Referred Sections:
Section 151
Section 68 of the I.T. Act.,
Section 292BB of the Act,
Section 143(2) of the Act.
Section 148 of the I.T. Act
Section 139(1)
Referred Cases / Judgments:
Micron Enterprises Pvt. Ltd. Vs. ITO in ITA No. 901/Del/2016 (AY 2006-07) order dated 14.5.2018.
Commissioner of Income Tax vs. Parikalpana Estate Development (P) Ltd.
Income tax vs. Mukesh Kumar Agrawal (2012) 345 ITR 29
Allahabad High Court in Manish Prakash Gupta vs. Commissioner of Income Tax (Supra)
Micron Enterprises Pvt. Ltd. Vs. ITO in ITA No. 901/Del/2016 (AY 2006-07)
Director of Income Tax vs. Society for Worldwide Interbank Financial Telecommunications (2010) 323 ITR 249
New Delhi vs. ITO, Ward-50(3), New Delhi in ITA.No.1262
Director of Income Tax vs. Society for Worldwide Interbank Financial
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH `SMC' : NEW DELHI)
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
ITA NO. 4945/DEL/2017
(A.Y. 2005-06)
CASTLETON CAPITAL LTD., VS. ACIT, CIRCLE 17(1),
1004, CHIRANJIV TOWER, 43, NEW DELHI
NEHRU PLACE, NEW DELHI 19
(PAN: AABCV5623Q)
Assessee By Sh. K.P. Garg, CA
Revenue By Ms. Rakhi Vimal, Sr. DR.
ORDER
Assessee has filed this appeal against the impugned order dated
03.05.2017 passed by Ld. CIT(A)-33, New Delhi on the following
grounds:-
1. That the initiation of the proceedings u/s.148 on the basis of search
material found and seized from third party are contrary to law and
procedure prescribed under the Act due to non-obstante provisions
in S.153C for search cases and the Ld. CIT(A) has erred in
confirming action u/s.148.
2. That notice dated 28-03-2012 issued u!s.148 in the old name
/ashulinga Synthetics Pvt. ltd. by the ACIT Circle-17(1}, New Delhi
is without jurisdiction, in view of the change in name of Castleton
Capital Ltd. Before the issue of such notice.
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3. That service of notice u/s.148 is barred by time since reasons
recorded never supplied to the assessee before passing the order,
accordingly the assessment so made is without jurisdiction and
contrary to law.
4. That the issue of notice U/s.148 without recording reasons and
without forming proper reasons of belief, without following the
procedure laid down in the Act, without approval of the appropriate
authority prescribed under section 151 is bad in law being without
the authority of law.
5. The assessment made without service of any notice u/s.143(2) of
the Act and the Ld. CITA has erred in stating that notice u/s.143(2)
has duly been served, without confronting the assessee with the
remand report and the evidence produced by the AO before the Ld.
CIT(A).
6. The consequent reassessment u/s.147 is bad in law and void having
been made without the authority of law and the Ld. CIT(A) has
erred in confirming assessment u/s.147.
7. That the assessment having been so made without allowing proper
opportunity to defend is against equity and in violation of principles
of natural Justice and is therefore null and void.
WITHOUT PREJUDICE TO THE ABOVE LEGAL GROUNDS:
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8. The appellant denies his liability to tax as upheld by the
learned CIT(A) and determined and computed by the learned
assessing officer and the manner in which it has been so
determined or computed, as:
9. The learned CIT(Appeals) has erred in law and on facts in
sustaining the following additions made by the assessing
officer which are impugned in this appeal:
a. Rs.20,00,000/- u/s.68 on account ot alleged
accommodation entries
b. Rs. 70,000/- u/s.69C on account of alleged commission
paid
2. The brief facts of the case are that the assessee originally filed its
return on 29.10.2015 declaring income at Rs. 3,178/- for the AY 2005-
06. Subsequently, the case of the assessee was reopened u/s. 147 of the
Income Tax Act, 1961 (in short "Act") by issuing notice u/s. 148 of the
Act dated 23.3.2012 alognwith copy of reasons for reopening and in
response to the same notice, the AR of the assessee attended the
proceedings and filed his reply. The AO has observed that assessee has
failed to discharge its onus of proving the identity and creditworthiness of
concerned party and genuineness of transactions in terms of provisions of
Section 68 of the Act and observed that the amount of Rs. 20,00,000/-
received from the entry operators represents the credit entry whose
nature and source could not be satisfactorily proved by the assessee and
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hence it is covered within the mischief of Section 68 of the I.T. Act.,
hence, the same was added to the income of the Assessee u/s. 68 of the
Act and also commission @ 3.5% amounting to Rs. 70,000/- to carry out
the said accommodation entry was also added to the income of the
assessee and assessment was completed at Rs. 20,73,178/- vide his
order dated 18.03.2013 passed u/s. 143(3)/147 of the Act. Aggrieved
with the assessment order dated 18.3.2013, assessee appealed before
the Ld. CIT(A), who vide his impugned order dated 03.05.2017 dismissed
the appeal of the assessee. Against the impugned order dated 3.5.2017,
assessee is in appeal before the Tribunal.
3. No doubt that assessee has raised as many as 09 grounds of
appeal, but at the time of hearing, he only argued the ground no. 5 i.e.
"The assessment made without service of any notice u/s. 143(2) of the
Act and the Ld. CIT(A) has erred in stating that notice u/s. 143(2) has
duly been served, without confronting the assessee with the remand
report and the evidence produced by the AO before the Ld. CIT(A)." He
draw my attention towards the order of the Ld. CIT(A) and stated that
assessee has taken this ground before the Ld. CIT(A) vide ground no. 3.1
which is at page no. 2 of the impugned order i.e. "That the assessment
u/s. 147 made without the service of statutory notice u/s. 143(2) before
making the assessment is without jurisdiction and bad in law." and stated
that Ld. CIT(A) has wrongly observed that the notice u/s. 143(2) was in
order and decided the same against the assessee vide para no. 4 to 4.2
of the impugned order at page no. 2. He further draw my attention
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towards proceedings sheet dated 28.2.2013 before the AO wherein the
AO has served the notice u/s. 143(2) of the Act dated 28.2.2013 on the
same date i.e. 28.2.2013 when the Assessee's counsel appeared before
the AO in the proceedings, which is totally illegal, without application of
mind. He further stated that the issue in hand is squarely covered with
the decision of the Hon'ble Delhi High Court decision in the case of Silver
Line Reported at 383 ITR 455 and the decision of the ITAT, Delhi Bench in
the case of Micron Enterprises Pvt. Ltd. Vs. ITO in ITA No. 901/Del/2016
(AY 2006-07) order dated 14.5.2018.
4. On the contrary, Ld. DR relied upon the orders of the authorities
below.
5. I have heard both the parties and perused the records especially
the order of the revenue authorities. I find that assessee's counsel has
argued only ground no. 5 i.e. "The assessment made without service of
any notice u/s. 143(2) of the Act and the Ld. CIT(A) has erred in stating
that notice u/s. 143(2) has duly been served, without confronting the
assessee with the remand report and the evidence produced by the AO
before the Ld. CIT(A)." and the same ground was also taken before the
Ld. CIT(A) vide ground no. 3.1 which is at page no. 2 of the impugned
order i.e. "That the assessment u/s. 147 made without the service of
statutory notice u/s. 143(2) before making the assessment is without
jurisdiction and bad in law." I further find that Ld. CIT(A) vide para no. 4
to 4.2 of the impugned order which are at page no. 2 has held as under:-
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"4. To examine the contention of the appellant that notice
u/s. 143(2) was not issued at the assessment stages, the
note sheet of the assessment proceedings was examined. The
order sheet entry dated 28.02.2013 reads as under:-
"Present Shri A.K. Mishra, he was given notice u/s.
143(2) dated 28.2.2013 has been seen and found in
order.
4.1 Further, from the assessment file the office copy of
notice u/s. 143(2) dated 28.02.2013 has been found in order.
4.2 In view of above, the modified ground no. 2 is
rejected."
5.1 After perusing the aforesaid records especially the impugned order,
proceeding sheet dated 28.2.2013 written by the AO during assessment
proceedings and the findings of the Ld. CIT(A) page no. 2, as aforesaid,
I find considerable cogency in the contention of the Ld. Counsel for the
Assessee that the assessment made without service of any notice u/s.
143(2) of the Act and the Ld. CIT(A) has erred in stating that notice u/s.
143(2) has duly been served, without confronting the assessee with the
remand report and the evidence produced by the AO before the Ld.
CIT(A). It is also noted that on 28.02.2013, when Ld. Counsel for the
assesee appeared before the AO in the proceedings, the AO has served
the notice u/s. 143(2) of the Act on him on the same date i.e. 28.2.2013
by hand, which shows that the notice was served in an improper
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manner and also shows the non-application of mind on the part of the
Assessing Officer and also against the spirit of the decision of the Hon'ble
Delhi High Court in the case of Silver Line Reported at 383 ITR 455
wherein the Hon'ble High Court has observed as under:-
"...12. The Court first proposes to consider the
question as to whether in terms of the proviso to
Section 292BB of the Act, the Assessee was
precluded, at the stage of the proceedings before
the ITAT, from raising a contention regarding
failure of the AO to issue a notice under section
143(2) of the Act. The legal position appears to be
fairly well settled that Section 292BB of the Act
talks of the drawing of a presumption of service of
notice on an assessee and is basically a rule of
evidence. In Commissioner of Income Tax vs.
Parikalpana Estate Development (P) Ltd. (supra)
in answering a similar question, the Court referred
to its earlier decision in ITA No. 5789 of 2015 and
connected matters page 10 of 15 of Income tax
vs. Mukesh Kumar Agrawal (2012) 345 ITR 29
(All.) and pointed out that Section 292BB of the
Act was a rule of evidence which validated service
of notice in certain circumstances. It introduces a
deeming fiction that once the Assessee appears in
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any proceeding or has cooperated in any enquiry
relating to assessment or reassessment it shall
be deemed that any notice under any provision of
the Act that is required to be served has been
duly served upon him in accordance with the
provisions of the Act and the Assessee in those
circumstances would be precluded from objecting
that a notice was required to be served upon him
under the Act was not served upon him or not
served in time or was served in an improper
manner. It was held that Section 292BB of the Act
is a rule of evidence and it has nothing to with the
mandatory requirement of giving a notice and
especially a notice under section 143(2) of the Act
which is a notice giving jurisdiction to the AO to
frame an assessment. The decision of the
Allahabad High Court in Manish Prakash Gupta vs.
Commissioner of Income Tax (Supra) is also to
the same effect."
5.2 I further find that the ITAT, Delhi Bench in the case of Micron
Enterprises Pvt. Ltd. Vs. ITO in ITA No. 901/Del/2016 (AY 2006-07) vide
order dated 14.5.2018 has decided the similar and identical issue in
favour of the assessee by relying on another decision of the Hon'ble High
Court in the case of Society for Worldwide Inter Bank Financial,
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Telecommunications decided in ITA No. 441/2010, reported at 323 ITR
249 by observing as under:-
"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 inresponse 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 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
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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 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, itwould 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
27thMarch, 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 :
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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."
7. On the other hand, Ld. D.R. submitted that assessee
did not file return under section148 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
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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
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. Keeping in view of the aforesaid discussions and respectfully
following the precedents, as aforesaid, I quash the reassessment
proceedings being invalid in the eyes of law and accordingly, allow the
ground no. 5 raised by the Assessee. Since the reassessment has been
quashed, there is no need to adjudicate the other grounds.
7. In the result, the Appeal of the Assessee is allowed.
Order pronounced on this 27th day of September, 2019.
Sd/-
(H.S. SIDHU)
JUDICIAL MEMBER
Dated the 27th day of September, 2019
SRB
Copy forwarded to:-
1. Appellant
2. Respondent
3. CIT
4. CIT(A), New Delhi.
5. CIT(ITAT), New Delhi
AR, ITAT
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