SADHANA M. SHAH,MUMBAI vs. ITO 16(2)(2), MUMBAI

The appellant prays that exemption u/s.54F be allowed to her. A.Y. 2003-04

The brief facts of the case are that the assessee filed her return of income on 19.11.2003 declaring total income to the tune of Rs.13,76,040/-. The return was accompanied by tax audit report u/s.44AB in form no.3CB and 3CD, balance sheet and profit and loss account and annexures, in the case of M/s.Sadhna Engineering Corporation and also M/s. Sadhana Office Business Centre separately, and TDS certificates, computation of income etc. The return was processed u/s.143(1) of the Income Tax Act, 1961 ( in short “the Act”). Thereafter, the return u/s.143(2) issued and served upon the assessee. Further notice u/s.143(2) and 142(1) of the Act along with questionnaire were issued and served upon the assessee. The assessee was carrying on business as the proprietor of (1) M/s. Sadhana Engineering Corporation and (2) M/s. Sadhana Business Centre. In addition, the assessee had earned Long Term Capital Gain and income from other sources. The assessment of the assessee was completed by the assessing her income to the tune of Rs.46,85,626/- u/s. 143(3) of the Act on 31.01.2006. The assessee was not satisfied with the said assessment, therefore filed an appeal before the CIT(A) who confirmed the assessment order u/s.143(3) of the Act. Therefore, feeling aggrieved the assessee has filed the present appeal before us.

We have heard the arguments advanced by the learned representative of the parties and perused the record. The learned representative of the assessee has argued that the assessee has filed her return of income for the A.Y.2003-04 on 19.11.2003. The assessee received the notice u/s.143(2) of A.Y. 2003-04 the Act on 08.12.2005 dated 06.12.2005 beyond one year therefore the assessment u/s.143(3) of the Act is time barred in view of the law settled in Commissioner of Income Tax, Chennai Vs. Gitsons Engineering Co. [2015] 53 taxmann.com 108 (Madras). It is also argued that it is necessary that the notice should be issued within the one year but factually the same should be served also within the one year which is not in her case. Therefore, the assessment u/s.143(3) is wrong against law and facts in view of the law settled in Subham Enterprises Vs. Income Tax Officer [2004] 3 SOT 250 (All.) and Commissioner of Income Tax Vs. Bhan Textiles Pvt. Ltd. [2006] 287 ITR 370 (Delhi) and Prakash Ramji Gavali Vs. Income Tax Officer, Ward 3(1), Thane [2012] 21 taxmann.com 534 (Mum.) and BHPE Kinhill Joint Venture Vs. Additional Director of Income Tax, Range – 1 [2009] 116 ITD 123 (Delhi).

However, on the other hand the learned departmental representative has strongly relied upon the order passed by the CIT(A) in question. On appraisal of the assessment order on record it came into the notice that notice u/s.143(2) and 142(1) of the Act along with questionnaire were issued and served upon the assessee but the exact date of issuance of notice are not mentioned on record. The assessee filed her return of income on 19.11.2003 for the A.Y.2003-04. The copy of remand report dated 04.05.2011 on the file speaks that notice for the A.Y.2003-04 u/s.143(2) of the Act was issued on 24.11.2004 but nowhere speaks about the service of the said notice. The said report also speaks that the direct proof of service of first notice is not available on the record. In view of the said report, it is not on record about the service of notice issued on 24.11.2004. In brief the assessee filed her A.Y. 2003-04 return of income on 19.11.2003 and up to the one year there was no record on the file to which it can be assumed that the authority issued the notice and said notice has duly been served upon the assessee within one year. The assessment u/s.143(3) has been concluded without service of notice beyond the period of one year which does not seem justifiable and in accordance with law. In this regard we also find support of law settled in Subham Enterprises Vs. Income Tax Officer [2004] 3 SOT 250 (All.) and Commissioner of Income Tax Vs. Bhan Textiles Pvt. Ltd. [2006] 287 ITR 370 (Delhi) and Prakash Ramji Gavali Vs. Income Tax Officer, Ward 3(1), Thane [2012] 21 taxmann.com 534 (Mum.) and BHPE Kinhill Joint Venture Vs. Additional Director of Income Tax, Range – 1 [2009] 116 ITD 123 (Delhi). Therefore, in view of the said circumstances we set aside the assessment order of the assessment year of 2003-04 in question u/s.143(3) of the Act. Accordingly this issue is being decided in favour of the assessee and against the revenue.

The issue no.2 to 5 are on the merit of the case. While deciding the issue no.1 the assessment order u/s.143(3) of the Act in question has been ordered to be set aside, therefore, deciding the said issues is merely become an academic in nature hence not required to be adjudicated.

In the result the appeal filed by the assessee is hereby allowed. A.Y. 2003-04