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Income Tax Appellate Tribunal, “D” BENCH : KOLKATA
Before: Hon’ble Shri M.Balaganesh, AM & Hon’ble Shri S.S.Viswanethra Ravi, JM]
ORDER Per M.Balaganesh, AM
This appeal by the Revenue arises out of the order of the Learned Commissioner of Income Tax(Appeals)-12, Kolkata [in short the ld CIT(A)] in Appeal No.154/CIT(A)- 12/Kol/Ward-42(3)/2015-16 dated 18.11.2016 against the order passed by ITO, Ward- 42(3), Murshidabad [ in short the ld AO] under section 147/143(3) of the Income Tax Act, 1961 (in short “the Act”) dated 29.01.2016 for the Assessment Year 2011-12.
The only effective issue involved in this appeal of the revenue is as to whether the ld CITA was justified in holding the re-assessment framed in the hands of the assessee as bad in law, in the facts and circumstances of the case.
2 Shri Bikash Das A.Yr. 2011-12 3. The brief facts of this appeal is that a notice u/s 148 of the Act dated 15.10.2014 was served on the assessee on 17.10.2014 on the ground that there were certain cash deposits in the bank account maintained with Axis Bank , Berhampore Branch for the financial year 2010-11 to the tune of Rs 76,35,000/- based on AIR information and accordingly, the ld AO concluded that he had reason to believe that income had escaped assessment in the hands of the assessee. In response to the said notice u/s 148 of the Act, the assessee filed a letter dated 14.11.2014 stating that he is working as an accountant of a retail shop of spare parts earning Rs 3,000/- per month as salary and that his annual income was only Rs 36,000/-. Accordingly, it was pleaded by the assessee that he is not obligated as per law to file any return of income. This reply letter was sought to be treated by the assessee as a reply in response to notice u/s 148 fo the Act issued by the ld AO. The ld AO thereafter on request of the assessee also furnished the reasons recorded for reopening of the assessment to the assessee. The assessee during the course of re-assessment proceedings claimed that his father is a rickshawpuller and his mother is a maid servant. He informed that Shri Sumit Chatterjee, S/o Supriyo Chatterjee , residing at 4, S.N.Bagchi Road, Berhampore had opened the said SB Account with Axis Bank in his name showing proof of identities and evidences without taking his consent or signature. He stated that he was residing at their house from his childhood with his mother who was working there as maid servant. He further stated that the identities and evidences in his name required to open such bank account were kept in their custody which was used by them for opening the bank account. Accordingly he completely denied the maintaining of such bank account and the monies deposited thereon as not belonging to him in the sum of Rs 76,35,000/-. The assessee further reiterated vide separate letter dated 8.6.2015 opposing that he is not holder of bank account in Axis Bank and also enclosed a copy of compliant lodged against Shri Sumit Chaterjee (PAN AHDPC4883D) by him before Berhampore Police Station vide GDE / CASE No. 2384 dated 23.5.2013. The assessee also appeared personally before the ld AO and filed a written submission explaining the entire facts of the case with a 2
3 Shri Bikash Das A.Yr. 2011-12 request to drop the proceedings initiated against him as his annual income is not more than Rs 36,000/- and by reiterating that the deposits in the Axis Bank in the sum of Rs 76,35,000/- does not belong to him and were indeed done by Shri Sumit Chaterjee without his knowledge. The assessee again appeared before the ld AO on 10.12.2015 and filed a written submission reiterating the earlier submissions and also filed an affidavit dated 14.10.2015 confirming the submissions already made. The assessee again appeared before the ld AO on 15.1.2016 and 27.1.2016. The ld AO however held that the cash deposits in the sum of Rs 76,35,000/- made in the bank account stood unexplained by the assessee and the statements of the assessee is sub-judice and hence cannot be accepted until and unless the GDE/ CASE No. 2384 dated 23.5.2013 of Berhampore Police Station is settled , establishing that the holder of the bank account is Shri Sumit Chatterjee and not the assessee herein. Accordingly the sum of Rs 76,35,000/- (representing cash deposits) and Rs 750/- (representing interest) were added to the total income of the assessee as his income from undisclosed sources.
Before the ld CITA, the assessee raised a preliminary objection that the notice u/s 143(2) of the Act was never issued and served on the assessee before the completion of re-assessment proceedings eventhough the assessee had duly submitted a written reply in response to notice u/s 148 of the Act as early as 14.11.2014 itself ( i.e within 30 days from the issue of notice) . The ld CITA called for a remand report from the ld AO in this regard , wherein the ld AO stated as under:-
“Notice u/s 148 of the IT Act 1961 was issued upon the assessee on 15.10.2014 and served on him with his signature on 17.10.2014 with the departmental notice server and the notice u/s 142(1) was issued on 06.10.2015 and served by post (with acknowledgement). In response of the said notices the assessee appeared without submission of any return of income . He submitted some other documents and an affidavit. As no return of income was submitted in response of the notice u/s 148 and 142(1) , there was no scope for the issuance of notice u/s 143(2).”
4 Shri Bikash Das A.Yr. 2011-12 5. The ld CITA on perusal of the records and the facts of the present case, found that no notice was issued u/s 143(2) of the Act by the ld AO after the issuance of notice u/s 148 of the Act and accordingly cancelled the reassessment framed by the ld AO in the hands of the assessee as bad in law. Aggrieved, the revenue is in appeal before us.
We have heard the rival submissions. The preliminary issue to be decided is whether the re-assessment framed by the ld AO without issuance of notice u/s 143(2) of the Act after the issuance of notice u/s 148 of the Act, could be held to be valid as per law. We find that the notice u/s 148 of the Act was served on the assessee on 17.10.2014. The assessee vide his letter dated 14.11.2014 ( i.e within 30 days from the date of issue) had submitted a reply that his annual income is only Rs 36,000/- and accordingly not obligated to file return of income. It was further pleaded in the said letter that the said reply may be treated as a reply filed in response to notice u/s 148 of the Act. In our considered opinion, the said reply would have to be effectively construed as Nil return filed by the assessee as according to law, he was not obligated to file return of income. The assessee had duly responded to the notice u/s 148 of the Act. We further find that the ld AO had duly taken cognizance of this letter dated 14.11.2014 of the assessee and had further proceeded with the re-assessment proceedings by duly furnishing the reasons recorded for reopening the assessment based on request made by the assessee in that regard. Hence it cannot be said that the assessee had not replied to the notice u/s 148 of the Act. In these facts and circumstances, it is incumbent on the part of the ld AO to issue separate notice u/s 143(2) of the Act by treating the letter dated 14.11.2014 containing the income details of the assessee, as return filed in response to notice u/s 148 of the Act. It is not in dispute that the notice u/s 143(2) of the Act was never issued and served on the assessee after the issuance of notice u/s 148 of the Act. We find that the Hon’ble Jurisdictional High Court in its recent judgement in the case of PCIT vs Oberoi Hotels Pvt Ltd in ITAT No. 152 of 2015 GA No. 3671 of 2015 dated 22.6.2018 by placing reliance on the decision of Hon’ble Supreme Court in the case of CIT vs 4
5 Shri Bikash Das A.Yr. 2011-12 Hotel Blue Moon reported in 321 ITR 362 (SC) had held that issuance and service of notice u/s 143(2) of the Act within the prescribed time is mandatory in nature and non- compliance of the same cannot be cured even u/s 292BB of the Act . Hence respectfully following the said decision and in view of the undisputed fact that no notice u/s 143(2) of the Act was issued and served on the assessee, we find no infirmity in the order of the ld CITA cancelling the re-assessment order as unsustainable in law. Accordingly, the grounds raised by the revenue are dismissed.
In the result, the appeal of the revenue is dismissed.
Order pronounced in the Court on 13.07.2018