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Income Tax Appellate Tribunal, DELHI BENCH “SMC”, NEW DELHI
Before: SHRI H.S. SIDHU
ORDER The Assessee has filed the present appeal against the impugned order dated 09/1/2015 passed by the Ld. Commissioner of Income Tax (Appeals)-19, New Delhi on the following grounds:-
1. That the Ld. CIT(A) has erred in law and on facts in sustaining a disallowance of Rs. 11,47,123/- as against an addition of Rs. 16,58,000/- on account of alleged
unexplained income under section 69A of the Act.
1.1 That in doing so, the Ld. CIT(A) has ignored the basic fact that the cash deposited in bank account amounting to Rs.
16,58,000/- was duly explained to the Ld. CIT(A), which explanation has been arbitrarily rejected and that too on assumptions, presumptions, surmises and conjectures and hence the addition so sustained is unsustainable and liable to be deleted.
1.2 That the adverse findings recorded by the Ld. CIT(A) while sustaining the impugned addition has been recorded with preconceived notions and by arbitrarily brushing aside the detailed submissions / evidences / material placed on record, which were furnished in order to support the fact that no disallowance was called for in the instant case.
2. That the Ld. CIT(A) has grossly erred in sustaining the part
disallowance and that too, without providing to the assessee, a fair, proper and meaningful opportunity of being heard, thereby violating the principles of natural justice and thus, such an order of its vitiated both on fact and in law.
Assessee has also filed an Application for admission of additional ground of Appeal vide its Application dated 06.9.2016 in which the assessee has stated that in view of the settled decisions in the case of NTPC 229 ITR 383 (SC), (legal ground can be raised for first time in collateral and second round also). The legal ground can be very well raised for first before the ITAT which goes to the root of the matter. For the sake of convenience, the legal additional ground raised by the asseseee is reproduced as under:-
“That the assessment order dated 26.12.2008 passed by learned assessing officer is without jurisdiction and void-ab-initio and is liable to be quashed, as no notice under section 143(2) of the Act was issued and served on assessee – appellant.”
Ld. Counsel of the Assessee requested that keeping in view of the decision of the Hon’ble Supreme Court of India in the case of NTPC 229 ITR 383 (SC) (Supra), the additional ground raised by the assessee may be admitted and decided first.
On the contrary, Ld. DR strongly opposed the admission of additional ground (legal) raised by the assessee.
After hearing both the parties as well as perusing the additional ground alongwith the orders passed by the Revenue Authorities, I am of the considered view that in view of the decision of the Hon’ble Supreme Court of India in the case of NTPC Limited 229 ITR 383 (Supra), the additional ground raised by the assessee vide its Application dated 6.9.2016 is purely legal ground and did not require fresh facts which is to be investigated and goes to the root of the matter. In the interest of justice, I admit the aforesaid additional ground raised by the assessee, in view of the case law of NTPC Limited (Supra) and proceed to decide the additional ground first.
The facts in brief are that the assessee filed the return on 23.2.2007 at a total income of Rs. 1,01,850/-. The case of the assessee was selected for scrutiny based on AIR information that assessee had deposited cash of RS. 16,58,000/- in his account with Vijaya Bank, Vigyan Vihar Branch. As the assessee failed to respond to various notices issued 3 by the AO, the assessment was completed exparte under section 144 of the Income Tax Act, 1961 on 26.12.2008 and the entire cash deposit of Rs. 16,58,000/- was considered as the undisclosed income of the assessee.
Aggrieved with the aforesaid order dated 26.12.2008, assessee filed the Appeal before the Ld. CIT(A), who impugned order dated 09.1.2015 has partly allowed the appeal of the assessee.
Against the aforesaid order dated 26.12.2008 passed by the Ld. CIT(A), assessee is in appeal before the Tribunal.
At the time of hearing ld. Counsel of the assessee has only argued the additional ground i.e. legal ground in which he has stated that the assessment order dated 26.12.2008 passed by learned assessing officer is without jurisdiction and void-ab-initio and is liable to be quashed, as no notice under section 143(2) of the Act was issued and served on assessee. Therefore, the proceedings initiated are illegal, unsustainable and untenable under the law and needs to be quashed.
On the other hand, Ld. DR relied upon the order passed by the revenue authorities and opposed the request of the ld. Counsel of the assessee.
I have heard both the parties and perused the relevant records especially the order passed by the Revenue Authorities. I find considerable cogency in the assessee’s counsel submissions that the assessment order dated 26.12.2008 passed by the assessing officer is without jurisdiction and void-ab-initio and is liable to be quashed, as no notice under section 143(2) of the Act was issued and served on assessee. Therefore, the assessment proceedings initiated are illegal, unsustainable and untenable under the law. Hence, the assessment so framed by the AO is totally illegal and needs to be quashed. My view is fully supported by the following judgment of the Hon’ble Supreme Court of India, Hon’ble High Courts, Coordinate Benches of the ITAT decisions:-
ACIT & Anr. vs. Hotel Blue Moon: [(2010) 321 ITR 362 (SC)] ACIT & Anr. vs. Hotel Blue Moon: [(2010) 321 ITR 362 (SC)] ACIT & Anr. vs. Hotel Blue Moon: [(2010) 321 ITR 362 (SC)] ACIT & Anr. vs. Hotel Blue Moon: [(2010) 321 ITR 362 (SC)] HELD: “It is mandatory for the AO to issue notice u/s 143 (2). The issuance and service of notice u/s 143 (2) is mandatory and not procedural. If the notice is not served within the prescribed period, the assessment order is invalid Reassessment-----Notice----- Assessee intimating original return be treated as fresh return--- Reassessment proceedings completed despite assessee filing affidavit denying serviced of notice under section 143(2)---- Assessing Officer not representing before Commissioner (Appeals) that notice had been issued---- Reassessment order invalid due to want of notice under section 143(2)--- Income-tax Act, 1961, ss. 143, 147, 148(1), prov.----ITO v. R.K. GUPTA [308 ITR 49 (Delhi)Tribu.,” CIT vs. M/s Panorama Builders Pvt. Ltd. in Tax Appeal no. 435 of CIT vs. M/s Panorama Builders Pvt. Ltd. in Tax Appeal no. 435 of CIT vs. M/s Panorama Builders Pvt. Ltd. in Tax Appeal no. 435 of CIT vs. M/s Panorama Builders Pvt. Ltd. in Tax Appeal no. 435 of 2011 of Hon'ble Gujarat High Court 2011 of Hon'ble Gujarat High Court 2011 of Hon'ble Gujarat High Court 2011 of Hon'ble Gujarat High Court Issue Involved: "Whether non-issuance of the notice u/s 143(2) within the prescribed time, made the whole block assessment order null and void and bad in law, despite the assessee not having raised any objection before the passing of the assessment order and despite the provisions of section 292BB of the Act? " Held: “In this case, Hon'ble High Court has held that section 292BB cures the defects in service of notice but section 292BB is 'confined to only service of notice under this Act and this section does not apply to 'Issuance of notice' under the provisions of Act. It does not lay down that if a mandatory notice is required to be issued by the assessing officer and it has not been issued within the period of limitation fixed under the law, then such notice shall be deemed to have been issued within time. It has been further held that resort cannot be taken by the Revenue to section 292BH to give a go-bye to mandatory requirement of issuance of notice within the statutory fixed by the proviso to section I43(2) of the Act.” CIT vs Rajeev Sharma 336 ITR 678, High court of Allahabad. CIT vs Rajeev Sharma 336 ITR 678, High court of Allahabad. CIT vs Rajeev Sharma 336 ITR 678, High court of Allahabad. CIT vs Rajeev Sharma 336 ITR 678, High court of Allahabad. “In view of above submissions and case laws, it has been established that no notice u/s 143(2) was issued in the present case and therefore the impugned assessment is liable to be annulled.” M/s Sapthagiri Finance and Investments vs. ITO: TC(A). No. 159 of M/s Sapthagiri Finance and Investments vs. ITO: TC(A). No. 159 of M/s Sapthagiri Finance and Investments vs. ITO: TC(A). No. 159 of M/s Sapthagiri Finance and Investments vs. ITO: TC(A). No. 159 of 2006 dated 17.07.2012 (Mad HC) [(2013) 90 DTR (Mad) 289] 2006 dated 17.07.2012 (Mad HC) [(2013) 90 DTR (Mad) 289] 2006 dated 17.07.2012 (Mad HC) [(2013) 90 DTR (Mad) 289] 2006 dated 17.07.2012 (Mad HC) [(2013) 90 DTR (Mad) 289] Relevant para reproduced here under: "13. As far as the present case is concerned, the provisions of Section 148 also uses the expression "so far as may be apply accordingly as if such return were a return required to be furnished under Section 139". Thus, understanding this provisions in the background of the decision of the Apex Court, on the facts available, we are of the view that in completing the assessment under Section 148 of the Act, compliance of the procedure laid down under Sections 142 and 143 (2) is mandatory. On the admitted fact that beyond notice under Section 142(1), there was no notice issued under Section 143(2), and in the light of the fact that the very basis of the reassessment was the failure on the part of the assessee in not disclosing the capital gains arising on the transfer of property for assessment and that admittedly the assessee had requested the officer to accept the original return as a return filed in response to Section 148 of the Act, we hold that there was total failure on the part of the Revenue from complying with the procedure laid down under Section 143(2) of the Act, which is mandatory one as held by the Apex Court.” Alpine Electronics Asia Pte Ltd. vs. DGIT & Ors: [(2012) 341 ITR 247 Alpine Electronics Asia Pte Ltd. vs. DGIT & Ors: [(2012) 341 ITR 247 Alpine Electronics Asia Pte Ltd. vs. DGIT & Ors: [(2012) 341 ITR 247 Alpine Electronics Asia Pte Ltd. vs. DGIT & Ors: [(2012) 341 ITR 247 (Del) (Del) (Del) (Del) Held: “The service of notice u/s 143(2) within the statutory time limit is mandatory and is not an inconsequential procedural requirement. Omission to issue notice u/s 143 (2) is not curable and the requirement cannot be dispensed with. S. 143(2) is applicable to proceedings u/s 147 & 148.” JYOTI PAT RAM VS. ITO [(2005) 92 ITD 423 (Lucknow) JYOTI PAT RAM VS. ITO [(2005) 92 ITD 423 (Lucknow) - ShreeJai JYOTI PAT RAM VS. ITO [(2005) 92 ITD 423 (Lucknow) JYOTI PAT RAM VS. ITO [(2005) 92 ITD 423 (Lucknow) ShreeJai ShreeJai ShreeJai Shiv Shonhor Traders (P) Ltd. - A.Y. Shiv Shonhor Traders (P) Ltd. A.Y. - 2008 2008-09 09 Shiv Shonhor Traders (P) Ltd. Shiv Shonhor Traders (P) Ltd. A.Y. A.Y. 2008 2008 09 09 “Reassessment order passed under section 143(3)/148 without issue of a valid notice under section 143(2) was illegal.” RAJ KUMAR CHA WLA AND ORS. VS. ITO - (2005) 94 ITD 1 RAJ KUMAR CHA WLA AND ORS. VS. ITO (2005) 94 ITD 1 RAJ KUMAR CHA WLA AND ORS. VS. ITO RAJ KUMAR CHA WLA AND ORS. VS. ITO (2005) 94 ITD 1 (2005) 94 ITD 1 (Del)(SB) (Del)(SB) (Del)(SB) (Del)(SB) Limitation for re-assessment- Service of notice u/s143(2) in time - A.Y.1995-96. “It was presumed by legal fiction that a return filed uls 148 of the Income Tax Act 1961 would be treated as a return filed u/s 139 of the Act. The assessee had filed its return in response to a notice issued u/s 148 of the Income Tax Act 1961. The service of notice u/s143(2) of the Act within 12 months of filing the return u/s 148 of the Act was mandatory, but the notice had been served beyond 12 months. Therefore, as the re-assessment was barred by limitation, no re- assessment could be made u/s 143(3) r/w S.147 of the Act.- ITAT Delhi ‘F’ Special Bench.” CIT & Anr. Vs. Bihari Lal Agrawal (Allahabad High Court) reported CIT & Anr. Vs. Bihari Lal Agrawal (Allahabad High Court) reported CIT & Anr. Vs. Bihari Lal Agrawal (Allahabad High Court) reported CIT & Anr. Vs. Bihari Lal Agrawal (Allahabad High Court) reported in 346 ITR 67 in 346 ITR 67 in 346 ITR 67 in 346 ITR 67
We also may mention here that the question of section 292BB of the Act pressed into service by the Revenue herein came up for consideration before this court in Income Tax Appeal No.286 of 20 11, decided on November 23, 2011 (ClT v. Mukesh Kumar Agrawal since reported in [2012l 345 ITR 29 (All)) and this court has held that the proviso to section 292BB is not applicable in a case where the authority did not have jurisdiction to proceed further and male assessment. Hon’ble Delhi High Court in the case CIT vs. Delhi Kalyan Samiti Hon’ble Delhi High Court in the case CIT vs. Delhi Kalyan Samiti Hon’ble Delhi High Court in the case CIT vs. Delhi Kalyan Samiti Hon’ble Delhi High Court in the case CIT vs. Delhi Kalyan Samiti vide dated 22.3.2016 held as under: vide ITA No. 696/2015 dated 22.3.2016 held as under:- vide ITA No. 696/2015 dated 22.3.2016 held as under: vide ITA No. 696/2015 dated 22.3.2016 held as under:
Mr. Jain’s contention that a belated return filed by the assessee prior to the assessee cannot be ignored as an invalid return, prima facie, appears to be merited. However, in the facts of the present case, the said question does not arise as the AO had issued a notice under section 142(1) of the Act on 30th November, 2011, inter alia, calling upon the assessee to file its return. Further, on 10th
December, 2007, the AO was informed that the Assessee was in the process of filing its reutnr and an adjournment was requested.
The AO had acceded to his request, which would be wholly unnecessary if the AO was of the view that a belated return would be invalid. Thus, in the facts of the present case, the returns filed by the assessee could not be ignored by the AO.”
In the background of the aforesaid discussions and respectfully following the precedents as aforesaid, I am of the considered view that the Jurisdictional AO has not issued any notice u/s 143(2) of the I.T. Act to the assessee, hence, the assessment order in dispute is invalid, void abnitio and against the provisions of the law and is not sustainable in the eyes of law. Therefore, the assessment order as well as the appellate order stand cancelled and appeal of the assessee stands allowed.
In the result, the appeal of the Assessee is allowed.
Order pronounced in the Open Court on 17/02/2017.