Creative Dyeing & Printing Mills Pvt. Ltd., New Delhi V. ITO WARD - 6(4), New Delhi

ITA 4349/DEL/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0742 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-07-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 12-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; TDS
• Section: 147; 148; 143(3); 142(1); 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘SMC’ NEW DELHI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA No.4349/Del/2019 Assessment Year: 2010-11 M/s. Creative Dyeing & Printing Mills Pvt. Ltd., G-6, Vaikunth, 82-83, Nehru Place, New Delhi Vs. Income Tax Officer, Ward-6(4), New Delhi PAN :AABCC8332R (Appellant) (Respondent) ORDER This is an appeal by the assessee against order dated 29.03.2019 of learned Commissioner of Income Tax (Appeals)-2, New Delhi, for the assessment year 2010-11. 2. In ground nos. 1.1, 1.2 and 1.3, the assessee has challenged the validity of the assessment order passed under section 147/143(3) of the Income-tax Act, 1961 (in short ‘the Act’) due to non-service of notice under section 148 of the Act. Whereas, in ground no. 2.1, 2.2 and 2.3, the assessee has challenged the Appellant by Sh. M.P. Rastogi, Advocate Sh. P.N. Shastri, CA Respondent by Sh. Om Parkash, Sr. DR Date of hearing 18.07.2022 Date of pronouncement 14.10.2022 ITA No.4349/Del/2019 AY: 2010-11 2 | Page addition made of Rs.5,01,502/-, representing alleged contractual receipts. 3. Briefly the facts are, the assessee is a resident corporate entity. From the system of the Department, the Assessing Officer noticed that the assessee had received contractual receipts of Rs.13,78,973/- during the year under consideration. Alleging that the assessee had not filed any return of income for the impugned assessment year, the Assessing Officer formed a belief that the income representing the contractual receipts has escaped assessment. Accordingly, he reopened the assessment under section 147 of the Act by issuing a notice under section 148 of the Act on 29.03.2017. As alleged by the Assessing Officer, the assessee did not comply with the notice issued under section 148 of the Act. However, in response to a notice under section 142(1) of the Act subsequently, the assessee filed a letter stating that the return filed originally for the impugned assessment year on 23.09.2010 should be treated as return in response to the notice issued under section 142(1) of the Act. In course of assessment proceeding, though, the assessee furnished a copy of return of income and some other documents, however, the Assessing Officer observed that the documents furnished did not indicate ITA No.4349/Del/2019 AY: 2010-11 3 | Page that the assessee has offered the contract receipts of Rs.16,71,672/- to tax. Accordingly, he treated 30% of gross contract receipts as the income of the assessee and added back an amount of Rs.5,01,500/- to the income of the assessee. Against the assessment order so passed, the assessee preferred an appeal before learned Commissioner (Appeals), inter alia, on the ground that due to non-service of notice issued under section 148 of the Act, the assessment order is invalid. However, learned Commissioner (Appeals) did not find any merit, either in the grounds raised on the legal issue or even on merits. In nutshell, he dismissed assessee’s appeal. 4. Before me, learned counsel appearing for the assessee submitted that no notice under section 148 of the Act was ever served on the assessee. He submitted, though, from assessment year 2001 onwards the assessee had been filing its return of income showing the address as G-6, Vaikunth, 82-83, Nehru Place, New Delhi, however, the notice under section 148 of the Act was issued on a wrong address and was never served. Further, he submitted, even in the return of income filed for the impugned assessment year, the assessee had mentioned the very same address. Despite that the Assessing Officer issued the notice ITA No.4349/Del/2019 AY: 2010-11 4 | Page under section 148 of the Act on a wrong address, which was never served on the assessee. Thus, he submitted, in absence of proper service of notice under section 148 of the Act, initiation of proceeding under section 147 of the Act is vitiated. He submitted, for the impugned assessment year, the assessee had voluntarily filed its return of income under section 139(1) of the Act. He submitted, the assessment in case of the assessee was completed under section 143(3) of the Act prior to reopening of assessment for the impugned assessment year. Thus, he submitted, the allegation of the Assessing Officer that the assessee had not filed any return of income for the impugned assessment year is factually incorrect, hence, reveals complete non-application of mind while reopening the assessment. 5. As regards the merits of the issue, learned counsel submitted, the assessee has offered whatever contract receipts were received in the year under consideration. In this context, he drew our attention to TDS Certificates issued in Form 16A. Further, drawing our attention to the contract receipts referred to by the Assessing Officer appearing in phase-2 of the assessment order, learned counsel submitted, all the receipts are reflected in the books of account of the assessee. Thus, he submitted, on ITA No.4349/Del/2019 AY: 2010-11 5 | Page merits also, the addition cannot be sustained as the income from contract receipts have already been offered to tax in the original return of income. 6. Learned Departmental Representative relied upon the observations of the Assessing Officer and learned Commissioner (Appeals). 7. I have considered rival submissions and perused the materials on record. The first issue arising for consideration is the validity of the assessment order due to non-service of notice issued under section 148 of the Act. On a perusal of the observations made by learned Commissioner (Appeals) in paragraph 6.2 of the appellate order, it is very much clear that he has accepted the fact that the notice under section 148 was issued on a wrong address. It is observed from the materials placed before me that from assessment year 2001 onwards, the assessee had been filing its return of income mentioning the address as G-6, Vaikunth, 82-83, Nehru Place, New Delhi. Whereas, the Assessing Officer has issued notice under section 148 of the Act on a different address, namely, E-25A, Rajouri Garden, New Delhi. Thus, it is a fact on record that notice under section 148 of the Act was never served on the assessee due to ITA No.4349/Del/2019 AY: 2010-11 6 | Page issuance of notice on a wrong address. Further, the assessment order reveals that the Assessing Officer has reopened the assessment assuming that the assessee had not filed any return of income for the impugned assessment. This finding of the Assessing Officer is factually incorrect and contrary to the materials available on record. 8. As could be seen, for the impugned assessment year, the assessee filed its return of income under section 139(1) of the Act on 23.09.2010. In fact, the assessment in case of the assessee was completed under section 143(3) of the Act vide order dated ‘nil’ accepting income returned at Rs.93,98,648/-, a copy of which is placed at page 34 of the paper-book. Thus, reopening of assessment has been made based on complete non-application of mind to the facts and material available in the records of the Department. Proper service of notice under section 148 of the Act on the assessee is a sine qua non for initiating proceeding under section 147 of the Act, which is lacking in the present case. Therefore, it is a gross jurisdictional error committed by the Assessing Officer which cannot be wished away by taking recourse to section 292B of the Act. Therefore, the observations of ITA No.4349/Del/2019 AY: 2010-11 7 | Page learned Commissioner (Appeals) in this regard cannot be accepted. 9. In any case of the matter, when the assessee from assessment year 2001 onwards is filing its return of income mentioning a particular address, the Assessing Officer cannot remain oblivious to such factual position and issue notice under section 148 of the Act on a wrong address. Thus, due to non- service of notice under section 148 of the Act, the assessment proceeding is vitiated. For this reason alone, the assessment order deserves to be quashed. Accordingly, I do so. 10. Having held so, for the sake of completeness, I must observe, the assessee has a strong case on merits as well. As could be seen from the assessment order, the disputed addition has been made by the Assessing Officer by estimating profit on contract receipts allegedly not offered to tax by the assessee. However, from the facts and materials placed on record, it is observed that the contract receipts were not only reflected in the TDS certificates in Form 16A issued to the assessee, but were entered in the books of account of the assessee. In fact, in the return of income filed originally, the assessee has offered the contract receipts to tax. It seems, without taking note of the original return of income filed ITA No.4349/Del/2019 AY: 2010-11 8 | Page by the assessee, the Assessing Officer has proceeded to complete the present assessment by assuming that the contract receipts were never offered to tax. However, the aforesaid finding of the Assessing Officer is, evidently, contrary to facts and materials on record. Since, the assessee has offered the contract receipts to tax in the original return of income filed for the impugned assessment year, there is no reason to sustain the addition made by the Assessing Officer. Accordingly, I direct the Assessing Officer to delete the addition of Rs.5,01,500/-. Grounds are allowed. 10. In the result, the appeal is allowed. Order pronounced in the open court on 14 th October, 2022 Sd/- (SAKTIJIT DEY) JUDICIAL MEMBER Dated: 14 th October, 2022. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi