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TMI Blog2023 (8) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the assessee and proceeded purely on estimate basis which was not justified. Therefore, hold that the addition made by the AO purely on estimation basis without verifying the correctness of the claim of the assessee, is not in accordance with law, the same deserves to be deleted. AO is therefore, directed to delete the impugned addition. Assessee appeal allowed. - ITA No. 9432/Del/2019 - - - Dated:- 31-7-2023 - Shri Kul Bharat, Judicial Member For the Appellant : Shri Mukesh Kohli, CA For the Respondent : Shri Om Parkash, Sr. DR ORDER PER KUL BHARAT, JM : The present appeal filed by the assessee is directed against the order of Ld.CIT(A)-34, New Delhi passed u/s 147/143(3) of the Income Tax Act, 1961 ( the Act ) dated 12.09.2019 for the assessment year 2003-04. The assessee has raised following grounds of appeal:- 1. That the order passed by the learned AO/ Commissioner of Income-tax (Appeals), is erroneous, contrary to the facts and circumstances of the case, based on surmises and conjectures, against law and principles of natural justice and thus erroneous and unsustainable. 2. Based on the facts and circumstances of the case and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal has been pending before Appellate Authority, Excise and Luxury entertainment Tax, Government of NCT of Delhi, Since 25/08/2005. Therefore, the order passed by the A.O. and confirmed by CIT(A) is wrong. 6. That Hon'ble Tribunal has jurisdiction to examine a question of law which arises from the fact as found by authority below and having bearing on tax liability of the assessee even through such question was not raised before authority below nor in grounds in appeal but raised by way of additional issue in forwarding letter. 3. Facts giving rise to the present appeal are that the assessee filed his return of income on 10.11.2004, declaring total income of INR 1,03,890/-. The case of the assessee was re-opened and notice u/s 148 of the Act was issued to the assessee. In response to the notice issued, it is recorded by the Assessing Officer ( AO ) that the assessee sought reasons for re-opening of the assessment which was duly supplied to him. It was also requested by the assessee that the return filed by him, may be treated as return of income filed in response to notice issued u/s 148 of the Act vide letter dated 27.12.2010. It was also stated by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the re-assessment proceedings and the condonation for the same cannot be given u/s 292BB of the Act. In this regard, it is submitted that the issuance of notice u/s 143(2) of the Act, and the proof for the service of the same could not be ascertainable at the moment because the assessment records are not traceable right now despite all possible efforts. However, from perusal of assessment order passed by the then A.O. on 31.12.2010, it is crystal clear that the assessee has not filed fresh return in response to notice issued u/s 148 of the Act, till the completion of assessment proceedings. Assessee has been almost non-responsive during the entire period of assessment proceedings. On 27.12.2010 (just 04 days before expiring of limitation to pass assessment order), he has stated that return filed as per the provisions of section 139(1) of the Act, may kindly be treated as return filed in response to notice u/s 148 of the Act. We have filed our reply against this factual report on 21.12.2022 before the Hon'ble Bench. Copy of the same is attached. In our case, notice u/s 148 was issued on 23.3.2010. In response to the notice the assessee has filed his return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this case, notice u/s 148 was issued on 30.3.2010 in response to which no return of income was filed. On 1.10.2010, the Ld A.O. issued notice u/s 143(2), which was duly served. Subsequently notice u/s 142(1) were also issued on certain occasions. AR of the assessee on 16.12.2010 presented and stated that return of income filed u/s 139 may be treated as furnished in response to notice u/s 148. Assessment was completed vide order dated 31.12.2010. In that situation also, the Hon'ble Court held that A.O. ought to have issued notice after 16.12.2010, in absence of which assessment was held invalid. In our case also the return was filed after the issue of notice u/s 142(1), this is squarely covered by the decision of Hon'ble Delhi high Court as stated above. Further we wish to submit that we have raised this issue first time before the Income Tax Appellate Tribunal and it is settled legal position that the requirement of issuance of notice under section 143(2) of the Act is a jurisdictional one, it goes to the root of the matter as far as the validity of the reassessment proceedings under section 147/148 of the Act is concerned. The Hon'ble Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was application to a proceedings u/s 147/148 also, since proviso to Section 148 of the Act, granted certain specific liberties to the revenue, with regard to extension of time for serving such notices. No doubt, Hon'ble Madras High Court in the case of Areva T and D India Ltd., (supra) had heid that issue of notice u/s 143(2) was procedural in nature. However, Co-ordinate Bench in the case of M/s Amit Software Technologies Pvt. Ltd., (supra) after considering the decision of the Hon'ble Madras High Court as well as Delhi High Court had held that Section 143(2) of the Act, was a mandatory requirement and not a procedural one. Once notice u/s 148 of the Act, issued to the assessee required it to file a return within 30 days from the date of service of such notice. There is no provision in the Act, which would allow an A.O. to treat the return which was already subject to a proceeding u/s 143(1) of the IT Act, as a return filed pursuant to a notice subsequently issued u/s 148 of the Act. However, once an assessee itself declare before the A.O. that his earlier return could be treated as filed pursuant to notice u/s 148 of the IT Act, three results can follow. Assessing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved information from ITO (Inv.) Unit-V (5) New Delhi vide letter dated 28/03/2008. How can an inspector make inquiry about the number of cable connections after the closure of business and after so many years. The Ld A.O. made addition without making any independent enquiry but only relied upon the order passed by Entertainment officer New Delhi and order confirmed by Deputy Commissioner (Taxes). The Ld A.O. has not applied his mind while recording satisfaction and reason to belief that the income has been escaped. The reassessment notice has to be issued by A.O. by his own satisfaction and not on borrowed satisfaction. In our case A.O. has not issued re-assessment notice on his satisfaction. We rely upon the following court judgments. PCIT VS Shodiman Investment (P.) Ltd. (2018) 93 taxmann.com 153 (Bombay). (Page No.- 70-71 of Paper Book Dated 24/02/2022) Reynolds Shirting Ltd. Vs ACIT (2022) 135 taxmann.com 78 (Bombay). (Page No.-79-82 of Paper Book Dated 24/02/2022) Please delete the addition made by A.O. and confirmed by CIT (A) and oblige. 21st December, 2022 Hon ble Sir, This has reference to factual report for the assessment year 2003-04 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belief that the income assessable with respect to the receipts received on account of 28000 cable subscriptions were escaped from income chargeable to tax. We wish to submit that the Assessee has closed his business on January 2005 and he has intimated to Entertainment Officer on 18/05/2005 about this closure of business. The A.O. received information from ITO(Inv) Unit-V (5) New Delhi vide letter dated 28/03/2008. How can an inspector make enquiry about the number of cable connections after the closure of business? When the Assessee subscribed 2000 connection then how can he sale 28000 connection. Copy of receipt from Star India Limited is enclosed at page no 54 of paper book. When we requested the A.O. to inspect the assessment record on 22/02/2022 then we were informed by the A.O. on 20/05/2022 that record keeper is unable to trace the record despite his best efforts to locate the files. As per Para 6.4 of CIT(A) order at page no 14 and 15 of the paper book. In the case of the appellant AO has received the information from the investigation wing that during the year under consideration appellant had 28000 cable connections subscribers, whereas the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any independent inquiry and merely relied upon the order confirmed by Ld. Dy. Commissioner (Taxes) of Government of Delhi. It is pointed out by the Ld. Counsel for the assessee that the assessee subscribed cable connection numbers of 2000 throughout the year and how could he have allotted 28000 cable connection which is not possible. I find that these contentions of the assessee were not considered and adverted by the lower authorities. The assessee has placed reliance on various case laws including the decision of Hon ble Bombay High Court in the case of Pr.CIT vs Shodiman Investment P.Ltd. [2018] 93 Taxmann.com 163 (Bombay). Further, reliance placed upon the judgement of Hon ble Supreme Court in the case of ACIT vs Hotel Blue Moon [2010] 321 ITR 362 (SC) so far the question of legality, the reasons for re-opening the assessment is concerned the AO acted upon information received from the Investigation Wing wherein order by Entertainment Tax Officer was brought to the notice of the Assessing Authority. As per the aforesaid order, it was stated that the assessee had 28000 cable connection subscribers whereas he paid entertainment tax only to the extent of 2000 cable connection sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a curable defect. Hon ble Delhi High Court in the case of Pr.CIT vs Shri Jai Shiv Shankar travels (P.) Ltd. [2015] 64 Taxmann.com 220 (Delhi) has elaborately discussed this issue wherein the Hon ble High Court has unequivocal terms held that the failure of Assessing Officer in reassessment proceedings to issue notice u/s 143(2) prior to finalizing the reassessment order cannot be condoned by referring to section 292BB of the Act. Further, the Hon ble High Court observed that the resultant position is that the failure by the AO to issue a notice to the assessee u/s 143(2) of the Act is fatal to the order of reassessment. Subsequent to 16.12.2010 when the assessee made a statement before the AO to the fact that original return filed, should be treated as return of income pursuant to a notice issued u/s 148 of the Act, is fatal to the order of reassessment. 10.1. In the present case, the Assessing Authority itself noted that on 27.12.2010, the assessee himself attended the proceedings and filed a letter dated 27.12.2010 stating that the return already filed u/s 139(1) of the Act, may be treated as filed u/s 139(1) of the Act. The facts are identical in the present case. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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