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TMI Blog2017 (10) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... the DRP inter alia on following grounds: 1. The learned Assessing Officer has erred, in law and in facts, in passing final assessment order under section 147 read with section 143(3) read with section 144C(5) and 144C(8) of the Income-tax Act, 1961 and thereby assessing the total income of the Appellant at ₹ 21,77,85,571, as against Rs.NIL, based on the Return of Income filed by the Appellant; 2. The learned Assessing Officer has erred, in law and in facts, by holding that the fee from management and administrative support services provided by the Appellant is subject to tax in India partly as Royalty and partly as 'Fee for Technical Services ; 3. The learned Assessing Officer has erred in facts in concluding that the Appellant has not provided any documentary support without appreciating the submissions made by the Appellant. 4. The learned Assessing Officer has failed to appreciate the nature of services rendered by the Appellant to its group entity (i.e., TNT India Pvt. Ltd) and thus has erroneously concluded that few services provided by the Appellant under the Management and Administration Services Agreement (hereinafter referred to as WAS A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 143(3) and all necessary requirement for completing the assessment under section 143(3) are required to be fulfilled. It was further contended that it is a settled position of law that for completing the assessment under section 143(3) of the Act, AO is required to serve the notice under section 143(2) of the Act in order to assume the jurisdiction over the assessee to frame the assessment. Similarly, while completing the assessment under section 147 r.w.s. 143 of the Act, AO is required to serve the notice under section 143(2) of the Act. The assessment framed without serving the aforesaid notice would be invalid and void-ab-initio. 4. During the course of hearing, in order to verify the facts whether notice under section 143(2) was served upon the assessee or not, DR was asked to ascertain the facts and file a report accordingly. The learned DR sought the comments from the AO and the AO has admitted that notice under section 148 was issued on 23.11.2010 and return of income was filed in response thereto on 23.12.2010. The AO further admitted that notice under section 143(2) was not issued and after serving the notice under section 142(1), the assessment was completed. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment of jurisdictional High Court was also followed by the Tribunal in the case of ING Bewaar Maatschappiji B. V. Vs. Addl. DIT (IT) and the Tribunal of the Bengaluru Bench in the case of H. Gouthamchand Vs. Addl. CIT (131 TTJ 204). 7. Having carefully examined the orders of the authorities below in the light of rival submissions and the judgments referred to by the assessees and the documents placed on record, we find that undisputedly the return of income was filed within the period prescribed in the notice issued under section 148 of the Act. It is also an undisputed fact that notice under section 143(2) was not issued upon the assessee and the AO has completed the reassessment under section 147 r.w.s. 143(3) of the Act. Now the question arises whether the assessment framed on the basis of return filed consequent to notice under section 148 of the Act without serving notice under section 143(2) of the Act is a valid assessment. The Revenue placed reliance upon the judgment of Hon ble Delhi High Court in the case of ACIT Vs. Madhay Bharat Energy Corporation Ltd., (supra). But later on, this judgment was modified by another order of the High Court in which it was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act was justified. 18. The wording of Section 143(2)(ii) of the Act, which is applicable in the present case, requires the AO to be satisfied on examining the return filed that prima facie the Assessee has understated the income or has computed excessive loss or has underpaid the tax in any manner . The AO has the discretion to issue a notice under Section 143 (2) if he considers it necessary or expedient to do so. This exercise by the AO under Section 143 (2) of the Act is qualitatively different from the issuance of a notice under Section 142(1) of the Act, which as noted hereinbefore, is in a standard proforma. 19. The Court is unable to accept the submission of the Revenue that in the present case, no return was filed by the Assessee pursuant to the notice issued to it under Section 148 of the Act. If after receiving the letter dated 1st April 2011 of the Assessee the AO was of the view that the return originally filed in the Saral Form could not be treated as the return pursuant to the notice under Section 148 of the Act, then he should have drawn the attention of the Assessee to that fact. In the present case all that the AO did was to send a no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld 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. 22. The decisions of the Allahabad High Court in Rajeev Sharma (supra) and Salarpur Cold Storage (P.) Ltd. (supra) also reiterate the above legal position. As far as this Court is concerned, the decision in DIT v. Society For Worldwide Inter Bank Financial, Telecommunications [2010] 323 ITR 249 (Delhi) and the recent decision in Shri Jai Shiv Shankar Traders (P.) Ltd. (supra) hold likewise. 23. With the legal position being abundantly clear that a reassessment order cannot be passed without compliance with the mandatory requirement of notice being issued by the AO to the Assessee under Section 143(2) of the Act, the ITAT was in the present case right in concluding that the reassessment orders in question were legally unsustainable. 9. The judgment of Hon ble Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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