GIRISH CHAND AGARWAL,JAIPUR vs. I.T.O.,WARD-46(1), KOLKATA

The assessee’s sole substantive grievance plead that the PCIT herein has erred in law and on facts in assuming is u/s. 263 of the Act revision jurisdiction vide following detailed discussion:-

Girish Chand Agarwal Vs. ITO Wd-46(1), Kol. Page 2 “In this case the assessment for A.Y. 2009-10 was completed on 30.12.201.2. u/s. 147 read with section 143(3) of the Income-tax Act, 1961. Original return of income was filed for A.Y. 2009-10 at a total income of Rs.3,08,8691-. A return was also filed on 31.08.2016 through e-filing in response to notice u/s.148. The assessment was reopened on the following grounds by the ITO, Wd-3(2), Jaipur who has recorded satisfaction for re-opening as under: "As per information received from sub-registrars, the assessee has sold property/properties at Khasra No. 376, 377, 378, 379, 381, 393/2314, Kukas, Amer, Jaipur on 29.07.2008. As per the provisions of section 50C of the Income tax Act, 1961 the sale consideration or registered value, whichever is higher, is Rs.73,67,140/-. As per the records available with this office the assessee has not filed his return of income for A. Yr. 2009-2010, consequent to non-filing of return of income by the assessee it is established that income from capital gained amounting to Rs.73,67,140/- has escaped assessment. Hence, it is a fit case for issuance of notice u/s. 148 of the IT Act, 1961/or A.Yr. 2009-2010. In view of the above reasons, it is requested that necessary approval as laid down under sub section (2) of Section 151 of the I T Act, 1961 may kindly be accorded".

In response to opportunity letter issued on 12.03.2019 the assessee has sought adjournment vide letter dated 19.03.2019 and asked for seven days time. Accordingly the assessee was given further time upto 28.03.2019 to furnish written submission. On 26.03.2019" Sri N.M. Bhansali, Advocate attended andfiled a written submission dated 25.03.2019 along with 'Vakalatnama'. A copy of the same submission has also been received by post from the assessee on 28.03.2019 which is placed on record. The contents of the submission are as under: "I have received your above show-cause notice u/s 263 dtd. 12.03.2019 alongwith copy of notice dtd. 11.05.2018, 02.11.2018 and 04.02.2019 allegedly sent at my old address. In this connection I state that I had not received any noticed dtd. 11.05.2018, 02.11.2018 and 04.02.2019 as alleged in your notice dtd. 12.03.2019. It appears that notices were sent by you at my old address even though my new address of Jaipur was intimated to the A.O. in 2015 itself. From the copy of your earlier notice it is alleged that the assessment order passed u/s 147 dtd. 30.12.2016 appears to be erroneous and prejudicial to the interest of revenue. Since the land was treated as agricultural land which exempted the assessee from making payment of tax on capital gain without due verification and enquiry. In response to your show- cause I state that the assessment was completed by the A. O. after detailed scrutiny and after examination of necessary details, evidences, bank statements and also after making enquiry u/s 133(6). In this connection correspondence with the IT.O. is enclosed herewith. Therefore your allegation that the assessment was completed without making proper enquiry is wrong and incorrect. Therefore assessment so made is erroneous and prejudicial to the interest of revenue and the provisions of sec. 263 are not attracted in my case. I would like to invite your kind attention that the power u/s 263 cannot be invoked to correct each and every type of mistake committed by the A.O. Every erroneous order cannot be disturbed U/S 263. The power of suo-motu revision u/s 263(1) of the IT. Act, 1961 is in the nature of supervisory jurisdiction and can be exercised only if circumstances specified therein exist - vide observations of the Bombay High Court - 203-ITR-108 (Bom) in the case of Gabriel India Ltd. Your petitioner states that it is well settled in law that the power u/s 263 of the income Tax Act 1961 can be exercised only when the assessment order is 'prejudicial to the interests of the revenue' as well as erroneous order. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of the revenue. . This view has been well settled by the Apex Court in the case of Malabar Industrial Co. Ltd - Vs-Commissioner of Income Tax 243-ITR-83, Commissioner of Income Tax (Central), Ludhiana - Vs - Max India Ltd 295- ITR-282, Commissioner of Income Tax, Shimla -Vs- Greenworld Corporation 314-ITR81. The Learned Commissioner of Income Tax exercised his powers u/s 263 of the IT Act 1961 merely to substitute his view with that of the assessing officer which is beyond the scope of his powers u/s 263 of the IT Act, 1961. In the case of CIT-Vs-MAX India Ltd. 295-ITR-282 (SC) the Hon'ble Supreme Court has held that the phrase "prejudicial to the interest of Revenue" in sec. 263 of the Income tax Act, 1961 has to be in conjunction Girish Chand Agarwal Vs. ITO Wd-46(1), Kol. Page 5 with the expression "erroneous" order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of Revenue". It has also been held that the revision u/s 263 cannot be made merely because the CIT is not satisfied with the order passed by the Assessing Officer. In the case referred above the Hon'ble court held that where the view expressed by the A.O. is a possible view, the CIT cannot hold the Asst. order as an erroneous order prejudicial to the interest of Revenue. Further it is well settled in law that there is a distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate, that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Income-tax Act, 1961, merely because he had a different opinion in the matter of reliance in this regard is made on the decision of the Delhi High Court in the case CIT v. Anil Kumar Sharma [2011] 335 ITR 83/[2010] 194 Taxman 504 (Delhi). Without prejudice to the contention that the provisions of sec. 263 are not attracted in the facts of my case and the proceeding deserves to be dropped, I state that I do not agree with the issues raised in your notice as the sale consideration of agricultural land was established by the copy of Deed and the certificate of the Tahesildar, Patwari, who is the competent authority in this matter. Further enquiry u/s.133(6) was also made by the A.O. The A.O has rightly assessed the income of the assessee after considering all the materials, therefore your allegation of the assessment papers to be erroneous and prejudicial to the interest of revenue is wrong and unfounded I, therefore, request you to kindly consider the matter judicially and drop the proceedings u/s.263 under intimation to me".

The Hort'ble Kolkata High Court in the case of M/s Raj Mandir Estate Pvt. Ltd. (2016) 70 Taxmann.com 124 (CAL) has held that the inadequate enquiry is a valid ground for revision of assessment u/s.263. The IT AT, Kolkata in the case of Subhalakshmi Vanijya Pvt. Ltd. Vs. CIT (2015) in by order dated 30-07-2015 has held that the fact that no enquiry was conducted in the case is sufficient to itself for invoking of provisions of section 263. The Hon'ble Supreme Court in the case of DenieI Marchants(P) Ltd. vs. ITO by order dated 29.11.2017, has dismissed SLP No.23976/2017 of the assessee in favour of Revenue for 263 proceeding and has upheld the view of Hon'ble Calcutta High Court that inadequate enquiry is a valid ground for setting aside order u/s.263 and that the CIT has directed A.O. to carry out detailed enquiry, which was perfectly valid to ascertain the genuineness & sources of share application money.

After having considered the position of law and facts of the case discussed above, the assessment order u/s.143(3) dt.30.12.2016 passed by the Assessing Officer is held erroneous and in so far as it is prejudicial to the interest of revenue. The assessment order u/s.143(3) dt.19.12.2016 passed by the Assessing Officer is hereby cancelled and the Assessing Officer is directed to pass a fresh assessment order. On the issues for which the assessment is directed to be revised uls.263 of the Income-tax Act, 1961, the Assessing Officer is directed to complete the revision assessment proceeding and pass a speaking order after carrying out any further enquiries necessary and marshalling necessary facts and documents on the issue of genuineness of claim of huge agricultural income. The assessee should be provided sufficient opportunity before passing any assessment order.”

Learned authorized representative invited our attention to the assessee’s petition dated 28.11.2019 seeking to raise an additional ground that the Assessing Officer had not issued any valid notice u/s 148 before completing the re-assessment in question dated 30.12.2016 forming subject- matter of revision proceedings. The Revenue objected the assessee’s admission of additional ground that such a plea challenging validity of re- assessment itself is not admissible and that too by way of its additional plea sought to be raised at this stage belated stage. We find no merit in Revenue’s instant technical argument. This tribunal’s co-ordinate bench’s decision in M/s D.D. Deposits & Advances Pvt. Ltd., vs. Commissioner of Income Tax-1, Kolkata in decided on 11.05.2018 has declined the Revenue’s identical plea as under:- “7. We sought to know what is to whether the assessee could raise such a plea in the instant proceedings involving question of validity of CIT’s order passed u/s. 263 of the Act. Learned counsel takes as to a co-ordinate bench’s order ITA No.764- 766/Kol/2014 in M/s Classic Flour & & food Processing Pvt. Ltd. Kolkata vs. CIT-IV, Girish Chand Agarwal Vs. ITO Wd-46(1), Kol. Page 7 Kolkata decided on 05.04.2017. Learned co-ordinate bench held that an assessment is in the nature of primary proceedings whereas revision process u/s. 263 of the Act is a collateral one wherein validity of the former can always be challenged. This tribunal’s decision in M/s Westlife Development Ltd. vs. Principal CIT in places reliance upon hon'ble apex court’s judgment in Kiran Singh & Ors. vs. Chaman Paswan & Ors.(1955) 1 SCR 117 (SC). Their lordships are of the view that a decree passed by a court without jurisdiction is a nullity which could be put to challenge in execution or in collateral proceedings. Their lordships conclude that any defect of jurisdiction in pecuniary or territorial or in respect of subject-matter of the action strikes at the very authority of the court to pass any decree and the same would not curable even by consent of the parties. Mr. Surana takes pains to enlighten us that hon'ble Rajasthan high court’s judgment in Decp chand Kothari vs. CIT (1988) 179 ITR 381 (Raj) adopts the very reasoning in civil jurisprudence to income tax proceedings as well.

Learned counsel next relies upon this tribunals co-ordinate bench decision in Dr. SB Kalidhar vs. ITO Ward-4 in ITA No.1082/Del/2016 decided on 27.11.2017. Learned co-ordinate bench there is annuls similar assessment / re-assessment on the ground that non issue of notice u/s 143(2) of the Act after filing of a return renders entire assessment / re-assessment to be bad in the eyes of law. It quotes hon'ble apex court’s judgment in ACIT vs. Hotel Blue Moon (2010) 321 ITR 362 (SC) whilst quashing the assessment in question to be non est & void.

Learned CIT-DR emphasizes that relevant assessment records duly corroborate the fact that the Assessing Officer had issued u/s 143(2) notice on 16.11.2009 as followed by Section 142(1) notice. Mr. Usman states that the assessee’s third substantive ground in question takes advantage of the CIT above crucial observation (supra) going against the assessment records. He pleads that the same are not Girish Chand Agarwal Vs. ITO Wd-46(1), Kol. Page 8 binding on the Revenue since they are neither appealable nor rectifiable at its behest. He further invites our attention to the CIT’s notice(s) initiating section 263 proceedings dated 21.12.2011 and 15.01.2013, as well as assessee’s reply thereto on the latter date to the effect that it had filed all the relevant details and documents as called during the assessment from time to time. The assessee had asserted as per its reply that all of its books of account, bills, vouchers and other supporting documents had also been called by the Assessing Officer for examination as produced in the course of scrutiny followed by independent verification through notice / summons issued u/s 133(6) / 131 of the Act. Learned DR further submits in the end that the re-assessment in question is neither non est nor void so as not to be revised in u/s 263 jurisdiction vested with the CIT. We posed a specific query to the Revenue as to whether the assessment records comprise of the relevant notices issued u/s 143(2) or u/s. 142 142(1) or not. The reply received is in negative. The Revenue emphasises that there is sufficient material on record indicating that said notice(s) had very much been issued but not forming part of the case records since the same has seen multiple rounds of proceedings involving movement of the case file from one authority to another. Learned DR quotes Section 292B of the Act as well that the assessee cannot plead non issuance of notice at this belated stage once it had defended the relevant assessment is revision proceedings.

We have given our thoughtful consideration to rival submissions. Suffice to say, we have already narrated the basic facts that our instant adjudication is confined to assessee’s third substantive ground that the CIT could not have revised the re- assessment in question framed on 28.12.2010 since the latter one is a non est order in the eyes of law not exigible to revision. We quote all the relevant case law relied upon at the assessee’s behest (supra) to observe first of all that it is very much open for the assessee to challenge validity of the re-assessment in section 263 proceedings on the ground that same are non est in the eyes of law. Co-ordinate bench’s decision(s) (supra) have already concluded that assessment proceedings are primary proceedings whereas those u/s 263 of the Act are in the nature of collateral proceedings. The question before us in this backdrop of facts is as to whether the Assessing Officer can be held to have issued notices u/s 143(2) or 142(1) of the Act or not. In case the reply is in negative, it would render the entire re- assessment bad in the eyes of law as per hon'ble apex court’s decision in Hotel Blue Moon (supra) followed in this tribunal’s co-ordinate bench’s order. We now revert back to the relevant facts of the case. It emerges from the case records that the Assessing Officer had initiated the impugned re-opening vide section 148 notice issued on 03.11.2009. These assessment file notings dated 16.11.2009 make it clear that he had issued section 143(2) as well as section 142(1) notice(s). Learned counsel’s case is that there is no such notice on record. We find no merit in the instant plea as the above narrated assessment notings make it clear that Assessing Officer had indeed issued the said two notices. We quote section 114(e) of the Indian Evidence Act to presume as a court that the Assessing Officer had performed an official act of completing re-assessment in assessee’s case as per the prescribed procedure. We reiterate that although assessee has pleaded of neither it itself nor its authorized representative to have appeared during the course of scrutiny in furtherance to the said notice(s), the above narrated ‘facts speak otherwise wherein it had not even filed its authorized representative affidavit to rebut the above assessment notice(s). The very auditor had been continuing to represent the assessee’s right from re-assessment to section 263 proceedings as well as the consequential assessment framed on 26.07.2014. We take note of the assessee’s reply filed before the CIT (supra) as well defending the above assessment to have been completed after calling necessary books, bills, vouchers as well as supporting documents for examination as produced at its behest followed by notice / summons Girish Chand Agarwal Vs. ITO Wd-46(1), Kol. Page 9 issued u/s. 133(6) and 131 of the Act; respectively. We are of the view in these facts that the assessee could not have placed on record the required documents within any notice at all before section 133(6)/131 process. The assessee’s instant substantive ground therefore appears to be as well worded one wherein it has sought to reiterate the CIT’s observation only that the Assessing Officer had not issued the said statutory notice(s) before completing the assessment in question. We conclude in view of these facts that the CIT’s said observation is against the assessment records. Mere on non production of the notice(s) in question; in our considered view, is not sufficient to conclude that the Assessing Officer had not issued sec. 143(2) and sec. 142(1) notices which is view of the above overwhelming supportive evidence in the nature of assessment proceedings before us. We quote sec. 136 of the Act to conclude that the legislature has indeed treated proceedings before us Income Tax authorities to be judicial proceedings as well.”

Coming to admission of assessee’s additional ground, we note that hon'ble apex court’s landmark decision in National Thermal Power Corporation. Ltd. vs. Commissioner of Income-tax (1998) 229 ITR 383 (SC) considered in All Cargo Global Logistics Ltd. vs. DCIT (2012) 137 ITD 26 (Mum) holds that the tribunal can very well entertain an additional ground in order to determine the correct taxable in case provided the relevant facts are already on record. We go by the very reasoning herein as well to admit assessee’s additional ground.

We now advert to the relevant factual matrix. There is hardly any dispute that it is the assessee’s sale deed dated 28.07.2008 regarding 1.93 hect land in khasrh No. 376 to 393 measuring 7 bighas 16 biswa for ₹24,55,200/- which forms the subject-matter of the instant lis. The assessee’s case throughout is that the said land is agricultural not forming a capital asset sec.2(14) of the Act since situated at a distance of 9 K.M. from the municipal limits. We further find that after the execution of the assessee’s sale deed, the ITO Ward-3(2) Jaipur had issued sec. 148 notice dated 23.03.2016 after forming reasons to believe that her taxable income liable to be assessed as escaped assessment. The assessee’s letter dated 27.06.2016 pleaded that he had been regularly filing his returns before ITO Ward-46(1) Kolkata. The relevant re-assessment forming subject-matter under challenged dated 30.12.2016 also indicates that after receiving the assessee’s said letter / petition, the ITO Ward-3(2) Jaipur transferred sec.148 proceedings to ITO Girish Chand Agarwal Vs. ITO Wd-46(1), Kol. Page 10 Ward-46(1) Kolkata vide its speed post letter dated 11.07.2016 and the impugned re-assessment stood framed thereafter.

Mr. Surana submits in this factual backdrop that the Assessing Officer Jaipur did not have territorial jurisdiction in assessee’s case and therefore, the entire re-assessment deserves to be quashed as non est. The Revenue’s case on the other hand is that the ITO at Jaipur transferred the case to ITO Ward-46(2) Kolkata after coming to know about the assessee to have been regularly assessed in the latter jurisdiction. We find no force in Revenue’s argument. The fact remains undisputed is that ITO Ward-3(2) Jaipur who had issued sec. 148 notice dated 23.03.2016 did not have territorial jurisdiction to assess the appellant / taxpayer. The latter assessing authority i.e., ITO Ward- 46(1) Kolkata who framed the assessment had never issued any sec. 148 notice at all. We observe in these peculiar facts and circumstances that the relevant re-assessment framed in assessee’s case is not substantiate for want of a valid sec. 148 notice issued by the Assessing Officer having territorial jurisdiction. Hon'ble jurisdictional high court’s decision in (2016) 383 ITR 546 Ramshila Enterprise Pvt. Learned. Vs. DCIT, Central Circle, Kolkata (Cal) holds that the proceedings without concerned authority having territorial jurisdiction are not upheld. We therefore hold that the re-assessment forming subject-matter of PCIT’s sec. 263 assumption of revision jurisdiction itself stands quashed. His revision directions under challenge are therefore non est to the limited extent being in the nature of collateral proceeding only. We order accordingly.