PER BENCH ; These 24 appeals of three different assessees arise from different orders of CIT(A), Jammu for the assessment years 1999-2000 to 2006-07 as per details given below: S.No. ITA No. Name of the party Asstt. Yr. CIT(A) Date of order 1 to 4 141,142,149,150, M/s. Goodfaith Constructions Pvt. Ltd. 1999- 2000, 2000-01, 2001-02, 2003-04, Jammu 14.02. 5 to 8 171, 172, 173 & 174(Asr) -do- 2002-03, 2004-05, 2005-06 & 2006- 07 -do- 14.03. 9 to 12 133 to 136 (Asr)/ M/s. Healthy Holding Pvt. Ltd. 1999- 2000, 2000-01, 2001-02, 2003-04, ITA Nos. 141,142,149, 150 and others 3 13 to 16 165 to 168(Asr)/ -do- 2002-03, 2004-05, 2005-06 & 2006- 07 do- 14.03. 17 to 19 145, 158, 159 (Asr) M/s. Govind Impex Pvt. Ltd Jammu 1999- 2000, 2000-01 & 2001- 02 20 to 24 169, 211, 212, 170 & 213 (Asr)/ -do- 2003-04, 2002-03, 2004-05, 2005-06 & 2006- 07 -do- 14.03.
2. In the case of Goodfaith, Construction (P) Ltd; Jammu the assessee has raised following common grounds in all the appeals: 1. That the Ld. CIT(A), Jammu has grossly erred in upholding the order passed by the Assessing Officer which is illegal, arbitrary and contrary to facts.
2. That the Ld. CIT(A), Jammu has grossly erred in rejecting the contention of the assessee regarding illegal service of notice u/s 148 dated 28.03.2006 by affixture in the first instance and in ignoring the provisions of order 5 Rule 20 of Civil Procedure Code.
3. That the remand report dated 30.09.2010 given by the Assessing Officer and reproduced in the appellate order was never confronted to the assessee by Ld. CIT(A), Jammu.
4. That the order passed by Ld. CIT(A), Jammu is perverse as the findings given by him on the issue of illegal service of notice u/s 148 are based on facts contrary to evidence on record. ITA Nos. 141,142,149, 150 and others 4
5. That the Ld. CIT(A), Jammu has grossly erred in relyng upon the decision of Yogesh Kumar & Sons (HUF) 115 TTJ 696 (Asr) and ignoring the direct decisions of Punjab & Haryana High Court in the case of CIT vs. Avi Oil India Ltd. reported at 323 ITR 242 (P & H).
6. That the Ld. CIT(A) Jammu has completely misdirected himself in not appreciating that the proceedings for A.Y. 1999- 2000 had never traveled to ITAT, Amritsar Bench and that he was passing the first appellate order.
7. That the Ld. CIT(A), Jammu has grossly erred in rejecting the application of the assessee to place additional evidence on record regarding specific business activity having been carried out by the assessee.
8. That the Ld. CIT(A), Jammu has grossly erred in confirming the action of the A.O. in invoking proceedings u/s 148 without any new facts having been brought on record and acting merely on change of opinion and direction of superior officers.
9. That the Ld. CIT(A), Jammu has grossly erred in not appreciating the doctrine of resjudicata applicable to assessee because there was no change of facts or law with regard to nature of the income as Business Income as in past asstt. years.
10. That the Ld. CIT(A), Jammu has grossly erred in confirming the order of the A.O. in departing from the principle of consistency of accepted history of the assessee, which is contrary to several decisions of Supreme Court.
11. That the Ld. CIT(A), Jammu has grossly erred in not allowing House Tax & Business Expenses claimed by the assessee company incurred in order to maintain its assets and its status as a company. ITA Nos. 141,142,149, 150 and others 5
3. In the case of M/s. Healthy Holdings Pvt. Ltd; Jammu the assessee has raised following common grounds in all the appeals: 1. That the Ld. CIT(A), Jammu has grossly erred in upholding the order passed by the Assessing Officer which is illegal, arbitrary and contrary to facts. 2 That the Ld. CIT(A), Jammu has grossly erred in rejecting the contention of the assessee regarding illegal service of notice u/s 148 dated 28.03.2006 by affixture in the first instance and in ignoring the provisions of order 5 Rule 20 of Civil Procedure Code.
3. That the remand report dated 30.09.2010 given by the Assessing Officer and reproduced in the appellate order was never confronted to the assessee by Ld. CIT(A), Jammu.
4. That the order passed by Ld. CIT(A), Jammu is perverse as the findings given by him on the issue of illegal service of notice u/s 148 are based on facts contrary to evidence on record.
5. That the Ld. CIT(A), Jammu has grossly erred in relyng upon the decision of Yogesh Kumar & Sons (HUF) 115 TTJ 696 (Asr) and ignoring the direct decisions of Punjab & Haryana High Court in the case of CIT vs. Avi Oil India Ltd. reported at 323 ITR 242 (P & H).
6. That the Ld. CIT(A) Jammu has completely misdirected himself in not appreciating that the proceedings for A.Y. 1999- 2000 had never traveled to ITAT, Amritsar Bench and that he was passing the first appellate order.
7. That the Ld. CIT(A), Jammu has grossly erred in rejecting the application of the assessee to place additional evidence on record regarding specific business activity having been carried out by the assessee.
8. That the Ld. CIT(A), Jammu has grossly erred in confirming the action of the A.O. in invoking proceedings u/s 148 without ITA Nos. 141,142,149, 150 and others 6 any new facts having been brought on record and acting merely on change of opinion and direction of superior officers.
9. That the Ld. CIT(A), Jammu has grossly erred in not appreciating the doctrine of resjudicata applicable to assessee because there was no change of facts or law with regard to nature of the income as Business Income as in past asstt. years. 10 That the Ld. CIT(A), Jammu has grossly erred in confirming the order of the A.O. in departing from the principle of consistency of accepted history of the assessee, which is contrary to several decisions of Supreme Court.
11. That the Ld. CIT(A), Jammu has grossly erred in not allowing House Tax & Business Expenses claimed by the assessee company incurred in order to maintain its assets and its status as a company.
4. In the case of M/s. Govind Impex Pvt. Ltd; Jammu the assessee has raised following common grounds in all the appeals: 1. That the Ld. CIT(A), Jammu has grossly erred in upholding the order passed by the Assessing Officer which is illegal, arbitrary and contrary to facts. 2 That the Ld. CIT(A), Jammu has grossly erred in rejecting the contention of the assessee regarding illegal service of notice u/s 148 dated 28.03.2006 by affixture in the first instance and in ignoring the provisions of order 5 Rule 20 of Civil Procedure Code. 3 That the remand report dated 30.09.2010 given by the Assessing Officer and reproduced in the appellate order was never confronted to the assessee by Ld. CIT(A), Jammu. ITA Nos. 141,142,149, 150 and others 7 4 That the order passed by Ld. CIT(A), Jammu is perverse as the findings given by him on the issue of illegal service of notice u/s 148 are based on facts contrary to evidence on record. 5 That the Ld. CIT(A), Jammu has grossly erred in relyng upon the decision of Yogesh Kumar & Sons (HUF) 115 TTJ 696 (Asr) and ignoring the direct decisions of Punjab & Haryana High Court in the case of CIT vs. Avi Oil India Ltd. reported at 323 ITR 242 (P & H). 6 That the Ld. CIT(A) Jammu has completely misdirected himself in not appreciating that the proceedings for A.Y. 1999- 2000 had never traveled to ITAT, Amritsar Bench and that he was passing the first appellate order. 7 That the Ld. CIT(A), Jammu has grossly erred in rejecting the application of the assessee to place additional evidence on record regarding specific business activity having been carried out by the assessee.
8. That the Ld. CIT(A), Jammu has grossly erred in confirming the action of the A.O. in invoking proceedings u/s 148 without any new facts having been brought on record and acting merely on change of opinion and direction of superior officers.
9. That the Ld. CIT(A), Jammu has grossly erred in not appreciating the doctrine of resjudicata applicable to assessee because there was no change of facts or law with regard to nature of the income as Business Income as in past asstt. years. 10 That the Ld. CIT(A), Jammu has grossly erred in confirming the order of the A.O. in departing from the principle of consistency of accepted history of the assessee, which is contrary to several decisions of Supreme Court.
11. That the Ld. CIT(A), Jammu has grossly erred in not allowing House Tax & Business Expenses claimed by the assessee company incurred in order to maintain its assets and its status as a company. ITA Nos. 141,142,149, 150 and others 8
5. First of all, we take up appeal of the assessee in the case of M/s. Goodfaith Construction (P) Ltd; Jammu, in ITA No.141(Asr)/ for the assessment year 1999-2000. Since the facts in the present appeal are identical to the facts in other appeals of the same assessee for different years as well as other appeals of other assessees for all the assessment years, accordingly our decision given hereinbelow in the present appeal of M/s. Goodfaith Construction (P) Ltd; for the assessment year 1999-2000 in ITA No.141(Asr)/ shall be identically applicable in all other 23 appeals of different years of three different assessees mentioned hereinabove.
6. The brief facts in the present appeal in ITA No.141(Asr)/ for the A.Y. 1999-2000 in the case of M/s. Goodfaith Construction (P) Ltd. are that the return of income was filed on 22.02.2000 showing an income of Rs.5,44,840/-. On assessment the AO due to reasoning advanced in the assessment order held that the income amounting to Rs.17,28,000/- received as rent to be assessed as income from house property and not under income from business as claimed. The Ld. CIT(A) decided the appeal in favour of assessee vide his order dated 26.03.2007. The case traveled to ITAT and before it the revenue has filed additional grounds also and an application for admission of certain additional evidence. On the other hand assessee also ITA Nos. 141,142,149, 150 and others 9 filed a petition for admission of certain additional evidence. The ITAT has referred the matter back to the file of CIT(A) with the directions as under:
We have heard both the parties and have gone through the material placed on record. These additional evidences go to the root of the matter and the CIT(A) had no occasion to consider these additional evidences. In the interest of justice, we set-aside the aforesaid evidences to the file of the ld. CIT(A) for fresh examination. He would be at liberty to obtain a remand report in this regard from the A.O. Thereafter, the CIT(A) shall decide both the appeals afresh on merits, in the light of the aforesaid additional evidences.
7. Before the ld. CIT(A) additional evidences filed by both sides were forwarded to each side for their respective comments. It was also mentioned by the ld. CIT(A) that each and every issue raised and written submissions filed during the course of assessment proceedings were forwarded to both the parties so as to provide adequate opportunity to both the parties. The assessee filed written submissions for the assessment year 2003-04 and the ld. CIT(A) has mentioned in para 3(b) of his order that identical submissions applies for other assessment years also as the core issue is identical in all assessment years except some minor modifications. Such written submissions of the assessee are part of the order of CIT(A) at page 3 to 21. The Ld. CIT(A) observed that written submissions and the arguments of the assessee are more or less comprises of the following: ITA Nos. 141,142,149, 150 and others 10 i. The first contention raised is technical/legal in nature that the service of notice in the first place through affixture was not a valid service hence the assessment was illegal ( this plea is raised for the first time in this second innings). Certain case laws are filed in support. ii. The assessee is neither an owner of the property nor a deemed owner of the property nor a deemed owner as per section 27(iiib) of the Act refer with 269UA(f) of the Act. iii. The deptt. in the past has accepted the stands of the assessee even in assessments made u/s 143(3) of Income-tax Act, 1961 and hence, rule of consistency demands that no departure is to be made.
8. Vide para 4(b), the Ld. CIT(A) observed that the contention No.1 as mentioned hereinabove has been raised for the first time during the entire proceedings that too only on 25.08.2010 which was never before the ITAT and there was no occasion to adjudicate the same by the ITAT. The relevant findings of the CIT(A) in para 4(b) are reproduced for the sake of convenience as under:
4.b. Regarding argument at (i) above, this is made for the first time during entire proceedings and for that only on 25.08.2010 an additional ground is raised. This was also not before the ITAT and hence there was no occasion to adjudicate it by the ITAT. The directions of ITAT while remanding the matter to file of CIT(A) does not mentioned about this issue. In other words, such contention is not only not direct by the ITAT nor it has arisen out of the orders. The directions confine themselves to additional evidence to be examined and mater to be decided.ITA Nos. 141,142,149, 150 and others 11
9. The said additional ground, however, was forwarded to A.O. for his comments. The A.O. vide letter dated 30.09.2010 has submitted his observations which are available in para 4(d) to 4(h) at pages 22 to 25 of CIT(A)s order. The relevant case records were produced by the A.O. on the date of hearing before the ld. CIT(A) which were perused by the ld. CIT(A), who dismissed the additional grounds of the assessee. The findings of the ld. CIT(A) for the sake of convenience in para 4(j) to 4(r) at pages 25 to 28 are reproduced for the sake of convenience as under: 4j. The relevant case records were also produced on the date of hearing i.e. 06.10.2010, it is seen that notice by RPAD was issued on
29.03.2006 and also the affixture was done on 29.03.2006. In view of this it cannot be said that notice was sought to be served by AO only by the way of affixture and by one other way. Considering this the reliance of assessee on cases of Kunj Bihari vs. ITO 139 ITR 75 (P&H), Smt. Krishna Khanna in ITA No.602(Asr)/2004 dated
11.08.2006 are not helping the cause of assessee as the facts as brought out are clearly distinguishable . The case law in case of Kuber Tobacco Products (P) Ltd. vs. DCIT decided by ITAT Delhi Special Bench 120 TTJ (Del) SB 577 is also of no help that holds that the amendment in section 292BB w.e.f. A.Y.2008-09 is not retrospective, as the AO has resisted from over emphasizing his reliance as to this amendment but has relied on the fact that the case laws relied on by the assessee were distinguishable considering the facts of the present case in view of the action of the Assessing Officer by serving the notice through speed post and as an alternate service, through affixture when it couldnt have served as per the satisfaction recorded by the A.O. 4k. It is decided in following cases that service of notice by RPAD which has not received back unserved, raises the presumption of the service of notice on the assessee: i) CIT vs. Vins Overseas India Ltd. 305 ITR 320 (Del) ITA Nos. 141,142,149, 150 and others 12 ii) CIT vs. Yawce Industries Ltd. 306 ITR 309 (Del) iii) CIT vs. Madhsy Films (P) Ltd 301 ITR 69 (Del) iv) CIT vs. Shanker Lal Ved Parkash 300 ITR 243 (Del) No rebuttal to the above contention brought out by A.O. has been raised by the assessee, instead the assessee had replied to the AO as reported in the above referred report acknowledging the service of notice as per letter of assessee dated 28.05.2006 and implied by subsequent conduct. The conduct of the assessee throughout has been to participate in the assessment proceedings, appellate proceedings before the CIT(A) and thereafter before Honble ITAT and in this first innings such contention was never raised and thats why the directions of ITAT which are specific and directory dont say anything on this. Having said the above, the most important issue issue is that whether CIT(A) can travel beyond the directions of ITAT In the present case, the directions of the ITAT are quite clear that in view of the additional evidences filed before the tribunal which goes to the root of the matter, the CIT(A) was to decide the appeal. This issue was nowhere is picture till then and this issue involved entertaining fresh evidence and investigations in to the case records which is not permissible is view of the decision of the Apex Court in case of Manji Dama vs. CIT, 60 ITR 582 (SC), head notes of which reads as under:
Tribunal shall not be said to be working arbitrarily if it refuses the permission of raising an entirely new issue involving additional evidence or investigation into fresh facts which couldnt have raised at an earlier stage.4m. Further, it is also held by the Honble P & H High Court in case of Baldev Singh Giani vs. CIT reported at 248 ITR 266 that when ITAT directs the CIT(A) to record a finding on one issue then the powers of CIT(A) is limited to that issue. 4n. In a recent order passed by Honble High Court of Punjab & Haryana on 09.12.2010 reported in 49 DTR judgments in case of M/s. Aravali Engineers (P) Ltd. The similar question arose and it was decided against assessee by holding: ITA Nos. 141,142,149, 150 and others 13
Appeal (Tribunal)-Additional ground Admissibility assessee raised plea of the assessment being barred by limitation on the ground that notice u/s 143(2) was not served within the stipulation time Normally a question of fact may not be allowed to be raised for the first time as it may prejudice the other side question of validity of notice may not be allowed to be raised for the first time in appeal Subsequent amendment adding S. 292B supports this principle such a plea could not be allowed to be raised for the first time before the Tribunal.4p. In the same judgment it was discussed there As regards question (i), we do not find any reason to take a view different from the view taken by the Tribunal. No doubt that an appellate authority can allow question to be raised for the first time even if such a question was not raised at a lower forum but the discretion to do so has to be exercised in the interest of justice in the facts and circumstances and no mechanically. Normally a question of fact may not be allowed to be raised for the first time as it may prejudice the other side. If such question is raised at the earliest opportunity, the other side can lead evidence which it may not be able to do if such a question is raised for the first time before the appellate authority. Of course, there can be no total bar on such question being allowed, if interest of justice so requires. In National Thermals case (supra) it has not been laid down that in every case a question of fact can be mechanically allowed to be raised for the first time. The Madhya Pradesh High Court in CIT vs. Premium Capital Market & Investment Ltd. (2005) 275 ITR 260 (MP) held that question of validity of notice may not be allowed to be raised for the first time in appeal. Subsequent legislative amendment adding s. 292B supports this principle. The question has, thus, to be answered against the assessee. 4q. Similar issue was decided by Honble High Courts of Calcutta in case of M/s. Mukti Properties (P) Ltd. reported in 50-DTR judgments, passed on 11.02. as under:
Appeal (High Court) Scope Issue not raised before authorities below assessee did not agitate the issue of jurisdiction of AO to initiate the reassessment proceedings before any authority ITA Nos. 141,142,149, 150 and others 14 below. Moreover, assessee itself invited the AO and the CIT(A) to decide the matter on merits waiving its right to question the validity and legality of the notice u/s 148 and the action of reassessment Therefore, this issue cannot be dealt with in the appeal u/s 260A.4r. In view of the above, I hold that the additional ground raised by the assessee deserves dismissal and hence dismissed.
10. Regarding the facts of the case, the ld. CIT(A) reproduced the events entering into the agreement by the assessee and three companies mentioned hereinabove with the land lady Mrs. Ranjit Kaur on different dates in respect of construction and development of property at B-68, Greater Kailash, New Delhi and subsequently taking it on lease and further giving it on rent to M/s. ANZ Grindlays Bank by assessee companies is discussed by the ld. CIT(A) at pages 28 & 29 of his order, which for the sake of convenience is reproduced as under:
i. Agreement dated 13.01.1998: This was the agreement between Mr. Ranjit Kaur, the and lady and three companies as mentioned above of the assessee group through the Managing Director Mr. M.L.Magotra of M/s. Bovind Impex. The agreement was made for construction and development of the property at B-68, Greater Kailash, and New Delhi. The property as per default of clause 10 & 11 and in view of clause 12 the property devolved on three companies as above to dealt with the said property anyway it deemed fit without any need for approval or consonance of the owner: (This is an additional evidence filed by the revenue) ii) Lease agreement between Mr. Ranjit Kaur M/s. Health Holding (P) Ltd. dated 16.01.91. ITA Nos. 141,142,149, 150 and others 15 The property was taken on lease by the company for a term of 5 years initially. The following were salient features of lease agreement. a) for renewal, the option was with the lessee. b) Right to sublet without prior consent of the landlady c) Tenants can make structural alteration, erect upon premise and plant/furnitures/fixtures. d) Tenants had unfettered right to renewal and the right to terminate the lease. iv) Addendum to lease deed dated 20.11.91 Clause v of this addendum provided that lease deed would then be co-terminus with the subsistence of the sub-tenancy of M/s. ANZ Grindlays Bank or its successors. The lease shall be continued to remain lease so long as ANZ Grindlays Bank or its successor remain in possession of the property:. iii) Sublease deed between assessees and ANZ Grindlays Bank dt.31.06.91 In view of the clauses of original lease deed and the addendum, the assessee need not to have any concurrence of Mrs. Ranjit Kaur, the landlady. She is not a signatory to their deed. The lease was 9 years term. Renewal for 9 more years at the option of the bank.
11. The Ld. CIT(A) after discussing the contention of the assessee , facts on record and additional evidence filed by both sides, pleas of the assessee as to consistency in proceedings, arguments of the assessee and the case laws relied upon , dismissed the appeal of the assessee by confirming the action of the A.O. The said findings are available at pages 32 to 39 of CIT(A)s order, which for the sake of convenience are reproduced as under: It is abundantly clear from the above that by way of entering into lease deed dated 16.01.1991 the assessee companies got the lease for ITA Nos. 141,142,149, 150 and others 16 5 years subject to renewal at their option for 3 more successive terms. Alongside by entering into a sub-letting deed with M/s. ANZ Grindlays Bank for 9 years and extendable to 9 further years, in effect they exercised their right for extension/renewal which was to be done without the consent of the landlady. The addendum signed on
20.11.1991 has further expanded the rights of assessee to have the lease deed renewed automatically till the bank was in the possession. In effect when in year 2000 the bank renewed the sub-lease for another 9 years ( which is still in possession of the bank) it was undisputedly covered u/s 27(iii) b of the I.T.Act. It is seen from the documents filed by the assessee that on one hand the assessee is fighting tooth and nail for its irrevocable rights over its portion (Telegram sent to landlady on 15.12.1995 for renewal) and on the other hand contending otherwise. Whatever the assessee is consciously contending before the courts to defend its irrevocable interest is in contradiction with what is averred before Income tax authorities. The undisputed fact is that assessee since 1991 has been enjoying the rights till now and the bank is still in possession of the premises. What the assessee wants to contend is presumption of assessee of not being the deemed owner in view of the suit filed, that too by moving the clock backward. The fact that as per the agreements on record and assessees pleadings before the court and factual position of the assessee enjoying its rights till now undoubtedly put the assessee on the position of deemed owner for the purpose of section 22 to 26 which deals with assessment of rental income as the income from house property. 4u. Before passing this order, a recent order of the Honble Supreme Court has come to the notice in which the Honble Apex Court decided the matter relating to one of the assessee companies M/s. Govind Impex (P) Ltd has held that the assessee was undoubtedly a deemed owner throughout. This case relates to the prosecution proceedings initiated by the Appropriate Authority against the assessee company as above. The said judgment was forwarded to the authorized counsel of the assessee vide this office letter No.707 dated
25.01. and a reply has been received that the decision of Apex Court is binding. The Authorized Representative reiterated the arguments taken in support of additional ground taken in respect of service of notice. It is to reveals once again reiterate that since two ITA Nos. 141,142,149, 150 and others 17 other companies are also lessees in respect of the same premises and rented their shares to M/s. ANZ Grindlays Bank Ltd. the order of the Honble Supreme Court apply to them also. The relevant part of the decision of Honble Supreme Court in criminal appeal No.41 of 2006 in case of M/s. Govind Impex (P) Ltd. has been decided on 07.12.2010 are reproduced as under: The rival submissions necessitate examination of Section 269UA(f)(i) of the Act, particularly its explanation, same reads as follows: (i) in relation to any immovable property referred to in sub-clause (i) of clause (d), means transfer of such property by way of sale or exchange or lease for a terms of not less than twelve years, and includes allowing the possession of such property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) Explanation - For the purposes of this sub-clause, a lease which provides for the extension of the term thereof by a further term or terms shall be deemed to be a lease for a term of not less than twelve years, if the aggregate of the term for which such lease is 6 to be granted and the further term or terms for which it can be so extended is not less than twelve years;
6. On a plain reading of the explanation aforesaid it is evident that a lease which provides for the extension of the term thereof by a further term it shall be deemed to be a lease for a term of not less than twelve years, if the aggregate of the period for which the lease is granted and period of extension counted together makes it more than twelve years. In the present case, we are proceeding on our assumption that explanation to Section 269 UA(f)(i) would be attracted only when lease provides for extension of term and in view thereof, we do not consider it expedient to examine the judgment relied on by Mr. Salve. In the case in hand, the lease was for a period of nine years and the question, therefore, is as to whether the same was extendable for a further period of nine years so as to make it for not less than twelve years. To answer this one is required to refer to the lease deed and Clauses 1 and 12 thereof which are relevant for the purpose, same read as follows:
That the Lessors of the First Part have agreed to lease out to the Lessee of the Second Part the demised premises as aforesaid which are being used for commercial purposes at present namely on the lower ground floor/basement, ground floor/upper ground floor, first floor, second floor and the terrace of the building known as B-68, Greater Kailash-I, New Delhi - 110048, and clearly delineated in green outlines in the site plan annexed herewith for a period of nine years, extendable purely at the discretion and option of the Lessee of the Second Part for a further period of nine years, commencing from the date when the ITA Nos. 141,142,149, 150 and others 18 possession of the premises is handed over i.e. 1.06.1991 and ending on the last date when the period of first nine years expires i.e. on 31.05.2000 at a monthly lease amount of Rs.2,50,000/- (Rupees Two lacs and fifty thousand only) subject to the periodic revision as mentioned in later para. The said premises comprise of a total area of about 12904 sq. ft. with floor wise rentals as per the details below:-4v. Since the above decision is delivered in the case of assessee itself and is applicable equally to all the three companies involved i.e. M/s. Govind Impex Pvt. Ltd. M/s. Goodfaith Constructions )P) Ltd and M/s. Health Holdings Pvt. Ltd; the issue as to whether the assessee was a deemed owner in view of section 269UA read with ITA Nos. 141,142,149, 150 and others 19 section 27(iii)(b) of I.T.Act and has to be assessed consequently under the head income from house property has been set to rest by the decision of the highest court of the land. All the contentions raised by assessee in this regard before the undersigned need no further discussion as it would be only academic in nature as the issue has been clinched. 4w. Here, one contention of assessee that section 269UA is no more on statute may be discussed. In case of M/s. Surana Steels (P) Ltd 237 ITR 777 the Honble Supreme Court had discussed the implication and effect of incorporation of the act into another act as following: Section 115J, Explanation, clause (iv), is a piece of legislation by incor poration. Dealing with the subject, Justice G. P. Singh states in Principles of Statutory Interpretation (7th edition, 1999) (page 233). "Incorporation of an earlier Act into a later Act is a legislative device adopted for the sake of convenience in order to avoid verbatim reproduc tion of the provisions of the earlier Act into the later. When an earlier Act or certain of its provisions are incorporated by reference into a later Act, the provisions so incorporated become part and parcel of the later Act as if they had been bodily transposed into it. The effect of incorporation is admirably stated by Lord Esher, M.R. : If a subsequent Act brings into itself by reference some of the clauses of a former Act, the legal effect of that, as has often been held, is to write those sections into the new Act as if they had had been actually written in it with the pen, or printed in it.": 4x. The clause (f) of section 269UA is incorporated in section 27(iii)(b) and in view of the above order of Honble Supreme Court it is immaterial whether section 269UA(f) is no more in operation. Its alive and kicking in section 27(iii)(b) of I.T. Act which is there for the purpose of section 22 to 26. Section 27(iii)(b) of I.T. Act: a person who acquires any rights (excluding any rights by way of a lease from month to month ITA Nos. 141,142,149, 150 and others 20 or for a period not exceeding one year) in or with respect to any building or part thereof, by virtue of any such transaction as is referred to in clause (f) of section 269UA, shall be deemed to be the owner of that building or part thereof;] And clause (f) of section 269UA reads. f) transfer
12. That the Lessee may at its option and discretion renew the lease for a further period of nine years after the expiry of the term of the present lease on 31st May,
2000. If the Lessee shall be desirous of such renewal it shall give a notice of such renewal to the Lessors at least three months prior to the expiry of the term in the present lease deed. The subsequent renewals of the Lease Deed shall also be got duly signed and registered. The renewals of the Lease shall be on the same terms and conditions.
7. Mr. Salve submits that statute providing for penal prosecution has to be construed strictly. He refers to Clause 12 aforesaid and contends that it shall govern the field. Mr. Bhatt submits that it is Clause 1 of the lease deed which shall govern the issue. We do not have the slightest hesitation in accepting the broad submission of Mr. Salve that Penal statute which make an act a penal offence or impose penalty is to be strictly construed and if two views are possible, one favourable to the citizen is to be ordinarily preferred but this principle has no application in the facts of the present case. There is no serious dispute in regard to the interpretation of explanation to Section 269UA(f) of the Act and in fact, we are proceeding on an assumption that it will cover only such cases where exists provision for extension in lease deed. In our opinion, what we are required to consider is the terms and conditions of lease. The terms of lease are not to be interpreted following strict rules of construction. One term of the lease cannot be taken into consideration in isolation. Entire document in totality has to be seen to decipher the terms and conditions of lease. Here in the present case, Clause 1 in no uncertain term provides for extension of period of lease for a further period of 9 nine years and clause 12 thereof provides for renewal on fulfillment of certain terms and conditions. Therefore, when the document is constructed as a whole, it is apparent that it provides for the extension of the term. If that is taken into account the lease is for a period of not less than twelve years. Once it is held so the explanation to Section 269UA(f)(i) is clearly attracted. We are of the opinion that the High Court is right in observing that "on a conjoint reading of paras 1 and 12 of the lease deed, the lessor intended the lease to last for 18 years and further the lessor could not have refused to renew/extend the lease after first term if the lessee complied with the conditions.
(i) in relation to any immovable property referred to in sub-clause (i) of clause (d), means transfer of such property by way of sale or exchange or lease for a term of not less than twelve years, and includes allowing the possession of such property to be taken or retained in part performance of a contract of the nature referred to in section 5A of the Transfer of Property Act, 1882 (4 of 1882). Explanation.For the purposes of this sub-clause, a lease which provides for the extension of the term thereof by a further term or terms shall be deemed to be a lease for a term of not less than twelve years, if the aggregate of the term for which such lease is to be granted and the further term or terms for which it can be so extended is not less than twelve years ; (ii) in relation to any immovable property of the nature referred to in sub-clause (ii) of clause (d), means the doing of anything (whether by way of admitting as a member of or by way of transfer of shares in a co-operative society or company or other association of persons or by way of any agreement or arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, such property.4y . It is well settled that where a deeming provision is intended to enlarge the meaning of a word has to be given its full effect and carried to its logical conclusion within the filed of the definite purpose for which the friction is created. In view of this once the assessee has been held to be deemed owner by the Apex Court, the assessee has to be treated as a deemed owner for the purpose of section 22 to 26 of I.T. Act and the rental income received by it has necessarily to be treated as Income from house property ITA Nos. 141,142,149, 150 and others 21 and not under any other head, as all the heads of income are mutually exclusive. 4z.In view of the above, it is held that the assessee is a deemed owner of the property in question and on this account, the income received by way rent received from M/s. ANZ Grindlays Bank is to be assessed as Income from house property. In view of the above, the decision in case of M/s. Divya Devi 217 ITR 824 is also of no help to assessee, as the decision of the Honble Supreme Court has been passed in case of assessee itself. 4aa.The last contention of assessee was that in view of earlier assessments the consistency is not to be disturbed as no new fact have come to light in subsequent years. This is heavily relied by the assessee. This remained a major factor while deciding the appeal of assessee by my ld. predecessor. The assessee has filed a lot number of case laws in its support to contend that on the issue of consistency as well as on merits it had a strong case. 4ab. The jurisdictional ITAT, Amritsar in case of ITO vs. Goverdhan Dass 20 ITD 681 has held that an erroneous view in law could not be allowed to be perpetuated on the ground of consistency. 4ac. Here it is quite clear that in view of the decision of Honble Supreme Court in assessees own case, holding it to be deemed owner and thus liable to be assessed under the head income from house property has undisputedly established that the view taken earlier was an erroneous view and had to be rejected. It is well settled that rule of resjudicata does not apply to income tax proceedings. It is true that certain weightage is given by courts to the consistency so that a settled issue is not unsettled by a change of opinion or approach. This case is different because the view taken earlier ( if a considered view was taken or not it is also to be discussed in brief in this order), is rendered legally not tenable on the basis of factual position, as held by the Honble Supreme Court in the case of assessee itself. ITA Nos. 141,142,149, 150 and others 22 4ad . I have gone through the assessment orders in respect of these three companies and found that the issue of assessability under the Income from house property is seldom investigated or discussed by the A.O. during assessment. In view of this it cannot be said that a considered view was taken so as to apply consistency. In view of the verdict of Honble Supreme Court (supra), this issue also is now more or less academic. The various case laws in support of their respective contentions cited by both the revenue and the assessee, on merits or otherwise need no deliberation in view of the order of the Honble Supreme Court (supra). It is seen that deduction of municipal taxes has been allowed by the A.O. in order passed u/s 154 of the Act, hence this contention needs no further deliberations. Also the plea tat assessee has received advances against sale of shops has been raised for the first time and was no subject matter of dispute before the Honble ITAT, the additional evidence in this regard is not to be entertained as the undersigned is not mandated for the same. Further, the assessee has never taken such plea and the issue as per directions of Honble ITAT has well defined shape.
5. In view of the above, all the grounds raised by assessee including additional grounds taken are decided against the assessee and the action of the Assessing Officer is confirmed.
12. The Ld. counsel for the assessee, Mr. Padam Bahl, CA with regard to the legal issue in grounds No. 1 to 8 invited our attention to paper book page 1 being the reasons recorded by the A.O. which are dated 23.03.2006, PB-2 being notice u/s 148 dated 28.03.2006 and PB-3 being satisfaction of the AO dated 28.03.2006 that notice u/s 148 is not possible in the ordinary course of service and therefore, direction to the notice server to serve notice by means of affixture on the last known address of the assessee. ITA Nos. 141,142,149, 150 and others 23
13. The Ld. counsel for the assessee, Mr. Padam Bahl, CA argued and conceded that there is no dispute to the fact that the notice was actually affixed on 28.03.2006 at the Jammu address of the assessee. He also argued and conceded that service by ordinary course was though affected but only after notice by affixture. He argued probably that notice issued in the ordinary course must have been served on 3 rd April, 2006 for which he does not have any record.
14. The Ld. counsel for the assessee, Mr. Padam Bahl, CA argued that there is no question that notice has not been served. The question as to whether service by affixture can be made without adopting ordinary course of service of notice which if made is illegal and he relied upon the following decisions in this regard: i) CIT vs. Avi-Oil India (P) Ltd 323 ITR 242 (P&H) ii) DCIT vs. K.G.Singhania 29 DTR 289 iii) CIT vs. Avtar Singh 304 ITR 333 (P&H) iv) Arun Lal vs. ACIT 126 TJ (Agra ) (TM) 346 v) Kuber Tobacco Products (P) Ltd vs. DCIT 120 TTJ (Del) (SB) 577 Therefore, notice issued and served u/s 148 is bad in law and reassessment proceedings are liable to be quashed. ITA Nos. 141,142,149, 150 and others 24
15. On the query from the Bench, the ld. counsel for the assessee replied and conceded that there is no dispute that the assessee did not raise any legal objection w.r.t. service of notice either by affixture or by ordinary course during assessment proceedings before the A.O. and the assessee participated in the reassessment proceedings.
16. The Ld. counsel for the assessee also argued that there is a change of opinion while recording the reasons by the AO in the present case and on this account also, the reassessment proceedings are bad in law.
17. He further argued that the ld. CIT(A) has not confronted the remand report.
18. As regards grounds No. 9 & 10, the ld. counsel for the assessee, Mr. Padam Bahl, CA conceded at the outset and drew our attention to para 4(u) of CIT(A)s order where the Ld. CIT(A) has referred to the decision of Honble Supreme Court in one of the assessees companies M/s.Govind Impex (P) Ltd, where it has been held that the assessee was undoubtedly a deemed owner throughout. The Honble Supreme Court held that explanation to section 269U(f)(i) is clearly attracted. He argued that the said explanation has been referred and has to be read with section 27(iii)(b) under the head Income from House Property. The ld. counsel for the assessee, therefore, conceded that the issue as regards the ownership as ITA Nos. 141,142,149, 150 and others 25 referred to hereinabove in section 27(iii)(b) in view of section 269UA is against the assessee in that year and on identical facts, it is against the assessee in the impugned year. The Honble Supreme Court has held the assessee has deemed ownership of the property. Therefore, principle of res- judicate cannot be applicable and grounds No. 9 & 10 has to be decided against the assessee.
19. As regards ground No.11 regarding not allowing house-tax and business expenses claimed by the assessee-company incurred in order to maintain its assets and its status as a company, the ld. counsel for the assessee argued that such expenses of course are not allowable as business expenditure in view of the decision of Honble Supreme Court in assessee- company case, since the rental income is not the business income. But at the same time, expenses are allowable under section 57(iii) since the expenditure has been incurred wholly and exclusively for earning rental income. On the proposition, he relied upon the decision of various courts of law as under: i) CIT vs. Rampur Timber & Turnery Co. Ltd (1981) 129 ITR 58 (All.) ii) Nakodar Bus Service Pvt. Ltd. vs. CIT (1989) 179 ITR 506 (Pun.) iii) CIT vs. Patiala Flour Mills Co. Pvt. Ltd. (1989) 180 ITR 75 (Punj) iv) CIT v. Ganga Prop. Ltd. 199 ITR 94 (Cal.) v) CIT vs. Karampura Collieries Ltd. 201 ITR 498 (Cal.) ITA Nos. 141,142,149, 150 and others 26 vi) United Pr. Elec. Supply Co. Ltd. 204 ITR 794 (Cal.) vii) CIT vs. Benaras Electric Light & Power Co. Ltd. 204 ITR 804 (Cal.)
19.1. Such expenses which are covered by the above decisions are annexed at page 48 of the paper book, year-wise and therefore, are allowable against rent received and interest income.
20. He further argued without prejudice to the arguments made hereinabove that the ld. CIT(A) has wrongly mentioned that the A.O. has allowed deduction of Municipal Taxes in the order passed by the AO u/s 154 of the Act, which in fact, has not been allowed in certain years.
21. The Ld. DR, Mr. Tarsem Lal, on the other hand, argued that the ld. counsel for the assessee, Mr. Padam Bahl, CA has conceded and also arise from the record that assessee has responded to the service of notice served on Delhi address which was made in the ordinary course and has participated in the assessment proceedings. No objection with regard to the issue or service of notice has been taken in the assessment proceedings and in view of settled law the assessees grounds are liable to be dismissed.
22. As regards the change of opinion, the Ld. DR relied upon the decision of Honble Punjab & Haryana High Court in the case of Sewak Ram vs. ITO reported in (2010) 236 CTR 462 dated 7 th October, 2010 and the decision in the case of Tilak Raj Bedi vs. JCIT reported in (2009) 319 ITR 385 (P&H) ITA Nos. 141,142,149, 150 and others 27 where it has been held that power of reassessment can be validly exercised if satisfaction is arrived at to the effect that income has escaped assessment even if it involves change of opinion. Since after the amendment of section 147 w.e.f. Ist April, 1989 reassessment can be initiated even if the relevant material is disclosed in the return and the same is processed u/s 143(1) or assessment is made u/s 143(3) without considering the contents of the return. The reasons can be based even on particulars disclosed in the return without any new material.
23. On merit, the Ld. DR argued that since in the assessee-companys own cases, the Honble Supreme Court has decided the issue against the assessee and therefore, grounds No. 9 & 10 are liable to dismissed as the assessee has been held to be deemed owner of the house property where the income has to be assessed under the head Income from House Property and only deductions allowable under sections 22 to 27 under the head Income from house property can be allowed and none more or less as claimed by the assessee. Accordingly, ground No.11 of the assessee is also liable to be dismissed except to the extent that deduction as provided u/s 22 to 27 under the head House Property are to be allowed as deduction.
24. We have heard the rival contentions and perused the facts of the case. In ground No. 1 to 8 raised by the assessee, primarily the contention raised ITA Nos. 141,142,149, 150 and others 28 by the ld. counsel Mr. Padam Bahl, CA is with regard to challenge to the legality of the continuation of reassessment proceedings as a consequence of the issuance and service of notice under section 148 of the Act. The grounds pertaining to the said challenge have been raised for the first instance during the stage of the Tribunal proceedings before us wherein the law is no more res integra that the legal issue on the undisputed facts can be raised before the Tribunal. However, the present challenge reveals a paradoxical stand at the hands appellant leading to contradictory pleadings and that too at a belated stage after participating in the reassessment proceedings and acquiescing through attending and furnishing of all the required details through written submissions vide letter dated 8.11.2006 wherein the assessee has challenged the reassessment proceedings in extenso at para 2.1 of the reassessment order dated 22.12.2006 after which the objections of the assessee has been disposed off on 29.11.2006 in para 1.3 and thereafter subsequently in para 4.1 on 8.12.2006, the assessee has again duly participated in the proceedings which is a sufficient material having bearing on the legal grounds raised that challenge is to the application of the jurisdiction whereas the fundamental challenge to the assumption of jurisdiction is neither addressed nor contested and thus having pleaded the assessment to be treated as unsustainable in law is unwarranted. Only on ITA Nos. 141,142,149, 150 and others 29 this account, legal grounds of the assessee with regard to the challenge of the legality of continuation of reassessment as a consequence of issuance and service of notice u/s 148 of the Act are dismissed. The said issue is covered by the decision of ITAT, Amritsar Bench in the case of ITO vs. Smt. Promila Gupta in ITA No.184(Asr)/2013 dated 16.07.2013 in which on identical issue the decision of Honble Punjab & Haryana High Court and others which have been considered and the relevant findings given in the case of Smt. Promila Gupta (supra) are reproduced for the sake of convenience as under:
12. We have heard the rival contentions and perused the facts of the case. As regards the arguments of the ld. counsel for the assessee that reassessment is nullity that there being a jurisdictional defect in continuation of proceedings, we are of the view that the word jurisdiction does not have a fixed meaning and in one sense it means an entitlement to enter upon the enquiry in question and in wider sense it implies right to conduct enquiry into the matter in lawful manner.
12.1 In the aforesaid context, there is no argument on behalf of the assessee as to what nature of challenge is being made to the proceedings i.e. on the assumption of jurisdiction/ or application thereof and further to state that no pleadings have been raised of whatsoever kind which addresses the point that the AO do not have any right to conduct enquiry.
12.2. The another issue which leads to be considered is the challenge to the jurisdiction is determinable at the commencement and not at the conclusion of the proceedings and this aspect has been very clearly noticed by the Honble Supreme Court in the case of M.L. Sethi vs. R.P. Kapur reported in (1972) 2 SCC 427 in para 12 at pages 434 & 435 which for the sake of convenience is reproduced as under: ITA Nos. 141,142,149, 150 and others 30 The "jurisdiction" is a verbal coat of many colours Jurisdiction originally seems to have had the meaning which Lord Reid ascribed to it in Anisminic Ltd. v. Foreign Compensation ommission, namely, the entitlement "to enter upon the enquiry in question". If there was an entitlement to enter upon an enquiry into the question, been any subsequent error could only be regarded as an error within the jurisdiction. The best known formulation of this theory is that made by Lord Darman in R. v. Bolton. He said that the question of jurisdiction is determinable at the commencement, not at the conclusion of the enquiry. In Anisminic Ltd. case (supra), Lord Reid said: "But there are many cases where, although the tribunal had jurisdiction to enter on the enquiry it has done or failed to do something in the course of the enquiry which is of such a nature that its decision is a nullity. It may have given its decision in bad faith. It may have made a decision which it had no power to make. It may have failed in the course of the enquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. It may have refused to take into account something which it was required to take into account. Or it may have based its decision on some matter which, under the provisions setting it up, it had no right to take into account. I do not intend this list to be exhaustive." In the same case, Lord Pearce said "Lack of jurisdiction may arise in various ways. There may be an absence of those formalities or. things which are conditions precedent to the tribunal having any jurisdiction to embark on an ,enquiry. Or the tribunal may at the end make an order that it has no jurisdiction to make. Or, in the intervening stage while engaged on a proper enquiry, the tribunal may depart from the rules of natural justice; or it may ask itself the wrong questions; or it may take into account matters which it was not directed to take into account. Thereby it would step outside its jurisdiction. It would turn its inquiry into something not directed by Parliament and fail to make the inquiry which the Parliament did direct. Any of these things would cause its purported decision to be a nullity." ITA Nos. 141,142,149, 150 and others 31 The dicta of the majority of the House of Lords in the above case would show the extent to which `lack and excess of jurisdiction have been assimilated or, in other words, the extent to which we have moved away from the traditional concept of "jurisdiction". The effect of the dicta in that case is to reduce the difference between jurisdictional error and error of law within jurisdiction almost to vanishing point. The practical effect of the decision is that any error of law can be reckoned as jurisdictional. This comes perilously close to saying that there is jurisdiction it the decision is right in law but none if it is wrong. Almost any misconstruction of a statute can be represented as "basing their decision on a matter with which they have no right to deal", "imposing an unwarranted condition" or "addressing themselves to a wrong question". The majority opinion in the, case leaves a Court or Tribunal with virtually no margin of legal error. Whether there is excess of jurisdiction or merely error within jurisdiction can be determined only by construing the empowering statute, which will, give little guidance. It is really a question of how much latitude the Court is prepared to allow. in the end it can only be a value judgment (see H.W.R. Wade, "Constitutional and Administrative Aspects of the Anismanic case", Law Quarterly Review, Vol. 85, 1969, p. 198). Why is it that a wrong decision on a question of limitation or res judicata was treated as a jurisdictional error and liable to be interfered with in revision It is a it difficult to understand how an erroneous decision on a question of limitation or res judicata would oust the jurisdiction of the Court in the primitive sense of the term and render the decision or a decree embodying the decision a nullity liable to collateral attack. The reason can only be that the error of law was considered as vital by the Court. And there is no yardstick to determine the magnitude of the error other than the opinion of the Court.
12.3. The aforesaid principle of law with greatest respect we are bound to follow.
12.4. Even as per records before us, it has been noticed that the assessee has been diligent in pursuing the remedy available through attending to the case proceedings before the AO and it is a settled law that objection regarding jurisdiction be raised at the earlier possible opportunity. Thus, there is no reason for coming forward for the assessee waiting for such long for raising said objection (legal ground) ITA Nos. 141,142,149, 150 and others 32 after completion of reassessment. Another issue to be addressed is that challenge is not to the continuation of proceedings by the A.O. whereas the purpose of issuance notice u/s 143(2) of the Act cannot be lost sight and we are supported by the principle of law as noticed in the case of Dhirendra Nath Goari ( In CA No.85 of 1961), Subal Chandra Nath Saha And Others ( In CA No.86 of 1961) vs. Sudhir Chandra Ghosh And Others (1964) 6 SCR 1001 : AIR 1964 SC
1300. In para-7 where the difference between a nullity and an irregularity has been noticed, which has been extracted hereinbelow: Even then, the question arises whether an act done in breach of the mandatory provision is per force a nullity. In Ashutosh Sikdar v. Behari Lal Kirtania(1), Mookerjee, J., after referring to Macnamara on "Nullity and Irregulari- ties", observed : no hard and fast line can be drawn between a nullity and an irregularity; but this much is clear, that an irregularity is a deviation from a rule of law which does not take away the foundation or authority for the proceeding, or apply to its whole operation, whereas a nullity is a proceeding that is taken without any foundation for it, or is so essentially defective as to be of no avail or effect whatever, or is void and incapable of being validated." Whether a provision falls under one category or the other is not easy of discernment, but in the ultimate analysis it depends upon the nature, scope and object of a particular provision. A workable test has been laid down by Justice Coleridge in Holmes v. Russell(2), which reads: "It is difficult sometimes to distinguish between an irregularity and a nullity; but the safest rule to determine what is an irregularity and what is a nullity is to see whether the party can waive the objection; if he can waive it, it amounts to an irregularity; if he cannot, it is a nullity." A waiver is an intentional relinquishment of a known right but obviously an objection to jurisdiction cannot be waived, for consent cannot give a court jurisdiction where there is none. Even if there is inherent jurisdiction, certain provisions cannot be waived. Maxwell in his book "On the (1) (1908) I.L.R. 35 Cal. 61,
72. (2) [1841] 9 Dowl. 487. 1012. Interpretation of Statutes", 11th Edn., at p. 375, describes the rule thus: ITA Nos. 141,142,149, 150 and others 33 "Another maxim which sanctions the non- observance of a statutory provision is that cuilibet licet renuntiare juri pro se introducto. Everyone has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any public right or public policy." The same rule is restated in "Craies on Statute Law", 6th Edn., at p. 269, thus : "As a general rule, the conditions imposed by statutes which authorise legal proceedings are treated as being indispensable to giving the court jurisdiction. But if it appears that the statutory conditions were inserted by the legislature simply for the security or benefit of the parties to the action themselves, and that no public interests are involved, such conditions will not be considered as indispensable, and either party may waive them without affecting the jurisdiction of the court."
12.5 Having noticed material facts, we consider it appropriate with great respect in accordance with the principle of law that at the most the present kind of grievance is merely an error within jurisdiction, which can be determined only by construing the empowering statute, which will give guidance on the subject and in the present case. Further we are supported by the decision of ACIT vs. Hotel Blue Moon decided by the Honble Supreme Court reported in (2010) 321 ITR 362 dated 2 nd Feb., 2010. Thus, the purpose is to give opportunity to the assessee for bringing to the knowledge the proceedings being undertaken in accordance with law which too has been done by the A.O. The relevant part of the decision in the case of ACIT & Anr. Vs. Hotel Blue Moon reported in (2010) 321 ITR 362 (SC) in para 15 is reproduced as under: But s. 143(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, why the authorities should issue notice under s. 143(2). However, if an assessment is to be completed under s. 143(3) r/w s. 158BC, notice under s. 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under s. 143(2) cannot be a procedural irregularity and the same is not curable ITA Nos. 141,142,149, 150 and others 34 and, therefore, the requirement of notice under s. 143(2) cannot be dispensed with. The other important feature that requires to be noticed is that the s. 158BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the AO while completing the block assessments under Chapter XIV-B of the Act. This legislation is by incorporation. This section even speaks of sub- sections which are to be followed by the AO. Had the intention of the legislature was to exclude the provisions of Chapter XIV of the Act, the legislature would have or could have indicated that also. A reading of the provision would clearly indicate, in our opinion, if the AO, if for any reason, repudiates the return filed by the assessee in response to notice under s. 158BC(a), the AO must necessarily issue notice under s. 143(2) of the Act within the time prescribed in the proviso to s. 143(2) of the Act. Where the legislature intended to exclude certain provisions from the ambit of s. 158BC(b) it has done so specifically. Thus, when s. 158BC(b) specifically refers to [sic-s. 143(2)] applicability of the proviso thereto cannot be excluded. We may also notice here itself that the clarification given by CBDT in its Circular No. 717. dt. 14th Aug.. 1995, has a binding effect on the Department, but not on the Court. This circular clarifies the requirement of law in respect of service of notice under sub-s. (2) of s. 143 of the Act. Accordingly, we conclude even for the purpose of Chapter XIV-B of the Act. for the determination of undisclosed income for a block period under the provisions of s. 158BC. the provisions of s. 142 and sub-ss. (2) and (3) of s. 143 arc applicable and no assessment could be made without issuing notice under s. 143(2) of the Act. However, it is contended by Sri Shekhar. learned counsel for the Department that in view of the expression "So far as may be" in s. 153BC(b), the issue of notice is not mandatory but optional and are to be applied to the extent practicable. In support of that contention, the learned counsel has relied on the observation made by this Court in Dr. Partap Singhs case (supra). In this case, the Court has observed that s. 37(2) provides that "the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under s. 37(2). Reading the two sections together it merely means that the methodology prescribed for carrying out the search provided in s. 165 has to be ITA Nos. 141,142,149, 150 and others 35 generally followed. The expression "so far as may be" has always been construed to mean that those provisions may be generally followed to the extent possible. The learned counsel for the respondent has brought to our notice the observations made by this Court in the case of Maganlal v. Jaiswal Industries & Ors. [1989] 4 SCC 344 , wherein this Court while dealing with the scope and import of the expression "as far as practicable" has stated "without anything more the expression as far as possible will mean that the manner provided in the code for attachment or sale of property in execution of a decree shall be applicable in its entirety except such provision therein which may not be practicable to be applied."
13. The Ld. counsel for the assessee has strongly relied upon the decision in the case of CIT vs. Cebon India Ltd. (2012) 347 ITR 583 , Indo Swiss Exports Ltd; Chennai vs. Department of Income Tax dated 21 st June, 2012 (ITAT, Chennai), decision of Honble Delhi High Court in the case of Alpine Electronics Asia PTE Ltd. vs. Director General of Income Tax & Others, dated 24 th January, 2012 in Write Petition (Civil) No.7932/2010 quo proposition in the absence of service of notice u/s 143(2) and with great respect the decision of CIT vs. Cebon India Ltd. (supra) was confirmed finding of fact as recorded. We are in agreement with the decision stating therein that merely giving of dispatch number will not render the finding to be perverse and absence of notice cannot be held to be curable under section 292 BB of the Act.
14. As regards the decision in the case of Alpine Electronics Asia PTE Ltd. vs. Director General of Income Tax & Others (supra) the Honble Court referred to the decision of Hotel Blue Moon (supra) and having considered the principles involved therein held that the final assessment order has not been passed whereas only a draft assessment order is passed and the principle of estoppel under section 292BB will not apply and in those circumstances, the reliance by the Department upon the provisions of section 292BB cannot be relied upon and the claim for notice under section 143(2) admitting to have been served within the stipulated time will not apply wherein question falling consideration was in consequence to the prayer for obtaining no objection certificate from the Income Tax Department in terms of Master Circular No.2/2008-09 dated 01.07.2008 for being submitted to the Reserve Bank of India and in accordance with the fact in para 6, there were initiation of reassessment proceedings. Thus, in ITA Nos. 141,142,149, 150 and others 36 consequence the Honble Courts allowed the petition quashing the reassessment proceedings with a direction in the writ of Mandamus to issue that no objection certificate as prayed for which relevant findings are extracted hereinbelow:
Accordingly, the writ petition is allowed and a Writ Certiorari is issued quashing the assessment proceedings pursuant to the notices under section 148 of the Act. A Writ of Mandamus is issued to the respondents to issue no objection certificate to the petitioner as per the needs and requirements of the Reserve Bank of India. The no objection certificate will be issued within 6 weeks from today. There will be no order as to costs.
15. We may refer to the judgment of Honble Jurisdictional High Court of Punjab & Haryana which is binding in nature titled as CIT vs. Ram Narain Bansal reported in ITA No.814 of 2010 dated 13 th July, 213 reported in 202 Taxman 213 (placed on record) pertaining to assessment year 2002-03 wherein the question falling consideration is the same as raised before this Bench in the present appeal, which is extracted hereinbelow:
Whether on the facts and circumstances of the case, the Tribunal was right in law in concurring with the finding of CIT (A) in holding the assessment bad in law, made pursuant to the issue of notice u/s 148 without appreciating that no prejudice was caused to the assessee by non-issuance of notice u/s 143(2), particularly, when the assessee was participating in the assessment proceeding without objecting to the assessment proceedings on this account at the assessment stage
16. The Honble High Court noticing the provisions of law has answered the question against the assessee and in favour of the revenue with the direction of remanding the matter to the Tribunal for decision on merit afresh in accordance with law. The relevant portion of the judgment of the Honble Punjab & Haryana High Court in the case of CIT vs. Ram Narain Bansal (supra) is reproduced hereinbelow for the sake of convenience as under:
9. Learned counsel for the Revenue submitted that notice ITA Nos. 141,142,149, 150 and others 37 under Section 148 of the Act was issued to the assessee which was duly served. In pursuance to the said notice, the assessee appeared before the assessing authority and participated in the re-assessment proceedings on 30.11.2007, 6.12.2007, 12.12.2007, 13.12.2007, 18.12.2007, 24.12.2007, 27.12.2007, 28.12.2007 and 31.12.2007 and also cross-examined the witnesses who were summoned and their statements were recorded. The counsel drew support from a judgment of the Kerala High Court in K.J. Thomas vs. CIT (2008) 301 ITR 301 to submit that non-service of notice under Section 143 (2) of the Act was not fatal to re-assessment proceedings. Reference was made to Section 292 of the Act and according to the counsel the said provisions were applicable to all pending proceedings. Reliance was also placed on a judgment of this Court in Commissioner of Income Tax, Bathinda v. M/s Panchvati Motors (P) Ltd. (ITA 292 of 2008) decided on 3.5..
10. We find considerable force in the submission of the learned counsel. The Kerala High Court in K.J.Thomass case (supra), while considering similar issue, had held as under:
The procedure under S. 143(2) of the Act is to ensure that an adverse order is issued only after proper opportunity is given to the assessee. In this case, it is conceded that the assessee got opportunity to file reply and detailed reply was in fact filed and reassessment notice and final order were also issued within the time- limit prescribed under the Act.
11. Further, this Court in M/s Panchwati Motor (P) Ltd.s case (supra) while examining the scope of Section 292 BBof the Act and its applicability had noted as under: Section 292BB of the Act was inserted by Finance Act, 2008 w.e.f. 1.4.2008. It reads thus:-
292BB: Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of the Act, which is required to be served upon him, has been duly served upon him in time in ITA Nos. 141,142,149, 150 and others 38 accordance with the provisions of this Act and such assessee shall be precluded from 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 an improper manner. Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.A presumption has been raised under the said provision relating to service of notice upon the assessee in respect of assessment or reassessment proceedings. According to this provision, where an assessee appears in any proceedings or cooperates in any enquiry relating to assessment or reassessment proceedings, it shall be presumed that the assessee has been validly served and it shall not be open to the assessee to object that the notice was not served upon him or was not served in time or was served upon him in an improper manner. However, an exception to the aforesaid presumption has been made in a case where such objection has been raised before completion of assessment or reassessment. The provision has been made effective from 1.4.2008 and therefore, shall apply to all pending proceedings. The Central Board of Direct Taxes issued the circular No.1 of 2009 dated 27 March, 2009 (2009) 310 ITR (St.) 42 giving explanatory notes on the provisions ITA Nos. 141,142,149, 150 and others 39 relating to direct taxes contained in Finance Act, 2008. Clause 42.7 (at page 86 of the report) is relevant which relates to applicability of this provision and reads thus:
42.7 Applicability This amendment has been made applicable with effect from 1st April,
2008. This means that the provision of new-section 292 shall apply in all proceedings which are pending on 1st April, 2008.
12. It is not disputed that the assessee had appeared before the assessing officer on various dates and participated in the re- assessment proceedings before the finalization and no objection regarding issuance and service of notice under Section 143(2) of the Act was raised before the assessing officer. The CIT(A) and the Tribunal were, thus, in error in nullifying the re-assessment proceedings and declaring the re-assessment order to be invalid.
13. In view of the above, the substantial question of law is answered in favour of the Revenue and against the assessee. Consequently, the matter is remanded to the Tribunal for decision afresh on merits in accordance with law.
ITA Nos. 141,142,149, 150 and others 40
17. Thus, under the aforesaid facts and circumstances and the decision of the Honble Court, restored the matter to the Tribunal and we are bound to follow the decision of the Jurisdictional High Court of Punjab & Haryana which is directly on the question involved in the present case and the decisions as relied upon by the ld. counsel which are not directly on the issue does not support the case of the assessee and likewise the decision of Chennai Bench of Tribunal relied upon by the Ld. AR cannot prevail on the decision of Honble Punjab & Haryana High Court in the case of Ram Narain Bansal (supra). In view of the matter and our findings hereinabove, the matter is set aside to the file of the A.O. who is directed to issue notice u/s 143(2) of the Act to the assessee for a decision in accordance with law. Thus, grounds raised by the Revenue are allowed for statistical purposes.
25. It will be relevant to address the controversy at the hands qua the meaning of the word Issue and Service of notice wherein identical question fell for consideration before the jurisdictional Punjab & Haryana High Court in the case of V.R.A. Cotton Mills (P) Ltd. vs. Union of India And Ors (2012) 250 CTR (P&H) 188 (70 DTR (P&H) 439 wherein the Honble High Court dismissed the writ petition filed noticing the provisions of section 282(1) of the Act and especially relying upon the decision in the case of CIT vs. AVI-Oil India P. Ltd. (2010) 323 ITR 242 (P&H) and held that certain principles of law for which the relevant part is extracted hereinbelow: The grievance of the petitioner is that such notice was not served on the assessee till 30.09.2010 i.e. the last date of limitation for the initiation of proceedings for the Assessment Year 2009-10. The relevant provisions of the Act i.e. Section 143(2) of the Act read as under:
143(2) Where a return has been furnished under Section 139, or in response to a notice under sub-section (1) of Section 142, the Assessing Officer shall (ii) notwithstanding anything contained in clause (i), if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not been computed excessive loss or has not under-paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced, any evidence on which the assessee may rely in support of the return:- Provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.The petitioner has relied upon Section 282(1) of the Act, which contemplates that a notice or requisition may be served on the person therein named either by post or as if it was a summon issued by a Court under the Code of Civil Procedure,
1908. Thus, it is contended that service by affixation at 11.20 pm on 30.09.2010 ITA Nos. 141,142,149, 150 and others 41 is not in terms of the Code of Civil Procedure. In support of such contention, learned counsel for the petitioner relies upon a Division Bench judgment of this Court reported as Commissioner of Income-Tax Vs. AVI-OIL India P. Ltd. (2010) 323 ITR 242 , wherein it has been observed that notice under Section 143(2) is not only to be issued, but has to be served before the expiry of 12 months, as was applicable during the relevant assessment year, from the end of the month in which the return was furnished. A perusal of proviso to Section 143(2) (ii) contemplates that no notice under said clause shall be served on the assessee after the expiry of six months. The question is that what is the meaning of expression served Whether such expression is to be used literally, so as to mean that actual physical receipt of notice by the addressee or the expression served is inter changeable with the word issue. We are of the opinion that the expressions serve and issue are interchangeable, as has been noticed in Section 27 of the General Clauses Act, 1887 and also in a judgment of Honble Supreme Court reported as Banarsi Devi Vs. The Income Tax Officer, District IV, Calcutta and others AIR 1964 SC 1742 . In the aforesaid case, an argument was raised that Section 4 of the Amending Act (Act No.1 of
1959) only saves a notice issued after the prescribed time, but does not apply to a situation where notice is issued within but served out of time. The Court observed as under: (10). ..Section 4 of the Amending Act was enacted for saving the validity of notices issued under Section 34(1) of the Act. When that Section used a word interpreted by courts in the context of such notices, it would be reasonable to assume that the expression was designedly used in the same sense. That apart, the expressions issued and served are used as inter-changeable terms both in dictionaries and in other statutes. The dictionary meaning of the word issue is
the act of sending out, put into circulation, deliver with authority or delivery. Section 27 of the General Clauses Act (Act X of 1897) reads thus: 27. Meaning of service by post Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression serve or either of the expressions give or send or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre- paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. It would be seen from this provision that Parliament used the words serve, give and send as inter-changeable words. So too, in Sections 553, 554 and 555 of the Calcutta Municipal Act, 1951, the two expressions issued to or served upon are used as equivalent expressions. In the legislative practice of our country the said two expressions are sometimes used to convey the same idea. In other words, the expression issued is used in a limited as well as in a wider ITA Nos. 141,142,149, 150 and others 42 sense. (emphasis supplied). We must, therefore, give the expression issued in Section 4 of the Amending Act that meaning which carries out the intention of the Legislature in preference to that which defeats it. By doing so we will not be departing from the accepted meaning of the expression, but only giving it one of its meanings accepted, which fits into the context or setting in which it appears. The Honble Supreme Court in Collector of Central Excise, Madras Vs. M/s M.M.Rubber and Co., Tamil Nadu 1992 Supp (1) SCC 471 examined the provisions in the context of time for the commencement of limitation such as from the date of decision or order. It has been held that limitation shall commence in the cases where a right of the party is to avail remedy of appeal etc. is concerned from the date of communication of the decision or order appealed against. But if an authority is to exercise a power or to do an act affecting the rights of the parties, he shall exercise that power within the period of limitation. The decision of such authority comes into force and is operative from the date, it is signed by him. The Court held:
9. The words "from the date of decision or order" used with reference to the limitation for filing an appeal or revision under certain statutory provisions had come up for consideration in a number of cases, We may state that the ratio of the decisions uniformly is that in the case of a person aggrieved filing the appeal or revision, it shall mean the date of communication of the decision or order appealed against. However, we may note a few leading cases on this aspect.The said principle of the issue of a notice or communication has also come up for consideration before the Honble Supreme Court in the context of the provisions of Section 4 of the Contract Act, 1872. It has been held that the moment the proposer puts his proposal in the course of transmission, it is complete as against the acceptor i.e. addressee. Therefore, the moment the notice ITA Nos. 141,142,149, 150 and others 44 is signed and put in the course of transmission by the department, the notice is deemed to be served as the communication is out of the proposer. It has been so held by the Honble Supreme Court in Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas & Co., AIR 1966 SC 543 , wherein it has been held to the following effect:
11. The ratio of these judgments was applied in interpreting Sec. 33A(2) of the Indian Income Tax Act, 1922 in Muthia Chettiar v. C.I.T., ILR 1951 Mad 815 with reference to a right of revision provided to an aggrieved assessee. Section 33A(I) of the Act on the other hand authorised the Commissioner to suo motu call for the records of any proceedings under the Act in which an order has been passed by any authority subordinate to him and pass such order thereon as he thinks fit. The proviso, however, stated that the Commissioner shall not revise any order under that sub- section "if the order (sought to be revised) has been made more than one year previously". Construing this provision the High Court in Muthia Chettiars case held that the power to call for the records and pass the order will cease with the lapse of one year from the date of the order by the subordinate authority and the ratio of date of the knowledge of the order applicable to an aggrieved party is not applicable for the purpose of exercising suo motu power. Similarly in another decision reported in Viswanathan Chettiar v. Commr. of Income Tax, Madras, 25 ITR 79 Mad, construing the time limit for completion of an assessment under Section 34(2) of the Income Tax Act, 1922, which provided that it shall be made "within four years from the end of the year in which the income, profit and gains were first assessable", it was held that the time limit of four years for exercise of the power should be calculated with reference to the date on which the assessment or reassessment was made and not the date on which such assessment or reassessment order made under Section 34(2) was served on the assessee. ITA Nos. 141,142,149, 150 and others 43
12. It may be seen, therefore, that, if an authority is authorised to exercise a power or do an act affecting the rights of parties, he shall exercise that power within the period of limitation prescribed therefore. The order or decision of such authority comes into force or becomes operative or becomes an effective order or decision on and from the date when it is signed by him. The date of such order or decision is the date on which the order or decision was passed or made: that is to say when he ceases to have any authority to tear it off and draft a different order and when he ceases to have any locus panetentiae. Normally that happens when the order or decision is made public or notified in some form or when it can be said to have left his hand. The date of communication of the order to the party whose rights are affected is not the relevant date for purposes of determining whether the power has been exercised within the prescribed time.(emphasis supplied)
13. So far as the party who is affected by the order or decision for seeking his remedies against the same, he should be made aware of passing of such order. Therefore Courts have uniformly laid down as a rule of law that for seeking the remedy the limitation starts from the date on which the order was communicated to him or the date on which it was pronounced or published under such circumstances that the parties affected by it have a reasonable opportunity of knowing of passing of the order and what it contains. The knowledge of the party affected by such a decision, either actual or constructive is thus an essential element which must be satisfied before the decision can be said to have been concluded and binding on him. Otherwise the party affected by it will have no means of obeying the order or acting in conformity with it or of appealing against it or otherwise having it set. This is based upon, as observed by Rajamanner, C.J. in Muthia Chettiar v. C.I.T. (supra) "a salutary and just principle". The application of this rule so far as the aggrieved party is concerned is not dependent on the provisions of the particular statute, but is so under the general law.
18. Thus if the intention or design of the statutory provision was to protect the interest of the person adversely affected, by providing a remedy against the order or decision any period of limitation prescribed with reference to invoking such remedy shall be read as commencing from the date of communication of the order. But if it is a limitation for a competent authority, to make an order the date of exercise of that power and in the case of exercise of suo motu power over the subordinate authorities orders, the date, on which such power was exercised by making an order are the relevant dates for determining the limitation. The ratio of this distinction may also be founded on the principle that the Government is bound by the proceedings of its officers but persons affected are not concluded by the decision.
By the second clause of Section 4, the communication of an acceptance is complete as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor. This implies that where communication of an acceptance is made and it is put in a course of transmission to the proposer, the acceptance is complete as against the proposer: as against the acceptor, it becomes complete when it comes to the knowledge of the proposer. In the matter of communication of revocation it is provided that as against the person who makes the revocation it becomes complete when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it, and as against the person to whom it is made when it comes to his knowledge. Subsequently in State of Punjab v. Khemi Ram, AIR 1970 SC 214 , the Court observed as: 16. ..It will be seen that in all the decisions cited before us, it was the communication of the impugned order which was held to be essential and not its actual receipt by the officer concerned and such communication was held to be necessary because till the order is issued and actually sent out to the person concerned the authority making such order would be in a position to change its mind and modify it if it thought fit. But once such anorder is sent out, it goes out of the control of such an authority, and therefore, there would be no chance whatsoever of its changing its mind ormodifying it. In our view, once an order is issued and it is sent out to the concerned government servant, it must be held to have been communicated to him, no matter when he actually received it. We find it difficult to persuade ourselves to accept the view that it is only from thedate of the actual receipt by him that the order becomes effective. If that be the true meaning of communication, it would be possible for a government servant to effectively thwart an order by avoiding receipt of it by one method or the other till after the date of his retirement even though such an order is passed and despatched to him before such date. An officer against whom action is sought to be taken, thus, may go away from the address given by him for service of such orders or may deliberately give a wrong address and thus prevent or delay its receipt and be able to defeat its service on him. Such a meaning of the word communication ought not to be given unless the provision in question expressly so provides. Actually knowledge by him of an order where it is one of dismissal, may, perhaps, become necessary because of the consequences which the decision in The State of Punjab v. Amar Singh Harika AIR 1966 SC 1313 contemplates. But such consequences would not occur in the case of an officer who has proceeded on leave and against whom an order of suspension is passed because in his case there is no question of his doing any act or passing any order and such act or order being challenged as invalid. ITA Nos. 141,142,149, 150 and others 45 Learned counsel for the petitioner has also relied upon the judgment of Honble Supreme Court in Assistant Commissioner of Income Tax and another Vs. Hotel Blue Moon (2010) 3 SCC 259. But the said judgment does not provide any help to the argument raised. In fact, in para 7 of the said judgment, it has been observed that the Assessing Officer has to issue notice under Section 143 (2) within the prescribed time-limit to make the assessee aware that his return has been selected for scrutiny assessment. In AVI-OIL India P. Ltd. case (supra), the provisions of the Contract Act, the judgments of the Honble Supreme Court were not brought to the notice of the Bench; therefore, the Bench has taken a view on the literal meaning of word expression serve. In view of the above, the judgment rendered by the Division Bench of this Court in AVI-OIL India P. Ltd. case (supra) is in ignorance of the statutory and other binding precedents, therefore, does not lay down any binding principle and the same is per incuriam. Another judgment relied upon by the petitioner is Kunj Behari Vs. Income Tax Officer, District-II (VI), Amritsar and others 1983 (139) ITR 73. The issue raised in the aforesaid case is not of issuance or serving of a notice, but method of substituted service. The issue raised is not necessary to be decided in the present case, as notice has been issued within the time prescribed. That issuance of notice is sufficient compliance of the provisions of Section 143(2) of the Act. We may notice that Honble Supreme Court in Commissioner of Sales Tax and others Vs. Subhash & Co. (2003) 3 SCC 454 observed as under:
12. Whether service of notice is valid or not is essentially a question of fact. In the instant case, learned Single Judge found that certain procedures were not followed while effecting service by affixture. There was no finding recorded that such service was non est in the eye of the law. In a given case, if the assessee knows about the proceedings and there is some irregularity in the service of notice, the direction for continuing proceedings cannot be faulted. It would depend upon the nature of irregularity and its effect and the question of prejudice which are to be adjudicated in each case on the basis of surrounding facts. If, however, the service of notice is treated as non est in the eye of the law, it would not be permissible to direct de novo assessment without considering the question of limitation. There also the question of prejudice has to be considered.In view of the said judgment, the date of receipt of notice by the addressee is not relevant to determine, as to whether the notice has been issued within the prescribed period of limitation. The expression serve means the date of issue of notice. The date of receipt of notice cannot be left to be undetermined dependent upon the will of the addressee. Therefore, to bring certainly and to avoid attempts of the addressee to evade the process of receipt of notice, the purpose of the statute will be better served, if the date of issue of notice is considered as compliance of the requirement of proviso to Section 143(2) of the Act. In fact that is the only conclusion that can be arrived at to the expression serve appearing in Section 143(2) of the Act. Consequently, we do not find any merit in the present petition. The same is dismissed.
22. The emerging principles are: (i) Non-issue of notice or mistake in the issue of notice or defective service of notice does not affect the jurisdiction of the assessing officer, if otherwise reasonable opportunity of being heard has been given. (ii) Issue of notice as prescribed in the Rules constitutes a part of reasonable opportunity of being heard. ITA Nos. 141,142,149, 150 and others 46 (iii) If prejudice has been caused by non-issue or invalid service of notice the proceeding would be vitiated. But irregular service of notice would not render the proceedings invalid; more so, if the assessee by his conduct has rendered service impracticable or impossible. (iv) In a given case when the principles of natural justice are stated to have been violated it is open to the Appellate Authority in appropriate cases to set aside the order and require the assessing officer to decide the case denovo.
26. Accordingly present issue being identical and therefore, legal grounds raised by the assessee as mentioned hereinabove on the issue of nullifying or invalidating the reassessment proceedings are dismissed in view of decisions relied upon hereinabove.
27. As regards the challenge made in ground No.8 regarding change of opinion, the ld. counsel for the assessee made detailed submissions contesting therein that continuation of proceedings are bad in law since there has already been made assessment u/s 143(3) of the Act for the assessment year 2003-04 dated 29.03.2006 wherein the stand of the assessee was thoroughly contested up to the Honble Supreme Court of India qua the pleadings of charging income from house property under the head business ITA Nos. 141,142,149, 150 and others 47 income from the assessment year 1992-93 consistently and the said stand of the assessee has been negated by the Honble Supreme Court of India as evident from the order in the case of the assessee group company in case of M/s. Govind Impex dated 07.12.2010 for which the relevant part is extracted hereinbelow: The rival submissions necessitate examination of Section 269UA(f)(i) of the Act, particularly its explanation, same reads as follows: (i) in relation to any immovable property referred to in sub-clause (i) of clause (d), means transfer of such property by way of sale or exchange or lease for a terms of not less than twelve years, and includes allowing the possession of such property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) Explanation - For the purposes of this sub-clause, a lease which provides for the extension of the term thereof by a further term or terms shall be deemed to be a lease for a term of not less than twelve years, if the aggregate of the term for which such lease is 6 to be granted and the further term or terms for which it can be so extended is not less than twelve years;
6. On a plain reading of the explanation aforesaid it is evident that a lease which provides for the extension of the term thereof by a further term it shall be deemed to be a lease for a term of not less than twelve years, if the aggregate of the period for which the lease is granted and period of extension counted together makes it more than twelve years. In the present case, we are proceeding on our assumption that explanation to Section 269 UA(f)(i) would be attracted only when lease provides for extension of term and in view thereof, we do not consider it expedient to examine the judgment relied on by Mr. Salve. In the case in hand, the lease was for a period of nine years and the question, therefore, is as to whether the same was extendable for a further period of nine years so as to make it for not less than twelve years. To answer this one is required to refer to the lease deed and Clauses 1 and 12 thereof which are relevant for the purpose, same read as follows:
That the Lessors of the First Part have agreed to lease out to the Lessee of the Second Part the demised premises as aforesaid which are being used for commercial purposes at present namely on the lower ground floor/basement, ground floor/upper ground floor, first floor, second floor and the terrace of the building known as B-68, Greater Kailash-I, New Delhi - 110048, and clearly ITA Nos. 141,142,149, 150 and others 48 delineated in green outlines in the site plan annexed herewith for a period of nine years, extendable purely at the discretion and option of the Lessee of the Second Part for a further period of nine years, commencing from the date when the possession of the premises is handed over i.e. 1.06.1991 and ending on the last date when the period of first nine years expires i.e. on 31.05.2000 at a monthly lease amount of Rs.2,50,000/- (Rupees Two lacs and fifty thousand only) subject to the periodic revision as mentioned in later para. The said premises comprise of a total area of about 12904 sq. ft. with floor wise rentals as per the details below:-
12. That the Lessee may at its option and discretion renew the lease for a further period of nine years after the expiry of the term of the present lease on 31st May,
2000. If the Lessee shall be desirous of such renewal it shall give a notice of such renewal to the Lessors at least three months prior to the expiry of the term in the present lease deed. The subsequent renewals of the Lease Deed shall also be got duly signed and registered. The renewals of the Lease shall be on the same terms and conditions.
7. Mr. Salve submits that statute providing for penal prosecution has to be construed strictly. He refers to Clause 12 aforesaid and contends that it shall govern the field. Mr. Bhatt submits that it is Clause 1 of the lease deed which shall govern the issue. We do not have the slightest hesitation in accepting the broad submission of Mr. Salve that Penal statute which make an act a penal offence or impose penalty is to be strictly construed and if two views are possible, one favourable to the citizen is to be ordinarily preferred but this principle has no application in the facts of the present case. There is no serious dispute in regard to the interpretation of explanation to Section 269UA(f) of the Act and in fact, we are proceeding on an assumption that it will cover only such cases where exists provision for extension in lease deed. In our opinion, what we are required to consider is the terms and conditions of lease. The terms of lease are not to be interpreted following strict rules of construction. One term of the lease cannot be taken into consideration in isolation. Entire document in totality has to be seen to decipher the terms and conditions of lease. Here in the present case, Clause 1 in no uncertain term provides for extension of period of lease for a further period of 9 nine years and clause 12 thereof provides for renewal on fulfillment of certain terms and conditions. Therefore, when the document is constructed as a whole, it is apparent that it provides for the extension of the term. If that is taken into account the lease is for a period of not less than twelve years. Once it is held so the explanation to Section 269UA(f)(i) is clearly attracted. We are of the opinion that the High Court is right in observing that "on a conjoint reading of paras 1 and 12 of the lease deed, the lessor intended the lease to last for 18 years and further the lessor could not have refused to renew/extend the lease after first term if the lessee complied with the conditions.
28. On the change of opinion, the Honble Punjab & Haryana High Court in the case of Tilak Raj Bedi v. JCIT reported in (2009) 319 ITR 385 , ITA Nos. 141,142,149, 150 and others 49 wherein the question falling for consideration was regarding reopening of the assessment on the basis of change of opinion and having noticed pleadings of the assessee, the appeal was dismissed. The relevant findings given in para 8 of the judgment are reproduced as under: After hearing learned counsel for the parties, we are of the view that no substantial question of law arises as the impugned judgment of the Tribunal is consistent with the settled law on the point. The power of reassessment can be validly exercised if satisfaction is arrived at after following due procedure that income had escaped assessment. Such satisfaction may involve change of opinion but was not at par with mere change of opinion . If satisfaction is arrived at on the basis of any relevant material, such satisfaction cannot be assailed. In the present case, the Assessing Officer has referred to proceedings for the subsequent assessment years. In such a situation, the judgments relied upon on behalf of the assessee are clearly distinguishable. The law for exercise of power of reassessment has been authoritatively settled by the hon ble Supreme court, inter alia, in A. L. A. Firm v. CIT [1991] 189 ITR 285 ; [1991] 2 SCC 558. The view of the Tribunal is consistent with the settled law. It is not disputed by learned counsel for the assessee that the second proposed question is consequential and if reassessment is upheld, the levy of interest cannot be objected to. Thus, no substantial question of law arises. The appeal is dismissed.
29. Identical question fell for consideration in a subsequent case of Sewak Ram vs ITO reported in (2010) 47 DTR 361 (P&H) wherein it has been held as under:
4. We have heard learned counsel for the parties and perused the record.
5. Learned counsel for the assessee submits that the reasons for reassessment were not based on a new material but on the basis of the particulars in the return and ITA Nos. 141,142,149, 150 and others 50 reassessment amounted to change of opinion and initiating a roving enquiry was not permissible. Reliance has been placed on the following judgments:-
1. [2007] 291 ITR 500 (SC) Assistant Commissioner ofIncome Tax v. Rajesh Jhaveri Stock Brokers P. Ltd.
2. [1999] 236 ITR 696 (SC) Ram Bai v. Commissioner of Income-Tax
3. [2008] 12 DTR (Del) 115 Commissioner of Income Tax v. Batra Bhatta Company
4. [1979] 118 ITR 1 (SC) Income Tax Officer and others v. Madnani Engineering Works Ltd.
5. [1971] 79 ITR 603 (SC) Chhugamal Rajpal v. S.P. Chaliha and others
6. [1976] 103 ITR 437 (SC) Income Tax Officer, I Ward, Distt. VI, Calcutta and others v. Lakhmani Mewal Das
7. [1981] 132 ITR 707 (Del) Asoke Kumar Sen v. Income Tax Officer, Special Circle-V, New Delhi and another
8. 255 ITR 220 (P&H) Vipan Khanna v. Commissioner of Income Tax and others
9. [2006] 287 ITR 337 (Del) Smt. Kamlesh Sharma v. B.L. Meena, Income Tax Officer and others
6. We are unable to accept the submission. After amendment of Section 147 w.e.f. 1.4.1989, reassessment can be initiated even if there is disclosure in the return if without considering the particulars of the return, processing is done under Section 143(1) or assessment is made under Section 143(3). No doubt, mere change of opinion by itself is not a ground for reassessment as held in the judgments relied upon on behalf of the assessee but if there are reasons to believe that tax has escaped, reassessment is permissible. Reasons can be even on the basis of particulars of the return without any new material. Even if proceedings under Section 143(2) are not taken, reassessment proceedings can be taken.
7. In the present case, the CIT (A) set aside the proceedingsby wrongly holding that reassessment could not be initiated on the basisof material already disclosed in the return without going into thecorrectness of the reasons.
8. We find, prima facie, that the reasons for reassessment are not irrelevant. In any case, the same could have been gone into by the CIT (A) before reassessment was set aside as rightly held by the Tribunal. The judgments relied upon by learned counsel for the assessee, thus, have no applicability in ITA Nos. 141,142,149, 150 and others 51 the present case. In these circumstances, the view taken by the Tribunal cannot be held to be erroneous. No substantial question of law arises.
9. The appeal is accordingly dismissed.
30. Under the aforesaid facts and circumstances and nature of the case, we are unable to agree with the arguments raised by the assessee with regard to the change of opinion to invalidate the reassessment proceedings and accordingly ground so raised is dismissed.
31. As regards the issue raised by the assessee that the proceedings for the assessment year 1999-2000 has never traveled to ITAT, the Ld. CIT(A) vide para 3.b. at page 3 of his order has given the findings in this regard that the submissions filed before him were in respect of assessment year 2003-04. The identical submissions applies for other assessment years also as the core issue is identical in all assessment years except minor modifications. This fact has not been disputed by the ld. counsel for the assessee and therefore, the said ground is also dismissed. Also w.r.t. remand report, the assessees submissions were taken into consideration by CIT(A) on the issue. Accordingly, grounds no. 1 to 8 raised by the assessee are dismissed.
32. As regards grounds No. 9 & 10, the ld. counsel for the assessee has conceded that grounds No.9 & 10 are against the assessee in view of the decision of Honble Supreme Court in the case of assessee-company i.e. M/s. Govind Impex P.Ltd. dated 07.12.2010 which is part of the ld. ITA Nos. 141,142,149, 150 and others 52 CIT(A)s order in para 4.u. at pages 32 to 35 as mentioned hereinabove. Accordingly grounds Nos. 9 & 10 of the assessee are dismissed.
33. As regards ground No.11, the ld. counsel for the assessee made forceful pleadings to convass that if the assessee is not succeeding then in the alternative on merit in case the income from house property is not treated as business income then claim regarding expenses incurred to earn the income from the house property be granted under section 57(iii) of the Act which are eligible as a consequence of the scheme of the Act. However, we are unable to persuade as to the question that the charge is on a source or head of income and the assessee has accepted the charge of a source under the head Income from house property, then in the facts and circumstances, to dissect the said charge of a source under the head of income from house property qua other income under the residuary head of income i.e. Income from other sources none material of whatsoever kind has been furnished on the record to reveal the usage of income from house property qua the income from other source i.e. Residuary Head. This aspect has not been examined or discussed by the A.O. during the assessment proceedings. Therefore, for the limited extent, to allow claim of deduction under the head Income from house property or Income from other source ITA Nos. 141,142,149, 150 and others 53 the matter is set aside to the file of the Assessing Officer, who will decide the issue whether the said expenditure is allowable under the head Income from house property in view of the decision of Honble Supreme Court as referred to in para 4-u of CIT(A)s order and accepted by the assessee or income from other sources, as argued by Ld. counsel for the assessee and ground No.11 before us. The A.O. will afford adequate opportunity of being heard to the assessee to furnish relevant details of the expenditure under the heads of Income which so having been filed and examined by the AO the necessary direction shall be allowed in accordance with law. Thus, ground No.11 of the assessee is allowed for statistical purposes. The appeal of the assessee in ITA No.141(Asr)/ for the assessment year 1999-2000 is partly allowed for statistical purposes.
34. Since the facts in other appeals mentioned hereinabove in the case of all the three assessees are identical on facts and as mentioned hereinabove, our decision in ITA No.141(Asr)/ for the A.Y. 1999-2000 in the case of M/s. Goodfaith Construction P. Ltd. Jammu shall be applicable in all 23 appeals of the present and other assessees mentioned hereinabove. Accordingly, all the appeals of three different assessees are partly allowed for statistical purposes. ITA Nos. 141,142,149, 150 and others 54
35. In the result, the appeals in ITA Nos. 141, 142, 149,150,171,172,173 & 174(Asr)/ in the case of M/s. Goodfaith Constructions Pvt. Ltd; in ITA Nos. 133,134,135,136, 165,166,167 & 168(Asr)/ in the case of M/s. Health Holdings Pvt. Ltd; and in ITA Nos. 145, 158, 159, 150,169, 212, 170 & 213 In the caseof M/s. Govind Impex (P) Ltd; are partly allowed for statistical purposes. Order pronounced in the open court on 3th July, 2013. Sd/- Sd/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 30th July, 2013 /SKR/ Copy of the order forwarded to:
1. The Assessees: M/s. Goodfaith Constructions Pvt. Ltd. (ii) M/s. Health Holding Pvt. Ltd. (iii) M/s. Govind Impex Pvt. Ltd; Jammu.
2. The ACIT, Circle-2, Jammu.
3. The CIT(A), Jammu
4. The CIT, Jammu
5. The SR DR, ITAT, Amritsar. True copy By order (Assistant Registrar) Income Tax Appellate Tribunal, Amritsar Bench: Amritsar.
