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TMI Blog2024 (12) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly quashed. Assessee appeal allowed. - Shri S. Rifaur Rahman, Accountant Member And Shri Yogesh Kumar U.S., Judicial Member For the Assessee : Shri Amit Goel, CA, Shri Pranav Yadav, Advocate For the Revenue : Ms. Amisha S. Gupt, CIT DR ORDER PER S. RIFAUR RAHMAN, AM : 1. These cross appeals are filed by the assessee and Revenue against the order of ld. Commissioner of Income-tax (Appeals)-30, New Delhi (hereinafter referred to ld. CIT (A) ) dated 05.01.2024 for Assessment Year 2016-17. 2. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. 3. Brief facts of the case are, assessee filed its return of income on 26.09.2016 declaring total income of Rs. 55,54,950/-. The case was selected for scrutiny through CASS and notices u/s 143(2) and 142(1) of the Income-tax Act, 1961 (for short the Act ) were issued and served on the assessee. In response, ld. AR for the assessee appeared and submitted the relevant informations as called for. 4. During assessment proceedings, AO observed that the assessee has received total contract for transportation of earth at Attibeli Hobli, Anekal Taluk, Bangalore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of six months from the end of relevant financial year in which return was filed u/s. 139 or in response to notice u/s. 142(1). In this case return was filed on 12.07.2017 u/s. 139, therefore, notice u/s. 143(2) could have been legally issued till 30.09.2018. Therefore, the contention of the appellant that the jurisdiction assumed by the AO by issuing notice u/s. 143(2) of the Act dated 23.08.2018 was barred by limitation is misplaced and is legally not tenable. Accordingly, this ground of appeal is dismissed. 7. With regard to addition of Rs. 21.37 crores, ld. CIT (A) allowed the ground raised by the assessee partially by observing as under :- 11.4 I have carefully examined the facts of the case, observations of the Assessing Officer in the Assessment Order and the submissions of the appellant. It is observed that the appellant has declared revenue from operation in its P L Account amounting to Rs. 116,29,60,501/- which included revenue from transportation services amounting to Rs. 22,81,51,404/-. This ground of appeal pertains to income earned by the appellant on account of transportation services provided by it as declared in the P L Account. It is observed that the appellant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Regarding the expenditure in the provision of these services, AO opined that the expenditure claimed by the appellant on account of material consumed and job work paid were sufficient to meet expenses on account of transportation services as well. The appellant has submitted details regarding its other contract receipts amounting to Rs. 93.16 Crore and corresponding expenditure of job work paid amounting to Rs. 49.42 Crore to demonstrate that none of the expenses incurred for the transportation services were claimed under the head job work paid/labour charges as alleged by the Assessing Officer. The appellant has also mentioned the location of project sites in respect of which these expenses were claimed (refer PR: Page 106). The details submitted by the appellant have been perused and it is found that the receipts on account of transportation services and the transportation expenses claimed thereon have been accounted for by the appellant separately in its P L account. The transportation services have been treated as a separate stream of revenue and break up was provided in the paper book. The AO did not make any adverse remarks in his remand report with respect to this conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot make any adverse comments with respect to the breakup of gross receipts submitted by the appellant as part of its paper book in the Remand Report in which receipts from M/s DLI is shown. Accordingly, I find that the addition amounting to Rs. 6,21,67,854/- made by the Assessing Officer has resulted into double addition, as same was already included in the gross receipts shown by the appellant. Thus, the addition made by the AO is deleted. 9. Aggrieved with the above order, both assessee and Revenue are in appeal before us raising following grounds of appeal :- Assessee s Appeal (ITA No. 726/Del/2024) : 1. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming addition to the extent of Rs. 2,61,17,059/- (12.5% of Rs. 21,37,36,472/-). On the facts and circumstances of the case and in law, the CIT(A) ought to have deleted the entire addition of Rs. 21,37,36,472/- made by the AO. 2. On the facts and circumstances of the case and in law, no notice under section 143(2) was served on the appellant within time prescribed under the law and hence the assessment order passed by the AO is illegal, bad in law and without jurisdiction and CIT(A) erred in not hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it ratio of 12.5% when the AO himself has accepted NP ratio of 0.12% on the transactions other than the impugned transactions. 11. Further with regard to ground no.2, he submitted as under :- 1. The assessee company filed the return of income on26/09/2016 (This fact is also mentioned in first para of the assessment order). 2. The notice u/s 143(2) of the Act was issued on 23/08/2018 (This fact is also mentioned in first para of the assessment order). 3. As per proviso to section 143(2), no notice u/s 143(2) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. 4. In this case, the financial year in which the return was furnished is F.Y. 2016-17 and, therefore, notice u/s 143(2) could not have been issued after 30/09/2017. 5. Since, the notice u/s 143(2) in this case was issued on 23/08/2018, the same is bad-in-law, without jurisdiction and barred by limitation. 6. The CIT(A) has dealt with this issue in para 10 of his order and has held that notice u/s 143(2) issued was valid. The reasoning given by the CIT(A) for holding so is that original return of income was filed by the appellant on 26/09/2016. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice issued u/s 143 (2) of the Act. 13. Considered the rival submissions and material placed on record. Since the assessee has raised jurisdictional issue of notice issued u/s 143(2) of the Act, we shall deal with the same first. We noticed that assessee has filed its return of income on 26.09.2016 and assessee also filed the order sheet and noting from the IT Portal. From the above, we noticed that the AO has considered the original return filed by the assessee as defective and notices were issued to the assessee. As per the note sheet, the assessee has rectified the same on 04.02.2017 and further finally rectified the same on 12.07.2017. We noticed that notice u/s 143(2) was issued on 23.08.2018. As per the provisions of section 143(2) of the Act, no notice u/s 143(2) can be served on the assessee after the expiry of six months form the end of the financial year in which the return is furnished. The assessee has raised the above issue before the ld. CIT (A) and ld. CIT (A) has decided that the notice u/s 143(2) is proper. After considering the facts on record, we observed that the issue raised by the assessee is for the purpose of issue of notice u/s 143(2) the date should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Ltd., [1986] 162 ITR 652. In that case, the profit and loss account and balance-sheet were not enclosed with the return as is the position in the instant case. The assessee in response to the notice had produced and filed its profit and loss account as well as the balance-sheet. The Assessing Officer completed the assessment. On appeal, the Commissioner of Income-tax (Appeals) held that the return was invalid and he set aside the assessment so far as the charging of interest was concerned and directed the Assessing Officer to charge interest on the return from the date of the return till the date of furnishing the profit and loss account and balance-sheet. On further appeal, the Tribunal found that the return filed by the assessee was accepted by the Assessing Officer as a legally valid return and he had acted upon the same. The Tribunal set aside the order of the Commissioner of Income-tax (Appeals). On a reference made to the High Court, it was held that once the return has been found to be valid and only a defect within the meaning of section 139(9) of the Act was found then the Commissioner of Income-tax (Appeals) was not justified in levying interest. 6. We are in respectf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.] 12.1 The financial year, in the case of the petitioner s/assessee's original return, would have ended on 31.03.2017. Six (6) months, as mandated by the proviso, would have ended on 30.09.2017. 13. Undoubtedly, the notice issued under Section 143(2) of the Act is time-barred. Consequently, the notice under Section 142(1) of the Act will also collapse. The impugned notices are, accordingly, quashed. 14. Further we observed that in the case of Kunal Structure (India) (P) Ltd. vs. DCIT (supra), the Hon ble Court has held as under :- 20. In the facts of the present case, as discussed earlier, the petitioner filed its return of income under sub-section (1) of section 139 of the Act on 10.09.2016. Since the return was defective, the petitioner was called upon to remove such d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessable . In case if we accept the proposition of Ld. CIT(A) then there will not be any finality to the assessments selected for scrutiny under CASS or any other method of selection. It will defeat the method specified in the Act. It is irrelevant when the defect is cured by the assessee but what is relevant is the responsibility of the AO to follow the due procedure set out in the Act. It is his duty to issue the notice u/s 143(2) within the prescribed time limit. The Courts have held that once the AO misses the above time frame to issue the notice, the assessment will be bad in law. With regard to rectification of defect in the RoI filed u/s 139(1) and limitation period to issue notice u/s 143(2) as relying on KUNAL STRUCTURE (INDIA) (P.) LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-2 (1) (2) [2020 (2) TMI 725 - GUJARAT HIGH COURT] we are inclined to set aside the order passed by the Ld. CIT(A) and the order passed u/s 143(3) is defective and bad in law. Accordingly, grounds raised by the assessee is allowed. 16. From the above ratio of the decisions held by various High Courts, it is held that the limitation period for issue of notice u/s 143(2) is relevant to the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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