TMI Blog2018 (12) TMI 1327X X X X Extracts X X X X X X X X Extracts X X X X ..... ls filed by the Revenue and cross objections by both the assessee pertaining to A.Y. 2011-12 are directed against the order of Ld. Commissioner of Income Tax(Appeals)-II, Indore, (in short CIT(A) ), vide order dated 23.12.2016 which is arising out of the order u/s 143(3) of the Income Tax Act 1961(hereinafter called as the Act ) framed on 30.10.2015 by ACIT-Khandwa. 2. As common issues have been raised in these appeals and Cross Objections these were heard together and are being disposed off by this common order for the sake of convenience and brevity. In the case of Sukhmani Cotton Industries: The Revenue has taken following grounds of appeal in ITANo.222/Ind/2017 Whether on the facts and in the circumstances of the case, the ld. CIT(A) was justified in restricting the addition made on account of bogus purchase to 6% of total bogus purchases of ₹ 67,75,050/- The assessee (namely Sukhmni Cotton Industries) has raised following grounds of appeal in Cross Objection No.16/Ind/2018 1) That the learned Commissioner of Income tax (A) erred in law in not deciding the issue relating to validity of reopening the assessment u/s. 147 of the Act based on rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order passed without issue of such notice deserves to be quashed as failure to issue notice u/s. 1 43(2) renders the reassessment void. 3. We will first take up the cross objections for A.Y. 2011- 12 raised by both assessees challenging the validity of the assessment proceedings completed u/s 143(3) r.w.s. 147 of the Act alleging that notice u/s 143(2) of the Act was not served upon the assessee during reassessment proceedings. As both the parties have accepted that the facts relating to this common issue raised in cross objections are similar we will take the facts of Sukhmani Cotton Industries for adjudication purpose. 4. The facts in brief are that e-return of income was filed on 24.09.2011 declaring income of ₹ 46,83,090/-. Case was picked up for scrutiny through CASS and assessment u/s 143(3) of the Act was framed on 22.03.2013 assessing income at ₹ 50,00,000/-. Subsequently, the case was reopened by issuance of notice u/s 148 of the Act dated 23.03.2015 on the basis of information received from DCIT investigation Mumbai for the alleged bogus purchases. Immediately, after issuance of notice u/s 148 of the Act and recording reasons the assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y issuance of notice u/s 148 of the Act. PCIT vs. Shree Jai Shiv Shankar Traders Pvt. Ltd. IT Appeal No.1068 of 2013 dtd. 18.02.2015 A.Y. 2008-09 (Delhi High Court ) (2016) 383 ITR 448 Energy In Review Petition No.441/2011 in ITANo.950/2008 (CIT vs. Madhya Bharat Energy Corporation) this Court reviewed its main judgment in the matter rendered on 11th July 2011 on the ground that the said appeal had not been admitted on the question concerning the mandatory compliance with the requirement 0 issuance of notice under Section 143(2) of the Act. The upshot of the above discussion is that the decision 0 this Court in CIT vs. Madhya Bhara Energy Corporation(Supra) is not of any assistance to the Revenue as far as the issue in the present case is concerned. (Para-9) ACIT vs. Greater Noida Industrial Development Authority (2015) 93 CCH 185 (All HC) A.Y. 2011-12 CIT vs. Rajiv Sharma (2011) 336 ITR 678 (All.) Since the Assessing Officer failed to 52 to 57 issue notice within the specified period under Section 143(2) of the Act, the Assessing Officer had no jurisdiction to assume jurisdiction under Sector 143(2) of the Act and this defect cannot be cured by taking r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aders Pvt. Ltd. (supra) wherein Hon'ble High Court of Delhi has held dismissing the appeal of the revenue that there was no legal infirmity in the order of the Tribunal as subsequent to the statement of the assessee on the returnable date to treat the original return filed as a return while pursuant to notice u/s 148 of the Act, the assessing officer s failure to issue notice u/s 143(2) of the Act invalidated the order of reassessment . We find that in the recent decision given by Income Tax Appellate Tribunal, Delhi Bench on 02.01.2018 in the case of ACIT vs. Dimension Promoters Pvt. Ltd. in ITANo.1105/Del/2011 similar issue came for adjudication and the Coordinate Bench has dismissed the revenue s appeal placing reliance on various judgments including the judgment of Hon'ble High Court of Delhi in the case of PCIT vs. Shree Jai shiv Shankar Traders Pvt. Ltd. (supra) and also discussed about the judgment of Hon'ble High Court of Delhi in the case of CIT vs. Madhya Bharat Energy Corporation (supra) which was relied by the Ld. DR and Coordinate Bench of I.T.A.T., Delhi has noted this fact that the judgment relied on by Ld. DR has already been considered by Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 389 (Del). 4. The ld. AR, in his rejoinder, submitted that after considering the judgment of Madhya Bharat Energy Corpn. (supra), the Hon'ble Delhi High Court in the case of Alpine Electronics Asia Pvt. Ltd. Vs. DCIT (supra) and in V.R. Education Trust in appeal No. 510 of 2011 has again held that service of notice u/s. 143(2) is a mandatory requirement even in the proceedings u/s. 148 of the Act. 5. We have heard the rival parties and have gone through the material placed on record. From the findings of the Assessing Officer and ld. CIT(A), one thing is apparent that no notice u/s. 143(2) was issued to the assessee as the ld. CIT(A) himself has held that mere non-issuance of notice u/s. 143(2) by itself cannot be said to vitiate the assessment proceedings. In a number of judgments delivered by various Courts and Tribunals, it has been held that service of notice u/s. 143(2) is mandatory requirement. The Hon'ble Delhi High court in recent case of Indus Tower Limited vs. CIT vide its judgment dated 29.05.2017 has also considered similar issue by following the judgment of Hotel Blue Moon, 321 ITR 366 (SC) and CIT vs. Jai Shree Shiv Shankar and has again decided th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been admitted on the question concerning the mandatory compliance with the requirement of issuance of notice under Section 143(2) of the Act. In its review order, this Court noted that at the time of admission of the appeal on 17th February, 2011 after noticing that in the said case that no notice under Section 143(2) had ever been issued, the Court held that no question of law arose on that aspect. The upshot of the above discussion is that the decision of this Court in CIT v. Madhya Bharat Energy Corporation (supra) is not of any assistance to the Revenue as far as the issue in the present case is concerned. Therefore, this judgment is also not relevant and in view of the facts discussed on the judgment relied on by the Ld. DR, this is distinguishable on the facts. 7. Hon'ble Delhi High court in the case of CIT vs. Shri Jai Shiv Shankar Pvt. Ltd. (supra) has also considered the judgment of Delhi High court in the case of Mandhya Bharat Energy Corporation (supra) and has also considered the decision in the case of CIT vs. Vision Inc. (supra) and after considering these judgments, Hon'ble High Court decided the issue in favour of the assessee wherein it has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return filed pursuant to the notice under Section 148 of the Act, was fatal to the order of re-assessment. 12.The narration of facts as noted above by the Court makes it clear that no notice under Section 143(2) of the Act was issued to the Assessee after 16th December 2010, the date on which the Assessee informed the AO that the return originally filed should be treated as the return filed pursuant to the notice under Section 148 of the Act. 13. In DIT v. Society for Worldwide Interbank Financial Telecommunications (2010) 323 ITR 249 (Del), this Court invalidated an reassessment proceedings after noting that the notice under Section 143(2) of the Act was not issued to the Assessee pursuant to the filing of the return. In other words, it was held mandatory to serve the notice under Section 143(2) of the Act only after the return filed by the Assessee is actually scrutinized by the AO. 14. The interplay of Sections 143 (2) and 148 of the Act formed the subject matter of at least two decisions of the Allahabad High Court. In CIT v. Rajeev Sit anna (2011) 336ITR 678 (All.) it was held that a plain reading of Section 148 of the Act reveals that within the statutor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to issue a notice under Section 143 (2) of the Act and in the absence of a notice under Section 143 (2) of the Act, the assumption of jurisdiction itself would be invalid. A) In the same decision in v. Salarpur Cold Storage (P.) Ltd.{ supra), the Allahabad High Court noticed that the decision of the Supreme Court in ACIT v. Hotel Blue Moon {supra) where in relation to block assessment, the Supreme Court held that the requirement to issue notice under Section 143(2) was mandatory. It was not a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. The Madras High Court held likewise in Sapthagiri Finance Investments v. ITO (2013) 90 DTR 289 (Mad). The facts of that case were that a notice under Section 148 of the Act was issued to the Assessee seeking to reopen the assessment for AY 2000- 01. However, the Assessee did not file a return and therefore a notice was issued to it under Section 142 (1) of the Act. Pursuant thereto, the Assessee appeared before the AO and stated that the original return filed should be treated as a return filed in response to the notice under Section 148 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of reassessment. 8. In view of the above facts and circumstances, we decide the ground No. 3 of cross objections in favour of the assessee and we hold that the reassessment order passed in this case is bad, void ab initio. In view of our decision on ground No. 3, the rest of the grounds taken in the cross objections do not require any adjudication. Accordingly, the cross objections filed by the assessee are partly allowed. The appeal filed by the Revenue has become infructuous and, therefore, same is dismissed. 9. In nutshell, the cross objections filed by the assessee are partly allowed and the appeal filed by the Revenue is dismissed. 13. We, therefore, respectfully following the judgment of Hon'ble Delhi High Court in the case of Shree Jai Shiv Shankar Traders Pvt. Ltd. (supra) as well as decision of Coordinate Bench of Delhi in the case of Dimension Promoters Pvt. Ltd. (supra) and in the given facts and circumstances of the case, are of the considered opinion that even though notice u/s 148 of the Act has been issued but the notice u/s 143(2) of the Act has not been issued in the case of both the assessees namely M/s.Sukhmani Cotton Industries Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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