H.L. Karwa, President - These five appeals filed by the assessee are directed against the consolidated order of ld. CIT(A) Guwahati, dated 04-03-2013 for the assessment years 1991-92, 1993-94,1994-95, 1998-99 & 1999-2000 respectively.
2. The assessee has raised the following common grounds in all the above appeals which read as under:—
"1. |
for that, in the facts and circumstances of the case, learned CIT(A) was wrong and unjustified in holding that notice u/s. 147 read with section 148 of the Act for the said year was validly served on the appellant without fully following the directions of the Hon'ble Income-tax Appellate Tribunal, Guwahati in this connection given by it in its consolidated ordered 05.09.2008 passed in Appeal Nos. ITA Nos. 135; 136; 137; 138 and 139/Gau/2008 for Assessment Years 1991-02, 1993-94, 1994-95, 198-99 and 1999-2K respectively and without verifying the issue register, postal stamp register maintained by the department, where the envelope containing the alleged notices was properly addressed and duly stamped and also without examining the process server and the note of mode of issue of notice in the order sheet maintained by the learned A/O in the case of the appellant. In the facts and circumstances of the case whole impugned order of the learned CIT(A) is perverse. |
2. |
For that, the hon'ble Tribunal had, by its order dated 05.09.2008 restored the issue of service of notice u/s. 147/148 back to the file of the learned CIT(A) with the direction to also to verify whether there was another Smt. Chapala Kalita in Bisisthapur and also to make appropriate enquiry from the postal department to verify whether the specific notice was sent by registered post on 31.05.2001 to the assessee. Neither of these issues have been independently and properly enquired into by the authorities below and as such disposal of appeal and confirmation of ex parte assessment made accordingly on the basis of letter dated 31.01.2013 of the learned ITO, Ward 1(2) to the learned CIT(A) is wrong and unjustified and is without any lawful basis and is perverse and as such is liable to be quashed in its entirety. |
3. |
For that, in the facts and circumstances of the case the learned CITX(A) has passed the impugned order on consideration of wrong and some irrelevant materials in the case and as such the same is vitiated under the law and therefore the impugned order is liable to be cancelled and/or annulled in its entirety. |
4. |
For that the whole proceedings for reassessment and the impugned order passed therein is illegal and without jurisdiction. From the records of the appellant it appears that no notice u/s. 147/148 for the relevant year was served on the appellant. |
5. |
For that the appellant begs to state that there is no basis, justification and materials for jurisdiction to initiate the reassessment proceedings under section 147 of the Act and as such, the same is bad in law and liable to be quashed and the impugned order of assessment passed therein should be annulled in its entirety. |
6. |
For that, no proper and justifiable reasons were available to and recorded by the learned Assessing Officer for initiation of the impugned reassessment proceedings and no such reasons were supplied to the appellant and as such, the whole proceeding is against principles of natural justice and his void in law and liable to be quashed and the impugned order of assessment passed therein should be annulled in its entirety. |
7. |
For that the whole proceeding for reassessment and the impugned order passed therein is barred by limitation. |
8. |
For that the impugned order of ex-parte assessment is made without affording sufficient and reasonable opportunity of hearing and is illegal and passed without jurisdiction, as no proper and timely notice for hearing of the case on 31-03-2003 and/or other notice filing hearing of the case was served on the appellant by the assessing officer. |
9. |
For that in view of the categorical submissions of the appellant about non-receipt of the notice u/s. 147/148 of the Act as alleged by the learned Assessing Officer, the onus of issue and service of notice for assumption of jurisdiction to make the impugned ex parte assessment lies on the Assessing Officer, which having not been conclusively discharged, the whole of the proceedings u/s. 147/148 is vitiated under the law and the impugned orders passed there under are liable to be cancelled and/or annulled in its entirety. |
10. |
For that without prejudice to the above, the appellant begs to reiterate all the grounds on merits of additions as taken before the learned CIT(A) and also in the cross objection filed in the original appeal as below:— |
(a) |
For that, without prejudice to the submissions on the ground of non-service of notice u/s. 147/148 of the Act, it is submitted that in the facts and circumstances of the case, learned CIT(A) was wrong and unjustified in confirming the various additions and/or disallowances made by the learned Assessing Officer in its impugned order of Assessment without affording an opportunity of hearing to the appellant in the matter and without considering the written submissions submitted and lying in records of the case before the learned CIT(A). Dismissal of the appeal without considering the material available on the record and also without affording reasonable opportunity of the appellant in the matter is wrong and illegal and as such the impugned order and the disputed assessment is liable to be set aside/annulled in its entity. |
(b) |
For that the impugned order passed by the learned CIT(A) is wrong, unjustified and void in law as it has been passed without taking into consideration the facts available on records of the case and also written submissions made by the appellant in this connection regarding various additions made in the impugned ex parte assessment and as such dismissal of appeal on that ground is wrong, unjustified perverse and illegal and as such the whole order is liable to be annulled in its entirety. |
(c) |
That the learned ITO was wrong & unjustified in completing the impugned assessment without considering the return of income filed by the appellant. |
(d) |
For that the learned ITO was wrong and unjustified and had no basis for determining and assessing an amount of Rs.2,76,695/- as income from undisclosed sources. Whole of investment in construction of the house is fully meted out of known and valid sources and there is no question of there being any undisclosed sources as held by the learned AO without any basis, whatsoever. |
(e) |
For that, in any view of the matter, the assessment as made is high and excessive and is based on mere surmises and conjectures and as such the same is liable to be annulled in its entirety. |
(f) |
For that the learned ITO was wrong and unjustified in charging an amount of Rs.30,400/- and Rs.2,41,745/- as interest u/s. 234A & 234B respectively." |
3. Briefly stated, the facts of the case are that the assessee is an individual and proceedings under section 147 of the Income-tax Act, (in short the 'Act) were initiated and notices u/s. 148 of the Act were issued to the assessee. The assessee did not file any returns of income in response to notices u/s. 148 of the Act. According to the AO, the assessee was given an opportunity of being heard and the case was fixed for hearing on 27.2.2002 but no compliance was made by the assessee. The case was again refixed on 31.3.2003, but the assessee did not comply with the notices. Since the case was becoming time barred, the AO had no other option but to complete the assessmentsexparte u/s. 144 of the Act, to the best of his judgement on the basis of information available on record. The Assessing Officer passed the assessment orders for the assessment years under consideration on 31.3.2003 u/s.144/147 of the Act, making certain additions/disallowances.
4. Aggrieved by the orders of the AO, the assessee preferred appeals before the ld CIT(A). The ld CIT(A) quashed all the assessment orders vide his consolidated order dated 14.3.2008. The said order was subject matter of departmental appeals before the Tribunal and the Tribunal vide its order dated 5.9.2008 passed the order in ITA Nos.135 to 139/Gau/2008 set aside the consolidated order dt. 14.3.2008 passed by the ld CIT(A) pertaining to the assessment years under consideration, observing as under:
'6. We have heard the rival submissions and perused the various materials available on record. On a careful consideration of the same, we are of the view that in the peculiar facts and circumstances of the case, the impugned order deserves to be set aside as the facts on record are not established. It is seen that whereas before the CIT(A), the concerned Assessing Office took a specific stand that there was no initial to show service of notice. However, the revenue before the Tribunal has placed various documents to show that the stand taken by the Assessing Office before the CIT(A) was not borne out from records and in fact is grossly incorrect. However, on a perusal of the cross objections filed by the assessee and the argument is, we have seen that the assessee has challenged the genuineness of the postal receipt dated 31.3.01, which has been heavily relied upon by the department. It is challenged on the ground that it has not been issued by the postal authorities as the same has not been initiated or signed by any receiving officer. We have seen that in support of the departmental ground that the address given by the department in the postal receipt was the address available with the department which had been placed by the assessee herself. However, it is also being stated that there was another assessee of the same name and the fact that the notice for refixation has been received by Shri Devakar Kalita, unknown to the assessee also need verification. Since the facts need verification, the application of law shall follow only thereafter. Accordingly, in the above mentioned facts and circumstances, we consider it appropriate to restore the issue back to the file of the CIT(A) who shall also consider the arguments of the assessee whether there was another Smt. Chapala Kalita in Basisthapur and the CIT(A) shall also make appropriate enquiry from the postal department to verify whether the specific notice was sent by registered post on 31st May, 2001 to the assessee. Since the primary facts itself need verification we leave the issue of refixation notice served upon the assessee open for the CIT(A) for a decision on merits, after hearing the ld. AR as it will come into question only after the service of initial notice is addressed on facts.
6.1 Before parting we would like to address the judgment of the Hon'ble Apex Court which lays down the proposition that there is a clear distinction between the "issue of notice" and "service of notice", where the notice is issued within the period of limitation, jurisdiction becomes vested in the Income Tax Office to proceed to reassess. Service under the Ac is not a condition precedent to the confinement of the jurisdiction on the Income Tax Officer. It is a condition precedent only to making of the order of assessment. As such, notice which was issued within time is not barred by limitation and having been sent by registered post on 31st March, 2003. Mere fact that it was received by the assessee on 3rd April, 2003 was held to be neither barred by limitation nor suffering from jurisdiction and the ITO was held to have validly proceeded to complete the assessment.
6.2 In the facts of the present case as observed this basic issue is under challenge and the CITX(A) shall after obtaining necessary report from the postal authorities shall decide the issue in accordance with law after giving the assessee a reasonable opportunity of being heard. Since the issue of legality has been restored back to the file of the CIT(A), the decision on merits for which the assessee has agitated in its Cross Objections is also directed to be taken in accordance with law.
7. In the result, the departmental appeals as well as the cross objections filed by the assessee are allowed for statistical purposes.'
5. In pursuance to the order of the Tribunal dated 5.9.2008, ld CIT(A), Guwahati passed a fresh consolidated order on 4.3.2013 and he has dismissed all the appeals filed by the assessee.
6. Now, the assessee has preferred these appeals against the consolidated order of ld CIT(A) dt.4.3.2013 before us.
7. We have heard the rival submissions. The main arguments of the assessee are stated in the grounds of appeal, referred to above. On the other hand, ld D.R. relied on the order of Id CIT(A) in support of the Revenue's case.
8. In this case, the main contention of ld counsel for the assessee is that the assessment orders passed by the AO are illegal and without jurisdiction as no notices u/s.148 of the Act were served on the assessee. As per the report of K.L. Mang, Income Tax Officer, Ward-1(2), Guwahati dated 6.3.2008, it is evident that notices u/s.148 of the Act dated 31.5.2001 for the assessment year 1991-92, 1993-94 and 1994-95 were issued to the assessee. Simultaneously, notices u/s.148 of the Act dated 24.5.2001 for the assessment years 1998-99 and 1999-2000 were issued to the assessee. In the said report, the ITO has categorically stated that "Tear Off Acknowledgement Slip for the said notice u/s.148 is not found in the record" for all the assessment years under consideration. Thus, it is clear, there is no evidence with the Revenue regarding service of notices u/s 148 of the Act for the purpose of initiating proceedings for reassessments. It is observed that ld CIT(A), Guwahati vide his letter dated 12.7.2012 requested the Post Manager, Dispur Post Office, Christian Basti, Guwahati to verify from their records whether a copy of postal receipt dt.31.5.2001 produced before him by the ITO, Ward-1(2), Guwahati, in the course of appeal proceedings in the case of Smt. Chapala Kalita is genuine or not. In response to the said letter, the Sub-Post Master, Dispur, Guwahati vide his letter dated 23.7.2012 stated that "With due respect, it is to submit that the U/R case is a time barred case and, therefore, the complaint cannot be entertained". It is also observed that the assessee submitted an affidavit before the ld CIT(A) stating therein that another lady of similar name is residing in the same locality. The ld CIT(A) required the AO to give report and his report was received vide letter dated 31.1.2013. In the said report, it is stated that only one registered post receipt is available in the report, which is found to be posted on the notice u/s.148 for AY 1999-2000. However, Shri A. Sanyal, Income Tax Officer, Ward -1(2), Guwahati did not say anything about service of notice u/s.148 of the Act. Thus, it is clear that there is no evidence on record regarding proof of service of notice u/s.148 of the Act. It is observed that the assessee sought information under RTI Act, 2005 (Issue branch of registered letters) vide letter dated 22.4.2013 regarding postal receipt dated 31.5.2001. In response to the application filed under RTI Act, Dr. Alice K. Vizo, Sr. Superintendent of Post Offices CIIO, Guwahati Division, Guwahati has replied as under:
"The parawise reply of your aforesaid RTI application is appended below:
| (i) |
The Xerox copy enclosed does not bear any number of article, moreover the case relates to 2001, as per rule, the records related to register articles are preserved only upto one and half year. So all records related to 2001 have been disposed off since long, so no information can be furnished now. It has already been intimated to you by our previous letter dt 17.4.2013. |
(ii) |
The copy supplied by you is a xerox copy without any number, without original receipt no identification can be made. |
(iii) |
If a article is presented in the counter with proper address and proper packing for registration by a customer, a receipt is issued with initial of the counter clerk and a date stamp impression of the booking office, -however now a days computer generated receipt is issued-as most of the urban pos are computerized. |
(iv) |
Already stated at para ii above. |
|
Para v to para vii -No comments. |
|
Enclosure |
|
The copy of the ruling related to preservation of records. |
Sd/-
Sr. Superintendent of Post Office, CPIO
Guwahati Division, Guwahati 781001"
9. In the instant case, even there is no concrete evidence to prove that notices u/s.148 of the Act, were sent by Regd. post on 31.5.2001. Evidence of such notice even does not establish on record that a separate notice for each assessment year under consideration was issued.
10. Considering the above facts, we hold that no notice u/s.148 was served on the assessee. The revenue has miserably failed to prove that notices u/s.148 of the Act were served on the assessee. It is true that the AO derives his jurisdiction to initiate the proceedings u/s.147 of the Act on the basis of service of notice u/s.148 of the Act. For a proceeding u/s.147 of the Act, to be valid, it is mandatory that the service of notice u/s.148 should be effected. In the case of CIT v. Mintu Kalita [2002] 253 ITR 334/[2001] 117 Taxman 388 (Gauhati), Hon'ble Jurisdictional High Court held that service of notice prescribed in section 148 for the purpose of initiating proceeding for reassessment is not a mere procedural requirement but it is a condition precedent to the initiation of proceedings for the assessment u/s.147 of the Act. The mere issuance of notice is not sufficient. The relevant observations made in this regard by the Hon'ble High Court are reproduced hereinbelow:
'4. We have heard Shrik. P. Sarma, the learned counsel for the Revenue. None appears for the assessee. The finding of the Tribunal in IT Appeal Nos. 209 and 210 (Gau) of 1983 is quoted below:
"In fact s. 148 requires that before making the assessment, reassessment or the recomputation under s. 147 of the Act, the ITO shall serve on the assessee a notice under s. 148 containing all or any of the requirements which may be included in a notice under sub-s. (2) of s. 139 and other procedure would follow suit. Service of notice on the assessee is inevitable unless service was effect, we cannot say that reassessment should be treated to be in order as held by the AAC on the ground that the assessee had not raised this ground in the appeal as he has not sought leave to adduce the said additional grounds. The appellate authority would have to take into account any plea to dispose of the mater as such."
It is the further finding in IT Appeal Nos. 245 and 248 of 190 and that is quoted below:
"In that remand report, the AO categorically stated that notice under s. 148 was issued for both the years by registered post as established by necessary entries in the file and registers relevant for the purpose. But the AO has categorically stated that acknowledgment slip or indication of service of notice under s. 148 is not available at this stage."
The further finding of the Tribunal is as follows:
"In the present case before us and on the basis of the remand report and the additional remand report, it is seen that the notice under s. 148 was issued by the ITO to the assessee under registered post. But the ITO has reported that no acknowledgement slip is available at this stage. From the photo-copies of the order sheet entries for the assessment years under considerations, it cannot be seen that there was any service of notice under s. 148 to the assessee for both the years."
The further finding of the Tribunal is as follows:
"That in the present case before us, we find that the notice under s. 148 was actually issued by the ITO for both the years and, therefore, the ITO had the jurisdiction to call for a return, account books, etc., for the purpose of reassessment proceedings. But as pointed out by the Supreme Court that the mandate of s. 148(1) is that reassessment order shall not be made until there has been service of such notice."
5. Sec. 148(1) is quoted below:
"Issue of notice where income has escaped assessment. - (1) Before making the assessment, reassessment or recomputation under s. 147, the AO 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 during 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; and the provisions of this Act shall, so far as may be, apply accordingly, as if such return were a return required to be furnished under s. 139."
Service of notice prescribed by s. 148 for the purpose of initiating the proceeding for reassessment is not a mere procedural requirement, it is a condition precedent to the initiation of a proceeding for the assessment under s. 147. Mere issuance of a notice is not sufficient. In R.K. Upadhyaya v. Shanabhai P. Patel (1987) 62 CTR (SC) 17 : IR 1987 SC 1378 : TC 41R1711, the Supreme Court has pointed out "that service under the new Act is not a condition precedent to conferment of jurisdiction in the ITO to deal with the matter, but it is a condition precedent to making of the order of assessment".
6. There is no material to show that the employee appeared in pursuance of a notice under s. 148. He appeared only in response to a notice under s. 142(1) Sec. 142(1) deals with enquiry before assessment and the appearance of the employee in terms of this notice to produce such account or document as the AO may require cannot be deemed to be the knowledge of the proceeding under s. 147.
7. That being the position, agreeing with the findings as quoted above, we hold that no notice was served under s. 148 and the appearance of a person in response to a notice under s. 142(1) cannot be deemed to be the knowledge of the proceedings under s. 147. The question is, accordingly, answered in favour of the assessee. Accordingly, the IT reference shall stand disposed of.'
11. From the above observations of Hon'ble Jurisdictional High Court, it is abundantly clear that service of notice u/s.148 of the Act, for the purpose of initiating proceedings for reassessment is not a mere procedural requirement but it is a condition precedent to the initiation of proceedings for reassessment; in the absence of proof of service of notice, reassessment is not valid. In our opinion, the decision of Hon'ble Jurisdictional High Court is squarely applicable to the facts of the present case and applying the ratio laid down by the Hon'ble Jurisdictional High Court, referred to above to the facts of present case, we have no other alternative except to annul the reassessment orders made by the AO as well as the impugned order of ld CIT(A) for all the five assessment years under consideration. Thus, the impugned order stands annulled.
12. In the result, all the five appeals are allowed.