Income Tax Appellate Tribunal - Delhi
Goldy Merchants Pvt. Ltd., Delhi vs Ito, Ward- 10(2), New Delhi on 18 May, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES: BENCH "C" NEW DELHI
BEFORE SRI R.K.PANDA, ACCOUNTANT MEMBER
AND
SMT. BEENA PILLAI, JUDICIAL MEMBER
ITA No.1371/Del/2018
A.Y. 2008-09
Goldy Merchants Pvt.Ltd. vs. ITO, Ward 10(2)
64, Kailash Kunj, Greater Kailash I New Delhi
Delhi 110 049
PAN: AACCG3214H
(Appellant) (Respondent)
Appellant by: Sh. Vinay Jain, C.A.
Respondent by: Sh. S.L.Anuragi, Sr.D.R.
Date of hearing: 12.04.2018
Date of Pronouncement: 18.05.2018
ORDER
PER BEENA A PILLAI, JUDICIAL MEMBER
The present appeal has been filed by assessee against order dated 04.12.2017 passed by Ld.CIT(A)-35 for A.Y. 2008-09 on the following grounds of appeal:
"1. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in upholding the initiation of reassessment proceedings u/s 147 of the LT. Act, 1961 as well as the resultant order of reassessment flowing there from dated 30.03.2016 passed by the Id. AO Ward-l0(2), New Delhi u/s 143(3)/147 of the Act for AY 2008-09 as valid, which otherwise, is illegal and is bad in law for want of requisite jurisdiction, as the mandatory requirements to assume jurisdiction did not exist or have not been complied with apart from being contrary to the principles of Natural Justice and consequently, the same is liable to be annulled.ITA No. 1371/Del/2018 A.Y.: 2008-09
Goldy Merchants Pvt.Ltd. vs. ITO, Ward 10(2)
2. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in upholding the validity of the notice dated 23.03.2015 issued u/s 148 of the Act for AY 2008-09 by the Income Tax Officer, Ward-1 (2), Ghaziabad, not a jurisdictional officer and where the assessee is subject to the jurisdiction at ITO Ward 10(2), New Delhi
3. The Ld CIT(A) failed to appreciate the judgement of the Hon'ble Delhi High Court in the case of CIT Vs Chetan Gupta quashing the reassessment proceeding when the service of notice is not effected as per the law.
4. That on the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in confirming addition on account of long term capital gain of Rs.58,80,0001- alleged to have been made on transfer of immovable property by the AO when no such property is ever transferred by the assessee company during the previous year relevant to the assessment year 2008-09 falling within the definition of transfer as contemplated in clause 47 of section
2."
2. Brief facts of the case are as under.
It has been submitted by Ld.AR that assessee is having its registered office at: 64, Kailash Kunj, Greater Kailash 1, Delhi 110 049 and assessee has been filing its return of income under the jurisdiction which lies with ITO, Ward 10(2) from the year under consideration. He submitted that assessee received notice u/s 148 of the Income Tax Act, 1961 (the Act) issued by ITO, Ward 1(2), Ghaziabad for the year under consideration, along with notice u/s 142(1) of the Act. Ld.A.R. submitted that against the notice issued by ITO, Ward 1(2), Ghaziabad, assessee requested to supply the reasons for reopening of assessment u/s 148 of the Act. He submitted that as alleged by Ld.A.O. letter dt. 17/03/ 2016 with the reasons recorded for issuance of notice u/s 148 of the Act was never delivered to assessee. Assessee thereafter approached his jurisdictional A.O. being ITO, Ward 10(2) on 29/03/ 2016 and received letter dated 17/03/2016 issued by ITO, Ward 1 (2), Ghaziabad. Ld.AR submitted that reasons were recorded and notice u/s 148 was issued by ITO 1(2), Ghaziabad, and not by the jurisdictional A.O. being ITO 10(2), New Delhi. He submitted that A.O. having jurisdiction over assessee completed assessment proceedings u/s 147 without issuing 2 ITA No. 1371/Del/2018 A.Y.: 2008-09 Goldy Merchants Pvt.Ltd. vs. ITO, Ward 10(2) any notice u/s 143(2) of the Act. The additions made by Ld.A.O. was under
the head 'capital gains' on the pretext that assessee has sold a property which was not declared in the return filed for the year under consideration. 2.1. Aggrieved by the order of Ld.AO assessee preferred appeal before Ld.CIT(A).
2.2. Before Ld.CIT(A) assessee raised objections regarding the legality/validity of initiation of re-assessment proceedings, which is as under.
"4.3.1. The appellant has submitted as below.
OBJECTION ON THE RECORDING THE REASON AND RECORDING THE SATISFACTION Sir, we shall also like to bring to your kind notice that while recording the reason for initiating proceedings u/s 148 and for obtaining the approval of ACIT/CIT, Ld.ITO, Ward 1(2), Ghaziabad has recorded that:
'On the basis of AIR information received, it is found that M/s Goldy Merchants Pvt.Ltd. the assessee sold immovable property on 29.3.2008 for a sum of Rs.64,00,000/-. As per record of this office the return of income had not been filed by assessee for A.Y. 2008-
09. Therefore it is evident that the assessee has not paid tax on capital gain arose from transfer of capital assets.' "So, the plain reading of the above para suggests that the basis of reopening the assessment is the information as received from AIR and the content of the same is that the assessee sold, a property of Rs.64,00,000/-in the AY 2008-
09. Sir, going through this, it is evident that the said recording of the reason is by the non jurisdictional officer and not by the jurisdictional officer and before initiating the proceeding u/s 148 of the Act not only Ld. ITO 1(2), Ghaziabad but Ld.Addl CIT Range, 1, Ghaziabad also not verified the information as received and in haste issued the said notice. Even the jurisdictional officer before issuing notice on the assessee on 15.03.2016 simply relied upon the recording of the non-jurisdictional officer, which is bad in law. Sir, we shall like to mention, here that during the year under review, assessee has not sold' any immovable property in the' year under consideration. To substantiate our point we shall like to submit Audited Accounts of the assessee for the Financial Year ended, 31st March, 2008: Copy of the same is enclosed at P 10 to 13. In the audited accounts of the year, PY figures ie. for the FY2007-08 is also available and in both the year there is no sale of property. While completing the assessment Ld AO failed to conclude which property was sold by the assessee on which addition of Rs 58,80,000/- was 3 ITA No. 1371/Del/2018 A.Y.: 2008-09 Goldy Merchants Pvt.Ltd. vs. ITO, Ward 10(2) made' under the heading Capital Gain.
Accordingly, the reason recorded for are wrong on facts and denied. In the event since there is no sale of property, question of capital gain arising out of it does not arise. Sir, we shall like to submit here that the any addition made without verifying the transaction cannot be held good in the eyes of the law and accordingly, additions of Rs.58,80,000/- made by the Ld.AO on account of sale of property and under the head 'Capital Gain' is bad in law and ignoring the fact available on record. We shall request you to please delete the additions made of Rs. 58,80,000/- and oblige."
2.3. However, Ld.CIT(A) dismissed the appeal of assessee without going into the legality/validity of submissions made by assessee. 2.4. Aggrieved by the order of Ld.CIT(A) assessee is in appeal before us now.
3. Ground no.1-3 raised by assessee relates to the challenge regarding initiation of re-assessment proceedings and validity of the resultant order passed u/s 143(3) r.w.s.147 of the Act by Ld.AO, Ward 10(2), New Delhi. 3.1. Ld.A.R. submitted that the jurisdictional A.O. passed re-assessment order on the basis of notice issued by ITO, Ward 1(2), Ghaziabad for the year under consideration. He submitted that notice u/s 148 is alleged to have been issued by ITO, Ghaziabad being non-jurisdictional officer on the basis of AIR information alleged to have been received by him. Ld.AR submitted that in the assessment order by jurisdictional A.O., it has been recorded that A.O., Ghaziabad has served notice u/s 148 at the address of assessee being D-248, Ram Prastha Colony, Ghaziabad, U.P. on 23 March, 2015. Ld.A.R. submitted that A.O. do not have any proof of such notice having been delivered/served at the afore stated address. He submitted that only address of assessee was at 64, Kailash Kunj, Greater Kailash Part I, New Delhi, as per the records which emanates from the reasons recorded for issuance of notice u/s 148.
3.2. Ld.A.R. submitted that after the case was centralised and was transferred to the jurisdictional A.O. of assessee, no fresh notice u/s 148 has been issued by the jurisdictional A.O. for assuming jurisdiction to re- assess the income for A.Y. under consideration, and that no notice u/s 143(2) has been issued subsequently in order to carry out the re-assessment 4 ITA No. 1371/Del/2018 A.Y.: 2008-09 Goldy Merchants Pvt.Ltd. vs. ITO, Ward 10(2) proceedings. He thus submitted that the assessment order passed u/s 147 r.w.s.143(3) of the Act is bad in law and without jurisdiction by Ld.AO. 3.3. Ld.D.R. submitted by supporting the orders of the authorities below that once assessee participated in the re-assessment proceeding, s s.292BB of the Act comes into play and assessee cannot argue upon the validity of the proceedings due to non-issuance of notice u/s 143(2).
4. We have pursed the submissions advanced by both the sides in the light of records placed before us. . It is observed that ACIT, Circle Noida on 18.6.2010 issued notice to assessee at 24A, 15A, Noida, UP, raising query on the basis of AIR information regarding purchase of immovable property for the year under consideration. Thereafter notice u/s 148 issued by ITO, Ghaziabad dated 23.03.2015 issued to assessee at the address H No.248, Ram Prastha Colony, which is placed at page 13 of the paper book. Finally on 07.03.2016 jurisdictional A.O. issued notice u/s 142(1) to assessee at the registered address reflected in the return of income filed for the year under consideration.
4.1. In reply to notice u/s 142(1) of the Act assessee objected to the notice issued by ITO, Ghaziabad as assessee had never had any registered office or a working office at Ghaziabad. Assessee had objected before the Ld.AO that notice u/s 148 issued by the non-jurisdictional Officer at a wrong address is invalid. It was submitted that the registered address of assessee was notified u/s 124 of the Act and as per the section A.O. having jurisdiction over the assessee alone has powers to issue notice to assess/reassess the income for the relevant A.Y. under consideration. These were addressed by the assessee to the jurisdictional A.O. vide letter dated 16.03. 2016, which is placed at page 20 of paper book.
4.2. Objection has been raised by assessee regarding time limit within which notice u/s 148 has to be issued. Ld.AR submitted that notice u/s 148 for the year under consideration should have been issued and served upon by the jurisdictional A.O. on or before 31.03.2015 as per the requirement u/s 149 of the Act. However, in the present case, notice u/s 148 issued by non-jurisdictional A.O. has been served upon assessee on 15.03.2016 and that re-assessment order has been passed by the 5 ITA No. 1371/Del/2018 A.Y.: 2008-09 Goldy Merchants Pvt.Ltd. vs. ITO, Ward 10(2) jurisdictional A.O. on the basis of the satisfaction recorded by the non- jurisdictional A.O., without issuing fresh notice u/s 148 to assume jurisdiction over assessee to re-assess the income for year under consideration.
5. On perusal of the records and the submissions, the short question that arises for consideration is whether notice issued and served upon assessee is as per law or not. At this juncture it is also observed that assessee has objected the validity of issuance of notice by a non- jurisdictional A.O. in consequence to which re-assessment order has been passed, without following due process of law.
6. Ld.A.R. placed reliance upon the decision of Hon'ble Supreme Court in the case of ACIT vs. Hotel Blue Moon reported in 321 ITR 362 and the decision of Hon'ble Delhi High Court in the case of CIT vs. Hotline International Pvt. Ltd. reported in 296 ITR 333. In our considered opinion, as has been held by various decisions, service of notice is a jurisdictional requirement. It is a settled proposition of law that merely because assessee has participated in the proceedings, the requirement of service of proper notice upon assessee within the legal requirement u/s 148 cannot be dispensed with, specifically when assessee has in writing objected to the same before the authorities below. In the present case S.292BB is not attracted as assessee has objected before the authorities below regarding service of notice u/s 148, which is not in accordance with law. Consequently Revenue cannot take advantage of the main provision of S.292BB as held by Special Bench of this Tribunal in the case of Kuber Tobacco Products Pvt. Ltd. vs. DCIT, reported in 28 SOT 292 (Delhi).
7. The requirement u/s 148 of the Act in respect of issue of notice to the assessee and service thereof upon assessee by jurisdictional A.O. has to be mandatorily complied with, they are not mere procedural requirements. The jurisdictional A.O. has to mandatorily issue notice u/s 148 in order to exercise its jurisdiction to re-open the assessment and further the jurisdictional A.O. cannot complete the re-assessment without service of such notice so issued upon assessee in accordance with s.282 of the Act, as 6 ITA No. 1371/Del/2018 A.Y.: 2008-09 Goldy Merchants Pvt.Ltd. vs. ITO, Ward 10(2) held by Hon'ble High Court in the case of CIT vs. Hotline International Ltd. (supra).
8. Since in the facts of the present case as has been discussed above, there has been no proper issuance and service of notice upon assessee, we hold the re-assessment proceedings and the re-assessment order passed by Ld.AO to be bad in law.
9. Accordingly legal ground no.1-3 raised by assessee are allowed. Since the assessment has been quashed, we do not find it necessary to decide the appeal on merits, as the same becomes academic.
10. In the result, appeal filed by assessee stands allowed. Order pronounced in the Open Court on 18th May, 2018.
Sd/- Sd/-
(R.K.PANDA) (BEENA A PILLAI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dt. 18th May, 2018
*mv
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ITA No. 1371/Del/2018
A.Y.: 2008-09
Goldy Merchants Pvt.Ltd. vs. ITO, Ward 10(2)
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
- TRUE COPY -
By Order,
ASSISTANT REGISTRAR
ITAT Delhi Benches
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