KAMAKSHI SHIPPING,,VISAKHAPATNAM vs. ACIT, CIRCLE-1(1),, VISAKHAPATNAM

Per Shri D.S.Sunder Singh, Accountant Member : This appeal is filed by the assessee against the order of the Pr.Commissioner of Income Tax [Pr.CIT]-1, Visakhapatnam vide F. No.Pr.CIT-1/VSP/263/32016-17 dated 27.03.2017 for the Assessment Year (A.Y.)2012-13.

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18.12.2017. Taking support from the above facts, the Ld.AR argued that the revision order u/s 263 was passed after 31.03.2017 and further argued that had the order was passed before 31.03.2017, there is no reason for delay in serving the order after 9 months. It is served after 9 months not only to the assessee but also to the Assessing Officer, thus it is to be construed that the order was passed after the limitation period provided in the Act, hence invalid. The Ld.AR relied on the order of this Tribunal in the case of Kosanam Pushpavathi Vs. ITO, Ward-2(2), Vijayawada reported in (2019) Tax Corp (A.T.) 69474, ITAT, Visakhapatnam, wherein, the Coordinate Bench relied on the decision of Hon’ble Supreme Court in the case of State of Andhra Pradesh & M.Ramakishtaiash and Co. and held that order served u/s 143(3) after 9 months is barred by limitation. The Ld.AR also relied on the decision of Hon’ble High Court of Andhra Pradesh in the case of Ushodaya Enterprises Limited Vs. Commissioner of Commercial Taxes dated 24.03.1998 (1998) (3) ALD 478, wherein the Hon’ble Jurisdictional High Court held that the order served on the assessee beyond 8 months is invalid.

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Pr.CIT had passed the order on 27.03.2017 which is supported by the order sheet entry. The AO also produced record of the Pr.CIT as per which the order was stated to be passed on 27.03.2017. Hence, argued that since the order was passed before 31.03.2017 it was not barred by limitation, and the order is valid, accordingly requested to uphold the order of the Ld.Pr.CIT and dismiss the appeal of the assessee.

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the Bench has asked for clarification from the Ld.DR with regard to reasons for such a long delay in serving the order to the assessee as well as the AO. The Ld.DR could not submit any valid and reasonable explanation to support the delay. The Bench also has asked the Ld.DR to produce any evidences such as notice service register, dispatch register to establish that the order was passed before 31.03.2017 and sent for dispatch to the assessee and the AO with in the reasonable time. No such evidence was furnished by the department. The Ld.DR relied on the decision of Hon’ble Supreme Court in the case of K.U.Srinivasa Rao, Vs. Commissioner of Wealth Tax, Andhra Pradesh reported in (1985) 152 ITR 0128, wherein, the Hon’ble Supreme Court held that the act merely require that the order of assessment shall be made within the prescribed period, but it does not require that it should be communicated within the prescribed period and thus, the Hon’ble Supreme Court held that even though the order was served on the assessee on April 06, 1957, the order was held to be made on or before March 29. In the cited order, the delay was only 9 days, hence, the Supreme Court held that the order deemed to have been made on 29.03.1957. However, in the instant case, though the Ld.PCIT stated to have passed the order on 27.03.2017, the department could not place any

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evidence to show that the order was dispatched for service to the assessee within reasonable time. The proceedings would be completed only after passing he order and communicated the same to the assessee. Unless the communication is sent to the assessee by serving the order, it could not be held to be passed and does not serve the intended purpose. The department could not demonstrate with tangible evidence that the order was passed within time limit permitted in the act and failed to explain the reasons for such a long delay in serving the order to the assessee. Even to the AO the order was served on the on 18.12.2017, which supports the contention of the assessee that the order was back dated. No other evidence was produced by the departmental representative to show that the cited order was passed u/s 263 before 31.03.2017 and sent for dispatch within a reasonable time. Therefore, the case law relied upon by the Ld.DR is not applicable in the assessee’s case. The assessee relied on the decision of Hon’ble High Court of Andhra Pradesh in Ushodaya Enterprises Limited (supra), wherein Hon’ble High Court held that the order served beyond 8 months is invalid. For the sake of clarity and convenience, we extract para No.29 of the cited order of the Hon’ble High Court of Andhra Pradesh which reads as under :

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“29. The next question that has been argued before us is the issue of limitation. The impugned order of the Commissioner bears the date 20-11- 1995. It purports to revise the order dated 25-11-1991 passed by the Appellate Deputy Commissioner, Kakinada. That order was served on the petitioner on 27-1-1992. For setting aside that order in exercise of revisional powers under Section 20(1), a limitation of 4 years from the date of service of notice is prescribed. It is not in dispute that the last date for passing a final order in exercise of revisional power under Section 20(1) is 27-1-1996 i.e., four years from the date of service of the appellate order: Though the impugned revisional order of the Commissioner bears the date 20-11-1995, admittedly, it was served on the appellant on 30.08.1996. We find from the record that the said order reached the Commercial Tax Office concerned on 27.07.1996, as the stamp on the top of the order bears out and thereafter it was sent for service to the appellant who received the same on 3-8-1996. Thus, there is time lag of more than 8 months between the purported date on which the impugned revisional order was passed and the date on which it was served on the assessee, The reason for such inordinate delay remains unexplained. Even after perusal of the relevant record, the learned Government Pleader is not in a position to tell us as to what caused such extraordinary delay. In these circumstances, the ratio of the decision in State of Andhra Pradesh v. Ramakishtaiah and Co., 93 STC 406 is attracted and it must he presumed that the order was not passed on the date on which it was purportedly, passed. In an identical situation, the Supreme Court held : “We are of the opinion that this appeal has be dismissed on the ground urged by the assessee himself. As stated above, the order of the Deputy Commissioner is said to have been made on January 6, 1973, but it was served upon the assessee on November 21, 1973, i.e., precisely 10 ½ months later. There is no explanation from the Deputy Commissioner why it was so delayed. If there had been a proper explanation, it would have been a different matter. But in the absence of any explanation whatsoever, we must presume that the order was not made on the date it purports to have been made. It could have been made after the expiry of the prescribed four years’ period. The civil appeal is accordingly dismissed.”

4.1. Similarly, this Tribunal in the case of Smt.Kosanam Pushpavathi Vs. ITO cited supra, following the decision of Hon’ble Supreme Court in the

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case of State of Andhra Pradesh Vs. Khetmal Parekh & M.Ramakishtaiah and Co. held as under :

“6. We have heard both the parties and perused the material placed on record. In this case, assessment order was stated to have been passed on 04.03.2013, but it was served on the assessee on 05.12.2013 i.e after 9 months. For a query from the bench, the Ld.DR replied that the assessment order and demand notice was served through the departmental notice server. Though the Ld.DR argued that the assessment order was passed on 04.03.2013, no evidence was placed before us to establish that the order in fact was passed on 04.03.2013. Though the limitation period is available for passing the assessment order, but not for service of the assessment order and demand notice, the order must be served on the assessee within the reasonable time as held by the various high courts. The Ld.CIT(A) relied on the decision of CIT Vs. Subrata Roy cited supra, wherein, the facts are completely different and distinguishable. In the said case, the order was passed u/s 143(3) on 31.12.2008, but the assessee refused to accept the order, hence the assessment order and the demand notice was sent through registered post which caused delay of 47 days and the Hon’ble High Court held that the delay of 47 days is not time long enough which can even make any one suspicious as regards correctness of the date of the order. In the instant case, there was no such default or refusal from the assessee and the delay was 9 months. The department did not establish with any evidence that the said order was passed on 04.03.2013 and explained the reasons for delay in service of the assessment order and the demand notice. Therefore, we are unable to accept the contention of the department that there was a reasonable cause for delay of 9 months in the service of the demand notice and the assessment order. In the absence of any evidence to establish that the order was passed within the time limit allowed u/s 143(3) and failure of the department to explain the delay of nine months from the date of passing the order, we are unable to accept the contention of the revenue that the order was passed on 04.03.2013. The Ld.AR relied on the decision of ACIT Vs. Orissa Stevedores Ltd., wherein, Hon’ble ITAT Cuttack in (2012) 16 ITR 0431 held that the order passed with a delay of 85 days is barred by limitation. Similarly, the Ld.AR relied on the decision of Hon’ble Supreme Court in the case of State of Andhra Pradesh Vs. Khetmal Parekh & M.Ramakishtaiah and Co. in Civil Appeal No.491 of 1977 and 1014 of 1977 held as under : “We are of the opinion that the theory evolved by the High Court may not be really called for in the circumstances of the case. We are of the opinion that this appeal has to be dismissed on the ground urged by the assessee himself. As stated above, the order of the Deputy Commissioner is said to have been made on January 6, 1973, but it was served upon the assessee on November 21, 1973, i.e. precisely 10 ½

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months later. There is no explanation from the Deputy Commissioner why it was so delayed. If there had been a proper explanation, it would have been a different matter. But, in the absence of any explanation whatsoever, we must presume that the order was not made on the date it purports to have been made. It could have been made after the expiry of the prescribed four years period. The civil appeal is accordingly dismissed. No costs.” In the instant case, there was a delay of 9 months in serving the demand notice and the assessment order on the assessee. The department did not explain the reasons for service of the said notice and the assessment order with 9 months delay. Therefore, we hold that there is no material to believe that the assessment order was passed on 04.03.2013. Accordingly, we hold that the assessment order passed u/s 143(3) is barred by limitation and the same is annulled and the appeal of the assessee is allowed.” 4.2. Since the facts are identical to the case laws relied upon by the assessee and the delay involved in the instant case was more than 9 months which is unreasonable and the department could not explain the reasons for such long delay in serving the order to the assessee as well as the AO, we hold that the order was passed beyond the time limit allowed under the Act, hence, the order passed u/s 263 was unsustainable and quashed. Accordingly the appeal of the assessee is allowed.

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Order pronounced in the open court on 21st August, 2019.

Sd/- Sd/- (िी.दुगाा राि) (धड.एस. सुन्दर धसंह) (V. DURGA RAO) (D.S. SUNDER SINGH) न्याधयक सदस्य/JUDICIAL MEMBERलेखा सदस्य/ACCOUNTANT MEMBER नवशधखधपटणम /Visakhapatnam नदनधंक /Dated : 21.08.2019 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee- Kamaakshi Shipping, D.No.50-102-14, Plot No.186, 2nd Floor, North Extension Layout, Seethammadhara, Visakhapatnam 2. रधजस्व/The Revenue – ACIT, Circle-1(1), Visakhapatnam 3. The Pr.Commissioner of Income Tax-1, Visakhapatnam 4. तिभागीय प्रतितिति, आयकर अिीिीय अतिकरण, तिशाखािटणम/DR, ITAT, Visakhapatnam 5.गार्डफ़ाईि / Guard file आदेशािुसार / BY ORDER // True Copy //

Sr. Private Secretary ITAT, Visakhapatnam