2018 (5) TMI 1018 - AT - Income Tax

Reopening of assessment - invalid notice u/s 143 - Held that - It is an admitted fact that assessee filed reply in response to the notice under section 148 of the I.T. Act on 26.11.2013 and submitted before A.O. that original return filed before him may be treated as return filed in response to the notice under section 148 of the I.T. Act. The A.O. on the same day served notice under section 143(2) upon assessee-company whose signature tally on the said notice. Therefore, notice issued under section 143(2) is invalid and resultantly, the assessment is vitiated and is liable to be quashed. - Decided in favour of assessee

Summary

Issues:
Challenge to addition of ?10 lakhs received from M/s. Hill Ridge Investment Ltd. on account of share capital for A.Y. 2006-2007 under section 68 of the I.T. Act, 1961.

Analysis:
The appeal was against the order of the Ld. CIT(A) challenging the addition of ?10 lakhs received from M/s. Hill Ridge Investment Ltd. The case was reopened under section 147 of the I.T. Act, and the AO made the addition under section 68 of the I.T. Act. The assessee's appeal was initially dismissed for default but was re-fixed for hearing on merit after allowing M.A. of the assessee.

The assessee filed additional grounds of appeal challenging the reassessment order passed by the AO under sections 147 and 143(3) of the I.T. Act. The additional grounds were admitted for hearing as they were legal in nature and not opposed by the Revenue. The counsel for the assessee argued that the AO did not validly assume jurisdiction under section 147 and 143(3) as the notice under section 143(2) was issued before the notice under section 148, citing relevant case law to support the argument.

The ITAT Delhi Bench and the Hon'ble Delhi High Court judgments were referred to in support of the argument that the notice under section 143(2) must be issued after the AO has examined the return filed by the assessee. The ITAT order in a similar case supported the contention that the assessment should be quashed if the notice under section 143(2) was issued on the same date the return was filed, indicating a lack of independent application of mind by the AO.

The Ld. D.R. argued that the assessee did not file the return under section 148 within the specified period. However, after considering the submissions, the ITAT held in favor of the assessee based on the judgments cited, concluding that the notice issued under section 143(2) was invalid, leading to the quashing of the reassessment proceedings and deletion of all additions. Therefore, the appeal of the assessee was allowed, and the orders of the authorities below were set aside.

In conclusion, the ITAT allowed the appeal of the assessee, quashing the reassessment proceedings and deleting the addition of ?10 lakhs received from M/s. Hill Ridge Investment Ltd. on account of share capital for A.Y. 2006-2007 under section 68 of the I.T. Act, based on the invalidity of the notice issued under section 143(2).