1
ITA 1643/Del/2008
ITO Vs. M/s Staunch Marketing Pvt. Ltd.
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "G" NEW DELHI
BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER
AND
SHRI H.S. SIDHU: JUDICIAL MEMBER
ITA no. 1643/Del/2008
A.Y. 2003-04
Income-tax Officer, Vs. M/s Staunch Marketing Pvt. Ltd.,
Ward 9(2), New Delhi. A-402, Krishna Kunj, Naseerpur
Road, Dwarka, Phase-I, New Delhi.
PAN: AAFCS 3105 C
AND
C.O. No. 151/Del/2009
( In ITA no. 1643/Del/2008)
A.Y. 2003-04
M/s Staunch Marketing Pvt. Ltd., Vs. Income-tax Officer,
A-402, Krishna Kunj, Naseerpur Ward 9(2), New Delhi.
Road, Dwarka, Phase-I, New Delhi.
( Appellant ) ( Respondent )
Department by : Shri Ramesh Chander CIT (DR)
Assessee by : Shri Ved Jain Adv. &
Shri Venketsh Mohan Choursia CA
Date of hearing : 13-04-2015
Date of order : 12-05-2015.
ORDER
PER S.V. MEHROTRA, A.M:-
This appeal, by the department and the cross-objection by the assessee, are
directed against the order dated 19-2-2008 passed by the ld. CIT(A)-XII, New
Delhi in appeal no. 72/06-07 relating to A.Y. 2003-04.
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ITO Vs. M/s Staunch Marketing Pvt. Ltd.
2. Brief facts of 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. had paid incentives to Shri Surender Singh and Shri
Ravinder Singh who were assessed with Ward 37(1), New Delhi. In the
income-tax return filed in the name of Shri Surender Singh and Shri
Ravinder Singh, refund was claimed against TDS certificates issued by this
company. On enquiry by the ITO Ward 37(1), New Delhi, it was found that
Shri Surender Singh and Shri Ravinder Singh had not filed returns in their
names but Shri Hoshiar Singh, who was a director of M/s Staunch
Marketing Pvt. Ltd. had actually 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 Rs. 17,16,500/- and Rs.
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ITA 1643/Del/2008
ITO Vs. M/s Staunch Marketing Pvt. Ltd.
16,48,890/- respectively. Statements were recorded and after coming to the
conclusion that bogus returns in the names of different persons were filed by
Shri Hoshiar Singh, notice u/s 148 was issued to the company on 19-9-2005,
requiring the company to file the return of income for AY 2003-04. The
assessee did not comply with this notice. Therefore, notice u/s 142(1) was
issued to furnish evidence of income-tax return filed by the company, its
directors and was also required to furnish tax audit report and other details
by 5-12-2005. However, assessee did not respond to the 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 the assessment order. In
this show cause notice the AO pointed out that in the absence of necessary
documents/ books of a/c, vouchers, he was left with no other alternative but
to complete the assessment ex-parte.
3. In respect of this notice the AO has observed as under:
"In response to it, Shri Hoshiar Singh, Director attended the office on 27-
1-2006, filed copy of PAN Card and copy of Identity Card issued by Supdt.
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ITO Vs. M/s Staunch Marketing Pvt. Ltd.
Of Customs (Police), New Customs House, New Delhi for `category' 1st H
Chance and 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
(85986.43)
Gross Total Income Rs. NIL
Tax due Rs. NIL
Tax paid u/s 14A Rs. NIL
Unabsorbed Depreciation Carried Forward u/s 32 85,986.43"
4. The AO has further pointed out that after this return was filed no
compliance was made to the notice issued u/s 142(1) and summons u/s 131.
Therefore, the AO in para 4.3 observed that he was left with no other alternative
but to complete the assessment ex parte. The assessment was accordingly
completed at a total income of Rs. 4,86,08,295/-. Ld. CIT(A) partly 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 Rs. 57,21,746/-
( included in the total amount of Rs. 2,67,25,498/- ) claimed to
have been paid by the assessee as incentives to 19 parties but
could not substantiate the same by producing the details i.e
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ITO Vs. M/s Staunch Marketing Pvt. Ltd.
mode of payments and dates of payments etc. and hence failed
to discharge its primary onus to vouch the payments."
2. "On the facts and in the circumstances of the case, the Ld.
CIT(A) has erred in deleting the addition of Rs. 44,500/-
(included in the total amount of Rs. 3,44,500/-) made u/s 68
whereas the assessee could not furnish any documentary
evidence to substantiate the issue of shares and raising of share
capital."
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 assessment order passed by AO was illegal. He
relied on following case laws:
- ACIT Vs. Hotel Blue Moon (Civil appeal no. 1198 of 2010 (SC) dated
2-2-2010);
- Mrs. Mudra G. Nanawati Vs. DCIT (2009) 30 DTR
(Mumbai)(Trib)217;
- Jyoti Pat Ram Vs. ITO 92 ITD 423 (Luck.);
- ACIT Vs. Smt. Jyoti Devi 84 TTJ (Jai) 689;
- Ms. C. Malathy Vs. ITO 88 ITD 37 (Chennai);
- Smt. Amarjeet Kaur Vs. AcIT 17 DTR (Del)(Trib) 127;
- Aegis Chemical Ind. Ltd. Vs. ITO 65 ITD (Mum) 147;
- Sat Narain Vs. ITO 94 TTJ (Del) 499;
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ITO Vs. M/s Staunch Marketing Pvt. Ltd.
- 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 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 precluded from taking
any objection in any proceeding or inquiry under this Act that the notice
was-
(a) Not served upon him; or
(b) Not served upon him in time; or
(c) Served upon him in an imporoper manner.
10.1. He further pointed out that as per proviso to section 292BB, the
operation of 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.
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ITO Vs. M/s Staunch Marketing Pvt. Ltd.
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 order. He further submitted that
cross objection has been filed belatedly and suffers from latches.
10.3. Ld. CIT(DR) referred to the provisions of section 253(4) of the Act
and submitted that assessee failed to file a memorandum of cross-objection/
additional ground against any part of the CIT(A)'s order within the time
specified in sub-section (3) and, therefore, cannot be acted upon. He further
submitted that whether a notice u/s 143(2) of the Act is issued or not is only
a question of fact and 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 Sandeep M. Patel
22 Taxmann.com 288.
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ITO Vs. M/s Staunch Marketing Pvt. Ltd.
11. Ld. counsel for the assessee in the rejoinder submitted that all the
objections raised by ld. CIT(DR) were also raised in the case of DCIT Vs.
M/s Silver Line (ITA nos. 1809 /Del/2013 & ors; and CO nos. 122,109,107
& 108/Del/2013) wherein the ITAT in paras 7.2, 7.3 and 7.4 of its order
dated 26-9-2014 has observed as under:
7.2. We shall now proceed to analyse the judicial views on
the issue, as under:
The Hon'bleGuwahati High Court in CIT v. Purbanchal
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 assessee as well as by the
AO against the order in appeal Uponfiling of such
cross-objections it has been made obligatory upon
the Tribunal to decide such memorandum of cross-
objections as if it was an appeal There is
absolutely no ambiguity in the provision made
under sub-so (4). Rule 22 of the ITAT Rules
makes it further clear that memorandum of cross-
objections which has been so filed under sub-so (4)
of s. 253 shall be registered and numbered as if it
was an appeal These two provisions stand on 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
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ITO Vs. M/s Staunch Marketing Pvt. Ltd.
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
Dy. CIT(A). In other words, cross-objections need
not be confined to the points taken by the opposite
party in the main appeal The words "against any
part of the order of the Dy. CIT" are wide enough
to cover a situation where the Revenue has
challenged the order of the Dy. CIT(A) on the
merits regarding the quantum of the tax liability,
but the assessee in cross-objections can challenge
the order of the Dy. CIT not only on the quantum
of tax amount but on other points also. In view of
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 decided the issue in favour of the assessee. The
issue, in brief, wasthat the assessee had filed an application
before the Tribunal for admitting additional ground and
proceeding sheet of assessment as additional evidence to the
following effect:
"1. That following ground be please admitted as
additional ground of appeal
Additional ground: That in the absence of notice
issued u/s 143 (2), the reassessment proceedings
and consequential assessment order is without
jurisdiction and unsustainable in law as well as on
merits.
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ITO Vs. M/s Staunch Marketing Pvt. Ltd.
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 and
goes to the root of the matter (and) in view of Hon'ble Supreme
Court judgment in the case of NTPC (supra) -[National
Thermal Power Company Ltd v. CIT 229 ITR 383 (SC)] - we
are inclined to admit the same."
With regard to non-issuance of a notice u/s 143(2) of the Act,
the earlier Bench had, after analysing the submissions of either
of the party, recorded its findings as under:
"6. (On Page 13) Apropos, the issue of notice u/s
143(2) from the assessment order and the proceedings
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
Petition No.1 071 of 2005 judgment dated 25.1.2006] had held
that the Tribunal was not justified in not entertaining the
additional ground raised by the assessee. The additional ground
raised by the assessee was 'whether the assessment order is
invalid on account of non-service of a notice u/s 143(2) within
the stipulated time? It was held by the Hon'ble Court as under:
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ITO Vs. M/s Staunch Marketing Pvt. Ltd.
"Having heard learned Counsel for the parties, in
my view, order of Tribunal is not sustainable.
There is no dispute that 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 added in the grounds
of appeal. In the case of National Thermal Power
Company Ltd v. Commissioner of Income-tax
(supra), the Apex Court held as follows:
'The view that the Tribunal is confined only to issues arising out
of the appeal before the Commissioner of Income-tax (Appeals)
takes too narrow a view of the powers of the Appellate Tribunal
(vide, e.g., CIT v. Anand Prasad (1981) 128 ITR 388 (Del), CIT
v. Karamchand Premchand P. Ltd (1969) 74 ITR 254 (Guj), and
CIT v. Cellulose Products 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 that it is not correct
to say that the notice under section 143(2) of the Act has not
been issued within the specified time, may be correct, but this
aspect of the matter has to be adjudicated by the Tribunal after
entertaining the ground in this respect and for the purposes of
admission of new ground, this aspect of the matter is not
relevant In the result, petition is allowed Order of Tribunal
dated 26.5.2005 (Annexure - I to the writ petition) is quashed.
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ITO Vs. M/s Staunch Marketing Pvt. Ltd.
The application for addition of additional 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 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 ground at any
stage of the proceedings as held by Apex Court in the case of
CIT Vs. Varas International reported in 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 decided,
so we will adjudicate this issue".
12. We have considered the rival submissions and have perused the record
of the case. As far as ld. CIT(DR)'s objection that this issue could not be
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ITO Vs. M/s Staunch Marketing Pvt. Ltd.
raised by way of CO, we find that Tribunal in the case of M/s Silver Line
(supra) has exhaustively considered this issue with reference to the decision
of Hon'ble Guwahati High Court in the case of Purbanchal Parbahan Gosthi
(supra).
12.1. It has been clearly held that even if the issue has not been considered
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 assessment order.
12.2. Ld. CIT(DR) has also referred to section 124(3), which, in our
opinion, is relevant only when the jurisdiction of an AO is challenged on the
basis of area and not otherwise as is evident from sub-section (1) of section
124. The objection raised with reference to section 292BB is also not tenable
because the present assessment year under consideration is 2003-04,
whereas section 292BB is applicable from AY 2008-09. We find that all the
objections raised by ld. CIT(DR) have been 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:
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ITO Vs. M/s Staunch Marketing Pvt. Ltd.
"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 had vitiated the conclusion of the assessments u/s
147 read with s. 143(3) of the Act? On receipt of information
from the DIT (Inv), Jaipur that there were alleged bogus
purchases resorted to by the assessee firm, the AO had re-
opened the assessments of the assessee for the assessment years
under dispute by issuance of notices u/s 148 of the Act.
Subsequently, notice u/s 142(1) of the Act along with
questionnaire was issued to the assessee. In the reassessment
proceedings, after having considered 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
above sequence of events categorically proves that notice u/s
143(2) of the Act was neither issued nor served on the assesee."
12.4. Further we find that in the case of Naseman Farms Pvt. Ltd. (supra),
the ITAT in para 15 of its order has observed as under:
15. In the light of the above, we are of the view that the AO
has not issued notice u/s. 143(2) of the Act which is mandatory.
We are also of the view that in completing the assessment u/s.
148 of the Act, compliance of the procedure laid down u/s. 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 case,
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ITO Vs. M/s Staunch Marketing Pvt. Ltd.
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
Jurisdictional High Court. The relevant portion of the head-
notes of various judgments of the Hon'ble Courts are
reproduced 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 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, 196I,ss.143, 147, 148{I), prov.----
ITOv. R.K. GUPTA [3081TR49 (Delhi) Tribu., "
CIT vs. Vishu & Co. Ltd. In ITA No. 470 of 2008 (2010) 230
CTR (Del) 62
Assessment - validity - Non Service of notice under section
143(2) within time - Notice served on the last date after office
hours by 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)
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ITO Vs. M/s Staunch Marketing Pvt. Ltd.
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 dispatch number will not render the said finding to be
oetvetse. In absence of notice being setveo. the AO had no
jurisdiction to make assessment. Absence of notice cannot be
held to be curable under s 29288 of the Act.
CIT Vs.Mr. Salman Khan, ITA No.508 of 2010
I. In the present case, reassessment order passed under section
143(3) r/w 147 of the Income Tax Act, 1961 is held to be bad in
law in view of the fact that the assessing officer has not issued
notice under section 143(2) after issuing notice 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 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/De1/2013
vii. The Hon'ble ITAT of Agra 8ench, in the case of ITO v.
Aligarh Auto Centre reported in 152 ITJ (Agra) 767, on an
identical issue that of the present issue, has recorded its findings
as under:
"5. We have considered the rival submissions and the
material on record. It is not in dispute that the assessee
filed original return of income and at .the 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
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ITO Vs. M/s Staunch Marketing Pvt. Ltd.
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 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 precluded from taking any
objection in any proceeding or inquiry under this Act that
the notice was-
(a) 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 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
India Ltd. (supra) squarely applies against the revenue. It was
held in this case that absence of notice is 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
18
ITA 1643/Del/2008
ITO Vs. M/s Staunch Marketing Pvt. Ltd.
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 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 in the
assessment proceedings then at a later stage the assessee
is precluded from raising such objection. Therefore, the
provisions of section 2928 are not applicable in the case
where the assessing officer has not at all issued notice
under section 143 (2) within the period as prescribed."
7.9. Taking into account the facts and circumstances of the
issue as deliberated upon in the fore-going paragraphs and also
in views of the judicial pronouncements (supra), we are of the
view that the re-assessment's made for the assessment years
under consideration have become invalid for not having served
the mandatory notice u/s 43(2) of the Act on the assessee. It is
ordered accordingly.
7. 10 We have since decided that the re-assessment proceedings
concluded u/s 147 r/w 143(3) of the Act were invalid for the
AYs under dispute, the issues raised by the revenue in its
appeals and also the Cross objections of the assessee firm based
on the invalid assessment orders have not been addressed to."
12.5. Respectfully following the decisions cited in the case of Naseman
Farms Pvt. Ltd. (supra), the ground raised in the cross objection is allowed
19
ITA 1643/Del/2008
ITO Vs. M/s Staunch Marketing Pvt. Ltd.
and the impugned assessment order is cancelled. In the result, the assessment
order is held to be void ab initio. The grounds raised by the department in its
appeal have become infructruous and are treated accordingly.
13. In the result, revenue's appeal is dismissed and the asessee's cross
objection is allowed.
Order pronounced in open court on 12-05-2015.
Sd/- Sd/-
(H.S. SIDHU) ( S.V. MEHROTRA )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 12-05-2015.
MP: Copy to :
1. Assessee
2. AO
3. CIT
4. CIT(A)
5. DR
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