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Question: Whether assessment order would be void ab initio when  the ld. Assessing Officer failed to issue  a  notice under section 143(2)  of  the Income Tax Act. Further whether procsseding u/s  263 action can be taken:  ITAT KOLKATA decided the issue on 27.8.2022

 

For full order kindly click the link

 

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH, KOLKATA

 

Before Shri Rajpal Yadav, Vice- President ( KZ) &

Shri Girish Agrawal, Accountant Member

I .T.A.   No. 468/KOL/2021

Assessment Year: 2010- 2011

 

M/ s.  Goyal Solar Systems Pvt. Limited, – Vs.- Principal Commissioner of  Income

Module No. 2802 , Shilpangan Face II,   Tax- 2 ,Kolkata, 

LB- 1 , Sector-  3   ,   Salt    Lake,     Office of Principal Commissioner of

Kolkata-  700098 [ PAN: AACCG5890K] Income Tax

Appellant Aayakar Bhawan, P- 7 , Chowringhee

Square, Kolkata- 700069

Respondent

Appearances by:

Shri Akshay Ringasia, CA and Shri Taraknath Jaiswal, Advocate, appeared on behalf of the assessee

Shri Sudipta Guha, CIT (DR), appeared on behalf of the Revenue

 

Date of concluding the hearing : August 24 , 2022

Date  of  pronouncing the order:  August 24 , 2022

 

O   R   D   E   R 

 

Per Rajpal Yadav, Vice- President ( KZ):-

The assessee is in appeal before  the  Tribunal against the  order  of  ld. Principal Commissioner of Income Tax-2, Kolkata dated 11. 05. 2020 passed for the assessment year 2010-11. The assessee has taken fourteen grounds of appeal, which are argumentative and descriptive in nature and not in consonance with Rule 8 of the ITAT Tax Rules.

 

2. In brief, Counsel for the assessee, at the veryoutset, submitted that though the ld. Assessing Officer has passed an  assessment  order under section 143( 3) read with section 147, but he  did  not  issue  any notice under section 143( 2) of the Income Tax  Act.  According to  him,  if  the ld. Assessing Officer failed to issue  a  notice under section 143( 2)  of  the Income Tax Act, then assessment order would be void ab initio and on that wrong order, no 263 action can be taken. In order to buttress his argument, that no notice under section 143( 2) was issued, he took us through the paragraph no. 6 of the impugned order, where  Ld. Commissioner himself admitted this fact.
3. CIT( DR) did not controvert thisfact.

 

4. We have duly considered the  rival  contentions  and  gone  through the record A perusal of sub-section 2 of section 143( 3) would contemplate that where a return has  been furnished under section 139, or  in response to a notice under section 142(1), ld. Assessing Officer or the prescribed Income Tax Authority, as the case may be, if he considers it necessary or expedient to ensure that the  assessee  has  not  understated the income or has not computed excessive loss or has not  under-paid the  tax in any manner, serve on the assessee a  notice requiring him, ona  date  to be specified therein, either to attend or to produce, or cause to be produced, before the ld. Assessing Officer any evidence on which the assessee may rely in support of the return. In other words, this section provides that if any Assessing Officer has any doubt about the claim made  by the assessee in  the return, which can be excess  claim of loss understatement of the income or payment of  taxes  on  a  lower  amount, then in order to cross verify his doubt, he would first provide  an opportunity to the assessee to submit the details in support of the return filed by it. It is the first opportunity to be given  to  the  assessee  before cross verifying the claim by issuing a notice under section 142( 1) for collecting the other details or in other words investigating the issue claimed by the assessee in the return.  Thus  it  is  a  jurisdictional  notice and without giving this notice, he cannot scrutinise the return, though in the present case, the returned income is  nil  and assessed income is  also  nil. In a way, the ld. Assessing Officer has accepted the return as it is. But even before doubting the claim of assessee  disclosing nil  income,  he  has to first issue a notice under section 143(2), so that  the  assessee  can  submit evidence in support of its claim while it has  shown  nil  income.  After this notice only, he can verify other details and change the  status of  nil income. Thus the assessment order itself  is  not  sustainable.  If  an  order itself suffers from the patent irregularity, it cannot be made a foundation for subsequent proceedings either 263  or  any  other proceeding. It is also pertinent to note that as far as the fact regarding non-issuance of notice is concerned, it has been specifically observed by  the ld. Commissioner in paragraph no. 6 of the impugned  order,  which reads as under:-

 

 

 

“6. I have carefully considered the facts of the case and gone through the submission of the assessee. On perusal of the assessment record, it is seen that, the case was re-opened on the basis of information received from the Investigation Wing in respect of bogus commodity profit on NMCE platform. On going through the assessment record, the following observations are made:

 

1. Notice u/s 142(1) issued is general in nature and some irrelevant requisitions have been made, except the issues for which the case was reopened.
2. Noticeu/s 143(2) was issued, but the order was passed u/s 143(3) w.s 147 of the I T Act.
3. Profit & Loss A/c and Balance Sheet for the relevant period have not been obtained and placed on record by the
4. The assessee has filed an objection on 10.10.2017 against re-opening, where the assessee submitted that it had transacted on NMCE platform through broker “M/s Shyam Shree Commodities (P) Ltd.” As per the date available, the company M/s Shyam Shree Commodities (P) Ltd. is a shell company of entry operator Mr. Hamish Toshniwal and the broker was suspended by NMCE. (A CD was provided by the Investigation  Wing regarding data relevant to NMCE trade and involved entry operator / broker firm etc., but the same is not available on record). The officer has accepted the returned income, without delving into the evidences available in CD for such malpractices. The officer did not even make any inquiry from NMCE regarding the veracity of the
5. The order had been passed in a casualmanner”.

 

5. In view of the above discussion, the impugned order  is  not sustainable and accordingly it is For fortifying  ourselves,  we draw the support from the decision of theHon’ble  Jurisdictional  High Court in the case of PCIT –vs.- Oberoi Hotels (P) Limited reported in 96 taxmann.com 104 or 409 ITR 132 (Calcutta).

 

6. In the result, the appeal of the assessee is

Order pronounced in the open Court on August 24, 2022.

 

Sd/- Sd/-

(Girish Agrawal) (Rajpal Yadav)

Accountant Member Vice- President