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08-11-2019, Chebolu Lakshmi, Section 20(1), 147, 263, Tribunal Visakhapatnam

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3 days 6 hours ago #11372 by amit
Section - 20(1), 147, 263
Order Date - 08-11-2019
Favouring - Assessee
Court - Tribunal Visakhapatnam
Appellant - Chebolu Lakshmi
Respondent - ITO
Justice - V. DURGA RAO JM & D.S. SUNDER SINGH AM
Citation - 1119Taxpundit107
Appeal No. - I.T.A.No.06/Viz/2018
Asstt. Year - 2007-08

Order

PER : D.S.Sunder Singh

This appeal is filed by the assessee against the order of the Principal Commissioner of Income Tax (Pr.CIT)-1, Visakhapatnam in F.No. Pr.CIT1/VSP/263/2016-17 dated 27.03.2017 for the Assessment Year (A.Y.) 2007-08.

2. In this case, assessment was completed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short ‘Act’) on 16.03.2015 on total income of Rs.3,00,020/-. Subsequently, the Ld.Pr.CIT has taken up the case for revision u/s 263 and observed that the Assessing Officer (AO) has committed an error in computing the capital gains on sale of land admeasuring 153 sq.yds at Allipuram Ward, Visakhapatnam. The said land was sold on 31.05.2006 for a consideration of Rs.22,95,000/- which was acquired for a consideration of Rs.9.00 lakhs, against which the AO had adopted the market value of Rs.14,99,400/- as cost of acquisition, which resulted in under assessment of Rs.5 lakhs. Hence, the Ld.Pr.CIT held that the assessment order passed by the AO is erroneous and prejudicial to the interest of the revenue and accordingly, set aside the assessment order with a direction to redo the assessment after giving opportunity of being heard to the assessee. Against which the assessee is in appeal before this Tribunal.

3. During the pendency of appeal, the assessee raised additional ground stating that the order passed by the Ld.Pr.CIT u/s 263 is barred by limitation, hence the order is invalid. The additional ground raised by the assessee reads as under :

“On the facts and in the circumstances of the case, whether the Order dt.27.03.2017 u/s 263 of the Act which was served on 26.12.2017 with an inordinate delay of 9 months is barred by limitation?”

3.1. During the appeal hearing, the Ld.AR submitted the order passed u/s 263 dated 27.03.2017 was served on the assessee on 26.12.2017 with time a gap of 9 months, hence contended that the order was not passed within the time limit allowed u/s 263 of the Act, hence, submitted that the same is invalid. The Ld.AR further submitted that the entire facts are available on record, no fresh enquiry or investigation is necessary for adjudication of the additional ground. Since the additional ground goes to the root of the revision order, the Ld.AR requested to admit the additional ground.

4. On the other hand, the Ld DR vehemently opposed for admission of the additional ground.

5. We have heard both the parties and observed that the additional ground raised by the assessee goes to the root of the assessment and questions the validity of order passed u/s 263 of the Act. Since the facts are available on record, no fresh enquiry required to be conducted in this case, we admit the additional ground raised by the assessee for adjudication. Accordingly, additional ground is admitted.

6. During the appeal hearing, the Ld.AR submitted that the order u/s 263 required to be passed within 2 years from the end of the financial year in which the orders are sought to be revised. In the instant case, the order u/s 143(3) r.w.s 147 was passed on 16.03.2015 and thus, the time limit available for passing the order u/s 263 got expired on 31.03.2017. In the instant case though the order was dated 27.03.2017, the said order was served on the assessee on 26.12.2017 i.e. after 9 months of passing the impugned order. The Ld.AR further submitted that though there is no time limit for serving the order, the order required to be served to the assessee within a reasonable time after passing the same. In the instant case, the order was served on the assessee after 9 months which cannot be held to be served within the reasonable time by any stretch of imagination. Had the order was passed on 27 03.2017, there is no reason to serve the order with inordinate delay 9 months. Therefore, the Ld.AR argued that the order u/s 263 was passed beyond the time limit allowed under the Act, hence, requested to quash the order u/s 263. The Ld.AR also relied on the order of this Tribunal in the case of Kamaakshi Shipping Vs. ACIT, Circle-1(1) in I.T.A.No.01/Viz/2018 dated 21.08.2019.

7. On the other hand, the Ld.DR submitted that the order was passed on 27.03.2017 and the Ld.Pr.CIT has also made the order sheet noting which shows that the order was passed within the time limit available u/s 263 of the Act. The Ld.DR further submitted that as per the Act, there is no time limit for serving the order passed. Hence, requested to uphold the order of the Ld.Pr.CIT and dismiss the appeal of the assessee.

8. We have heard both the parties and perused the material placed on record. As per records of the Ld.Pr.CIT and the order sheet entry, the order was passed on 27.03.2017. However, as per the information placed before us by the assessee, the order was served on 26.12.2017 on the assessee, after the lapse of 9 months. Though the Ld.DR submitted that the order was passed on 27.03.2017 as per the noting in the order sheet and there is no time limit for serving the order, the department required to demonstrate that the order was passed on 27.03.2017 and dispatched within the reasonable time. As per the settled issue, the order required to be communicated to the assessee or served to the assessee within the reasonable time. The Ld.DR was asked to explain the reasons for such
inordinate delay of 9 months and the Ld.DR failed to adduce any reasonable cause for such inordinate delay in serving the order. The Ld.DR was asked to produce any evidence, such as notice server register, inward outward registers etc.., having sent the order for service to the assessee within reasonable time and the revenue could not furnish any evidence to show that the order was passed before time limit available in the Act and sent it for service to the assessee. We understand that the AO also received the said order at the same time which shows that the department has not made any efforts to serve the order within the reasonable time and failed to explain the reasons for not serving the order within the reasonable time. The department also failed to produce any evidence to show that the order was passed and dispatched to the assessee as well as the AO, within the reasonable time. Therefore, we are unable to accept the contention of the department that the order was passed before the time limit available under the Act. On identical facts, this Tribunal has considered identical issue in the case of Kamaakshi Shipping (supra) and quashed the order passed u/s 263. For the sake of clarity and convenience, we extract relevant part of the order of this Tribunal in para No.4 to 4.2 which reads as under.

“4. We have heard both the parties and perused the material placed on record. As per the records of the Ld.Pr.CIT and the order sheet entry, the order was passed on 27.03.2017, however, as per the information placed before us by the assessee, the order was served on the assessee on 26.12.2017 after lapse of 9 months. As per page No.15 of the paper book, the assessee had demonstrated that the order was posted on 23.12.2017 and delivered on 27.12.2017. As submitted by the Ld.AR, the copy of the order of the Ld.Pr.CIT u/s 263 dated 27.03.2017 was also served on the concerned AO also on 18.12.2017. The assessee came to know regarding passing of order u/s 263 from the AO and had received the copy of 263 order on 26.12.2017 from the AO. The above facts clearly show that the order was served on the assessee as well as to the AO after the lapse of 9 months from the date of passing of the order. During the appeal hearing, the Bench has asked for clarification from the Ld.DR with regard to reasons for such a long delay in serving the order to the assessee as well as the AO. The Ld.DR could not submit any valid and reasonable explanation to support the delay. The Bench also has asked the Ld.DR to produce any evidences

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