TMI Blog2021 (9) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... anesh , Member ( A ) And Ravish Sood , Member ( J ) For the Appellant : Vijay Mehta and Purushottam, A.Rs For the Respondents : Shreekala Pardeshi, D.R. ORDER Per Ravish Sood , J M The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)-49, Mumbai, dated 25.01.2017, which in turn arises from the order passed by the A.O. under Sec. 143(3) of the Income-tax Act, 1961 (for short 'Act'), dated 24.03.2014 for A.Y. 2006-07. The assessee has assailed the impugned order on the following grounds before us: A. PRINCIPLE OF NATURAL JUSTICE: 1. On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income-tax (Appeals) - 49, Mumbai ( the CIT(A) ) erred in confirming the order of the Deputy Commissioner of Income-tax, Central Circle - 40, Mumbai ( the Assessing Officer ) after considering the facts that the order was passed without giving a fair and reasonable opportunity of hearing to the Appellant. The Appellant prays that the order passed under section 143(3) of the Act by the Assessing Officer be held as ab-initio-void and bad in law. WITHOUT PREJUDICE TO GROUND No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to delete or appropriately reduce the interest charged under section 234B of the Act. F. GENERAL: The Appellant's craves leaves to add to, alter, amend and/or delete all or any of the above grounds of appeal. 2. Briefly stated, the assessee company had e-filed its return of income for A.Y. 2006-07 on 24.10.2006, declaring an income of ₹ 25,310/-. Search and seizure action u/s. 132 of the Act was conducted by the Investigation Wing of the Income-tax Department in the case of M/s. Ruchi Soya Industries Ltd. and the assessee company was covered in the said proceedings. As per the pre-search investigations conducted and information gathered by the department, it transpired that Shri Jagdish Purohit who had promoted the assessee company was an accommodation entry provider and had effective control over a number of companies that did not conduct any real business but were mainly involved in providing accommodation entries to other business concerns. On further enquiries carried out by the department, it was revealed that the assessee company had as on 31.03.2006 i.e. the period relevant to the year under consideration issued 135553 shares at an unjustified pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the genuineness of the transactions and the creditworthiness of the share applicants. Accordingly, the A.O. vide his order passed u/s. 143(3) r.w.s. 147, dated 24.03.2014 treated the share premium of ₹ 13,41,97,470/- as an unexplained cash credit within the meaning of Sec. 68 of the Act and assessed its income at ₹ 13,42,22,780/-. 4. Aggrieved, the assessee assailed the assessment framed by the A.O. vide his order passed u/s. 143(3) r.w.s. 147, dated 24.03.2014. Before the CIT(A), the assessee had on multiple grounds assailed the validity of the jurisdiction that was assumed by the A.O. for reopening of its case u/s. 147 of the Act. Also, the assessee challenged the merits of the additions that were made by the A.O. u/s. 68 of the Act. However, the CIT(A) was not inclined to accept the contentions advanced by the assessee and upheld the reopening of its case and framing of the assessment u/s. 147 of the Act. Also, addition of the share premium made by the A.O. as an unexplained cash credit u/s. 68 of the Act was upheld by the CIT(A). 5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorised Represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Intimation u/s. 143(1) for A.Y. 2012-13, dated 18.05.2013. Apart from that, it was submitted by the ld. A.R. that the case of the assessee company was selected for scrutiny assessment for A.Y. 2009-10 and A.Y. 2010-11, and in the respective assessment orders passed by the A.O. u/s. 143(3), dated 19.12.2011 and 30.01.2013 the new registered office address of the assessee company was mentioned. Also, our attention was drawn by the ld. A.R. to the application dated 03.11.2015 that was filed by the assessee company for change of its address in the PAN data base. In the backdrop of the aforesaid facts, it was submitted by the ld. A.R. that as the impugned notice u/s. 148, dated 19.03.2013 was issued by the A.O. at a wrong address, which thereafter was received back, therefore, the said notice could not be held to have been validly issued by the A.O. It was further submitted by the ld. A.R. that a photocopy of the notice u/s. 148 was on 25.06.2013 handed over for the very first time to the assessee's Chartered accountant, viz. Shri Rajendra Laddha. It was submitted by the ld. A.R. that as the notice u/s. 148 was handed over to its authorised representative on 25.06.2013 i.e. beyond t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be said that the process of issuance of notice was complete. Apropos its claim that a notice u/s. 148 despatched by the department at a wrong address would be an invalid notice, the ld. A.R. had relied on the judgments of the Hon'ble High Court of Delhi in the case of CIT Vs. Eghan Holdings (P.) Ltd. (2010) 2 DTL online 297 (Del) and CIT Vs. Eshaamn Holdings (P.) Ltd. (2012) 25 taxmann.com 99 (Del). Accordingly, the ld. A.R. in the backdrop of his aforesaid contentions had came forth with four submissions, viz. (i). that not a mere issuance of a notice of reopening of assessment but its service on the assessee, that too, within the time frame envisaged under Sec. 149 is necessary for a valid reopening of assessment; (ii). that as the notice u/s. 148, dated 19.03.2013 was issued by the A.O. at a wrong address, therefore, the same was invalid and had no existence in the eyes of law; (ii). that the A.O. had failed to effect service of notice u/s. 148, dated 19.03.2013 as per the mandate of Sec. 282(1) r.w. Rule 127 of the Income-tax Rules, 1962; and (iv). that as the copy of notice u/s. 148, dated 19.03.2013 handed over for the very first time on 25.06.2013 to its authorised re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 143(3) of the Act; for the succeeding years, all of which were anterior to the issuance of the impugned notice u/s. 148 of the Act, dated 19.03.2013, clearly mentioned the new registered office address of the assessee. As such, the short proposition that has been canvassed by the ld. A.R. before us has two parts, viz. (i). that as the notice u/s. 148, dated 19.03.2013 dispatched at a wrong address was invalid and non est, therefore, no valid service of notice could be gathered therefrom; and (ii). that a mere issuance of a notice for reopening of an assessment but its service on the assessee and that too within the time frame envisaged under Sec. 149 is necessary for a valid reopening of an assessment. 8. Before adverting to the sustainability of the contentions advanced by the ld. A.R., we shall first cull out the relevant provisions of the Act which shall have a material bearing on the adjudication of the controversy in hand. As per the mandate of Section 148 of the Act, the A.O. before making an assessment, reassessment or recomputation under Sec. 147, shall serve on the assessee a notice requiring him to furnish within the stipulated time period as may be specified in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of that section.] Insofar the mode and manner of service of a notice issued under Sec. 148 of the Act is concerned, the same can be traced in Sec. 282 of the Act and Rule 127 of the Income-tax Rules, 1962, which reads as under: 282 (1) The service of a notice or summon or requisition or order or any other communication under this Act (hereafter in this section referred to as communication) may be made by delivering or transmitting a copy thereof, to the person therein named: (a) by post or by such courier services as may be approved by the Board; or (b) in such manner as provided under the Code of Civil Procedure, 1908 (5 of 1908) for the purposes of service of summons; or (c) in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000); or (d) by any other means of transmission of documents as provided by rules made by the Board in this behalf. (2) The Board may make rules providing for the addresses (including the address for electronic mail or electronic mail message) to which the communication referred to in sub-section (1) may be delivered or transmitted to the person therein named. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (including any bank or banking institution referred to in section 51 of the said Act); or (ii) the address of the assessee as available with the Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898); or (iii) the address of the assessee as available with the insurer as defined in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938); or (iv) the address of the assessee as furnished in Form No. 61 to the Director of Income-tax (Intelligence and Criminal Investigation) or to the Joint Director of Income-tax (intelligence and Criminal Investigation) under sub-rule (1) of rule 114D; or (v) the address of the assessee as furnished in Form No. 61A under sub-rule(1) of rule 114E to the Director of Income-tax (Intelligence and Criminal Investigation) or to the Joint Director of Income-tax (Intelligence and Criminal Investigation); or (vi) the address of the assessee as available in the records of the Government; or (vii) the address of the assessee as available in the records of a local authority as referred to in the Explanation below clause (20) of section 10 of the Act;], (b) for communi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e department can safely or infact inescapably be gathered from the intimations u/s. 143 for the succeeding years that were issued by the department mentioning the said new registered address, viz. (i). Intimation u/s. 143(1) for A.Y. 2010-11, dated 12.02.2011; and (ii). Intimation u/s. 143(1) for A.Y. 2012-13, dated 18.05.2013. Apart from that, the fact that the A.O. had in the respective assessment orders passed by him u/s. 143(3), dated 19.12.2011 and 30.01.2013 for A.Y. 2009-10 and A.Y. 2010-11 mentioned the new registered address of the assessee company, therein, dispels all doubts and in fact proves to the hilt that the department at the time of dispatching the impugned notice u/s. 148, dated 19.03.2013 at the old registered office address of the assessee company was well conversant about the new registered office address to which the assessee company had shifted. At the same time, we are not persuaded to accept the claim of the ld. A.R. that all needful qua the change in the registered office address that was required to be done on the part of the assessee was done by the assessee. Although, it is the claim of the assessee that it had filed an application for change of its re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad most casually proceeded with the reassessment proceedings. As noticed by us hereinabove, the copy of the notice u/s. 148, dated 19.03.2013 was handed over for the very first time to the authorized representative of the assessee, viz. Shri Rajendra Laddha on 25.06.2013. It is in the backdrop of the aforesaid facts, that we shall adjudicate upon the validity of the jurisdiction assumed by the A.O. for framing the reassessment vide his order passed u/s. 143 r.w.s. 147, dated 24.03.2014. 11. Before us, it is the claim of the ld. A.R. that as a notice of reassessment issued against the assessee before limitation but served on it after limitation would be without jurisdiction, void and ineffective, therefore, the impugned notice u/s. 148, dated 19.03.2013 that was served on the assessee on 25.06.2013 i.e. beyond the prescribed period of six years from the end of the relevant assessment year was barred by limitation. On the contrary, it was the claim of the ld. D.R. that as per the mandate of law though a notice u/s. 148 was mandatorily required to be issued within the prescribed time period therein contemplated, however, the same could be served on the assessee before making the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Off Katha Bazar Masjid (W), Mumbai - 400 009 . Although, we are in agreement with the ld. D.R. that as the assessee had not made any request for change of its registered office address in the PAN database, therefore, there was some justification on the part of the A.O. to have dispatched the notice u/s. 148, dated 19.03.2013 at the said old registered office address. But what we are unable to comprehend and in fact disturbs us is that now when the aforesaid notice u/s. 148, dated 19.03.2013 was returned by the postal authorities on 22.03.2013, for the reason, that the address therein mentioned was found to be wrong, then, what stopped the department from doing the bare minimum and look into its records which would had beyond doubt revealed the new registered office address of the assessee company. Accordingly, in the backdrop of the aforesaid facts, we are absolutely not at all able to accept the inaction on the part of the A.O. in not even attempting to track the address of the assessee company from his own records. As observed by us at length hereinabove, Rule 127(2)(a) of the Income-tax Rules, 1962, inter alia, contemplates the address available in the last income-tax return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble High Court of Bombay in the case of Harjeet Surajprakash Girotra Vs. Union of India (2019) 108 taxman.com 491 (Bom). For a fair appreciation of the issue under consideration, we think it apt to briefly cull out the facts as were involved in the case before the Hon'ble High Court. In the case before the Hon'ble High Court, the assessee a widowed lady was allotted Permanent Account Number (for short 'PAN') by the Income tax Department. However, being a housewife she had never filed her return of income since she did not have any taxable income. After the death of her husband, she had shifted from Mumbai to Jabalpur and resided there with her sister. Observing, that the assessee during the year under consideration had entered into various high value transactions such as cash deposits in bank account, purchase of mutual funds, sale and purchase immovable property etc., the A.O. reopened her case and issued a notice u/s. 148, dated 15.03.2013 and despatched the same for delivery through post at the address that was mentioned in her PAN database. However, the aforesaid notice issued u/s. 148,dated 15.03.2018 was returned by the postal authorities on 23.03.2018 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee before us had though shifted its registered office address but had not filed a request for change of its address at the relevant point of time in its PAN database. However, we find that the facts involved in the case before us stand on a much better footing, as not only the assessee during the period anterior to issuance of notice u/s. 148, dated 19.03.2013 had in its returns of income filed for the succeeding years mentioned its new registered office address, but in fact the department too for the said succeeding years had issued intimations u/s. 143(1) of the Act as well as framed assessments u/s. 143(3) mentioning the new registered office address of the assessee company. Be that as it may, we are of the considered view that now when the notice despatched by the A.O. u/s. 148, dated 19.03.2013 at the old address that was available in the assessee's PAN database was returned by the postal authorities, for the reason, that the address was wrongly mentioned, then, the A.O. was obligated to have exhausted the remaining three sources of addresses provided in Rule 127 of the Income-tax Rules, 1962 for communicating the said notice to the assessee, which as observed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed form. Section 149 of the Act pertains to time limit for such notice to be issued under section 148 of the Act. 8. In terms of section 148(1) of the Act, thus, before making reassessment under section 147, the Assessing Officer had to serve on the assessee the notice requiring him to furnish a return. Service of notice is necessary and not its mere issuance. In terms of provisions contained in section 149 of the Act, such notice could have been issued latest by 31.3.2018. As we have noted, the Department did issue such a notice on 15.3.2018 and despatched it through post for its service to the petitioner at the address given by her in the PAN card. This postal despatch, however, was returned by the postal department with a remark left . The Assessing Officer proceeded on the basis of such notice and its return and completed the assessment after issuing notices under section 143(2) of the Act. The question is could he have done so? 9. It is consistent view of the Courts that not mere issuance of notice of reopening of assessment but its service on the assessee, that too, within the time frame envisaged under section 149 of the Act is necessary for a valid reopenin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined similar issue and opined as under: 9. In our opinion, therefore, the assumption of jurisdiction by the Income-tax Officer of reassessing an assessee is subject to the provisions contained in section 148 to 153 of the Act. Section 148 and 149, which we have reproduced above, clearly show that such jurisdiction cannot be assumed without issuance of notice within the prescribed period and service thereof on the assessee concerned. Mr. Kaji, however, attempted to persuade us that the very fact that the legislature has divided these different provisions contained in the old section 34 of the 1922 Act by suitably enacting sections 147, 148 and 149, where the Income-tax Officer has been given power to reassess after service of notice on the assessee issued within the prescribed period, clearly indicates that the legislature intended to depart from the positions as it emerged from the provisions contained in section 34 of the old Act of 1922. We do not think that this submissions of Mr. Kaji is justified. The scheme for the power of reassessment has been now suitably divided in section 147 onwards of the 1961 Act. This scheme of power was originally comprehended within the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as good law and its authority must be held to have been impliedly overruled, though we may point out that even if the view taken by the Bombay High Court in this decision were correct, we should still have found considerable difficulty in accepting the contention that the proceedings under section 34 commence on the issue of the notice. The Supreme Court in the decision to which we have just referred pointed out that the words 'issued' and 'served' are used as interchangeable terms in the context of notice issued under section 34 and that where the legislature has used the word 'issued' in the context of such notices, that word is used in the same sense as the word 'served'. This decision of the Supreme Court made it clear that, so far as notices under section 34 are concerned, there are no two distinct and separate stages such as the stage of issue of notice and the stage of service of notice; the notice is issued to the assessee when it is served upon him. If that be the position, the entire foundation on which the superstructure of the argument urged on behalf of the petitioner is based must disappear. There being only one stage, whether it be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the provisions of section 34 of the old Act regarding notice of reassessment. The Supreme Court held in Banarsi Debi vs. Income-tax Officer (1), that the words, 'service of notice' or 'issuance of notice' in section 34 have no fixed connotation but are interchangeable. The same meaning should be given to the words 'issue of notice' in section 148 and 'service of notice' in section 149. Under the Act of 1961 also there are no two distinct and separate stages of issue of notice and service of notice. Notice of reassessment is issued to the assessee when it is served on him. A notice of reassessment issued against the assessee before limitation but served on the assessee after limitation would be without jurisdiction, void and ineffective. (4) We are respectfully in agreement with the above observations. Similar view was taken by a learned single judge of the Calcutta High Court in Lilooah Steel Wire Co. Ltd. v. Income-tax Officer, (4). Mr. Awasthy has placed reliance on a Full Bench judgment of this court in Seth Balkishan Das v. Commissioner of Income-tax, Patiala (5). In that case the question referred to this court was: whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ronic mail or electronic mail message) to which the communication referred to in sub-section (1) may be delivered or transmitted to the person therein named. Explanation. - For the purposes of this section, the expressions electronic mail and electronic mail message shall have the meanings as assigned to them in Explanation to section 66A of the Information Technology Act, 2000 (21 of 2000). 14. As per the sub-section (1) of section 282 thus, the service of notice or summons, etc. may be made by delivering or transmitting a copy to the person named, inter alia as per clause (a) by post or by such courier service as may be approved by the Board or in such manner as provided under the Code of Civil Procedure for the purposes of service of summons. The Department has followed the procedure envisaged in clause (a) of subsection (1) of section 282 of attempting to deliver the notice by post. 15. Rule 127 of the Rules pertains to service of notice, summon, requisition, order and other communications, the relevant portion of which reads as under: Service of notice, summons, requisition, order and other communication. 127.(1) For the purposes of sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or such purpose, which is not in the present case. The further proviso to sub-rule (2) which is of considerable importance to us provides that where communication cannot be delivered or transmitted to the addresses mentioned in item Nos. (i) to (iv) or the address furnished by the assessee as per the first proviso, the communication shall be delivered or transmitted to the addresses given below the said further proviso. At item No. (i) is the address of the assessee as available with the Banking company or a cooperative bank to which Banking Regulations Act, 1949 applies. 17. Since the delivery of the notice could not be made at the address of the assessee available in PAN database, by virtue of the further proviso to sub-rule (2) of Rule 127, the communication had to be delivered at the address as available with the banking company. 18. It is undisputed that the Department had access to the petitioner's bank account. It is precisely from the activities in such bank account that the department had gathered the material prima facie believing that the income chargeable to tax had escaped assessment. In terms of Rule 127 and in particular, sub-rule (2) therefore, having ..... X X X X Extracts X X X X X X X X Extracts X X X X
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