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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
Before: Shri A.M. Alankamony & Shri S.S. Godara
Per S. S. Godara, J.M.
These assessee’s and Revenue’s cross appeals for A.Y 2010-11 arise against the CIT (A)-11, Hyderabad’s order dated 1/1/2020 in case No.10046/2019-20 involving proceedings u/s 143(3) of the Income Tax Act, 1961, in short, the Act. Heard both the parties. Case files perused. 2. We first of all advert to the Revenue’s cross appeal ITA No.467/Hyd/2020 challenging correctness of CIT (A)’s action quashing the impugned assessment for want of a valid section 143(2) notice vide following lower appellate discussion:- “6. I have considered the assessment order, submissions of the assessee. I have also perused the documents placed before me and the original assessment record as produced Page 1 of 27
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before me. It is seen from the order sheet that the Aa has issued notice ujs.142(1) on 08.11.2011 calling for return of income. . The return of income in response to above notice was filed' on 28.11.2011.
The AO mentioned in the order that notice ujs.143(2) and 142(1) Were issued on 14.12.2011. But perusal of order sheet shows that no such notice is mentioned therein. Further, there is no copy of notice nor acknowledgement of service of such notice is available on the record, The Aa who was present during the hearing was also enquired with. The AO could not produce any such evidence and stated that any evidence of service of notice is not readily available on record. In view of the factual and legal position as above, the assessment order suffer from legal infirmity and the same cannot be held to be valid.
6.1.1 In the case of ACIT Vs Hotel Blue Moon 321 ITR 362 (SC), the Hon'ble Supreme court held as under:
"The only question that arises for our consideration in this batch of appeals is, whether service of notice on the assessee under Section 143(2) within the prescribed period of time is a pre-requisite for framing the block assessment under Chapter XIV-B of the Income Tax Act, 1961?
8) Chapter XVI-B prescribes the special procedure for making the assessment of search cases.
9) Section 158 B defines "undisclosed income", and "block period" which are the two basic factors for framing the block assessments.
10) Section 158 BA is an enabling section, empowering the assessing officer, to assess "undisclosed income" as a result of search. initiated or requisition made after June 30, 1995, in accordance with the provisions of this Chapter and tax the same at the fixed rate specified in Section 113. Section 158 BB provides the methodology for computation of undisclosed income of the block period. Section 158 BC prescribes the procedure for making the Block assessment of the searched person. Section 158 BD enables assessment of any person, other than the searched person. Section 158 BB sets the time limits for completion of the Block assessments. Section 158 BB provides for immunity from levy of interest under Sections 234A, 234B and 234C and penalties under Section 271 (l)(G), 271A and 2718. Section 158 BFA provides [or levy of interest and penalty in cases of search on .or after January 1, 1997. Section 158 BO specifies the authorities competent to make the block assessment. Section 158 BH provides for application of all the other provisions of this Act, except those as provided in Chapter XIV-B. Section 158 BI provides for abolition of the scheme in cases of search after 31.5.2003.
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11) The scheme of Block assessment has been explained by Central Board of Direct Taxes in paragraph 39.3 of Circular No. 717 dated 14th August, 1995 ([1995J 215 ITR.70). We may only notice clause (e) of the circular which provides for the procedure for making Block assessment. Omitting what is not necessary for the purpose of this case, clause (e) is extracted and it reads as under t-
"(e) Procedure for making block: assessment: (i) The Assessing Officer shall serve a notice on such person
requiring him to furnish within such time, not being less than 15 days, as may be specified in the notice, a return in the prescribed form and verified in the same manner as a return under clause
(i) of sub-section(l) of section 142 setting forth his total income including undisclosed income for the block period. The officer shall proceed to determine the undisclosed income of the block period arid the provisions of section 142, sub-sections (2) and (3) of section 143 and section 144 shall apply accordingly. "
12) Chapter XIV-B provides for an assessment of the undisclosed income unearthed as a result of search without affecting the regular assessment made or to be made. Search is the sine qua non for the Block assessment. The special provisions are devised to operate in the distinct field of undisclosed income and are clearly in addition to the regular assessments covering. the previous years falling in the block period. The special procedure of Chapter XW-B is intended to provide a mode of assessment of undisclosed income; which has been detected as a result of search. It is not intended to be substitute for regular assessment. Its scope and ambit is limited in that sense to materials unearthed during search. It is in addition to the regular assessment already done or to be done. The assessment for the block period can only be done on the basis of evidence found as a result of search or requisition of books of accounts or documents and such other materials or information as are available with the assessing officer. Therefore, the income assessable in Block assessment under Chapter XIV-B is the income not disclosed but found and determined as the result of search under Section 132 or requisition under Section 132A of the Act.
13) Section 158 BC stipulates that the Chapter would have application where search has been effected under Section 132 or on requisition of books of accounts, other documents or assets under Section 132A. By making the notice issued under this Section mandatory, it makes such notice the very foundation for jurisdiction. Such notice under the Section is
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required to be served on 'the person who is found to be having undisclosed income. The Section itself prescribes the time limit 'of 15 days for compliance. In respect of searches on or after 1.1. 1997, the time limit may be given up to 45 days instead of 15 days for compliance. Such' notice is prescribed under Rule 12(lA) which in turn prescribes Form 2Bfor block return.
14) Section 158 BC(b) is a procedural provision for making a regular assessment applicable to Block assessment as well. Section 158 BC(c) would require the assessing officer to compute the income as well as tax on completion of the proceedings to be made. Section 158 BC(d) would authorise the assessing officer to apply the assets seized in the same mariner as are applied under Section 132B.
15) We may now revert back to Section 158 BC(b) which is the material provision
which requires our consideration. Section 158 BC(b) provides for enquiry and assessment. The said provision reads "that the assessing officer shall proceed to determine the undisclosed income of the Block period in the manner laid down in Section 158 BB and the provisions of Section 142, sub-section (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be, apply." An analysis of this sub section indicates that, after the return. is filed, this clause enables the assessing officer to complete the assessment by following the procedure like issue of notice under Sections 143(2)/142 and complete the assessment under Section 143(3). This Section does not provide for accepting the return as provided under Section 143(i)(a). The assessing officer has to complete the assessment under Section 143(3)only. In case of default in not filing the return or not complying with the notice under Sections 143(2)/142, the assessing officer is authorized to complete the assessment ex-parte under Section
Clause (b) of Section 158 BC by referring to Section 143(2) and (3) would appear to imply that. the provisions of Section 143(1) are excluded. But Section 143(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, Why the authorities should issue notice under Section 143(2). However, if an assessment is to be completed under Section 143(3) read with Section 158-BC, notice under Section 143(2) should be issued within one year from the date of filing of block, return. 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 notice under Section 143(2) cannot be dispensed with. The other important feature that requires to be noticed is that the
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Section 158 BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the assessing officer while completing the block assessments under Chapter XIV-B of the Act. This legislation is by incorporation. This Section even speaks of sub- sections which are to be followed by the assessing officer. Had the intention of the legislature was to exclude the provisions of Chapter XIV of the Act, 'the legislature would have or could have indicated that also. A reading of the provision would clearly indicate, in. our opinion, if the assessing officer, if for any reason, repudiates the return filed by the assessee in response to notice under Section 158 BC(a), the assessing officer must necessarily issue notice under Section 143(2) of the Act within the time prescribed in the proviso to Section 143(2) of the Act. Where the legislature intended to exclude certain provisions from the ambit of Section 158 B<:;(b} it has done so specifically. Thus, when Section 158 BC{b) specifically refers to applicability of the proviso thereto cannot be exclude. We may also notice here itself that the clarification given by CBDT in its circular No. 717 dated 14th August, 1995 r has a binding effect 01l the department, but not 'on the Court. This circular clarifies the requirement of law in respect of service of notice under sub- section (2) of Section 143 of the Act. Accordingly, we conclude even for the purpose of Chapter XIV-B of the Act, for the determination of undisclosed income for a block- period under the provisions of Section 158 BC, the provisions of Section 142· and sub-sections (2) and (3) of Section 143 are applicable and no assessment could be made without issuing notice under Section 143(2) of the Act. However, it is contended by Sri 'Shekhar, learned counsel for the department that in view of the expression "So far as may be" in Section 153 BC(b), the issue of notice is not mandatory but optional and are to be applied to the extent practicable. In support of that contention, the learned counsel has relied on the observation made by this Court in Dr. Pratap Singh's case [1985J 155 ITR 166(SC). In this case, the Court has observed that Section 37(2) provides that "the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under Section 37(2). Reading the two sections together it merely means that the methodology prescribed for carrying out the search provided in Section 165 has to be generally followed. The expression "so far as may be" has always been construed to mean that those provisions may be generally followed to the extent possible. The learned counsel for the respondent has brought to our notice the observations made by this Court in the case of Maganlal Vs. Jaiswal Industries, Neemach and Ors., /(1989) 4 SCC 344J, wherein this Court while dealing with the scope and import of the expression "as far as practicable" has stated "without anything more the expression 'as far as possible' will mean that the manner provided in the code for attachment or sale of property in execution of a decree shall be applicable in its
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entirety except such provision; therein which may not be practicable to be applied. "
16) 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 158 BC(a) proceeds to make an enquiry, he has necessarily to follow the provisions of Section 142, sub-sections (2) and (3) of Section 143.
17) Section 158 BH provides for application of the other provisions of the Act. It reads:
"Save as otherwise provided in this Chapter, a{l the other provisions .of this Act shall apply to assessment made under this Chapter." This is an enabling provision, which makes all the provisions of the Act, save as otherwise provided, applicable for proceedings for block assessment. The provisions which are specifically included are those which are available in Chapter XIV-B of the Act, which includes Section 142 and sub-sections (2) and (3) of Section 143."
6.1.2 In the case of CIT VS Mukesh Kumar Agarwal 345 ITR 29 (Al1ahabad), the Hon'ble High Court held as under:
"The S. C held in Hotel Blue Moon's case (supra) that if the AO 1 for any reason repudiates the return filed by an assessee in response to the notice under sec.158BC(a) of the Act relating to a block assessment, the Assessing Officer must necessarily issue notice under sec. 143(2) of the act within the time prescribed in the proviso to sec. 143(2). It was further held that by making the issue of notice mandatory, section 158 BC, dealing with block assessments, makes such notice the very foundations for jurisdiction. Such notice is required to be served on the person, who is found to have undisclosed income. The requirement of notice under sec. 143(2) cannot be dispensed with.
6 .. Sec.292BB is a rule of evidence, which validates the notice in certain circumstances. The newly inserted sec. 292BB provides that where an assessee has appeared in any proceedings 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
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assessee shall be precluded from taking any objection in any proceedings or inquiry under the act that the notice was not served upon him or not served upon him in time or served upon him in an improper manner.
In the present case, the Tribunal has returned the findings that the notice u/ s.143(2) of the act was admittedly not issued in this case. The Assessing authority thus did not have jurisdiction to proceed further and make assessment.
we do not find that the non-consideration of sec.292BB} which is rule of evidence, and a deeming provision to validate the notice in. certain circumstances, will have any effect on the judgment in Hotel Blue Moon(supra). It was held in Hotel Blue Moon's case (supra) that the very foundation of the jurisdiction of the AO is on the issuance of the notice under sec. 143(2). "
6.1.3 In the case of CIT, Lucknow Vs Salarpur Storage Ltd 228 Taxmann 48 (Allahabad], the Hon'ble High Court held as under:
“2. The assessee filed its return of income for AY 2008-09 on 30 September 2008. The Assessing Officer issued a notice under Section 143(2) of the Act on 6 October 2009. The assessment proceedings were completed and an order of assessment was passed under Section. 143(3) of the Act on 24 December 2010. In appeal, the Commissioner of Income Tax (Appeals) - 11, Lucknow held that the notice under Section. 143(2) of the Act was not issued within the period stipulated in that provision. Hence, the question of its service either within or beyond the time permitted or its improper service within the meaning of Section 292 BB of the Act would not according to the CIT (A) arise. In the view of the CIT (A) Section 292 BB of the Act operated to debar any challenge by the assessee, who appears before the Assessing Officer with respect to non-service, service within time or improper service of a notice, if the assessee had not raised such an objection before the completion of assessment or reassessment proceedings. In this view, it was. held that Section 292 BB of the Act would not save a situation where the notice itself had not been issued before the expiry of the period of limitation since it could only cure a defect of service within the stipulated period.
This view of the CIT (A) has been confirmed in appeal by the Tribunal. The Tribunal observed that time has been specified for the issuance of a notice under Section 143(2) of the Act, for assuming jurisdiction over the assessee to complete the assessment. The Tribunal held that a notice under Section 143(2) of the Act is of a statutory nature through which the Assessing Officer assumes jurisdiction over the assessee to frame an assessment under Section
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143(3) of the Act. If the jurisdiction was not properly assumed by the Assessing Officer by issuing a valid notice under Section 143(2) of the Act, the assessment so framed would be without a valid assumption of jurisdiction and would be invalid.
In the present case, it was noted by the Tribunal that the Assessing Officer had recorded in the order of assessment that a notice under Section 143 (2) of the Act was issued on 6 October 2009 much beyond the period prescribed under Section. 143(2) of the Act which was till 30 September 2009. Since no notice under Section 143(2) of the Act was issued within the prescribed period, the Tribunal held that the assessment was not valid. The appeal by the Revenue was consequently dismissed.
The submission which was urged on behalf of the Revenue is that the CIT(A) as well as the Tribunal have failed to consider the provisions of Section 292 BB of the Act. That is the submission which falls for consideration in, these proceedings.
Section 143(2) of the Act provides as follows: a "
"(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall a "
(i) Where he has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, serve on the assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him, on a date to be specified therein to produce, or cause to be produced, any evidence Or particulars specified therein or on which the assessee may rely, in support of such. claim:
Provided that no notice under this clause shall be served on the assessee on or after the 1st day of June, 2003;
(ii) notwithstanding anything contained in clause (i), if it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or h.as not under-paid the tax. in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced, . any evidence, on which the assessee may rely in support of the return:
Provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished."
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Under clause (ii) of sub-section (2) of Section 143, the Assessing Officer is required to serve) on the assessee, a notice requiring him to attend the office or to produce evidence on which the assessee may rely in support of the return, if the Assessing Officer considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner. Under the proviso to clause (ii), it has been specified that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. Service on the assessee of a notice within the period prescribed by the proviso presupposes the issuance of a notice for, it is only when a notice is issued, that it can be served. Thereafter, the provisions of sub- section (3) of Section 143 of the Act stipulate that on the date specified in the notice issued under clause (ii) of sub- section (2) of Section 143 of the Act, the Assessing Officer shall, after hearing the evidence as the assessee may produce and considering such other evidence as he may require and upon. taking into account all relevant material, by an order in writing make an assessment of the total income or loss of the assessee. The jurisdiction of the Assessing Officer to make cm assessment under Section 143(3)(ii) of the Act is premised on the issuance of a notice under clause (ii) of Section 143(2) of the Act. The proviso to clause (ii) of sub- section (2) of Section 143 of the Act stipulates that a notice must be 'served on the assessee no later than the expiry of six months from the end of the financial year in whi.ch the return. has been furnished. If a notice is not even issued within the period of six months from the end of the financial year in which. the return is furnished, there would be no occasion to serve it upon the assessee within the stipulated period.
In the present case, the facts which are not in dispute are that the assessee had filed its return of income on 30 September 2008 for AY 2008-09. The notice under Section 143 (2) of the Act ought to have been issued by 30 September 2009 which was the date of the expiry of the period of six months from the end of the financial year in which the return. was furnished. A notice was) however, issued on 6 October 2009 much beyond the period of six months. In such a situation, there could be no occasion to serve the notice within six months since the very act of issuance was beyond six months.
Now, it is in this background that it would be necessary to consider the provisions of Section 292 BB of the Act. Section 292 BB provides as follows: a “
"292 BB. Where an assessee has appeared iii any proceeding or co-operated in any inquiry relating to an assessment or reassessment. It shall be deemed that any
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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) (a) not served upon. him; or (b) not served upon him in time; or (c) 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. " 10. Section 292 BB of the Act was inserted by the Finance Act, 2008 with effect from 1 April 2008. Section 292 BB of the Act provides a deeming fiction. The deeming fiction is to the effect that once the assessee has appeared in any proceeding or cooperated in. any enquiry relating to an assessment or reassessment, it shall be deemed that any notice under the provisions of the Act, which is required to be served on the assessee, has been duly served upon him in time in accordance with the provisions of the Act. The assessee is precluded from taking any objection in any proceeding or enquiry that the notice was (i) not served upon him; or (ii) not 'served upon hi111 in time; or (iii) served upon him in an improper manner. In other words, once the deeming fiction comes into operation, the assessee is precluded from raising a challenge about the service of Cl notice, service within time or service in an improper manner. The proviso to Section 292 BB of the Act, however, carves out an exception to the effect that the Section shall not apply where the assessee has raised an objection before the completion of the assessment or reassessment. Section 292 BB of the Act cannot obviate the requirement of complying with a jurisdictional condition. For the Assessing Officer to make an order of assessment under Section 143 (3) of the Act} it is necessary to issue a notice under Section 143 (2) of the Act and in the absence of a notice under Section 143(2) of the Act, the assumption of jurisdiction itself would be invalid.
This principle is no longer in doubt having due regard to the law laid down by the Supreme Court in the decision in Asstt. CIT vs. Hotel Blue Moon [201 Of 321 ITR 362/188 Taxman 113. While construing the provisions Of Chapter XIV-B of the Act in relation to block assessments} the Supreme Court in that decision considered the effect of Section 143 (2) of the Act. The Supreme Court held as follows: "
" ... But Section 143(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms' to the undisclosed. income inferred by the authorities, there is no reason, why the authorities should issue notice under Section 143(2). However, if an
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assessment is to be completed under Section 143(3) read with Section 158-BC, notice under Section 143(2} should be issued within one year from the date of filing of block return. 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 notice under Section 143(2) cannot be dispensed with. "
The Supreme Court has, therefore, dearly held that the omission on the part of the Assessing Officer to issue a notice under Section 143(2) of the Act is not ii procedural irregularity and is not curable. The requirement of a notice under Section 143(2) of the Act cannot be dispensed with.
In our view, where the Assessing Officer fails to issue a notice within the period of six months as spelt out in the proviso to clause (ii) of Section 143 (2) of the Act, the assumption of jurisdiction under Section 143 (3) of the Act would be invalid. This defect in regard to the assumption of jurisdiction. cannot be cured by to. Icing recourse to the deeming fiction under Section 292 BB of the Act. The fiction in Section. 292 BB of the Act overcomes a procedural defect in regard to the n9n.service of a notice on the assessee} and obviates a challenge that the notice was either not served or that it was not served in time or that it was served in an improper manner, where the assessee has appeared in a proceeding or cooperated in an enquiry without raising an objection. Section 292 BB of the Act cannot come to the aid of the revenue in a situation where the issuance of a notice itself was not within the prescribed period, in which event the question of whether it was served correctly or otherwise, would be of no relevance whatsoever, Failu.re to issue a notice within the prescribed period would result in the Assessing Officer assuming jurisdiction contrary to law.
The judgment of a Division Bench of the Punjab and Haryana High Court in CIT u. Panchvati Motors(P) Ltd. [2011) 200 Taxman 136 (Mag.)/12 taxmann.com111, which Was relied upon. by the learned counsel for the Revenue would not to carry the case any further. In that case, a notice was issued under Section 148 of the Act. The assessee filed a return in pursuance of the notice without raising any objection in regard to the valid service of a notice. The Punjab and Haryana High Court held that once that was so, the argument of the assessee that there was no valid service of the notice under Section 148 of the Act would fail particularly having due regard to the provisions of Section. 292 BB of the Act. These facts are clearly distinguishable”.
6.1.4 In the case of Pr. CIT Vs Silver Line 383 ITR 455 (Delhi), the Hon'ble High Court held as under:
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"The Court first proposes to consider the question as to whether in terms of the proviso to Section 292BB of the Act, the Assessee was precluded, at the stage of the proceedings before the ITAT, from raising a contention regarding failure of the AO to issue a notice under Section 143(2) of the Act. The legal position appears to be fairly well settled that Section 292BB of the Act talks of the drawing of a presumption of service of notice on an Assessee and is basically a rule of evidence. In Parikalpana Estate Development (P.) Ltd. (supra) in answering a similar question, the Court referred to its earlier decision in Mukesh Kumar Agarwal [2012) 345 ITR 29/25 taxmanri.com 112 (All.} and pointed out that Section 292BB of the Act was a rule of evidence which validated service of notice in certain circumstances. It introduces a deeming fiction that once the Assessee appears in any proceeding . or has cooperated in any enquiry relating to assessment or reassessment it shall be deemed that any notice under any provision of the Act that is required to be served has been duly Served upon him in accordance with the provisions of the Act and the Assessee in those circumstances would be precluded from objecting that a notice that was required to be served upon him under the Act was not served upon. him or not served in time or was served in art improper manner. It was. held that Section 292BB of the Act is a rule of evidence and it has nothing to do with the mandatory requirement of giving a notice and especially a notice under Section 143(2) of the Act which is a notice giving jurisdiction to the AO to frame an assessment. The decision of the Allahabad High Court in Manish Prakash. Gupta (supra) is also to the same effect.
In Shri Jai Shiv Shankar Traders (P.) Ltd. (supra), this Court has also discussed the distinction between a. failure to 'issue' notice and a failure to 'serve' a notice on an Assessee. It was held, after noticing the decisions of the Allahabad High Court in CIT v. Rajeev Sharma(2011) 336ITR 678//2010] 192 Taxman 197 and CIT v. Salarpur Cold Storage (P.) Ltd. [2014] 50 taxmann.com 105/(2015) 228 Taxman. 7/15/2019 www.taxmann.com. 6/7 48 (All.) (Mag.) and the decision of the Madras High Court in Sapthagiri Finance & Investments v. ITA /2012j 25 taxmann.com 341/210 Taxman 78 (Mag.), that Section 292 BB of the Act would apply insofar as failure of 'service' of notice was concerned and not with regard to the failure to 'issue' notice. In other words, the failure of the Aa, 'in re- assessment proceedings, to issue notice under Section 143(2} of the Act, prior to finalising the re-assessment order, cannot be condoned by referring to Section 292BB of the Act.
Consequently, the Court does not find merit in the objection Of the Revenue that the Assessee was precluded from raising the point concerning the non-issuance of notice
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under Section 143 (2) of the Act in the present case in view of the proviso to Section 292BB of the Act.
The Court also finds merit in the contention of the Assessee that in any event as far as AYs 2005-06 to 2007- 08 is concerned, Section 292B8 of the Act would not apply since it is prospective in its application, i.e., applicable from AY 2008-09 onwards. The legal position in this regard appears to be well settled as explained in Kuber Tobacco Producers (P.) Ltd. (supra) and Mohammad Khaleeq (supra),
As regards the objection of the Revenue to the ITAT permitting the Assessee to raise the point concerning non- issuance of notice under Section 143(2} of the Act for the first time in the appeal before the ITAT, the Court is of the considered view that in view of the settled legal position that the requirement of issuance of such notice is Cl jurisdictional one, it does go to the root Of the matter as far as the validity of the reassessment proceedings under Section 147/148 of the Act is concerned. It raises a question of law 0..<;; far as the present cases are concerned since it is not in dispute that prior to finalisation of the reassessment orders, notice under Section. 143(2} of the Act was not issued by the AO to the Assessee. With there being no fresh evidence or disputed facts sough.t to be brought on record, and the issue being purely one of law, the ITAT was not in error in permitting the Assessee to raise such a point before it. this finds support in the decision of the Supreme Court in. National Thermal Power Co. Ltd. (supra) and the decision of this Court in Gedore Tools (P) Ltd. (supra).
On the question of whether the notice under Section 143(2) of the Act was in the facts and circumstances mandatory, Mr. Sahni sought to distinguish the long line of decisions including the recent decision of this Court in Shri Jai Shiva Shankar Traders Pvt. Ltd. (supra) on the ground that there was no occasion for the AD to issue any notice under Section 143 (2) Of the Act since the Assessee had,' in fact, not filed Cl return. He submitted that the original return was filed in the 'Saral Form' which had since been replaced with a different form. for filing of returns. Consequently, the said return. could not have been treated as a return filed pursuant to the notice issued to the Assessee under Section 148 of the Act. He further submitted that with no discrepancy having been found by the AO in the returns for A Ys 2005-06 till 2007-08, which. were processed under Section 143 (1) of the Act, there was no occasion for the AO to issue Cl notice under Section 143 (2) of the Act. Mr. Sahni submitted that in the circumstances, the action of the AO in finalising the reassessment orders without notice under Section 143 (2) of the Act was justified.
The wording of Section 143(2){ii) of the Act, which is applicable in the present case, requires the AO to be
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satisfied on examining the return filed that prima facie the Assessee has "understated the income" or has "computed excessive loss " or has "underpaid the tax in any manner". The AO has the discretion to issue Cl notice under Section 143 (2) if he considers it "necessary or expedient" to do so. This exercise by' the AO under Section 143 (2) of the Act is qualitatively different from the issuance of a notice under Section 142(1} of the Act, which as noted hereinbefore, is in a standard proforma .
The Court is unable to accept the submission of the Revenue that in the present case, no return. was filed by the Assessee pursuant to the notice issued to it under Section 148 of the Act. If after receiving the letter dated 1st April 2011 of the Assessee the AO was of the view that the return originally filed in the Saral Form could not be treated as the return. pursuant to the notice under Section. 148 of the Act, then he should have drawn the attention of the Assessee to that fact. In the present case all that the AO did was to send a notice under Section. 142 (J) of the Act. The Assessee was not made aware as to why he was required to file a return. Had a notice been issued to him under Section 143 (2) of the Act, the AO would have been obliged to let the Assessee know why he was being asked to file a return. notwithstanding his letter dated 1st April 2011. In the circumstances, the Assessee was justified in proceeding on the basis that it had not committed any default in communicating to the AO that the return already filed should be treated as the return. filed pursuant to the notice under Section 148 of the Act.
The proposal to reopen an assessment under Section 147 of the Act is to be based on reasons to be recorded by the AO. Such reasons have to be communicated to the Assessee. However, merely because the Assessee participates in the proceedings pursuant to such notice under Section 148 of the Act, it does not obviate the mandatory requirement of the AO having to issue to the Assessee Cl notice under Section 143(2) of the Act before finalising the order of the reassessment.
In this context reference may be made to the decision of the Madras High Court in Saptagiri Finance & Investments (supra) where again the Assessee did not file a return pursuant to Section 148 of the Act. The AO then issued a notice to it under Section 142(1} of the Act. The Assessee thereafter appeared before the AO and stated that the original return filed should be treated as the return filed in response to the notice under Section 148 of the Act. In those circumstances, the High Court observed that if there was some explanation that was required la be offered by the Assessee, notwithstanding the above submission made by it, the AO ought to have issued a . notice under Section 143(2) of the Act. The Madras High Court observed:-
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"Merely because the matter was discussed with the Assessee and the signature is affixed it does not mean the rest of the procedure of notice under Section 143(2) of the Act was complied with or that on. placing the objection the Assessee had waived the; notice for further processing of the reassessment proceedings. The fact that on the notice issued u/ s 143(2) of the Act; the assessee had placed its objection and reiterated its earlier return filed as one filed in response to the notice issued u/ s 148 of the Act and the Officer had also noted. that the same would be considered for completing of assessment, would show that the AO has the duty of issuing the notice under Section 143(3) to lead on to the passing of the assessmen.t. In the circumstances, with no notice issued u/ s 143(3) and there being no waiver, there is no justifiable ground to accept the view of the Tribunal that there was a waiver of right of notice to be issued u/ s 143(2) of the Act."
The decisions of the Allahabad High Court in Rajeev Sharma (supra) and Salarpur Cold Storage (P.) Ltd. (supra) also reiterate the above legal position. As far as this Court is concerned, the decision in DIT v. Society For Worldwide Inter Bank: Financial, Telecommunications (2010)323 ITR 249 (Delhi) and the recent decision in Shri Jai Shiva Shankar Traders (P.) Ltd. (supra) hold likewise.
With the legal position being abundantly clear that a reassessment order cannot be passed without compliance with the mandatory requirement of notice being issued by the AO to the Assessee under Section 143(2) of the Act, the ITAT was in the present case right in concluding that the reassessment orders in question were legally unsustainable. II
6.1.5 The Hon'ble High Court of Punjab and Haryana in the case of CIT, Faridabad Vs Cebon India Ltd 347 ITR 5383 (P&H) held that:
"2. The assessee filed return for the A.Y in question on 30.11.1996, which was processed under sec. 143(l)(a) on 30.05.1997. There-after assessment was framed under sec.144 of the act, which was affirmed in appeal. The tribunal, however, remanded the matter to CIT(A). The CIT(A) in the second round allowed the appeal on the ground that there was no evidence to show that notice under sec. 143(2) of the act had been served on the assessee before 30.11.1997, within one year of the filing of the return, it was accordingly held by the CIT(A) that the assessment was void.
The finding of the CIT(A) has been affirmed by the Tribunal.
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Learned counsel for the revenue submits that a notice has been duly dispatched to the assessee on 13.11. 1997 and the irregularity or defect in issuing notice was curable under section 292BB of the act.
We find that concurrent finding has been recorded by the CIT(A) as well as the Tribunal on the question of date of service of notice. Notice was not served within stipulated time. Mere giving of dispatch number will not render the said finding to be perverse. In absence of notice being served, the AO had no jurisdiction to make assessment. Absence of notice cannot be held to be curable under sec. 292BB of the act. "
6.1.6 In the case of M/s. Sanjeev Agarwal Vs DCIT 159 ITD 302 (Chandigarh Tribunal) held as under:
« 7. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the: material available on record. From the. order of the learned CIT (Appeals); we observe that there is no quarrel to the fact that in the present case notice under section 143(2) of the Act was not issued to the assessee. The fact of issuing notice under section 143(2) of the Act is also not coming out from the order of the Assessing Officer. This fact has not been controverted by the learned D.R. even before us. In view of this, since the learned CIT (Appeals) dismissed the ground of the assessee on the basis of provisions of section 292BB of the Act, the only issue remaining before us is to decide whether in the absence of issue of notice under section 143(2) of the Act, the assessment framed under section 147 r.w.s. 143(3) of the Act is 'Valid in the background of provisions of section 292BB of the Act. The provisions of section 292BB read 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 al1Y 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: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.
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From the bare perusal of the above section, we see that a deeming fiction has been created by this section. In case, an assessee cooperates during the assessment even if no notice has been served on him, it is deemed to be served upon him in time as per the provisions of the Act. The provisions of this section clearly laid down the circumstances under which the deeming fiction has to come into force. These conditions have been stated to be as (a),(b) and (c), which talks about the situation where the notice was not served upon the assessee or not served upon him in time or served upon him in an improper manner respectively. Therefore, we see that section talks about only the situation where the assessee raises the issue of non- service of a notice and still cooperates with the Department. Otherwise also, we are of the opinion that issuance of statutory notice cannot be dispensed with by the cooperation of the assessee. Since this notice forms the basis for Assessing Officer to assume jurisdiction under respective sections. Reliance placed by the learned counsel for the assessee on the judgment of the Punjab & Haryana High Court in the case of Cebon India Ltd. (supra) is not out of place, whereby it has been very categorically held that absence of a statutory notice cannot be held to be curable under section 292BB of the Act.
As regards the arguments of the learned D.R. that section 147 r. w.s. 148 of the Act, are a complete code in itself and there is no need for the Assessing Officer to go into other sections. to assess or re-assess income under the said section. We would like to observe the substantive part of provisions of section 148, which reads as under:
{Issue of notice where income has escaped assessment.
[(i)] Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, {* * *J 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 be, apply accordingly as if such return were a return required to be furnished under section 139:”
From the perusal of the above provisions, it is quite clear that the Assessing Officer has to issue and serve a notice under section 148 of the Act to the assessee before making assessment under section 147 of the Act. The notice under section 148 of the Act requires the assessee to furnish his return of income- within the time specified in the notice. This return. has to be in the prescribed form and in the
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prescribed manner, It has been very categorically provided in the section that afterwards the provisions of this Act shall 'so far as may be, apply accordingly as if such return. were a return required to be furnished under section 139 of the Act. Therefore} the provisions of section itself negate the arguments taken by the learned D.R. that once
. issuing notice under section 148 of the Act, the Assessing Officer cannot go into
the provisions of other sections. Once the assessee files return in pursuance of notice under section 148 of the Act, which is deemed to be filed under section 139 of the Act and in case the Assessing Officer wants to proceed with the return filed by the assessee, he has to issue a notice under section 143(2] of the Act.
Any assessment framed without issue of notice under section 143(2} of the Act} suffers from Jurisdictional error. This position of law has also clarified by Delhi High Court in the case of Alpine. Electronics Asia Pte Ltd. (supra]. In view of the above) we hereby quash the order Of the Assessing Officer, which was made without issue of notice under section 143{2] of the Act”.
6.1.7 The Hon'ble ITAT, Kolkata Bench, in case of M/s. Alok Mittal VS DCIT 167 ITD 325 (Kolkata Trib) held as under:
(6. As regards the preliminary issue raised in the additional ground no. 2, the ld. counsel for the assessee has submitted that no notice was issued by the Assessing Officer under section 143{2] before passing the order under section 143(3}I 14 7 and in the absence of issue of such statutory notice) the assessment made by the Assessing Officer under section I. T. A . N o. 5 2 6/ KO L . 1 2 0 1 7 Assessment year: 2008-2009 14.3(3]1147 is bad-in-law and is void ab initio. As per the direction of the Tribunal, the ld. D.R. has produced the relevant assessment record which shows that the notice under section 143{2] was not issued by the Assessing Officer to the assessee before framing the assessment under section 143(3}/ 14 7 and this position clearly evident from the assessment records is not disputed even by the ld. D.R. He, however, has relied on the provisions of section 292BB introduced in the Statute w.e.f. 1 s t April} 2008 in support of the revenue's case that the assessee having participated in the assessment proceedings without raising the issue of non-issuance of notice under section 143(2]} he is precluded from taking any objection now before the Tribunal about the non-issuance of notice under section 143{2]. The provisions of section 292BB relied upon by the ld. D.R. are reproduced here under:
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"292BB: Notice deemed to be valid in certain circumstances Where an assessee has appeared in any proceeding or cooperative 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.
Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment".
As submitted by the learned Counsel for the assessee, the provisions of section 292BB are applicable where there is a failure to serve the notice and not where there is a failure to issue the notice under section 143(2). He has contended that the issuance of notice under section 143(2) before completing the assessment is a statutory requirement as held by the Hon'ble Supreme Court in the case of Hotel Blue Moon {321 ITR 362J and the failure to issue notice under section 143(2) in compliance with such f. T. A . N o. 5 2 6 / KO L / 2 0 1 7 Assessment year: 2008-2009 statutory requirement is not covered under section 2928B. In support of this contention, he has relied on the decision of the Hon'ble Allahabad High Court in the case of ACIT vs. Greater Noida Industrial Development Authority [379 ITR 14J, wherein it was held that the deeming fiction under section 292BB of the Act is with regard to "service of notice" and since the initial requirement of "issuance of notice;' was not met by· the Assessing Officer, the deeming fiction under section 292BB is not applicable. It was held that there was a defect on the part of the Assessing Officer in failing to issue notice under section 143(2) within the specified period and since the said defect was not curable under section 292BB, the order of assessment passed by the Assessing Officer was bad in law. The ld. Counsel for the assessee has also relied on the decision of the Hon'ble Delhi High Court in the case of Principal CIT vs. Shri Jay Shiv Shankar Traders Pvt. Limited (I T.A. No. 519 of 2015 dated 14.10.2015), wherein it was held that the provision of section 292BB would apply in so far as failure of "service" of notice is concerned and not with regard to failure to "issue" notice. It was held that the failure of the Assessing Officer to issue notice under section 143(2) prior to finalizing the reassessment order, therefore, cannot be condoned by referring to section 2928B of the Act" and such failure is fatal to the order of reassessment. The ld. Counsel for the assessee has also placed reliance on the decision of the
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Hon'ble Kerala High Court in the case of Travancore Diagnostic Pvt. Limited -vs.- DCFT /390 FTR 167 (Kerala)j, wherein it was held that if a notice under section 143(2) has not been issued, the Assessing Officer cannot claim the benefit under section 29288 of the Act and in the absence of notice under section. 143(2), proceedings of assessment initiated, conducted and completed for the assessment year 2009-10 will have to fail.
Keeping in view the legal position emanating from the various judicial pronouncements discussed above and, having regard to the facts of the present case, I find merit in the additional ground no. 2 raised by the assessee and allow the same by holding that the assessment made by f. T. A . N o. 5 2 6 / KO L / 2017 1 7 Assessment year: 2008- 2009 the Assessing Officer under section 143(3)/147 without issuance of the statutory notice under section 143(2) is bad in law and the same is liable to be cancelled. I order accordingly .
6.1.8 The Hon'ble Kerala High Court in the case of M/s. Travancore Diagnostics P Ltd Vs ACIT has held that:
“28. The issue that, however, engages out attention more than the other issues is the contention of the learned counsel for the appellant that before making an assessment under Section 143(3) read with Section 147 of the Act, they ought to have been given a statutory notice under Section 143(2) of the Act. We must say that this contention, in our mind, assumes great significance. The question as to whether a notice has to be issued under Section 143(2) before making an assessment or re assessment under the provisions of Sections 143 and 147 respectively is no longer res integra and is not untouched by dicta. The Hon'ble Supreme Court has answered this with precision in Asstt. CIT v. Hotel Blue Moon 1201 DJ 321 ITR 1201 DJ 321 ITR 362/188 Taxman 113 (SC) stating as under:
"But s. 143(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, why the authorities should issue notice under s. 143(2). However, it an assessment is to be completed under s. 143(3) read with s. 158BC, notice under s. 143(2) should be issued within one year from the date of
filing of block return. Omission on the part of the assessing authority to issue notice under s. 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under s. 143(2) cannot be dispensed with. "
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At the time when the matter was heard, the learned counsel for the Revenue virtually admitted that no notice under Section 143(2) of the Act has been issued but held out that even in the absence of Section 143(2) notice, the assessment made could be maintained on two grounds. He contends that the Assessing Officer had, during the proceedings, issued a. notice as is discernible from the order sheet produced as Annexure-A2 in the papers of ITA 221/2015, on 10.12.2012. Even though the said notice has not been produced before us, we see from the order of the ITAT that same has been extracted. For ease of reference and since the Revenue contends that this notice can be treated as one issued under Section 143(2), we deem it appropriate to extract the same here:
Government of India Income Tax Department Office of the Additional Commissioner of Income-tax Kollam Range, Kollam No. AACFT1116C/Cir.1/2011-12 Date: 10/12/2012 To M/ s. Trauancoe Diagnostics Put. Ltd. Chamakada, Najeem Complex, Kollam.
Sub: Income tax Assessment in your own case-A. Y.2009-10 reg. Ref: Notice u/ s. 143(2) dated 11/ 0 1/ 20 12. Sir, Income tax assessment for the A. Y. 2009-10 is posted for hearing at my office at Kollam on 19-12-12 at 3.30 p. m. You are requested to appear before me on the date of hearing either in person or through an Authorized Representative. Failure on your part, the assessment will be finalized on the basis of material available on record.
Yours faithfully, Sd/ - (V. VINODKUMAR) Asst. Commissioner of Income-tax Circle-1, Kollam.
From a reading of this notice, we believe that the submission that this may be treated as one issued under Section 143(2} of the Act is a contention bordering on brinkmanship by the Revenue and not one with real conviction. The order sheet very clearly shows that this is a notice that had been issued as a "posting notice" and nothing else. The above extracted notice ineffably refer to a notice under Section 143(2} dated 11.01.2012. However, the learned counsel for the Revenue took a defence that it was only a typographical error and in fact) refers to Section 148 notice that was issued on 11.01.2012. In any event of the matter, the fact that the above extracted notice can no way qualify itself to be a notice under Section 143(2) becomes obvious from the way Section 143(2} is engrafted in the Statute.
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Section 143(2} of the Act, as it stood before being substituted by the Finance Act, 2016, reads as under: "Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be) if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any 'evidence on Which the assessee may rely in support of the return:
Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.”
It is indubitable from the section that the Assessing Officer shall serve on the assessee a notice specifying the particulars of such claim of loss, exemption, deduction, allowance or relief made in the return, if he has reason to believe that all such are inadmissible. The notice is also to direct the assessee to produce or cause to be produced any evidence or particulars specified therein or on which the assessee may rely. A notice under Section 143(2} is the hypostasis on which any proceedings under Section 143(3) or a reassessment under Section 147 (if the time for regular assessment is not over) will have to be rested on. In the absence of a notice under Section 143(2}, it is obvious that no further proceedings can be continued for assessment under Section 143 and the Hon'ble Supreme Court has already settled the law that without such a notice the Assessing Officer could not
• assume jurisdiction and that this defect cannot be cured subsequently, since it is not a procedural defect, but it is the defect that goes to the root of the jurisdiction.
The learned counsel for the Revenue, however, fervently tried to support the assessment in the absence of Section 143(2) notice, taking refuge under the provisions of Section 292BBof the Act. For immediate reference, the said section is extracted under:
"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
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precluded from taking any objection in any proceedings 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: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.
This section was introduced by the Finance Act, 2008 with effect from 01.04.2008. This section incorporates the principle of estoppel. It stipulates that the assessee, who has appeared in a proceeding and has co-operated in an enquiry relating to the assessment or re-assessment, shall be deemed to be served with the notice, which was required to be served and that he would, thereafter, be precluded from objecting that notice was not served upon him, or that it was served upon him in an improper manner or that it was not served upon him in time. In this case, it is admitted by the assessee that his representative had appeared before the Assessing Officer on 19.12.2012, 11.03.2013 and 27.03.2013. The Revenue, therefore, asserts that since the assessee had appeared in the proceeding and had co- operated with the inquiry, he shall be then precluded from raising any contention that no notice had been served on him. This submission at the first blush appears to be appealing. However, on a clear reading of the section it becomes inscrutable that the issue of estoppel would arise against the assessee only after he had appeared in the assessment proceeding pursuant to a notice validly issued. In this case, the learned. Counsel for the assessee maintains that since no notice under Section 143(2) was issued to the assessee and that they have only received a Section 148 notice, they had been co-operating with the Assessing Officer wider the bona fide impression that the proceedings that were going on was the re-assessment under Section 147 and not for assessment under Section 143 for the year 2009-10. We are not impressed with this stand of the assessee because as regards 2010-11, the assessee admits that the Revenue had issued a Section 143(2) notice and that the assessee had received the same. He was, therefore, obviously aware of the fact that the proceedings being continued were under Sections: 143 and 147. However, the assessee is entitled to take all technical defenses available to them and we cast no aspirations on their conduct in making a defense that they were not aware that they was participating in a proceedings under Section 143 for the year 2009- 10."
It is virtually admitted by the Revenue that no notice under Section 143(2) had been issued. In Hotel Blue Moon's case (supra), the Hon'ble Supreme Court has already settled the position of law the omission on the part of the Assessing Officer under Section 143(2) cannot be a
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procedural irregularity and that the same is not curable and that therefore, the requirement of notice under Section 143(2) cannot be dispensed with. This emphatic statement of law, in the absence of issuance of a notice under Section 143(2) by the Revenue, would, therefore, inure to the benefit of the assessee, even though as noticed above, we are not impressed by the contention that he was not aware of the proceedings under Section 143 for the assessment year 2009-10. However, when the. statute makes it imperative that notice under Section 143 (2) is to be issued, the omission or failure would then hit at the root of the jurisdiction applying the principles enunciated in Anisminic Ltd. v. Foreign Compensation Commission [1969J 2 AC 147 , which has been approved by the Hon'ble Supreme Court in several judgments.
The extended question then is whether even if the assessee is deemed to have participated in the proceedings under Section 143, even without the Assessing Officer having issued the mandatory notice, would the Revenue be entitled to the benefit provided under Section 292BB of the Act. Section 292BB creates an estoppel against the assessee in claiming that no notice has been served on him, if he has participated in the proceedings. However, the said section does not in any manner grant any privilege to the Assessing Officer in dispensing with. the issuance of a notice under Section 143(2) Of the Act. Since the jurisdiction 'under Section 143 is founded on the issuance of a notice under Section 143(2), the assessing officer could have assumed jurisdiction only after issuing a notice under Section 143 (2). Even the participation of the assessee would not provide' the benefit under Section 292BB to the Revenue. The requirement that a notice be issued is mandatory and the Assessing Officer has no other option but to issue the notice before commencing the jurisdiction. Here we draw support from. The judgment of the Hon'ble Supreme Court in Asstt. CIT v. Greater Noida Industrial Development Authority [2015J 379 ITR 14 (All.), wherein it was held as under:
"Section 148(1) provides for service of notice as a condition precedent to making the order of assessment. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the Income-tax Officer to proceed to reassess. The mandate of section 148(1) is that reassessment shall not be made until there has been service. The requirement of issue of notice is satisfied when a notice is actually issued. "
The only benefit that Section 292BB obtains to the assessing officer is that after the issuance of such notice the' assessee appears and participates in the proceedings, then he shall not he heard, subject to the proviso to the said section, that he had not been properly served with notice.
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We have no hesitation in holding that the Assessing Officer can claim and avail the benefit under Section 292BB'and the assessee will be burdened by the rigour of estoppel contained therein only after a notice under Section 143(2) had been validly issued. 'When it is virtually admitted that no such notice had been issued, the Assessing Officer loses even the authority to enter int~ the jurisdiction under Section 143 and the participation or otherwise of the assessee would be of no avail. It is here that the words of Rowlat, J. vide supra in paragraph 5 of this judgment assumes climataric importance because in taxation nothing is to be intended and nothing can be presumed. If a notice under Section 143(2) has not been issued, the Assessing Officer cannot claim the benefit under Section 292BB and the claim that the earlier notice extracted in paragraph. 29 of the judgment was intended to be the notice issued under Section 143(2) and that substantial compliance under Section 143(2) must be inferred, cannot be countenanced.
From the records available before us, we are unable to understand why a notice under Section 143(2) was not issued for the year 2009- J 0 when the same was issued for the year 2010-11. The order sheet, Annexure-A2 annexed along with the papers in ITA 221/2015, shows that the Assessing Officer was aware of the need for issuance of the said notice as early as in April 2012. The only reason for not issuing a Section 143(2) notice has been recorded by him in the order sheet as "it is not possible to generate notice under Section 143(2) through an AST, since the assessee has not filed the return, electronically". The order sheet further shows that the assessee was again requested to file their return in response to Section 148 electronically. This conduct of the Assessing Officer is rather surprising and it defies logic, since the assessee cannot be forced and coerced to file their return electronically so as to then enable the Assessing Officer to issue a notice under Section 143(2) of the Act. This is more so because even in the absence of such an electronic return for the year 2010- 11, the Assessing Officer had in fact issued the mandatory notice for that year on 11.01.2012. It is beyond comprehension that even though the Assessing Officer had time till 30.09.2011 to issue notice under Section 143(2) and even though he had recorded the reasons for assuming jurisdiction under Section 147 for re-assessment on 21.09.2011, he had still not chosen to issue the notice which would have then given him the jurisdiction to continue with the proceedings. We are unable to obtain any reasons to these omissions and it is rather distressing, as we have recorded in the opening lines of the judgment) that on account of this omission and non compliance of mandatory and imperative provisions, the assessee would now be entitled to reliefs which they otherwise would not have able to obtain.' We have, therefore, no other option but to hold in the absence of a Section 143(2) notice,
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proceedings of assessment initiated, conducted and completed for the year 2009-10 will have to fail but for the year 2010-11, since the proceedings have been continued on the basis of a validly issued Section 143(2) notice, same is being upheld. « 6.1.9 The jurisdictional ITAT in the case of ACIT, Thirupathi Vs Dr. N. Madhava Reddy in ITA No.1897 /Hyd/20 11, dt.1 0.11.20 17 held that: "The assessment u/ s.143(3) cannot be' passed without compliance with the mandatory requirement of notice being issued u/ s.143(2), therefore) the assessment order in question is legally . unsustainable and the same is quashed." 6.2 Respectfully, following the ratio laid down in the above cases which has again been affirmed by Hon'ble S.C in case of Mr. Laxmandas Khandewal 417 ITR 325 (S.C) and the facts and circumstances of the case as brought out supra, it is held that the proceedings are not validily initiated and the order passed thereafter is liable to be set aside and the order passed is set aside. The assessee succeeds on above grounds. As the order is set aside in the absence of valid notice u/s 143(2), the other grounds raised are not adjudicated. 7. In the result, the appeal is treated as allowed”.
Learned DR could not file any case records before us about the Assessing Officer having issued the corresponding section 143 (2) notice to the assessee. We make it clear that the instant issue stands of non issuance of such a notice settled by the hon'ble apex court in Laxmandas Khandewal 417 ITR 325 (S.C) that the same is very much mandatory condition for framing of a valid assessment. We thus find no substance in Revenue’s vehement contention seeking to revive the impugned assessment in foregoing terms. The Revenue’s instant sole substantive ground as well as ITA No.467/Hyd/2020 stand rejected.
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Learned counsel next stated that the assessee does not press for its appeal in ITA No.409/Hyd/2020 keeping in mind the outcome of the Revenue’s foregoing arguments. Rejected accordingly.
This assessee’s appeal ITA No.409/Hyd/2020 is dismissed as not pressed and Revenue’s cross appeal ITA No.467/Hyd/2020 is dismissed in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in the Open Court on 21st March, 2022.
Sd/- Sd/- (A.M.ALANKAMONY) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad, dated 21st March, 2022. Vinodan/sps Copy to: S.No Addresses 1 Smt.Indrani Prasad, C/o P Murali & Co. C.A. 6-3-655/2/3 Somajiguda, Hyderabad 500082 2 ACIT, Central Circle-3 Hyderabad 3 CIT (A)-11 Hyderabad 4 Pr. CIT – Central, Hyderabad 5 DR, ITAT Hyderabad Benches 6 Guard File
By Order
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