SHRI VINOD KUMAR JAIN,INDORE vs. THE ITO 2(1), INDORE

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ITA 318/IND/2017Status: DisposedITAT Indore11 March 2019AY 2006-076 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were invalid and void ab initio due to the non-issuance of the mandatory notice under Section 143(2) after the issuance of notice under Section 148. Consequently, the assessment order was quashed.

What were the facts?

The assessee filed a return for AY 2006-07. Reassessment proceedings were initiated under Section 147, and an addition was made. However, the Assessing Officer failed to issue a notice under Section 143(2) before commencing the assessment proceedings.

What were the issues?

Whether reassessment proceedings are valid if a notice under Section 143(2) is not issued after initiating proceedings under Section 147/148.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: HONBLE KUL BHARAT & HONBLE MANISH BORAD

For Appellant: Shri C.G. Rawka, CA
For Respondent: Shri B.J.Boricha, Sr.DR, Shri C.G. Rawka, CA
Hearing: 06.03.2019Pronounced: 11.03.2019

order u/s 143(3)/147 of the Income Tax Act 1961(In short the ‘Act’) dated 18.03.2014 framed by ITO 2(1), Indore.

2.

The assessee has raised following grounds of appeal;

“(1) That the Ld. AO erred on facts of the case and ignored the proviso to clause (ii) of section 143(2) requiring him to issue notice u/s 143(2) within the period of six months from the end of financial year in which the return is furnished. Such action of AO of non issuing of notice u/s 143(2) which has been overlooked by Ld. CIT(A) is totally wrong under the facts of the case. (2) That the Ld CIT(A) erred on facts of the case and confirmed the reopening of case u/s 147/148. This action of AO and further confirmed by CIT(A) is totally wrong, arbitrary and illegal under the facts of the case. (3) That the addition made by AO and confirmed by CIT is totally wrong and illegal on the facts of the case. (4) That the Ld CIT(A) erred on facts of the case and confirmed the addition made by AO on account of undisclosed income of Rs.15,OO,OOO/-. The addition made by AO and confirmed by CIT(A) is totally wrong under the facts of the case. (5) That the appellant craves to leave, add, alter or amend any of the ground at or before hearing.”

3.

At the outset Ld. Counsel for the assessee referring to the legal ground No.1,2 & 3 submitted that notice u/s 143(2) of the Act was not issued to the assessee before commencing the reassessment proceedings and therefore in view of the decision of the co-ordinate bench in the case of ACIT V/s Sukhamani Cotton Industries and others, order dated 21.12.2018 the impugned assessment u/s 143(3) r.w.s. 147 of the Vinod Kumar Jain Act is liable to be quashed being bad in law and void ab initio.

4.

Per contra Departmental Representative though supported the orders of lower authorities but could not controvert the fact that the Ld. Assessing Officer is failed to issue notice u/s 143(2) of the Act to the assessee after issuance of notice u/s 148 of the Act.

5.

We have heard rival contentions and perused the records placed before us. Through Ground No. 1,2, & 3 assessee challenged the legality of the reassessment proceedings in view of the fact that the notice u/s 143(2) of the Act was not issued.

6.

We observe that the assessee earned income from salary and contract work and filed its income tax return for Assessment Year 2006-07 on 23.03.2007 declaring income of Rs.4,22,360/- .

Subsequently reassessment proceedings were initiated by issuance of notice u/s 148 of the Act dated 21.5.2012 along with issuance of notice u/s 142(1) of the Act which were duly served and after conducting the reassessment proceedings addition of Rs.15,00,000/- was made assessing income at Rs.19,22,360/-.

Revenue has not controverted this fact that the Ld. A.O failed to Vinod Kumar Jain 143(2) of the Act before commencing the assessment proceedings u/s 143(3) r.w.s. 147 of the Act.

7.

Now the question before us is whether the impugned order can be held to be invalid merely for non issuance of notice u/s 143(2) of the Act. We observe that similar issue came before us in the case of ACIT V/s Sukhamani Cotton Industries and others (supra) wherein notice u/s 148 of the Act was issued but the Ld. A.O failed to issue notice u/s 143(2) of the Act and we quashed the reassessment proceedings by following the decision of Co-ordinate Bench, Delhi in the case of ACIT Vs. Dimension Promoters Pvt. Ltd in I.T.A.No.1105/Del/201,1 observing as follows;

“13. We, therefore, respectfully following the judgment of Hon'ble Delhi High Court in the case of Shree Jai Shiv Shankar Traders Pvt. Ltd. (supra) as well as decision of Coordinate Bench of Delhi in the case of Dimension Promoters Pvt. Ltd. (supra) and in the given facts and circumstances of the case, are of the considered opinion that even though notice u/s 148 of the Act has been issued but the notice u/s 143(2) of the Act has not been issued in the case of both the assessees namely M/s.sukhmani Cotton Industries Pvt. Ltd. & M/ s. Manjeet Vinod Kumar Jain Cotton Pvt. Ltd. a fatal error has been committed by Ld. Assessing Officer and thus the reassessment order passed u/s 147 r.w.s 143(3) of the Act is invalid bad in law and void ab initio and thus liable to be quashed. We accordingly, allow the common ground no.2 raised by both the assessee in the Cross Objections challenging the validity of reopening of assessment u/s 147 of the Act for non-issuance of notice u/s 143(2) of the Act”.

8.

We therefore respectfully following the decision of the Co- ordinate Bench as well as in the given facts and circumstances of the case are of the considered view that the impugned reassessment order is liable to be quashed being invalid, bad in law and void abinitio as the revenue authorities post issuance of notice u/s 148 of the Act failed to issue statutory notice u/s 143(2) of the Act which is mandatory before commencing the assessment proceedings. In the result Ground No. 1,2, & 3 of the assessee’s appeal are allowed.

9.

Ground No.4 relates to the quantum addition which becomes infructuous as we have already quashed reassessment proceedings.

10.

Ground No.5 is general in nature which needs no adjudication.

11.

In the result the appeal of the assessee is allowed.

The order pronounced in the open Court on 11.03.2019.

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