TaxTMI 
TaxTMI 
2015 (5) TMI 516
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....ch Marketing Pvt. Ltd. had paid incentives to Shri Surender Singh and Shri Ravinder Singh who were assessed with Ward 37(1), New Delhi. In the income-tax return filed in the name of Shri Surender Singh and Shri Ravinder Singh, refund was claimed against TDS certificates issued by this company. On enquiry by the ITO Ward 37(1), New Delhi, it was found that Shri Surender Singh and Shri Ravinder Singh had not filed returns in their names but Shri Hoshiar Singh, who was a director of M/s Staunch Marketing Pvt. Ltd. had actually filed the income-tax returns in the names of Shri Surender Singh and Shri Ravinder Singh. TDS certificates issued by M/s Staunch Marketing Pvt. Ltd., showing month wise payment of incentives and tax deducted on it was attached. The incentives allegedly paid to Shri Surender Singh and Shri Ravinder Singh by M/s Staunch Marketing Pvt. Ltd. were declared as professional receipt at Rs. 17,16,500/- and Rs. 16,48,890/- respectively. Statements were recorded and after coming to the conclusion that bogus returns in the names of different persons were filed by Shri Hoshiar Singh, notice u/s 148 was issued to the company on 19-9-2005, requiring the company to file the ret....
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....ingly completed at a total income of Rs. 4,86,08,295/-. Ld. CIT(A) partly allowed the assessee's appeal. 5. Being aggrieved with the order of ld. CIT(A), the department is in appeal before us and assessee has filed cross objection. 6. The revenue in its appeal has raised following grounds of appeal: 1. "On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 57,21,746/- ( included in the total amount of Rs. 2,67,25,498/- ) claimed to have been paid by the assessee as incentives to 19 parties but could not substantiate the same by producing the details i.e mode of payments and dates of payments etc. and hence failed to discharge its primary onus to vouch the payments." 2. "On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 44,500/- (included in the total amount of Rs. 3,44,500/-) made u/s 68 whereas the assessee could not furnish any documentary evidence to substantiate the issue of shares and raising of share capital." 7. The assessee in its cross objection has taken fo....
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....e before ld. CIT(A) also either in statement of facts or in grounds of appeal and, therefore, the ground raised by assessee in the cross objection does not arise out of CIT(A)'s order. He further submitted that cross objection has been filed belatedly and suffers from latches. 10.3. Ld. CIT(DR) referred to the provisions of section 253(4) of the Act and submitted that assessee failed to file a memorandum of cross-objection/ additional ground against any part of the CIT(A)'s order within the time specified in sub-section (3) and, therefore, cannot be acted upon. He further submitted that whether a notice u/s 143(2) of the Act is issued or not is only a question of fact and not a question of law and, therefore, it could not be raised on the premise that a legal issue can be raised at any stage of proceedings. 10.4. Ld. CIT(DR) further referred to section 124(3) to submit that the issue regarding jurisdiction of the AO can be raised only within 30 days from the date on which assessee was served with a notice u/s 142(1) or 143(2). Ld. CIT(DR) submitted that by way of cross objection no new case can be made out. He relied on the decision of the ITAT in the case of Sandeep M. Patel....
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..... CIT(A) on the merits regarding the quantum of the tax liability, but the assessee in cross-objections can challenge the order of the Dy. CIT not only on the quantum of tax amount but on other points also. In view of the aforementioned discussion it can safely be held on a point of law that there is absolutely no difference between an appeal and a cross objection...." 7.3. Further, in the absence of a notice u/s 143(2) of the Act, the assessment prevails or not is to be examined: Whether it is a legal question or not? In an identical issue to that of the issue under consideration, the earlier Bench of this Tribunal in the case of B.R.Arora v. ACIT in ITA NO.6020/De1/2012 dated 29.5.2014 has decided the issue in favour of the assessee. The issue, in brief, wasthat the assessee had filed an application before the Tribunal for admitting additional ground and proceeding sheet of assessment as additional evidence to the following effect: "1. That following ground be please admitted as additional ground of appeal Additional ground: That in the absence of notice issue....
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....of the Act, issuance of notice under section 143(2) of the Act within the specified time, is mandatory and in case if it is not issued, assessment order passed stand illegal. Thus, in my opinion, ground which has been raised and sought to be added in the grounds of appeal is a legal ground which goes to the root of the matter, and thus, the Tribunal ought to have allowed the application and the ground sought to be added be permitted to be added in the grounds of appeal. In the case of National Thermal Power Company Ltd v. Commissioner of Income-tax (supra), the Apex Court held as follows: 'The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) takes too narrow a view of the powers of the Appellate Tribunal (vide, e.g., CIT v. Anand Prasad (1981) 128 ITR 388 (Del), CIT v. Karamchand Premchand P. Ltd (1969) 74 ITR 254 (Guj), and CIT v. Cellulose Products of India Ltd (1985) 151 ITR 499 (Guj) (FB). Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But wheretlie Tribunal is only required to c....
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.... so we will adjudicate this issue". 12. We have considered the rival submissions and have perused the record of the case. As far as ld. CIT(DR)'s objection that this issue could not be raised by way of CO, we find that Tribunal in the case of M/s Silver Line (supra) has exhaustively considered this issue with reference to the decision of Hon'ble Guwahati High Court in the case of Purbanchal Parbahan Gosthi (supra). 12.1. It has been clearly held that even if the issue has not been considered by CIT(A) still by filing cross-objection, the assessee can raise this issue. The plea of ld. CIT(DR) that it is purely a question of fact as to whether 143(2) notice was issued or not, is misplaced inasmuch as the non-issuance of notice u/s 143(2) results in raising a question of law as to whether the same results into invalidating the assessment order per se or not. Therefore, this issue is a mixed question of law and fact and goes to the very root of jurisdiction of passing of the assessment order. 12.2. Ld. CIT(DR) has also referred to section 124(3), which, in our opinion, is relevant only when the jurisdiction of an AO is challenged on the basis of area and not otherwise as is ev....
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....ssessment u/s. 148 of the Act, compliance of the procedure laid down u/s. 142 and 143(2) is mandatory. As per record, we find that there was no notice issued u/s. 143(2) of the Act which is very much essential for reassessment and it is a failure on the part of the AO for not complying with the procedure laid down in section 143(2) of the Act. If the notice is not issued to the assessee before completion of the assessment, then the reassessment is not sustainable in the eyes of law and deserves to be cancelled. In view of above facts and circumstances of the present case, the issue in dispute raised in additional ground relating to non issue of the mandatory notice u/s. 143(2) of the Act is decided in favour of the assessee and we hold that the impugned assessment order dated 31.12.2009 passed u/s. 147/143(3) of the Act by the AO as invalid. Our view is supported by the various judgments of the Hon'ble Supreme Court, and Hon'ble Jurisdictional High Court. The relevant portion of the headnotes of various judgments of the Hon'ble Courts are reproduced as under:- "ACIT & Anr. VS. Hotel Blue Moon: [(2010) 321 ITR 362 (SC)] HELD: "It is mandatory for the AO to issue no....
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....e appeal is dismissed with no order as to costs. DCIT Vs. M/s Silver Line, ITA No. 1809, 1504, 1505 & 1506/De1/2013 vii. The Hon'ble ITAT of Agra 8ench, in the case of ITO v. Aligarh Auto Centre reported in 152 ITJ (Agra) 767, on an identical issue that of the present issue, has recorded its findings as under: "5. We have considered the rival submissions and the material on record. It is not in dispute that the assessee filed original return of income and at .the reassessment proceedings, the assessee contended before the AO that the original return filed earlier may be treated to nove been filed in response to the notice u/s. 10 ITA NO. 1175/DeI/2011 & CO 174/DEL/2011 147, which is also supported by order sheet entry dated 09.08.2006 (PB-20). It is also not in dispute that AO never issued any notice u/s. 143(2) of the IT Act. The Revenue merely contended that the CIT (A) should have appreciated the provisions of section 292BB of the IT Act. Section 292 BB of the IT Act provides as under: "292BB. Where an assessee....