ADITI INFRABUILD AND SERVICES LIMITED,DELHI V. DCIT CENTRAL CIRCLE 30, DELHI

ITA 726/DEL/2024

AI Insights

The case involves cross appeals by Aditi Infrabuild and Services Limited and the DCIT, Central Circle 30, against the order of the Commissioner of Income-tax (Appeals)-30, New Delhi, concerning the assessment year 2016-17. The primary issues revolved around the validity of the notice issued under section 143(2) and the subsequent additions made to the assessee's income. The Tribunal examined the procedural validity of the notice and the substantive issues related to the additions made by the Assessing Officer, which included disallowances based on alleged bogus subcontractors and understated receipts.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 31415 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-10-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 17-02-2024
• Other Referred Cases: SMC Comtrade Ltd. v. ACIT, Atul Projects India Private Limited Versus Union of India, Travel Designer India Pvt. Ltd. v. DCIT, Kunal Structure (India) (P) v. DCIT, RITE Developers v. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMISHA S. GUPT
• Assessee Lawyers: AMIT GOEL
• Keywords: Set aside; Invalid notice; Bogus purchase; Period of limitation; Validity of assessment; Time period of passing order; Bogus
• Section: 143(3); 142(1); 143(2); 139(1); 131; 133(6); 13; 139

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’, NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI YOGESH KUMAR U.S., JUDICIALMEMBER ITA No.726/DEL/2024 (Assessment Year : 2016-17) Aditi Infrabuild and Services Limited, vs. DCIT, Central Circle 30, M-122, First Floor, Left Side, Delhi. Jagatram Park, Laxmi Nagar, Vikas Marg, Delhi – 110 092. (PAN: AAECM7270K) ITA No.1557/DEL/2024 (Assessment Year : 2016-17) DCIT, Central Circle 30, vs, Aditi Infrabuild and Services Limited, Delhi. M-122, First Floor, Left Side, Jagatram Park, Laxmi Nagar, Vikas Marg, Delhi – 110 092. (PAN: AAECM7270K) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Amit Goel, CA Shri Pranav Yadav, Advocate REVENUE BY : Ms. Amisha S. Gupt, CIT DR Date of Hearing : 24.10.2024 Date of Order : 04.12.2024 O R D E R 2 ITA No.726/Del/2024 ITA No.1557/Del/2024 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 Urban District, Karnataka is for Rs.18,07,50,932/- whereas assessee has sub-contracted the said work to 17 parties for total amount of Rs.21,37,36,472/-. He observed that even assessee managed to execute the work order without any escalation or additional cost, it will lose Rs.3,29,85,540/- on the abovesaid contract. He observed various abnormal features in the result declared by the assessee and in order to investigate, 3 ITA No.726/Del/2024 ITA No.1557/Del/2024 further summons u/s 131 of the Act were issued to several sub-contractors and service of summons were reproduced in the assessment order at pages 5 & 6. The AO observed that out of 17 sub-contractors, 16 were not found at the addresses given by the assessee. The assessee was show-caused as to explain and asked to produce sub-contractors before him. Since assessee has not produced any sub-contractors and also not submitted various documents to satisfy the AO, the AO proceeded to disallow the total expenses claimed by the assessee of Rs.21.37 crores. 5. Further he observed that in respect to notice u/s 133(6) of the Act, Distribution Logistics Infrastructure Pvt. Ltd. (DLI) has furnished ledger account of the assessee as appearing in their books of account. The credit entries in the ledger account furnished by them are reproduced by the AO at pages 13 to 15 of the order as per which DLI has credited the assessee an amount of Rs.24,29,18,766/- whereas the assessee has only shown the original contracted amount of Rs.18,07,50,932/-. Since he noticed that there is a difference of Rs.6.21 crores, he came to the conclusion that assessee has under-stated its receipts on contract with DLI of Rs.6,21,67,854/-. Accordingly, he proceeded to make the addition as undisclosed income. 6. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A) and ld. CIT (A) considered the detailed submissions made by the 4 ITA No.726/Del/2024 ITA No.1557/Del/2024 assessee, which is reproduced by the ld. CIT (A) in his order. In view of the above submissions, the assessee has raised the ground of in-proper notice issued u/s 143 (2) of the Act and also additions made by the AO. After considering the detailed submissions of the assessee, ld. CIT (A) decided the jurisdictional issue raised by the assessee u/s 143(2) against the assessee by observing as under :- “10.4 From the simple reading of the provisions, it is clear that notice u/s. 143(2) can be issued at any time before the expiry 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 has claimed transportation/logistic charges 5 ITA No.726/Del/2024 ITA No.1557/Del/2024 separately under the sub-head operational cost which was amounting to Rs.22,36,82,899/-. 11.5 The appellant submitted following details of receipts and expenditure on account of transportation services (paper book page No.53). ADITI INFRABUILD AND SERVICES LIMITED DETAILS OF TRANSPORTATION AND LOGISTIC CHARGES PAID Sr.No. Name Address PAN No. Amount 1 Shri Krishan Grit Co. 521, Ring Road Mall, Delhi AASPG7488G 12,241,968.00 2 Distribution Logistics Infrasturcure Pvt. Ltd. #484, Laxmi Arcade, 2nd Floor, 27th Main, 17th Cross, HSR Layout, Sec.II, Bangalore AABCV7123P 180,750,932.00 3. Ambit Logistics Pvt.Ltd. Door No.06, 3rd Main, 8th Cross, Venkatapura, Kormangala, Bangalre AABCM3828L 35,158,504.00 Total 228,151,404.00 ADITI INFRABUILD AND SERVICES LIMITED DETAILS OF TRANSPORTATION AND LOGISTIC CHARGES PAID Sr.No. Particulars Amount 1. Freight & Cartage for Material Purchase 3,046,402 2. Transportation Charges (Subcontractor) 213,736,472 3. Toll Expenses for Material through own Vehicle 4,538,908 4. Transportation Charges for Bitumen Material 799,659 5. Transportation Charges for Aggregate Materila Supply at Site 1,561,457 Total 223,682,898 11.6 The Assessing Officer made detailed enquiries in respect of transportation charges claimed to have been incurred by the appellant by payment to 17 sub-contractors. AO found that none of the parties except one was available at the given addresses. These parties did not respond to the notices u/s. 133(6) and summons issued to them. The outcome of physical enquiries conducted by the Assessing Officer in respect of these parties was against the appellant. On careful examination of facts of the case, I find that the appellant failed to establish the genuineness of the transactions with 17 subcontractors against whom expenditure of Rs 21.37 crores were booked as 6 ITA No.726/Del/2024 ITA No.1557/Del/2024 transportation charges. I concur with the findings of the AO that these parties are bogus and bills raised by them were bogs Mils. 11.7 It is however, observed that the appellant has declared revenue amounting to Rs.21.59 crores on account of transportation and logistics services provided to M/s DLI and M/s Ambit which are supported by the written contracts and confirmation by the parties. The Assessing Officer has not doubted the receipts and the transportation services having been provided by the appellant to these parties. 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 contention of the appellant. Accordingly, I find that the allegation of the AO in the assessment order that the transportation expenses with respect to transportation services have been claimed under other heads of expenses is unsupported by any evidence and is presumptive in nature. The disallowance of 100% transportation charges on the ground 7 ITA No.726/Del/2024 ITA No.1557/Del/2024 that the sub-contractors were found to be bogus is too harsh. At the same time, I also find that the GP of 1% shown by the appellant is too little and devoid of commercial sense. The appellant has definitely suppressed its income by resorting to bogus bills. The issue of bogus purchases and estimation of suppression of profit through such purchases have been much discussed and debated by the various courts. In many judicial pronouncements on the issue, the courts have taken a view that in the case of bogus bills/unverifiable purchases, only part of such purchases can be disallowed, particularly in cases where corresponding sales has not been doubted. Alternatively, the profit embedded in such sales against the alleged bogus purchases can only be brought to tax. …………. 11.8 On a careful consideration of the entire relevant facts as discussed above and the judicial precedents available to me, I am of the opinion that it would be just and proper to restrict the addition on account of inflated / bogus purchases to Rs. 2,67,17,059/- being 12.5% of purchases made from bogus suppliers, which can alternatively be treated as undisclosed profit embedded in such sales against the alleged bogus purchases. Accordingly, addition to extent of Rs. 2,67,17,059/- is confirmed and remaining addition of Rs. 18,70,19,413/- is deleted.” 8. With regard to addition of Rs.6.25 crores, ld. CIT (A) has deleted the addition with the following observations :- “12.3 On perusal of the job work receipts for the relevant A.Y. submitted by the appellant party wise (page No.54 of the paper book), it has been noted that the amount of Rs.5,72,30,524j- which is a matter of dispute in this ground of appeal has been accounted for by the appellant in its gross receipts credited in the P&L. This amount is credited under the sub head job works 8 ITA No.726/Del/2024 ITA No.1557/Del/2024 receipts. Therefore, the finding of the Assessing Officer that the amount of Rs 6,21,67,854 which included service tax of Rs. Rs.49,37,330 received from M/s. DLI was not offered to tax is factually wrong. The Assessing Officer did not 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 holding so.” “Revenue’s Appeal (ITA No. 1557/Del/2024) 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in partially allowing the appeal of asses see partially without considering the facts and circumstance of this case. 9 ITA No.726/Del/2024 ITA No.1557/Del/2024 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs.18,70,19,413/- (out of total addition of Rs. 21,37,36,472) being 12.5% of purchases made from bogus suppliers. 3. The Ld.CIT(A) has ignored the finding of AO during assessment proceedings wherein the parties said to be bogus, did not respond to the notices issued by the Assessing Officer. 4. The Ld.CIT(A) has ignored that the Summon u/s 131 was issued to all the parties asking them to appear before the undersigned and the following details were called for. The summons were issued through e-mail as well as the Inspectors were also deputed to serve the summons on the above mentioned subcontractors. However, only one out of these 17 parties were found at these premises and summons could be served only on one of the party i.e. Shyam Lal, Proprietor of S P Enterprises. Out of the 17 sub-contractors, 16 were not found at the addresses given by the assessee. 5. The Ld.CTT(A) has ignored the finding of AO during assessment proceedings wherein the assessee failed to produce even a single party out of the 17 persons and in fact assessee also failed prove that the entire transactions was not a sham created by the assessee to book bogus expenses in order to reduce the taxable income. 6. The order of Ld. CIT(A) is erroneous and is not tenable on facts and in law. 7. The grounds of appeal are without prejudice to each other.” 10. At the time of hearing, ld. AR for the assessee with regard to ground no.1 submitted as under :- 10 ITA No.726/Del/2024 ITA No.1557/Del/2024 “The CIT(A) has erred in confirming the addition to the extent of 12.5%. The addition made by the assessing officer is erroneous and, in any case, very high. The overall Net Profit of the company for the year was 0.28% whereas in the impugned transaction, the profit declared was 1% S. No. Particulars Sales/Reven ue (In Rs.) Profit (In Rs.) Net Profit Ratio 1. Total Sales/Revenue 116.29 crore 33.54 Lakh 0.28% 2. Impugned Transaction 21.59 crore 22 Lakh 1% 3. Other than Impugned Transaction 94.7 crore 11.54 Lakh 0.12% From the above, it is evident that the CIT(A) was not justified in applying Profit 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. 11 ITA No.726/Del/2024 ITA No.1557/Del/2024 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 return was found to be defective by the assessing officer and defects were removed and rectified return was filed on 12/07/2017. According to the CIT(A), the notice u/s 143(2) could have been issued upto 30/09/2018, (when reckoned from the rectified return) and, therefore, according to CIT(A), the notice u/s 143(2) issued on 23/08/2018 was valid. 7. Thus, the issue for consideration, is whether the time limit for issue of notice u/s 143(2) is to be reckoned from the date of original return or the rectified return u/s 139(9). 8. The issue is no more res-integra. It is a settled law the once the defects are removed, the same would relate back to the original date of filing of return of income and time limit for issue of notice u/s 143(2) has to be reckoned from the date of furnishing of original return of income. 9. He relied on the following case laws :- (i) SMC Comtrade Ltd. v. ACIT [WP (c) 11875/2018) vide decision dated 09/10/2023; (ii) Hon’ble Bombay High Court in the case of Atul Projects India Private Limited Versus Union of India (2020) 442 ITR 478 (Bombay High Court); (iii) Hon’ble Gujarat High Court in the case of Travel Designer India Pvt. Ltd. v. DCIT (2019) (10) TMI 1583; (iv) Kunal Structure (India) (P) v. DCIT 2020 (2) TMI 725; (v) RITE Developers v. DCIT (2021) (11) TMI 914 – ITAT Mumbai.” 12. On the other hand, ld. DR for the Revenue submitted that all the sub- contractors were found to be bogus contractors and except one, 16 sub- 12 ITA No.726/Del/2024 ITA No.1557/Del/2024 contractors were found to be not existent at the addresses provided by the assessee. Therefore, notices issued u/s 133(6) were returned unserved. It clearly shows that the assessee has claimed bogus expenditure. Ld. DR objected to the findings of the ld. CIT (A) that this contract payment was already included in the gross receipts recorded by the assessee and he held that the contracts were actually executed. She submitted that the assessee has not provided any material to prove the genuineness of the transaction. However, she objected to the findings of the ld. CIT (A) who restricted the additions to the extent of Rs.2.67 crores and treated the same as business transaction and sustained the addition @ 12.5%. She prayed that findings of the AO may be sustained. With regard to ground no.2 raised by the assessee, she relied on the findings of the ld. CIT(A) and she brought to our notice the factual matrix on the issue of 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 13 ITA No.726/Del/2024 ITA No.1557/Del/2024 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 reckoned from the date of original return rather finally rectified u/s 139 (9) of the Act. We observed that exact similar issue was considered by the Hon’ble jurisdictional High Court in the case of SMC Comtrade Ltd. vs. ACIT (supra) and they considered the exact similar jurisdictional issue as under :- “9. Significantly, the AO took up the original ROI filed on 14.10.2016 for processing on 22.11.2017, after the defects were removed. Therefore, the AO considered the error-free ROI as the return that was required to be processed. 10. Thus, the submission advanced on behalf of the petitioner/assessee, that the return date relates back to the date on which the original ROI was filed seems to have been the yardstick that the AO applied in the instant case. The petitioner’s plea, in this behalf, is supported by the decision taken by the High Court of Punjab and Haryana in Sohan Lal Chhajjan Mal case. The relevant observations made by the court read as follows: 14 ITA No.726/Del/2024 ITA No.1557/Del/2024 “5. A perusal of the aforementioned provision makes it evident that when the return of income furnished by the assessee is defective then the Assessing Officer is to intimate the defect to the assessee, afford him an opportunity to rectify the defect within a period of 15 days from the date of such intimation or within such further period which the Assessing Officer may in his discretion allow. If the defect is rectified then the return is to be considered as valid. The Explanation appended to sub-section (9) of section 139 of the Act clarifies that a return of income would be regarded as defective if the annexures, statements and columns in the return concerning computation of income, etc., are not fulfilled or copies of the audited or otherwise profit or loss account have not been attached as required by clauses (e) and (f) of the Explanation. In other words, the statutory provision clearly envisages that in cases where profit and loss account and balance-sheet are not accompanying the return of income, it would be regarded as defective in contradistinction to invalid return. A defective return, therefore, cannot be regarded as invalid return ipso facto. It may assume the character of invalid return if the defect after due notice has not been removed by the assessee. The question is not res integra and fell for consideration of a Division Bench of the Calcutta High Court in the case of CIT v. Bharat Refineries 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 15 ITA No.726/Del/2024 ITA No.1557/Del/2024 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 respectful agreement with the view taken by the Division Bench of the Calcutta High Court in the case of Bharat Refineries Ltd., [1986] 162 ITR 652; which has been correctly followed and applied by the Tribunal. The finding recorded by the Tribunal in the instant case that the return was defective in contradistinction to be invalid must be regarded as a question of fact. Moreover, the absence of profit and loss account and balance-sheet from the return is itself has been considered by clause (e) of the Explanation appended to sub-section (9) of section 139 of the Act. Therefore, it cannot be concluded that the return, in fact, was filed on the day when the defect was removed, i.e., on January 3, 1992. The date of filing the return would not change a fortiori. It follows that the period of limitation for issuance of notice under section 143(2) of the Act could be issued only within a period of six months (as prevailing at the relevant time, i.e., the assessment year 1989-90). 7. In view of the above, both the questions are answered against the Revenue and in favour of the assessee.” 11. Concededly, as noted above, the SLP filed against the said judgment of the High Court of Punjab and Haryana was dismissed, not only on the technicality of limitation but also on merits via order dated 21.07.2008. 12. Therefore, by logical extension, if the date of the ROI originally filed on 14.10.2016 is taken into account, then, the impugned notices served on the petitioner/assessee would be 16 ITA No.726/Del/2024 ITA No.1557/Del/2024 time-barred, as the first proviso appended to Section 143(2) of the Act stipulated, at the relevant point in time, that the notice under the said Section could not have been served on the assessee, in this case, the petitioner, after the expiry of six (6) months from the end of the financial year in which the ROI is filed. For convenience, Section 143(2) and the first proviso appended to it [as amended by the Finance Act, 2016, with effect from 01.06.2016] is extracted hereafter: “(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, 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, shall serve on the assessee a notice requiring 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 :- 17 ITA No.726/Del/2024 ITA No.1557/Del/2024 “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 defects, which came to be removed on 07.07.2017, that is, within the time allowed by the Assessing Officer. Therefore, upon such defects being removed, the return would relate back to the date of filing of the original return, that is, 10.09.2016 and consequently, the limitation for issuance of notice under sub-section (2) of section 143 of the Act would be 30.09.2017, viz. six months from the end of the financial year in which the return under sub-section (1) of section 139 came to be filed. In the present case, it is an admitted position that the impugned notice under sub-section (2) of section 143 of the Act has been issued on 09.08.2018, which is much beyond the period of limitation for issuance of such notice as envisaged under that sub-section. The impugned notice, therefore, is clearly barred by limitation and cannot be sustained. 21. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned notice dated 09.08.2018 issued under sub-section (2) of section 143 of the Act and all proceedings taken pursuant thereto are hereby quashed and set aside. Rule is made absolute accordingly, with no order as to costs.” 15. Similarly, ITAT, Mumbai held in the case of Rite Developers vs. DCIT (supra) as under:- “Validity of assessment - limitation period to issue notice u/s 143(2) - whether the limitation period commences from the date of the actual filing of RoI or rectified RoI. - HELD THAT:- CIT(A) rejected the assessee’s contention and observed that the proviso to section 143(2) allows the AO to issue the notice before the expiry of six months from the end of financial year in which the return is furnished. He interpreted the words “end of 18 ITA No.726/Del/2024 ITA No.1557/Del/2024 financial year in which the return is furnished” to mean that the limitation period given in the Act will extend from the date of actual filing the RoI. He interpreted the provision to mean the limitation period commences from the date of the actual filing of RoI or rectified RoI. The assessment procedure laid down in the Act are based on the respective financial year and assessment year. The responsibilities of assessee as well as AO are clearly specified in the Act so that the assessment can be completed for the respective AY’s as per the time frame given in section 153(1). The words used in section 153(1) are “any time after expiry of 21months from the end of the AY in which the income was first 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 19 ITA No.726/Del/2024 ITA No.1557/Del/2024 financial year and assessment year. When the AO considered the return of income after rectification for the purpose of initiation of assessment proceedings, the relevant date for initiation of proceedings, dates back to original date of return of income, therefore the time limit for issue of notice u/s 143(2) has to be considered for date of filing of original return of income. Respectfully following the decision of Hon’ble Delhi High Court, we are inclined to treat the notice issued u/s 143(2) as invalid notice. Accordingly, further proceedings initiated with invalid notice are bad in law. Therefore, assessment order passed on the basis of invalid notice is also bad in law and accordingly quashed. 17. Other issues raised by the assessee and Revenue are academic in nature, therefore, they are not adjudicated at this stage. 18. In the result, the appeal of the assessee is allowed and the appeal of the Revenue is dismissed. Order pronounced in the open court on this 4th day of December, 2024. Sd/- sd/- (YOGESH KUMAR U.S.) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 04.12.2024 TS 20 ITA No.726/Del/2024 ITA No.1557/Del/2024 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals)-26, New Delhi. 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "