Prominent Insurance Brokers Pvt. Ltd., Delhi V. ITO, New Delhi

ITA 818/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8106 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 03-02-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 13-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Assessee Lawyers: VED JAINCA; ASHISH CHADHA
• Keywords: Reassessment proceedings
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 818/DEL/2014 AY: 20 04-05 PROMINENT INSURANCE BROKERS PVT. LTD., VS ITO, NOW KNOWN AS BRV DEVELOPERS PVT. LTD., WAR D 14(4), C-52, VIVEK VIHAR, NEW DELHI. DELHI-110095 (PAN: AADCP3196J) (APPELLANT) (RES PONDENT) APPELLANT BY : S/SHRI VED JAIN,CA & ASHISH CHADHA RESPONDENT BY : SHRI O.P. MEENA, SR. DR DATE OF HEARING: 03.02.2016 DATE OF PRONOUNCEMENT: 29.04.2016 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 25.11.2013 PASSED BY THE LD. CIT(A)-XVII, NEW DELHI FOR ASSESSMENT YEAR 2004-05 WHEREIN THE ADDITION OF RS. 20 LACS MADE BY THE ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) HAS BEEN SUSTAI NED. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE HAD F ILED ITS RETURN OF INCOME ON 29.10.2004 DECLARING NIL INCOME SUBSE QUENTLY, ON RECEIVING CERTAIN INFORMATION FROM THE INVESTIGATIO N WING, THE CASE OF THE ASSESSEE WAS RE-OPENED AND NOTICE U/S 1 48 OF THE ACT I.T.A. NO. 818/D/2014 ASSESSMENT YEAR 2004-05 2 WAS ISSUED TO THE ASSESSEE COMPANY ON 28.03.2011 AT THE ADDRESS S-524, VIKAS MARG, SHAKARPUR, DELHI. THE A SSESSEE, SUBSEQUENTLY IN SEPTEMBER, RAISED THE PRIMARY ISSUE THAT NO NOTICE U/S 148 OF THE ACT (DATED 28.03.2011) WAS EV ER RECEIVED BY THE ASSESSEE. THE ASSESSEE RAISED OBJECTION TO THE PROCEEDINGS U/S 148 ON THE GROUND OF NON-SERVICE OF THE STATUTO RY NOTICE. HOWEVER, THE ASSESSING OFFICER PROCEEDED TO COMPLET E THE ASSESSMENT. THE ISSUE OF NON-SERVICE OF NOTICE WAS AGAIN RAISED BEFORE THE FIRST APPELLATE AUTHORITY BUT THE LD. CI T (A) ALSO HELD THAT NON-SERVICE OF NOTICE WAS NOT AN ISSUE AT ALL. THE ASSESSEE ALSO CHALLENGED THE REASSESSMENT PROCEEDINGS ON THE GROUND THAT THE REASONS RECORDED DID NOT WARRANT REASSESSMENT. THE ASSESSEES GROUND OF APPEAL ON THE ISSUE OF VALIDIT Y OF THE REASSESSMENT PROCEEDINGS BASED ON REASONS RECORDED WAS ALSO DISMISSED BY THE LD. CIT (A). THE ASSESSEE ALSO CH ALLENGED THE IMPUGNED ADDITIONS OF RS. 20 LACS ON MERITS BUT THE SE GROUNDS WERE ALSO DISMISSED AND THE ADDITION WAS CONFIRMED. 3. NOW, IN THIS APPEAL BEFORE US, THE ASSESSEE HAS RAISED AS MANY AS 11 GROUNDS OF APPEAL, HOWEVER, WE ARE PROCE EDING TO ADJUDICATE GROUND NO. 3 FIRST WHICH IS GERMANE TO T HE ENTIRE REASSESSMENT PROCEEDINGS AND DEPENDING ON THE OUTCO ME OF THE I.T.A. NO. 818/D/2014 ASSESSMENT YEAR 2004-05 3 FATE OF THIS GROUND OF APPEAL, WE SHALL PROCEED TO ADJUDICATE THE REMAINING GROUNDS AS REQUIRED. GROUND NO. 3 READS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW I N CONFIRMING THE ASSESSMENT UNDER SECTION 147 READ WI TH SECTION 148 OF THE ACT AS THE SAME HAS BEEN PASSED WITHOUT SERVICE OF STATUTORY NOTICE UNDER SECTION 1 48 OF THE ACT. 4. THE LD. AR SUBMITTED THAT THIS GROUND DEALS WITH THE ACTION OF THE LD. CIT (A) IN UPHOLDING THE ASSESSMENT ORDE R PASSED BY THE AO, WHICH HAS BEEN PASSED WITHOUT THE ISSUANCE OF STATUTORY NOTICE U/S 148 OF THE ACT. 5. IN THIS REGARD, IT WAS SUBMITTED THAT THE CASE O F THE ASSESSEE WAS REOPENED U/S 148 OF THE ACT. THE ASSES SEE RECEIVED A NOTICE DATED 09.09.2011 (PAPER BOOK PAGE 14) FROM THE AO, REFERRING TO AN EARLIER NOTICE ISSUED BY HIS PREDEC ESSOR U/S 148 OF THE ACT. THE ASSESSEE, HOWEVER, VIDE REPLY DATED 14 .09.2011 (PAPER BOOK PAGE 15) SUBMITTED THAT THE ASSESSEE HAD NOT RECEIVED ANY NOTICE U/S 148 OF THE ACT. SIMILAR NOT ICE WAS AGAIN RECEIVED BY THE ASSESSEE ON 07.10.2011 (PAPER BOOK PAGE 16), WHICH WAS REPLIED TO BY THE ASSESSEE VIDE ITS REPLY DATED I.T.A. NO. 818/D/2014 ASSESSMENT YEAR 2004-05 4 14.10.2011 (PAPER BOOK PAGE 17). THE AO, HOWEVER, R EJECTED THE OBJECTION RAISED BY THE ASSESSEE AND PASSED THE IMP UGNED ASSESSMENT ORDER. IT WAS FURTHER SUBMITTED THAT THE ISSUE WAS AGAIN RAISED BY THE ASSESSEE BEFORE THE LD. CIT (A) . THE LD. CIT (A), HOWEVER, UPHELD THE ORDER PASSED BY THE AO, HO LDING THAT WHAT THE STATUTE REQUIRES IS THAT THE NOTICE SHOULD BE ISSUED TO THE ASSESSEE, AND THE SAME WAS DONE. THE LD. AR FUR THER SUBMITTED THAT IT IS NOT DISPUTED THAT THE NOTICE U /S 148 WAS ISSUED ON 28.03.2011, BUT THE SAME WAS SENT BY SPEE D POST AT THE ADDRESS S - 524, VIKAS MARG, SHAKARPUR, DELHI, WHICH HAS ALSO BEEN CONFIRMED BY THE LD. CIT (A). THE ADDRESS OF THE ASSESSEE COMPANY, HOWEVER, AS ON THE SAID DATE WAS CHANGED TO C - 52, VIVEK VIHAR - I, NEW DELHI - 110095. ALL TH E CORRESPONDENCE MADE BY THE AO WITH THE ASSESSEE COM PANY WAS AT THE SAID ADDRESS ONLY, AS IS EVIDENT FROM THE VA RIOUS NOTICES ISSUED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD AR ALSO SUBMITTED THAT THE LD. CIT (A) HAS HELD IN PAR A 5.3 OF HER ORDER THAT AS PER THE RECORDS, THE ADDRESS OF THE A SSESSEE WAS S - 524, VIKAS MARG, SHAKARPUR, DELHI. HE SUBMITTED THA T IN THIS REGARD IT IS PERTINENT TO REFER TO THE ORDER PASSED BY THE CIT (A) IN ASSESSEES OWN CASE FOR A.Y. 2008-09 DATED 28.02.20 11, WHEREIN I.T.A. NO. 818/D/2014 ASSESSMENT YEAR 2004-05 5 THE ADDRESS OF THE ASSESSEE IS MENTIONED AS C - 52, VIVEK VIHAR, DELHI - 110095. THEREFORE, IT IS CLEAR THAT THE ADD RESS OF THE ASSESSEE WAS UPDATED IN THE RECORDS OF THE DEPARTME NT. THUS, THE ALLEGATION OF THE LD. CIT (A) THAT IT WAS THE D UTY OF THE ASSESSEE TO INFORM THE DEPARTMENT ABOUT THE CHANGE OF ADDRESS WAS FACTUALLY INCORRECT. THE LD. AR SUBMITTED THAT , IT WAS CLEAR THAT THE NOTICE U/S 148 OF THE ACT WAS ISSUED AT A WRONG ADDRESS, AND THUS, WAS NOT SERVED ON THE ASSESSEE, IN THE AB SENCE OF WHICH, THE ORDER PASSED BY THE AO AND SUSTAINED BY THE LD. CIT(A) WAS BAD IN LAW AND LIABLE TO BE QUASHED. HE RELIED ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT (CENTRAL)-I V. CHETAN GUPTA IN ITA NO. 72 OF 20 14, DATED 15.09.2015. 6. THE LD. DR PLACED RELIANCE ON THE ORDER OF THE A SSESSING OFFICER AND THE LD. CIT(A) AND SUBMITTED THAT TECHN ICAL DEFECT, IF AT ALL, CANNOT VITIATE THE ENTIRE REASSESSMENT PROC EEDINGS AND THAT ON MERITS ALSO, THE ADDITION DESERVES TO BE UP HELD. I.T.A. NO. 818/D/2014 ASSESSMENT YEAR 2004-05 6 7. WE HAVE HEARD THE RIVAL PARTIES AND HAVE ALSO PE RUSED THE RECORDS. IT IS MENTIONED IN THE ASSESSMENT ORDER THAT THE NOTICE U/S 148 OF THE ACT WAS ISSUED ON 28.3.2011 WHICH WA S DULY SERVED ON THE ASSESSEE BY SPEED POST. THE ASSESSIN G OFFICER HAS FURTHER NOTED IN PARA 1 OF HIS ORDER THAT THE ASSES SEE HAD SUBMITTED A LETTER DATED 14.09.2011 AND 19.09.2011 STATING THAT IT HAD NOT RECEIVED THE NOTICE U/S 148 DATED 28.03. 2011 AND VIDE ORDER SHEET ENTRY DATED 21.09.2011, A COPY OF THE N OTICE U/S 148 ISSUED ON 28.03.2011 WAS HANDED OVER TO THE REPRESE NTATIVE OF THE ASSESSEE MR. MANOJ SHARMA. THUS, THE ASSESSEE HAD, IN THE VERY PRELIMINARY STAGE, RAISED THE OBJECTION OF NON -SERVICE OF THE STATUTORY NOTICE WITHIN THE STATUTORY TIME FRAME OF SIX YEARS. THE LD. CIT (A) HAS EXAMINED THE ISSUE IN PARA 5.1 TO 5 .3 OF THE IMPUGNED ORDER AS UNDER:- 5.1 AS PER SECTION 149 (1) NO NOTICE U/S 148 SHALL BE ISSUED FOR THE RELEVANT ASSESSMENT YEAR:- (A) IF FOUR YEARS HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE CASE FALLS UND ER CLAUSE (B); (B) IF FOUR YEARS, BUT NOT MORE THAN SHE YEARS, HA VE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEA R UNLESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAP ED ASSESSMENT AMOUNTS TO OR IS LIKELY TO AMOUNT TO ONE LAKH RUPEES OR MORE FOR THAT YEAR. I.T.A. NO. 818/D/2014 ASSESSMENT YEAR 2004-05 7 EXPLANATION: IN DETERMINING INCOME CHARGEABLE TO TA X WHICH HAS ESCAPED ASSESSMENT FOR THE PURPOSES OF TH IS SUB SECTION, THE PROVISIONS OF EXPLANATION 2 OF SEC TION 147 SHALL APPLY AS THEY APPLY FOR THE PURPOSES OF T HAT SECTION. (2) THE PROVISIONS OF SUB-SECTION (1) AS TO THE ISSUE OF NOTICE SHALL BE SUBJECT TO THE PROVISIONS OF SECTIO N 151. (3) IF THE PERSON ON WHOM A NOTICE U/S 148 IS TO BE SERVED IS A PERSON TREATED AS DIE AGENT OF A NON-RE SIDENT U/S 163 AND THE ASSESSMENT, REASSESSMENT OR RE- COMPUTATION TO BE MADE IN PURSUANCE OF THE NOTICE I S TO BE MADE ON HINI AS THE AGENT OF SUCH NON-RESIDENT, THE NOTICE SHALL NOT BE ISSUED AFTER THE EXPIRY OF A PE RIOD OF TWO YEARS FROM THE END OF THE RELEVANT ASSESSMENT Y EAR. IN VIEW THEREOF THE RELEVANT POINT HERE IS THAT NOT ICE SHOULD BE ISSUED'. IN THIS CASE, NOTICE WAS ISSUED WITHIN TIME . 5.2 IN THE CASE OF MAYAWATI V CIT AND OTHERS (2010 ) 321 ITR 349 (DELHI) THE COURT OBSERVED AS UNDER:- REASSESSMENT - NOTICE-NOTICE U/S 149 - NOTICE SHOU LD BE ISSUED WITHIN PRESCRIBED PERIOD - NOT , NECESSAR Y THAT NOTICE SHOULD BE SERVED WITHIN PRESCRIBED PERIOD - NOTICE SERVED BY INSPECTOR OF INCOME TAX - INFORMATION THA T ASSESSEE HAD SHIFTED HER RESIDENCE AND CONSEQUENT SERVICE BY SPEED POST - PRESUMPTION THAT NOTICE HAD BEEN SERVED. I.T.A. NO. 818/D/2014 ASSESSMENT YEAR 2004-05 8 5.3 I HAVE PERUSED THE RECORDS AND SEEN THAT NOTI CE U/S 148 WAS ISSUED ON 28.03.2011 AND WAS SENT BY SPEED POST. AS PER THE RECORDS THE ADDRESS OF THE APPELLANT WAS S-524, VIKAS MARG, SHAKARPUR DELHI. THE AO HAS STATED THE NOTICE WAS SERVED. THE NOTICE WAS NOT WA S RETURNED BACK. IT IS THEREFORE PRESUMED THAT IT WAS SERVED. IF THE APPELLANT HAD CHANGED ITS ADDRESS, I T WAS THE DUTY OF THE APPELLANT TO GIVE INFORMATION TO TH E DEPARTMENT. THE GROUNDS OF APPEAL ARE THEREFORE RUL ED AGAINST THE APPELLANT AS THE NOTICE WAS ISSUED ON T IME AND IN COMPLIANCE WITH LAW. 8. THUS, THE LD. CIT(A) HAS, ON ONE HAND, CONCLUD ED THAT ISSUED TANTAMOUNT TO SERVED AND, ON THE OTHER HAND, HAS RAISED A PRESUMPTION AGAINST THE ASSESSEE THAT SINCE THE N OTICE WAS SENT THROUGH SPEED POST AND WAS NOT RETURNED, THE NOTICE IS PRESUMED TO HAVE BEEN SERVED. HOWEVER, THE DEPARTMENT HAS NOT BEEN ABLE TO CONTROVERT THE SUBMISSION OF THE A SSESSEE THAT THE DEPARTMENT WAS IN POSSESSION OF THE CORRECT/NEW ADDRESS OF THE ASSESSEE AS EARLY AS ON 28.02.2011 AND, THEREFO RE, WE ARE OF THE CONSIDERED OPINION THAT THE DEPARTMENT CANNOT S HY AWAY FROM ITS RESPONSIBILITY OF DULY SERVING THE STATUTO RY NOTICE. 9. IT IS OUR CONSIDERED VIEW THAT WHENEVER A REAS SESSMENT IS SOUGHT TO BE MADE U/S 147, ISSUING AND SERVING OF A VALID NOTICE I.T.A. NO. 818/D/2014 ASSESSMENT YEAR 2004-05 9 U/S 148 IS A MANDATORY PRECONDITION. THE ONUS LIES ON THE REVENUE AUTHORITIES TO PROVE THAT THE NOTICE WAS SE RVED ON THE ASSESSEE WITHIN THE STIPULATED PERIOD. IT IS ONLY I F THE SAID NOTICE IS SERVED ON THE ASSESSEE THAT THE ASSESSING OFFICE R WOULD BE JUSTIFIED IN TAKING UP PROCEEDINGS AGAINST THE ASSE SSEE. IF NO NOTICE IS ISSUED, OR IF THE NOTICE ISSUED IS SHOWN TO BE INVALID, THEN THE PROCEEDINGS TAKEN UP BY THE ASSESSING OFFI CER WOULD BE ILLEGAL AND VOID. IN THIS CASE, IT IS VERY MUCH APP ARENT THAT THE NOTICE U/S 148 HAD NOT BEEN SERVED ON THE ASSESSEE WITHIN THE STIPULATED PERIOD. THE ASSESSING OFFICER CAN ASSUM E JURISDICTION TO COMPLETE THE ASSESSMENT ONLY AFTER VALID AND LEG AL SERVICE OF THE NOTICE IN ACCORDANCE WITH LAW. UNLESS SUCH NOTI CE HAS DULY BEEN SERVED, THE ASSESSING OFFICER CANNOT BE SAID T O HAVE BEEN CLOTHED WITH THE JURISDICTION TO PASS THE ASSESSMEN T ORDER. THE MANDATE OF SECTION 148 IS THAT NOTICE SHOULD BE SER VED ON THE ASSESSEE, BY PRESCRIBED MODE OF SERVICE, WHICH HAS UNDENIABLY NOT BEEN CARRIED OUT IN THIS CASE. IN THE ABSENCE O F A VALID SERVICE OF NOTICE U/S 148, THE REASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ILLEGAL AND VOID AB INITIO . THE HON'BLE DELHI HIGH COURT IN CIT VS CHETAN GUPTA (I.T.A. NO. 72 OF 2014) HAS I.T.A. NO. 818/D/2014 ASSESSMENT YEAR 2004-05 10 DISCUSSED THE ENTIRE LAW AND SUMMARISED THE LEGAL P OSITION IN ITS JUDGEMENT DATED 15 TH SEPTEMBER, 2015 AS UNDER:- (I) UNDER SECTION 148 OF THE ACT, THE ISSUE OF NOT ICE TO THE ASSESSEE AND SERVICE OF SUCH NOTICE UPON THE ASSESS EE ARE JURISDICTIONAL REQUIREMENTS THAT MUST BE MANDAT ORILY COMPLIED WITH. THEY ARE NOT MERE PROCEDURAL REQUIREMENTS. (II) FOR THE AO TO EXERCISE JURISDICTION TO REOPEN AN ASSESSMENT, NOTICE UNDER SECTION 148 (1) HAS TO BE MANDATORILY ISSUED TO THE ASSESSEE. FURTHER THE AO CANNOT COMPLETE THE REASSESSMENT WITHOUT SERVICE OF THE NOTICE SO ISSUED UPON THE ASSESSEE IN ACCORDANCE WI TH SECTION 282 (1) OF THE ACT READ WITH ORDER V RULE 1 2 CPC AND ORDER III RULE 6 CPC. (III) ALTHOUGH THERE IS A CHANGE IN THE SCHEME OF S ECTIONS 147, 148 AND 149 OF THE ACT FROM THE CORRESPONDING SECTION 34 OF THE 1922 ACT, THE LEGAL REQUIREMENT O F SERVICE OF NOTICE UPON THE ASSESSEE IN TERMS OF SEC TION 148 READ WITH SECTION 282 (1) AND SECTION 153 (2) O F THE ACT IS A JURISDICTIONAL PRE-CONDITION TO FINALIZING THE REASSESSMENT. (IV) THE ONUS IS ON THE REVENUE TO SHOW THAT PROPER SERVICE OF NOTICE HAS BEEN EFFECTED UNDER SECTION 1 48 OF THE ACT ON THE ASSESSEE OR AN AGENT DULY EMPOWERED BY HIM TO ACCEPT NOTICES ON HIS BEHALF. IN THE PRESENT CASE, THE REVENUE HAS FAILED TO DISCHARGE THAT ONUS. (V) THE MERE FACT THAT AN ASSESSEE OR SOME OTHER PE RSON ON HIS BEHALF NOT DULY AUTHORISED PARTICIPATED IN T HE REASSESSMENT PROCEEDINGS AFTER COMING TO KNOW OF IT WILL NOT CONSTITUTE A WAIVER OF THE REQUIREMENT OF EFFEC TING PROPER SERVICE OF NOTICE ON THE ASSESSEE UNDER SECT ION 148 OF THE ACT. (VI) REASSESSMENT PROCEEDINGS FINALISED BY AN AO WI THOUT EFFECTING PROPER SERVICE OF NOTICE ON THE ASSESSEE UNDER SECTION 148 (1) OF THE ACT ARE INVALID AND LIABLE T O BE QUASHED. I.T.A. NO. 818/D/2014 ASSESSMENT YEAR 2004-05 11 (VII) SECTION 292 BB IS PROSPECTIVE. IN ANY EVENT T HE ASSESSEE IN THE PRESENT CASE, HAVING RAISED AN OBJE CTION REGARDING THE FAILURE BY THE REVENUE TO EFFECT SERV ICE OF NOTICE UPON HIM, THE MAIN PART OF SECTION 292 BB IS NOT ATTRACTED. 10. THEREFORE, ON FACTS OF THE CASE AND RESPECTFULL Y FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN CIT VS CHETAN GUPTA (SUPRA), WE HOLD THAT IN ABSENCE OF VALID SER VICE OF NOTICE U/S 148 OF THE ACT WITHIN THE STIPULATED PERIOD, TH E REASSESSMENT PROCEEDINGS ARE VOID AB INITIO . GROUND NO. 3 IS ALLOWED AND OTHER GROUNDS ARE DISMISSED AS HAVING BECOME IN FRUCTUOUS IN VIEW OF OUR ADJUDICATION OF GROUND NO. 3. 11. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.04.2016. SD/- SD/- (N.K. SAINI) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: THE 29 TH OF APRIL, 2016 GS I.T.A. NO. 818/D/2014 ASSESSMENT YEAR 2004-05 12 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR