Shri V.Ramamurthie, By L/R R.Mahalakshmi, Trichy V. ITO, Trichy

ITA 988/CHNY/2006

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1178 (ITAT-CHENNAI)
• Duration Of Justice: 6 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2013
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 26-02-2013
• Assessment Year: 1993-1994
• Appeal Filed On: 20-04-2006
• Court: TRIBUNAL
• Assessee Lawyers: PHILIP GEORGE SHRI S DASGUPA
• Keywords: Business income; Period of limitation
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH CHENN AI BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER .. ITA NO.988/MDS./2006 ASSESSMENT YEAR:1993-94 V.RAMAMURTHIE, BY L/R R.MAHALAKSHMI, NO.46,SUPER BAZAAR, SINGARATHOPE, TIRUCHIRAPALLI. VS. INCOME TAX OFFICER, WARD II(1), TIRUCHIRAPALLI. PAN (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PHILIP GEORGE RESPONDENT BY : SHRI S.DASGUPA DATE OF HEARING : 26.02.13 DATE OF PRONOUNCEMENT : 14. 03.13 O R D E R PER ABRAHAM P GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY ASSESSEE, ITS GRIEVANCE IS THAT THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR WAS REO PENED MERELY TO VERIFY THE CORRECTNESS OF THE CLAIM OF LO SS AND SUCH REOPENING WAS UNTENABLE IN LAW. ITA. 988 /MDS/06 2 2. SHORT FACTS APROPOS OF THE FACT ARE THAT ASSESS EE HAD FILED ITS RETURN FOR IMPUGNED ASSESSMENT YEAR ON 25.03.19 94, WHICH WAS PROCESSED UNDER SECTION 143(1)(A) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THEREAFTER ON 29.05.200 1, A NOTICE FOR RE-OPENING WAS ISSUED UNDER SECTION 148 OF THE ACT . THOUGH THE ASSESSEE FILED ANOTHER RETURN IN PURSUANCE OF SUCH NOTICE, IT ALSO FILED OBJECTIONS TO THE REOPENING. AS PER ASSESSEE , NOTICE UNDER SECTION 148 WAS SERVED ON ASSESSEE ONLY ON 18.07.20 01, EVEN THOUGH ISSUED ON 29.05.2001. FURTHER AS PER ASSESS EE, SIX YEARS PERIOD WITHIN WHICH REOPENING COULD BE RESORTED TO, HAD EXPIRED ON 31.03.2000 AND THEREFORE, THE NOTICE ISSUED AFTE R THE SAID DATE WAS INVALID. ASSESSEE ALSO RAISED A PLEA THAT NOTI CE UNDER SECTION 143(2) WAS ISSUED AFTER 12 MONTHS AND REASO NS FOR REOPENING WERE NEVER SUPPLIED TO IT. 3. HOWEVER, THE ASSESSING OFFICER REJECTED THE ABO VE PLEADING OF THE ASSESSEE AND PROCEEDED WITH THE REASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR. ASSESSEE HAD CLAIMED LOS S OF ` 7,94,220/- FROM ONE M/S. S.S.INTERNATIONAL EXPORTS (LEATHER), WHICH WAS SET OFF AGAINST OTHER BUSINESS INCOME. A S PER THE ASSESSING OFFICER, THE CORRECTNESS OF SUCH CLAIM OF LOSS HAD TO BE EXAMINED, SINCE THE LOSS PERTAINED TO A FIRM, WHICH WAS TAKEN ITA. 988 /MDS/06 3 OVER BY THE ASSESSEE. THEREAFTER ASSESSMENT WAS CO MPLETED DISALLOWING THE SET OFF OF LOSS OF ` 7,94,220/- OF M/S. S.S.INTERNATIONAL EXPORTS (LEATHER). 4. ASSESSEE MOVED IN APPEAL BEFORE THE CIT(A), STR ONGLY CHALLENGING ASSUMPTION OF JURISDICTION BY THE ASSES SING OFFICER. ACCORDING TO THE ASSESSEE, NOTICE UNDER SECTION 148 WAS ISSUED AFTER THE SIX YEARS PERIOD FROM THE END OF THE RELE VANT ASSESSMENT YEAR. ASSESSEE ALSO ASSAILED THE REASSESSMENT FOR WANT OF NOTICE UNDER SECTION 143(2) OF THE ACT, WHICH AS PE R ASSESSEE WAS ISSUED TO IT AFTER EXPIRY OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH HE HAD FILED THE RETURN. HOWEVER, L D.CIT(A) AGREED WITH THE FINDINGS OF THE ASSESSING OFFICER. ACCORDING TO HIM, NOTICE WAS ISSUED WITHIN THE TIME PERIOD AND S ERVICE BEYOND THE TIME PERIOD DID NOT AFFECT THE VALIDITY OF THE PROCEEDINGS. CIT(A) ALSO HELD THAT VALID REASONS WERE THERE FOR THE A.O, JUSTIFYING THE REOPENING THE ASSESSMENT AND ISSUE O F NOTICE UNDER SECTION 143(2) OF THE ACT WAS NOT APPLICABLE FOR RE TURNS FILED PURSUANT TO THE NOTICE UNDER SECTION 148 OF THE ACT . 5. NOW BEFORE US, LD. A.R STRONGLY ASSAILING THE O RDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT NOTICE ISSUED TO THE ITA. 988 /MDS/06 4 ASSESSEE UNDER SECTION 148 OF THE ACT WAS DATED 29. 05.2001. ACCORDING TO HIM, THE DATE OF DISPATCH OF SUCH NOT ICE BY THE DEPARTMENT WAS DATED 16.07.2001. LD. A.R PLACED ON RECORD A REPLY GIVEN BY THE INFORMATION OFFICER OF THE DEPAR TMENT TO A PETITION UNDER RIGHT TO INFORMATION ACT, WHEREIN IT HAS BEEN STATED THAT THE DISPATCH OF THE NOTICE WAS DONE ON 16.07.2 001. FURTHER, ACCORDING TO HIM, IT WAS AN ADMITTED POSITION THAT THE NOTICE WAS SERVED ON THE ASSESSEE ONLY ON 18.07.2001. LD. A. R POINTED OUT THAT SIX YEAR PERIOD FROM THE END OF THE IMPUGNED A SSESSMENT YEAR MENTIONED IN SEC.149(1)(B) OF THE ACT EXPIRED ON 31.03.2000. FURTHER ACCORDING TO HIM, AMENDMENT TO SEC.147 ENABLING A REOPENING WITHIN A PERIOD OF 10 YEARS WA S REDUCED TO 6 YEARS WITH EFFECT FROM 01.06.2001. ACCORDING TO HI M, THE DATE OF DESPATCH OF NOTICE BEING 16.07.2001, THE AMENDED PR OVISION APPLIED, THEREBY RENDERING THE PROCEEDINGS INVALID IN THE EYES OF LAW. 6. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE SUB MITTED THAT WHAT WAS RELEVANT WAS THE DATE OF ISSUE OF NOTICE. ACCORDING TO HIM, SUCH DATE OF ISSUE HAS BEEN CONSIDERED AS THE DATE OF NOTICE, WHICH IN THE PRESENT CASE WAS 29.05.2001. THIS WAS PRIOR TO FIRST JUNE, 2001. AS ON THE DATE OF NOTICE, TI ME PERIOD ITA. 988 /MDS/06 5 AVAILABLE WAS 10 YEARS FOR RESORTING TO A REOPENING . HENCE, THE ISSUE OF NOTICE WAS DONE WITHIN TIME LIMIT. STRONG RELIANCE WAS PLACED ON THE DECISION OF THE APEX COURT IN THE CAS E OF R.K.UPADHYAYA VS. SHANABHAI P. PATEL ( 166 ITR 163 ). LD. D.R. ARGUED THAT ONCE A NOTICE WAS ISSUED WITHIN THE PER IOD OF LIMITATION, JURISDICTION BECAME VESTED IN THE ASSES SING OFFICER TO PROCEED WITH A REASSESSMENT. THEREFORE, ACCORDING TO THE LD. D.R ASSESSMENT PROCEEDINGS WERE VALIDLY REOPENED AN D COMPLETED. 7. AD LIBITUM, LEARNED A.R. SUBMITTED THAT HONBLE GUJARAT HIGH COURT IN THE CASE OF KANUBHAI M. PATEL (HUF) VS. H IREN BHATT OR HIS SUCCESSORS TO OFFICE AND OTHERS ( [2011] 334 I TR 25 (GUJ.) ) HELD THAT ISSUE OF NOTICE MEANT PLACING IN THE HAND S OF THE PROPER OFFICER FOR SERVICE, AND NOT SIMPLY KEEPING IN THE FILE. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THERE CANNOT BE A DISPU TE THAT THE NOTICE UNDER SECTION 148 OF THE ACT WAS DISPATCHED ONLY ON 16.07.2001. LETTER DATED 27.06.2011 OF THE INFORM ATION OFFICER OF THE DEPARTMENT, ADDRESSED TO SMT.R.MAHALAKSHMI, LEG AL HEIR OF ASSESSEE, CLEARLY STATE THAT NOTICE WAS DISPATCHED BY REGISTERED ITA. 988 /MDS/06 6 POST ON 16.07.2001, AS PER THE DISPATCH REGISTER. SAID NOTICE WAS RECEIVED BY THE ASSESSEE ON 18.07.01. TIME LIM IT FOR ISSUE OF NOTICE UNDER SECTION 148 HAS BEEN SPECIFIED IN SEC .149 OF THE ACT. THE SAID SECTION PRIOR TO AMENDMENT BY FINANC E ACT, 2001 READ AS UNDER:- (1) NO NOTICE UNDER SECTION 148 SHALL BE ISSUED FO R THE RELEVANT ASSESSMENT YEAR,- (A) IN A CASE WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR SUC H ASSESSMENT YEAR, - (I) IF FOUR YEARS HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE CASE FALLS UNDER SUB-CLAUSE (II) OR SUB-CLAUSE(III) (II) IF FOUR YEARS, BUT NOT MORE THAN SEVEN YEARS, HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AMOUNTS TO OR IT LIKELY TO AMOUNT TO RUPEES FIFTY THOUSAND OR MORE FOR THAT YEAR; (III) IF SEVEN YEARS, BUT NOT MORE THAN TEN YEARS, HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE INCOME CHARGEABLE TO TAX WHICH ITA. 988 /MDS/06 7 HAS ESCAPED ASSESSMENT AMOUNTS TO OR IS LIKELY TO AMOUNT TO RUPEES ONE LAKH OR MORE FOR THAT YEAR; (B) IN ANY OTHER CASE, - (I) IF FOUR YEARS HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE CASE FALLS UNDER SUB-CLAUSE (II) OR SUB-CLAUSE(III) (II) IF FOUR YEARS, BUT NOT MORE THAN SEVEN YEARS, HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AMOUNTS TO OR IT LIKELY TO AMOUNT TO RUPEES TWENTY FIVE THOUSAND OR MORE FOR THAT YEAR; (IV) IF SEVEN YEARS, BUT NOT MORE THAN TEN YEARS, H AVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AMOUNTS TO OR IS LIKELY TO AMOUNT TO RUPEES FIFTY THOUSAND OR MORE FOR THAT YEAR; AFTER SUBSTITUTION OF CLAUSES (A) & (B) BY FINA NCE ACT, 2001 WITH EFFECT FROM 01.06.2001, THE SAID SECTION STOOD AS U NDER:- ITA. 988 /MDS/06 8 (1) NO NOTICE UNDER SECTION 148 SHALL BE ISSUED FO R THE RELEVANT ASSESSMENT YEAR,- (A) IF FOUR YEARS HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE CASE FALLS UNDER CLAUSE (B); (B) IF FOUR YEARS, BUT NOT MORE THAN SIX YEARS, HAV E ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AMOUNTS TO OR IS LIKELY TO AMOUNT TO ONE LAKH RUPEES OR MORE FOR THAT YEAR; A READING OF THE ABOVE SECTION PRE AND POST AMENDME NT CLEARLY SHOWS THAT THE TEN YEAR PERIOD EARLIER AVAILABLE FO R ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT WAS REDUCED TO SIX YEA RS PERIOD, EVEN WHERE THE INCOME ESCAPING ASSESSMENT AMOUNTED TO ONE LAKH RUPEES OR MORE. IF WE CONSIDER THE ISSUE OF N OTICE TO BE THE SAME AS DATE OF NOTICE VIZ.,29.05.2001, THEN ASSESS ING OFFICER WAS HAVING THE POWER FOR INITIATING THE REASSESSMEN T PROCEEDINGS. IF ON THE OTHER HAND, WE CONSIDER THE ISSUE OF NOTICE, AS THE DATE OF DISPATCH VIZ 16.07.2001, THEN ASSES SING OFFICER HAD NO POWER TO INITIATE A REASSESSMENT PROCEEDING S. SIX YEAR PERIOD WAS OVER BY 31.03.2000. AMENDMENT TO SEC.1 47 WAS ITA. 988 /MDS/06 9 EFFECTIVE FROM 01.06.01. IN OUR OPINION, DATE OF ISSUE OF NOTICE AND DATE OF SERVICE OF NOTICE CANNOT BE EQUATED. IT IS NOT REQUIRED UNDER SECTION 148 OF THE ACT THAT SERVICE OF THE NOTICE SHOULD BE EFFECTED WITHIN THE PERIOD MENTIONED UNDE R SECTION 149. HOWEVER, ISSUE OF NOTICE IS VERY MUCH NECESSARY. D ECISION OF THE APEX COURT IN THE CASE OF R.K.UPADHYAYA VS. SHANAB HAI P. PATEL ( SUPRA) RELIED ON BY LD. D.R., IS CLEAR THA T IN THE CONTEXT OF ISSUANCE OF NOTICE, ONCE A NOTICE WAS ISSUED WITHI N THE PERIOD OF LIMITATION, JURISDICTION BECAME VESTED IN THE ASSES SING OFFICER TO PROCEED WITH REASSESSMENT. 9. HOWEVER, THE QUESTION THAT IS STILL REQUIRED TO BE ANSWERED IS WHETHER DATE OF ISSUE CAN BE CONSIDERED AS THE D ATE OF NOTICE ITSELF. IN OUR OPINION, THIS QUESTION HAS BEEN ANS WERED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF KANUBHAI M. PATE L (HUF) VS. HIREN BHATT OR HIS SUCCESSORS TO OFFICE AND OTHERS (SUPRA) RELIED ON BY LD. A.R. THEIR LORDSHIPS HELD THAT ISSUE OF N OTICE MEANT SENDING IT OUT OR PLACING IT IN THE HANDS OF THE PR OPER OFFICER FOR SERVICE. MERELY SIGNING OF THE NOTICE CANNOT BE EQU ATED WITH ISSUANCE OF NOTICE AS CONTEMPLATED UNDER SECTION 14 9 OF THE ACT. ADMITTEDLY, NOTICE UNDER SECTION 148 WAS HANDED OVE R TO THE POST ITA. 988 /MDS/06 10 OFFICE ONLY ON 16.07.01. THEREFORE, CONSIDERING TH E DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF KANUBHAI M. PATEL (HUF) (SUPRA), WE ARE OF THE OPINION THAT ISSUE OF NOTICE CAN ONLY BE DEEMED AS 16.07.2001 BEING THE DATE OF DISPATCH BY THE REGISTERED POST. THIS DATE FELL BEYOND BOTH 31.0 3.00 AS WELL AS 01.06.01. BY 31.03.00, THE SIX YEAR PERIOD ENDED A ND BY 01.06.01, AMENDMENT TO SEC.147 CAME INTO STATUTE RE DUCING THE TIME LIMIT UNDER SECTION 149 FROM 10 YEARS TO 6 YEA RS. WE ARE THEREFORE, OF THE OPINION THAT NOTICE WAS ISSUED OU T OF TIME. NOTICE WAS INVALID AND CONSEQUENTLY, SUBSEQUENT REA SSESSMENT PROCEEDINGS WERE ALSO INVALID. ASSESSMENT IS QUAS HED. 10. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 14 TH MARCH, 2013 AT CHENNAI. SD/- SD/- (S.S.GODARA) (ABRAHAM P GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED 14 TH MARCH, 2013 . K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE ITA. 988 /MDS/06 11