SATISH KUMAR ,FARIDABAD vs. ITO, WARD- 2(3), FARIDABAD

This is an appeal by the Assessee against the order dated 12.3.2018

of the Ld. CIT(A), Faridabad relevant to assessment year 2008-09 on the

following grounds:-

1) That having regard to the fact and circumstances of

the case, Ld. C1T (A) has erred in law and on facts

in confirming the action of Ld. AO in framing the

impugned reassessment order as the assessment

order was passed without complying with the

mandatory conditions of section 147 to 151 of the

Income Tax Act, 1961 and without recording valid

reasons as per law and without obtaining valid

approval as per law and in any case reopening of

the assessment and framing of the reassessment

order was contrary to law.

2) That in any view of the matter and in any case,

action of Ld.CIT(A) in confirming the action of Ld.

AO in reopening of the impugned assessment u/s

143(3)/147 is bad in law and against the facts and

circumstances of the case.

3) That having regard to the facts and circumstances

of the case, Ld. CIT(A) has erred in law and on facts

in upholding the action of the Ld. A.O. in framing

the impugned reassessment in u/s 143(3)/147 of

the Act, and that too without issuing / serving the

mandatory notice u/s 143(2) within the statutory

allowable period and more so by not fulfilling the

requirements of the provisions of law.

4) That in any view of the matter and in any case,

action of Ld.CIT(A) in confirming the action of Ld.

A.O. in restricting the addition to the extent of Rs.

17,77,886/- being 12.5% of the purchases i.e. Rs.

1,42,23,093/- claimed to have been made, allegedly

on account of bogus purchases from M/s Maa Durga

Trading Company and that too without proper

appreciation of facts on record, and by recording

incorrect facts and findings, and making allegations

without any basis, material or evidence and merely

on the basis of surmises and conjectures and

without observing the principal of natural justice.

5) That in any case and in any view of the matter,

action of Ld. CIT(A) in confirming the addition of Rs.

17,77,886/- is bad in law and against the facts and

circumstances of the case.

6) That having regard to the facts and circumstances

of the case, Ld. CIT(A) has erred in law and on facts

in confirming the action of AO in passing the

impugned order without giving adequate

opportunity of being heard.

7) That the appellant craves the leave to add, alter or

amend the grounds of appeal at any stage and all

the grounds are without prejudice to each other.

income declaring at Rs. 2,54,083/- on 24.4.2008. Later on, as per the

information available with the Department the proceedings u/s. 147 fo the

I.T. Act, 1961 were initiated after recording reasons by AO. Notice u/s. 148

of the Act was issued on 26.3.2015. In response to notice u/s. 148 fo the

Act no return was filed by the assessee. The reassessment u/s.

143(3)/147 was completed on 21.3.2016 at an assessed income fo Rs.

45,21,010/-. AO on going through the information received from

Investigation Wing, found that the assessee has made payment of Rs.

1,83,43,517/- to M/s Maa Durga Trading Company on account of

accommodation entries provided by him to the assessee during the year.

Against the order of the AO, the assessee appealed before the ld. CIT(A),

who vide his impugned order dated 12.3.2018 has partly allowed the appeal

of the assessee. Aggrieved with the order of the Ld. CIT(A), assessee

appealed before the Tribunal.

relating to upholding the action of the AO in framing the impugned

reassessment u/s. 143(3)/147 of the Act, and that too without issuing /

serving the mandatory notice u/s. 143(2) of the Act within the statutory 4

allowable period and more so by not fulfilling the requirements of the

provisions of law. During the hearing, ld. counsel for the assessee stated

that the assessee filed its return of income on 24.4.2008 declaring total

income of Rs. 2,94,083/-. The AO started the proceedings u/s. 147 of the

Act after recording the reasons on 26.3.2015 and accordingly issued notice

u/s. 148 of the Act to the assessee on 26.3.2015. But the assessee did not

appear and has also not filed return in response to the same. AO has

issued notice u/s. 142(1) for 23.6.2016, 15.7.2015, but again assessee did

not appear nor filed any return. Due to change of jurisdiction again notice

u/s. 142(1) was issued on 12.8.2015 fixing the case for 26.8.2015 which

was received by the assessee and in response to the same the AR of the

assessee appeared on 12.8.2015 and filed power of attorney, copy of ITR

alongwith computation and requested to treat the original return filed in

response to the notice u/s. 148 of the Act. He draw my attention towards

page no. 14 which is the copy of the notice u/s. 148 of the Act dated

26.3.2015 and also the page no. 16 which the copy of the notice u/s.

143(2) of the Act dated 12.8.2015 and also page no. 17 which the copy of

the reply filed by the AR of the assessee dated 07.9.2015 in which the

assessee has filed some documentary evidence which the copy of income

tax return alongwith computation of income for AY 2008-09, copy of Audit

Report for the FY 2007-08 and copy of Auditable Balance Sheet alongwith

complete annexure, trading and profit and loss account with complete

annexure. Finally he stated that AR of the assessee appeared on

12.8.2015 and stated that original return filed by the assessee may be

treated the return of income filed in response to the notice u/s. 148 of the

Act, but on the same date the AO given the notices to the assessee i.e.

12.8.2015 u/s. 143(2) of the Act which is at page no. 16 of the Paper Book.

He stated that in response to the return filed by the assessee which is a

letter dated 12.8.2015 when the assessee’s counsel appeared and made the

statement on the same date that AO had issued notice dated 12.8.2015 is

invalid, void abinitio for want of valid notice u/s. 143(2) of the Act. He

further submitted that the additional ground in identical facts has been

accepted and assessment u/s. 143(3) of the Act was passed without proper

issue and service of notice u/s. 143(2) of the Act, which was later quashed

by the ITAT and the Hon’ble High Court in the following cases:-

i) Hon’ble Delhi High Court in the case of Director of Income Tax Vs.

Society for Worldwide Inter Bank Financial, Telecommunications in

ITA No. 441/2010, reported at 323 ITR 249

ii) Delhi ITAT in case of Micron Enterprises Pvt. Ltd. Vs. ITO in I.T.A

No. 901/DEL/2016 (A.Y .2006-07) order dated 14/05/2018

iii) Delhi ITAT in Harsh Bhatia case ITA Nos. 1262/& 1263/DEL/2017

[A.Ys. 2008-09 & 2009-10] order dated 17.10.2017.

iv) Delhi ITAT, in the case of Ashtech Industries Pvt. Ltd. vs. DCIT in

ITA No. 2332/Del/2018 (AY 2009-10) dated 20.12.2018.

below and opposed the request of Ld. counsel for the assessee and prayed

for dismissal of ground no. 3, because assessee did not file return under

section 148 within the specified period.

assessment order, paper book and the impugned order as well as the

notice, I find that AO started the proceedings u/s. 147 of the Act after

recording the reasons on 26.3.2015 and accordingly issued notice u/s. 148

of the Act to the assessee on 26.3.2015. But the assessee did not appear

and has also not filed return in response to the same. AO has issued notice

u/s. 142(1) for 23.6.2016, 15.7.2015, but again assessee did not appear

nor filed any return. Due to change of jurisdiction again notice u/s. 142(1)

was issued on 12.8.2015 fixing the case for 26.8.2015 which was received

by the assessee and in response to the same the AR of the assessee

appeared on 12.8.2015 and filed power of attorney, copy of ITR alongwith

computation and requested to treat the original return filed in response to

the notice u/s. 148 of the Act. After perusing the Paper Book especially the

page no. 14 which is the copy of the notice u/s. 148 of the Act dated

26.3.2015; page no. 16 which the copy of the notice u/s. 143(2) of the Act

dated 12.8.2015 and also page no. 17 which is the copy of the reply filed by

the AR of the assessee dated 07.9.2015 in which the assessee has filed

some documentary evidence which the copy of income tax return

alongwith computation of income for AY 2008-09, copy of Audit Report for

the FY 2007-08 and copy of Auditable Balance Sheet alongwith complete

annexure, trading and profit and loss account with complete annexure, I

find considerable cogency in the submission of the assessee’s counsel that

assessee appeared on 12.8.2015 and stated that original return filed by the

assessee may be treated the return of income filed in response to the

notice u/s. 148 of the Act, but on the same date the AO given the notices to

the assessee i.e. 12.8.2015 u/s. 143(2) of the Act which is at page no. 16

of the Paper Book, which shows non-application of mind on the part of the

of the AO. Therefore, notice under section 143(2) is invalid and

resultantly, the assessment is vitiated and is liable to be quashed. I

accordingly, set aside the orders of the authorities below and quash the

reassessment proceedings in the matter and allow the legal ground no. 3

argued by the Ld. counsel for the assessee. Since the reassessment has

been quashed, there is no need to adjudicate the other grounds. My

aforesaid view in allowing the ground no. 3 which is legal in nature, is

squarely covered in favour of the assessee by the following

judgment/decisions wherein on identical facts and circumstances of the

case, the reassessment was quashed.

5.1 The Hon’ble Delhi High Court in the case of Director of Income Tax vs.

Society for Worldwide Interbank Financial Telecommunications (2010) 323

ITR 249 (Del.) has held as under :

“Both the CIT(A) and the Tribunal have returned a concurrent and

clear finding of fact that the notice under s. 143(2) was issued on 23rdMarch, 2000 and since the return was filed on 27thMarch, 2000,

the notice was not a valid one and, therefore, the assessment

completed on the basis of the notice was also invalid and was

consequently set aside. It is for the first time that the counsel for

the appellant contends that the notice, in fact, was issued on 27thMarch, 2000 and not on 23rdMarch, 2000, the date which is

recorded on the notice itself. No such contention was raised before

the lower appellate authorities. Consequently, the said contention

cannot be raised before the Court for the first time. The appellant has stated that the return was filed by the assessee on 27thMarch,

2000 and the notice under s. 143(2) was served upon the

Authorized Representative of the assessee by hand when the

Authorized Representative of the assessee came and filed return.

However, the date of the notice was mistakenly mentioned as 23rdMarch, 2000. Assuming the aforesaid to be true, the notice was

served on the Authorized Representative simultaneously on his filing

the return which clearly indicates that the notice was ready even

prior to the filing of the return. The provisions of s. 143(2) make it

dear that the notice can only be served after the AO has examined

the return filed by the assessee. Whereas it is dear that when the

assessee came to file the return, the notice under s. 143(2) was

served upon the Authorized Representative by hand. Thus, it would

amount to gross violation of the scheme of s. 143(2).”

5.1.1. And the conclusion is as under :

“Assessment made in pursuance of a notice under section 143(2) issued on 23rd March, 2000 when the return was filed on 27th March, 2000 is invalid.”

5.2 The ITAT, Delhi in the case of Shri Harsh Bhatia, New Delhi vs. ITO,

Ward-50(3), New Delhi in ITA.No.1262 and 1263/Del./2017 dated

17.10.2017 has held as under : 10. “It was further argued by the ld. counsel for the

assessee Dr. Rakesh Gupta that notice u/s 143(2) of the

Act, was issued on 17.09.2014 and which is the same date

on which return was filed. This is apparent from the

Assessing Officer’s order in para 3 at page 1. Therefore,

the Assessing Officer has not applied his mind

independently while issuing notice u/s 148 of the Act. On

this count also, the assessment deserves to be quashed.

Accordingly, under the facts and circumstances of the

case, the legal grounds of the assessee are allowed.”

5.3 The ITAT, Delhi Bench in the case of Micron Enterprises Pvt. Ltd. vs.

ITO ITA No. 801/Del/2016 (AY 2006-07) vide order dated 14.5.2018 has

held as under:-

“5. Learned Counsel for the Assessee submitted that

assessee filed reply to the notice under section 148 of the

I.T. Act on dated 26.11.2013 which is noted in the

assessment order, copy of which, is filed at page-11 of

the paper book, in which, assessee explained that the

return already filed under section 139(1) may be treated

as return filed in response to notice under section 148 of

the I.T. Act. He has submitted that on the same day A.O.

issued notice under section 143(2) i.e., on 26.11.2013,

copy of which, is filed at page-12 of the paper book. He

has, therefore, submitted that the A.O. has not validly

assumed jurisdiction under section 147 and 143(3) of the

I.T. Act to pass the assessment order against the

assessee. He has submitted that the issue is covered in

favour of the assessee by the judgment of the Hon’ble

Delhi High Court in the case of Director of Income Tax vs.

Society for Worldwide Interbank Financial

Telecommunications (2010) 323 ITR 249 (Del.) in which it

was held as under : “Both the CIT(A) and the Tribunal

have returned a concurrent and clear finding of fact that

the notice under s. 143(2) was issued on 23rd March,

2000 and since the return was filed on 27th March, 2000,

the notice was not a valid one and, therefore, the

assessment completed on the basis of the notice was also

invalid and was consequently set aside. It is for the first

time that the counsel for the appellant contends that the

notice, in fact, was issued on 27th March, 2000 and not

on 23rd March, 2000, the date which is recorded on the

notice itself. No such contention was raised before the

lower appellate authorities. Consequently, the said

contention cannot be raised before the Court for the first

time. The appellant has stated that the return was filed by

the assessee on 27th March, 2000 and the notice under s.

143(2) was served upon the Authorized Representative of

the assessee by hand when the Authorized Representative

of the assessee came and filed return. However, the date

of the notice was mistakenly mentioned as 23rd March,

2000. Assuming the aforesaid to be true, the notice was

served on the Authorized Representative simultaneously

on his filing the return which clearly indicates that the

notice was ready even prior to the filing of the return. The

provisions of s. 143(2) make it dear that the notice can

only be served after the AO has examined the return filed

by the assessee. Whereas it is dear that when the

assessee came to file the return, the notice under s.

143(2) was served upon the Authorized Representative by

hand. Thus, it would amount to gross violation of the

scheme of s. 143(2).”

5.1. And the conclusion is as under : “Assessment made

in pursuance of a notice under section 143(2) issued on

23rd March, 2000 when the return was filed on 27th

March, 2000 is invalid.”

followed by ITAT, Delhi Bench, in the case of Shri Harsh

Bhatia, New Delhi vs. ITO, Ward-50(3), New Delhi in

ITA.No.1262 and 1263/Del./2017 dated 17.10.2017 in

which the Tribunal held as under :

assessee Dr. Rakesh Gupta that notice u/s 143(2) of

the Act, was issued on 17.09.2014 and which is the

same date on which return was filed. This is

apparent from the Assessing Officer’s order in para

3 at page 1. Therefore, the Assessing Officer has

not applied his mind independently while issuing

notice u/s 148 of the Act. On this count also, the

assessment deserves to be quashed. Accordingly,

under the facts and circumstances of the case, the

legal grounds of the assessee are allowed.”

did not file return under section 148 within the specified

period. Therefore, this ground of appeal of assessee may

be dismissed.

invalid and resultantly, the assessment is vitiated and is liable to be quashed. I, accordingly, set aside the orders of the authorities below and quash the re-assessment proceedings in the matter. Resultantly, all additions stands deleted. In view of the above, there is no need to decide other contentions raised by Learned Counsel for the Assessee.

Order pronounced on 14-01-2019.

Sd/- [H.S. SIDHU] JUDICIAL MEMBER

Date:14/01/2019

SRBhatnagar