Anchor Marine Tech Services Pte Limited , Mumbai V. DCIT Int. Taxation Circle-1(1)(2), Delhi

ITA 951/DEL/2022

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5293 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 07-07-2024
• Assessment Year: misc
• Appeal Filed On: 05-05-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 147; 148; 144; 142(1); 44BB; 139(1); 119; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘D’ BENCH, NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No.951/DEL/2022 [A.Y. 2012-13] Anchor Marine Tech Services Ltd Vs. The Dy. C.I.T 206, Vasaikar House, Old Cadell Road International Taxation Dadar West, Mumbai Circle -1(1)(2) PAN – AAJCA 0089 M (Applicant) (Respondent) Assessee By : Shri K.M. Gupta, Adv Ms. Shruti Khimta, AR Department By : Shri Vijay B. Vasanta, CIT-DR Date of Hearing : 08.07.2024 Date of Pronouncement : 06.08.2024 ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:- This appeal by the assessee is preferred against the order of the ld. CIT(A), Delhi – 42 dated 08.03.2022 pertaining to A.Y. 2012-13. 2 2. Though the assessee has raised as many as 14 grounds of appeal, but the challenge to the service of notice u/s 148 of the Income-tax Act, 1961 [the Act, for short] for assumption of jurisdiction to frame order u/s 147 of the Act goes to the root of the matter, therefore, we decided to adjudicate the same first. 3. Representatives of both the sides were heard at length. Case records carefully perused. Relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules. 4. Briefly stated, the facts of the case are that the assessee is a foreign company, resident of Singapore. The assessee renders specialized overseas sourcing, logistics and supply chain management including renting of vessels on charter basis for towage of goods in sea. For the year under consideration, it entered into an arrangement with Larsen & Toubro Ltd ('L&T') for providing the vessel WOS 5504 on charter basis for towage of barge SMC 3333 on an offshore facility of ONGC that is engaged in exploration and production of mineral oil. 3 5. The assessee in respect of providing vessel WOS 5504 on charter basis billed L&T an amount aggregating to Rs. 13,48,45,564/-. The assessee has furnished details of payment received and invoices raised by the assessee. Since, L&T was acting as a contractor for ONGC and services which were procured from the assessee was in connection with the exploration and prospecting for oil and gas, L&T had deducted tax at source in respect of the above payments made to the assessee @ 4% plus surcharge and cess as the services fall under section 44BB of the Income-tax Act, 1961 [the Act, for short]. 6. For the year under consideration, the assessee officer found from the ITS-26AS that the assessee, incorporated in Singapore, had received Rs 26,96,91,128/- from an Indian entity L&T. L&T had deducted a TDS @ 4% on the payment made. As the assessee had not filed the return of income under section 139(1) of the Act, the AO issued a notice u/s 148 dated 29.03.2019. The assessee, however, did not comply with various notices. Therefore, the Assessing Officer determined the total income at Rs. 29,96,91,128/- at applicable tax rate for foreign company and computed the tax liability at Rs. 32,18,71,400/- u/s 144 r.w 147 of the I T Act vide assessment order dated 26.02.2020. 4 7. When the aggrieved assessee went in appeal before the ld. CIT(A), he confirmed the order of the Assessing Officer in respect of the taxability of the above sum. However, the ld. CIT(A) directed the Assessing Officer to delete the excessive addition made by the Assessing Officer while completing the assessment, i.e. to treat the actual amount of 13,48,45,564/- as taxable income instead of Rs. 29,96,91,128/-stated in the final assessment order. 8. Being aggrieved with taxability of the above sum on the rates applicable to foreign company, the assessee has preferred the present appeal before us. 9. The ld counsel of the assessee submitted that no return u/s 139(1) was filed because the assessee was under the bonafide belief that the taxes on such receipts had already been deducted by the deductor in accordance with Act and there is no additional liability of tax on the assessee for such income. 10. The ld AR of the assessee further submitted that being a resident of Singapore, it was not registered on the online portal of the Indian tax authorities i.e., ITBA portal and therefore it was unaware of any 5 proceedings going on under the Income Tax Act. On account of the above reasons, the assessee was not able to participate in the assessment proceedings taken up by the Assessing Officer. 11. The communication of passing of the final assessment dated order 29.02.2020 was received by the assessee on its address 3, Shenton Houses, Shenton Way # 07-09, Shenton Houses, Singapore- 68805. On receipt of the above final assessment order, the assessee through its Authorized Representative got itself registered on the Income Tax Portal on March 12, 2020 and filed an appeal before the ld. CIT(A) on March 19, 2020, pursuant to which, the assessee through its authorized representative filed a written submission before the ld. CITA) through the e-filing portal. 12. The ld AR of the assessee, after narrating the facts of the case, took up the legal ground no 1 raised in the appeal. The ld. counsel for the assessee vehemently argued that the assessment made is void ab initio as the notice u/s 148 was never served to the assessee. She submitted the sequence of events on the issue of service of notice u/s 148 as below: 6 (a) Notice u/s 148 of the Act dated 29.03.2019 Notice addressed to 20 Maxwell Road, 8-10, Maxwell House, Singapore 069113, being sent by speed post. However, the same was returned back with a comment from the Singapore post, that the assessee has moved. Further, the screenshot of Income tax portal shows that the above notice was never sent through e-mail. (b) Notice u/s 142(1) of the Act dated 10.10.2019 Notice addressed to 3, Shenton Houses, Shenton Way # 07-09, Shenton Houses, Singapore- 68805, being sent on e-mail id [e-mail] mail was used in connection with the sales, and the assessee does not know the reasons why the assessing officer used such mail. The above notice was not sent by post. Another observation that can be made from the notice is that it mentions the new address of the company which was not on the earlier notice under section 148 of the Act. All the subsequent notices also have the new address. (c) Notice u/s 142(1) of the Act dated 13.11.2019 7 Notice addressed to 3, Shenton Houses, Shenton Way # 07-09, Shenton Houses, Singapore- 68805, being sent on the e-mail [e-mail] and not sent by post. It is observed that the jurisdiction of the AO changed from Circle to Ward. There is also a communication provided for change of jurisdiction therein. (d) Notice u/s 142(1) of the Act dated 28.11.2019 Notice addressed to 3, Shenton Houses, Shenton Way # 07-09, Shenton Houses, Singapore- 68805, being sent on the e-mail [e-mail] and not sent by post. (e) Notice u/s 144 of the Act dated 28.11.2019 Notice addressed to 3, Shenton Houses, Shenton Way # 07-09, Shenton Houses, Singapore- 68805 being sent on the e-mail [e-mail] and not sent by post. There is change in jurisdiction again, however this time there is no mention of order under section 129 of the Act. (f) Communication of draft assessment order The said communication addressed to 3, Shenton Houses, Shenton Way # 07-09, Shenton Houses, Singapore- 68805 was 8 also sent on the e-mail [e-mail] and not sent by post. (g) Final assessment order passed. The said order addressed to 3, Shenton Houses, Shenton Way # 07-09, Shenton Houses, Singapore- 68805 was sent by post and received by the assessee. 13. The ld. counsel for the assessee further submitted that in view of the above factual position, it can be seen that the notice issued u/s 148 of the Act was issued manually but returned undelivered to the office of the Assessing Officer. The subsequent notices issued in the course of assessment were either issued u/s 142(1) of the Actor a show cause before the completion of assessment u/s 144 of the Act. There is no notice u/s 148 of the Act which was served on the assessee either through post or electronically. 9 14. Accordingly, it is argued that from the sequence of events tabulated above, it can be seen that no notice u/s 148 of the Act was served on the assessee before the completion of the re-assessment proceedings. It is therefore the specific averment of the assessee that in the absence of service of notice issued u/s 148 of the Act, the completion of assessment under the provisions of Section 147 r.w Section 144 of the Act vide the assessment order dated 26.02.2020 is invalid in view of the provisions of section 148(1) of the Act. The AR relied on the decision in the case of PCIT V Atlanta Capital P Ltd (2020) 119 taxmann.com 292(Del) the SLP against which was dismissed by the Supreme Court in 119 taxmann.com 293(SC) holding the proposition that proper service of notice u/s 148 is sine qua non for re-assessment. 15. Per contra, the ld. DR relied upon the orders of the authorities below. The ld. DR also referred to the factual report dated 19.07.2023 from the ACIT Circle 1(1)(1), International Taxation, New Delhi which stated that notice u/s 148 was issued through ITBA. It is the contention of the AO that such notices are issued through ITBA only and are 10 clearly visible to the assessee on its E-Filing portal under the pending scrutiny assessment. The AO alleges that it is the assessee who has not checked its portal and has failed to inform the Department about any change in address or update its email id. 16. In its rejoinder, the ld AR of the assessee vehemently argued that the assessee never received the notice u/s 148 dated 29.03.2019. On the issue of notices being available on the ITBA portal, the ld AR stated that the assessee, being a foreign company, became aware of the reassessment proceedings when it received the final assessment order which was sent on correct address by post. It was only after the reassessment proceedings were concluded, the assessee got itself registered on the e-filing portal of Income Tax Department on 12.03.2020. The AR filed a document evidencing the date of registration at page 76 of the supplementary Paper Book. It was also reiterated that the AO did not adhere to the provisions of section 282 read with Rule 127(2)(b) of the Income Tax Rule which pertain to the manner of delivery/service of communications electronically. 11 17. It is submitted that the Rule 127(2)(b) provides for using email address available in income tax Return/last income tax return furnished or email address of the company in the Ministry of Corporate Affairs website or any email address made available by the addressee. It is submitted that the email address used by AO is neither from the I T Returns nor furnished by the assessee or available in Ministry of Corporate Affairs site as the assessee is a foreign company and has never filed any return in India. The Ld AR relied on the jurisdictional Delhi High Court in the case of Jyoti Narang (W.P. (C) 9289/2023) for the proposition that notice issued on incorrect email address is not valid. 18. We have heard the rival submissions and have perused the relevant material on record. We find that the notice u/s 148 dated 29.03.2019 for AY 2012-13 was issued to the assessee on the address: 20 Maxwell Road, 8-10, Maxwell House, Singapore 069113. This notice was returned back with a comment from the Singapore post, that the assessee has moved. We find that the notice u/s 148 dated 29.03.2019 was not received by the assessee as it had moved to a new address 3, 12 Shenton Houses, Shenton Way # 07-09, Shenton Houses, Singapore- 68805. 19. Thereafter, the Assessing Officer issued notices u/s 142(1) dated 10.10.2019,13.11.2019 and 28.11.2019. These notices u/s 142(1) were issued and sent on email [e-mail] and not sent by post. Thereafter, the AO issued show cause 06.12.2019 for assessment u/s 144 of the IT Act and sent the same on the e-mail [e-mail] and not sent by post. Similarly, the draft order was also sent on the e-mail [e-mail] and not sent by post. Though all the notices u/s 142(1) and 144 were addressed at correct address 3, Shenton Houses, Shenton Way # 07-09, Shenton Houses, Singapore- 68805,they were not sent by post but through email id of the sale department of the assessee. We find that the email id used by the AO were not in compliance with Rule 127(2)(b) as the same was not supplied by the assessee. Finally, the Final assessment order dated 26.02.2020 was sent by post at the correct address which was received by the assessee. 13 20. In the above factual matrix of the case, we are to adjudicate the effect of mandatory provision of the section 148 of the I T Act. Here, it would be relevant to extract the provisions of section 148(1) of the Act which read as under: “Issue of notice where income has escaped assessment. 148. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139....” 21. From the reading of the section 148, we come to firm view that the provision of section 148 mandates a legal obligation upon the assessing officer to serve, within the time prescribed u/s 149 of the IT Act, a notice u/s 148 before commencing the re-assessment 14 proceedings. From the facts of the case as evidenced by the sequence of events tabulated above, we find that the assessee was not served with notice under Section 148 of the Act either through post or electronically. The assessee was a foreign company, had never filed IT returns in India and was not registered in the ITBA portal of Income Tax Department. Therefore, the various notices sent through email cannot be considered as being in compliance with the provisions of Rule 127(2)(b). The assessee got itself registered with ITBA portal only on 12.03.2020. Therefore, it cannot be expected that before this date, it was monitoring the ITBA portal and was aware of the IT proceedings against it. 22. The ld DR of the Revenue has not controverted the fact of non- service of notice u/s 148 upon the assessee. In such a situation, the assessment order is liable to be quashed as it has been passed without assumption of proper jurisdiction by mandatory service of notice u/s 148 of the Act. We are fortified in our view by the jurisdictional Delhi High Court decision in the case of Atlanta Capita(supra) which held that where there is no proper service of notice u/s148, the assessment so framed is liable to be quashed. 15 23. In view of the above factual position and our discussion hereinabove, we are of the considered view that the re-assessment order passed without service of notice u/s 148 is bad in law and needs to be quashed. Since we have quashed the re-assessment order, we do not find it necessary to dwell into the merits of the case. 24. In the result, the appeal of the assessee in ITA No. 951/DEL/2022 is allowed. The order is pronounced in the open court on 06.08.2024. Sd/- Sd/- [VIKAS AWASTHY] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 06 th August, 2024. VL/ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi 16 Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order