JCIT(OSD)-14(1)(1), MUMBAI V. MAHARASHTRA STATE ELECTRICITY TRANSMISSION CO. LTD., MUMBAI

ITA 2092/MUM/2025

AI Insights

The case involves the Maharashtra State Electricity Transmission Co. Ltd., which was assessed for the year 2009-10. The original assessment was contested, leading to a reassessment under Section 148 of the Income Tax Act, 1961. The reassessment was challenged on the grounds of non-service of the notice under Section 148. The Commissioner of Income Tax (Appeals) found the reassessment to be void due to the absence of proof of service of the notice, a decision which was upheld by the Tribunal. The revenue's appeal to the Tribunal argued that the legal ground of non-service was raised too late, but this was countered by the assessee's representative, who argued that the ground was raised at the earliest opportunity.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705416 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: misc
• Other Referred Cases: M/s Novartis India Ltd ITA No. 6832/MUM/2010, P.N. Sasikumar vs CIT(1998) 170 ITR 80 (Ker.), R K Upadhyaya Vs. Shanabhai P. Patel, (1987) 33 Taxmann.com 226
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V. J. ASRANI; SATYAPRAKASH R.SINGH
• Keywords: Set aside; Revised return; Depreciation; Additional depreciation; Period of limitation; Principle of natural justice; Assessment record
• Section: 148; 144; 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No. 2092/Mum/2025 (Assessment Year: 2009-10) DCIT-14(1)(1), Mumbai Vs. M/s. Maharashtra State Electricity Transmission Co. Ltd. Plot No. C-19, E Block Prakashganga, Bandra Kurla Complex, Bandra, East, Mumbai – 400 020. PAN/GIR No. AAECM2936N (Appellant) : (Respondent) Assessee by : Shri V. J. Asrani Respondent by : Shri Satyaprakash R. Singh SR DR Date of Hearing : 26.06.2025 Date of Pronouncement : 03.07.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the revenue, challenging the order of the learned Commissioner of Income Tax (Appeals) Delhi (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2009-10. 2. The revenue has raised the following grounds of appeal: “1. Whether on the facts and circumstances of the case and in law the Ld.CIT(A) erred in quashing the order passed by the Assessing Officer on legal basis instead of discussing the case on merits. ITA No. 2092/Mum/2025 (A.Y. 2009-10) Maharashtra State Electricity Transmission Co. Ltd. 2 2. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) erred in not appreciating the fact that there were inadvertent delay on his behalf to remand the matter to the file of Assessing Officer. 3. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) erred in not appreciating the fact that in the case M/s Novartis India Ltd ITA No. 6832/MUM/2010 (A.Y. 2002-03), on identical issue, the Hon'ble ITAT has rejected the contention of the assessee as there were inadvertent delay of raising the ground.” 3. Brief facts of the case are that the assessee company is engaged in the business of Electricity Transmission in the state of Maharashtra and had filed its return of income dated 29.09.2009, declaring total income at Rs. 5,38,58,02,602/- and has filed revised return dated 27.03.2010, declaring total income at Rs. 3,92,85,08,611/- and the same was processed u/s. 143(1) of the Act. The assessee’s case was selected for scrutiny and assessment u/s. 143(3) of the Act was passed on 30.12.2011, where the ld. AO determined the total income at Rs. 4,67,18,27,460/-. 4. The assessee was in appeal before the first appellate authority, who had disposed off the appeal filed by the assessee vide an order dated 26.08.2013. It is observed that the assessee’s case was subsequently reopened vide notice u/s. 148, dated 19.03.2013 for the following reasons: “1. It was seen from the notes to account – 3(b), 3(c) and 3(k) that assessee had changed its accounting policy of capitalizing Head Office expenses, General Establishment Expenses and Interest to Capital work in Progress and fixed asset on an ad-hoc predetermined percentage basis to actual expenditure incurred falling in line with applicable accounting standard. Accordingly, assesseе withdrew an amount of Rs.309, 11,43, 194 from fixed assets which was earlier capitalized and debited it to profit and loss account. As these expenses pertains to prior period, expenses of Rs.309,11,43,194 debited in the profit and loss account need to be disallowed. It is to be mentioned that assessee had not withdrawn any such amount from fixed asset schedule prepared for income tax purpose for claiming depreciation. 2. It was seen from the revised computation of income that assessee claimed a deduction of Rs.2,52,33,071/- on account of profit on sale of fixed asset. However, it was seen from ITA No. 2092/Mum/2025 (A.Y. 2009-10) Maharashtra State Electricity Transmission Co. Ltd. 3 the schedule of fixed asset prepared for income tax purpose that no asset was shown as deducted from the written down value. The only deduction that was shown in the schedule was pertaining to migration effect i.e. non deduction of government grants and consumer contributions from the assets capitalized in earlier years. As no adjustment was made in the schedule of fixed assets, it appears that assessee had availed depreciation on the asset sold. In view of this, the correct claim of depreciation needs to be checked.\" 5. The assessee has failed to respond to the notice u/s. 148 of the Act and the ld. AO then passed the assessment order dated 30.03.2014, u/s. 144 r.w.s. 147 of the Act being the best judgement assessment determining total income at Rs. 776,67,55,614/- after making addition of Rs. 309,11,43,194/- towards the prior period expenses and disallowance of excess depreciation amounting to Rs. 37,84,960/-. 6. Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 27.01.2025, allowed the appeal filed by the assessee on the legal ground that notice u/s. 148 of the Act was not served upon the assessee, thereby holding the assessment order passed u/s. 144 r.w.s. 147 of the Act to be void ab initio and bad in law. 7. Aggrieved by the said order, the revenue is in appeal before us, challenging the order of the ld. CIT(A). 8. The learned Departmental Representative ('ld. DR' for short) for the revenue contended that the assessee has raised the legal ground of non-issuance of notice u/s. 148 before the ld. CIT(A) for the first time and due to the restructuring in the income tax department, where there was transfer of case from one charge to another which involved movement of records, the assessee’s case records could not be traced due to lapse of considerable amount of time. The ld. DR further contended that the ld. AO has stated in the assessment order that notice u/s. 148 dated 19.03.2013 was served upon the ITA No. 2092/Mum/2025 (A.Y. 2009-10) Maharashtra State Electricity Transmission Co. Ltd. 4 assessee the proof of service could not be accessed as the relevant assessment year 2009-10. The ld. DR relied on the decision of the Tribunal in the case of M/s Novartis India Ltd ITA No. 6832/MUM/2010 were the legal ground raised by the assessee was rejected due to prolonged delay in raising such legal grounds. The ld. DR relied on the assessment order. 9. The learned Authorised Representative ('ld. AR' for short) for the assessee on the other hand controverted the said fact and stated that the assessee has raised the legal ground well before the ld. CIT(A) in the appeal filed by the assessee which was on 01.05.2014, were the assessment order u/s. 144 r.w.s. 147 was passed on 30.03.2014. The ld. AR stated that there was no lapse of time in assessee’s case and the legal ground was raised at the first instance when the assessee was brought to knowledge the passing of the assessment order. The ld. AR distinguished the facts of the case relied upon by the ld. AR in M/s Novartis India Ltd (supra), were the jurisdictional issue was not raised neither before the ld. AO nor before the ld. CIT(A) and the Tribunal in the said case applied the principles of estoppel of latches where there was inordinate delay of 16 years. The ld. AR distinguished the facts of the present case with the facts of M/s Novartis India Ltd (supra). The ld. AR relied on the order of the ld. CIT(A) and submitted that the ld. CIT(A) has rightly quashed the assessment order after duly considering the submissions and the legal propositions laid down by the various Courts. 10. We have heard the rival submissions and perused the materials available on record. The issue in hand that requires adjudication is whether the ld. CIT(A) has erred in quashing the assessment order on the legal ground that notice u/s. 148 was not served upon the ITA No. 2092/Mum/2025 (A.Y. 2009-10) Maharashtra State Electricity Transmission Co. Ltd. 5 assessee and whether or not the facts of the case in M/s Novartis India Ltd (supra), would be applicable in assessee’s case. It is observed that the assessee has not made compliance before the ld. AO who then passed the assessment order u/s. 144 being the best judgement assessment with the available material on record. The assessee before the ld. CIT(A) has challenged the assessment order by stating that the notice u/s. 148 has not been served upon the assessee. Though the assessee has also raised the grounds on the merits of the case towards the addition on prior period expenditure and the additional depreciation claimed by the assessee, the ld. CIT(A) had decided the same on the legal grounds, thereby quashing the assessment order to be null and void. The limited issue before us is only on the legal ground raised by the assessee and not on the addition made by the ld. AO and therefore, we restrict our finding only to the extent of the legal ground raised by the revenue. During the appellate proceeding, the ld. DR for the revenue fairly conceded to the fact that the proof of service of the notice u/s. 148 of the Act was not furnished by the department. Not only during the appellate proceeding before us but even during the first appellate authority, the ld. CIT(A) had granted several opportunities to the ld. AO to furnish details of the service of the notice where a remand report was also called for on several occasions which is specified herein under: A.Yr.2009-10 Sr. No. Date Compliance Date Remarks 1. 06-02-2023 17-02-2023 No reply filed 2. 20-02-2023 27-02-2023 No reply filed 3. 13-03-2023 20-03-2023 No reply filed ITA No. 2092/Mum/2025 (A.Y. 2009-10) Maharashtra State Electricity Transmission Co. Ltd. 6 4. 21-02-2024 08-03-2024 No reply filed 5. 12-12-2024 26-12-2024 No reply filed 11. On perusal of the same, it is observed that the ld. CIT(A) has directed the ld. AO to verify the assessment records and to provide proof of service of notice u/s. 148 as the same was also not reflecting in the ITBA portal. The ld. CIT(A) concluded that neither notice u/s. 148 nor Section 143(2) of the Act were served upon the assessee which being a mandatory requirement, has not been complied with by the ld. AO, thereby violating the principle of natural justice. The ld. CIT(A) held that the assumption of jurisdiction for reassessment was bad in law and therefore the consequential order was held to be void ad initio and liable to be quashed and set aside. The ld. CIT(A) has relied on the decision of Hon'ble High Court of Kerala in the case of P.N. Sasikumar vs CIT(1998) 170 ITR 80 (Ker.) relied upon by the assessee, where the Hon'ble High Court held that the violation of service of notice u/s. 148 is a fundamental infirmity and not mere irregularity which is not curable u/s. 292B of the Act and that the onus is upon the revenue to substantiate that the notice has not only been issued but has been served upon the assessee. The ld. CIT(A) also relied on the decision of the Hon'ble Apex Court in the case of R K Upadhyaya Vs. Shanabhai P. Patel, (1987) 33 Taxmann.com 226, wherein it was reiterated that the reassessment can be initiated only by service of the notice u/s. 148 of the Act. The said decision has also distinguished ‘the issue of notice’ and ‘service of notice’ as per the provisions of law and that the serv ice of notice u/s. 148(1) of the Act is a condition precedent for passing an assessment order which has to be issued within the prescribed period of limitation as per Section ITA No. 2092/Mum/2025 (A.Y. 2009-10) Maharashtra State Electricity Transmission Co. Ltd. 7 149 of the Act. There are also catena of decisions which has reiterated the said proposition of law. 12. From the above observations, we do not find any infirmity in the order of ld. CIT(A) in quashing the assessment order as null and void for the reason that notice u/s. 148 was not served upon the assessee. In the absence of proof of service of notice, it can be fairly presumed that the ld. AO has not issued the notice u/s. 148 mandated by the provisions of law as per any of the methods prescribed under law. We therefore find justification in dismissing the grounds of appeal raised by the revenue. 13. In the result, the appeal filed by the revenue is dismissed. Order pronounced in the open court on 03.07.2025 Sd/- Sd/- (VIKRAM SINGH YADAV) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 03.07.2025 Karishma J. Pawar (Stenographer) Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai "