Case Law Details
Oracle Systems Corporation Vs ADIT (ITAT Delhi)
ITAT Delhi held that reasons recorded for reopening of assessment u/s 147 of the Income Tax Act doesn’t disclose that income has escaped assessment due to failure on the part of the assessee to disclose fully and truly all the material facts and hence assessment order passed thereon are quashed.
Facts-
In course of assessment proceeding for AY 2001-02, AO observed that while completing assessment under section 143(3) of the Act for AYs 1998-99, 1999-2000 and 2000-01, the issue of royalty on software sales was discussed only on the stand-point of rate of tax applicable to the income from royalty, whether to be taxed at 30% as per section 115A or at 15% as claimed by the assessee, and no other issue was taken up for consideration. Thus, he opined that since the taxability of royalty of all software sales made by the assessee in India and attribution of such income to the Permanent Establishment (PE) has not been examined, the assessments have to be reopened.
According to AO, the assessee had a PE in India through its Indian subsidiary OIPL having office at Hyderabad, and secondly, the royalty income from the global deals relating to sale of software by the assessee or its affiliates involving Indian customers have to be taxed in India. Basis such reasoning, the Assessing Officer reopened the assessment u/s. 147 of the Act by issuing a notice u/s. 148 of the Act. In course of assessment proceeding, though, the assessee objected to the reopening of assessment as invalid, however, such objection was rejected by AO.
AO completed the assessment u/s. 143(3) read with section 148. CIT(A) also dismissed the appeal filed by the assessee.
Conclusion-
A reading of reasons recorded for reopening of assessment u/s. 147 of the Act do not disclose even a semblance of allegation made by AO indicating that the income has escaped assessment due to failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.
Thus, it is patently clear, while reopening the assessment under section 147 of the Act, the Assessing Officer has not fulfilled the conditions of the proviso to section 147 of the Act, as applicable for the impugned assessment years.
FULL TEXT OF THE ORDER OF ITAT DELHI
Captioned appeals by the assesse arise out of a common order dated 20.01.2009 of learned Commissioner of Income Tax (Appeals)-XXIX, New Delhi, pertaining to assessment years 1997-98 to 2000-01.
2. The grounds raised by the assessee in all these appeals, inter alia, challenge the validity of reopening assessment under section 147 of the Income-tax Act, 1961 (in short ‘the Act’) and the assessment orders passed pursuant thereto. Of course, the assessee has also raised additional grounds in all these years concerning the validity of reopening of assessment under section 147 of Act. Additional grounds raised by the assessee, since, are on purely legal and jurisdictional issues going to the root of the matter, we admit them. Hereinafter we will proceed to decide the appeals independently by addressing the legal issues raised by the assessee at the outset.
ITA No.1829/Del/2009 (AY: 1997-98)
3. Before we proceed to deal with legal issues raised by the assessee, it is necessary to discuss the relevant facts. The assessee is a non-resident corporate entity incorporated in the Unites States of America (USA) and is stated to be one of the largest independent software company in the world. The assessee has a wholly owned subsidiary in India known as Oracle India Pvt. Ltd. (OIPL) which was incorporated in India in the year 1993 and started its operation by setting up a facility at Bangalore. As stated, the Indian subsidiary carries on business in two segments, i.e., software development support services and software duplication and distribution segment. For the assessment year 1997-98, the assessee had filed its return of income on 24.04.1997 declaring income of Rs.17,30,01,448/-. The return of income filed by the assessee was processed under section 143(1) of the Act and there was no scrutiny assessment under section 143(3) of the Act. Subsequently, in course of assessment proceeding for assessment year 2001-02, the Assessing Officer observed that while completing assessment under section 143(3) of the Act for assessment years 1998-99, 1999-2000 and 2000-01, the issue of royalty on software sales was discussed only on the stand-point of rate of tax applicable to the income from royalty, whether to be taxed at 30% as per section 115A or at 15% as claimed by the assessee, and no other issue was taken up for consideration. Thus, he opined that since the taxability of royalty of all software sales made by the assessee in India and attribution of such income to the Permanent Establishment (PE) has not been examined, the assessments have to be reopened. Based on such reasoning recorded in assessment years 2000-01 and 2001-02, the Assessing Officer reopened the assessment for the impugned assessment year. According to the Assessing Officer, the assessee had a PE in India through its Indian subsidiary OIPL having office at Hyderabad, and secondly, the royalty income from the global deals relating to sale of software by the assessee or its affiliates involving Indian customers have to be taxed in India. Basis such reasoning, the Assessing Officer reopened the assessment under section 147 of the Act by issuing a notice under section 148 of the Act. In course of assessment proceeding, though, the assessee objected to the reopening of assessment as invalid, however, such objection was rejected by the Assessing Officer.
4. Ultimately, the Assessing Officer completed the assessment under section 143(3) read with section 148 of the Act vide order dated 23.03.2006 determining the total income at Rs.13,14,60,723/-. Against the assessment order so passed, assessee preferred an appeal before learned Commissioner (Appeals), inter alia, challenging the validity of reopening of assessment under section 147 of the Act. However, learned Commissioner (Appeals) did not find merit in the submissions of the assessee, hence, dismissed the appeal.
5. Drawing our attention to the specific issues raised through main as well as addition grounds challenging the validity of reopening of assessment under section 147 of the Act, learned counsel appearing for the assessee submitted, based on the reasoning on which the Assessing Officer sought approval for scrutiny assessment relating to assessment year 2001-02, assessments for preceding assessment years, including assessment year 1997-98 were reopened. Drawing our attention to the reasons recorded by the Assessing Officer for seeking approval for scrutiny assessment relating to assessment year 2001-02 and the approval of the Director of Income Tax (DIT), International Taxation, a copy of which is placed at page 91 of the paper-book, learned counsel submitted, while granting approval for scrutiny assessment of assessment year 2001-02, the DIT had specifically mentioned that reassessment proceeding for earlier assessment years should be initiated only if there is concrete information about escapement of income in those years. However, he submitted, the Assessing Officer, in complete disregard of the directions of the DIT, initiated reassessment proceeding for assessment years 1997-98 to 2000-01.
6. Proceeding further, he submitted, the Assessing Officer has initiated reassessment proceeding without independent application of mind by simply adopting his reasoning in the assessment order passed for assessment years 2000-01 and 200102. Drawing our attention to the reasons recorded for reopening of assessment for the impugned assessment year, learned counsel submitted, the reasons recorded are factually incorrect about existence of Hyderabad unit of OIPL as the said unit was set up in the previous year relating to assessment year 1999-2000. Further, he submitted, the allegation of the Assessing Officer that OIPL carried on core revenue generating activity on behalf of the assessee is misconceived as while recording such observation, the Assessing Officer has not correctly reproduced the facts mentioned in Form 10K. He submitted, Form 10K only refers to employees being hired in India and did not refer to any core activity. He submitted, the Assessing Officer failed to notice the fact that Form 10K of 2003 specifically states that significant revenues are not generated from R & D activities for several years. He submitted, the Assessing Officer initiated reassessment proceeding merely based on suspicion without being backed by tangible material. He submitted, Form 10K of a different assessment year cannot constitute a tangible material as it reports about all Oracle group entities as a whole. He submitted, while reopening the assessment, the Assessing Officer has blindly relied upon conclusions drawn by him in assessment year 2001-02, which was based on different set of facts, and referred to Circular 01/2004, dated 2nd January, 2004. He submitted, the said Circular relied upon by the Assessing Officer was subsequently withdrawn by CBDT with immediate effect vide Circular No. 5/2004, dated 28th September, 2004. Thus, he submitted, reliance of the Assessing Officer on the said circular to conclude that OIPL is carrying on the core activity is unsustainable. He submitted, assessment years 2000-01 and 2001-02 are factually different especially in relation to global deals, hence, cannot be relied upon for reopening assessment for assessment year 1997-98. He submitted, in assessment years 1997-98 to 1999-2000 there was no agreement for global deals as well as no revenue transfer was received by OIPL for global deals. He submitted, the Assessing Officer without appreciating the factual differences has reopened the assessment based on his approach in assessment year 2000-01 and 2001-02. He submitted, reopening of assessment under section 147 of the Act based on wrong assumption of facts is invalid. In this context, he relied upon the following decision:
1. CIT Vs. Rainee Singh [2010] 189 Taxman 202 (Delhi)
7. The next contention of learned counsel for the assessee is, the reasons were recorded without independent application of mind and conclusions drawn in subsequent assessments cannot be the basis for initiating reassessment proceedings in absence of any new material. For such proposition, he relied upon the following decisions:
2. CIT Vs. Orient Craft Ltd., [2013] 29 com 392 (Delhi)
3. E-Funds IT Solution Inc., [2017] 399 ITR 34 (SC).
8. He submitted, the reasons recorded must have a live link with the material/information resulting in reassessment. He submitted, the expression ‘reason to believe’ postulates belief and existence of reasons for that belief must be held in good faith and cannot be pretended. In this context, he relied upon the decision of the Hon’ble Supreme Court in the case of Calcutta Discount Company Ltd. Vs. ITO, 41 ITR 191 (SC). He submitted, the reasons recorded are not reasons to belief in real sense of the term but are reasons to suspect. Therefore, he submitted, reopening of assessment should be declared invalid.
9. Learned Departmental Representative strongly relied upon the observations of the Assessing Officer and learned Commissioner (Appeals). He submitted, before reopening the assessment, the Assessing Officer has duly recorded his reason to believe that income has escaped assessment. He submitted, the reason recorded has been approved by superior authority. He submitted, there is no bar on the Assessing Officer to reopen the assessment based on reasons/materials, which form the basis for reopening of assessment in another assessment year. He submitted, at the time of recording of reasons for reopening of assessment, the Assessing Officer has to form a prima facie belief that income has escaped assessment. He submitted, such belief has to be formed on the basis of material available on record. He submitted, in the facts of the present case, the Assessing Officer had enough material in his possession to form belief that income chargeable to tax has escaped assessment. Therefore, he submitted, there is no lacuna in reopening of assessment made under section 147 of the Act.
10. We have considered rival submissions in the light of decisions relied upon and perused the materials available on record. Insofar as the factual aspect of the issue is concerned, there is no dispute that the return of income filed by the assessee under section 139(1) of the Act was processed under section 143(1) of the Act. In other words, prior to reopening of assessment under section 147 of the Act, there was no regular assessment under section 143(3) of the Act. Having said that, it is necessary to examine, whether the reopening of assessment under section 147 of the Act meets legal requirement. As discussed earlier, while examining the return of income filed by the assessee for assessment year 2001-02, the Assessing Officer was of the view that whether the issue of consideration received from sale of software is in the nature of royalty was not examined by the Assessing Officer in scrutiny assessment for assessment years 1998-99 and 1999-2000. Further, he found that similar issue was also involved in assessment year 2000-01, where the return filed by the assessee was processed under section 143(1) and the time limit prescribed for issuing of notice under section 143(2) of the Act has lapsed. Basis the aforesaid reasoning, the Assessing Officer sought approval from the DIT (International Taxation) for scrutiny assessment for assessment year 2001-02.
11. While granting approval for scrutiny assessment for assessment year 2001-02, the DIT (International Taxation), in order dated 01.10.2002, had specifically observed that the reopening of assessment, if any, for the earlier assessment years should be done only after concrete information about escapement of income for those years are available with the department. In fact, in the reasons recorded for reopening of assessment for the impugned assessment year, the Assessing Officer himself admitted that based on the facts involved in assessment years 2000-01 and 2001-02, the assessments for the impugned assessment year was reopened. A careful perusal of the reasons recorded would reveal that the formation of belief regarding the escapement of income is on account of profit from royalty received from sale of software, which allegedly is attributable to the PE of the assessee, being the Hyderabad unit of OIPL. The Assessing Officer has alleged that all the core activities related to software development were undertaken in India on behalf of the assessee, hence, the Hyderabad unit of OIPL for all intent and purposes constitutes the PE of the assessee in India and even in respect of global deals. The royalty earned by the assessee would be attributable to the PE.
12. However, the material on record establish that the Hyderabad unit of OIPL was approved by the Software Technology Park of India (STPI) on 15.07.1998, i.e., during the financial year relevant to the assessment year 1999-2000. Thus, in sum and substance, in the impugned assessment year, the Hyderabad unit of OIPL was not set up, hence, not in existence. Therefore, the belief formed by the Assessing Officer regarding escapement of income relating to royalty earned from global deals of software attributable to Hyderabad unit of OIPL is factually misconceived. It is patent and obvious, merely adopting the reasoning for reopening of assessment in assessment year 2000-01 and scrutiny assessment for assessment year 2001-02, the Assessing Officer has formed belief regarding reopening of assessment for the impugned assessment year, though on completely non-existent facts.
13. In the aforesaid context, the directions of learned DIT (International Taxation) while approving for scrutiny assessment for assessment year 2001-02 assumes significance. As discussed earlier, while granting approval for scrutiny assessment for assessment year 2001-02 on the issue of royalty income attributable to PE in India, learned DIT had specifically directed the Assessing Officer to reopen the assessments for earlier assessment years only after he is in possession of concrete information about escapement of income. However, eventually the Assessing Officer has not followed the directions of the approving authority and merely relying upon the reasoning/factual observations relating to assessment years 2000-01 and 2001-02, the Assessing Officer has reopened the assessment for the impugned assessment year.
14. As demonstrated before us by learned counsel appearing for the assessee, the factual position in the impugned assessment year, insofar as it relates to royalty from global deals, stands in a completely different footing than assessment years 2000-01 and 2001-02, primarily, for two reasons. Firstly, there was no agreement for global deals and, secondly, no revenue transfer received by OIPL for global deals particularly the Hyderabad unit of OIPL, as, it was not in existence. Thus, it is quite clear, the reasons recorded for reopening of assessment is without independent application of mind but simply based on conclusions drawn in the subsequent assessment years without having any tangible material. It is further evident, the reasons recorded do not have any live link with material/information in possession of the Assessing Officer which could have establish escapement of income for the impugned assessment year. Thus, it is very much evident, the assessment has been reopened merely on reason to suspect rather than reason to belief. Thus, in our view, the reopening of assessment made by the Assessing Officer on irrelevant facts and on a mere reason to suspect cannot survive. Therefore, we hold that the reopening of assessment for the impugned assessment year is invalid. Hence, the subsequent action taken by the Assessing Officer in pursuance thereof resulting in the impugned assessment order is also invalid. Accordingly, we quash the assessment order for the impugned assessment year. Therefore, the impugned order of learned Commissioner (Appeals) having no leg to stand, is hereby set aside. Since, we have decided the appeal on the legal issue, the grounds raised by the assessee on merits, having become academic, do not require adjudication at this stage.
15. In the result, the appeal is allowed, as indicated above.
ITA No.1830/Del/2009 (AY: 1998-99)
ITA No.1831/Del/2009 (AY: 1999-00)
16. We have heard the parties and perused the materials on record. The decisions cited by the parties before us were carefully examined. In these years also, the assessee has raised additional grounds in addition to the main grounds challenging the validity of reopening of assessment under section 147 of the Act. In addition to the submissions made by learned counsel for the assessee in respect of ITA NO. 1829/Del/2009 on the issue. He further submitted that assessee’s case stands on a stronger footing for these two years as the proviso to section 147 of the Act applies. He submitted, neither in the reasons recorded nor anywhere else the Assessing Officer in specific terms has stated that the alleged escapement of income is on account of failure of the assessee to disclose the particulars of his income truly and correctly. Thus, he submitted, on this ground alone, the reopening of assessment has to be declared as invalid. In support of such contention, he has relied upon the following decisions:
1. Appellant’s own case for AY 2004-05 in WP (C) No. 1873/2013 & CM No.3570/2013 (judgment dated. 08.10.2015) (Delhi High Court)
2. CIT Vs. Viniyas Finance & Investment (P) Ltd., 357 ITR 646 (2013) (Delhi High Court)
3. Rural Electrification Corporation Ltd. (2013) 355 ITR 356 (Delhi High Court)
17. We have considered rival submissions and perused the materials on record. As could be seen from the facts on record for assessment year 1998-99, the assessee did not file any return of income under section 139(1) of the Act. Noticing that though the assessee had earned income in India, however, not filed any return of income, the Assessing Officer reopened the assessment under section 147 of the Act by issuing the notice under section 148 of the Act on 10.04.2000/-. In response to the said notice, the assessee on 03.05.2005 had filed a return of income declaring income of Rs.21,15,78,260/-. Assessment in case of the assessee was completed under section 143(3)/147 of the Act vide order dated 26.03.2002. As far as assessment year 1999-00 is concerned, the assessee filed its return of income on 21st December, 1999 declaring income of Rs.35,00,88,180/-. Assessment in case of the assessee was completed under section 143(3) of the Act vide order dated 26.03.2002. Thus, from the aforesaid facts, it is crystal clear that assessment orders in these two assessment years were passed either under section 143(3) or section 147 of the Act. Further, reopening of assessment under section 147 of the Act, which is the subject matter of challenge in these appeals was initiated after expiry of four years from the end of the relevant assessment years. Therefore, the proviso to section 147 of the Act clearly applies. On a reading of proviso to section 147 of the Act, it is very much clear that in case of a particular assessee, where assessments have already been made, either under section 143(3) or section 147 of the Act for any assessment year, no action for reopening of assessment can be taken after expiry of four years from the end of the relevant assessment year, unless, the following conditions are fulfilled:
(i) The assessee has failed to make a return under section 139 or in response to notice issued under section 142(1) or section 148.
(ii) The assessee has failed to disclose fully and truly all material facts necessary for his assessment for that assessment year.
18. In the present case, first condition does not apply as there is no allegation of failure on the part of the assessee in filing return of income under section 139 or in response to notice issued under section 142(1) or section 148 of the Act. Insofar as the second condition of failure of the assessee to disclose fully and truly all material facts necessary for assessment, facts on record reveal that the assessee furnished its return of income disclosing all material facts relating to his assessment. Assessments were also completed under section 147 and 143(3) of the Act, respectively, accepting the return income. A reading of reasons recorded for reopening of assessment under section 147 of the Act, which are identical for both the years, do not disclose even a semblance of allegation made by the Assessing Officer indicating that the income has escaped assessment due to failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.
19. On the contrary, a careful reading of the reasons recorded would demonstrate that, basis conclusions drawn in assessment years 2000-01 and 2001-02, the Assessing Officer has reopened the assessments for these two years. Thus, it is patently clear, while reopening the assessment under section 147 of the Act, the Assessing Officer has not fulfilled the conditions of the proviso to section 147 of the Act, as applicable for the impugned assessment years. Legal position in this regard is fairly well settled, as would be evident from the ratio laid down in the decision relied upon by the assesse. In fact, in assessee’s own case in assessment year 2004-05, the Hon’ble High Court while dealing with identical issue, has held as under :-
“3. We have heard the counsel for the parties. Without going into great detail, the simple point taken by the learned counsel for the assessee is that this is a case of reopening of assessment beyond 4 years from the end of the assessment year and therefore the first proviso of section 147 of the Income Tax Act, 1961 would come into play. One of the pre-conditions for reopening of assessment stipulated in the first proviso is that there must be failure on the part of the assessee to fully and truly disclose all the material facts necessary for the assessment. It is the case of the petitioner/assessee that the reasons recorded for reopening the assessment do not even allege that there has been any failure on the part of the assessee to fully and truly disclose all the material facts necessary for the assessment.
4. Reliance has been placed by the learned counsel on the decision of this court in Haryana Acrylic Manufacturing Co. Vs. CIT (2009) 308 ITR (Delhi). In that case, this court had observed as under:
“In the reasons supplied to the petitioner, there is no whisper, what to speak of any allegation, that the petitioner had failed to disclose fully and truly all material facts necessary for assessment and that because of this failure there has been an escapement of income chargeable to tax. Merely having a reason to believe that income had escaped assessment, it is not sufficient to reopen assessments beyond the four year period indicated above. The escapement of income from assessment must also be occasioned by the failure on the part of the assessee to disclose material facts, fully and truly. This is a necessary condition for overcoming the bar set up by the proviso to section 147. If this condition is not satisfied, the bar would operate and no action under section 147 could be taken. We have already mentioned above that the reasons supplied to the petitioner does not contain any such allegation. Consequently, one of the conditions precedent for removing the bar against taking action after the said four year period remains unfulfilled. In our recent decision in Wei Intertrade P. Ltd. (2009) 308 1TE 22(Delhi) we had agreed with the view taken by the Punjab and Haryana High Court in the case of Duli Chand Singania (2004) 269 ITR 192 (P&H) that, in the absence of an allegation in the reasons recorded that the escapement of income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, any action taken by the Assessing Officer under section 147 beyond the four year period would be wholly without jurisdiction. Reiterating our viewpoint, we hold that the notice dated March 29, 2004, under Section 148 based on the recorded reasons as supplied to the petitioner as well as the consequent order dated March 2, 2005, are without jurisdiction as no action under section 147 could be taken beyond the four year period in the circumstances narrated above.”
5. The said decision was also followed in Rural Electrification Corporation Ltd. Vs. CIT & Anr. 355 ITR 356 (Delhi).
6. The reasons in the present case, arc as under:
“Reasons for reopening – For the year under review. OIPL has been held to be the PE of the assessee in India. The royalty was paid at 15%. The assessee company is earning royalties in India linked to the PE. Therefore, this royalty income must be taxed @ 20% gross instead of 15%. Further, the royalty income offered by the assessee includes Rs. 11,064,710 towards the interest on delayed royalty which should be taxed at 41.82 percent. ”
7. It is be evident from the above quoted recorded reasons, that there is no whisper of the petitioner having failed to disclose fully and truly all material facts necessary for his assessment. Therefore, the necessary ingredient for inviting the provisions of Section 147 is missing. As such, the initiation of the re-assessment proceedings pertaining to assessment year 2004-05 does not have the backing of law. Consequently, the impugned notice under Section 148 and all proceedings pursuant thereto including the order disposing of the objections are set aside.”
20. The ratio laid down by the Hon’ble Jurisdictional High Court, as aforesaid, squarely applies to the facts of the present appeals. Thus, respectfully following the ratio laid down by the Hon’ble Jurisdictional High Court in assessee’s own case as well as in other decisions cited before us, we hold that due to non-fulfillment of the conditions prescribed under the first proviso to section 147 of the Act, the reopening of assessment is invalid. Consequently, the assessment orders passed under section 143(3) read with section 147 of the Act for both the assessment years, being invalid, are quashed. As a natural corollary the impugned orders of learned Commissioner (Appeals) are hereby set aside. Since, we have decided the appeals on legal issue, the grounds raised by the assessee on merits having become academic are not adjudicated at this stage.
21. In the result, both the appeals are allowed.
ITA No.1832/Del/2009 (AY: 2000-01)
22. Insofar as this assessment year is concerned, learned counsel appearing for the assessee, while challenging the validity of reopening of assessment under section 147 of the Act submitted, the only reason for which the Assessing Officer reopened the assessment is, the notice under section 143(2) of the Act could not be issued on time. He submitted, merely because the notice under section 143(2) of the Act could not be issued within the time limit, cannot lead to reopening of assessment under section 147 of the Act. He submitted, the Assessing Officer must be in possession of tangible material to indicate escapement of income. He submitted, assessment cannot be reopened merely for making fishing inquiry. He submitted, material in possession of the Assessing Officer must indicate that income has escaped assessment. In support of such contention, he relied upon the following decisions:
1. PCIT v. Manzil Dineshkumar Shah ( 2018) 406 ITR 326
2. CIT Vs. Orient Craft Ltd. (2013) 2015 Taxman 28
23. Further, he submitted, before completing assessment under section 143(3) read with section 147 of the Act, the Assessing Officer has not issued any notice under section 143(2) of the Act which is mandatory. Thus, he submitted, in absence of notice issued under section 143(2) of the Act, the assessment proceeding is vitiated and the assessment order is invalid. In support of such contention, he relied upon the following decisions:
1. Appellant’s own case for A.Y. 2006-07 [W.P. (C) 4729/2014 & CM No. 27598/2018, Order dated 23.08.2018) (Delhi High Court)
2. ACIT Vs. Hotel Blue Moon, [2010] 188 Taxman 113 (SC)
3. PCIT Vs. Sh. Jai Shiv Shankar Traders Pvt. Ltd. [2015] 64 com 220 (Delhi)
24. We have considered rival submissions and perused the materials on record. It is the specific contention of the assessee before us that the Assessing Officer had failed to issue any notice under section 143(2) of the Act in course of assessment proceeding. Though, in the body of the assessment order the Assessing Officer has mentioned that notice under section 143(2) of the Act was issued to the assessee, however, in response to query raised by us, learned Departmental Representative was unable to controvert assessee’s allegation that no notice under section 143(2) of the Act was ever issued to the assessee. No contrary evidence was placed before us by the department to establish valid issuance and service of notice under section 143(2) of the Act on the assessee. While dealing with an identical issue in assessee’s own case, the Hon’ble Jurisdictional High Court has observed as under:
“……………. Additionally, it is contended that pursuant to the reassessment notice the AO did not issue any further notice as called for by law under Section 143(2) of the Act, within the time prescribed, proposing to take further proceedings in the re-assessment. This aspect too is undisputed. The notice under Section 143(2) of the Act ought to have been issued within six months prescribed period (which in this case ended on 30.09.2013), however, that notice was issued on 09.01.2014. This aspect was highlighted not in the petition but in the course of the proceedings in the rejoinder filed by the assessee sometime in July, 2016. It sought to follow this up through an amendment application (CM No.27598/2018). In the light of these events, which are both subsequent to the initiation of the reassessment proceedings, the entire purpose for re-assessment, assuming that there was any, can no longer be achieved. The judgment of this Court in Pr. Commissioner of Income Tax vs. Silver Line (2016) 383 ITR 455 and the other subsequent decisions have ruled that omission to issue notice under Section 143(2) of the Act within the time stipulated in respect of any assessment is fatal.
As a result of the above discussion, the reassessment notice dated 15.02.2013 and all consequent proceedings emanating from it are hereby quashed
25. The other decisions cited by learned counsel for the assessee also express similar view. Thus, respectfully following the ratio laid down by Hon’ble High Court in assessee’s own case, as discussed above, we hold that in absence of a valid issuance and service of notice under section 143(2) of the Act on assessee, the present proceeding has become invalid. Accordingly, we quash the impugned assessment order. Consequently, the order passed by learned Commissioner (Appeals) is hereby set aside. In view of our decisions hereinabove, grounds raised on merits are not required for adjudication.
26. In the result, all the appeals are allowed, as indicated above. Order pronounced in the open court on 26th September, 2022
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