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Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI
Before: SHRI G.S. PANNU, HON’BLE & SHRI AMIT SHUKLA
The aforesaid appeal has been filed by the revenue against impugned order dated 29.12.2014, passed by Ld. CIT(Appeals)-8, Delhi for the quantum of assessment passed u/s 147/143(3) of the Act for the assessment year 2005-06. In the grounds of appeal the revenue has raised following ground :- 1. “The Ld. CIT(A) has erred in law and on facts in holding the re-assessment order passed by the AO u/s 147 read with section 143(3) as illegal and abinito void and not deciding the issue of disallowance of excess depreciation on merits.”
The facts in brief qua the issue involved are that the assessee had filed its return of income on 26.10.2005, declaring total loss of Rs. 8,45,75,634/-. Thereafter return of income for subject to scrutiny order u/s 143(3) was passed at Rs. 8,08,42,550/-. Thereafter the assessee’s case was reopened on the ground that assessee has claimed and was allowed depreciation on electrical installation @ 25% amounting to Rs. 91,75,833/-. However, the allowable depreciation was Rs. 55,05,500/- and is applicable @ 15%. Thus, AO had stated that it has resulted into excess depreciation allowed to the assessee to the tune of Rs. 36,70,333/-. The notice u/s 148 of the IT Act was issued on 15.2.2012. However, as per the AO, none attended in compliance of the said notice. The relevant observation in the assessment order relating to the issuance and compliance of notice is as under :- “Notice u/s 148 was issued on 15/02/2012 and served by speed post. None attended on the above notice. Notice u/s 142(1), alongwith show cause was issued on 14/01/2013 fixing the hearing on 16/11/2012. In response to the above statutory notices, Shri Sudhir Kumar Sharma, CA/AR of the assessee appeared from time to time and case was discussed with him. During the course of assessment proceedings the Ld. AR was asked to explain as why the excess depreciation claimed on electric installation amounting to Rs. 3670333/- be not disallowed and added back to the total taxable income. In absence of any plausible reply and documentary to support the claim of the assessee the amount of Rs. 3670333/- is being disallowed and added back to the total income of the assessee. (Addition : 3670333/-)”
Before the Ld. CIT (A) besides various other grounds the impugned reassessment order was challenged on the ground that no notice u/s 143(2) has been issued by the AO after filing the return u/s 147 by the assessee. Ld. CIT (A) had adjudicated this issue after observing as under :- 5. “I have considered the assessment order, original assessment order, written submission filed by the A.R. of the appellant and also the judgements filed by the Ld. AR of the appellant. I have also perused the assessment record. From the assessment records it is observed that case was reopened on the basis of audit objection. Since in this case original assessment was completed u/s 143(3) of the IT Act, proper approval from Commissioner of Income Tax, Delhi-Ill, New Delhi was obtained. After receiving the notice, Ld. AR vide letter dt. 16-03-2012 intimated to the Ld. AO that original return filed by the appellant may be treated as return filed in compliance to the notice issued u/s 148 of the IT Act. Alongwith that letter they have also furnished the zerox copy of the return. After that the Ld. AO issued notice u/s 142(1) on 14-01-2013 and date was fixed on 22-01- 2013. On 22-02-2013, appellant furnished copies of bills related to the electrical installations and also explained that it has correctly taken the depreciation @25%. Ld. AR of the appellant has given the reference of letter dt. 14-01-2013. From the records it appears that one notice u/s 143(2) dt. 14-01-2013 is typed and placed on record, however, on this notice the date of hearing is fixed on 12- 01-2013. There is no mention of issuing of this notice u/s 143(2) on ordersheet. On the ordersheet only issue of show cause notice and reasons recorded to be supplied to the appellant is mentioned on 14-01-2013. In view of these facts, I find that after issuing the notice u/s 148, no valid notice u/s 143(2) was served on the appellant. I have considered this issue and the decision of the Hon'ble ITAT, Bangalore 'C' Bench, in the case of Sh. G.N Mohan Raju v. ITO, in and 243 (Bang.) (2013) vide order dt. 07-10-2014 discuss the same issue and after considering the Hon'ble Apex Courts, case of ACIT v. Hotel Blue Moon 321 ITR, 362 (Supreme Court) , Hon'ble members have decided the issue in the favour of the appellant. Hon'ble members have hold that issue of notice u/s 143(2) of the I.T. Act, is mandatory in re-assessment proceedings, initiated u/s 148 of the I.T. Act. This has been clearly laid down by the Hon'ble Delhi High Court in the case of M/s Alpine Electronics Asia PTE Ltd. that notice u/s 143(2) is mandatory for re- assessment proceedings initiated u/s 148 of the I.T. Act. Respectfully following above cases, I hold that Ld. AO has not issued and served valid notice u/s 143(2) of the I.T. Act. Hence, the assessment made by the AO u/s 147 read with section 143(3) is illegal and ab initio void. The additional ground of appeal No.4 taken by the appellant is allowed.”