PR.COMMISSIONER OF INCOME TAX-08 vs. STAUNCH MARKETING PVT.LTD.

$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI 8 + ITA 935/2015 PR.COMMISSIONER OF INCOME TAX-08 Appellant Through: Mr. Sanjay Kumar and Mr. Dileep Shivpuri, Advocates versus STAUNCH MARKETING PVT. LTD. Respondent Through: Mr. Ved Kumar Jain, Mr. Rano Jain „.and Mr. Pranjal Srivastava, , , Advocates CORAM: ^ JUSTICE S. MURALIDHAR JUSTICE CHANDER SHEKHAR ORDER % 28.04.2017 " r ; 1. This appeal under Section 26oX,of tlie Income Tax Act, 1961 ('Act') by the Revenue is against the oi^der dkted ,12'*^ May, 2015 passed by the Income Tax Appellate Tribunal;; (TTAT'l; injITA ISto for the Assessment Year.('AY.'),2603-04. 2. While admitting this appeal by-iorder dated 4^"^ September 2016, the following question oflaw was framed: "Whether the tribunal fell into error in holding that the assessment for the concerned year was not effective because of lack of notice under Section 143 (2) of the Income Tax Act in the given facts of the case?" 3. The facts leading to the filing of the present appeal are that in the ITA 935/2015 Page1 of 6 2017:DHC:8724-DB

t assessment order passed by the Assessing Officer ('AO') on August, 2006, it was noted inter alia that on 19^^ September 2005, a notice under Section 148 of the Act was issued requiring the Assessee to file a return of income for AY 2003-04. After several notices were not responded to, a show cause notice dated 23'^''/24^'^ January, 2006 was issued by the AO stating that there was no option left but to proceed with the assessment ex parte. However, a final opportunity was granted and a hearing was fixed for 2?"^ January, 2006. On that date, the Director of the Assessee attended the hearing and sought ftirther time.: The case was then adjourned to 31^^ January, 2006. 4. Para 3.2 ofthe AO's order dated 31st August 2006 records the income tax return was filed-by the Assessee. It reiads as under: "3.2 An income-tax return fom was submitted by the Assessee which is placed on record.- \ 'i The statement ofincome ehclpsed therein stated as under...." 5. Therefore, it is apparent that'in th^ above proceedings the Assessee appeared and submitted its return. In the said return, the Assessee noted "Original filed vide Ack. NoV 3680: Dt. 2/12/2003 Range-9". The AO, however, did not find any evidence that the original return was filed as claimed by the Assessee. According to the AO, despite several notices thereafter and even after examining the return register, it could not be established that any such return was filed by the Assessee. The AO then proceeded to complete the assessment. 6. One question that was raised by the Assessee in the appeal before the ITA 935/2015 Page 2of 6 2017:DHC:8724-DB

Commissioner of Income Tax (Appeals) [CIT) (A)] was whether the assessment could have been completed without adequate opportunity being granted to the Assessee. However, there was no specific ground urged that notice under Section 143(2) of the Act should have been issued to the Assessee. 7. By the order dated 17* February, 2008, the CIT (A) partly allowed the appeal by deleting some ofthe additions made by the AO. 8. Aggrieved by the above order of the CIT(A), the Revenue filed ITA No. 1643/Del/2008. The Assessee also filed a cross-objection being C.O. 151/Del/2009. The said cross-objections were based on a solitary ground viz., that the assessment order was bad in law since the statutory notice under Section 143(2) ofthe Act,was not issued. I . ' ' I ' ' 9. The ITAT decided to take up the cross objections first since they went to the root of the matter. Relying inter alia on the decision of the ITAT in ITO V. Naseman Farms Pvt. XM ^(ITA No.ll75/Del/2011) which in turn relied on the decision of the Supreme Court in ACIT v. Hotel Blue Moon (2010) 321 ITR 362, the ITAT came to the conclusion that the assessment order was void ab initio since notice under Section 143(2) was not issued to the Assessee. Consequently the cross-objection of the Respondent Assessee was allowed and the impugned assessment order of the AO was cancelled. As a consequence the ITAT observed that the grounds raised by the Revenue in its appeal had become infructuous. The Revenue's appeal was therefore dismissed. ITA 935/2015 Page 3 of 6 2017:DHC:8724-DB

nothing further remains. 13. Faced with this quandary, learned counsel for the Revenue sought to urge that this court should somehow treat this appeal as also against the allowing of Assessee's cross objections by the ITAT since after all the entire order was before the Court. This submission is unable to be accepted by the Court. In tax matters, it is very plain from reading the order of the ITAT as to which portion of the impugned order deals with either the appeal or the cross objections. The impugned order in the present appeal leaves no marmer of doubt that the. ITAT in fact dealt with the only the cross objections and allowed them..The failure by the Revenue to challenge the order insofar as it allowed the .Assessee's cross objection cannot be characterized as a mere 'mistake'T ' ';., 14. In any event, factually the Assessee filed a return pursuant to notice issued under Section 148 of the-Act^ notwithstanding that it may not have filed a return in the first plate under Section 139 of the Act for the AY in question. Once a return is filed notice under Sesction 143 (2) of the Act to the Assessee is mandatory prior to framing an assessment. The question of framing an assessment ex parte without even issuing a notice under Section •143(2) of the Act did not arise. The mandatory nature ofthat requirement is settled not only by the decision ofthe Supreme Court in the case ofACIT v. Hotel Blue Moon {supra) but also by a decision of this court in Commissioner of Income Tax-08 v. Jai Shiv Shankar Traders Pvt. Ltd. (2016) 388ITR 448 Del. 15. For all the aforementioned reasons, the question framed does not arise ITA 935/2015 Page 5 of 6 2017:DHC:8724-DB

in the present appeal and is declined to be answered. In any event, the court does not find any substantial question of law arise from the impugned order. The appeal is, accordingly, dismissed. ' ^ D APRIL 28, 2017 b ITA 935/2015 ""'a/.,' '• : •i -H ' r. ••••• • 'v •• • "»•, 'I.- v.'m''-- •-. '• 1 t'': - '• 'i n • > S. MURALIDHAR, J CHANDER SHEKHAR, J Page 6 of 6 2017:DHC:8724-DB