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TMI Blog2019 (6) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... per channel, even though such notice has been served through a person, who is not authorised to receive notice, it is a case that the notice required to be served was not served on the assessee. Consequently, the whole assessment proceedings become vicious. In this case, on perusal of facts available on record, it is abundantly clear that notice u/s 143(2) has been served on the person, who is not authorised to receive notice or attend any proceedings before the AO. Therefore, assessment order passed by the AO, consequent to invalid service of notice / non service of notice to the assessee is bad in law and liable to be quashed. Accordingly, we quashed the assessment order passed u/s 143(3). - Decided in favour of assessee. - ITA No2041/Mum/2017 - - - Dated:- 31-5-2019 - Shri Mahavir Singh (Judicial Member) And Shri G Manjunatha (Accountant Member) For the Appellant : Ms. Pooja Jain For the Respondent : Ms Harkamal Sohi ORDER PER G MANJUNATHA, AM : This appeal filed by the assessee is directed against order of the CIT(A)-9, Mumbai dated 23-12-2016 and it pertains to AY 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and in law, the Id. CIT (A) erred in confirming the decision of AO in making addition of ₹ 1,20,71,301, being unsecured loans received from a director and a limited company, to the income of the Appellant by invoking section 68 of the Act on the alleged ground that the same represent unexplained cash credit. 2.2 The Ld. CIT (A) failed to appreciate and ought to have held that: a. the loans were received by the Appellant from the parties during the regular course of business; b. the loans were received through proper banking channels and the AO could have verified the same by making independent cross inquiries etc, despite specific request by the appellant; c. the appellant has furnished complete address PAN of loan creditors and even confirmation and Balance sheet and ITR of loan creditors; d. the Appellant could have been given reasonable opportunity to put forward its case; e. the condition of section 68 of the Act are not satisfied, the question of invoking the same does not arise; and f. the various decisions relied on by him are disting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d/ or surmises; and 3.3 The Appellant prays that it be held that loss on account of foreign exchange fluctuation be allowed as deduction u/s 37(1). Ground No. 4: Initiation of Penalty 4.1 On the facts and circumstances of the case, the Id. CIT (A) erred in not ordering to delete findings in the order as to initiation of penalty proceedings u/s 271 (1) (c) of the act without giving any reasons as to why such action is required. 2. The brief facts of the case are that the assessee company is engaged in the business of trading in non ferrous metals, gold, silver diamonds and also dealing in purchase and sale of shares and securities, including futures and options, filed its return of income for AY 2012-13 on 30-09-2012, declaring total income at Nil. The case was selected for scrutiny through CASS. The AO claims to have issued notice u/s 143(2) dated 08-08-2013 and also duly served on the assessee on 27-08-2013. Thereafter notice u/s 142(1) dated 23-04-2014 was issued at the registered address of the assessee, but said notice has been returned by the postal authorities with the remark not known . Again, further noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in foreign exchange fluctuation. Although, the assessee claims that records were destroyed by termite, but could not furnish any evidence to justify its claim. Therefore, it could not be accepted that no records were available due to termite and accordingly, rejected arguments of the assessee and made addition towards loss on foreign exchange fluctuation. 4. Aggrieved by the assessment order, assessee preferred appeal before the CIT(A). Before the CIT(A), assessee has challenged validity of assessment proceedings consequent to non service of notice required to be served u/s 143(2) of the Act. The assessee has also challenged addition made by the AO towards unsecured loans of ₹ 1,20,71,301 as unexplained cash credit u/s 68 of the Act. Insofar as disallowance of loss in foreign exchange fluctuation, the assessee has filed various details and submitted that it is in the business of import of goods and to hedge possible loss in fluctuation of foreign currency, entered into forward contracts in order to mitigate loss. Therefore, loss incurred on foreign exchange fluctuation is intrinsically linked to business activity of the assessee and hence, the same is rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on service of notice u/s 143(2) within the prescribed time provided under the Act. The Ld.AR submitted that before taking up case for scrutiny assessment proceedings, it is a prerequisite condition to issue notice u/s 143(3) within the time allowed under the Act. Unless notice required to be served u/s 143(2) is served, the AO cannot proceed with assessment proceedings. In this case, although the AO claims to have served notice u/s 143(2) dated 08-08-2013 to the assessee on 27-08-2013, but the copy of notice issued u/s 143(2) was not given to the assessee despite the assessee has made various attempts including filing application under the RTI Act, 2005. In absence of any statutory notice required to be issued u/s 143(2), the assessment order passed by the AO suffers from legal sanctity; hence, the assessment order passed by the AO should be quashed in the interest of justice. The Ld.AR further submitted that the Ld.CIT(A) failed to appreciate the fact in right perspective in the light of objection filed by the assessee for non service e of notice before the AO vide its letter dated 24-03-2015 which is part of record of assessment order where the AO has discussed objection filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07) (165 Taxman 488) Del. HC 6. Addl. CIT v. Prem Kumar Rastogi (1980) (124 ITR 381) All. HC 7. Jayanthi Talkies Distributors v. CIT ( 1 979) (120 ITR 576) Mad. HC 8. Heaven Distillery (P.) Ltd. v. 1TO (2017) (185TTJ 197) Mum. ITAT 9. DCIT v. M/s. M. K. Enterprise (ITA Nos. !81and426/Kol/2013) 10. Anil Kumar Goel v. ITO (2008) (116 TTJ 239) 11. Hind Book House v. ITO (2005) (92ITD 415) 12. ITO v. Suraj Prakash (1984) (7 ITD 839) 13. CIT v. Baxiram Roadmal (1934) (2 ITR 438 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations from the AO in connection with any income-tax proceedings. Therefore, even if such notice is served on the persons, who is not authorised to receive notice from the assessee, it cannot be said that there is a valid service of notice. We further note that the assessee has filed various details to argue that Shri Anant Dongarkar is no longer employed with the assessee at the time of service of notice. In fact, the assessee has filed ledger account copy of salary paid to him as per which he was employed upto 31-03-2011. This fact has been confirmed by Mr. Anant Dongarkar in his affidavit dated 09-04-2019 where he has categorically stated that he left the service of the assessee from 01-04-2011 and also the AO has called him to his office during August, 2013 and forcibly handed over notice u/s 143(2) for AY 2012-13 despite he having refused to accept the notice on the ground that he was no longer employee of the assessee and also he could not send the notice to the company. Further, this fact has been reiterated by the directors of the assessee company where they have, in their affidavits filed on 09-04-2019 stated that Mr.Anant Dongarkar left the service of the assessee on 31-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f attorney to conduct assessment proceedings for that year, was not valid in view of the fact that power of attorney did not include in it any authority to accept any fresh notice. The revenue has filed SLP against order of the Hon ble High Court and such SLP has been dismissed by the Hon ble Supreme Court in its order dated 03-07- 2018 where it was held that re-assessment proceedings initiated on the basis of notice served u/s 148 on accountant of the company were vitiated as accountant was not principal officer of company nor was there any material to show that he had been authorised by company to accept any notice. The Hon ble Delhi High Court in the case of CIT vs Chetan Gupta (2016) 382 ITR 630 (Del) has considered an identical issue and after analysing provisions of section 282(1) read with order 5 Rule 12 of CPC and order 3 Rule 6 of CPC held that notice required to be served u/s 148 has to be mandatorily served upon assessee in accordance with section 282(1) of the Act. The court further held that where prior to completion of assessment, assessee raised an objection that he had not been duly served notice in accordance with section 148, Proviso to section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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