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Income Tax Appellate Tribunal, DELHI BENCH ‘G’ NEW DELHI
ORDER Per C.M. Garg, JM
This appeal by the assessee has been filed against the order of the Commissioner of the Income Tax (Appeals) –IX, New Delhi order dated 27.09.2012 passed in First Appeal No. 93/07-08 for AY 2000- 01.
Application of appellant assessee for admission of additional grounds.
2 We have heard arguments of both the parties on above application and carefully perused the relevant material placed on record before us. The Ld Assessee’s representative (AR) placing reliance on the decision of Hon’ble Supreme Court in the case of NTPC Vs CIT reported as 229ITR 383 (SC) submitted that additional ground being legal may kindly be admitted for adjudication as the same goes to the route of the matter. The Ld DR pointed out that there is no new grounds in the application as additional ground No. 2, 3 & 4 are similar to the ground No. 2 , 1 &4 raised in the form No. 36 filed by the assessee.
3 On careful consideration of above submissions first of all we note that the Ld AR has submitted that the assessee is not interested to press additional ground No. 1 therefore, the same may kindly be ignored while admitting additional grounds of the assessee. However, it is also noted that the ground No. 2, 1 & 4 raised by the assessee in the original appeal as mentioned in the form No. 36 are similarly worded as additional ground No. 2, 3 & 4 respectively therefore there is no need of admission of additional grounds which have already been taken by the assessee at the time of filing appeal. Finally, in view of above noted discussion we hold that since the grounds No. 2, 1 & 4 of the assessee are already on record therefore, there is no need of admitting the same as additional grounds and hence application of the assessee is dismissed by observing that the grievance of the assessee regarding non-service of notice U/s 148 of the Act, challenge to the proceeding U/s 147 of the Act and on merits would be addressed by adjudicating original grounds which are already on record.
Original ground No. 2 of the Assessee “2. That no notice U/s 148 has been served, in the absence of which, the proceedings are without jurisdiction.”
4 We heard argument of both the sides and carefully perused the relevant material placed on record. The Ld AR pointed out that the AO issued notice U/s 148 of the Act on 30.03.2007 to the address A-36, Guru Nanak Pura, Vikas Marg, Delhi-110092 and same was never served/received the Ld counsel pointed out that the assessee has filed its affidavit available at page 11a & 11b of the Act before CIT(A) supporting this fact that the said notice issued by the AO was never served on or received by the assessee. The Ld AR also pointed out that in the assessment order passed by the AO U/s 143(3) read with section 147 of the Act there is no mention regarding service of notice on the assessee. The Ld AR vehemently pointed out that the assessee was not occupying the above noted A- 36 Guru Nanak Pura, Vikas Marg, premises on 30.03.2007 and the same was left by the assessee in the month of May, 2005 and the assessee company shifted its office to S-529, First Floor, School Block, Shakarpur, Delhi-110092.The assessee also filed returns of income of AY 2005-06 on 31.10.2005 with the AO of the same circle i.e. Ward 6(1) with the said new address and return of AY 2006-07 was also filed from the new address prior to 30.03.2007 thus, the new address was very well placed on the record of the AO by the assessee several times before 30.03.2009. The Ld AR also pointed out that above contentions of the assessee also find support from the fact that in the impugned assessment order the AO has also mentioned the said new and correct address.
5 After submission of above facts the Ld AR vehemently pointed out that when the assessee had already been vacated old premises situated at Guru Nanak Pura, quite long back from the date of issuance of notice U/s 148 of the Act on 30.03.2007 then in a position when the assessee has informed its new address to the AO by filing return of AY 2005-06 on 31.10.2005 and subsequently by filing return for AY 2006-07 with the new address prior to 30.03.2007 then the notice sent to the wrong address cannot be deemed to have been served upon the assessee. The Ld AR lastly pointed out that in a absence of valid service notice U/s 148 of the Act the valid jurisdiction to frame assessment U/s 147 of the Act cannot be assumed by the AO and hence impugned assessment order as well as all subsequent proceedings being without jurisdiction may be quashed. The Ld AR also pointed out that this is a non-curable defect and thus provisions of section 292 BB of the Act are not applicable in the light of preposition laid down by special bench of ITAT Delhi in the case of Kuber Tobacco Products reported as 117 ITD 273 (Delhi-Tribunal) (SB) which has been affirmed by Hon’ble Delhi High Court order dated 06.10.2010 in WP No. 1159 & 1161/2010.
6 Placing reliance on the various decisions of Hon’ble High Court of Delhi including decision in the case of CIT Vs Eshaan Holdings (P) Ltd. 344 ITR 541 (Delhi) the Ld AR strenuously contented that when the return has been submitted giving new address then the notice of reassessment U/s 148 of the Act sent to the old address and the same was serviced by affixture at the old address then there is no valid or proper service of notice and all proceedings subsequent thereto deserve to be quashed. The Ld AR further placing reliance on the decision of CIT Vs Mani Kakar 18DTR (Delhi) 145 submitted that in absence of proper service of notice upon the assessee issued U/s 148 of the Act is a non curable defect and the AO cannot take shelter of the provisions of section 292BB of the Act and therefore, assessment order framed U/s 147 of the Act is bad in law.
7 The Ld AR again drawn out attention towards affidavit of Sh. Santosh Goyal, Director of assessee company dated 15.04.2014 available at page 11a & 11b of the assessee’s paper book submitted that all facts regarding change of premises prior to 30.03.2007 was informed to the AO by way of filing return for AY 2005-06 and 2006- 07, which were furnished before 30.03.2007 mentioning the new address therefore, notice issued on 30.03.2007 to the new address cannot be deemed to have been served or received by the assessee company which had already shifted its office to the new address of Shakarpur much prior to the issuance of notice on 30.03.2007. The Ld AR submitted that in absence of any rebuttal from the AO to the affidavit of the director of the assessee the facts mentioned therein should be treated as established. The Ld AR also pointed out that when the said defect is not curable U/s 292BB of the Act then the impugned assessment order cannot be held as passed by the AO under valid assumption of jurisdiction.
8 Replying to the above the Ld DR submitted that the assessee concealed material facts from the revenue authorities and the AO was kept in dark about the change of premises and address the Ld DR also pointed out that the notice was sent to the assessee to the address which was given in the original return of income for AY 2000-01, therefore it would be presumed that the notice U/s 148 of the Act was properly and validly served upon the assessee and if there was any defect in the service of notice then it is curable defect U/s 292BB of the Act because the assessee participated in the assessment proceedings before the AO without any objection in this regard.
9 The Ld AR also placed rejoinder to the above submissions of the assessee and again placing reliance on the dicta rendered by special bench of the tribunal, which has been upheld by the Hon’ble Jurisdictional High Court of Delhi, in the case of Kuber Tobacco Product (Supra) submitted that section 292BB is not applicable for AY 2000-01 and the AO cannot take shelter of said provision for removing the defect in the proceedings.
10 On careful consideration of above submissions of both the sides at the very outset we note that the impugned notice U/s 148 of the Act was undisputedly issued to the address A-36 Guru Nanak Pura, Vikas Marg, New Delhi 110092 on 30.03.2007 by the AO. From copy of the return filed by the assessee for AY 2005-06 on 30.10.2005 available at page 8 of the assessee’s paper book it is clear that the assessee filed its return of income for the said period mentioning the address of S-529, First Floor School Block, Shakarpur Delhi 110092. From the letter address to the post master post office Krishna Nagar, Delhi 110092 dated 04.05.2005 it is clear that the assessee informed to the postal services about the change of its address from Guru Nanak Pura to Shakarpur to the postal authority in the month of May, 2005 and prior to this assessee company had changed the office premises to the Shakarpur, and these facts have remained uncontroverted in view of unrebutted affidavit of the director of the assessee company stating similar facts about the non service of the notice upon the assessee.
11 Further, we are not in agreement with the contention of the Ld DR that since the assessee participated in the reassessment proceedings therefore he cannot challenge the validity of assessment order on the ground of non service of notice U/s 148 of the Act because it’s a precondition for framing an assessment order U/s 147 of the Act as the provisions of section 292BB of the Act are not applicable for AY 2000-01 and hence assessment order passed U/s 147 of the Act without valid service of notice U/s 148 of the Act has to be held as bad in law and without jurisdiction. This preposition also finds strong support from the dicta of Hon’ble Jurisdictional high Court of Delhi in the case of CIT Vs Mani Kakar (Supra) as relied by the Ld AR.
12 Furthermore, when we proceed to consider the challenge of the assessee to the validity of service of notice issued U/s 148 of the Act upon the assessee then we note that the assessee changed its premises from Guru Nanak Pura to Shakarpur in the month of May, 2005 and this fact was informed to the concerned postal authority by way of submitting a letter on 04.05.2005 to the Post master of Krishna Nagar Post Office. However, we may point out that this letter was not submitted before the AO during reassessment proceedings but the same was submitted at the first appellant stage. At the same time we cannot ignore that the assessee inform the AO about the new address of Shakarpur by filing return of income for Ay 2005-06 on 31.01.2005 (copy available at page 8 of the assessee’s paper book) and again by filing return for AY 2006-07 by stating the same new address of Shakarpur. These facts have not been controverted by the Ld DR. It is also relevant to mention that the AO has also noted the new address in the impugned reassessment order which again supports the case of the assessee that the new address was informed to the AO much prior to the issuance of notice U/s 148 of the Act on 30.03.2007. In this situation the notice u/s 148 of the Act which was sent to the old address of Guru Nanak Pura cannot be deemed to have been served upon the assessee or received by the assessee.
At this juncture, it is profitable to take respectful cognizance of the recent decision of the Hon'ble Jurisdictional High Court of Delhi in the case of CIT Vs. Chetan Gupta since reported as [2015] 126 DTR [Delhi] 40 wherein their Lordships speaking for one Hon'ble Jurisdictional High Court, after considering all the available decisions and proposition, draft all the relevant points viz jurisdictional requirement of service of notice u/s 148(1) of the Act, onus is on the Revenue to prove service of notice upon the assessee, participation of assessee in proceedings is not a waiver, decision on the issue is in favour of the Revenue, non attraction of section 292 BB of the Act and thereafter a conclusion settling the issue. The relevant operative para 46 & 47 of this decision, summarizing the conclusion of Hon'ble Jurisdictional High Court, is reproduced below for the sake of completeness in our findings :
“ (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 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.
(vi) 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.
On the facts of the present case, the Court finds that the ITAT was right in its conclusion that since no proper service of notice had been effected under Section 148 (1) of the Act on the Assessee, the reassessment proceedings were liable to be quashed. Consequently, the question framed is answered in the affirmative, i.e., in favour of the Assessee and against the Revenue. ”
On the basis of foregoing discussion we are inclined to hold that the notice U/s 148 of the Act was neither received by the assessee nor it can be deem to have been validly served upon the assessee and in this situation assessment order framed U/s 147 of the Act is bad in law and the same is without jurisdiction and cannot be held as sustainable. Consequently, we also hold that the reassessment order dated 07.12.2007 for AY 2000-01 passed U/s 147/144 of the Act is not sustainable and the same deserves to be quashed and we quash the same.
Original Ground No. 1 of the Assessee “1. That under the facts and circumstances, proceedings U/s 147 are un-warranted, un-sustainable and without jurisdiction in law as well as on merits.”
13 We heard argument of both the sides and carefully perused the material placed on record before us. The Ld AR pointed out that the reasons recorded by the AO for reopening of assessment are based on the information of the investigation being New Delhi that accommodation entries of Rs. 2.00 Lac has been received by the assessee from Victoria Advertising Pvt. Ltd. The Ld AR further pointed out that said information was given to the AO in the form of CD to ITO Ward 6(1) New Delhi and the ITO wrote a letter dated 23.03.2007 to DICT Circle 6(1) New Delhi requesting to take necessary action in the matter. The Ld AR vehemently pointed out that from the reasons of reopening recorded on 26.03.2007 available at paper book page 2, it is apparent that the DCIT/AO proceeded in the case on non-application of mind and in a casual and mechanical manner. The Ld AR also pointed out that the proceedings have been initiated simply on the basis of so called information from the investigation being only and the AO did not have any material with him at the time and even subsequently on the basis of which said opinion was formed by the AO. The Ld AR also pointed out that the AO did not even examine the prima-facie correctness of the information and the AO in the reopening even did not disclose any other material on the basis of which reason to believe of the fact that income has escaped assessment. The Ld AR further contended that the AO did not examine the information and material on the basis of which opinion was found by the investigation being which became basis of reopening of assessment.
The Ld AR vehemently pointed out that the AO simply acted on the suggestion of ITO, Ward 6(1) vide is order dated 23.03.2007 without application of mind and mechanically which is not a proper approach for reopening the assessment U/s 147 of the Act and the same cannot be held as valid basis for issuance of notice U/s 148 of the Act.
14 Replying to the above contentions of the assessee, the Ld DR pointed out that the dicta laid down by Hon’ble High Court of Delhi in the case of PCIT Vs G & G Pharma, dated 08.10.2005 in is not applicable to the facts of the present case and the same has wrongly been relied by the Ld AR to support the challenge of reopening of assessment. The Ld DR further pointed out that the preposition laid down by Hon’ble High Court of Delhi in the case of Nova Promoters reported as 342 ITR 169 (Delhi) is applicable to the present case wherein it has been held that the reopening of the assessment U/s 147 of the Act and issuance of notice U/s 148 of the Act on the basis of information from investigation wing is sustainable and valid. The Ld AR also pointed out that the information received by the ITO from the investigation wing of the department in the form of CD was forwarded to the DCIT/AO along with letter dated 23.03.2007, therefore there was sufficient material before the AO at the time of recording reasons and issuing notice U/s 148 of the Act and the same should be held as valid.
On careful consideration of rival submissions of both the sides firstly for the sake of completeness in our findings we find it necessary to reproduce reasons recorded by the AO on 26.3.2007 which are as under:
“Reasons for reopening the Assessment Name of the Assessee: M/s M.G. Capital Services Ltd. AY 2000-01 The Director of Income Tax (Investigation), New Delhi had sent a report in the case of Beneficiaries & Operator of Accommodation entries in Delhi. The modus operandi at opted by the beneficiaries and operators has been discussed in details in the report. A CD containing details of such beneficiaries and operators of accommodation entries has also been received through the O/o Cit, Delhi-II, New Delhi. The perusal of the report and the details contained in the CD, it has been noticed that M/s M.G. Capital Services Ltd. (PAN AAACM66708) has also received and accommodation entries of Rs. 2 Lac from M/s Victoria Advertising (P) Ltd. on 22.04.1999 i.e. during the previous year relevant to the Asst. Year 2000-01. In fact the accommodation entry represents assessee’s own undisclosed income which has been introduced in the books of accounts. In view of the above credible information received from the Investigation Wing of the Department the assessment records of the assessee for the Assessment year 2000-01 were examined and it has been found that the assessee has not disclosed true particulars of its income. I have therefore reason to believe that the income of the assessee for the assessment year 2000-01 to the extent of Rs. 2 Lac has escaped asst. as per provisions of Sec. 147 of the I.T. Act, 1961. I am also satisfied that the case of the assessee is a fit case for taking action U/s 147 of the I.T. Act, 1961. So, approval to issue notice U/s 148 of the Income-tax Act, 1961 in the case of the assessee for the Assessment Year 2000-01 may kindly be accorded.