ITO, Bhiwani v. Sh. Lilu Ram (deceased) through his son and LR Sh. Narain Dass,, Bhiwani

ITA 3662/DEL/2010 | 1992-1993
Pronouncement Date: 30-03-2011 | Result: Dismissed

Appeal Details

RSA Number 366220114 RSA 2010
Assessee PAN OFITA3658T
Bench Delhi
Appeal Number ITA 3662/DEL/2010
Duration Of Justice 8 month(s)
Appellant ITO, Bhiwani
Respondent Sh. Lilu Ram (deceased) through his son and LR Sh. Narain Dass,, Bhiwani
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 30-03-2011
Date Of Final Hearing 30-03-2011
Next Hearing Date 30-03-2011
Assessment Year 1992-1993
Appeal Filed On 30-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI A.K. GARODIA ITA NOS. 3658 TO 3666/DEL/10) ASSTT. YR: 1988-89 TO 1996-97 INCOME-TAX OFFICER VS. LILU RAM (DECEASED) THR OUGH WARD-1 BHIWANI. HIS SON AND L/H NARAIN DASS OPP. NEHRU PARK DHANI SAROGYAN NEAR GANPAT RAI HOSPITAL BHIWANI. PAN/ GIR NO. ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : MRS. BANITA DEVI SR. DR RESPONDENT BY : SHRI A.K. GUPTA CA O R D E R PER R.P. TOLANI J.M: : THIS IS A GROUP OF NINE APPEALS FILED BY THE ASSESS EE AGAINST CONSOLIDATED ORDER OF CIT(A) DATED 19-5-2010 RELATI NG TO A.Y. 1988-89 TO 1996-97. THE ASSESSEE AND GROUNDS BEING SAME ALL T HESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER. 2. FOLLOWING COMMON GROUNDS ARE RAISED IN ALL THESE APPEALS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN HOLDING THAT SECOND NOTICE CANN OT BE ISSUED U/S 148 WHEN PROCEEDINGS AGAINST THE EARLIER NOTICE HAVE NOT BEEN COMPLETED WITHOUT APPRECIATING THE FACT THAT T HE PROCEEDINGS INITIATED U/S 148 EARLIER IN THE CASE H AD BEEN FILED BY THE AO VIDE ORDER-SHEET DATED 28-03-2006 PLACED IN THE ASSESSMENT RECORDS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS FURTHER ERRED IN HOLDING IN HOLDING THE ASSESSMENTS INVALID WITHOUT APPRECIATING THAT THE SECOND NOTICE U/S 148 WERE ISSUED ON 1.3.2007 UNDER THE PROVISIONS OF SECTION 150(1) OF THE ITA 3658 TO 3666/DEL/10 AY 1988-89 TO 1996-97 2 I.T. ACT 1961 WHICH PRESCRIBES THAT NOTICES U/S 14 8 MAY BE ISSUED AT ANY TIME FOR THE PURPOSE OF MAKING AN ASS ESSMENT IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR ANY DIRECTION CONTAINED IN AN ORDER PASSED BY ANY AUTHORITY IN AN Y PROCEEDING UNDER THE INCOME TAX ACT 1961 BY WAY OF APPEAL RE FERENCE OR REVISION OR BY A COURT IN ANY PROCEEDING UNDER ANY OTHER LAW. IT MAY BE MENTIONED THAT THE ISSUE OF ASSESSABILITY OF ENHANCED COMPENSATION & INTEREST HAD ATTAINED FINALITY CONSE QUENT UPON THE JUDGMENT OF HONBLE SUPREME COURT DELIVERED IN NOV. 2002 AND IN CONSEQUENCE THEREOF NOTICE U/S 1548 CAN BE ISSUED AT ANY TIME IN TERMS OF SECTION 150(1) OF THE INCOME T AX ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN DIRECTING THAT CHARGING OF INTE REST U/S 234A AND 234B IS NOT IN ORDER WITHOUT APPRECIATING THAT THE CHARGING OF INTEREST IS MANDATORY IN NATURE. 3. BRIEF FACTS ARE THAT ASSESSEES LAND WAS ACQUIRE D BY HUDA QUA WHICH ASSESSEE RECEIVED ADDITIONAL COMPENSATION AND INTER EST. ON THE BASIS OF THIS INFORMATION NOTICES U/S 148 DATED 12-5-1998 WERE I SSUED FOR A.Y. 1996-97 AND 1997-98. AO FRAMED THE ASSESSMENT ORDERS U/S 14 3(3)/ 147 ON 30-3- 2001. ASSESSEE DID NOT FILE APPEALS AGAINST THESE A SSESSMENT ORDERS. 3.1. THEREAFTER AO IMPOSED PENALTY U/S 271(1)(C) VI DE ORDER DATED 12-9- 2001 WHICH WERE CONFIRMED BY CIT(A) VIDE ORDER DA TED 26-6-2002. THE ASSESSEE CHALLENGED THESE PENALTIES BEFORE ITAT IN SECOND APPEALS AND THE ITAT VIDE ORDER DATED 23-9-2005 DELETED THE PENALTI ES. 3.2. IN THE MEANWHILE ISSUE OF AWARD OF COMPENSATI ON WAS TAKEN BEFORE HONBLE PUNJAB & HARYANA HIGH COURT WHICH VIDE ORD ER DATED 18-2-1999 REDUCED THE COMPENSATION TO RS. 79.98 PER SQ. YD. T HIS WAS CHALLENGED BY ASSESSEE AND HUDA IN APPEAL BEFORE HONBLE SUPREME COURT WHICH VIDE ITA 3658 TO 3666/DEL/10 AY 1988-89 TO 1996-97 3 ORDER DATED 12-11-2002 CONFIRMED THE PUNJAB & HARYA NA HIGH COURTS ORDER. 3.3. CONSEQUENT TO THE SUPREME COURT JUDGMENT DATED 12-11-2002 ASSESSEE FILED AN APPLICATION DATED 2-4-2003 U/S 15 4 BEFORE THE AO TO RECTIFY THE ASSESSMENT ORDERS DATED 30-3-2001 PASSED U/S 14 3(3)/147 REQUESTING TO TAKE THE COMPENSATION AMOUNT AS DETERMINED BY SUPRE ME COURT AND CONSEQUENT EFFECT ON THE INTEREST . AO VIDE ORDER D ATED 11-9-2003 U/S 154 PARTIALLY ALLOWED THE SAME AS ASSESSEES REQUEST FO R CHARGING INTEREST ON ACCRUAL BASIS SPREADING OVER EARLIER YEARS WAS NOT ACCEPTED. THEREAFTER ASSESSEE CHALLENGED THIS ORDER PASSED BY AO U/S 154 BEFORE CIT(A) WHO VIDE ORDER DATED 13-8-03/11-3-2004 ALLOWED THE ASS ESSEES PLEA ABOUT ACCRUAL OF INTEREST IN RESPECTIVE YEARS AND SPREADI NG OVER OF THE SAME. CONSEQUENTLY CIT(A) DIRECTED THE ASSESSEE TO FILE RETURNS OF INCOME FOR ALL THE RELEVANT ASSESSMENT YEARS IN WHICH THE ASSESSEE REQUESTED FOR ASSESSABILITY/ SPREADING OVER OF INTEREST. 3.4. IT IS PERTINENT THAT DEPARTMENT PREFERRED APPE ALS AGAINST THE ORDERS OF CIT(A) AND ITAT VIDE ITS ORDER DATED 30-6-2006 DISM ISSED THE REVENUES APPEALS. 3.5. THE ASSESSEE FILED ITS RETURNS OF INCOME FOR A .Y. 1988-89 TO 1996-97 ON 21-3-2005 AS DIRECTED BY THE CIT(A). TO REGULARI ZE THESE RETURNS AO ISSUED NOTICES DATED 19-4-2005 U/S 148 FOR ALL THES E ASSESSMENT YEARS. ASSESSEE ALSO FILED A LETTER REQUESTING THAT THE RE TURNS FOR ALL THESE YEARS ALREADY FILED ON 21-3-2005 MAY BE TREATED AS FILED IN RESPONSE TO NOTICE U/S 148. ITA 3658 TO 3666/DEL/10 AY 1988-89 TO 1996-97 4 3.6. AO DID NOT TAKE ANY FURTHER ACTION ON SUCH RET URNS. IN THE MEAN TIME THE ABOVE MENTIONED ORDER OF ITAT DATED 30-6-2006 W AS RECEIVED BY AO WHO AGAIN ISSUED NOTICES U/S 148 WITHOUT APPRECIATI NG THE FACT THAT ASSESSEES HAD ALREADY FILED RETURNS U/S 147. THE ASSESSEE OBJ ECTED THAT THE NEW SET OF NOTICES DATED 1-3-2007 WERE BAD IN LAW AS CONSEQUEN T TO NOTICES ISSUED U/S 148 ON 19-4-2005 RETURNS FILED THEREON WERE STILL PENDING AND ASSESSMENTS WERE NOT FRAMED. IT WAS SUBMITTED THAT NO NEW FACTS WERE IN POSSESSION OF AO AT THE TIME OF ISSUING THE NEW SET OF NOTICES U/ S 148 DATED 1-3-2007. ASSESSEES OBJECTION WAS NOT ACCEPTED BY AO WHO PA SSED IMPUGNED ASSESSMENT ORDERS DATED 25-9-2007 ON THE BASIS OF R ETURNS FILED BY THE ASSESSEE RELATABLE TO 148 NOTICES DATED 19-4-2005 A ND INTEREST U/S 234A & B WAS ALSO CHARGED. 3.6. AGGRIEVED ASSESSEE PREFERRED FIRST APPEALS AG AINST THE ASSESSMENT ORDERS DATED 25-9-2007. CIT(A) ALLOWED THE ASSESSEE S APPEALS BY FOLLOWING OBSERVATIONS: THE ISSUE INVOLVED AND THE SUBMISSIONS MADE BY THE APPELLANT HAVE BEEN CONSIDERED VIZ A VIZ THE LEGAL ASPECT OF THE CASE IN THE FOLLOWING PARAS: (I) IT IS A SETTLED LAW THAT SECOND NOTICE CANNOT BE IS SUED U/S 148 WHEN PROCEEDINGS AGAINST THE EARLIER ONE ARE NO T COMPLETED. IN THE APPEAL UNDER CONSIDERATION IT HAS BEEN SEEN THAT AFTER THE RECEIPT OF THE COMMISSIONER OF INCOME TAX (APPEALS) ORDER DATED 11.3.2004 THE AO ISSUED NOTICES DATED 19.4.2005 TO REGULARIZE THE RETURNS F ILED BY THE APPELLANT ON 21.3.2005; OTHER NOTICES DATED 1.3 .2007 WERE ISSUED U/S 148 AFTER RECEIPT OF THE ORDER DATE D 30.6.2006 OF ITAT; THE ISSUANCE OF SECOND NOTICE WA S NOT IN ORDER WHEN THE PROCEEDINGS FOR EARLIER YEARS WER E NOT COMPLETED. THEREFORE THE ASSESSMENTS COMPLETED ITA 3658 TO 3666/DEL/10 AY 1988-89 TO 1996-97 5 CONSEQUENT TO THE ISSUANCE OF THE SECOND NOTICE ARE NOT VALID ASSESSMENT. (II) THE ASSESSMENT FOR THE A.YS. 1996-97 AND 1997-98 WE RE COMPLETED ON 30-3-2001 CONSEQUENT TO ISSUANCE OF NOTICES U/S 148 DATED 12.5.1998. THESE ARE VALID ASSESSMENTS BECAUSE THE NOTICED U/S 148 WERE ISSUED WELL WITHIN TIME. AS REGARDS THE NOTICES DATED 19.4.2005 THE NOTICES U/S 148 WERE ISSUED TO REGULARIZE THE RETURNS FILED IN COMPLIANC E WITH THE DIRECTIONS OF THE COMMISSIONER OF INCOME TAX (A) DA TED 11.3.2004. LEGAL POSITION ON SECTION 150(2) IS THAT THE AO CAN START PROCEEDINGS IN COMPLIANCE WITH THE DIRECTIONS CONTAINED IN THE HIGHER AUTHORITY ORDER ONLY IN RESPECT OF THOSE ASSESSMENT YEARS WHICH COULD HAVE BEEN REOPENED ON THE DATE OF THE ORDER WHICH WAS SUBJECT MATTER OF APPEAL BEFORE THE HIGHE R AUTHORITY. IN THE APPEAL UNDER CONSIDERATION THE SUBJECT MATTE R OF APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) WAS THE 154 ORDER PASSED BY THE AO ON 03-09-2003 AND AS ON 03-0 9-2003 THE AO COULD HAVE LEGALLY ISSUED NOTICES U/S 148 UP TO THE A.Y. 1998-99 IN TERMS OF PROVISO TO SECTION 147 OF THE I T ACT. THE AFORESAID LEGAL POSITION AHS EMERGED FROM THE FOLLO WING CASE LAWS: (A) KM SHARMA VS. ITO 254 ITR 772(SC); (B) SH. HARVINDER SINGH BARAR VS. ITO 282 ITR 371 (C) PARVEEN KUMAR NAND KISHOR VS. CIT & ANOTHER 237 ITR 339 (D) GREEN WOOD CORPORATION VS. ITO 285 IUTR 118 (HP). THEREFORE THE NOTICE U/S 148 ISSUED ON 19.4.2005 IS NOT IN ORDER FOR THE A.YS. PRIOR TO THE A.Y. 1998-99. AN ASSESSM ENT MADE ON THE BASIS OF INVALID NOTICE IS NOT A VALID ASSES SMENT. THEREFORE THE ASSESSMENT ORDERS FIR THE AYS 1988-8 9 TO 1996- 97 ON THE BASIS OF 148 DATED 19.4.2005 ARE NOT VALI D ASSESSMENT ORDERS. ITA 3658 TO 3666/DEL/10 AY 1988-89 TO 1996-97 6 5. AS REGARDS THE ADDITIONAL GROUND OF APPEAL NOW IT HAS BECOME A SETTLED LEGAL PROPOSITION THAT TAX IS TO B E PAYABLE ON INTEREST ON ENHANCED COMPENSATION ON ACCRUAL BASIS WHEN THE ISSUE PERTAINING TO THE COMPENSATION AMOUNT REACHES FINALITY; THIS IS HOWEVER CONTRARY TO THE RECEIPT OF THE COMP ENSATION WHICH IS TAXABLE IN THE YEAR OF RECEIPT. CIT VS. HA RDWARI LAL (HUF) AND OTHERS 219 CTR (P&H); CIT VS. SH. KARTAR SINGH 36 IT REP. 441 (P&H) CIT VS. DEHRADOON TEA CO. 291 ITR 212 (UTTRAKHAND). IN THE APPEALS UNDER CONSIDERATIO N THE MATTER REACHED FINALITY WITH THE SUPREME COURT ORDER DATED 21.11.2002. SINCE THE APPELLANT WAS NOT AWARE OF TH E INTEREST DUE TO IT ON THE COMPENSATION/ ENHANCED COMPENSATIO N/ REDUCED COMPENSATION IT WAS NOT SUPPOSED TO KNOW THE TAX P AYABLE ON THE INTEREST ACCRUED OR OTHERWISE. THEREFORE THE C HARGING OF INTEREST U/S 234A & 234B IS NOT IN ORDER. THE SAME IS DELETED FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION ON MERITS; EVEN THOUGH THE ASSESSMENT ORDERS HAVE BEEN HELD AS NOT VALID. AGGRIEVED REVENUE IS IN APPEALS FOR ALL THESE YEAR S. 4. LEARNED DR CONTENDS THAT : (I) THE ORDER OF CIT(A) DATED 13-8-2004 WAS ACCEPTED BY ASSESSEE AND FILED RETURNS FOR ALL THESE YEARS ON THE SPREA D OVER/ ACCRUAL OF INTEREST BASIS VOLUNTARILY. THESE RETURNS FILED ON THE DIRECTIONS OF CIT(A) ON AN ORDER ACCEPTED BY THE ASSESSEE WERE P ENDING BEFORE AO TO REGULARIZE THE SAME. 148 NOTICES DATED 19-4- 2005 WERE ISSUED. ASSESSEE HIMSELF REQUESTED THAT THE RETURNS FILED BY THE ASSESSEE ON 21-3-2005 MAY BE TREATED AS RETURNS U/S 148. (II) THESE RETURNS HAVE BEEN FIELD BY THE ASSESSEE CONSE QUENT TO CIT(A)S ORDER AND EVEN IF THE ASSESSMENTS WERE NO T FRAMED THE ASSESSEES RETURNS ARE DEEMED TO BE ACCEPTED BY AO. (III) CONSEQUENT TO ITAT ORDER DATED 30-6-2006 CIT(A)S ORDER BECAME FINAL AND AO ISSUED FRESH NOTICES U/S 148. T HE ORDER OF ITA 3658 TO 3666/DEL/10 AY 1988-89 TO 1996-97 7 CIT(A) STANDS MERGED IN THE ORDER OF ITAT DATED 30- 6-2006. THEREFORE THE PROVISIONS OF SECTION 150 WILL BE SQ UARELY APPLICABLE AND THE TIME LIMIT REFERRED TO U/S 149 WILL STAND A CCORDINGLY EXTENDED. THEREFORE THE REASSESSMENTS ARE PROPER. ORDERS OF AO WERE RELIED ON. 4. LEARNED COUNSEL FOR THE ASSESSEE IN REPLY VEHEM ENTLY CONTENDS AS UNDER: (I) AT THE TIME OF ISSUE OF SECOND SET OF NOTICES U /S 148 OF I.T. ACT 1961 THERE WAS NO NEW INFORMATION REAS ONS FACTS OR CIRCUMSTANCES TO WARRANT NOTICE U/S 148 OF I.T. ACT 1961. (II) THAT THE ASSESSEE HAD ALREADY DISCLOSED HIS IN COME AND PAID TAXES ON SUCH INCOME. THE ASSESSMENTS ON RETU RNS FILED IN PURSUANCE OF DIRECTIONS GIVEN IN APPELLATE ORDER BY CIT(APPEALS) HAD ALREADY REACHED FINALITY MORE SO B Y VIRTUE OF SECTION 150(2) OF THE ACT. THAT THERE WAS NO ORDER ABOUT INTEREST ON TAX UNDER ANY SECTION AND SO INTEREST C HARGED IN REASSESSMENT PROCEEDINGS FOR WHICH THE ASSESSEE IS IN APPEAL SHOULD BE DROPPED. (III) THAT THE IMPUGNED ASSESSMENT ORDERS ARE BARRE D BY LIMITATION IN VIEW OF SECTION 150(2) EVEN IF NOTI CE WERE ISSUED U/S 148 READ WITH SECTION 150(1). IN THE ORDER OF C IT(A) THESE ASSESSMENTS FOR A.Y. 1988-89 TO 1996-97 WERE TIME B ARRED. THE ASSESSEE HAS STATED IN COMPUTATIONS FILED ALON G WITH RETURNS ON THE DIRECTIONS OF CIT(A) THAT THE RETURN S FOR THESE ASSESSMENT YEARS WERE TIME BARED. RELIANCE IS PLACED ON HONBLE SUPREME COURT IN KM S HARMA VS. ITO 254 ITR 772 AND PUNJAB & HARYANA HIGH COURT IN THE ITA 3658 TO 3666/DEL/10 AY 1988-89 TO 1996-97 8 CASE OF COL. SIR HARINDER SINGH BRAR VS. ITO 282 IT R 371 HAS UPHELD THAT SECTION 150(2) IS CLEARLY AND EXCEPTION TO 150(1) AND BAR OF LIMITATION CANNOT BE LIFTED FOR THOSE YE ARS WHICH HAVE REACHED FINALITY. ORDERS OF CIT(A) ARE RELIED ON. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS THE FACTS EMERGE IT IS UND ISPUTED THAT: (I) THE ASSESSEES RETURNS OF INCOME FOR A.Y. 1988-89 T O 1996-97 FILED ON 31-3-2005 REMAINED ON AOS RECORD WHICH ASSESSE E HIMSELF REQUESTED TO BE TREATED AS CONSEQUENT TO NOTICES U/ S 147/148 ISSUED ON 1-3-2007. (II) IT IS ALSO UNDISPUTED THAT QUA 148 NOTICES DATED 9- 4-2005 THE ASSESSMENTS U/S 147 READ WITH SEC. 143(3) WERE NOT FRAMED BY AO. (III) AO CANNOT ISSUE REASSESSMENT NOTICES WHEN ALR EADY THE SAME ACTION WAS PENDING AND RETURNS WERE ALSO FILED BY THE ASSE SSEE. THE FRESH NOTICES ISSUED BY AO U/S 148 DATED 1-3-2007 CANNOT BE JUSTIFIED OR UPHELD INASMUCH AS THE ASSESSEES RETURNS WERE ALRE ADY PENDING. (IV) BY THE TIME AO ISSUED NOTICES U/S 148 ON 19-4-2005 THE ORDER OF ITAT DATED 30-6-2007 WAS NOT PASSED. ON THIS DATE THE ORDER OF CIT(A) DATED 13-8-2004 STOOD AND WAS NOT MERGED INT O ITAT ORDER DATED 30-6-2006. AO SHOULD HAVE COMPLETED AS SESSMENTS U/S 148 ON THESE RETURNS BY REGULARIZING ASSESSEES RETURNS AS REQUESTED IN LETTER DATED 21-3-2005. IN VIEW OF THE SE FACTS AND CIRCUMSTANCES THERE BEING NO ITAT ORDER TILL 30-6- 2006 AO SHOULD HAVE PROCEEDED TO FRAME THE ASSESSMENT ON TH ESE RETURNS WITHIN TIME. HAVING NOT DONE SO TIME LIMIT CANNOT BE EXTENDED. ITA 3658 TO 3666/DEL/10 AY 1988-89 TO 1996-97 9 (V) IN VIEW OF OUR ABOVE OBSERVATIONS WE HAVE TO UPHOL D THE ORDER OF CIT(A) QUASHING THESE ASSESSMENTS. (VI) HOWEVER CONTENTIONS OF LEARNED COUNSEL FOR THE ASS ESSEE THAT HE IS ELIGIBLE TO REFUNDS FOR TAXES PAID FOR A.Y. 1988-89 TO 1996-97 CANNOT BE ACCEPTED INASMUCH AS THESE ARE REVENUES APPEALS. BESIDES ASSESSEE HAVING ACCEPTED THE CIT(A)S DIRE CTIONS AND FILED THE RETURNS AND PAID THE TAXES HE IS TO BE A SSESSED ON THE RETURNS FILED BY THE ASSESSEE. THEREFORE THE ASSES SEES PLEA OF DIRECTION FOR REFUND CANNOT BE ACCEPTED AS HE IS NE ITHER IN APPEAL NOR IN CO NOR THIS ISSUE ARISES OUT OF THE ORDER OF CIT(A). WITH THESE OBSERVATIONS REVENUES APPEALS ARE DISMISSED . 6. IN THE RESULT ALL THE APPEALS FILED BY THE REVE NUE STAND DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 30-3-2011. SD/- SD/- ( A.K. GARODIA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30-03-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR