ITO 12 (1)(1), MUMBAI V. M/S ARUNS HOUSING REMEDIES LTD., MUMBAI

ITA 7616/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1820 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 11-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIDDRAM A PPA
• Keywords: Bogus purchase; Period of limitation; Corroborative evidences; Accommodation entries; Assessment record; Tax effect; Reassessment proceedings
• Section: 292BB; 143(2); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE SHRI SAKTIJIT DEY, J UDICIAL M EMBER ITA NO. 7616 /MUM/2019 ASSESSMENT Y EAR: 2009 - 10 INCOME TAX OFFICER 12 (1)(1), ROOM NO. 129, 1 ST FLOOR, AAYAKAR BHAVAN, M.K . ROAD, MUMBAI - 400020 VS. M/S ARUN S HOUSING REMEDIES LTD., 316 - 317, HIGHWAY COMMERCE CENTRE, JN. OF I.B. PATEL ROAD, & W.E. HIGHWAY, GOREGAON (EAST), MUMBAI - 400063 PAN: AAGCA0421J (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SHIDDRAM A PPA (DR) ASSESSEE BY : NONE DATE OF HEARING : 27 /05 /202 1 DATE OF PRONOUNCEMENT: 25 / 0 6 /202 1 O R D E R THIS IS AN APPEAL BY THE REVENUE AGAINST T HE ORDER DATED 27.09.2019 OF LEARNE D COMMISSIONER OF INCOME TAX (APPEALS) - 20, MUMBAI FOR THE ASSESSMENT YEAR 2009 - 10. 2. THE EFFECTIVE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: - 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) ERRED IN HOLDING THAT THE ASSESSMENT ORD ER WAS BAD IN LAW ON THE GROUND THAT NOTICE U/S 143 (2) HAD NOT BEEN SERVED ON THE ASSESSEE IN TIME WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS RESPONDED TO THE NOTICES ISSUED AND ALSO FILED ITS SUBMISSIONS IN RESPONSE TO THE NOTICES ISSUED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) ERRED IN DELETING THE ADDITIONS MADE BY THE AO ON ACCOUNT OF 2 ITA NO. 7616 / MUM/2019 ASSESSMENT YEAR: 20 09 - 1 0 BOGUS PURCHASES RS. 25,19,878/ - MERELY ON THE GROUND THAT THE ASSESSMENT ORDER WAS BAD IN LAW WITHOUT GOING INTO THE FACTS OF THE C ASE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HONBLE ITAT IS REQUESTED TO ENTERTAIN THIS APPEAL THOUGH THE TAX EFFECT IS BELOW THE MONETARY LIMIT PRESCRIBED IN THE CBDTS CIRCULAR NO. 17/2019 DATED 08.08.2019 READ WITH CIRCULAR NO. 3/2018 DATED 1 1.07.2018 AS AMENDED ON 20.08.2018 AS THE CASE FALLS IN THE EXCEPTION RECEIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES, NAMELY, SALES TAX AUTHORITIES. 3. WHEN THE APPEAL WAS CALLED FOR HEARING NO ONE APPEARED ON BEHALF OF THE ASS ESSEE TO RE PRESENT THE CASE. HOWEVER, CONSIDERING THE NATURE OF DISPUTE, I PROCEED TO DISPOSE OF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENT ATIVE AND BASED ON MATERIALS ON RECORD. 4. BRIEFLY THE FACTS ARE, THE ASS ESSEE IS A RESIDENT COMPANY ENGAGED IN THE BUSINESS OF INSTALLATION AND ERECTION OF PRE - FABRICATED HOUSES AND OTHER STRUCTURES. 5. FOR THE ASSESSMENT YEAR UNDER DISPUTE, ASSESSEE FILED ITS RETURN OF INCOME ON 13.09.2009 DECLARING NIL INCOME . SUBSEQUENTLY , ON THE BASED ON INFORMATION RECEIVED FROM SALES TAX DEPARTMENT THROUGH DGIT (INV.), MUMBAI THAT PURCHASES WORTH RS. 25,19,878/ - , BEING IN THE NATURE OF ACCOMMODATION ENTRIES, ARE NON GENUINE , THE ASSESSING OFFICER (AO) REOP E NED THE ASSESSMENT UNDER SECTI ON 147 OF THE ACT. AFTER CALLING FOR DETAILS/SUPPORTING EVIDENCES FROM THE ASSESSEE TO PROVE THE GENUIN ENESS OF THE DISPUTED PURCHASES, T HE AO ULTIMATELY HELD THE PUR CHASES TO BE NON - GENUINE AND ADDED BACK TO THE INCOME OF THE ASSESSEE. AGAINST THE ASSESSM ENT ORDER SO PASSED ASSESSEE PREFERRED AP PEAL BEFORE LEARNED COMMISSIONER (APPEALS). BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE INTER ALIA CHALLENGED THE VALIDITY OF THE 3 ITA NO. 7616 / MUM/2019 ASSESSMENT YEAR: 20 09 - 1 0 ASSESSMENT ORDER ON THE GROUND THAT THE AO HAD NOT SERVED THE NOTICE UNDER SEC TION 14 3(2) OF THE ACT WITHIN THE PERIOD OF LIMITATION. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF F ACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) BE ING CONVINCED THAT NO NOTICE UNDER SECTION 143 (2) OF THE ACT WAS SERV ED ON THE ASSESSEE WITHIN THE PRESCRIBED PERIOD , HELD THE ASSESSMENT ORDER PASSED AS INVALID . WHILE DOING SO, LEARNED COMMISSIONER (APPEALS) HELD THAT THE CASE OF REVENUE WILL NOT BE PROTECTED UNDER SECTION 292BB OF THE ACT AS THE ASSESSEE HAD RAISED OBJE CTION DURING THE ASSESSMENT PROCEEDINGS. ACCORDINGLY, HE ANNULLED THE ASSESSMENT ORDE R . 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , IN COURSE OF APPELLATE PROCEEDINGS, THE AO HAD FILED A REPORT STATING THAT NOTICE UNDER SECTION 143(2) AND 142(1 ) OF THE ACT ISSUED IN T HE NAME OF THE ASSESSEE WERE HANDED OVER TO THE POSTAL AUTHORITY ON 30.04.2014, WITHIN THE PERIOD OF LIMITATION. THUS, HE SUBMITTED , ONCE THE NOTICES WERE HANDED OVER TO TH E POSTAL AUTHORITIES FOR SERVICE ON THE ASSESSEE WITHIN THE PERIOD OF LIMITATION, IT WOULD AMOUNT TO PROPER SERVICE OF NOTICE IN TERMS OF BUSINESS POST MANAGEMENT BETWEEN THE INCOME TAX DEPARTMENT AND DEPARTMENT OF POST. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN CASE OF M/S ABAD OFFSHORE LTD. VS. DCIT WP NO. 29643 OF 2015 JUDGMENT DATED 08.11.2016. 7 . I HAV E CONSIDERED SUBMISSIONS OF LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. A RE ADING OF THE OBSERVATIONS OF LEARNED COMMISSIONER (APP E ALS) IN PARAGRAPH 4.4.1 AN D 4.4.2 WOULD REVEAL THAT IN REPLY TO ASSESSEE S CHALLENGE REGARDING VALIDITY OF THE ASSESSMENT ORDER D UE TO NON SERVICE OF NOTICE UNDER SECTION 143 (2) OF THE ACT, THE AO HAD FURNISHED LETTER DATED 23 .02.2017 STATING THAT NOTICE U NDER SECTION 143(2) AND 142 (1) OF T HE ACT DATED 28.04.2014 WERE HANDED OVER TO THE POSTA L AUTHORITY ON 30.04.2014 FOR ONWARD SERVICE ON THE ASSESSEE. THUS, IT IS THE CONTENTION OF THE REVENUE THAT ONCE THE NOTICE ISSUED UNDER SECTION143(2) OF THE ACT WAS 4 ITA NO. 7616 / MUM/2019 ASSESSMENT YEAR: 20 09 - 1 0 H ANDED OVER TO THE POSTAL AUTHORITY, IT WOULD AMOUNT TO VALID SERVICE ON THE ASSESSEE A S PER THE BUSINESS POST MANAGEMENT. HOWEVER, THE FOLLOWING OBSERVATIONS OF COMMISSIONER (APPEALS) WILL HAVE CRUCIAL BEARING IN DECIDING THE ISSUE : 4.4.3 IN COURSE OF TH E APPELLATE PROCEEDINGS, BY THIS OFFICE LETTER DATED 06.05.2019 THE AO WAS REQUESTED TO FURNISH THE PROOF OF SERVICE INDICATING THE DATE OF SERVICE. THE RELEVANT PORTION OF THE LETTER IS REPRODUCED BELOW: IN THIS CASE, THE APPELLANT HAS FILED AN AFFIDAV IT ON 06.05.2019 STATING THAT THE NOTICE U/S 143 (2) WAS NOT RECEIVED BY IT. AS PER PROVISO TO SECTION 143 (2), THE NOTICE UNDER THAT SECTION IS TO BE SERVED ON THE ASSESSEE WITHIN 6 MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN OF INCOME I S FILED. THEREFORE, IT IS NOT SUFFICIENT TO PROVE THAT THE NOTICE WAS ISSUED. THE DATE OF SERVICE OF THE NOTICE IS CRUCIAL. 2. IN THIS REGARD, YOU ARE REQUESTED TO REBUT THE APPELLANTS CLAIM WITH PROOF OF SERVICE INDICATING THE DATE OF SERVICE. PLEASE FU RNISH CERTIFIED COPY OF DOCUMENT RELIED UPON BY YOU (SUCH AS ACKNOWLEDGMENT ). 3. THE APPELLANT HAS CONTENDED THAT IN THE COURSE OF REASSESSMENT PROCEEDINGS BY ITS LETTER DATED 16.03.2015 IT HAD INFORMED THE AO THAT NOTICE U/S 143 (2) HAD NOT BEEN SERVED U PON IT. PLEASE COMMENT ON APPELLANTS CLAIM. 4.4.4 THE AO WAS REQUESTED TO SUBMIT THE REPORT IN THIS OFFICE ON OR BEFORE 25.05.2019. HOWEVER, NO REPLY HAS BEEN RECEIVED FROM THE AO. THEREFORE, A REMINDER LETTER DATED 14.06.2019 WAS SENT TO THE AO REQUIRI NG THE AO TO SUBMIT HIS REPORT BY 25.06.2019. IN RESPONSE, THE AO BY HIS LETTER DATED 17.06.2019 HAS MENTIONED THAT THE ASSESSMENT RECORDS TO OLD PERIOD AND THE SAME ARE NOT TRACEABLE HIS OFFICE. THEREFORE, HE REQUESTED TO GRANT THE TIME UPTO 04.07.2019. H OWEVER, NO REPLY WAS RECEIVED FROM THE AO EVEN AFTER 04.07.2019. THEREAFTER, A FRESH REMINDER LETTER DATED 26.08.2019 WAS SENT TO THE AO REQUIRING THE AO TO SUBMIT HIS REPLY BY 05.09.2019. AGAIN ANOTHER REMINDER LETTER DATED 29.08.2019 WAS ISSUED TO THE AO REQUIRING THE AO TO SUBMIT THE REPORT BY 11.09.2019. HOWEVER, THERE WAS NO RESPONSE FROM THE AO. THEREFORE, A FINAL REMINDER LETTER DATED 18.09.2019 WAS ISSUED TO THE AO REQUIRING 5 ITA NO. 7616 / MUM/2019 ASSESSMENT YEAR: 20 09 - 1 0 HIM TO SUBMIT HIS REPLY BY 25,09.2019. HOWEVER, TILL DATE NO REPLY HAS BEEN RECEIVED FROM AO. 4.4.5 IN VIEW OF THE ABOVE, IT IS PRESUMED THAT THE AO HAS NOTHING TO SAY IN THIS REGARD. THE AO HAS FAILED TO CONTROVERT THE CONTENTION OF THE APPELLANT THAT NO NOTICE U/S, 143(2) WAS SERVED ON THE APPELLANT WITHIN SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN OF INCOME WAS FILED - THE ONUS IN THIS CASE WAS ON THE AO TO CONTROVERT THE CONTENTION OF THE APPELLANT BY PRODUCING EVIDENCE TO SHOW THAT THE NOTICE U/S.143(2) WAS INDEED SERVED UPON THE APPELLANT. THE AO HAS FURNISHED EVIDENCE TO PROVE THAT NOTICE U/S.143(2) DATED 28.04.2014 WAS ISSUED AND THE SAME WAS HANDED OVER TO THE POSTAL AUTHORITIES ON 30.04.2014. HOWEVER, AS PER THE PROVISO TO SECTION 143(2], IT IS NECESSARY NOT ONLY TO ISSUE THE NOTICE BUT ALSO TO SER VE THE SAME ON THE APPELLANT WITHIN SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN WAS FILED. 4.4.6 AS MENTIONED IN PARA 4.4.2 ABOVE, THE APPELLANT HAD RAISED OBJECTION TO THE REASSESSMENT PROCEEDINGS ON THE GROUND THAT NOTICE U/S.143(2 ) WAS NOT SERVED WITHIN THE STIPULATED TIME. IN VIEW OF THE OBJECTIONS RAISED BY THE APPELLANT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE PROVISIONS OF SECTION 292BB CANNOT SAVE THE ASSESSMENT ORDER. 8 . AS COU LD BE SEEN FROM THE AFORESAID EX TRACT S FROM THE IMPUGNED ORDER OF LEARNED COMMISSIONER (APPEALS) , WHILE DEALING WITH SPECIFIC CONTENTION OF THE ASSESSEE THAT NO NOTICE UNDER SECTION 143 (2) WAS EVER RECEIVED BY IT, LEARNED COMMISSIONER (APPEALS) HAD CALLED UPON THE AO TO FURNISH A REPORT AS TO WHETH ER THE NOTICE ISSUED UNDER SECTION 143 (2) WAS ACTUALLY SERVED UPON THE ASSESSEE. HOWEVER, IN SPITE OF REPEATED REMINDER AND REQUEST BY LEARNED COMMISSIONER (APPEALS), NO RESPONSE FROM THE AO WAS FORTHCOMING. THUS, IN ABSENCE OF ANY REPLY FROM THE AO, LEARNE D COMMISSIONER (APPEALS) W AS CONVINCED THAT THE NOTICE UNDER SECTION 143 (2) , ALLEGED TO HAVE BEEN ISSUED , WAS NEVER SERVED ON THE ASSESSEE WITHIN THE PERIOD OF LIMITATION. THUS, HE QUASHED THE ASSESSME NT ORDER. THUS, KEEPING IN VIEW THE PROVISION S OF SECTI ON 143 (3) READ WITH ITS PROVISO, I AM COVINCED THAT NO NOTICE UNDER SECTION 143 (2) OF THE ACT WAS SERV ED ON THE ASSESSEE AS MANDATED BY THE STATUTE . THAT BEING 6 ITA NO. 7616 / MUM/2019 ASSESSMENT YEAR: 20 09 - 1 0 THE CASE, ASSESSMENT ORDER WAS RIGHTLY HELD AS INVALID. I ALSO AG REE WITH THE VIEW OF LEARNED CO MMISSIONER (APPEALS) THAT THE ASSESSMENT ORDER WOULD NOT BE PROTECTED UNDER THE EXCEPTIONS PROVIDED UNDER SECTION 292BB OF THE ACT AS THE ASSESSEE HAD OBJECTED TO THE PROCEEDINGS. 9 . AS REGARDS, THE DECISION RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESE NTATIVE AS NOTED ABOVE , IN MY CONSIDER ED OPINION , DUE TO FACTUAL DISTINCTION THE AFORESAID DECISION WOULD NOT APPLY. AS COULD BE SEEN FROM FACT S OF THE CASE RELIED UPON BY THE LEARNED D EPARTMENTAL R EPRESENTATIVE, THE NOTICE ISSUED UNDER SECTION 143 (2) OF T HE ACT WAS ACTUALLY SERVED UPON THE ASSE SSEE, T HOUGH, THE ASSESSEE CLAIMED THAT IT WAS NOT SERVED WITHIN THE PERIOD OF LIMITATION. HOWEVER, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE FROM THE VERY BEGINNI NG HAS STATED THAT NO NOTICE UNDER SECTION 143(2 ) OF THE ACT WAS EVER SERVED ON IT. IN FACT , IN COURSE OF PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY , THE ASSESSEE HAD FURNISHED AN AFFIDAVIT REITERATING THE AFORESAID CLAIM. 10 . IN VIEW OF THE AFORESA ID, I UPHOLD THE DECISION OF LEARNED COMMISSION ER ( APPEALS ) BY DISMISSING THE GROUNDS RAISED. 11. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE , 2021 . SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER MUMBAI ; DATED: 25 / 06 /202 1 ALINDRA, PS 7 ITA NO. 7616 / MUM/2019 ASSESSMENT YEAR: 20 09 - 1 0 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4 . / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / B Y ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI