SHRI AMARDEEP SINGH SARKARIA,AMRITSAR vs. INCOME TAX OFICER WARD-2(1), AMRITSAR

The appeal has been filed by the Assessee against the impugned order dated 22.12.2017, passed by Ld. Commissioner of Income Tax (Appeals)-I, Amritsar, in respect of the Assessment Year 2009-10. In the grounds of appeal, the Assessee has raised the following grounds:

Grounds No.1 to 3 are interlinked where the assessee has challenged initiation of proceedings u/s.148 by the Assessing Officer without application of mind in view of no valid service of notice u/s.148 on the assessee.

The facts of the case as per record are that the assessee’s case was selected for scrutiny based on information that he has deposited cash in his Savings Bank Account with HDFC Ltd., Amritsar amounting to Rs.10,25,000/- on different dates pertaining during the financial year relevant. He has mentioned in the assessment order that notice u/s.148 of the Income Tax Act, 1961 was issued to the assessee on 30.03.2016 after taking approval of the ld. PCIT-I, Amritsar, which was received back undelivered. Subsequently, notices u/s.142(1) of the Act and show cause were issued on different dates were also issued and notices were sent by office server of this office, Shri Jaimal Singh who reported that assessee was not traceable. The Assessing Officer has mentioned that finally the notice was received by his brother Shri Yadvender Singh and Shri S.B. Khanna, Advocate attended the proceedings on 22.11.2016 along with power of attorney given in favour of advocate by the aforesaid Shri Yadvender Singh, younger brother of the assessee. The Assessing Officer has requested the Advocate to either file legally executed power of attorney in his favour of the assessee or to file return reply duly signed by the assessee himself as per order sheet entry as per page 2 of the assessment order. In the absence of power of attorney in favour of either younger brother of the assessee or Shri S.B. Khanna, Advocate except a photocopy of e-mail of the assessee, the Assessing Officer did not entertain the reply filed by the assessee in response of cash deposits in his bank account during the relevant period as above. Accordingly, the Assessing Officer has passed assessment order u/s.144 of the Income Tax Act treating the cash deposits of Rs.10,25,000/- in his bank account as unexplained income u/s.68/69 of the Income Tax Act, 1961.

The Ld. Counsel for the assessee submitted that no notice u/s 148 was served. Reference may kindly be made to assesseement order wherein it has been observed by the AO “Notice u/s 148 of the Income Tax Act, 1961 was issued to the assessee on 30/03/2016 after taking approval of the Pr. Commissioner of Income Tax -1, Amritsar which was received back undelivered.” In support, he placed reliance on the following decisions:

He contended that Sh. Amardip Singh Sarkaria, the assessee, vide email again requested for supply of the copy of reasons recorded as under:-

The Counsel argued that inspite of request made by the assessee as above he has not been supplied the copy of reasons recorded. In support, he cited 259 ITR

The counsel concluded that initiation of proceedings by the AO are without application of mind and as such proceedings initiated are illegal, invalid and viod abnitio in the present case of no valid service of notice u/s 148 has been effected upon the appellant. 10. The Ld DR on the other side stands by the order of the authorities below. 11. Heard both the sides and perused the facts on record and citatios placed before us. It is admitted fact on record that no notice u/s 148 has been served upon the assessee as per the assessment order itself, Pg.1 wherein the AO stated that the notice issued u/s 148 on 30.03.2016 was received back undelivered and had never been attempted to serve this notice till the passing of the assessment order. Further the Assessee has not been supplied the copy of the reasons recorded by the AO despite written request letter of the assessee as reproduced on Pg, No 3 and 4 of the Assessment order and also above submissions of the assessee. The relevant para of the letters reads as under: AO Pg. 3 “That the reasons recorded may kindly be supplied for the same so that proper reply be submitted” Pg. 4 “I therefore, request your goodself the reasons recorded for reopening the case may be handed over to my brother or to my advocate Sh. S.B. Khanna for proper reply.” 12. In the backdrop of the aforesaid admitted fact, we appreciate the grievance of the assessee that the AO has no valid jurisdiction to reassess the income of the assessee. The ITAT Agra Bench in the case of “Rajeev Kumar Doneria”, (Supra) held that unless notice is served on proper person in manner prescribed under section 282, service is insufficient and Assessing Officer does not have jurisdiction to reassess escaped income.

The Hon’ble Delhi High Court in the case of “Brahm Prakash (Supra) held that it will be mandatory to serve a notice under section 148 before initiating any reassessment against the assessee. Principal of natural justice and the mandatory provisions of section 148 ought to have been followed by the Revenue. The principle of audi alteram partem should have been followed by the revenue. Hence the reassessment done without serving notice under section 148 was bad in law.

As regards to the supply of reasons recorded u/s 148 of the act, the Hon’ble HIGH COURT OF BOMBAY in the case of “Commissioner of Income-tax, (Large Tax Payer Unit), Mumbai v. IDBI Ltd.”, [2016] 76 taxmann.com 227 on the issue of assessment without supplying assessee reasons recorded to issue re- opening notice, order of reassessment would be without jurisdiction. Assessee asked from Assessing Officer copy of reasons for issuing re-opening notice and the reasons were never communicated to assessee inspite of its repeated requests.

In the case at hand, the Assessment order being passed without service of notice U/s 148 of the act and in absence of supply of the reasons recorded for issue of re-opening notice. In our view, such an assessment order reassessing the income of the assessee is without assuming valid jurisdiction is bad in law.

In the above view, we accept the grievance of the assessee justified. We quash the order of the authorities below as the assessment order was without jurisdiction.