Commissioner of Income Tax vs Smt. Sunita Gupta

D.K. Jain, C.J.—This appeal by the revenue u/s 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act) is directed against the order dated 28-5-2004 passed by the Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal) in Income Tax Appeals No. 881/Dethi/2004 and C.O. No. 91/Delhi/2004 pertaining to the assessment year 1995-96. By the impugned order, the Tribunal has dismissed revenues appeal and has allowed the cross objection filed by the assessee, challenging the validity of notice issued u/s 148 of the Act.

According to the revenue, the order of the Tribunal involves the following substantial questions of law:

(a) Whether the Hon''ble Income Tax Appellate Tribunal has erred in holding the notice u/s 148 of Income Tax Act served by affixture as bad in law ?

(b) Whether the Hon''ble Income Tax Appellate Tribunal has erred in law in holding initiation of proceedings u/s 147 and service of notice u/s 148 as bad in law, illegal, and in consequent assessment framed u/s 147/143(3) of Income Tax Act declared invalid and cancelled ?

(c) Whether the Hon''ble Income Tax Appellate Tribunal has erred in law in accepting the crossobjections of the assessee on different grounds filed by department against the deletion of , additions by the learned Commissioner (Appeals) ?"

Briefly stated the material facts giving rise to the present appeal are as follows:

In her return of income for the aforenoted assessment year, the assessee, an individual, claimed exemption u/s 54F of the Act in respect of the long-term capital gains on sale of shares of one M/s. Parsidh Exports Limited. Exemption was claimed on the plea that the said capital gains had been invested in construction/ acquisition of a residential property. According to the assessee; the sale consideration of Rs. 6,02,620 was received by means of two demand drafts of Rs. three lakhs each and the balance amount was received in cash.

It appears that assessment for the relevant assessment year was ,completed u/s 143(1) of the Act. However, subsequently, on the basis of the information received by the assessing officer from the Deputy Director of Income Tax (Investigation), reassessment proceedings were initiated and a notice u/s 148 of the Act, dated 30-3-2003, was issued to the assessee. Since the assessee did not respond to the said notice, the assessing officer issued a notice u/s 142(1) of the Act. In response thereto, the assessee denied the service of any notice u/s 148 of the Act. The assessee was informed that the said notice had been served by affixture. Ignoring the objections raised by the assessee regarding the validity of initiation of proceedings under sections 147 and 148 of the Act or validity of service of notice and relying on the statements of certain persons, the assessing officer came to the conclusion that transactions of sale and purchase of shares and consequential claim of long-term capital gain in respect thereof was bogus taking the total amount of sale price received by the assessee, along with premium alleged to have been paid by her, treated the same as her undisclosed income. Claim made by the assessee u/s 54F of the Act was also declined.

Aggrieved, the assessee preferred appeal to the Commissioner (Appeals). Insofar as the objection of the assessee with regard to the service of notice was concerned, the Commissioner came to the conclusion that there was no serious infirmity in the procedure adopted by the assessing officer so as to invalidiate the proceedings. However, on the issue of re-opening of assessment u/s 147 of the Act, the Commissioner concluded that there was no material or evidence with the assessing officer to come to the afore noted conclusion. Accordingly, the Commissioner held that the reasons for re-opening the assessment were insufficient. Thus, the addition made by the assessing officer was deleted.

Being aggrieved, the revenue took the matter in further appeal to the Tribunal. Not being satisfied with the finding of the Commissioner in regard to the service of notice u/s 148 of the Act, the assessee challenged the said finding by filing cross-objection in the appeal preferred by the revenue. As noted above, by the impugned order, revenues appeal has been dismissed and assessees cross-objection has been allowed. Hence, the present appeal.

Having heard, Mr. Bindal, learned Counsel for the revenue, we are of the view that the appeal is bereft of any merit. The Tribunal, while upholding the objection of the assessee with regard to the validity of service of notice, has observed that in the first instance assessees claim that she did not have any servant by the name of Ram Bahadur, had not been refuted by the revenue. Secondly, the procedure for effecting the service of a notice as per the procedure laid down either in the Act or in the C.P.C. had not been complied with. The question relating to the service of notice, on the facts found by the Tribunal, is a pure finding of fact, involving no question of law, much less a substantial question of law. Since we have come to the conclusion that question raised by the revenue regarding the validity of service of notice is not a substantial question of law, we deem it unnecessary to deal with other questions, raised in the appeal.

Consequently, we decline to entertain the appeal.

Dismissed.