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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI ABY T. VARKEY, JM & SHRI PRASHANT MAHARISHI, AM
O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee against the order of the Ld. CIT(A)/NFAC, Delhi dated 13.04.2023 for the AY. 2013-14.
The assessee inter-alia has raised the legal issue of non-issuance of mandatory notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter “the Act”) before framing the assessment u/s 147/143(3) of the Act.
Brief facts relating to the legal issue are that the assessee an individual had filed his return of income on 31.07.2013 disclosing total income of Rs.4,14,700/- for AY. 2013-14. Later, based on information received from the office of CCIT, Thane dated 24.12.2014, that the assessee had sold immovable property at a rate lower than the market A.Y. 2013-14 Allan Sameul Chandekar rate, the AO reopened the assessment of the assessee by issuing notice u/s 148 of the Act on 21.01.2015, and thereafter the assessment was framed u/s 147/143 of the Act on 04.03.2016 by making an addition of Rs.55,00,000/- on account of undisclosed advance received against disputed sale of land. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A)/NFAC who was pleased to dismiss the same. Aggrieved, the assessee is before this Tribunal.
We have heard both the parties and perused the records. The legal issue raised by the assessee is that the assessment framed by the AO dated 04.03.2016 u/s 143(3)/147 of the Act is bad in law for non- issuance of mandatory notice u/s 143(2) of the Act. In this regard, it is noted that the AO in the assessment order had stated to have issued notice u/s 143(2) of the Act at para no. 1 of his order. However, since the assessee raised the aforesaid legal issue before the Ld. CIT(A)/NFAC, the Ld. CIT(A), called for remand report on this issue from the AO. And pursuant to which, the AO filed his remand report wherein he admitted of not finding a copy of notice u/s 143(2) of the Act and the remand report has been reproduced by the Ld. CIT(A) at para no. 10 of the impugned order as under: - “Sub: Remand Report in the case of Allan Samuel Chandekar (AFPPC0597J) for AY. 2013-14 with reference to Appeal Number CIT(A), Thane-2/10018/2016-17-Regarding. In compliance to the directions of the Ld. CIT(A) under the subject ‘Request for Remand Report’, in the case of the assessee about furnishing the date of issue of notice u/s 143(2) of the I. T. Act, during the assessment proceedings and the service of such notice u/s 143(2) A.Y. 2013-14 Allan Sameul Chandekar upon the assessee which is under appeal before the Appellate Authority against the assessment order u/s 143(3) r.w.s. 147 of the I. T. Act, 1961 completed on 04.03.2016 for the AY. 2013-14. 2. On going through the assessment record, it is seen that the then AO has mentioned in the assessment order passed that notice u/s 143(2) of the I. T. Act, was issued and duly served upon the assessee, however, on going through the physical record no notice u/s 143(2) is found to be place therein.”
However, in the remand report, the AO also submitted that before the re-assessment order was passed, the AO had given the assessee proper opportunity. And therefore, according to him no prejudice was caused to the assessee as such for non-issuance of notice u/s 143(2) of the Act. Despite non-issuance of notice u/s 143(2) of the Act, AO relied upon section 292BB of the Act which according to him, precludes the assessee from taking any objection regarding non- receipt of notice after participating in the proceedings. Therefore, according to the AO, the legal issue regarding non-receipt of notice u/s 143(2) of the Act should be rejected.
The Ld. CIT(A) after going through the remand report of the AO on this issue has observed at para no. 13.6 of the impugned order, wherein he admitted ‘ non-issue of notice u/s 143(2) of his Act is a flaw, the same can never efface or erase the liability to pay taxes, where such liability has been created by substantive provisions”. And the Ld. CIT(A) dismissed the legal issue. Aggrieved by aforesaid action of the Ld. CIT(A), the assessee is before us. A.Y. 2013-14 Allan Sameul Chandekar 7. Before us, the Ld. AR for assessee asserted that assessee didn’t receive notice u/s 143(2) of the Act, and that AO had not even issued the notice u/s 143(2) of the Act before framing of assessment order; and according to him, in the light of admission on the part of AO (remand report) itself corroborates the fact of non-issuance of notice u/s 143(2) of the Act, and therefore this omission on the part of AO vitiates the assessment order framed by him. Therefore, he pleads for quashing the assessment order. At the time of hearing, on a query from the Bench to the Ld. DR as to whether there was any evidence to prove that AO had issued notice u/s 143(2) of the Act before framing of the assessment order u/s 143(3)/147 of the Act dated 04.03.2016, the Ld. DR could not give answer in the affirmative, rather he could not controvert the admission made by the AO in the remand report dated 18.11.2022 that he couldn’t trace any copy of such notice in the assessment folder of assessee. In the light of the discussion (supra), and the finding of fact given by Ld. CIT(A) to the effect that the non- issuance notice u/s 143(2) of the Act is a flaw, the consequence of such a finding is that re-assessment order framed by AO is vitiated [refer decision of the Hon’ble Supreme Court in the case of ACIT Vs. Hotel Blue Moon (2010) 321 ITR 362 (SC)] and the AO’s reliance of section 292BB of the Act would not come to his rescue as held by the Hon’ble Supreme Court decision in the case of CIT Vs. Laxman Das Khandelwal (Civil Appeal Nos. 6261-6262 of 2019 dated 13.08.2019) wherein the Hon’ble Supreme Court has even negatived such a contention of the revenue and held that section 292BB of the Act A.Y. 2013-14 Allan Sameul Chandekar cannot cure the defect of non-issuance of statutory notice us/ 143(2) of the Act before framing assessment u/s 143(3) of the Act and the Hon’ble Supreme Court reiterated that the issuance of notice u/s 143(2) of the Act is sine qua non before framing of assessment u/s 143(3) of the Act and held as under:- “6. The question, however, remains whether Section 292BB which came into effect on and from 01.04.2008 has effected any change. Said Section 292BB is to the following effect:- "292BB. Notice deemed to be valid in certain circumstances.- Where an assessee has appeared in any proceeding or cooperated 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 (c) Served upon him in an improper manner; Provider that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or re-assessment”
A closer look at Section 292BB shows that if the assessee has participated in the proceedings, it shall be deemed that any notice which is required to be served upon was duly served and the assessee would be precluded from taking any objections that the notice was (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner. According to Mr. Mahabir Singh, learned Senior Advocate, A.Y. 2013-14 Allan Sameul Chandekar since the Respondent had participated in the proceedings, the provisions of Section 292BB would be a complete answer. On the other hand, Mr. Ankit Vijaywargia, learned Advocate, appearing for the Respondent submitted that the notice under Section 143(2) of the Act was never issued which was evident from the orders passed on record as well as the stand taken by the Appellant in the memo of appeal. It was further submitted that issuance of notice under Section 143(2) of the Act being prerequisite, in the absence of such notice, the entire proceedings would be invalid. 8. The law on the point as regards applicability of the requirement of notice under Section 143(2) of the Act is quite clear from the decision in Hotel Blue Moon's case (supra). The issue that however needs to be considered is the impact of Section 292BB of the Act. 9. According to Section 292BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said Section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself. 10. Since the facts on record are clear that no notice under Section 143(2) of the Act was ever issued by the Department, the findings rendered. by the High Court and the Tribunal and A.Y. 2013-14 Allan Sameul Chandekar the conclusion arrived at were correct. We, therefore, see no reason to take a different view in the matter. 11. These Appeals are, therefore, dismissed. No costs.”
In the light of the aforesaid discussion, since we found that the AO failed to issue statutory notice u/s 143(2) of the Act before framing the re-assessment dated 04.03.2016 u/s 143(3)/147 of the Act, the ibid assessment order has been passed without following the requisite procedures mandated by law. And therefore, the re-assessment order framed by AO dated 04.03.2016 cannot be sustained in the eyes of law and we set aside the same and assessee succeeds on the legal issue raised on this issue.
Other ground in the light of the aforesaid action of ours has become academic and is not adjudicated and so left open.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on this 25/10/2023.