The Commissioner Of Income Tax-Ii,Amritsar v. M/S Rai Bahadur Kishore Chand & Sons

In the High Court for the States of Punjab and Haryana at Chandigarh… ITA No. 522 of 2007 Date of decision: 13.2.2008 The Commissioner of Income Tax-II,Amritsar ..Appellant Versus M/s Rai Bahadur Kishore Chand & Sons.. Respondent Coram: Hon’ble Mr.Justice Satish Kumar MittalHon'ble Mr.Justice Rakesh Kumar Garg Present:Mr.Sanjiv Bansal, Advocatefor the appellant-Revenue. Rakesh Kumar Garg,J 1.The Revenue has filed the present appeal under Section 260-A ofthe Income Tax Act,1961 challenging order dated 18.5.2007 passed by theIncome Tax Appellate Tribunal, Amritsar Bench, Amritsar in ITA No.462(ASR)/2004 by raising the following substantial questions of law:- i) Whether in the facts and circumstances of the case, theTribunal was right in law in concluding that the assessment orderhad not been passed on 26.3.2004 though the revenue hadstated that the said assessment order had been dispatched to theassessee on 31.3.2004 ? ii) Whether in the facts and circumstances of the case, theTribunal has erred in law in setting aside the order of theassessment and Commissioner of Income-tax (Appeals), whobased upon the office record had recorded a finding that theassessment order had been dispatched by Regd. Post on31.3.2004 ? 2.The brief facts of the case are that the assessee filed return on31.10.2001 declaring total income of Rs. 1,92,971/-. The same was processed under Section 143(1) on 30.3.2002 at the returned income. However, the casewas selected for scrutiny and as per the stand of the Revenue, the AssessingOfficer completed the assessment under Section 143(3) of the Income Tax Act,1961 vide his order dated 26.3.2004. The taxable income of the assessee wascomputed by the Assessing Officer as under:- Rent receivedAdd: Arrears of rent Rs.13,95,116-00Rs. 25,880-00Rs.14,20,996-00Rs. 1,71,722-00Rs. 12,49,274-00 Less: Municipal Taxes shown under the account'House-Tax' in 'Miscellaneous Expenses' Less: Deduction under section 24(1)(i) @ 25%Income from house propertyAdd: Miscellaneous income Rs. 3,12,318-00Rs. 9,36,956-00Rs. 28,682-00Rs. 9,65,638-00 Total: Vide this order, the Assessing Officer also ordered for initiation of penaltyproceedings under Section 271(1)(c) of the Income Tax Act against theassessee for concealing the particulars of its income . The assessee filed anappeal before the Commissioner of Income Tax(Appeals) against the said orderon the ground that the order dated 26.3.2004 was served on the assessee byaffixture on 1.4.2004 and the same is barred by limitation as the same was neverproperly served upon the assessee. However, the said appeal was dismissed byhim vide his order dated 3.8.2004. 3.Aggrieved against the said order, the assessee filed an appealbefore the Income Tax Appellate Tribunal raising the grievance that theassessment order for the Assessment Year 2001-02 had not been passed withinthe time allowed. Although the assessment order passed by the AssessingOfficer is dated 26.3.2004, yet it was served on the assessee by affixture only on1.4.2004. It was also argued that no effort was made to serve the notice on theassessee through normal means before serving the notice by affixture. Thus, itwas submitted that the service of the notice could be done by affixture only ifservice through normal means was not possible. It was also argued that in casethe order was passed on 26.3.2004, why the same was not served by registeredpost on that date. It was also stated by the assessee that admittedly, a noticeunder Section 17(1) of the Wealth Act, 1957 dated 29.3.2004 for the Assessment Year 1997-98 issued by the same Assessing Officer and wasserved on the assessee on 31.3.2004 and the service on the said notice wasaccepted by the assessee and if the impugned assessment order was alsoready along with demand notice and challan, the same could have beenaccepted by the assessee on 31.3.2004 and where was the need for theAssessing Officer to effect service of the assessment order by affixture. Thus, itwas argued that the assessment order had not been passed on 31.3.2004. 4.It is also relevant to mention here that the Tribunal had asked theRevenue to produce the assessment record before the Bench vide directionsdated 11.7.2006 and allowed five opportunities to the Revenue to produce thisrecord. However, the department failed to produce any record and in fact astatement was made by the departmental representative before the Tribunal tothe effect that the matter be decided in the light of the facts on record of thecase. In view of these facts, the Tribunal accepted the contention of theassessee that the assessment order was not passed on 26.3.2004 and came tothe conclusion that there is no evidence adduced by the Revenue that the orderwas indeed passed on or before 31.3.2004. It was also observed that despiterepeated opportunities granted to the Revenue, no evidence was producedbefore the Bench to show that the assessment order was dispatched byregistered post on 31.3.2004. The Tribunal also observed that it is surprising thateven the service by affixture was made on 1.4.2004 in the presence of theInspector of the department alone and not in the presence of an independentwitness and thus taking into account these facts coupled with the non-productionof assessment record before the Bench, the Tribunal held that the assessmentorder was time barred and therefore, the impugned assessment order for theyear 2001-02 was quashed being passed after the statutory time limit. 5. We find no force in the contention raised by the learned counselfor the Revenue. The basic question to be decided in this case is “Whether theimpugned assessment order was passed within the statutory period of limitationup to 31.3.2004 or not ? “ The Tribunal after perusing the evidence on record and taking into account the non-production of assessment record before theBench has given a finding of fact that the impugned assessment order for theAssessment Year 2001-02 was passed after the statutory time limit. TheTribunal has noted the fact that the Revenue was given more than 5opportunities to produce record of the Department to challenge the specificgrounds of appeal taken by the assessee to the effect that assessment orderdated 26.3.2004 was not served upon him within the statutory period of limitationand as such the same is liable to be quashed being passed after the statutorytime limit and ultimately, the departmental representative stated before theTribunal that the matter may be decided in the light of the facts on record of thecase. While dismissing the appeal of the Revenue, the Tribunal has given acategoric finding that no evidence has been adduced by the Department to showthat the impugned order dated 26.3.2004 passed by the Assessing Officer wasindeed passed before the statutory time limit. 6.In view of the above, we find no irregularity/ error in the order ofthe Tribunal. Thus, no substantial question of law arises in the present appealand the same is hereby dismissed. (RAKESH KUMAR GARG) JUDGE February13,2008 nk (SATISH KUMAR MITTAL) JUDGE