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Income Tax Appellate Tribunal, DELHI BENCH “SMC” NEW DELHI
Before: SHRI B.P. JAIN
PER B.P. JAIN, ACCOUNTANT MEMBER:
This appeal of the assessee arises from the order of ld. CIT(A), Rohtak vide order dated 23.1.2015 for the A.Y. 2007-08. The assessee has raised the following grounds of appeal:- “On the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in passing the order after rejecting the ground concerning validity of proceedings u/s 147/148 of the Act and in confirming an addition of Rs. 38,00,735/- to the returned income as made by the Assessing Officer.
The addition as made being arbitrary, erroneous and unjust must be quashed with directions for appropriate relief.”
The brief facts of the case on legal ground as per the arguments of ld. counsel for the assessee and as per submissions on record is that the assessee did not receive the notice u/s 147 of the Act and reasons recorded does not have any material that income has escaped assessment. In fact it is an information only and therefore every receipt cannot be an income. The ld. counsel for the assessee relied upon the decision of Hon’ble Delhi High Court in case Sarthak Security and SIFL Investment and also on no service of notice the decision of Hon’ble High Court of Delhi in the case of CIT vs. Chetan Gupta in 2015 62 taxman.com 249.
The ld. DR relied upon the order of the ld. CIT(A) and that of the Assessing Officer. 4. After perusing the material on record the ld. DR has not been able to bring on record the service of notice, u/s 147 of the Act and therefore without service of the notice, the assessment cannot be held to be valid. In the case of Chetan Gupta (supra) the hon’ble High Court of Delhi vide para 46 summarized the decision as under:-
“(i) Under Section 148 of the Act, the issue of notice to the Assessee and service of such notice upon the Assessee are jurisdictional requirements that must be mandatorily complied with. They are not mere procedural requirements. (ii) For the AO to exercise jurisdiction to reopen an assessment, notice under Section 148 (1) has to be mandatorily issued to the Assessee. Further the AO cannot complete the reassessment without service of the notice so issued upon the Assessee in accordance with Section 282 (1) of the Act read with Order V Rule 12 CPC and Order III Rule 6 CPC.
(iii) Although there is change in the scheme of Sections 147, 148 and 149 of the Act from the corresponding Section 34 of the 1922 Act, the legal requirement of service of notice upon the Assessee in terms of Section 148 read with Section 282 (1) and Section 153 (2) of the Act is a jurisdictional pre-condition to finalizing the reassessment.
(iv) The onus is on the Revenue to show that proper service of notice has been effected under Section 148 of the Act on the Assessee or an agent duly empowered by him to accept notices on his behalf. In the present case, the Revenue has failed to discharge that onus.
(v) The mere fact that an Assessee or some other person on his behalf not duly authorised participated in the reassessment proceedings after coming to know of it will not constitute a waiver of the requirement of effecting proper service of notice Page 3 of 6 on the Assessee under Section 148 of the Act.
(vi) Reassessment proceedings finalised by an AO without effecting proper service of notice on the Assessee under Section 148 (1) of the Act are invalid and liable to be quashed.
(vii) Section 292 BB is prospective. In any event the Assessee in the present case, having raised an objection regarding the failure by the Revenue to effect service of notice upon him, the main part of Section 292 BB is not attracted.”
In such circumstances and facts of the case without service of notice on the assessee, the assessee does not acquire the jurisdiction to make any assessment/reassessment and therefore the reassessment so made is bad in law and is directed to be quashed.
The second pleadings taken by the ld. counsel is about the reasons recorded which are reproduced here in below:- “As per AIR information for F.Y. 2006-07 received in this office, the assessee has made cash deposits of Rs. 89,08,000/- in his bank account with Canara Bank, Rewari. A query notice was issued to the assessee on 24.01.2012. But no response has been received form the assessee. I, therefore have reason to believe that the assessee has deposited cash in his bank account out of his income from unexplained sources. Accordingly income to the extent of Rs. 89,08,000/- and any other income which subsequently comes to the notice of the undersigned has escaped assessment within the meaning of section 147 of the IT. Act, 1961. Issue notice u/s Page 4 of 6
148 of the I. T. Act, 1961 for the assessment year 2007-08.”
From the reading and perusal reasons recorded, it is amply clear that this is mere an information and no material fact has been brought on record to make a reason to believe that any income chargeable to tax has escaped assessment for the impugned year. In the absence any reason to believe and on the basis of mere information every receipt by the assessee cannot take the colour of income. Reliance is placed on the decision of Hon’ble Delhi High Court in the case of Sarthak Securities Investment (supra). In the circumstances and facts of the case the assessee does not acquire any jurisdiction to make the reassessment of u/s 147 of the Act and notice so issued u/s 148 and assessment so made u/s 147 read with section 143(3) is void ab initio and is quashed. Thus the assessee succeeds on the legal ground. Since the assessee succeeds on legal ground I do not adjudicate the appeal on merit.
In the result the appeal of the assessee is allowed.