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Income Tax Appellate Tribunal, DELHI BENCH ‘H’ : NEW DELHI
PER SHAMIM YAHYA, ACCOUNTANT MEMBER :
This appeal by the Revenue is directed against the order of ld. CIT (Appeals)-25, New Delhi dated 15.11.2019 and pertains to AY 2007-08.
2. Grounds of appeal taken by the Revenue read as under :-
“1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has failed to appreciate the fact that as per section 139(1) of the I.T. Act 1961 return was required to be filed in prescribed form and verified in the prescribed manner setting forth such other particulars as may be prescribed. 2. Whether on the facts and in the circumstances of the case, the Ld. CIT (A) has erred on facts in holding the proceedings u/s 147 of the Act as illegal, bad in law and invalid without appreciating the fact that return was not filed by the assessee in response to notice 148 dated 27.03.2014 or the notices issued u/s 142(1) dated 21.05.2014 & 27.03.2014 instead of filing a single letter by the counsel of the assessee Sh. Dinesh Mohan for treating the return originally filed u/s 139(1) in response to notice u/s 148 of the Act.
3. Whether on the facts and in the circumstances of the case, Ld. CIT (A) has failed to appreciate the fact that counsel of the assessee through POA (power of attorney) was authorized to plead the case for various purposes like sign, file verify and present pleadings, appeals, cross- objections, petitions review, restoration, withdrawal, certificate, statement of accounts, income tax, wealth tax books of accounts or such other documents before the assessing officer and not for signing the documents related to filing of return of income.
Whether on the facts and in the circumstances of the case, the Ld. CIT (A) has erred on facts in holding the proceedings u/s 147 of the Act as illegal, bad in law and invalid without appreciating the fact that return of income filed by the assessee should have signed by the by managing director of the company or other persons as per section 140 of the I.T. Act 1961.
5. Whether on the facts and in the circumstances of the case, Ld. CIT (A) has failed to appreciate the fact that during the entire assessment proceedings completed u/s 147 of the Act, assessee has not contended before the assessing office for not issuing the notice u/s 143(2) of the I.T Act 1961.
Whether on the facts and in the circumstances of the case, Ld. CIT (A) has failed to appreciate the fact that during the entire assessment proceedings completed u/s 147 of the Act, assessee has not filed the return u/s 148 r.w.s 139(1) of the I.T. Act 1961 signed by the authorized signatory as per section 140 of the Act, accordingly, assessment proceeding were completed u/s 144/147 of the LT Act 1961.
7. Whether the order of the CIT (A) is perverse, erroneous and is not tenable on facts and in law.
8. Whether grounds of appeal are without prejudice to each other.”
3. Although Revenue has raised various grounds, the main ground revolves around ld. CIT (A)’s finding that in absence of service of notice under section 143 (2), the assessment is void.
4. In this regard, ld. CIT (A) has elaborately dealt with the issue. On page 25 of the ld. CIT (A)’s order, there is AO’s remand report in which AO mentioned that notice u/s 143 (2) could not be found. Further, elaborating this aspect, ld. CIT (A) has relied upon the decision of Hon’ble Delhi High Court in the case of PCIT vs. Sh. Jai Shiv Shankar Traders Pvt. Ltd. 2015-TIOL-2477-HC-Del. and held that the assessment order passed by the AO is invalid. We may gainfully refer to the order of ld. CIT (A) in this regard as under :-
“ The appellant has raised a ground that the Assessing Officer did not issue notice u/s 143 (2) in the case which was mandatory, accordingly the assessment order passed by the AO dated 31.03.2015 becomes illegal, bad in law and without justification. The appellant has submitted affidavits from the Director of Company Sh. Sachin Aggarwal affirming the above fact. The comments of the Assessing Officer was received vide letter dated 11.05.2022 which is reproduced above in para 8. The Assessing Officer has stated in his remand report that no notice u/s. 143(2) was found in the assessment records. On perusal of Assessment Order it has been noticed that the Assessing Officer has also not mentioned the fact regarding the issuance of notice u/s 143(2) in this case. The appellant relied upon plethora of decisions of Hon'ble Courts in which it has been held that the issuance of notice u/s. 143(2) is mandatory before issuance of the order of reassessment and that the participation of assessee in the proceeding u/s. 143/147 does not obviate the requirement of issuance of notice u/s. 143(2). In this case, there is no notice u/s. 143(2) on records nor there is any mention of the issue of notice u/s. 143(2) in the Assessment Order. In view of the above facts, it has been noted that the order u/s. 144/147 dated 31.03.2015 cannot be held legally valid in absence of issue of notice u/s. 143(2). Reliance is placed on the decision of Hon'ble ITAT in the case of ACIT Vs P&R Infraprojects Ltd., dt. 07/01/2022 (Hon'ble ITAT Delhi), in which the Hon 'ble IT AT has held as under: 1. "The assessee has challenged the validity of assessment order in absence of issue of notice u/s.143(2) of the IT Act. A perusal of assessment order as well as the order of the CIT(A) shows that no notice u/s. 143(2) was ever issued to the assessee before completing the assessment u/s. 143(3) /147 even in reassessment proceedings and non-issuance of the same makes the assessment order illegal and null.
We find merit in the above argument of the ld. Counsel for the assessee. The Hon'ble Delhi High Court in the case of PCIT vs. Sh. Jai Shiv Shankar Traders Pvt. Ltd. (Supra) has held that the failure of the AO in reassessment proceedings to issue notice u/s. 143(2) prior to finalizing the reassessment order cannot be condoned by referring to section 292BB of the IT Act.
In view of the above decision, we hold that the reassessment proceedings, in the instant case, completed u/s. 143(3)/147 are not in accordance with the law in absence of issuance of notice u/s.143(2) of the IT Act. Therefore, we hold that the reassessment proceedings are invalid. The ground raised by the assessee as per Rule 27 of the Income Tax (Appellate Tribunal) Rules is accordingly allowed. Since the assessee succeeds on this legal ground, the ground raised by the Revenue on merit is not being adjudicated being academic in nature." In view of the above facts and judicial precedence, the assessment order passed by the AO is held to be invalid and hence annulled. Other grounds raised by the appellant are not required to be adjudicated.”
Against this order, Revenue is in appeal before us. We have heard both the parties and perused the records.
6. Ld. Counsel for the assessee reiterated the submissions made before the ld. CIT (A) and pointed out that in the remand report, the AO has accepted that no notice has been issued u/s 143 (2) of the Act.
Furthermore, the decision relied upon of Hon’ble Delhi High Court in the case of Sh. Jai Shiv Shankar Traders Pvt. Ltd. (supra) is squarely applicable on the facts of the case. He, therefore, pleaded to uphold the order of ld. CIT (A).
We may note that in this case ld. DR for the Revenue has tried to distinguish the ld. CIT (A)’s order by referring that assessee has not filed any return of income pursuant to notice u/s 148 of the Act. However, ld. Counsel of the assessee submitted that pursuant to notice u/s 148, assessee has duly mentioned that return submitted earlier may be treated as the return being submitted pursuant to the notice. Ld. Counsel for the assessee further pointed out that this was the exact position also dealt with in the case of Hon’ble Delhi High Court in the case of Sh. Jai Shiv Shankar Traders Pvt. Ltd. (supra). We have carefully considered this issue and gone through the aforesaid order of Hon’ble Delhi High Court and are of the view that Revenue’s contention in this regard is not tenable in view of the aforesaid decision of Hon’ble Delhi High Court.
In view of the above and respectfully following the precedent as above, we do not find any infirmity in the order of ld. CIT (A). Accordingly, we uphold the same. 9. In the result, the appeal filed by the Revenue stands dismissed. Order pronounced in the open court on this 3rd day of March, 2023.