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DIVYA S RAO vs. INCOME TAX OFFICER
IN THE ITAT BANGALORE BENCH ‘B’
B.R. BASKARAN, AM & BEENA PILLAI, JM.
ITA No. 2384 to 2387/BANG/2018
6 Nov, 2020
Section 271[1], 274, 144, 147, 249(4)(b)
AY 2008 – 09
Decision in favour of: Assessee
क्या होगा जब पुन: कर निर्धारण के लिए धारा 148 का नोटिस गलत जगह भेजकर आईटीओ रिअसेसमेंट कर दे। 6 नवंबर 2020 को आईटीआई बेंगलुरु ने DIVYA S RAO vs. आईटीओ के मामले में जो आर्डर दिया उसको जानने के लिए पूरा केस पढ़ें नीचे लिखे लिंक को क्लिक कर।
When, the notice under section 148 was issued based on information received without verifying with the details that is already available with the revenue like address mentioned on PAN card etc., filed by assessee.. Under such circumstances, impugned notice under section 148 issued at wrong address cannot be held to be valid, and the assessment order passed consequent to such notice deserves to be quashed and the consequential assessment order passed is set aside.
Counsel appeared:
V Srinivasan, Advocate for the Appellant.: S Sundar Rajan for the Respondent
BEENA PILLAI, JM.
1. Present appeals are filed by assessee against separate orders dated 21/06/2018 passed by Ld. CIT (A), Mysore in quantum proceeding and penalty proceeding u/s 271(1)(c), and u/s 271(1)(b) and 271E of the Act for assessment year 2008-09

ITA No.2384/Bang/2018

“1. The orders of the authorities below in so far as they are against the appellant, are opposed to Law, equity, weight of evidence, probabilities, facts and circumstances of the case.

2. The learned CIT[A] is not justified in holding that the appeal filed was belated based on the information given by the [earned ITO, Ward – 1[4], Mysore in ITNS 51 that the impugned order and demand notice served on 01/09/2016 without appreciating that the appellant was not aware of the assessment proceedings taken up by the department being abroad and had obtained certified copy of the assessment order on 01/05/201 7 and certified copy of the demand notice on 15/05/2017 and thereupon, the appellant had filed the appeal on 13/06/2017, which was within time of 30 days and thus there was no delay in filing the appeal and hence, there is no requirement for filing any application seeking condonation of delay under the facts and in the circumstances of the appellant’s case.

3. The learned CIT[A] is not justified in holding that the appeal filed was not maintainable being hit by the provisions of section 249[4][b] of the Act as the appellant had not paid amount in equivalent to the Advance-tax without appreciating that the provisions of Section 249[4B] of the Act were wholly inapplicable since the appellant had challenged the very reopening of the assessment as welt as the computation of the Capital Gains in the appeal filed before the learned CT[A] under the facts and in the circumstances of the appellant’s case.

4. The learned CIT[A] ought to have appreciated that the entire assessment proceedings were completed u/s. 144 rws 147 of the Act without serving any of the notices on the appellant under the facts and in the circumstances of the appellant’s case and consequently the impugned order passed is bad in law and the same requires to be annulled.

5. The order of re-assessment is bad in law and void-ab-initio for want of requisite jurisdiction especially, the mandatory requirements to assume jurisdiction u/s 148 of the Act did not exist and have not been complied with and consequently, the order of re-assessment requires to be cancelled.

6. Without prejudice to the above, the learned CIT[A] is not justified in upholding the computing a sum of Rs.6,55,000/- as income from Short term capital gain under the facts and in the circumstances of the appellant’s case.

7. Without prejudice to the right to seek waiver with the Hon’ble CCIT/DG, the appellant denies herself liable to be charged to interest u/s.234-A, 234-B and 234-C of the Act, which under the facts and in the circumstances of the appellant’s case and the levy deserves to be cancelled.

8. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.”

ITA No.2385/Bang/2018

1. The orders of the authorities below in so far as levying penalty u/s 271[1][c] of the Act against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.

2. The learned CIT[A] is not justified in holding that the appeal filed was belated based on the information given by the learned ITO, Ward – 1[4], Mysore in ITNS 51 that the impugned order and demand notice served on 01/09/2016 without appreciating that the appellant was not aware of the assessment proceedings taken up by the department being abroad and had obtained certified copy of the penalty order on 01/05/2017 and certified copy of the demand notice on 15/05/2017 and thereupon, the appellant had filed the appeal on 13/06/2017, which was within time of 30 days and thus there was no delay in filing the appeal and hence, there is no requirement for filing any application seeking condonation of delay under the facts and in the circumstances of the appellant’s case.

3. The learned CIT[A] is not justified in holding that the appeal filed was not maintainable being hit by the provisions of section 249[4][b] of the Act as the appellant had not paid amount in equivalent to the Advance-tax without appreciating that the provisions of Section 249[4B] of the Act were wholly inapplicable since the appellant had challenged the very reopening of the assessment as well as the computation of the Capital Gains in the appeal filed before the learned CT[A] under the facts and in the circumstances of the appellant’s case.

4. The order levying penalty u/s.271[1][c] of the Act, is bad in Law in as much as, the Learned A 0 has neither reached any satisfaction nor has such satisfaction been recorded in the assessment order and consequently, the very initiation of proceedings u/s.271[1][c] of the Act, is not in accordance with the requirements of Section 271[1] of the Act and consequently, the order of penalty founded on the invalid initiation of penalty proceedings is liable to be cancelled

5. The order of penalty passed u/s 271[1][c] of the Act is bad in law as the notice issued under section 274 rws 271 of the Act is not discernable whether the penalty proceedings is initiated for furnishing of inaccurate particulars of income or concealment of income under the facts and in the circumstances of the appellant’s case.

6. Without prejudice to the above, the learned CIT[A] is not justified in upholding the penalty of Rs. 1,42,260/- u/s 271[1][c] of the Act under the facts and in the circumstances of the appellants case.

6.1 The learned CIT[A] failed to appreciate that the appellant has neither concealed any income nor furnished inaccurate particulars of income to warrant levy of penalty and therefore, the penalty levied u/s.271[1][c] of the Act requires to be cancelled.

6.2 Without prejudice to the above, the penalty levied is highly excessive and Liable to be reduced substantially.

7. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.”

“1. The orders of the authorities below imposing penalty u/s. 271[1][b] of the Act in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.

2. The learned CIT[A] is not justified in holding that the appeal filed was belated based on the information given by the learned ITO, Ward – 1[4], Mysore in ITNS 51 that the impugned order and demand notice served on 01/09/2016 without appreciating that the appellant was not aware of the assessment proceedings taken up by the department being abroad and had obtained certified copy of the penalty order on 01 /05/2017 and certified copy of the demand notice on 15/05/2017 and thereupon, the appellant had filed the appeal on 13/06/2017, which was within time of 30 days and thus there was no delay in filing the appeal and hence, there is no requirement for filing any application seeking condonation of delay under the facts and in the circumstances of the appellant’s case.

3. The learned CIT[A] is not justified in holding that the appeal filed-was not maintainable being hit by the provisions of section 249[4][b] of the Act as the appellant had not paid amount in equivalent to the Advance-tax without appreciating that the provisions of Section 249[4B] of the Act were wholly inapplicable since the appellant had challenged the very reopening of the assessment as well as the computation of the Capital Gains in the appeal filed before the learned CT[A] under the facts and in the circumstances of the appellant’s case.

4. The authorities below are not justified in levying penalty u/s.271[1][b] of the Act, under the facts and in the circumstances of the appellants case.

They failed to appreciate that the appellant had not committed any default actionable u/s.271[1][b] of the Act and consequently, the levy of penalty deserves to be cancelled.

5. Without prejudice to the above, the learned CIT[A] failed to appreciate that the appellant was prevented by reasonable cause in not complying with the notices and consequently, the penalty levied deserves to be cancelled.

6. Without prejudice to the above, the penalty levied is excessive and liable to be reduced substantially.

7. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.”

1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.

2. The learned CIT[A] is not justified in holding that the appeal filed was belated based on the information given by the learned ITO, Ward – 1[4], Mysore in ITNS 51 that the impugned order and demand notice served on 01/09/2016 without appreciating that the appellant was not aware of the assessment proceedings taken up by the department being abroad and had obtained certified copy of the penalty order on 01/05/2017 and certified copy of the demand notice on 15/05/2017 and thereupon, the appellant had filed the appeal on 13/06/2017, which was within time of 30 days and thus there was no delay in filing the appeal and hence, there is no requirement for filing any application seeking condonation of delay under the facts and in the circumstances of the appellant’s case.

3. The learned CIT[A] is not justified in holding that the appeal filed was not maintainable being hit by the provisions of section 249[4][b] of the Act as the appellant had not paid amount in equivalent to the Advance-tax without appreciating that the provisions of Section 249[4B] of the Act were wholly inapplicable since the appellant had challenged the very reopening of the assessment as well as the computation of the Capital Gains in the appeal filed before the learned CT[A] under the facts and in the circumstances of the appellant’s case.

4. The [earned CIT[A] is not justified in upholding the penalty u/s.271F of the Act, of Rs.5,000/- without appreciating that there was no requirement for the appellant to file a return of income for the year under appeal and therefore the penalty imposed is misconceived.

4. Without prejudice to the above, the [earned CIT[A] ought to have appreciated that the appellant was prevented by reasonable cause in not filing the return of income for the year under appeal and therefore, no penalty ought to have been levied.

5. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.”

Brief facts of the case are as under:

2. Assessee is an individual and that, she had acquired immovable property consisting of a site at measuring 40′ x 16′ on 29/04/2006 for a consideration of Rs.1,20,000/-. It has been stated that, assessee sold said immovable property on 30/09/2017 for sale consideration of Rs.7,75,000/-.

3. Ld.AO noted that, assessee did not furnish return of income within due date, for relevant period disclosing, capital gains arising from sale of property, and therefore issued notice under section 148 of the Act. It has been recorded by Ld.AO that, as the notice was returned unserved, Ld.AO served the notice by affixing at the last known address of assessee as per sale deed. Ld.AO also noted that, there was no response from assessee, and due opportunity was given by serving a proposal to assess the income escaping assessment by affixture. Ld.AO noted that, as there was no response to the proposal of reassessment as well, and best judgment assessment was made under section 144 read with section 147 of the Act on 29/02/2016 assessing the escaped income under the head capital gains at Rs.6,55,000/-. Ld.AO, subsequently initiated proceedings u/s 271(1)(c), 271(1)(b) for non compliance of notice, and 271F for not filing Return of income.

4. Aggrieved by the addition, assessee preferred appeal before Ld.CIT(A). Assessee also filed appeals before Ld.CIT(A) against penalty orders passed by Ld.AO dated 31/08/2016 u/s 271(1)(c), 271(1)(b) and 271F. Representative of assessee appeared before Ld.CIT(A) and filed written submission dated 12/06/2018.

5. Before Ld.CIT(A), assessee filed appeal belatedly, as the impugned orders and notice of demand were not be communicated to assessee in time due to wrong address. Ld.CIT(A) noted that, assessee failed to file return of income within due date, and also failed to pay advance tax which was payable by her as per the provisions of section 249(4)(b) of the Act, before filing of appeal before First appellate authority. Ld. CIT(A) therefore did not admit the appeals and dismissed it.

6. Aggrieved by orders of Ld.CIT(A) assessee is in appeal before us. Assessee has preferred appeals against quantum order as well as penalty orders.

7. Before us, Ld.AR submitted that, preliminary issue challenged is regarding validity of re-assessment order and penalty orders passed, without following due process of law. He submitted that, the reassessment order and penalty orders are bad in law, as no valid notice was served to assessee intimating assessment and penalty proceedings. Ld.AR submitted in written submission dated 12/06/2018 wherein the correct address of assessee has been mentioned, with details of supporting documents:

8. It is submitted by Ld.AR that none of the income tax details of assessee refers to the address being, No. 387, “Skanha”, 4th Main, TK layout, Mysore. He relied on documents like copy of election card, and passport wherein the address is mentioned to be No. 723, 10th Cross, 2nd Stage, Siddarthanagar, Nazarbad Mohalla , Mysore placed in paper book. Assessee has filed before us the copy of Aadhar card, however the address mentioned therein is not readable hence we are unable to ascertain the same. It has been submitted by Ld.AR that, even in PAN card the address mentioned is 723, 10th Cross, 2nd Stage, Siddarthanagar, Nazarbad Mohalla, Mysore. He thus submitted that no details with income tax department filed by assessee mentions the address, at which impugned notice under section 148 was issued. He submitted that even the assessment order mentions wrong address and therefore it was not communicated to assessee in time.

9. On the contrary Ld.Sr.DR submitted that notice u/s 147 was issued based on information received wherein the address of assessee was mentioned to be No.387, ‘Skanha’ 4th Main, T.K Layout, Mysore. He also submitted that admittedly no returns were filed by assessee for relevant assessment year declaring the capital gains earned from sale of immovable property. He placed reliance on the information received by Ld.AO, filed in paper book. Further, Ld.Sr.DR argued that assessee in her written submission mentions regarding sale proceeds, utilised for meeting her higher studies cost outside India. He thus submitted that provisions of law have not been met with by assessee, on sale of immovable property. He submitted that either assessee should have paid taxes on the sales proceeds received during the year or the capital gain earned should have been invested as per provisions of sec.54 of the Act. He also emphasised that assessee has not filed her returns of income for year under consideration till date. He submitted that income has escaped assessment in the present circumstances. He supported orders passed by authorities below and submitted that ignorance of law cannot be an excuse. He submitted that though notices issued to assessee with wrong address was not received by her, but the assessment order and penalty orders were received belatedly, against which assessee filed appeals before Ld.CIT(A). It has thus been submitted that this is rectifiable under sec.292B of the Act.

10. We have perused submissions advanced by both sides in light of records placed before us.

11. Ground No.1, 2 & 8 are general in nature. Therefore does not require adjudication.

12. We note from the documents placed before us that, the notice under section 148 was served to assessee at, No. 387, “Skanha”, 4th Main, TK layout, Mysore. Whereas, the address, where assessee was residing as per submissions reproduced herein above at the time of sale of immovable property was, No. 723, 10th cross, 2nd stage, Siddharth Nagar, Nazarabad Mohalla, Mysore. We note that, notice under section 148 was issued based on information received. It is a fact that, Ld. AO before issuing notices did not verify with the details that is already available with the revenue like address mentioned on PAN card etc., filed by assessee. Ld.AO should have verified the details available with department before issuing any notice. Under such circumstances, impugned notice under section 148 issued at wrong address cannot be held to be valid, and the assessment order passed consequent to such notice deserves to be quashed.
13. The re-assessment order dated 29/2/2016, passed is without offering proper opportunity of being heard to assessee, which is not in accordance with law. While passing impugned reassessment order, principle of natural justice and ‘audi alterm partem’ needs to be followed. We therefore quash impugned notice issued under section 148 dated 28/04/2015 at the wrong address and the consequential assessment order passed is set aside.
Accordingly, we allow legal issue raised by Ld.AR in ground No. 4-5.
17. Issue raised by assessee in Ground No. 6 is on merits as we have quashed the basis of such addition, this ground becomes academic. Ground No.7 is consequential to any add on merits, as addition itself stand automatically set asides. This issue stands set aside.
Penalty Appeals
18. Consequent to assessment order dated 29/2/2016, notice u/s 274 of the Act initiating penalty u/s 271(1)(c), 271(1)(b)/271E were also issued to assessee and subsequently penalty orders were also passed. We note that all these penalty notices and consequential orders were issued and passed with wrong address, which cannot be sustained.

19. We also note that notice u/s 271(1)(b) and 271E are unsustainable in the eyes of law as assessee did not receive any notice u/s 148 and consequential notices being 143(2) and 141(1) of the Act which were issued by Ld.AO at wrong address. Therefore, assessee could not furnish any return of income in response. In our view, notice u/s 271(1)(b) and 271E also deserves to be quashed and set aside.

20. In regard to notice u/s 271(1)(c), is consequential to assessment order dated 29/02/2016, which we have already held to be bad in law as passed without granting proper opportunity of being heard to assessee. Accordingly notice issued to a wrong address and consequential orders passed by Ld.AO stands & quashed and set aside as bad in law.
In the result appeals filed by assessee stands allowed.
Order pronounced in the open court on 6th Nov, 2020