M/S.SANVIJ EXPORTS,MUMBAI vs. INCOME TAX OFFICER WARD 19(3)(2), MUMBAI

Briefly the facts are that the assessee a partnership firm filed its return of income for the impugned assessment year on 23.09.2008 declaring total income of Rs.2,35,840/-. The assessment in case of the assessee was completed u/s. 143(3) of the Act vide order dated 26.10.2010 accepting the return of income. Subsequently, the Assessing Officer on the basis of information received from the Director of Income Tax(Investigation), having formed an opinion that the assessee had made bogus purchases, wanted to reopen the assessment u/s. 147 of the Act. Accordingly, the Assessing Officer issued a notice u/s. 148 of the Act on 31.03.2015. However, in the body of the said notice, the assessment year mentioned was 2010-11. In response to the said notice, as stated by the ld. Authorized Representative, the assessee filed a return of income for the assessment year 2010-11. Subsequently, the Assessing Officer issued notices u/s. 142(1) and 143(2) to the assessee requiring furnishing of certain information. In the course of assessment proceedings, the assessee objected to the assessment proceedings initiated u/s. 147 of the Act on the ground that no notice u/s. 148 of the Act has been issued by the Assessing Officer for the impugned assessment year. As could be seen from the impugned assessment order, though the M/s. Sanvij Exports Assessing Officer acknowledged the fact that in the notice issued u/s. 148 of the Act, the assessment year was wrongly mentioned as assessment year 2010-11 instead of 2008-09, however, he observed that the mistake was brought to the notice of the assessee vide letter dated 17.06.2015 and further, the Assessing Officer observed that as per section 292B of the Act, no notice issued in pursuance to any of the provision of the Act shall be involved or shall be deemed to be involved merely by the reason of any mistake, defect or any omission in such notice. Thus, the Assessing Officer proceeded with the assessment proceeding and ultimately passed an assessment order on 15.03.2016 u/s. 143(3) r/w s. 147 of the Act by making the addition of Rs.14,29,814/- on account of bogus purchases.

The assessee challenged the assessment order by filing appeal before the ld. Commissioner of Income Tax (Appeals), inter alia, on the ground that the assessment order is invalid in the absence of a valid notice issued u/s. 148 of the Act.

As could be seen from the impugned order of the ld. Commissioner of Income Tax (Appeals), while dealing with the said issue raised by the assessee, the ld. Commissioner of Income Tax (Appeals) upheld the validity of the reopening of assessment u/s. 147 of the Act by stating that at the time of issuance of notice u/s. 148 of the Act, the Assessing Officer is only required to form a broad opinion about the income escaping assessment and he is not required to exactly quantify the amount of concealment. Of course, insofar as the addition made by the Assessing Officer is M/s. Sanvij Exports concerned, the ld. Commissioner of Income Tax (Appeals) issued directions to quantify the addition by following certain methodology.

The ld. Authorized Representative submitted before us that notice issued u/s. 148 of the Act by the Assessing Officer was for the assessment year 2010-11. In this context, he drew our attention to a copy of the notice placed at page 1 of the paper book. He submitted, for the impugned assessment year the Assessing Officer has not issued any notice u/s. 148 of the Act. He submitted, without issuing a valid notice u/s. 148 of the Act, the Assessing Officer could not have assumed jurisdiction for framing assessment u/s. 147 of the Act. He submitted, though, this issue was specifically raised before the ld. Commissioner of Income Tax (Appeals), he has completely ignored/failed to deal with the issue. Therefore, he submitted, the matter may be restored to the file of the ld. Commissioner of Income Tax (Appeals) for deciding the issue raised by the assessee with regard to the validity of assessment order passed u/s. 143(3) r.w.s. 147 of the Act.

The ld. Departmental Representative has no objection if the matter is restored back to the file of the ld. Commissioner of Income Tax (Appeals) for deciding the matter afresh.

We have considered rival submissions and perused the material on record. The pertinent issue raised by the assessee is, whether in the absence of a valid notice u/s. M/s. Sanvij Exports 148 of the Act the Assessing Officer is empowered to pass an assessment order u/s. 147 of the Act? Undisputedly, the notice issued u/s. 148 of the Act by the Assessing Officer is for assessment year 2010-11. This is evident from the copy of the notice placed at page 1 of the paper book. In fact, the Assessing Officer himself has acknowledged this fact in the assessment order. However, he has tried to overcome such deficiency by stating that the said defect in the notice was brought to the notice of the assessee vide letter dated 17.06.2015 and has also taken shelter under the provision of section 292B of the Act. Be that as it may, before the ld. Commissioner of Income Tax (Appeals), the assessee has specifically challenged the validity of the assessment order on the ground of no valid notice issued u/s. 148 of the Act. It is manifest from the order of the ld. Commissioner of Income Tax (Appeals) that he has not at all dealt with the specific grievance of the assessee that in the absence of a valid notice issued u/s. 148 of the Act for the impugned assessment year; the Assessing Officer could not have framed the impugned assessment order. The ld. Commissioner of Income Tax (Appeals) has simply upheld the validity of the assessment order by observing that the opinion formed by the Assessing Officer for reopening the assessment cannot be challenged by the assessee. He has not at all addressed the issue whether in the absence of a valid notice u/s. 148; the Assessing Officer could have passed the impugned assessment order. When this fact was pointed out to the ld. Departmental Representative, he fairly submitted that the impugned order of the ld.

In view of the aforesaid, we are inclined to restore the issue to the file of the ld. Commissioner of Income Tax (Appeals) for deciding the specific grievance of the assessee that in the absence of a valid notice u/s. 148 of the Act for the impugned assessment year, the assessment order could not have been passed by the Assessing Officer. Only after deciding this issue, the ld. Commissioner of Income Tax (Appeals), if warranted, may proceed to decide the grounds raised on merits. Needless to mention, the ld. Commissioner of Income Tax (Appeals) must afford reasonable and proper opportunity of being heard to the assessee in the matter. The grounds are allowed for statistical purpose.

In the result, assessee’s appeal is allowed for statistical purpose. Order pronounced in the open court on 13.06.2018