Delhi High Court
Pr.Commissioner Of Income Tax-08 vs Staunch Marketing Pvt. Ltd. on 28 April, 2015
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
8
+ ITA 935/2015
PR.COMMISSIONER OF INCOME TAX-08 ..... Appellant
Through: Mr. Sanjay Kumar and Mr. Dileep
Shivpuri, Advocates
versus
STAUNCH MARKETING PVT. LTD. ..... Respondent
Through: Mr. Ved Kumar Jain, Mr. Rano Jain
and Mr. Pranjal Srivastava,
Advocates
CORAM:
JUSTICE S. MURALIDHAR
JUSTICE CHANDER SHEKHAR
ORDER
% 28.04.2017
1. This appeal under Section 260A of the Income Tax Act, 1961 („Act‟) by
the Revenue is against the order dated 12th May, 2015 passed by the Income
Tax Appellate Tribunal („ITAT‟) in ITA No. 1643/Del/2008 for the
Assessment Year („AY‟) 2003-04.
2. While admitting this appeal by order dated 4 th September 2016, the
following question of law was framed:
"Whether the tribunal fell into error in holding that the assessment
for the concerned year was not effective because of lack of notice
under Section 143 (2) of the Income Tax Act in the given facts of
the case?"
3. The facts leading to the filing of the present appeal are that in the
assessment order passed by the Assessing Officer („AO‟) on 31st August,
2006, it was noted inter alia that on 19th September 2005, a notice under
Section 148 of the Act was issued requiring the Assessee to file a return of
income for AY 2003-04. After several notices were not responded to, a
show cause notice dated 23rd/24th January, 2006 was issued by the AO
stating that there was no option left but to proceed with the assessment ex
parte. However, a final opportunity was granted and a hearing was fixed for
27th January, 2006. On that date, the Director of the Assessee attended the
hearing and sought further time. The case was then adjourned to 31st
January, 2006.
4. Para 3.2 of the AO‟s order dated 31st August 2006 records the income tax
return was filed by the Assessee. It reads as under:
"3.2 An income-tax return form was submitted by the Assessee
which is placed on record.
The statement of income enclosed therein stated as under...."
5. Therefore, it is apparent that in the above proceedings the Assessee
appeared and submitted its return. In the said return, the Assessee noted
"Original filed vide Ack. No. 3680 Dt. 2/12/2003 Range-9". The AO,
however, did not find any evidence that the original return was filed as
claimed by the Assessee. According to the AO, despite several notices
thereafter and even after examining the return register, it could not be
established that any such return was filed by the Assessee. The AO then
proceeded to complete the assessment.
6. One question that was raised by the Assessee in the appeal before the
Commissioner of Income Tax (Appeals) [CIT) (A)] was whether the
assessment could have been completed without adequate opportunity being
granted to the Assessee. However, there was no specific ground urged that
notice under Section 143(2) of the Act should have been issued to the
Assessee.
7. By the order dated 17th February, 2008, the CIT (A) partly allowed the
appeal by deleting some of the additions made by the AO.
8. Aggrieved by the above order of the CIT(A), the Revenue filed ITA No.
1643/Del/2008. The Assessee also filed a cross-objection being C.O.
151/Del/2009. The said cross-objections were based on a solitary ground
viz., that the assessment order was bad in law since the statutory notice
under Section 143(2) of the Act was not issued.
9. The ITAT decided to take up the cross objections first since they went to
the root of the matter. Relying inter alia on the decision of the ITAT in
ITO v. Naseman Farms Pvt. Ltd. (ITA No.1175/Del/2011) which in turn
relied on the decision of the Supreme Court in ACIT v. Hotel Blue Moon
(2010) 321 ITR 362, the ITAT came to the conclusion that the assessment
order was void ab initio since notice under Section 143(2) was not issued
to the Assessee. Consequently the cross-objection of the Respondent
Assessee was allowed and the impugned assessment order of the AO was
cancelled. As a consequence the ITAT observed that the grounds raised by
the Revenue in its appeal had become infructuous. The Revenue's appeal
was therefore dismissed.
10. The present appeal by the Revenue is directed only against the
impugned order of the ITAT in so far as it rejected the Revenue's appeal
being ITA No. 1643/Del/2008. The Revenue has not challenged the
impugned order of the ITAT in so far as it has allowed the cross objections
of the Assessee and held the assessment order to be void.
11. Consequently, the question that has been urged by the revenue in the
present appeal and on which a question has been framed by the Court does
not in fact arise in the Revenue's appeal being ITA No. 1643/Del/2008
before the ITAT. It arose in the cross objections being C.O. 151/Del/2009
filed by the Assessee. The revenue has filed an appeal only against the
impugned order of the ITAT in so far as it has ordered the deletion of some
additions. There is no appeal by the Revenue against the impugned order of
the ITAT allowing the Respondent's cross objections. allows the cross
objections of the Assessee. As a result, the impugned order of the ITAT has
become final as regards the assessment order under Section 148 read with
Section 144 of the Act is concerned. Therefore, the question that has been
framed by the court does not arise in the present appeal filed by the
Revenue which only pertains to its corresponding appeal before the ITAT
being ITA 1643/Del/2008.
12. Once it is clear that the ITAT order allowing the Assessee's cross
objections and holding the assessment order to be bad in law has attained
finality, the question of entertaining of the present appeal of the Revenue
does not arise at all. This is for the simple reason that entire assessment
order has already been set aside by the ITAT as null and void. Therefore
nothing further remains.
13. Faced with this quandary, learned counsel for the Revenue sought to
urge that this court should somehow treat this appeal as also against the
allowing of Assessee‟s cross objections by the ITAT since after all the
entire order was before the Court. This submission is unable to be accepted
by the Court. In tax matters, it is very plain from reading the order of the
ITAT as to which portion of the impugned order deals with either the
appeal or the cross objections. The impugned order in the present appeal
leaves no manner of doubt that the ITAT in fact dealt with the only the
cross objections and allowed them. The failure by the Revenue to challenge
the order insofar as it allowed the Assessee‟s cross objection cannot be
characterized as a mere „mistake‟.
14. In any event, factually the Assessee filed a return pursuant to notice
issued under Section 148 of the Act, notwithstanding that it may not have
filed a return in the first place under Section 139 of the Act for the AY in
question. Once a return is filed notice under Section 143 (2) of the Act to
the Assessee is mandatory prior to framing an assessment. The question of
framing an assessment ex parte without even issuing a notice under Section
143(2) of the Act did not arise. The mandatory nature of that requirement is
settled not only by the decision of the Supreme Court in the case of ACIT v.
Hotel Blue Moon (supra) but also by a decision of this court in
Commissioner of Income Tax-08 v. Jai Shiv Shankar Traders Pvt. Ltd.
(2016) 388 ITR 448 Del.
15. For all the aforementioned reasons, the question framed does not arise
in the present appeal and is declined to be answered. In any event, the court
does not find any substantial question of law arise from the impugned order.
The appeal is, accordingly, dismissed.
S. MURALIDHAR, J
CHANDER SHEKHAR, J
APRIL 28, 2017
b
