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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 853/2015
TULSI TRACOM PRIVATE LIMITED ..... Appellant
Through: Mr. C.S. Aggarwal, Senior Advocate
with Mr. Prakash Kumar and Ms.
Pushpa Sharma, Advocates.
versus
COMMISSIONER OF INCOME TAX 9 ..... Respondent
Through: Mr. Ashok Manchanda, Senior
Standing Counsel with Mr.
Raghvendra Singh and Mr. Anand K.
Chaudhari, Advocates.
CORAM: JUSTICE S.MURALIDHAR
JUSTICE PRATHIBA M. SINGH
ORDER
% 14.09.2017
Prathiba M. Singh J.,
1. This is an appeal under Section 260 A of the Income Tax Act, 1961
(hereinafter referred to as `the Act') impugning order dated 30th July, 2015
passed by the Income Tax Appellate Tribunal (`ITAT') Kolkata, Bench-B,
Kolkata in ITA No. 1905/Kol/2013 for the Assessment Year (`AY') 2008-
09.
2. On 17th December, 2015, this Court had rejected the preliminary objection
raised by the Respondent as regards the maintainability of the appeal on the
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ground of lack of territorial jurisdiction. The appeal was admitted and the
following two questions of law were framed:
"(i) Did the notice dated 18th March 2013 issued by the
Commissioner of Income Tax, Kolkata to the Assessee at
the address shown therein satisfy the requirements of
Section 263(1) of the Act as regards providing the
Assessee an opportunity of being heard?
(ii) If the answer to questions (i) is in the affirmative,
whether on merits the order dated 30th March 2013
passed by the Commissioner of Income Tax, Kolkata
under Section 263 of the Act is sustainable in law."
Brief facts
3. The Appellant is a company engaged in the business of trading and
investment of shares and is assessed to tax. It had filed its return of income
for AY 2008-09 on 16th May, 2008 before the ITO Ward-4(1), Kolkata
(hereinafter referred to as `ITO'). Proceedings were initiated under Section
147 of the Act and the assessment order was passed on 10th May, 2010
under Section 143(3)/147 of the Act. According to the Appellant, while
passing the assessment order under Sections 143 (3)/147, the Assessing
Officer (`AO') had conducted a detailed inquiry with respect to the
Appellant's books of accounts and the share capital contribution from the
various shareholders.
4. At the time of filing of the returns for AY 2008-09, the Appellant had its
registered office at 2, Raja Woodmunt Street, Kolkata-700001(`hereinafter
referred as `Raja Woodmunt Street'). It thereafter shifted its registered
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office to 14, Weston Street, 2nd Floor, Kolkata-700012. This shifting of the
registered office was duly communicated to the Ministry of Company
Affairs on 1st June, 2010. For AY 2010-11 and 2011-12 it filed its return
with this address. With effect from 31st May, 2012, the Appellant shifted its
registered office to B-222, 2nd Floor, Okhla Industrial Area, Phase-I, New
Delhi-110020 (hereinafter `Delhi address'). For AY 2012-13 it filed its
return on 25th September, 2012, reflecting this address.
5. On 18th March, 2013, the Respondent issued a show cause notice (`SCN')
under Section 263 of the Act proposing to revise the assessment order dated
10th May, 2010 under Section 143 (3)/147 for AY 2008-09. Pursuant to the
said notice, order dated 30th March, 2013 came to be passed by the
Commissioner of Income Tax (`CIT') holding that the assessment order
dated 10th May, 2010 passed by AO was erroneous and prejudicial to the
interest of the Revenue. The CIT directed the AO to pass a fresh assessment
order after conducting adequate inquiries and verification.
6. Thereafter, the AO passed a fresh assessment order on 29th March, 2014
for AY 2008-09 under Sections 144/263/143 (3)/147 of the Act, assessing
the Appellant and making an addition of Rs. 4,39,70,000/- as unexplained
cash credit under Section 68 of the Act. On 3rd September, 2015, the CIT
(A)-2 Kolkata allowed the appeal of the Assessee and held that the
Appellant was able to establish the identity and authenticity of the share
applicants as also the genuineness of the transaction and deleted the addition
of Rs. 4,39,70,000/- made under Section 68 of the Act. This order of the AO
dated 29th March 2014 is not subject-matter of this Appeal.
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7. Independently of the proceedings before the AO, the Assessee challenged
the order dated 30th March 2013 passed by the CIT before the ITAT. The
ITAT dismissed the said appeal on 30th July, 2015, thereby upholding the
notice under Section 263 and the order passed thereon.
Submissions of the Appellant
8. Mr. C.S. Aggarwal, learned Senior Counsel appearing for the Appellant
submits that the notice under Section 263 of the Act was never issued to
and/or served upon the Appellant and hence it was not given a hearing prior
to the passing of the order dated 30th March, 2013. The main plank of the
submissions of Mr. Aggarwal is that the ITO had sent the notice under
Section 263 to an incorrect address which resulted in the Appellant not
being given an opportunity of being heard on 22nd March, 2013 before the
ITO. A copy of the said SCN dated 18th March, 2013 is on record which
shows that the same is addressed to the Appellant with the Raja Woodmunt
Street address. It is his submission that this address was the old address of
the Appellant and the ITO had sufficient knowledge of the shifting of the
registered office of the Appellant, in view of the various returns filed for the
AY 2009-10, 2010-11, 2011-12 and 2012-13.
9. Mr. Aggarwal relies on the note sheet of the Respondent's file which
shows that the copy of the notice under Section 263 was returned to the ITO
and was placed back on the file. According to Mr. Aggarwal the order dated
30th March, 2013 was thus passed without hearing the Appellant and is thus
bad in law. Mr. Aggarwal submits that the note sheet reveals a noting that
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`the evidence of shifting of registered office of the company filed by the `a'
(sic Assessee) is received and placed on filed'. According to Mr. Agarwal
this noting is deliberately undated as the ITO was well aware of the new
registered office of the Appellant.
10. Mr. Aggarwal specifically placed reliance upon CIT vs. Chandra
Agencies 10 Taxmann.com 176 (Del) (hereafter `Chandra Agencies') as
also Rajesh Kumar vs. DCIT [2006] 287 ITR 91 (SC) and J.T. (India)
Exports vs. Union of India [2003] 262 ITR 269 (Del) to submit that since
no notice was served upon the Appellant, no notice was received by the
Appellant, and the Appellant having not been given an opportunity of being
heard, the proceedings under Section 263 are thus, void and the order passed
pursuant to the said notice is contrary to law and unsustainable.
11. Mr. Aggarwal also refers to Section 282 of the Act to submit that service
of the notice ought to have been done in compliance with any of the modes
provided and recognised therein and in the absence of the same there was no
proper opportunity of hearing afforded to the Assessee.
Submissions of the Respondent
12. Mr. Manchanda, Senior Standing Counsel for the Revenue has taken
pains to point out to the court that the Revenue had in fact issued the notice
to the correct address i.e. the Delhi address of the Appellant. He points to the
original file from the ITO, produced in Court, to demonstrate that the notice
dated 18th March, 2013 was initially issued to the Appellant at the Raja
Woodmunt Street address. However, when the notice server went to deliver
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the same, he was informed of the correct address at New Delhi.
Accordingly, the same notice of 18th March, 2013 was re-posted to the Delhi
address of the Appellant on 20th March, 2013. Mr. Manchanda produced the
original envelope as also the acknowledgment slip to show the handwritten
noting of the notice server of the new address on the acknowledgement slip
and the re-posting of the same to the Delhi address of the Appellant. He
submits that even the notice to the Delhi address was returned to the ITO,
Kolkata who then proceeded ex-parte and passed the impugned order dated
30th March, 2013. According to Mr. Manchanda, the ITO is left with no
option under such circumstances as he has complied with the requirements
under Section 263. In fact, according to Mr. Manchanda, no notice needs to
be issued under Section 263 as per the judgment of the Hon'ble Supreme
Court in CIT vs. Amitabh Bachchan [2016] 384 ITR 200 (hereinafter
`Amitabh Bachchan') and only a hearing is to be given.
13. Mr. Manchanda vehemently contends that the Assessee was all along
aware of the proceedings and there was a lapse by the Assessee in informing
the ITO about the change of its address. Mr. Manchanda relies upon a letter
of the Assessee intimating the ITO of the factum of shifting of its registered
office to New Delhi. He submits that while the copy of the letter filed by the
Assessee at page 5 of the additional documents shows delivery of the said
letter on 8th April, 2013, the letter itself is undated. This is a deliberate
mischief played by the Assessee who was well aware of the proceedings
under Section 263. The fact that the letter is undated and received only on 8th
April, 2013, which is subsequent to the order dated 30th March 2013, shows
that an incorrect averment is made in the writ petition that the Assessee had
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informed the ITO of the change of its registered office prior to the order
dated 30th March, 2013. Mr. Manchanda, thus submitted that there was no
error on the part of the ITO in passing the impugned order and the same
deserves to be sustained.
Analysis and Findings
14. The law insofar as it relates to a notice under Section 263 is well-settled
by the judgement of the Supreme Court in Amitabh Bachchan (supra).
Para 11 of the said judgment reads as under:
"...11. It may be that in a given case and in most cases
it is so done a notice proposing the revisional exercise
is given to the Assessee indicating therein broadly or
even specifically the grounds on which the exercise is
felt necessary. But there is nothing in the section
(Section 263) to raise the said notice to the status of a
mandatory show-cause notice affecting the initiation of
the exercise in the absence thereof or to require the
Commissioner of Income-tax to confine himself to the
terms of the notice and foreclosing consideration of
any other issue or question of fact. This is not the
purport of Section 263. Of course, there can be no
dispute that while the Commissioner of Income-tax is
free to exercise his jurisdiction on consideration of all
relevant facts, a full opportunity to controvert the same
and to explain the circumstances surrounding such
facts, as maybe considered relevant by the Assessee,
must be afforded to him by the Commissioner of
Income-tax prior to the finalisation of the decision...."
(emphasis added)
15. Thus, what is required to be given is a full opportunity to the Assessee to
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controvert the contents of the notice under Section 263 of the Act and
explain the circumstances as may be considered to be relevant by the
Assessee.
16. The short question that, therefore, arises is as to - whether such an
opportunity was afforded to the Appellant in the present case?
17. A perusal of the records reveals that the ITO was well aware of the
various addresses of the Appellant including the latest address at New Delhi
at the time when the notice under Section 263 of the Act dated 18th March,
2013 was to be issued. The Appellant had filed its return for AY 2012-13 on
25th September, 2012 i.e. a full five months prior to the issuance of the
notice under Section 263 of the Act. Thus, the first error committed by the
ITO was to issue the notice under Section 263 on 18th March 2013, to the
address of the Appellant which was changed as far back in AY 2010-11.
There was no justification whatsoever to issue a notice of hearing under
Section 263 of the Act to the Assessee at an address which was at least three
years old. This shows that the ITO did not do the bare minimum of even
perusing the various returns filed by the Assessee prior to the issuance of the
notice.
18. From the records produced before us, the submission of Mr. Manchanda
is correct to the extent that the notice which was returned to the ITO was re-
posted to the Delhi address of the Appellant on 20th March, 2013. What
needs to be borne in the mind, however, is that the notice was dispatched on
20th March, 2013 to the Delhi address and the hearing was fixed for 22nd
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March, 2013 at 4pm in the ITO's office at Kolkata. This notice sent on 20th
March 2013, was also returned to the ITO, Kolkata on 25th March, 2013,
with an endorsement at the back of the envelope, which was not readable
either to the counsels or the Court.
19. While agreeing with Mr. Manchanda that the notice was issued on 20th
March, 2013, to the Delhi address, the question as to whether it constituted a
full opportunity to the Assessee to attend the hearing on 22nd March, 2013
needs no answer as it is obvious that even if the notice had been served, the
Assessee did not have adequate time to attend a hearing in Kolkata. Under
such circumstances, the CIT recorded in the impugned order dated 30th
March, 2013 that it is proceeding ex-parte in the matter. The noting in the
impugned order reads:
"The showcause notice, which was served by post
calling for compliance on 22-03-2013. The notice was
returned by the postal authority 25.03.2013. This
order is therefore being passed ex-parte."
20. The CIT who issued the order under Section 263 of the Act ought to
have been fully satisfied that adequate opportunity was given to the
Assessee to controvert the facts stated in the notice under Section 263 of the
Act and to explain the circumstances surrounding such facts. The
satisfaction of the CIT on these counts could not have been arrived at as per
the narration of facts and events as discussed hereinabove as the process
commencing with the issuance of the notice under Section 263 culminating
in the order dated 30th March 2013, was completed hurriedly - in a matter of
10 days even if the date of posting of the notice i.e., 20th March 2013 is
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included. Thus, the satisfaction of the CIT was misplaced.
21. The ITO, Kolkata could not have expected the Assessee to receive the
notice being posted on 20th March, 2013, and attend the hearing on 22nd
March, 2013. This Court has no doubt that this does not constitute full
opportunity as required by the Supreme Court in Amitabh Bachchan
(supra) in respect of a notice under Section 263 of the Act.
22. It, thus, appears that the notice having been given initially at the wrong
address and thereafter posted to the correct address just two days prior to the
said hearing and the said notice also having been returned unserved due to
the reasons which are not decipherable, the requirement under Section 263
(1) of the Act is not satisfied. In Chandra Agencies (supra) this Court has
gone to the extent of holding that refusal by the Assessee's son to receive
the notice under Section 148 of the Act does not constitute good service.
23. This Court has also examined the question as to whether an opportunity
of hearing could now be afforded to the Appellant. However, Section 263
(2) of the Act is a clear bar for any order being passed pursuant to a notice
under Section 263 of the Act, after the expiry of two years from the end of
the financial year in which the order sought to be revised was passed. Thus,
there is an outer limit in the statute under Section 263 which, in the present
case, is 31st March, 2013. Since, no useful purpose will be served in giving
an opportunity to the Appellant of being heard at this stage, this Court
answers question No.1 in the negative i.e. in favour of the Assessee and
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against the Revenue.
24. In view of the above, question No.2 does not survive. The appeal is
allowed and the notice dated 18th March 2013 as also order dated 30th
March, 2013 are set aside. There will be no order as to costs.
PRATHIBA M. SINGH, J
S.MURALIDHAR, J
SEPTEMBER 14, 2017
`ns'
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