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2022 Supreme(Telangana) 374
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
Ujjal Bhuyan, C.V.Bhaskar Reddy, JJ.
Pr. Commissioner of Income Tax-2, Hyderabad - Appellant
Versus
M/s GJ Trading Pvt. Ltd. – Respondent
I.T.T.A.No.246 of 2022
Decided On : 05-09-2022
Advocate Appeared:
For the Appellant : Ms. K.Mamata Chowdary
Point of Law : Section 115WD of the Act, without prejudice to the provisions contained in Section 139 of the Act, every employer who has paid or made provision for payment of fringe benefits to his employees during the previous year shall on or before the due date furnish the return of fringe benefits to the assessing officer.
Headnote:
Income Tax Act, 1961 - Section 260A, 143(2), 115WE(2), 139, 115WA, D, 143 - Finance Act, 2021 - Assessment Year - Return of Income - Whether on facts and in circumstances of case and in law, ITAT is correct in applying ratio of Apex Court in case of ACIT v. Hotel Blue Moon when a valid notice u/s. 143(2) of Act was issued and served within prescribed limit - Whether on facts and in circumstances of case and in law, ITAT is correct in holding that mentioning of “Section 115WE(2)” in notice issued will invalidate assessment proceedings when provisions of “Section 115WE(2) of Act were very much in vogue and provisions of Section 115WE(2) are in pari materia with provisions of Section 143(2) for scrutiny of return of “Fringe Benefit”?” – Para 11.
Finding of the Court :
Above question was examined in light of Section 158BC of Act dealing with block assessment following search and seizure, nonetheless Supreme Court upheld views expressed by the Gauhati High Court that Section 143(2) of Act is mandatory and violation thereof cannot be construed to be a procedural irregularity - Though Tribunal had followed aforesaid decision which decision may not be strictly applicable to facts of case, nonetheless, Court is of view that notice cannot be construed to be a notice under Section 143(2) of Act for purpose of assessment under Section 143 of Act - It was a notice issued for purpose of assessment on fringe benefits - Insofar this issue is concerned, Court is of view that it goes to root of matter and therefore, Tribunal was justified in entertaining petition filed by respondent raising additional ground, which is nothing but a pure question of law going to root of jurisdiction - Therefore, not on ground on which Tribunal arrived at conclusion, but for reasons mentioned above, Court is not inclined to interfere with order of Tribunal - Thus Court do not find any question of law involved, not to speak of any substantial question of law.
Result : Appeal dismissed.
JUDGMENT :
Ujjal Bhuyan, J.
Heard Ms. K.Mamata Chowdary, learned Standing Counsel for Income Tax Department appearing for the appellant.
2. This appeal has been preferred by the revenue as the appellant under Section 260A of the Income Tax Act, 1961 (briefly, ‘the Act’ hereinafter) assailing the order dated 12.07.2021 passed by the Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad (Tribunal), in ITA No.337/Hyderabad/2017 for the assessment year 2008-09.
3. The appeal has been preferred proposing the following as substantial questions of law:
“1. Whether on the facts and in the circumstances of the case and in law, the ITAT is correct in applying the ratio of Apex Court in the case of ACIT v. Hotel Blue Moon ((2010) 321 ITR 362), when a valid notice u/s. 143(2) of the Act was issued and served within the prescribed limit?
2. Whether on the facts and in the circumstances of the case and in law, the ITAT is correct in holding that mentioning of “Section 115WE(2)” in the notice issued will invalidate the assessment proceedings when the provisions of “Section 115WE(2) of the Act were very much in vogue for A.Y.2008-09 and the provisions of Section 115WE(2) are in pari materia with the provisions of Section 143(2) for scrutiny of the return of “Fringe Benefit”?”
4. To appreciate the above, we may briefly analyse the relevant facts. Respondent is an assessee under the Act having the status of a company, engaged in the business of trading in iron and steel products. Respondent filed its return of income for the assessment year 2008-09 on 29.09.2008 declaring total loss of Rs.26,18,29,327.00. The return was selected for scrutiny whereafter notices under Section 143(2) and 143(1) of the Act were issued. The matter was heard. In the course of assessment proceedings, assessing officer noted that respondent had shown sales of Rs.210,39,18,689.00 and declared gross loss of Rs.26,20,10,099.00 which worked out to 12.45%. Assessing officer further noted that gross loss admitted by the respondent for the immediately preceding assessment year i.e., 2006-07 was 4.28% and immediately succeeding year i.e., 2007-08 was 0.067%. Details as to claim of various expenditures made by the respondent were called for. Assessing officer further noticed that in one of the group cases namely M/s. Ganga Exim Pvt. Ltd., assessee had declared gross profit of 0.75% for the assessment year 2008-09 while admitting gross profit of 0.65% for the assessment year 2007-08 and 1.14% for the assessment year 2006-07. Holding that respondent had failed to produce any evidence to substantiate its claim of loss, assessing officer rejected the book results and estimated the income of the respondent at 2.5% on the gross receipts of Rs.210,39,18,689.00 which worked out to Rs.5,25,97,967.00 whereafter tax and interest were levied.
5. This assessment order came to be challenged by the respondent before the first appellate authority i.e., Commissioner of Income Tax (Appeals) - 2, Hyderabad. First appellate authority by the appellate order dated 24.11.2016 held that assessing officer had dealt with the issue elaborately. Though opportunities were granted, respondent failed to produce any evidence in support of its claim. Agreeing with the conclusions drawn by the assessing officer, first appellate authority held that assessing officer was justified in estimating the income of the assessee at 2.5% of the gross receipts and accordingly dismissed the appeal.
6. Aggrieved by the above, respondent preferred further appeal before the Tribunal. Before the Tribunal, respondent filed a petition dated 24.05.2021 for raising an additional ground in view of the decision of the Supreme Court in NTPC Limited v. CIT, (1998) 229 ITR 383 (SC) that assessing officer had failed to issue notice under Section 143(2) of the Act within the specified period of six months from the end of financial year in which the return was furnished. Further reliance was placed on the decision of the Supreme Court in A
