AAMNABEN GAFAR MADKIYA,JAMNAGAR vs. ITO, WARD - 2(10), JAMNAGAR, JAMNAGAR

Consequently, the notice u/s 148 of the Act, was issued on 31/03/2021 through ITBA System and duly served upon the assessee. In response to notice u/s 148 of the Act, dated 31.03.2021 of Act, she has filed her ITR on 10.03.2022, which was not within the due date, as specified in the notice u/s 148 of the Act, thus, the same was treated as non-est by the Assessing Officer. Consequently, notice u/s 142(1) of the Act, 1961 along with query letters were issued through ITBA assessment module on 27.11.2021, 02.02.2022 & 17.03.2022 fixing the date of hearing on 13.12.2021, 14.02.2022 & 20.03.2022. All the aforesaid statutory notices were duly delivered upon the assessee on the same day in its email id hamirkait@gmail.com. A show cause notice was also issued dated 07.03.2022 fixing date of hearing on 16.03.2022.

In response to the aforesaid notices, the assessee uploaded her reply on 10.03.2022 & 19.03.2022, in which she uploaded documents like computation of income, sale deed, purchase deeds in support of claim of deduction u/s 54B of the Act, valuation report, etc.

The assessing officer noticed that as per information available with the Department, it is revealed that the assessee has sold following immovable property:

Aggrieved by the order of the assessing officer, the assessee, carried the matter in appeal, before the learned CIT(A), who has confirmed the action of the assessing officer, on merit. Apart from this, the ld. CIT(A) has also adjudicated the issue relating to non-issuance of notice, under section 143(3) of the Act, observing as follows: “Ground No.3: The assessee claimed in this ground that notice u/s 143(2) of the I.T. Act was not issued before the completion of the assessment. However, it is discussed in detail in the previous paragraphs that the AO treated the return of income filed on 10.03.2022 as non-est. Once the return of income was treated as non-est, issue of notice u/s 143(2) of the I.T. Act does not arise. Hence, Ground No.3 is not maintainable and dismissed.”

Aggrieved by the order of the learned CIT(A), the assessee is in further appeal before us.

Learned Counsel for the assessee, argued that ground No. 5, raised by the assessee, in appeal memo, alongwith Form No. 36 should be adjudicated first and on priority basis. In ground No.5, the assessee has stated that during the assessment proceedings, the assessing officer has not issued notice, under section 143(2) of the Act, which goes to the root of the matter. The Learned Counsel submitted that during the assessment proceedings, the assessee has submitted his return of income. Once the assessee has submitted its return of income, then it was the duty of the assessing officer, to issue the notice under section 143(2) of the Act to do the assessment on the income of the assessee and to frame the assessment order. The assessing officer simply stated that the assessee`s appeal was treated, as non-est in the eye of law, therefore, it was not necessary for the assessing officer to issue the notice under section 143(2) of the Act. Learned Counsel for the assessee, however submitted that it is mandatory for the assessing officer, to issue the notice under section 143(2) of the Act, to acquire the jurisdiction to frame the assessment order. The notice under section 143(2) of the Act, is a statutory notice and it must be issued by the assessing (AY 2013-14) Amana Gafar Madakiya officer, since the assessing officer has not issued the notice under section 143(2) of the Act, hence the assessment order may be quashed, on this score only.

On the other hand, learned DR for the revenue submitted that it was not necessary for the assessing officer, to issue the notice under section 143(2) of the Act, because the assessing officer has treated the return of income, filed by the assessee, as invalid, therefore, once the assessing officer has treated the return of income filed by the assessee, as invalid, then, it is not necessary to issue the notice by the assessing officer, under section 143(2) of the Act. That is, the AO treated the return of income filed on 10.03.2022, by the assessee, as non-est, therefore, issue of notice u/s 143(2) of the Act, does not arise.

We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld. CIT(A) and other materials brought on record. We note that ground No. 5 raised by the assessee, states that the notice u/s 143(2) of the Act, was not issued by the assessing officer. The ld. CIT(A) held that the AO treated the return of income filed on 10.03.2022, as non-est and once the return of income was treated as non-est, the issue of notice u/s 143(2) of the Act does not arise.

We do not agree with the above statement of the learned CIT(A) to the effect that once the return of income was treated as non-est, the issue of notice u/s 143(2) of the Act does not arise. We note that Hon’ble Delhi High Court in its decision in the case of Pr. CIT v/s Shri Jai Shiv Shankar Traders (P) Ltd. (383ITR 448) has held that failure of assessing officer to issue notice u/s 143(2) is fatal to order of reassessment and such failure cannot be condoned by referring to section 292BB of the Act. We note that Ld. Counsel of the Assessee (AY 2013-14) Amana Gafar Madakiya had referred plethora of judgments laid down by Hon'ble High courts following the judgment of the Apex court where in the facts were similar to case at hand and it was held that for completing the assessment under section 148 of the Act, compliance with the procedure of issue of notice under Section 143 (2) was mandatory. This position of law has been clarified by Delhi high Court in the case of Alpine Electronics Asia Pvt. Ltd. v/s. DCIT (2012) 341 ITR 247 (Del). It has been also contended by ld. DR that assessee attended the assessment proceeding appellate proceedings, regularly and never objected regarding issue and service of notice u/s143(2) so the default can be treated as procedural irregularity u/s 292BB of the Act. As per the provision of section 292BB where an assessee had appeared in any proceedings or cooperated in any enquiry relating to an assessment or re-assessment, 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 provision of this Act. The provision of section 292BB clearly laid down the circumstances / conditions 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: (a) notice was not served upon the assessee, (b) not served upon him in time, and (c) served upon him in an improper manner respectively. Therefore, section 292BB talks about only the situation where the assessee raises the issue of non-service of notice and still co-operates with the Department. The issuance of statutory notice cannot be dispensed with by the co-operation of the assessee. Since this notice 143(2) forms the basis for the Assessing Officer to assume jurisdiction under respective sections. To support this proposition, we rely on the decision of P & H High Court in the case of CIT v/s. Cebon India Ltd (2012) 347 ITR 583 wherein it has been categorically held that absence of a statutory notice cannot be held to be curable u/s 292BB of the Act.

We note that it shall be incumbent to send a notice under section 143(2) of the Act, to the assessee. The provisions contained in sub-section (2) of section 143 is mandatory. During the year under consideration, the assessee has received a notice u/s 148 of the Income tax Act, 1961, dated 31.03.2021. However, due to technical glitch on income tax portal, notice u/s. 148 was not reflected on Portal and hence, assessee was not able to file return of income in response to notice u/s 148 within the time prescribed in the notice. However, the return of income, in response to notice u/s. 148 of the Act was submitted by the assessee, before the assessing officer, on 10/03/2022.

Thereafter, various notices u/s 142(1) of the Act, along with the query letters issued through ITBA assessment module has been issued to the assessee, by the assessing officer. In response, the assessee had filed reply on 10.03.2022 & 19.03.2022 along with explanation and supporting documents, before the assessing officer. Accordingly, order u/s 147 r.w.s. 144B dated 30.03.2022, was passed by the AO and made an addition in relation to the sale of plot as long- term capital gain wherein cost of acquisition claimed by assessee was not allowed. However, we note that during the assessment proceedings AO had not issued the notice u/s 143(2) of the Act, and without which, the assessment cannot be completed, that is, the assessing officer does not get power to frame the assessment order, on the assessee. In this regard, it is useful to go through the provisions of section 143(2) of the Act, which reads as follows: “Section 143(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 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”

We note that Hon’ble Apex Court in case of ACIT vs. Hotel Blue Moon [2010] 188 Taxman 113 (SC), held that the issuance and service of notice u/s 143 (2) is mandatory and not procedural. The Hon`ble Supreme Court has further held that omission on the part of the assessing authority to issue notice under Section 143(2) of the Act 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. Considering these facts and circumstances, we quash assessment order and allow the appeal of the assessee.

As the assessment itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous.

In the result, appeal of the assessee is allowed.