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Income Tax Appellate Tribunal, DELHI BENCH “SMC-3”, NEW DELHI
Before: SHRI H.S. SIDHU
Revenue has filed this Appeal against the Order dated 30.4.2014 passed by the Ld. Commissioner of Income Tax (Appeals)-XV, New Delhi pertaining to assessment year 2005-06 on the following grounds:-
On the facts and circumstances of the case, the Ld.
CIT(A) has erred in treating the reassessment proceedings u/s. 147 of the Act as bad in law.
On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 38,01,030/- without deciding the matter on merits.
3. On the facts and circumstances of the case, the Ld. CIT(A) has erred in treating the notice issued u/s. 148 of the I.T. Act as defective. 4. The appellant craves to add, alter, amend, modify, add or forego any ground of appeal
at any time before or during the hearing of this appeal.
2. The brief facts of the case are that the assessee has filed the return declaring an income of Rs. 98,140/- on 30.6.2005. In this case, information has been received from the office of the DIT(Inv.), New Delhi about the companies who were involved in taking/giving accommodation entries for unaccounted money. It leads to the fact that the assessee company was one of the company, who has taken accommodation entry from parties for its own unaccounted money.
Considering the above information, case of the assessee was reopened u/s. 147/148 of the Income Tax Act, 1961 (hereinafter referred the Act), after recording reasons, necessary approval received from Addl. CIT(A), Range-12, New Delhi. Notice u/s. 148 of the Act dated 22.3.2012 was issued and served by the Speed Post at the old address of the assessee company i.e. 25, Harsh Vihar, Pitampura, Delhi-34. In response to the notice, neither anyone attended nor any written submissions were field, therefore, notice u/s. 142(1) of the Act dated 30.1.2013 was issued at the new address of the assessee company, calling details of income and expenditures relevant to AY 2005-06. Then Ld. AR of the assessee attended the proceedings and filed the reply dated 6.2.2013 by way objecting the proceedings u/s. 148 stating that the matter is time barred as no notice u/s. 148 of the Act dated 22.3.2012 was served upon the assessee and the reply of the assessee has been considered and objection raised were duly replied vide notice u/s. 142(1) of the Act with letter dated 8.2.2013. Thereafter, the AO observed that opportunities were allowed to the assessee to explain its contention with supporting evidence, but it has failed in every respect to discharge its onus to prove that the amount of of Rs. 38,01,030/- credited in the books of account/ bank accounts of the assessee are not its unaccounted money. Therefore, a sum of Rs. 38,01,030/- was added back in the income of the assessee being unexplained credits u/s. 68 of the Act and AO completed the assessment at Rs. 38,99,170/- u/s. 144/147 of the Act vide his order 28.3.2013.
Against the order of the Ld. AO, assessee appealed before the Ld. CIT(A), who vide impugned order dated 30.4.2014 has allowed the appeal of the assessee.
Aggrieved with the order of the Ld. CIT(A), Revenue is in appeal before the Tribunal.
The present Appeal came up for hearing before the Bench on 16.6.2016. Ld. DR filed an Application for adjournment, but Ld. Counsel of the assessee raised objection that the issue involved in the present appeal is squarely covered by the various decisions of the ITAT and the Hon’ble High Court, therefore, the matter may be heard. Keeping in view of the facts and circumstances of the present case and the issue involved in the present appeal as well as the order passed by the revenue authority, in the interest of justice the case was adjourned for 17.6.2016 being part heard. Both the parties were duly informed about the next date of hearing i.e. 17.6.2016. Again on 17.6.2016, the DR filed an application for adjournment for 20.6.2016 and the case was adjourned for 20.6.2016, as the case was partly heard, Ld. Counsel of the assessee again objected for adjournment. The DR has also taken note of the next date of hearing i.e. 20.6.2016, but when the case came up for hearing before the Bench on 20.6.2016 no one appeared on behalf of the Department till the conclusion of the Bench, nor filed any Application for adjournment. In view of the above facts and circumstances, I am of the considered opinion that no useful purpose would be served to adjourn the case again and again, hence, the Revenue’s appeal is decided exparte qua DR, after hearing the Ld. Counsel of the assessee and perusing the records.
During the course of hearing Ld. Counsel of the assessee relied upon the order of the Ld. CIT(A) and stated that the same may be upheld.
7. I have heard Ld. Counsel of the Assessee and perused the records especially the orders of the Revenue authorities. I find that Ld. CIT(A) has elaborately discussed the issue in dispute vide para no. 6 to para 9 at pages 8 to 14. The relevant paras are reproduced as under:-
“6. I have carefully considered the facts of' the case in the light of the submissions made by the appellant and the observation made by the AO in the impugned order.
Accordingly, my decision on various grounds is as under:
6.2 I find that there is no dispute that in the case of appellant, in terms of the provisions of Section 151, the notice u/s 148 was to be issued on or before 31.3.2012. In the case of the appellant, the said notice was issued on 22.3.2012, however, it was issued at old address of the appellant form which the appellant had filed its original return of income. However, subsequently, the appellant had shifted from that premises w.e.f. 28.6.2005 itself and shifted to KD-178 at Pitampura.
The appellant had filed subsequent returns of income relating to AY 2007-08 and 2008-09 from that premises. Subsequently, the appellant furnished intimation of change of address to Office No.3, First Floor, CSC, KD Block, Pitampura Delhi w.e.f.
5.3.2008 from where subsequent returns were filed.
Undisputedly, the appellant had mentioned about the change of address to the ROC, informed the AO about the change and got the address changed in PAN/TAN data base in January, 2010. Evidences in support of this, were furnished before me, which have been duly verified by me. Undisputedly, the Ld. AO was also informed of this change, vide letter dated 10.8.2009, which was taken into cognizance by the AO himself, who had issued notice in respect of the proceedings for the assessment year 2005-06 to the new address. In fact, in the impugned order itself, the Ld. AO mentioned of his letter dated 19.3.2013, in which it was conceded that even though the appellant had intimated the new address to the Department but inadvertently the notice u/s 148 was issued at the old address. Thus, there is no doubt that the notice u/s 148 was defective, to that extent, as the AO had the knowledge of the correct and valid address, however, still he mentioned the old address, on which the appellant was not carrying out business at that time. Further, I find that the notice u/s 148, even though issued within the prescribed time, was not served upon the appellant, even before passing the order of re-assessment.
6.3 I find that there is no dispute that the notice u/s 148 did not return back to the Ld. AO. However, at the same time, there was no response from the appellant to the notice u/s 148 and the appellant responded to the AO only on 6.2.2013.
Therefore, the only logical presumption could be drawn is that the appellant was informed of the impugned proceeding only by way of notice u/s 142(1) dated 30.1.2013, which was issued at the new and valid address of the appellant. Under the circumstances, it is evident that the notice u/s 148 dated 22.3.2012, was not served upon the appellant within the prescribed time limit u/s 151. I find that during the re- assessment proceedings also, notice u/s 148 was not served upon the appellant before passing of the impugned order. It is a settled law that service of notice u/s 148 before passing of assessment order is a condition precedent. I also find that the appellant had taken all necessary steps for the purpose of making due diligence in the matter by informing ROC, AO and DIT(System). Therefore, the mistake is attributable to the AO only, who was casual in issuing the notice u/s 148 at the old address, without verifying own records for the subsequent years and the specific information dated 10.8.2009, given by the appellant, whereby the appellant had informed change of address to the AO.
6.4 The Ld. AO, having admitted the above mistake, has still gone ahead with the impugned proceeding by holding that the service at the old address at 25, Harsh Vihar, Pitampura, Delhi, which was owned by one of the Directors of the appellant company was a valid service. The appellant, on the other hand, with the support of relevant documents claimed that the said premises at 25, Harsh Vihar, Pitampura, Delhi, which was in the name of the Director (in the current year) Mr. Munna Babu Goel, was vacated on 11.6.2011 after his death on 15.1.2011. Necessary evidences in support of the same were furnished, which have been verified. Further, a letter to NDPL for not raising electricity bill was also filed, as the electricity company was raising electricity bill after vacating the premises on estimated basis. Moreover, in the current year, the new Directors of the appellant company (from the family of late Munna Babu Goal) have also shown the new address at 24A, Alipur Road Civil Lines, New Delhi and there is no evidence at premises at 25, Harsh Vihar, Pitampura, Delhi was used as a business premises of the appellant or by its Directors, as on the date of issue of notice u/s 148 dated 22.3.2012. Further, there is no evidence brought on record that the appellant company may have authorized anyone, who may be in beneficial ownership or residing at 25, Harsh Vihar, Pitampura, Delhi, to receive statutory notices and any correspondence on behalf of the appellant company.
6.5 In any case, a company is a distinct legal entity from its directors. This relationship gets further remote, where such a Director is a deceased one, who cannot be expected to receive the notice issued by the Ld. AO on 22.3.2012, having expired in January, 2011. The Ld. AO has made some vague statements such as 'the issue arises due to carelessness of concerned persons of your side (letter dated 8.2.2013) and 'it is not a matter of department whether the person of the assessee has given it or not to the concerned authority of the assessee company.' However, since the premise did not belong to the appellant company and the Director of the company, who was the owner of the premise had deceased, by no stretch of imagination, the notice dated 22.03.2012 could have been served upon the appellant.
Under the circumstances, it remains undisputed that the notice u/s 148 dated 22.3.2011 which is the foundation stone of reassessment proceeding u/s 147, was issued at an incorrect address due to mistake attributable to the AD and could not be served upon the appellant within the statutorily prescribed time of 6 years and even thereafter, before the order of re-assessment was passed. In view of this the re- assessment proceeding are held as bad in law.
7.2 The Delhi High Court, in the case of elT vs. Eshaan Holding (P.) Ltd. [2012) 344 ITR 0541, on similar facts, where the notice u/s 148 was issued at the old address of the assessee, dismissing the appeal, held that for the assessment year 2003-04, there was no valid service of notice under section 148 of the Income-tax Act, 1961, and hence the reassessment proceedings were null and void. In holding so the Hon'ble High Court had held as under:
"The first notice issued on January 29J 2004J by speed- post was said to have been served at the old address at East of Kailash. There was no proof of service on record.
Even otherwise, this was not valid service because the assessee had already filed its return on November 28,
2003 and in this return the address shown was Panchsheel Park. Thus, the record of the Department already contained the new address of the assessee.
Before issuing notice under section 148J it was expected of the Assessing Officer to have checked up if there was any change of address, because valid service of a notice of reopening the assessment is a jurisdictional matter and this is a condition precedent for a valid reassessment. The notice served by affixture was also not valid service because it was done at the old address, which was not the last known address, as the new address had already been intimated to the Department in the return of income filed for the assessment year 2003-
04.”
7.2.2 Further, the Honble ITAT Delhi in the case of ITO v. On Exim P. Ltd. [2013] 026 ITR (Trib) 0697 allowed the appeal by holding that the notice was handed over to the postal authorities on April 1, 2008 which was beyond the period of limitation of six years provided in section 149 of the Act. The Hon'ble ITAT had held as under:
"(ii) That the notice was not correctly addressed. The notice had to be sent to the address of the assessee given in its record with the Income-tax Department and not to some other address which might have been given by the Investigation Wing. The notice was issued in March/ 2008 and the assessment was completed in December/ 2008 and/ in the assessment order/ the Assessing Officer himself had given a different address other than what was given in the notice under section 148 of the Act. Therefore the notice was issued at the incorrect address/ which was not valid issue of notice."
7.2.3 The Hon'ble ITAT relied upon the decision of the Gujarat High Court in the case of Kanubhai M.Patel (HUF) v. Hiren Bhatt or his successors to Office [2011] 334 ITR
25 (Guj) at pages 32 of 334 ITR, in which the following was held:
"Thus 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 as section 149 would therefore/ have to be read in the aforesaid context. In the present case/ the impugned notices have been signed on March 31/ 2010/ whereas the same were sent to the speed post centre for booking only on April 7/ 2010. Considering the definition of the word 'issue', it is apparent that merely signing the notices on March 31, 2010 cannot be equated with issuance of notice as contemplated under section 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 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 April 7, 2010, the date of issue of the said notices would be April 7,
2010 and not March 31, 2010, as contended on behalf of the Revenue. In the circumstances, the impugned notices under section 148 in relation to the assessment year 2003-04, having been issued on April 7, 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.
(emphasis supplied)
I also hold that the defect in notice u/s 148 is not curable in terms of the provisions of Section 292BB
either, as the appellant had right through out raised objection on the validity of proceedings on the ground of non-service of the said notice u/s 148 dated 22.3.2012 and not participated in the re-assessment proceedings.
9. Keeping in view the above and in the light of the decision of the Hon'ble Delhi High Court in the case of ClT vs. Eshaan Holding (P.) Ltd (Supra), the decision of Allahabad High Court in the case of Dr. Ajay Prakesh (Supra) and of Hon'ble ITAT Delhi in the case of OM Exim Pvt. Ltd. (Supra), the impugned assessment proceeding resulting from the issue of a defective notice u/s 148 dated 22.3.2012, which was addressed at an address, which is not the current address as per the record of the AO, and which was not served upon the appellant before passing the impugned order, is held as bad in law.
Accordingly, the addition made by the Ld. AO, on which the appellant did not argue on merit, cannot be sustained. In view of this, the addition made by the Ld. AO is deleted.” 8. After perusing the finding of the Ld. CIT(A), I find that it is undisputed fact that the notice u/s. 148 of the Act dated 22.3.2011 which is foundation stone of reassessment proceedings u/s. 147, was issued at an incorrect address due to mistake attributable to the AO and could not be served upon the assessee within the statutorily prescribed time of 6 years and even thereafter, before the order of reassessment was passed. Therefore, in my considered opinion, CIT(A) by respectfully following the following decisions has rightly held that the reassessment proceedings are bad in law and deleted the addition.
- CIT vs. Eshaan Holding (P) Ltd. (2012) 344 ITR 0541. - ITO vs. Exim P Ltd. (2013) 026 ITR (Trib.) 0697. - Kanubhai M. Patel (HUF) vs. Hiren Bhatt (2011) 334
ITR 25 (Guj.) at pages 32 of 334 ITR 8.1 In view of above, I am of the considered view that Ld. CIT(A) has passed a well reasoned and speaking order which does not require interference on my part, hence, I uphold the order of the Ld. CIT(A) and dismiss the Appeal filed by the Revenue.
In the result, the Appeal filed by the Revenue stand dismissed.
Order pronounced in the Open Court on 01/07/2016.