TAPAS KUMAR DAS,KOLKATA V. I.T.O., WARD - 50(5), KOLKATA, KOLKATA

ITA 1660/KOL/2024

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This case involves an appeal by Tapas Kumar Das against the order of the National Faceless Appeal Centre, Delhi, concerning the assessment year 2017-18. The primary contention was the validity of a notice issued under section 143(2) of the Income-tax Act, 1961, which was challenged for not adhering to the CBDT's prescribed format. The assessee argued that the notice was not valid as per the law, referencing a specific CBDT circular. The Tribunal, after examining the notice and relevant instructions, agreed with the assessee's position, leading to the quashing of the assessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474019 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Other Referred Cases: Jute Corporation of India Ltd. Vs CIT, National Thermal Power Co. Ltd v. CIT, Shib Nath Ghosh Vs. ITO
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHRO DAS
• Assessee Lawyers: S. K. TULSIYAN
• Keywords: Invalid notice; Bad and doubtful debts
• Section: 144; 142(1); 143(2); 119; 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No. 1660/KOL/2024 (Assessment Year:2017-18) Tapas Kumar Das 18,18, Ambika Mukherjee Road, Kolkata-700013, West Bengal Vs. ITO, Ward-50(5),Kolkata Income Tax Office, Uttarapan Complex, Manicktla Civic Centre, Ultandanga, Kolkata-700054 West Bengal (Appellant) (Respondent) PAN No. BMPPD1220D Assessee by : Shri S.K. Tulsiyan, AR Revenue by : Shri Subhro Das, DR Date of hearing: 13.02.2025 Date of pronouncement : 11.03.2025 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 11.06.2024 for the AY 2017-18. 02. At the outset, the ld. Counsel for the assessee brought to the notice of the Bench the additional ground is raised vide letter dated 04.11.2024, which is a legal issue and is against the issue of notice u/s 143(2) in violation of CBDT Circular No. F.NO.225/157/2017/ITA- 11 on 23.06.2017. The said additional ground raised by the assessee is extracted below:- Page | 2 ITA No. 1660/KOL/2024 Tapas Kumar Das; A.Y. 2017-18 “That the Ld. AO erred in issuing notice u/s 143(2) of the Act dated 24.09.2018 without complying to the CBDT Instruction F.No. 225/157/2017/ITA-II dated 23.06.2017 and so the notice issued u/s 14392) is not valid as per law.” 03. We find that the additional ground raised by the assessee is purely legal issue qua which all the facts are available in the appeal folder and no further verification of facts is required to be done at the end of the ld. AO and accordingly, we are inclined to admit the same for adjudication by following the ratio laid down by the Hon'ble Apex Court in the case of Jute Corporation of India Ltd. Vs CIT in 187 ITR 688(SC) and National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 (SC). 04. The facts in brief are that the assessee filed the return of income on 30.10.2017, declaring total income of ₹3,75,780/-, which was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS). Thereafter the notice u/s 143(2) and 142(1) of the Act were issued along with the questionnaire which were duly served upon the assessee. When there was no compliance in the assessment proceedings, , the AO framed the ex-parte assessment u/s 144 of the Act vide order dated 27.12.2019, wherein an addition of ₹25,74,500/- was made on account of unexplained money u/s 69A of the Act deposited in the bank account of the assessee during demonetization period. 05. In the appellate proceedings also the ld. CIT (A) confirmed the order of the ld. AO when there is no compliance made on the part of the assessee. 06. 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 Page | 3 ITA No. 1660/KOL/2024 Tapas Kumar Das; A.Y. 2017-18 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:- “आमकर अधिनियम 1961 की िारा 143(2) क े अिीि िोटिस Notice under section 143(2) of the Income-tax Act, 1961 संवीक्षा (क ंप्यूिर आिाररत संवीक्षा चयि Scrutiny (Computer Alded Scrutiny Selection) महोदय/महोदया/ भेससस, Sir/Madam/ M/s, आपको सूधचत ककया जाता है कक नििासरण वर्स 2017-18 क े पावती संख्या 269322761301017 क े अिुसार आपक े द्वारा टदिांक 30/10/2017 को दाखिल की गई आयकर वववरणी को संवीक्षा क े ललए चुिा गया है। 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. इस संबंि में, आपको टदिीक 16/11/2018 को 01:00 PM तक साक्ष्य प्रस्तुत करिे अथवा साक्ष्य प्रस्तुत करािे का अवसर प्रदाि ककया जा रहा है जजस पर आप उक्त आयकर वववरणी क े समथसि में निभसर हैं/ 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. उपयुसक्त निटदसष्ि प्रमाण / सूचिा को आपको ऑिलाइि माध्यम से इलेक्रॉनिक रूप में Incometaxindiaefiling.gov.in पर अपिे ई-फाईललंग िाता द्वारा प्रस्तुत ककया जािा है। बाद की नििासरण कायसवाही भी आयकर ववभाग की 'ई-कायसवाही' सुवविा द्वारा की जायेगी। 'ई-कायसबाही' पर एक संक्षक्षप्त िोि आपक े संदभस क े ललए संलग्ि है। 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. नििासरण कायसवाही क े दौराि, यटद आवश्यक होगा तो सूचिा / दस्तावेज हेतु ववशेर् प्रश्िावली (यों) या अधियाचिा (यााँ) को बाद में जारी ककया जाएगा। 4. In course of assessment proceedings, if required, specific questionnaire(s) or requisition(s) for information/document shall be issued subsequently. Page | 4 ITA No. 1660/KOL/2024 Tapas Kumar Das; A.Y. 2017-18 5. क ृपया ध्याि दें कक यटद आपक े पास ई-फाइललंग िाता है तो आपक े ललए पैरा 3 लागू है। आपक े द्वारा स्वयं अपिा िाता ि बिा लेिे तक नििासरण कायसवाही आपक े द्वारा वखणसत की गई ई-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” 07. 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 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. Page | 5 ITA No. 1660/KOL/2024 Tapas Kumar Das; A.Y. 2017-18 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.” 08. 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. 09. 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. 010. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 11.03.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 11.03.2025 Sudip Sarkar, Sr.PS Page | 6 ITA No. 1660/KOL/2024 Tapas Kumar Das; A.Y. 2017-18 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 "