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2015 (11) TMI 1209 - ITAT DELHI

2015 (11) TMI 1209 - ITAT DELHI - TMI - Reopening of assessment - non serving of notice - assessee submitted that the order u/s 143(1) was passed by the AO on 21.12.2004 and the notice u/s 148 was claimed to be issued on 29.03.2011 at a wrong address which remained unserved, was beyond a period of six years - disallowance of expenditure on account of site expenses - Held that:- In the present case, it is an admitted fact that the notice u/s 143(2) of the Act was not issued before framing the ass .....

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ee had claimed and was allowed an expenditure on account of site expenses in the profit and loss account which were of capital in nature. So, no new material came in possession of the AO for issuing the notice u/s 148 of the Act. There was nothing in the reason recorded to show that any tangible material had come into his possession subsequent to the issue of the intimation u/s 143(1) of the Act. - Decided in favour of assessee - ITA No. 2517/Del/2013 - Dated:- 9-10-2015 - Sh. N. K. Saini, AM An .....

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by the assessing officer under section 147 of the Income-tax Act, 1961 ( the Act ) was beyond jurisdiction, bad in law and void-abinitio. 1.1 That the Commissioner of Income Tax (Appeals) erred in not appreciating that the alleged notice dated 29.03.2011 issued under section 148 of the Act was invalid and no-nest as the same was issued on wrong address and was, thus, not served on the appellant. 1.2 That the Commissioner of Income Tax (Appeals) erred on facts and in law in upholding the validity .....

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and without satisfying other conditions precedent for initiating proceedings under that section. 2. That the Commissioner of Income Tax (Appeals) erred on facts and in law in alleging that the appellant surreptitiously filed additional evidences without moving necessary application for admission of the same in terms of Rule 46A of the Income tax Rules, 1962. 2.1 That the Commissioner of Income Tax (Appeals) erred on facts and in law in not appreciating that no additional evidences/documents were .....

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facts and in law in not appreciating that aforesaid expenditure neither brought into existence any capital asset nor provided any enduring benefit to the appellant in as much as the appellant does not own the roads so constructed. The appellant craves leave to add, alter, amend or vary from all or any grounds of appeal at or before the time of hearing. 3. Vide Ground Nos. 1 to 1.3 the grievance of the assessee relates to the proceedings u/s 147 of the Income Tax Act, 1961 (hereinafter referred t .....

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the objection regarding initiation of proceedings u/s 148 of the Act and stated that those proceedings were barred by limitation, the assessee summarized its submission as under: i) That for valid reopening of assessment after four years, the Assessing Officer should have reason to believe that the income of the assessee had escaped assessment by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. It is a condition pr .....

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sed on reasons which are relevant and material. iii) The reason to believe does not mean reason to suspect . The expression reason to believe in section 147 does not mean purely subjective satisfaction on the part of the Assessing Officer. The belief must be held in good faith; it cannot be merely a pretence. There must be a rational connection between the reasons for the belief and the relevant material. iv) The belief of the Officer should not be a product of imagination or speculation. There .....

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the Assessing Officer to come to a conclusive finding that the income escaped assessment. Such belief obviously at that stage is a tentative belief on the material before him to be examined and scrutinized on such evidence as may be available in the proceedings for reassessment. But there must be some ground for reasonable belief that there had been a non-disclosure etc. of material facts resulting in escapement of income. viii) For determining whether initiation of reassessment proceeding was .....

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or was based on vague, irrelevant and nonspecific information. 5. The reference was made to following case laws: Johri Lal (HUF) Vs CIT (1973) 38 ITR 439 (SC) ITO Vs Lakhmani Mewal Das (1976) 103 ITR 437 (SC) CIT Vs T S PLP Chidambaram Chattier (1971) 80 ITR 467 (SC) Ø H A Hanji & CO. Vs ITO (1979) 120 ITR 593 (Cal) Ø Sheo Nath Sing Vs AAC (1971) 82 ITR 147 (SC) Shri Krishna (P) Ltd. Vs ITO (1996) 221 ITR 538 (SC) Raymond Woollen Mills Ltd. Vs ITO (1999) 236 ITR 34 (SC) S. Nara .....

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es Paid 4,11,972 5. Personnel Expenses 17,95,310 6. Administrative expenses 10,38,678 7. Rate, Taxes 1,01,075 Gross Total 87,69,732 7. According to the AO the assessee could not give a satisfactory reply regarding the allowability of the above expenditure. He therefore, made the addition of ₹ 87,69,732/-. 8. Being aggrieved the assessee carried the matter to the ld. CIT(A) and challenged the reopening by stating that the notice u/s 148 of the Act was not served on the correct address and t .....

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entitled to produce before the CIT(A), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer except in the following circumstances, namely:- (a) Where the AO has refused to admit evidence which ought to have been admitted: or (b) Where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the AO; or (c) Where the appellant was prevented by suffi .....

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easonable opportunity. (a) To examine the evidence or document or to cross-examine the witness produced by the appellant; or (b) To produce any evidence or document or any witness in rebuttal of the (4) Nothing contained in this rule shall affect the power the CIT(A) to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motio .....

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2.2011 have not been submitted in the hearing conducted on 22.12.2011. Further, the notice u/s 142(1) dated 17.8.2011 was sent by speed post (copy enclosed). The assessee s counsel requested for copy of reasons which was supplied to him by hand on 02.09.2011. Copy of the order sheet in this regard is enclosed. Further, the AO has recorded the reasons in which satisfaction for reopening the case and approval as required on the Add. CIT was also obtained (Copy enclosed). With regard to the assesse .....

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ntended that no notice u/s 143(2) has been issued. In this regard, copy of the notice u/s 142(1) was issued on 17.08.2011 by speed post (copy of the notice and the speed post receipt is enclosed). In this regard, the assessee never complied with notice u/s 148 either by responding to it or by filing a return of Income. Further, also in terms of section 292BB the order is passed according to the intent and purpose of the I.T. Act, 1961. Hence the notice u/s 143(2) was rightly not issued and notic .....

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elhi and even the return filed for A.Y. 2004-05 bears the address of Barakhamba Road, New Delhi. Hence, the AO had rightly issued the notice at the Barakhamba Road, New Delhi Address. Further, the assessee filed letter dated 28.11.2011 in this office on 13.12.2011 that his address as further changed to 81, Vigyan Vihar, New Delhi-110092 on which the order u/s 148 was passed. 10. The ld. CIT(A) after considering the submissions of the assessee and the remand report of the AO, did not find merit i .....

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ing the notice to the available address. It may have been a different matter if the notice had been sent to the address of another person however, in this case all that can be said at best, is that the notice was sent to the address of the appellant on the AO s record, and the appellant s address had changed subsequently. In the assessment order, the AO has observed that case of the captioned assessment year was reopened u/s 147 by issue of notice u/s 148 dated 29.03.2011. In response to the not .....

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he following case laws: CIT Vs Jagat Novel Exhibitors (P.) Ltd. (2012) 18 Taxmann.com 138 (Del) CIT Vs Three Dee Exim P. Ltd. (2012) 20 Taxmann.com 146 (Del) CIT Vs Vision Inc. (2012) 21 Taxmann.com 515 (Del) I. M. Constructions P. Ltd. Vs CIT (2012) 24 Taxmann.com 162 (Del) 12. The ld. CIT(A) also observed that the reasons for reopening were given to the assessee after he made a request for supply of the reasons. According to him there was no requirement in law that the reasons were to be commu .....

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the Act. The ld. CIT(A) also observed that the AO duly issued the notice u/s 142(1) of the Act. The reliance was placed on the judgment of the Hon ble Punjab & Haryana High Court in the case of CIT Vs Ram Narayan Bansal (2011) 202 Taxmann 213. 14. Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the order u/s 143(1) of the Act was passed by the AO on 21.12.2004 and the notice u/s 148 was c .....

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It was also stated that the notice u/s 143(2) of the Act for the assessment year 2009-10 was also issued by the department at the changed address, so it cannot be said that the new address was not in the knowledge of the department. It was contended that the notice for the year under consideration u/s 148 of the Act was not issued at the new address, therefore, without serving notice, the reassessment framed u/s 147 of the Act was not valid. It was further stated that the AO has not issued noti .....

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ents Vs ITO, TC(Appeal) (2012) 210 Taxman 78 (Mad) CIT Vs Alstom T & D India Ltd. (2014) 226 Taxman 103 (Mad) CIT Vs C. Palanippan 284 ITR 257 (Mad) CIT Vs Adarsh Travel Bus Service 204 Taxman 114 (Mag.) (All.) Raj Kumar Chawla 145 Taxman 12 (Del) (SB) ITO Vs Tilak Raj Satija, ITA No. 391/Del/2010 (Del) order dated 14.08.2013 Shri Mohinder Kumar Chhabra Vs ITO, ITA No. 3523/Del/2013 order dated 13.12.2013 UKT Software Technologies (P) Ltd. Vs ITO, ITA No. 4719/Del/2011 order dated 16.01.2013 .....

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a Ltd. 320 ITR 561 (SC) CIT Vs Orient Craft Ltd. 354 ITR 536 (Del) Mohan Gupta (HUF) Vs CIT (2014) 366 ITR 115 (Del) Shipra Srivastava Vs ACIT 319 ITR 221 (Del) Telco Dadajee Dhackjee Ltd. Vs DCIT, ITA No. 4613/Mum/2005 (TM) (Mum) order dated 12.05.2010 16. It was further submitted that all the information were furnished by the assessee to the AO. Therefore, the reassessment framed was only a change of opinion. 17. In his rival submissions the ld. DR strongly supported the order of the authoriti .....

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ssuing the notice u/s 148 of the Act, the assessee was required to file the return which is mandatory as per the explanation appended to section 148 of the Act. It was further stated that issuance of notice u/s 143(2) of the Act is required only when return of income is filed but in this case the assessee did not file any return in response to the notice u/s 148 of the Act. Therefore, the reassessment framed by the AO u/s 147 of the Act was justified. It was further submitted that the assessee d .....

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d his mind while issuing the said intimation. It was contended that when the AO came to the conclusion that income had escaped there was proper application of mind. Therefore, the notice issued u/s 148 of the Act was after forming the opinion that the income escaped the assessment as such the addition made by the AO and sustained by the ld. CIT(A) was fully justified. 18. We have considered the submissions of both the parties and carefully gone through the material available on the record. In th .....

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o to section 148 of the Act grants liberty to the Revenue to serve notice under section 143(2) of the Act before passing the assessment order for returns furnished on or before October 1, 2005. In respect of returns filed pursuant to notice under section 148 of the Act after October 1, 2005, it is mandatory to serve notice under section 143(2) of the Act, within the stipulated time limit. Section 292BB incorporates the principle of estoppels. It stipulates that an assessee, who has appeared in a .....

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pletion of assessment or reassessment. 19. In the present case also the AO was required to serve the notice u/s 143(2) of the Act before passing the assessment order u/s 147 of the Act within stipulated time limit but no such notice has been issued to the assessee. Therefore, the reassessment framed vide order dated 29.12.2011 was not valid. Moreover, from the reasons recorded, copy of which is placed at page no. 30 of the assessee s paper book. It is clear that the AO himself admitted that the .....

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ent was earlier made under section 143(3) of the Income-tax Act, 1961, and another applicable where an intimation was earlier issued under section 143(1). It follows that it is open to the assessee to contend that notwithstanding that the argument of change of opinion is not available to him, it would still be open to him to contest the reopening on the ground that there was either no reason to believe or that the alleged reason to believe is not relevant for the formation of the belief that inc .....

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