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Income Tax Appellate Tribunal, “SMC” BENCH KOLKATA
Before: SHRI RAJESH KUMAR & SHRI SONJOY SARMA
Present for: Appellant by : Shri P. K. Himatsinghka, AR Respondent by : Shri Ankur Goyal, JCIT, Sr. DR. Date of conclusion of Hearing : 22.02.2024 Date of Pronouncement : 26.02.2024 O R D E R
Per Sonjoy Sarma, Judicial Member:
This appeal has been preferred by the assessee against the order dated 25-05-2023 of the Ld. Commissioner of Income-tax, Appeals, National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’], passed u/s. 250 of the Income-tax Act, 1961 hereinafter referred to as ‘the Act’ for the AY 2017-18.
The assessee has raised the following grounds of appeal before this Tribunal: “1. That under the facts and circumstances of the case, the notice u/s 148 dated 31.03.2021 issued on 01.04.2021 is barred by limitation, the notice therefore is illegal, bad in law and the whole proceedings consequent to invalid notice is void-ab-initio.
2. That under the facts & circumstances of the case, the notice issued u/s 148 on dated 01.04.2021 without issue of notice u/s 148A and without complying mandatory procedure contained u/s 148A is without jurisdiction, the notice so issued is unlawful, illegal, bad in law and liable to be quashed, and subsequent proceeding continued with such non-jurisdictional notice are also not sustainable in law and void-ab-initio.
Ranicherra Tea Co. Ltd., AY 2017-18 3. That the assessment order dated 30.03.2022 has been framed u/s 147 r.w.s 144B of Income Tax Act without complying mandatory condition of satisfaction note mentioned u/s 153C, the assessment & consequent demand are not sustainable in law.
That under the facts and circumstances of the case, re-opening proceeding has been initiated u/s 148 r.w.s 147 of I.T. Act, 1961, on the basis of vague, arbitrary and suspicious reasoning without attaching the report of investigation wing and without bringing any tangible material on record and without linking the assessee that Income chargeable to tax has escaped assessment.
For that the approval for initiation of reopening proceedings u/s.148 has not been taken from appropriate authorities u/s. 151 of I. T. Act, 1961, the notice is therefore illegal & void-ab-initio.
6. That under the facts & circumstances of the case, Ld. CIT(A) erred in confirming the order made by AO in making addition of Rs. 22,00,029/- unsecured loan received from Kamalraj Tradelink Pvt. Ltd. u/s. 68 as an unexplained cash credit despite the assessee had discharged the onus that lay on the assessee by producing sufficient documentary evidences, the addition therefore liable to be deleted.
That the re-opening proceeding has been initiated at the dictate from higher authorities mechanically without any application of mind, is impermissible in law.
8. For that the addition of unsecured loan of Rs. 22,00,029/- is illegal, unjustified and bad in law, when the loan amount were returned in subsequent month along with the interest and TDS thereon deducted from payment of interest.
9. That the appellant craves to add or amend any ground of appeal on or before the date of hearing.”
Brief facts of the case are that assessee filed its return of income for the AY 2017-18 by showing total income at Rs.19,54,260/-. Subsequently, case of the assessee was reopened u/s. 147 of the act by stating that reasons for reopening of the case of the assessee prior to issue of notice u/s. 148 of the Act. In response to the notice, assessee has filed its return of income followed by statutory notice u/s. 143(2) as well as 142(1) of the Act calling various details and documents in connection with the reassessment proceeding. In compliance to the notice, assessee filed and submitted various documents before the AO. During the assessment proceeding, Ld. AO noticed that assessee has received Rs.22,00,029/- from M/s. Kamalraj Tradelink Pvt. Ltd. during
Ranicherra Tea Co. Ltd., AY 2017-18 the FY 2016-17 and it also found from the data of MCA that M/s. Kamalraj Tradelink Pvt. Ltd. from whom the assessee has received the alleged money are paper/shell company and are providing accommodation entries in the nature of bogus unsecured loans to the assessee. The Ld. AO after examining the various documents and case laws relied on found that alleged purported loan amount of Rs.22,00,029/- is treated as a cash credit in the hands of assessee whose nature and source are not explained, therefore, treated it assessee’s income as envisaged in section 68 of the Act. Aggrieved by the above order, assessee went into appeal before the Ld. CIT(A) wherein the assessee raised various grounds. However, appeal of the assessee was dismissed. Dissatisfied with the above order, assessee is in appeal before the Tribunal raising multiple grounds of appeal. However, the first two grounds in the instant appeal are on the issue of law point by which the assessee stated that the notice issued u/s. 148 of the Act dated 31.03.2021 issued on 01.04.2021 is barred by limitation, therefore, it is an illegal notice which is bad in law. Therefore, the instant proceeding consequent to such invalid notice is void ab initio. Similarly, in the present facts and circumstances of the case, the alleged notice issued u/s. 148 dated 01.04.2021 was issued to the assessee without issuing of notice u/s. 148A of the Act without complying the mandatory procedure as contained u/s. 148A is bad in law, liable to be quashed. Therefore, subsequent proceedings in terms of non-jurisdictional notice are also not sustainable in law and void ab initio.
4. The Ld. AR stated before the Bench that as per assessee’s e-mail address the alleged notice was served on 01.04.2021, the extract is stated as under:
Ranicherra Tea Co. Ltd., AY 2017-18
5. The Ld. AR in this regard brought to our notice the judgment of Hon’ble High Court at Calcutta in W.P. No. 4382 of 2022 Marudhar Vintrade Private Limited Vs. Union of India & Ors. wherein the Hon’ble High court clearly stated that the statutory notice issued u/s. 148 of the Act was signed on 31.03.2021 but same was uploaded for communication on 01.04.2021. The relevant extract of the judgment of the Hon’ble High Court is as under: “Learned advocate for the respondent was asked as to whether final assessment order has already been passed or not in this case to which he submits that final assessment order has already been passed. He further submits on the basis of record that the impugned notice under section 148 of the 1961 Act, though it bears date and signature of the authority showing that it was singed on March 31, 2021, but it was actually uploaded for communication on April 1. 2021 at 3 a.m which has to be treated as date of issuance of the impugned notice. Considering these facts, I am of the considered view that this case clearly falls under the amended Act relating to proceedings under section 147 of the Act under which issuance of notice under section 148A of the Act is mandatory before issuing any notice under section 148 of the amended Act which has not been complied with in this case. Considering the above facts and circumstances of the case and In view of the order of this court in the case of Bagaria Properties and Investment Private Limited & Anr. v. Union of India & Ors. reported in (2022) 134 taxman.com 196 (Calcutta) and also in the case of Monoj Jain v. Union of India reported in (2022) 134 taxman.com 173 (Calcutta), the impugned notice under section 148 of the Ranicherra Tea Co. Ltd., AY 2017-18 Act and all subsequent proceedings are not sustainable in law and the same are quashed. However, quashing of the impugned notice and proceeding will not debar the respondent-authority concerned to issue any fresh notice in future in accordance with law. With the above observations, WPA No 4382 of 2022 stands disposed of.”
In that case it is necessary on the part of the Ao to issue notice u/s. 148A of the Act which is mandatory in terms of amended section 148 by finance Act 2021 effective from 01.04.2021. Similarly, in the present case also the Ld. AO has failed to comply with the provisions of sec. 148A as in the case of assessee, therefore, the impugned notice as well as subsequent proceeding is void ab initio liable to be set aside.
7. On the other hand, ld. DR supported the orders passed by the authorities below and objected to the prayer made by the Ld. AR of the assessee.
We after hearing the rival submissions and on perusal of the documents available on record find that the instant notice u/s. 148 of the Act was signed on 31.03.2021. However, same was delivered to the assessee on 01.04.2021, therefore, the instant notice was barred by limitation in terms of statutory provision of Act. Similarly, prior to issuance of notice u/s. 148 of the Act in terms of amended provisions of sec. 148 (inserted by the Finance Act, 2021 effective from 01.04.2021), it is also mandatory on the part of Ld. AO to issue notice u/s. 148A of the Act before issuance of notice u/s. 148 of the Act. However, in the present case, the revenue did not comply to the provisions of the Act. Accordingly, we following the judgment rendered by the Hon’ble jurisdictional High Court as in the case of Marudhar Vintrade Private Limited (supra), we find force in the contention of the Ld. AR of the assessee and the instant notice as well as purported assessment is termed as void ab initio. Accordingly, the addition made in the hands of Ranicherra Tea Co. Ltd., AY 2017-18 assessee is hereby deleted by allowing the aforesaid two grounds of appeal raised by the assessee.
Since we have allowed the appeal of the assessee on law point the remaining grounds of appeal need not required to be adjudicated.
In the result, the appeal of the assessee is allowed.