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Income-tax Officer, Ward 9(2), New Delhi. Road, Dwarka, Vs. M/s Staunch Marketing Pvt. Ltd., A-402, Krishna Kunj, Naseerpur Road, Dwarka, Phase-I, New Delhi.
May, 14th 2015
                                        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.
                                         2
                                                                             ITA 1643/Del/2008
                                                         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.
                                          3
                                                                                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.
                                             4
                                                                                   ITA 1643/Del/2008
                                                               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
                                          5
                                                                              ITA 1643/Del/2008
                                                          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;
                                          6
                                                                             ITA 1643/Del/2008
                                                         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.
                                          7
                                                                              ITA 1643/Del/2008
                                                          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.
                                         8
                                                                             ITA 1643/Del/2008
                                                         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
                                    9
                                                                         ITA 1643/Del/2008
                                                     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.
                                  10
                                                                        ITA 1643/Del/2008
                                                    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:
                                   11
                                                                        ITA 1643/Del/2008
                                                    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.
                                            12
                                                                                 ITA 1643/Del/2008
                                                             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
                                         13
                                                                              ITA 1643/Del/2008
                                                          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:
                                        14
                                                                              ITA 1643/Del/2008
                                                          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,
                                  15
                                                                      ITA 1643/Del/2008
                                                  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)
                                    16
                                                                          ITA 1643/Del/2008
                                                      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
                                   17
                                                                         ITA 1643/Del/2008
                                                     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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