JCIT, NEW DELHI vs. M/S. DELHI METRO RAIL CORPORATION LTD., NEW DELHI

Brief facts of the case are that in respect of the assessment year 2005-06, the assessee filed the return of income on 30/10/2005 declaring a total loss of Rs.373,65,94,910/-and by order dated 24/12/2007 passed under section 143(3) of the Income Tax Act, 1961 (for short “the Act”), learned Assessing Officer assessed the total loss of the assessee at Rs.372,62,77,617/-after adding back Rs.1,03,17,293/-on account of depreciation on the assets not owned by the Delhi Metro Rail Corporation Limited (DMRC). Subsequently notice under section 148 of the Act was issued and 20/3/2012 but the same was not served on the assessee. The assessee submitted before the Assessing Officer that the return filed by them for the assessment year 2005-06 may be treated as return filed in response to notice under section 148 of the Act. By order dated 8/3/2012, income of the assessee was assessed at a loss of Rs.355,00,43,720/-under section 143(3) of the Act read with section 147 of the Act by making certain additions.

Assessee preferred appeal before the Ld. CIT(A) on several grounds challenging the additions. Assessee also preferred an additional ground to the effect that since the assessee has not been served by a notice under section 143(2) of the Act, an incurable defect, and vitiates the assessment proceedings and the assessee placed reliance on the decision reported in ACIT vs. Hotel Blue Moon (2010) 321 ITR 362 (SC) .

A remand report was called for and the learned Assessing Officer submitted that the assessee had not raised any objection of non-service of notice under section 143(2) of the Act any time before the Assessing Officer prior to or during the reassessment proceedings and therefore, the assessee is precluded from raising such an objection. Learned Assessing Officer, however, further stated that the assessee did not file any return of income in response to the notice under section 148 of the Act, but merely stated that the return filed for the assessment year 2005- 06 may be treated as a return filed in response to notice under section 148 of the Act and therefore, there was no occasion for the Assessing Officer to issue notice under section 143(2) of the Act.

Having considered the addition made by the assessing officer to the effect that no notice under section 143(2) of the Act was issued pursuant to the letter filed by the assessee stating that the return filed for assessment year 2005-06 may be treated as a return filed in response to notice under section 148 of the Act, by placing reliance on the decision of the special Bench of the Tribunal in the case of Raj Kumar Chawla & Ors. Vs. ITO (2005) 94 ITD 1 (Del)(SB), which is also considered by Division Bench of Delhi Tribunal in the case of ITO vs. Tilak Raj Satija (ITA No. 391/Del/2010 – order dated 14.08.2013, Ld. CIT(A) reached a conclusion that for want of notice under section 143(2) of the Act the assessment is rendered null and void.

Aggrieved by such findings returned by the Ld. CIT(A), Revenue preferred this appeal. Assessee preferred the cross objections challenging the reassessment under section 147 of the Act and stated that it is only a change of opinion.

Ld. DR placed reliance on the assessment order. Ld. AR placed reliance on the decisions of the Hon’ble Delhi High Court in the cases of PCIT vs. Sh. Jai Shiv Shankar Traders Private Limited (2016) 383 ITR 448 (Delhi) and PCIT vs. Silver Line (2016) 383 ITR 455 (Delhi) for the principle that subsequent to the statement of the assessee in response to notice u/s. 148 to treat the original return filed as a return filed pursuant to a notice under section 148 of the Act, the Assessing Officer’s failure to issue notice under section 143(2) of the Act invalidates the order of reassessment.

We have gone through the record in the light of the submissions made on either side. Though the assessee claims to have not received the notice under section 148 of the Act, they have filed a letter dated 4/12/2012 stating that the return filed for the assessment year 2005-06 may be treated as return filed in response to notice under section 148 of the Act. While admitting this fact, in the remand report, learned Assessing Officer stated that since no fresh return of income was filed in response to the notice under section 148 of the Act, there was no occasion for the Assessing Officer to issue notice under section 143(2) of the Act. It, therefore, goes that subsequent to the statement of the assessee in response to the notice under section 148 of the Act that the original return may be treated as a return in response to notice under section 148 of the Act, there was no notice under section 143(2) of the Act.

This fact situation is squarely covered by the addition of the Hon’ble jurisdictional High Court in the case of Jai Shiv Shankar Traders Private Limited (supra). Further the Ld. CIT(A) placed reliance on the decision of the in the case of Tilak Raj Satija (supra) which, while placing reliance on the decision of the Delhi High Court in the case of Alpine Electronics Asia Private Limited vs. DCIT 341 ITR 247, laid down that in view of the legal fiction created by section 148 of the Act that a return filed under that section is to be treated as one under section 139, proviso to section 143(2) of the Act also applies to a return filed in response to notice under section 148 of the Act and no assessment can be made, if the notice under section 143(2) of the Act is not served within the time as prescribed by the proviso to section 143(2) of the Act.

In view of this settled position of law, we do not find anything illegal or irregular in the findings returned by the Ld. CIT(A) in the impugned order. We therefore, while upholding the impugned order, find the grounds of appeal of the Revenue as devoid of merits and are liable to be dismissed. In view of our finding in the Revenue’s appeal, the cross- objection preferred by the assessee becomes infructuous and is also liable to be dismissed.

In the result, both the appeal of the Revenue and the cross objections of the assessee are dismissed. Order pronounced in the Open Court on 20th January, 2020.