Income Tax Appellate Tribunal - Hyderabad
Late Smt. Shanta Bai Birla L/R By Sri ... vs Income Tax Officer, Ward-4(4), ... on 28 February, 2020
ITA No 528 of 2019 Late Smt. Shanta Bai Birla Hyderabad.
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ' A ' SMC Bench, Hyderabad
Before Smt. P. Madhavi Devi, Judicial Member
ITA No.528/Hyd/2019
Assessment Year: 2010-11
Late Smt.Shanta Bai Birla Vs. Income Tax Officer,
L/R by Sri Radha Kishan Ward 4(4)
Birla, Hyderabad Hyderabad
PAN:ADIPB2163Q
(Appellant) (Respondent)
Assessee by: Sri Siddharth Toshniwal
Revenue by: Sri Solgy Jose T. Kottaram, DR
Date of hearing: 27/01/2020
Date of pronouncement: 28/02/2020
ORDER
This is assessee's appeal for the A.Y 2010-11 against the order of the CIT (A)-1, Hyderabad, dated 29-12-2017.
2. Brief facts of the case are that the assessee, an individual, filed her return of income for the A.Y 2010-11 on 30.07.2010 admitting total income of Rs.7,94,120/-. The AO received information that the assessee has sold a property at Sultan Bazar on 28.10.2009 for a sale consideration of Rs.70,00,000/- whereas its value as per the Stamp Valuation Authority was Rs.1,01,90,981/-. As there was escapement of income of capital gain within the meaning of section 147 of the I.T. Act, the AO reopened the assessment by issuing a notice u/s 148 of the Act dated 31.03.2017. The notice was served by affixture. Thereafter, a notice u/s 142(1) was also issued to the assessee. In response to the said notice, the assessee submitted Page 1 of 6 ITA No 528 of 2019 Late Smt. Shanta Bai Birla Hyderabad.
that she has received the notice u/s 142(1) in connection with the assessment proceedings for the A.Y 2010-11 but there was no assessment proceeding pending for the A.Y 2010-11. It was submitted that the assessment for A.Y 2010-11 has become final and conclusive and is now barred by limitation. The assessee also submitted that she has been filing her return of income in Ward 4(4) Hyderabad, as per her place of residence. The AO transferred the case to Ward 4(4) Hyderabad. The AO of the assessee rejected the assessee's objection on non-service of notice u/s 148 and proceeded to apply the provisions of section 50C. He accordingly applied the same for computation of capital gain and after allowing deductions u/s 54 and 54EC, he assessed the long term capital gain at Rs.45,97,895/- and brought it to tax. Aggrieved, the assessee preferred an appeal before the CIT (A) who confirmed the order of the AO on the validity of re-assessment proceedings. As far as the application of section 50C is concerned, the CIT (A) observed that the AO has already referred the matter of the valuation of the property to the Valuation Officer. Thus, she directed the AO to adopt the value arrived at by the Valuation Officer. Thus, she granted partial relief to the assessee and the assessee is in second appeal before the Tribunal by raising the following grounds of appeal:
"On Validity of Reassessment Order: Tax effect 7,83,588/-
1) That the learned CIT(Appeals) erred in holding that the Reassessment Order passed u/s 144 rws 147 without serving Notice u/s 148 is a valid Order.
2) That service of Notice u/s 148 is a condition precedent to the validity of Reassessment order and in the absence of the Service of Notice u/s 148 the Reassessment order so passed is void
3) That the learned CIT(Appeals) erred in holding that the Notice u/s 148 was served by affixture ignoring the fact that the address where the Notice was purportedly affixed is not Page 2 of 6 ITA No 528 of 2019 Late Smt. Shanta Bai Birla Hyderabad.
the correct address of Appellant and in such circumstances there was no service of Notice u/s 148
4) That without prejudice to above, the learned CIT(Appeals) erred in ignoring Appellant's contention that even otherwise the alleged service by affixture is illegal as statutory process was not followed before affixing the Notice and none of the circumstances that warrant service by affixture under Rule 17 of Order V of Code of Civil Procedure, 1908 were existing.
5) That the learned CIT(Appeals) erred in holding that the Appellant has not furnished latest address and not filed the Return of Income, ignoring the fact that Income Tax Officer issuing Notice u/s 148 was having knowledge of the correct address as he served the notice u/s 142(1) on the correct address and Return of Income was duly filed with the jurisdictional officer.
6) That without prejudice to above the learned CIT(Appeals) erred in ignoring the contention of Appellant that Reassessment Proceedings were initiated by Income Tax Officer Ward 5(1) who did not have jurisdiction over Appellant and this renders the Reassessment proceedings void as the same were not initiated by Assessing Officer having jurisdiction over Appellant.
7) That without prejudice to above, learned CIT(Appeals) erred in ignoring the contention of Appellant that Order passed u/ 144 rws 147 is bad in law as there was no reason to believe that Income has escaped assessment and Assessing Officer [ITO Ward 4(4)] has to form his own reasons and cannot proceed on the basis of reasons recorded by a different Income Tax Officer [ITO ward 5(1)].
On Valuation of Immovable Property: Tax Effect: 7,83,588/-
8) That the learned CIT(Appeals) erred in confirming the value of Property as per Report of Valuation Officer.
9) That the reasons assigned by the learned CIT(Appeals) are wrong, insufficient and illegal.
10) Any other Ground that may arise in the course of hearing of the Appeal".
3. The first and foremost of the ground of the assessee is that the re-assessment order passed u/s 144 r.w.s. 147 is without service of notice u/s 148 of the Act on the assessee. The learned Counsel for the assessee brought out that the assessee's address is "House No.3-5-170/1/8/1 F.No.201, Ashish Orchied, Page 3 of 6 ITA No 528 of 2019 Late Smt. Shanta Bai Birla Hyderabad.
Narayanguda, Hyderabad" whereas the notice u/s 148 is allegedly served on "House No.4-2-64 and 4-2-65/A Badi Chowdi, Sultan Bazar, Hyderabad". He submitted that this is the address of the property which has been sold by the assessee in 2009; whereas the notice has been served by affixture while there was no such person. Therefore, according to the learned Counsel for the assessee, the notice has not been validly issued and served on the assessee and therefore, the re-assessment proceedings are not validly initiated and have to be set aside accordingly.
4. The learned DR, on the other hand, supported the orders of the authorities of the AO and the CIT (A) and submitted that the subsequent notice u/s 142(1) has been served on the assessee on the correct address and therefore, the assessee has participated in the re-assessment proceedings and hence there was no prejudice caused to the assessee and as rightly held by the AO and the CIT (A), the re-assessment proceedings are valid.
5. Having regard to the rival contentions and the material on record, I find that the relevant A.Y is 2010-11 and the six-year period within which an assessment could be reopened would end on 31.03.2017. I find that the notice u/s 148 is dated 31.3.2017 and therefore, the condition for issuance of notice within the time limit, is satisfied but the notice issued is at a wrong address or non-existent address. Whether, in such circumstances can the notice be held to be a valid notice?. Admittedly and as referred to by the AO in the assessment order, it is the property which is sold, at which the notice is served by affixture. The property was sold by the assessee in the year 2009. Thus u/s 148, it is clear that the assessee is no longer the owner of the property nor is she Page 4 of 6 ITA No 528 of 2019 Late Smt. Shanta Bai Birla Hyderabad.
expected to be living in the property after a period of 7 years after the sale of the property. Another fact to be noted is that the assessee has been filing her returns of income with the new address and the AO could have verified and corrected the address of the assessee before issuance of notice u/s 148 of the Act. By merely issuing a notice in the name of the assessee at the address given in the sale deed is a mere eyewash, to satisfy the provisions of the Act. It is not subjective satisfaction. I did not find that any efforts have been made by the AO to find out the correct address of the assessee. He could have atleast verified the returns of income filed by the assessee or even the address given in the PAN Card. Further, on page 28 of the Paper Book, I find that there is a report of the Income Tax Inspector who was sent to serve the notice by affixture and the details of the same are as under:
"SERVICE OF NOTICE BY AFFIXTURE As directed by the ITO, Ward-5(l), Hyderabad, I have visited the premises of the assessee, viz., Smt.Shanta Bai Birla, situated at H.NoA-264/65A, Badi Chowdi, S.ultan Bazar, Hyderabad on 31.03.2017, for service of notice u/s.148 of the I.T.Act, 1961, dt.31.03.2017.
At the time of my visit, it is noticed that it is a vacant land in the above said address. On enquiry, it revealed that the existing building/premises was dismantled for construction of new building.
In the above circumstances, I have tried to contact the responsible person or any family members of the assessee. I have also tried to contact the neighbours, but nobody responded properly, For the above said reasons, I have no other option except to serve the notice u/s 148 by Affixture. Therefore, the notice u/s.148, dt.31.03.2017 is served by Affixture on 31.03.2017 at conspicuous place of the assessee's premises i.e, on top of the blue sheet which is covering the premises, faced on the main road of Badi Chowdi.
As a token of Affixture on the above said premises, the signatures of the following witnesses are obtained.
Affixed in our presence:
Witness 1. Sd/-Page 5 of 6
ITA No 528 of 2019 Late Smt. Shanta Bai Birla Hyderabad.
Witness 2. Sd/-
Affixed by me Sd/-
(G.Murali Krishna) Income Tax Inspector O/o ITO Ward 5(1) Hyderabad
6. This clearly shows the non-application of mind by the Department Personnel. Having recorded that it is a vacant land and non existence of any building or premises, how he could come to the conclusion that the notice is served by posting the notice on the blue sheet which is covering the premises is un- understandable. I am satisfied that the notice has not been validly issued by the AO for reopening of the assessment and therefore, the re-assessment proceedings are set aside. Since the re- assessment proceedings are held to be invalid, the other grounds of appeal on merits of the addition are not adjudicated. Assessee's appeal is thus partly allowed.
7. In the result, assessee's appeal is partly allowed.
Order pronounced in the Open Court on 28th February, 2020.
Sd/-
(P. MADHAVI DEVI) JUDICIAL MEMBER Hyderabad, dated 28th February, 2020.
Vinodan/sps Copy to:
1 Late Smt.Shanta Bai Birla L/R by Sri Radha Kishan Birla,C/o Siddharth Toshnival, Advocate, 3-5-144/5 Eden Garden, Hyderabad 2 ITO Ward 4(4) Room No.746, 7th Floor, D Block, IT Towers, AC Guards, Hyderabad 500057 3 CIT (A)-1 Hyderabad 4 Pr. CIT - 1 Hyderabad 5 The DR, ITAT Hyderabad 6 Guard File By Order Page 6 of 6