R.V. AGENCIES PVT. LTD,,PUNJAB vs. ITO, NEW DELHI

PER ANADEE NATH MISSHRA, ACCOUNTANT MEMBER (A). The present appeal has been filed by the assessee against the order dated 10.03.2013 of CIT(A)-XVIII, New Delhi pertaining to 2004-05 assessment year.

Grounds of appeal filed by the assessee are as under:-

I.T.A .No.-2909/Del/2013 R.V.Agencies Pvt.Ltd., vs ITO

3.) The respondent has erred in law as the notice u/s 148 has not been issued/sen/ed and the impugned order ought to have been set aside by the CIT(A) and failure to do so has vitiated the impugned order. 4.) The respondent has erred in law as the statutory requirement of section 147 to 153 of the Income Tax Act and the impugned order ought to have been set aside by the CIT(A) and failure to do so has vitiated the impugned order. 5.) That the Respondent ITO Ward 15(1) is wrong in assuming jurisdiction u/s 144 hence the Assessment Order passed without jurisdiction the impugned order ought to have been set aside by the CIT(A) and failure to do so has vitiated the impugned order, 6.) The order of Re-assessment having been passed in violation of natural justice and hastily by obtaining behind the back of the appellant on the basis of some alleged statements/information none of which had been made available to the appellant nor any opportunity provided to rebut the same and without providing opportunity of cross-examination of different persons and there was not even a show cause notice specifically proposing to make the additions nor any effective opportunity of personal hearing was giving hence, the impugned order ought to have been set aside by the CIT (A) and failure to do so have vitiated the impugned order. 7.) That under the facts and circumstances of the case and in law, the respondent has not discharged its onus of proof in any manner and has chosen to make illegal addition perversely and all the additions therefore ought to be set aside by Ld. CIT(A) and failure to do so has vitiated the impugned order. 8.) The CIT (A) has also erred in upholding the illegal addition of Rs.56,50,000/- perversely made by the ITO and impugned order are therefore liable to be quashed and the additions so illegally made and confirmed ought to be deleted. 9.)The appellant craves leave to raise further/additional grounds and documents and file paper book before the hearing of the appeal and prays for the appeal to be allowed after hearing both side. ”

(B). The original return was filed by the assessee on 26.10.2004 declaring income of Rs. 1,11,090/-. At the time of filing of return, the jurisdiction of the assessee was with ITO, Ward-15(1), New Delhi and accordingly the assessee filed the return in the office of ITO, Ward-15(1), New Delhi. Subsequently, the assessee applied for change of address from Delhi to Gyan Singh Street No.4, Patiala Road, Sangrur,

Punjab-148001. The assessee received communication from Income Tax

Department on 22.03.2006 (Page 14 of the Paper Book filed by the assessee), I.T.A ,No.-2909/Del/2013 R.V.Agencies Pvt.Ltd., vs ITO intimating that the assessee’s request for change in PAN data had been processed as per change/correction form submitted by the assessee Later, after a gap of many years, on the basis of information received from DIT(lnv.), the ITO, Ward-15(1), New Delhi initiated proceedings u/s 147 of the Income Tax Act, 1961 (in short “Act”) vide notice dated 25.03.2011 u/s 148 of the Act. The copies of the notice dated 25.03.2011 u/s 148 of the Act were dispatched by the ITO, Ward- 15 0 ), New Delhi by speed post on 07.04.2011 and sent at the assessee’s addresses both at Delhi and at Sangrur, Punjab. These notices were, however, not served on the assessee and were returned back to the ITO, Ward-15(1), New Delhi with postal remark “No such person is available on this address’’. A notice dated 16.09.2011 u/s 142(1) of Act was also sent by the ITO, Ward-15(1), New Delhi by speed post which also was returned back to the ITO, Ward-15(1), New Delhi with postal remark “No such person is available on this address”. Also, notice u/s 142(1) of the Act alongwith questionnaire and notice u/s 143(2) of the Act were issued by the ITO, Ward-15(1), New Delhi on 21.10.2011 by speed post which were also returned back to the ITO, Ward-15(1), New Delhi with postal remark “No such person is available on this address”. A show cause notice was also issued by the ITO, Ward-15(1), New Delhi on 11.11.2011 to the assessee. It is stated by ITO, Ward-15(1), New Delhi in the assessment order that the same notices were also served by affixture at the asessee’s Delhi address i.e. R.V.

Agencies Pvt. Ltd., 110, D.B. Chamber, D.B.Gupta Road, New Delhi-110008 The ITO, Ward-15(1), New Delhi proceeded to pass assessment order u/s 147/144 of the Act wherein additions totaling Rs.56,50,000/- were made and total income was I.T.A .No.-2909/Del/2013 R.V.Agencies Pvt.Ltd., vs ITO assessed at Rs.57,61,090/- vide assessment order dated 07.12.2011. The assessee filed appeal before the Ld.CIT(A), who vide order dated 10.03.2013 dismissed the assessee’s appeal.

(C). Aggrieved, the assessee has filed this appeal in ITAT against the aforesaid order dated 10.03.2013 of Ld.CIT(A). In the course of the appellate proceedings in ITAT, the assessee filed a Paper Book containing 226 pages. The assessee also filed written submissions which are reproduced below for ready-reference:-

“1. Return was filed on 18.10.2004 assessed u/s 143( 1) and returned income was accepted as correct.

(C-1). At the time of hearing before us, the Ld. Counsel for the assessee made detailed oral submissions in addition to the aforesaid written submissions and explained the same with the help of Paper Book filed by the assessee. To summarize, the Ld. Counsel challenged the assessment order in written and oral submissions on the following bases:-

(a)The initiation of proceedings u/s 147 of the Act was invalid in the absence of valid service of notice u/s 148 of the Act; (b)The assessment order was void ab-initio in the absence of valid of notice u/s 143(3) of the Act; (c)The assumption of jurisdiction u/s 144 of the Act was invalid in the absence of valid service of notice u/s 142(1) of the Act and in the absence of valid service of hearing notices issued by ITO, Ward-15( 1), New Delhi; (d)ITO, Ward-15(1), New Delhi who initiated the proceedings u/s 147 of the Act and passed assessment order dated 07.12.2011 u/s 147/144 of the Act did not have jurisdiction because the assessee was being assessed not in Delhi but in Sangrur, Punjab;

I.T.A ,No.-2909/Del/2013 R.V.Agencies Pvt.Ltd., vs ITO

(e)Notice u/s 147 of the Act was barred by limitation as the notice was dispatched on 07.04.2011, more than six years after the expiry of two assessment year, although the notice was dated 25.03.2011; (f) The initiation of proceedings u/s 147 of the Act was invalid because Statutory approval required u/s 151 of the Act given by Additional CIT, was mechanical and without application of mind. (C.2). The Ld. Departmental Representative (In short “DR”) appearing for Revenue relied on the order of the ITO, Ward-15(1), New Delhi and Ld.CIT(A).

(D). We have heard both sides patiently. We have also considered the materials on record carefully. On perusal of reasons recorded by ITO, Ward-15(1), New Delhi for initiation of proceedings u/s 147 of the Act (pages 21-23 of Paper Book filed by the assessee), we notice that address of the assessee is stated by the ITO, Ward-15(1), New Delhi to be Gyan Singh Street No.4, Patiala Road, Sangrur, Punjab-148001. Thus, it is obvious that ITO, Ward-15(1), New Delhi was aware about the fact that the address of the assessee was at Sangrur, Punjab, even before issuance of notice u/s 148 of the Act. Well before that, Income Tax Department had also sent letter to the assessee informing that the assessee s request for change in details in PAN data had been processed as per change/correction forms submitted by the assessee (page 14 of Paper Book filed by the assessee). Therefore, the statutory notices should have been served on the assessee at the assessee’s new address at Sangrur, Punjab. The ITO, Ward- 15(1), New Delhi has, however, himself recorded in the assessment order that the notices sent to the assessee by speed post were returned back by postal authority with the remark “No such person is available on this address”. Thus, the notices sent by ITO, Ward-15(1), New Delhi but returned back by postal authorities I.T.A .No.-2909/Del/2013 R.V.Agencies Pvt.Ltd., vs ITO remained unserved. Though the ITO, Ward-15(1), New Delhi claims that notice was served by affixture, however the service by affixture was at the assessee’s

Delhi address and not at the assessee’s last known address at Sangrur, Punjab.

Service of notice by affixture at an address other than the last known address of the assessee is not a valid service. The relevant portion of the assessment order is reproduced hereunder for ready-reference:-

“............. after recording the reasons and with the prior approval of the Add!. CIT, notice u/s 148 of the I.T. Act was issued on 25/03/2011 and served upon the assessee by speed post on various address ( R V Agencies P Ltd., Gyansingh Street No.-4, Patiala Road, Sangrur, Punjab-148001), ( R V Agencies P Ltd., 7B, Netaji Subhash Marg, Darya Ganj, Delhi-110002), (R Paul Jain & Co., CA, 110, B D Chamber, 10/54, Deshi Bandhu Gupta Road. Karol Bagh, Delhi-110065) which are return back with postal remark “No such person is available on this address". A notice u/s 142(1) alongwith questionnaire was issued on 16-09-2011 by speed post which were also return back with postal remark "No such person is available on this address". Further notices u/s 142(1) alongwith questionnaire and notice u/s 143(2) were issued on 21-10-2011 by speed post which are return back with postal remark "No such person is available on this address". A show cause notice for final opportunity was also issued to the assessee on 11.11.2011. The same notices were also served by affixture at (R V Agencies P Ltd., 110, D B Chamber, D B Gupta Road, New Delhi-110008)..........”

(E). Thus, the notices sent by ITO, Ward-15(1), New Delhi by speed post remained unserved (being returned back by postal authorities) and the notices served by affixture were not valid service (being served at an address other than last known address of the assessee). In view of these undisputed facts, we are constrained to conclude that the Statutory notices u/s 148 of the Act, u/s 142(1) of the Act, u/s 143(2) of the Act and the hearing notices cannot be held to be properly served on the assessee in the eyes of law. Thus, we are of the view that the statutory notices u/s 148 of the Act, u/s 142(1) of the Act, u/s 143(2) of the Act and hearing notices remained unserved. In the absence of valid service of notice u/s I.T.A ,No.-2909/Del/2013 R.V.Agencies Pvt.Ltd., vs ITO

147 of the Act, we hold that the initiation of proceedings u/s 147 of the Act was invalid. Further, in the absence of valid service of notice u/s 143(2) and u/s 142(1) of the Act, the assessment order is unsustainable and we hold the assessment order to be void ab-initio. Further, in the absence of proper and valid service of hearing notices, the assumption of jurisdiction u/s 144 of the Act is held to be invalid. In view of these facts and circumstances, we set aside the order of the Ld.CIT(A) and annul the assessment order passed by the ITO, Ward-15(1), New Delhi. The other issues raised by the assessee in its appeal do not require specific adjudication being academic in nature as we have already decided to set aside the order of Ld.CIT(A) and to annul the assessment order; and therefore, such issues are not being adjudicated.

(F). In the result, the appeal of the assessee is allowed.

The order is pronounced in the open court on 17th of March 2017.