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Income Tax Appellate Tribunal, DELHI BENCH : E : NEW DELHI
Before: SHRI R.K. PANDA & SHRI K. NARASIMHA CHARY
per annum. He accordingly submitted that even on merit the addition so sustained by the CIT(A) should be deleted.
The ld. DR, on the other hand, strongly challenged the arguments advanced by the ld. counsel for the assessee and heavily relied on the order of the CIT(A).
She submitted that the non-issuance of notice u/s 143(2) was never raised before the Assessing Officer during the course of assessment proceedings. Further, there was no reason for keeping the orders for both the assessment years together since the facts of this year are different from that of the preceding assessment year inasmuch as in the preceding assessment year the reply filed by the assessee was traceable whereas for the impugned assessment year such reply is not on the records of the Department. Referring to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Madhya Bharat Energy Ltd., 337 ITR 389, she submitted that the Hon'ble High Court in the said decision has held that non-issue of notice u/s 143(2) of the Act on an assessee prior to the completion of reassessment would not be fatal to the reassessment. She also relied on the decision of the Hon'ble Delhi High Court in the case CIT vs. Vins Overseas India Ltd., reported in (2008) 305 ITR 320 (Del). She further submitted that the Assessing Officer in the instant case has issued notice u/s 143(2) on 15.03.2016 as per para 2 of the assessment order.
13.1 So far as the merit of the case is concerned, she submitted that the addition was made on the basis of incriminating evidences found during the course of survey in the shape of a diary which was recovered from one of the employees of the assessee company. The entries so recorded in the diary clearly mention that the assessee was making false entries in its books of account to suppress its income or not recording certain transactions. Therefore, the addition on account of business procurement expenses, scrap sales, interest paid on borrowals was rightly upheld by the CIT(A).
The ld. counsel for the assessee in his rejoinder, referring to the decision of the Hon'ble Delhi High Court in the case of PCIT vs. Jai Shiv Shankar Traders Pvt. Ltd. (2016) 383 ITR 448 (Del), submitted that the Hon'ble High Court in the said decision has held that failure of the Assessing Officer to issue notice u/s 143(2) in reassessment proceedings, prior to finalizing the reassessment order, cannot be condoned by referring to section 292BB and is fatal to the order of reassessment. He submitted that in the said decision, it has been clearly brought out that the decision of the Hon'ble High Court in the case of Madhya Bharat Energy Ltd., (supra) has been recalled, therefore, the decision relied on by the ld. DR is of no use. So far as the decision reported in the case of CIT vs. Vins Overseas India Ltd. (supra) is concerned, he submitted that the Hon'ble High Court in the said decision has held that in terms of section 27 of the General Clauses Act, 1897, if a notice is properly addressed and dispatched through registered post, there is a presumption that it has been served on the assessee. He submitted that if the decision relied on by the ld. DR is accepted for a moment, then, it has to be held that the assessee has filed the reply in response to notice u/s 148 which is evidenced by the speed post receipt. Therefore, the order of the Tribunal for the preceding assessment year has to be followed and the assessment order has to be quashed for non-issuance of notice u/s 143(2). Referring to the decision of the Hon'ble Calcutta High Court in the case of Mayadevi Bansal vs. CIT, reported in 117 ITR 125, he submitted that the proposition laid down by the Hon'ble High Court is that in absence of non-filing of the return, assessment has to be completed u/s 144. It has further been held that even if the return has been filed in a wrong form, the assessment cannot be made u/s 143(3) and it has to be passed u/s 144 of the Act. Therefore, the Assessing Officer, in the instant case, having not passed the assessment order u/s 144, the inevitable conclusion is that the assessee has filed the return in response to notice u/s 148 of the IT Act. It has been held in various decisions that in terms of section 27 of the General Clauses Act, if a notice is properly addressed and dispatched through registered post, there is a presumption that it has been served on the assessee. If this theory is applicable to the assessee as argued by the Revenue in a number of cases, the vice versa also should be applicable to the Revenue and, therefore, if an assessee files a reply which is properly addressed and dispatched through registered post, then, there is a 13 presumption that it has been duly served on the Assessing Officer. So far as the argument of the ld. DR that notice u/s 143(2) was issued on 15.03.2016 which is prior to completion of assessment is concerned, he submitted that the same being not issued within statutory period of filing of the return in response to notice u/s 148 has got barred by limitation.
We have considered the rival arguments made by both the sides and perused the orders of the A.O and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer, in the instant case, has reopened the assessment by issue of notice u/s 148 on 09.01.2015, copy of which is placed at page 32 of the paper book. In response to such notice, the assessee, vide letter dated 23rd March, 2015, filed a reply stating that the return filed by them for assessment year 2011-12 on 29th September, 2011 may kindly be treated as the return filed in response to such notice dated 9th January, 2015. In support that this letter was sent by speed post, the assessee has enclosed the postal receipt bearing No.EH60011746IN dated 23rd March, 2015, copy of which has been placed at page 41 of the paper book. It is the case of the assessee that since the assessee has filed a letter stating that the original return filed should be treated as the return filed in response to notice u/s 148, therefore, the Assessing Officer was duty bound to issue notice u/s 143(2) and since the said notice was never issued by the Assessing Officer, therefore, the assessment order is bad in law and has to be quashed. However, we find the ld.CIT(A) did not accept the contention of the assessee and dismissed the ground raised on this issue the reasons for which have already been reproduced in the preceding paragraphs. It is the submission of the ld. counsel for the assessee that when the notice u/s 148 was issued by the same Assessing Officer for both the assessment years i.e., 2010-11 and 2011-12 on the same date and when the assessee had filed the reply before the same Assessing Officer on the same date and the assessment order was also passed by the same Assessing Officer on the same date, the order disposing of the objections filed by the assessee is also on the same date and the order of the CIT(A) was also passed on the same date for both the assessment years, therefore, it cannot be said that the assessee has filed the reply only for assessment year 2010-11 stating that the return filed originally may be treated as the return filed in response to the notice u/s 148 and no such reply was filed for assessment year 2011-12.
We find some force in the arguments advanced by the assessee. A chronology of dates for both the assessment years shows that the notice u/s 148 was issued on the same date, the objection of the assessee for such reopening was disposed of by the Assessing Officer by passing a speaking order on the same date, the reassessment orders for both the years were passed on the same date and the CIT(A) also has passed the appellate orders for both the years separately on the same date. Therefore, it cannot be said that the assessee has filed the reply for treating the earlier return as return in response to the notice u/s 148 dated 09.01.2015 only for assessment year 2010-11 and not for assessment year 2011-12, especially when the Postal receipts for both the speed posts are also on the same date. It is pertinent to mention here that the Assessing Officer has not passed the order u/s 144 nor any interest has been levied u/s 234A of the IT Act. Therefore, it strengthens the argument of the ld. counsel for the assessee that he has, in fact, filed the reply in response to the notice u/s 148 stating that the return filed earlier be treated as return filed in response to the notice u/s 148.
Once it is held that the assessee has filed a letter stating that the return filed earlier be treated as return in response to the notice u/s 148 dated 09.01.2015, the next stage is regarding the issue of notice u/s 143(2). It is an admitted fact that no notice u/s 143(2) has been issued by the Revenue to the assessee thereafter within the stipulated time as the notice was issued only on 15.03.2016. Further, in response to the query raised under RTI Act, it has been mentioned that no such letter is available on the record maintained in the office of the Department. In our opinion, the assessee cannot be penalized for the mistake on the part of the Department or the Assessing Officer.
17.1 We find the Assessing Officer in the case of the assessee for A.Y. 2010-11 at para 2 of the assessment order has observed as under:-
“2. The assessee filed letter date 14.03.2016 wherein in objected against the re-assessment proceedings u/s 147 for A.Y. 2010-11. The above objection of the assessee was considered but not found to be acceptable. Further, the undersigned vide order dated 15.03.2016 passed a speaking order disposing objections to the notice u/s 148 of the Act for A.Y. 2010-11 and proceeded with the reassessment proceedings by issuing notice u/s 143(2) dated 15.03.2016.”
We find, under identical circumstances, the Tribunal in assessee’s own case in the immediately preceding assessment year, has held the assessment order to be bad in law on account of non-issuance of notice u/s 143(2) of the IT Act, 1961 within the stipulated time prescribed under the Act. The relevant observations of the Tribunal at para 5 read as under:-
“5. Heard the arguments of both the parties and perused the material available on record. We find that the judgment of Broadway Shoe Co . 99 Taxmann 83 relied by the ld. DR i s not applicable to the facts of the case as in that case the assessee has not filed a return in response to the notice issued u/s 148 of the Act whereas in the instant case, the assessee has filed return u/s 139(1) of the Act in regular course and al so replied to the notice that the return filed by them on 15.10.2010 may be treated as returned filed in response to the notice u/s 148 issued on 09.01.2015. Under such circumstances, it is incumbent upon the Assessing Officer to issue notice u/s 143(2) within the time stipulated as per the provisions of the Act which he failed to observe. Hence, keeping in view the judgment o f Jurisdictional High Court in the case of Alpine Electronics Asia Pvt. Ltd. 341 ITR 247 wherein the judgment of Hotel Blue Moon 321 ITR 362 (SC) has been duly referred to, we hereby hold that omission to issue notice u/s 143(2) is not curable and the requirement cannot be dispensed with. It is mandatory to issue notice u/s 143(2) even in the case of reassessment u/s 148. Similarly, Section 292BB incorporates the principle of estoppel and stipulates that an assessee who has appeared in any proceeding and co-operated in any enquiry relating to assessment or reassessment shall be deemed to be served with any notice which was required to be served and would be precluded from objecting that the notice was not served upon him or was served upon him in an improper manner or was not served upon him in time. However, the principle of estoppel does not apply if the assessee has raised objection in reply to the notice before completion of assessment or reassessment which is the issue in the instant case. Hence, keeping in view, the entire facts of the case and established judgments on the issue, we hereby hold that the assessment completed by the revenue cannot be held to be valid in the eyes of law.”
The Hon'ble Delhi High Court in the case of PCIT vs. Jai Shiv Shankar Traders Pvt. Ltd. (supra) has held that failure of the Assessing Officer to issue notice u/s 143(2) in reassessment proceedings, prior to finalizing reassessment order cannot be condoned by referring to section 292BB and is fatal to the order of reassessment. Various other decisions relied on by the assessee in the case law compilation also support his case that in absence of issue of notice u/s 143(2) even in reassessment proceedings, the order becomes invalid and has to be quashed.
Since, in the instant case, the assessee filed the letter stating that the return filed originally may be treated as return filed in response to notice u/s 148 and since the notice u/s 143(2) was not issued within the statutory period and since the assessment was not completed u/s 144 nor any interest u/s 234A has been charged which indirectly proves that the assessee, in fact, has filed the letter stating that the return filed originally may be treated as return filed in response to notice u/s 148, therefore, respectfully following the decision of the Tribunal in assessee’s own case for the immediately preceding assessment year, we hold that the assessment order passed by the Assessing Officer is not in accordance with law and has to be quashed. The legal ground raised by the assessee challenging the validity of the assessment order is accordingly allowed. Since the assessee succeeds on the legal grounds, the various other grounds raised by the assessee become academic in nature and, therefore, are not being adjudicated.