$~30
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 31.10.2018
+ W.P.(C)No.11739/2018 & CM Nos.45456-57/2018
JINDAL METAL CO. ..... Petitioner
Through : Mr. Rajesh Jain, Mr. Girish K.
Shukla, Mr. A.K. Jain and Ms.
Aastha Gandhi, Advs.
versus
PRINCIPAL COMMISSIONER OF
INCOME TAX, DELHI-21 ..... Respondent
Through : Mr. Zoheb Hossain, Sr.
Standing Counsel for Revenue
and Mr. Deepak Anand, Jr.
Standing Counsel for Revenue.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE PRATEEK JALAN
S. RAVINDRA BHAT, J.(ORAL)
1. The writ petitioner challenges a revisional order dated 22.05.2017 of
the Commissioner of Income Tax ("CIT" hereafter) which upheld the
reassessment order of the Assessment Officer (AO) made for the
assessment year (AY) 2008-09.
2. The petitioner, an individual tax payer, claims to reside at C-309,
Vikas Puri, New Delhi-110018. From the said address, he submits that he
has been filing his income tax returns since 1996 onwards in accordance
with Section 124(1)(b) of the Act. This address falls within the jurisdiction
W.P.(C)No.11739/2018 Page 1 of 7
of Income Tax Officer Ward - 26(4) from where he was issued notice dated
28.02.2003 under Section 271F for AY 2000-01 followed by the penalty
order dated 12.03.2003. It is not in dispute that on 09.05.1999, he opened a
proprietorship concern by the name of Jindal Metal Co. at 5870/37, First
Floor, Basti Harphool Singh, Sadar Bazaar, Delhi-110006 which was
registered with the sales tax department at Delhi. The Petitioner filed his
income tax return for the AY 2008-09 with ward 26(4) against PAN
No.AEEPJ7166A on 29.09.2008. Along with the return, he filed an audit
report in Form 3CB as required under Section 44AB of the Act fully
disclosing all the details relating to sale/purchase, expenses, etc. On
26.04.2010, search and seizure under Section 132 of the Act was carried out
of M/s Rakesh Gupta, Vishesh Gupta, Navneet Jain & Vaibhav Jain
(hereafter "Rakesh Gupta & Ors."). The search assessments in accordance
with provisions of the Act (Section 153A etc) were pursued by the
Revenue, against Rakesh Gupta & Ors. In the meanwhile, claiming that the
materials gathered and the statements made in the course of search were
relevant, the Revenue sought to re-open the petitioner's assessment for AY
2008-09. The Additional CIT approved this move, on 23.03.2015. It is
alleged that on the same day, the AO issued a notice under Section 148 in
the name of Jindal Metal Co. This could not be served as the shop was
closed on 24/25 and 26.03.2015. It is alleged that one Rajesh Kumar, the
process server put a note dated 24.03.2015 on the file stating therein that on
enquiry it was found that the person has sold this shop long time ago. But
he affixed the notice under Section 148 on 26.03.2015 which as per the
affixture report was witnessed by one Anil Kumar, Inspector of Income
Tax.
3. On 05.10.2015, the AO issued notice under Section 142 (1) to the
petitioner which was not responded to in the course of reassessment
W.P.(C)No.11739/2018 Page 2 of 7
proceedings. Again, on 04.01.2016, a notice of hearing and final
assessment was sought to be served; due to the petitioner's absence, it was
affixed at the premises; in these circumstances, the AO completed the
reassessment on 11.01.2016, at `12,52,390/- after allowing credit of pre-
paid taxes, if any, and charged interest u/s 234A, 234B, 234C and 234D of
Income Tax Act as per law. Penalty proceedings under Section 271 (1) (b)
& 271 (1) (c) of the Act too were initiated.
4. The petitioner apparently did not respond; however, he approached
the CIT under Section 264 of the Income Tax Act, seeking revision of the
reassessment order. In the revision petition, it was averred as follows:
"The petitioner received on 28/01/2016 an assessment order
passed under section 143(3)/147 of the I T Act, 1961 on 11-01-
2016 accompanied by a notice of demand of date for Rs
785588.00 from the ITO, Ward-63(3), New Delhi in the case of
M/s Jindal Metal Co. in the status of Firm for Assessment Year
2008-09.
As it was not addressed to the petitioner and did not emanate
from his jurisdictional Assessing Officer, namely, ITO, Ward-26(
4), New Delhi the petitioner took these to have been miss-sent
and didn't bother much about it.
On 21-12-2016 the petitioner received yet another assessment
order passed under section 143(3)/14 7 of the I T Act, 1961
accompanied by another notice of demand of date for
Rs.589960.00again from the ITO, Ward-63(3), New Delhi in the
case of M/s Jindal Metal Co. in the status of firm for Assessment
Year 2009-10.
Alarmed by the recurrence the petitioner sought inspection of the
assessment records of the Firm M/s Jindal Metal Co, and came
to know that the learned AO, ITO, Ward-63(3), New Delhi had
acted on receipt of some information from ACIT, Central Circle
10, New Delhi about some alleged accommodation bills having
been issued by Shri Rakesh Gupta, Vinesh Gupta, Navneet Jain,
Vaibhav Jain to various traders including one M/s Jindal Metal
Co. which have culminated in these assessments.
Since the petitioner is also doing business under the trade name
M/s Jindal Metal Co. and the address of the Firm assessed by the
W.P.(C)No.11739/2018 Page 3 of 7
AO coincides with that of the petitioner, he felt that it may be
possible that the ITO, Ward-63(3), New Delhi intended to assess
the petitioner himself and as the petitioner is a law abiding
citizen and an honest tax payer and doesn't want to dodge any
proceedings intended to assess him, he decided to intervene.
He has preferred an appeal to the learned CIT (Appeal) XX New
Delhi impugning the assessment order dated 21-12-2016 for the
assessment year 2009-10 and since the time for filing an appeal
against the assessment order dated 11-01-2016 for the
assessment year 2008-09 has elapsed, the petitioner has come up
before you with this humble petition under section 264 of the
Income Tax Act."
5. The CIT disposed of the revision petition, stating as follows:
"I have carefully considered the submission of the assessee in the
petition under reference and the comments offered by the
assessing officer in this regard. It is a fact on record that the
assessee had not bothered to appear before the assessingofficer
in response to valid notice issued under section 148 of the
income tax act 1961 and assessee has partially admitted its
lapse, which according to him is due to the fact that the notice u/s
148 of the IT Act and subsequent assessment order was received
on January 28, 2016 passed under section 144/147 of the IT Act
1961 dated 11.01.2016 accompanied by a notice of demand of
status of firm for the A.Y. 2008-09 but accordingly to the
assessee as what he claims that as the same was not addressed to
the petitioner assessee and did not emanate from his
jurisdictional assessing officer, namely ITO Ward 26(4), New
Delhi the assessee petitioner look the assessment order and
notice of demand to have been misspent and he did not bother
accordingly, that it is only on 21.12.2016, when the petitioner
received yet another assessment order passed under section
144/147 of the IT Act accompanied by another notice of demand
of date in the case of M/s Jindal Metal Co. in the status of firm
for the A Y 2009-10, he sought inspection of the assessment
records of the firm M/s Jindal Metal Co. and came to know about
the factual details of the case and intervened in the matter and
subsequently filed the revision petition as the time for filing an
appeal against the assessment order dated 11.01.2016 for the
A.Y. 2008-09 had elapsed. However it IS evident that due to no-
W.P.(C)No.11739/2018 Page 4 of 7
cooperative and recalcitrant attitude of the assessee he could file
any appeal before the CIT (Appeal) though the assessment order
who duly served on the assessee on 28.01.2016 as also admitted
by the assessee. The order has been validity issued by the
assessing officer u/s 144 r.w.s. 147 of the IT Act 1961. Moreover
the assessee in its audit report u/s 44AB of the IT Act 1961, has
reflected 5870/37, First Floor, Basti Harphool Singh, Sadar
Bazar, Delhi as his business address. Here the 'reason to believe'
of the assessing officer is based on relevant and material reasons
and the assessee is required to file a return of income in response
to issue of notice under section 148 of the IT Act 1961, even if
return if filed under section 139 or 142(1) of the IT Act,
therefore, this petition of the assessee seeking relief for the
cancellation of the assessment order is herebydismissed being
devoid of any merits. However, the assessing officer should verify
the details submitted by the assessee during the review petition
filed before the undersigned and take appropriate action as
provided under the income tax act, 1961 including rectification
for carrying out the change of status of the assessee and if
deemed necessary may obtain the necessary records of the case
from the present assessing officer of the assessee he being the
correct jurisdictional officer of the case under reference.
The petition of the assessee is disposed of accordingly."
6. It is urged by the petitioner that the entire proceedings right from the
issuance of notice under Section 148 followed by the framing of the
assessment order under Section 147 of the Act are without jurisdiction. It is
submitted that the foundation of the case rests on the search conducted on
Rakesh Gupta & Ors. on 26.04.2010. The search was carried out under
Section 132 of the Act by the DGIT (Investigation). During investigations,
it was found that these persons were engaged in the business of providing
accommodation entries. As a consequence of this, assessment orders of the
above persons were passed by the ACIT, Central Circle-X under Section
153A/143(3) of the Act on 28.03.2013. It is submitted therefore, that the
proceedings could have been initiated only under Section 153C, and not
through reassessment.
W.P.(C)No.11739/2018 Page 5 of 7
7. It is stated that the entire proceeding under Section 147 is vitiated as
thejurisdictional notice u/s 148 of the Act has not been served upon the
petitioner. The fact of the matter is that the Section 148 notice dated
23.03.2015 was sent by Speed Post on 23.03.2015. This could not be served
because in terms of the report, the shop was found to be closed on 24, 25
and 26.03.2015 itself. The notice so sent apparently came back to the AO
on 30.3.2015. But before this report of non-service could come back, the
said notice was said to be affixed on 24.03.2015. The affixture was said to
be made under Order V Rule XVII of the Code of Civil Procedure. It is
submitted that as per the affixture report, Mr. Rajesh Kumar, the notice
server stated that he had affixed the notice at the address of the petitioner, in
the presence of the Inspector, who affirmed that the notice has been affixed
by the notice server at the last known address. It was therefore, argued that
the entire reassessment proceedings and additions made were vitiated and
consequently, the Commissioner erred in not interfering with it. Learned
counsel relied on some decisions, notably R. K. Upadhyay v Shanabhai P.
Patel (1987) 3 SCC 96 and that of this Court in Commissioner of Income
Tax v Chetan Gupta (2016) 382 ITR 613 (Del) which, following R. K.
Upadhyay (supra) and considering other judgments as well, has reiterated
that the legal requirement of service of notice upon the assessee in terms of
Section 148.
8. The materials on record show that the petitioner had one PAN
number; furthermore, it is not in dispute that he was served with
proceedings relating to reassessment notice. However, according to his
admission (in the averments in the revision petition) notice of assessment
and notice of demand for the subsequent assessment years were received by
him. These established that he was functioning at the address to which the
reassessment notices (and hearing notices) were addressed. In these
W.P.(C)No.11739/2018 Page 6 of 7
circumstances, his claim that the process server's file noting conclusively
established that notice could not be served (due to his absence) and the
defect alleged in the affixture (at the address) is insubstantial and
unmerited. The revision petition admitted in clear terms that the
reassessment order and subsequent demand notice, were received. In the
circumstances, the argument that notice of reassessment and hearing notices
were not received, rings hollow.
9. Undoubtedly, reassessment proceedings can be initiated and
completed after notice to the assessees and granting opportunity to them.
However, the facts of this case reveal that not only were the notices
received, even the reassessment order was received (the revision petition
admits as much) and the assessee did not care to appeal against it;
concededly, he filed the revision petition after the period of limitation.
Given these facts, the Commissioner cannot be faulted for rejecting the
revision petition on the ground that there was no jurisdictional error.
10. For the above reasons, this court is of opinion that there is no merit
in this petition; it is accordingly dismissed but without any order on costs.
Pending applications also stand dismissed.
S. RAVINDRA BHAT, J.
PRATEEK JALAN, J.
OCTOBER 31, 2018
W.P.(C)No.11739/2018 Page 7 of 7
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