Ita/679/2016 Of Shri.h.c.byregowda v. Asst. Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1/ DAY OF SEPTEMBER 27071 PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’/BLE MR. JUSTICE HEMANT CHANDANGOUDAR BETWEEN: LT.A. NCO.6/79 OF 201 SHRI. H.C. BYREGOWDA|L/ H OF LATE CHIKKANNA @ THAMMAIAHAGED ABOUT 53 YEARS ~SON OF LATE SRI CHIKKANNA |NO 1288/3 3RD MAIN, MAGADI CHORD ROADBENGALURU - 5600/79. (BY SRI. A. SHANKAR, SR. COUNSEL FOR.SRI. B.S. BALACHANDRAN, ADV.,) ... APPELLAN| AND* ASST. COMMISSIONER OF INCOME TAX CIRCLE -9 (1), BENGALURU - 560085. .., RESPONDENT (BY SRI. ARAVIND K.V. ADV.,) THIS I.T.A. IS FILED UNDER SEC. J6O0-A OF INCOME TAXACT 1961, ARISING OUT OF ORDER DATED 17.06.2016, PASSEDIN ITA Nos.606 & 607/BANG/2015, FOR THE ASSESSMENT YEARS|2004-2005 & 2005-2006, VIDE ANNEXURE-A, PRAYING THIS—HON BLE COURT TO (A) FORMULATE THE QUESTION OF LAW STATED ABOVE;|(B) ALLOW THE APPEAL AND SET-ASIDE THE ORDER OF)THE INCOME-TAXK APPELLATE TRIBUNAL BEARING ITA Nos.606 & 607/Bang/2015 FOR THE ASSESSMENT YEARS 2004-2005 & 2005-2006; AND (c) PASS SUCH OTHER SUITABLE ORDERS AS THIS.HON'BLE COURT DEEMS FIT TO GRANT ON THE FACTS ANDCIRCUMSTANCES OF THE CASE [IN THE INTEREST OF JUSTICEAND EQUITY. THIS I.T.A. COMING ON FOR’ HEARING, THIS’ DAY, |ALOK ARADHE J.,DELIVERED THE FOLLOWING: | JUDGMENT This appeal under Section 260A of the Income TaxAct, 1961 (hereinafter referred to as the Act for short)has been preferred by the assessee against the order|dated 17.06.2016 passed by Income Tax AppellateTribunal (hereinafter referred to as the tribunal forShort). The subject matter of the appeal pertains to the|Assessment year 2004-05 & 2005-06. The appeal wasadmitted by a bench of this Court on the following|substantial question of law: Whnetner in law, the finding of Tribunalthat an AO could issue two notices is perverse for reason that the first notice continued to.subsist? 2 |Facts leading to filing of this appeal brieflystated are that assessee is the legal representative ofLate.Chikkannaalias.Thimmalah.Asearch|WaSconducted In|thepremisesoftheaSS@ . The revenue found the documents during>the course of the search, which related to his father Late.Chikkannaand|proceedingWaSinitiatedinvoking provisions of Section 153C of the Act. Thereafter, anorder of assessment was passed on 22.12.2008 in thecase of the father of the assessee under Section 143(3).read with Section 153C of the Act for Assessment Years.2004-05and2005-06. The.aforesaidorderofassessment was under challenge in an appeal. TheCommissioner of Income Tax (Appeals) annulled theproceeding under Section 153C of the Act on the groundthat the condition precedent for issuing notice under|Section 153C of the Act was non existent. The revenue|did not assall the order passed by the Commissioner ofIncome Tax (Appeals), wnich has attained finality. 3Thereafter, the Assessing Officer initiated re-assessment proceeding under Section 147 of the Act and.issued notices dated 27.03.7011 under Section 14/7 ofthe Act. The first notice was served at the business|premises of the assessee on 25.03.2011, whereas,another notice was served at the residential premises ofthe assessee on 06.04.2011. The assessee thereupon.filed objections to the re-opening proceeding inter alia|on the ground that since, notice under Section 148 ofthe Act was issued to the assessee on 25.03.2011, theproceeding for re-assessment as required under Section|153(2) of the Act ought to have been completed within 9 months from the end of financial year i.e., on or before.31.12.2011. However, tne Assessing Officer by an order.dated 28.02.2013 completed the assessment underSection 143(3) read with Section 147 of the Act. 4The assessee filed an appeal before theCommissioner of Income Tax (Appeals) who by an order.dated 10.02.2015 dismissed the appeal. The aforesaid order has been affirmed by the tribunal on 17.06.2016.In the aforesaid factual background, this appeal has.been filed. 4The assessee filed an appeal before theCommissioner of Income Tax (Appeals) who by an order.dated 10.02.2015 dismissed the appeal. The aforesaid order has been affirmed by the tribunal on 17.06.2016.In the aforesaid factual background, this appeal has.been filed. 5.|Learned Senior counsel for the assesseesubmitted that tribunal has failed to assign any reasons|while recording the conclusion that time limit for'completion of the assessment has to be reckoned from.the date of service of notice at the residential premises.of the assessee i.e., with effect from 06.04.2011,though, first notice was admittedly served on the|assessee on 25.03.2011. it is further submitted that the|assessment has not been completed within the period ofnine months as stipulated under Section 153(2) of theAct and therefore, the same is beyond limitation. It isalso urged that tribunal failed to appreciate that until|and unless one set of proceeding is disposed of, the|Assessing Officer was precluded in law from initiatinganother proceeding under Section 148 of the Act and itought to have been appreciated that the proceeding initiated pursuant to notice which was served on theassessee on 25.03.2011 continued. In Support ofaforesaid submissions, reliance has been placed on.decisions.'COMMUNIDADOOFCHICALIMVS,INCOME-TAX OFFICER’, (2000) 113 TAXMANN 331.(SC),"'ADITYAMEDISALESLTD,VS,DEPUTYCOMMISSIONER OF INCOME-TAX CIRCLE 1(1),,(2016) 73 TAXMANN.COM 197 (GUJARAT), ‘GAYTRAVELS (P) LTD. VS. DEPUTY COMMISSIONER OFINCOME-TAX, COMPANY CIRCLE II (2), CHENNAI’,(2017) 85 TAXMANN.COM 131 (MADRAS)', M/S.RENUKAINDUSTRIES|VS,ITOINITANO.187/2003 DATED 28.11.2007. 6.|On the other hand, learned counsel for therevenue submitted that two notices dated 7227.03.201were dispatched to the business premises and theresidential premises of the assessee. The notice issuedto the business premises of the assessee was served on.25.03.2011,whereas,thenoticeissued|CO.the residential premises of the assessee was served on.06.04.2011 and since, the service of notice on theresidential premises of the assessee was a valid service,therefore, the authorities have rightly treated the date|of service of notice as 06.04.2011. It is urged that the|decisions relied upon by learned Senior counsel for the.assessee do not apply to the fact situation of the case asin the instant case, two notices were issued on the same.dated i.e., 22.03.2011 and the instant case is not a caseof issuance of different notices on different dates. It Is/further stated by learned counsel for the revenue thatthe records of the case are not available as the same|have been destroyed.| 7We have considered the submissions made.by learned counsel for the parties and have perused therecord. Section 153(2) of the Act provides that no orderof assessment, re-assessment or re-computation shall.be made under Section 14/7 after expiry of nine monthswhere the notice under Section 148 of the Act was/ served on the assessee on or after 1st day of April, 2005.but before 1st day of April, 2011. 8 _Section 282 of the Act provides that noticecan be served on an assessee in the manner mentionecdtherein viz., (a) by post or by such courier serviceapproved by the board; (b) in such manner as provided.under the Code of Civil Procedure, 1908 for the purposeof service of Summons; (c) in the form of any electronicrecord as provided in Chapter IV of the Information.Technology Act, 2000; or (d) by any other means of.transmission of documents as provided by rules made.by the Board in this behalf. Tnus, service of notice willbe complete if it is served on the assessee in person. — 9 |In the instant case, the notice was served on.the assessee on 25.03.2011, which is evident from the.order of assessment as well as the communication dated05.05.2011 sent by tne Assessing Officer to theassessee. [ne relevant extract reads as under: ORDER OF ASSESSMENT 9 |In the instant case, the notice was served on.the assessee on 25.03.2011, which is evident from the.order of assessment as well as the communication dated05.05.2011 sent by tne Assessing Officer to theassessee. [ne relevant extract reads as under: ORDER OF ASSESSMENT The|adSSCSSCElate.Sri. ChikannaIS.representedby L/H Sri. H.C.Byregowda.|Notice U/S 148 was issued on 22.03.2011which was served on the assessee on!25.03.7011 for the Assessment Year 7004-05. further, one more notice u/s 148 dated|27.03.7011 was served on the assessee on.06.04.7011. As per your letter you have mentionedthat he notice u/s 148 for Assessment Year|2005-06 was served on 06.04.7011. 10. Thus, it is evident that admittedly the noticewas served on the assessee on 25.03.7011 and-therefore, the time for completion of assessmentproceeding in respect of Assessment Year 2004-05 and.2005-06 is 31.12.2011 I.e., nine months from the dateof financial year in which notice under Section 148 of the.Act was served. However, the order of assessment has—been passed beyond the aforesaid period i.e., on.28.03.7013..Therefore,theproceedingfor.re-assessment were completed beyond the period of. limitation as prescribed under Section 153(2) of the Act.Admittedly, the first notice which was served on thebusiness premises of the assessee was existing and was|not withdrawn. Therefore, the same continued to subsist|and the finding of the tribunal that Assessing Officer|could issue two notices is perverse. For the aforementioned reasons, the substantialquestion of law is answered in the affirmative and infavour of the assessee. The order dated 17.06.7016|passed by the tribunal pertaining to Assessment Years|2004-05 and 2005-06 is hereby quashed. In the result,the appeal is allowed. Sd/-—JUDGE. Sd/-JUDGE.