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Income Tax Appellate Tribunal, “B”, BENCH KOLKATA
Before: SHRI A. T. VARKEY, JM & DR. A.L.SAINI, AM
Per Dr. A. L. Saini: This is an appeal preferred by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals) – 3 dated 30.06.2016 for Assessment Year 2008-09. 2. The first ground of the appeal of the Revenue is against the action of the ld. CIT(A) in holding that the notice u/s 147 was issued beyond stipulated time limit. 3. Brief facts of the case are that the assessee company was granted certificate of registration on 13.08.2009 by Reserve Bank of India to carry out business of Non-Banking Financial Company (NBFC). Accordingly, the assessee was engaged in providing financial transactions and was dealing in share and securities. The return of income was filed on 27.09.2008 declaring total income at Rs.84,687/-. Thereafter, the return was processed
M/s Accurex Traders Pvt. Ltd. ITA Nos.1783/Kol/2016 Assessment Year: 2008-09 u/s 143(1) [hereinafter referred to as the ‘Act’]. The Assessing Officer issued notice u/s 148 of the Act on 31.03.2015 calling for fresh return and proposing to reopen the assessment on the ground of escapement of income. According to the assessee company, it received the notice u/s 148 issued by the Assessing Officer dated 31.03.2015 only on 08.04.2015. Pursuant to the notice u/s 148 issued by the Assessing Officer dated 31.03.2015, the assessee replied to the Assessing Officer by letter dated 29.04.2015 to treat the return of income originally filed by the assessee on 27.09.2008 vide Acknowledgement No.40367011270908 u/s 139(1) of the Act for Assessment Year 2008-09. Further, in that letter, the assessee brought to notice of the Assessing Officer that the Assessing Officer’s notice u/s 148 of the Act is barred by limitation, since the notice has not been issued before 31.03.2015. For saying so, the assessee brought to notice of the Assessing Officer that as per the tracking record of Indian Post (which was annexed with the letter to the Assessing Officer) that the notice bearing no.RW 636262795IN was bagged by Kolkata RMS(CRC) only on 05.04.2015 in the postal bag which was meant for CRC Delhi. I was brought to the notice of Assessing Officer that the notice u/s 148 ultimately dispatched by CRC Delhi in favour of Sriniwaspuri Post Office and had reached to the assessee on 08.04.2015. Thus, according to the assessee, even though the notice u/s 148 was dated 31.03.2015, it is an afterthought and the notice has been issued only after 31.03.2015 which is evident from the fact that the notice was handed over to the Postal Authorities only on 05.04.2015 and therefore, according to the assessee, the very initiation of notice u/s 148 was bad in law and, therefore, the assessee prayed to the Assessing Officer that in the light of the aforesaid facts the proposed reopening should be dropped. It was also prayed in the letter that the reasons for reopening may be given to the assessee as per Hon’ble Supreme Court’s direction in GKN Driveshafts (India) Ltd vs. ITO, 125 Taxman 963(SC). However, the Assessing Officer brushed aside the aforesaid contention of the assessee and vide letter dated 01.02.2016 rejected the assessee’s objection by observing as under: Page | 2
M/s Accurex Traders Pvt. Ltd. ITA Nos.1783/Kol/2016 Assessment Year: 2008-09
Thereafter, the assessment was completed and aggrieved by the reassessment order passed by the Assessing Officer, the assessee filed an appeal before the ld. CIT(A) and raised the legal issue of the notice u/s 148 being issued after the time limit as prescribed by the Act (the last date to issue section 148 notice was on 31.03.2015). This ground of appeal of the assessee was adjudicated by the Ld. CIT(A) as under:
“7. I have examined the issue carefully and also gone through the submissions of the AR of the appellant filed before the AO in course of assessment proceedings as well as the submissions filed by him before me in course of appellate proceedings. Since the AR has raised an issue of fact connected to legal issue and disputed the validity of issue of notice u/s 148 by contending that the same was barred by limitation, I shall first decide the issue of validity of service of notice u/s 148 challenged by the appellant vide its ground nO.1(b). I had called for the assessment records and I find that the notice u/s 148 is dated 31.03.2015. The Assessing Officer has issued notice u/s 148 Page | 3
M/s Accurex Traders Pvt. Ltd. ITA Nos.1783/Kol/2016 Assessment Year: 2008-09 dated 31.03.2015 which was served upon the appellant on 07.04.2015. The AR has contended that the notice u/s 148 was issued after 31.03.2015 and for this the AR has relied upon the records of the postal authorities. The AR has filed copies of tracking of website of India Post bearing No. RW6362627951N which evidence that the item was bagged by Kolkata RMS(CRC) on 05.04.15 in favour of CRC Delhi and then it was dispatched to the appellant in Delhi on 06.04.15. I find that the appellant has objected to this before the Assessing Officer also, but the Assessing Officer has summarily rejected the contentions of the appellant without any evidence to controvert the findings of the appellant. The AO has not brought any material on record to prove that the notice u/s 148 was issued within 31.03.2015. In the given facts of the case it is apparent that notice u/s 148 could be said to have been dispatched/left the control of the Assessing Officer only when it was handed over to the postal authorities – which was on 05.04.15. It is an accepted legal position that the date of issue of any notice can be taken to be that date on which it leaves the control of the issuing authority. In this case, the only incontrovertible date available on record is the date on which the postal authorities received the said notice. This date is available with the postal authorities themselves and is found to 5.4.15. Therefore, as per the settled position of law, the date of issue of notice has to be taken as 05.04.15. As of consequence it has to be held that the same has been issued beyond the prescribed period of limitation. In this, I find that the reliance placed by the appellant, on the decisions cited supra by the AR of the appellant in this regard is very pertinent. I find that the decisions are squarely applicable in the instant case and it will not be out of place to say that this issue is also covered in favour of the appellant by the decisions of Hon'ble Kolkata ITAT in the case of Shri Nirmalendu Dutta vs. DCIT, Cir-28, Kolkata bearing ITA No. 593 & 594/Kol/2013 wherein the facts are the same. Respectfully following the legal authorities cited above, I find that this ground of the appellant has to be allowed.”
Aggrieved by the aforesaid order of the Ld. CIT(A) in favour of the assessee, the Revenue is before us.
We have heard both the parties and perused the records, we note that the ld. DR relied on the statement of the Assessing Officer that he had issued notice u/s 148 on 31.03.2015 itself and handed over to the Postal Authorities and if there is any delay or lapses caused by the Postal Authorities that cannot be attributed against the Assessing Officer because it was the Postal Authorities who had to duly book the handed over notices and promptly dispatch it without any delay and so the order of Ld CIT(A) is erroneous on this score. For that the ld. DR relied on the Hon’ble Supreme Court’s decision in the case of R.K. Upadhyay Vs. Sanabhai P. Patel (1987) 166 ITR 163 (SC). Accordingly, he wants us to reverse the order of the ld. CIT(A) on this count. On the other hand, the ld. AR vehemently opposing the said plea of the ld. DR, drew our attention to Page 23 of the Paper Book which has the tracking record of Indian Post. The consignment of the notice which issued by the Assessing Officer u/s 148 of the Act has been numbered as RW 636262795IN which has been originated from Kolkata RMS(CRC) on 05.04.2015 and time recorded is 02:46:00 which Page | 4
M/s Accurex Traders Pvt. Ltd. ITA Nos.1783/Kol/2016 Assessment Year: 2008-09 was bagged to CRC Delhi on 06.04.2015 at 15:04:08 and on 15:48:09 the bag was dispatched to Sriniwaspuri Post Office and the assessee has received the same on 08.04.2015. From the aforesaid facts, we note that notice u/s 148 of the Act to the assessee company was taken over by the Post Office at Kolkata on 05.04.2015. The ld. DR could not bring any material on record like dispatch register or any relevant material to suggest that Assessing Officer after signing the notice on 31.03.2015, had handed over the same to Postal Authorities on 31.03.2015 itself, so as to counter the evidence furnished before us by the assessee. The ld. AR drew our attention to the Hon’ble Gujarat High Court decision on a similar issue wherein the Hon’ble Gujarat High Court decided in the case of Kanubhai M. Patel (HUF) v. Hiren Bhatt or His Successors to Office and Others [2011] 334 ITR 25(Guj) wherein the Revenue’s case was that Assessing Officer had issued the notice on 31.03.2010 (that is the last date for issue of notice). However, the Hon’ble High Court noted that the notice was sent to the Speed Post Office only on 07.04.2010. So, the Hon’ble High court held that the issue date of notice by Assessing Officer has to be taken as 07.04.2010 and not 31.03.2010 as written in the notice by the Assessing Officer. wherein it was held as under:
Section 149 of the Act insofar as the same is relevant for the purpose of the present petition reads thus: “149. Time limit for notice.(1) No notice under Section 148 shall be issued for the relevant assessment year,- [(a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. Explanation -In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of Section 147 shall apply as they apply for the purposes of that section. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of Section 151.” 13. On a plain reading of section 149, it is apparent that under the said provision, the maximum time limit for issuance of notice under section 148 is six years from the end of the relevant assessment year. In the present case, the relevant assessment year in each of the petitions is 2003- Page | 5
M/s Accurex Traders Pvt. Ltd. ITA Nos.1783/Kol/2016 Assessment Year: 2008-09 2004; the impugned notices are dated 31.03.2010; and the said notices were sent for booking to the Speed Post Centre, Ahmedabad, on 07.04.2010. On behalf of the petitioners, it has been contended that the notices which have been dispatched for service only on 07.04.2010, are clearly time barred inasmuch as the date of dispatch would be the date of issue of the notices. Whereas, on behalf of the revenue, it has been contended that the notices were actually signed on 31.3.2010, hence, the said date would be the date of issue and as such, the impugned notices have been issued within the time limit prescribed under section 149 of the Act. 14. In the background of the aforesaid facts and contentions, the core issue that arises for consideration is as to when can the notice under section 148 of the Act be said to have been issued. In this context it would be necessary to examine the true import of the expression “shall be issued” as employed in section 149 of the Act. 15. The expression “issue” has been defined in Black’s Law Dictionary to mean “To send forth; to emit; to promulgate; as, an officer issues orders, process issues from court. To put into circulation; as, the treasury issues notes. To send out, to send out officially; to deliver, for use, or authoritatively; to go forth as authoritative or binding. When used with reference to writs, process, and the like, the term is ordinarily construed as importing delivery to the proper person, or to the proper officer for service etc.” [15.1] In P. Ramanathan Aiyer’s Law Lexicon the word “issue” has been defined as follows: “Issue. As a noun, the act of sending or causing to go forth; a moving out of any enclosed place; egress; the act of passing out; exit; egress or passage out (Worcester Dict.); the ultimate result or end. As a verb, “To issue” means to send out, to send out officially; to send forth; to put forth; to deliver, for use, or unauthoritatively: to put into circulation; to emit; to go out (Burrill); to go forth as a authoritative or binding, to proceed or arise from; to proceed as from a source (Century Dict.) Issue of Process. Going out of the hands of the clerk, expressed or implied, to be delivered to the Sheriff for service. A writ or notice is issued when it is put in proper form and placed in an officer’s hands for service, at the time it becomes a perfected process. “Any process may be considered “issued” if made out and placed in the hands of a person authorized to serve it, and with a bona fide intent to have it served. "In this regard, the record produced before the court is sufficient to come to the conclusion that the notices had been sent for booking to the speed post centre only on 7-4-2010, in absence of any evidence to the contrary being pointed out by the respondents, as well in the light of the fact that the said position as confirmed by the Postal Department has not been controverted by the revenue. The court is required to examine the contention of the petitioners that the notices in question have been issued beyond the period of limitation prescribed under section 149 of the Act. The expression to issue in the context of issuance of notices, writs and process, has been attributed the meaning, to send out; to place in the hands of the proper officer for service. The expression "shall be issued" as used in section 149 would therefore have to be read in the aforesaid context. In the present case, the impugned notices have been signed on 31-3-2010, whereas the same were sent to the speed post centre for booking only on 7-4-2010. Considering the definition of the word "issue", it is apparent that merely signing the notices on 31-3-2010, cannot be equated with issuance of notice as contemplated under section 149.The date of issue would be the date on which the same were handed over for service to the proper officer, which in the facts of the present case would be the date on which the said notices were actually handed over to the post office for the purpose of booking for the purpose of effecting service on the petitioners. Till the point of time the envelopes are properly stamped with adequate value of postal stamps, it cannot be stated that the process of issue is complete. In the facts of the present case, the impugned notices having been sent for booking to the speed post centre only on 7-4-2010, the date of issue of the said notices would be 7- 4-2010 and not 31-3-2010, as contended on behalf of the revenue. In the circumstances, impugned notices under section 148 in relation to assessment year 2003-04, having been issued on 7-4-2010 which is clearly beyond the period of six years from the end of the relevant assessment year, are clearly barred by limitation and as such, cannot be sustained. Page | 6
M/s Accurex Traders Pvt. Ltd. ITA Nos.1783/Kol/2016 Assessment Year: 2008-09
We note that aforesaid dictum of law was laid down by the Hon’ble Gujarat High Court after considering by the Hon’ble Supreme Court’s decision in R.K. Upadhyay Vs. Sanabhai P. Patel (supra) which the ld. DR relied upon in support of Revenue’s contention. So, we note that even if the notice of the Assessing Officer has been dated 31.03.2015, since the same reached to the Postal Authorities only 05.04.2015, the date of issue can be taken as 05.04.2015 and not 31.03.2015 as contended by the Revenue. As per provision of Section 149 of the Act the time limit for notice reads as follows: “149. Time limit for notice. - (1) No notice under section 148 shall be issued for the relevant assessment year, (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. Explanation.— In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151.”
On a plain reading of section 149, it is apparent that under the said provision, the maximum time limit for issuance of notice u/s 148 is the relevant Assessment Year 2008-09, comes to an end on 31.03.2015 and therefore the last date of issuance of notice u/s 148 of the Act was 31.03.2015. Considering the definition of word “issue”, as held by the Hon’ble Gujarat High Court in the case of Kanubhai M. Patel (HUF) v. Hiren Bhatt (supra) it is apparent that merely signing the notices on 31.03.2015 cannot be equated with the issuance of notice as contemplated u/s 149 of the Act. The date of issue would be the date on which the same were handed over for service to the proper officer, which in the fact of the present case would be the date on which the said notices were actually Page | 7
M/s Accurex Traders Pvt. Ltd. ITA Nos.1783/Kol/2016 Assessment Year: 2008-09 handed over to the Post Office for the purpose of booking, for the purpose of effecting service on the assessee. Therefore, the process of issue of notice will be completed only when the envelope containing the notice is handed over to the Postal Authorities in Kolkata which is only on 05.04.2015 and therefore, the notice u/s 148 of the Act even though dated 31.03.2015 has to be taken as issued only on 05.04.2015, which action of Assessing Officer is clearly barred by limitation and as such cannot be sustained. Since, in this case, it is apparent that notices though dated 31.03.2015 have been dispatched/left the control of the officer only on 05.04.2015 and the same was served only on assessee on 08.05.2015 for Assessment Year 2008-09, it means that the notices are clearly barred by limitation and, therefore, the Assessing Officer lacks jurisdiction to issue notice u/s 148 of the Act and therefore, the impugned notice u/s 148 itself is non-est in the eyes of law and therefore, all subsequent proceedings have to be held ‘null’ in the eyes of law. Therefore, we uphold the order of the ld. CIT(A) and since the legal issue is in favour of assessee other grounds are academic in nature and so are dismissed.
In the result, the appeal of the Revenue is dismissed.
Order is pronounced in the open court on 30.05.2018.
Sd/- Sd/- (A. T. VARKEY) (A .L .SAINI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER कोलकाता /Kolkata; �दनांक/ Date: 30/05/2018 (RS, Sr.PS)
M/s Accurex Traders Pvt. Ltd. ITA Nos.1783/Kol/2016 Assessment Year: 2008-09
आदेशक���त�ल�पअ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ�/The Appellant- ITO, W ard-9(1), Kolkat 2. ��यथ�/ The Respondent- M/s Accurex Traders Pvt. Ltd. 3. आयकरआयु�त(अपील) / The CIT(A), 4. आयकरआयु�त/ CIT 5. �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण, कोलकाता/ DR, ITAT, Kolkata 6. गाड�फाईल / Guard file. स�या�पत��त