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Income Tax Appellate Tribunal, DELHI BENCH “G”, NEW DELHI
Before: SHRI H.S. SIDHU & SHRI L.P. SAHU
ORDER ORDER ORDER ORDER
PER H.S. SIDHU, JM PER H.S. SIDHU, JM PER H.S. SIDHU, JM PER H.S. SIDHU, JM
1. The Assessee has filed the present appeal against the impugned order dated 14/02/2014 passed by the Ld. Commissioner of Income Tax (Appeals-2), Faridabad on the following grounds:-
“Legal ground on service of jurisdictional notice u/s. 143(2) before exparte assessment framed u/s. 144.
That on the facts and in the circumstances of the case and in law, the impugned exparte assessment framed by AO is void ab initio for want of mandatory service of jurisdictional notice u/s. 143(2) at latest available address. 1
Prayer to call: Case records (if deemed appropriate)
2. That on the facts and in the circumstances of the case and in law, the impugned exparte assessment framed by AO is void ab inito for which straight prayer is made to call for case records from the office of AO. Addition of Rs. 60,29,000/- wrongly sustained by CIT(A) on merits.
3. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the addition of Rs. 60,29,000/- on basis of perverse findings and irrelevant grounds and ignoring assessee’s pleadings.
4. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the addition of Rs. 40,00,000/- which is sufficiently explained being received from duly identified Sh. Har Prakash as advance for property sale without any meaningful enquiry from said party and summarily rejecting assessee’s plea.
5. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) in sustaining the addition of Rs. 40,00,000/- which is sufficiently explained being received from duly identified Sh. Har Prakash who has handsome creditworthiness as demonstrated from his bank statement and genuineness is proved by agreement to sell.
6. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the balance addition of Rs. 20,29,500/- being cash withdrawn and re-deposited which is proved by fund flow statement.
That the appellant craves leave to add, to, amend, modify, rescind, supplement or alter any of the grounds stated hereinabove, either before or at the time of hearing of this appeal.”
The facts emanate from the assessment order are that Return declaring an income of Rs. 2,58,140/- for A.Y. 2009-10 was filed on 08-03-2010 by the assessee, which was processed u/s 143(1) of the Income Tax act, 1961 (hereafter referred as Act). The case of the assessee was selected for scrutiny through CASS for A.Y 2009-10. Statutory notice u/s 143(2) of the Income Tax Act was issued on 19-08-2010 by the Income Tax Officer, Ward-3, Gurgaon fixing the case for 06-09-2010 and duly served. Thereafter, the case transferred to the ITO, Ward 1(1), Gurgaon as the jurisdiction over the case lies with him. Accordingly, notice u/s 143(2) and 142(1) of the Income Tax Act, 1961 alongwtth detailed questionnaire were issued on 8.6.2011 and case was fixed for hearing on 22.6.2011 and duly served. Thereafter, various opportunities were allowed to the assessee by issuing notices under section 143(2) and 142(1) of I.T. Act, however, the assessee has not made any compliance. As per AO, the assessee was not cooperating in the matter of finalization of assessment proceedings and it was of no use keeping the case pending which is going to be barred by limitation on 31.12.2011, therefore, notice u/s. 142(1) alongwith detailed show cause giving therein details of opportunities allowed was issued on 08.11.2011 finally fixing the case for 14.11.2011. AO noted that even on the final fixed dated i.e. 14.11.2011 and thereafter till date the assessee has not furnished any information/ documents. AO further observed that from the non-cooperative attitude of the assessee, it can be concluded that the assessee has no explanation and evidence in regard to the information / documents as called for vide questionnaire and final show cause notice. Under these circumstances, the AO was left with no alternative but to finalise the assessment exparte u/s. 144 of the Income Tax Act, 1961 on the basis of best judgment and on the basis of material available on record at the income of Rs. 3,97,36,900/- by making addition of Rs. 60,29,500/- and Rs. 3,34,49,264/- vide order dated 09.12.2011.
Aggrieved with the aforesaid order dated 09.12.2011, assessee filed the Appeal before the Ld. CIT(A), who impugned order dated 14.02.2014 has partly allowed the appeal of the assessee.
Against the aforesaid order dated 14.02.2014 passed by the Ld. CIT(A), assessee is in appeal before the Tribunal.
At the time of hearing Ld. Counsel of the assessee argued only on the issue involved in ground no. 1 relating to service of jurisdictional notice u/s. 143(2) before exparte assessment framed u/s. 144 of the I.T. Act, 1961. He stated that no notice u/s. 143(2) of the I.T. Act, 1961 was served upon the assessee, as a result of which critical evidence pertaining to the additions made 4 by the AO could not be submitted during the assessment proceedings. He further stated that Ld. CIT(A) in his order at page no. 6 & 7 vided para no. 3.4 has held that the AO has not commented upon the fact that the assessee could not get notice u/s. 143(2)/142(1) of the Income Tax Act, because of which there was no compliance on her part and additions were made in the order u/s. 144 of the Act. Therefore, he stated that the present case has involved the legal issue of non-service of mandatory notice u/s. 143(2) of the Act which is squarely covered by the decision of the Hon’ble Supreme Court of India in the case of ACIT & Anr. Vs. Hotel Blue Moon [2010] 321 ITR 362 (SC) wherein the Hon’ble Supreme Court has held that the issue of notice u/s. 143(2) of the I.T. Act is mandatory and not procedural.
On the contrary, Ld. DR relied upon the order passed by the Ld. CIT(A) and stated that the Ld. First Appellate Authority has passed a well reasoned order on the basis of the records and as per the provisions of law, therefore, the impugned order may be upheld by dismissing the Appeal filed by the Assessee.
We have heard both the parties and perused the relevant records especially the order passed by the Revenue Authorities alongwith the documentary evidence filed by the assessee supporting the claim of the assessee as well as the aforesaid decision rendered by the Hon’ble Supreme Court of India on the legal issue in dispute. No doubt assessee has raised so many grounds of appeal
in which the assessee challenged the non-service of the notice u/s. 143(2) of the Act and also merits of the case. Assessee has also challenged the addition in dispute on merit also by producing various documentary evidence supporting its claim before the Revenue Authority as well as before us, but he argued only on the legal issue raised in ground no.
1. Keeping in view of the facts and circumstances of the present case and the arguments advanced by the Ld. AR of the assessee, we are of the view that the legal issue raised in ground No. 1 regarding the non-issuance of notice u/s. 143(2) of the I.T. Act, which goes to the root of the matter, can be taken up first and decide according to the facts and circumstances of the case law cited by the Ld. Counsel of the assessee.
7.1 We find that Ld. CIT(A) in his impugned order vide para no. 3.4 & 3.5 at page no. 6 & 7 has observed as under:-
“3.4 I have considered the facts of the case together with the submissions of the appellant and the report of the AO on the admissibility of additional evidence. It has been submitted by the appellant that notices 143(2)/142(1) of the Income Tax Act could not be served on her, as a result of which critical evidence pertaining to the additions made by the AO could not be submitted during the assessment proceedings. Since, critical evidence having significant ramification in so far as this case is concerned, could not be filed and no compliance made during the assessment proceedings, the AO was left with no option but to pass the order u/s 144 of the Income Tax Act. It has been submitted by the appellant that she could know about the assessment only on 18.04.2012 when the notice of recovery of demand was served on her. Accordingly, the appellant applied for a copy of order and demand notice, which was served on her on 22.06.2012 against which the appeal was filed on 25.06.2012. The AO has submitted that at least 3 opportunities were given to the appellant followed by a show cause notice which remained un-complied with, as a result of which he has left with no alternative but to pass order u/s 144 of the Income Tax Act. However, the AO has not commented upon the fact that the appellant could not get notice u/s 143(2)/142(1) of the Income Tax Act because of which there was no compliance on her part and additions were made in the order u/s 144 of the Income Tax Act. Rule 46A lists 4 circumstances under which the additional evidence shall be admitted at the appellate stage: a) "Where the Assessing Officer has refused to admit evidence which ought to have been admitted; or b) Where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer; or c) Where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal; or a) Where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidenced relevant to any ground of appeal."
3.5 After considering the facts of the case and in the light of the four circumstances mentioned in Rule 46A, I hold that the appellant's case is covered by Rule 46A(1)(b) and (c) of the Income Tax Rules. Hence, considering the facts of the case, particularly, the non-service of notices u/s. 143(2)/142(1), the amount involved and in the interest of justice and fair play, the additional evidence filed by the appellant during the course of appellate proceedings is hereby admitted.”
7.2 After perusing the aforesaid findings of the Ld. CIT(A), we are of the considered view that Ld. CIT(A) has himself admitted in the aforesaid para no. 3.5 that he is admitting additional evidences filed by the Assessee under Rule 46A(1)(b) and (c) of the Income Tax Rules, because of non-service of notice u/s. 143(2)/142(1) of the I.T. Act. Secondly, the Ld. CIT(A) has also mentioned in para no. 3.4 as reproduced above, that the Appellant could not get notice u/s. 143(2)/142(1) of the I.T. Act, because there was no compliance by the Assessee and addition were made in the order u/s. 144 of the Act meaning thereby that Ld. CIT(A) himself admitted that no notice u/s. 143(2)/142(1) of the I.T. Act has been served upon the assessee and the AO completed the assessment by making the addition in dispute in the case of the assessee and the Ld. CIT(A) has upheld the order of the AO without appreciating the non-service of notice to the Assessee u/s. 143(2) of the I.T. Act. Under the circumstances, the exparte assessment order is void ab initio for want of mandatory service of jurisdictional notice u/s. 143(2) of the I.T. Act, 1961 and hence, not sustainable in the eyes of law, in view of the decision of the Hon’ble Supreme Court of India in the case of ACIT & Anr. Vs. Hotel Blue Moon [2010] 321 ITR 362 (SC) wherein the Hon’ble Supreme Court has held that the issue of notice u/s. 143(2) of the I.T. Act is mandatory and not procedural. The operative portion of the aforesaid decision is reproduced as under:- 8 ACIT & Anr. vs. Hotel Blue Moon: [(2010) 321 ITR 362 (SC)] ACIT & Anr. vs. Hotel Blue Moon: [(2010) 321 ITR 362 (SC)] ACIT & Anr. vs. Hotel Blue Moon: ACIT & Anr. vs. Hotel Blue Moon: [(2010) 321 ITR 362 (SC)] [(2010) 321 ITR 362 (SC)] HELD: “It is mandatory for the AO to issue notice u/s 143 (2). The issuance and service of notice u/s 143 (2) is mandatory and not procedural. If the notice is not served within the prescribed period, the assessment order is invalid Reassessment-----Notice----- Assessee intimating original return be treated as fresh return--- Reassessment proceedings completed despite assessee filing affidavit denying serviced of notice under section 143(2)---- Assessing Officer not representing before Commissioner (Appeals) that notice had been issued---- Reassessment order invalid due to want of notice under section 143(2)--- Income-tax Act, 1961, ss. 143, 147, 148(1), prov.----ITO v. R.K. GUPTA [308 ITR 49 (Delhi)Tribu.,”
In the background of the aforesaid discussions and respectfully following the precedent, as aforesaid, we cancel the assessment order as well as the impugned order, by accepting the appeal filed by the Assessee.
In the result, the appeal of the Assessee is allowed.
Order pronounced on 04/12/2017.