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Income Tax Appellate Tribunal, DELHI BENCH ‘A’ : NEW DELHI
Before: SHRI G.D. AGRAWAL & SHRI KULDIP SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘A’ : NEW DELHI) BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT and SHRI KULDIP SINGH, JUDICIAL MEMBER ITA No.1653/Del./2011 (ASSESSMENT YEAR : 1996-97) ITA No.1654/Del./2011 (ASSESSMENT YEAR : 1997-98) M/s. Auram Jewellery Exports (P) Ltd., vs. ACIT, Circle, 6/110, Sector 2, Rajinder Nagar, Noida. Sahibabad (Distt. Ghaziabad (UP) (PAN : AAECA3124A) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/Shri Salil Agarwal & T.R. Talwar, Advocates And Shailesh Gupta, CA REVENUE BY : Shri S.K. Jain, Senior DR Date of Hearing : 02.01.2017 Date of Order : 23.01.2017
O R D E R
PER KULDIP SINGH, JUDICIAL MEMBER :
The Appellant, M/s. Auram Jewellery Exports (P) Ltd. (hereinafter referred to as ‘the assessee’) by filing the present appeal sought to set aside the impugned order dated 07.02.2011, passed by the Commissioner of Income-tax (Appeals), Muzaffarnagar under section 144/147 of the Income-tax Act, 1961 (for short ‘the Act’) qua the assessment years 1996-97 and 1997-98 on the grounds inter alia that :-
AY 1996-97 “On the facts and circumstances of the case, the learned CIT(A) has erred:- i) in confirming the jurisdiction of the Asstt. CIT Circle Noida over the assessee company and up holding his order passed u/s 144/147, when the jurisdiction over the appellant lied in Delhi, being a company having Registered Office in Delhi , Registered with ROC Delhi and Haryana , being controlled by the Directors from Delhi and also filing its return in Delhi, thus making his order illegal and bad in law. ii) in estimating the business income at Rs.3,71,2501- on adhoc basis against the loss of Rs.3,65,668/- shown by the assessee in its profit and loss account. iii) in assuming that gold worth Rs.24.75 lacs was imported during the year by the assessee company to be used for conversion of jewellery and export ignoring the factual position that the same was imported by MMTC who only supplied gold worth Rs.12,75,000 during the year to the assessee company for export. iv) in confirming the addition of Rs.41,000/- as unexplained investment in the purchase of Ceilo car for Rs.5,41,000/- while accepting the investment of Rs.5 lacs.”
AY 1997-98
On the facts and circumstances of the case, the learned CIT(A) has erred:- i) in confirming the jurisdiction of the Asstt. CIT Circle Noida over the assessee and up holding his order passed u/s 144/147, when the jurisdiction over the appellant lied in Delhi, being a company having
Registered Office in Delhi , Registered with ROC Delhi and Haryana , being controlled by the Directors from Delhi and also filing its return in Delhi, thus making his order illegal and bad in law. ii) in confirming the addition of Rs.66,484/- as unexplained investment in the purchase of Maruti Zen car for Rs.3,36,173/- while accepting the investment of Rs.2,69,689/-.”
Briefly stated facts of this case are : the assessee company is into the business of export of jewellery. On the basis of report received form Additional Director Income-tax (Inv.), Ghaziabad, the Assessing Officer initiated proceedings under section 147 of the Act by issuance of the notice dated 27.03.2003 u/s 148 of the Act to the assessee by registered post and subsequently by affixture. On failure of the assessee to file any return, AO completed the assessment u/s 144 of the Act by perusing the balance sheet and profit & loss account for different assessment year. In AY 1996-97, AO made addition of Rs.3,71,250/- being the profit @ 15% of the balance gold on account of business income as the assessee has made sale to the extent of Rs.4,50,000/- only as against the purchase of gold to the tune of Rs.24,75,000/-.
Assessee has also purchased a Ceilo Car No.UP14C-3207 through its MD, Shri Deepak Gupta but failed to furnish the sources of its investment and thereby made an addition of Rs.5,41,000/- u/s 69 of the Act in AY 1996-97.
3. In AY 1997-98, AO made addition of Rs.1,00,000/- being disallowance on account of office maintenance, misc. Expenses, staff welfare expenses, telephone expenses etc.. In AY 1997-98, assessee also made investment in car which was not declared in the balance sheet and also not explained that the said car either belong to the company or its director and also no evidence for source of investment had been furnished. Therefore, the AO made the addition of Rs.3,36,173 as unexplained investment u/s 69 of the Act. AO assessed the net taxable income of the assessee at Rs.9,12,250/- in AY 1996-97 and Rs.4,36,170/- in AY 1997-98.
Assessee carried the matter before the ld. CIT (A) by way of filing the appeals who has partly allowed the appeals. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Assessee by moving an application sought to raise additional grounds inter alia that :-
“1. That no notice u/s 148 had been ever served upon the assessee and as such assessment so framed in pursuance to the same is legally unsustainable being bad in law.
2. That service of notice u/s 148 by affixture was unjust and improper as no evidence has been led by the Assessing Officer to establish that assessee had ever refused the notice u/s 148 of the I.T. Act.”
Tribunal, vide order dated 18.02.2014 passed in both the aforesaid appeals, allowed application moved by the assessee to raise the additional grounds.
From the facts and circumstances of the case, arguments addressed by the ld. Representatives of the parties, perusal of the orders of the lower authorities and case law relied upon, the sole question arises for determination in this case is :-
“as to whether no notice u/s 148 has ever been served upon the assessee necessary to proceed u/s 147/148 of the Act as contended by the assessee?”
Undisputedly, the opening lines of the assessment order apparently contains the fact that, “notice u/s 148 dated 26.03.2003 was served upon the assessee on 26.03.2003 by registered post and subsequently by affixture on 27.03.2003 and in compliance to the said notice, no return of income was filed by the assessee within stipulated period.”
During the course of hearing, ld. Senior DR was called upon to bring on record the summons sent through registered post with receipt/acknowledgement issued by the Postal Department, summons reported to be served through affixture for both the assessment years i.e. 1996-97 & 1997-98 to work out if the assessee was ever served upon in this case before passing of the assessment order u/s 147/144 of the Act. Ld. Senior DR filed summary of the facts along with copies of the summons reported to be issued through registered post as well as through affixture. The summary of the facts brought on record by the ld. Senior DR by way of synopsis is reproduced as under for ready perusal :-
“Sub: Appeal in the case of M/s Auram Jewellery Export (P) ltd, in & 1654/De1/2011for the A.Ys. 1996-97 & 1997-98 - reg.
Kindly refer to the subject mentioned above.
In the above mentioned appeals the hon'ble bench has directed to produce the evidence of service of notice u/s 148 of the I.T. Act, 1961. In this regard, it is respectfully submitted that the said notices u/s 148 of the LT. Act were issued on 26.03.2003 and were sent by the speed post-to the various known addresses of the assessee i.e. (i) Plot No.167, NEPZ, Noida (Received back with postal remark "Closed" dated 28.03.2003), (ii) 6/133, Sector-2, Rajendra Nagar, Sahibabad Ghaziabad (Received back with postal remark "No such Firm or Company at this address, sent back dated 29.03.2003"), (iii) 6/111, Sector-2, Rajendra Nagar, Sahibabad Ghaziabad (Received back with postal remark "No such Firm or Company at this address, sent back dated 29.03.2003"), (iv) 6/110, Sector-2, Rajendra Nagar, Sahibabad Ghaziabad (Received back with postal remark "No such Firm or Company at this address, sent back dated 29.03.2003"). However, while the notices were in transit, the AO deputed two inspectors in anticipation on 27.03.2003 to serve the notices to the assessee on the above mentioned addresses. On the address Plot No.167, NEPZ, Noida, they reported that the company has closed its affairs and nobody was present there and hence they served the notice through affixture. On the other above- mentioned addresses, they reported that "after repeated calls, nobody open the door and the chowkidar also refused to receive the notice" and hence they served the notices through affixture. Copies of notices and report of the inspectors are annexed for kind perusal.
From the perusal of the above details, it is quite clear that the Assessing Officer made all the bonafide efforts to serve the notices u/s 148 of LT. Act by speed post as well as through the Inspectors on the various addresses as were available information and in the circumstances the service of notices should be treated as valid service on the last given addresses of the assessee. Further, if there was any change in the address of the assessee, it was the duty of the assessee to apprise the department of the same and no such intimation has been received on behalf of the assessee.
So, considering all the circumstances as mentioned above it is prayed that the service of notice u/s 148 of the LT. Act in both the assessment year i.e. 1996-97 and 1997-98 should be treated as valid service as per the I.T. Act, 1961.”
Bare scrutiny of the synopsis filed by the ld. Senior DR supported with copies of notices issued u/ 148 dated 26.03.2003 and 27.03.2003 and assessment order passed in both the appeals by the AO apparently goes to prove that when notices u/s 148 were sent through speed post on the various known addresses of the assessee on 26.03.2003 then what was tearing hurry to issue the second notice dated 27.03.2003 to be served through two Inspectors of the Revenue without waiting for the outcome of the notices issued through speed post who have reported vide report dated 27.03.2003, that “after repeated calls no body opened the door and Chowkidar also refused to receive the notice and they are left with no option but to affix the notice on the main gate of the said premises.”
First of all, bare perusal of the notice dated 27.03.2003 allegedly refused by Chowkidar of the assessee company as reported by Inspectors of the Revenue, goes to prove that this is an exercise in futility because neither name of the Chowkidar has been mentioned who has refused to accept the notice nor the factum of refusal by the Chowkidar has been got attested from any of the independent witness. Secondly, Inspectors reported to be deputed for service of notice u/s 148 have decided on their own to get the service of notice affected through affixture without reporting the factum of refusal of the Chowkidar of the assessee to the AO and got the notice affixed on the premises of the assessee on 27.03.2003.
Chronology of the events as to issuance of the notice u/ 148 on 26.03.2003 through speed post and then without waiting for the outcome of the service or non-service, as the case may be, issued the notice dated 27.03.2003 to be served by the two Inspectors of the Revenue who reported that the Chowkidar of the assessee has refused to accept the notice and then they have decided on their own to get the service affected on 27.03.2003 through affixture goes to prove that no effort has been made by the Revenue to serve the notice u/s 148 upon the assessee rather paper work has been completed within two days.
13. Even, the Revenue is not aware till passing of the assessment orders after a period of one year from the date of alleged service through affixture as to what was the fate of notice sent through speed post. The entire exercise of completing assessment without service of notice upon the assessee has been made in haste. It is humanly not possible to believe that service of notice through registered post can be affected on the same date i.e. 26.03.2003 on which it was issued/posted. Moreover, perusal of the assessment record produced by the Revenue during the course of argument goes to prove that the notice u/s 148 has never been issued at the registered office address of the assessee at Delhi registered with ROC, Delhi and Haryana. So, we are of the considered view that when no valid notice u/s 148 has ever been served upon the assessee either through registered post or through affixture necessary to reopen the assessment, the entire exercise as to opening the assessment is illegal and void, hence not sustainable.
In view of what has been discussed above, without going into merits, both the aforesaid appeals are allowed for want of valid notice u/s 148 of the Act and consequently assessment order dated 23.03.2004 in both the assessment years i.e. 1996-97 and 1997-98 stand quashed. Order pronounced in open court on this 23rd day of January, 2017.