SUNIL SINGH,KOLKATA V. I.T.O., WARD - 30(1), KOLKATA

ITA 2555/KOL/2024

AI Insights

This case involves an appeal by Sunil Singh against the order of the National Faceless Appeal Centre, Delhi, which upheld the additions made by the Income Tax Officer, Ward 30(1), Kolkata, for the assessment year 2018-19. The primary contention in the appeal was the validity of the notice issued under section 143(2) of the Income Tax Act, 1961, which was argued to be in an invalid format and not in accordance with the CBDT instructions. The tribunal admitted the additional ground raised by the assessee, focusing on the legal issue of the notice's validity, which was found to be non-compliant with the prescribed formats, leading to the quashing of the assessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779267 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2018-2019
• Appeal Filed On: 13-12-2024
• 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: S.B. CHAKRABORTHY
• Assessee Lawyers: SOMNATH GHOSH
• Keywords: Invalid notice; Bad and doubtful debts
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.2555/KOL/2024 (Assessment Year:2018-19) Sunil Singh North Tangra, Dhapa Road, Chowbagha South 24 Parganas, Kolkata-700105, West Bengal Vs. ITO Ward 30(1), Kolkata Aaykar Bhawan Dakshin, 2, Gariahat Road (South), Room No.3, Fifth Floor, Kolkata-700053 West Bengal (Appellant) (Respondent) PAN No. ANBPS5909E Assessee by : Shri Somnath Ghosh, AR Revenue by : Shri S.B. Chakraborthy, DR Date of hearing: 25.08.2025 Date of pronouncement: 15.10.2025 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 29.12.2023 for the AY 2018-19. 02. At the outset, we note that the appeal of the assessee is barred by limitation by 288 days, for which condonation petition along with affidavit of the assessee is filed. On perusal of the condonation petition, the reasons for delay in filing the appeal seems to be genuine and bonafide. The Ld. D.R did not raise any objection in condoning the delay. Keeping in view the contents of the condonation petition as well as judicial pronouncement that the case should be decided on merit not on technical issue, the delay is hereby condoned. Printed from counselvise.com Page | 2 ITA No. 2555/KOL/2024 Sunil Singh: A.Y. 2018-19 03. At the time of hearing, we note that the assessee has raised an additional ground challenging the issuance of notice u/s 143(2) of the Act. The ground raised by the assessee is as under:- “1. That your applicant had preferred the instant appeal aggrieved by the appellate order dated 29-12-2023 passed by the Ld Commissioner of Income Tax (Appeals)- NEAC who upheld the aggregate addition of Rs. 45.89.286 resorted to on four counts by the Ld. Income Tax Officer, Ward 30(1), Kolkata in the assessment order dated 22- 04-2021 framed u/s 143(3) of the Income Tax Act, 1961. 2. That due to lack of knowledge, no ground was raised neither any arguments on the validity of the assessment order framed was advanced before the Ld Commissioner of Income Tax (Appeals)-NFAC. Accordingly, your applicant with the leave of your Honour carves to raise the following ground as under: FOR THAT in the facts and circumstances of the instant case, the Ld Commissioner of Income Tax (Appeals)-NFAC acted unlawfully in not appreciating that none of the conditions precedent existed for and/or were fulfilled by the Ld. Income Tax Officer, Ward 30(1), Kolkata for lis specious action of framing the assessment order u/s. 143(3) of the Income Tax Act 1961 on 22-04-2021 in the instant case basing on a notice dated 20-09 2019 issued u/s 143(2) of the Income Tax Act, 1961 in contravention of the CBDT Instruction E. No. 225/157/2017/ITA-II Dated 23-06-2017 and the impugned inaction on that account renders the assessment order framed ab initio void, ultra vires and null in law\" 3. That due to lack of legal opinion, the aforesaid ground was not raised before the Ld. Commissioner of Income Tax (Appeals)-NF.A.C. for adjudication In fact, the aforesaid Ground is purely legal in nature and goes to the root of the matter and as such, leave to argue the ground may please be granted in this regard. 4. That your applicant has a strong prima facie case. The balance of convenience strongly favours your applicant in passing an order of admission of the additional ground. Your applicant will suffer irreparable injury if the prayer is refused. It is therefore most respectfully prayed that your Honour may be graciously kind enough to admit the additional ground raised for adjudication,\" 04. The ld. Counsel for the assessee submitted that the said ground is purely a legal issue and the assessee is within his legal right to raise the same before any of the appellate authority at any stage whatsoever. The ld. Counsel for the assessee submitted that the notice u/s 143(2) of the Act has been issued in an invalid format in violation to the CBDT instruction no. F. No. 225/157/2017/ITA-II Printed from counselvise.com Page | 3 ITA No. 2555/KOL/2024 Sunil Singh: A.Y. 2018-19 Dated 23-06-2017 and accordingly, the assessment order passed consequently is void ab initio, ultra virus and nullity in the eyes of law. The ld. Counsel for the assessee submitted that since the issue raised is legal issue which goes to the root of the matter and since no further verification of facts is required to be done from any quarter whatsoever, the legal ground raised by the assessee may kindly be admitted for adjudication. In defense of his arguments the ld. AR relied on the decisions of the Apex court in the case of 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). 05. 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. 06. After hearing the rival contentions and perusing the material on record, we find that the assessee has raised an additional ground of appeal challenging the validity of the notice issued u/s 143(2) of the Act being in an invalid format and in our opinion the issued raised in the additional ground is a purely a legal issue qua which all the facts are available in the appeal folder and no further verification of facts are required from any quarter whatsoever. In our considered view the assessee is at liberty to raise any legal issue before any appellate authority for the first time even when the same has not been raised before the lower authorities. The case of the assessee is squarely covered by the decisions of the 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 Printed from counselvise.com Page | 4 ITA No. 2555/KOL/2024 Sunil Singh: A.Y. 2018-19 High Court in PCIT vs. Britannia Industries Ltd. (supra). Therefore, we are inclined to admit the same for adjudication. 07. The ld. AR vehemently submitted that the notice u/s 143(2) of the Act, a copy of which is available at page no.53 of the Paper Book, does not specify whether it is a limited scrutiny or a complete scrutiny or a compulsory manner 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, that the notice u/s 143(2) can be issued in one of the three format which 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. 08. 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, additional ground raised by the assessee may kindly be dismissed. 09. 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 10.08.2018, 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 Printed from counselvise.com Page | 5 ITA No. 2555/KOL/2024 Sunil Singh: A.Y. 2018-19 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 तकसाक्ष्यप्रस्तुतकरिेअथवासाक्ष्यप्रस्तुतकरािेकाअवसरप्रदािककयाजारहाहैजजसपरआपउक्तआयकरवववरणी क ेसमथसिमेंनिभसरहैं/ 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. 3. उपयुसक्तनिटदसष्िप्रमाण / सूचिाकोआपकोऑिलाइिमाध्यमसेइलेक्रॉनिकरूपमें Incometaxindiaefiling.gov.in परअपिेई- Printed from counselvise.com Page | 6 ITA No. 2555/KOL/2024 Sunil Singh: A.Y. 2018-19 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 ” 7. 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 Printed from counselvise.com Page | 7 ITA No. 2555/KOL/2024 Sunil Singh: A.Y. 2018-19 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 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.” 010. 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. Printed from counselvise.com Page | 8 ITA No. 2555/KOL/2024 Sunil Singh: A.Y. 2018-19 011. 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 and are being left open to be decided at the later stage if need arises for the same. 012. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 15.10.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 15.10.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "