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TMI Blog2012 (5) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the order of the AO is without jurisdiction we therefore find that the CIT(A) has rightly quashed the order of the AO. - Decided against the revenue. - IT APPEAL NO. 2777 (AHD.) OF 2011 - - - Dated:- 10-2-2012 - MUKUL KUMAR SHRAWAT, A.L. GEHLOT, JJ. Alok Johri and Samir Tekriwal for the Appellant. O.P. Mody for the Respondent. ORDER A.L. Gehlot, Accountant Member The appeal is filed by the Revenue and the Cross Objection filed by assessee against the order of the Ld. CIT(A)- Valsad in appeal No. CIT(A)/VLS/258/10-11 dated 25-8-2011 for the assessment year 2006-07. 2. The grounds taken by the Revenue are as under:- "1. On the facts and circumstances of the case and in law. The Ld. CIT(A) has erred in treating the passing of assessment order u/s. 144 r.w.s. 147 of the Act as invalid and without appreciating the facts of the case. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the deemed dividend u/s. 2(22) of the Act amounting to Rs.1,15,72,981/-." 3. The grounds raised in Cross objection are in support of the order of CIT(A) and effective ground raised is that the CIT(A) erred in not deciding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t New Delhi and administrative office is also at New Delhi. Therefore, the notice u/s. 148 of the Act dated 29-6-2009 was issued by ACIT New Delhi and the AO of Vapi issued notice dated 13-10-2010.The Ld. DR submitted that there is no prescribed form for issuing notice u/s. 148 of the Act. The letter dated 13-12-2010 wherein the AO has clearly stated the reasons for reopening the assessment. The said letter fully satisfied the conditions of the notice, therefore, the CIT(A) has wrongly held that reopening was illegal as no notice u/s. 148 of the Act was given to the assessee. The Ld. D.R. submitted that such type of mistake is curable u/s. 292BB of the Act. The Ld. DR further submitted that in response to said notice the assessee has filed the return of income also and also furnished related details before the AO. The Notice u/s. 143(2) was also issued to the assessee and the assessee has accordingly made compliance of the said notice. 7. The Ld. DR further submitted that there is no hard and fact line can be drawn between a nullity and irregularity; is deviation from a rule of law which does not take away foundation of authority for the proceedings or apply to its whole operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BLDG., New Delhi. PAN AABCR3231J Regd. 10-7-09 Dated 29-6-2009 To, M/s. Resham Petrotech Ltd., 95, Jor Bagh, 1st Floor, New Delhi-110003. Sir, Whereas I have reason to believe that your income in respect of which you are assessable Chargeable to tax for the assessment year 2006-07 has escaped assessment within the meaning of section 147 of the Income Tax Act,1961. I, therefore, propose to assessee/re-assess the income Re-compute loss/depreciation allowance for the said assessment year and I hereby require you to deliver to me within 30 days from the date of service of this notice, a return in the prescribed form of your income the income of for the said assessment year in respect of which you are Assessable. This notice is being issued after obtaining the necessary satisfaction of the Commissioner of Income Tax/the Central Board of Direct Taxes. Sd/- (B. Srinivas Kumar) Seal. Asstt. Commissioner of Income Tax Circle 15(1), New Delhi." 12. The Jurisdictional A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as show cause notice and notice u/s. 148 seeking your explanation on the above. 6. Please note that on 20-12-2010 assessment will be completed as per the above mentioned proposition in case you fail to attend or make any compliance on 20-12-2010. Yours truly, Seal. Sd/- Assistant Commissioner of Income Tax, Vapi Circle, Vapi." 13. In compliance to the AO's letter dated 13-12-2010 the reply filed by the assessee is reproduced below:- "RPL Resham Petrotech Limited Regd.Office: 95, Jor Bagh, 1st Floor, New Delhi-110 003. Fax: 011 -24691060 Works: Survey No.910/4/2/2,Village Dokmardi,Amli,Silvassa-396 230 (U.T. of D N H). Tel. (0260) 3291512, Telefax:0260 -2644827, E-mail : [email protected]. Date:- 20-12-2010. The Assistant Commissioner of Income Tax, Vapi Circle, Vapi. Sir, Sub :- Assessment Proceeding u/s. 148 in the case of M/s. Resham Petrotech Ltd., for the A.Y. 2006-07. - --- We are in receipt of your letter dated 13-12-2010 asking us to reply as to why provisions of section 2(22)(e) may not be applied and the alleged loan be not treated as dividend in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or re compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned. Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. Provided further that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. 16. Section 148(1) of the Act provides that before making the assessment, reassessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rather than statute which he ignored in taking an illegal action. 20. The jurisdictional High Court while deciding a case, Kubanhussein Ibrahimji Mithiborwala v. CIT [1968] 68 ITR 407 (Guj) referred a judgment of Bomaby High Court in the case of CIT v. Ramsukh Motilal [1955] 27 ITR 54 and noted as under (Page 413 of ITR 68):- "... .... It was further held that the failure to give notice or a defect in a notice under s. 22 is a procedural defect; in the case of s. 34 it is not a procedural defect but is a failure to comply with condition precedent to the assumption of jurisdiction. At page 59 of the report, Chagla C.J. delivering the judgment of the Division Bench has observed as follows (1955) 27 ITR 54: "That raises a very important question as to whether failure to give notice under s.34 is merely a procedural defect or whether it is failure to comply with a condition precedent to the assumption of jurisdiction by the ITO." At page 62 (1955) 27 ITR 54 of the report, Chagla C.J. has dealt with a judgment of the Calcutta High Court in Commissioner of Agri. v. Sultan Ali [1951] 20 ITR 432 (Cal), and after dealing with that judgment of the Calcutta High Court, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ening of the case has been in accordance with law and there was no lawful proceedings initiated against the assessee as mentioned by the Ld. CIT(A). The whole perception of the Ld. CIT(A) is factually wrong". 22. Apart from admission by revenue that it can be treated as irregularity on the part of ACIT Vapi Circle, Vapi by not issuing notice u/s. 148 of the Act again, there is nothing on record to show that pursuant to an order under section 127 of the Act, the assessment records of the assessee were transferred from Delhi to Vapi. Contrary to that it is noticed that the Vapi AO vide his letter dated 13-12-2010 continued the proceedings u/s. 148 issued on 29-6-2009 which was objected to by the assessee vide letter dated 6-8-2009. The Revenue emphasized that letter dt. 13-12-2010 is notice under section 148 of the Act. This argument cannot be accepted because on acceptance of such argument the whole safeguards provided in section 147 and 148 of the Act as discussed above will be collapsed. Under that circumstance how one can say that the jurisdictional AO has acquired jurisdiction to re-assess the income under section 147 of the Act Under the circumstances how it can be said the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t served upon him in time; or ( c ) Served upon him in an improper manner: On plain reading of section of 292BB we find that the said section is in respect of certain procedural lapses in respect service of notice, but in the case under consideration the question is of acquisition of jurisdiction which is a mandatory requirement of the Act. The CIT(A) discussed this aspect of the matter of "irregularity" and "nullity" in detail. The CIT(A) held that in the case under consideration lapses on the part of revenue cannot be treated as irregularity but it is nullity. Some of the relevant observations of the CIT in this regards are as under:- "The ITO alone is entrusted with the power to administer the Act; if he has information from which it maybe said, prima facie, that he had reason to believe that income chargeable to tax had escaped assessment, it is not open to the High Court, exercising powers under Art 226 of the Constitution, to set aside or vacate the notice for assessment or a reappraisal of the evidence [ CIT v. A. Raman Co., [1968] 67 ITR 1 (SC) TCS 51R 423 affirming decision of the Gujarat High Court in A. Raman Co. v. ITO [1966] 59 ITR 290 (Guj.) TC 51R 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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