9911796707
TMI Blog2020 (2) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... as not taken into consideration the provisions of section 292BB as the provision was effective from 01.04.2008 and the assessment in case of assessee was completed on 24.03.2015 i.e. after more than six years of insertion of the provision. 3. Whether on the facts and in the circumstances of the case and in law ld. CIT (A) has erred in not appreciating the fact that the notice issued u/s 148 was also received by ld. A/R of the assessee and the ld. A/R has attended the proceedings. 4. Whether on the facts and in the circumstances of the case and in law ld. CIT (A) has erred in not appreciating the case laws narrated in remand report in support of assessment order and in favour of revenue." 2. The brief facts of the case are that M/s. Mahla Real Estate Pvt. Ltd. filed its return of income on 15.11.2007 declaring loss of Rs. 5,22,052/-. Subsequently a notice under section 148 of the IT Act was issued to the assessee on 14.03.2014 and the assessment order under section 147/143(3) of the Act was passed on 24.03.2015 determining total income at Rs. 3,64,16,430/-. 3. Aggrieved by the order of the AO, assessee filed appeal before the ld. CIT (A) and the ld. CIT (A) during the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 3.1.1 of the order of ld. CIT (A) which are reproduced herein in below :- "3.1.1 Submission made by the appellant In this case during the course of assessment proceedings the assessee submitted a written reply on 09.03.2014 challenging the service of notice u/s 148 of the Income Tax Act, 1961. The Learned Assessing Officer did not reply. A copy of letter dated 09.03.2014 is available on paper book page no 1 to 2. The case of the assessee is that no valid service was made of notice u/s 143. Therefore the entire proceeding are ab-initio void. It is further submitted that since the ser,fice of notice u/s 148 was challenged during the course of assessment proceedings, hence the provisions of section 29088 are of no help. It is the case of the assessee that notice u/s 148 was not served upon the assessee. The entire facts are discussed below. The assessment framed by the Learned Assessing Officer deserves to/be quashed. 1. Service of notice u/s 148 not valid: - (i) Chandan: - In the assessment order the Learned Assessing Officer has dealt the issue of service of notice in para 4.1. The Learned Assessing Officer has observed as under: - "The first contention of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the case of company service of notice has to be made in accordance with the provision of section 282(I)(b) of the Income Tax Act, 1961 which state that "service has to be made in such manner as provided under the Code of Civil Procedure, 1908 (5 of 1908) for the purposes of service notice". It is submitted that it is settled position of law that when service is effected by notice server of the department in such case it is for the department to prove that notice has been served in accordance with provisions of order V of the Code of Civil Procedure, particularly rules 16 to 20 thereof In support the following case laws are quoted: - (i) CIT vs. Mai Chanri 28 /TR 684 (Cal; (ii) (Ii) Saha Vs. CIT 27 ITR 231 (Cal) In the case of the company the notice has to be served either upon to the assessee i.e. the Directors or upon the Principal Officer or any person duly authorized by the company. In this case none of these conditions are fulfilled. Notice has not been served on directors or on the Principal Officer of the company. Shri Chandan was not an authorized person on behalf of the company to receive such notice. An affidavit to this effect of Shri Aman Gupta director o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Dey Brothers [1935] 3 ITR 213 (Rang.) and C.N. Nataraj v. Fifth ITO [19651 56 1TR 250 (Mys.). In CIT v. Baxirarn Rodmal [194] 2 ITR 438 (Nag.) It has been held that the mere fact that a person had accepted notices on behalf of the assessee on previous occasions and appeared for the assessee would not constitute him an agent on whom a notice or requisition under the Act would be validly served nor would any statement made by him bind the assessee. In C.N. Nataraj v. Fifth ITO ([1965] 56 ITR 250, the Mysore High Court took the view that the service of notice under section 148 on a clerk of the assessee's father who was neither an agent of the assessee nor authorized by him to accept notices on his behalf was not valid and, therefore, the assessee would not be assessed under section 147 in pursuance of such service of notice . Thus, in order tha't there should be a valid service, the person on whom service is effected must have valid authorization given to him in writing to receive such notice and mere implied authority will not be enough. It was fundamental requirement to get the notice served on the assessee before proceeding to complete the reassessment and as it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 14.12.2015 to furnish copy of notice u/s 148 disclosing the service upon Shri Anand Sharma, no copy of notice u/s 148 has been furnished which discloses the signature of Shri Anand Sharma CA. In any case the assessee submits that Shri Anand Sharma was also not competent nor authorized to receive notice u/s 148. It is with the issue of notice u/s 148 and service thereof that proceeding of assessment stand initiated. It is subsequent to this that a CA is appointed for handling the assessment proceedings. Thus a CA cannot come into picture before the assessment proceedings are initiated. The assessee cannot imagine or visualize issuance of notice u/s 148, therefore no question arises of CA being authorized to receive notice u/s 148. Shri Anand Sharma was not authorized for receiving notices on behalf of the assessee, therefore any service upon him is invalid. The assessee further quotes the following decision in support: - (x) Singar Gutkha vs. Deputy Commissioner of Income Tax (2011) 138 TTJ 318 (Lucknow) Service of notice under s. 148 on a chartered accountant who was not empowered to receive such notice on behalf of the assessee company or on another person who was not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the assessment order passed quashed-Assessee's writ petition allowed. (ii) COMMISSIONER OF INCOME TAX (NOIDA) vs. DEEPAK GUPTA (2014) 100 DTR ((ALL)) We agree with the reasoning given by ITAT that it was mandatory for the A.O. to decide objections and that the exercise of discretion on the objections would in any case not validate the notice under Section 147/148 of the Income Tax Act. (II) GKN DRIVESHAFTS (INDIA) LTD. vs. INCOME TAX OFFICER & ORS. 259 ITR 0019 Notice under ss. 143(2) and 148-Writ petition challenging the validity of notices-Reasons for issuing the impugned notices have been disclosed-Petitioner can raise objections before the AO-AO has to dispose of the objections, if filed by the petitioner, by passing a speaking order before proceeding with the assessment-Writ petition right dismissed as premature The ratio of aforesaid decisions is fully applicable to the facts of the case. The objections raised by the assessee remained unattended by the Learned Assessing Officer. The assessee had challenged the very root of the assessment proceedings. The service of notice u/s 148 was challenged. The Learned Assessing Officer has disposed this objection in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had no business transactions with assessee that the transactions were bogus and the amount was returned back-No link between facts found and the satisfaction arrived at by the assessing authority- Assessee at the time of his assessment has presented before the assessing authority all the material and relevant facts-Assessing authority while assessing the income of the assessee has scrutinized those facts and made the order of assessment-Impugned notice issued to the assessee and further proceedings initiated under s. 147/148 therefore liable to be quashed. (II) SIGNATURE HOTELS (P) LTD. vs. INCOME TAX OFFICER & ANR. HIGH COURT OF DELHI (2011) 3381TR 51 Information received by the AO from the Director of IT (Inv.) that the assessee had introduced unaccounted money by way of an accommodation entry being extremely scanty and vague cannot be regarded as a material or evidence that prima facie establishes escapement of income, more so as the AO did not apply his own mind to the information to arrive at the belief as to whether or not any income had escaped assessment; proceedings under s. 147 are quashed. (II) CIT Vs. SFIL Stock Broking Ltd. (2010) 41 DTR 98 (Del) Mere informati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inciple of natural justice because of which the assessee was adversely affected. (ii) COMMISSIONER OF INCOME TAX vs. BIJU PATNAIK HIGH COURT OF ORISSA 190 ITR 0396 Although answers can be recorded either in favour of the Department or against it, ultimately each answer would again become inconclusive on account of the final findings of fact of the Tribunal that ITO has not given reasonable opportunity to the assessee to rebut the statements recorded ex parte under s. 131 of the Act and to furnish explanation to some of the materials. It is true that Tribunal has not given due weight to the relevant and admissible evidence while recording the findings of fact. However, the findings of the Tribunal on such fact are also vulnerable as they may require reconsideration. If answers in respect of each of the questions are indicated in the absence of reasonable opportunity being afforded to the assessee, they would be of academic interest inasmuch as the answers against the assessee would become vulnerable on account of the need to undo the absence or reasonable opportunity. A clear and conclusive finding binding cn the parties can be given only after reasonable opportunity is given to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tner of firm DCI- In his statement recorded during search, R stated that the key of locker and the two envelopes were handed over to him by the assessee-K also admitted in his statement recorded on the same day at 2.00 AM midnight that he had executed the pronote and signed it on behalf of DCI after obtaining a sum of Rs. 8,78,358-Later, K filed an affidavit that his statement was recorded at late hours in the night under coercion and pressure-Subsequently, K along with two other partners of DCI, made a voluntary disclosure of a sum of Rs. 11 lacs including the amount of Rs. 8,78,358 and same was assessed in the hands of the three partners- Relying on the statement of R and the retracted statement of K, AO made addition of Rs. 8,78,358 under s. 68 in the hands of assessee also and the same was confirmed by CIT(A) and Tribunal-Not justified- Apparently, there was a violation of principles of natural justice as the statement of one of the important witnesses, namely, R on which heavy reliance was placed by the AO is neither referred to in the assessment order nor copy thereof was given to the assessee nor the assessee was given an opportunity of cross-examining the said R-Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 threatening the assessee for completion of assessment u/s 144 on total income of Rs. 3,57,13,900/-. The date of hearing was filed on 09.03.2015. Copies of all these notices are enclosed herewith. 2. On the purported last date of hearing i.e. 09.03.2015 assessee submitted a detailed submission agitating the service of notice u/s 148 of the Income Tax Act, 1961. Thus it would be seen till the last date of hearing assessee did not make any compliance of notice u/s 148 as there was no valid service of it. 3. It was on account of threatening by the Learned Assessing Officer on the date of hearing i.e. on 09.03.2015 that assessee in protest filed return on 14.03.2015 declaring Nil income. Thus it would be seen that assessee did not file the return voluntarily in compliance to any notice u/s 148 as there was no valid service of notice u/s 148. It may also be appreciated that before filing the return on 14.03.2015 the assessee had objected to the service of notice u/s 148 of the Income Tax Act, 1961. 4. It is submitted that in the notice issued u/s 148 on 14.03.2014 the Learned Assessing Officer had granted time of 30 days only for filing return of income. Any return filed thereaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically claimed by the assessee that the notice issued under section 148 of the Act was never served upon it. The remand report submitted by the AO has been given in detail at page 15 to 26 of the order of the ld. CIT (A). After obtaining the remand report wherein it was mentioned by the AO that the service of the notice was effected on Shri Chandan and also letter dated 20.05.2014 was served upon Shri S.L. Poddar, Senior Advocate on 29.05.2014 and show cause notices dated 26.06.2014 was also served on Shri Dinesh Kumar on 27,.06.2014 and notice under sec. 142(1) dated 09,02.2015 was served upon Shri Anup Gupta on 10.02.2015 and show cause notice under sec. 144 along with the notice under sec. 142(1) was served upon Shri Chandan on 04.03.2015 and apart from that notice under section 142(1) dated 13.03.2015 was served upon Shri S.L. Poddar, Senior Advocate on 13.03.2015. 8. On these factual findings, assessee had also filed rejoinder which contained at pages 26 to 36 of the order of the ld. CIT (A) and the same is reproduced below :- "Rejoinder to the remand report: 1. Introduction: - Before submitting para wise comments on the remand report of the Learned Assessing Officer it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore service upon Shri Chandan is invalid. He was not connected in any way with the assessee company. His receiving of any other notice earlier or subsequently does not make the service of notice u/s 148 valid. (iii) Affidavit of Shri Aman Gupta is uncontroverted : - In his affidavit furnished Shri Aman Gupta Director of the company has stated that Shri Chandan was not authorized to receive notices of the company and he never informed of having received the notice u/s 148. The Learned Assessing Officer has not deemed it appropriate to examine Shri Aman Gupta regarding his averment in the affidavit. Therefore the facts narrated by him in the affidavit remained uncontroverted. In his report the Learned Assessing Officer has mentioned that before serving notice Shri Chandan made a telephonic talk with Shri Aman Gupta and thereafter notice was served upon him. The story is just a made believe and is unsupported by any evidence. Further it is settled position of law that oral authority is not sufficient and the law requires a written authority for receiving notices. In Paparruna Rao v. Revenue Divisional Officer AIR 1918 Mad. 589, a Division Bench of Madras High court while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the issue of following notices: - (a) Notice u/s 148 issued on 14.03.2014 (b) Reminder of filing of return issued on 20.05.2014 (c) Show cause notice for completion of assessment u/s 144 issued on 26.06.2014. (d) The above letters were issued by the then Learned Assessing Officer Shri Surendra Yaday. He never issued any notice u/s 142(1). Thereafter there was change of incumbency and Shri Pradeep Sharma took over as ITO, Ward - 2(2), Jaipur. He issued notices as under: - i) Notice u/s 142(1) on 09.02.2015 ii) Notice u/s 142(1) on 02.03.2015 along with letter asking to show cause why assessment should not be completed u/s 144. The makes it clear that hardly two effective opportunities were granted to the assessee within a small period of one month and in view of this the Learned Assessing Officer cannot allege that assessee intentionally delayed in filing the objection. In fact not a single notice was served upon the assessee except the one dated 09.02.2015. It was only and only after this notice that assessee came to know about the proceedings and approached his counsel and thereafter filed the objection under letter dated 09.03.2015. Thus the assessee cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade before him by the assessee, it automatically means that the Learned CIT(A) in his discretion has admitted the papers submitted by the assessee and it is only thereafter that on these papers comments of the Learned Assessing Officer have been called for 4. Papers submitted by the assessee go to the root of the case: - It is further submitted that virtually no additional evidence has been furnished by the assessee. The assessee has furnished affidavit of Shri Chandan and of Shri Aman Gupta in support of the contention that there was no valid service of notice u/s 148. This issue was raised during the course of assessment proceedings. But the Learned Assessing Officer did not pay due regard to the contention of the assessee and did not seek any additional evidence. In fact the Learned Assessing Officer did not take the issue of service of notice seriously. The notice u/s 148 were served in a very causal manner, A first upon one Shri Mukesh and then upon Shri Chandan and lastly upon Shri Anand Sharma. The service upon all thps4g. persons was I made one after another as the Assessing Officer had a lurking doubt in his mind regarding the validity of service. The assessee has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under s. 251(I)(a) necessitating a compulsory admission of the evidence before him in the interest of justice. Therefore, in the present circumstances and facts of the case, the CIT(A) was not justified in not admitting the additional evidences which were necessary for the disposal of the case. (iv) Shahrukh Khan Vs. Dv. CIT (2007) 13 SOT 61 (Mum) The assessee in an appeal against addition made by the Assessing Officer, filed additional evidence before the Commissioner (Appeals). The Commissioner (Appeals) called for a remand report on such evidence from the Assessing Officer and after going through remand report, concluded that sufficient opportunities were granted to the assessee and his case did not fall in any of exceptions available in sub-rule (1) of rule 46A. The Commissioner (Appeals), therefore, refused to admit additional evidence and confirmed the addition. Held that in the instance case, though from the record it was not discernible whether permission to adduce additional evidence was granted by recording reasons in writing, but impliedly it was discernible that after filing the additional evidence, the commissioner (appeals) took steps provided in sub-rule (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eiving of notices subsequently is equally bad in law and cannot validate the earlier service. His putting stamp of Durga Motor Company is of no avail. Durga Motor Company is a separate entity. How putting the seal of Durga Motor Company validate the service of notice u/s 148 is not understandable. The Learned Assessing Officer has not substantiated his contention in any way. In view of this the submission of the Learned Assessing Officer regarding service upon Chandan are of no avail. (B) Case laws quoted by the Learned Assessing Officer :- The Learned Assessing Officer has quoted certain case laws to support his contention that service upon Shri Chandan was valid. In this regard it is submitted that the assessee had quoted the following decisions while making earlier submission before your goodself: - (i) CIT vs. Vardhman Estate P. Ltd. 287 ITR 368 (Del) (ii) CIT vs. Bhan Textiles P. Ltd. 287 ITR 370 (Del) (iii) CIT vs. Lunar Diamonds Ltd. 281 ITR 1 (Del) (iv) Venkat Naicken Trust v. ITRO 242 ITR 141 (Mad) (v) Sudev Industries Ltd. v. ITO 98 TTJ 97 (Del) (vi) Hind Book House v. ITO 92 lTD 415 (Del) (vii) Dulli Chand Laxmi Narain v. ACTT 89 lTD 426 (Del) (viii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee company or on another person who was not authorized to receive a notice was not a valid service of notice on the assessee, more so when it was not shown that the assessee was keeping out of way for the purpose of avoiding service of notice or that there was any other reason that the notice could not be served on the assessee in the ordinary way and, therefore, assessment completed pursuant to said notice was bad in law. (iii) Arjun Singh vs. ADIT (Inv.) [20001 2461TR 363 (MP) Service of notice on the counsel of the petitioners and service through IT Inspector is not in consonance with the requirement of s. 282. 7. Assessment completed without first deciding the objection: - The Learned Assessing Officer has submitted that the assessee filed the objection at the 11th hours which did not leave time to him for deciding the objection and in any case he has met the objections in the assessment order. In this regard it is submitted that the assessee objected to the service of issue of notice u/s 148 well in time. The assessee ,was not served any notice except the one dated 09.02.2015 soon thereafter the assessee contacted his counsel and filed the objections vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. The Learned Assessing Officer had more than a year to complete the assessment at his disposal but hardly a month and a half was given to the assessee. These facts established that proper opportunities were granted to the assessee. (iii) The Learned has based the assessment order and has made the addition on the basis of statement of Shri Hitesh Garg recorded at the time of survey. The principles of natural justice required that before utilizing the statement of Shri Hitesh Garg assessee should have been furnished the copy of his statement and also allowed an opportunity for cross examining Shri Hitesh Garg, this was not done. This renders the assessment void. The Learned Assessing Officer has mentioned that assessee was in possession of the statement of Shri Hitesh Garg. In this regard it is submitted that no authority of department i.e. either the DDIT or the Learned Assessing Officer ever supplied the copy of statement of State of of Shri Hitesh Garg. The allegation of the Learned Assessing Officer is false. The Learned Assessing Officer has not spelt out the reasons for not affording opportunity for cross examining Shri Hitesh Garg. In the remand report the submissions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertinent to mention here that Shri Chandan while receiving the notice dated 14.03.2014 affixed the stamp of M/s Durga Motor Company meaning thereby that the saic notice issued in the name of the appellant company was received on behalf of M/s Durga Motor Company and by no stretch of imagination, it could be presumed that it was serves upon the appellant company. (v) It may be mentioned that in the case of CIT vs. Chetan Gupta [2015] 62 taxmann.com 249 (Delhi), the Hon'ble High Court of Delhi has considered a number of judicial pronouncements on the issue and it was held by the Hon'ble High Court of Delhi that: "* To summarize the conclusions: (i) Under section 148, the issue of notice to the assessee and service of such notice upon the assessee are jurisdictional requirements that must be mandatorily complied with. They are not mere procedural requirements. (ii) For the Assessing Officer to exercise jurisdiction to reopen on assessment,, notice under section 148 (1) has to be mandatorily issued to the assessee. Further the Assessing Officer cannot complete the reassessment without service of the notice so issued upon the assessee in accordance with section 282 (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. These facts are identical with the facts of the instant case under consideration and therefore the decision of Hon'ble High Court of Delhi in the case of CIT Vs Chetan Gupta (Supra) is squarely applicable to the instant case under consideration. (vi) It may be mentioned here that section 292BB of the Act has been inserted w.e.f. 01.04.2008 and as it was held by the Hon'ble Delhi High Court in the case of CIT vs. Chetan Gupta (Supra) that section 292BB is prospective in nature, therefore, it is not applicable to the AY 2007-08 which is the year under consideration. Moreover, in the instant case under consideration, the appellant has challenged the service of notice issued u/s 148 of the Act at the first available opportunity itself before the AO during the course of assessment proceedings and even if, the appellant attended the proceedings before the AO, the provisions of section 292BB of the Act are not applicable as the provisions of section 292BB of the Act were held to be prospective in nature by the Hon'ble High Court of Delhi. (vii) It may be mentioned that in a recent decision in the case of ITO Vs Om Parkash Kukreja [2016] 70 taxmann.com 147 (Chandigar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant case under consideration and the judicial pronouncements as discussed above, it is held that the notice issued u/s 148 of the Act on 14.03.2014 was not served upon the appellant and thus the AO has assumed the jurisdiction to assess the income of the appellant without the authority of law as non service of notice issued u/s 148 of the Act is not a mere procedural irregularity but the service of notice issued u/s 148 of the Act in a valid manner is a mandatory requirement. Hence, it is held that the impugned assessment order passed by the AO is without jurisdiction and is bad in law and thus hereby quashed." 9. After having heard the ld. Counsels for both the parties at length and after going through the facts of the present case, we find that there are certain undisputed facts in this case i.e. the AO has not admittedly sent any notice issued under section 148 of the IT Act to the registered office address of the assessee company at 12-13, Patel Colony, Laxmi Path, Sardar Patel Marg, Jaipur either through registered post or speed post and further the AO has made no efforts to serve notice through Affixture at the above registered office address. Although the assessee has ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be set aside. The ld. A/R has also drawn our attention to the decision of the Coordinate Bench of the Tribunal in case of Charan Singh vs. ITO in ITA No. 906/JP/2018 wherein also the above legal proposition has been reiterated by relying upon the decision in the case of CIT vs. Chetan Gupta (supra). Therefore, we are also of the considered view that service of notice issued under section 148 of the Act is a mandatory as well as jurisdictional requirement and thus without valid service of notice, the reassessment order passed is liable to be quashed. Even in the order passed by Hon'ble Delhi High Court in case of CIT vs. Chetan Gupta (supra) it has been held that section 292BB of the Act is prospective in nature and the main part of section 292BB was not applicable and thus participation by the assessee or some other person on his behalf not duly authorized in the reassessment proceedings, will not constitute a waiver of the requirement of effecting proper service of notice on the assessee under section 148 of the Act. Since the facts contained in the present case are also identical with the facts contained in case of CIT vs. Chetan Gupta (supra), therefore, the findings of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
