M/S DURGA AUTOMOTIVES PVT. LTD.,SILIGURI vs. DCIT, CIR.-1 , SILIGURI

The captioned appeal by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeal), NFAC, Delhi [hereinafter referred to as “the Ld. CIT(A)”] vide order no. ITBA/NFAC/S/250/2023- 24/1056426955(1) dated 22.09.2023 passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2017-18.

, which reads as follows: “1. For that on the facts of the case, the Assessing Officer issuing the notice u/s.143(2) of the I.T. Act, 1961 on 27.09.2018 did not have jurisdiction over the case of the assessee, as there was no mention of the type of scrutiny under which the case of the assessee has been selected, hence the notice is bad-in- law and the assessment order passed on the basis of such notice is baseless and should be quashed.

2. For that on the facts of the case, the A.O. was wrong in issuing notice u/s. 143(2) on 27.09.2018 without complying to the CBDT Instruction F. No. 225/157/2017/ITA-II dated 23.06.2017and so the notice issued u/s. 143(2) is not valid as per Provision of Act.

3. For that the appellant reserves the right to adduce any further ground or grounds, if necessary, at or before the hearing of the appeal.”

5. In the additional grounds, the assessee has challenged the notice issued u/s. 143(2) of the Act. The Ld. AR drew our attention to the notice u/s. 143(2) of the Act which reads as follows:

7. It was a submission that as the notice issued u/s. 143(2) in the case of the assessee which has been extracted above is not in conformity with the notice issued u/s. 143(2) as prescribed in the e-proceeding M/s. Durga Automotive Pvt. Ltd., AY 2017-18 format. The notice u/s. 14392) is liable to be quashed. It was the submission that consequently the assessment order is also liable to be set aside. The Ld. AR placed reliance on the decision of the Coordinate Bench of this Tribunal in the case of Sajal Biswas Vs. ITO, dated 26.03.2025 wherein in para 9 and 10 the coordinate bench of this Tribunal has held as under:

09.After hearing the rival contentions and perusing the materials available on record, we find that undisputedly the notice issued u/s 143(2) of the Act dated 10.08.2018, specifies only com- puter aided scrutiny selection which neither mentioned it either to be a limited or a complete scrutiny nor compulsory manual scrutiny. Thus, the said notice has been issued in violation of the instruction issued by CBDT as noted above. In our opinion, the revenue authorities have to follow the instruction issued by CBDT and violation thereto would certainly render the notice as invalid with the result all the consequential proceeding would also be invalid. The case of the assessee find support from the decision of the co-ordinate Bench in the case of Tapas Kumar Das Vs. ITO (supra), wherein a similar issue has been decided in favour of the assessee. The operative part of the same is extracted below:- “After hearing the rival contentions and perusing the materials available on record, we find that particularly the notice was issued u/s 143(2) of the Act, a copy of which is avail- able at page no. 25 of the Paper Book. We note that the said notice has not been issued in consonance with the CBDT Instruction F No. 225/157/2017/ITA-II Dated 23.06.2017. The said notice is extracted below for the sake of ready reference:- ““आमकरअिधिनयम 1961 कीधारा 143(2) केअधीननोिटस Notice under section 143(2) of the Income-tax Act, 1961 संवी�ा (कं�ूटरआधा�रतसंवी�ाचयन Scrutiny (Computer Alded Scrutiny Selection) महोदय/महोदया/ भेसस�, Sir/Madam/ M/s, आपकोसूिचतिकयाजाताहैिकिनधा�रणवष� केपावतीसं�ा 2017-18 269322761301017 केअनुसारआपके�ारािदनांक 30/10/2017 कोदा�खलकीगईआयकरिववरणीकोसंवी�ाकेिलएचुनागयाहै। This is for your kind information that the return of income filed by you for assessment year 2017-18 vide ack, no. 269322761301017 on 30/10/2017 has been selected for Scrutiny. इससंबंधम�, आपकोिदनीक को 2. 16/11/2018 01:00 PM तकसा���ुतकरनेअथवासा���ुतकरानेकाअवसर�दानिकयाजारहाहैिजसपरआपउ�आय करिववरणीकेसमथ�नम�िनभ�रह�/ रह�गे। 2. In this regard, an opportunity is being given to you to produce or cause to produce any evidence on which you may like to rely in support of the said return of income by 16/11/2018 at 01:00 PM.

M/s. Durga Automotive Pvt. Ltd., AY 2017-18 3. उपयु� िनिद��माण / सूचनाकोआपकोऑनलाइनमा�मसेइले��ॉिनक�पम� Incometaxindi- परअपनेई- aefiling.gov.in फाईिलंगखाता�ारा��ुतिकयाजानाहै।बादकीिनधा�रणकाय�वाहीभीआयकरिवभागकी 'ई- काय�वाही' सुिवधा�ाराकीजायेगी। 'ई-काय�बाही' परएकसंि��नोटआपकेसंदभ�केिलएसंल�है। 3. The evidence/information specified above has to be furnished online electronically through your E-filing account in incometaxindiaefiling.gov.in. Subsequent assessment proceedings shall also be conducted electronically through the 'E-Proceeding' facility of Income-tax Department. A brief note on 'E-Proceeding' is enclosed for your kind refer- ence. 4. िनधा�रणकाय�वाहीकेदौरान, यिदआव�कहोगातोसूचना / द�ावेजहेतुिवशेष��ावली (यों) याअिधयाचना (याँ) कोबादम�जारीिकयाजाएगा। 4. In course of assessment proceedings, if required, specific questionnaire(s) or requisi- tion(s) for information/document shall be issued subsequently. कृपया�ानद�िकयिदआपकेपासई-फाइिलंगखाताहैतोआपकेिलएपैरा 5. 3 लागूहै।आपके�ारा�यंअपनाखातानबनालेनेतकिनधा�रणकाय�वाहीआपके�ाराविण�तकीगईई-मे is created by you, assessment proceedings shall be carried out either through your speci- fied e-mail account or manually (if e-mail is not available). संल�क : यचौध�र Enclosure as above ”

7. In our opinion, the notice issued u/s 143(2) of the Act which is not in the pre- scribed format as provided under the Act is an invalid notice and accordingly, all the subsequent proceedings thereto would be invalid and void ab initio. The case of the as- sessee find support from the decision of Shib Nath Ghosh Vs. ITO in for A.Y. 2018-19 vide order dated 29.11.2024, wherein the co-ordinate Bench has held as under:- “10. After hearing both the sides and the materials available on record, we find that the notice issued u/s 143(2) dated 9th August, 2017 was not in any of the formats as provided in the CBDT instruction F.No.225/157/2017/ITA-II dated 23.06.2017. We have examined the notice, copy of which is available at page no.1 of the Paper Book and find that the same is not as per the format of CBDT Instruction F.No. 225/157/2017/ITA-II dated 23.06.2017 as stated above. In our opinion, the instruction issued by the CBDT are man- datory and binding on the Income tax authorities failing which the proceedings would be rendered as invalid. Hon'ble Apex Court in case of UCO Bank (supra) held that the cir- cular issued by CBDT in exercise of its statutory powers u/s 119 of the Act, are binding on the authorities. The Hon'ble Apex court held as under:- “The Central Board of Direct Taxes under section 119 of the Income-tax Act, 1961, has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under section 119 of the Act which are binding on the authorities in the administration of the Act. Under section 119(2)(a), however, the circulars as contemplated therein cannot be adverse to the as- sessee. The power is given for the purpose of just, proper and efficient management of the M/s. Durga Automotive Pvt. Ltd., AY 2017-18 work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the as- sessee and the fiscal laws may be correctly applied. Hard cases Which can be properly categorized as belonging to a class, can thus be given the benefit of relaxation of law by Issuing circulars binding on the taxing authorities. In order to aid proper determination of the income of money lenders and banks, the Cen- tral Board of Direct Taxes issued a circular dated October 6, 1952, providing that where interest accruing on doubtful debts is credited to a suspense account, It need not be in- cluded in the assessee's taxable income, provided the Income-tax Officer is satisfied that recovery is practically improbable. Twenty-six years later, on June 20, 1978, in view of the judgment of the Kerala High Court In STATE BANK OF TRAVANCORE v. CIT [1977] 110 ITR 336, the Board by another circular, withdrew with immediate effect the earlier circular. However, by circular dated October 9, 1984, the Board decided that Interest in respect of doubtful debts credited to suspense account by banking companies would be subjected to tax but Interest charged in an account where there has been no recovery for three consecutive accounting years would not be subjected to tax in the fourth year and onwards. The circular also stated that if there is any recovery in the fourth year or later, the actual amount recovered only would be subjected to tax in the respective years. This procedure would apply to assessment year 1979-80 and onwards.”

by the assessee is allowed.”

8. The Ld. AR also drew our attention to the decision of the Coordinate bench of this Tribunal in the case of Tapas Kr. Das Vs. ITO in dated 11.03.2025, wherein the coordinate Bench of this Tribunal has held in para 6 to 8 as under:

06.“After hearing the rival contentions and perusing the materials available on record, we find that particularly the notice was issued u/s 143(2) of the Act, a copy of which is available at page no. 25 of the Paper Book. We note that the said notice has not been issued in consonance with the CBDT Instruction F No. 225/157/2017/ITA-II Dated 23.06.2017. The said notice is extracted below for the sake of ready reference:- “आमकर अिधिनयम 1961 की धारा 143(2) के अधीन नोिटस Notice under section 143(2) of the Income-tax Act, 1961 संवी�ा (कं�ूटर आधा�रत संवी�ा चयन Scrutiny (Computer Alded Scrutiny Selection) महोदय/महोदया/ भेसस�, Sir/Madam/ M/s, M/s. Durga Automotive Pvt. Ltd., AY 2017-18 आपको सूिचत िकया जाता है िक िनधा�रण वष� 2017-18 के पावती सं�ा 269322761301017 के अनुसार आपके �ारा िदनांक 30/10/2017 को दा�खल की गई आयकर िववरणी को संवी�ा के िलए चुना गया है। This is for your kind information that the return of income filed by you for assessment year 2017-18 vide ack, no. 269322761301017 on 30/10/2017 has been selected for Scrutiny. 2. इस संबंध म�, आपको िदनीक 16/11/2018 को 01:00 PM तक सा� ��ुत करने अथवा सा� ��ुत कराने का अवसर �दान िकया जा रहा है िजस पर आप उ� आयकर िववरणी के समथ�न म� िनभ�र ह�/ रह�गे। 2. In this regard, an opportunity is being given to you to produce or cause to produce any evidence on which you may like to rely in support of the said return of income by 16/11/2018 at 01:00 PM. 3. उपयु� िनिद� �माण / सूचना को आपको ऑनलाइन मा�म से इले��ॉिनक �प म� Incomet- axindiaefiling.gov.in पर अपने ई-फाईिलंग खाता �ारा ��ुत िकया जाना है। बाद की िनधा�रण काय�वाही भी आयकर िवभाग की 'ई-काय�वाही' सुिवधा �ारा की जायेगी। 'ई-काय�बाही' पर एक संि�� नोट आपके संदभ� के िलए संल� है। 3. The evidence/information specified above has to be furnished online electronically through your E-filing account in incometaxindiaefiling.gov.in. Subsequent assessment proceedings shall also be conducted electronically through the 'E-Proceeding' facility of Income-tax Department. A brief note on 'E-Proceeding' is enclosed for your kind refer- ence. 4. िनधा�रण काय�वाही के दौरान, यिद आव�क होगा तो सूचना / द�ावेज हेतु िवशेष ��ावली (यों) या अिधयाचना (याँ) को बाद म� जारी िकया जाएगा। 4. In course of assessment proceedings, if required, specific questionnaire(s) or requisi- tion(s) for information/document shall be issued subsequently. 5. कृपया �ान द� िक यिद आपके पास ई-फाइिलंग खाता है तो आपके िलए पैरा 3 लागू है। आपके �ारा �यं अपना खाता न बना लेने तक िनधा�रण काय�वाही आपके �ारा विण�त की गई ई-मे is created by you, assessment proceedings shall be carried out either through your speci- fied e-mail account or manually (if e-mail is not available). संल�क : यचौध�र Enclosure as above”