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Income Tax Appellate Tribunal, VISAKHAPATNAMBENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
अपीलधर्थी की ओर से/ Appellant by : Shri I. Kama Sastry, AR प्रत्यधर्थी की ओर से/ Respondent by : Dr. Aparna Villuri, Sr.AR सुिवधई की तधरीख/ Date of Hearing : 15.07.2024 घोर्णध की तधरीख/Date of Pronouncement : 29.07.2024 आदेश /O R D E R
Per Shri Duvvuru RL Reddy, Judicial Member:
This appeal is filed by the assessee against the order of Learned 1. Commissioner of Income Tax (Appeals) [Ld.CIT(A)], National Faceless Appeal Centre (NFAC), Delhi in DIN & Order No.ITBA/NFAC/S/250/2023- 24/1056720923(1) dated 03.10.2023, arising out of order passed u/s.143(3) r.w.s.147 of the Income Tax Act, 1961 (in short ‘Act’) dated 20.12.2019 for the Assessment Year (A.Y.) 2016-17.
Lokanadha Rao Bathina, Visakhapatnam 2. Brief facts of the case are that the assessee, an individual, engaged in the business of water proofing treatment contracts for buildings under the name and style of Laila Builders Enterprises and also earning income from commission business in the field of real estate as an agent, filed his original return of income for the Assessment Year 2016-17, declaring a net income of Rs.7,84,530/- from business including interest from savings bank. Statutory notices u/s 148 of the Act, dated 01.05.2018 and 143(2) of the Act, dated 06.11.2019 were issued and served on the assessee. In response to the notice, the assessee submitted information on various dates. During the year under review, the assessee entered into a sale agreement jointly for purchase of land along with three others Bathina Rajyalakshmi, M.Sridevi and M.AdiSankar and the consideration attributable to assessee’s share amounting to Rs.3,07,75,000/-. Further, the assessee has also incurred registration and stamp duty expenses of Rs.23,08,175/-. An amount of Rs.55,74,687/- was paid during the year under review including TDS of Rs.2,95,500/-. The TDS was duly deducted and paid to the Central Government account and Form No.16B was duly issued to the seller. Thus, the assessee has paid an amount of Rs.55,74,687/- out of the loans taken from the following persons Bathina Rajyalakshmi, wife
Lokanadha Rao Bathina, Visakhapatnam Rs.7,00,000/-, G.Ravi Kumar, Hyderabad Rs.2,50,000/-, G.S.Raju G. Con Rs.12,50,000/-, Hema Rs.75,000/-, I.R.Enterprise Rs.12,10,000/-, M.Soma Brahmam G. Con Rs.50,00,000/-, Srinivas Rs.17,50,000/- and V.S. Kumar Rs.14,90,976/-, totalling to Rs.1,17,25,976/-. During the assessment proceedings, the assessee submitted confirmation letters from the parties along with ledger account copies of the parties and the details are as follows, Bathina Rajyalakshmi, wife Rs.7,00,000/-, G.Sivarama Teja Rs.12,50,000/-, M. Somabrahmam Rs.50,00,000/- and V.S.Kumar Rs.14,90,976/- totalling to Rs.84,40,976/-. The confirmation letter consist signatures of the parties, address and PAN of the parties. In the case of Smt. Bathina Rajyalakshmi, wife of the assessee and the assessment proceedings in her case is pending for the Assessment Year 2016-17 before the Income tax Officer, Ward3(1), Visakhapatnam. In the case of Sri G. Sivarama Teja and Shri M. Somabrahmam, both are partners of G.Con Housing Corporation. A survey took place under section 133A by the DDIT, Unit-3, Visakhapatnam on 09-02-2017 at the business premises of GCon Housing Corporation and the assessment proceedings are also pending in their case. The AO completed the assessment by adding an amount of Rs.84,40,976/- for which confirmation letters were filed. Further, the assessee has failed to Lokanadha Rao Bathina, Visakhapatnam furnish the confirmation letters from the other parties amounting to Rs.32,85,000/- i.e. Rs. 1,17,25,976/- less Rs. 84,40,976/-. Later, the assessee submitted the confirmation letters along with the sources for Rs.32,85,000/- and creditworthiness, as additional evidence before the Ld.CIT(A) and pleaded to accept the additional evidence. The Assessing Officer has made an addition of Rs.1,17,25,976/- including an amount of Rs.84,40,976/- as detailed above and passed the Assessment order on 20.12.2019 assessing the total income as Rs.1,25,10,476/-.
3. Aggrieved by the order of the Ld.AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) relying on the decision of Hon’ble Delhi High Court in the case of M/s. N.R. Portfolio v. PCIT (Delhi) which has been approved by Hon’ble Supreme Court has held that mere transactions through banking channel does not make a bogus transaction as a genuine transaction. Hence confirmed the addition made by the Assessing Officer dismissed the appeal of the assessee.
4. Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal: - Lokanadha Rao Bathina, Visakhapatnam “1. The assessment order is null and void as the Ld.Assessing Officer has not assumed jurisdiction as the notice under section 143(2) is issued beyond the time provided for in that section/ ground 2. The assessment order is null and void as the notice under section 148 dated 01.05.2018 is issued without DIN and the same is not regularised by 31.10.2019 as mandated by paragraph 7 of CBDT Circular No.19 of 2019 dated 14.08.2019.
The assessment order is null and void as the Ld.Assessing Officer has not furnished the reasons recorded for reopening the assessment within a reasonable period.
The assessment order is null and void for the reason that the Assessing Officer has reopened the assessment for verification of the sources for investment in immovable property.
The Assessment order is null and void as the sanction accorded under section 151 by the Higher Authority is without application of mind 6. The Ld.AO is not justified in treating the amount of Rs.1,17,25,976/- as unexplained cash credits under section 68 and CIT(Appeals), National Faceless Appeal Centre is not justified in confirming the same.: i. When reopening is done for verification of sources for investment in property and not for verifying the sources for unexplained cash credits and no addition has been made for the reasons for which the reopening is done. ii. Even on merits the action of the AO and the CIT(A) are not justified.
7. Al the above grounds of appeal
are mutually exclusive and without prejudice to one another
8. The appellant craves leave to add to, alter, modify, delete all or any of the above grounds of appeal.”
Lokanadha Rao Bathina, Visakhapatnam 5. The assessee also raised an additional ground by filing a letter before the Tribunal and submitted that the assessee inadvertently failed to raise legal ground and pleaded to admit the additional ground which was not raised before the Ld.CIT(A). The additional ground reads as follows:-
“In the facts and circumstances of the case, the assessment order is null and void as the same is in violation of CBDT Circular No.19/2019 requiring mandatory DIN.”
Since the additional ground raised is a legal ground,we admit the additional ground for adjudication.
Before proceeding to adjudicate the grounds including the additional ground raised by the assessee, we find it deem fit to adjudicate Ground No. 1 which is a legal ground. On this issue, Ld. AR of the assessee submitted that the Ld. Assessing Officer has issued notice under section 143(2) of the Act on 06.11.2019 whereas it should have been issued on or before 30.09.2019 as the return of income in response to notice under section 147 of the Act was filed on 19.05.2018. He therefore pleaded that since the notice has been issued beyond the stipulated period, under section 143(2) of the Act the Assessment Order framed consequent to the issue of notice is non-est in law. In this Lokanadha Rao Bathina, Visakhapatnam connection he relied on the decision of the Hon’ble Supreme Court of India in the case of ACIT & ANR v. Hotel Blue Moon [(2010) 321 ITR 362]. Further, Ld. AR also placed reliance on the decision of the Coordinate Special Bench of Delhi in the case of Raj Kumar Chawla & Ors. v. ITO [(2005) 94 ITD 0001 (SB)], he therefore pleaded that the Assessment Order has to be quashed, since void ab-initio.
Per contra, the Learned Departmental Representative [hereinafter in short “Ld. DR”] submitted that the defect can be curable as per provisions of section 292BB of the Act. Ld. DR placed reliance on the decision of the Hon'ble Delhi High Court in the case of Pr.CIT v. M/s. Dart Infrabuild (P.) Ltd., in ITA 10/2022 dated 17.11.2023.
We have heard both the parties and perused the material available on record including the orders of the Learned revenue Authorities and the case laws. The legal issue involved in this case which is raised by the assessee is with respect to the validity of the notice issued under section 143(2) of the Act. At this juncture, it is pertinent to extract the provisions of section 143(2) of the Act, which reads as under: - Lokanadha Rao Bathina, Visakhapatnam “Sec. 143(2) Where a return has been furnished undersection 139, or in response to a notice under sub-section (1) ofsection 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.”
As per the proviso to section 143(2) of the Act, no notice shall be served on the assessee after the expiry of six months from the end of the Financial Year in which the return is furnished. In the present case, the assessee has filed his return of income in response to notice under section 148 of the Act on 19.05.2018 and therefore the notice under section 143(2) of the Act ought to have been served on or before 30.09.2019. However, the Ld. Assessing Officer has issued notice under section 143(2) of the Act on 06.11.2019 which is placed in Page No. 8 of the Paper Book. Undisputedly, it is found that the notice under section 143(2) of the Act has been issued after the expiry of six months from the end of the Financial Year in which the return is furnished by the assessee. Therefore, in our considered view it attracts proviso of Lokanadha Rao Bathina, Visakhapatnam section 143(2) of the Act in which case assessment made based on such notice becomes void ab-initio.
The reliance placed by the Ld. DR on the decision of the Hon'ble Delhi High Court in the case of Pr.CIT v. M/s. Dart Infrabuild (P.) Ltd., (supra) is of no help to the revenue as in that case it was observed that no notice under section 143(2) of the Act was issued to the assessee before framing of the Assessment Order since the assessee has filed the return of income beyond the prescribed period under section 148 of the Act.
In the case of ACIT & ANR v. Hotel Blue Moon (supra) relied on by the Ld. AR, the Hon’ble Supreme Court of India in Para No. 15 of the order observed and held as follows: - “15. ...... A reading of the provision would clearly indicate, in our opinion, if the AO, if for any reason, repudiates the return filed by the assessee in response to notice under section 158BC(a), the AO must necessarily issue notice under s. 143(2) of the Act within the time prescribed in the proviso to s. 143(2) of the Act.”
Further, a similar view was held by the Delhi “F” Special Bench in Para No. 40 in the case of Raj Kumar Chawla & Ors. v. ITO (supra), which is reproduced below: -
“40. In the light of the analysis of the relevant provisions of law and judicial precedents, we are of the considered view that the return filed pursuant to notice under s. 148 of the Act must be Lokanadha Rao Bathina, Visakhapatnam assumed and treated to be a return filed under s. 139 of the Act and the assessment must thereafter be made under s. 143 or 144 of the Act after complying with all the mandatory provisions. Accordingly, it is incumbent upon the assessing authority to issue notice under s. 143(2) of the Act within the period as stipulated in the proviso thereunder. In this view of the matter, the first question before the Special Bench is answered in affirmative.”
Similar view was held in the case of Harman Singh Dhingra v. ACIT [(2021) 092 ITR (Trib) 0133] and the coordinate Bench of the Delhi as under: -
“7. We have heard both the parties and perused the material available on record. Since the additional grounds are legal grounds we are firstly deciding the same by admitting the additional grounds. It is pertinent to note that the notice u/s 143(2) should have been issued till the date 30-9-2014 but the same was issued after the statutory limit. This fact was not denied by the Ld. DR after going through the assessment records. Hence, the additional ground raised by the assessee are allowed. Thus, the assessment order itself becomes null and voidab initioas the notice issued was not issued within the specified time. Since, the assessment itself becomes nullity; there is no need to discuss the merits of the case. The appeal of the assessee is allowed.”
Respectfully following the judicial precedents as discussed above and also following the principle of consistency, we are of the considered view that since the notice under section 143(2) of the Act not issued within the statutory time limit the Assessment Order passed by the Ld.Assessing Officer consequent to such invalid notice, becomes null and void ab-initio. Thus, Ground No.1 raised by the assessee is allowed.
Lokanadha Rao Bathina, Visakhapatnam 16. Since the legal ground raised by the assessee in Ground No. 1 is adjudicated in favour of the assessee, adjudication of other grounds including the additional ground raised by the assessee are merely academic in nature and hence not adjudicated.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 29th July, 2024.
Sd/- Sd/- (एस बालाकृष्णन) (दुव्वूरु आर.एल रेड्डी) (S. BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य /ACCOUNTANT MEMBER न्याधयक सदस्य/JUDICIAL MEMBER Dated :.29.2024 Giridhar, Sr.PS आदेश की प्रति लिपिअग्रेपिि / Copy of the order forwarded to:- 1. निर्धाररती/ The Assessee–Lokanadha Rao Bathina, D.No.54-11-33/3/1, Aditya Nagar, Isukathota-530013, Andhra Pradesh रधजस्व/The Revenue –Income Tax Officer, Ward-3(2), Infinity Towers, 2. Shankaramattam Road, Visakhapatnam - 530016 3. The Principal Commissioner of Income Tax, 4.नवभधगीयप्रनतनिनर्, आयकरअपीलीयअनर्करण, नवशधखधपटणम / DR, ITAT, Visakhapatnam 5. Commissioner of Income Tax गधर्ा फ़धईल / Guard file 6. आदेशधिुसधर / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam