No Assessment can be made u/s 143 or 144 of Income Tax Act after Twelve Months from end of Relevant Assessment Year: ITAT [Read Order]

The Chandigarh bench of the Income Tax Appellate Tribunal (ITAT) observed that no assessments can be made under section 143 or 144 of Income Tax Act after twelve months from end of relevant assessment year. The assesse company initially reported a taxable income of Rs. 8,59,050/- in 2012, later assessed at Rs. 12,13,510/ in 2015. A search in 2018 revealed the company had set up sub-contractor firms, using them to falsely claim expenses and reduce profits. The Assessing Officer, based on an Investigation Wing report, issued a notice in 2019, alleging Rs. 10,30,66,089/- in bogus expenses. The AO believed this amount escaped assessment due to the company's failure to fully disclose material facts about accommodation entries, remaining unverified in the original and returned income assessments. In response to a section 148 notice, counsel for the assesse Ashwani Kumar Aditya Kumar and Muskan Garg filed an income return, declaring Rs. 9,91,640/- on 23/04/2019. Seeking reasons for the notice, received on 30/10/2019, the assessee raised objections on 15/11/2019, addressed by the AO on 27/11/2019. Notices under sections 143(2) and 142(1) were issued on 28/11/2019 and 29/11/2019, respectively. Despite the assessee's submissions, the AO, in the assessment order dated 17/12/2019 under sections 143(3) and 147, deemed sub-contractor firms fictitious for bogus expenses, taxing Rs. 10,30,66,089/- under section 69C due to the failure to produce sub-contractors for examination. During the hearing, the counsel for the respondent Sarabjeet Singh argued that had seriously erred in affirming the validity of the assessment order. This, despite the proceedings not adhering to the Department's instructions, which were obligatory for the Assessing Officer (AO) to follow. The assessment order was not uploaded on the e-filing portal of the assessee company and was solely served via courier. Additionally, the order was passed without mentioning the Document Identification Number (DIN). Counsel for the assesse Ashwani Kumar Aditya Kumar and Muskan Garg challenged the mentioned findings, arguing that the reassessment order and notice of demand were issued under separate sections. Thus, they were considered independent communications, necessitating distinct Document Identification Numbers (DIN). In support of his stance, he submitted a copy of the assessment order under section 143(3), notice of demand under section 156, and tax computation sheet for one of the assessee's group companies, M/s SPS Realtors Private Limited. These documents, issued by the Assistant Commissioner of Income Tax, Central Circle-1, Chandigarh, were simultaneously dated on 23/06/2021, pertaining to Assessment Year 2019-20. The counsel for the respondent Sarabjeet Singh emphasized that the demand notice and assessment order should not be viewed in isolation, and the absence of a separate DIN number did not render 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 In light of the aforementioned discussions where set aside reassessment order, other grounds of appeal regarding the merits of the case, etc., became academic. It was thus held that, “We did not deem it necessary to adjudicate on the same. These grounds of appeal were thus left open, to be decided at an appropriate time should the need arise in the future. For the present, they were dismissed as infructuous.” Accordingly, the appeal of the assessee was partly allowed. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates