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Income Tax Appellate Tribunal, DELHI BENCHES “SMC” : DELHI
Before: SHRI BHAVNESH SAINI
ORDER Both appeals by assessee are directed against the different orders of the Ld. CIT(A)-12, New Delhi, dated 28th February, 2017 for A.Y. 2011-2012, challenging the addition on merit as well as levy of penalty under section 271(1)(c) of the I.T. Act, 1961.
I have heard the learned Representatives of both the parties and perused the material on record. The Ld. D.R. also produced the assessment record and filed copies of the notice under 2 ITA.No.3162 & 3163/Del./2017 Shri Vikas Asopa, Delhi. section 143(2) of the I.T. Act, notice under section 142(1) and copies of order sheet of the A.O. The record is also perused.
Briefly the facts of the case are that the assessee filed return of income on 21st February, 2012 declaring income at Rs.1,72,820. The A.O. issued notices under section 143(2) and 142(1) to the assessee and thereafter, issued several notices under section 142(1) of the I.T. Act at the address of the assessee but none have been attended by the assessee. The A.O. also issued show cause notice for levy of penalty under section 271(1)(b) of the I.T. Act which is also not responded by the assessee. The A.O. ultimately passed the ex-parte order under section 144 of the I.T. Act. The A.O. made addition of Rs.44,62,342 on account of unexplained cash deposit in the bank account of the assessee. Interest credited to the bank account in a sum of Rs.2711 was also added. The deduction of Rs.24,000 was denied for want of documentary evidence. The A.O. completed the assessment at Rs.47,61,874.
3.1. The assessee challenged the additions before the Ld. CIT(A) as well as challenged the validity of the assessment order for non-service of notice issued under section 143(2) of the I.T. Act. The 3 ITA.No.3162 & 3163/Del./2017 Shri Vikas Asopa, Delhi. assessee submitted before Ld. CIT(A) that return was filed on 21st February, 2012. Notice under section 143(2) required to be served up to 30th September, 2012. On inspection of the record, it came to the notice of assessee that the notice under section 143(2) of the I.T. Act sent on 6th August, 2012 through speed post was received back as unserved on 16th August, 2012. The assessee therefore, contended that no notice under section 143(2) have been served upon the assessee. Therefore, the assessment order is without jurisdiction and is liable to be set aside. The A.O. in the remand report stated that notice under section 143(2) dated 6th August, 2012 have been issued through speed post at the address provided by the assessee. For other years, notices sent at same address. Therefore, the assessee cannot deny about knowledge of assessment proceedings in his name.
3.2. The Ld. CIT(A) also on going through the record noted that the notice dated 6th August, 2012 has been received back with the comments “no such person”. Similarly, other notice issued under section 142(1) but none have been responded. Therefore, it appears that assessee deliberately avoided to receive the notices and 4 ITA.No.3162 & 3163/Del./2017 Shri Vikas Asopa, Delhi. accordingly, this ground was dismissed. The assessee also challenged the additions on merit. However, the appeal of assessee has been partly allowed by reducing the addition on account of cash deposit in the bank account. On the cash deposit in the bank account and other additions, penalty was levied separately which was also reduced by the Ld. CIT(A) because of the addition on merit have been reduced by the Ld. CIT(A). penalty appeal was partly allowed.
The first issue involved in the appeal is regarding the jurisdiction of the A.O. for non-service of the notice under section 143(2) within the statutory time limit. It is not in dispute that assessee filed return of income on 21st February, 2012. According to assessee, as per proviso to Section 143(2), the notice under section 143(2) was required to be served upon the assessee upto 30th September, 2012. According to assessee the said notice is received unserved. The Ld. D.R. filed copy of the notice dated 06th August, 2012 issued under section 143(2) of the I.T. Act. The Ld. D.R. also produced the assessment record which revealed that the said notice has been returned unserved to the A.O. with the remarks “Left to sendor”. The Ld. CIT(A) also noted in the appellate order that notice
5 ITA.No.3162 & 3163/Del./2017 Shri Vikas Asopa, Delhi. has been received back with the comments “No such person”. The report is dated 11th August, 2012 and according to assessee the same has been received unserved by the department on 16th August, 2012.
According to proviso to Section 143(2) of the I.T. Act as applicable to assessment year under appeal the same provides “provided that no notice under this clause shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.” It would show that the notice under section 143(2) could be served upon the assessee upto 30th September, 2012.
The Ld. D.R. admitted that except the notice under section 143(2) dated 06th August, 2012 which returned unserved, no other notice under section 143(2) have been issued to the assessee. The order sheet also revealed that the A.O. thereafter did not issue any notice under section 143(2) to the assessee for the purpose of service and to assume jurisdiction to frame scrutiny assessment under section 143(3) of the I.T. Act. Though the A.O. issued several notices under section 142(1) of the I.T. Act, but none have been served upon the assessee as per order sheet. These facts therefore, clearly reveal that when the only notice under section 143(2) dated 06th August, 2012
6 ITA.No.3162 & 3163/Del./2017 Shri Vikas Asopa, Delhi. have been returned to the A.O. unserved in August, 2012 itself, the A.O. could have made some efforts to serve the notice to the assessee upto 30th September, 2012 through other mode of service prescribed under law. However, the A.O. did not make any effort to serve the notice under section 143(2) of the I.T. Act upon the assessee. It clearly show that A.O. never wanted to serve the assessee with jurisdictional notice under section 143(2) of the I.T. Act. It stands proved on record that no notice under section 143(3) have been served upon the assessee within the time prescribed under the law or thereafter. Therefore, the entire assessment order got vitiated due to non-service of the notice under section 143(2) of the I.T. Act. The A.O. therefore, did not get valid jurisdiction to proceed to make scrutiny assessment against the assessee. The assessment order is null and void abinitio. I, therefore, set aside the orders of the authorities below and quash the assessment order under section 143(3) of the I.T. Act. Resultantly, all additions made in the assessment order stands deleted.
In the result, ITA.No.3162/Del./2017 of the assessee is allowed.
7 ITA.No.3162 & 3163/Del./2017 Shri Vikas Asopa, Delhi. ITA.No.3163/Del./2017 – A.Y. 2011-2012 :
The A.O. also levied the penalty under section 271(1)(c) of the I.T. Act, 1961 on making the additions on account of unexplained cash deposit in the bank account of the assessee and other additions.
Since the assessment order have been quashed due to non-service of the notice under section 143(2) of the I.T. Act, therefore, nothing is left with the Revenue to levy the penalty under section 271(1)(c) of the I.T. Act. I, accordingly, set aside the orders of the authorities below and cancel the penalty under section 271(1)(c) of the I.T. Act.
The appeal of assessee in ITA.No.3163/Del./2017 is allowed.
To sum-up, both the appeals of the assessee are allowed.
Order pronounced in the open Court. 1.