M/S. PROFESSIONAL LEASING & CAPITAL SERVICES LTD.,NEW DELHI vs. DCIT, NEW DELHI

Date of Hearing 04.08.2015 Date of Pronouncement 09.10.2015 ORDER

By the present appeal, the assessee assails the correctness of the order dated 26.02.2014 of CIT(A)-XII, New Delhi pertaining to 2003-04 assessment year on the following grounds:-

1. “The CIT(A) erred in law and facts in holding the issuance of notice u/s 148 of the act as valid though the said notice was issued without obtaining sanction from the Commissioner of Income-Tax as required by the proviso to section 1151(1) of the Act as the assessment was completed u/s 143(3). Thus the notice issued u/s 148 without proper sanction as per provisions of law is invalid and the assessment made on the basis of such notice should be annulled.

2. The CIT(A) erred in law and on facts in making an addition of Rs.2,50,000/- received from M/s D.N.Kansal Securities (P.) Ltd. through banking channel for dealing in shares ignoring the facts and evidences placed on record. Thus the addition so made should be deleted.

3. The appellant craves the leave to add, substitute, modify, delete or amend all or any ground of appeal either before or at the time of hearing.”

2. However, at the time of hearing the parties were heard only in regard to Ground No.-1. The facts relatable to the same are found addressed at page 2 wherein the grounds raised by the CIT(A) are found reproduced. The factual submissions in regard to this aspect are found recorded at pages 4 & 5 in paras

I.T.A .No.-1797/Del/2014 1.3 to 1.9 of the impugned order. For ready-reference, these are reproduced hereunder:- 1.3. “It has been held by the ITAT in its recent decision in the case of Shri Amarlal Bajaj Vs ACIT in appeal no, 611/Mum/2004 that the reopening proceedings as bad in law as the Commissioner has simply mentioned "approved" to the report submitted by the concerned AO and did not apply his mind. Here in the case of the assessee, it appears that the sanction has not been obtained at all though it was required by law. 1.4. The assessee made request for the inspection of the assessment folder vide letters dated 7/5/12 and reminder dated 31/7/12. Photocopy of the letter dated 7/5/12 already paced on record on page 42 and the copy of letter dated 31/7/12 is enclosed. However, the assessee has not been allowed the inspection of the said folder till date. It is therefore requested that the assessment folder may kindly be called for so that the facts can be verified from the said file. These facts are necessary to be determined as they go to the root of the jurisdiction of the assessing officer. 1.5 Further, the notice issued u/s 148 did not contain the reasons recorded for issuing such notice which should be a part and parcel of the notice and the same should also be served with the notice. The notice should accompany the reasons recorded for issue of notice. The assessing officer discloses and opens his mind through reasons recorded by him. He has to speak through his reasons. The reasons have not been served on the assessee on till date. 1.6 It has been held by Hon'ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. Vs C1T (2009) 308 1TR 38 that that a notice u/s 148 without the communication of the reasons there for is meaningless inasmuch as the AO is bound to furnish the reasons within a reasonable time. It was held that a case where the notice has been issued within the said period of six years but the reasons have not been furnished within that period is hit by the bar of because the issuance of the notice and the communication and furnishing of reasons go hand in hand. As the issuance of the notice under section 148 and the communication and furnishing of reasons go hand in hand, the reasons have to be supplied to the assessee before the expiry of period of 6 years. If this is not done, the validity of the s. 148 notice cannot be upheld. 1.7 The Hon'ble ITAT in the case of Balwant Rai Wadhwa, copy of the decision enclosed, following the observations of Haryana Acrylic (supra) held that if the reasons for reopening were not served within six years, the reopening was void. Since in this case, the reasons have not been supplied to the assessee till date, the notice issued is void and the assessment made on the basis of said notice should be cancelled. 1.8 It is further submitted that proviso to Section 147 provides that where an assessment under section 143(3) has been made for any year, then no action shall be taken under section 147 after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment by reason of failure on the part, of the assessee to file a return u/s 139 or in response to notice issued u/s 142(1) or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. The assessment of the assessee for AY 2003-04 was completed u/s 143(3) and there was no failure on the part of the assessee to disclose fully and truly all the material facts necessary for its assessment. The transaction of the amount received from M/s D.N. Kansal Securities Ltd. has been Page 2 of 5 I.T.A .No.-1797/Del/2014 undertaken through bank account and was fully and truly disclosed in the books of account and during assessment proceedings. 1.9 Thus the notice issued without fulfilling the conditions laid down by the law is invalid and the assessment made on the basis of invalid notice should be cancelled.”

I.T.A .No.-1797/Del/2014