C.I.T., AMRITSAR vs. BALDEV RAJ MEHRA

ITA/612/2008HC Punjab & HaryanaPHHC01080620200815 February 2011Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL3 pages
AI SummaryDismissed

What were the facts?

The Revenue, Commissioner of Income Tax, appealed to the High Court under Section 260-A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Amritsar. The ITAT had set aside a further addition made by the Commissioner of Income Tax (Appeals) [CIT(A)] on the grounds that the procedure under Section 251(2) of the Act was not followed before making the addition. The ITAT had also dismissed the assessee's cross-appeal challenging the assessment itself, citing non-service of notice under Section 143(2) within the stipulated period for the block assessment (1.4.1989 to 22.7.1999). The assessee had previously appealed to the High Court, which allowed the appeal and set aside the assessment, following the Supreme Court's decision in Asstt. Commissioner of Income Tax and another v. M/s Hotel Blue Moon, holding the assessment illegal due to the absence of a statutory notice under Section 143(2) within the prescribed time.

What did the High Court hold?

The High Court held that the appeal by the Revenue had been rendered infructuous. This was because the High Court, in a separate appeal (I.T.A. No.372 of 2009) filed by the assessee, had already allowed the assessee's appeal and set aside the assessment itself. The High Court's decision in that prior appeal was based on the Supreme Court's ruling in Asstt. Commissioner of Income Tax and another v. M/s Hotel Blue Moon, which held that an assessment is liable to be set aside if the statutory notice under Section 143(2) of the Act is not issued within the stipulated time. Since the assessment itself was declared illegal, the Revenue's appeal challenging the ITAT's order of setting aside further additions became moot. Consequently, the Revenue's appeal was dismissed. The High Court did not decide the specific questions of law raised by the Revenue regarding the opportunity of hearing and procedural errors under Section 251(2) on their merits, as the underlying assessment was already quashed.

What were the issues?

The High Court was to decide the following substantial questions of law: 1. Whether the ITAT erred in concluding that the photocopy of a letter not being provided to the assessee, but only to their counsel, did not amount to a grant of reasonable opportunity (Section 251(2) of the IT Act). 2. Whether the ITAT overlooked that the assessee's counsel, duly representing the assessee and having replied to the letter, meant the assessee had exercised their right of hearing before income enhancement. 3. Whether there was a violation of natural justice or a procedural error as provided under Section 251(2) of the IT Act. 4. Whether, even if a proper opportunity was not given, the ITAT was justified in quashing the enhanced addition instead of remanding the matter to the CIT(A) for a proper opportunity. Contentions: The Revenue argued that the counsel's receipt of the letter and subsequent reply constituted sufficient opportunity for the assessee. They contended that the assessee had exercised their right of hearing and that there was no violation of natural justice or procedural error under Section 251(2). The Revenue also argued that the ITAT should have remanded the matter for a proper opportunity rather than quashing the addition. The Assessee argued that the assessment itself was liable to be set aside due to the non-issuance of notice under Section 143(2) within the stipulated period, as held by the Supreme Court in M/s Hotel Blue Moon.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 143(1)(a),Section 143(3),Section 251(2),Section 143(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

Date of decision: 15.2.2011 Commissioner of Income Tax -----Appellant. Vs. Sh. Baldev Raj Mehra. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Sukant Gupta, Standing Counsel for the appellant Ms. Radhika Suri, Advocate for the respondent. --- ADARSH KUMAR GOEL, J. This appeal has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, Amritsar dated 16.11.2007 in I.T.(SS)A. No.14(ASR)/2003 (Block period from 1.4.1989 to 22.7.1999) raising following substantial questions of law:- “(i) Whether the Hon’ble Tribunal has erred in concluding that since the photocopy of the letter had been made available to the counsel for the assessee and not to the assessee, the same also did not amount to grant of reasonable opportunity?

(ii) Whether the Hon’ble ITAT even while concluding so has lost sight of the fact that the counsel was duly representing the assessee in the proceedings and had also replied to the said letter on th

The order continues below.

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