ITO,Ward 10(3), Hyderabad V. The Armed Forces Officers Cooperative Housing Society Ltd., Secunderabad

ITA 987/HYD/2014

• Counselvise Citation: 98722514 RSA 2014
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-01-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 21-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: B SHANTI KUMAR
• Section: 143(3); 147; 148; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 987/HYD/2014 ASSESSMENT YEAR: 2001-02 INCOME-TAX OFFICER, WARD 10(3), HYDERABAD. VS. THE ARMED FORCES OFFICERS COOPERATIVE HOUSING SOCIETY,SECUNDERABAD. PAN AAATT39274 (APPELLANT) (RESPONDENT) REVENUE BY : SHRI RAJAT MITRA ASSESSEE BY : SHRI B. SHANTI KUMAR DATE OF HEARING 11-02-2015 DATE OF PRONOUNCEMENT 18-02-2015 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST ORDER DATED 28/02/2014 PASSED BY LD. CIT(A)-VI, HYDERABAD FOR A.Y. 2001-02. 2. AS CAN BE SEEN FROM THE GROUNDS RAISED, DEPARTME NT IS BASICALLY AGGRIEVED WITH THE DECISION OF LD. CIT(A) IN HOLDING THAT ISSUANCE OF NOTICE U/S 147 OF THE ACT IS BARRED BY LIMITATION IN ABSENCE OF APPROVAL BY APPROPRIATE AUTHORITY U/S 15 1(1) OF THE ACT. 3. BRIEFLY, THE FACTS ARE, ASSESSEE IS A COOPERATIV E SOCIETY CREATED WITH THE OBJECTS TO CATER FOR THE BENEFIT O F ITS MEMBERS IN THE TRADE OF BUILDING AND OF BUYING, ACQUIRING, SEL LING, HIRING, LETTING AND DEVELOPING LAND FOR THE CONSTRUCTION OF NEW BUI LDINGS BY ITS 2 ITA NO. 987/HYD/2014 THE ARMED FORCES OFFICERS COOPERATIVE HOUSING SOCI ETY MEMBERS. IT IS ALSO ENGAGED IN CARRYING ON VARIOUS OTHER ACTIVITIES FOR THE BENEFIT OF ITS MEMBERS. FOR THE AY UNDER CO NSIDERATION, ASSESSEE FILED ITS RETURN OF INCOME ON 05/11/2011 D ECLARING TOTAL LOSS OF RS. 94,940. A NOTICE U/S 148 OF THE ACT WAS ISSUED TO ASSESSEE ON 01/10/2004, PURSUANT TO WHICH ASSESSMEN T FOR THE IMPUGNED ASSESSMENT YEAR WAS COMPLETED U/S 147 VIDE ORDER DATED 28/02/2006 DETERMINING TOTAL INCOME AT RS. 33 ,350. WHEN THE MATTER STOOD LIKE THIS, AO AGAIN ON 05/06/2007 ISSU ED ANOTHER NOTICE U/S 148 ON THE REASON THAT ASSESSEE HAS CLAI MED EXEMPTION OF INTEREST RECEIVED ON FIXED DEPOSITS AMOUNTING TO RS. 11,81,361 ON THE GROUND OF MUTUALITY, WHICH OTHERWISE, IS TAX ABLE. IN RESPONSE TO THE NOTICE ISSUED U/S 148, ASSESSEE FILED ITS RE TURN OF INCOME AGAIN CLAIMING EXEMPTION ON THE GROUND OF MUTUALITY . ALONG WITH RETURN OF INCOME, ASSESSEE FILED A LETTER DATED 22/ 08/2007 WHEREIN IT WAS STATED THAT ASSESSMENT IN CASE OF ASSESSEE W AS COMPLETED UNDER SECTION 147 OF THE ACT VIDE ASSESSMENT ORDER DATED 28/02/06 DETERMINING TOTAL INCOME AT RS. 33,350. THEREFORE, AS NOTICE ISSUED U/S 148 ON 05/06/07 IS BEYOND THE PERIOD OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR, IT COULD NOT HAVE BEE N ISSUED WITHOUT PRIOR APPROVAL OF THE CHIEF COMMISSIONER OF INCOME-TAX OR COMMISSIONER OF INCOME-TAX (CCIT/CIT) AS PER THE PR OVISIONS OF SECTION 151(1) OF THE ACT. ACCORDINGLY, ASSESSEE RE QUESTED TO DROP THE PROCEEDING. AO, HOWEVER, DID NOT ACCEPT THE CON TENTION OF ASSESSEE BY OBSERVING THAT AS EARLIER ASSESSMENT OR DER WAS PASSED U/S 143(3) READ WITH SECTION 147 WITHOUT ISS UING A NOTICE U/S 143(2), IT IS TO BE TREATED THAT THERE IS NO OR DER PASSED U/S 143(3) READ WITH SECTION 147 IN CONSEQUENCE TO THE NOTICE ISSUED U/S 148 ON 01/10/04. THEREFORE, ACCORDING TO AO, NO TICE ISSUED U/S 148 ON 05/06/07 IS IN ACCORDANCE WITH THE PROVISION S OF SECTION 151(1) OF THE ACT. HAVING HELD SO, AO PROCEEDED TO COMPLETE THE ASSESSMENT BY MAKING DISALLOWANCES/ADDITIONS INCLUD ING THE BANK INTEREST OF RS. 11,81,361, WHICH RESULTED IN DETERM INATION OF TOTAL 3 ITA NO. 987/HYD/2014 THE ARMED FORCES OFFICERS COOPERATIVE HOUSING SOCI ETY INCOME AT RS. 12,14,710 AS PER THE ASSESSMENT ORDER DATED 19/12/08 PASSED U/S 143(3) READ WITH SECTION 147 OF THE ACT. BEING AGGRIEVED OF THE ASSESSMENT ORDER, SO PASSED, ASSES SEE PREFERRED APPEAL BEFORE LD. CIT(A) CHALLENGING THE ASSESSMENT ORDER BOTH ON THE VALIDITY OF NOTICE ISSUED U/S 148 AS WELL AS ON THE MERITS OF THE ADDITIONS. 4. IN COURSE OF HEARING OF APPEAL BEFORE LD. CIT(A) , IT WAS ARGUED ON BEHALF OF ASSESSEE THAT AS IN THE IMPUGNE D AY THERE IS ALREADY AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 OF THE ACT, AS PER THE PROVISO TO SECTION 151(1) OF THE ACT, N OTICE U/S 148 OF THE ACT COULD NOT HAVE BEEN ISSUED BEYOND THE PERIO D OF FOUR YEARS FROM THE END OF THE RELEVANT AY WITHOUT PRIOR APPRO VAL OF THE CCIT/CIT. IT WAS SUBMITTED BY ASSESSEE THAT AS IN T HE PRESENT CASE APPROVAL WAS BY ADDITIONAL CIT ONLY AND NOT EITHER BY CCIT/CIT, THE NOTICE ISSUED IS BARRED BY LIMITATION, HENCE, A SSESSMENT ORDER PASSED IN CONSEQUENCE THEREUPON IS ALSO INVALID. 5. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE IN THE CONTEXT OF RELEVANT STATUTORY PROVISION AS WELL AS FACTS AND MATERIALS ON RECORD, HELD THAT AS IN ASSESSEES CAS E ASSESSMENT WAS ORIGINALLY COMPLETED U/S 143(3) READ WITH SECTI ON 147 OF THE ACT, SECOND NOTICE U/S 148 COULD HAVE BEEN ISSUED A FTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT AY ONLY IF PRIOR APPROVAL WAS OBTAINED FROM CCIT/CIT. SINCE AO HAS NOT FOLLOW ED THIS MANDATORY REQUIREMENT BY OBTAINING APPROVAL OF CCI T/CIT PRIOR TO ISSUANCE OF NOTICE U/S 148 OF THE ACT, THE NOTICE S O ISSUED IS BARRED BY LIMITATION AND AFFECTS THE VALIDITY OF THE ASSE SSMENT ORDER ITSELF. ACCORDINGLY, HE HELD THE IMPUGNED ASSESSMENT ORDER TO BE INVALID AND VOID. BEING AGGRIEVED, DEPARTMENT IS IN APPEAL BEFORE US. 4 ITA NO. 987/HYD/2014 THE ARMED FORCES OFFICERS COOPERATIVE HOUSING SOCI ETY 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WE LL AS OTHER MATERIALS ON RECORD. UNDISPUTEDLY, ASSESSMENT IN CA SE OF ASSESSEE WAS ORIGINALLY COMPLETED U/S 143(3) READ WITH SECTI ON 147 OF THE ACT VIDE ASSESSMENT ORDER DATED 28/02/06. IT IS ALS O NOT DISPUTED THAT NOTICE U/S 148 IN PURSUANCE TO WHICH IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED BY AO WAS ISSUED ON 05/06/07 I.E. AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT A Y. IT IS ALSO A FACT ON RECORD THAT ASSESSEE AFTER RECEIVING THE NOTICE U/S 148 OF THE ACT HAS OBJECTED TO THE INITIATION OF PROCEEDING BE FORE AO BY CONTENDING THAT THE PROVISIONS OF SECTION 151(1) HA VE NOT BEEN COMPLIED. THEREFORE, BEFORE DECIDING THE ISSUE OF V ALIDITY OF THE NOTICE U/S 148 OF THE ACT, IT IS RELEVANT TO LOOK I NTO THE PROVISIONS OF SECTION 151(1) OF THE ACT, WHICH ARE EXTRACTED HERE IN FOR READY REFERENCE: 151. (1) IN A CASE WHERE AN ASSESSMENT UNDER SUB-SECTIO N (3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO NOTICE SHALL BE ISSUED UNDER SE CTION 148 [BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF ASSISTA NT COMMISSIONER [OR DEPUTY COMMISSIONER], UNLESS THE [JOINT] COMMISSIO NER IS SATISFIED ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE] : PROVIDED THAT, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE ISSUED UNL ESS THE [ PRINCIPAL CHIEF COMMISSIONER OR ] CHIEF COMMISSIONER OR [ PRINCIPAL COMMISSIONER OR ] COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER AFORESAID, THAT IT IS A FIT CASE FOR THE IS SUE OF SUCH NOTICE. ON PLAIN READING OF THE AFORESAID PROVISION, IT IS PATENT AND OBVIOUS THAT IN CASE OF AN ASSESSEE WHERE ASSESSMENT HAS EA RLIER BEEN COMPLETED U/S 143(3) OR 147 OF THE ACT, NOTICE U/S 148 CANNOT BE ISSUED AFTER EXPIRY OF FOUR YEARS FROM THE END OF T HE RELEVANT AY WITHOUT OBTAINING PRIOR APPROVAL OF CCIT/CIT. IF WE EXAMINE THE FACTS OF THE PRESENT CASE VIS--VIS THE AFORESAID S TATUTORY PROVISION, TWO CLEAR FACTS EMERGE. FIRSTLY, IN ASSESSEES CASE ASSESSMENT 5 ITA NO. 987/HYD/2014 THE ARMED FORCES OFFICERS COOPERATIVE HOUSING SOCI ETY ORDER U/S 143(3) R.W.S. 148 HAS ALREADY BEEN PASSED AND SECONDLY SECOND NOTICE U/S 148 WAS ISSUED AFTER EXPIRY OF FO UR YEARS FROM THE RELEVANT AY WITHOUT OBTAINING PRIOR APPROVAL FR OM CCIT/CIT. CIT. THEREFORE, THE MANDATORY CONDITIONS OF SECTIO N 151(1) HAS NOT BEEN SATISFIED. THE AO HAS TRIED TO OVERCOME THE OB JECTION OF ASSESSEE AS WELL AS THE STATUTORY REQUIREMENT BY OB SERVING THAT EARLIER ASSESSMENT ORDER CANNOT BE HELD TO BE A VAL ID ASSESSMENT ORDER AS NO NOTICE U/S 143(2) WAS ISSUED TO ASSESSE E. EVEN ASSUMING FOR THE SAKE OF ARGUMENT THAT THE EARLIER ASSESSMENT ORDER WAS NOT VALID AS OBSERVED BY AO, BUT, CERTAIN LY HE IS NOT THE AUTHORITY TO DECIDE THE VALIDITY OF THE ASSESSMENT ORDER, SO PASSED. WHEN THE EXISTENCE OF THE ASSESSMENT ORDER IS NOT D ISPUTED AND THE VALIDITY OF SUCH ASSESSMENT ORDER HAS NOT BEEN DECIDED BY THE APPELLATE AUTHORITY, AO HAS NO JURISDICTION TO REVI EW THE VALIDITY OF THE ASSESSMENT ORDER PASSED EARLIER. IN CASE OF CIT VS. SPLS SIDDHARTHA LTD. 345 ITR 223, THE HONBLE DELHI HIG H COURT HAS HELD THAT A NOTICE U/S 148 IN VIOLATION OF SECTION 151(1) IS WITHOUT JURISDICTION AFFECTING THE VALIDITY OF THE ASSESSME NT ORDER ITSELF, HENCE, CANNOT BE CONSIDERED TO BE AN IRREGULARITY C URABLE U/S 292B. THE HONBLE HIGH COURT OBSERVED, IF POWERS CONFERRE D ON A PARTICULAR AUTHORITY ARE ARROGATED BY OTHER AUTHORI TY WITHOUT MANDATE OF LAW, IT WILL CREATE CHAOS IN THE ADMINIS TRATION OF LAW AND HIERARCHY OF ADMINISTRATION WILL MEAN NOTHING. FURT HER, THE HONBLE COURT HELD, SATISFACTION OF ONE AUTHORITY CANNOT BE SUBSTITUTED BY SATISFACTION OF ANOTHER AUTHORITY. WHEN A STATUTE R EQUIRES A THING TO BE DONE IN A CERTAIN MANNER, IT SHALL BE DONE IN TH AT MANNER ALONE. 7. THEREFORE, CONSIDERING THE FACT THAT IN THE PRES ENT CASE THERE IS CLEAR VIOLATION OF THE PROVISO TO SECTION 151(1) WHILE ISSUING THE NOTICE U/S 148 ON 05/06/2207, WE DO NOT FIND ANY IN FIRMITY IN THE ORDER OF LD. CIT(A) IN HOLDING THE ASSESSMENT ORDER TO BE VOID AND 6 ITA NO. 987/HYD/2014 THE ARMED FORCES OFFICERS COOPERATIVE HOUSING SOCI ETY INVALID. ACCORDINGLY, WE UPHOLD THE DECISION OF LD. CIT(A) BY DISMISSING THE GROUNDS RAISED BY REVENUE. 8. IN THE RESULT, DEPARTMENTS APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 18/02/2015. SD/- SD/- (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 18 TH FEBRUARY, 2015 KV COPY TO:- 1) ITO, WARD 10(3), ROOM NO. 627, AC GUARDS, IT T OWERS, HYDERABAD . 2) THE ARMED FORCES OFFICERS COOPERATIVE HOUSING S OCIETY LTD., SAINIKPURI, SECUNDERABAD 500 094. 3) CIT(A)-VI, HYDERABAD 4) CIT-V, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.