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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD
आदेश/O R D E R
PER PRADIP KUMAR KEDIA - AM:
The captioned appeal has been filed at the instance of the Revenue against the order of the Commissioner of Income Tax (Appeals)-5, Ahmedabad (‘CIT(A)’ in short), dated 29.05.2015 arising in the assessment order dated 26.03.2015 passed by the Assessing Officer (AO) under S. 144 r.w.s. 147 of the Income Tax Act, 1961 (the Act) concerning AY 2009-10.
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The grounds of appeal raised by the Revenue read as under:
“(1) The Ld.CIT (A) has erred in law and on facts in holding that the reassessment completed is bad in law for the reason of non-issuance of notice u/s 143(2) of the Act, because the assessee had never raised such objection before completion of the assessment proceedings thus section 292BB of the Act is applicable in the case of assessee. (2) The Ld.CIT(A) has erred in law and on facts in holding that the initiation of reassessment proceedings was not in accordance with the provisions of law as there was no discussion on the issue in the original assessment order and no details were called for, question of change of opinion does not arise, reliance is placed on Kalyanji Mavji & Co. Vs. CIT (SC) 102 ITR 287. [3] The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs.4,97,44,712/- made on account of unexplained investment in purchase of land, as the addition was made on the basis of evidences found during the course of survey in the case of co- purchaser of the land and his admission regarding payment of on- money.”
The learned DR relied upon the assessment order and in furtherance submitted that the defect is of technical nature which is curable under s. 292B/292BB of the Act.
When the matter was called for hearing, the learned AR for the assessee in Revenue’s appeal, on the other hand, referred to the assessment order and the CIT(A)’s order at the outset submitted that the re-assessment order framed by the AO is bad in law for the reason of non-issuance of notice under s.143(2) of the Act. The learned AR submitted that in the absence of issuance of notice under s.143(2) of the Act, the jurisdiction to do the re-assessment was never available and the non issuance of notice under s.143(2) of the Act is a substantive defect which is not curable with the aid of Section 292B / 292 BB of the Act. In elaboration to the legal ground, the learned AR for the assessee adverted our attention to the assessment order and pointed out that there is no reference to the issuance of notice in consequence of notice issued under s.148 of the Act. Therefore, the
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jurisdiction assumed for completion of re-assessment is bad in law. The learned AR vehemently contended that the assessment finalized under s.143(3) of the Act r.w.s. 147 is not sustainable in the absence of fulfillment of mandatory requirement of issuance of notice under s.143(2) of the Act. The learned AR also referred to the order of the CIT(A) to submit that the assessment records were gone through by the first appellate authority and it was categorically found that notice under s.143(2) of the Act was never issued. The learned AR accordingly submitted that in view of series of decisions of various High Courts including the decision of Hon’ble Gujarat High court in the case of CIT vs. Sukhini P. Modi reported at (2014) 367 ITR 682 (Guj.), the impugned assessment order passed under s.144 r.w.s. 147 of the Act in appeal has been rightly quashed by the CIT(A). The learned AR supported its case by the decision of Hon’ble Delhi High Court in the case of Pr.CIT vs. Shri Jai Shiv Shankar Traders Pvt. Ltd. (2015) 64 Taxmann.com 220 (Del.); Sapthagiri Finance & Investments vs. ITO [2012] 25 taxmann.com 341 (Mad.); CIT vs. K M Ravji in Tax Appeal No. 771 of 2010 order dated 18.07.2011 (Gujarat High Court); & CIT vs. Salarpur Cold Storage (P.) Ltd. [2014] 50 taxmann.com 105 (Allahabad). In substance, the learned AR submitted that the assessment order itself is non est due to incurable legal defect as rightly held by the first appellate authority.
We have carefully considered the rival submissions and perused the orders of the authorities below and material placed on record.
At the outset, we find substantial merit in the legal plea raised on behalf of the assessee. The assessee has claimed that no notice under s.143(2) of the Act has been issued to the assessee to enable the Revenue to frame the re-assessment order under s.143(3) r.w.s. 147 of the Act. In this regard, we find no reference to the issuance of such
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notice under s.143(2) of the Act in the re-assessment order. We also notice that CIT(A) has requisitioned the assessment records and has come to a categorical finding that no such notice under s.143(2) of the Act has been issued. The Revenue could not bring anything to contradict the allegation of non issuance of notice. It will be appropriate to reproduce the relevant finding of the first appellate authority in this regard:
“4.2. I have considered the facts of the case and submission made by the appellant. It has been noticed that in this case notice u/s.148 of the I.T. Act have been issued on 18.3.2014 to file the return of income and incompliance thereto the appellant vide his reply in Tapal on 24.4.2014 has stated that the original return filed by him on 17.12.2009 vide acknowledgement No.0024600236 may be treated as return filed in compliance to the notice issued u/s.148 of the T.T. Act. He also enclosed a copy of the acknowledgment of the original return of income filed. The appellant has objected the reassessment completed by the A.O. for the reason that no notice u/s. 143(2) has been issued by him after initiation of reassessment proceedings which is against the provisions of law. In support of non-service of the notice u/s.143(2) of I.T. Act, the appellant also submitted an affidavit duly notarized with regard to the grounds so raised. In support he has relied upon various judgments holding the mandatory requirement of the issuance of notice u/s.143(2) on the given facts. 4.3. Considering the appellant's objection through filing the affidavit, the records were gone through and it is noticed that there was no mention about the issuance of notice u/s. 143(2) and service thereof upon the appellant in the body of assessment order. To verify the contention of the appellant, further the assessment records from the A.O. i.e. DC1T, Circle-5(2), Ahmedabad were also requisitioned through this office letter dtd.28.4.2015 and in response to the same the assessment records were produced by the A.O. on 13.5.2015. On going through the assessment record, it was noticed that no notice u/s.143(2) of I.T. Act had been issued after initiation of the re-assessment proceedings in appellant's case. The contention of the appellant is found correct and the objection of the A.O. is having substance. It is mentioned that non issue of notice is not a curable defect 292BB of the I.T. Act and therefore the reassessment completed is not found in accordance with the provisions of law. Therefore, the reassessment completed is bad in law. Reliance is placed on the following judgments. - The Hon'ble 1TAT, Delhi Bench in the case of DCIT Vs. Silver Line in ITA No.1809,1504,1505 and 1506/Del/2013 dtd.26.9.2014 has held that non issue of notice u/s. 143(2) renders u/s. 147 assessment
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void. Section 292BB does not apply. If there is a conflict of judicial opinion the view in favour of the assessee must be taken.
- The Hon'ble ITAT Delhi in the ease of UKT Software Technologies Pvt. Ltd. Vs. ITO Wd-18(1), New Delhi in ITA No.5293 & 5294/Del/20lO dtd.11.2.2011 has held that if the assessment is framed u/s.143(3) either read with Section 158 BC or Section 147 it is mandatory for the AO to issue notice u/s. 143(2). The issuance and service of notice u/s. 143 (2) is mandatory and not procedural. If the notice is not served within the prescribed period the assessment order is invalid.
- The Hon'ble ITAT Delhi in the case of ITO Vs. M7s. Staunch Marketing Pvt. Ltd. in ITA No.l643/Del/2008 dtd. 12.5.2015 has held that for completing the assessment u/s.148 the compliance of the procedure laid down u/s.143(2) is mandatory. If there is failure on the part of the A.O. for not complying with the procedure laid down in Section 143(2) then the reassessment is not sustainable in the eyes of law and deserves to be cancelled.
- The Hon'ble ITAT, Agra Bench in the case of ITO Vs. Alligarh Auto Centre 152 ITJ (Agra) 767 has also held the similar views.
- The Hon'ble ITAT Mumbai Bench in the case of Sanjeev R. Arora Vs. ACIT in IT(SSA) No.l03/MUM/2004 dtd. 25.7.2012 has also held as under:-
"We are of the view that the reassessments made for the assessment years under consideration have become invalid for not having served the mandatory notice u/s. 143(2) of IT. Act on the assessee"
- The Hon'ble Madras High Court in the case of C1T Vs. C. Pakniappan 284 ITR 257 has also held that the reopening of assessment of assessee u/s. 147 and completion of assessment without issue of notice u/s.143(2) within 12 months would not be valid.
- The Hon'ble Madras High Court in the case of CIT Chennai Vs. Alstom T&D India Ltd. in Tax Case (Appeals) No.1183 and 1186 of 2006 dtd. 3.9.2012 has held that even where assessee requested AO to treat the original return as one in response to Section 148 proceedings notice u/s.143(2) was mandatory otherwise reassessment would be bad in law.
- The Hon'ble Bombay High court in the case of ACIT Cir.2(1), Panaji Vs. Jeno Pharmaceutieals Ltd. in Tax Appeals No.75 to 78 of 2012 dtd. 14.2.2013 has held that notice u/s. 143(2) is mandatory and in absence of such service AO cannot proceed to make an inquiry on return file in compliance with notice issued u/s. 148.
- The Hon'ble Madras High Court in the case of CIT Vs. K.S. Mangudi (2008) 304 ITR 388 and also in other case namely CIT Vs.
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M. Chellappan (2006) 281 ITR 444 has held that where there is no well service of notice u/s. 143(2) within the time limit the assessment was found invalid.
- The Hon'ble Guhawati High Court in the case of CIT Vs. Deep Baruah (2010) 329 ITR 362 has held that the reassessment is bad in law for lack of notice u/s.143(2)of I.T. Act.
- The Hon'ble Bombay High Court in the case of CIT Vs. Salman Khan in Income-tax Appeal(L) No.2362 of 2009 dtd. 1.12.2009 has held that for failure to issue notice reassessment held to be not valid. Section 292BB does not have retrospective effect.
- The Hon'ble ITAT Mumbai Bench in the case of Ramesh Abaji Walavalkar Vs. Addl.CIT (2012) 54 SOT 15 (URO) has also held that reassessment made by the AO u/s. 143(3) r.w.s. 147 without issuing notice u/s. 143(2) is invalid.
- The Hon'ble ITAT Kochin Bench in the case of B.R. Sreekumar Vs. ITO (2012) 136 ITD 257 (TM) has held that issue of notice u/s. 143(2) is mandatory which has to be issued before passing assessment order. - The Hon'ble Delhi High Court in the case of Alpine Electronics Asia Pvt. Ltd. Vs. DCIT (2012) 341 ITR 247 has even held that delay in issue of notice u/s. 143(2) in reassessment proceedings renders assessment invalid. - The Hon'ble Delhi ITAT in the case of Shri Mohinderkumar Chhabra in ITA No.3523/Del/2013 has held that reassessment completed without issue of notice u/s, 143(2) of I.T. Act was invalid hence the same was quashed and consequently the assessment order passed in pursuance thereto was also cancelled.
- The Hon'ble ITAT Bangalore in the case of Shri G.N. Mohana Raju Vs. ITO in ITA No.242 and 243/Bang/2013 dated November, 2014 has also held that in absence of issuance of issue of valid notice u/s. 143(2) of I.T. Act the assessment renders it invalid and the ITAT quashed the reassessment.
The Hon'ble Gujarat High Court in the case of CIT Vs. K.M. - Ravji in Tax Appeal No.771/2012 dtd. 18.7.2011. - The Hon'ble Gujarat High Court in the case of CIT Vs. Panorama Builders Pvt. Ltd. in Tax Appeal No.435/20ll dtd. 30.8.2012. In view of the aforesaid discussion, the ground of appeal is allowed.”
In view of the decision of the Hon’ble Gujarat High Court in the case of Sukhini P. Modi (supra) and other hosts of judgments, the
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legal challenge that re-assessment order which is subject matter of appeal as void ab initio is well settled. In the absence of notice under s.143(2) of the Act issued to assessee, the re-assessment order passed under s.144 r.w.s. 147 of the Act dated 26.03.2015 in question is rightly held to be without authority of law and consequently rightly quashed by the CIT(A). We do not see any reason to interfere with the action of the CIT(A) on this score. Consequently, the appeal of the Revenue is dismissed.
In the result, appeal of the Revenue is dismissed.
This Order pronounced in Open Court on 28/02/2019
Sd/- Sd/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 28/02/2019 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।