Case Law Details

Case Name : Shri Ajay Sharma Vs DCIT (ITAT Delhi)
Appeal Number : I.T.A. No. 3555/Del./2015
Date of Judgement/Order : 05/03/2019
Related Assessment Year : 2011-12
Courts : All ITAT (6377) ITAT Delhi (1461)

Ajay Sharma Vs DCIT (ITAT Delhi)

It is not in dispute that search was conducted in the case of the assessee and others on 11th October, 2010, therefore, the assessment year under appeal i.e., A.Y. 2011-­2012 is the year of search. It is not in dispute that assessee filed return of income on 14th March, 2013 and on the same day, notice under section 143(2) have been issued. This fact is mentioned in the assessment order. The assessee also filed copy of the notice under section 143(2) and copy of the order sheet on record, which also supports the same fact that notice under section 143(2) have been issued on the date of filing of the return of income itself.

Learned D.R. referred to page-22 of the Ld. CIT(A) Order. The A.O. in the assessment order has mentioned that notice under section 142(1) have been issued on 18th September, 2012. The Ld. CIT(A) noted in para 6.4 of the appellate order, as referred to by the Ld. D.R. that this notice issued under section 142(1) on 18th September, 2012 was received un-served. Another notice under section 142(1) with questionnaire is issued on 14th December, 2012 for compliance on 3rd January, 2013 but, there were no compliance. Summons under section 131 and show cause notice under section 276CC was issued on 6th June, 2012 but, there was no compliance. The A.O. as well as the Ld. CIT(A) have nowhere mentioned in the impugned orders, if any of the above notices have been served upon the assessee ? Therefore, there is no question of any non-compliance or non cooperation on the part of the assessee as is contended by the Ld. D.R. The contention of the Ld. D.R. is, therefore, rejected. It, therefore, stands established that the A.O. issued notice under section 143(2) on the same day when the return of income was filed by the assessee. Thus, there was no application of mind on the part of the A.O. The entire assessment proceedings are vitiated and are bad in the eye of Law.

FULL TEXT OF THE ITAT JUDGEMENT

This appeal by assessee has been directed against the order of Ld. CIT(A), Ghaziabad, Dated 31st March, 2015 for the A.Y. 2011-2012.

2. Briefly the facts of the case are that a search under section 132 of the Income Tax Act was conducted in the case of Shri Pankaj Sharma and assessee (Shri Ajay Sharma) on 11th October 2010. It was informed that cash was going to be withdrawn from A/c.xxx 2277 of M/s. A.K. Traders with HDFC Bank, Ambedkar Road, Ghaziabad, source of which is not explained in the hands of the assessee, proprietor of M/s. A.K. Traders. When the team visited the Bank premises, it was found that an amount of Rs.2.78 crores was already got transferred to account xxx16097 with Punjab National Bank, Navyug Market, Ghaziabad, standing in the name of M/s. Tushar Building Material Supplier, Gautam Budh Nagar. Bank Authorities were requested to put the balance of Rs.1,78,35,905/-standing to credit in A/c. No.xxx2277 of M/s. A.K. Traders under restraint. Meanwhile, the team immediately visited Punjab National Bank and it was found that by that time the entire amount of Rs.2.78 crores had been withdrawn in cash. The Bank premises of HDFC, Ghaziabad in the case of Bank A/c. xxx2277 of M/s. A.K. Traders was searched on 11th October, 2010 and balance standing to the credit was seized. The statement of assessee was recorded in which he has stated that he does not know about the source of the amount credited to the account and the entire affairs were being looked after by his brother in law Shri Pankaj Sharma. The A.O. recorded that so many concerns are being operated and the amounts in the accounts have been credited by transfer through RTGS or otherwise and accommodation entries have been provided. A list showing names of beneficiaries and numerous firms who had been given accommodation entries by assessee and others are noted at pages 5 to 13 of the assessment order. The A.O. on the basis of the search and seizure operation and enquiries conducted noted that assessee is engaged in the business of providing accommodation entries. Notice under section 153A of the I.T. Act was issued for A.Ys.2005-2006 to 2010-­2011 on 18th September, 2012 and notice under section 142(1) was issued for assessment year under appeal i.e., 2011-2012 on 18th September, 2012, for filing of the return of income. The assessee filed return of income on 14th March 2013 showing income of Rs.57,140/- from salary income and other sources. The A.O. on the same day on 14th March 2013 issued notices under section 143(2) and 142(1) of the Income Tax Act, seeking explanation of assessee. The A.O. considered 3% commission income on the gross deposits and made addition of Rs.1.04 crores and further made addition on protective basis on Rs.34.67 crores. The A.O. passed the assessment order under section 143(3) dated 31st March 2013 and computed the total income of assessee at Rs.35,72,04,017/-. The Ld. CIT(A) dismissed the appeal of assessee.

3. The assessee raised several grounds in appeal challenging the above additions. The assessee also filed the following additional grounds of appeal.

“That impugned assessment order passed by Ld. Assessing officer u/s 153A/143(3) of the Act is invalid and void ab initio for want of valid notice u/s 143(2) as per law as evident from fact that when return in response to notice u/s 142(1) dated 14/12/2012 was admittedly filed on 14/03/2013 notice u/s 143(2) is issued on very same day that is 14/03/2013 which shows non application of mind in issuing notice u/s 143(2) and thereafter in framing the assessment and accordingly all proceedings are nullity.

“That impugned assessment framed u/s 143(3) on basis of notice u/s 143(2) dated 14/03/2013 is invalid and void ab initio being made on basis of non est return filed u/s 153A/153C on 14/03/2013 as no return was there u/s 139/142 filed on 14/03/2013 to validly issue notice u/s 143(2) which shows non application of mind in issuing notice u/s 143(2) and thereafter in framing the assessment and accordingly all proceedings are nullity”

“That impugned assessment framed u/s 153A/143(3) is invalid and void ab initio being made without issuance of any show cause much less any show cause notice as evident from order sheet entries of case records filed in paper book ”

4. Learned Counsel for the Assessee submitted that all facts are available on record and it is not in dispute that return of income was filed on 14th March, 2013 and on the same day, A.O. issued notice under section 143(2). Therefore, entire assessment order is a illegal and vitiated and is liable to be quashed. He has submitted that additional ground may be admitted for hearing. PB 35 is order sheet to show that return of income was filed on 14th March, 2013 and on the same day, notice under section 143(2) have been issued to assessee. PB 24 is notice under section 143(2) dated 14th March, 2013. He has a submitted that the issue is covered in favour of the assessee by the order of ITAT, Delhi A-Bench, in the case of Ashtech Industries Pvt. Ltd., Delhi vs. DCIT, Circle-3(2), New Delhi, in ITA.No.2332/Del./2018, Dated 20th December, 2018. He has submitted that a similar view have been taken by ITAT, Delhi SMC-Bench in the case of Satish Kumar, New Delhi vs. ITO, Ward-2(3), Faridabad in ITA.No.3586/Del./2018, Dated 14th January, 2019.

5. On the other hand, Ld. D.R. referred to page 28 of the Ld. CIT(A) order and submitted that assessee did not co­operate with the A.O, therefore, there was no time left with the A.O. to issue notice under section 143(2) of the Income Tax Act. He has, therefore, submitted that additional ground may not be admitted.

6. We have considered the rival submissions and perused the material on record. The additional ground is legal in nature and goes to the root of the matter. It is well settled Law that taxability of the income should be in accordance with law. All the material facts are available on record. Therefore, it being the legal issue, we admit the additional ground of appeal for the purpose of disposal of the appeal. We rely upon decision of Hon’ble Supreme Court in the case of NTPC 229 ITR 383 (SC). We also rely upon the decision of Hon’ble Gauhati High Court in the case of Assam Company India Limited 256 ITR 423 (Gau.) in which it was held that “the Tribunal may consider any new ground if facts are available on record.” The additional ground is, therefore, admitted for deciding the appeal.

6.1. It is not in dispute that search was conducted in the case of the assessee and others on 11th October, 2010, therefore, the assessment year under appeal i.e., A.Y. 2011-­2012 is the year of search. It is not in dispute that assessee filed return of income on 14th March, 2013 and on the same day, notice under section 143(2) have been issued. This fact is mentioned in the assessment order. The assessee also filed copy of the notice under section 143(2) and copy of the order sheet on record, which also supports the same fact that notice under section 143(2) have been issued on the date of filing of the return of income itself.

6.2. Learned D.R. referred to page-22 of the Ld. CIT(A) Order. The A.O. in the assessment order has mentioned that notice under section 142(1) have been issued on 18th September, 2012. The Ld. CIT(A) noted in para 6.4 of the appellate order, as referred to by the Ld. D.R. that this notice issued under section 142(1) on 18th September, 2012 was received un-served. Another notice under section 142(1) with questionnaire is issued on 14th December, 2012 for compliance on 3rd January, 2013 but, there were no compliance. Summons under section 131 and show cause notice under section 276CC was issued on 6th June, 2012 but, there was no compliance. The A.O. as well as the Ld. CIT(A) have nowhere mentioned in the impugned orders, if any of the above notices have been served upon the assessee ? Therefore, there is no question of any non-compliance or non cooperation on the part of the assessee as is contended by the Ld. D.R. The contention of the Ld. D.R. is, therefore, rejected. It, therefore, stands established that the A.O. issued notice under section 143(2) on the same day when the return of income was filed by the assessee. Thus, there was no application of mind on the part of the A.O. The entire assessment proceedings are vitiated and are bad in the eye of Law. The issue is covered in favour of the assessee by order of the ITAT, Delhi Bench in the case of Ashtec Industries Pvt. Ltd., Delhi vs. DCIT, Circle-3(2), New Delhi (supra) which is reproduced as under.

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