2020 (9) TMI 762 - AT - Income Tax

Validity of assessment order passed u/s 143(3) - beyond period of limitation - HELD THAT - The impugned notide dated 14/08/2018 is issued beyond the period of limitation. Respectively following view taken in case of Kunal Structures India Pvt.Ltd. 2020 (2) TMI 725 - GUJARAT HIGH COURT we quash and set aside impugned notice dated 14/08/2018 issued under section 143(2) of the Act, and all proceedings taken pursuant thereto. - Appeal filed by assessee stands allowed.

Issues Involved:
1. Validity of the assessment order under section 143(3) due to the period of limitation.
2. Disallowance of brokerage and commission on sales.
3. Disallowance of advertisement expenses.
4. Disallowance of business promotion expenses.
5. Disallowance of office function expenses.
6. Adequacy of opportunity of being heard and principles of natural justice.
7. Adhoc disallowance and requirement for invoking section 133(6).
8. Consideration of submissions and evidence by the CIT(A).

Detailed Analysis:

1. Validity of the Assessment Order under Section 143(3) Due to the Period of Limitation:
The assessee argued that the assessment order dated 20/12/2018 was beyond the period of limitation, as the time limit should start from the original return filed on 28/09/2016. The CIT(A) held that the corrected return filed on 22/06/2017 was the valid return, and the period of limitation should be counted from that date. The Tribunal referred to the Gujarat High Court's decision in Kunal Structures India Pvt. Ltd. vs DCIT, which clarified that the corrected return relates back to the original return date. Consequently, the notice under section 143(2) issued on 14/08/2018 was beyond the period of limitation, rendering the assessment order invalid.

2. Disallowance of Brokerage and Commission on Sales:
The CIT(A) upheld the disallowance of ?13,95,847/- made by the AO. The Tribunal did not delve into the merits of this issue as the primary ground regarding the validity of the assessment order was allowed.

3. Disallowance of Advertisement Expenses:
The CIT(A) granted partial relief on the disallowance of ?4,11,175/- made by the AO. However, since the primary ground was allowed, the Tribunal did not further analyze this issue.

4. Disallowance of Business Promotion Expenses:
The CIT(A) granted partial relief on the disallowance of ?33,25,375/- made by the AO. The Tribunal did not address this issue further due to the primary ground being allowed.

5. Disallowance of Office Function Expenses:
The CIT(A) upheld the disallowance of ?4,82,485/- made by the AO. The Tribunal did not address this issue further as the primary ground was allowed.

6. Adequacy of Opportunity of Being Heard and Principles of Natural Justice:
The assessee contended that there was a lack of opportunity to be heard, and the assessment order violated the principles of natural justice. The Tribunal's decision on the primary ground rendered this issue academic.

7. Adhoc Disallowance and Requirement for Invoking Section 133(6):
The assessee argued that the AO and CIT(A) erred in not invoking section 133(6) to verify the genuineness of the claims. The Tribunal did not address this issue further due to the primary ground being allowed.

8. Consideration of Submissions and Evidence by the CIT(A):
The assessee contended that the CIT(A) failed to consider the submissions and evidence adequately. The Tribunal's decision on the primary ground rendered this issue academic.

Conclusion:
The Tribunal quashed the notice dated 14/08/2018 issued under section 143(2) as it was beyond the period of limitation, following the Gujarat High Court's decision in Kunal Structures India Pvt. Ltd. vs DCIT. Consequently, the assessment order and all proceedings taken pursuant to the notice were set aside, and the appeal filed by the assessee was allowed. Other grounds on merits became academic and were not further analyzed.

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