IN THE INCOME TAX APPELATE TRIBUNAL
DELHI BENCH "SMC": NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
ITA NO. 3586/DEL/2018
A.Y. 2008-09
SATISH KUMAR, VS. ITO, WARD 2(3),
RRA TAXINDIA, FARIDABAD
D-28, SOUTH EXTENSION, PART-I,
NEW DELHI 49
(PAN: AAVPK4726E)
(Appellant) (Respondent)
Assessee by : Sh. Somil Aggarwal, Adv.
Department by : Sh. S.L. Anuragi, Sr. DR.
ORDER
This is an appeal by the Assessee against the order dated 12.3.2018
of the Ld. CIT(A), Faridabad relevant to assessment year 2008-09 on the
following grounds:-
1) That having regard to the fact and circumstances of
the case, Ld. C1T (A) has erred in law and on facts
in confirming the action of Ld. AO in framing the
impugned reassessment order as the assessment
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order was passed without complying with the
mandatory conditions of section 147 to 151 of the
Income Tax Act, 1961 and without recording valid
reasons as per law and without obtaining valid
approval as per law and in any case reopening of
the assessment and framing of the reassessment
order was contrary to law.
2) That in any view of the matter and in any case,
action of Ld.CIT(A) in confirming the action of Ld.
AO in reopening of the impugned assessment u/s
143(3)/147 is bad in law and against the facts and
circumstances of the case.
3) That having regard to the facts and circumstances
of the case, Ld. CIT(A) has erred in law and on facts
in upholding the action of the Ld. A.O. in framing
the impugned reassessment in u/s 143(3)/147 of
the Act, and that too without issuing / serving the
mandatory notice u/s 143(2) within the statutory
allowable period and more so by not fulfilling the
requirements of the provisions of law.
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4) That in any view of the matter and in any case,
action of Ld.CIT(A) in confirming the action of Ld.
A.O. in restricting the addition to the extent of Rs.
17,77,886/- being 12.5% of the purchases i.e. Rs.
1,42,23,093/- claimed to have been made, allegedly
on account of bogus purchases from M/s Maa Durga
Trading Company and that too without proper
appreciation of facts on record, and by recording
incorrect facts and findings, and making allegations
without any basis, material or evidence and merely
on the basis of surmises and conjectures and
without observing the principal of natural justice.
5) That in any case and in any view of the matter,
action of Ld. CIT(A) in confirming the addition of Rs.
17,77,886/- is bad in law and against the facts and
circumstances of the case.
6) That having regard to the facts and circumstances
of the case, Ld. CIT(A) has erred in law and on facts
in confirming the action of AO in passing the
impugned order without giving adequate
opportunity of being heard.
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7) That the appellant craves the leave to add, alter or
amend the grounds of appeal at any stage and all
the grounds are without prejudice to each other.
2. The brief facts of the case are that the assessee filed his return of
income declaring at Rs. 2,54,083/- on 24.4.2008. Later on, as per the
information available with the Department the proceedings u/s. 147 fo the
I.T. Act, 1961 were initiated after recording reasons by AO. Notice u/s. 148
of the Act was issued on 26.3.2015. In response to notice u/s. 148 fo the
Act no return was filed by the assessee. The reassessment u/s.
143(3)/147 was completed on 21.3.2016 at an assessed income fo Rs.
45,21,010/-. AO on going through the information received from
Investigation Wing, found that the assessee has made payment of Rs.
1,83,43,517/- to M/s Maa Durga Trading Company on account of
accommodation entries provided by him to the assessee during the year.
Against the order of the AO, the assessee appealed before the ld. CIT(A),
who vide his impugned order dated 12.3.2018 has partly allowed the appeal
of the assessee. Aggrieved with the order of the Ld. CIT(A), assessee
appealed before the Tribunal.
3. Ld. Counsel for the assessee has only argued the ground no. 3
relating to upholding the action of the AO in framing the impugned
reassessment u/s. 143(3)/147 of the Act, and that too without issuing /
serving the mandatory notice u/s. 143(2) of the Act within the statutory
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allowable period and more so by not fulfilling the requirements of the
provisions of law. During the hearing, ld. counsel for the assessee stated
that the assessee filed its return of income on 24.4.2008 declaring total
income of Rs. 2,94,083/-. The AO started the proceedings u/s. 147 of the
Act after recording the reasons on 26.3.2015 and accordingly issued notice
u/s. 148 of the Act to the assessee on 26.3.2015. But the assessee did not
appear and has also not filed return in response to the same. AO has
issued notice u/s. 142(1) for 23.6.2016, 15.7.2015, but again assessee did
not appear nor filed any return. Due to change of jurisdiction again notice
u/s. 142(1) was issued on 12.8.2015 fixing the case for 26.8.2015 which
was received by the assessee and in response to the same the AR of the
assessee appeared on 12.8.2015 and filed power of attorney, copy of ITR
alongwith computation and requested to treat the original return filed in
response to the notice u/s. 148 of the Act. He draw my attention towards
page no. 14 which is the copy of the notice u/s. 148 of the Act dated
26.3.2015 and also the page no. 16 which the copy of the notice u/s.
143(2) of the Act dated 12.8.2015 and also page no. 17 which the copy of
the reply filed by the AR of the assessee dated 07.9.2015 in which the
assessee has filed some documentary evidence which the copy of income
tax return alongwith computation of income for AY 2008-09, copy of Audit
Report for the FY 2007-08 and copy of Auditable Balance Sheet alongwith
complete annexure, trading and profit and loss account with complete
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annexure. Finally he stated that AR of the assessee appeared on
12.8.2015 and stated that original return filed by the assessee may be
treated the return of income filed in response to the notice u/s. 148 of the
Act, but on the same date the AO given the notices to the assessee i.e.
12.8.2015 u/s. 143(2) of the Act which is at page no. 16 of the Paper Book.
He stated that in response to the return filed by the assessee which is a
letter dated 12.8.2015 when the assessee's counsel appeared and made the
statement on the same date that AO had issued notice dated 12.8.2015 is
invalid, void abinitio for want of valid notice u/s. 143(2) of the Act. He
further submitted that the additional ground in identical facts has been
accepted and assessment u/s. 143(3) of the Act was passed without proper
issue and service of notice u/s. 143(2) of the Act, which was later quashed
by the ITAT and the Hon'ble High Court in the following cases:-
i) Hon'ble Delhi High Court in the case of Director of Income Tax Vs.
Society for Worldwide Inter Bank Financial, Telecommunications in
ITA No. 441/2010, reported at 323 ITR 249
ii) Delhi ITAT in case of Micron Enterprises Pvt. Ltd. Vs. ITO in I.T.A
No. 901/DEL/2016 (A.Y .2006-07) order dated 14/05/2018
iii) Delhi ITAT in Harsh Bhatia case ITA Nos. 1262/& 1263/DEL/2017
[A.Ys. 2008-09 & 2009-10] order dated 17.10.2017.
iv) Delhi ITAT, in the case of Ashtech Industries Pvt. Ltd. vs. DCIT in
ITA No. 2332/Del/2018 (AY 2009-10) dated 20.12.2018.
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4. On the contrary, Ld. DR relied upon the orders of the authorities
below and opposed the request of Ld. counsel for the assessee and prayed
for dismissal of ground no. 3, because assessee did not file return under
section 148 within the specified period.
5. I have heard both parties and perused the records, especially the
assessment order, paper book and the impugned order as well as the
notice, I find that AO started the proceedings u/s. 147 of the Act after
recording the reasons on 26.3.2015 and accordingly issued notice u/s. 148
of the Act to the assessee on 26.3.2015. But the assessee did not appear
and has also not filed return in response to the same. AO has issued notice
u/s. 142(1) for 23.6.2016, 15.7.2015, but again assessee did not appear
nor filed any return. Due to change of jurisdiction again notice u/s. 142(1)
was issued on 12.8.2015 fixing the case for 26.8.2015 which was received
by the assessee and in response to the same the AR of the assessee
appeared on 12.8.2015 and filed power of attorney, copy of ITR alongwith
computation and requested to treat the original return filed in response to
the notice u/s. 148 of the Act. After perusing the Paper Book especially the
page no. 14 which is the copy of the notice u/s. 148 of the Act dated
26.3.2015; page no. 16 which the copy of the notice u/s. 143(2) of the Act
dated 12.8.2015 and also page no. 17 which is the copy of the reply filed by
the AR of the assessee dated 07.9.2015 in which the assessee has filed
some documentary evidence which the copy of income tax return
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alongwith computation of income for AY 2008-09, copy of Audit Report for
the FY 2007-08 and copy of Auditable Balance Sheet alongwith complete
annexure, trading and profit and loss account with complete annexure, I
find considerable cogency in the submission of the assessee's counsel that
assessee appeared on 12.8.2015 and stated that original return filed by the
assessee may be treated the return of income filed in response to the
notice u/s. 148 of the Act, but on the same date the AO given the notices to
the assessee i.e. 12.8.2015 u/s. 143(2) of the Act which is at page no. 16
of the Paper Book, which shows non-application of mind on the part of the
of the AO. Therefore, notice under section 143(2) is invalid and
resultantly, the assessment is vitiated and is liable to be quashed. I
accordingly, set aside the orders of the authorities below and quash the
reassessment proceedings in the matter and allow the legal ground no. 3
argued by the Ld. counsel for the assessee. Since the reassessment has
been quashed, there is no need to adjudicate the other grounds. My
aforesaid view in allowing the ground no. 3 which is legal in nature, is
squarely covered in favour of the assessee by the following
judgment/decisions wherein on identical facts and circumstances of the
case, the reassessment was quashed.
5.1 The Hon'ble Delhi High Court in the case of Director of Income Tax vs.
Society for Worldwide Interbank Financial Telecommunications (2010) 323
ITR 249 (Del.) has held as under :
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"Both the CIT(A) and the Tribunal have returned a concurrent and
clear finding of fact that the notice under s. 143(2) was issued on
23rdMarch, 2000 and since the return was filed on 27thMarch, 2000,
the notice was not a valid one and, therefore, the assessment
completed on the basis of the notice was also invalid and was
consequently set aside. It is for the first time that the counsel for
the appellant contends that the notice, in fact, was issued on
27thMarch, 2000 and not on 23rdMarch, 2000, the date which is
recorded on the notice itself. No such contention was raised before
the lower appellate authorities. Consequently, the said contention
cannot be raised before the Court for the first time. The appellant
has stated that the return was filed by the assessee on 27thMarch,
2000 and the notice under s. 143(2) was served upon the
Authorized Representative of the assessee by hand when the
Authorized Representative of the assessee came and filed return.
However, the date of the notice was mistakenly mentioned as
23rdMarch, 2000. Assuming the aforesaid to be true, the notice was
served on the Authorized Representative simultaneously on his filing
the return which clearly indicates that the notice was ready even
prior to the filing of the return. The provisions of s. 143(2) make it
dear that the notice can only be served after the AO has examined
the return filed by the assessee. Whereas it is dear that when the
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assessee came to file the return, the notice under s. 143(2) was
served upon the Authorized Representative by hand. Thus, it would
amount to gross violation of the scheme of s. 143(2)."
5.1.1. And the conclusion is as under :
"Assessment made in pursuance of a notice under section
143(2) issued on 23rd March, 2000 when the return was filed on
27th March, 2000 is invalid."
5.2 The ITAT, Delhi in the case of Shri Harsh Bhatia, New Delhi vs. ITO,
Ward-50(3), New Delhi in ITA.No.1262 and 1263/Del./2017 dated
17.10.2017 has held as under :
10. "It was further argued by the ld. counsel for the
assessee Dr. Rakesh Gupta that notice u/s 143(2) of the
Act, was issued on 17.09.2014 and which is the same date
on which return was filed. This is apparent from the
Assessing Officer's order in para 3 at page 1. Therefore,
the Assessing Officer has not applied his mind
independently while issuing notice u/s 148 of the Act. On
this count also, the assessment deserves to be quashed.
Accordingly, under the facts and circumstances of the
case, the legal grounds of the assessee are allowed."
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5.3 The ITAT, Delhi Bench in the case of Micron Enterprises Pvt. Ltd. vs.
ITO ITA No. 801/Del/2016 (AY 2006-07) vide order dated 14.5.2018 has
held as under:-
"5. Learned Counsel for the Assessee submitted that
assessee filed reply to the notice under section 148 of the
I.T. Act on dated 26.11.2013 which is noted in the
assessment order, copy of which, is filed at page-11 of
the paper book, in which, assessee explained that the
return already filed under section 139(1) may be treated
as return filed in response to notice under section 148 of
the I.T. Act. He has submitted that on the same day A.O.
issued notice under section 143(2) i.e., on 26.11.2013,
copy of which, is filed at page-12 of the paper book. He
has, therefore, submitted that the A.O. has not validly
assumed jurisdiction under section 147 and 143(3) of the
I.T. Act to pass the assessment order against the
assessee. He has submitted that the issue is covered in
favour of the assessee by the judgment of the Hon'ble
Delhi High Court in the case of Director of Income Tax vs.
Society for Worldwide Interbank Financial
Telecommunications (2010) 323 ITR 249 (Del.) in which it
was held as under : "Both the CIT(A) and the Tribunal
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have returned a concurrent and clear finding of fact that
the notice under s. 143(2) was issued on 23rd March,
2000 and since the return was filed on 27th March, 2000,
the notice was not a valid one and, therefore, the
assessment completed on the basis of the notice was also
invalid and was consequently set aside. It is for the first
time that the counsel for the appellant contends that the
notice, in fact, was issued on 27th March, 2000 and not
on 23rd March, 2000, the date which is recorded on the
notice itself. No such contention was raised before the
lower appellate authorities. Consequently, the said
contention cannot be raised before the Court for the first
time. The appellant has stated that the return was filed by
the assessee on 27th March, 2000 and the notice under s.
143(2) was served upon the Authorized Representative of
the assessee by hand when the Authorized Representative
of the assessee came and filed return. However, the date
of the notice was mistakenly mentioned as 23rd March,
2000. Assuming the aforesaid to be true, the notice was
served on the Authorized Representative simultaneously
on his filing the return which clearly indicates that the
notice was ready even prior to the filing of the return. The
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provisions of s. 143(2) make it dear that the notice can
only be served after the AO has examined the return filed
by the assessee. Whereas it is dear that when the
assessee came to file the return, the notice under s.
143(2) was served upon the Authorized Representative by
hand. Thus, it would amount to gross violation of the
scheme of s. 143(2)."
5.1. And the conclusion is as under : "Assessment made
in pursuance of a notice under section 143(2) issued on
23rd March, 2000 when the return was filed on 27th
March, 2000 is invalid."
6. He has submitted that the same order have been
followed by ITAT, Delhi Bench, in the case of Shri Harsh
Bhatia, New Delhi vs. ITO, Ward-50(3), New Delhi in
ITA.No.1262 and 1263/Del./2017 dated 17.10.2017 in
which the Tribunal held as under :
10. "It was further argued by the ld. counsel for the
assessee Dr. Rakesh Gupta that notice u/s 143(2) of
the Act, was issued on 17.09.2014 and which is the
same date on which return was filed. This is
apparent from the Assessing Officer's order in para
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3 at page 1. Therefore, the Assessing Officer has
not applied his mind independently while issuing
notice u/s 148 of the Act. On this count also, the
assessment deserves to be quashed. Accordingly,
under the facts and circumstances of the case, the
legal grounds of the assessee are allowed."
7. On the other hand, Ld. D.R. submitted that assessee
did not file return under section 148 within the specified
period. Therefore, this ground of appeal of assessee may
be dismissed.
8. After considering the rival submissions, I am of the
view that the issue is covered in favour of the assessee by
the Judgment of Hon'ble Delhi High Court in the case of
Director of Income Tax vs. Society for Worldwide
Interbank Financial Telecommunications (supra) and
Order of ITAT, Delhi Bench in the case of Shri Harsh
Bhatia, New Delhi vs. ITO, Ward-50(3), New Delhi
(supra). It is an admitted fact that assessee filed reply in
response to the notice under section 148 of the I.T. Act on
26.11.2013 and submitted before A.O. that original return
filed before him may be treated as return filed in response
to the notice under section 148 of the I.T. Act. The A.O.
on the same day served notice under section 143(2) upon
assessee-company whose signature tally on the said
notice. Therefore, notice issued under section 143(2) is
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invalid and resultantly, the assessment is vitiated and is
liable to be quashed. I, accordingly, set aside the orders
of the authorities below and quash the re-assessment
proceedings in the matter. Resultantly, all additions
stands deleted. In view of the above, there is no need to
decide other contentions raised by Learned Counsel for
the Assessee.
9. In the result, appeal of assessee is allowed."
6. In the result, appeal of the assessee stands allowed.
Order pronounced on 14-01-2019.
Sd/-
[H.S. SIDHU]
JUDICIAL MEMBER
Date:14/01/2019
SRBhatnagar
Copy forwarded to: -
1. Appellant 2. Respondent 3. CIT 4.CIT (A) 5. DR, ITAT
TRUE COPY By Order,
Assistant Registrar, ITAT, Delhi Benches
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