Income Tax Appellate Tribunal - Jaipur
Shri Puran Chand Bairwa, Jaipur vs Income Tax Officer, Ward-7-2, Jaipur on 7 November, 2019
vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj
IN THE INCOME TAX APPELLATE TRIBUNAL,
JAIPUR BENCHES 'SMC', JAIPUR
Jh fot; iky jko] U;kf;d lnL; ds le{k
Before : Shri Vijay Pal Rao, Judicial Member
vk;dj vihy la-@ITA No. 629/JP/2018
fu/kZkj.k o"kZ@Assessment Years : 2008-09
Shri Puran Chand Bairwa cuke The ITO
Plot No.22, Rainbow Colony, Vs. Ward- 7(2)
Near Mausm Vibhag, Budhsinghpura, Jaipur Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AHVPB 6301 M
vihykFkhZ@ Appellant izR;FkhZ@
Respondent
fu/kZkfjrh dh vksj ls @Assessee by :Shri S.L. Poddar Advocate
jktLo dh vksj ls@ Revenue by : Shri A.K. Mahla, JCIT- DR
lquokbZ dh rkjh[k@ Date of Hearing : 26/09/2019
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 07 /11/2019
vkns'k@ ORDER
PER VIJAY PAL RAO, JM
This appeal by the assessee is directed against the order dated 13-03-2018 of ld. CIT(A) -3, Jaipur for the Assessment Year 2008-09 wherein the assessee has raised following grounds of appeal.
''1. The ld. CIT(A) not allowed the deduction claimed by the assessee u/s 54F of Rs. 16,51,000/- for purchase of residential plot and construction on it of Rs.2,00,000/- i.e. total investment in residential plot of Rs. 18,51,000/- against the capital gain arise on sale of agriculture land and confirmed the addition made by the AO. 2 ITA No. 629/JP/2018
Shri Puran Chand Bairwa vs ITO, Ward- 7(2), Jaipur
2. That the ld. CIT(A) taking the cost of agricultural land don 01-04-1998 of Rs. 20,000/- instead of Rs. 1,00,000/-
2.1 The assessee has also raised the additional grounds as under:-
1. The ld. CIT(A) has erred in confirming the assessment framed by the AO as the same deserves to be quashed having been completed without service of notice u/s 148 of the I.T. Act, 1961.
2. The ld. CIT(A) has erred in confirming the assessment framed by the AO as the same deserves to be quashed on the ground that notice u/s 148 was issued prior to sanction u/s 152 (1).
3. The ld. CIT(A) has erred in confirming the assessment framed by the AO as the same deserves to be quashed on the ground that AO erred in recording reason assuming that land sold was within 8 kilometers from local limits of Jaipur Municipal Corporation in terms of section 2(14)(iii)(b) as it stood then.
2.2 During the course of hearing, the ld.AR of the assessee has submitted that due to inadvertent mistake on the part of the another counsel of the assessee who represented before the AO as well as ld. CIT(A) could not take these grounds of appeals and hence the additional grounds of appeal have been raised which goes to the crux and root of the matter. He further contended that the additional grounds raised by the assessee involve issues which are purely legal in nature and, therefore, the same should be admitted for adjudication on merit. In support of his contention, the ld.AR of the assessee relied on the decision of Hon'ble Supreme Court in the case of NTPC Ltd. vs CIT (1998), 229 ITR 383 as well as the decision 3 ITA No. 629/JP/2018 Shri Puran Chand Bairwa vs ITO, Ward- 7(2), Jaipur of Hon'ble Jurisdictional High Court in the case of Ravindra Arora vs ACIT (2018) 404 ITR 452. Thus the ld.AR of the assessee submitted that there can be no bar on the assessee to raise the legal grounds for the first time before the Tribunal when all the relevant material for deciding the issue in question already exists on the record and no further investigation of fact is required.. 2.3 On the other hand, ld. DR vehemently objected to the additional grounds raised by the assessee and submitted that the assessee has not raised any objection against the validity of reopening of the assessment as well as service of notice u/s 148 of the Act as well as nature of the land sold by the assessee being capital asset.
Therefore, the assessee cannot raise these grounds first time at this stage when some of the grounds require verification and investigation of facts. 2.4 I have considered the rival submissions as well as the relevant material available on record on the point of admission of additional grounds raised by the assessee. As regards the Ground No. 1 of the assessee regarding non-service of notice u/s 148 of the Act, all the facts and materials in respect of service of notice u/s 148 of the Act are part of the assessment record and therefore, no fresh facts are required to be verified or investigated for the purpose of adjudicating this ground. Further the service of notice u/s 148 of the Act is an issue which goes to the root of the matter and very decision of the AO to proceed reassessment 4 ITA No. 629/JP/2018 Shri Puran Chand Bairwa vs ITO, Ward- 7(2), Jaipur proceedings. Therefore, in view of the decision of Hon'ble Supreme Court in the case of NTPC Ltd vs CIT (supra), the additional ground no. 1 of the assessee is admitted.
3.1 As regards the Ground No. 2 of the assessee, though this is regarding the prior approval / sanction u/s 152(1) of the Act for issuing notice u/s 148 and therefore, this is purely a matter of fact which is available on the assessment record. On verification of the assessment record, it is found that AO obtained requisite approval/ sanction from the competent authority before issuing notice u/s 148 of the Act. Therefore, the additional ground no. 2 raised by the assessee is rejected when the approval / sanction is already obtained and available on record. 4.1 The additional Ground No. 3 of the assessee on the issue of land in question is not capital asset in terms of section 2(14) of the Act. This additional ground has been raised by the assessee to contend that the land sold by the assessee was beyond 8 KM from local limit of Jaipur Municipal Corporation. It is pertinent to note that the issue raised by the assessee in additional Ground No. 3 is factual in nature to decide whether the land in question is situated in an area which is beyond 8 KM from Jaipur Municipal Corporation limits. Therefore, until and unless, this fact is verified by conducting a proper enquiry and investigation which require the physical verification on the ground and cannot be considered on the basis of 5 ITA No. 629/JP/2018 Shri Puran Chand Bairwa vs ITO, Ward- 7(2), Jaipur submission of the assessee. The AO has duly recorded this fact in para 3 of the impugned order as per report of Tehsildar, Sanganer vide letter dated 24-02-2016 that the land in question was stated to be situated at 5.10 KM from Jaipur Municipal Corporation limit. This factual finding has not been challenged by the assessee either before the AO or before the ld. CIT(A). Therefore, the assessee cannot set up a new case at this stage which requires the investigation of facts. Hence, in view of the facts and circumstances of the case, this additional Ground No. 3 of the assessee cannot be admitted and the same is rejected. 5.1 The additional Ground No. 1 is regarding validity of initiation of proceedings u/s 147/148 for want of service of notice issued u/s 148 of the Act. The ld.AR of the assessee submitted that the AO issued and sent notice u/s 148 of the Act at incomplete address of the assessee and therefore, the notice was not served upon the assessee. He has referred to notice dated 30-03-2015 issued u/s 148 of the Act and submitted that the address of the assessee given in the notice as well as address of the assessee given in the postal address is incomplete and rather wrong. Therefore, from the records itself, it is clear that the said notice is not served upon the assessee for want of complete address/ correct address of the assessee. Hence, there was no service of notice u/s 148 of the Act and consequently, the reassessment order passed by the AO is without jurisdiction. The 6 ITA No. 629/JP/2018 Shri Puran Chand Bairwa vs ITO, Ward- 7(2), Jaipur ld.AR of the assessee further submitted that it is not only the case of incorrect address on the notice u/s 148 of the Act but the notice u/s 142(1) of the Act was also issued at wrong address and finally the notice dated 22-02-2016 issued u/s 142(1) was issued by the AO at correct address of the assessee. In response to such notice, the assessee appeared before the AO and filed the return of income. Thus the first notice served on the assessee was dated 10-02-2016 which is beyond the limitation of service of notice u/s 148 and mere appearance of filing of return of income of the assessee will not cure the illegality in the initiation of proceedings u/s 147/148 of the Act. The ld.AR of the assessee relied on the decision of Hon'ble Bombay High Court in the case of Harjeet Surajprakash Girotra vs Union of India & Ors, 266 Taxman 29.
5.2 On the other hand, the ld. DR has submitted that notice u/s 148 was issued well in time by the AO and sent through Regd. Post at the address of the assessee. He further submitted that the assessee was not having PAN and is not filing any return of income. Therefore, the proceedings u/s 148 of the Act were initiated on the basis of the information that the assessee has sold an immovable property during the year under consideration. He further submitted that the AO issued the valid notice within the period of limitation and thereafter the assessee appeared before the AO and filed the return of income. Thus in view of the provisions of 7 ITA No. 629/JP/2018 Shri Puran Chand Bairwa vs ITO, Ward- 7(2), Jaipur section 292BB, the assessee cannot raise the objection of service of notice after completion of assessment. In rejoinder the ld.AR of the assessee submitted that the assessee has duly raised the objection of non-service of notice u/s 148 of the Act vide letter dated 22-02-2016.
5.3 I have considered the rival submissions and relevant materials available on record. It is manifest from the record that the AO issued notice u/s 148 of the Act on 30-03-2015 which was sent through Registered Post dated 31-03-2015. The assessment was reopened on the basis of information that assessee has sold an immovable property during the year under consideration. The AO has given the address of the assessee in the notice ''Shri Puran Chand S/o Ram Gopal, Sanganer, Jaipur''. The same address is given in the postal receipt but with a Pin code 302001. Similarly, the AO has also issued notice u/s 142(1) dated 8-05-2015 at the same address. On perusal of the record, it is noted that said notice was received back unserved with postal department remarks that ''address is incomplete''. The AO has taken the address of the assessee from the Registered sale deed dated 19- 05-2007 vide which the land in question was sold by the assessee. The address of the assessee as per registered sale deed is clearly mentioned as ''Resident of Village: Kishorepura, Tehsil: Sanganer, Distt. Jaipur (Rajasthan). The ld.AR of the assessee pointed out that even the Pin code given in the postal receipt is not the 8 ITA No. 629/JP/2018 Shri Puran Chand Bairwa vs ITO, Ward- 7(2), Jaipur pincode of the assessee's village or area. It is clear from the record that the notice issued u/s 148 of the Act was sent at incomplete and incorrect address of the assessee. Similarly, the notice issued by the AO u/s 142(1) of the Act at the same incorrect and incomplete address was received back with the postal department remarks that ''address is incomplete''. In such facts and circumstances of the case, it is discernible that the AO has not performed his part of sending the valid notice to the assessee. Once the AO has failed in performing his duty to issue proper and valid notice u/s 148 of the Act despite the fact that complete address of the assessee is available in the sale deed then the appearance and participation of the assessee after more than a year from the date of expiry of limitation of issue of notice u/s 148 of the Act will not rectify the illegality and defect in issuing and serving of notice 148 of the Act. Only when the AO has performed his part properly and issued the notice u/s 148 of the Act within the period of limitation and the same is sent at the correct address of the assessee. If the assessee has subsequently appeared and participated in the assessment and has not raised any objection regarding the service of notice u/s 148 of the Act or any other notices then the assessee is not permitted to raise such an objection of service of notice after completion of assessment. In this case, the assessee first time appeared before the AO on 22-02-2016 and assessee duly raised this objection vide 9 ITA No. 629/JP/2018 Shri Puran Chand Bairwa vs ITO, Ward- 7(2), Jaipur letter dated 22-02-2016 that the alleged notice issued u/s 148 of the Act was not received by the assessee. Once the assessee has raised this objection during the assessment proceeding then the provisions of Section 292BB of the Act cannot be pressed into service. There is no quarrel on the point that if the AO has issued a proper notice u/s 148 of the Act within the limitation and the same is sent through Registered Post at the correct address of the assessee then even there is an irregularity and infraction in the service of said notice but the assessee has appeared and participated in the assessment proceeding without raising any objection then as per proviso to section 292BB, the assessee is not permitted to raise such an objection of notice not served upon him after completion of assessment. For ready reference Section 292BB is quoted as under:-
[Notice deemed to be valid in certain circumstances.
292BB.Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was--
(a) not served upon him; or
(b) not served upon him in time; or
(c) served upon him in an improper manner:
Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.] 10 ITA No. 629/JP/2018 Shri Puran Chand Bairwa vs ITO, Ward- 7(2), Jaipur It is noted in the case in hand that there is no dispute that notice issued by the AO u/s 148 was sent through Registered Post on 31-03-2015 which is on the last date of limitation for issuing the notice and said notice was sent at the incorrect and incomplete address of the assessee. Even the pincode given in the postal address is also incorrect. This incorrect and incomplete address and non-service of notice is further corroborated by the facts that subsequent notice issued by the AO u/s 142(1) on 8-05-2015 was also received back unserved with the postal remarks that ''address is incomplete''. Therefore, it is a failure on the part of the AO to issue a valid notice u/s 148 of the Act and valid service of the same on the assessee that too notice was sent on the last date of limitation then non-service of such notice leaves no scope for the AO to take any further step to serve the notice on the assessee. However, the AO has not taken any further step even to serve the notice at correct address of the assessee. Only a notice u/s 142(1) dated 22-02-2016 was issued at correct address of the assessee. Therefore, the AO subsequently realized and admitted the fact that earlier notices u/s 148 as well as 142(1) of the Act were issued and sent at the incorrect and incomplete address of the assessee. Hon'ble Bombay High Court in the case of Harjeet Surajprakash Girotra vs Union of India, 266 Taxman 29 has elaborately analyzed relevant provisions of section 148,149 and 282 of the Income Tax Act, 1961 on the point of valid notice u/s 148 of the 11 ITA No. 629/JP/2018 Shri Puran Chand Bairwa vs ITO, Ward- 7(2), Jaipur Act as well as service of the same on the assessee and finally held in para 17 to 19 as under:-
''17. Since the delivery of notice could not be made at the address of the assessee available in PAN database, by virtue of the further proviso to sub-rule (2) of Rule 127, the communication had to be delivered at the address as available with the banking company.
18. It is undisputed that the Department had access to the petitioner's bank account. It is precisely from the activities in such bank account that the department had gathered the material prima facie believing that the income chargeable to tax had escaped assessment. In terms of Rule 172 and in particular, sub-rule (2) therefore, having regard to the further proviso therein, the Department had to deliver the notice of reassessment at the petitioner's address given by her to the bank where her account was maintained. No such step was taken. Service of notice, therefore, was not complete. In absence of service of notice before the last date envisaged under section 149 of the Act for such purpose, the Assessing Officer could not have proceeded further with the reassessment proceedings. His consequential steps for attempting to service the notices of scrutiny assessment were of no consequences. Reopening of assessment was invalid. No valid assessment thereon could have been framed.
19. In the result, the impugned notice dated 15-03-2018 and the consequential order of reassessment passed by the Assessing Officer are set aside. All subsequent steps for coercive recovery of the tax dues arising out of such order of assessment are also set aside. The attachment of the petitioner's bank accounts would, therefore, stand nullified. The petition is allowed and disposed off accordingly.'' 5.4 In view of the above facts and circumstances of the case as discussed above, I am of the considered opinion that there was no valid notice u/s 148 of the Act and consequently the AO has initiated proceedings u/s 147/148 of the Act and passed impugned assessment order without jurisdiction which renders initiation of proceedings as well as reassessment order invalid and void abinitio. Hence, the same is quashed. Since the reassessment is quashed being invalid, therefore, the 12 ITA No. 629/JP/2018 Shri Puran Chand Bairwa vs ITO, Ward- 7(2), Jaipur other grounds raised by the assessee become infructuous. Thus the appeal of the assessee is allowed.
6.0 In the result, the appeal of the assessee is allowed. .
Order pronounced in the open court on 07/11/2019.
Sd/-
¼fot; iky jko½ (Vijay Pal Rao) U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 07 /11/ 2019 *Mishra vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant-Shri Puran Chand Bairwa , Jaipur
2. izR;FkhZ@ The Respondent- The ITO, Ward- 7(2), Jaipur
3. vk;dj vk;qDr¼vihy) @ CIT(A),
4. vk;dj vk;qDr@ CIT,
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No.629/JP/2018) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar