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Income Tax Appellate Tribunal, “SMC’’ BENCH, AHMEDABAD
Before: SHRI MAHAVIR PRASAD & SHRI WASEEM AHMED
आदेश/O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER:
The captioned appeals have been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-7, Ahmedabad dated 13/11/2017 ( in short “Ld.CIT(A)”) 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") dt. 28/11/2016 relevant to the Assessment Years 2011-2012 & 2012-2013.
First we take up ITA No. 87/AHD/2018 for A.Y. 2011-12.
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The assessee has raised the following ground of appeal. 1. The Id CIT(Appeals) has erred both in law and on facts in confirming validity of reassessment when the fact regarding non-issuance of notice u/s 143(2) was not disputed . On the facts of the case and in view of legal position settled by Jurisdictional ITAT and High Court, reassessment ought to be quashed. It be quashed now. 2. The Id CIT(Appeals) failed to appreciate that when the return in pursuance of notice u/s 148 was treated as filed in view of appellant's letter and assessment made acting on the said return u/s 143(3), the AO ought to have mandatorily issued notice u/s 143(2) and hence reassessment order ought to be annulled. It be annulled now. 3. The Id CIT(Appeals) erred in law and on facts in confirming reassessment made by AO by invoking section 147 without there being a valid reason to believe as envisaged by section 147 .The reassessment being bad in law and without jurisdiction , the same ought to be held illegal and invalid. 4. Without prejudice to the above grounds, the Id CIT(Appeals ) erred both in law and on facts in confirming addition of Rs. 4,50,000/- when there was no evidence of any un explained cash payment as also, facts being admitted by the builder in his affidavit .The addition of Rs. 4,50,000/- made towards alleged unexplained investment deserves to be deleted. It be deleted now. 5. The Ld.CIT(Appeals) erred both in law and on facts in not following the judgment of the jurisdictional ITAT and High Court cited before her both on issue of legality and on merits of the grounds and not commenting on the same by reasoned and speaking order. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any o the grounds of appeal at the time of or before the hearing of the appeal.
The assessee in the 1st ground of appeal has challenged the validity of 2. the assessment framed under section 147 of the Act on the ground that the statutory notice under section 143(2) of the Act was not issued.
The assessee before the learned CIT (A) challenged the validity of the assessment framed under section 147 of the Act on the ground that the statutory notice under section 143(2) of the Act was not issued by the revenue. Therefore, the assessee claimed that the assessment framed under
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section 147 of the Act without issuing the notice under section 143(2) is null and void.
The learned CIT (A) to verify the contention of the assessee called for the assessment records and found that there was no notice available on record issued by the AO under section 143(2) of the Act. However, the learned CIT (A) further observed that the notice under section 148 was issued upon the assessee dated 11 August 2015 requesting the assessee to furnish the return of income within 30 days. But the assessee filed a letter dated 21 June 2016 beyond 30 days requesting to treat the original return filed by him as the return filed under section 148 of the Act. Accordingly, the learned CIT (A) held that in the absence of any return under section 148 of the Act, there was not possible to issue the notice under section 143(2) of the Act. Accordingly, the learned CIT (A) held that the assessment framed under section 147 of the Act is within the provisions of law. The relevant finding of the learned CIT(A) stands as under: 4.2 I have carefully considered the assessment order, facts of the case and the submission made by the appellant. The main grounds raised by the appellant is that no notice u/s.143(2) was issued to the appellant during the assessment proceedings and subsequent to issuance of notice u/s. 148 of the Act. Therefore, it was claimed that the re-assessment proceedings were invalid and deserved to be quashed. In view of the submission made by the appellant, a factual report was called for from the AO, who vide letter dated 27.10.2017 has submitted that while notice u/s. 148 was issued to the appellant on 11.08.2015, notice u/s. 142[1) was issued on 14.06.2016 and then notices u/s. 142(1] and 143(2) of the Act were again issued to the appellant on 01.08.2016. It has been stated by the AO however that the said notice u/s. 143(2) is not on record. To verify these facts, I have also called for and verified the assessment records. It is seen from the same that no notice u/s. 143(2) has been issued to the appellant. However, it is pertinent to note here that the notice u/s. 148 which was issued to the appellant on 11.08.2015 clearly mentioned that the return of income in the prescribed form was to be furnished within 30 days from the service of the notice. A perusal of the submission made by the appellant and the documentary evidences filed shows that the appellant filed a letter before the AO on 21.06.2016 along with the copy of the original return filed on 05.01.2013 stating that the same should be treated as return filed in response to notice u/s. 148 of the Act. Thus, it is very evident that there was no response from the appellant within the prescribed period of 30 days and a response was made only after a period of more than one year of receiving the notice u/s. 148.
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Therefore, since there was no. valid-return filed by the appellant in response to the notice u/s. 148 and no letter was filed either, there was no question of issuing notice u/s. 143(2) of the Act. It is settled law that where there is no return of income, there can be no issue of notice u/s. 143(2). In view of these facts, the re- assessment order is held to be a valid order and grounds of appeal Nos. 1 &2 are dismissed.
Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.
The learned AR before us submitted that the letter was filed on 21-06- 2016 for treating the original return as return filed under section 148 of the Act immediately after receipt of the notice issued under section 142(1) of the Act dated 14-06-2016 for filing the return of income. The learned AR also claimed that even if the letter filed beyond 30 days as prescribed in the notice issued under section 148 of the Act, the AO cannot absolve from his duty for issuing the notice under section 143(2) of the Act.
On the other hand, the learned DR before us produced the original assessment records and admitted the fact that the notice under section 143(2) of the Act was not available in such records. However, he vehemently relied on the order of the learned CIT (A).
We have heard the rival contentions of both the parties and perused the materials available on record. There is no issue to the fact that the notice was not issued under section 143(2) of the Act though the AO in his letter dated 27 -10-2017 claimed to have issued notice under section 142(1)/143(2) of the Act again on 1 August 2016 to the assessee. However, the fresh notices as claimed by the AO are also not available on record. In our considered view, the AO can acquire the jurisdiction to proceed for the assessment under section 147 of the Act only after the issuance of notice under section 143(2)
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of the Act in the given facts and circumstances. Even the provision of section 292B of the Act does not rescue the AO from issuing the notice under 143(2) of the Act.
7.1 In holding so we find support and guidance from the judgment of Hon’ble Gujarat High Court in the case of ITO versus Smt. Sukhini P. Modi. Reported in 367 ITR 682 wherein it was held as under: “8. The apex court in the case of Asstt. CIT v. Hotel Blue Moon [2010] 321 ITR 362/188 Taxman 113 has considered the very issue. The apex court held that the Assessing Officer has to necessarily follow the provisions of section 142 and sub- sections (2) and (3) of section 143. It did not accept the submission of the Revenue that the requirement of the notice under section 143 can be dispensed with and the same is mere procedural irregularity. In the words of the apex court, it is held as under (page 370) : "The case of the Revenue is that the expression 'so far as may be apply' indicates that it is not expected to follow the provisions of section 142, sub-sections (2) and (3) of section 143 strictly for the purpose of block assessments. We do not agree with the submissions of the learned counsel for the Revenue, since we do not see any reason to restrict the scope and meaning of the expression' so far as may be apply'. In our view, where the Assessing Officer in repudiation of the return filed under section 158BC(a) proceeds to make an enquiry, he has necessarily to follow the provisions of section 142, sub-sections (2) and (3) of section 143." 9. In the instant case, we notice that both the Commissioner of Income-tax (Appeals) and the Tribunal have held that the procedure prescribed of issuance of notice under section 143(2) has not been followed at all. This realm of fact has not been disputed by the Revenue. In view of this decision of the apex court, the assumption of the jurisdiction of issuance of notice of reopening itself would not be sustainable, and, therefore, this court does not require to indulge into the concurrent findings of both the authorities. In the absence of fulfilment of mandatory requirement of issuance of notice under section 143(2) both the authorities rightly and validly held against the Revenue and in favour of the assessee. Resultantly, the tax appeals deserve no further consideration and are dismissed with no order as to costs.”
7.2 Admittedly, the assessee did not file the return of income within the time as mentioned in the notice issued under section 148 of the Act. But such return would not cease to be a return of income filed under section 148 of the Act on account of such delay. Moreover, we also note that the assessee filed the letter dated 21-6-2016 for the treating the original return as return under section 148 of the Act much before the completion of the assessment under
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section 147 of the Act dated 28-11-206. Thus it is clear that there was sufficient time available with the AO of the assessee for the issue of such notice. In holding so we find support & guidance from the order of Bombay Tribunal in the case of Smt. Amina Ismil Rangari Vs. ITO in ITA No. 6261/Mum/2013 for the AY 2003-04 dated 15-9-2017 wherein it was held as under: We are of the considered view that though a statutory obligation is cast upon the assessee to comply with the notice issued u/s.148 and file the ‘return of income’ in compliance thereto within the stipulated time period of 30 days, however, in case the same is filed by the assessee beyond the stipulated time of period, then merely for the reason that some delays is involved in filing of the said ‘return of income’ would not render the same as invalid and nonest. We are of the considered view that a ‘return of income’ filed by an assessee beyond the specified time period contemplated in the notice issued u/s.148, would though lead to characterizing the same as a return of income filed beyond the stipulated time period, but however, the same would not cease to be a ‘return of income’ filed pursuant to the notice issued u/s.148.
In view of the above, we hold that the assessment framed under section 147/143(3) of the Act is not sustainable in view of the fact that the statutory notice under section 143(2) of the Act was not issued by the AO. As we have addressed the technical issue, we refrain from adjudicating the issue raised by the assessee on merit. Hence the ground of appeal of the assessee is allowed.
7.3 In the result, the appeal of the assessee is partly allowed.
Now coming to the ITA No.88/Ahd/2018 for AY. 2012-13
At the outset, we note that the identical issue was raised by the assessee in his own case in ITA No. 87/AHD/2018 which we have decided in his favour vide paragraph number 7 of this order. For the detailed discussion, please refer the relevant paragraph. Hence the ground of appeal of the assessee is allowed.
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In the result, the appeal of the assessee is partly allowed.
In the combined result, both the appeals of the assessee are partly allowed.
Order pronounced in the Court on 28/11/2019 at Ahmedabad.
-Sd- -Sd- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER (True Copy) Ahmedabad; Dated 28/11/2019 manish