Income Tax Appellate Tribunal - Chandigarh
Indo Pacific Finlease Ltd,Chandigarh vs Pcit Chandigarh 1, Chandigarh on 16 April, 2025
आयकर अपीलीय अिधकरण,च डीगढ़ यायपीठ,च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, 'A' CHANDIGARH
BEFORE SHRILALIET KUMAR, JUDICIAL MEMBER AND
SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER
आयकर अपील सं./ I.T.A. Nos.448 & 449/CHD/2024
िनधारणवष / Assessment Years: 2014-15 & 2015-16
Indo Pacific Finlease Vs PCITChandigarh 1,
Ltd., SCO-98-99, Chandigarh
Sector 34 Sub City
Centre, Chandigarh
160002
थायीलेखासं./PANNO. AAACI2176E
अपीलाथ /Appellant यथ /Respondent
Assessee by : Sh. Ashok Goel, C.A.
Revenue by : Sh.Rohit Sharma, CIT-D.R.
Date of Hearing :19.03.2025
Date of Pronouncement ; 16/04/2025
PHYSICAL HEARING
ORDER
PER LALIET KUMAR, J.M.:
Both the appeals are being filed by the assessee, feeling aggrieved by the order passed by the ld. Pr. Commissioner of Income Tax, Chandigarh-1 dated 28.03.2024& 23.03.2024 u/s 263 for the Assessment Years: 2014-15& 2015-16.
2. The assessee has raised the common grounds of appeal in ITA Nos. 448 & 449/CHD/2024 as under:
ITA Nos.208/CHD/2021 & Ors.A.Ys.2018-19& Ors.2
"1. On th e f acts & circumstances of the c ase and in la w the PCIT Patiala has erred in initiating proceed ing u/s 263 of the income tax Ac t by wrongly assumin g jurisdic tion u/s 2 63, henc e the order passed by PC IT u/s 26 3 of the In co me tax Ac t is bad in l aw & void ab-ini tio .
2. That having regard to the f acts and circumstances of the case, Ld. Pr. C IT has erred in law and on f acts in assuming jurisdic tion u/s 263 wh ich is bad in la w in rejecting the objec tion that the assessee cannot ch allenge the Jur isd ictional Validity of the order passed u/s 147 r. w.s 1 44B d ated 26.03. 2022 in the procee ding u/s 263 of the IT Ac t on the basis that expl anatio n 2(a) to Section 203(1) super sede all other legal consider ation. no appeal again st said order f iled and an y other statutory instru ment or mediu m not undertaken and no objection raised earlie r.
3. That having regard to the f acts and circumstances of the case, Ld. Pr. C IT has erred in law and on f acts in assuming jurisdic tion u/s 263 wh ich is bad in la w in ter alia f or this reaso n that the reassessme nt order passed u/s 147 r. w.s 144 r. w.s 144 8 dated 26.03.2022 wh ich is sough t to be revised u/s 263 itself was invalid inter alia on var ious ground s as mentioned belo w and thu s proceedings initiated u/s 263 again st the in valid reassessment or der is clearly bad in la w, which were summarily rejec ted. a) That notice u/s 148 is time barred. b) T he reason has been recorded o n Incorrec t f acts as no loan has been rec eived f rom Sh . Joginder Pal Gu pta c ) The reasons have been recorded on borro wed satisf action d) Objection to reason we re f iled on 01.01.2022 there is no d isposal order bef ore assessment order. e) T he notice is base d on inf ormation as per search on 3rd par ty on 23.12.2019 f or wh ich specif ic provision 153C is applicable and not 148.
4. That The learned PC IT has erred in se tting aside the reassessment ord er passed that notice issue d is no t as per la w as the same is based on tha t AO f ailed to verif y whe ther any amount received in bank ac count f rom th e Shel l companies controlled by S h. Jog inde r Pal Gu pta whe n the reason recorded wa s regarding Lo an rec eived f rom Sh. Joginder Pal Gupta only with ou t any detail of ban k.
5. Without preju dice to grou nd no. 2 above, on the f acts and c ircumstances of the case and in La w, the 14. PCTT has erred in assuming jur isd iction an d passing the revision ary order u/s 263 of the Income T ax Ac t. 1961 ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.3
in spite of th e f act that the Ld. AO has made adequate inqu iries and veri f ication as require d f or proceed ing u /s 147 of the IT Act and the sand in quirie s were as per SOP issued by the C IBD I also and asse ssment wa s under f aceless scheme. T he order passed by th e AO is neither erroneous nor prejud icial to the in terest of revenue, henc e the order of PC IT should be se t asid e.
6. That the learned PC IT has erred in inv oking explan ation 2 of section 263 f or the f irst time in the above order. Other wise also the adequate inquiry/Verif ic ation s h ave been made as required f or reassessment u/s 147 of the IT Act. Hence the order of PC IT should be set as ide .
7. Without prejudice to above gr ound of appe al, th at having regard to f acts & circumstance s of the case . Ld. Pr.CIT has erred in l aw and on f ac ts in se tting aside th e impugned reassessment order d ate d 26.03.202 2 and direc tin g f or detail enquiries f or the amount of Rs. 3,65,00 ,00 0/-received in the assessee bank account f rom the bank, accoun t of shell companies c ontrolled by Sh. Jogind er pal Gupta which was no t as per the reason reco rded f or whic h order was passed u /s 147 hence th e direc tionsf or enquires/verif ication are bey ond the reason s recorded wh ic h are not as per law.
8. That the c ase la w whic h have been cite d by the worthy PCTT Chandigarh are not applic able to the f acts of the case.
9. The appellant craves leave to add amend alter an y of the ground of appeal or to take any add ition al ground of appeal bef ore the appeal is f inally disposed of ."
3. The brief facts as per the order of the ld. Pr. CIT in para 1 and 2 are as under:
The br ief f ac ts of the c as e are th at as per inf o rm ati o n diss em in ated o n 'Verif ic atio n' mo d ule of Ins ig h t po r tal unde r CRIU / VR U H igh R isk c as es, state men t of Sh. Jogind er P al Gu pta was rec orded on oath u/s 1 32 (4 ) of the Act d uring s e arc h and s eizur e oper ati on o n 2 3.12.2019 and he admi tted tha t h e was an e n tr y o p er ato r who con tro lled v ar iou s s he ll c o mpanie s and pro vided ac co mmo d ation en tries to benef ic iar ies . The as sess e e c ompan y was also one of the ben ef iciaries and it h ad rec eiv e d an amo un t of Rs. 3, 65 ,00,000/-. The re f ore, pro ce edin gs u/s 147 of th e Act we re in iti ate d in th is c ase and in re spon se to this, the ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.4
asse ssee company f iled the re tur n of inc o me on 10. 04.202 1 by de clar ing an inc o me of R s. 5,3 9, 040/ -. S ubs eq ue ntl y, asse ssment u /s 1 4 7 r. w. s. 144B o n 26.03 .2022 of the A ct was c o mple te d b y acc e pting th e re tur n ed inco me.
2. On perus al of the as sessmen t rec o rd, it h as bee n f ound th a t the FA O h as n o t e ven c alled f or the b an k s tatemen ts of th e ass essee c ompan y in o rde r to ve rif y wh ether an y am oun t was r ec eive d in its bank ac c ount f ro m th e s hell comp an ies con tr olle d by Sh. Jo g inde r Pal Gu pta. Fur the rmo re , as pe r the as se ss ee's r eply d a te d 2 3.03. 20 2 2 f iled in re sponse to the no tic e u /s 1 4 2(1 ) of the A c t, it was s tated th at the b al anc e inf o rm ation would be subm i tted by 29.03.20 22. The F A O, ho weve r c om ple ted the pr oc e edin gs on 26.03 .2022 witho u t m aking inq uirie s to v er if y the inf o rm ation av ail able wi th the depar tme nt. Conse que n tly, a notice u/s 263 was issued to th e as sess e e vide lette r IT BA/RE V/F/ RE V1/2023-24/10 60 392092 (1) date d 01.02.20 24 b y f ix in g the he ar ing on 16 .02.2024.
4. The ld. PCIT had issued a show cause notice to the assessee u/s 263(1) of the Act, and in response thereto, the assessee filed a reply to the notice issued by the ld. PCIT and had raised various pleas showing that the notice u/s 263 is not legally valid. In response to the said notice, the assessee had also submitted that the notice u/s 148 was issued by the Assessing Officer on 01.04.2021 and therefore, the notice issued by the Assessing Officer under section 148 was barred by limitation. For the above said purposes, the ld. AR had drawn our attention to para 3 of the ld. CIT(A) decision is as under:
3. In response to the notice supra, the assessee company, vide its submission requested to adjourn the hearing, and accordingly, the was granted so.
Thereafter, the assessee company sent its reply by the way of submission. The written submissions of the assessee are reproduced verbatim as follows:-
In regard to above notice, it is respectfully submitted that re- assessment order passed u/s 147r.w.s 144B against which the above notice is issued, is bad in law and invalid order. It is submitted that the jurisdiction or legality of the ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.5
original proceedings could be challenged in subsequent collateral proceedings also. Reliance is also placed on the following judgments:-
(i) The Hon'ble Chandigarh Bench of the Tribunal in Parveen Kumar Mittal vs. Principal CIT (ITA No. 22/Chd/2021)
(ii) M/s Westlife Development Ltd., ITA No.688/Mum/2016
(iii) Vision Promoters & Builders (P) Ltd. Vs. CIT, ITA 401/Chd/2012 dated 28.9.2017
(iv) Supersonic Technologies Private Limited, ITA 2269/Del/2017 dated 10.12.2018." 197 TTJ (Del) 889: (2019) 175 DTR (Del) (Trib) 30-Ed.) (2019) 69 ITR (Trib) 585 (Del).
(v) M/S Suraj Pulses Processors..vs Pr. Cit-8, New Delhi on 6 July, 2021 The said reassessment order passed was illegal and invalid due to following:-
1. Notice u/s 148 issued on 01.04.2021 is time barred for the above Assessment Year.
Regarding the date of issue of notice, there is no date mentioned on ITBA portal when the notice was uploaded and column is left blank. The snapshot is as under:
It is relevant to mention here that all other notices were uploaded with date. As per the mail received on the registered mail id the dt. 01.04.2021 as depicted below:ITA Nos.208/CHD/2021 & Ors.
A.Ys.2018-19& Ors.6
Hence the notice were issued on 01.04.2021, which is time barred. Regarding date of issue, Reliance is placed on following judgments.
(All-HC) 2022 ITL 734: (2022) 444 ITR 41: (2022) 325 CTR 659: (2022) 212 DTR 1: (2022) 286 ΤΑΧΜΑΝ 623 Daujee Abhushan Bhandar (P) Ltd. v. UOI & Ors.
IN THE ALLAHABAD HIGH COURT "Thus, considering the provisions of section 282 and 282-A of the Act, 1961 and the provisions of section 13 of the Act, 2000 and meaning of the word 'issue' we find that firstly notice shall be signed by the assessing authority and then it has to be issued either in paper form or be communicated in electronic form by delivering or transmitting the copy thereof to the person therein named by modes provided in section 282 which includes transmitting in the form of electronic record. Section 13(1) of the Act, 2000 provides that unless otherwise agreed, the dispatch of an electronic record occurs when it enters into computer resources outside the control of the originator. Thus, the point of time when a digitally signed notice in the form of electronic record is entered in computer resources outside the control of the originator i.e. the assessing authority that shall the date and time of issuance of notice under section 148 read with Section 149 of the Act, 1961.
In view of the discussion made above, we hold that mere digitally signing the notice is not the issuance of notice. Since the impugned notice under section 148 of the Act, 1961 was issued to the petitioner on 6-4-2021 through e-mail, therefore, we hold that the impugned notice under section 148 of the Act, 1961 is time barred. Consequently, the impugned notice is quashed."
(Del-HC) 2022 ITL 3073: (2022) 328 CTR 1001: (2022) 218 DTR 327: (2022) 449 ITR 517: (2023) 290 Taxman 493 Suman Jeet Agarwala Ors. v. ITO ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.
7IN THE DELHI HIGH COURT "26. 23. We also take judicial notice of the fact that the Department from May, 2022, for Notices issued on or after 1-4-2021, has considered the date and time of dispatch of the notices as recorded by the ITBA portal as the date of issuance and disregarded the date of generation of notice i.e. 31-3- 2021. For notices dispatched on or after 1-4-2021, the Department, following the Supreme Court's order in Ashish Agarwal (supra) considered the notices as issued under section 148A of the Act of 1961. This shows that the Department itself acknowledges and admits that the date of generation is distinct from date of issuance and the Department considers the dispatch by ITBA Portal as the date of issue for the purpose of section 149 of the Act of 1961.
Category C: is in respect of writ petitions where Notice is dated 31-3-2021 or before, digitally signed on or before 31-3-2021, however sent and received on or after 1-4- 2021.
Finding for Notices falling under category C Since the time taken by the ITBA email software system in triggering the e- mails is attributable to the Department, the assessing officer is directed to determine the date and time on which the emails were triggered by the ITBA system server as per the ITBA records and consider the same as the date of issuance."
We refer to section 149 of the IT act for time limit for the issue of notice.
Time limit for notice.
149. (1) No notice under section 148 shall be issued for the relevant assessment year,-
(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);
(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of
(i) an asset;
(ii) Expenditure in respect of a transaction or in relation to an event or occasion; or
(iii) an entry or entries in the books of account, Which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:) Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if [a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be], as they stood immediately before the commencement of the Finance Act, 2021:
ITA Nos.208/CHD/2021 & Ors.A.Ys.2018-19& Ors.8
The above notice is time barred in view of the proviso to section 149 of the IT act, a notice which cannot be issued at the time of issue, as per the old provision of section 148 cannot be issued under the new provision. Hence the same is time barred. Without prejudice, many High Courts have held that all notices issued after 31.03.2021 has to follow new procedure for issue of notices under section 148, subject to limitation under section 149. The said decision has been upheld by Honorable Supreme Court in the case of UNION OF INDIA & ORS. v. ASHISH AGARWAL 444 ITR 1 as per the following para 7.
"Thus, the new provisions substituted by the Finance Act, 2021 being remedial and benevolent in nature and substituted with a specific aim and object to protect the rights and interest of the assessee as well as and the same being in public interest, the respective High Courts have rightly held that the benefit of new provisions shall be made available even in respect of the proceedings relating to past assessment years, provided s. 148 notice has been issued on or after 1st April, 2021. We are in complete agreement with the view taken by the various High Courts in holding so."
The direction given are not applicable in this case as assessment order has already passed complete. In view of the above the notice issued is time barred the assessment framed on that basis is void.
However the Ld. PCIT after recording the objection of the assessee had dismissed this objection vide his findings given at page 23 to 24 as under:
4. T he reply (alongside the annexures) f iled through its ARs (sig ned by the autho rised signa tory of the assessee) has caref ully been considered wi th ref erence to the fac ts of the case f rom the relevant assessmen t reco rds. T he matter per tains to an order passed by the then AO u/s 147 r.w. s. 144 B of the A ct passed by the A O withou t examining the submissions mad e by th e assessee on 29.03.2 022. In consequen ce, the af oresaid ord er passed prematurely and in a hasty manner by the A ssessing Off icer on 26.03. 2022 suff ers f rom violatio n of law as provided in Explanation 2(a) to Section 263( 1) of the Ac t th at enquires as mandated under the law were no t carr ied ou t by the Assessing Off icer in such manner s as th ey "ought to have been c arried out".
In conse quence, the enquiries into bank acc oun ts and books of accounts of the assessee company and as we ll as its books of accounts n eed to be carried out f ully and co mprehensivel y to examine wh ether any amoun ts h ave been received/cred ited therein f rom the bank accoun ts of th e shell compa nies con trolled by Sh. Joginder Pal Gupta. T he se are d irected to be c arried out b y the A O, f ailing wh ich the earlier passed u/s 147 r.w.s. 144B of th e Ac t would be held to be erroneous and prejud icial to ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.
9th e interests of Revenue as al so provided in Explanation 2(a) to Section 263(1) of the A ct.
The arguments and position taken by the assessee tha t no lo ans or amou nts of any nature have been r eceive d or stands cred ited in the name of Sh. Jogind er Pal Gupta or any of his associate person s or group en tities are an importan t materi al consid eration that n eed s to be examine d and verif ied by the A ssessing Off icer at the very ince ption of the consequential ac tio ns directed to be carr ied ou t through this order of revision u/s 263 of the Act.
The other legal position s stated as appl icabl e by the assesse e including the arriving at, the sati sf ac tio n and/or reason to bel ieve, by the Asse ssing Of f icer, in proceedings and passing of order u/s 147 of the Act, the resultant alleged non-maintainability of revision ac tion u/s 263 of the A ct, as al so ostensibly su ppo rte d by the several judicial r atios of the Hon'ble Cour ts and Tribunals, are discoun ted and disregarded sin ce;
(a). Explan ation 2( a) to Section 263(1) of the ac t whic h is applicable here is an expressly legislated statutory provision which hold s that if inqu iries/examina tio ns in th e manners in wh ich they ough t to have been c arrie d out have not been so carried ou t, such impugned order of assessment would be held to be er roneous and adverse/preju dic ial to the interests of revenue. T his would ther ef ore supersede all other legal considerations.
(b). T he decisions of the H on' ble Cour ts and T ribunals th at hav e been ci ted by the assessee are parima ter ia distinguish able f rom the f ac ts of the instan t c ase including on the matter of invocation of Explan ation 2(a) to Section 26 3(1) of the Act.
(c). T he decisions of the ITAT Benches in the cases of other assessees are orders in personam and not order in rem and are theref ore not applicable.
(d). T he decisions of the non- jurisdic tion al Hig h Cour ts are only in dicative an d not d irec tly bind ing on the f acts of the instan t case of the assessee in ref erence.
(e). T he assessee has only alleged that the impugned order of assessm ent passed u/s 147 r. w.s. 144 B was inv alid and bad in law and "could be" challe ng ed in respec t of jurisdic tion or l egal ity in subsequ en t colla ter al proceedings also. T he assessee has not brough t on ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.
10record till date any f act whic h shows that it h as indeed ch allenged the validity, jurisdiction or leg ality of the issue of the notice u/s 148 of the Ac t, or the order passed u /s 147 r. w. s. 144B of the Act in appe al or th rough any other sta tu to ry instrumen t or mediu m. T his means that the assessee's position in th e matte r is disingenuous, mendaciou s and in consistent in that it see ks to unlawf ull y buy a non-existent f u ture in sur ance in the nature of a threat to ch allenge to the validity of th e underlying (orig inal) pr oceedings, to undercu t the legality of the instan t revision proceedings u /s 263 of th e Ac t. T his self -serving position of the asse ssee stands exposed f orits a priori unacceptab ility per the accep ted principles of law and statute, and is rejected withou t prejudice to the veracity of the f actual matrix applicable in this case.
In sum, there is presently no proven unla wf uln ess in the no tice issued u/s 148 of the Act, on the groun d of its issue being statutorily barred in time or f or other reason s, nor is there any evidence placed on record, other than vague prognoses and unf ounded thre ats catapulted back f rom th e f utur e, abou t the supp osed inv alidity and illegality of the proc eedings or order passed u/s 14 7 r.w.s. 144B of the Act. T hese arguments are rejec ted as inapplic able and exerc ises in su perf luous verbo sity sans any f ound ation at th is time .
5. feeling aggrieved by the order passed by the Ld. PCIT the assessee is in appeal before us for the grounds mentioned hereinabove.
6. The contention of the assessee before us, that the notice issued under section 148 was barred by limitation provided for and therefore the revisional jurisdiction exercised by the Ld. PCIT against the nonest order is not maintainable.
7. The Tribunal vide direction dt. 07/01/2025 had directed the parties to file the report alongwith the annexure mentioning therein as to when the notice was ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.
11generated by the Assessing Officer and as to when it was out from the possession / control of the Assessing Officer. It is relevant to reproduce the order sheet of the Bench dt. 07/01/2025 wherein it was directed as under:
Th e pre se nt app e al i s di re ct e d at t h e i n st an ce of as se s s ee agai n s t t h e o r de r of t h e Id. CI T dat e d 2 8 .0 3 . 202 4 p a ss e d un de r Se ct i on 2 63 i n as se s s m en t y e ar 2 01 4- 15 .
2. A t t h e ve ry out s e t , I d. Co un se l f o r t h e as se s se e h as s u bm i tt e d t h at a s s e s s ee h as f i l ed i t s re t urn of i n co me on 05 .0 9 . 2 01 4 de cl ari n g t o t al i n co m e of Rs .5 .39 .0 40 / Th e D e p ar tm e n t h a d ca rri e d o u t a se arc h u po n on e S h ri Jo gi n de r P al Gu pt a an d h i s st at e m e n t un d e r S e c t i o n 1 32 (4 ) was re c o rde d. Sh ri Jogi n de r P al Gu pt a h a s d e c la re d i n h i s st at e me n t un de r Se c t ion 1 3 2 (4 ) t h at he was e n gag e d in p rovi d in g a c c om m o d at i o n e n t ri es .
Ac co rdi n g t o t he A O, as s es s e e is o n e of th e be n e f i ci ari es of ac c o m m o dat i on en t ri e s to the e xt en t of R s . 3 .6 5 .00. 00 0 / T h e r e f or e , re a so n s we re re c o rde d t o re o pe n t he as s e s s m en t of t h e as se ss e e . Th e I d . Co un se l f o r t h e as s e ss e e h as poi nt e d o ut t h at al le g e d n ot i c e u n d e r Se ct i o n 1 48 wa s i ss u e d on 31 .03 .2 02 1 b ut i t i s no wh e re di s c e rn i bl e wh et h e r t h i s no t ic e w as i ssu e d f o r se rv i ce b e f o re 12 o 'c loc k P . M. of 31 .03 .2 02 1. I n ot he r wo rd s, th e n ot i ce s h o ul d h a ve be en aw ay f rom t h e c on t rol o f t h e A O f o r s e rvi ce u po n t h e as se s se e . I t i s pe rti n en t t o n ot e t h at AO h as n o t m a de an y ad di t i o n of t h e i t e m f o r wh i ch as s e s s m en t was re ope n e d. Th e re f o re, t h e i d. CI T f o u n d t h at t h i s ord e r i s e rron e o us a n d p re j u di ci al t o t h e i n t e re s t s of R ev en ue . He i n vo ke d h is r evi si on al po we rs u n d e r S e ct i on 26 3 . Th e as se s s e e con t e n de d th at s in c e n ot i ce un de r S e c t i on 14 8 was n ot wi t h i n t i me l imi t, t h er e f or e, as s e s sm e nt orde r i n i t se lf i s n ot v a li d an d i f i t i s n ot v al i d, t h e n n o act i on un de r S e ct i on 2 63 c an be t ake n .
3. T he I d. CI T was of t h e vi e w t h at t h i s p le a c an n ot be t ak e n i n t h e pre se nt pro ce e di n gs . In o u r o pi ni on , i t is an e rron e o us app ro ac h a t t h e e n d of t h e I d . C IT . t he ref ore , f act um of se r vi ce of n o t ic e de se rv e s t o b e e st abli sh e d an d i f i t i s n o t i s su e d b ef ore 12 o ' cl oc k of 3 1 .0 3 .2 0 21, t h en as s e s s m en t wi ll b e i nv al id . Con s e qu en t ly , n ot ic e un d e r Se ct i o n 2 6 3 wi ll be i nv ali d . Th e re f o re, we a re o f t h e vi e w t h at i t is ne c e s s ary t o f i n d o ut wh et h e r n ot i ce un d e r Se ct i on 14 8 wa s i ss ue d on 31 .03 .20 21 be f ore 12 o' cl o ck i n t h e n i gh t o r n ot . Th e I d . CI T-D R po in t e d o ut t h at as s e s s e e s h o ul d be di r e ct e d t o do wn loa d th e co py o f t h at n ot i ce an d pl a ce i t be f ore t h e B e n ch f or a ppre c i at i on . I t w as s u bm i t t ed t h at o n ce a n o t ic e i s be i n g ge n e ra t e d on t he Po rt al it wi ll l ef t t h e Port a l t o wa rd s t he as s e ss ee an d e vi de n ce o f i ssu an ce of n ot i ce w i l l be avai l abl e . O u r ba si c aim i s t o f i n d o ut wh et h e r n ot i ce was i s s ue d wi t h i n t h e t i m e li m i t or n ot . T he r ef o re , we di re ct bot h t he s i de s t o pl ac e e ve ry d et ai l s i n t h ei r po s se ssi o n s o th at we ca n re s ol v e th i s di s pu t e . Th e A O i s di re ct e d t o fi l e a re p ort alo n g wi t h an n e xu re wh e n n ot i ce l ef t h is con t rol an d as s e ss e e i s al s o di re ct e d t o d o wnl o ad c o py o f t h at n ot i ce an d pl ac e i t o n t he re c ord . C opy of t h i s o rde r s h e e t be ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.
12s u p pli e d t o bot h t h e pa rt i e s for co m pli an ce . He ari n g is adj o u rn e d t o 1 9 . 03. 202 5 .
8. The Ld. AR has also filed a communication dated 30.01.2025, wherein it was submitted that, as per the records available on the ITBA Portal, the notice under Section 148 was uploaded on 01.04.2021. It was further submitted that the said notice was generated on 31.03.2021. In support of this submission, the learned AR filed a copy of the notice issued under Section 148, which bears a digital signature dated 31.03.2021. Additionally, the assessee also furnished a copy of the RTI reply received from the Assessing Officer, clearly indicating the date and time at which the email containing the notice was sent. The relevant documents have been scanned and placed on record as under:
(i) Screen shot of ITBA Portal where notice u/s 148 uploaded ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.13
(ii) Copy of Notice u/s 148 enclosed with above.
(iii) Reply of AO including the request made under RTI ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.14 ITA Nos.208/CHD/2021 & Ors.
A.Ys.2018-19& Ors.
15(iv) Copy of Annexure-A and Annexure-B attached with above reply by AO ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.
16(v) Annexure-B shows sent time stamp 01.04.2021 12:48:03 AM ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.
179. In compliance with the direction of the Bench, the Assessing Officer vide communication dt. 17/03/2025 has filed the following reply alongwith the Annexures before us:
ITA Nos.208/CHD/2021 & Ors.A.Ys.2018-19& Ors.18 ITA Nos.208/CHD/2021 & Ors.
A.Ys.2018-19& Ors.19 ITA Nos.208/CHD/2021 & Ors.
A.Ys.2018-19& Ors.20 ITA Nos.208/CHD/2021 & Ors.
A.Ys.2018-19& Ors.21 ITA Nos.208/CHD/2021 & Ors.
A.Ys.2018-19& Ors.22
10. The learned Authorised Representative (AR) submitted that the last date for issuance of notice under Section 148 for the Assessment Year 2014-15 was 31.03.2021. Since the notice was in fact issued by the Assessing Officer on 01.04.2021, i.e., beyond the prescribed period of limitation, the said notice is invalid, and consequently, the assessment order passed pursuant to it is nonest in the eyes of law.
In support of this contention, the learned AR placed reliance on the following judicial pronouncements:
Hon'ble Chandigarh Bench of the Tribunal in Parveen Kumar Mittal vs. Principal CIT (ITA No. 22/Chd/2021) Daujee Abhushan Bhandar (P) Ltd. v. UOI & Ors. 444 ITR 41 Gagandeep Singh vs Deputy Commissioner Of Income Tax ...
Deputy Commissioner of Income Tax 86 ORS. V. Gagandeep Singh ( Supreme Court) 2024 ITL212 Suman Jeet Agarwal & Ors. v. ITO (Del-HC) 449 ITR 517 MICROSOFT CORPORATION (INDIA) PVT. LTD. VERSUS DCIT, CIRCLE-16 (1) , DELHI (DEL-Trib.) 2024 ITL 687 Fortune metalics limited Vs DCIT Hon'ble ITAT Chandigarh Bench ITA 1090/chd/2019 2021 ITL 50 Smt. Simar Kaur V. Assistant Commissioner of Income Tax 212 TTJ 236 Atlas Cycle Industries, 180 ITR 319 M/s Century Fiscal Services LTD V. Income Tax Officer 2020 ITL 3642 (CAL-HC) 2024 ITL 949 : (2024) 298 Taxman 673 PRINCIPAL COMMISSIONER OF INCOME TAX - 5, KOLKATA V. SHRI SANJAY MEHTA ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.23
M/s Prince Polutry Farm, C/o Shri Nitin Bhasin, Advovcate V. The PR. CIT, Panchkula 2023 ITL 4604
11. The learned Departmental Representative (DR) supported the order passed by the learned PCIT and submitted that the assessee did not raise any objection at the time of issuance of notice under Section 148 or at the stage of passing the assessment order by the Assessing Officer pursuant to the reopening dated 31.03.2022. It was contended that the assessee is now raising a technical objection for the first time, which is not tenable in the eyes of law. The learned DR further submitted that the matter ought to be examined on merits in light of the principles laid down by the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT [2018] 402 ITR 640 (SC).
12. We have heard the rival contention of the parties and perused the material available on the record.
13. Before adjudicating the issue at hand, it is pertinent to reproduce the relevant statutory provisions of the Income Tax Act, 1961, and the Income Tax Rules, 1962, which govern the issuance and service of notice under Section 148. The provisions relevant for our consideration are Sections 148, 149, and 282 of the Act, along with Rule 127 of the Rules. These are reproduced below for ready reference:
Sect ion 1 48 - I ssu e of No tice where I ncome h as ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.24
Escaped A ssessme nt (1 ) Be f o re m aking t he asse ssme nt, re assessmen t o r re co mpu tatio n u nde r se cti o n 1 47, the As sess ing Office r shal l se rve o n the asse ssee a notice re qui ring him to fu rnis h, wi thi n such peri od as m ay be spe cif ied in the noti ce , a re t urn of h is income o r the i ncome of any othe r pe rso n i n re spe ct of w hich he is asse ssabl e unde r thi s Act , fo r the re le vant as se ssme nt ye ar, in the pre scribe d form and ve rif ie d in the pre s cribe d manne r and se tting forth su ch ot he r p articu lars as m ay b e pre scribe d; (2 ) The Asse ssi ng Office r shal l, be fore issuing any no tice unde r su b-se ction (1), con du ct su ch inqui rie s, as he deems fi t, t o o btain pri or app roval of the speci fie d autho rity .
Sect ion 149 - Time Limit fo r N oti ce (1 ) No no ti ce unde r sec tio n 14 8 shal l b e iss ued f or the rele vant assessme nt ye ar -- (a) i f three years have el apse d fr om t he e n d o f t he rele vant asse s sme nt yea r, u nle ss the case falls unde r c lause (b); ( b) if three ye ars, but n ot more than te n ye ars, have e l apse d fro m t he e nd of t he re le vant asse ssme nt year, only if the Asse ssing O ffice r h as in h is pos se ss ion boo ks of a cco un t o r othe r docume nts o r ev ide nce wh ich re ve al th at the in come c harge able to tax, re p re se nte d i n the f or m of asse t, which has e scape d asse ssme nt am ounts to or is li ke ly to am ount to f if ty la kh ru pee s or more .
Sect ion 282 - Serv ice of N oti ce Gen er all y (1 ) The se rvice of a no ti ce or summo n or re qui sition or orde r o r any othe r communicatio n un de r t his Act m ay be made by deli ve ri ng or transmi tti ng a co py the re of to the pe rso n named t herei n--
(a) by pos t o r b y suc h co urie r se rvi ces as m ay be approve d by the Board; or (b ) i n su ch manne r as pro vide d under the Code of Civil Proc e dure , 1908; or
(c) in the f orm of any e lect ronic re cord as p rov ide d in Chapte r IV of t he In form ati on Te ch nol ogy Act, 20 00; or (d ) by any other me ans o f trans mi ssi on, includin g ele ctron ic m ail or fax me ssage , as the Bo ard m ay n ot ify.
(2 ) Th e Bo ard m ay make ru les provi di ng f or the a ddre sse s (in clu di ng the addre ss for ele ctro ni c m ai l or e lect ro nic mail me ssage ) to w hich suc h c om mun icat io n may be deli ve re d or t ransmi tte d.
Rul e 127 - S ervice o f Not ic e, Summons, Req uisition, Order, an d Oth er Commun ica tion (1 ) For the pu rpose s of sub-se ction (2) o f se c tion 282 , the add re ss of the asse ssee f or communi cati on sha ll be --
(a) the addre ss a vailab le in the PAN d atabase o f the asse ssee ; or (b ) t he add re s s avai lable in th e re turn of i ncome f urn ishe d by the asse ssee f or the rele vant asse ssme nt ye ar; o r ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.
25(c) the addre ss a vailab le in the last in co me -tax re tu rn fu rnis he d; or (d ) the ad dre ss avail abl e in the re cor ds o f the Asse ssin g Of fice r; or (e ) the e mail ad dre ss av ai lable in the e lect ro nic filin g acco u nt re g iste red b y the asses see.
(2 ) The commu nicat ion shal l be dee med to have bee n de live re d--
(a) if se nt by pos t--a t th e time at which it would be de live re d in the o rdinary course of po st;
(b ) if de live re d e lec tronic ally --at the t ime of send ing the ele ctron ic re cord.
14. Upon a conjoint reading of Sections 148, 149, and 282 of the Income Tax Act, 1961, along with Rule 127 of the Income Tax Rules, 1962, it becomes abundantly clear that a communication shall be deemed to be delivered or transmitted electronically at the moment it is sent to the email address provided in the income tax return furnished by the assessee, or to any other email address available with the Income Tax Department.
15. The legislature, for the purpose of service of notice under Section 148, has employed the expressions "delivered" or "transmitted," and the term "served." In the present case, although the notice under Section 148 was generated on the CBDT portal on 31st March 2021, the actual service through electronic mode was effectuated only on 1st April 2021. Thus the notice was issued beyond period, hence was not in accordance with law.
16. In our considered view, the issuance of notice beyond the statutory time limit prescribed under Section 149 of the Act, is in direct contravention of the ratio laid down by the Hon'ble Supreme Court in Rajiv Bansal ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.
26(supra), renders the notice invalid and void ab initio. Accordingly, the notice issued under Section 148 is bad in law. Consequently, the assessment order passed by the Assessing Officer pursuant to such a notice is nonest in the eyes of law and cannot be treated as a valid and lawful order.
17. Having held that the notice issued under Section 148 and the consequent assessment order are bad in law, the next question that arises is whether the learned Principal Commissioner of Income Tax (PCIT) could invoke jurisdiction under Section 263 of the Act to revise such a non-existent and invalid order.
18. In our considered opinion, the learned PCIT lacks the jurisdiction to revise an order which is non est. The exercise of powers under Section 263 presupposes the existence of a valid and legally sustainable assessment order. Unless such an order exists, there can be no question of treating it as erroneous or prejudicial to the interest of revenue. For any order to be revised under Section 263, it must first be in existence and recognized in law as such.
19. In the present case, since the assessment order has been held by us to be invalid and non-existent--having been issued and passed in contravention of the law--we do not find any merit in the contention of the learned Departmental Representative (DR) that the learned PCIT was justified in invoking revisional jurisdiction. Once the ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.
27foundation of the assessment itself is held to be void ab initio, the consequential revisional proceedings under Section 263 cannot be sustained in law.
20. Lastly in this regard, we may also refer to the decision of the Coordinate Bench referred by the Ld. AR in case of Parveen Kumar Mittal Vs. The Pr. CIT in ITA No 22/Chd/2021 dt. 02/11/2021 wherein the coordinate Bench has held as under:-
14. In the case of M/s Westlife Development Ltd.(supra) the ITAT has, after referring to various case laws held that the legality of the proceedings can be agitated in a subsequent proceeding or even in a collateral proceeding or execution proceeding also. The relevant findings of the ITAT are as under:
"7. We have heard both the parties on this issue and also gone through the orders passed by the lower authorities as well as the judgments relied upon before us. In our view, we need to decide following issues, before we go into any other issues or merits of the impugned order:
1. Whether the assessee can challenge the validity of an assessment order during the appellate proceedings pertaining to examination of validity of order passed u/s 263?
2. Whether the impugned assessment order passed u/s 143(3) dated 24-10-2013 was valid in the eyes of law or a nullity as has been claimed by the assessee?
3. If the impugned assessment order passed u/s 143(3) was illegal or nullity in the eyes of law, then, whether the CIT had a valid jurisdiction to pass the impugned order u/s 263 to revise the non est assessment order?
In our considered view, since these issues are jurisdictional issues and go to the root of the matter, therefore before dealing with any other issue, we shall first deal with all above three issues one by one, as under:
8. Challenging the jurisdictional defects of assessment order for assailing the jurisdictional validity of the revision order passed u/s 263:
The first issue that arises for our consideration is - whether the assessee can challenge the jurisdictional validity of order passed u/s 143(3) in the appellate proceedings taken up for challenging the order passed ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.28
u/s 263? If we analyse the nature of both of these proceedings, which are under consideration before us, we find that the original assessment proceedings can be classified in a way as 'primary proceedings'. These are, in effect, basic / foundational proceedings and akin to a platform upon which any subsequent proceedings connected therewith can rest upon. The proceedings initiated u/s 263 seeking to revise the original assessment order is off shoot of the primary proceedings and therefore, these may be termed as 'collateral proceedings' in the legal framework. The issue that arises here is whether any illegality/invalidity in the order passed in the 'primary proceedings' can be set up in the 'collateral proceedings' and if yes, then of what nature?
8.1. We have analysed this issue carefully. There is no doubt that after passing of the original assessment order, the primary (i.e. original proceedings) had come to an end and attained finality and, therefore, outcome of the same cannot be disturbed, and therefore, the original assessment order framed to conclude the primary proceedings had also attained finality and it also cannot be disturbed at the instance of the assessee, except as permitted under the law and by following the due process of law. Under these circumstances, it can be said that effect of the original assessment order cannot be erased or modified subsequently. In other words, whatever tax liability had been determined in the original assessment order that had already become final and that cannot be sought to be disturbed by the assessee. But, the issue that arises here is that if the original assessment order is illegal in terms of its jurisdiction or if the same is null & void in the eyes of law on any jurisdictional grounds, then, whether it can give rise to initiation of further proceedings and whether such subsequent proceedings would be valid under the law as contained in Income Tax Act? It has been vehemently argued before us that the subsequent proceedings (i.e. collateral proceedings) derive strength only from the order passed in the original proceedings (i.e. primary proceedings). Thus, if order passed in the original proceedings is itself illegal, then that cannot give rise to valid revision proceedings. Therefore, as per law, the validity of the order passed in the primary (original) proceedings should be allowed to be examined even at the subsequent stages, only for the limited purpose of examining whether the collateral (subsequent) proceedings have been initiated on a valid legal platform or not and for examining the validity of assumption of jurisdiction to initiate the collateral proceedings. If it is not so allowed, then, it may so happen that though order passed in the original proceedings was illegal and thus order passed in the subsequent proceedings in turn would also be illegal, but in absence of a remedy to contest the same, it may give rise to an 'enforceable' tax liability without authority of law. Therefore, the Courts have taken this view that jurisdictional aspects of the order passed in the primary proceedings can be examined in the collateral proceedings also. This issue is not res integra. This issue has been decided in many judgments by various courts, and some of them have been discussed by us in followings paragraphs.ITA Nos.208/CHD/2021 & Ors.
A.Ys.2018-19& Ors.29
8.2. In a matter that came up before Hon'ble Supreme Court in the case of Kiran Singh & Ors. v. Chaman Paswan & Ors., [1955] 1 5CR 117 the facts were that the appellant in that case had undervalued the suit at Rs.2,950 and laid it in the court of the Subordinate Judge, Monghyr for recovery of possession of the suit lands and mesne profits. The suit was dismissed and on appeal it was confirmed. In the second appeal in the High Court the Registry raised the objection as to valuation under Section 11. The value of the appeal was fixed at Rs.9,980. A contention then was raised by the plaintiff in the High Court that on account of the valuation fixed by the High Court the appeal against the decree of the court of the Subordinate Judge did not lie to the District Court, but to the High Court and on that account the decree of the District Court was a nullity. Alternatively, it was contended that it caused prejudice to the appellant. In considering that contention at page 121, a four Judge Bench of Hon'ble Supreme Court speaking through Vankatarama Ayyar, J. held that:
"it is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties."
8.3. This judgment was subsequently followed by Hon'ble Supreme Court in the landmark case of Sushil Kumar Mehta vs Gobind Ram Bohra, (1990) 1 SCC 193, wherein an issue arose whether a decree can be challenged at the stage of execution and whether a decree which remained uncontested operates as res-judicata qua the parties affected by it. Hon'ble apex court, taking support from aforesaid judgment, observed as under:
"In the light of this position in law the question for determination is whether the impugned decree of the Civil Court can be assailed by the appellant in execution. It is already held that it is the Controller under the Act that has exclusive jurisdiction to order ejectment of a tenant from a building in the urban area leased out by the landlord. Thereby the Civil Court inherently lacks jurisdiction to entertain the suit and pass a decree of ejectment. Therefore, though the decree was passed and the jurisdiction of the Court was gone into in issue Nos. 4 and 5 at the ex-parte trial, the decree there-under is a nullity, and does not bind the appellant. Therefore, it does not operate as a res judicata. The Courts below have committed grave error of law in holding that the decree in the suit operated as res judicata and the appellant cannot raise the same point once again at the execution."
8.4. Similar view has been taken by Hon'ble Supreme Court by following aforesaid judgments recently in the case of Indian Bank vs Manual Govindji Khona reported in 2015 (3) SCC 712. Further, similar view was emphasized by Hon'ble Bombay High Court (GOA Bench) in ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.
30the case of Mavany Brothers vs CIT (Tax Appeal No 8 of 2007) in its order dt 17th April, 2015 wherein it was held that an issue of jurisdiction can be raised at any time even in appeal or execution.
8.5. The aforesaid principles, enunciated by the Apex Court in the case of Kiran Singh & Ors. v. Chaman Paswan & Ors, supra were reiterated by the Apex Court in the cases of Superintendent of Taxes vs Onkarmal Nathmal Trust (AIR 1975 SC 2065) and Dasa Muni Reddy v. Appa Rao (AIR 1974 SC 2089). In the first of these decisions it was pointed out that revenue statutes protect the public on the one hand and confer power upon the State on the other, and the fetter on the jurisdiction is one meant to protect the public on the broader ground of public policy and, therefore, jurisdiction to assess or reassess a person can never be waived or created by consent. This decision shows that the basic principle recognized in Kiran Singh (supra) is applicable even to revenue statutes such as the Income Tax Act. Dasa Muni Reddy (supra) is a judgment where the principle of 'coram non judice' was applied to rent control law. It was held that neither the rule of estoppel nor the principle of res ludicata can confer the Court jurisdiction where none exists. Here also the principle that was put into operation was that jurisdiction cannot be conferred by consent or agreement where it did not exist, nor can the lack of jurisdiction be waived.
8.6. These judgments were subsequently noticed by Hon'ble Gujarat High Court in the case of P. V. Doshi 113 ITR 22(Gujrat). This case arose under the Income Tax Act with reference to the provisions of Section 147 dealing with re-assessment. The facts were that the assessment was sought to be reopened under Section 147 and notice under section 148 was issued. Validity of reopening was not challenged upto Tribunal and additions were challenged on merits only. The Tribunal restored the matter to the Assessing Officer with some directions to reexamine the issue on merits. When the matter came back to the assessing officer the assessee specifically raised the point of jurisdiction to reopen the assessment, contending that the notice of reopening was prompted by a mere change of opinion. The AO rejected plea of the assessee but the AAC accepted this ground and also held the reassessment to be bad in law on jurisdictional ground. Against the order of the AAC the Revenue went in appeal before the Tribunal and specifically raised the plea that the question of jurisdiction to reopen the assessment having been expressly given up by the assessee in the appeal against the reassessment order in the first round, the assessee was debarred from raising that point again before the AAC and the AAC was equally wrong in permitting the assessee to raise that point which had become final in the first round and in adjudicating upon the same. The plea of the Revenue impressed the Tribunal which took the view that after its earlier order in the first round of proceedings the matter attained finality with regard to the point of jurisdiction which was given up before the AAC and not agitated further and that in the remand proceedings what was open before the Assessing Officer was only the question whether the addition was justified on merits and the point regarding the jurisdictional aspect was not open before the Assessing Officer. According to the Tribunal, the assessee having raised ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.
31the point in the first round and having given it up could not revive it in the second round of proceedings where the issue was limited to the merits of the additions. In this view, the Tribunal accepted the Revenues plea. The assessee thereafter carried order of the Tribunal in reference before the Gujarat High Court. The High Court after considering various judgments of the Supreme Court on the point of jurisdiction to reopen the assessment and also after specifically discussing the judgment of the Supreme Court in Onkarmal Nathmal Trust (supra) and Dasa Muni Reddy (supra) held that the Tribunal was in error in holding that the question of jurisdiction became final when it passed the earlier remand order. It was held that neither the question of res judicata nor the rule of estoppel could be invoked where the jurisdiction of an authority was under challenge. According to Hon'ble Gujarat High Court, the rule of res judicata cannot be invoked where the question involved is the competence of the Court to assume jurisdiction, either pecuniary or territorial or over the subject matter of the dispute. Hon'ble High Court further held that since neither consent nor waiver can confer jurisdiction upon the Assessing Officer where it did not exist, no importance could be attached to the fact that the assessee, in the first round of proceedings, expressly gave up the plea against the erroneous assumption of jurisdiction by the assessing authority. According to the Hon'ble Court, the "finality or conclusiveness could only arise in respect of orders which are competent orders with jurisdiction and if the proceedings of reassessment are not validly initiated at all, the order would be a void order as per the settled legal position which could never have any finality or conclusiveness. If the original order is without jurisdiction, it would be only a nullity confirmed in further appeals'. In this view of the matter, Hon'ble High Court finally answered the reference in favour of the assessee.
8.7. It is further noted that many of these judgments were discussed and followed by the co-ordinate bench of the Tribunal in the case of Indian Farmers Fertilizers Co-operative Ltd vs KIT 105 lTD 33 (Del), wherein a similar issue had arisen. In this case, the issue raised before the bench was whether it is open to the assessee, not having appealed against the reassessment order, to set up or canvass its correctness in collateral proceedings taken for rectification thereof u/s
154. The bench minutely analysed law in this regard and applying the principle of 'coram non judice' and following aforesaid judgments of the supreme court, it was held that if an assessee seeks to challenge the reassessment proceedings as being without jurisdiction, when action for rectification is sought to be taken on the assumption of the validity of the reassessment order, then the assessee has to step in and protect its interests and the liberty to question even the validity of the reassessment proceedings ought to be given to it......." (emphasis supplied) 8.8. Similar view was taken in another decision of the Tribunal in the case of Dhiraj Suri vs ACIT 98 lTD 87 (Del). In the said case, appeal was filed by the assessee before the Tribunal against the levy of penalty. In the appeal challenging the penalty order, the assessee challenged the validity of block assessment order which had ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.
32determined the tax liability of the assessee on the basis of which penalty was levied subsequently. The revenue objected with respect to the ground of the assessee raising jurisdictional issues of assessment proceedings in the appeal against the penalty order. After analysing the legal position, as clarified by Hon'ble Gujrat High Court in the case of P.V. Doshi, supra and Hon'ble Bombay High Court in the case of Jainaravan Babulal vs CIT. 170 ITR 399, the bench held as that if the block assessment itself is without jurisdiction then there is no question of levy of any penalty u/s. 158BFA(2) and therefore it is open to the assessee to set up the question of validity of the assessment in the appeal against the levy of penalty.
8.9. We also derive support from another judgement of Hon'ble Bombay High Court in the case of Inventors Industrial Corporation Ltd vs CIT 194 ITR 548 (Bombay) wherein it was held that assessee was entitled to challenge the jurisdiction of the AO to initiate re- assessment proceedings before the CIT(A) in the second round of proceedings, even though he had not raised it in earlier proceedings before the Assessing Officer or in the earlier appeal.
8.10. Thus, on the basis of aforesaid discussion we can safely hold that as per law, the assessee should be permitted to challenge the validity of order passed u/s 263 on the ground that the impugned assessment order was non est and we hold accordingly."
15. Ld. DR was unable to point out any decision holding to the contrary. Therefore the objection of the Ld. DR to the argument of the Ld.Counsel for the assessee challenging the legality of the present proceedings u/s 263 of the Act, by contesting the validity of the original proceedings u/s 147 of the Act, we hold merits no consideration and is dismissed.
16. Having said so, coming to the facts of the present case before us, the assessee's argument in support of his contention that the original proceedings in the present case, u/s 147 of the Act, was invalid, is the insufficiency of information leading to the formation of belief of escapement of income, which it is settled law, is an essential prerequisite for reopening the case u/s 147 of the Act.
17. We have patiently heard at length the arguments of both the parties in this regard and have also carefully perused the contents of the reasons recorded for reopening the case of the assessee placed before us at Paper Book page No.15. We find merit in the contention of Ld.Counsel for the assessee that the reasons recorded do not demonstrate sufficient information in the possession of the AO to lead to the formation of belief of escapement of income. In fact the information available with the AO could not have lead to the formation of belief of escapement of any income at all.
18. As per the reasons recorded by the AO, the belief of escapement of income is based on the information of cash deposits in the bank account of the assessee remaining unexplained on account of no ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.
33return of income of the assessee available in the system of the department and no explanation regarding the source of the same furnished by the assessee to ITO, Ward-4 (para 7 of the reasons reproduced above).
19. As it turns out the only valid information in the possession of the AO, while recording reasons for escapement of income, was the fact of cash deposits in the bank account of the assessee amounting to Rs.4.17 crores and no other information. The non availability of return of the assessee in the income tax systems(ITS) has no implications and carries no weight for the formation of opinion that the source of cash deposits has remained unexplained since it does not mean and is not equivalent to the fact of no return having been filed by the assessee. On the contrary, we find, that the fact in the present case is that return was filed by the assessee which fact is noted by the AO also in his reason mentioning the recording of this fact by the ITO, Ward-4. The AO, in truth, was clueless and uncertain of the fact whether return of income was filed by the assessee or not.
20. Further, even the assessee not responding to inquiries conducted by the AO, NMS, i.e. ITO Ward-4 regarding the cash deposits, we find, is of no relevance for forming opinion of the cash deposits being unexplained, since as rightly pointed out by the Ld.Counsel for the assessee, it is the AO of the assessee whose satisfaction is crucial for reopening and it cannot be a borrowed satisfaction. Also, as pointed out to us by the Ld.Counsel for the assessee and not controverted by the DR, the jurisdiction of the AO, NMS, lay with regard to non-filer assessees only, while the assessee had duly communicated the fact of his having filed his return of income for the impugned year. This fact, we find, stands corroborated by the contents of the reasons itself which note that the ITO, Ward-4, who had jurisdiction in the NMS system, had noted in his sheet that the assessee had filed return for assessment year 2011-12 i.e. the impugned year. Therefore the AO, NMS, had no jurisdiction over the assessee and the assessee was therefore not required to give any explanation regarding the source of cash deposited to him. Therefore the fact of no explanation of the cash deposits being given by the assessee to ITO, Ward 4, was irrelevant for the formation of belief of escapement of income.
21. What transpires from the above facts therefore is that the AO only had information of cash deposits in the bank account of the assessee, which fact on its own, cannot lead to the belief of escapement of income. What is crucial and important for assuming the jurisdiction to reopen the case of an assessee u/s 147 of the Act is the "belief of the AO of the escapement of income". The mere fact that the cash is found deposited in the bank account may lead to a suspicion at best but it definitely cannot lead to belief of escapement of income. The cash deposit may be justified by the facts and figures revealed in the income tax return filed by the assessee. In any case there has to be more information in the possession of the AO to form belief that the cash deposits represent assesses own escaped income. In the present case we find that the AO has no categorical information in his ITA Nos.208/CHD/2021 & Ors. A.Ys.2018-19& Ors.
34possession either regarding the fact of return having been filed by the assessee nor any other information to the effect that the source of the cash deposits was unexplained. No inquiries were independently conducted by the AO regarding the source of cash deposits, which would have surely assisted in the formation of belief of escapement of income with regard to the same.
22. The reasons recorded therefore do not justify the assumption of jurisdiction by the AO to reopen the case of the assessee u/s 147 of the Act. The order passed u/s 147 of the Act therefore is clearly not a valid order in the eyes of law.
23. The collateral proceedings on the said order, u/s 263 of the Act, are therefore, we agree, not sustainable in law.
The order passed by the Ld.PCIT u/s 263 of the Act is accordingly set aside.
24. Before us arguments were made on the merits of the case also but since we have set aside the order passed by the Ld.PCIT allowing the legal ground raised by the assessee, the adjudication on merits is merely academic and is therefore not being dealt with by us.
25. The appeal of the assessee is allowed in above terms.
21. We have not referred to the other decisions cited by the learned Authorized Representative (Ld. AR) for the sake of brevity, as they pertain to the same issue. The learned Departmental Representative (Ld. DR) has also not brought to our notice any contrary judgment rendered either by any High Court or by the Hon'ble Supreme Court on the issue at hand. In the absence of any binding precedent to the contrary, we are bound to follow the decision of the coordinate Bench as relied upon by the Ld. AR.
22. Accordingly, we allowed the appeal of the assessee and struck down the order passed by the ld. PCIT u/s 263 of the Act.
ITA Nos.208/CHD/2021 & Ors.A.Ys.2018-19& Ors.
3523. The findings and observations as given in ITA No. 448/Chd/ is applied in ITA No. 449/Chd/ mutatis mutandis.
24. In the result, both the appeals are filed by the assessee are allowed.
O r d er p r o n o un ced o n 1 6 / 0 4 / 2 02 5 .
Sd/- Sd/- (KRINWANT SAHAY) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER "GP/Sr. PS"
आदेश क ितिलिप अ ेिषत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकरआयु / CIT
4. िवभागीय ितिनिध, आयकर अपीलीय आिधकरण, च डीगढ़/ DR, ITAT, CHANDIGARH
5. गाड फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar