ITO, Ward 18(3), New Delhi vs M/s. Norm Consultants Pvt. Ltd.

PER MAHAVIR SINGH, VP :

This appeal of the revenue is arising out of the order of the Ld. Commissioner of Income Tax (Appeal-37), Delhi in Appeal No. CIT(A), Delhi-37/10020/20176-17 dated 31.08.2020. Assessment was framed by the ITO, Ward 13(3), Delhi for the AY 2002-03 u/s 147/144 of the Income Tax Act, 1961 (hereinafter referred as “the Act”) vide his order dated 18.12.2007.

At the threshold, it is noted that there is a delay of 284 days in filing the appeal before the Tribunal by the Revenue for which the revenue has filed the condonation application. After perusing the condonation application and after hearing both the sides, we are of the considered view that the delay in dispute has been caused due to sufficient cause, thus, the delay of 284 days in filing the appeal is condoned and appeal of the revenue is admitted.

The first and foremost legal issue argued in this appeal of the revenue is as under:-

The brief facts of the case are that the assessee filed its return of income on 31.10.2002 showing loss of Rs. 47,640/-. The assessee was engaged in the business of share trading / investment and financial activity. The return of the assessee was processed u/s. 143(1) of the Act and the case was reopened and selected for scrutiny. The AO completed the assessment u/s. 147/144 of the act vide order dated 18.12.20087 at a total income of Rs. 3,99,52,360/- by making addition of Rs. 4,00,00,000/- u/s. 68 of the Act.

Against the action of the AO, assessee preferred appeal before the Ld. CIT(A) who allowed the appeal of the assessee by holding that reasons for reopening the assessment were not furnished to the assessee by the AO till the date of completion of assessment and notice u/s. 143(2) of the Act was not served upon the assessee. Aggrieved, revenue is in appeal before us.

Ld. DR submitted that Ld. CIT(A) erred in holding that reasons for reopening the assessment were not furnished to the assessee by the AO, whereas the reasons were duly supplied vide letter dated 1.6.2007, as recorded in the assessment order as well as in the remand report filed before the CIT(A). It was further submitted that notice under section 143(2) was not served upon the assessee and, therefore, the reassessment order passed by the AO u/s. 144 read with section 147 was invalid and void ab initio, whereas issuance / service of notice under section 143(2) was not required in the present case, since no return of income was filed in response to notice under section 148 of the Act.

On the other hand, Ld. AR relied upon the order of the CIT(A) and stated that in response to notice u/s. 148 of the Act, assessee vide its letter dated 20.4.2007 has intimated that assessee filed its return of income on time i.e. on 31.10.2002 vide acknowledgement no. 2506.

We have heard the rival contentions and perused the facts and circumstance of the case. We note that AO in his assessment order AO noted that the reasons were supplied to the assessee vide letter dated 1.6.2007 and sent through speed post, but the same was returned unserved on 28.10.2007, hence, objections was not raised. Similarly, notice u/s. 143(2)/142(1) and questionnaire were also issued on 11.10.2007 and the same were also returned unserved and remained uncomplied. However, in response to notice u/s. 148 of the Act dated 28.3.2006, assessee vide his letter dated 20.4.2007 has intimated that the return of income tax for the assessment year 2002-03 was filed in time i.e. on 31.10.2002 vide acknowledgement no. 2506 and also requested to supply the reasons for reopening the case. In view of above, it reveals that notice u/s. 143(2) was not served upon the assessee nor where the “reasons recorded to reopen the assessment u/s. 147 of the Act” provided /served upon the assessee. It is noted that the in the instant case the notice u/s. 148 was issued on 28.3.2006 and the address of the assessee was Flat No. 101, Ansal Building, B-1-2, Mukherjee Nagar Commercial Complex, Delhi and the reasons recorded were sent on 1.6.2007 but were returned unserved on 28.10.2007 i.e. after a period of 5 months and notice u/s. 143(2) was issued on 11.10.2007 but the same was also returned unserved. It is also noted that in the subsequent assessment year i.e. 2003-04 which was taken up for scrutiny and order u/s. 143(3) of the Act was passed vide order dated 31.1.2006 i.e. two months prior to issue of notice u/s. 148 and the address of the assessment year 2003-04 was same as for AY 2002-03 and the assessment For AY 2002-03 was completed at the returned income. In AY 2003-04, the notice u/s. 143(2) was served by affixture. Similarly, the case of the assessment for AY 2006-07 was also taken up for scrutiny and case was completed u/s. 143(3) vide order dated 8.12.2008 (after a completion of the present assessment). The address in this return was 309-A, Vakil Chambers, A-115, Vikas Marg, Shakarpur, New Delhi. The above facts clearly establish that the addresses of the assessee as per ITRs filed for AY 2003-04 and 2006-07 and addresses of the Directors were available as per record of the AO and the notice u/s. 143(2) for AY 2003-04 too was served by affixture at the said address. It is well settled law that for passing the order u/s. 147 the recording of reasons u/s. 148 and communication thereof to the assessee concerned is mandatory and copy for the same have to be supplied to the assessee. In view of the aforesaid factual matrix, Ld. CIT(A) rightly held that in the present case the reasons for reopening the assessment were not furnished to the assessee by the AO till the date of completion of assessment i.e. 18.12.2007 and the notice u/s. 143(2) was also not served upon the assessee, therefore, the reasons for reopening the assessment were not furnished to the assessee by the AO till the date of completion of assessment and the notice u/s. 143(2) of the Act was also not served upon the assessee, thus, the reassessment order passed by the AO u/s. 144 r.w.s. 147 was rightly held as invalid and void ab initio, which does not need any interference on our part, hence, we uphold the same and reject the ground raised by the revenue. Our view is fortified by the decision of the Hon’ble Supreme Court in the case of ACIT vs. Hotel Blue Moon reported in 324 ITR 372 (2010) (SC) wherein it has held that in the absence of the notice u/s. 143(2) of the Act the assessment framed by the Assessing Officer is liable to be quashed

As regards the other issues of jurisdictional as well as on merits, since we have already adjudicated the issue of jurisdiction against the revenue and in favour of the assessee, thus, we hold the other pleadings have become academic and accordingly dismissed as such.

In the result, the appeal of the revenue is dismissed.