Shri Mahavir Pulses Private Limited vs ACIT, CC-27

PER ANUBHAV SHARMA, JM:

These cross appeals are preferred by the assessee and revenue against the order dated 22.08.2025 of the Ld. Commissioner of Income Tax (Appeals)-29 New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in Appeal No.: NFAC/2017-18/10228873 arising out of the order dated 28.03.2023 u/s 147 r.w.s 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the Assessment Unit, Income Tax Department for AY: 2018-19.

Heard and perused the record. The assessee is a private limited company and engaged in manufacturing and marketing of Urad dal during the year under consideration and consequent to a search and seizure operation u/s 132 of the Act carried out in the case of Pan Group on 19.12.2017 statement of one Sumit Jindal was recorded who had allegedly deposed on providing bogus sales/purchase entries and assessee was also found to be a beneficiary therefrom the assessing officer has reopened the case of the assessee and had passed the assessment order making addition on the basis that assessee had filed accommodation entries to inflate its purchases. Ld. CIT(A) has considered the facts and circumstances and modified the addition with a direction to apply gross profit rate of 10% on the amount of these purchases of Rs.2,37,25,155/- and thereupon both assessee and department are in appeal before us and at the time of hearing assessee’s counsel has stressed for disposal of ground No. 1 which raises a pure question of law, as to if, the reassessment proceedings are on the foundation of notice issued u/s 143(2) of the Act belatedly and thus, liable to be quashed.

Coming to the Ground No.1 by which assessee has asserted that mandatory notice u/s 143(2) of Act has been issued beyond stipulated period. We find that from the perusal of the notice u/s 143(2) of the Act available at PB 61-64 that in para 2 it is mentioned that the appellant company has made compliance of the notice u/s 148 on 31.03.2022 by filling a letter dated 31.03.2022. The copy of same is also available at PB 102-106 and in this request was made to the JAO that the return of income originally filed on 21.09.2018 be treated as return of income filed in response to notice u/s 148 of the Act. This compliance has also been accepted by Assessment Unit to be in order as is indicated in the table in the show cause notice dated 18.01.2023 available at PB 68-99.

The case set up by the ld. AR is that to assume valid jurisdiction to make the assessment of the return of income filed during FY 2021-22, the notice u/s 143(2) of the Act was required to be issued and served on the appellant on or before 30.06.2022. But, in the present case, the para 2 of the said notice underlines the fact that the notice has been issued and served on the appellant on 28.12.2022, beyond the above specified time limit. The assessment in present case is therefore invalid for the lack of compliance of section 143(2) on account of failure to issue notice within the time period allowed for such purpose under the proviso to above section. It is also violation of the mandatory CBDT Guidelines dt: 11.05.2022 as per which the notice u/s 143(2) in view of the facts of the case was required to be issued and served on or before 30.06.2022. The Jurisdictional Hon’ble Delhi High Court decisio’n in the case of Alpine Electronics Asia P Ltd 260 ITR 341 (Del) has been relied. It was submitted that the above decision is in consonance to the decision of Indus Tower vs. DCIT 82 Taxmann.com 430 (Del) and the department SLP against the above decision has been dismissed by Hon'ble Apex Court vide order dt: 21.01.2019 in Diary No.34285 of 2018. The above view has been upheld in the decision of Hon'ble Madras High Court in the case of Amec Foster Wheeler Iberia SLU-India vs. Dy. CIT 451 ITR 117 (Mad).

This grievance was raised before the Ld CIT(A) in Ground No.4 , however, as ld. CIT(A) had given assessee benefitted on merits the legal grounds were considered to be academic and left open.

The decision which ld. AR has relied in the case of Amec Foster Wheeler (Supra) has considered the question of issuance of notice u/s 143(2) of the Act within the limitation period is necessary for assumption of jurisdiction.

Apparently, in the notice issued u/s 143(2) on 28.12.2022 copy of which is available at page 61 of the paper book in para No. 2 the assessing officer accepts

At page No. 102 of the paper book assessee had provided copy of the response dated 31.03.2022. Admittedly, the proviso to Section 143(2) lays down the time limit in which the assessee can be served notice u/s 143(2) and the same indicates that w.e.f 01.04.2021the notice has to be served on the assessee before the expiry of 3 months and before 01.04.2021 period of 6 months from the end of financial year in which the return is furnished was provided. In the case before us once assessee had responded to the respondent by communication dated 31.03.2022 that return filed on 31.09.2018 may be treated as return filed in response to notice u/s 148 of the Act then the notice u/s 143(2) should have been issued within 6 months from 31.03.2022 and the issuance of notice on 28.12.2022 is thus beyond the limitation period and the ground deserves to be sustained. As a consequence of aforesaid the appeal of assessee is allowed and the impugned reassessment proceedings and consequential reassessment order passed gets vitiated and the same deserves to be quashed. Accordingly, we dismiss the appeal of the revenue and allow the appeal of the assessee.