Smt. Gayatri Devi vs The Commissioner Of Income Tax ...
2017 Latest Caselaw 4530 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
Court No. - 3
 

 
Case :- INCOME TAX APPEAL No. - 11 of 2006
 

 
Appellant :- Smt. Gayatri Devi
 
Respondent :- The Commissioner Of Income Tax Agra And Another
 
Counsel for Appellant :- Shah O.P. Agrawal, Rohit Agrawal
 
Counsel for Respondent :- Manish Goyal
 
With
 
Case :- INCOME TAX APPEAL No. - 432 of 2012
 

 
Appellant :- Smt. Gayatri Devi
 
Respondent :- The Commissioner Of Income Tax Agra And Another
 
Counsel for Appellant :- Sah O.P. Agarwal, Rohit Agarwal
 
Counsel for Respondent :- SC, Manish Goyal
 
And
 
Case :- INCOME TAX APPEAL No. - 433 of 2012
 

 
Appellant :- Smt. Gayatri Devi
 
Respondent :- The Commissioner Of Income Tax Agra And Another
 
Counsel for Appellant :- Sah O.P.  Agarwal, Rohit Agrawal
 
Counsel for Respondent :- Manish Goel
 

 
Hon'ble Pankaj Mithal,J.

Hon'ble Umesh Chandra Tripathi,J.

Heard Sri S.O.P. Agarwal, learned counsel for the assessee and learned counsel for the Department.

All these three appeals relates to the same assessee in respect of the assessment years 1992-93, 1993-94 and 1994-95 and since the matters have been dealt with by a common order by the Income Tax Appellate Tribunal giving rise to common questions of law, we are taking up all the three of them together.

The order of the Income Tax Appellate Tribunal dated 26.08.2005 has been impugned in all the three appeals.

The Department came to know that the assessee had constructed a residential house, 7 Bank House, near Civil Court, Agra, which was completed in the financial year 1993-94.

The Assessing Officer referred the matter to the Departmental Valuation Cell. The year-wise break up of the investment declared by the assessee in the construction of said house and the amount estimated by the valuer was as under :-

Financial year    Declared by the assessee     Estimated by the AVO
 
1992-93		    Rs.1,81,231/-			  Rs.1,72,800/-
 
1993-94		    Rs.1,63,200/-			  Rs.2,38,200/-
 
1994-95		    Rs.1,87,000/-			  Rs.2,72,900/-			The Assessing Officer added the entire estimated investment in the income of the assessee under Section 69 of the Income Tax Act, 1961 (hereinafter referred to as the "Act"). The assessee preferred appeals against the aforesaid additions.
 
		In the appeals, one of the grounds taken was that the notices were issued after the expiry of the limitation period and were not validly served. 
 

The Appellate Authority repelled the above submissions but reduced the additions to the difference between the estimated value and the cost of construction declared by the assessee, which is as under :-

 
F. year   Cost declared by assessee   Cost estimated by AVO   Difference
 
1992-93	Rs.1,18,231/-		Rs.1,53,282/-	      Rs.35,052/-
 
1993-94	Rs.1,63,200/-		Rs.2,11,585/-	      Rs.48,385/-
 
1994-95	Rs.1,87,000/-		Rs.2,42,440/-	      Rs.55,440/-
 
Total :-	Rs.4,68,431/-		Rs.6,07,308/-	   Rs.1,38,877/-	
 
		Still not satisfied, the assessee preferred appeals before the Tribunal. 
 

The Tribunal by the impugned order dated 26th August, 2005 affirmed the additions as made by the CIT (Appeals) to the tune of Rs.1,38,877/- being the difference between the estimated value and the cost of the construction declared by the assessee for all the three years but reduced it to Rs.1,10,000/- giving further relief of Rs.28,877/- as the addition appeared to be slightly on the higher side.

The above order of the Tribunal is impugned in these appeals.

On the submissions of the parties, only the following two substantial questions of law arise for consideration:-

"(i) Whether the notice issued under Section 148 of the Act was validly served upon the assessee ?

(ii) Whether the notice issued under Section 148 of the Act on 26.03.2001 was within time in respect of the above assessment year ?"

There is no dispute to the fact that the notice under Section 148 of the Act in respect of all the three years was issued on 26.03.2001. The notice was sent to the assessee by speed post and the ITO took care to serve the notice personally as well. The notice sent for personal service was undoubtedly served on 29.03.2001 upon Ms. Priyanka, the assessee's minor daughter.

Section 148 of the Act, which provides for the issuance of notice to the assessee where the income has escaped assessment categorically lays down that before making any assessment, re-assessment or computation under Section 147 of the Act, the Assessing Officer shall serve on the assessee, a notice requiring him to furnish return within the specified period.

A simple reading of the above provision clearly reflects that the notice contemplated therein is required to be served upon the assessee and not upon any other person much less a minor.

Section 282 of the Act specifically lays down the manner of service of the notices under the Act. It provides that the service of notice may be made by delivering or transmitting of a copy thereof to the person named in the notice either by post or courier service; or in the manner provided under the Code of Civil Procedure, 1908; or in the form of any electronic record as provided in Chapter IV of the Information and Technology Act, 2000; or by any other means of transmission of documents as provided by the Rules made by the Board in that behalf.

A reading of the above provision also indicates that the service of the notice has to be effected upon the person named in the notice, i.e. upon the assessee and not upon any other person.

In view of the above, the service of notice, if any, upon the minor daughter of the assessee may not be a valid service.

Notwithstanding the above service of the notice was also resorted to by speed post.

The CIT (Appeals) had called for the report from the Assessing Officer regarding the service of the notice issued under Section 148 of the Act. The Assessing Officer vide his letter dated 14.08.2002 has replied and has stated "in this connection, it is submitted that on the perusal of the records, it is noted that the notices under Section 148 of the Act for the assessment years 1992-93, 1993-94 and 1994-95 dated 26.03.2001 issued in the name of the assessee Smt. Gayatri Devi wife of Sri Hari Shankar Mishra, Trans Yamuna Colony, Agra, were sent through speed post on 26.03.2001 vide postal receipt EE000092069 from the Post Office Sanjay Place, Agra,.............."

The CIT (Appeals) after examination of the entire material and on consideration of the above report returned a finding that Assessing Officer had sent the notice through speed post, which was not returned by postal authorities, which means the same was served upon the assessee.

The aforesaid service of notice upon the assessee by post is in accordance with the procedure provided for service under the Code of Civil Procedure, 1908.

Section 27 of the General Clauses Act, 1897 raises a presumption that a notice sent by the registered post to the addressee at his correct address, if not returned undelivered, would be presumed to be served.

In view of the above presumption, which had not been rebutted by the assessee, the authorities below have rightly treated the service of notice upon the assessee to be sufficient.

The contention of Sri S.O.P. Agarwal that there could be no valid service of the notice upon the minor cuts no ice in the light of deemed service of notice by post.

Accordingly, the question no.1 is answered against the assessee and it is held that the notice issued under Section 148 of the Act was validly deemed to be served upon the assessee.

The next submission of Sri S.O.P. Agarwal, learned counsel for the appellant is that the notice issued under Section 148 of the Act was barred by time.

Section 149 of the Act prescribes the time limit for issuing the notice under Section 148 of the Act. The aforesaid provision was amended with effect from 01.06.2001 vide Finance Act of 2001 and it provides a period of four years and the extended period of six years from the end of the relevant assessment year for issuing notice under Section 148 of the Act provided the income chargeable to tax escaping assessment amounts to or is likely to amount one lakh rupees or more for that year. In the event, the income chargeable to tax escaping assessment is of a higher amount, the period of limitation is four years and is extendable to 16 years.

However, we are not concerned with the above limitation, which has been amended and provided by the Finance Act, 2001, inasmuch as in the case at hand, the notice was issued on 26.03.2001 prior to its enforcement and at that time, the unamended provisions of Section 149 of the Act were in force.

The unamended provisions of Section 149 of the Act, which were in existence prior to 01.06.2001 reads as under :-

Section 149. (1) No notice under Section 148 shall be issued for the relevant assessment year :-

" (a) in a case where an assessment under sub-section (3) of section 143 or section 147 has been made for such assessment year,--

(i) if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause (ii) or sub-clause (iii) ;

(ii) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year ;

(iii) if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees one lakh or more for that year ;

(b) in any other case.--

(i) if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause (ii) or sub-clause (iii) ;

(ii) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees twenty-five thousand or more for that year ;

(iii) if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year."

Since, there was no assessment under sub-section 3 of Section 143 or Section 147, Clause (a) of unamended Section 149 would not be attracted and therefore, the limitation in the present case would be governed by sub-clause (b) of unamended Section 149 of the Act.

It means the limitation for issuing the notice under Section 148 of the Act would be four years from the end of the relevant assessment year; four years but not more than 7 years from the end of the relevant assessment year, if the income chargeable to tax escaping assessment is Rs.25,000/- or more for that year; 7 years but not more than 10 years from the end of the relevant assessment year, unless the income chargeable to tax escaping assessment is likely to be Rs.50,000/- or more in that year.

In this way, three periods of limitation have been prescribed depending upon the amount chargeable to tax escaping assessment.

In the case we are dealing, the relevant assessment years are 1992-93, 1993-94 and 1994-95. Therefore, the limitation for issuing notice under Section 148 of the Act in respect of these years would commence from the end of these assessment years i.e. 31st March, 1993, 31st March, 1994 and 31st March, 1995.

The income chargeable to tax escaping assessment in these three years happened to be as under :-

Financial Year 	   Income chargeable to tax escaping assessment	
 
1992-93				Rs. 35,052/-.
 
1993-94				Rs. 48,385/-.
 
1994-95				Rs. 55,440/-. 
 

Now, applying the limitation as provided by Clause (b) of unamended Section 149 of the Act as in all the three assessment years, the income chargeable to tax escaping assessment was over Rs.25,000/- and in one of the years above Rs.50,000/-, the limitation to give notice under Section 148 of the Act would be a maximum of 7 years and 10 years.

Thus, for the assessment year 1992-93, wherein the income chargeable to tax escaping assessment happens to be Rs.35,052/- and for the assessment year 1993-94, where the income chargeable to tax escaping assessment happens to be Rs.48,385/-, notice under Section 148 of the Act would have been given within 7 years from the end of the relevant years, which in the above cases would be 31st March, 2000 and 31st March, 2001.

Similarly, in respect of the assessment year 1994-95 as the income chargeable to tax escaping assessment happens to be Rs.55,440/-, the limitation for giving notice under Section 148 of the Act would be 10 years from the end of the relevant assessment year i.e. 31st March, 2005.

Admittedly, the notice under Section 148 of the Act for all the three years was issued on 26.03.2001. Therefore, the notice was beyond time in so far as the assessment year 1992-93 is concerned but it is within limitation for the assessment year 1993-94 and 1994-95.

Accordingly, the question no.2 is partly answered in favour of the assessee and it is held that the notice under Section 148 of the Act for the assessment year 1992-93 was barred by time and that for the assessment year 1993-94 and 1994-95 to be within time.

In view of the aforesaid facts and circumstances, the addition made under Section 69 of the Act for the assessment year 1992-93 is held to be illegal but that for the assessment year 1993-94 and 1994-95, it is upheld.

All these three appeals stand decided accordingly.

Order Date :- 18.09.2017 /Nadim