ACIT, CIRCLE-64(1), NEW DELHI vs. GURNIHAL SINGH PIRZADA, CHANDIGARH

Two appeals have been filed by the revenue against order dated 14.02.2019 in appeal for assessment years 2008-09 and 2013-14 passed by Commissioner of Income Tax (Appeals)-28, New Delhi (hereinafter referred to as the First Appellate Authority in short ‘Ld. F.A.A.’) in regard to the appeal before it arising out of assessment order dated 21.03.2016 u/s 143(3) / 147 of the Income Tax Act by ITO, Ward-64(3), New Delhi (hereinafter referred to as the Assessing Officer ‘AO’).

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“Kindly take reference to your office letter F.No. CIT(A)- 21/Remand t/2017-18/112 dated 17.08.2017 on the subject cited above. In this connection it submitted that the query raised by the assessee Sh. Gurnihal Singh Pirzada in the case of his assessment order for A. Y. 2008- 09. On the basis of available records the requisite report for the above mentioned year is given below:- 1. A.Y. 2008-09:- The case of Sh. Gurnihal Singh Pirzada, was reopened u/s 147 of the I.T. Act, 1961, by the DCIT, Circle-64(1), New Delhi with the approval of competent authority from the issue as mentioned in assessment order, after taking the approval for issue of notice u/s 148 of the I.T. Act, 1961 notice was issued to the assessee on 23.03.2015 vide speed post no. as per Annexure no. 1 on available different addresses, (copy enclosed) Notice u/s 143(2) of the I.T. Act, 1961 was issue on 27.10.2015 by the Income Tax Officer, Ward-64(3), New Delhi. Neither & 3952.Del.2019 Gurnihal Singh Pirzada 3 assessee nor any authorised representative has attended the case in stipulated time. As per that to process the case further notice u/s 142(1) of the I.T. Act 1961 was issued on 23.03.2016 to attend the case on 29.02.2016. In reference thereto, Sh. Anil Kumar katia, C.A. of the assessee was appeared and submit the reply against the penalty. The reasons recorded for re-opening the case of Sh. Gurnihal Singh Pirzada has also been provided vide letter dated 10.03.2016 as requested by him. In this regard, the assessment u/s 147/143(3) of the I.T. Act 1961 was completed at the assessed income of Rs. 10,33,90,945/- on 21.03.2016. The main addition was made on the basis of available record and AIR information available with the department. On going through the submission of the assessee, it was found that the assessee has filed his ITR for A.Y. 2008-09 on 09.03.2016 declaring income of Rs. 40,945/-. "As per the Punjab Vigilance Bureau report submitted on 23.07.2015 to Chairman CBDT, during the financial year under consideration a property (H.No. 59, Sector-4, Chandigarh) was purchased in the name of M/s fateh Homes Pvt. Ltd. On 13.04.2007 for a consideration of Rs. 10,33,50,000/- vide sale deep no.

and from these loaps the in possession of G. S. Pirzada and his family. The lease rent being paid by G.S. Pirzada and his family for the above property is lower than the market rate. In view of the above Sh. G.S. Pirzada and his family for the above property s tower than the market rate. In view of the above Sh. G.S. Pirzada is beneficiary owner of H.No. 59, Sector-4, Chandigarh. The same investment made for the purchase of the above property that is Rs. 10,33,50,000/- is added back in the income of the assessee for FY 2008-09 being benami transaction." The remand Report has been summarized on the available record on assessment file.”

5. The revenue is in appeal and grounds raised are common for both the appeals and for convenience grounds of appeal for A.Y. 2008-09 are reproduced below :-

“(i) The Ld. CIT(A) has grossly erred on the facts and in the circumstances of the case and in law in holding the reassessment proceedings as invalid and without jurisdiction. The Ld. GIT(A) has grossly erred on the facts and in the (ii) circumstances of the case and in law in holding that no notice u/s 143(2) was issued, regardless of actual fact of the case that notice u/s 143(2) was issued and served upon the assessee. The Ld. CIT(A) has grossly erred on the facts and in the (iii) circumstances of the case and in law by relying upon the case laws which are entirely different from the present case of the assessee because this is case where notice u/s 143(2) was issued and served upon the assessee and not otherwise." The Ld. CIT(A) has grossly erred on the facts and in the (iv) circumstances of the case and & 3952.Del.2019 Gurnihal Singh Pirzada 5 in law in not holding that this is not a case where notice u/s 143(2) was not at all issued % and served upon the assessee. The Ld. CIT(A) has grossly erred on the facts and in the (v) circumstances of the case and in law by relying upon the case laws pertaining To Section 292B# which are entirely different from the present case of the assessee because, this is not a case where notice u/s; 143(2) was not issued and served upon the assessee. The Ld. CIT(A) has grossly erred on the facts and in the (vi) circumstances of the case and in law by completely ignoring the applicability of the provisions of Section 292BB to this case, given that assessee has duly appeared and co-operated in the reassessment proceedings, and has never raised such objection regarding validity cr propernessbf any notices issued during the proceedings, including the one issued: u/s 143 (2). (vii) The Ld. CIT(A) has grossly erred on the facts and in the circumstances of the case and in law by quashing the reassessment proceeding and in not holding that the notice us 143(2) is deemed to be valid in view of the applicability of the provisions of Section 292BB of the IT Act and thereby deleting the entire addition of Rs. 10,33,50,945/- for this assessment year. (viii) The Ld. CIT(A) has grossly erred on the facts and in the circumstances of the case and in law in quashing the reassessment proceeding despite the binding emphasisTaid down by the Hon’ble Supreme Court in the case of CIT vs. Jai Prakash Singh (1996) 219 ITR 737 examining the validity of the assessment where notice u/s 143(2) was not issued and served on the Assessee has held that an omission to issue or serve or any defect in the service of notices: provided by procedural provisions does efface or erase the liability to pay; tax where such liability is created by charging section. Further the Hon’ble Apex Court held that any such omission or defect may render the order irregular depending upon the nature of provision not complied with but certainly will not make order void or illegal and such order cannot be quashed. The Ld. CIT(A) has grossly erred on the facts and in the (ix) circumstances of the case and in law in quashing the reassessment proceeding despite the various binding judgments/’ observations pronounced by the Hon’ble High Court of Delhi in the case of Intarcraft India vs. CIT (1985) 154 ITR 662; and also & 3952.Del.2019 Gurnihal Singh Pirzada 6 in the case of CIT vs. Narain Dass (2001) 249 ITR 148 that non- issue of notice u/s 143(2) is merely a procedural irregularity which can be corrected by remitting matter back to the AO. The Ld. CIT(A) has grossly erred on the facts and in the (x) circumstances of the case and in law in quashing the reassessment proceeding despite the legal jurisprudence as held by Hon’ble Supreme Court in the case of Krishan Lai & vs. State of J&K (1994) 4 SCC 422, 432 that irregularity is for want of adherence to some prescribed procedure whereas nullity is a void act or an act having no legal force or validity. The Ld. CIT(A) has grossly erred on the facts and in the (xi) circumstances of the case and in law in not considering the quantum additions made in A.Yrs. 2008-09 to 2013-14 on merits (xii) The appellant craves, leave toc add, alter or amend any of the grounds of appeal before or during the course of hearing of the appeal.”

6. Heard and perused the record.

7. Ld. DR relying the judgment of Hon’ble Supreme Court of India in CIT vs. Jai Prakash Singh 1996 AIR 1303 and Hon’ble Delhi High Court in Intarcraft India vs. CIT 1985 154 ITR 662 Delhi contended that Ld. CIT(A) has failed to take note of these two judgments which hold that non-issuance of notice u/s 143(2) of the Act is a mere irregularity and the reassessment is not void ab initio as held by Ld. CIT(A). It was submitted that as Ld. CIT(A) has failed to consider the case on merits, matter be remanded back to the Ld. CIT(A).

8. On the other hand, Ld. AR relied the findings of Ld. CIT(A) and specifically referred to the remand report made available in the paper book. It was submitted that the settled proposition of law is that the notice u/s 143(2) is mandatory in nature and there is no exception to it. Ld. AR has relied following judgments of Hon’ble Supreme Court, Hon’ble Delhi High Court, Co-ordinate Bench‘s Delhi and Allahabad High Court :- & 3952.Del.2019 Gurnihal Singh Pirzada 7 S. No. Name of the Judgement Citation 1. CIT vs. Laxman Das Khandelwal (2019) 417 ITR 325 2. ACIT vs. Hotel Blue Moon (2010) 321 ITR 362 3. CIT vs. Delhi Kalyan Samiti (2016) 95 CCH 399 4. PCIT vs. Jai Shiv Shankar traders (2016) 338 ITR 448 P. Ltd.

“9. In the circumstances, we reject the application. In view of the novelty of the point and particularly the contentions raised regarding procedural irregularity and procedural illegality, we make no order as to costs.”

Order pronounced in the open court on 23rd February, 2023.