LAHANDA GOMARDA SAMABAY KRISHI UNNAYAN SAMITY LTD.,UTTAR DINAJPUR V. ITO WARD-2(4), RAIGANJ

ITA 131/KOL/2025

AI Insights

The case involves Lahanda Gomarda Samabay Krishi Unnayan Samity Ltd., the appellant, contesting an assessment order for the assessment year 2017-18 issued by the Income Tax Officer, Ward 2(4), the respondent. The primary legal contention raised was the invalidity of the notice issued under section 143(2) of the Income-tax Act, 1961, due to non-compliance with CBDT instructions regarding the format of such notices. The tribunal admitted the additional ground raised during the hearing, which was a legal issue concerning the notice's compliance with procedural requirements set by the CBDT. The tribunal's decision was influenced by precedents and instructions that mandate strict adherence to procedural norms in the issuance of notices under the Income-tax Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360826 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: Jute Corporation of India Ltd. Vs CIT, National Thermal Power Co. Ltd v. CIT, PCIT vs. Britannia Industries Ltd, Tapas Kumar Das Vs. ITO, Shib Nath Ghosh Vs. ITO
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAPIL MONDA
• Assessee Lawyers: SOUMITRA CHOUDHURY; PRANABESH SARKAR; ARS
• Keywords: Invalid notice; Bad and doubtful debts

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.131/KOL/2025 (Assessment Year: 2017-18) Lahanda Gomarda Samabay Krishi Unnayan Samity Ltd. Maharaja Hat, Lahanda, Dist. Uttar Dinajpur, West Bengal 733129 Vs. Income Tax Officer, Ward 2(4), IT Office, SBI Building, Karnojhora, Raiganj, West Dinajpur, West Bengal-733134 (Appellant) (Respondent) PAN No. AAAAL5359A Assessee by : Shri Soumitra Choudhury & Shri Pranabesh Sarkar, ARs Revenue by : Shri Kapil Monda, DR Date of hearing: 15.05.2025 Date of pronouncement : 19.05.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 19.06.2024 for the AY 2017-18. 02. At the outset, we observe from the appeal folder that there is a delay of 138 days in filing the appeal for which the condonation petition along with affidavit was filed, stating the reasons for delay in filing the appeal to be on account of non-receipt of notice issued by the appellate authority. It became known to the assessee only when the department asked the assessee to deposit the outstanding demand over telephone. The assessee enquired the status of the appeal in the appellate proceedings and only then the Chartered Accountant, who Page | 2 ITA No.131/KOL/2025 Lahanda Gomarda Samabay Krishi Unnayan Samity Ltd.; A.Y. 2017-18 accessed the IT Portal on 08.10.2024, came to know that the appellate order was already passed and thereafter, steps were taken to prepare and file the appeal and finally, the appeal was filed with a delay of 138 days. 03. After hearing the rival contentions and perusing the materials available on record including the contents of the condonation petition, we are inclined to condone the delay by treating the reasons for delay to be bonafide and genuine. 04. The assessee raised an additional ground during the hearing which was against the invalid notice issued u/s 143(2)of the Income-tax Act, 1961 (the Act) on 24.09.2018, which was not as per the CBDT instruction no. F. No. 225/157/2017/ITA-II Dated 23-06-2017 and accordingly, the assessment order passed consequently is void ab initio, ultra virus and nullity in the eyes of law. 05. The ld. AR submitted that the issue raised in the additional ground is a purely a legal issue which goes to the root of the assessment and does not require any verification of facts from any quarter whatsoever. Therefore the same may kindly be admitted for adjudication by relying on the decisions i) Jute Corporation of India Ltd. Vs CIT in 187 ITR 688 , ii) National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 and also by the decision of Hon’ble Calcutta High Court in PCIT vs. Britannia Industries Ltd. [2017] 396 ITR 677 (Cal) 06. The ld. DR on the other hand submitted that the issue was not raised before any of the authorities below and therefore, may kindly be restored to the file of any of the authorities below for adjudication. 07. After hearing the rival contentions and perusing the material on record, the issue has been raised for the first time by the assessee Page | 3 ITA No.131/KOL/2025 Lahanda Gomarda Samabay Krishi Unnayan Samity Ltd.; A.Y. 2017-18 before the Bench at the time of hearing which is a legal issue and goes to the root of the assessment. After perusing the case file, we find that no further verification is required to be done from any quarter whatsoever and therefore, we are inclined to admit the issue for adjudication by relying on the decision of the Hon'ble Apex court in the case of i) Jute Corporation of India Ltd. Vs CIT(supra), ii) National Thermal Power Co. Ltd v. CIT (supra) and also by the decision of Hon’ble Calcutta High Court in PCIT vs. Britannia Industries Ltd. (supra). 08. The ld. AR vehemently submitted that the notice u/s 143(2) of the Act, a copy of which is available at page no.61 of the Paper Book, does not specify whether it is a limited scrutiny or a complete scrutiny or a compulsory manual scrutiny. The ld. AR submitted that the CBDT has issued specific instruction vide instruction no. F. No. 225/157/2017/ITA-II Dated 23-06-2017 to the effect that the notice u/s 143(2) can be issued in one of the three formats which were specifically mentioned and prescribed but the present notice issued is not in accordance with such said instruction and therefore, the assessment framed consequently is invalid and void ab initio. The ld. AR in defense of his argument relied on the decision of Tapas Kumar Das Vs. ITO in ITA No. 1660/KOL/2024 vide order dated 11.03.2025 for A.Y. 2017-18, wherein similar issue has been decided in favour of the assessee. The ld. AR therefore prayed that the additional ground raised by the assessee may kindly be allowed. 09. The ld. DR on the other hand submitted that this is a computer- generated notice and the non-mentioning of the fact of either limited or complete scrutiny or compulsory manual scrutiny would not render the issuance of notice u/s 143(2) of the Act as invalid. Therefore, the ground raised by the assessee may kindly be dismissed. Page | 4 ITA No.131/KOL/2025 Lahanda Gomarda Samabay Krishi Unnayan Samity Ltd.; A.Y. 2017-18 010. After hearing the rival contentions and perusing the materials available on record, we find that undisputedly the notice issued u/s 143(2) of the Act dated 24.09.2018, specifies only computer aided scrutiny selection which neither mentioned it either to be a limited or a complete scrutiny nor compulsory manual scrutiny. Thus, the said notice has been issued in violation of the instruction issued by CBDT as noted above. In our opinion, the revenue authorities have to follow the instruction issued by CBDT and violation thereto would certainly render the notice as invalid with the result all the consequential proceeding would also be invalid. The case of the assessee find support from the decision of the co-ordinate Bench in the case of Tapas Kumar Das Vs. ITO (supra), wherein a similar issue has been decided in favour of the assessee. The operative part of the same is extracted below:- “After hearing the rival contentions and perusing the materials available on record, we find that particularly the notice was issued u/s 143(2) of the Act, a copy of which is available at page no. 25 of the Paper Book. We note that the said notice has not been issued in consonance with the CBDT Instruction F No. 225/157/2017/ITA-II Dated 23.06.2017. The said notice is extracted below for the sake of ready reference:- “आमकरअधिनियम 1961 कीिारा 143(2) क ेअिीििोटिस Notice under section 143(2) of the Income-tax Act, 1961 संवीक्षा (क ंप्यूिरआिाररतसंवीक्षाचयि Scrutiny (Computer Alded Scrutiny Selection) महोदय/महोदया/ भेससस, Sir/Madam/ M/s, आपकोसूधचतककयाजाताहैककनििासरणवर्स 2017-18 क ेपावतीसंख्या 269322761301017 क ेअिुसारआपक ेद्वाराटदिांक 30/10/2017 कोदाखिलकीगईआयकरवववरणीकोसंवीक्षाक ेललएचुिागयाहै। This is for your kind information that the return of income filed by you for assessment year 2017-18 vide ack, no. 269322761301017 on 30/10/2017 has been selected for Scrutiny. 2. इससंबंिमें, आपकोटदिीक 16/11/2018 को 01:00 PM तकसाक्ष्यप्रस्तुतकरिेअथवासाक्ष्यप्रस्तुतकरािेकाअवसरप्रदािककयाजारहाहैजजसपरआपउक्तआयकरवववरणीक ेसमथसि मेंनिभसरहैं/ रहेंगे। 2. In this regard, an opportunity is being given to you to produce or cause to produce any evidence on which you may like to rely in support of the said return of income by 16/11/2018 at 01:00 PM. Page | 5 ITA No.131/KOL/2025 Lahanda Gomarda Samabay Krishi Unnayan Samity Ltd.; A.Y. 2017-18 3. उपयुसक्तनिटदसष्िप्रमाण / सूचिाकोआपकोऑिलाइिमाध्यमसेइलेक्रॉनिकरूपमें Incometaxindiaefiling.gov.in परअपिेई- फाईललंगिाताद्वाराप्रस्तुतककयाजािाहै।बादकीनििासरणकायसवाहीभीआयकरववभागकी 'ई-कायसवाही' सुवविाद्वाराकीजायेगी। 'ई-कायसबाही' परएकसंक्षक्षप्तिोिआपक ेसंदभसक ेललएसंलग्िहै। 3. The evidence/information specified above has to be furnished online electronically through your E-filing account in incometaxindiaefiling.gov.in. Subsequent assessment proceedings shall also be conducted electronically through the 'E-Proceeding' facility of Income-tax Department. A brief note on 'E-Proceeding' is enclosed for your kind reference. 4. नििासरणकायसवाहीक ेदौराि, यटदआवश्यकहोगातोसूचिा / दस्तावेजहेतुववशेर्प्रश्िावली (यों) याअधियाचिा (यााँ) कोबादमेंजारीककयाजाएगा। 4. In course of assessment proceedings, if required, specific questionnaire(s) or requisition(s) for information/document shall be issued subsequently. 5. क ृपयाध्यािदेंककयटदआपक ेपासई-फाइललंगिाताहैतोआपक ेललएपैरा 3 लागूहै।आपक ेद्वारास्वयंअपिािातािबिालेिेतकनििासरणकायसवाहीआपक ेद्वारावखणसतकीगईई-मे is created by you, assessment proceedings shall be carried out either through your specified e-mail account or manually (if e-mail is not available). संलग्िक : यचौिरर Enclosure as above” In our opinion, the notice issued u/s 143(2) of the Act which is not in the prescribed format as provided under the Act is an invalid notice and accordingly, all the subsequent proceedings thereto would be invalid and void ab initio. The case of the assessee find support from the decision of Shib Nath Ghosh Vs. ITO in ITA No. 1812/KOL/2024 for A.Y. 2018-19 vide order dated 29.11.2024, wherein the co- ordinate Bench has held as under:- “10. After hearing both the sides and the materials available on record, we find that the notice issued u/s 143(2) dated 9th August, 2017 was not in any of the formats as provided in the CBDT instruction F.No.225/157/2017/ITA-II dated 23.06.2017. We have examined the notice, copy of which is available at page no.1 of the Paper Book and find that the same is not as per the format of CBDT Instruction F.No. 225/157/2017/ITA-II dated 23.06.2017 as stated above. In our opinion, the instruction issued by the CBDT are mandatory and binding on the Income tax authorities failing which the proceedings would be rendered as invalid. Hon'ble Apex Court in case of UCO Bank (supra) held that the circular issued by CBDT in exercise of its statutory powers u/s 119 of the Act, are binding on the authorities. The Hon'ble Apex court held as under:- “The Central Board of Direct Taxes under section 119 of the Income-tax Act, 1961, has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under section 119 of the Act which are binding on the authorities in the administration of the Act. Under section 119(2)(a), however, the circulars as contemplated therein cannot be adverse to the assessee. The power is given for the purpose of just, proper and efficient management of the work of assessment and in Page | 6 ITA No.131/KOL/2025 Lahanda Gomarda Samabay Krishi Unnayan Samity Ltd.; A.Y. 2017-18 public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Hard cases Which can be properly categorized as belonging to a class, can thus be given the benefit of relaxation of law by Issuing circulars binding on the taxing authorities. In order to aid proper determination of the income of money lenders and banks, the Central Board of Direct Taxes issued a circular dated October 6, 1952, providing that where interest accruing on doubtful debts is credited to a suspense account, It need not be included in the assessee's taxable income, provided the Income-tax Officer is satisfied that recovery is practically improbable. Twenty-six years later, on June 20, 1978, in view of the judgment of the Kerala High Court In STATE BANK OF TRAVANCORE v. CIT [1977] 110 ITR 336, the Board by another circular, withdrew with immediate effect the earlier circular. However, by circular dated October 9, 1984, the Board decided that Interest in respect of doubtful debts credited to suspense account by banking companies would be subjected to tax but Interest charged in an account where there has been no recovery for three consecutive accounting years would not be subjected to tax in the fourth year and onwards. The circular also stated that if there is any recovery in the fourth year or later, the actual amount recovered only would be subjected to tax in the respective years. This procedure would apply to assessment year 1979- 80 and onwards.” 8. Considering the facts of the instant case in the light of the decision of the co-ordinate bench, we are inclined to hold that notice issued u/s 143(2) of the Act is invalid notice and accordingly, the assessment framed consequentially to that is also invalid and is hereby quashed. 9. The other grounds raised on merit are not being decided at this stage and are being left open to be decided if need arises for the same at later stage. 10. In the result, the appeal of the assessee is allowed.” 011. Since the facts of the assessee’s case are similar to one as decided by the co-ordinate Bench, we therefore, respectfully following the same hold that the notice issued u/s 143(2) of the Act is invalid notice and accordingly, the assessment framed consequentially is also invalid and is hereby quashed. The additional ground raised by the assessee is allowed. 012. Since, we have allowed the appeal of the assessee on legal issue, the other grounds raised on merit are not being adjudicated at this stage Page | 7 ITA No.131/KOL/2025 Lahanda Gomarda Samabay Krishi Unnayan Samity Ltd.; A.Y. 2017-18 and are being left open to be decided at the later stage if need arises for the same. 013. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 19.05.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 19.05.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "