DESIGNER EXIM PVT. LTD.,MUMBAI vs. INCOME TAX OFFICER, 1(1)(2), SURAT

Brief facts of the case are that the assessee is a company, engaged in export of fabric and dress material, filed its return of income on 29/09/2012 declaring income of Rs. 1,86,240/- for A.Y. 2012-13. Subsequently, the case of assessee was reopened on the basis of information received from Investigation Wing on 22/03/2019 wherein it was revealed that a bank account in Axis bank in the name of Shrikant Deven Patel, proprietor of Sonali Enterprises wherein there was high M/s Designer Exim P Ld. Vs ITO value transaction and RTGS credits. The bank account was opened on 16/02/2011 and was closed on 12/12/2021. From the bank account of Sonali Enterprises, it was found that the assessee company has made a credit of Rs. 9,07,039/-. In order to verify such suspicious transaction, the case of assessee was reopened after recording reasons. Notice under Section 148 of the Income Tax Act, 1961 (in short, the Act) dated 31/03/2019 was served upon the assessee. The assessee in response to notice under Section 148 of the Act filed its letter dated 07/10/2019 requesting the assessing officer to consider the original return filed on 29/09/2012 as written in response to notice under Section 148 of the Act. The Assessing Officer noted that filing of return of income is mandatory in response to notice under Section 148 of the Act. The Assessing Officer proceeded for assessment and after recording that no response was made by assessee, the assessment was completed under Section 144 r.w.s. 147 of the Act on 12/12/2019 by making addition of Rs. 9,07,039/- as bogus and treated the same as income of assessee.

On appeal before the ld. CIT(A), the assesse filed written submission. The submission of assessee is recorded in para 5 of order of ld. CIT(A). The assessee besides challenging the additions and validity of initiation of proceedings under Section 147 and notice under Section 148, also raised a legal issue in its submissions that notice under Section 143(2) of the Act was not issue and in absence of such notice, the assessment M/s Designer Exim P Ld. Vs ITO order is liable to be annulled. The ld. CIT(A) instead of giving any finding on legal issues or jurisdictional issues, confirmed the addition by holding that the bank account was opened by Sonali Enterprises on 16/02/2021 and closed on 12/12/2021 and there was huge debit and credit of Rs. 94.89 crores. Further aggrieved, the assessee has filed the present appeal before this Tribunal.

I have heard the submissions of the learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue and have gone through the orders of the lower authorities carefully. The ld. AR of the assessee submits that besides other jurisdictional issue, the assessee strongly pressed ground No. 4 of the appeal, wherein he has raised issue that the assessment order, is passed without issuing notice under Section 143(2) of the Act, which is bad in law, ultra vires and liable to be quashed. The ld. AR of the assessee by referring the contents of assessment order, submits that the Assessing Officer nowhere either recorded that any notice under Section 143(2) was issued nor in fact issued such notice. The assessee by way of specific objection, raised this issue before the ld. CIT(A), however, no finding on such fact was given by ld. CIT(A). In absence of notice under Section 143(2) of the Act, the assessment order is void ab initio and liable to be quashed. To support M/s Designer Exim P Ld. Vs ITO his submission, the ld. AR of the assessee has relied on the following decisions: (i) CIT Vs Laxman Das Khandelwal (2019) 108 taxmann.com 183 (SC) (ii) ACIT Vs Hotel Blue Moon (2010) 188 taxmann.com 113 (SC) (iii) Tiwari Kanahaiya Lal Vs CIT (1985) 154 ITR 109 (Raj) (iv) V.R. Sreekumar Vs ITO (2012) 21 taxmann.com 545 (Coch). (v) ITO Vs Smt. Kuldip Kaur (2012) 20 taxmann.com 99 (Chandigarh) (vi) ITO Vs R.K. Gupta (2008) 115 ITD 384 (Delhi) 5. On the other hand, the ld. Sr. DR for the revenue supported the orders of lower authorities.

I have considered the submissions of both the parties and have gone through the orders of lower authorities carefully. I have also deliberated on case laws relied upon by the ld. AR of the assessee. Perusal of assessment order reveals that the notice under Section 148 was issued to the assessee on 31/03/2019. In response to notice under Section 148, the assessee filed its reply/letter on 07/10/2019 and requested assessing officer to consider original return of income filed on 29/09/2012 in response to notice under Section 148 of the Act. Such contention of assessee was not accepted by the Assessing Officer. The Assessing Officer straightway proceeded for reassessment and after serving show cause notice dated 26/10/2019 made addition of Rs. 5 M/s Designer Exim P Ld. Vs ITO 9,07,039/-. I find that before the ld. CIT(A), the assessee raised specific plea that no notice under Section 143(2) was served. The ld. NFAC/CIT(A) has not given any finding on such fact. It is settled position under the law that in case, in case the assessee feels that it is not necessary for him to file fresh return and that the return filed by him under Section 139 should be treated as return for the purpose of reassessment, he may inform the Assessing Officer of his decision. In such event, earlier return is treated as fresh return submitted in response to notice under Section 148 of the Act. Such view is find support from the decision of Hon’ble Rajasthan High Court in Tiwari Kanhaiya Lal Vs CIT (supra).

I find that neither the assessing officer recorded in the assessment order that notice under section 143(2) was issued, nor the contention of the assessee was controverted by ld Sr DR by showing any evidence that the plea raised by assessee is not correct. Since no notice under Section 143(2) of the Act had been issued by the Assessing Officer, thus the reassessment order passed by the Assessing Officer vide order dated 12/12/2019 is invalid and liable to be quashed as has been held in series of decisions including the decision of Hon’ble Jurisdictional High Court in CIT Vs Sukhini P Modi (2014) 52 taxmann.com 159 (Gujarat). Hence, I allow ground No. 4 of the appeal. Considering the fact that I have M/s Designer Exim P Ld. Vs ITO allowed ground No. 4 of the appeal which is purely legal in nature, therefore, adjudication of other grounds of appeal