Chandigarh ITAT: Can’t Use IT Section 143 & 144 for Assessment After Deadline Has Passed

No assessments could be made under section 143 or 144 of the Income Tax Act post 12 months from the finish of the pertinent assessment year, the Chandigarh bench of the Income Tax Appellate Tribunal (ITAT) observed.

The taxpayer company reported a taxable income of Rs. 8,59,050/- in 2012, later assessed at Rs. 12,13,510/ in 2015. An investigation in 2018 shows the company had set up sub-contractor firms, using them to falsely claim expenses and reduce profits.

The assessing officer on the grounds of the investigation wing report issued a notice in 2019 alleging Rs 10,30,66,089 in the fake expenses. The AO considered that the same amount escaped assessment because of the failure of the company to completely show the material facts regarding accommodation entries, remaining unverified in the original and returned income assessments.

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In reply to a section 148 notice, counsel for the taxpayer Ashwani Kumar Aditya Kumar and Muskan Garg filed a return of income, declaring Rs. 9,91,640/- dated 23/04/2019. Asking reasons for the notice obtained dated 30/10/2019, the taxpayer raised objections on 15/11/2019, addressed by the AO on 27/11/2019.

Under sections 143(2) and 142(1) the Notices were issued dated 28/11/2019 and 29/11/2019, respectively. Despite the submissions of the taxpayer, the AO, in the assessment order on 17/12/2019 under sections 143(3) and 147, considered sub-contractor firms fictitious for fake expenses, taxing Rs. 10,30,66,089/- under section 69C due to the failure to produce sub-contractors for examination.

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During the hearing, the respondent Sarabjeet Singh’s counsel emphasized a serious error in confirming the assessment order’s validity. They highlighted that the proceedings didn’t comply with the Department’s mandatory instructions for the Assessing Officer (AO).

The assessment order wasn’t uploaded on the assessee company’s e-filing portal but was only delivered via courier. Moreover, crucially, the order lacked the mention of the Document Identification Number (DIN).

On the other side, counsel for the assessee—Ashwani Kumar, Aditya Kumar, and Muskan Garg—contested these findings. They argued that the reassessment order and notice of demand were issued separately under distinct sections.

Therefore, they were deemed independent communications, necessitating different Document Identification Numbers (DIN). In aid of his stance, he has given a copy of the assessment order under section 143(3), a notice of demand under section 156, and a tax computation sheet for one of the assessee’s group companies, M/s SPS Realtors Private Limited.

Such documents, allocated through the Assistant Commissioner of Income Tax, Central Circle-1, Chandigarh, were simultaneously on 23/06/2021, regarding Assessment Year 2019-20.

The counsel for the respondent Sarabjeet Singh has stressed that the demand notice along with the assessment order must not be viewed in isolation and the absence of a separate DIN number does not make the assessment order invalid. 

The two-member bench of the tribunal comprising Aakash Deep Jain (Vice President) and Vikram Singh Yadav (Accountant Member) concluded that under the aforesaid discussions where set aside reassessment order, other bases of petition for the merits of the case, etc., became academic.

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Therefore, it was determined that there was no need to make a decision on this matter. These appeal grounds were consequently left unresolved, to be addressed later if necessary. At the moment, they were considered irrelevant and dismissed. Consequently, the assessee’s appeal was partially granted.

Case Title	M/s SPS Realtors Private Limited V/S The DCIT
Citation	ITA NO. 130/Chd/2023
Date	22.12.2023
Assessee By	Shri Ashwani Kumar, C.A Shri Aditya Kumar and Ms. Muskan Garg, C.A’s
Revenue By	Shri Sarabjeet Singh, CIT DR
Chandigarh ITAT	Read Order