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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals)-NFAC, Delhi [‘CIT(A)’ in short] dated 05.09.2025 arising from the assessment order dated 22.03.2016 passed by the DCIT, Circle-25(1), New Delhi under section 143(3) of the Income Tax Act, 1961 (‘the Act’) concerning Assessment Year (A.Y.) 2013-14.
The grounds raised by the assessee are as under :
1.That the Commissioner of Income Tax (Appeals) ['CIT(A)'], vide order dated 05.09.2025 has erred both on facts and in law in not quashing the assessment order dated 22.03.2016 passed under Section 143(3) of the Income-tax Act, 1961 ('the Act') by the Assessing Officer ('AO') on the ground of being illegal, bad in law, without jurisdiction, barred by time limitation and not in accordance with the provision of the Act.
2.That the CIT(A) has erred in not adjudicating that the notice issued under Section 143(2) of the Act was barred by limitation, as it was not issued within the period prescribed under the Act.
3.That the CIT(A) has erred in upholding the income of the Appellant at Rs. 4,04,91,250/- as against the returned income of Rs. 87,52,850/-
4.That the CIT(A) has erred both on facts and in law in upholding the disallowance of Rs. 31,28,027/- made by the AO on account of write-off of shoe lasts on the alleged ground that the same was not supported by adequate documentary evidence, without appreciating that all necessary documents were duly filed by the Appellant.
5.That the CIT(A) has erred both on facts and in law in upholding the disallowance of Rs. 2,82,09,798/-, being various business expenses incurred by the Appellant under different heads during the year under consideration, on the ground that some parties did not respond to 133(6) notices without appreciating the detailed documentary evidence filed by the Appellant.
5.1.That the CIT(A) has erred both on facts and in law in upholding the disallowance of Rs. 2,82,09,798/- without considering the additional evidence filed by the Appellant, and remand report of the AO.
6.That the CIT(A) has erred both on facts and in law in upholding the addition of Rs. 1,20,126/- made by the AO on account of interest income on FDRs, on the ground that no submissions were filed by the Appellant without appreciating that the same stood netted against bank interest and charges paid during the year under consideration, and that the net amount was duly offered to tax by the Appellant in the return of income.
7.That the CIT(A) has erred both on facts and in law in upholding the disallowance of Rs. 2,80,445/- made by the AO under Section 14A read with Rule 8D, allegedly attributable to the earning of exempt income, on the ground that no submissions were filed by the Appellant without appreciating that the Appellant had not earned any exempt income during the year under consideration.
8.Without prejudice to the above, the CIT(A) has erred both on facts and in law in upholding the disallowance of Rs. 2,80,445/- made by the AO under Section 14A read with Rule 8D, without appreciating that the strategic investment made in the group company was not liable for disallowance.
9.That the documents and the material available on record have not been properly considered and judicially interpreted and have been wrongly ignored.
10.On the facts and circumstances of the case and in law, the AO has erred in charging the interest under Section 234A/234B/234C/234D of the Act.
11.On the facts and circumstances of the case and in law, the AO has erred in initiating the penalty proceedings against the Appellant under Section 271(1)(c) of the Act That the Appellant craves leave to add or alter, amend, and/or withdraw any ground or grounds of appeal either before or during the course of hearing the appeal.”
Brief facts of the case are that assessee is a company engaged in the business of Manufacturing and Export of Leather goods. Assessee electronically filed its return of income on 28.09.2013 at Rs.87,52,850/-. The case was selected for scrutiny assessment and following disallowance was by the AO:
Disallowance of Rs.31,28,027/- on account of write off of shoe.
Disallowance of Rs.2,82,09,798/- on account of bogus and is added back to the income of the assessee
Disallowance of Rs.1,20,126/- on account of interest income on FDRs.
Disallowance of Rs.2,80,445/- u/s 14A r.w.s 8D, allegedly attributable to the earning of exempt income.
Aggrieved, assessee was in appeal before the CIT(A) which was dismissed.
Aggrieved, assessee in appeal before us.
At the outset, the learned Counsel of the assessee stated that the notice u/s 143(2) of the Act was barred by limitation as the same were not issued within the period prescribed and therefore, the assessment made for A.Y. 2013-14 is not valid under the law. It is submitted that the assessee filed the return of income on 28.09.2013. The due date of issuance of notice u/s 143(2) was therefore, on 30.09.2014. However, the notice u/s 143(2) was issued on 02.07.2015 and the order u/s 143(3) was passed on 23.03.2016.
Per contra, learned DR relied on the order of the authorities below.
We have heard the rival submissions and perused the material available on record. We find that assessee had filed his return of income for A.Y. 2013-14 declaring income of Rs.87,52,850/- on 28.09.2013. The assessee was issued a notice u/s 143(2) of the Act on 02.07.2015 by DCIT, Cir-25(2), New Delhi, a fact which remains uncontroverted. Admittedly, the notice u/s 143(2) was to be issued by 30.09.2014 whereas we find that the notice was issued on 02.07.2015. We therefore, hold that the notice u/s 143(2) was barred by limitation. Accordingly, the assessment made u/s 143(3) is vitiated and accordingly, quashed. Ground 1 and 2 are allowed.
In the result, appeal of the assessee is allowed.