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2020 (2) TMI 989 - AT - Income TaxReopening of assessment u/s 147 - non serving the mandatory notice u/s. 143(2) - Assessee challenging the notice u/s. 143(2) of the Act issued on 21.6.2016 i.e. on the same date when the assesee appeared before the AO and filed a letter dated 21.6.2016 stating therein that the return filed u/s. 139(1) of the Act may be treated as return filed in response to the notice u/s. 148 - HELD THAT - After thoroughly gone the orders passed by the Hon ble Delhi High Court in the case of Director of Income Tax vs. Society for Worldwide Interbank Financial Telecommunications 2010 (4) TMI 43 - DELHI HIGH COURT and Micron Enterprises Pvt. Ltd. 2018 (5) TMI 1018 - ITAT DELHI issue involved in the additional ground no. 1 which is legal in nature raised by the assessee is similar to the facts and circumstances of the aforesaid cases.- notice dated 21.6.2016 u/s. 143(2) of the Act is invalid and resultantly the assessment is not sustainable in the eyes of law, hence quash the same by setting aside the orders of the authorities below and deleted the addition in dispute by accepting the appeal of the assessee.
Issues Involved:
1. Validity of reassessment order without serving mandatory notice u/s 143(2). 2. Legality of initiating proceedings u/s 147 based on documents found during a search u/s 132(1). Detailed Analysis: 1. Validity of Reassessment Order Without Serving Mandatory Notice u/s 143(2): The assessee argued that the reassessment order was invalid as it was framed without serving the mandatory notice u/s 143(2). The Tribunal examined the facts and noted that the assessee had filed the original return declaring NIL income, which was processed u/s 143(1). Later, based on information from the Director of Income Tax (Investigation-II), the case was reopened, and a notice u/s 148 was issued on 28.03.2016. The assessee responded by stating that the original return should be treated as filed in response to the notice u/s 148. The AO issued a notice u/s 143(2) on the same day, 21.06.2016, when the assessee appeared before the AO. The Tribunal found that issuing the notice u/s 143(2) on the same day the return was treated as filed in response to the notice u/s 148 was not valid. This was supported by the Hon’ble Delhi High Court's decision in the case of Director of Income Tax vs. Society for Worldwide Interbank Financial Telecommunications (2010) 323 ITR 249 (Del.), which held that a notice u/s 143(2) must be issued after examining the return. Consequently, the Tribunal declared the notice u/s 143(2) invalid, rendering the reassessment unsustainable in law. The Tribunal quashed the reassessment and deleted the addition in dispute. 2. Legality of Initiating Proceedings u/s 147 Based on Documents Found During a Search u/s 132(1): The assessee contended that the proceedings u/s 147 were initiated based on documents found during a search u/s 132(1), which should have led to proceedings u/s 153C instead. The Tribunal admitted this additional ground, citing the Hon’ble Supreme Court decision in NTPC vs. CIT (229 ITR 383), which allows raising legal issues at any stage. However, since the reassessment was already quashed due to the invalid notice u/s 143(2), this issue became academic and was not further adjudicated. The Tribunal emphasized that no contrary order from higher authorities was presented by the Department to challenge the assessee's arguments. Conclusion: The Tribunal allowed the appeals partly, primarily on the ground that the notice u/s 143(2) was invalid, leading to the quashing of the reassessment order. Other contentions raised by the assessee were deemed academic and not addressed further. The decision underscores the importance of adhering to procedural requirements in reassessment proceedings.
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