Case Law Details

Case Name : Sri Anthi Reddy Yamireddy Vs DCIT (ITAT Hyderabad)
Appeal Number : I.T.A. No. 96/HYD/2017
Date of Judgement/Order : 23/05/2017
Related Assessment Year : 2006- 07
Courts : All ITAT (4213) ITAT Hyderabad (237)

Opportunity of being heard is little more than serving a notice on assessee. It is not an empty formality. Without giving a proper opportunity to assessee, revision proceedings u/s. 263 cannot be finalized as the provisions of Section 263 mandates that the CIT may pass such orders after giving an opportunity of being heard. Since the mandatory requirement of opportunity of being heard has not been provided to assessee, the order passed by CIT is void ab-initio. Further as considered above, the record do indicate that AO has examined the issue and CIT was wrong in not examining the record properly and arriving at certain conclusions without any basis. Though revisional authority considers himself to be an extended arm of Revenue department in collection of correct tax, he does not get any leverage to exercise such jurisdiction, to do, so giving a go by to the established principles enunciated in law which are inbuilt checks provided in Section 263 itself. Justice should not only be done but it should also appear to be done. In this case the haste in which the proceedings are sought to be commenced and completed indicate that paramount importance is given to bring to tax the alleged tax as capital gains and there it can only be concluded that CIT has not followed the principles of natural justice. Thus, looking at from any angle it can be concluded that the order passed by CIT u/s 263 has not followed the prescribed provisions mandated and so the same cannot be upheld. In these circumstances, we have no other option than to quash the proceedings initiated by the CIT u/s. 263.
FULL TEXT OF THE ITAT JUDGMENT

This is an appeal by assessee against the ex-parte order of the Ld. Commissioner of Income Tax (Central)-Hyderabad, dated 28-03-2014 u/s. 263 of the Income Tax Act [Act]. The order of Ld. CIT was passed on 28-03-2014 but was not served on assessee immediately and assessee has obtained certified copy on 13-12-2016 having come to know when bank account was attached. The present appeal was filed accordingly in time.
2. Brief facts of the case are that assessee was served with a notice u/s. 153C of the Act in connection with search and seizure proceedings in the case of M/s. MBS Jewelers Pvt. Ltd. and its group cases. Assessee filed return of income on 11-02-2011 declaring an income of Rs. 85,000/-. The assessment was completed on 30-12-2011 u/s. 143(3) r.w.s. 153C of the Act accepting the returned income resulting in NIL demand. Subsequently, Ld. CIT invoked the provisions of Section 263 and set aside the order date 30-12-2011 along with other orders for AYs. 2007- 08 to 2010- 11. The grievance is with reference to AY 2006- 07 only. Ld.CIT as seen from the show cause notice issued for the impugned assessment year has initiated the proceedings for non- examination of certain information in the seized material. As per the CIT, assessee has executed ten sale deeds in favor of Shri Sukesh Gupta and his group on land situated at Guttala Begumpet, Hyderabad. It was also noted that assessee claimed that he had given GPA to one Shri G. Koteshwara Rao in the year 1994 and the same was cancelled in the year 1997. It was claimed by assessee before the AO that the ten sale deeds are invalid as they were executed by Shri G. Koteshwara Rao after the GPA was cancelled. Assessee was not served with any notice in these proceedings, the fact of which was recorded by the CIT in para 3 of the order as under:

“3. Accordingly, show cause notices dated 14.03.2014 were issued separately for the above Assessment Years to the assessee to
explain as to why the assessment orders passed for the aforementioned assessment years shall not be revised u/s. 263 of the I.T. Act. The notices were sent to the A.O. for service of the same on the assessee. Apparently the A.O. could not serve the notices on assessee since whereabouts of the assessee are not known. It is also stated that the premises where the assessee was staying as per last known address were demolished and the occupants have shifted. Under the circumstances, due to the limitation expiring on 31st March, 2014, the revision proceedings are completed based onthe material available on record”.

3. Since no notice was received by assessee, none appeared before the Ld.CIT. The CIT has set aside the order stating as under:
“4. It is evident from the assessment orders that the AO has not verified the unexplained investments pertaining to land transactions of Guttala Begumpet, Hyderabad…………………….
5. Under these circumstances stated above, the Assessment orders passed by the A.O. for the A.Ys. 2006- 07 to 2010- 11 dated 30.12.2011 are set aside with a direction to examine the issues as above proper perspective and pass appropriate assessment orders. During the reassessment proceedings, the Assessing Officer should make effort to trace the assessee and obtain his explanation on the issue and pass orders thereafter considering the explanation so obtained if any”.
 
(emphasis supplied)
4. Even though the said order was passed on 28-03-2014, assessee came to know when the Axis Bank, Nallakunta Branch, Hyderabad informed assessee vide letter dt. 27-09-2016 that a notice u/s. 226(3) was received by them from ACIT, Central Circle- 3(1), intimating the tax dues at Rs. 93 Lakhs. Assessee vide letter date 27-09-2016 requested the AO to intimate the reasons. Subsequently having come to know that proceedings u/s. 263 were initiated on the earlier assessment order, assessee obtained the copy of the order and preferred the present appeal.
5. The present appeal is on the proceedings concluded by the CIT u/s. 263. Assessee has raised the following grounds:
1. The order u/s. 263 passed by the learned Commissioner of Income Tax, Central, is not correct either on facts or in law and in both.
 
2. The learned Commissioner of Income Tax is not justified in holding that the order u/s. 143(3) r.w.s. 153(c) passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue.
 
3. The learned Commissioner of Income Tax failed to appreciate the fact that the Assessing Officer, in the assessment proceedings, raised a specific query and verified the information filed by the appellant regarding cancellation of general power of attorney given to Sri G. Kotshwer Rao and hence the said order is not erroneous.
4. The appellant craves leave to add or amend or alter any of the grounds at the time of hearing of appeal”.
5.1. Assessee also raised the additional ground as under:
“In the absence of Valid and Proper Service of show cause notice u/s. 263, the order passed by the Commissioner of Income Tax u/s. 263 is not valid”.
6. Ld. Counsel referring to the order of the CIT, specifically para 3 extracted above, had submitted that it is clear that no notice was served on assessee either through process server or through post or by affixture or by any other method prescribed for service of notice and the order of CIT itself indicates that no notice was served before the said order passed. It was the submission that the provisions of Section 263 specifically mentions that assessee should be given due opportunity before an order is passed. Therefore, the order u/s. 263 date 28-03-2014 is bad in law. Assessee has relied on the following case law:
i. ACIT Vs. Sher Singh Alias Balshear Singh [131 TTJ 1] (CHD)(UO) – ITAT Chandigarh;
ii. CIT Vs. Girdharilal [147 ITR 379] (Raj);
iii. CIT Vs. Sattamdas Mohandas Sidhi [96 Taxman 263] (MP);
iv. Sri Srinivasa Rao Vs. DCIT [ITAT, Hyd dt. 18-09-15]
6.1. Coming to the merits of the issue, it was submitted that there were ten sale deeds executed by the GPA in favor of Shri Sukesh Gupta and his group companies and assessee has explained that these sale deeds do not pertain to assessee and assessee has not sold any property.
6.2. Ld. Counsel referred to the show cause notice issued by the AO date 18-11-2011 in the course of scrutiny proceedings in which as item (vii) of para 2 specifically a question was raised as under:
“vii. Please give details of the immovable property transactions entered into with M/s. MBS Jewellers P. Ltd., M/s. MBS Imp ex Ltd., Aashi Realtors, Sukesh Gupta, Pramod Kumar Gupta or their group concerns during the period (F Y 2003- 04 to 2009- 10)”
6.3. In reply, it was submitted by assessee vide letter dt nil to the ACIT, Central Circle-3 as under:
“With reference to the above subject, I hereby submit that I did not made any Sale of Property during the Financial Years 2003-04 to 2009-10. Particularly with regard to Property at Guttala Begumpeta, Serilingampally Mandal, Ranga Reddy District, I have not Sold any Property till today. In this respect I would like to bring to your kind notice I have given a Registered GPA to Sri G.Koteswara Rao in the year 1994 and cancelled the GPA with the Registrar in the year 1997 i.e., Cancellation also Registered in the year 1997 (Copies of Regd. GPA and cancellation of Regd. GPA are enclosed herewith]. Hence, kindly consider the above information. Hence, any Sale Deeds entered by Sri G.Koteswara Rao after cancellation of Regd. GPA since 1997 to till date are invalid and null and void. Hence, from my point of view still I am the Owner, I did not entered any Sale Deeds till now with regard to the above mentioned property. In fact I have no information about any Sale Deeds entered by Sri G.Koteswara Rao as a Regd. GPA Holder for the Financial Years 2003- 04 to 2009- 10.
I further confirm have not entered any Immovable Property transactions with M/s. MBS Jewelers Pvt. Ltd., M/s. MBS Imp ex Pvt. Ltd., Aashi Realtors, Sukesh Gupta, Pramod Kumar Gupta or their group concerns during the period (Financial Years 2003- 04 to 2009- 10). This is for your kind information”.
7. Ld. Counsel also referred to further letter submitted to the Asst. Commissioner (Pg. 7 of the Paper Book) where in it was clearly stated that there are no purchase/ sale of immovable properties during the Financial Years 2003-04 to 2009-10 and gave the statement of affairs in pg. 2 of the said letter. It is also clearly reiterated vide para 6 of that letter that there are no immovable property  transactions entered with M/s. MBS Jewellers Pvt. Ltd., or others as stated by the AO and clearly stated that GPA was cancelled and those documents were enclosed to the above letter. Referring to the above correspondence between assessee and the AO at the time of original assessment, it was submitted that AO has accepted the facts as stated by assessee and therefore, question of non-verification, as opined by Ld.CIT, does not arise, Ld. Counsel relied on the judgment of the jurisdictional High Court in the case of Spectra Shares & Scrips Pvt Ltd., Vs. CIT [354 ITR 35 (AP)] to submit that CIT could not take any other opinion and as the entire information pertaining to so called ten sale deeds was available in the seized documents; AO has examined the same and accepted assessee’s submissions. In view of that, on merits, the order of the CIT is not justifiable. He also pointed out the discrepancy between the show cause notice and the order issued by the CIT. In the show cause notice, it was stated that assessee has executed sale deeds and the same were not examined by the AO, whereas CIT in para 4 states that AO has not verified the ‘unexplained investments’. It was the submission that the question of unexplained investment does not arise in a sale transaction. Due to these inconsistencies, stand taken by the CIT and further on the fact that AO has verified the transactions in the course of assessment proceedings itself, the order of the CIT on merits is not sustainable.

8. Ld. CIT- DR, however, while admitting that no notice could be served on the assessee, referred to the order of the CIT to submit that CIT has attempted to serve the notice on the ‘last known address’ as assessee had failed to supply the correct address to the department when there is change of address. Therefore, the action of the CIT cannot be faulted. Since it is a procedural deficiency, Ld. CIT- DR, however, requested for setting aside the order of the CIT so that proceedings can be continued by issuing proper notice to assessee and taking objections from assessee. On merits, it was the submission that AO has not examined the said transactions, hence the proceedings are warranted.9. We have considered the rival contentions and perused the order of the CIT. As can be seen from the order itself, CIT clearly stated that no notice could be served on assessee due to reasons stated therein and order was passed ex- parte, as it is getting time barred. The provisions of Section 263 are as under:

 “263. (1) The Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.
[Explanation 1.]……………………
……………………………………………………………………………..”
10. Admittedly, Ld.CIT can call for any record and examine, but before passing such order thereon, he has to satisfy two conditions which are required to be fulfilled.
1) He may pass such order after giving assessee an opportunity of being heard and
2) After making or causing to be made such inquiry as he deems necessary.
In this case, neither of the conditions have been fulfilled as discussed herein after.
11. The first condition of ‘opportunity of being heard’ has not been satisfied, as no notice was served on assessee, leave alone giving sufficient opportunity. Coming to the issue of non- service of notice, it is to be noted that the Ld.CIT did not serve any notice on assessee. As explained by the Ld.CIT-DR, the notice was sent through service by process server to the AO who reported that assessee was not living in the given address and his whereabouts are not available and the address which was given was demolished. In these circumstances, without taking recourse to any other mode of service of notice, CIT concluded that the proceedings are to be completed as they were time barring. As can be seen from para 6, the notice date 14-03-2011 was issued but not served but an order was passed on 28-03-2014. At any rate, reckoned from the date of issuing the notice, even the mandatory two weeks’ time was also not provided by the CIT. Ld.CIT could have sent the notice by post to make ‘evidence on record’ that a proper notice was at-least issued, if not served, on assessee. No notice was sent by post. Having come to know that assessee was not living in the given address, no attempt was made to locate assessee, as was subsequently found out in the course of recovery proceedings. In the present case, neither there was any issuance of a show cause notice by way of post nor was there any service by affixture. There is no substituted service also as admitted in this case.12. As per the provisions of Section 282 of the IT Act 1961, the notice may be served either by post or as if it were a court summons under the Civil Procedure Code. The procedure for service by post is given in Section 27 of the General Clauses Act. Requirements for valid service by post are:
i. Proper addressing;
ii. Prepaying
iii. sending by registered post with acknowledgement due
12.1. The service of notice is affected when the letter is delivered in the ordinary course by post. The presumption is that the delivery on assessee has been affected. This is so even if a third person receives the post. The onus of proving otherwise is on assessee. If the notice comes back with a postal remark ‘refused’ it will still have the effect of valid service. If assessee denies such refusal on oath, the postman must be examined. But if the notice is returned with the postal remarks left, not found or not known, valid service cannot be presumed.

12.2. The Code of Civil Procedure [Chapter-V, Rule 9-30] specifies the manner of service of court summons. Rule 9 specifies that a notice can be served in the following manner:

i. Personal service;
ii. Registered post acknowledgment due;
iii. Speed post;
iv. Courier service approved by High Court;
v. Other means of transmission of documents (including fax message or electronic mail service) provided by the Rules made by the High Court.

For personal service, copy of the notice is served on assessee or his empowered agent, generally in the department, by a notice server. In case the notices are not served personally, service by affixture is resorted to in two circumstances:

i. When the addressee or his agent refused to sign the acknowledgment for service of notice and

ii. When the serving official after using of due and reasonable diligence cannot find the addressee in his residential or business premises within a reasonable time and there is nobody else authorized to receive the notice.

12.3. In the above circumstances, ITI can effect the service by affixture on his own initiative, without waiting for an order from the AO. A copy of the notice should be affixed on the outer door or a conspicuous part of business or residential premises. A report is to be drawn up by the ITI on the facts and circumstances of the service by affixture, specifying date and time of service and name of the identifier if any. It should conclude with an affidavit of the ITI solemnly affirming the facts and particulars of service as reiterated. The report is to be filed as an endorsement to the original notice after being docketed in the order sheet. The report should be verified by an affidavit. In the absence of such affidavit, the officer must examine the Inspector on oath. The AO can also order service by affixture or by putting a newspaper advertisement under certain circumstances. Such service is called substituted service. This can be resorted to (a) when AO is satisfied that there is reason to believe that addressee is kept out of the way for the purpose of avoiding service and (b) the notice cannot be served in the ordinary way for any other reason. In these cases, AO is expected to pass a speaking order to the affect that he is satisfied as to the existence of the circumstances which necessitates a substituted service. A detailed noting in the order sheet to this effect will satisfy the requirements. The above procedure stated in this Para 12 is as prescribed in the Manual of Office Procedure (Volume-II, Technical), [February, 2003] of the department.

12.4. The show cause notice even though was dated 14-03-2014, the same was sent to AO for service, who reported that assessee was not available in the given address and the place of address was also demolished. That report was date 20-03-2014 as verified from the record. In those circumstances, since the place of address (last known address) was not available for service by affixture, Ld.CIT should have taken the alternate course of action i.e., substituted service. Rule 20 of Order 5 of CPC specifies as under:

“20. Substituted service: (1) Where the court is satisfied that there is reason to believe that the defendant is keeping out of the way for the purpose of avoiding service, or that for any other reason the summons cannot be served in the ordinary way, the court shall order the summons to be served by affixing a copy thereof in some conspicuous place in the court house, and also upon some conspicuous part of the house (if any) in which the defendant is known to have last resided or carried on business or personally worked for gain, or in such other manner as the court thinks fit.

(1A) Where the court acting under sub-rule(1) orders services by an advertisement in a newspaper, the newspaper shall be a daily newspaper circulating in the locality in which the defendant is last known to have actually and voluntarily resided, carried on business or personally worked for gain.

(2) Effect of substituted service – Service substituted by order of the court shall be as effectual as if it had been made on the defendant personally.

(3) Where service substituted, time for appearance to be fixed – Where service is substituted by order of the Court, the Court shall fix such time for the appearance of the defendant as the case may require”.

Since place of last known address was demolished, the service should have been ordered to be effected by publication in a local daily newspaper. In that case service substituted by that manner [Rule20(1A)] shall be as effectual, as if it had been made on the assessee personally [Rule20(2)]. If local publication was given in a daily newspaper of the regional language (or in known language of assessee is familiar with), either assessee or any known person to assessee would have noticed and there would be compliance to the proceedings. None of these have been undertaken by the CIT before finalizing the proceedings u/s. 263; in other words, the Ld. Commissioner’s action in completing the proceedings within 10 days, that too, on an issue wherein facts on record indicate otherwise, indicate haste in setting aside the order without service of notice.

12.5. Specifying the procedure of service of notice, in the case of Sanjay Badani Vs. DCIT-10(3), Mumbai, Co-ordinate Bench of ITAT [35 ITR(T) 536] has held as under:

• As per sub-section (1) of section 282, the notice is to be served on the person named therein either by post or as if it was a summons issued by Court under the Code of Civil Procedure, 1908 (V of 1908). The relevant provisions for effecting of service by different modes are contained in rules 17, 19 and 20 of Order V of CPC. Rules 17, 19 and 20 of Order V of CPC lay down the procedure for service of summons/ notice and, therefore, the procedure laid down therein cannot be surpassed because the intention of the Legislature behind these provisions is that strict compliance of the procedure laid down therein has to be made. The expression after using all ‘due and reasonable diligence’ appearing in rule 17 has been considered in many cases and it has been held that unless a real and substantial effort has been made to find the defendant after proper inquiries, the Serving Officer cannot be deemed to have exercised ‘due and reasonable diligence’. Before taking advantage of rule 17, he must make diligent search for the person to be served. He therefore, must take pain to find him and also to make mention of his efforts in the report. Another requirement of rule 17 is that the Serving Officer should state that he has affixed the copy of summons as per this rule. The circumstances under which he did so and the name and address of the person by whom the house or premises were identified and in whose premises the copy of the summon was affixed. These facts should also be verified by an affidavit of the Serving Officer. [Para 13]

• The reason for taking all these precautions is that service by affixture is substituted service and since it is not direct or personal service upon the defendant, to bind him by such mode of service the mere formality of affixture is not sufficient. Since the service has to be done after making the necessary efforts, in order to establish the genuineness of such service, the Serving Officer is required to state his full action in the report and reliance can be placed on such report only when it sets out all the circumstances which are also duly verified by the witnesses in whose presence the affixture was done and thus the affidavit of the Serving Officer deposing such procedure adopted by him would also be essential. In the instant case, the whole thing had been done in one stroke. It was not known as to why and under which circumstances another entry for service of notice by affixture was made on 27-72012 when sufficient time was available through normal service till 30-9-2012. Nor there is any entry in the note- sheet by the Assessing Officer directing the Inspector for service by affixture and had only recorded the fact that the notice was served by the affixture. It appears that the report of the Inspector was obtained without issuing any prior direction for such process or mode. However, the fact remained that Serving Officer had not set out reason for passing subsequent entry nor for adopting the mode for service by affixture and without stating the reasons for doing so, the adoption of the mode of substituted service could not be legally justified. Notice was served by affixture. The reason for service through affixture has not been noted by the Assessing Officer in the note sheet nor he had issued any direction for issuing notice through affixtures. The next entry of note sheet dated 28-7-2012 just indicates that letter was filed by the Inspector regarding service of notice by affixtures, dated 17-7-2012. Thus, on 17-7-2012, the first entry was made and without recording any apprehension about the delay by such mode second entry for affixation was made on 28-7-2012 without showing justification for the same. Thus, it is clear that report of the Inspector was obtained without issuing any prior direction for such process or mode. Thus, the adoption of mode of substituted service was not legally justified. It is also clear from the Inspector’s report that there is no mention of name and address of the person who had identified the house of the assessee and in whose presence the notice under section 143 (2) was affixed. There is no evidence or indication in the report of Inspector that he had personal knowledge of the place of the business of the assessee and was, thus, in a position to identify the same. Therefore, neither the procedure laid down under Order V rule 17 had been followed nor that laid down under Order V rules 19 and 20 had been adhered to. Neither before taking recourse to service by affixture, the Assessing Officer or the concerned officer had recorded the findings to justify the service by this mode nor afterwards called for the affidavit or certificate of service by affixture from the Serving Officer. He had not certified that the service had been effected by adopting this course. [Para 14]

• In view of the above, it is clear that there was no valid service of notice under section 143(2) by way of affixation. Since in the instant case, the department has not been able to demonstrate that notice under section 143(2) was served within the statutory time limit, the assessment made on the basis of such invalid notice could not be treated to be valid assessment and, hence, such assessment order deserves to be treated as null and void and liable to be quashed and annulled. Accordingly, the assessee’s appeal on legal issue regarding non- service of notice under section 143(2) is allowed. [Para 15] ”

13. Hon’ble Supreme Court in the case of Commissioner of Income Tax, West Bengal-III and others Vs. Ramendra Nath Ghosh [82 ITR 888] (SC) has held, affirming the decision of the High Court on the facts, that the service of notices was not in accordance with law and therefore, it could not be said that assessee had been given proper opportunity to put forward their case as required by Section 33B of the Income Tax Act, 1922. In the above said case, the facts are similar, that the CIT initiated revision proceedings u/s. 33B of the Income Tax Act, 1922, corresponding to Section 263 of Income Tax Act, 1961. There the ITI who had to serve notices u/s. 33B of the said Act claimed to have served notices by affixing them on assessee’s place of business, but in his report did not mention the names and addresses of the proceedings, who identified the place of business of assessee nor did he mention in his report or in the affidavit filed by him that he personally know the place of business of assessees. Assessees, however, claimed that they had closed their businesses long before the notices were issued. In the Writ Petition filed by assessee, the High Court held that there was no proper service on assessee and the orders of Commissioner pursuant thereto could not be sustained. The Hon’ble Supreme Court upheld the judgment of Hon’ble High Court.

14. Ld. Counsel relied on the decision of ACIT Vs. Sher Singh Alias Balshear Singh [131 TTJ 1] (CHD)(UO) – ITAT Chandigarh. In the said case, the issue was whether notice was served properly when provisions of Section 158BD require service of notice on assessee. In that case, proper notice was not served on assessee under any of the procedures prescribed. Co-ordinate Bench of ITAT upheld that there is no proper service of the notice. Similarly, in the case of CIT Vs. Girdharilal [147 ITR 379] (Raj) wherein, after completion of assessment, assessee was issued show cause notice for revision of assessment order, but the same was returned with postal remark left without address. Thereafter, the commissioner issued notices to ‘R’, who is authorized to attend matters pertaining to assessment for the relevant assessment year. ‘R’ could not contact assessee and commissioner completed the proceedings ex- parte. The question was whether power of attorney did meet the requirement of proper power of attorney, after completion of assessment proceedings and therefore, notice on R did not meet requirement of ‘opportunity of being heard’ as contemplated by Section 263. The Hon’ble High Court of Rajasthan held affirmatively in favor of assessee and held that service of notice of R was not a proper service on assessee, so as to hold that assessee had opportunity of being heard for the purpose of passing order u/s. 263. The proceedings were accordingly set aside. Similar facts existed in the case of CIT Vs. Sattamdas Mohandas Sidhi [96 Taxman 263] (MP) wherein, under similar circumstances, where a telegram was issued as a substituted service, the Hon’ble Madhya Pradesh High Court upheld the ITAT order wherein it was held that telegram which was sent to assessee did not contain any reason, except directing him to appear before that authority. Accordingly, it was held that order u/s. 263 was bad in law for want of detailed show cause notice. Thus, the precedents relied on has considered the requirement of satisfying the stipulation of ‘opportunity of being heard’ as per Section 263 of the Act, before an order was passed by CIT u/s 263. In the present case, there is no attempt to serve a notice on assessee even by post or there was any attempt to serve the notice by way of affixture. There was no report on record that any of the prescribed methods for service of notice was at least attempted to. The Ld.CIT clearly states that no opportunity of being heard was given to assessee.

15. Apart from not giving an opportunity to assessee, Ld.CIT also did not verify the record properly. The proceedings u/s. 153C were initiated as the department has seized certain documents in search of M/s. MBS Jewellers Pvt. Ltd. Obviously, AO could not have completed the assessment, without examining these documents, as the very basis for issuing of notices u/s. 153C or the impugned year was the said sale deed copies. Moreover, AO issued a show cause notice, as discussed in the arguments of Ld. Counsel and assessee had given a detailed reply. It was further submitted that assessee has given GPA to one Shri Koteswara Rao and subsequently cancelled the same within two years. The said GPA copies were enclosed to letter by assessee in the course of assessment proceedings itself. The copies of sale documents obviously pertain to the period after GPA was cancelled. Therefore, as presumed by assessee and may be in the eye of law, they are not valid documents. Not only that assessee has also clearly stated that he has not sold any property and the statement of affairs do indicate that the impugned property is in assessee’s possession. Thus, if the CIT has examined the record correctly, he would not have come to a conclusion that there is no verification of the issue. In fact, AO has certainly verified this aspect as it is the very basis for assessment proceedings. AO has not made any addition nor brought to tax capital gains, if any, nor made any adverse observation in the order as the explanation was found to be acceptable. It is to be noted that this order was also approved by the Jt. Commissioner, being an assessment consequent to search and seizure proceedings. In these circumstances, it cannot be stated that AO has not verified the issue. The Hon’ble jurisdictional High Court in the case of Spectra Shares & Scrips Pvt Ltd., Vs. CIT [354 ITR 35 (AP)], Hon’ble jurisdictional High Court has held as follows:

“If there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders u/s 263 merely because he has a different opinion in the matter. It is only in cases of lack of inquiry that such a course of action would be open. An assessment order made by the Income Tax Officer cannot branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. There must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than was just, has been imposed. The power of the Commissioner u/s 263(1) is not limited only to the material which was available before the AO and in order to protect the interests of the Revenue, the Commissioner is entitled to examine any other records which are available at the time of examination by him and to take into consideration even those events which arose subsequent to the order of the assessment”.

16. Opportunity of being heard is little more than serving a notice on assessee. It is not an empty formality. Without giving a proper opportunity to assessee, revision proceedings u/s. 263 cannot be finalized as the provisions of Section 263 mandates that the CIT may pass such orders after giving an opportunity of being heard. Since the mandatory requirement of opportunity of being heard has not been provided to assessee, the order passed by CIT is void ab-initio. Further as considered above, the record do indicate that AO has examined the issue and CIT was wrong in not examining the record properly and arriving at certain conclusions without any basis. Though revisional authority considers himself to be an extended arm of Revenue department in collection of correct tax, he does not get any leverage to exercise such jurisdiction, to do, so giving a go by to the established principles enunciated in law which are inbuilt checks provided in Section 263 itself. Justice should not only be done but it should also appear to be done. In this case the haste in which the proceedings are sought to be commenced and completed indicate that paramount importance is given to bring to tax the alleged tax as capital gains and there it can only be concluded that CIT has not followed the principles of natural justice. Thus, looking at from any angle it can be concluded that the order passed by CIT u/s 263 has not followed the prescribed provisions mandated and so the same cannot be upheld. In these circumstances, we have no other option than to quash the proceedings initiated by the CIT u/s. 263. Grounds raised by assessee are accordingly allowed.

17. In the result, appeal of assessee is allowed.

Order pronounced in the open court on 23rd May, 2017.

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