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TMI Blog2017 (7) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 - Held that:- CIT(A) has categorically held that the assessee has discharged his onus to prove all the ingredients as stipulated under section 68 of the Act inasmuch as he has clearly stated that the Assessing Officer has not made any enquiry to examine the contents of the information submitted by the assessee. The assessee has received subscription for share capital from four corporate entities through cheque and these corporate entities are duly registered with ROC and they are active as per the website of the Ministry of Corporate Affairs. They are also having permanent account number and regularly filing their returns. The Assessing Officer without discharging his onus or bringing any material to the contrary, just rejected the evidences filed by the assessee. Hon'ble Supreme Court in the case of CIT vs. Orisssa Corporation(1986 (3) TMI 3 - SUPREME Court) has categorically held that for inaction of the Assessing Officer, the assessee cannot be penalized. - Decided in favour of assessee. - ITA No. 5626/DEL/2012, C. O. No. 319/DEL/2016 - - - Dated:- 30-3-2017 - Shri P. K. Bansal, Accountant Member And Shri K. N. Charry , Judicial Member Department by : Shri Amrit Lal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of hearing, the ld. A.R. of the assessee before us contended that the delay in filing of the appeal has been occurred due to the fault of the Chartered Accountant of the assessee, as the Chartered Accountant of the assessee was busy in statutory audit compliance work, which was 17.10.2016. The cross objection in the instant case should have been filed by 20.10.2016 but was filed on 24.10.2016. Reliance was placed on the decision of the Hon'ble M.P. High Court in the case of Mahaveerprasad Jain vs. CIT, 172 ITR 331 (MP) as well as that of the Hon'ble Supreme Court in the case of Concord Of India Insurance Co. Ltd. Vs. Smt. Nirmala Devi Ors., 118 ITR 507. He has also drawn our attention towards the decision of the Hon'ble Apex Court in the case of Improvement Trust vs. Ujagar Singh, 6 SCC 786, in which it was held that unless the malafides are writ large, the delay should be condoned. 4. The ld. D.R., on the other hand, has contended that this is not a reasonable cause and the delay should not be condoned. 5. After hearing the rival submissions, we are of the view that for the default of the counsel, the assessee cannot be penalized. It is a case where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Finance Ltd., 254 ITR 449 (Delhi). Respectfully following the decision of the Hon'ble jurisdictional High Court, we hold that no notice under section 143(2) of the Act has been issued or served on the assessee before completion of assessment under section 147/148 of the Act. Once this inference is drawn, the contention of the ld. A.R. of the assessee was that non-issuance and service of notice under section 143(2) of the Act before completion of the assessment under section 147/148 of the Act makes the assessment invalid and void ab-initio and in this regard he has placed reliance on the following decisions:- 1. Kuber Tobacco Products vs. DCIT, 117 ITD 273 (SB) 2. CIT vs. Jai Shiv Shankar Traders, 383 ITR 448 (Del) 3. Alpine Electronics vs. Director General Income Tax, 341 ITR 247 10. The ld. D.R., on the other hand, has contended before us that non-issuance of notice under section 143(2) of the Act before completion of the assessment under section 147/148 of the Act will not make the assessment to be illegal and void ab-initio and in this regard he relied on the decision of the Hon'ble Delhi High Court in the case of CIT vs. Madhya Bharat Energy Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adhya Bharat Energy Corporation) whereby this Court reviewed its main judgment in the matter rendered on 11th July 2011 on the ground that the said appeal had not been admitted on the question concerning the mandatory compliance with the requirement of issuance of notice under Section 143(2) of the Act. In its review order, this Court noted that at the time of admission of the appeal on 17th February, 2011 after noticing that in the said case that no notice under Section 143(2) had ever been issued, the Court held that no question of law arose on that aspect. The upshot of the above discussion is that the decision of this Court in CIT v. Madhya Bharat Energy Corporation (supra) is not of any assistance to the Revenue as far as the issue in the present case is concerned. 10. Ms Aggarwal nevertheless urged that notwithstanding the above position, the decision of this Court in CIT v. Vision Inc. (2012) 73 DTR 201 (Del) would apply. The said judgment held that since on the facts of that case the Assessee had been properly served with the notice under Section 143(2) of the Act within the statutory time limit prescribed under the proviso thereto, the ITAT should not have set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall serve notice specifying particulars of such claim. In view of the above, after receipt of return in response to notice under Section 148, it shall be mandatory for the AO to serve a notice under sub-Section 2 of Section 143 assigning reason therein. In absence of any notice issued under sub-Section 2 of Section 143 after receipt of fresh return submitted by the Assessee in response to notice under Section, the entire procedure adopted for escaped assessment, shall not be valid. 15. In a subsequent judgment in CIT v. Salarpur Cold Storage (P.) Ltd. (2014) 50 Taxmann.com 105 (All) it was held as under: 10. Section 292 BB of the Act was inserted by the Finance Act, 2008 with effect from 1 April 2008. Section 292 BB 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 143(2) of the Act was complied with or that on placing the objection the Assessee had waived the notice for further processing of the reassessment proceedings. The fact that on the notice issued u/s 143(2) of the Act, the assessee had placed its objection and reiterated its earlier return filed as one filed in response to the notice issued u/s 148 of the Act and the Officer had also noted that the same would be considered for completing of assessment, would show that the AO has the duty of issuing the notice under Section 143(3) to lead on to the passing of the assessment. In the circumstances, with no notice issued u/s 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 u/s 143(2) of the Act. 18. As already noticed, the decision of this Court in CIT v. Vision Inc. proceeded on a different set of facts. In that case, there was a clear finding of the Court that service of the notice had been effected on the Assessee under Section 143 (2) of the Act. As already further noticed, the legal position regarding Section 292BB has already been made explicit in the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Adonis Finance Ltd. The said amount has been credited into assessee's bank account by way of transfer entry. On investigation made by the investigation wing it has been found that assessee is a beneficiary of taking the aforesaid accommodation entries. I have also perused various materials and report from Investigation Wing and on that basis it is evident that the assess company has introduced its own unaccounted money in its bank by way of accommodation entries, therefore, I have reason to believe that the income amounting to at least ₹ 98,50,000/- has escaped assessment. 16. The provisions of section 147 of the Act mandates that the Assessing Officer can assess or reassess any income chargeable to tax escaped assessment in any assessment year subject to the provisions of sections 148 to 153 of the Act if he has reason to believe. He has also been empowered to assess any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of proceedings under this section if he has assessed any income on the basis of the reasons to believe. The reasons to believe must be bona-fide. It can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case. 13. Mr. Sawhney took the Court through the order of the CIT(A) to show how the CIT (A) discussed the materials produced during the hearing of the appeal. The Court would like to observe that this is in the nature of a post mortem exercise after the event of reopening of the assessment has taken place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the Assessee has escaped assessment. Unless that basic jurisdictional requirement is satisfied a post mortem exercise of analysing materials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity . 14. In the circumstances, the conclusion reached by the ITAT cannot be said to be erroneous. No substantial question of law arises. 17. The reasons involved in this case of the assessee are also similar to the case of the assessee in the present appeal. The Assessing Officer has simply mentioned in the reasons that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to examine the contents of the information submitted by the assessee. The assessee has received subscription for share capital from four corporate entities through cheque and these corporate entities are duly registered with ROC and they are active as per the website of the Ministry of Corporate Affairs. They are also having permanent account number and regularly filing their returns. The Assessing Officer without discharging his onus or bringing any material to the contrary, just rejected the evidences filed by the assessee. 21. We noted that the Hon'ble Supreme Court in the case of CIT vs. Orisssa Corporation, 159 ITR 78(SC) has categorically held that for inaction of the Assessing Officer, the assessee cannot be penalized. We noted that the ld. CIT(A) has categorically took a view that the case of the assessee is duly covered by the recent decision of the Hon'ble Delhi High Court in the case of CIT vs. Goel Sons Golden Estate Pvt. Ltd. in ITA No.212/2012, dated 11.4.2012. The relevant findings of the ld. CIT(A) are given as under:- 8.12. In view of the factual position as well as the judicial pronouncement on the subject, discussed above, I am of the considered vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Directors/ parties. Assessee expressed its inability to produce them. The Assessing Officer did not consequent thereto conduct any inquiry and closed the proceedings. This is a case where the Assessing Officer has failed to conduct necessary inquiry, verification and deal with the matter in depth specially after the affidavit/ confirmation along with the bank statements etc. were filed. In case the Assessing Officer had conducted the said enquiries and investigation probably the challenge made by the Revenue would be justified. In the absence of these inquiries and nonverification of the details at the time of assessment proceedings, the factual findings recorded by the Assessing Officer were incomplete and sparse. The impugned order passed cannot be treated and regarded as perverse. The appeal is dismissed as no substantial question of law arises.......... . 8.14. In the light of the above discussion and in view of the recent decision of jurisdictional High Court in the case of Goel Sons Golden Estate (supra), I am inclined to agree with the arguments and evidences provided by the appellant to substantiate that the transaction regarding Share Application Money received by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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