Case Number: ITA 672/DEL/2019
Appellant: Durga Ferrous P. Ltd., AN-2, Shalimar Bagh, New Delhi
Respondent: ITO, Ward-7(4), New Delhi
Assessment Year: 2008-09
Result: Appeal Allowed
Case Filed On: 2019-01-31
Order Type: Final Tribunal Order
Date of Order: 2020-02-13
Pronounced On: 2020-02-13
Durga Ferrous Pvt. Ltd., a private limited company engaged in the business of trading non-ferrous metals such as SS Flats and SS Patties, filed an appeal against the reassessment order for the assessment year 2008-09. The appeal challenged the reassessment proceedings initiated by the Assessing Officer (AO) based on information from the Investigation Wing about accommodation entries amounting to Rs. 15,00,000.
The AO issued a notice under Section 148 of the Income Tax Act, 1961, on the basis of information received that the assessee had taken accommodation entries from entities managed by Surender Kumar Jain and Virender Kumar Jain. These individuals were known for providing accommodation entries in various forms such as unsecured loans, share capital, and share premium.
The AO completed the assessment under Section 147/143(3), making an addition of Rs. 15,00,000 to the returned loss. The assessee appealed against this order, but the CIT(A) upheld the AO’s decision. Aggrieved by the CIT(A)’s order, the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT).
During the ITAT hearing, the appellant’s counsel, Sh. Suresh Kumar Gupta, argued that the reassessment order was invalid due to the improper issuance of notice under Section 143(2) of the Act. The counsel pointed out that the notice under Section 143(2) was issued on the same day the return in response to the notice under Section 148 was filed, indicating non-application of mind by the AO.
The appellant’s counsel cited the Hon’ble Supreme Court’s decisions in NTPC vs. CIT (229 ITR 383) and Jute Corporation of India Ltd. vs. CIT (187 ITR 688) to support the admissibility of the additional ground of appeal. The counsel requested the tribunal to quash the reassessment proceedings based on this legal ground.
The ITAT, presided over by Judicial Member Shri H.S. Sidhu, admitted the additional ground of appeal, noting that it was a legal issue that did not require fresh investigation into the facts. The tribunal examined the order sheet dated 05.10.2015, which confirmed that the notice under Section 143(2) was issued on the same day the return was filed in response to the notice under Section 148.
The tribunal held that the reassessment order was invalid and void-ab-initio due to the improper issuance of notice under Section 143(2). The tribunal cited the Hon’ble Delhi High Court’s decision in PCIT vs. Silver Line (2016) 383 ITR 455, which emphasized the mandatory nature of notice under Section 143(2) for jurisdiction to frame an assessment.
The ITAT concluded that the reassessment proceedings were invalid due to the lack of a valid notice under Section 143(2). Consequently, the reassessment order was quashed, and the appeal filed by Durga Ferrous Pvt. Ltd. was allowed.
Source: Income Tax Appellate Tribunal, Delhi Benches ‘SMC’, New Delhi
Disclaimer: This article provides an overview of the case and is not a substitute for professional legal advice. For detailed information, readers are encouraged to refer to the official case documents and consult with a qualified legal professional.
Durga Ferrous vs ITO: Invalid Reassessment Order for AY 2008-09
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