M/S PRINT-FAB (INDIA) P. LTD.,NEW DELHI vs. ITO, NEW DELHI

ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 12/08/2013 of learned Commissioner of Income-tax (Appeals)-XVII, New Delhi, for assessment year 2003-04, raising following grounds , which are revised on 22.02.2016:

2. That on the facts and circumstances of the case and in law, the CIT(A) has erred in not appreciating that the assessment was not validly reopened, for no valid notice 148 dated 25.3.2010 was issued and notice served through affixture was also invalid.

3. That on the facts and circumstances of the case and in law, the CIT(A) erred in not appreciating that before reopening the assessment , the Assessing Officer did not apply mind to the information received from Investigation Wing and that there was no tangible material to reopen the assessment.

4. Without prejudice, on the facts and circumstances of the case and in law, the reassessment dated 23.12.2010 was bad in law as no notice under section 143(2) of the Act was issued before completing the assessment under section 147 /143(3) of the Act.

5. That on the facts and circumstances of the case and in law, the CIT(A) has erred in upholding the addition of Rs. 17,52,000/- under section 68 of the Act, as bogus accommodation entry.

6. That the Appellant craves leave to add, alter, amend or vary any of the ground either at or before the hearing of the appeal.

as reproduced above.

3. In ground No. 4, the assessee has challenged the reassessment proceedings on the ground that no notice under section 143(2) of the Act was issued before expiry of the time limit for making the reassessment. 3.1 Before us, the learned Authorized Representative of the assessee referring to para 7.5 of the impugned order, submitted that learned Commissioner of Income-tax (Appeals) has clearly admitted that no notice under section 143(2) was issued before completion of the reassessment proceedings. He drawn our attention towards judgment dated 22/03/2016 of Hon’ble Jurisdictional High Court in the case of CIT Vs. Delhi Kalyan Samiti in to 699/2015 wherein the reassessment proceedings in absence of issue of notice under section 143(2) are held as invalid. He, accordingly, submitted to quash the reassessment proceedings. 3.2 On the contrary, the learned Senior Departmental Representative relied on the authorities below.

3.3 We have heard the rival submissions and perused the material on record. In the case, the Assessing Officer issued notice under section 148 of the Act on 25/03/2010, directing the assessee to file the return of income. In response thereof, the assessee filed return of income on 09/10/2010. Thereafter, the assessee attended the office of the Assessing Officer and the assessment was completed, however, from the assessment order, it is seen that no notice under section 143(2) of the Act was issued. The fact that no notice under section 143(2) of the Act was issued before completion of the reassessment proceedings under section 147 of the Act, has been duly accepted by the learned Commissioner of Income-tax (Appeals), however, he held that non-issue of notice under section 143(2) of the Act did not render the reassessment as invalid. Thus, in our view, the fact that no notice under section 143(2) of the Act was issued before completion of the reassessment proceedings is not in dispute between the parties. Now, the only issue is whether the reassessment proceedings in absence of notice under section 143(2) of the Act are invalid. In the judgment of CIT Vs. Delhi Kalyan Samiti (supra), the Revenue challenged the findings of the Tribunal that the assessment order in question having been passed without issuing notice under section 143(2) of the Act was invalid. In that case notice under section 148 of the Act was issued on 29/03/2007, however, the assessee objected to the reopening of the assessment. Thereafter, the Assessing Officer issued notice under section 142(1) of the Act to file the return of income as well as to furnish details as per questionnaire. Subsequently, the assessee filed return of income on 19/12/2007, however, the same was not taken note by the Assessing Officer and he proceeded to pass assessment order under section 144 read with section 147 of the Act, without issuing any notice under section 143(2) of the Act. The Hon’ble Jurisdictional High Court after considering earlier judgments on the issue in dispute observed that whenever the return filed by the assessee is not accepted at its face, it is mandatory for the Assessing Officer to issue notice under section 143(2) of the Act for proceeding further. The Hon’ble Court did not find any infirmity in the order passed by the Tribunal and the appeal of the Revenue was dismissed. The relevant observations of the Hon’ble High Court are as under: “9. It is now well established that if the AO does not accept the return filed by the Assessee on its face and he is required to issue a notice under Section 143(2) of the Act and provide an opportunity to the Assessee to produce the necessary material in support of his return. Mr Shivpuri had argued that a notice under Section 143(2) was required to be issued only in cases where the AO considers it necessary or expedient to do so and in cases where the Assessee had not filed its response to the notice under Section 142(1) it was not necessary for the AO to issue such notice under Section 143(2). In our view, this contention is bereft of any merits and completely ignores the scheme of the machinery provisions for assessment under the Act. It is now well settled by a number of decisions (See: Pr. CIT Silver Line and 283 CTR 148 (Del), ACIT v. Hotel Blue Moon: 321ITR 362 (SC) and CIT v. PawanGupta: 318 ITR 322 (Del)) that whenever the return filed by an Assessee is not accepted at its face, it is mandatory for the AO has to issue a notice under Section 143(2) of the Act for proceeding further. It is thus not open for the AO to not issue a notice under Section 143(2) of the Act and proceed directly under Section 144 of the Act by rejecting the return filed by the Assessee.

3.4 Thus, the Hon’ble High Court in the above case has clearly held that in reassessment proceedings under section 147 of the Act, issuing notice under section 143(2) of the Act is mandatory and, therefore, in absence of which, the reassessment proceedings are invalid. Therefore, respectfully following the findings of the Hon’ble High Court in the case of CIT Vs. Delhi Kalyan Samiti (supra), we hold that in absence of issue of notice under section 143(2) of the Act before completion of the reassessment proceedings in the case of the assessee, the reassessment proceedings are held as invalid and not in accordance with law. Accordingly, the ground of the appeal is allowed.