Head Note: Where on the date of issuance of Notice u/s 148, AO was not in possession of the information received from other IT authority, which was the sole basis of reopening, AO could not have formed reason to believe that income of the assessee had escaped assessment. Thus, impugned reassessment notice being erroneous was quashed.

Synopsis of Appeal Submission:

1. Facts of the Case: The present appeal has been preferred by the appellant, in respect of the Reassessment Order for the AY 2010-11, passed u/s 147/143(3), by the learned Assessing Officer, ITO, Ward 29(5), New Delhi, dated 29.12.2017, and partly upheld by the learned CIT (Appeals), National Faceless Appeal Centre, vide the appeal order dated 11.9.2023. The appellant is a well reputed medical practitioner. The appellant is a regular taxpayer assessee and has been regularly filing her return of income since last more than 20 years For the AY 2010-11, the appellant had filed its return of income on 31.07.2010 declaring an income of Rs. 5,46,080/-. The case was reopened u/s 148 of the Income tax Act on 29.3.2017, on the basis of an information received from ITO (I&CI), Jodhpur vide their letter No. ITO (I& CI)/JDH/2016-17/2166 dated 30.3.2017 and received by the AO of the appellant on 30.3.2017 through email. The ld. AO, vide his assessment order dated 29.12.2017, had made several additions amounting in total to Rs. 51,23,000/- u/s 56 of the Income Tax Act. On being aggrieved by the same, the appellant has, therefore, filed present appeal against the reassessment order passed by the AO and as partly upheld by the learned CIT(Appeals) NFAC, Delhi.

2. The appellant has raised 7 grounds of appeal. First four grounds are legal grounds challenging the validity and jurisdiction of the impugned reassessment notice, reassessment proceedings and the subject reassessment order for the AY 2010-11, passed u/s 147/143(3) of the Income Tax Act. The remaining 3 grounds are addressing the (de)merits of the impugned additions.

3. First four grounds of appeal are legal grounds and go to the root and the jurisdiction of the matter, and as such these are being represented first.

4. Ground 1 The main crux of our ground no 1 of our appeal is that on the date of issuance of Notice u/s 148 of the Act, on 29.3.2017, (copy of the Notice u/s 148 issued on 29.3.2017 enclosed at page no. 1 of the Paper Book), the learned AO was not having any information, material or evidence in his possession, so as to form a Reason to Believe that any income of the appellant for the subject AY 2010-11 had escaped assessment, so as to warrant reopening of the said case.

This is duly evident from the copy of the reasons for reopening (enclosed at page no 4 of paper Book), as supplied by the AO, during the course of the impugned reassessment proceedings, in response to the request letter of the appellant.

A careful perusal of the said reasons for reopening the assessment, makes it abundantly evident that the sole basis for the initiation of reassessment proceedings for the AY 2010-11, was some alleged information received from the ITO (I & CI), Jodhpur pertaining to the purchase of immovable property by the appellant. It is pertinent to mention here that in the very first sentence of the said reasons for reopening, it has been acknowledged by the ld. AO that some information was received from ITO (I&CI), Jodhpur vide their letter No. ITO (I & CI)/JDH/2016-17/2166 dated 30.3.2017 through email.

Therefore, it is duly evident that at the time of issuing Notice u/s 148 of the Act on 29.3.2017, concerning the initiation of the reassessment proceedings against the appellant, for the AY 2010-11, Ld. AO was not in possession of the so called “information” received from the ITO (I & CI), Jodhpur, on the very basis of which the Ld. AO could have formed the reason to believe to justify the initiation of the impugned reassessment proceedings, because as per the ld. AO’s Acknowledgement in the Reasons for Reopening the assessment only, the said information was received on 30.3.2017 vide letter No. ITO (I & CI)/JDH/2016-17/2166 dated 30.3.2017 through email.

It is pertinent to mention here that the appellant had duly raised the said legal objection against the reopening of the assessment for the AY 2010-11, vide its written submissions dated 11.5.2017, 27.7.2017 (enclosed at pages 5-10) and further submissions dated 20.11.2017 and 27.11.2017, enclosed at page nos. 15-35) of Paper Book, for ready reference.

However, the ld. AO had simply brushed aside the said objections by stating that the date printed on notice was typographical error the notice was issued on 31.03.2017 by speed post and through mail on your E-mail ID sjctax@bpopioneers.com……”

The ld. CIT(Appeals) in his appeal order has not agreed with our above ground no. 1. In paras 5.1.2, 5.1.3 and 5.1.4 of his appeal order he has stated that,

“from the appellant’s submission it indicates that another notice under section 148 of the Act was issued on March31,2017 replacing the notice that suffered from defect. Thus, it is evident that notice in question was issued under section 148 of the Act within time limit set forth in section 148 of the Act and, therefore, no prejudice was caused to the appellant with respect of limitation.
The mistake or error in mentioning date in the notice was merely a technical defect. It is not the case of the appellant that no notice was served. The appellant got the opportunity to object to irregularity in course of assessment proceedings. In fact, the appellant raised the objection to irregularity and the assessing officer duly dealt with his objection.
Based on the above facts, I am of the considered view that the notice in question was issued in due compliance of the provision of the section 148 of the Act. Hence, the appellant suffered no prejudice. The reassessment proceeding cannot be invalidated when there has been no prejudice to the appellant. As a result, ground No.1 taken in the appeal is not successful on this ground and hence dismissed.”

In this regard it is submitted that the appellant had not stated or suggested anywhere in its appeal submissions submitted before the ld. CIT (Appeals) in the faceless hierarchy that another notice u/s 148 dated 31.3.2017, had been issued to the appellant.

It is a matter of fact that no second notice u/s 148 dated 31.3.2027 was being issued by the AO to the appellant. The AO had simply mailed the very same Notice u/s 148 dated 29.3.2017 to the appellant’s email id on 31.3.2017. The copy of the said email being sent by the AO on 31.3.2017 and containing the enclosement of the very same Notice u/s 148 dated 29.3.2017, is enclosed as per Annexure 1 of this Brief/Synopsis, for Your Honours’ ready reference. The said email is also being offered to verify in original from the mobile phone of the standing counsel of the appellant. Thus, the assumption made in the CIT appeal order that another Notice u/s 148 dated 31.3.2017 was issued replacing the notice that suffered from defect, is factually misconceived and is contrary to the actual facts of the case.

Further, even for academic considerations, if it is assumed that another Notice u/s 148 dated 31.3.2017 was indeed issued by the AO, then also, in view of the well-settled and established legal position that during subsistence of a reassessment proceedings, another reassessment notice cannot be issued for same assessment year, and thus the second notice is itself a nullity in the eyes of Law. Reliance in this regard is placed upon the binding legal precedent of the jurisdictional hon’ble Delhi High Court in the cases of “Kamdhenu Enterprises Ltd v. ITO” [2023] 146 taxmann.com 417 (Delhi) and “CIT v. Sanjay Kumar Garg [2015] 64 taxmann.com 334 (New Delhi) [copy enclosed as per Annexure-2 of the Brief/Synopsis].

Further regarding the contention of the ld. AO that the date of 29.3.2017 mentioned in the Notice u/s 148, was only a typographical error and as also upheld by the ld. CIT(Appeals) on the reasoning that it is merely a technical defect and had not caused any prejudice to the appellant, it is submitted that the notice issued u/s 148 of the Act and the date of issue mentioned in that notice, bears a legal sanctity and once a notice has been issued by the assessing authority on a particular date, then it can’t be brushed aside/ignored or substituted by a subsequent email or even new notice, by merely stating that the date mentioned on the original notice was a typographical error. Such a defect is not merely a typographical error or a technical defect but infact it goes to the very root of the assumption of unlawful jurisdiction by the AO in initiating the said reassessment proceedings. It is a well settled and established legal position that any jurisdictional defect in the Notice issued u/s 148 of the Act, more particularly the date of issuance of such notice, can’t be rectified subsequently, or even brushed aside simply by stating that it was a typographical error.

The assumption u/s 147 of the Act for reopening the assessment/ reassessing the income, can be lawfully exercised by the Assessing Authority only on formation of a reason to believe that any income of the assessee has escaped assessment. In the absence of formation of such reason to believe by the AO, provisions u/s 147 of the Act, cannot be invoked and resorted to by the AO.

In this regard, some of such binding judicial pronouncements of the Hon’ble Supreme Court and the Hon’ble High Courts are cited as under:
(i) Johri Lal (HUF) vs. CIT, 88 ITR 439 (SC).
(ii) Sheo Nath Singh vs. AAC, 82 ITR 147 (SC).
(iii) Ganga Saran & Sons (P) Ltd. vs. ITO, 130 ITR 1 (SC).
(iv) ITO vs. Lakhmani Mewal Das, 103 ITR 437(SC).
(v) Commissioner of Income Tax v. G&G Pharma (2015) 384 ITR 147 (Del.)
(vi) CIT vs Insecticides India Ltd 357 ITR 330, Delhi High Court;
(vii)CIT vs SFIL Stock Broking Ltd 325 ITR 285, Delhi High Court;
(viii)Sarthak Securities Co. (P) Ltd vs ITO, 329 ITR 110, Delhi High Court;
(ix) PCIT vs RMG PolyVinyl (I) Ltd Delhi High Court;
(x) Oriental Insurance Company Limited v. Commissioner of Income Tax 378 ITR 421 (Del).

Held by Hon’ble Delhi ITAT G Bench:
“7. From the plain reading of the notice u/s 148 of the Act dated 29/03/2017 and the reasons recorded u/s 147, the inference can be drawn that, as on the date of issuance of notice u/s 148 of the Act dated 29/03/2017, the Ld. A.O. was not having any information, material or evidence in his possession so as to form a Reason to Believe that any income of the assessee for the year under consideration had escaped assessment. It is the case of the Department that there was mistake in mentioning the date as ‘29/03/2017’ in the notice issued u/s 148 of the Act, therefore, by rectifying the said error another notice was issued again on 31st March, 2017 replacing the notice that suffered from defect. The said contention of the Ld. Departmental Representative cannot be accepted as even the e-mail sent on 31st March, 2017 was having an attachment that of the very same notice dated ‘29/03/2017’ which can be corroborated from the screen shot of the e-mail produced by the assessee along with the synopsis & the downloaded attachment of the notice. Furthermore, the Department has not produced any such notice issued u/s 148 of the Act dated 31/03/2010 which was claimed to have been issued to the assessee. Thus, it can be safely concluded that as on the date of issuance of notice u/s 148 of the Act dated 29/03/2017, the Ld. A.O. was not having any information, material or evidence in his possession as to form the reason to believe that any income of the assessee for the subject Assessment Year had escaped assessment as the information itself has been received by the A.O. on 30/03/2017. Thus, in our opinion the reassessment proceedings initiated by the A.O. are erroneous. Accordingly, the Assessment Order and the order of the Ld. CIT(A) are hereby set aside.”