Commissioner Of Income-Tax, Faridabad v. Shri Mangal Singh

ITA No. 84 of 2009 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 84 of 2009 (O&M) Date of Decision: 1.9.2015 Commissioner of Income-tax, Faridabad Versus ....Appellant. Shri Mangal Singh ...Respondent. 1.Whether the Reporters of the local papers may be allowed to see the judgment?the judgment? 2.To be referred to the Reporters or not? Yes 3.Whether the judgment should be reported in the Digest? CORAM:-HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MR. JUSTICE RAMENDRA JAIN. PRESENT: Mr. Tajender K. Joshi, Advocate for the appellant. Mr. Ravi Shankar, Advocate with Mr. B.M. Monga, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.This appeal has been filed by the revenue under Section260A of the Income Tax Act, 1961 (in short “the Act”) against the orderdated 31.7.2008 (Annexure A-III) passed by the Income Tax AppellateTribunal, Delhi Bench “E”, New Delhi (hereinafter referred to as “theTribunal”) in ITA No. 3246/D/2004, for the assessment year 2000-01,claiming the following substantial questions of law:- A.Whether, on the facts and in the circumstancesof the case, the Ld. ITAT is right in law inholding that the assessment framed by theAssessing Officer u/s 143(3) in the case of theassessee Mangal Singh, HUF is invalid andhaving annulled the same, deciding the groundsof the case, the Ld. ITAT is right in law inholding that the assessment framed by theAssessing Officer u/s 143(3) in the case of theassessee Mangal Singh, HUF is invalid andhaving annulled the same, deciding the grounds ITA No. 84 of 2009 B. of appeal taken by the revenue on merits, ismerely academic and therefore the Hon'bleITAT refused to consider the case on merits?Whether, on the facts and in the circumstancesof the case, the Ld. ITAT is right in law inholding the assessment framed by AssessingOfficer u/s 143(3) in the case of the assesseeMangal Singh, HUF as invalid and annulling thesame, even when the assessee himself filed therevised return in the status of HUF at the sameincome as that in original return and also filedevidence in support of HUF status andaccepted an agreed order in the status of HUF? 2.Put shortly, the facts necessary for disposal of the presentappeal as mentioned therein are that the assessee filed his originalreturn on 24.1.2001 for the assessment year 2000-01 in the status of'individual' declaring the income at ` 7,64,920/-. Subsequently, he filedthe revised return on 26.3.2002 in the status of 'HUF' with no variationsin the income. The said case was selected for scrutiny and notice underSection 143(2) of the Act was issued on 4.9.2002 along withquestionnaire. The assessment was framed by the Assessing Officervide order dated 28.3.2003 (Annexure A-I) under Section 143(3) of theAct at ` 92,11,020/-. Feeling aggrieved, the assessee filed an appealbefore the Commissioner of Income Tax (Appeals) [for brevity “the CIT(A)”]. The CIT(A) vide order dated 11.5.2004 (Annexure A-II) partlyallowed the appeal and deleted the addition of ` 77,97,408/-. Againstthe order of the CIT(A), the revenue filed an appeal before the Tribunal whereas the assessee filed cross objections. The Tribunal vide orderdated 31.7.2008 (Annexure A-III) dismissed the appeal of the revenueand allowed the cross-objections filed by the assessee. It was held bythe Tribunal that the assessment in the status of HUF was invalid andthat the ground of appeal taken by the revenue on merits was merelyacademic. Hence, the present appeal by the revenue. 3.We have heard learned counsel for the parties. whereas the assessee filed cross objections. The Tribunal vide orderdated 31.7.2008 (Annexure A-III) dismissed the appeal of the revenueand allowed the cross-objections filed by the assessee. It was held bythe Tribunal that the assessment in the status of HUF was invalid andthat the ground of appeal taken by the revenue on merits was merelyacademic. Hence, the present appeal by the revenue. 3.We have heard learned counsel for the parties. 4.The Tribunal had adjudicated the cross-objection filed by theassessee holding that the assessment proceedings in the status of HUFof Shri Mangal Singh was invalid. It was contended by the learnedcounsel for the revenue that initially the return was filed by the assesseeon 24.1.2001 in the status of individual which was later on revised on26.3.2002 by claiming the status of HUF. In such a situation, no benefitcould be derived by the assessee by urging that no notice under Section143(2) of the Act was issued to the assessee in the status of HUF.Further reliance was placed upon the judgment of this Court in TheCommissioner of Income Tax, Bathinda v. M/s Panchvati Motors (P)Ltd. ITA No. 292 of 2008 decided on 3.5.2011. 5.Controverting the aforesaid submissions, learned counselfor the assessee, in view of judgment of this Court in Commissioner ofIncome-Tax v. Rohtas (2007) 311 ITR 460 argued that the Tribunal wasright in deciding that the assessment order in the status of HUF wasvoid. 6.We find merit in the contention of learned counsel for therevenue. The assessee himself had filed the return in the status of HUFdeclaring the same income which was earlier filed in the individualstatus. Once the assessee had filed the return in the status of HUF and ITA No. 84 of 2009 did not raise any objection to the framing of assessment in that status, itshall not be open for the assessee to take contradictory stand before theappellate authority. 7.Further, Section 292BB of the Act was introduced in the Actby Finance Act, 2008 effective from 1.4.2008. The scope and theapplicability of Section 292BB of the Act was considered by this Court inM/s Panchvati Motors (P) Ltd's case (supra) wherein it was observedthat where an assessee appears and cooperates in the proceedingsthen later on he is precluded from raising objection that no notice wasserved upon him in time or was served upon him in an improper manner.The provision was held to be applicable to all pending proceedings. Therelevant observations recorded therein read thus:- “10.Section 292BB of the Act was inserted byFinance Act, 2008, w.e.f. 1.4.2008. It reads thus : - Finance Act, 2008, w.e.f. 1.4.2008. It reads thus : - “292BB Where an assessee has appeared inany proceeding or cooperated in any inquiryrelating to an assessment or reassessment, itshall be deemed that any notice under anyprovision of this Act, which is required to beserved upon on him has been duly served uponhim in time in accordance with the provisions ofthis Act and such assessee shall be precludedfrom taking any objection in any proceeding or inquiry under this Act that the notice was -- (a)not served upon him; or (b)not served upon him in time; or (c) served upon him in any improper manner. Provided that nothing contained in this sectionshall apply where the assessee has raised suchobjection before the completion of suchassessment or reassessment.” “292BB Where an assessee has appeared inany proceeding or cooperated in any inquiryrelating to an assessment or reassessment, itshall be deemed that any notice under anyprovision of this Act, which is required to beserved upon on him has been duly served uponhim in time in accordance with the provisions ofthis Act and such assessee shall be precludedfrom taking any objection in any proceeding or inquiry under this Act that the notice was -- (a)not served upon him; or (b)not served upon him in time; or (c) served upon him in any improper manner. Provided that nothing contained in this sectionshall apply where the assessee has raised suchobjection before the completion of suchassessment or reassessment.” 11.A presumption has been raised under the saidprovision relating to service of notice upon theassessee in respect of assessment or reassessmentproceedings. According to this provision, where anassessee appears in any proceedings or cooperatesin any enquiry relating to assessment orreassessment proceedings, it shall be presumed thatthe assessee has been validly served and it shall notbe open to the assessee to object that the notice wasnot served upon him or was not served in time or wasserved upon him in an improper manner. However, anexception to the aforesaid presumption has beenmade in a case where such objection has been raisedbefore completion of assessment or reassessment.The provision has been made effective from01.04.2008 and therefore, shall apply to all pendingproceedings. The Central Board of Direct Taxesissued circular No. 1 of 2009 dated 27[th] March, 2009(2009) 310 ITR (St.) 42 giving explanatory notes onthe provisions relating to direct taxes contained inFinance Act, 2008. Clause 42.7 (at page 86 of thereport) is relevant which relates to applicability of this ITA No. 84 of 2009 provision and reads thus: “42.7 Applicability – This amendment hasbeen made applicable with effect from 1[st]April, 2008. This means that the provision ofnew-section 292BB shall apply in allproceedings which are pending on 1[st] April,2008.”been made applicable with effect from 1[st]April, 2008. This means that the provision ofnew-section 292BB shall apply in allproceedings which are pending on 1[st] April,2008.” 8.Adverting to the judgment in Rohtas's case (supra), it wasa case where the assessee had filed the return in the status of an'Individual' and the notice was also issued in that status. However, theAssessing Officer framed the assessment in the status of 'HUF' whichwas seriously disputed by the assessee. The Tribunal had also recordedtherein that the assessee had never made any statement about thestatus of HUF in any letter on which the Assessing Officer had placedheavy reliance. It was in these circumstances that the assessment inthe status of HUF was held to be invalid. In the present case,undisputedly the assessee himself had filed the revised return on26.3.2002 in the status of HUF declaring the same income as wasdisclosed by him in his original return filed on 24.1.2001 in the status ofindividual. The relevant observations noted by the Assessing Officermay be reproduced with advantage which read thus:- “I.Status:- The assessee claimed individual statusin the original return filed on 24.1.2001 which hesubsequently revised on 26.3.2002 in the status ofHUF. On being specifically confronted on this issue,the assessee has contended that his correct status isHUF but through inadvertence he declared thein the original return filed on 24.1.2001 which hesubsequently revised on 26.3.2002 in the status ofHUF. On being specifically confronted on this issue,the assessee has contended that his correct status isHUF but through inadvertence he declared the “I.Status:- The assessee claimed individual statusin the original return filed on 24.1.2001 which hesubsequently revised on 26.3.2002 in the status ofHUF. On being specifically confronted on this issue,the assessee has contended that his correct status isHUF but through inadvertence he declared thein the original return filed on 24.1.2001 which hesubsequently revised on 26.3.2002 in the status ofHUF. On being specifically confronted on this issue,the assessee has contended that his correct status isHUF but through inadvertence he declared the individual status in the original return. In support ofhis claim he has furnished copy of the bank challanfor deposit of tax wherein the status of HUF has beenshown at the appropriate place. Further more, it wasalso brought on record that in the past as well theassessee was assessed in the status of HUF. Thecontentions of the assessee are verifiable from therecords and as such I am convinced with the claim ofthe assessee for HUF status. Accordingly I allow thestatus of HUF to the assessee.” Thus, no advantage can be derived by the assessee from the saidpronouncement. 9.The fact that the assessee himself had filed the return in thestatus of HUF coupled with the provisions of Section 292BB of the Act,the Tribunal was not right in declaring the assessment order as non-est. 10. In view of the above, the substantial questions of law areanswered in favour of the revenue and against the assessee. Theappeal is allowed and the order dated 31.7.2008 (Annexure A-III) passedby the Tribunal is set aside. The matter is remanded to the Tribunal toadjudicate the issue on merits after affording an opportunity of hearing tothe parties in accordance with law. (AJAY KUMAR MITTAL) JUDGE September 1, 2015gbs (RAMENDRA JAIN) JUDGE