Court : INCOME TAX APPELLATE TRIBUNAL
Brief : : As per a Supreme Court decision, objection to notice must be disposed of first and only thereafter assessment can be proceeded. The objections dated 16.3.2010 were disposed of by Income-tax Officer on 22.10.2010 and notice u/s 143(2) is dated 15.9.2010. Thus it is bad in law and the notice is invalid. No subsequent such notice has been issued in this case. Valid issuance of notice is a necessary precondition for reassessment which is missing.
Citation : Ingrain Securities (P) Ltd. ,1/561, G.T. Road, Shahdara, New Delhi-32(Appellant) V/s. Income-tax Of f icer, Ward-11(4), New Delhi [PAN:AAACI 1511 R] (Respondent)
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI ‘C’ BENCH
BEFORE SHRI I.C. SUDHIR, JM & SHRI A.N. PAHUJA, AM
Assessment year: 2003-04
Ingrain Securities (P) Ltd. ,
1/561, G.T. Road, Shahdara,
Income-tax Of f icer,
[PAN:AAACI 1511 R]
Assessee by Shri S.C. Singhal, AR
Revenue by Shri Satpal Singh, DR
Date of hearing 24.7.2012&01-08-2012
Date of pronouncement 01-08-2012
O R D E R
This appeal filed on 22-05-2012 by the assessee against an order dated 27-02-2012 of the ld. CIT(A)-XV, New Delhi, raises the following grounds:-
1. “The learned Income-tax Officer has mechanically without application of his mind has issued notice u/s 148 simply on the basis of information received from investigation wing. The reasons recorded show lack of application of mind by the Incometax Officer. The approval before issue of notice u/s 148 is missing on the notice received. The initiation and notice u/s 148 be held invalid and bad in law.
2. Belief must follow investigation and not vice versa. On page 6 of assessment order, any sign of enquiry or investigation is missing which has been done only after issue of notice u/s 148. This is not correct in law and results in holding the notice invalid.
3. Reasons recorded were not sent with the notice u/s 148 dated 15.3.2010. As per assessment order admittedly they were provided on 22.10.2010. In view ITAT Delhi and Delhi High Court, notice sent in the end of limitation period must be accompanied with reasons recorded otherwise, the notice will be invalid.
4. Inspite of specific request before the Income-tax Officer in letter dated 16.3.2010 (point 4), no evidence etc. with Income-tax Officer was ever shown to assessee. Rather bank a/c statements collected directly by the Assessing Officer later on were also not given to the assessee. Principles of natural justice do not permit it. Information gathered directly by Income-tax Officer later on were also not given to the assessee. Principles of natural justice do not permit it. Informatifon gathered directly by Income tax Officer and used against the assessee and not disclosed to him, is not allowed to be used.
5. As per a Supreme Court decision, objection to notice must be disposed of first and only thereafter assessment can be proceeded. The objections dated 16.3.2010 were disposed of by Income-tax Officer on 22.10.2010 and notice u/s 143(2) is dated 15.9.2010. Thus it is bad in law and the notice is invalid. No subsequent such notice has been issued in this case. Valid issuance of notice is a necessary precondition for reassessment which is missing.
6. In case of exparte assessment order and CIT(A) order, the ITAT can accept the additional evidences and decide the case on merits. Permission be kindly granted for submission of additional evidences.
7. Almost all the transactions are with limited companies listed in assessment order and their bank a/c obtained directly by Income-tax Officer confirm cheque transaction in each case. Following Supreme Court decision, the addition in this case is uncalled for. Further providing source of source is not the obligation of the appellant. The onus laid by law on assessee has been discharged.
8. Formula of peak credit could have been applied as each transaction is one after the other and not simultaneously. Maximum amount rotated is ``5 lakh.
9. Income-tax Officer himself has treated appellant as entry operator and worked out 0.25% income as commission for providing accommodation entries. Following ITAT special Bench, Delhi total amount of transactions at ``80,52,000/- need be added and only 0.25% thereof be treated as income.
10. The commission @0.25% is without any past history of the case, arbitrary and purely on guess work. No comparable case has been cited and the same is denied. No opportunity was given.
11. The hearing before earlier CIT(A) was attended and written submissions were filed and the hearing was completed. The new CIT(A) as per order gave two notices. As no notices could be served on the appellant the hearing could not be attended and CIT(A) without ensuring service of notice, passed an exparte order.
The CIT(A) file carries all information and no comment is there on facts and merits of the case. The limitation period problem is clear from Income-tax Officer file. Income-tax Officer sent initially assessment order of some other party in envelop addressed to the appellant. On written application, the correct order was provided by the Income-tax Officer and then the appeal was filed within given time.
12. The appellant denies levy of interest without clear finding in assessment order and alternatively it be reduced in the light of relief granted.”
2. Adverting first to ground no.11 in the appeal, facts in brief, as per relevant orders that return declaring loss of ``9,86,415/- filed on 13.09.2004 by the assessee, was processed on 28.09.2004 u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the Act). Subsequently, on a report received from DIT(Investigation)-I, New Delhi that the assessee obtained accommodation entries of `82,52,000/-from various persons as detailed on page 1 to 6 of the assessment order, the Assessing Officer (A.O. in short), after recording reasons in writing, reopened the assessment with the issue of a notice u/s 147 of the Act on 15.3.2010. In response, the assessee replied vide letter received by the AO on 21.4.2010 that return already filed on 13th September, 2004 may be treated as return in response to the notice u/s 148 of the Act. Inter alia, the assessee sought a copy of reasons recorded. The AO observed that a copy of reasons had already been supplied before issuing notice u/s 148 of the Act. The objections raised by the assessee were disposed of vide order dated 22.10.2010. Since the assessee did not submit details sought by the AO in a questionnaire nor furnished confirmation of the parties from whom share capital/share application money was received, the AO added the amount of ``80,52,000/- u/s 68 of the Act besides commission of ``20,130/- +12,000/- in obtaining the aforesaid accommodation entries.
3. On appeal, despite seeking adjournments in pursuance to notice dated 27th June, 2011, 13th October, 2011 and 01.12.2011, none appeared on behalf of the assessee on 6.1.2012. Accordingly, the ld. CIT(A) without going into the merits of the issue, dismissed the appeal of the assessee, being not maintainable, in the following terms:-
“5. From the perusal of Form No.35 and the other documents attached, while filing the appeal with this office, this appeal is against the Assessing Officer’s order dated 30.11.2010, whereas the appeal (as per Form No.35) is filed on 17.02.2011. The records show that assessment order and notice of demand were dispatched to the appellant by “speed post” on 13.12.2010, hence as per provisions of section 249(2), the appeal is filed late and is also not accompanied by any application for “condonation of delay”, as a result, the appeal is not maintainable.”
4. The assessee is now in appeal before us against the aforesaid findings of the ld. CIT(A).The ld.AR on behalf of the assessee submitted that none of the notices were served upon the assessee and the ld CIT(A) was not justified in dismissing the appeal in limine. To a query by the Bench, the ld. AR did not reply as to why the assessee did not appear before the ld. CIT(A)despite seeking adjournments, as mentioned in the impugned order. On the other hand, the ld. DR supported the findings of the ld. CIT(A). To a query by the Bench, the ld. DR admitted that assessment order was dispatched to the assessee through speed post on 13.01.2011 and not on 13th December, 2010 as mentioned by the ld. CIT(A).
5. We have heard both the parties and gone through the facts of the case. The assessee mentioned in its grounds of appeal no. 11 that the hearing before the earlier CIT(A) was attended, written submissions were filed and the hearing was completed. The new CIT(A) issued two notices. As no notice could be served on the assessee the hearing could not be attended and ld. CIT(A) without ensuring service of notice, passed an exparte order. It is also mentioned in the ground that the AO initially sent assessment order of some other party in envelop addressed to the assessee and on written application, the correct order was provided by the AO and accordingly, appeal was filed within time before the ld. CIT(A). The ld. AR appearing before us did not reply as to who appeared before the ld. CIT(A) on 23.8.2011 & 4.11.2011,seeking adjournments and on 6.9.11,who filed abridged grounds of appeal. The approach of the assessee in seeking adjournments on one pretext or the other before the lower authorities is not in accordance with law and apparently, the assessee did not co-operate with the ld. CIT(A) in determining correct income of the assessee. We may clarify that we are not condoning the default on the part of the assessee. The appeal in this case was filed before the ld. CIT(A) on 17.02.2011, claiming that assessment order was served upon the assessee on 19.01.2011. The ld. CIT(A) has not recorded any specific findings as to when the assessment order was served upon the assessee while the ld. DR admitted before us that assessment order was dispatched only on 13.01.2011 and not on 13.12.2010 as observed by the ld. CIT(A). In these circumstances, especially when the ld. CIT(A) did not record has specific findings on the date of service of the assessment order while the assessee claimed before him that order was served only on 19.1.2011,we have no alternative but to vacate the findings of ld. CIT(A) and accordingly, restore the matter to his file with the directions to re-adjudicate the issues in accordance with law after ascertaining the correct date of service of assessment order on the assessee and of course after allowing sufficient opportunity to both the parties. With these directions ground no.11 in the appeal is disposed of. As a corollary, remaining grounds raised by the assessee do not survive for our adjudication at this stage.
6. No other argument or submission was made before us.
7. In result, appeal is allowed but for statistical purposes.
Order pronounced in open Court
(I.C. SUDHIR) (A.N. PAHUJA)
(Judicial Member) (Accountant Member)
Copy of the Order forwarded to:-
2. Income-tax Officer, Ward-11(4) ,New Delhi
3. CIT concerned.
4. CIT (A)-XV, New Delhi
5. DR, ITAT,’C’ Bench, New Delhi
6. Guard File.