Delhi High Court
Mohan S Lakhani vs Income Tax Officer & Anr. on 11 February, 2015
Author: S.Ravindra Bhat
$~21
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on: 11th February, 2015
+ ITA 18/2014
MOHAN S LAKHANI ..... Appellant
Through Mr. K V S Gupta, Adv.
versus
INCOME TAX OFFICER & ANR. ..... Respondents
Through Mr. Arjun Harkauli, Adv.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE R.K.GAUBA
MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)
%
1. The question of law aggrieved by the assessee is whether Income
Tax Appellate Tribunal (hereinafter referred to as "the ITAT") fell into
error in holding that in the circumstances of the case the notice under
Section 143(2) was served within the period of limitation so as to validate
the assessment proceedings of assessment year (AY) 2006-07.
2. The brief facts of the case are that the assessee concededly filed its
return for AY 2006-07. It did not receive any notice during the statutory
limitation period prescribed by law as it prevailed then. The Assessing
Officer (AO) nevertheless proceeded to frame and finalize the assessment
year seeking to bring to tax amounts, on 12.12.2008. The assessee carried
that order in appeal to the CIT(Appeals), which confirmed the additions.
The CIT(Appeals) rejected the assessee's contentions with regard to its not
ITA No.18/2014 Page 1
having received notice within the limitation period. The Commissioner
was guided by the revenue's assertions that notice had been issued to the
assessee through its chartered accountant. It is not in dispute that after
31.7.2007, notice was received by the assessee as a result of which it
participated - though under protest - in the assessment proceedings. The
ITAT noticed the assessee's contentions with respect to its having
participated in the assessment proceedings - though under protest, in the
following terms :
"Aggrieved by the Order of the A.O., the assessee took up the
matter in appeal and submitted that the notice u/s 143(2) could
have been served on the assessee latest by 31.07.2007 i.e.
within 12 months of the end of the month in which return was
furnished. The first notice was served in the month of October,
2007, and objection to that was filed vide letter dated
05.11.2007. The first notice u/s 143(2) received in Oct. 2007.
The said objection was again reiterated vide letter dated
12.05.2008. However, the assessee has participated in the
assessment proceedings stated to be under protest and it was
pleaded that the assessment made by the AO. is null and void
as no notice u/s 143(2) was served within the statutory time."
Nevertheless it rejected the appeal holding as follows :
"Heard both the sides, considered the material on record as
well as the case law cited by rival sides. It is not in dispute that
notice u/s 143(2) dated 28.06.2007 was sent through Shri KBS
Gupta, CA, the Ld. A.R. of the assessee, who attended the
assessment proceedings from time to time and filed the details
called for. The said notice was issued within one year from the
date of filing of return of income. All the pleas raised before
the tribunal were duly raised before Ld. CIT(A) also who has
dealt with the issue in detail after considering the facts and
circumstances and case law cited by the assessee, (and noted
by the first appellate authority) has passed the impugned
ITA No.18/2014 Page 2
order. Since no fresh material or evidence has been produced
and the order of Ld. CIT(A) is based on the decision of
Hon'ble Jurisdictional Court against which no direct decision
of any High Court has been cited, therefore, no reasonable
basis have been found to interfere in the order passed by Ld.
CIT(A). As such, while upholding the order of Ld. CIT(A),
appeal of the assessee is dismissed."
3. It was argued that when the consistent position of the assessee was
that it never received notice, nor was it proved to the satisfaction of the
Tribunal that such service could be deemed to have been served in a
manner known to law, the findings rendered by the ITAT are in error of
law. The learned counsel stressed upon the fact that participation in the
assessment proceedings was under-protest and could not have been taken as
adverse fact against the claim for not receiving notice.
4. This Court had directed the revenue to produce the original record of
the assessment. Carbon copies of notice are on record and such notices
were alleged to have been sent to the assessee before 31.7.2007, yet there is
no material to show that they were dispatched. Another important aspect is
that the notice was not sent through registered post nor affixed at the
assessee's address known to the revenue so as to allow presumption
enacted under Section 7 of the General Clauses Act to operate. In these
circumstances the notice issued after the period of limitation could not be
held against the assessee as done by the CIT(Appeals) which rejected the
appeal. Consequently, following the previous rulings of this Court, [i.e.
Shyam Gopal Charitable Trust V. Director of Income Tax (2006) 290 ITR
99 (Del.); BHPE KINHILL Joint Venture V. Addl. DIT (2008) 304 ITR and
(AT) 285 Delhi; World wide Exports P. Ltd. Vs ITO (2005) 272 ITR 162
ITA No.18/2014 Page 3
(AT) (Del.)], it is held that the revenue did not discharge the burden of
proving due service of notice which was caused by law upon it.
Consequently, the findings of the ITAT and as well as CIT(Appeals) cannot
be sustained. The question of law is answered against the revenue and in
favour of the appellant.
5. The appeal is accordingly allowed in the above terms.
S. RAVINDRA BHAT
(JUDGE)
R.K.GAUBA
(JUDGE)
FEBRUARY 11, 2015
vld
ITA No.18/2014 Page 4
