ASSISTANT COMMISSIONER OF INCOME TAX, DELHI vs. SHEETAL CHAUDHARY, UTTAR PRADESH

The revenue has raised the following grounds of appeal before us:- Page | 1 “1 Whether on the facts and in the circumstances of the case and in law, the Learned CIT(A) is correct in holding that notice u/s 143(2) had to be issued in the case when the return filed on 29.05.2019 in response to notice u/s 148 was defective invalid and the system was showing it to the AO be filed u/s 119(2)(b) of the Act 2. Whether on the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in failing to appreciate that notice u/s 143(2) of the Act can only be issued on a valid return 3. Whether on the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in failing to appreciate that the non-issuance of notice u/s 143(2) was not by mistake but the AO in Para 3 of the assessment order has specifically stated the circumstances why notice u's 143(2) could not be issued in the case 4. Whether on the facts and in the circumstances of the ease and in law, the Learned CIT(A) has erred in failing to appreciate that even if at a later stage the system is showing the return as filed u/s 148 then the AO should have been allowed the benefit of See 292B of the Act 5. Whether on the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in deleting the addition of Rs 2,00,00,000 as deemed dividend us 2(22)(c) of the Act 6. The appellant craves to add. alter OR amend any/all of the 6 grounds of appeal before OR during the course of hearing of the appeal.”

The Ground Nos. 1 to 4 raised by the revenue are challenging the action of the Learned CIT(A) in quashing the assessment on the ground that no notice under section 143(2) of the Act stood issued to the assessee after the filing of return in the facts and circumstances of the instant case. These grounds go to the root of the matter and hence we deem it fit to take up the same first for our adjudication.

4. We have heard the rival submissions and perused the materials available on record. The brief facts of the case are that the assessee filed her return of income for the assessment year 2012-13 on 23-07-2012 under section 139(1) of the Act declaring taxable income of Rs 20,86,513. The reopening was sought to be made by the Learned AO on the pretext that no return of income has been filed by the assessee. Hence the reopening got triggered based on incorrect assumption of fact by the Learned AO. Information was received from CIT(CIB) Kanpur that an immovable property has been purchased by the Assessee having 50% share for Rs 6,77,25,000. To examine the source of such investment, letter under section 133(6) of the Act stood issued to the assessee on various dates which were not complied with by the assessee. Accordingly, the Learned AO came to the conclusion that income of the assessee had escaped assessment coupled with the fact that no return of income has been filed for the year under consideration. Hence, notice under section 148 of the Act stood issued to the assessee on 25-03-2019 after obtaining the prior approval of the Learned Principal Commissioner of Income Tax , Noida in terms of section 151 of the Act. The assessee through her authorized representative letter dated 1-04-2019 acknowledged the receipt of notice under section 148 and submitted a copy of ITR already filed on 23-07-2012 for assessment year 2012-13 and stated that the same may be treated as ITR within the meaning of section 147 of the Act. Later, the assessee filed another return on 29-5-2019 in response to notice under section 148 and communicated the same to ITO Ward 35, Noida vide her letter dated 30-5-2019. The Learned AO noted that the second ITR filed by the assessee on 29-5-2019 was under section 119(2)(b) of the Act which is invalid return under section 147 of the Act and observed that therefore online notice under section 143(2) of the Act could not be issued. Factually, the second return filed on 29-05-2019 was filed only under section 147 of the Act, which is evident from the ITBA Portal screenshot placed on record. Nowhere it is mentioned that the said return was filed under section 119(2)(b) of the Act by the assessee. It is the Learned AO’s own creation that the second return was filed under section 119(2)(b) of the Act in order to make the said return invalid. In any event, having treated the second return as invalid, the Learned AO determines the total income by starting from the income as per return under section 148 of the Act in the sum of Rs 20,86,510 and thereafter proceeds to make an addition of Rs 2 crores in the reassessment on account of a totally different issue other than those recorded in the reasons. For the first return filed by the assessee vide letter dated 1-4- 2019, no notice under section 143(2) of the Act was issued by the Learned AO. For the second return filed on 29-05-2019, no notice under section 143(2) of the Act was issued by the Learned AO. Hence, it got conclusively proved that no notice under section 143(2) of the Act was issued at all by the Learned AO for the return filed in response to notice under section 148 of the Act. Hence, this being a jurisdictional defect, the same would not get cured even by the provisions of section 292BB of the Act.

When this matter travelled to the Learned CIT(A), the Learned CIT(A) duly appreciated the contentions of the assessee and quashed the entire assessment proceedings by observing as under:-

Since the entire assessment is quashed, the other grounds raised by the revenue on merits need not be adjudicated and they are left open.

In the result, the appeal of the revenue is partly allowed.