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Income Tax Appellate Tribunal, ‘’ A’’ BENCH, AHMEDABAD
Before: SHRI RAJPAL YADAV, & SHRI WASEEM AHMED
आदेश/O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned cross appeals have been filed at the instance of the Assessee and the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-1, Vadodara, dated 18/03/2016 arising in the matter of assessment order passed under s. 143(3) r.w.s 147 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2000-2001.
First, we take up the appeal filed by the assessee bearing ITA No. 1289/Ahd/2016 for A.Y. 2000-01. The assessee has raised the following grounds of appeal: 1. CIT(A) has grievously erred in fact and in law in upholding reopening of the assessment though reopening was illegal in as much as reasons recorded do not have any nexus with the belief that income has escaped the assessment since consideration received for transfer of capital assets having nil cost of acquisition is not chargeable to tax. 2. That CIT(A) further grievously erred in fact and in law in not appreciating that, even otherwise, reassessment was barred by limitation since notice u/s 143(2) was issued on 11.10.2004 which is beyond limitation period of 6 months from the expiry of financial year ending on 31.3.2004 as per the provisions as prevailing then.
The assessee in its appeal has challenged the order of the learned CIT (A) on technical grounds as well as on merits. Among other grounds, the assessee challenged the validity of the assessment framed under section 147 of the on the reasoning that there was no notice issued under section 143(2) of the Act which was mandatory under the provisions of law.
The learned AR before us submitted that the assessment in the present case has been framed under section 147 read with section 143(3) of the Act dated 31/03/2005. However, there was no notice issued under section 143(2) of the Act prior to completion of the assessment as discussed above. As per the learned AR it was mandatory for the revenue to serve the notice under section 143(2) of the Act after initiating the proceedings on account of escapement of income by issuing
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notice under section 148 of the Act. But the Revenue in the present case has failed to follow the procedure laid down under the provisions of law. Therefore, in the absence of the notice under section 143(2) of the Act, the assessment framed under section 147 read with section 143(3) of the Act is not sustainable and therefore the same is liable to be quashed.
On the other hand, the learned DR vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. The provisions for the income escapement assessment as applicable for the year under consideration require Revenue to issue a notice under section 148 of the Act to file the return of income which reads as under: [Issue of notice where income has escaped assessment. 71148.72[(1)] Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve73 on the assessee a notice requiring him to furnish within such period, 74[* * *] as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be75, apply accordingly as if such return were a return required to be furnished under section 139.] 76[(2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so.] 6.1 Once a return is filed by the assessee in response to the notice issued under section 148 of the Act, the same is treated as if such return was furnished under the provisions of section 139(1) of the Act. Accordingly, all other provisions as prescribed under the Act shall apply to the return filed in response to the notice under section 148 of the Act. Thus it is implied that the revenue was under the obligation to serve the notice upon the assessee under section 143(2) of the Act. In holding so, we draw support and guidance from the judgment of Hon’ble Delhi High court in case of Alpine Electronics Asia Pte. Ltd. reported in 18 taxmann.com 246 wherein it was held as under:
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It is now well-settled that service of notice under section 143(2) within the statutory time- limit is mandatory and is not a procedural requirement, which is inconsequential. [Para 21] Section 143(2) is applicable to proceedings under section 147/148. Proviso to section 148 protects and grants liberty to the revenue to serve notice under section 143(2) before passing of assessment order for returns furnished on or before 1-10-2005. In respect of returns filed pursuant to notice under section 148 after 10-1-2005, it is mandatory to serve notice under section 143(2) within the stipulated time-limit. [Para 24]
6.2 In the present case, the controversy arises whether the notice under section 143(2) was served upon the assessee. In this regard we find that, the learned DR has filed a letter written by the DCIT dated 8 November 2021 which reads as under: In this regard it is submitted that the Assessee has conveyed vide letter dated 11/08/2003 that the return of income filed u/s.139(1) on 30/11/2000 be treated as return filed in response to notice u/s.148 of the Act. Regarding notice issued u/s.143(2) on the IT Act, it is submitted that as per records available no notice u/s.143(2) is found in file thereon. However, on perusal of notice dated 11/10/2004 (copy enclosed) it is observed that said notice was issued in the line of notice u/s.143(2) of the Act, it is also evident from notice dated 19/11/2004 wherein in letter No. mentioned 142(1) and details as called in 11/10/2001 were asked. The Ld.CIT(A) vide order No.CAB-I/01/2014-15 dated 18/03/2016 also considered the notice dated 11/04/2004 u/s.143(2) of the Act and rejected the assessee’s contentions. In view of above discussion and in view of deeming provision of section 292B of Income tax Act, the contention of the assessee on this technical ground should be rejected.
6.3 A perusal of the above letter reveals that the mandatory notice was not available in the records of the Revenue. Thus it can be inferred that the notice under section 143(2) of the Act was not issued by the Revenue. Thus in the absence of such mandatory notice, the proceedings initiated under section 147 of the Act are not maintainable and liable to be quashed.
6.4 As regards the contention of the learned DR to resort to the provisions of section 292BB of the Act, we are of the view that such provisions cannot extend any benefit to the revenue. The provisions of section 292B of the Act reads as under: Notice deemed to be valid in certain circumstances. 292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was— (a) not served upon him; or (b) not served upon him in time; or
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(c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.
6.5 The above provisions safeguards the interest of the Revenue to the extent of non-service of notice or served notice in improper manner. But it doesn’t cover the situation where no notice has been served upon the assessee for initiating the proceedings under the provisions of law. So the provisions of section 292BB shall not help the Revenue in the present case. In holding so, we draw support and guidance from the judgment of Hon’ble Supreme Court in case of ACIT vs. Hotel Blue Moon reported in 321 ITR 362, the relevant part of Hon’ble apex court reads as under: Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of a notice under section 143(2) cannot be dispensed with.
6.6 In view of the above we hold that the revenue cannot be absolved from its duty for issuing notice under the provisions of section 143(2) of the Act in the given facts and circumstances for initiating the proceedings under section 147 of the Act. Accordingly, we hold that the assessment framed under section 147 of the Act is bad in law and liable to be quashed. We direct accordingly. Hence the assessee succeeds in its technical ground of appeal.
6.7 As the assessee, succeeds in its technical ground of appeal, we do not find any reason to adjudicate the issue raised by the assessee on merit. As such the issues raised by the assessee on merit become infructuous and therefore we dismiss the same.
6.8 In the result, the appeal filed by the assessee is partly allowed.
Coming to the ITA number 1593/Ahd/2016 for A.Y. 2000-01 an appeal by the Revenue
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At the outset we note that the assessment framed in the present case under the provisions of section 147 read with section 143(3) of the Act has been held as invalid by us vide paragraph number 6 of this order. For the detailed discussion please refer the relevant paragraph. Hence, the grounds of appeal filed by the revenue are dismissed.
7.1 In the result, the appeal filed by the revenue is dismissed.
In the combined result, the appeal filed by the assessee is partly allowed whereas the appeal filed by the revenue is dismissed.
Order pronounced in the Court on 06/10/2021 at Ahmedabad.
Sd/- Sd/ (RAJPAL YADAV) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 06/10/2021 Manish