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2015 (5) TMI 516 - ITAT DELHI

2015 (5) TMI 516 - ITAT DELHI - TMI - Validity of re-assessment u/s 147 - non serving notice u/s 143(2) - Held that:- The assessment in question is invalid because of lack of jurisdiction of the Assessing Officer as the revenue has failed to show that the notice u/s 143(2) was served on the assessee within the stipulated period. Accordingly, we quash/ set aside the assessment in question. Also see ITO Vs. Naseman Farms Pvt. Ltd.[2015 (4) TMI 764 - ITAT DELHI ] - Decided in favour of assessee. - .....

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the case are that notice u/s 148 was issued to assessee company on 19-9-2005 on the basis of information received from CIT, Delhi-XIII, New Delhi vide letter F.No. CIT-XIII/Fraud. Refund/2622 dated 14-3-2005 and from the Addl. CIT, Range-37, New Delhi vide letter F. No. Addl. CIT/Range-37/2004-05/925 dated 18.2.2005, enclosing therewith copy of letter No. ITO, Ward 37(1)/2004-05 dated 9.2.2005 of Shri Krishan, Income-tax Officer, Ward 37(1), New Delhi stating that M/s Staunch Marketing Pvt. Ltd. .....

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ctually filed the income-tax returns in the names of Shri Surender Singh and Shri Ravinder Singh. TDS certificates issued by M/s Staunch Marketing Pvt. Ltd., showing month wise payment of incentives and tax deducted on it was attached. The incentives allegedly paid to Shri Surender Singh and Shri Ravinder Singh by M/s Staunch Marketing Pvt. Ltd. were declared as professional receipt at ₹ 17,16,500/- and ₹ 16,48,890/- respectively. Statements were recorded and after coming to the conc .....

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e notice. Subsequently, Shri Hoshiar Singh, director of the company was contacted on telephone who then attended the office on 23-1-2006; filed a copy of return of income for AY 2003-04 and claimed that original return was filed on 2- 12-2003 vide acknowledgement no. 3680 with Addl. Commissioner of Income-tax, Range-9, New Delhi. However, copy of acknowledgment for filing the return was not filed. The AO, accordingly, issued final show cause notice, which has been reproduced at pages 3 to 5 of t .....

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bearing Sl. No. 393/2005 dated 11/06 with the address R09/02, Ruhela Associates. He sought further adjournment and the case was then adjourned for 31.1.2005. An income-tax return form was submitted by the assessee which is placed on record. The statement of income enclosed therein stated as under:- Profit & per P&L Account (242171.92) Add: Depreciation as per Companies Act, 1956 247716.00 Less: Depreciation as per Income Tax Act, 1961 143597.91 Add: Disallowance as per form 3cd 52067.40 .....

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artly allowed the assessee s appeal. 5. Being aggrieved with the order of ld. CIT(A), the department is in appeal before us and assessee has filed cross objection. 6. The revenue in its appeal has raised following grounds of appeal: 1. "On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 57,21,746/- ( included in the total amount of ₹ 2,67,25,498/- ) claimed to have been paid by the assessee as incentives to 19 parties but co .....

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al. 7. The assessee in its cross objection has taken following solitary ground: On the facts and circumstances of the case, the order passed by the learned AO is bad in law and is liable to be quashed, as the statutory notice under section 143(2) was not issued to the assessee 8. We first take up the cross objection because that goes to the very root of jurisdiction to pass the assessment order. 9. Ld. counsel for the assessee pointed out that no notice u/s 143(2) was issued and, therefore, the .....

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499; - Shringer Verlag GmbH v. DCIT 97 TTJ 269; - DCIt Vs. Indian Syntans Investments Pvt. Ltd. 107 ITD 457 (Chennai); - ACIT Vs. Santosh Kumar & Ors. 87 ITD 107 (All); - CIT Vs. Pawan Gupta & Ors. 22 DTR 291 (Del); - CWT Vs. HUF of H.H. Late Shri J.M. Scinida 300 ITR 193. 10. Ld. CIT(DR) submitted that the provisions of section 292BB makes it clear that where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be d .....

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this section does not come into play if the assessee has raised such objection before the completion of such assessment or the reassessment. He pointed out that no such objection was raised before AO till completion of assessment. 10.2. Ld. CIT(DR) further submitted that admittedly assessee did not raise any such issue before ld. CIT(A) also either in statement of facts or in grounds of appeal and, therefore, the ground raised by assessee in the cross objection does not arise out of CIT(A) s ord .....

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not a question of law and, therefore, it could not be raised on the premise that a legal issue can be raised at any stage of proceedings. 10.4. Ld. CIT(DR) further referred to section 124(3) to submit that the issue regarding jurisdiction of the AO can be raised only within 30 days from the date on which assessee was served with a notice u/s 142(1) or 143(2). Ld. CIT(DR) submitted that by way of cross objection no new case can be made out. He relied on the decision of the ITAT in the case of San .....

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rbanchal Parbahan Gosthi (1998) 234 ITR 663 (Gau) has stated that there is no distinction between an appeal and a cross objection except for the time limit for filing the appeal being 120 days and that of CO being 30 days. Therefore, the learned DR's objection that even a pure question of law cannot be taken up in a cross objection is without any merit. It has been observed by the Hon'ble Court as under: "Sec. 253(4) clearly envisages the filing of cross objections both by the asses .....

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a better footing than the provisions made in O. 41, r. 22 of the CPC which deals with filing of cross objections. Whereas there is no provision in the CPC to number the cross-objection as an appeal, such a provision has been made by the rule-making authority in the ITAT Rules, 1963. A combined reading of s. 253(4) and r. 22 makes it abundantly clear that any party aggrieved against the order of the appellate authority can file a memorandum of cross-objections against any part of the order of the .....

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f the aforementioned discussion it can safely be held on a point of law that there is absolutely no difference between an appeal and a cross objection…." 7.3. Further, in the absence of a notice u/s 143(2) of the Act, the assessment prevails or not is to be examined: Whether it is a legal question or not? In an identical issue to that of the issue under consideration, the earlier Bench of this Tribunal in the case of B.R.Arora v. ACIT in ITA NO.6020/De1/2012 dated 29.5.2014 has decid .....

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law as well as on merits. 2. that it is a pure legal ground which goes to the root of the matter and no new facts are required to be investigated or placed on records for adjudicating the same. Under these circumstances, as per the following authorities, the additional ground deserves to be admitted. " After having considered the rival submissions, the Hon'ble earlier Bench of this Tribunal had held that "2.2. Since the additional ground sought to be admitted is legal in nature an .....

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sheets filed by the assessee, it is clear that no notice u/s 143(2) was either issued or served on the assessee. In view of these facts, respectfully following Hon'ble Delhi High Court judgment in the case of Alpine Electronics Asia Pte Ltd (supra) and V.R. Educational Trust (supra), we hold the reassessment invalid for not serving mandatory notice u/s 143(2) on the assessee. The reassessment is quashed accordingly. " 7.4. The Hon'ble Allahabad High Court in Civil Misc. Writ Petitio .....

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before passing the assessment order under section 143(3) of the Act, issuance of notice under section 143(2) of the Act within the specified time, is mandatory and in case if it is not issued, assessment order passed stand illegal. Thus, in my opinion, ground which has been raised and sought to be added in the grounds of appeal is a legal ground which goes to the root of the matter, and thus, the Tribunal ought to have allowed the application and the ground sought to be added be permitted to be .....

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of India Ltd (1985) 151 ITR 499 (Guj) (FB). Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But wheretlie Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings, we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability.' The argument of learned Standing Counsel t .....

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onal ground, which is annexure-2 stand, allowed " 11.1. Ld. counsel further relied on the order of ITAT in the case of ITO Vs. Naseman Farms Pvt. Ltd. (ITA no. 1175/Del/2011 & CO no. 174/Del/2011) wherein the ITAT in para 9 of its order dated 8-4-2015 has observed as under: 9. 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 docu .....

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284 ITR 80(SC) and National Thermal Power Co. Ltd. Vs. CIT reported in 229 ITR 383 (SC)and the Special Bench decision in the case of DHL operators reported in 108 TIJ 152 (SB). Keeping in view the facts and circumstances of the present case and the arguments raised by the Id. 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 and should be taken up first and .....

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dered by CIT(A) still by filing cross-objection, the assessee can raise this issue. The plea of ld. CIT(DR) that it is purely a question of fact as to whether 143(2) notice was issued or not, is misplaced inasmuch as the non-issuance of notice u/s 143(2) results in raising a question of law as to whether the same results into invalidating the assessment order per se or not. Therefore, this issue is a mixed question of law and fact and goes to the very root of jurisdiction of passing of the asses .....

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duly considered by the ITAT in the case of M/s Silver Line (supra) and, therefore, we proceed to decide the issue raised in the cross objection. 12.3. Admittedly no notice u/s 143(2) was issued to the assessee and only notice u/s 142(1) was issued and on this aspect the ITAT in the case of Silver Line (supra) in para 7.1 of its order has observed as under: 7.1. Now, the moot question for consideration is: Whether the non-issuance of a notice u/s 143(2) of the Act as alleged by the assessee-firm .....

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d the asssessee's submissions, the AO had concluded the re-assessments making certain additions. While doing so, however, no notices u/s 143(2) of the Act were issued to the assessee, even though notice u/s 142(1) of the Act was ordered to be issued on 14.11.2011. This was apparent from the perusal of the Order Sheet for the AY 2005-06 [Source: P 88 of PB-I ARl. This fact has been admitted by the Revenue through a RTI query by the assessee firm [Refer: P 165 of PB AR (A.Y.2006-07)]. The abov .....

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. 142 and 143(2) is mandatory. As per record, we find that there was no notice issued u/s. 143(2) of the Act which is very much essential for reassessment and it is a failure on the part of the AO for not complying with the procedure laid down in section 143(2) of the Act. If the notice is not issued to 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 .....

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duced as under:- "ACIT & Anr. VS. Hotel Blue Moon: [(2010) 321 ITR 362 (SC)] HELD: "It is mandatory for the AO to issue notice u/s 143 (2). The issuance and service of notice u/s 143 (2) is mandatory and not procedural. If the notice is not served within the prescribed period, the assessment order is invalid Reassessment-Notice-Assessee intimating original return be treated as fresh return- Reassessment proceedings completed despite assessee filing affidavit denying serviced of not .....

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affixture as no authorized person was present at assessee's premises - is not a valid service of notice - Assessment framed in pursuance of such notice is not valid - It is immaterial that the assessee appeared in the proceedings." CIT Vs. Cebon India Ltd. (2012) 347 ITR 583 (P&H) 5. We find that concurrent finding has been recorded 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 dispat .....

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under section 148 of the Income Tax Act, 1961. This Court in the case of The Commissioner of Income Tax Vis. Mr. Salman Khan [Income Tax Appeal NO.2362 of 2009) decided on 1st December, 2009 has considered similar question and has held that in the absence of notice under section 143(2) (prior to the insertion of section 29288), the reassessment order cannot be sustained. In the present case, the reassessment year involved relates to the period prior to the insertion of Section 29288. In this vie .....

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reassessment proceedings, the assessee contended before the AO that the original return filed earlier may be treated to nove been filed in response to the notice u/s. 10 ITA NO. 1175/DeI/2011 & CO 174/DEL/2011 147, which is also supported by order sheet entry dated 09.08.2006 (PB-20). It is also not in dispute that AO never issued any notice u/s. 143(2) of the IT Act. The Revenue merely contended that the CIT (A) should have appreciated the provisions of section 292BB of the IT Act. Section .....

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not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment." The above provision has been inserted by the Finance Act, 2008 w.e.f. 01.04.2008. ITAT, Delhi Special Bench in the case of Kuber Tobacco Product Pvt. Ltd. vs. DCIT, 171TD 273 held that section 292BB has been inserted by Finance .....

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not curable defect u/s. 292BB of the IT Act. Considering the above discussion and the case laws cited above, the sole objection of the Revenue is not maintainable. Therefore, the Id. CIT (A) was justified in setting aside the entire assessment order. We, therefore, do not find any infirmity in the order of the Id. CIT (A) for interference. " (v) The Hon'ble Mumbai Bench of the ITAT has, in the case of Sanjeev R Arora v. ACIT [IT (SS)A No.103/MumI2004 dated 25.7.2012], recorded its findi .....

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