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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’, NEW DELHI
Before: SHRI H.S. SIDHU
ORDER PER H.S. SIDHU, J.M.:
This appeal by the assessee is directed against the order dated 28.03.2018 passed by learned Commissioner of Income Tax (Appeals)-2, Gurgaon, raising the following grounds of appeal:
1. That on the facts and in the circumstances of the case and in law, Ld. Commissioner of Income Tax (Appeals) [herein after referred to as "Ld. CIT(A)"] erred in upholding the re-assessment under section 148 of the Income Tax Act, 1961 as carried by id. Assessing Officer (herein after referred to as "Ld. A.O".), which is against the provisions of the Act.
2.1 That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in upholding the action of the Ld. A.O. in framing assessment without issuing the statutory notice under section 143(2) of the Act.
2.2 That on the facts and circumstances of the case and in law, the defect of non-issuance of notice under section 143(2) of the Act goes to the root of the matter and such jurisdictional defect cannot be cured by section 292BB or otherwise.
3.1 That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in upholding action of the Ld. A.O., for reopening assessment proceedings merely on the basis of information received from the Investigation Wing, Ahmedabad and without any tangible material.
3.2 That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in upholding the addition made of Rs. 16,61,557/- under the head 'Capital Gain' on account of client code modification by the share broker in sale / purchase transaction of securities solely based on information received from Investigation Wing, without application of mind and without making any further enquiries.
4. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in passing order on the basis of remand report which was call for on the issue of production of additional evidence before appellate authority as per Rule 46A of the Income Tax Rules. However, in the given case, there is no matter / issue about production of additional evidence before Ld. CIT(A) rather it was about raising of additional ground before Ld. CIT(A).
4.1 That on the facts and in the circumstances of the case and in law, the order passed below authorities are without application of mind and merely on the basis of remand report on the issue, not related to appellate proceedings.
4.2 That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in mentioning in her order that during the appeal proceedings no further submission on merit was made by the appellant as against the submissions were made by the appellant on facts and also discussed the same during the appellate proceedings.
5. That the appellant craves leave to add, alter, amend or vary any of the ground either at or before the hearing of the appeal.
At the hearing, learned counsel for the assessee stated that the similar issue regarding non-issuance of notice under section 143(2) of the Income-tax Act, 1961 (in short ‘the Act’) has already been adjudicated and decided by the Hon’ble Supreme Court in the case of Commissioner of Income Tax Vs. Laxman Das Khandelwal, in Civil Appeal Nos.6261-6262 of 2016, vide order dated August 13, 2019.
In support of his arguments he has also filed a copy of judgment passed by Hon’ble Supreme Court in the case of Commissioner of Income Tax Vs. Laxman Das Khandelwal (supra). He drawn my attention towards paras 5 to 11 of the order of Hon’ble Supreme Court, which read as under:
“5. At the outset, it must be stated that out of two questions of law that arose for consideration in Hotel Blue Moon’s case2 the first question was whether notice under Section 143(2) would be mandatory for the purpose of making the assessment under Section 143(3) of the Act. It was observed :- “3. The Appellate Tribunal held, while affirming the decision of CIT (A) that non-issue of notice under Section 143(2) is only a procedural irregularity and the same is curable. In the appeal filed by the assessee before the Gauhati High Court, the following two questions of law were raised for consideration and decision of the High Court, they were: “(1) Whether on the facts and in circumstances of the case the issuance of notice under Section 143(3) of the Income Tax Act, 1961 within the prescribed timelimit for the purpose of making the assessment under Section 143(3) of the Income Tax Act, 1961 is mandatory? And (2) Whether, on the facts and in the circumstances of the case and in view of the undisputed findings arrived at by the Commissioner of Income Tax (Appeals), the additions made under Section 68 of the Income Tax Act, 1961 should be deleted or set aside?”
The High Court, disagreeing with the Tribunal, held, that the provisions of Section 142 and subsections (2) and (3) of Section 143 will have mandatory application in a case where the assessing officer in repudiation of return filed in response to a notice issued under Section 158-BC(a) proceeds to make an inquiry. Accordingly, the High Court answered the question of law framed in affirmative and in favour of the appellant and against the Revenue. The Revenue thereafter applied to this Court for special leave under Article 136, and the same was granted, and hence this appeal. … …. ….
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 prerequisite for framing the block assessment under Chapter XIV-B of the Income Tax Act, 1961? …. …. ….. 27. 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(o) proceeds to make an enquiry, he has necessarily to follow the provisions of Section 142, sub-sections (2) and (3) of Section 143.”
6. The question, however, remains whether Section 292BB, which came into effect on and from 01.04.2008 has effected any change. Said Section 292BB is to the following effect:- “292BB. Notice deemed to be valid in certain circumstances. - Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was –
(a) Not served upon him; or (b) Not served upon him in time; or (c) Served upon him in an improper manner:
Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.”
7. A closer look at Section 292 BB shows that if the assessee has participated in the proceedings it shall be deemed that any notice which is required to be served upon was duly served and the assessee would be precluded from taking any objections that the notice was (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner. According to Mr. Mahabir Singh, learned Senior Advocate, since the Respondent had participated in the proceedings, the provisions of Section 292BB would be a complete answer.
On the other hand, Mr. Ankit Vijaywargia, learned Advocate, appearing for the Respondent submitted that the notice under Section 143(2) of the Act was never issued which was evident from the orders passed on record as well as the stand taken by the Appellant in the memo of appeal. It was further submitted that issuance of notice under Section 143(2) of the Act being prerequisite, in the absence of such notice, the entire proceedings would be invalid.
8. The law on the point as regards applicability of the requirement of notice under Section 143(2) of the Act is quite clear from the decision in Blue Moon's case. The issue that however needs to be considered is the impact of Section 292BB of the Act.
9. According to Section 292BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said Section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself.
Since the facts on record are clear that no notice under Section 1743(2) of the Act was ever issued by the Department, the findings rendered by the High Court and the Tribunal and the conclusion
arrived at were correct. We, therefore, see no reason to take a different view in the matter. 11. These Appeals are, therefore, dismissed. No costs.” 4. He requested that respectfully following the order of the Hon’ble Supreme Court the addition in dispute may be deleted.
Learned DR relied on the order passed by the learned First Appellate Authority.
I have heard both the parties and have perused the relevant records, especially orders passed by the Revenue Authorities along with the judgment passed by the Hon’ble Supreme Court. I have also perused the order sheet of the Assessing Officer and I am of the view that the Assessing Officer has not issued notice under Section 143(2) of the Act. We are of the considered view that the issue in disputed is squarely been covered by the judgment of Hon’ble Surpreme Court in the case of Commissioner of Income Tax Vs. Laxman Das Khandelwal (supra),
Keeping in view the facts and circumstances of the present case and the issue in dispute regarding non-issuance of notice under Section 143(2) of the Act, the issue which has already been adjudicated in favour of the assessee in the case of Commissioner of Income Tax Vs. Laxman Das Khandelwal (supra), the additions in dispute deserves to be deleted.
Accordingly, respectfully following the judgment passed by the Hon’ble Supreme Court in the case of Commissioner of Income Tax Vs. Laxman Das Khandelwal (supra), the addition in dispute is deleted and the appeal filed by the assessee is partly allowed. No other points have been argued by the learned Counsel for the assessee.
In the result, the appeal of the assessee is partly allowed.
Order is pronounced in the open court on 26th December, 2019.