Income Tax Appellate Tribunal - Agra
D.C.I.T. vs Shri Ramesh Chand Jain, Prop. Jain ... on 31 October, 2006
Equivalent citations: [2007]108ITD446(AGRA), (2007)109TTJ(AGRA)561
ORDER
K.D. Ranjan, Accountant Member
1. This appeal by the Revenue for the assessment year 1991-92 arises out of order of CIT(Appeals)-I, Agra.
2. The only issue for consideration relates to annulling of the assessment order on the ground that there was no application filed by the assessee Under Section 129 before the Assessing Officer, who passed the order.
3. The facts of the case, as apparent from the record, are that notices Under Section 142(1) was issued requiring the assessee to file return of income. The assessee did not file the return of income. The assessee was again served with notice Under Section 142(1) requiring certain information for the purpose of completion of assessment. The assessee produced books of accounts. However, the bills, vouchers, bank pass books, stock register etc. were not produced. The Assessing Officer after considering the replies and material produced before him concluded the assessment proceedings vide order sheet entry dated 22.11.1993 wherein the Assessing Officer noted "Not attended. For orders". However, no order was passed. Meanwhile, the Assessing Officer who heard the case, was transferred and his succeeding officer took over the charge in February, 1994. The assessee by an application dated 01.03.1994, which has been shown to have been received in the office of Assessing Officer on 25.03.1994, made a request Under Section 129 of the I.T. Act to provide an opportunity of hearing before passing the order for the assessment year 1991-92. The assessee was provided hearing on 04.03.1994 and 07.03.1994 and the case was discussed with Shri Sandeep Agarwal, Chartered Accountant, the Authorised Representative of the assessee. No further hearing was requested nor order was received by the assessee by 31.03.1994. Meanwhile the second officer was also transferred. The assessee was served with a notice on 06.05.1994 re-fixing the case for hearing on 09.05.1994 by calling upon the assessee to produce evidence on the points to be re-heard. The assessee again appeared before the Assessing Officer and filed copies of replies already submitted on various dates and informed the Assessing Officer issuing notice that he had already been heard by his predecessor before whom the application for rehearing was filed. The assessee reiterated his stand taken before the Assessing Officer during the earlier proceedings. It was also stated that before passing the order, the replies filed on 26.11.1993 and 07.03.1994 should be considered. The Assessing Officer finally passed order on 13.05.1994.
4. The assessee aggrieved by the order of Assessing Officer, filed an appeal before the learned CIT(Appeals) raising several grounds which inter-alia included the issue relating to limitation. It was pleaded that the Assessing Officer should have passed the order by 31.03.1994. Therefore, the order passed on 13.05.1994 was barred by limitation.
5. Before the learned CIT(Appeals), it was pleaded by the assessee that he had requested for hearing before the first succeeding Assessing Officer and not before the second succeeding officer. The request of the assessee was allowed by the first succeeding officer giving him an opportunity of being heard on 07.03.1994. Therefore, the assessment order should have been passed on 31.03.1994. The notice issued by the second succeeding officer was barred by limitation. The learned CIT(Appeals) after considering various case laws annulled the assessment proceedings on the sole ground that the same were barred by limitation as there was no application tiled before the Assessing Officer, who passed the assessment order for re-hearing and the time limit did not get extended beyond 60 days of time taken by Shri A.K. Dixit, A.C.I.T. Circle 1, Firozabad who joined in February, 1994 and re-heard the case on 07.03.1994. The second succeeding Assessing Officer who passed the assessment order could not make the proceedings alive after close of the year by considering the application dated 01.03.1994 which was shown as received on 25.03.1994. Aggrieved by the order of CIT(Appeals), the Revenue is in appeal before this Tribunal.
6. The learned D.R. heavily placed reliance on the order passed by the Assessing Officer. It was pleaded that the time of completing the assessment was extended because of the application filed by the assessee. On the other hand, the learned A.R. of the assessee placed reliance on the order passed by the learned CIT(Appeals).
7. We have heard both the parties and perused the material on record. As evident from the order of CIT(Appeals), the assessment proceedings were completed on 22.11.1993 and the assessment order was to be passed. However, the Assessing Officer who heard the case was transferred and his successor took over the charge before whom, the assessee vide letter dated 01.0.1994 requested to provide opportunity of being heard. The relevant extract of the letter is reproduced as under:
Sir, it seems that no assessment order was passed by him before his transfer and you would be proceeding to make the same. So the assessee humbly request you to kindly provide a hearing opportunity before passing the order of assessment in the case of the assessee for assessment year 1991-92.
Sir, this request is made in accordance with the provisions contained in Section 129 of the Income tax Act, 1961.
8. Apparently from the application of the assessee, it is clear that the assessee never wanted re-opening of previous proceedings. He wanted the opportunity of being re-heard before completion of assessment. This was done by the assessee vide his application dated 01.03.1994 which was received in the office of DCIT Range-I, Agra on 01.03.1994. Though the application said to have been filed on 01.03.2004 before the Assessing Officer, but for the same the office of the ACIT has issued receipt No. 74 in Book No. 11 on 25.03.1994. The Assessing Officer fixed the case for hearing on 04.03.1994 which was adjourned to 07.03.1994. The assessee submitted information in writing on 07.03.1994 itself. Thereafter, no action was taken by the Assessing Officer to dispose of the case by 31.3.1994.
9. The first succeeding Assessing Officer was also transferred in April, 1994 and second succeeding officer issued notice on 06.05.1994 fixing the case for hearing on 09.05.1994. The second succeeding Officer issued notice with reference to application filed by the assessee on 01.03.1994 for which receipt on 25.03.1994 was issued. From the above sequence of events, the facts can be summarized as below:
(i). the first Assessing Officer concluded the assessment proceedings on 22.11.1993 and no assessment order was passed by him;
(ii). the first succeeding Assessing Officer joined the office on transfer of the Assessing Officer in February, 1994. The assessee filed application dated 01.03.1994 before the succeeding Assessing Officer and copy thereof was filed before the DCIT Range-I, which was received on 01.03.1994. The Assessing Officer allowed opportunity of being heard on 4th & 7th March, 1994;
(iii). in April, 1994, the first succeeding Assessing Officer was transferred and second succeeding Officer who passed the assessment order issued letter dated 06.05.1994 fixing the case for hearing on 09.05.1994. The assessee did not file any application Under Section 129 before the second succeeding Assessing Officer.
10. Section 129 of I.T. Act, 1961 reads as under:
Section 129: "Whenever in respect of any proceeding under this Act an income-tax authority ceases to exercise jurisdiction and is succeeded by another who has and exercises jurisdiction, the income-tax authority so succeeding may continue the proceeding from the stage at which the proceeding was left by his predecessor:
Provided that the assessee concerned may demand that before the proceeding is so continued the previous proceeding or any part thereof be reopened or that before any order of assessment is passed against him, he be reheard.
11. From the plain reading of the provisions of Section 129, it is clear that in case of change of incumbent of the office, the succeeding Assessing Officer will continue the proceedings from the stage at which the proceedings were left by his predecessor. An exception has been carved out from the main provision that the assessee may demand before the proceedings are continued that (i) the previous proceedings or any part thereof be re-opened or (ii) that before any order of assessment is passed against him, he be re-heard. According to the Revenue the application dated 01.03.1994 was filed on 25.03.1994. The assessee was provided opportunity of being heard on 04.03.1994 and 07.03.1994. This means that the Assessing Officer provided an opportunity of being heard for the completion of the assessment. Proviso to Section 129 comes in operation only when Assessing Officer intimates the change of incumbent before continuation of assessment proceedings. Admittedly, no intimation was given by the succeeding officer to intimate the change of incumbent. It is a mere coincidence that assessee filed a request to provide him an opportunity of being heard. Therefore, the letter dated 01.03.1994 cannot be treated as an application Under Section 129 of the Act. This view if supported by the decision of Hon'ble Patna High Court in the case of CIT v. Sh. Jagdish Prasad Chaudhary discussed in next paragraph.
12. In the case of CIT v. Sh. Jagdish Prasad Chaudhary , the Hon'ble Patna High Court had an occasion to examine the provisions of Section 39 of W.T. Act. Section 39 of the W.T. Act deals with the effect of the transfer of authorities during the pendency of the proceedings. The proviso to Section 39 gives a right to assessee to demand that before the proceedings are continued by the succeeding officer, the previous proceedings or part thereof, may be reopened or that before any order is passed against him, he may be re-heard. This condition implies and postulates that before the assessee can demand the right given to him under the said proviso, he must necessarily have a right to be put on notice of two facts, namely, (a) that the previous authority who was so long continuing the proceeding has been succeeded by another officer; and (b) that the officer so succeeding wants to continue the proceeding from the stage at which the proceeding was left by his predecessor. It is upon his being informed of the aforesaid two facts that the assessee can make an effective exercise of his right to demand that the previous proceeding or part thereof may be reopened or that he may be reheard before a final order is passed in the proceeding. This is an opportunity of hearing at a pre-decisional stage. The obligation of the authority to inform the assessee of the facts stated at (a) and (b) above is inbuilt in Section 129 for the reason that transfer of officers while a proceeding is pending is an official act of which the assessee can have no clue unless he is informed. Therefore, in a given case, the valuable safeguard and right given to the assessee will be defeated if he is not informed of the facts pointed out at (a) and (b) above. Such a valuable right given to the assessee under the proviso to Section 39 cannot be made to depend on mere chance of his being informed. In that view of the matter, the obligation of Revenue to inform the assessee is inherent in the very scheme of Section 39 of the Act.
13. Provisions of Section 39 of the W.T. Act are identical to provision of Section 129 of I.T. Act, 1961. If the ratio of the decision of Hon'ble Patna High Court is applied to the facts of the case before us, it is clear that the Assessing Officer has not informed the assessee about the change of Assessing Officer. Therefore, the conditions stipulated in Section 129 and guidelines laid down by Hon'ble Patna High Court in the case of Sh. Jagdish Prasad Chaudhari (supra) are not fulfilled. To bring a case under the provisions of Section 129, the Assessing Officer is duty bound to inform the assessee. Merely because the assessee has expressed his desire to be reheard and mentioned in the application as filed Under Section 129 would not discharge the Assessing Officer from his obligation of informing the assessee. In a case if assessee had not filed application 129 on 01.03.1994, the Assessing Officer was duty bound to complete the assessment by 31.03.1994. The Assessing Officer has issued acknowledgement for receipt of letter dated 01.03.1994 on 25.03.1994 and has claimed extension of time under Clause (i) of Explanation 1 of Section 153 which reads as under:
Explanation -1: In computing the period of limitation for the purposes of this section
(i) the time taken in re-opening the whole or any part of the proceeding or in giving an opportunity to the assessee to be reheard under the proviso to Section 129, or shall be excluded.
14. From the facts stated above it is clear hat the first succeeding assessing authority provided opportunity of being heard on 4th & 7th March, 1994. There was no need for assessing officer to treat the application dated 01.03.1994 for the purpose of Section 129. Secondly, the effect of such application cannot continue indefinitely before each and every incumbent without bringing the change of incumbent to the notice of the assessee. Therefore, it has to be logically concluded that after affording an opportunity of being heard to assessee on 4th & 7th March, 1994, no application was pending which can be taken into consideration indefinitely as has been done in the present case. In any case, there was no application filed by the assessee before the second succeeding assessing officer in response to the notice of the latter issued Under Section 129 of the Act.
15. In view of the above facts and legal position, as explained by the Hon'ble Patna High Court in the case of Sh. Jagdish Prasad Chaudhari (supra), the application filed by the assessee on 01.03.1994 cannot be treated as an application 129 on the ground that the Assessing Officer has failed to discharge his legal obligation to inform the assessee about the change of incumbent. Moreover, the first succeeding Assessing Officer provided the assessee the opportunity of being heard on 4th & 7th March, 1994. Thus, the application taken on 25th March 1994, became redundant and cannot be acted upon. Therefore, the assessment proceedings were to be completed by 31.03.1994. In view of these facts, the second succeeding Assessing Officer cannot take recourse of invoking provisions of Section 129 read with Section 153 of the Act for exclusion of time taken in giving an opportunity to the assessee to be re-heard under the proviso to Section 129 of the Act.
16. On careful consideration of the facts and in the circumstances of the case, we are of the considered view that the provisions of Section 129 cannot apply to the facts of the case before us and the Assessing Officer was duty bound to complete the assessment by 31.03.1994. Having failed to do so, the assessment got barred by limitation on 31.03.1994 and the assessment framed on 13.05.1994 is beyond the time. The learned CIT(Appeals) has rightly annulled the assessment. Accordingly, we do not find any infirmity in the order passed by the CIT(Appeals).
17. In the result, the appeal filed by the Revenue is dismissed.
The order pronounced in the court on 31.10.06.