2021 (7) TMI 1381 - AT - Income Tax

Admission of additional ground of appeal - Failure in issuing section 143(2) notice within a specified time factor of six months from the end of financial year of furnishing of its return - HELD THAT - We find merit in assessee s instant additional ground petition as per All Cargo Global Logistics Ltd. Vs. DCIT 2012 (5) TMI 466 - ITAT MUMBAI holding in light of hon ble apex court s judgment in NTPC Ltd 1996 (12) TMI 7 - SUPREME COURT that this tribunal can very well entertain a pure question of law in order to determine correct tax liability of an assessee provided all the relevant facts are already on record. Valid notice u/s 143(2) - assessment on fringe benefits - whether notice issued for the purpose of assessment on fringe benefits? - HELD THAT - We find no merit in Revenue s foregoing arguments since the said notices pertained to section 115WE(2) Fringe Benefit Tax FBT proceedings (abolished w.e.f. A.Y. 2010-11) than assuming jurisdiction for determining the assessee s correct taxable income despite the fact that it had duly filed its return on 29.09.2008. We thus quote Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT and hold that the impugned assessment is not sustainable in law since framed in absence of a valid section 143(2) notice issued within the prescribed time period. The same stands quashed therefore. All other pleadings on merits are rendered academic.

Summary

Issues:
1. Addition of income based on estimation.
2. Validity of section 143(2) notice.
3. Applicability of legal precedents.
4. Sustainability of assessment in absence of valid notice.
5. Decision on appeal.

Analysis:

Issue 1: Addition of income based on estimation
The appellant contested the addition of Rs.5,25,97,967 to the income, arguing that both lower authorities erred in law and on facts by estimating income at 2.5% of gross receipts. The appellant referred to a petition seeking to raise an additional ground based on legal precedents, including the NTPC Limited Vs. CIT case, to challenge the assessment.

Issue 2: Validity of section 143(2) notice
The appellant raised a crucial point regarding the Assessing Officer's failure to issue a section 143(2) notice within the specified period of six months from the end of the financial year in which the return was furnished. The Revenue presented a detailed paper book to show that notices were issued within the prescribed time limit, countering the appellant's argument.

Issue 3: Applicability of legal precedents
The appellant cited legal precedents such as the ACIT Vs. Hotel Blue Moon case and CIT Vs. Laxmandas Khandelwal case to support their argument regarding the validity of the assessment. The tribunal considered these precedents along with the NTPC Ltd case to assess the correctness of the appellant's additional ground petition.

Issue 4: Sustainability of assessment in absence of valid notice
After careful consideration of the arguments presented, the tribunal found merit in the appellant's additional ground petition. Referring to the All Cargo Global Logistics Ltd. Vs. DCIT case and the NTPC Ltd judgment, the tribunal concluded that the assessment was not sustainable in law due to the absence of a valid section 143(2) notice issued within the prescribed time period. As a result, the assessment was deemed quashed.

Issue 5: Decision on appeal
Ultimately, the tribunal allowed the appellant's appeal based on the findings related to the validity of the section 143(2) notice and the sustainability of the assessment. The order was pronounced in open court on 12th July 2021, with the tribunal ruling in favor of the appellant and quashing the assessment on the grounds of procedural irregularity.

This detailed analysis highlights the key issues raised, legal arguments presented, and the tribunal's decision in the case.