Case Law Details
Vikas Asopa Vs ITO (ITAT Delhi)
Section 143(2) contemplates service of notice within the expiry of 6 months from the end of financial year in which return was filed, failing which it would be hit by limitation. Thus, AO was obliged to issue such a notice within prescribed time limit, and in its absence; no further proceedings could be undertaken by AO.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
Both appeals by assessee are directed against the different orders of the learned Commissioner (Appeals)-12, New Delhi, dated 28-2-2017 for assessment year 2011-2012, challenging the addition on merit as well as levy of penalty under section 271(1)(c) of the Income Tax Act, 1961.
2. I have heard the learned Representatives of both the parties and perused the material on record. The learned Departmental Representative also produced the assessment record and filed copies of the notice under section 143(2) of the Income Tax Act, notice under section 142(1) and copies of order sheet of the assessing officer The record is also perused.
3. Briefly the facts of the case are that the assessee filed return of income on 21-2-2012 declaring income at Rs. 1,72,820. The assessing officer issued notices under section 143(2) and 142(1) to the assessee and thereafter, issued several notices under section 142(1) of the Income Tax Act at the address of the assessee but none have been attended by the assessee. The assessing officer also issued show cause notice for levy of penalty under section 271(1)(b) of the Income Tax Act which is also not responded by the assessee. The assessing officer ultimately passed the ex-parteorder under section 144 of the Income Tax Act. The assessing officer made addition of Rs. 44,62,342 on account of unexplained cash deposit in the bank account of the assessee. Interest credited to the bank account in a sum of Rs. 2711 was also added. The deduction of Rs. 24,000 was denied for want of documentary evidence. The assessing officer completed the assessment at Rs. 47,61,874.
3.1. The assessee challenged the additions before the learned Commissioner (Appeals) as well as challenged the validity of the assessment order for non-service of notice issued under section 143(2) of the Income Tax Act. The assessee submitted before learned Commissioner (Appeals) that return was filed on 21-2-2012. Notice under section 143(2) required to be served up to 30-9-2012. On inspection of the record, it came to the notice of assessee that the notice under section 143(2) of the Income Tax Act sent on 6-8-2012 through speed post was received back as unserved on 16-8-2012. The assessee therefore, contended that no notice under section 143(2) have been served upon the assessee. Therefore, the assessment order is without jurisdiction and is liable to be set aside. The assessing officer in the remand report stated that notice under section 143(2) dated 6-8-2012 have been issued through speed post at the address provided by the assessee. For other years, notices sent at same address. Therefore, the assessee cannot deny about knowledge of assessment proceedings in his name.
3.2. The learned Commissioner (Appeals) also on going through the record noted that the notice dated 6-8-2012 has been received back with the comments “no such person”. Similarly, other notice issued under section 142(1) but none have been responded. Therefore, it appears that assessee deliberately avoided to receive the notices and accordingly, this ground was dismissed. The assessee also challenged the additions on merit. However, the appeal of assessee has been partly allowed by reducing the addition on account of cash deposit in the bank account. On the cash deposit in the bank account and other additions, penalty was levied separately which was also reduced by the learned Commissioner (Appeals) because of the addition on merit have been reduced by the learned Commissioner (Appeals). penalty appeal was partly allowed.
4. The first issue involved in the appeal is regarding the jurisdiction of the assessing officer for non-service of the notice under section 143(2) within the statutory time limit. It is not in dispute that assessee filed return of income on 21-2-2012. According to assessee, as per proviso to section 143(2), the notice under section 143(2) was required to be served upon the assessee upto 30-9-2012. According to assessee the said notice is received unserved. The learned Departmental Representative filed copy of the notice dated 6-8-2012 issued under section 143(2) of the Income Tax Act. The learned Departmental Representative also produced the assessment record which revealed that the said notice has been returned unserved to the assessing officer with the remarks “Left to sendor”. The learned Commissioner (Appeals) also noted in the appellate order that notice has been received back with the comments “No such person”. The report is dated 11-8-2012 and according to assessee the same has been received unserved by the department on 16-8-2012. According to proviso to section 143(2) of the Income Tax Act as applicable to assessment year under appeal the same provides “provided that no notice under this clause shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.” It would show that the notice under section 143(2) could be served upon the assessee upto 30-9-2012. The learned Departmental Representative admitted that except the notice under section 143(2) dated 6-8-2012 which returned unserved, no other notice under section 143(2) have been issued to the assessee. The order sheet also revealed that the assessing officer thereafter did not issue any notice under section 143(2) to the assessee for the purpose of service and to assume jurisdiction to frame scrutiny assessment under section 143(3) of the Income Tax Act. Though the assessing officer issued several notices under section 142(1) of the Income Tax Act, but none have been served upon the assessee as per order sheet. These facts therefore, clearly reveal that when the only notice under section 143(2) dated 6-8-2012 have been returned to the assessing officer unserved in August, 2012 itself, the assessing officer could have made some efforts to serve the notice to the assessee upto 30-9-2012 through other mode of service prescribed under law. However, the assessing officer did not make any effort to serve the notice under section 143(2) of the Income Tax Act upon the assessee. It clearly show that assessing officer never wanted to serve the assessee with jurisdictional notice under section 143(2) of the Income Tax Act. It stands proved on record that no notice under section 143(3) have been served upon the assessee within the time prescribed under the law or thereafter. Therefore, the entire assessment order got vitiated due to non-service of the notice under section 143(2) of the Income Tax Act. The assessing officer therefore, did not get valid jurisdiction to proceed to make scrutiny assessment against the assessee. The assessment order is null and void abinitio. I, therefore, set aside the orders of the authorities below and quash the assessment order under section 143(3) of the Income Tax Act. Resultantly, all additions made in the assessment order stands deleted.
5. In the result, ITA. No. 3162/Del./2017 of the assessee is allowed.
ITA. No. 3163/Del./2017 – assessment year 2011-2012 :–
6. The assessing officer also levied the penalty under section 271(1)(c) of the Income Tax Act, 1961 on making the additions on account of unexplained cash deposit in the bank account of the assessee and other additions. Since the assessment order have been quashed due to non-service of the notice under section 143(2) of the Income Tax Act, therefore, nothing is left with the Revenue to levy the penalty under section 271(1)(c) of the Income Tax Act. I, accordingly, set aside the orders of the authorities below and cancel the penalty under section 271(1)(c) of the Income Tax Act. The appeal of assessee in ITA. No. 3163/Del./2017 is allowed.
7. To sum-up, both the appeals of the assessee are allowed.
