Case Law Details

Case Name : ITO Vs Satish Singh Bhati (ITAT Delhi)
Appeal Number : ITA No. 2363/DEL/2019
Date of Judgement/Order : 15/05/2020
Related Assessment Year : 2009-10
Courts : All ITAT (7336) ITAT Delhi (1719)

ITO Vs Satish Singh Bhati (ITAT Delhi)

The issue under consideration is whether CIT(A) is correct by annulling the assessment order on the ground that no notice under section 143(2) was issued before the completion of assessment?

The assessee took the legal ground that the impugned assessment order was framed by the Assessing Officer without assuming the jurisdiction u/s 143(2) of the Income Tax Act, 1961 and without serving upon the assessee the necessary notices there under. Admittedly in the present case the Ld. DR stated that no notice under Section 143(2) of the Act was issued before the completion of the assessment. Hence, the Assessing Officer was further directed to reopen the Assessment under Section 147 of the Act and thereafter, reframe the assessment order after following the due process of law and after issuing necessary notices to the assessee as per law and after giving to the assessee reasonable opportunity of being heard and considering the evidence laid by the assessee. Thus, the appeal filed by the Revenue is dismissed.

FULL TEXT OF THE ITAT JUDGEMENT

These two appeals are filed by the Revenue against the order dated 15.08.2018 passed by CIT(A)-1, New Delhi for Assessment Year 2009-10 .

2. The grounds of appeal in both the appears are identical, hence we are reproducing the grounds of appeal of ITA No. 2363/Del/2019 are as under:-

ITA Nos. 2363/DEL/2019

1. “That the Ld.CIT(A) has erred in law and on facts by annulling the assessment order on the ground that no notice under section 143(2) was issued before the completion of assessment.

2. That the Ld. CIT(A) has erred in law and on facts by ignoring the facts that no return was filed by the assessee in response to notice under section 148 and notice u/s 143(2) is only mandatory, where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142 or in response to notice u/s 148 of the I.T. Act, 1961, whereas in this case no return was filed.

3. That the Ld. CIT(A) has erred in law and on facts by ignoring the fact that as per provision of section 143(2)(ii) there is a time limit for issuance of notice under section 143(2) i.e. shall be served on the assessee before the expiry of six months from the end of the financial year in which the return is furnished, but in the case under consideration no return was filed by the assessee.

4. That the Ld. CIT(A) has erred in law and on facts without considering the fact that the assessee had not filed return of income in response to notice u/s 148. If no return is filed, then notice u/s 143(2) cannot be issued as there is a precondition of filing of return of income for issuance of notice u/s 143(2), which has also been held by the Hon’ble Jammu & Kashmir High CourtSrinagar Bench vide order dated 11/10/2018 in the case of Pr.CIT Vs Broadway Shoe Co. in ITA No. 10/2017 and held as under:

“The Notice under Section 143(2) is required to be given only when return is furnished. Furnishing of the return is a sine qua non for issuance of notice under Section 143(2) of the Act. If no return is furnished by the assessee, there can be no reason for issuance of notice under Section 143(2) of the Act.

Similar view has been taken by a Division Bench of this Court in the case of Azziz Qazi & Brothers v. ITO, (1974) Tax LR 540 (J&K).”

5. That the Ld. CIT(A) has erred in law and on facts by annulling the assessment order as on similar issues Hon’ble ITAT, Delhi Bench ‘SMC’, New Delhi vide order dated 30/10/2017 in ITA No.4310/Del/2017 in the case of Sh. Sachin S/o Late Sh. Bhule Singh Village -Mamura, Sector-66, Pargana & Tehsil – Dadri, Noida ( PAN-APPPK6176F) for A.Y.2008-09 has allowed the appeal of the Revenue.

6. That the Ld. CIT(A) has erred in law and on facts by annulling the assessment order ignoring the fact that assessment order was passed u/s 147/144 and not u/s 143(3) as noted by Ld. CIT(A) in the body of the order.

7. That the Ld. CIT(A) has erred in law and on facts by directing the Assessing officer to reframe the assessment order under the provisions of section 150 of the I.T. Act, 1961 as in the instant case revival of assessment u/s 150 will not be applicable due to the provisions of sub-section (2) of section 150. This is due to the fact that this case pertains to the assessment year 2009-10 and assessment order, which is subject matter of appeal/revision, was passed on 07/12/2016. The provision of sub-section (1) of section 150 shall not apply in this case as action for assessment/reassessment proceedings would have been barred by time when the assessment order, which was subject matter of appeal, was passed in the light of provisions of sub section (2) of section 150. For clarity section 150 is reproduced as hereunder:

“150(1): Notwithstanding anything contained in section 149, the notice u./s 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision [ or by a Court in any proceeding under any other law], (2) The provisions of sub-section(l) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken. ”

8. That the Ld. CIT(A) has erred in law and on facts by annulling the assessment order ignoring the fact as noted by Hon’ble ITAT, Delhi Bench ‘E’, New Delhi vide its order in ITA No. 267/Del./2013 [ A.Y. 2002-03] in the case of ITO Ward-13(2), New Delhi Vs. M/s Neetee Clothing (P) Ltd., 6/28, Shanti Niketan, New Delhi, in which it has been amply clarified when the provisions of section 150 of the Act may be enacted. In the referred order (supra), it has been explained on this issue as under:

“We find that the provisions of sub-section (1) shall not apply where the reassessment proceedings would have been barred by time even at the time when the order, which was the subject-matter of appeal, revision, etc., was passed. In other words, sub-section (2) provides a rider as if in the nature of a proviso to subsection (1) providing that the provisions of sub-section (1) shall not apply where by virtue of any other provision limiting the time within which action for assessment, reassessment or recomputation may be taken, such assessment, reassessment or recomputation is barred on the date of the order which is the subject-matter of the appeal, reference or revision in which the finding or direction is contained. It would, thus, mean that an appellate or revision authority cannot give a direction for assessment or reassessment which goes to the extent of conferring jurisdiction upon the Assessing Officer if his jurisdiction had ceased due to the bar of limitation. If the issuing of a
notice for assessment or reassessment for a particular assessment year had become time-barred at the time of the order, which was the subjectmatter of the appeal, the provisions of section 150(1) cannot be invoked for making an assessment or reassessment. ” *

9. That the appeal is preferred as per para 10(a) of the CBDT Circular No.03/2018 dated 11/07/2018 notwithstanding the fact that tax effect in this case is below Rs.20 lakhs.

10. The appellant craves to leave, add, alter and amend any of the grounds of appeal on or before hearing.

11. That the order of the Ld. CIT(A) deserves to be set-aside and the order of the AO be restored.”

3. We are taking brief facts of ITA No. 2363/Del/2019 as in both the appeals facts are identical. The assessee is a farmer and sold agricultural land through two sale deeds. The total cash received from sale of said agricultural land was Rs.12,60,000/-. During the Assessment proceedings, the assessee submitted Tahsildar certificate for both the lands and submitted that the lands are situated 16 kilo meter far from municipal limit of Sikandrabad. The Assessing Officer admitted the amount of Rs. 3,60,000/- received by the assessee from his father through sale proceeds of the agricultural land but did not considered the sale proceeds of the second land. The Assessing Officer made addition of Rs. 6,74,000/- as cash deposit treated as unexplained income u/s 68 and passed the Assessment Order. The assessee submitted Tahsildar certificate for both the lands and submitted that the lands are situated 16 kilo meter far from municipal limit of Sikandrabad.

4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the substantial addition but sustained the protective addition.

5. The Ld. DR relied upon the assessment order. The Ld. DR submitted that the CIT(A) wrongly annulled the assessment order on the ground that no notice under Section 143(2) of the Act was issued before the completion of assessment. Hence, the finding of the CIT(A) is contrary to the facts and law and therefore, is liable to be set aside.

6. None appeared for the assessee despite giving notice, therefore, we are proceedings on the basis of the submissions made by the assessee before the Revenue authorities.

7. We have heard the Ld. DR and perused the material available on record. It is pertinent to note that before the CIT(A) the assessee took the legal ground that the impugned assessment order was framed by the Assessing Officer without assuming the jurisdiction u/s 143(2) of the Income Tax Act, 1961 and without serving upon the assessee the necessary notices there under. Admittedly in the present case the Ld. DR stated that no notice under Section 143(2) of the Act was issued before the completion of the assessment. The assessee has filed return of income at NIL in response to notice under Section 148 of the Act. The CIT(A) has rightly relied upon the decision of the Tribunal in case of ITO vs. Sanjay being ITA No. 3701/Del/2018 order dated 02.03.2020 and held that the impugned assessment order is defective in law and is annulled. The CIT(A) has further held that the revenue is protected under the provisions of Section 150 of the Income Tax Act. The Assessing Officer was further directed to reopen the Assessment under Section 147 of the Act and thereafter, reframe the assessment order after following the due process of law and after issuing necessary notices to the assessee as per law and after giving to the assessee reasonable opportunity of being heard and considering the evidence laid by the assessee. Thus, the CIT(A) has given a elaborate findings which does not require any interference. Hence, appeal being ITA No. 2363/Del/2019 filed by the Revenue is dismissed.

8. As regards to ITA No. 2364/Del/2019, the facts, grounds and the findings of the CIT(A) are identical, therefore, this appeal filed by the Revenue is also dismissed.

9. In result, both the appeals of the Revenue are dismissed.

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