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ITO vs. Gravity Systems Pvt. Ltd (ITAT Delhi)
June, 28th 2017

S. 143(2) notice: If the Department fails to produce evidence relating to the issue and service of the s. 143(2) notice, an adverse inference has to be drawn as per s. 114 of the Evidence Act. The s. 143(3) assessment order has to be held invalid and void ab initio

(i) The Tribunal vide order dated 28.11.2016 directed the Departmental Representative to produce the assessment record on the next date of hearing on 31.1.2017, but no such record was produced by the ld. D.R. and therefore the case was adjourned to 31.1.2017 and ultimately it was adjourned for 16.3.2017. When the Bench asked the ld. D.R. to produce the record to prove whether any notice under section 143(2) of the Act has been issued or served on the assessee, the ld. D.R. was fair enough to admit that he has written to the Assessing Officer but the Assessing Officer has stated that the record has been misplaced and is not traceable.

(ii) We are of the view that once this Tribunal has directed the Revenue to produce the record with regard to the assessment so that it can be verified whether notice under section 143(2) of the Act has been issued and served on the assessee before completing the assessment under section 147/148 of the Act, the Revenue was bound to produce the record. But the Revenue could not produce the record and just explained in the Bar that the record has been misplaced.

(iii) Under these circumstances, we are bound to take an adverse inference in view of the provisions of section 114 of the Evidence Act to the effect that had the assessment record been produced, the same would have gone against the interest of the Revenue.

(iv) Our aforesaid view is duly supported by the decision of the Hon’ble jurisdictional High Court in the case of CIT vs. Motor General Finance Ltd., 254 ITR 449 (Delhi). Respectfully following the decision of the Hon’ble jurisdictional High Court, we hold that no notice under section 143(2) of the Act has been issued or served on the assessee before completion of assessment under section 147/148 of the Act. Once this inference is drawn, the contention of the ld. A.R. of the assessee was that non-issuance and service of notice under section 143(2) of the Act before completion of the assessment under section 147/148 of the Act makes the assessment invalid and void ab-initio and in this regard he has placed reliance on the following decisions:-

1. Kuber Tobacco Products vs. DCIT, 117 ITD 273 (SB)

2. CIT vs. Jai Shiv Shankar Traders, 383 ITR 448 (Del)

3. Alpine Electronics vs. Director General Income Tax, 341 ITR 247.

(v) The ld. D.R., on the other hand, has contended before us that non-issuance of notice under section 143(2) of the Act before completion of the assessment under section 147/148 of the Act will not make the assessment to be illegal and void ab-initio and in this regard he relied on the decision of the Hon’ble Delhi High Court in the case of CIT vs. Madhya Bharat Energy Corporation Ltd., 337 ITR 389.

(vi) After hearing the rival submission and going through the orders of the authorities below as well as the case laws relied on by both the parties, we noted that the issue involved is duly covered in favour of the assessee by the decision of the Hon’ble jurisdictional High Court in the case of Principal CIT vs. Jai Shiv Shankar Traders Pvt. Ltd., 383 ITR 448 (Del) which is binding on us. In this decision, we noted that the Hon’ble High Court discussed the decision of the Hon’ble Delhi High Court in the case of CIT vs. Madhya Bharat Energy Corporation Ltd. (supra) on which the ld. D.R. has relied on. The Hon’ble Delhi High Court did not agree and distinguished the decision of the Hon’ble Delhi High Court in the impugned case. The facts involved in the case of Principal CIT vs. Jai Shiv Shankar Traders Pvt. Ltd. 383 ITR 448 (Del) are similar to the case of the assessee.

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