Maestro Multi State Cooperative Group Housing Society Ltd, Delhi V. ITO, Ward-39(4), New Delhi

ITA 3871/DEL/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8792 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 23-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Unexplained cash credit; Permanent establishment; Question of law; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 142(1); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI N.S.SAINI, ACCOUNTANT M EMBER ITA NO.-3871-72/DEL/2018 (A. Y. : 2011-12, 2014-15) MAESTRRO MULTI STATE COOPERATIVE GROUP HOUSING SOCIETY LTD. DELHI C/O. RAVI GUPTA, ADV. E-6A, KAILASH COLONY, NEW DELHI PAN : AABAT7650F VS ITO, WARD-39(4), NEW DELHI ASSESSEE BY SHRI P.C.YADAV, ADV. REVENUE BY SHRI S.L.ANURAGI, SR. DR ORDER PER N.S.SAINI, ACCOUNTANT MEMBER : THESE TWO APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-13, NEW DEL HI DATED 06.04.2018 PERTAINING TO ASSESSMENT YEAR 2011-12, 2014-15 2. IN THIS APPEAL THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- ITA NO. 3871/DEL/2018 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE O RDER PASSED BY THE LD. CIT (APPEAL) IS BAD BOTH IN THE E YES OF LAW AND ON FACTS. 2. THAT THE ASSESSMENT ORDER DATED 14/12/2016 PASSED BY LD AO IS WITHOUT JURISDICTION AND VOID AB-INITIO AND I S LIABLE TO BE QUASHED, AS NO NOTICE UNDER SECTION 143(2) OF THE A CT WAS ISSUED. DATE OF HEARING 27.12.2018 DATE OF PRONOUNCEMENT 28.12.2018 2 ITA N O. 3871-72/DEL/2018 WITHOUT PREJUDICE TO THE ABOVE GROUNDS: 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. CIT(A) ERRED IN 'SUSTAINING REASSESSMENT U/ S 147 IN VIOLATION OF MANDATORY JURISDICTIONAL CONDITIONS ST IPULATED UNDER THE ACT. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. CIT(A) ERRED IN SUSTAINING REOPENING ACTION OF LD AO U/S 148 ON THE BASIS OF REASONS CONTRARY TO THE FAC TS OF THE CASE. 5. THAT THE LD. CIT (APPEAL) HAS ERRED ON FACTS AND I N LAW IN SUSTAINING REOPENING ACTION OF LD AO U/S 148 WHICH IS PURELY CHANGE OF OPINION. 6. THAT THE LD. CIT (APPEAL) HAS ERRED ON FACTS AND I N LAW IN CONFIRMING THE ADDITION OF RS. 3,34,108/- BY DISALL OWING THE EXEMPTIONS OF THE INTEREST ON THE BANK DEPOSITS CLA IMED BY THE APPELLANT IGNORING FACTS OF THE CASE AND SUBMIS SION MADE BY THE APPELLANT. 7. THAT THE LD. CIT (APPEAL) HAS ERRED ON FACTS AND I N LAW IN CONFIRMING THE ADDITION OF RS. 4,87,949/- BY DISALL OWING THE EXEMPTIONS OF THE INTEREST ON THE SAVING BANK ACCOU NT CLAIMED BY THE APPELLANT IGNORING FACTS OF THE CASE AND SUBMISSION MADE BY THE APPELLANT. 8. THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARY, IL LEGAL, BAD IN LAW AND IN VIOLATION OF RUDIMENTARY PRINCIPLES OF CONTEMPORARY JURISPRUDENCE. 9. THAT THE APPELLANT CRAVES LEAVE TO ADD/ALTER ANY/ A LL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE A PPEAL. ITA NO. 3872/DEL/2018 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE L D AO FAILED TO ISSUE NOTICE U/S 143(2) THE MANDATORY JURISDICTIONA L CONDITIONS 3 ITA N O. 3871-72/DEL/2018 STIPULATED UNDER THE ACT; 2. THAT THE ASSESSMENT ORDER DATED 14/12/2016 PASSED BY LD AO IS WITHOUT JURISDICTION AND VOID AB INITIO AND IS L IABLE TO BE QUASHED, AS NO NOTICE UNDER SECTION 143(2) OF THE A CT WAS ISSUED. WITHOUT PREJUDICE TO ABOVE GROUNDS: 3. THAT ON FACTS-AND CIRCUMSTANCES OF THE CASE, THE O RDER PASSED BY THE LD. CIT (APPEAL) IS BAD BOTH IN THE EYES OF LAW AND ON FACTS. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. CIT(A) ERRED IN SUSTAINING REASSESSMENT U/S 147 IN VIOLATION OF MANDATORY JURISDICTIONAL CONDITIONS STIPULATED U NDER THE ACT. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING AND DECIDIN G THE ALLOWABILITY OF EXPENDITURE OF THE APPELLANT FOR TH E CONCERNED ASSESSMENT YEAR AMOUNTING TO RS. 4,73,809/-, IGNORI NG FACTS OF THE CASE AND SUBMISSION MADE BY THE APPELLANT AND D ESPITE THE FACT THAT SAME WERE ALLOWED BY THE SAME LD AO IN TH E PRECEDING ASSESSMENT YEAR. 6. THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARY, IL LEGAL, BAD IN LAW AND IN VIOLATION OF RUDIMENTARY PRINCIPLES OF C ONTEMPORARV JURISPRUDENCE. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD/ALTER ANY/ A LL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPE AL. 3. AT THE TIME OF HEARING THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE SHRI P.C.YADAV, ADV. DID NOT PRESS GROUND NOS. 6,7,8 AND 9 OF THE APPEAL FOR A.Y . 2011- 12 AND GROUND NOS. 5,6,7 FOR A.Y. 2014-15 AND ALSO MADE ENDORSEMENT TO THIS EFFECT IN THE GROUNDS OF APPEAL FILED 4 ITA N O. 3871-72/DEL/2018 WITH THE APPEAL MEMO IN FORM NO. 36 THEREFORE, THES E GROUNDS OF APPEAL ARE DISMISSED FOR WANT OF PROSECU TION. 4. IN GROUND NOS. 1 TO 5 OF THE APPEAL FOR THE A.Y. 2011- 12 AND GROUND NOS. 1 TO 4 OF THE APPEAL FOR A.Y. 20 14-15 THE GRIEVANCE OF THE ASSESSEE IS THAT THE ASSESSING OFFICER HAS PASSED THE ORDERS U/S 147 OF THE ACT ON 14.12.2 016 BOTH DATED FOR ASSESSMENT YEARS 2011-12 AND 2014-15 . WITHOUT ISSUING NOTICE U/S 143(2) OF THE ACT AND HE NCE THE ASSESSMENT ORDERS ARE BAD IN LAW. 5. THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE, S HRI P.C.YADAV SUBMITTED THAT FROM THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2011-12 IT WILL BE OBSERVED FROM PA RA 1 OF THE ORDER THAT THE ASSESSING OFFICER HAS OBSERVED T HAT THE ASSESSEE HAS E-FILED THE RETURN OF INCOME FOR ASSES SMENT YEAR 2011-12 DECLARING NIL INCOME ON 29.09.2012. PROCEEDINGS U/S 148 OF THE INCOME TAX ACT WERE INIT IATED ON THE BASIS OF INFORMATION RECEIVED FROM ITO WARD-39( 1), NEW DELHI THAT THE ASSESSEE HAD WRONGLY CLAIMED EXEMPTI ON FOR INTEREST EARNED ON FIXED DEPOSIT AMOUNTING TO RS. 3,34,108/- AND INTEREST ON SAVING BANK AMOUNTING TO RS. 4,87,959/- BY APPLICATION OF THE PRINCIPLE OF MUTU ALITY. NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 WAS ACCO RDINGLY ISSUED TO THE ASSESSEE ON 18.03.2016. THEREAFTER, T HE ASSESSEE REQUESTED FOR REASONS FOR REOPENING OF THE ASSESSMENT VIDE LETTER DATED 17.06.2016. A CERTIFIE D COPY OF THE REASON WAS PROVIDED ON 17.06.2016 NOTICE U/S 14 2(1) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 31.08.2016 IN 5 ITA N O. 3871-72/DEL/2018 RESPONSE TO WHICH ASSESSEE VIDE LETTER DATED 14.09. 2016 FILED A COPY OF RETURN OF INCOME ORIGINALLY FILED O N 29.09.2012. 6. SIMILARLY, IN THE ASSESSMENT YEAR 2014-15, THE ASSESSING OFFICER OBSERVED HAS OBSERVED THAT THE AS SESSEE HAS E-FILED THE RETURN OF INCOME FOR ASSESSMENT YEA R 2014- 15 DECLARING NIL INCOME ON 24.09.2014. PROCEEDINGS U/S 148 OF THE INCOME TAX ACT WERE INITIATED ON THE BAS IS OF INFORMATION RECEIVED FROM ITO WARD-39(1), NEW DELHI THAT THE ASSESSEE HAD WRONGLY CLAIMED EXEMPTION ON INTER EST EARNED ON FIXED DEPOSIT AMOUNTING TO RS. 37,28,503/ - AND INTEREST ON SAVING BANK AMOUNTING TO RS. 3,81,630/- BY APPLICATION OF THE PRINCIPLE OF MUTUALITY. NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 WAS ACCORDINGLY ISSUED TO THE ASSESSEE ON 18.03.2016. THEREAFTER, THE ASSESSEE RE QUESTED FOR REASONS FOR REOPENING OF THE ASSESSMENT VIDE LE TTER DATED 17.06.2016. A CERTIFIED COPY OF THE REASON WAS PROV IDED ON 17.06.2016. NOTICE U/S 142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 31.08.2016 IN RESPONSE TO WHICH THE ASS ESSEE E-FILED ITS RETURN OF INCOME ON 13.09.2016 VIDE ACKNOWLEDGEMENT NO. 446117921130916 DECLARING AN INCOME OF RS. 36,36,320/-. 7. HENCE, IT WAS HIS SUBMISSION THAT IT WILL BE OBS ERVED FROM THE ASSESSMENT ORDERS FOR ASSESSMENT YEARS 201 1-12 AND 2014-15 THAT NO NOTICE U/S 143(2) OF THE ACT WA S ISSUED BY THE ASSESSING OFFICER BEFORE PASSING THE ORDER U/S 147 OF THE ACT AND HENCE THE ORDERS OF ASSESSMENT A RE BAD 6 ITA N O. 3871-72/DEL/2018 IN LAW AND ARE LIABLE TO BE CANCELLED. HE FURTHER S UBMITTED THAT OPPORTUNITY WAS PROVIDED TO THE REVENUE TO SUBSTANTIATE ITS CLAIM BY THE TRIBUNAL FOR ISSUE OF NOTICE U/S 143(2) OF THE ACT BY PRODUCING THE ASSESSMENT RECOR DS ON 04.10.2018 AND 13.12.2018 AND THE DEPARTMENT HAS FA ILED TO DO SO. THEREFORE, THE APPEALS OF THE ASSESSEE SH OULD BE ALLOWED BY CANCELLING THE REASSESSMENT ORDERS PASSE D BY THE AO FOR THE ASSESSMENT YEARS 2011-12 AND 2014-15 . HE ALSO SUBMITTED THAT HE WAS MAKING STATEMENT AT BAR TO THE EFFECT THAT NO NOTICE U/S 143(2) OF THE ACT WAS ISS UED TO THE ASSESSEE BEFORE PASSING THE REASSESSMENT ORDERS U/S 147 OF THE ACT AND THEREFORE THE REASSESSMENT ORDERS ARE L IABLE TO BE QUASHED. HE RELIED ON THE DECISION OF THE HONBL E DELHI HIGH COURT IN THE CASE OF PR.CIT VS. SHRI JAI SHANK AR TRADERS PVT. LTD. [2016] 383 ITR 448 (DEL) AND DEC ISION OF HONBLE DELHI COURT IN THE CASE OF ALPINE ELECTRONI CS ASIA PTE, LTD. VS. DIRECTOR GENERAL OF INCOME TAX AND O RS. [2012] 341 ITR 247 (DEL). 8. ON THE OTHER HAND THE DEPARTMENTAL REPRESENTATIV E SHRI S.L.ANURAGI, RELIED ON THE DECISIONS OF HONBL E DELHI HIGH COURT IN THE CASE OF CIT VS. MADHYA BHARAT ENE RGY CORPORATION LTD. [2012] 20 TAXMANN.COM 557 (DELHI) TO CONTEND THAT THE HONBLE DELHI HIGH COURT HAS HELD THAT NON-ISSUANCE OF NOTICE U/S 143(2) OF THE ACT ARE NO T AS PER THE SCHEME OF THE PROVISIONS OF SECTION 147 AND 148 OF THE ACT AND THEREFORE THE REASSESSMENT ORDER CANNOT BE SAID TO BE BAD IN LAW. 7 ITA N O. 3871-72/DEL/2018 9. IN THE REJOINDER TO THIS SUBMISSION OF THE LD. DEPARTMENTAL REPRESENTATIVE, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF SHRI JAI SHANKAR TR ADERS PVT. LTD. HAS DISTINGUISHED THE DECISION IN THE CA SE OF CIT VS. MADHYA ENERGY CORPORATION LTD. AND HELD THAT IS SUANCE OF NOTICE U/S 143(2) OF THE ACT WAS MANDATORY BEFOR E PASSING THE REASSESSMENT ORDER U/S 147 OF THE ACT. 10. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDER OF THE LOWER AUTHORITIES AND MATERIALS AVAILA BLE ON RECORD. IN THE INSTANT CASE THE CONTENTION OF THE A R OF THE ASSESSEE IS THAT REASSESSMENT ORDER U/S 147 OF THE ACT WAS PASSED BY THE ASSESSING OFFICER IN THE ASSESSMENT Y EAR 2011-12 AND 2014-15 ON 14.12.2016 WITHOUT ISSUING N OTICE U/S 143(2) OF THE ACT TO THE ASSESSEE AND THEREFORE THE REASSESSMENT ORDERS ARE BAD IN LAW AND LIABLE TO BE ANNULLED. FOR THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS RELIED ON THE DECISION OF THE DELHI HIGH COURT PR. CIT VS. SHRI JAI SHIV SHANKAR TRADERS PVT. LTD. (SUPRA) AND ALPINE ELECTRONICS ASIA PTE. LTD. VS. DIRECTOR GENE RAL OF INCOME TAX AND ORS. (SUPRA). THE DEPARTMENTAL REPRESENTATIVE HAS RELIED ON THE DECISION OF THE HO NBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MADHYA BHAR AT ENERGY CORPORATION LTD. (SUPRA). 11. IN THE REJOINDER THE AUTHORISED REPRESENTAIVE O F THE ASSESSEE CONTENDED THAT THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MADHYA BHARAT ENE RGY 8 ITA N O. 3871-72/DEL/2018 CORPORATION LTD. HAS BEEN CONSIDERED BY THE HONBLE DELHI HIGH COURT IN THE DECISION OF SHRI JAI SHANKAR TRAD ERS PVT. LTD(SUPRA)AND DISTINGUISHED AND THEREFORE THE REASS ESSMENT ORDER PASSED U/S 147 OF THE ACT WITHOUT ISSUANCE OF NOTICE U/S. 143(2) OF THE ACT IS BAD IN LAW AND HENCE LIAB LE TO BE CANCELLED. I HAVE ALSO OBSERVED FROM THE ORDER SHEE T ENTRIES DATED 04.10.2018 AND 13.12.2018 IN THE APPEAL FILE THAT THE TRIBUNAL HAD ALLOWED TWO OPPORTUNITIES TO THE REVEN UE TO CONTROVERT THE CONTENTION OF THE ASSESSEE BY PRODUC ING ASSESSMENT FOLDER THAT NO NOTICE U/S 143(2) OF THE ACT WAS ISSUED BEFORE PASSING THE REASSESSMENT ORDERS U/S 1 47 OF THE ACT. THE DEPARTMENT FAILED TO PRODUCE THE ASSES SMENT FOLDER BEFORE THE TRIBUNAL. 12. IN THE ABOVE BACKGROUND OF THE CASE, I FIND THA T THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. SHRI JAI SHANKAR TRADERS PVT. LTD HAS HELD AS UNDER : PURSUANT TO A SCRUTINY OF THE RETURN FILED BY THE ASSESSEE, THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 1 48 OF THE INCOME-TAX ACT, 1961AND ANOTHER NOTICE UNDER SECTIO N 143(2) REQUIRING FURTHER INFORMATION AND FIXING A D ATE FOR THE ASSESSEE TO APPEAR. THE NOTICES WERE NOT SERVED ON THE ASSESSEE. A FURTHER NOTICE UNDER SECTION 142(1) WAS ISSUED WITH A RETURNABLE DATE. ON THE RETURNABLE DATE THE ASSESSEES AUTHORISED REPRESENTATIVE GAVE A STATEME NT THAT THE ORIGINAL RETURN FILED SHOULD BE TREATED AS A RE TURN FILED PURSUANT TO THE NOTICE UNDER SECTION 148 . AN ASSES SMENT ORDER WAS PASSED MAKING AN ADDITION OF A SUM AS UNEXPLAINED CREDITS UNDER SECTION 68 . THE COMMISSI ONER 9 ITA N O. 3871-72/DEL/2018 (APPEALS) DISMISSED THE APPEAL OF THE ASSESSEE HOLD ING THAT SUFFICIENT OPPORTUNITY WAS PROVIDED THROUGH QUESTIO NNAIRES TO SUPPORT HIS RETURN BY DOCUMENTARY EVIDENCE AND T HAT NON ISSUANCE OF NOTICE UNDER SECTION 143(2) DID NOT INVALIDATE THE REASSESSMENT. THE ASSESSEES FURTHER APPEAL WAS ALLOWED BY THE TRIBUNAL HOLDING THAT THE ORDER OF REASSESSMENT WAS UNSUSTAINABLE AS A NOTICE WAS NOT ISSUED BY THE ASSESSING OFFICER BEFORE THE COMPLETION OF REASSESSMENT. ON APPEAL : HELD, DISMISSING THE APPEAL, THAT THERE WAS NO LEGA L INFIRMITY IN THE ORDER OF THE TRIBUNAL. SUBSEQUENT TO THE STATEMENT OF THE ASSESSEE ON THE RETURNABLE DATE TO TREAT THE ORIGINAL RETURN FILED AS A RETURN FILED PURSUAN T TO A NOTICE UNDER SECTION 148 , THE ASSESSING OFFICERS FAILURE TO ISSUE NOTICE UNDER SECTION 143(2) INVALIDATED THE O RDER OF REASSESSMENT. NO QUESTION OF LAW AROSE. CIT V. MADHYA BHARAT ENERGY CORPN. LTD. [2011] 337 ITR 389 (DELHI) AND CIT V. VISION INC. [2012] 73 DTR 201 (DELHI) DISTINGUISHED.CIT V. RAJEEV SHARMA [2011] 336 ITR 678 (ALL),CIT V. SALARPUR COLD STORAGE (P.) LTD. [2014] 50 TAXMANN.COM 105 (ALL) AND SAPTHAGIRI FINANCE AND INVESTMENTS V. ITO [2013] 90 DTR 289 (MAD) RELIED ON. 13. FURTHER THE DELHI HIGH COURT HAS IN THE CASE OF ALPINE ELECTRONICS ASIA PTE. LTD. VS. DIRECTOR GENERAL OF INCOME TAX AND ORS. HAS HELD AS UNDER : SECTION 143(2) OF THE INCOME-TAX ACT, 1961, IS APP LICABLE TO PROCEEDINGS UNDER SECTION 147 / 148 OF THE ACT.T HE PROVISO TO SECTION 148 OF THE ACT GRANTS LIBERTY TO THE 10 ITA NO. 3871-72/DEL/2018 REVENUE TO SERVE NOTICE UNDER SECTION 143(2) OF THE ACT BEFORE PASSING THE ASSESSMENT ORDER FOR RETURNS FUR NISHED ON OR BEFORE OCTOBER 1, 2005. IN RESPECT OF RETURNS FILED PURSUANT TO NOTICE UNDER SECTION 148 OF THE ACT AFT ER OCTOBER 1, 2005, IT IS MANDATORY TO SERVE NOTICE UN DER SECTION 143(2) OF THE ACT, WITHIN THE STIPULATED TI ME LIMIT. SECTION 292BB INCORPORATES THE PRINCIPLE OF ESTOPPE L. IT STIPULATES THAT AN ASSESSEE, WHO HAS APPEARED IN AN Y PROCEEDING AND COOPERATED IN ANY ENQUIRY RELATING T O ASSESSMENT OR REASSESSMENT SHALL BE DEEMED TO BE SE RVED WITH ANY NOTICE WHICH WAS REQUIRED TO BE SERVED AND WOULD BE PRECLUDED FROM OBJECTING THAT THE NOTICE WAS NOT SERVED UPON HIM OR WAS SERVED UPON HIM IN AN IMPROPER MANN ER OR WAS NOT SERVED UPON HIM IN TIME. HOWEVER, THE PR OVISO STATES THAT THE PRINCIPLE OF ESTOPPEL INCORPORATED IN THE MAIN SECTION WOULD NOT APPLY, IF THE ASSESSEE HAS R AISED OBJECTION IN REPLY TO THE NOTICE BEFORE COMPLETION OF ASSESSMENT OR REASSESSMENT. THE ORDER UNDER SECTION 144C IS A DRAFT ASSESSMENT ORDER. THE ASSESSEE HAS TO FILE OBJECTIONS TO THE DRAFT AS SESSMENT ORDER WITHIN THE STIPULATED TIME. AFTER OBJECTIONS ARE FILED, THE DISPUTE RESOLUTION PANEL HAS TO DECIDE THE OBJE CTIONS AND ISSUE NECESSARY DIRECTIONS TO ENABLE THE ASSESS ING OFFICER TO COMPLETE THE ASSESSMENT. THE DRAFT ORDER IS NOT THE FINAL ASSESSMENT ORDER AND DOES NOT RESULT IN COMPLETION OF ASSESSMENT. UNDER SUB-SECTION (2) TO SECTION 144C , THE ASSESSEE HAS A RIGHT TO ACCEPT, WITHIN 3 0 DAYS, THE DRAFT ASSESSMENT ORDER OR HAS THE RIGHT TO FILE OBJECTIONS WITH THE DISPUTE RESOLUTION PANEL AND TH E ASSESSING OFFICER. UNDER SECTION 144C(3) , THE ASSE SSING 11 ITA NO. 3871-72/DEL/2018 OFFICER SHALL COMPLETE ASSESSMENT PROCEEDINGS ON TH E BASIS OF THE DRAFT ORDER ONLY IF THE ASSESSEE FILES HIS A CCEPTANCE TO THE VARIATIONS OR IF NO OBJECTIONS ARE RECEIVED WITHIN 30 DAYS. IN CASE OBJECTIONS ARE FILED, THE ASSESSING O FFICER IS TO AWAIT DIRECTIONS OF THE DISPUTE RESOLUTION PANEL. S UBSECTION (5) STATES THAT THE DISPUTE RESOLUTION PANEL CAN IS SUE DIRECTIONS, AS IT THINKS FIT, FOR GUIDANCE OF THE A SSESSING OFFICER TO ENABLE HIM TO COMPLETE THE ASSESSMENT. S ECTION 144C(13) STIPULATES THAT THE DIRECTIONS ISSUED BY T HE DISPUTE RESOLUTION PANEL UNDER SUB-SECTION (5) WILL BE BINDING ON THE ASSESSING OFFICER AND THE ASSESSING OFFICER IN CONFORMITY OF THE SAID DIRECTIONS SHALL COMPLETE THE ASSESSMENT. ON FEBRUARY 27, 2009, THE PETITIONER, WITH A VIEW T O CLOSING ITS LIAISON OFFICE IN INDIA, APPLIED PURSUANT TO A DIRECTION OF THE RESERVE BANK OF INDIA, FOR A NO OBJECTION CERTI FICATE FROM THE INCOME-TAX DEPARTMENT. THE ASSISTANT DIREC TOR CALLED FOR VARIOUS DETAILS AND INFORMATION IN REPLY TO WHICH THE PETITIONER STATED THAT IT WAS ONLY MAINTAINING A LIAISON OFFICE AND WAS RECEIVING MONEY FROM ABROAD FOR MEET ING THE ADMINISTRATIVE EXPENSES AND IT WAS NOT AUTHORIS ED TO CARRY ON ANY BUSINESS ACTIVITY. FURTHER DETAILS ASK ED FOR WERE ALSO FURNISHED. THE PETITIONER FILED A WRIT PE TITION DURING THE PENDENCY OF WHICH THE ASSISTANT DIRECTOR ISSUED NOTICES UNDER SECTION 147 / 148 OF THE ACT, BUT THE Y WERE RECEIVED BACK UNDELIVERED AS THE PREMISES FROM WHER E THE LIAISON OFFICE WAS OPERATING WERE FOUND CLOSED. THE COURT DIRECTED SERVICES OF NOTICES ON THE CHARTERED ACCOU NTANT AUTHORISED TO APPEAR FOR THE PETITIONER AND ENTITLE D TO RECEIVE COMMUNICATIONS. THEREAFTER, NOTICES WERE SE RVED 12 ITA NO. 3871-72/DEL/2018 ON JULY 31, 2009 FOR REOPENING ASSESSMENTS FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 AND ON AUGUST 26, 2009 FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07. THE PETITIONER FILED A LETTER DATED NOVEMBER 19, 2009 S TATING THAT THE RETURNS OF INCOME FILED UNDER SECTION 139( 1) SHOULD BE TREATED AS FILED IN RESPONSE TO THE NOTICE UNDER SECTION 147 / 148 OF THE ACT. BY ORDER DATED JANUARY 28, 20 10, THE PETITIONER WAS ASKED TO FILE OBJECTIONS AND THE ASS ESSING OFFICER WAS ASKED TO PASS A REASONED ORDER AND PROC EED IN ACCORDANCE WITH LAW. THE PETITIONER FILED OBJECTION S ON JULY 13, 2010 AND JULY 19, 2010 TO THE REOPENING STATING THAT IT HAD NOT BEEN FURNISHED A COPY OF THE APPROVAL GRANT ED BY THE ADDITIONAL DIRECTOR UNDER SECTION 151 OF THE AC T. ON AUGUST 20, 2010, THE PETITIONER WAS FURNISHED THE O RDER DATED AUGUST 19, 2010 PASSED BY THE ASSESSING OFFIC ER REJECTING THE OBJECTIONS. IN THE DRAFT ASSESSMENT O RDER DATED AUGUST 19, 2010 PASSED UNDER SECTION 144C OF THE ACT, THE ASSESSING OFFICER ESTIMATED 20 PER CENT. O F THE SALES MADE IN INDIA DURING THE YEAR BY THE ASSESSEE AS REASONABLE ESTIMATE OF THE PROFITS MADE AND HOLDING THAT 50 PER CENT. OF SUCH PROFITS WERE ATTRIBUTABLE TO T HE ACTIVITIES OF THE PERMANENT ESTABLISHMENT IN INDIA HE PROPOSED TO RECOMPUTE THE ASSESSEES INCOME. NOTICE UNDER SECTION 143(2) OF THE ACT WAS SERVED ON NOVEMBER 23 , 2010. ON A WRIT PETITION CONTENDING THAT THIS WAS B EYOND THE PERIOD OF SIX MONTHS PRESCRIBED IN THE PROVISO TO SECTION 143(2)(II) : HELD, ALLOWING THE PETITION, THAT THE ASSESSING OFF ICER HAD EARLIER RECORDED DETAILED REASONS DATED JULY 17, 20 09 FOR THE ASSESSMENT YEAR 2003-04 AND 2004-05 FOR APPROVA L 13 ITA NO. 3871-72/DEL/2018 UNDER SECTION 151(2) BY THE ADDITIONAL COMMISSIONER . BY LETTER DATED JULY 17, 2009, THE ASSESSING OFFICER W AS ASKED TO REDRAFT THEM WITH SPECIFIC EMPHASIS ON THE MATER IAL ON RECORD, CONCLUSION DRAWN AND STATEMENT OF INCOME IN A MORE CRYSTALLIZED AND CONCISE FORM. IN THE REASONS TO BELIEVE, COMMON TO ALL THE ASSESSMENT YEARS, THE AS SESSING OFFICER HAS OBSERVED THAT THE LIAISON OFFICE IN IND IA WAS IN FACT A PERMANENT ESTABLISHMENT AS THE PETITIONER WA S INVOLVED IN ACTIVITIES WHICH WERE BEYOND THE SCOPE OF ANCILLARY ACTIVITIES. ON THE QUESTION OF THE QUANTU M OF INCOME WHICH HAD ESCAPED ASSESSMENT, THE ASSESSING OFFICER IN THE REASONS TO BELIEVE HAD RECORDED THAT THE INDIA LIAISON OFFICE SHOULD HAVE BEEN REMUNERATED AT ARM S LENGTH PRICE BY THE SINGAPORE HEAD OFFICE AT THE RATE OF C OST PLUS MARK UP. THE ASSESSING OFFICER BY ORDER DATED AUGUS T 19, 2010 REJECTED THE ASSESSEES OBJECTIONS HOLDING THA T ALL THE ASPECTS WERE REQUIRED TO BE EXAMINED AND DETERMINED AT THE TIME OF FINAL ASSESSMENT. ADMITTEDLY THE PETITI ONER HAD FILED RETURNS OF INCOME PURSUANT TO THE NOTICE UNDE R SECTION 147 / 148 BY LETTER DATED NOVEMBER 19, 2009 ADOPTIN G ITS EARLIER RETURNS UNDER SECTION 139(1) OF THE ACT AND THE NOTICE UNDER SECTION 143(2) WAS ISSUED ONLY ON NOVE MBER 23, 2010. THE FINAL ASSESSMENT ORDER HAD NOT BEEN P ASSED AND ONLY A DRAFT ASSESSMENT ORDER HAD BEEN PASSED. THE PROVISO TO SECTION 292BB WAS APPLICABLE. THE PRINCI PLE OF ESTOPPEL UNDER SECTION 292BB WOULD THEREFORE, NOT A PPLY. IN THESE CIRCUMSTANCES, THE ASSISTANT DIRECTOR COUL D NOT RELY UPON THE MAIN SECTION 292BB AND CLAIM THAT NOT ICE UNDER SECTION 143(2) WAS DEEMED TO BE SERVED WITHIN THE STIPULATED TIME. IN VIEW OF THIS POSITION, THERE WA S NO REASON WHY REASSESSMENT PROCEEDINGS SHOULD CONTINUE AS 14 ITA NO. 3871-72/DEL/2018 NO NOTICE UNDER SECTION 143(2) OF THE ACT WAS SERVE D ON THE ASSESSEE WITHIN THE STIPULATED TIME. THE ASSESSMENT PROCEEDINGS PURSUANT TO THE NOTICES UNDER SECTION 1 48 OF THE ACT WERE TO BE QUASHED AND THE ASSISTANT DIRECT OR WAS TO ISSUE A NO OBJECTION CERTIFICATE TO THE PETITI ONER AS REQUIRED BY THE RESERVE BANK OF INDIA. 14. RESPECTFULLY FOLLOWING ABOVE QUOTED DECISIONS O F THE DELHI HIGH COURT I HOLD THAT THE REASSESSMENT ORDERS DATED 14. 12.2016 FOR THE ASSESSMENT YEARS 2011-12 AND 2014-15 PASSED BY THE ASSESSING OFFICER WITHOUT ISSUING U/S 143(2) OF THE ACT ARE BAD IN LAW AND CONSEQUENTLY I CANCEL THE REASSESSMENT ORDERS AND ALLOW THE APPEALS OF THE ASSESSEE. 15. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DECEMBER, 2018 AT NEW DELHI. SD/- (N.S.SAINI) ACCOUNTANT MEMBER DATED: 28.12.2018 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR 15 ITA NO. 3871-72/DEL/2018 ITAT NEW DELHI DATE OF DICTATION 27.12.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27.12.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER .12.2018 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 28.12.2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 28.12.2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 28.12.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 28.12.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER