9911796707
TMI Blog2012 (6) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... there are two appeals by the Revenue for the same assessment year is this. In the appeal filed against the assessment order, the assessee questioned the validity of the assessment order as also the additions made therein on merits. The CIT (Appeals) upheld the validity of the assessment order, but allowed substantial relief to the assessee on merits. Against the order of the CIT (Appeals) the Revenue preferred an appeal on merits to the Income Tax Appellate Tribunal ( Tribunal‟, for short) in ITA No.3339/Del/2007. Against the decision of the CIT (Appeals) on the validity of the assessment order, the assessee preferred CO No.115/Del/2008 before the Tribunal. The Tribunal took up the cross objections filed by the assessee first since it went to the root of the matter and decided the validity of the assessment order in favour of the assessee, thus allowing the cross objections. In view of this decision, the Tribunal thought it unnecessary to adjudicate upon the appeal filed by the Revenue which was formally dismissed. A common order was passed by the Tribunal on 13.02.2009. The Revenue has preferred two appeals under Section 260A before us for this reason, namely, that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeds as shown Rs. 6,07,27,576/- (b) Duty Drawback received Rs. 68,97,158/- (c) Unsecured loan of M/s. Lindt Exports Rs. 1,00,00,000/- (u/s 68) (d) Sales outside the books Rs. 26,97,577/- (e) Advances received from customers (u/s 68) Rs. 25,89,716/- (f) Cash deposited in the bank (u/s 68) Rs. 22,00,000/- Gross Total Income Rs. 8,51,12,027/- 5. The Assessing Officer did not allow the claim of Rs.94,378/- made by the assessee under Section 80HHC of the Act which resulted in the total income being assessed at the above figure. 6. The assessee appealed against the assessment order before the CIT (Appeals) and contested both the validity of the assessment order and the additions made therein on merits. As regards the validity of the assessment order, the contention of the assessee was that no valid notice under Section 143(2) had been served upon it and therefore the assessment order was invalid. It would appear that the assessee had filed written arguments before the CIT (Appeals) in which this point had been also included. The written arguments were sent by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d contention of the assessee in the following words: - (B) Now it is seen that the contention of the appellant is not correct. The assessment order makes it clear that notice under section 142(1) was issued on 12.9.05 after statutory notice under section 143(2) dated 30.12.04 accompanied with detailed questionnaire whereby the assessee was asked to furnish details/ information along with supporting documents and also to produce books of accounts i.e. ledger, cash book and bank book etc. In response to these notices Shri G. R. Keswani, FCA, Authorised representative of the assessee attended the proceedings from time to time with whom the case was discussed. He also filed part details which were placed on record. Thus the appellant s contention that the statutory notice u/s 143(2) was not served upon the appellant within the period of 12 months, does not hold good. If notice under section 143(2) was not served, no question about appearance and compliance by the AR of the appellant would have arisen. Secondly no such objection was raised at the time of assessment proceedings. The very fact that part compliance was made by the appellant proves that notice u/s 143(2) was served withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee-firm and that it was not even the case of the Assessing Officer that it was so served. According to the Tribunal, what can at best be stated in favour of the Revenue was that the notice might have been served on some employee of the assessee firm though the Assessing Officer had not stated upon whom the notice had been served. According to the Tribunal service of notice on the employee of the assessee did not amount to valid service as held by a Division Bench of this Court in CIT v. Rajesh Kumar Sharma, (2009) 311 ITR 235. The Tribunal also held that it was not the case of the Revenue that the person upon whom the notice was allegedly served was authorised to receive the same. On these findings the Tribunal held that there was no valid service of the notice upon the assessee and hence the assessment order was invalid and was liable to be quashed. It was accordingly ordered. 10. The Tribunal also referred to the provisions of Section 292BB and held that those provisions were not applicable to the assessment year 2003-04 since they were inserted w. e. f. 01.04.2008 and were accordingly applicable only from the assessment year 2008-09. In this view of Section 292BB the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receive the same. The learned counsel for the assessee protested before us that the participation or attendance in the proceedings before the Assessing Officer on 05.01.2005 was not pursuant to the notice issued on 30.12.2004. That in our opinion is an argument that is far-fetched to merit acceptance. It cannot be sheer coincidence that the notice is served on 31.01.2004 upon some person available at the proper address and the person for whom the notice is meant participates in the proceedings on 05.01.2005 which is the date fixed by the said notice. It is difficult to visualise how else could the assessee have come to know that his case is posted before the Assessing Officer on 05.01.2005, except from the notice. 12. Several contentions were raised on behalf of the assessee before us which we may notice. It was argued, almost as an afterthought, that there is no evidence to show that the case was fixed for hearing on 05.01.2005 or that any one appeared on that date before the Assessing Officer on behalf of the assessee. We say that this argument is an afterthought because the initial argument was that the appearance made on behalf of the assessee on 05.01.2005 was not pursuant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... town it cannot be said that they could not be found by the exercise of due diligence. The only option then available to the Assessing Officer was to hand over the notice to the person available at the address. All this, even if it was irregular, pales into insignificance once it is found that the notice intimated the date of hearing as 05.01.2005 and on that date the representative of the assessee appeared before the Assessing Officer and filed his power of attorney. This conduct clearly shows that the assessee was aware of the receipt of the notice and the posting of his case for hearing on 05.01.2005. As already pointed out, the issue of a notice under Section 143(2) of the Act is to enable the assessee to adduce evidence in support of the return submitted by him. The provision is essentially conceived in the interests of the assessee and once he comes to know of the opportunity that has been accorded to him and also takes a step towards availing of the same, it does not lie in his mouth to turn round and contend that there was no valid service of the notice upon him. 14. Several authorities were cited on behalf of the assessee, including those of this Court to the effect that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e‟s contention and held that there was no proper service of the notice under Section 148 of the Act and therefore the entire reassessment proceedings were without jurisdiction and invalid. A perusal of the judgment shows several distinguishing features. Firstly, it was dealing with a notice issued under Section 148 of the Act to reopen the assessment proceedings which is a jurisdictional notice affecting the very validity of the re-assessment proceedings. Long back in Y. Narayana Chetty and Anv. v. ITO, Nellore and Others, (1959) 35 ITR 388, it was held by Gajendragadkar, J., speaking for the Supreme Court as follows: - The argument is that the service of the requisite notice on the assessee is a condition precedent to the validity of any re-assessment made under section 34; and if a valid notice is not issued as required, proceedings taken by the Income-tax Officer in pursuance of an invalid notice and consequent orders of re-assessment passed by him would be void and inoperative. In our opinion, this contention is well-founded. The notice prescribed by section 34 cannot be regarded as a mere procedural requirement; it is only if the said notice is served on the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. There the notice was sent by registered post but an affidavit was filed on behalf of the assessee that it did not receive the notice. It was also contended that the receipt issued by the post office did not show the address of the assessee but only the name. These facts were considered sufficient by this Court to refute the service of the notice and the assessment order was accordingly quashed. As can be seen, the facts in the case before us are much stronger for the Revenue. The decision is therefore distinguishable. 17. In our opinion the Tribunal fell into an error in accepting the contention of the assessee without examining the crucial and relevant fact such as the appearance of the assessee‟s authorised representative before the Assessing Officer on 05.01.2005 which is the date fixed for hearing in the notice issued on 30.12.2004. The Tribunal further erred in holding that the participation of the assessee in the assessment proceedings is of no consequence because the provisions of Section 292BB came into force only from 01.04.2008. The participation of the assessee in the proceedings for the assessment in the present case is an important fact to be take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Officer is not entitled to assess the party or that the party is not liable to pay any tax because a notice had not been issued to him. The liability to pay the tax is founded on sections 3 and 4 of the Income-tax Act, which are the charging sections. Section 22, etc., are the machinery sections to determine the amount of tax. (underlining ours) 18. The above observations were approvingly cited by the Supreme Court in CIT v. Jai Prakash Singh, (1996) 219 ITR 737. In addition, the Supreme Court also noticed its observations made earlier in Estate of Late Rangalal Jajodia v. CIT, (1971) 79 ITR 505 which are as under: - The lack of a notice does not amount to the revenue authority having had no jurisdiction to assess, but that the assessment was defective by reason of notice not having been given to her. An assessment proceeding does not cease to be a proceeding under the Act merely by reason of want of notice. It will be a proceeding liable to be challenged and corrected. Noticing the aforesaid two judgments, the Supreme Court in Jai Prakash Singh‟s case (supra) held as under: - The principle that emerges from the above decision is that an omission ..... X X X X Extracts X X X X X X X X Extracts X X X X
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