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2015 (4) TMI 764 - ITAT DELHI

2015 (4) TMI 764 - ITAT DELHI - TMI - Admissibility of additional ground - Non-service of the notice u/s 143(2) for making reassessment u/s 147 - Addition of Income u/s 68 of Income Tax Act, 1961 - Held that:- We have heard both the parties and perused the relevant records especially the order passed by the Revenue Authorities along with the documentary evidence filed by the assessee attaching therewith the various documentary evidence supporting the claim of the assessee as well as the various .....

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rt] and the Special Bench decision in the case of DHL operators [2007 (3) TMI 420 - ITAT MUMBAI]. Keeping in view the facts and circumstances of the present case and the arguments raised by the ld. counsel, we are of the view that the issue raised in additional ground regarding the non-issuance of notice u/s. 143(2) of the Act which goes to the root of the matter, needs to be admitted.

We are of the view that the AO has not issued notice u/s. 143(2) of the Act which is mandatory. We a .....

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sustainable in the eyes of law and deserves to be cancelled. In view of above facts and circumstances of the present case, the issue in dispute raised in additional ground relating to non issue of the mandatory notice u/s. 143(2) of the Act is decided in favour of the assessee and we hold that the impugned assessment order dated 31.12.2009 passed u/s. 147/143(3) of the Act by the AO as invalid. Our view is supported by the various judgments of the Hon’ble Supreme Court, and Hon’ble Jurisdictiona .....

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e. - ITA No. 1175/Del/2011, C.O. No.174/Del/2011 - Dated:- 8-4-2015 - Shri S. V. Mehrotra And Shri A. T. Varkey JJ. For the Appellant : P. C. Yadav, Adv Rajesh Jain, FCA For the Respondent : Sh. P. Dam Kanunjna, Sr. DR ORDER Per A. T. Varkey, JUDICIAL MEMBER The Revenue has filed the present appeal and the Assessee has filed the Cross Objection against the impugned order dated 30/11/2010 passed by the Ld. Commissioner of Income Tax (Appeals)-XVI, New Delhi for the assessment year 2002-03 on the .....

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red in deleting the addition of ₹ 10,00,000/- made u/s 68 on account of income from undisclosed sources being the amount shown received as refund of share application money from M/s Aayushi Stock Brokers Pvt. Ltd. an identified entry operator. 3. That on the facts and circumstances of the case and in law the learned CIT(A) has erred In deleting the addition of ₹ 12,50,000/- made u/s 68 as income from undisclosed sources being the amount shown received as share application money from .....

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iscussed in the assessment order about the modus operandi of M/s Aayushi Stock Brokers P. Ltd.(an established entry operator) from whom the assessee shown to have received an amount of ₹ 50.00,000/- as sale consideration of shares, ₹ 10,00,000/- as refund of share application money and ₹ 12,50,000/- as share application money. Even the learned CIT(A) failed to verify the contention of the assessee from the Balance-Sheet and Annexures of M/s Aayushi Stock Brokers P. Ltd. 6. That .....

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s in holding that the A.O. was justified in invoking the provisions of section 147 when the same are not applicable on the facts of the case and also treating the service of notice. u/s 148 allegedly issued on 31.3.09 on a different address as proper and valid service. 2. That the Ld. CIT (Appeal) has erred in law and on facts in holding that the A.O. was justified in service of notice through affixture despite the fact that there was neither noting in the records made by the Id. AO that the ass .....

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recording of said reasons and without complying with necessary provisions and conditions laid down under the Income Tax Act, 1961. 4. That the ld CIT(Appeal) has erred in law and on facts in holding that the AO has passed a speaking order on the objections raised by the appellant about issuance and service of notice. 4. First we take up the Cross Objection filed by the assessee. The facts in brief are that the return of income declaring income of ₹ 5148/- was filed on 31.10.2002. The case .....

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n Appeal before the Ld. CIT(A), on the jurisdictional aspects as well as on merits. The CIT(A) vide his impugned order dated 30.11.2010 confirmed the jurisdiction of the AO to re-open the assessment, however, allowed the appeal of the assessee on merits and hence, the present cross-objections has been filed before us. 6. At the time of hearing Ld. Counsel of the assessee Sh P.C. Yadav, raised the additional ground relating to non-service of notice u/s. 143(2) of the Act. Ld. Counsel of the asses .....

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a routine and casual manner by stating that non-issue of notice u/s. 143(2) of the Act does not render the reassessment invalid. According to him, the said finding of the Ld. CIT(A) is contrary to the settled law on the issue. So, as per him, if the said mandatory notice is not served to the assessee within the prescribed period, the assessment order is invalid, hence, the same deserve to be quashed and section 292BB cannot cure the defect because the AO did not even issued the same. 7. Ld. Coun .....

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contention ld counsel for the assessee cited following judgments:- CIT Vs. Cebon India Ltd. (2012) 347 ITR 583 (P&H) - CIT vs. Kishan Chand [2010] 328 ITR 173 (P&H High Court) - ITAT, C Delhi Bench Chandra Agencies vs. ITO in ITA No. 1970/Del/1998) A.Y. 1985-86. Dated 29.8.2003 - ITAT, Amritsar Bench, Bhagwan Dass vs. ITO in ITA No. 92/A,r/1979 asstt. Year 1965-66 dated 7.1.1980 - CIT vs. Vishnu & Co. (P) Ltd. (2010) 230 CTR (Del) 62 (Delhi High Court) 8. On the other hand, the ld. .....

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the Revenue Authorities along with the documentary evidence filed by the assessee attaching therewith the various documentary evidence supporting the claim of the assessee as well as the various decisions rendered by the Hon ble Supreme Court on the legal issue in dispute. Regarding admission of this additional ground before us, which is challenging the very jurisdiction of the AO to pass the reassessment order, is no longer res-integra and it is well settled that an assessee can raise a legal g .....

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u/s. 143(2) of the Act which goes to the root of the matter, needs to be admitted and should be taken up first and decided, so we will adjudicate this issue 10. A perusal of the assessment order reveals that return of income declaring income of ₹ 5,148/- was filed on 31.10.2002. The case was processed u/s 143(1) of the Act. Subsequently, it was noticed from the record that the assessee company was incorporated on 23.12.1997 and the share capital has increased by ₹ 60,00,000/- during .....

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accommodation entry from the alleged entry operators. 11. Thereafter, the AO served notice u/s 148 of the Act on 31.03.2009 and since no return was filed in response to the said notice, another notice dated 09.10.2009 u/s 142(1) along with detailed questionnaire was issued on 04.11.2009 and reasons recorded to reopen were given to the assessee. There we find that a show-cause notice was sent by the AO on 27.11.2009 and notice u/s 133(6) to the assessee s bank on 15.11.2009. Assessee filed its o .....

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ame back to the AO with the postal remark left . However notice u/s 142(1) of the Act dated 09.10.2009 was issued at the correct address. The ld counsel of the assessee Adv P.C. Yadav inspected the file of the assessee at the AO s office on 04.10.2012 and found that the reassessment was framed without issuance of notice u/s 143(2) of the Act and has raised this additional legal ground before us, which reads as under : The order of the ld AO is legally not tenable and the same is void-ab-initio a .....

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res the defect in not serving 143(2) notice within specified period i.e. from 01.10.1991 to 30.09.2005. So the legislative intent is clear that during section 148 proceeding the notice u/s 143(2) shall be issued before the completion of assessment proceeding even though it is served beyond the prescribed time limit prescribed u/s 143(2) of the Act. Further, the explanation to section 148(1) clarifies that serving of notice u/s 143(2) is mandatory in respect of returns filed on or after 1st Octob .....

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s issued and the assessee in response to 142(1) notice has submitted that its original return filed on 31.10.2002 vide receipt no. 2591 be treated as the return filed u/s 142(1) notice. Once return has been filed pursuant to notice u/s 142(1), thus the provision of Sec. 143(2) namely issuance of notice for scrutiny gets triggered, so that assessee is given an opportunity to produce its books of accounts, other documents before the AO and assessment can be completed u/s 143(3) of the Act. The iss .....

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the same is not curable defect even u/s 292 BB which could have cured the said defect provided the notice u/s 143(2) was issued but not served on the assessee. Here in this case we find that the AO has not issued notice u/s 143(2) which is mandatory, before scrutiny assessment is done. 14. In the instant case, on 04.11.2009, the AR appeared before the AO in response to notice u/s 142(1) of the Act and filed its return of income originally filed dated 31.10.2002 and has submitted before the AO t .....

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43 (2) notice was found to have been issued however not served upon the assessee then in such a scenario sec. 292BB could have saved the situation. The Ld. DR could not controvert this factual aspect after going through the assessment records. So in the light of the inspection conducted by the ld counsel for the assessee and the inability of the DR to controvert the fact in issue we find that the AO has not issued notice u/s 143(2) of the Act. 15. In the light of the above, we are of the view th .....

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the assessee before completion of the assessment, then the reassessment is not sustainable in the eyes of law and deserves to be cancelled. In view of above facts and circumstances of the present case, the issue in dispute raised in additional ground relating to non issue of the mandatory notice u/s. 143(2) of the Act is decided in favour of the assessee and we hold that the impugned assessment order dated 31.12.2009 passed u/s. 147/143(3) of the Act by the AO as invalid. Our view is supported b .....

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ssessment-Notice-Assessee intimating original return be treated as fresh return-Reassessment proceedings completed despite assessee filing affidavit denying serviced of notice under section 143(2)-Assessing Officer not representing before Commissioner (Appeals) that notice had been issued- Reassessment order invalid due to want of notice under section 143(2)- Income-tax Act, 1961, ss. 143, 147, 148(1), prov.-ITO v. R.K. GUPTA [308 ITR 49 (Delhi)Tribu., CIT vs. Vishu & Co. Ltd. In ITA No. 470 .....

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rded by the CIT(A) as well the tribunal on the question of date of service of notice. Notice was not served within the stipulated time. Mere giving of dispatch number will not render the said finding to be perverse. In absence of notice being served, the AO had no jurisdiction to make assessment. Absence of notice cannot be held to be curable under s 292BB of the Act. CIT Vs.Mr. Salman Khan, ITA No.508 of 2010 1. In the present case, reassessment order passed under section 143(3) r/w 147 of the .....

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nt order cannot be sustained. In the present case, the reassessment year involved relates to the period prior to the insertion of Section 292BB. In this view of the matter, the appeal is dismissed with no order as to costs. DCIT Vs. M/s Silver Line, ITA No.1809,1504,1505 & 1506/Del/2013 vii. The Hon'ble ITAT of Agra Bench, in the case of ITO v. Aligarh Auto Centre reported in 152 TTJ (Agra) 767, on an identical issue that of the present issue, has recorded its findings as under: "5. .....

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ontended that the CIT (A) should have appreciated the provisions of section 292BB of the IT Act. Section 292 BB of the IT Act provides as under: "292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be .....

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uber Tobacco Product Pvt. Ltd. vs. DCIT, 117ITD 273 held that section 292BB has been inserted by Finance Act, 2008, has no retrospective effect and is to be construed prospectively. The assessment order under appeal is 2001-02. Therefore, the provision of section 292BB of the IT Act would not apply in the case of the assessee. Further, no notice u/s. 143(2) has been issued or served upon the assessee. Therefore, the decision of Hon'ble Punjab & Haryana High Court in the case of Cebon Ind .....

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as, in the case of Sanjeev R Arora v. ACIT [IT (SS)A No.103/Muml2004 dated 25.7.2012], recorded its findings as under. "Even, the irregularity in proper service of notice which can be treated as curable under section 292B of the Income-tax Act is only in the cases where the notice under section 143(2) was issued properly and within the period of limitation and the assessee did not raise any objection regarding the service of the notice during the assessment proceedings and also participated .....

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