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Income Tax Appellate Tribunal, DELHI BENCH ‘H’ : NEW DELHI
Before: SHRI J.S. REDDY & SHRI KULDIP SINGH
per Registration Certificate No.28/R.C. dated 13.02.1990 issued by Registrar, Ballabhgarh, assessee has received sale consideration of his land to the tune of Rs.2,24,87,500/- from M/s. Super Belts Pvt. Ltd., M-11, Middle Circle, Connaught Circle, New Delhi and has not declared his return of income declaring the said capital gain.
So, the assessee has undisclosed income of Rs.2,24,87,500/- which has escaped assessment under section 147 of the Income-tax Act, 1961 (hereinafter ‘the Act’). After recording the reasons, notice u/s 148 dated 13.03.2009 was sent through post to the assessee, but in response thereto, the assessee has not field his return of income.
On request of the counsel for assessee, the copy of reasons for initiating proceedings u/s 148 was supplied to him. Shri Shyam Sunder Mangla, CA attended the proceedings who was issued show-cause notice as to why amount of Rs.2,24,87,500/- be not added to the total income of the assessee. The assessee was called upon to furnish necessary documents on 18.12.2009 but none appeared on behalf of him nor filed any written reply.
Consequently, the AO came to the conclusion that the assessee has received the amount of Rs.2,24,87,500/- on account of sale of land to M/s. Green Valley Housing & Development Pvt. Ltd. M-11, Middle Circle, Connaught Circle, New Delhi. Hence, addition of Rs.2,24,87,500/- is made on account of long term capital gain.
The assessee carried the matter before the ld. CIT (A) who has partly allowed the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal.
At the same time, the revenue feeling aggrieved with the impugned order allowing deductions of Rs.4,47,994/- for index cost of acquisition while computing long term capital gain, allowing deduction of Rs.48,78,450/- u/s 54B and allowing the deduction of Rs.1.25 crores u/s 54F on the basis of estimation only, filed the present cross 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.
During the appellate proceedings before the Bench, the assessee has moved an application for admission of additional grounds to the following effect :-
“1) That neither intimation u/sec. 143(1) nor notice u/sec. 143(2) of the Income Tax Act, 1961 were issued by the learned Assessing Officer on the return of income filed by the appellant on 08.01.2009 which is a mandatory requirement in the law.' This return of income had been relied upon by the Hon'ble Commissioner of Income Tax (Appeals) in deciding the appeal of the appellant for the year under appeal. Thus order passed by the Hon'ble Commissioner of Income Tax (Appeals) based on this return in the absence of issuance and service of notice u/sec. 143(2) of the Act is non-est in law. 2) That the notice alleged to have been issued sec. 143(2) of the Act dated 14.12.2009 fixing the date of hearing for 18.12.2009 is not valid in law since:- i) At the time of issuance of said notice, he had no return of income was available in the assessment record of the appellant. ii) If the said notice is issued on the basis of return of income filed by the appellant on 08.01.2009, then as per the proviso to section 143(2) is barred by limitation.
In the face of the admitted fact that assessment order dated 18.12.2008 was passed in this case u/s 147/144 of the Act, no notice u/s 143(2) of the Act was required to be issued by the AO.
So, in view of the matter, application seeking incorporation of the additional ground as to non-issuance/invalid notice u/s 143(2) of the Act by the AO is not maintainable, hence hereby dismissed.
The ld. AR for the assessee challenging the impugned order contended inter alia that ld. CIT (A) has erred in returning the findings that the return of income filed by the assessee with Income-tax Officer, Ward 2(4), Faridabad on 08.01.2009 is invalid as he has no jurisdiction to entertain the same; that the AO has erred in reopening the assessment u/s 148 without service of notice and without examining the return filed by the assessee on 08.01.2009; that notice u/s 148 of the Act was never served upon the assessee; that during the assessment proceedings, the assessee sought one month time to file the requisite documents but the AO without providing opportunity of being heard completed the assessment within four days by conducting the ex-parte proceedings.
First contention raised by ld. AR that CIT (A) has erred in returning findings that the return of income filed by the assessee with Income-tax Officer, Ward 2(4), Faridabad on 08.01.2009 is non-est and invalid as he has no jurisdiction to entertain the same, is sustainable when examined in the light of the findings returned by the ld. CIT (A) in para 6 at page 45 of the impugned order which is reproduced for ready reference as under :-
……It is correct that the assessee filed his return of income but the said return was filed with Income Tax Officer, Ward 2 (4), Faridabad on 08.01.2009 whereas the jurisdiction over the case of assessee vested with Income Tax Officer, Ward 1 (5), Faridabad. Hence, the return filed with wrong jursidcition has to be treated as non-est, invalid in the eye of law and no cognizance of same can be taken. Consequently, the contentions raised that all primary facts necessary for assessment were fully and truly disclosed in the return…..
When undisputedly the assessee has filed the return of income qua the assessment year 2007-08 on 08.01.2009 with Income-tax Officer, Ward 2 (4), Faridabad, though it was required to be filed with ITO, Ward 1 (5), Faridabad, the CIT (A) was under legal obligation to provide an opportunity of being heard to the assessee by filing return of income with the competent revenue authority or he would have transferred the return of income dated 08.01.2009 to the competent revenue authority for further necessary action. AO in the assessment order has proceeded on the premise that no return of income was filed by the assessee and proceeded to reopen the assessment u/s 148 of the Act. So, the impugned order passed by the CIT(A) by treating the income-tax return filed by the assessee, though with ITO having no jurisdiction as non est and invalid is not sustainable in the eyes of law because CIT (A) being a quasi-judicial authority has the power to transfer the return of income wrongly filed due to jurisdictional error to the competent revenue authority having jurisdiction over the assessee to examine the same. So, in view of the matter, the impugned order is not sustainable in the eyes of law.
So far as, contention raised by the ld. AR for the assessee that no notice has been issued to the assessee by the AO u/s 143(1)/143(2) is concerned, the same is not sustainable because in case the assessment is completed u/s 144 of the Act, as in the instant case no notice is required to be issued u/ss 143(1)/ 143(2).
The next contention raised by the ld. AR for the assessee that during the assessment proceedings, the assessee sought one month time to file the requisite documents but the AO without providing opportunity of being heard completed the assessment within four days by conducting the ex-parte proceedings, is also sustainable because when the assessee has undisputedly taken specific grounds no.4(a) and 4 (b) before ld. CIT (A) that the assessee has not been provided with an adequate opportunity of being heard by bringing on record the requisite document specifically called for by the AO himself, the CIT (A) was required to provide adequate opportunity of being heard to the assessee. So, from the bare perusal of the assessment order and impugned order passed by ld. CIT (A), it stands proved that the entire exercise to complete the assessment u/s 147/144 has been made in haste without providing adequate opportunity of being heard to the assessee, thus the ld. CIT (A) has also failed to decide this issue judiciously.
Even otherwise, the AO has proceeded to complete the assessment in haste despite calling information from the assessee, for which he has sought one month period, within a period of four days, by treating the entire sale proceeds of Rs.2,24,87,500/- as income of the assessee, which is ex-facie not tenable and also proves the non-application of mind.
Moreover, had the assessee been provided with an opportunity to file the documents as required by the AO, he would have brought on record the factum of filing of the return of income wrongly with Income-tax Officer, Ward 2 (4), Faridabad on 08.01.2009 and other documents in his defence, the impugned assessment order would not have been passed;
So, in the backdrop of the aforesaid facts and circumstances of this case, we are of the considered view that without going into the merits of the case, proper opportunity of being heard is required to be provided to the assessee by the AO, who being a quasi judicial authority was under obligation to follow the rule of natural justice. Resultantly, cross appeal filed by the revenue is also not sustainable because when the assessment order is not sustainable in the eyes of law, the impugned order passed by the CIT (A) is also a nullity. Consequently, present appeal filed by the assessee is hereby allowed for statistical purposes and cross appeal filed by the revenue is hereby dismissed having been become infructuous. The file is ordered to be restored to the AO to decide afresh after providing adequate opportunity of being heard to the assessee.
Order pronounced in open court on this 20th day of May, 2016.