MURARI SUBHA RAO,SECUNDERABAD vs. INCOME TAX OFFICER, WARD-13(3), HYDERABAD

This appeal filed by the assessee is directed against the order of CIT(A) – 4, dated 19/07/2019, Hyderabad for AY 2010-11.

2.1 Apart from the above, assessee had also raised grounds challenging the computation of capital gains by the ld. AO in merits and also on the ground that claim of deduction u/s 54F made by the assessee was rejected without adducing proper reasons.

3.1 We find that the ld. DR duly defended the said arguments by way of explaining the modus operandi adopted by the department whenever any information as received by it from an external source or from an internal source and the procedure adopted by the department for the purpose of initiating reassessment proceedings in the prescribed proforma for obtaining sanction/approval from the ld. Pr. CIT in terms of section 151 of the Act.

3.2 We find that the assessee has raised additional grounds of appeal before us duly incorporating the original grounds as well as fresh grounds which are now taken up for adjudication after admitting the same as it goes to the root of the matter and does not involve verification of the facts.

3.3 We find that the crucial proposition raised by the ld. AR, which is preliminary point of service of notice on the wrong address is to be decided first which would clinch the entire issue in dispute before us. Hence, we deem it fit to take up the technical issue raised by the assessee before us that notice u/s 148 dated 31/03/2017 was served at the wrong address.

3 Murari Subba Rao, Sec’bad..

4 Murari Subba Rao, Sec’bad.. The assessee being in service had filed his return of income with Range – 13(3) (Salary Ward). Accordingly, the jurisdiction of the assessee’s case vests with ITO, Ward – 13(3), Hyderabad. Meanwhile, assessee shifted his residence from Sagar Enclave, Akbar Road to Flat No. 107, Mani Residency, Mani Enclave, JJ Nagar PO, Yapral, Secunderabad – 500 087. The change of address was duly intimated to the ITO, Range – 13(3) by the assessee by way of written communication. The assessee had also taken steps to modify his address in the PAN Portal vide letter dated 16/08/2013. Accordingly, PAN Portal had also taken note of the same and assessee had obtained a new PAN Card with colour photograph on 16/08/2013.

4.1 We find that the case records were also called for in the instant case and the same were duly submitted by the assessee at the time of hearing. We also find that the necessary documents which are required to be verified from the case records are already available in the paper books submitted by the parties. The following chronology of list of dates of events would explain the facts of the case of the assessee better: Date Particulars 31/07/2013 Date of filing of return of income for the AY 2013-14 by the assessee with the new address i.e. Mani Residency address. 16/08/2013 Date of intimation of revised address of the assessee in PAN Portal and date of obtaining new PAN card with colour photograph. 01/03/2014 Letter addressed by the ITO, Ward – 13(3), Hyderabad to the assessee in the changed address i.e. Flat No. 107, Mani Residency, Mani Enclave, Yapral, Secunderabad regarding tax arrears of AY 2010-11 to the tune of Rs. 920/-. 19/07/2014 Date of filing of return of income for AY 2014-15 by the assessee with Mani Residency address. 28/08/2014 Letter issued by ITO (Intelligence) – 5, Hyderabad to assessee in the new address i.e. Mani Residency address calling for information u/s 133(6) of the Act in connection with property tax assessment done on the property purchased

5 Murari Subba Rao, Sec’bad.. by the assessee. 10/08/2015 Date of filing of return of income by the assessee for AY 2015-16 mentioning the changed address i.e. Mani Residency address. 09/07/2016 Date of filing of return of income by the assessee for AY 2016-17 mentioning the changed address i.e. Mani Residency address. 28/06/2017 Date of filing return of income for AY 2017-18 by the assessee with new address i.e. Mani Residency address. 11/08/2017 Letter addressed b y the assessee to ITO, Ward – 10(1), Hyderabad objecting to the service of notice u/s 148 on 20/07/2017 beyond the limitation period mentioned in section 149(1)(b) of the Act. 16/08/2017 Letter of ITO, Ward – 10(1), Hyderabad addressed to assessee stating that the notice issued u/s 148 of the Act is not barred by limitation informing that the notice has been validly issued within the due date i.e. 31/03/2017, but, it was served on the assessee on 20/07/2017. The ld. AO also stated that section 149 of the Act does not speak about service of notice and talks only about the issue of notice. 04/09/2017 Letter addressed by the assessee to ITO, Ward – 10(1), Hyderabad stating that the return already filed on 22/06/2010 may be treated as a return in response to notice issued u/s 148 of the Act dated 31/03/2017, which was served on the assessee on 20/07/2017 and also requesting for reasons recorded for reopening the assessment. Transfer of records of the assessee in the prescribed proforma by the OTO, Ward – 10(1), Hyderabad to ITO, Ward – 13(3), Hyderabad on the ground that the jurisdiction of the assessee vests only with ITO, Ward – 13(3(), Hyderabad. Form 16A generated from TDS Centralized Processing Cell (Traces) for AY 2014-15 issued by SBI, Mudfort Branch to the assessee mentions that changed addressee i.e. Mani Residency in respect of tax deducted on interest paid on deposits. It is pertinent to note that the changed address of the assessee i.e. Mani Residency address gets notified in the traces once PAN portal is duly intimated the change of address. TDS received for AY 2013-14 addressed to the assessee in the old address i.e. Sagar Enclave, Akbar Road address in view of the fact that PAN Portal was intimated by the assessee regarding change of address only on 16/08/2013. Hence,

6 Murari Subba Rao, Sec’bad.. traces Form 16 was generated mentioning old address of the assessee. 04/09/2017 Assessee’s letter from the new address, addressed to ITO, Ward – 10(1), Hyderabad stating that the notice u/s 148 of the Act, dated 31/03/2017 was issued to the Post Office by the IT Department on 19/07/2017 as verified from the Website of “India Post” and the said notice was served on the assessee on 27/07/2017. 25/09/2017 Letter of ITO, Ward – 13(3) to the assessee communicating reasons recorded for the reopening of assessment. 25/09/2017 Notice u/s 143(2) of the Act issued by the ITO, Ward – 13(3) to the assessee in the new address. 29/09/2017 Assessee’s letter to ITO, Ward – 13(3), Hyderabad narrating the entire facts and questioning the validity of reopening of assessment. 18/10/2017 Letter of ITO, Ward – 13(3) to assessee asking for certain details. In the said letter, the AO mentioned that neither PAN was mentioned nor the fact of assessee being employed with Naval Force was mentioned in the sale deed and, hence, ITO, Ward – 10(1), Hyderabad was being territorial jurisdiction over the assessee. Accordingly, AO defended the issue of notice u/s 148 of the Act as valid. 10/11/2017 Pursuant to transfer of records by ITO, Ward – 10(1), Hyderabad to ITO, Ward – 13(3), Hyderabad, ITO, Ward – 13(3) issued letter dated 10/11/2017 asking for certain details in connection with scrutiny assessment proceedings of AY 2010-11 in the case of the assessee together with notice u/s 142(1) of the Act, dated 10/11/2017. 14/11/2017 Assessee’s letter ITO, Ward – 13(3), Hyderabad filing objections to the reasons recorded together with the chronology of events leading to the sale of property and its related civil court disputes to drive home the point that the property sold is a disputed one, which would not fetch fair market value prevailing in the market.

4.2 From the above chronology of dates together with respective events, which is evident as per the above table, from which it can be safely concluded that the notice u/s 148 of the Act, dated 31/03/2017 was never served on the assessee within a reasonable period of time in the correct address i.e., Flat No. 107, Mani Residency, Mani Enclave, JJ Nagar PO, Yapral, Secunderabad – 500 087. It was 7 Murari Subba Rao, Sec’bad.. pleaded by the ld. DR that notice u/s 148 dated 31/03/2017, which was sought to be served at the old address of the assessee came back unserved to the Department on 09/04/2017. It is not known what the ld. AO was doing from 09/04/2017 to 19/07/2017, in as much as the ld. AO sought to restart the process of service of notice u/s 148 of the Act at the correct address of the assessee only on 19/07/2017. The period of delay from the side of the ld. AO from 09/04/2017 to 19/07/2017 does not stand explained. Normally, any notice that is issued by the IT Department gets served on the assessee within a period of one week from the time of issue of notice after completing the necessary documentation in that regard. But, in the instant case, it is very peculiar that the notice u/s 148 had been served on the correct address of the assessee only on 20/07/2017 after starting the process on 19/07/2017. In the present case, there cannot be any allegation that could be levelled on the assessee of non-intimation of the change of address to the IT Department. As can be seen from the aforesaid chronology of list of dates and events, assessee had duly intimated the new address to the IT Department and had changed the address in the PAN Portal and that several documents, such as, generation of TDS certificate by SBI given to the assessee mentioning the new address of the assessee as narrated in the aforesaid table and that several letters were even addressed by the jurisdictional AO (ITO, Ward – 13(3), Hyderabad ) of the assessee seeking for payment of tax arrears in the new address of the assessee and strangely one such letter was even addressed by ITO (Intelligence) – 5, Hyderabad to assessee in new address calling for certain information u/s 133(6) of the Act in connection with property tax assessment done on the property purchased by the assessee. We would like to state that last of the aforesaid letter mentioned would clearly serve as a clinching evidence to drive home the point that the changed address had been duly incorporated in the PAN Portal of the IT Department, which alone would have enabled the ITO (Intelligence) – 5, Hyderabad to address to the assessee in the new address seeking for certain information.

8 Murari Subba Rao, Sec’bad.. 4.3 In view of the aforesaid observations, it can be safely concluded that there was no valid service of notice u/s 148 of the Act in terms of section 282 of the Act at the correct address of the assessee within a reasonable period of time by the revenue. When the assessee is assessed to tax by ITO, Ward – 13(3), Hyderabad and has been having regular correspondence with that Officer and returns of income for AYs, 2013-14, 2014-15, 2015-16 and 2016-17 were duly filed mentioning new address of the assessee with ITO, Ward – 13(3), Hyderabad, there is no reason as to why ITO, Ward – 10(1), Hyderabad should exercise jurisdiction over the assessee by issuing notice u/s 148 of the Act. In any case, ITO, Ward – 10(1), Hyderabad does not have jurisdiction over the assessee to trigger the initiation of the reassessment proceedings after recording of reasons for reopening of assessment. Hence, the reassessment framed by the ld. AO in the instant case deserves to be quashed as void ab-initio for want of jurisdiction of the ld. AO and for want of proper service of notice at the correct address of the assessee within the reasonable time. Accordingly, we hold that the reassessment framed by the AO is hereby quashed as void ab-initio.

4.4 Since the entire reassessment is quashed on the aforesaid two counts alone, the other technical arguments challenging the validity of reopening the assessment of the ld. AR and the arguments made by him on merits become academic in nature and, hence, no opinion is hereby given on the same and the issue thereon are left open.