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Facts
The Revenue appealed against the CIT(A)'s order, contesting the treatment of long-term capital gains as business profits and certain additions. The assessee filed cross-objections, arguing that the assessment framed under Section 143(3) was invalid due to the non-service of statutory notices under Sections 143(2) and 142(1).
Held
The Tribunal found that the Revenue failed to provide conclusive evidence of service of notice under Section 143(2) of the Income Tax Act. It held that proper service of this notice is a mandatory jurisdictional requirement, not a curable defect under Section 292BB if the objection is raised before the assessment is completed. Consequently, the assessment order was quashed.
Key Issues
Whether the assessment proceedings under Section 143(3) were *ab initio* invalid due to the non-service of statutory notices under Section 143(2) of the Income Tax Act on the assessee.
Sections Cited
143(3), 143(2), 142(1), 271(1)(c), 271B, 234A, 234B, 234C, 234D, 292BB
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Income Tax Appellate Tribunal, DELHI ‘E’ BENCH,
Before: SHRI N.K. BILLAIYA, & MS ASTHA CHANDRA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
The above captioned appeal by the Revenue and cross objections by the assessee are directed towards the very same order of the ld. CIT(A) – IX, New Delhi dated 21.09.2012 pertaining to Assessment Year 2009-10.
2. Since the underlying facts are common in the appeal and cross objections, they were heard together and are disposed of by this common order for the sake of convenience and brevity.
3. The grievances of the Revenue read as under:
“1. That the order of the Id. Addl. CIT passed uls 143(3) dated 30.12.2011 is bad and contrary to law and facts.
2. That on the facts as well as in law the Id. Addl. CIT has gravely erred in treating the long term capital gains of Rs.1,25,80,48,639/- on sale of shares as "Business Profits" whereas these shares were held for more than 12 months as investments in the hands of the Company which is against the law and is based merely on conjectures and surmises.
3. That the Id. Addl. CIT has gravely erred in making further addition of Rs.32,21,46,OOOI- as business profits of the assessee which was paid by the purchaser company to clear the existing liability against the assets of the company of which shares were transferred treating the same as additional consideration on sale on land. The addition made is based merely on presumption, conjectures and surmises.
That the Id. Assessing Officer has wrongly held and concluded that amount received for repayment of existing liabilities by Shivam Infratech Pvt. Ltd. of Rs.36,21,46,OOOI- from Stedman Developers Pvt. Ltd., the purchaser company of the shares of Shivam Infratech Pvt. Ltd. as additional sale consideration against sale of land.
5. That the Additions made by the Ld. Assessing Officer be deleted.
6. That the Ld. Addl. CIT has erred in initiating penalty proceedings u/s. 271 (1 )(c) and 271 B of I.T. Act.
7. That the Id. Addl. CIT has erred in charging interest u/s. 234A, 234B, 234C and 2340 of I. T. Act.
8. That the applicant craves for leave to amend or add any other ground of appeal.”
4. The cross objections of the assessee read as under:
“On the facts and circumstances of the case and in law the authorities below erred in persisting with the assessment proceedings by holding the same to be valid despite the factum of non-service of the requisite notices on the assessee as provided under law. The assessment being ab initio invalid ought to have been quashed.”
Since the grounds taken in the cross objections go to the root of the matter, we decided to adjudicate it first. The claim of the assessee is that the Assessing Officer without assuming jurisdiction framed assessment u/s 143(3) of the Income-tax Act, 1961 [the Act, for short] which is not according to the provisions of law.
The bone of contention is whether notice u/s 143(2) of the Act was served upon the assessee as per relevant provisions of law?
The case of the Revenue can be gathered from the remand report submitted by the Assessing Officer which reads as under:
The contention of the assessee finds support from the following order of the CCIT, Delhi – 2, New Delhi which reads as under:
It can be seen from the above that there is a marked contradiction between the observations of the Assessing Officer and that of the CCIT. We further find that request for supply of information under RTI Act was made to the Post Master, Post Office, Kalkaji, New Delhi in relation to the Speed Post No. ED963867848IN dated 20.08.2010 and reply of the Chief General Manager, reads as under:
“In continuation of this office letter of even number dated 15.03.2012, further enquires have revealed that only computer record is now available at Kalkaji HO. As per the computer record the article was returned and delivers with remarks “Addressee Left”.
Whereas the Additional CIT, Range – 6, New Delhi, in his order u/s 7 of the RTI Act, addressed to the assessee has mentioned the following :
Again, there is a marked contradiction between the reply of the Chief General Manager and the Additional CIT, Range-6.
We are of the considered view that the Revenue has grossly failed in furnishing any conclusive evidence in respect of service of notice u/s 143(2) of the Act. This quarrel has been decided in plethora of judgments to name a few:
Hon'ble Punjab High Court in the case of CEBON India Limited 347 ITR 583
“Mere giving of dispatch number, cannot be taken as an evidence of issuance of notice and the contention of the Revenue that where the notice has been duly dispatched to the assessee, the irregularity or defect in issuing notice was curable under section 292BB of the Act was rejected by the hon'ble High Court. It was further held by the hon'ble High Court that in the absence of notice being served, the Assessing Officer has no jurisdiction to make assessment and the absence of service of notice could not be held to be curable under section 292BB of the Act.”
Hon'ble Delhi Court Mascomptel India Ltd 345 ITR 58
“no attempt was made to serve the assessee on the correct address which was available with the department and in fact stated in the return of the income for the A.Y. 2006-07. Subsequent attempt to serve another notice long after the expiry of the limitation period prescribed by the proviso, could not help the Revenue.”
Hon'ble Delhi High Court Lunar Diamonds Ltd 281 ITR 1
“the assessed had filed an affidavit stating that it had not received the notice and the Tribunal rightly held that under these circumstances, the burden was upon the Appellant to prove that notice was served upon the assessed within the prescribed time. The Appellant had filed to prove its case in this regard.”
4. Hon'ble Delhi High Court NULON India Ltd 323 ITR 681
“The Assessing officer is also not sure nor specific as to when the notice in question has been served upon the assessed. It is only a presumption that notice which have been sent by speed post on 30th October, 2002, must have been delivered to the assessed by 31st October, 2002. There is no presumption under the law that any notice sent by speed post must have been delivered to the assessed within 24 hours. Moreover, there is nothing on record to show as whose instance the notice was redirected and sent at the address of Noida.
So, from the material available on record, we come to the conclusion that no notice u/s 143(2) of the Act, which is mandatory requirement of law, have been served upon the assessed within prescribed period.”
The contention of the ld. DR that it is a curable defect u/s 292BB of the Act has not been accepted by the Hon'ble High Court of Allahabad in the case of Salarpur Cold Storage [P] Ltd 228 Taxman 48 wherein the Hon'ble High Court held as under:
As no demonstrative evidence has been brought on record, in respect of service of notice u/s 143(2) of the Act, respectfully following the decision of the Hon'ble High Court [supra], the assessment order is quashed.
Since we have quashed the assessment, we do not find it necessary to dwell into the merits of the case.
In the result, the appeal of the Revenue in is dismissed and the cross objections of the assessee in CO No. 229/DEL/2015 are allowed.
The order is pronounced in the open court on 06.02.2024 in the presence of both the rival representatives.