TaxTMI 
TaxTMI 
2024 (2) TMI 1663
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....as received Rs. 2,01,87,000/- from M/s Sheetal Steel (Prop. Shri Pulak Saha) through various intermediary shell companies. The case of the assessee was accordingly reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 28.03.2020, which was duly served on the assessee and assessee complied with the same by filing return of income on 28.11.2020, declaring loss of Rs. 5,144/-. The ld. AO accordingly called for the information/ details from the assessee which were complied with by the assessee by furnishing evidences/details. The ld. AO thereafter taking into account the submissions/ contentions/ evidences filed by the assessee made an addition of Rs. 50,55,000/- as unexplained money u/s 69A of the Act in the assessment framed u/s 147 of the Act dated 28.09.2021, received from two parties i.e. M/s Dhanlaxmi Trading Company & M/s City Sarees. 04. The ld. PCIT thereafter on perusal of the assessment order noted that the assessment u/s 147 of the Act was based on the information that assessee has received money from different sources namely M/s Sheetal Steel of Rs. 2,01,87,000/-, Dhanlaxmi Trading Co. of Rs. 27,00,000/-, City Sarees of Rs. 23,55,000/- aggregating to Rs. 2....
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....s. 06. The ld. AR further submitted that the assessment framed u/s 147 of the Act is invalid, nullity in the eyes of law and ex-facie unsustainable on several counts; i. The ld. AR, by referring to the notice u/s 148 of the Act dated 20.03.2020, a copy of which is available at page no.9 of the Paper Book, submitted that the same is without signature of the Asima Mondal, Kolkata, which was not signed or digitally signed and therefore, when the said notice is unsigned, is bad in law. Thus there is no service of valid notice on the assessee. In defense of his argument, the ld. AR relied on the decision of Prakash Krishnavtar Bhardwaj Vs. ITO, in WP 9835 of 2022, order dated 09.01.2023 (Bom), PCIT Vs. Kesoram Industries Ltd. [2020] 423 ITR 180 (Calcutta) vide order dated 2nd August, 2019, Manoj Jain, Kolkata vs I.T.O. vide order dated 11 .07.2024. The ld. AR therefore prayed that on the ground of notice issued u/s 148 of the Act being unsigned either manually or digitally, rendering the said notice as invalid and so is the assessment framed u/s 147 of the Act. ii. Second limb of argument is that at page no.2 of the revisionary order, the ld. PCIT has noted that the....
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....ted that even on this count invoking the jurisdiction u/s 263 of the Act is invalid and bad in law. 07. The ld. DR on the other hand, relied on the order passed by ld. PCIT by stating that the notice u/s 148 of the Act sent through e-mail is not required to be signed by the ITO and therefore, the assessment cannot be termed as invalid and nullity on the basis of unsigned notice. So far as other contentions of the assessee are concerned, the ld. CIT DR fairly relied on the order of PCIT. 08. After hearing the rival contentions and perusing the materials available on record, we are of the considered opinion that the assessee has a legitimate right to challenge the validity of the assessment framed u/s 147 of the Act even in the consequential and collateral proceedings. In the present case, the assessee has challenged the revisionary order passed by the ld. PCIT to be invalid and bad in law on the ground that it being consequential to the assessment framed u/s 147 of the Act dated 28.09.2021, which is itself nullity and bad in law on the ground that the unsigned notice issued u/s 148 of the Act, a copy of which is available at page no.9 of the Paper Book, is not signed either ma....
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....come Tax v. Aparna Agency (P.) Ltd.1 to contend that the provisions of section 192(B) of the Act do not provide for a cure when the notice under the Act is invalid by virtue of it not having a signature affixed as is required under the relevant provisions. He further refers to another judgment of the High Court of Calcutta in B.K. Gooyee v. Commissioner of Income-tax2 and a judgment of a Division Bench of the Madhya Pradesh High Court in Umashankar Mishra v. Commissioner of Income-tax3 for the proposition that absence of a signature on notice is an invalid notice in the eyes of law and such an infirmity amounts to no notice at all. 12. Per contra, Mr. Ajeet Manwani, learned counsel for the respondents submits that assuming the notice u/s.148 of the Act was unsigned manually or digitally as is clear from the original record, this fact would not, by itself vitiate further proceedings in the matter, as according to him, provisions of Section 292B of the Act could cure this defect or mistake. He argues that applying the provisions of section 292B of the Act, the notice which is mistakenly not signed, would not be vitiated; since in any event the unsigned notice, at a later poi....
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....see, but it is determined on high authority, that the notice under section 34 (I mean a valid notice) is a condition precedent for the assumption of jurisdiction. A notice under section 34 is therefore, not merely a procedural requirement. In its absence, it does not become a case of procedural defect. The difference between the cases of want of jurisdiction and those of irregular exercise of jurisdiction, is to be remembered in this context. 15. Following the ratio laid down in B.K. Gooyee (supra) and another, a Division Bench of the High Court of Calcutta in Aparna Agency (P.) Ltd. (supra) whilst considering the validity of an unsigned penalty order issued u/s.271B of the Income Tax Act, 1961 and whether such a defect was curable in terms of provisions of section 292B of the Act, held thus: 6. A close scrutiny of B.K. Gooyee's case (supra) could show that the question for consideration was regarding the irregularity in the issuing of a notice under section 34 of the Indian Income tax Act, 1922. The notice did not contain the signature of the Income-tax Officer who issued it. It was held that service of a valid notice is a condition precedent to the assumptio....
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.... 418 relied upon by the Revenue the case on hand is not one where the authenticity of the show-cause notice is in question. In the case on hand as held by the fact-finding authority the show-cause notice has not been signed by any person and the place intended for signature was kept blank. 16. The Madhya Pradesh High Court has taken a similar view in Umashankar Mishra (supra) whilst following the same line of thinking as the Calcutta High Court in B.K. Goyee (supra) and has held as under: 4. The first question for consideration is whether the Tribunal was right in holding that the notice issued to the assessee under section 271(1)(a) of the Act was a valid notice. Now, the Tribunal has found that that notice was not signed by the ITO. Section 282 of the Act provides that a notice under the Act may be served on the person named therein as if it were a summons issued by a court under the Code of Civil Procedure, 1908. Sub-rule (3) of Rule 1 of O.5, CPC, provides that every summons shall be signed by the judge or such officer, as he appoints. In view of this provision, it must be held that the notice to show cause why penalty should hot be levied issued by the ITO sh....
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....Anand And Co. (supra) cited by the Revenue, proceeds on the basis that the notice issued u/s.148 of the Act did contain a signature, but the question before the Calcutta High Court was whether the signature was authenticated or not. In that case, the signature was affixed in the form of a curved line, which the assessee claimed was not an authentic signature. It is in that context that the High Court of Calcutta in Anand And Co. (supra) has held that the notice was proper, Anand and Co. (supra) was not a where there was no signature at all on the notice, but in view of the fact that the only challenge was to the doubtful authenticity of the curved line purporting to be his signature, the assessee could not raise an objection that the notice was infact invalid. In the facts of that case, the ratio laid down therein does not aid the argument of the respondents in any manner. 18. Sky Light Hospitality (supra) cited by the respondents was also not a case where the notice issued to the assessee was unsigned. That was a case where the notice u/s.148 was issued with a signature, but the address of the assessee was only partly correct. It was in that context that the Delhi High Co....
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....ct issued to the petitioner being invalid and sought to be issued after three years from the end of the relevant assessment year 2015-16 with which we are concerned in this petition, any steps taken by the respondents in furtherance of notice dated 21.03.2022 issued under clause (b) of section 148A of the Act and order dated 02.04.2022 issued under clause (d) of section 148A of the Act, would be without jurisdiction, and therefore, arbitrary and contrary to Article 14 of the Constitution of India. Consequently, we quash and set aside the notice dated 02.04.2022 issued by the respondents u/s.148 of the Act, order dated 02.04.2022 under clause (b) of section 148A of the Act and notice dated 21.03.2022 issued under clause (b) of section 148A of the Act." 010. The case of the assessee find support from the decision of in the case of Keshab Narayan Banerjee (supra) herein the Hon'ble Kolkata High Court has held as under:- "We, therefore, are of the view that there is neither any material which could justify the inference or finding that service by registered post was either effected or should be deemed to have been accomplished nor was this the case of the respondents be....
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....suming validly the jurisdiction to pass an order of assessment u/s 147 of the Act. It is settled law that the AO can reopen the assessment only after fulfilling the conditions laid down in the said section (section 147 of the Act) namely reason to believe that income chargeable to tax for that assessment year has escaped assessment. If this essential condition is not satisfied by the AO before initiating assuming jurisdiction u/s 147 of the Act then in such an event it cannot be said the AO has validly assumed jurisdiction u/s 147 of the Act. As discussed even if for any reason, the assessee had not challenged the validity of proceedings u/s 147 of the Act by filing appeal against the order framed u/s.147 of the Act, it can be challenged in the appeal against an order passed by the Ld. PCIT u/s 263 of the Act revising the invalid order u/s 147 of the Act. As noted this issue has been analysed by the Mumbai Bench of the Tribunal in the case of M/s. Westlife Development Ltd. (supra) wherein the Tribunal has equated the reopening assessment u/s 147 to primary proceedings and the subsequent proceedings by Ld. PCIT u/s 263 passed to be collateral proceedings. In this order the Tribunal ....
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....assessee may trigger "reason to suspect"; then the AO to make reasonable enquiry and collect material which would make him believe, that there is in fact an escapement of income. And thereafter if he believes the existence of escapement of income then record his reason to believe escapement of income and then issue notice u/s. 148 of the Act and not before that. Let us look at the settled position of law on this issue. 11. As noted (supra) the Parliament has given power to AO to reopen the assessment, if the condition precedent as discussed above are satisfied, and not otherwise. It should be kept in mind that the concept of assessment is governed by the time-barring rule and the assessee acquires a right as to the finality of proceedings. Queitus of the completed assessment is the Fundamental Rule and exception to this rule is Re-opening of assessment by AO under section 147 or exercise of Revisional jurisdiction by CIT under section 263 of the Act. Therefore, the Parliament in its wisdom has provided safeguards for exercise of the reopening of assessment jurisdiction to AO; and revisional jurisdiction of CIT by providing condition precedent which is sine qua non for assu....
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....the notice u/s 148 of the Act dated 17.03.2017. According to the Ld. AR, the premises/jurisdictional fact for reopening the assessment is discernible from the assessment order dated 29.12.2017 itself wherein the AO in his own words have stated as under: "Assessee submitted return on 29.07.2010, showing total income of Rs. 443/- and the case was processed accordingly, subsequently the case was selected for scrutiny u/s 147 on the basis of an information received from the authentic source that M/s Miracle Commodities Pvt Ltd there is frequent high value deposit in their bank accounts and immediate transfer to some third party account. During the course of further investigation it is found that large value of amount has been routed to M/s Concord Infra Projects Pvt. Ltd. From further detailed investigation and analysis of data/information it is revealed that during the FY: 2009-10 corresponding to A Y :2010-11, M/s Concord Infra Projects Pvt Ltd has allotted shares @ Rs. 10 per share at high premium to as many as 16 Kolkata based companies amounting to Rs. 8,34,00,000/-. The fund so raised was invested in the shares of Kolkata based companies at very high pr....
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....rebutted/contradicted by the Ld. CITDR. So Ergo, we note that the foundation on which the reason to believe escapement of income by the AO to issue notice u/s. 148 of the Act on 17.03.2017 itself was on wrong assumption of fact as is evident from the finding of fact by the Ld. PCIT that no money from M/s Miracle has been routed to the assessee company directly or indirectly whereas the foundation fact on the basis of which reopened the assessment as is evident from the reasons recorded (supra) was that high value of money was deposited in the bank account of M/s Miracle which inturn has been routed to the assessee through third party in the form of share subscription to the tune of Rs. 8.34 crores which fact was found by Ld. PCIT to be absent. So, the AO's belief of escapement of income was on wrong assumption of facts and so invocation of reopening jurisdiction by issue of notice u/s 148 of the Act is bad in law and, therefore, the consequent re-assessment order dated 29.12.2017 of the AO is a nullity and, therefore, the order of the Ld. Pr. CIT to interfere in the order of the AO dated 29.12.2017 u/s. 144/147 of the Act is also a nullity and, therefore, the action of the Ld. Pr. ....
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....t the assessee filed the reply on 16.09.2021 as evidenced by e-proceeding response acknowledgement, wherein the assessee stated the very reasons for which the reopening proceedings were initiated were factually incorrect and requested for the dropping of the same. Therefore, the ld. AO only after considering the reply of the assessee accepted the same and it is presumed that the ld. AO has examined and applied his mind on the reply and documents furnished before him by the assessee. The case of the assessee find support from the decision of Calcutta High Court in case of M/s Kesoram Industries Ltd. (supra), wherein Calcutta High Court held as under:- "5. In the present case, four broad aspects were questioned before the Tribunal. By the order impugned dated November 4, 2016, the Tribunal held in favour of the assessee. 6. The first aspect pertains to an order under Section 143(3) of the Act which was found to be erroneous and prejudicial to the interest of the Revenue. The specific matter pertained to the difference in the addition of fixed assets of about Rs. 1.10 crore. The notice under Section 263 of the Act was issued to clarify the difference. The assessee cl....
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....e Commissioner to assume jurisdiction under Section 263 of the Act on the ground that no enquiry in such regard had been conducted by the assessee. 11. Apropos the third aspect pertaining to trade discount, the tribunal found that the Commissioner had issued the notice for addition of trade discount on the ground that the assessee's claim for trade discount was not in order. The tribunal also found that details of the trade discount had been furnished by the assessee to the assessing officer at the time of assessment under Section 143(3) of the Act and the details of such discount had been included in the paper-book filed before the tribunal. Further, the tribunal found that the Commissioner had changed his stand as indicated in the notice and at the time of passing the order under Section 263 of the Act. For the same reasons, as in respect of the first head pertaining to fixed assets, the tribunal found that the Commissioner had acted without basis. 12. Finally, as regards the fourth issue pertaining to depreciation, the tribunal found that the Commissioner had raised the issue in the notice under Section 263 of the Act for excess depreciation but concluded i....