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2015 (10) TMI 258 - ALLAHABAD HIGH COURT

2015 (10) TMI 258 - ALLAHABAD HIGH COURT - TMI - Transfer of jurisdiction to Assistant Commissioner of Income Tax challenged - urged as no notice or opportunity of hearing was given - validity of order of ACIT directing to conduct a special audit under Section 142(2A) of the Act - Held that:- This Court is of the opinion that the impugned order dated 23rd September, 2008 passed by the Commissioner of Income Tax-VIII, New Delhi transferring the case to the Assistant Commissioner of Income Tax, Me .....

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ined.

In the light of the aforesaid, all consequential proceedings initiated by the Assistant Commissioner of Income Tax, Meerut by issuance of notice dated 30th October, 2009 and the notice dated 7th December, 2009 and the consequential order dated 18th December, 2009 directing to conduct a special audit under Section 142(2A) of the Act being without jurisdiction also cannot be sustained. In our opinion, it is necessary and essential for the authority to give reasons indicating the c .....

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oks of accounts and after inviting explanation from the assessee. If the books of accounts are not perused, the question of complexity cannot be judged. We are of the opinion that an order under Section 142(2A) cannot be passed on the basis of the seized material unless the assessee failed to produce books of accounts, which in the instant case has not happened, inasmuch as no hearing took place on 4th December, 2009 on the date when the petitioner was required to produce the books of accounts. .....

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n 142(2A) of the Act are quashed. - Decided in favour of assessee. - Civil Misc. Writ Petition (Tax) No. 165 of 2010 - Dated:- 23-9-2015 - Hon'ble Tarun Agarwala And Hon'ble Surya Prakash Kesarwani, JJ. ORDER ( Per: Tarun Agarwala, J. ) The petitioner is a partnership firm and came into existence on 18th August, 2003 and, therefore, the first assessment year was 2004-05. The petitioner is engaged in the business of development of real estate. The principal place of business as indicated .....

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hange of address, etc. A search and seizure operation took place on 15th February, 2008 under Section 132(1) of the Act at the business premises of the petitioner's firm at A-193, Ist Floor, Okhla Industrial Area, Phase I, New Delhi. Number of documents and cash was seized and a panchanama was prepared. It transpires that the Commissioner of Income Tax, Delhi-VIII issued an order dated 23rd September, 2008 under Section 127 of the Act transferring the case from the Assistant Commissioner of .....

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nder Section 271F of the Act should not be initiated. The petitioner appeared and filed his objections contending that the Assistant Commissioner of Income Tax, Meerut had no jurisdiction to proceed with the case and that the order of the Commissioner of Income Tax, New Delhi dated 23rd September, 2008 was patently illegal, inasmuch as it was passed in violation of the principles of natural justice. It was contended that no notice or opportunity of hearing was provided by the Commissioner of Inc .....

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tioner to submit various information in connection with the assessment proceedings under Section 153A of the Act. As many as 43 queries were raised and query no.43 directed the petitioner to produce the complete books of accounts including subsidiary books of accounts and bills and vouchers and fixed 4th December, 2009 for hearing. The petitioner has contended in paragraph 39 that no hearing took place on 4th December, 2009 as the Assistant Commissioner of Income Tax, Meerut was preoccupied with .....

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bjection and, thereafter, the authority passed an order dated 18th December, 2009 directing that the accounts should be audited under Section 142(2A) of the Act for the assessment years 2002-03 to 2008-09 by M/s Tandon Seth and Company, Chartered Accountants, Kanpur. The petitioner also contended that the Commissioner of Income Tax, New Delhi issued a corrigendum dated 26th October, 2009 correcting an error in its order dated 23rd September, 2008. The petitioner contended that even this order wa .....

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tion 153A of the Act dated 30th October, 2009 issued by the Assistant Commissioner of Income Tax, Meerut for the assessment years 2002-03 to 2007-08 and for quashing the order dated 18th December, 2009 issued by the Assistant Commissioner of Income Tax, Meerut directing special audit to be conducted under Section 142(2A) of the Act for the assessment years 2002-03 to 2008-09 by M/s Tandon Seth and Company, Chartered Accounts of Kanpur. In this backdrop, we have heard Sri Ashish Bansal, the learn .....

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agraph 14, 17, 18 and 28 of the writ petition and it has also been specifically asserted in the objection filed by the petitioner before the authority vide their letter dated 1st October, 2009, Annexure 15 to the writ petition. The learned counsel further asserted that the Assistant Commissioner of Income Tax, Meerut had no jurisdiction to issue a notice under Section 153A of the Act for initiating the assessment proceedings for the assessment year 2002-03 to 2008-09 and, therefore, the said not .....

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e other hand, the learned counsel for the department contended that notice under Section 127 of the Act was issued to the assessee and since no objection was filed nor the petitioner appeared, consequently, an order was passed transferring the jurisdiction to Meerut. It was therefore, contended that notice and opportunity of hearing was given, which the petitioner did not avail and that the principles of natural justice was complied with. It was also contended that the Assistant Commissioner of .....

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on, we find from a perusal of paragraph 8 of the counter affidavit that for the assessment year 2008-09, the petitioner's case was selected for scrutiny through computer aided selection scheme and notice was generated by the computer since the PAN of the petitioner was still lying with the Assistant Commissioner of Income Tax, Circle 22(1), New Delhi, inasmuch as the PAN of the petitioner had not migrated to the new Assessing Officer of Okhla and, therefore, the Assistant Commissioner of Inc .....

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affidavit a vague reply has been given that before issuing the corrigendum, a notice was issued to the petitioner and since no reply was received, a corrigendum was passed. No proof of issuance of notice has been filed. In our opinion, the assertion made in paragraph 8 and 10 of the counter affidavit is not only vague, and cannot be believed. Service of notice is required to be made in the manner specified under Section 282 of the Act. One of the methods of service is as per the procedure presc .....

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edged by this agency vide their letter dated 14th November, 2007. Further, the department knew about the change of address, inasmuch as, a search was carried out at the new address under Section 132 of the Act on 15th February, 2008. Therefore, it does not sounds logical nor reasonable for the Commissioner of Income Tax, New Delhi to issue notice dated 28th August, 2008 at the old address of the petitioner at Ashok Vihar. The notice, if any, should have been sent to the principal place of busine .....

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y received by the petitioner. A notice sent by registered post raises presumption of service but this presumption is rebuttal. In the instant case, the petitioner has denied receiving any such notice. Once receipt of notice is denied by the petitioner, the onus shifts back on the department. In fact, we find that the department has conveniently sworn paragraph 8 of the counter affidavit on the basis of legal advice and has not sworn it on the basis of personal knowledge or on the basis of record .....

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sed by the Commissioner of Income Tax-VIII, New Delhi transferring the case to the Assistant Commissioner of Income Tax, Meerut was patently illegal and in gross violation of the principles of natural justice. It was imperative for the authority to give notice and an opportunity of hearing to the petitioner before transferring the case under Section 127 of the Act, which in the instant case has not been done. Therefore, the impugned order dated 23rd September, 2008 as well as the corrigendum dat .....

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t be sustained. One of the contention raised by the petitioner is that the order passed by the Assistant Commissioner of Income Tax, Meerut dated 18th December, 2009 under Section 142(2A) of the Act was passed mechanically without application of mind and without giving any reason appears to be correct. In this regard, we find that the said authority issued a notice dated 25th November, 2009 directing the petitioner to produce the books of accounts including subsidiary books of accounts, bill, vo .....

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of the Act was passed on the basis of the documents found during the course of search, which indicated the complexity of the accounts. We are of the opinion that an order dated under Section 142(2A) of the Act entails civil consequences and, an order is required to be passed upon an application of mind and with due care. Complexity of the accounts can only be judged upon a perusal of the books of accounts and after inviting explanation from the assessee. If the books of accounts are not perused .....

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