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2017 (3) TMI 436 - ITAT DELHI

2017 (3) TMI 436 - ITAT DELHI - TMI - Validity of reopening of assessment - Held that:- Notice u/s 143(2) of the I.T. was never issued. Thus since the AO did not issue notice u/s 143(2) of the IT Act,1961 which is a compulsory requirement of the statute, the impugned order u/s 147 deserves to be invalidated - Decided in favour of assessee - ITA No. 2887/Del/2016, C.O. NO. 347/DEL/2016 - Dated:- 9-3-2017 - SHRI H.S. SIDHU, JUDICIAL MEMBER For The Department : Sh. S.K. Jain, Sr. DR For The Assesse .....

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n the grounds that no notice u/s. 143(2) of the Act was issued and thereby deleting addition of ₹ 40,00,000/- made by the AO on account of unexplained entries u/s. 68 of the Act. 2. The appellant craves, leave or reserving the right to amend modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 3. The grounds raised in the Assessee s Cross Objection read as under:- The Respondent - assessee has received notice of departmental appeal n .....

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w on merits. 2. On the facts and in the circumstances of the case, the order of AO dated 20.3.2013 is totally illegal and unsustainable, both on facts and in law, in view of notice u/s. 148 not having been served and no reasons recorded and the order was passed illegally u/s. 147/143(3) without complying with the statutory requirements. 3. On the facts and in the circumstances of the case, the illegal addition of ₹ 40 lacs perversely made by the AO is impermissible; both on facts and in la .....

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not call for interference. 5. The Respondent - assessee prays for hearing and decision of the Appeal of the Revenue and Cross objection of the assessee together. 4. The facts in brief are that the assessee filed its return declaring income of ₹ 38,220/- on 28.10.2005. The return was processed u/s. 143(1) of the I.T. Act., 1961. Subsequently, on the basis of information received from Addl. DIT(Inv.), New Delhi that the assessee is a beneficiary of accommodation entry of ₹ 31,50,000/- .....

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22.11.2012, 18.2.2013 and accordingly, the assessee s AR attended and filed the details of amount received from by M/s Stellar Investments Ltd. amounting to ₹ 21,50,000/- and Mehul Finvest Pvt. Ltd. amounting to ₹ 10,00,000/- alongwith the copy of confirmation, balance sheet and affidavits of the Directors of both the companies. The details filed by the assessee were rejected by the AO due discrepancies noticed during the assessment proceedings. As per the copy of the ITR filed by th .....

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he assessee by the Adonis Financial Services Pvt. Ltd. after depositing cash in their bank accounts remains unexplained and was accordingly added to the income of the assessee as its income from undisclosed sources. Accordingly, the income was assessed at ₹ 40,38,220/- u/s. 147/143(3) of the I.T. Act, 1961 vide order dated 20.3.2013. 5. Aggrieved with the aforesaid assessment order, assessee preferred an appeal before the Ld. CIT(A), who vide his impugned Order dated 20.3.2013 has allowed .....

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stated that Ld. CIT(A) has passed a well reasoned order which needs to be upheld and accordingly, the appeal of the Revenue may be dismissed and Cross Objection filed by the Assessee may be allowed. 9. I have heard both the parties and perused the records, especially the impugned order passed by the Ld. CIT(A). I find that Ld. CIT(A) has decided the appeal in assessee s favour by dealing the legal issue i.e. not serving the notice u/s. 143(2) of the I.T. Act and adjudicated the issue in dispute .....

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on 28.10.2005 vide Ack. No. 1345 declaring a net income of ₹ 38,220 under section 115JB of the Income Tax Act, 1961 and the same was processed under section 143(1) of the Act." Subsequently, on the basis of information received from Addl. DIT(lnv.), Unit II, New Delhi that the assessee is a beneficiary of accommodating entry of ₹ 31,50,000/- The said accommodation entry is stated to have been provided by one Mr.Surendra Kumar Jain, who provided accommodation entry to varies ben .....

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ct, 1961. Notice u/s 142(1) dated 10.07.2-12 fixing the date of hearing on 23.07.2012. The same remains uncomplied with. Notice u/s 142(1) dated 22.11.2012 fixing the date of hearing on 03.12.2012. The same remains uncomplied with. Notice u/s 142(1) dated 18.02.2013 fixing the date of hearing on 25.02.2012. the same remains uncomplied with." 3.2. Regarding the above the appellant submitted that all these above notices were served to wrong address. 3.3. It is noticed that notice u/s 143(2) w .....

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undantly clear that a reassessment order cannot be passed without compliance with the mandatory requirement of notice being issued by the AO to the Assessee under Section 143(2) of the Act, the ITAT was in the present case right in concluding that the reassessment orders in question were legally unsustainable." 4.2. The Hon'ble Court has given the following reasoning for this conclusion. "The Proposal to reopen an assessment under Section 147 of the Act is to be based on reasons to .....

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t, the impugned order u/s 147 dated 20.03.2013 is not sustainable in law. Same is annulled. 6. In view of the above, the remaining grounds of appeal are not required to be adjudicated. 7. In the result, the appeal is allowed. 9.1 After perusing the aforesaid findings of the Ld. CIT(A), it is noticed that notice u/s 143(2) of the I.T. was never issued. I further note that in the appellate proceedings the assessee has submitted that since the AO did not issue notice u/s 143(2) of the IT Act,1961 w .....

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