TaxTMI 
TaxTMI 
2025 (2) TMI 1343
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.... was an addition of Rs. 48,47,22,100/- u/s 68 on account of unexplained share capital (including share premium). Aggrieved by addition, the assessee carried matter in first-appeal before CIT(A). The CIT(A), vide his order dated 09.04.2019, deleted the addition on merit. At the same time, the CIT(A) also observed that the assessee received share capital of Rs. 48,47,22,100/- in two years, namely Rs. 42,01,80,700/- in Previous Year 2009-10 relevant to AY 2010-11 and Rs. 6,45,41,400/- in Previous Year 2010-11 relevant to AY 2011-12. Accordingly, relying upon the provision of section 68(1), the CIT(A) also held that the receipt to the extent of Rs. 42,01,80,700/- found credited in books of assessee of AY 2010-11 cannot be taxed in AY 2011-12, the same needs to be added to the total income of assessee for AY 2010-11. Based on such conclusion, the CIT(A) directed the AO to re-open assessee's case of AY 2010-11. Pursuant to CIT(A)'s direction, the AO re-opened assessee's case of AY 2010-11 under consideration in present appeal through notice dated 08.08.2019 u/s 148 r.w.s. 153(6) which ultimately culminated in passing of impugned order of re-assessment dated 09.01.2020 u/s 144 r.w.s. 147 ....
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....s: "1. Whether on the facts and circumstances of the case the NFAC, Delhi was justified in deleting the addition of Rs. 42,01,80,700/- made u/s 68 of the I.T. Act, 1961 in view of findings in assessment order. 2. Whether on the facts and circumstances of the case the NFAC, Delhi erred in deleting the addition of Rs. 42,01,80,700/- made u/s 68 of the I.T. Act, 1961, when it was evident that the entire share application money including share premium money was received by the assessee company in A.Y. 2010-11 not in A.Y. 2011-12." 6. We have heard the learned Representatives of both sides and perused the impugned order of CIT(A) re-produced above. After a careful consideration, we do not find any error or infirmity in the order of CIT(A) which has been passed following the view taken by ITAT, Indore in ITA No. 730 & 656/Ind/2019 for AY 2011-12 in assessee's own case. In that view of matter, we do not have any reason to interfere with the order of CIT(A), the same is hereby upheld. The appeal of revenue is thus dismissed being devoid of any merit. Assessee's Application under Rule 27 of Income-tax (Appellate Tribunal) Rules, 1963: 7. The assessee/respondent ha....
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.... 6. The assessee relies upon following decisions in respect of maintainability of the enclosed ground under Rule 27 of the ITAT Rules, 1963. (a) Peter Vaz v. CIT [436 ITR 616 / 322 CTR 121 (Bom)] (b) CIT v. India Cements Ltd. [424 ITR 410 / 312 CTR 168 (Mad)] (c) Dahod Sahakari Kharid Vechan Sangh Ltd. v. CIT [282 ITR 321 / 200 CTR 265 (Guj)]. cc - Departmental Representative, Division Bench, Indore. 8. By means of this application, the assessee/respondent has raised following ground for adjudication: "1. The learned CIT(A) ought to have held that the assessment order passed by the Assessing Officer is illegal and bad in law as the A.O. has failed to issue a notice u/s. 143(2) of the Act pursuant to the return of income filed by the assessee on 05.10.2019 in response to the notice u/s. 148 of the Act dated 08.08.2019 issued by the A.O." 9. Ld. AR for assessee submitted that in response to the notice dated 08.08.2019 u/s 148 issued by AO for re-opening assessee's case, the assessee filed return of income on 05.10.2019. Thereafter, the AO passed assessment-order dated 09.01.2020 u/s 144 r.w.s. 147 r.w.s. 153(6) without issuin....
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.... 129 Taxman 539/262 ITR 278. 11. The Tribunal took up for consideration the contentions advanced by the assessee that in terms of Rule 27 of the Rules, they were entitled to agitate the issue regarding the correctness of the reopening of assessment under section 147 of the Act. After referring to Rule 27 of the Rules, it was pointed out that a plain reading of Rule 27 of the Rules would clearly show that even if the respondent had not filed any appeal or cross objection, they could still agitate the points, which were decided against them. Further it was pointed out that if any issue was not adjudicated by the Appellate Authority, then it was deemed to have been decided against the appellant. Following the said principle, the Tribunal held that the issue of reopening, having not been decided by the CIT(A), should be taken as decision against the assessee and that they were entitled to agitate the issue before the Tribunal, even if appeal was filed by them. 12. With the above reasoning, the Tribunal proceeded to decide the validity of the reopening under section 147 of the Act. After taking note of the Proviso to section 147 of the Act, it was pointed out that if t....
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....f M/s. Subbaraya Aiyar Padmanabhan, learned counsel appearing for the respondent/assessee. 17. It was argued by Mr. Karthik Ranganathan, learned Senior Standing Counsel for the appellant/Revenue that the issue relating to the validity of the reopening of assessment was not adjudicated by the CIT(A) and without filing any appeal against the said order, the assessee was not entitled to agitate the issue before the Tribunal in an appeal filed by the Department. It was further submitted that the Tribunal travelled beyond the scope of Section 254 of the Act by adjudicating the issue relating to the validity of reopening of assessment, when the CIT(A) had not decided the said issue on the merits of the matter. It was vehemently contended that the CIT(A) erred in granting relief to the assessee under section 80I of the Act on sum of Rs. 9.89 crores ignoring the fact that the Assessing Officer pointed out to the CIT(A) that the assessee was not at all entitled to relief under section 80I of the Act on account of loss in business. Further, it was submitted that the Tribunal ought to have taken note of the fact that the Assessing Officer had given an enhancement proposal to the CIT(....
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.... substantial question of law Nos. 1 to 3. 22. In the case of Kiran Singh v. Chaman Paswan (AIR 1954 SC 340), the Hon'ble Supreme Court held that it is a fundamental principle well established that a decree passed by a Court without jurisdiction is a nullity and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. It was further pointed out that a defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject matter of the action strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties. 23. This decision was taken note of in the core of Deep Channel Kothai (supra) wherein one of the substantial questions framed, was as to whether, in the proceedings initiated under section 147(a) of the Act, the validity of the notices and proceedings taken in pursuance thereof was raised before the Income-tax Officer (ITO) and the appeal of the assessee was accepted on merits, the Tribunal was legally not right in not allowing the objection as to the juri....
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.... Tribunal. It was further pointed out that in case a party, having succeeded before CIT(A), opts not to file cross objection even when an appeal has been preferred by the other party, from that it is not possible to infer that the said party has accepted the order or the part thereof, which was against the respondent. 26. Section 253 of the Act provides for appeal to the Tribunal. Under sub- section (1), an assessee is granted right to file an appeal. Under sub-section (2), the CIT is granted a right to file an appeal by issuing necessary direction to the Assessing Officer. Sub-section (3) prescribes the period of limitation, within which an appeal could be preferred. Section 253(4) of the Act lays down that either the Assessing Officer or the assessee, on receipt of notice that an appeal against the order of CIT(A) has been preferred under Sub-section (1) or sub- section (2) by the other party, may, notwithstanding that no appeal had been filed against such an order or any part thereof, within 30 days of the notice, file a memorandum of cross-objections verified in the prescribed manner and such memorandum shall be disposed of by the Tribunal as if it were an appeal presc....
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....the decision quoted. After consideration, we agree that the assessee's application is permissible in terms of Rule 27 as decided by their Lordship of Hon'ble Madras High Court in India Cements Ltd (supra). Therefore, we allow assessee's application and proceed to adjudicate the ground raised therein on merit. 13. At first, we re-narrate the facts which are relevant to decide the ground. The AO issued notice dated 08.08.2019 u/s 148 for re-opening assessee's case u/s 147. In response to this notice, the assessee filed return of income on 05.10.2019. Thereafter, the AO passed assessment-order dated 09.01.2020 u/s 144 r.w.s. 147 r.w.s. 153(6) after making addition of Rs. 42,01,80,700/- without issuing notice u/s 143(2) [although the AO issued notices u/s 142(1)]. We may mention here that the factum of non-issuance of notice u/s 143(2) is accepted by Ld. DR by filing AO's letter dated 27.01.2025 wherein the AO has accepted that no notice u/s 143(2) was issued to assessee. Ld. AR drew us to Para 3 of assessment-order wherein the AO has made an adverse observation that in response to notice u/s 148, the assessee did not file return. Ld. AR submitted that this observation by AO is fact....
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....laced reliance upon the order of the Luknow Bench of the Tribunal in the case of M/s Preet Leasing Private Limited vs. ACIT. The ld. CIT(A) re-examined the issue in the light of assessee's contention and being convinced with the explanations of the assessee, he granted exemption under section 11 of the Act after having observed that there was no finding of the Assessing Officer of any violation of the nature specified in the provisions of section 13 of the Act. 6. Against the grant of exemption, the Revenue has preferred appeals before the Tribunal with the submission that since the return was not filed within the time prescribed under section 148 of the Act, the Assessing Officer has rightly treated the return to be non-est and ignored the claim of exemption under section 11 of the Act raised therein. The ld. D.R. further contended that the ld. Commissioner of Income-tax has allowed exemption under section 11 of the Act without affording opportunity to the Assessing Officer to examine the claim under section 11 of the Act independently with reference to section 13 of the Act. The ld. CIT(A) has observed in his order that there is no finding of the Assessing Officer wi....
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.... the ld. CIT(A) while accepting the return granted exemption under section 11 of the Act without verifying the fact whether there is any violation of the provisions of section 13 of the Act. The right course for the ld. CIT(A) would have been to call for the remand report asking the Assessing Officer to make a proper verification with regard to the claim of exemption under section 11 of the Act, but the ld. CIT(A) instead of doing this exercise has outrightly granted exemption under section 11 of the Act, which is not correct as per law. In the above circumstances, the matter should have been referred to the Assessing Officer to examine the claim of exemption of the assessee in the light of the provisions of section 13 of the Act. We accordingly set aside the orders of the ld. CIT(A) and restore the matter to the file of the Assessing Officer with a direction to readjudicate the claim of exemption under section 11 of the Act in the light of the relevant provisions of the Act after affording proper opportunity of being heard to the assessee. Accordingly both the appeals of the Revenue stand allowed for statistical purposes." (b) CIT Vs. Nagendra Prasad (2023) 156 taxmann.com 19 (....
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....ipulated by notice issued u/s 148? (ii) Whether on the facts and in circumstances of the case the ITAT was right in quashing the reassessment proceeding u/s 147/144 {mistakenly mentioned 143(3)} for the reason of non-issuance of notice u/s 143(2) wherein the assessee filed her return of income on 22.4.2014 which is 10 months 17 days beyond 5.7.2013 i.e. after expiry of 30 days' time from service of notice on 6.6.2013 stipulated in the notice issued u/s 148? (iii) Whether on the facts and in circumstances of the case the AO was under statutory obligation to issue notice u/s 143(2) before completing the assessment u/s 144 wherein the assessee filed her return of income 10 months 17 days beyond the 30 days' time allowed by notice issued u/s 148 which expired on 5.7.2013 as the notice was served upon on 6.6.2013? (iv) Whether on the facts and circumstances of the case the ITAT was right in quashing the reassessment proceeding u/s 147/144 {mistakenly mentioned 143(3)} relying upon the decision of Delhi High Court in the case of PCIT vs. Jai Shiv Shankar Traders Pvt. Ltd. 383 ITR 448 whereas the facts of the case are distinguishable that the return of i....
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.... -notices u/s 142(1) were issued on 17.11.2014 and 06.02.2015 and the proceedings were attended by the A/R of the assessee from time to time -Assessment order was passed u/s 143(3)/ 147 of the Act by Ld. AO vide order dated 05.03.2015. From the perusal of the summary of chronological events it is clearly evident that notice u/s 143(2) was never issued by ld.AO before completion of the assessment and this fact has categorically been admitted by ld.AO in remand report submitted before the ld. CIT(A) (APB 15-18). With this background of chronological events, kind attention of Hon'ble bench is invited to the provisions of section 148 of the Act, which reads as under: 148. [(1)] Before making the assessment, reassessment or re-computation under section (4 of 13) [ITA-197/2018] 147. the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, [* * *] as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and ve....
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....ce u/s 143(2) of the income Tax Act, 1961 was not issued after filing return of income in response to the notice u/s 148 of the Income Tax Act, 1961. Therefore, under the provisions of Income Tax Act, 1961, the notice u/s 148 can't be issued......... Ld. CIT(A) confirmed the validity of assessment order so passed without issue of notice u/s 143(2) by observing that assessee had attended the hearing on several occasions and no objection was raised during the proceedings before the ld. AO, thus non issuance of notice u/s 143(2) of the Act would not make assessment order invalid. Ld. CIT(A) further held that such mistake of ld. AO of non issue of notice u/s 143(2) is curable u/s 292BB of the Act. At this juncture, provisions of section 292BB of the Act are reproduced herewith for the sake of convenience: 292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be preclud....
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....y ld.AO u/s 153A, without issuing notice u/s 143(2), the same is applicable to assessments completed under Act, irrespective of the fact under which section assessment is to be completed as legislature has provided for issuance of such notice before completion of assessment under whatever section it may be. CIT v. Salarpur Cold Storage (P.) Ltd. [2014] 50 taxmann.com 105 (All) "10. Section 292BB of the Act was inserted by the Finance Act, 2008 with effect from April 1, 2008. Section 292BB of the Act provides a deeming fiction. The deeming fiction is to the effect that once the assessee has appeared in any proceeding or cooperated in any enquiry relating to an assessment or reassessment, it shall be deemed that any notice under the provisions of the Act, which is required to be (7 of 13) [ITA-197/2018] served on the assessee, has been duly served upon him in time in accordance with the provisions of the Act. The assessee is precluded from taking any objection in any proceeding or enquiry that the notice was (i) not served upon him; or (ii) not served upon him in time ; or (iii) served upon him in an improper manner. In other words, once the deeming fiction comes into operat....
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....f assessment without issue of notice u/s 143(2) is fatal to the assessment. In this case, notice u/s 148 was issued on 30.03.2010, in response to which no return of income was filed. On 01.10.2010, Ld.AO issued notice u/s 143(2), which was duly served. Subsequently notices u/s 142(1) were also issued on certain occasions. Authorized representative of assessee, on 16.12.2010 presented and stated that return of income filed u/s 139 may be treated as furnished in response to notice u/s 148. Assessment was completed vide order dated 31.12.2010, in that situation also, the Hon'ble Court held that AO ought to have issued notice after 16.12.2010, in absence of which assessment was held invalid. In our case also, the return was filed after the issue of notice u/s 142(1), thus is squarely covered by the decision of Hon'ble Delhi high court, as stated above. Further reliance is placed on the following: 323 ITR 249 - DIT V/s Society for Worldwide Inter Bank Financial Telecommunications (Delhi) (Case laws Paper book pages 49-50) Assessment - Enquiry - Notice - Only upon Examination of Return - Notice u/s 143(2) served upon assessee before filing of Return - ....
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....issued under section 143(3) and there being no waiver, there is no justifiable ground to accept the view of the Tribunal that there was a waiver of right of notice to be issued under section 143(2) of the Act." Recently Jaipur bench of ITAT in the case of Cameron (Singapore) Pte Ltd Vs. ADIT in ITA No. 2/JP/14 vide orders dt. 27/7/2017 held that where notice u/s 143(2) is not served upon the assessee within the stipulated time period, the consequent order passed cannot be sustained. In that case though the notice u/s 143(2) was issued but the same was not served upon the assessee within the (10 of 13) [ITA-197/2018] stipulated time period however, in our case the notice u/s 143(2) was never served upon the assessee. The Hon'ble ITAT Delhi bench in the case of DR. S.B. KALIDHAR Vs. ITO in ITA No. 1082/Del/2016 dated 27.11.2017 has given a finding in favour of the assessee, by placing reliance on the decision of the Hon'ble ITAT, SMC-2, Delhi Bench dated 16.10.2015 passed in ITA Nos. 4171- 4175/Del/2015 ((AY 2003-04) in the case of Ms. Meenakshi Aggarwal vs. ITO & Ors(Case laws paper book pages 7-9) in which reliance was placed on the decision of the Hon'....
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....notice u/s 148 of the IT Act. In the former two scenarios, AO has to follow the procedure set out for a best of judgment assessment and cannot make an assessment under section 143(3). On the other hand, if the AO chose to accept assessee's request, he can indeed make an assessment under section 143(3). In the case before us, assessments were completed under section 143(3) read with section 147. Or in other words AO accepted the request of the assessee. This in turn makes it obligatory to issue notice u/s 143(2) after the request by the assessee to treat his earlier return as filed in pursuance to notices u/s 148 of the IT Act was received. This request, in the given case, has been made only on 05- 10-2010. Any issue of notice prior to that date cannot be treated as a notice on a return filed by the assessee pursuant to a notice u/s 148 of the Act. Or in other words, there was no valid issue of notice u/s 143(2) of the IT Act, and the assessments were done without following the mandatory requirement u/s 143(2) of the IT Act. This in our opinion, render the subsequent proceedings all invalid" In view of above judicial pronouncements, it is submitted that so far as assess....
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....ot be condoned by referring to Section 292BB of the Act. (Para 18) The resultant position was that as far as the present case was concerned the failure by the AO to issue a notice to the Assessee under Section 143(2) of the Act subsequent to 16th December 2010 when the Assessee made a statement before the AO to the effect that the original return filed should be treated as a return pursuant to a notice under Section 148 of the Act, was fatal to the order of re- assessment. (Para 19) Consequently, there (13 of 13) [ITA-197/2018] was no legal infirmity in the impugned order of the ITAT. No substantial question of law arises. The appeal was dismissed." (Para 20) Thus, the facts of the assessee's case are similar to the facts of the case involved in the decision of the Hon'ble Delhi High Court wherein it has been categorically held that the issue of notice U/s 143(2) in reassessment proceedings, prior to finalizing re-assessment order, cannot be condoned by referring to Section 292BB and is fatal to the order of re- assessment. Respectfully following the same, we hereby set aside the order of the to 4 of the assessee's appeal. 8. Since we have quashed the ....