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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
ORDER Per:Anikesh Banerjee, JM: The instant appeal of the assesseewas filed against the order of the ld. Commissioner of Income Tax (Appeals), NFAC, Delhi,[in brevity the ‘CIT (A)’] order passed u/s 250of the Income Tax Act 1961, [in brevity ‘the Act’] for A.Y. 2017-18.The impugned order was emanated from the order of the ld. Income Tax Officer, Ward-5(4), Amritsar, [in brevity ‘ the AO’] order passed u/s 144of the Act.
The assessee has taken the following grounds: That the order passed u/s 250(6)of the Income Tax Act, is bad in law and against the facts of the case.
2. That the CIT(A) has erred in not appreciating that the AO had erred in law in making assessment without issuing notice u/s 143(2).
3. That the Ld.CIT(Appeals) has erred in law and in facts in sustaining the order passed by the ITO Ward 5(4) in which the Ld. AO has assessed the total income of the assessee at Rs. 49210360/- as against returned income of Rs. 426860 by making an addition of Rs. 34699498/- on account of credit entries appearing in bank account statement and Rs. 14084000/- on account of cash deposited in bank account.
4. That the Ld. CIT(A) has erred in not appreciating that the case of the assessee was selected under operation clean money based upon cash deposited to the tune of 13067000/- and as such, the addition made in respect of cash deposit of 14084000/-and credit entries of Rs. 34699498/- is out of scope and as such, bad in law.
5. That the Ld. CIT(A) has erred in alleging that the assessee did not produce the cash book, stock register, books of accounts, etc. It is a matter of record that the books of accounts of the assessee are subject to audit and hence the books of accounts along with the stock register were duly part of the records of the department.
6. That the Ld. CIT(A) has erred in not appreciating that the assessee had duly filed the return of income on 16.08.2019 and had furnished copy of cash book for the period of demonetization vide response dated 23.08.2019.
7. That without prejudice to the aforesaid, the Id. CIT(A) has failed to appreciate that the appellant company has been running the business of shawls and other allied items and the cash deposited during the demonetization period represents sale proceeds realized during the year.
8. That the Id. CIT(Appeals) has erred in ignoring the submissions and evidence brought on record by the assessee to explain the genuineness of the business income surrendered by the assessee.
9. That Ld. CIT(Appeals) has erred in confirming the action of the AO for application of section 115BBE on the cash deposited and credit entries by invoking section 69A. That the provisions of section 69A can be invoked only when whole of such alleged money, bullion, jewellery, or valuable article has escaped assessment or remains unexplained.
That the appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed off.”
The appeal was filed with a delay of 71 days. The assessee filed a condonation petition and placed that due to medical emergency the assessee was unable to submit the appeal within the time. The relevant short delay is duly condoned with the consent of ld. DR. Accordingly, the delay for 71 days is condoned.
The assessee’s case was taken for hearing by rejecting the adjournment petition of the assessee. Later on, the appeal was fixed for clarification about the legal ground for non-issuance of notice u/s 143(2) of the Act. The matter was further re-fixed on 23.05.2023 and the department placed the assessment folder before the bench. Accordingly, we proceed for adjudication of the appeal of assessee.
Brief fact of the case is thatthe addition was made amount of Rs.4,87,83,498/- for deposited cash in the bank account amount to Rs.1,40,84,000/- and other credit entries appearing in bank account amount to Rs.3,46,99,498/- which works out total amount of Rs.4,87,83,498/- in ICICI Bank and Punjab and Sindh Bank for F.Y. 2016-17. The assessment was completed u/s 144. The assessee filed an appeal before the ld. CIT(A) and submitted detailed documents before the appellate authority. The ld. CIT(A) upheld the order of the ld. AO. Being aggrieved,assessee filedan appeal before us.
6. The ld. AR for the assessee submitted a written submission which is kept in the record. The ld. AR first agitated the ground no. 2 related to non-issuance of the notice u/s 143(2) of the Act. The assessee placed this ground first time before the bench. The bench called for in the record and case was re fixed on 23.05.2023. On verification of record itself revealed that no notice u/s 143(2) was issued to the assessee. 6.1 The ld. AR further placed that the assesseecan agitate the additional ground before the bench and respectfully relied on the order of Hon’ble Supreme Court ofIndia in the case of National Thermal Power Co. Ltd.v Commissioner of Income-tax, [1998] 97 Taxman 358 (SC).
The ld. AR for the assessee placed the following dates and events related to proof of non-issuance of notice u/s 143(2) by the revenue which is duly extracted as below:-
6.2 The ld. AR relied on the following orders by challenging the jurisdiction of assessing authority related non-issuance of notice u/s 143(2) which caused assessment bad in law. Here, we placed the following judicial rulings as follow:- 6.2.1 Hon’bleSupreme Court of India Assistant Commissioner of Income-taxv.S.K. Industries, [2022] 141 taxmann.com 569 (SC) “Section 143, read with section 144. of the Income-tax Act, 1961 - Assessment - Issue of notice (Jurisdiction) -Assessment year 2013-14 - During year, case of assessee-company was transferred from Assessing Officer, Circle VIII to Assessing Officer, Circle 8(1) - Assessee filed its return of income and same was selected for scrutiny -Subsequently, a notice under section 143(2) was issued by ACIT, who had no jurisdiction over assessee -Assessing Officer, Circle 8(1), in pursuance to said notice issued by ACIT, passed an ex parte assessment order under section 143(3) which was challenged by assessee - High Court by impugned order held that since Assessing Officer, who had jurisdiction over assessee, passed impugned assessment order without issuing notice under section 143(2) within time limit prescribed, said order was liable to be set aside - Revenue filed an application for condonation of delay in filing SLP - Whether since no good ground and reason to condone delay was found, application for condonation and SLP filed against impugned High Court order was liable to be dismissed - Held, yes” 6.2.2.Hon’ble Supreme Court of India Assistant Commissioner of Income-taxv.Hotel Blue Moon, [2010] 188 Taxman 113 (SC)
“16. The case of the revenue is that the expression 'so far as may be apply' indicates that it is not expected to follow the provisions of section 142, sub-sections (2) and (3) of section 143 strictly for the purpose of block assessments. We do not agree with the submissions of the learned counsel for the revenue, since we do not see any reason to restrict the scope and meaning of the expression 'so far as may be apply'. In our view, where the Assessing Officer in repudiation of the return filed under section 158BC(a) proceeds to make an enquiry, he has necessarily to follow the provisions of section 142, sub-sections (2) and (3) of section 143.
Section 158BH provides for application of the other provisions of the Act. It reads : "Save as otherwise provided in this Chapter, all the other provisions of this Act shall apply to assessment made under this Chapter". This is an enabling provision, which makes all the provisions of the Act, save as otherwise provided, applicable for proceedings for block assessment. The provisions which are specifically included are those which are available in Chapter XIV-B of the Act, which includes section 142 and sub-sections (2) and (3) of section 143.
On a consideration of the provisions of Chapter XIV-B of the Act, we are in agreement with the reasoning and the conclusion reached by the High Court.
The result is that the appeals fail and are dismissed. No order as to costs.”
6.2.3. Hon’bleSupreme Court of India Commissioner of Income- taxv.Laxman Das Khandelwal, [2019] 108 taxmann.com 183 (SC)
“19. In view of the above, we hold that the AO had no valid jurisdiction to pass the assessment order and the very foundation of the assessment proceedings is bad in law. Hence, these proceedings culminating in the assessment order, as well as the impugned order stand quashed. Nothing else remains to be adjudicated. In consequence, the revenue's appeal in is dismissed."
Sub-section (2) of Section 143 of the Act of 1961 envisages: "[(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 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.]"
In Asstt. CIT v. Hotel Blue Moon [2010] 188 Taxman 113/321 ITR 362, on the question as to whether issue of notice under Section 143 (2) of the Act within the prescribed time for the purpose of block assessment under chapter- XIV B of the Act is mandatory for assessing undisclosed income detected during search conduct under Section 132 of the Act, their lordships were pleased to hold : "15 Omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with......."
8. The impugned order when is adjudged in view of the law laid down by the Supreme Court in Hotel Blue Moon (Supra), no substantial question of law arises for consideration.
9. Consequently, Appeal fails and is dismissed.”
7. The ld. DR fully relied on the order of the revenue authorities and not able to submit any contrary fact against the submission of the ld. AR.
We heard the rival submission and considered the documents available in the record. From departmental assessment folder,it is clear that the department was not able to find any notice u/s 143(2) initiating the assessment proceeding. The ld AR also placed the online record before the bench but there is no trace of the notice U/s 143(2) of the Act. The Without issuance of notice u/s 143(2) is caused the assessment bad in law. We respectfully relied on the order of the Hon’bleApex Court in the case of Hotel Blue Moon (supra) and Laxman Das Khandelwal(supra). 8.1. In view of the above, we conclude that there was no issuance of the valid statutory notice under section 143(2) of the Act within the prescribed time. The ld. DR has also not brought anything on record contrary to the arguments advanced by the ld. AR for the assessee. Thus, in the absence of the valid statutory notice, the assessment framed under section 144 of the Act is not sustainable. Hence, the ground raised by the assessee is allowed.Accordingly, the assessment for impugned assessment year 2017-18 is bad in law and liable to be quashed. The addition amount of Rs.4,87,83,498/- is deleted.
As this appeal has been decided on the short ground of jurisdiction in the assessment for non-issuance of notice U/s 143(2)so the Ground no-2 is fully allowed in favour of the assessee. We see no need to deal with the merits of the additions and the issue involved in other grounds. That aspect of the matter is academic as of now.