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Facts
The Revenue appealed against an order of the CIT(A) which restricted an addition made by the AO. The assessee filed cross-objections, primarily arguing that the assessment order was void ab initio due to non-service of the statutory notice under Section 143(2) of the Income Tax Act. The AO had made an addition of Rs. 35,05,89,182, which was deleted by the CIT(A) except for a partial amount.
Held
The Tribunal held that the assessment proceedings were vitiated due to the non-service of the notice under Section 143(2) of the Act, despite being granted time to produce proof of service. The Tribunal found the plea of the department to be based on presumption and quashed the entire proceedings.
Key Issues
Whether the assessment order is valid and sustainable in the absence of proof of service of notice under Section 143(2) of the Income Tax Act, 1961.
Sections Cited
143(3), 143(1), 142(1), 143(2)
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Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI
Before: SHRI S RIFAUR RAHMAN
O R D E R
PER Ms. MADHUMITA ROY, JM:
The instant Revenue’s appeal and the assessee’s cross-objections are directed against the order dated 27.06.2022 passed by the CIT(Appeals)-27, New
2. The grounds of appeal raised by the Revenue read as under:
1. That whether on the facts and in law, the Ld. CIT(A) erred in restricting the addition to existing GP as per IT return to Rs. 1.27.23.583/- 2% Rs. 63.61.79.160/-, and deleting the addition of Rs. 35.05,89.182/- as the assessee has failed to discharge its onus of providing concrete evidence regarding purchases and purchase parties.
2. That whether on the facts and in law, the Ld. CIT(A) is erred in accepting the books of account as correct and complete even when the same has been rejected by the AO and no corroborating evidence has been produced by assessee to establish their genuineness. 3. That the appellant craves leave to add, alter, amend or forego any ground(s) of appeal raised above at the time of hearing.” 3. The assessee has raised following grounds of cross objections:
“1. That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in sustaining an addition of a sum of Rs. 1. 27, 23, 583/- on account of gross profit assumed 2% on Rs. 63, 61, 79, 160/-, which is wholly misconceived in law and purely based on suspicion and surmises, without there being any material to have held the purchases to be bogus neither, statement of any alleged entry operator was provided nor any cross examination of the same was ever provided, as such, the addition so made and partly sustained deserved to be deleted 2. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate the fact that the assessee company had furnished all the requisite documentary evidences in order to establish that the purchases so made are genuine and have also resulted in corresponding sales which are also commensurate with past business practice of assessee company, however, learned CIT (A) sustained part addition after brushing aside all the aforesaid documentary evidences and proceeded to estimate gross profit purely on assumptions and surmises.
That the adverse findings recorded by the learned CIT (A) are perverse and have been recorded with preconceived notions and without considering the submissions/evidences/material produced on record and the addition so made is also without providing fair and proper opportunity of being heard, hence, such findings are vitiated and deserves to be deleted.
Vide application dated 10.11.2025 the assessee sought permission to raise the following additional grounds in the cross objections, alleging to be the legal grounds:
1. on the facts and circumstances of the case the impugned assessment order so passed in bad in law and without jurisdiction, as no notice under section 143(2) of the Act was ever issued and served on the assessee company and as such, the assessment so framed is null and void and deserves to be quashed.
It is further, submitted that that an assessee is entitled to raise a legal ground at any stage of the proceedings including on a reference or an appeal before the Hon'ble High Court. The Hon'ble Supreme Court, in the case of National Thermal Power Corporation Ltd. v. CIT reported in 229 ITR 383 has held that where all the material facts are on record and an additional ground raised is purely legal in nature, such ground should be admitted at any stage of the proceedings.
The assessee has raised the additional ground of appeal in the cross objection to this effect that the assessment order is without jurisdiction since no notice under Section 143(2) of the Act was ever issued and served on the assessee company and therefore, the assessment so framed is thus null and void and deserves to be quashed. As the additional ground sought to be raised is a legal ground and goes to the root of the matter and all the material facts are on record Thermal Power Corporation v. PCIT reported in 229 ITR 833 and Jute Corporation of India and is taken by us at the very threshold of the matter for adjudication.
6. The relevant facts, in brief, are that the assessee, engaged in trading of paddy and rice, filed its return of income on 30.09.2015 declaring loss at Rs. 35,07,58,801/. The same was processed under Section 143(1) of the Act and subsequently the case of the assessee was selected under CASS. Statutory notice under Section 143(2) of the Act was issued on 16.03.2016 through speed post and duly served on the assessee as mentioned by the Assessing Officer in the assessment order. The Learned Assessing Officer being ACIT, Central circle, New Delhi, on 7.4.2016, issued notice under Section 142(1) along with questionnaire asking for requisite details from the assessee and the assessment was finalized upon making addition of Rs. 35,05,89,182/- which in turn stood deleted by the First Appellate Authority, hence the instant appeal by the Revenue before us. The assessee has also filed cross objections.
7. The case made out by the assessee in the additional ground of objections before us is that no notice under Section 143(2) was ever received by the assessee, rather the same was never served upon the assessee. In that view of the matter the short point involved in this case to be considered by us is as to whether the notice jurisdiction by the Assessing Officer in scrutiny assessment.
At the time of hearing of the instant matter, Learned Senior Counsel Shri Salil Agarwal appearing for the assessee before us submitted to this effect that since the notice under Section 143(2) has never been served upon the assessee the entire assessment is void ab initio and liable to be quashed. In this regard he has further drawn our attention to the communication made by the Learned DR to the CIT Circle(1) New Delhi whereupon a report has been obtained stating that the fact of valid notice under Section 143(2) having not been issued and served upon the assessee is not correct and as per ITBA evidencing valid notice under Section 143(2) of the Act issued to the assessee on 16.2.2016 by the Commissioner, Central Circle-18, New Delhi was well within the prescribed limit as per provisions of the Act, copy whereof was attached to the said communication made to the Learned DR. In that view of the matter the allegation of lack of jurisdiction by the Assessing Officer is untenable and liable to be dismissed as all steps taken by the Learned ACIT circle 13(1) New Delhi has been brought to the notice of the Learned Senior Counsel Mr. Salil Agarwal, appearing on behalf of the assessee. In fact relying on the same communication he further argued that the notice dated 16.03.2016 which is claimed to have been issued and served upon the assessee though been annexed to the communication dated 12.11.2025, however, the proof notice under Section 143(2) of the Act ever made on the assessee and therefore, entire proceeding is vitiated and thus, liable to be quashed as argued by the Learned AR.
On the contrary, the Learned DR heavily relied upon the communication dated 26.11.2025 dealing with the e-mail daed 12.11.2025 requesting the concerned Commissioner Circle 13(1) New Delhi to send the requisite report/document. In reply thereto it was submitted that the records of the impugned case are not traceable and efforts are being made to trace out the record and the same would be furnished as soon as the records are traced out. He has further relied on further communication dated 12.11.2025.
As we have already discussed in the foregoing paragraph while recording the submissions made by the Learned Senior Counsel appearing for the assessee that as according to the Learned DR, the annexure to the said communication made by the ACIT Circle 13(1) New Delhi dated 12.11.2025 being the notice under Section 143(2) dated 16.03.2016 for A.Y. 2015-16 has been issued to the assessee but the Learned DR failed to produce the proof of service of such notice under Section 143(2) dated 16.03.2016 for A.Y. 2015-16 before us, under these facts and circumstances of the matter we find it fit and proper to hold that in the absence of 16.3.2016 under Section 143(2) of the Act scrutiny proceedings cannot be held to be valid. The plea of the department cannot be accepted on presumption basis.
Under these facts and circumstances of the matter we also granted 15 days’ time to the Learned DR to place on record the proof of service of notice under Section 143(2) before us which the Learned DR has again failed to produce. Thus, having no other alternative in the absence of the proof of service of the notice under Section 143(2) of the Act dated 16.03.2016 for A.Y. 2015-16 the entire proceeding is found to have been vitiated, void ab initio and therefore, quashed. Ordered accordingly.
Order pronounced in open court on 23.12.2025.