TaxTMI 
TaxTMI 
2021 (9) TMI 11
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....dering the facts that the order was passed without giving a fair and reasonable opportunity of hearing to the Appellant. The Appellant prays that the order passed under section 143(3) of the Act by the Assessing Officer be held as ab-initio-void and bad in law. WITHOUT PREJUDICE TO GROUND No. 1: B. ORDER PASSED UNDER SECTION 143(3) OF THE ACT IS BAD IN LAW: 2. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in confirming the action of the Assessing Officer that the assessment order passed under section 143(3) of the Act beyond the time limit prescribed under section 153 of the Act is bad in law. The Appellant prays that it be held that order passed under section 143(3) of the Act is ab-initio and/or otherwise void and bad-in-law. WITHOUT PREJUDICE TO GROUND NOS. 1 AND 2: C. REOPENING OF ASSESSMENT IS BAD IM LAW: 3. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in confirming the action of the Assessing Officer that reopening of the assessment under section 147 of the Act. The Appellant prays that it be held that reopening of....
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....er a number of companies that did not conduct any real business but were mainly involved in providing accommodation entries to other business concerns. On further enquiries carried out by the department, it was revealed that the assessee company had as on 31.03.2006 i.e. the period relevant to the year under consideration issued 135553 shares at an unjustified premium of Rs. 990/- per share to certain dubious companies of Shri Jagdish Purohit. Subsequently, the shares of the assessee company were transferred to entities of Ruchi Group. It was further gathered by the department that Shri Vishesh Shahra and Smt. Ushadevi Shahra had thereafter joined as the directors of the assessee company and hitherto controlled the affairs of the company. As per the records Shri Jagdish Purohit continued as a director in the assessee company till 25.03.2010. It was noticed by the A.O. that the investments of the assessee company in the dubious companies of Shri Jagdish Purohit were thereafter liquidated by the new management (i.e. Ruchi group wherein Shri Vishesh Shahra and Smt. Ushadevi Shahra were directors) and the same had resulted to accommodation entries to the tune of Rs. 13,41,97,470/-. ....
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....e reopening of its case and framing of the assessment u/s. 147 of the Act. Also, addition of the share premium made by the A.O. as an unexplained cash credit u/s. 68 of the Act was upheld by the CIT(A). 5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorised Representative (for short 'A.R.') for the assessee at the very outset assailed the validity of the assessment framed by the A.O. u/s. 143(3) r.w.s. 147, dated 24.03.2014, for the reason, that the same was passed without carrying out a valid service of a notice u/s. 148 of the Act within the prescribed time limit. Elaborating on his aforesaid claim, it was submitted by the ld. A.R., that though the impugned notice u/s. 148 of the Act, dated 19.03.2013 was dispatched vide speed post on 20.03.2013, however, the same was returned back by the postal authorities on 22.03.2013. Taking us through the observations of the CIT(A) at Page 19 of his order, it was submitted by the ld. A.R. that the notice u/s. 148, dated 19.03.2013, was dispatched to a wrong address i.e. "A-12, New Chandradoy, Banusali Lane, Ghatkopar (E), Mumbai - 400 077". It was submitted by th....
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....s further submitted by the ld. A.R. that a photocopy of the notice u/s. 148 was on 25.06.2013 handed over for the very first time to the assessee's Chartered accountant, viz. Shri Rajendra Laddha. It was submitted by the ld. A.R. that as the notice u/s. 148 was handed over to its authorised representative on 25.06.2013 i.e. beyond the prescribed period of 6 years from the end of the relevant assessment year, therefore, the same was barred by limitation. In support of his aforesaid contentions the ld. A.R. had pressed into service Sec. 282(1) of the Act r.w. Rule 127 of the Income-tax rules, 1962 which prescribes the mode and manner of service of a notice under the Act. The ld. A.R. had further relied on the judgment of the Hon'ble High Court of Bombay in the case of Harjeet Suraprakash Girotra Vs. UOI (2019) 108 taxmann.com 491 (Bom). It was submitted by the ld. A.R. that the Hon'ble High Court in its aforesaid judgment had inter alia held that not a mere issuance of notice of reopening of assessment but its service on the assessee, that too, within the time frame envisaged under Sec. 149 is necessary for a valid reopening of an assessment. It was further submitted by t....
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....d had no existence in the eyes of law; (ii). that the A.O. had failed to effect service of notice u/s. 148, dated 19.03.2013 as per the mandate of Sec. 282(1) r.w. Rule 127 of the Income-tax Rules, 1962; and (iv). that as the copy of notice u/s. 148, dated 19.03.2013 handed over for the very first time on 25.06.2013 to its authorised representative, viz. Shri Rajendra Laddha was beyond the prescribed period of 6 years from the end of the assessment year which expired on 31.03.2013, therefore, the same being barred by limitation was non-est. On the basis of his aforesaid contentions, it was submitted by the ld. A.R. that the assessment framed by the A.O. vide his order passed under Sec. 143(3) r.w.s. 147, dated 24.03.2014 de hors a valid service of notice u/s. 148 of the Act could not be sustained and was liable to be quashed. 6. Per Contra, the ld. Departmental Representative (for short "D.R.") relied on the orders of the lower authorities. 7. We have heard the ld. authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into servi....
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....Act which shall have a material bearing on the adjudication of the controversy in hand. As per the mandate of Section 148 of the Act, the A.O. before making an assessment, reassessment or recomputation under Sec. 147, shall serve on the assessee a notice requiring him to furnish within the stipulated time period as may be specified in the notice, a return of his income for the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. Admittedly, the assumption of jurisdiction for framing of an assessment or reassessment under Sec. 147 of the Act presupposes a valid service on the assessee of a notice issued under Sec. 148 of the Act. For the sake of clarity Sec. 148 (relevant extract) is culled out as under: "148(1)] Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, [***], as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act dur....
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.... (21 of 2000); or (d) by any other means of transmission of documents as provided by rules made by the Board in this behalf. (2) The Board may make rules providing for the addresses (including the address for electronic mail or electronic mail message) to which the communication referred to in sub-section (1) may be delivered or transmitted to the person therein named. Explanation - For the purposes of this section, the expressions 'electronic mail' and 'electronic mail message' shall have the meanings as assigned to them in Explanation to section 66A of the Information Technology Act, 2000 (21 of 2000)." Further, Rule 127 of the Income Tax Rules, 1962 contemplates the address (including the address for electronic mail or electronic mail message) to which a notice or summons or requisition or order or any further communication under the Act may be delivered for the purpose of sub-section (1) of Sec. 282, which reads as under: "Service of notice, summons, requisition, order and other communication." 127, (1) For the purposes of sub-section (1) of section 282, the addresses (including the address for electronic mail or e....
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....-rule(1) of rule 114E to the Director of Income-tax (Intelligence and Criminal Investigation) or to the Joint Director of Income-tax (Intelligence and Criminal Investigation); or (vi) the address of the assessee as available in the records of the Government; or (vii) the address of the assessee as available in the records of a local authority as referred to in the Explanation below clause (20) of section 10 of the Act;], (b) for communications delivered or transmitted electronically:- (i) email address available in the income-tax return furnished by the addressee to which the communication relates; or (ii) the email address available in the last income-tax return furnished by the addressee; or (iii) in the case of addressee being a company, email address of the company as available on the website of Ministry of Corporate Affairs; or (iv) any email address made available by the addressee to the income tax authority or any person authorised by such income-tax authority. (3) The Principal Director General of Income-tax (Systems) or the Director, Gene of Income-tax (Systems) shall specify the procedure, formats and Standard....
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....at the old registered office address of the assessee company was well conversant about the new registered office address to which the assessee company had shifted. At the same time, we are not persuaded to accept the claim of the ld. A.R. that all needful qua the change in the registered office address that was required to be done on the part of the assessee was done by the assessee. Although, it is the claim of the assessee that it had filed an application for change of its registered office address in its PAN data base, however, a perusal of the acknowledgement therein issued reveals that the said application was filed on 03.11.2015 i.e. much subsequent to the issuance of the notice u/s. 148 of the Act, dated 19.03.2013. Accordingly, it can safely be concluded, that though the assessee had not done the needful for getting its registered office address changed in the PAN database, but then, it remains as a matter of fact borne from the record that the department was well aware and conversant of the fact that the assessee company had shifted its registered office from, viz. "A-12, New Chandradoy, Bhanushali Lane, Ghatkopar (E), Mumbai - 400 077" to "205 Sujata Chambers, 2nd Floor, ....
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.... the impugned notice u/s. 148, dated 19.03.2013 that was served on the assessee on 25.06.2013 i.e. beyond the prescribed period of six years from the end of the relevant assessment year was barred by limitation. On the contrary, it was the claim of the ld. D.R. that as per the mandate of law though a notice u/s. 148 was mandatorily required to be issued within the prescribed time period therein contemplated, however, the same could be served on the assessee before making the assessment, reassessment or re-computation u/s. 147 of the Act. In sum and substance, it was the claim of the ld. D.R. that though a notice of reassessment was required to be mandatorily issued within the time period prescribed under Sec. 149 of the Act, however, insofar the obligation qua service of the said notice on the assessee was concerned, the same was required to be done before making the assessment, reassessment or re-computation u/s. 147 of the Act. As such, it was the claim of the ld. D.R. that as the notice u/s. 148, dated 19.03.2013 was issued by the A.O. within the prescribed limit and thereafter had been served upon the assessee prior framing of the reassessment, therefore, no infirmity qua the a....
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....h would had beyond doubt revealed the new registered office address of the assessee company. Accordingly, in the backdrop of the aforesaid facts, we are absolutely not at all able to accept the inaction on the part of the A.O. in not even attempting to track the address of the assessee company from his own records. As observed by us at length hereinabove, Rule 127(2)(a) of the Income-tax Rules, 1962, inter alia, contemplates "the address available in the last income-tax return furnished by the addressee" as one of the addresses to which a notice or summon or requisition or order or any other communication under the Act may be delivered or transmitted to an assessee. We, thus, are of a strong conviction that if the notice that was dispatched by the A.O. to the address available in the income-tax return to which the communication related i.e. A.Y. 2006-07 was returned back by the postal authorities on 22.03.2013, for the reason, that a wrong address was therein mentioned, then, the A.O. ought to have dispatched the said notice u/s. 148, dated 19.03.2013 at the address available in the last income-tax return furnished by the assessee company. 13. Be that as it may, it is a matter o....
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....the year under consideration had entered into various high value transactions such as cash deposits in bank account, purchase of mutual funds, sale and purchase immovable property etc., the A.O. reopened her case and issued a notice u/s. 148, dated 15.03.2013 and despatched the same for delivery through post at the address that was mentioned in her PAN database. However, the aforesaid notice issued u/s. 148,dated 15.03.2018 was returned by the postal authorities on 23.03.2018 with a remark 'left'. As the assessee had not changed the address in her PAN database, therefore, the department without making any further attempt to serve the said notice on the assessee proceeded with the reassessment proceedings. Order of reassessment was thereafter passed by the A.O. on 28.12.2018. It was only when the department had initiated certain recovery proceedings that the assessee learnt about the aforesaid reassessment order passed in her case. On a writ petition filed by the assessee, it was observed by the Hon'ble High Court that Sec. 282(1) of the Act r.w. Rule 127 of the Income Tax Rules, 1962 provided the addresses to which a notice or summons or requisition or order or any othe....
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....are of the considered view that now when the notice despatched by the A.O. u/s. 148, dated 19.03.2013 at the old address that was available in the assessee's PAN database was returned by the postal authorities, for the reason, that the address was wrongly mentioned, then, the A.O. was obligated to have exhausted the remaining three sources of addresses provided in Rule 127 of the Income-tax Rules, 1962 for communicating the said notice to the assessee, which as observed by us hereinabove, inter alia, as per sub-clause (iii) of clause (a) of sub-rule 2 to Rule 127 categorically refers to "the address available in the last income tax return furnished by the assessee". However, we find that the A.O. after receiving back the notice u/s. 148, dated 19.03.2013 from the postal authorities on 22.03.2013 acted in a callous manner and did not attempt to effect service of the said notice on the assessee. As observed by us hereinabove, in case the A.O. would have been slightly vigilant and would have merely looked into the records of the assessee company that were lying available with the department, then, he would have gathered the new registered office address of the assessee company. In....
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....rned by the postal department with a remark "left". The Assessing Officer proceeded on the basis of such notice and its return and completed the assessment after issuing notices under section 143(2) of the Act. The question is could he have done so? 9. It is consistent view of the Courts that not mere issuance of notice of reopening of assessment but its service on the assessee, that too, within the time frame envisaged under section 149 of the Act is necessary for a valid reopening of assessment. In case of Y. Narayan Chetty & Anr. vs. Income Tax officer, Nellore & Ors. reported in (1959) 35 ITR 388, the Supreme Court in the context of Income Tax Act, 1922 had observed as under: 5. The first point raised by Mr. Sastri is that the proceedings taken by respondent 1 under s. 34 of the Act are invalid because the notice required to be issued under the said section has not been issued against the assessees contemplated therein. In the present case the Income Tax Officer has purported to act under s. 34(1)(a) against the three firms. The said sub-section provides inter alia that "if the Income Tax Officer has reason to believe that by reason of the omission or failure ....
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.... has been given power to reassess after service of notice on the assessee issued within the prescribed period, clearly indicates that the legislature intended to depart from the positions as it emerged from the provisions contained in section 34 of the old Act of 1922. We do not think that this submissions of Mr. Kaji is justified. The scheme for the power of reassessment has been now suitably divided in section 147 onwards of the 1961 Act. This scheme of power was originally comprehended within the provisions contained in section 34 of the 1922 Act. This division of the provisions contained in the old section 34 into section 147 onwards, do not in any way materially alter the positions which could justify the court in accepting the interpretation canvassed by Mr. Kaji that the different stages have been prescribed before the assumption of jurisdiction. These stages, according to Mr. Kaji, are the issuance of notice within the prescribed period and service of the notice on the assessee. On the plain reading of sections 147,148 and 149, we do not think that this contention of Mr. Kaji can be sustained. Though the marginal notes of the sections are not decisive, they give us an idea ....
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....s the word 'served'. This decision of the Supreme Court made it clear that, so far as notices under section 34 are concerned, there are no two distinct and separate stages such as the stage of issue of notice and the stage of service of notice; the notice is issued to the assessee when it is served upon him. If that be the position, the entire foundation on which the superstructure of the argument urged on behalf of the petitioner is based must disappear. There being only one stage, whether it be described as issue of notice or as service of notice, proceedings under section 34 would commence when the step envisaged in that stage is taken and that would be when the notice is served on the assessee." 11. The decision of the Gujarat High Court was noticed by the Punjab & Haryana High Court in the case of Major Tikka Khushwant Singh vs. The Commissioner of Income Tax, Patiala & Anr. reported in (1975) 101 ITR 106. The Court observed as under: "Thus, it will be assumed that while enacting the 1961 Act, the legislature knew that the words "serve" and "issue" were being used interchangeably according to the judicial interpretation. In spite of the knowledge it p....
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....see before limitation but served on the assessee after limitation would be without jurisdiction, void and ineffective." (4) We are respectfully in agreement with the above observations. Similar view was taken by a learned single judge of the Calcutta High Court in Lilooah Steel & Wire Co. Ltd. v. Income-tax Officer, (4). Mr. Awasthy has placed reliance on a Full Bench judgment of this court in Seth Balkishan Das v. Commissioner of Income-tax, Patiala (5). In that case the question referred to this court was: whether on the facts and in the circumstances of the case, the service of the notice under section 34 on the assessee was invalid at law as copy of the notice was not affixed at any conspicuous place in the court-house or at any conspicuous place in the income-tax office. The matter for decision before the Full Bench was absolutely different. The learned counsel cannot derive any benefit from that case. In view of the aforesaid discussion, we are of the opinion that the words "issue" and "serve" are interchangeable and that the word "issue" has been used in section 1489 of the 1961 Act in the same sense in which the word "serve" has been used." 12. As per thes....
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....r service as may be approved by the Board or in such manner as provided under the Code of Civil Procedure for the purposes of service of summons. The Department has followed the procedure envisaged in clause (a) of subsection (1) of section 282 of attempting to deliver the notice by post. 15. Rule 127 of the Rules pertains to service of notice, summon, requisition, order and other communications, the relevant portion of which reads as under: "Service of notice, summons, requisition, order and other communication. 127.(1) For the purposes of sub-section (1) of section 282, the addresses (including the address for electronic mail or electronic mail message) to which a notice or summons or requisition or order or any other communication under the Act (hereafter in this rule referred to as "communication") may be delivered or transmitted shall be as per sub-rule (2) The addresses referred to in sub-rule (1) shall be-- (a) for communications delivered or transmitted in the manner provided in clause (a) or clause (b) of sub-section (1) of section 282-- (i) the address available in the PAN database of the addressee; or (ii) the address....
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..... 17. Since the delivery of the 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 127 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 steps were 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 of attempting to serve the notices of scrutiny assessment were of no consequence. Re....