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Income Tax Appellate Tribunal, DELHI BENCH : SMC : NEW DELHI
Before: SHRI R.K. PANDA
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER Assessment Year: 2009-10 MAS Metals & Components Pvt. Ltd., Vs. ITO, A-4, South Extension Part I, Ward-2(2), New Delhi. Noida. PAN: AADCM6451F (Appellant) (Respondent) Assessee by : Shri Arun Kumar Jain, CA Revenue by : Shri S.L. Anuragi, Sr.DR Date of Hearing : 21.02.2019 Date of Pronouncement : 26.02.2019 ORDER
This appeal by the assessee is directed against the order dated 30th June, 2017 of the CIT(A)-1, Noida, relating to Assessment Year 2009-10. 2. The grounds raised by the assessee are as under:- “1. That on the facts and circumstances of the case the Learned CIT(A) has erred both in law and on facts in upholding the service of various notices issued u/s 148, 142(1), 143(2) as valid service inspite of the fact that none of notices were issued in accordance with section 282 of the I.T Act read with rule 127 of the I.T rules, 1962 and therefore assessment made consequent thereto was without jurisdiction and liable to be quashed.
2. That on the facts and circumstances of the case the CIT(A) has erred both in law and on facts in upholding the validity of services of various notice(s) issued u/s 148, 144, 142(1) of I.T. Act as valid service at B-94, sector-10, Noida without appreciating that the registered office of the appellant is situated at A- 4, South Extension, New Delhi which is easily available from the ITR, PAN Data Base of the appellant and/or MCA website.
3. That on the facts and circumstances of the case the learned commissioner of Income Tax (Appeals) has erred both in law and on facts in issuing directions u/s 150 of I.T Act to the ITO ward 16(3), New Delhi for issue of fresh notice and passing the assessment order u/s 148 for A.Y. 2009-10.
That the impugned assessment order is barred by limitation therefore invalid and bad in law and may please be annulled.
5. That on the facts and circumstances of the case, the Ld. CIT(A) has erred both in law and on facts in upholding the validity of initiation of reassessment proceeding which was without recourse to the provision of section 147/148 of the Income Tax Act, 1961 and failing to appreciate that there were “no material” on record to believe that income of assessee has escaped assessment for the A.Y. 2009-10. 6. That having regard to the facts and circumstances of the case, the Ld. CIT(A) has erred both in law and on facts in upholding the initiation of proceeding u/s 148 which was without complying with the mandatory conditions of section 147 to 153 of the Income Tax Act, 1961 and reopening of the case is bad in law and may please be annulled. 7. That there was no material having live nexus with the foundation of belief, therefore, initiation of re-assessment proceeding is bad in law and may please be annulled. 8. That on the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in not deleting the addition of Rs. 32,99,000/- made u/s 45 of the I.T Act, 1961 being long term capital gain on sale of plot of land. 9. The appellant craves in the right to add, amend, modify, delete any grounds or grounds of appeal before or at the time of hearing and all the above grounds are without prejudice to each other.”
Facts of the case, in brief, are that the assessee is a private limited company. On the basis of non-PAN AIR information received by the Assessing Officer that the assessee has sold immovable property of Rs.40,99,000/- during the financial year 2008-09 relevant to the impugned assessment year and since the assessee has not quoted the PAN in this high value transaction as required u/s 139A(5) of the Act read with Rule 114B of the IT Rules, 1962, the Assessing Officer invoked the provisions of section 147 by recording the reasons and issued notice u/s 148 of the IT Act on 28th March, 2016. However, there was no compliance to the notice issued u/s 148 of the IT Act within the prescribed time. The Assessing Officer, therefore, issued notice u/s 142(1) on 5th August, 2016 to make compliance of notice u/s 148 of the Act on 22nd August, 2016. Again, there was no compliance to the above notice. Thereafter, another notice u/s 142(1) of the IT Act along with a questionnaire was issued by the Assessing Officer on 4th August, 2016, requiring the assessee to explain the source of high value transactions along with documentary evidence. Again, there was no compliance to such notice. The Assessing Officer thereafter issued a show cause notice u/s 144 to the assessee on 03.11.2016. Again, there was no compliance. Therefore, the Assessing Officer proceeded to complete the assessment u/s 144 on the basis of the material available on record and determined the total income at Rs.32,99,000/- after deducting the amount of Rs.8 lakhs towards indexed cost of acquisition on estimate basis from the sale consideration of Rs.40,99,000/-. The Assessing Officer, accordingly made addition of Rs.32,99,000/- as long-term capital gain.
4. Before the CIT(A), the assessee challenged the validity of the order passed by such non-jurisdictional Assessing Officer of NOIDA when the assessee is regularly assessed at New Delhi. The ld.CIT(A) observed that, admittedly, the assessee is an existing assessee in Delhi and, therefore, the Assessing Officer, Noida, could not have assumed jurisdiction against the assessee otherwise than the due procedure in law which action is admittedly not to have taken recourse to. Therefore, the impugned assessment order is bad in law being passed without jurisdiction. However, he held that while the notice in the case of a company is required to be served on its principal officer at its registered office, the same is only directory and not mandatory and the notice can be served in various other manners including upon the employees or representatives of the company and at other addresses. The concept of registered office will include various other addresses of the company for the purpose of statutory correspondence as well as the employees and representatives of the assessee would be included in the status ‘appellant.’ In this view of the matter, he deleted the addition made by the Assessing Officer in the assessment order but gave a direction to the successor Assessing Officer of the ITO, Ward 6(3), Delhi to issue notice u/s 148 once again to the assessee and frame necessary assessment order after giving the assessee a reasonable opportunity of being heard in accordance with law.
Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal.
The ld. counsel for the assessee, at the outset, submitted that the registered office of the assessee is situated at Delhi at A-4, South Extension Part I, New Delhi and the assessee is regularly filing its return of income with the Assessing Officer having jurisdiction over the assessee at New Delhi. He submitted that the return for assessment year 2009-10 was filed on 23rd October, 2009 and the return for assessment year 2015-16 was filed on 28th September, 2015 with the Assessing Officer at Ward 16(3), New Delhi. The return for assessment year 2016-17 was filed on 30th September, 2016. The order for assessment year 2006-07, copy of which is placed at page 48 of the paper book shows that the same was issued by Income-tax Officer, Ward 6(3), New Delhi on 28th November, 2006. He submitted that when the Assessing Officer, Noida does not have jurisdiction over the assessee, he cannot issue a notice u/s 148. The ld.CIT(A) is accepting the same and thereby holding that the addition made by the Assessing Officer is not justified. However, by directing the Assessing Officer having jurisdiction over the assessee to issue notice u/s 148, he has exceeded his jurisdiction. He accordingly submitted that the order of the CIT(A) to this extent should be set aside. He also relied on the following decisions:- • ITAT, New Delhi in the case of Zakia Begum New Delhi v ITO (2017) (ITA no.3002/Del/2016) • Hon'ble Delhi High Court in the case of CIT V. Eshaan Holding (P) Ltd (2012) 344 ITR 541 • ITAT New Delhi, in the case of Auram Jewellery Exports (P) Ltd. Vs ACIT (2017) (ITA No. 1653/Del/2011) • ITAT, New Delhi in the case of Aryan Corporate Solution (P) Vs. ITO (2016) [ITA No. 4565/Del/2012)
• ITAT, New Delhi in the case of Deepak Gupta Vs. ACIT (ITA No. 1708 to 1713/Del/11) • Hon’ble Delhi High Court in the case of Sunworld Infrastructure Pvt. Ltd. Vs. ITO (W.P ( C ) 1741/2015 & CM No. 3112/2015) • Hon’ble Supreme court of India in the case of Y. Narayana Chetty & Another Vs. ITO [(1959) 35 ITR 388 (SC)] • ITAT, Chandigarh in the case of Sh. Om Parkash Kukreja Vs. ITO (ITA No. 335 & 336/CHD/2015 • ITAT, New Delhi in the case of Jagdish Malhotra vs. ITO (ITA No.3652-53/Del/13) • ITAT, Mumbai in the case of Ashok B. Bafna vs. DCIT (2012) [18 ITR (Trib) 43 (ITAT Mumb.) • Hon’ble Allahabad High Court in the case of CIT vs. Adarsh Travel Bus Service [2012] (204 Taxman 114 (All) • Hon’ble Gujarat High Court in the case of Kanubhai M. Patel HUF vs. Hiren Bhatt or his successors to office & 4 (2010).
The ld. DR, on the other hand, submitted that the Department has not filed any appeal against the findings given by the CIT(A) that the Assessing Officer, Noida could not have assumed jurisdiction against the assessee other wise than the due procedure of law, therefore, the assessee should not have any grievance. So far as the direction of the CIT(A) to the concerned Assessing Officer to issue notice u/s 148 once again upon the assessee and frame necessary assessment order after giving reasonable opportunity of being heard to the assessee is concerned, the same is in accordance with law since the interest of Revenue is protected under the provisions of section 150 of the Act. Therefore, the assessee should not have any grievance.
I have considered the rival arguments made by both the sides and perused the orders of the authorities below. I have also considered the various decisions relied on by the ld. counsel for the assessee which are placed on the paper book. Admittedly, the assessee in the instant case is regularly assessed to tax at New Delhi and therefore, ITO Ward 2(2), Noida does not have jurisdiction of the assessee. Therefore, he could not have issued notice u/s 148 of the Act to the assessee and such action of the Assessing Officer being in excess of his jurisdiction, the entire order is liable to be quashed. The ld.CIT(A) has rightly quashed the order so passed by the Assessing Officer of Noida. However, while doing so, the ld.CIT(A) has given a direction to the Assessing Officer having jurisdiction over the assessee to issue notice u/s 148 which, in my opinion, in the facts and circumstances of the case is not proper. It is for the Assessing Officer having jurisdiction over the assessee to issue notice u/s 148 after recording reasons. The ld.CIT(A) could have at best forwarded the information to the Assessing Officer or the concerned CIT but could not have directed the Assessing Officer to issue notice u/s 148 of the Act. Since the Assessing Officer, being a subordinate officer of the CIT(A), is bound to follow the direction of his superior authority, therefore, it will cause undue hardship to the assessee for no fault committed by it. If the proposition laid down by CIT(A) is accepted, it will create havoc and any officer sitting anywhere in the country can pass an order against any assessee and the CIT(A) will direct the Assessing Officer having jurisdiction over the assessee to reopen the case. This is definitely not the intention of the statute and the law does not permit the officer to do something indirectly which he cannot do directly. In this view 7 of the matter, the direction of the CIT(A) to the Assessing Officer for issue of notice u/s 148 of the Act being not in accordance with the law is liable to be quashed. Accordingly, the direction of the CIT(A) to the Assessing Officer to issue notice u/s 148 is quashed. The grounds raised by the assessee are accordingly allowed.