. WE HAVE SPECIFICALLY G ONE THROUGH THE COPY OF THE ALLEGED NOTICE AVAILABLE AT PAGE 11 OF THE PAPER BOOK. THIS NOTICE SUGGEST THAT IT WAS RECEIVED BY SHRI RAMESHW AR. WHO IS THIS RAMESHWAR ? IN WHAT CAPACITY HE RECEIVED THE NOTICE ? WHO IS THE PROCESS SERVER ALL ARE MISSING . WE COULD ACCEPT TH E STAND OF REVENUE, IF WITH THE HELP OF CIRCUMSTANTIAL EVIDENCE, THE AO WH ILE ADJUDICATING THE OBJECTION OF ASSESSEE IN THE LETTER DATED 19 TH AUGUST, 2008 MADE IT SPECIFIC THAT THIS NOTICE WAS HANDED OVER TO A PART ICULAR PROCESS SERVER AND SHRI RAMESHWAR HAPPENS TO BE AN EMPLOYEE OR AN AGENT TO THE ASSESSEE. BUT THE LETTER DATED 19 TH AUGUST, 2008 WRITTEN BY THE AO TO THE ASSESSEE IN RESPONSE TO ITS OBJECTION IS TOTALLY SI LENT WITH REGARD TO ANY ITA NO. 688/DEL/2010 ASSTT. YEAR 2006-07 9 SUCH ASPECT AO SIMPLY OBSERVED THAT NOTICE WAS SERV ED ON 30 TH OCTOBER, 2007. THE QUESTION ARISES BEFORE US IS IF THE NOTI CE IS SERVED UPON ANY PERSON CAN IT BE A VALID SERVICE UPON THE ASSESSEE? OUR REPLY TO THIS QUESTION IS SIMPLE NO. THE OTHER CIRCUMSTANTIAL EVI DENCE IN SUPPORT OF SUCH EVIDENCE CAN BE THE ENTRY IN THE ORDER SHEET. THE POSSIBLE WAY COULD BE WHEN THE CASE WAS SELECTED FOR SCRUTINY WH EN IT WAS DECIDED TO ISSUE NOTICE UPON THE ASSESSEE U/S 143(2) WHEN SUCH NOTICE WAS DISPATCHED ETC. SHOULD DEPICT FROM THE INTERIM ORDE R SHEET MAINTAINED IN THE ASSESSMENT RECORD. FROM THE ASSESSMENT RECORD T HE ORDER SHEET ENTRIES COMMENCED FROM 30 TH JUNE, 2008. THESE ARE NOT THE MANDATORY RULES OF PROCEDURE, WE ARE POINTING OUT THE SURROUN DING CIRCUMSTANCES WHICH COULD HELP US TO ARRIVE US ON A CONCLUSION TH AT WHEN ACTUAL NOTICE WAS ISSUED AND SERVED UPON THE ASSESSEE. TAKING INT O CONSIDERATION ALL THESE DETAILS WE ARE OF THE OPINION THAT IT IS NOT ESTABLISHED ON THE RECORD THAT NOTICE U/S 143(2) WAS DULY AND LEGALLY SERVED UPON THE SERVICE WITHIN 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE ASSESSEE HAS FURNISHED THE RETURN I.E. IT OUGHT TO HAVE BEEN SER VED UPON THE ASSESSEE PRIOR TO 30 TH OCTOBER, 2007. IT WAS NOT SERVED. THEREFORE AO HAS NO JURISDICTION TO SCRUTINIZE THE RETURN OF ASSESSEE A ND PASSED THE IMPUGNED ASSESSMENT ORDER. IN VIEW OF THE ABOVE DIS CUSSION WE ALLOW THE FIRST GROUND OF APPEAL AND QUASH THE ASSESSMENT ORDER. SINCE WE ITA NO. 688/DEL/2010 ASSTT. YEAR 2006-07 10 HAVE QUASHED THE ASSTT. ORDER WE DO NOT DEEM IT FIT TO GO INTO OTHER ISSUES I.E. WHETHER LD. CIT(A) WAS JUSTIFIED IN NOT PERMITTING TO ADDUCE ADDITIONAL EVIDENCE OR WHETHER SHUTTERING EXPENSES WERE RIGHTLY DISALLOWED TO THE ASSESSEE OR NOT. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.7.2010. SD/- [K.G. BANSAL] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23.7.2010 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT