VEERENDRA SINGH ,JALAUN vs. ITO,W 2(1)(5),ORAI, JALAUN
Facts
The assessee's case was reopened under section 147 of the Income Tax Act, 1961, based on AIR information regarding cash deposits. The Assessing Officer (AO) believed income had escaped assessment and initiated reassessment proceedings. A notice under section 148 was issued, and the AO made additions to the assessee's income.
Held
The Tribunal held that the reassessment order was bad in law because the Assessing Officer failed to issue a notice under section 143(2) of the Act, which is mandatory even in reassessment proceedings. Several judicial precedents were cited in support of this view.
Key Issues
Whether the reassessment order is liable to be quashed due to the non-issuance of notice u/s 143(2) by the AO.
Sections Cited
147, 148, 143(2), 44AD, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’, AGRA BENCH, AGRA
Before: SHRI RAMIT KOCHAR
PER RAMIT KOCHAR, AM:
This appeal in ITA No. 169/Agr/2022 filed by the assessee for the Assessment Year 2011-12 has arisen from the appellate order dated 23.08.2022 in
DIN & Order No. ITBA/NFAC/S/250/2022-23/1044863445(1) passed by the Commissioner of Income Tax (Appeals) (NFAC), Delhi u/s 250 of the Income-tax Act, 1961 (“the Act”), which appeal before learned CIT(A), National Faceless
2 ITA no. 169/Agr/2022 Appeal Centre (NFAC), Delhi had arisen from the reassessment order dated
30.11.2018 passed by the Assessing Officer u/s 147 of the Act.
Grounds of appeal raised by the assessee in memo of appeal filed with the
Income Tax Appellate Tribunal, Agra Bench, Agra, read as under:
“1. That the Present assessment order is bad in the eyes of law and liable to be quashed as the Ld' AO completed the assessment proceedings without issuing and serving the notice u/s 143(2) of the Income Tax Act-1961. 2. That the Present assessment order is bad in the eyes of law and liable to be quashed as the reasons recorded by the Ld AO are factually incorrect and without application of mind. Further the necessary approvals taken are also without application of mind. 3. The Ld. CIT (A) is not justified in law and on facts in confirming the addition of Rs. 950000/- made by the Ld AO. The addition of Rs.950000/- done by Ld AO is liable to be deleted.”
Brief facts of the case are that the case of the assessee was reopened by the
Revenue u/s 147 of the Act for reassessment of the concluded assessment, with the
approval of the competent authority. A notice u/s 148, dated 23.03.2018, was
issued by the Assessing Officer to the assessee, requiring the assessee to file return
of income in pursuance to notice u/s 148. The assessee sought adjournments from
time to time. The case of the assessee was reopened based upon AIR information
that assessee had deposited cash of Rs. 26,78,350/- in his bank account during the year under consideration. The Assessing Officer observed “It is a No PAN case & No Return is found on records”. Hence, the Assessing Officer had reasons to
3 ITA no. 169/Agr/2022 believe that income of assessee to the tune of Rs. 26,78,350/- had escaped
assessment within the meaning of section 147 of the Act, and proceedings u/s 147
were initiated against the assessee. The Assessing Officer issued questionnaire to
the assessee. The AO has recorded in the assessment order that the assessee filed
his return of income on 16.7.2018 in response to notice u/s 148 of the Act as is
emerging from the reassessment order passed by the Assessing Officer. So far as
merits of the additions are concerned, the Assessing Officer made additions to the
tune of Rs. 13,81,377/- in the hands of the assessee, being interest income from
bank account to the tune of Rs. 21,882/-; unexplained cash deposit Rs. 55,000/-;
unsecured loan raised in cash to the tune of Rs. 9,50,000/-; and unexplained
investment in cash purchases to the tune of Rs. 3,54,495/-. Aggrieved, assessee
filed first appeal to the learned CIT(Appeals) and the CIT(Appeals) partly allowed
the appeal of the assessee. Now the assessee is in appeal before Tribunal.
At the outset, learned counsel for the assessee submitted and drew our
attention to page nos. 28 to 31 of the paper book in which copy of the ITR filed
originally u/s 139 for the impugned assessment year is placed. It was submitted
that it was an erroneous finding on the part of the AO that no return was filed by
the assessee originally u/s 139 of the Act. The assessee is engaged in retail sale of
liquor and the assessee has availed presumptive scheme of taxation u/s 44AD of
the Act and on gross turnover of Rs. 19,07,263/-, the assessee computed income of
4 ITA no. 169/Agr/2022 Rs. 1,52,589/- u/s 44AD which was offered for taxation under the presumptive
scheme u/s 44AD of the Act.
4.1 Learned counsel for the assessee also submitted that the said return of
income was processed by the Revenue and refund of Rs. 16,610/- was issued to the
assessee on 7.11.2012. Learned counsel for the assessee also drew my attention to
the e-portal information downloaded from the e-portal of the IT Department in
which it is mentioned that the assessee has filed return of income 18.09.2011 and
the ITR filed was received by the CPC on 14.10.2011 which was processed on
1.2.2012 and refund was issued on 7.11.2012. Thus it was submitted that it was
wrong to conclude that the assessee has not filed return of income originally u/s
139 of the Act. It was also submitted and my attention was drawn to ground no. 1
raised by the assessee in memo of appeal filed with the Tribunal in which assessee
has raised legal issue that the reassessment order is liable to be quashed as the
same has been passed without issuing and serving notice u/s 143(2) of the Act.
Learned counsel for the assessee relied upon several judicial pronouncements in
support of his contention as under:
(1) Hon’ble Delhi High Court’s judgment & order in the case of PCIT v. Dart Infrabuild Pvt. Ltd. (2024) 460 ITR 532 (Delhi);
5 ITA no. 169/Agr/2022 (2) Hon’ble Delhi High Court’s judgment & order in the case of Indus Towers Limited v. DCIT dated 29.5.2017 [2017 (6) TMI 24 – Delhi High Court]
(3) Learned counsel for the assessee also relied upon the decision of the Hon’ble Supreme Court in the case of ACIT & Another v. M/s Hotel Blue Moon (2010) 321 ITR 362 (SC) dated 02.02.2010.
4.2 Learned counsel for the assessee has also relied upon large number of
judicial precedents which are placed in paper book filed by the assessee. A
contention was raised by the learned counsel for the assessee that the reassessment
order passed by the AO is liable to be quashed.
Learned Sr. DR on the other hand submitted that no return of income was
filed in pursuance to notice u/s 148 of the Act. It was submitted that the Bench had
directed to produce the assessment record which was duly produced before the
Bench. On legal ground the learned Sr. DR submitted that reopening was validly
done and it is the assessee who has not filed return of income in response to notice
u/s 148 of the Act and hence there is no requirement to issue notice u/s 143(2) of
the Act.
I have considered rival contentions and perused the material available on
record. It is observed that on the basis of AIR information, case of the assessee was
reopened by the Assessing Officer u/s 147 of the Act. It is stated by the Assessing
6 ITA no. 169/Agr/2022 Officer that it is a case of ‘no return and no PAN’. There was deposit of cash to the
tune of Rs. 26,78,350/- in the bank account of the assessee which purportedly, as
per Revenue, has escaped assessment within the meaning of section 147 of the Act
leading to the reopening of the concluded assessment. I have observed that notice
u/s 148 dated 23.3.2018 was issued to the assessee. The assessee has filed return of
income originally u/s 139 of the Act which is placed in paper book pages 28 to 31.
Thus, it was an erroneous finding on the part of the Assessing Officer while
reopening of the assessment u/s 147 that the assessee has not filed return of
income. Further, I observe that the assessee has duly filed return of income before
the Assessing Officer during the reassessment proceedings. However, while filing
return of income the wording used by the assessee was not happily worded.
However, from the assessment order it is clear that the Assessing Officer has
clearly stated that the assessee has filed return of income on 16.7.2018 in response
to notice u/s 148 of the Act. The statutory authorities have to be very careful while
framing the orders and from the wordings used by the Assessing Officer it is very
clear that he has taken the filing of the original return of income u/s 139 by the
assessee to be a return filed in response to notice u/s 148. Be that as it may, the
Assessing Officer is under obligation to issue notice u/s 143(2) of the Act. There
are large number of judicial precedents relied upon by the assessee which support
the stand of the assessee, three of which are as under:
7 ITA no. 169/Agr/2022 (1) PCIT v. Dart Infrabuild Pvt. Ltd. (2024) 460 ITR 532 (Delhi);
(2) Indus Towers Limited v. DCIT dated 29.5.2017 [2017 (6) TMI 24 – Delhi High Court]
(3) ACIT & Another v. M/s Hotel Blue Moon (2010) 321 ITR 362 (SC) dated 02.02.2010.
6.1 Thus, keeping in view the legal position as emerging from the several
judicial precedents which have taken the consistent stand that issue of notice u/s
143(2) is mandatory even in reassessment proceedings, hence the reassessment
order framed by the Assessing Officer u/s 147 of the Act is not sustainable in the
eye of law and is liable to be quashed. Thus, I order quashing of the reassessment
order dated 30.11.2018 passed by the Assessing Officer u/s 147 of the Act.
6.2 Since I have adjudicated on the ground no. 1 raising legal issue that the re-
assessment order passed by the Assessing Officer without issuance of notice u/s
143(2) of the Act was bad in law and not liable to be sustained, I refrain to
adjudicate the other issues raised by the assessee on merits. Thus the appeal of the
assessee is allowed in the manner as indicated above.
Order pronounced in the open court on 19.02.2025.
Sd/- (Ramit Kochar ) ACCOUNTANT MEMBER Dated: 19.02.2025.
8 ITA no. 169/Agr/2022 PS: *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT AGRA
