SRI. KEMPANNA (HUF - DISRUPTED),BANGALORE vs. DCIT, BANGALORE

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH : BANGALORE

BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER

ITA No. 278/Bang/2016 Assessment Year : 2006-07

Shri Kempanna [HUF-Disrupted], The Deputy #32, Byrasandra Village, Commissioner of C.V. Raman Nagar, Vs. Income Tax, Bangalore – 560 093. Circle – 7 [1], PAN: AAKHKJ0290G Bangalore. APPELLANT RESPONDENT Assessee by : Shri Narendra Sharma, Advocate Revenue by : Shri N. Sukumar, Addl. CIT (DR) Date of hearing : 31.08.2018 Date of Pronouncement : 28.09.2018 O R D E R Per Shri A.K. Garodia, Accountant Member This appeal is filed by the assessee and the same is directed against the order of ld. CIT(A)-4, Bangalore dated 30.12.2015 for Assessment Year 2006-07. 2. The grounds raised by the assessee as per concise grounds of appeal are as under. “During the course of hearing on 23/07/2018, the Hon'ble Bench observed that the grounds of appeal filed along with the appeal memorandum originally were argumentative in nature and had directed concise grounds of appeal be filed and in accordance with the said directions of the Hon'ble Bench, the following concise grounds, to the extent possible without sacrificing the substantial ground involved for adjudication of the appeal, are being filed, which may kindly be admitted and taken on record, as under :- 1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the appellant's case. 2. The learned CIT[A] failed to appreciate that the reasons for reopening the assessment by issuance of notice u/s.148 of the Act sought for by the appellant under the letter dated 25/02/2013 was not furnished before the completion of the assessment and that the reasons recorded were only furnished upon further request under the cover of the letter dated 20/01/2014 after the completion of the assessment and the failure to furnish the reasons recorded for reopening the

ITA No.278/Bang/2016 Page 2 of 37 assessment before completion of the assessment transgresses the law laid down by the Hon'ble Supreme Court in the case of GKN DRIVESHAFT reported in 259 ITR 19 and consequently, the assessment order so passed was a nullity and ought to have been cancelled under the facts and in the circumstances of the appellant's case. 3. Without prejudice to the above, the learned CIT[A] failed to appreciate that the impugned assessment order framed on the appellant HUF after the oral partition amongst the members of the HUF, which was a complete partition and therefore there was no HUF in existence when the assessment order was passed and such an assessment made on a disrupted and non-existent HUF, which was hitherto not assessed as undivided before its disruption, was bad in law having regard to the ratio of the decision of the Hon'ble Karnataka High Court in the case of SRI LAKANNA & SONS in ITRC No.57/1994 dated 26/05/2005 and therefore the impugned assessment order passed ought to have been cancelled. 4. The learned CIT[A] erred in sustaining the assessment made invoking the provisions of section 144 of the Act without appreciating that the appellant had filed the return of income and had furnished its explanation on the points raised in course of the assessment proceedings and merely because the learned A.O. held a different view in the matter, it cannot be held that there was no compliance to warrant completion of the assessment u/s. 144 of the Act under the facts and in the circumstances of the appellant's case. 5. Without prejudice to the above, the learned CIT[A] erred in upholding the view that the appellant had transferred certain undivided interest in land in favour of the Developer during the year upon the execution of the joint development agreement dated 24/08/2005 having regard to the ratio of the decision of the Hon'ble Karnataka High Court in the case of CIT V. DR. T.K.DAYALU in ITA No.3165 of 2005 [reported in 60 DTR 403] under the facts and in the circumstances of the appellant's case. 5.1 The learned CIT[A] ought to have appreciated that following the oral Memorandum of Understanding [MOU] for joint development that was entered into on 14/12/2004 on which date the appellant received a sum of Rs.10 lakhs by cheque bearing No.414446 dated 14/12/2004 drawn on Oriental Bank of Commerce, Indiranagar Branch, Bangalore from the partner of the Developer firm, which was followed by a regular written MOU dated 23/12/2004 for joint development, it cannot be held that there was any transfer of undivided interest in land for the year under appeal and hence, the capital gains assessed for the assessment year 2006-07 was misconceived and liable to be deleted. 6. Without prejudice to the above, the learned CIT[A] failed to

ITA No.278/Bang/2016 Page 3 of 37 appreciate the consideration for the transfer of undivided interest in land upon joint development ought to have been determined based on the guideline value of the extent of the land which goes to the share of the developer on the date Joint Development and not the market value of the flats or the cost of construction by the developer of the flats falling to the share of the appellant under the facts and in the circumstances of the appellant's case. 7. The learned CIT[A] is not justified in holding that the appellant was not entitled to exemption u/s.54F of the Act in respect of the residential apartments that. were to be constructed and delivered by the developer upon completion of the development under the facts and in the circumstances of the appellant's case. 8. Without prejudice to the right to seek waiver with the Hon’ble CCIT/DG. the appellant denies himself liable to be charged to interest u/s. 234-A, 234-B and 234C of the Act, which under the facts and in the circumstances of the appellant's case deserves to be cancelled. 9. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.” 3. The assessee has also filed two additional grounds which are as under. “1. The order of assessment passed u/s 144 rws 147 of the Act dated 30/12/2013 is bad in law and void-ab-initio since no valid notice u/s 143[2] of the Act has been issued within the time allowed under the proviso to section 143[2] of the Act selecting the return of income filed by the appellant in response to the notice u/s 148 of the Act on 25/02/2013 for scrutiny and consequently the impugned order without complying with the requirement of section 143[2] of the Act requires to be cancelled. 2. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered.” 4. The ld. AR of assessee filed written submissions dated 14.08.2018 which are reproduced hereinbelow. “The appellant begs to submit the following written submissions and brief synopsis of the arguments advanced before the Hon'ble Bench in connection with the captioned appeal and the background facts relevant for appreciation of the contentions of the appellant are set-out for the sake of facility before the ground-wise submissions on the issues that arises for the consideration of the Hon'ble Bench, as under : 1. The appellant is a disrupted Hindu Undivided Family of

ITA No.278/Bang/2016 Page 4 of 37 which Sri Kempanna, was the kartha, during his lifetime. Sri Kempanna passed away on 01/12/2013, during the pendency of the appeal before the Hon'ble Bench. 2. NOTICES: A notice u/s.148 of the Act, dated 23/12/2012 issued by the learned A.O. for the assessment year 2006-07. In response to the said notice issued by the learned A.O., the appellant filed a return of income showing NIL income along with a reply dated 25/02/2013. In the aforesaid reply, the appellant submitted that the joint family of the appellant owned a piece of land No.13/2-2, at Byrasandra, K.R.PuramHobli, Bangalore and the joint family of the appellant was completely disrupted on account of the total partition and thereupon the said property was owned by the divided co-parcerners. It was submitted that there was no income from the aforesaid land held by the disrupted joint family and hence, no returns of income were filed for any of the years by either the disrupted HUF of the appellant or for that matter by the smaller joint families of each of the sons of the appellant, who were all owners of the aforesaid property after the partition.

2.1 It was also submitted in the same reply that the divided members of the erstwhile Joint family of the appellant had entered into a Memorandum of Understanding [MOU] dated 14/12/2004 with one Sri P.Srinivas, Partner of M/s.Sreeja Constructions. Later on, a Joint Development Agreement with the firm M/s. Sreeja Constructions [hereinafter referred to as "the developer"] was also executed on 24/08/2005, which was registered. It was also submitted in the aforesaid reply that the divided members of the erstwhile joint family of the appellant had contributed their share in the land with the developer M/s.Sreeja Constructions, who was a co-venturer and thus, there was an Association of Persons [A013] consisting of the divided members of the Hindu Undivided Family and M/s.Sreeja Constructions that has come into existence. It was pleaded that any income from the joint development of the property was not liable for assessment in the hands of the appellant HUF. 2.2 Hence, as stated above, the appellant filed a NIL return "Under Protest" in response to the notice issued u/s. 148 of the Act. In the aforesaid reply dated 25/02/2013, the appellant had also sought for the reasons recorded from the A.O. for reopening the assessment. Copy of the notice issued u/s.148 of the Act dated 23/11/2012, the appellant's reply dated 25/02/2013 and the NIL return of income filed by the appellant in response to the notice issued u/s. 148 of the

ITA No.278/Bang/2016 Page 5 of 37 Act, are placed at page 1, pages 2 to 4 and page 5 respectively of the Paper book. 2.3 Thereafter, assessment proceedings were taken up by the learned A.O. and there was a notice u/s.143[2] of the Act, dated 13/12/2013 along with a notice u/s. 142[1] of the Act of even date. Copy of the notice issued u/s.143[2] of the Act, dated 13/12/2013 is placed at page 6 of the Paper book. 3. ASSESSMENT: It is submitted that the learned A.O. concluded the assessment proceedings by the order passed u/s.144 rws 147 of the Act, dated 30/12/2013. In this order, the learned A.O. has brought to tax a sum ofRs.3,19,76,190/- as the capital gains arising on the joint development of the property belonging to the appellant HUF. 3.1 It has been held by the learned A.O. that there was a transfer of undivided interest in the lands held by the appellant in favour of the Developer by virtue of the Joint Development Agreement dated 24/08/2005 as per the provisions of section 2[47] rws 53A of the Transfer of Property Act. It is submitted that the learned A.O. worked out the capital gains by adopting the value of built-up area to be received by the appellant as the full value of consideration accruing as the result of transfer and deducting therefrom the indexed cost of acquisition. The learned A.O. has valued the built-up area to be received by the appellant by applying the cost of construction of the developer of Rs.800 per sft. 3.2 It may be mentioned here that the learned A.O. has observed in para [8] of the assessment order that the assessment was completed ex-parte u/s.144 of the Act, dated 30/12/2013, to the best of his judgement since the appellant had not responded to the proposal dated 13/12/2013 indicating the line on which the assessment was likely to be completed. The learned A.O., however, has also noted in para [4] of the assessment order that the appellant had filed a NIL return in response to notice issued u/s.148 of the Act. 4. FIRST APPEAL: The appellant filed a statutory first appeal before the learned CIT [Appeals] in which the following contentions were raised : (a) Validity of the re-opening u/s.148 of the Act, since the A.O. had not furnished the reasons recorded for re-opening the assessment which was requested by the appellant vide letter dated 25/02/2013; (b) Validity of the assessment framed on the appellant HUF after its complete partition and disruption;

ITA No.278/Bang/2016 Page 6 of 37

(c) Levy of Capital gains on the joint development of the property invoking the provisions of section 2[47] r.w.s 53A of the Transfer of Property Act alongwith the computation of the quantum of capital gains; (d) Claim of deduction u/s.54F of the Act in respect of the built-up area to be received upon joint development that comprises residential apartments, which was regarded as one residential house. 4.1 The learned CIT [A] upheld the assessment order passed by the learned A.O. and the finding recorded by the learned CIT[A] on the aforesaid issues are as under: (i) On the Validity of the re-opening u/s.148 of the Act, the learned CIT[A] held that the appellant was acutely aware of the reasons recorded for re-opening the assessment and no specific dispute was raised before the A.O. for non-issue of reasons and hence, there is no merit in the contention of the appellant in this regard [Para [8.1] at Page 12 of the appellate order]; (ii) In respect of the validity of the assessment framed on the disrupted HUF, the learned CIT[A] held that the A.O. has rightly assessed the capital gains liability in the hands of the appellant HUF holding that the appellant's singular argument of a pre-existing oral partition remains unsubstantiated and therefore its contention on this ground cannot be allowed [Para [6.3] at page [10] of the order]; (iii) In respect of the Levy of Capital gains on the joint development of the property by invoking the provisions of section 2[47] r.w.s 53A of the Transfer of Property Act, the learned CIT[A] held that the appellant had handed over the control of the property in part-performance of the contract vide their Joint Development Agreement dated 24/08/2005, which is relevant to the assessment year 200607 and accordingly, the capital gains taxed in the hands of the appellant for the assessment year 2006-07 was proper [Para [5.5] at Page [8] of the appellate order]; and (iv) In respect of the claim of deduction u/s.54F of the Act, the learned CIT[A] held that the appellant had not filed the return of income voluntarily and even in the return filed in response to notice u/s. 148 of the Act, there was no claim for deduction since no capital gains was offered. The learned CIT[A] also held that the facts and circumstances of the appellant's case do not support the claim of deduction u/s.54F of the Act, for not only in not filing the return but

ITA No.278/Bang/2016 Page 7 of 37 also in the absence of meeting the stipulated conditionality required to claim deduction u/s. 54F of the Act [Para [7] at page [11] of the appellate order]. 5. SECOND APPEAL: Aggrieved by the aforesaid order of the learned CIT[A] dated 30/12/2015, the appellant is before the Hon'ble Tribunal. Before the Hon'ble Bench, the appellant has filed concise grounds of appeal as directed and has also raised an additional ground along with a prayer for admission thereof, which may kindly be admitted. The submissions of the appellant on the issue raised and grouped by the relevant ground are set-out hereafter. 6. ADDITIONAL GROUND: The first contention of the appellant in the additional ground is that the assessment order passed by the learned A.O. dated 30/12/2013 being founded on an invalid notice u/s.143[2] of the Act, is also bad in law, void ab-initio and the same is liable to be quashed. The appellant submits the notice issued u/s. 143[2] of the Act is beyond the time allowed and hence, the same is invalid and the relevant dates of reopening the assessment, filing of the return of income and issue of the notice u/s. 143[2] of the Act are set-out below : (a) Notice issued u/s.148 of the Act on 23/11/2012 (b) Return filed in response to notice u/s.148 of the Act on 25/02/2013 (c) Notice issued u/s.143[2] of the Act on 13/12/2013

6.1 It is submitted that the provisions of section 143[2] of the Act, as it stood at the relevant point of time [before the latest amendment made by the Finance Act, 2016], which was as per the amended provisions by the Finance Act, 2008 with effect from 01/04/2008, read as under :- "[2] Where a return has been furnished under section 139, or in response to notice under sub-section [1] of section 142, the Assessing Officer shall - (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;

ITA No.278/Bang/2016 Page 8 of 37 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 he 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, 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 his 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" 6.2 In terms of the aforesaid provisions of the Act, the notice u/s.143[2] of the Act, ought to have been issued within 6 months from the end of the financial year in which the return of income is furnished. Therefore, the time limit for issue of notice u/s.143[2] of the Act, expired on 30/09/2013 since the appellant had filed the return of income in response to the notice issued, on 25/02/2013 and hence, the notice issued u/s. 143[2] of the Act on 13/12/2013 transgresses the time allowed in terms of the proviso and therefore, invalid. It is submitted that the assessment order that is so founded on an invalid notice u/s.143[2] of the Act, is also bad in law and a nullity having regard to the judgement of the Hon'ble High Court of Karnataka in the case of H.GOUTHAMCHAND in ITA No. 131 of 2010 dated 20/10/2011 [placed at page 57 of the list of citation relied upon] as well as the decision of the Hon'ble ITAT, Bangalore Bench in the case of Ms. RENUKA.G in ITA No.416/Bang/2015 dated 05/08/2016 [placed at page 67 of the list of citation relied upon]. 6.3 At this juncture, the learned DR submitted that the provisions of section 143[2] of the Act, relied upon by the appellant was amended w.e.f. 01/04/2008 and since, the impugned assessment year is 2006-07, the law as it stood before the amendment made by the Finance Act, 2008, w.e.f. 01/04/2008 must be applied to decide the period of limitation for issue of notice. It was submitted by the learned DR that the time limit for issue of notice u/s.143[2] of the Act, before the amendment w.e.f. 01/04/2008, was 12 months from the end of the month in which the return of income was filed and hence, the notice u/s.143[2] of the Act, dated 13/12/2013 was a valid one since the appellant had filed the return of income on 25/02/2013 and the notice was issued within 1 year from the end of the month in which the

ITA No.278/Bang/2016 Page 9 of 37 return of income was filed. The learned DR relied upon the judgement of the Hon'ble Supreme Court in the case of Brij Mohan [1979] 2 Taxman 209 [SC] to submit that the relevant law is the law which rules during the assessment year in question and hence, the un-amended provisions of section 143[2] of the Act, should be applied. 6.4 In so far as this contention advanced by the learned DR is concerned, it is submitted that the issue of notice u/s. 143[2] of the Act would be governed by the provisions of the Act that exists when the proceedings are taken up and not the law as applicable to the relevant assessment year. This is because the said provisions of the Act prescribe the time limit for issue of notice based on the date of filing the return. When the proceedings u/s.148 of the Act is taken up on 23/11/2012, which is after the amendment w.e.f. 01/04/2008, the said provisions would have to be followed. This contention of the appellant is supported by the view expressed issued by Hon'ble CBDT in the Circular No.1 of 2009 dated 27/03/2009 explaining the provisions of the Finance Act, 2008. The relevant portion of the Circular with regard to the amendment made to section 143[2] of the Act with effect from 01/04/2008 is contained in para [42] [See page 83 of the list of citation relied upon]. A plain reading of Para [42] of the Circular brings out the position that the amended provisions of section 143[2] of the Act, would apply to all proceedings that are pending as on 01/04/2008. Infact para [42.8] of the Circular clearly states that even returns of income filed before the amendment irrespective of the assessment year to which it pertains would be governed by the amended provisions of the Act and hence only where time was available as per the new provisions of the Act, the notice could be issued. There are also examples cited to explain this position and hence, the law as it stood at the time the proceedings were taken up would have to be applied and not the law as it stood for the relevant assessment year as sought to be argued by the learned DR. 6.5 As for the decision of the Hon'ble Supreme Court in the case of Brij Mohan [supra] relied upon by the learned DR, it is submitted that the said judgement relates to the applicable law for levy of penalty and it has been laid down by the Hon'ble Supreme court that the law applicable on the date on which the act of concealment takes place would be relevant. It is submitted that this judgement with regard to the applicable law for purpose of levy of penalty would be inapplicable to decide the relevant law for issue of notice u/s.143[2] of the Act. At any rate, the Board Circular issued by the Hon'ble CBDT is binding on the revenue and the opinion of the Board

ITA No.278/Bang/2016 Page 10 of 37 is very clear that the amended provisions of section 143[2] of the Act, would have to be applied irrespective of the assessment year to which the return of income pertains. Hence, the period for issue of notice would be 6 months from the end of the financial year in which the return of income was filed and hence, the notice issued u/s.143[2] of the Act, dated 13/12/2013 is beyond time. 6.6 Apart from the aforesaid arguments made by the learned DR, the Hon'ble Bench was also pleased to pose a query with regard to the very requirement to issue notice u/s.143[2] of the Act, based on the view taken by the Hon'ble ITAT, Patna Bench in the case of Chand Bihari Agrawal in IT[SS]A.No.05/Pat/2010. It has been held in the aforesaid decision of the Hon'ble ITAT, Patna Bench, that the judgement of the Hon'ble Supreme Court in the case of Hotel Bluemoon reported in 321 ITR 262 [SC] that has held that the issue of a valid notice u/s. 143[2] of the Act is mandatory would apply only where the return of income was filed in conformity with section 158BC of the Act and not for a return that was not filed in conformity with the provisions of section 158BC of the Act. It has been held that the return of income filed after expiry of the statutory period laid down in section 158BC of the Act would have to be treated as non-est and therefore, the A.O. was not required to issue a notice u/s.143[2] of the Act. Tested on this anvil, it was queried as to why the return of income filed by the appellant in response to the notice issued u/s. 148 of the Act, on 25/02/2013, which is after the period allowed under the notice u/s.148 dated 23/11/2012, should not be treated as invalid and hence, the requirement for issue of notice u/s.143[2] of the Act, be dispensed with. 6.7 In so far as the aforesaid views expressed by the Hon'ble Bench is concerned, it is submitted that the return of income filed by the appellant beyond the time allowed u/s. 148 of the Act cannot be treated as a invalid return and non est as there is no provision of the Act that prescribes such a view to be adopted. In fact, the provisions of the Act support the view that a return filed beyond the time allowed under the notice would still be a valid return of income and interest is charged for the delay in filing the return. Be that as it may, the appellant relies upon the judgement of the Hon'ble Gujarat High Court in the case of DevendranathG.Chaturvedi in Tax Appeal no.306 of 207 dated 12/06/2017 wherein the view taken by the Patna Bench of the Hon'ble ITAT was examined by the Hon'ble High Court. A copy of this judgment is enclosed herewith as Annexure-1. 6.8 In the aforesaid judgement the Hon'ble Gujarat High Court in the case of DevendranathG.Chaturvedi [Supra] has

ITA No.278/Bang/2016 Page 11 of 37 considered the following two questions of law raised by the revenue based on the view taken by the Hon'ble ITAT, Patna Bench in the case of Chand Bihari Agrawal in IT[SS]A.No.05/Pat/2010 referred to above : "[A] Whether the ITAT has erred in facts and on law in overlooking that the block return was filed on 12/7/2004, nearly 28 months after the issue of notice u/s.158BC doted 11/2/2002, and much beyond the statutory period of 45 days for filing such return? [B] Whether the ITAT has erred in law and on facts in not holding that the delayed return was thus to be treated as non- est return, as held by the Patna Bench of the 1TAT in the case of Chand Bihari Agarwal v/s ACTT, IT (SS) A No.5/ PAT/2010, and that that ratio of Hotel Blue Moon would not be applicable in this case? 6.9 After recording the submissions of the Revenue and the assessee, it has been held by the Hon'ble Gujarat High Court in the case of DevendranathG.Chaturvedi [supra] as under :- "5. Regarding second contention of the revenue, we notice that Section 143 of the Act pertains to assessment. Sub- section (1) of Section 143 provides that where a return has been filed by the assessee under Section 139 or in response to notice under sub-section (1) of Section142, the some would be processed in the manner provided therein. Subsection (2) of Section 143, as noted, would require the Assessing Officer to issue a notice where a return has been furnished and the Assessing Officer considers it necessary or expedient to ensure that the income is not under-stated. After issuing such a notice, the Assessing Officer would proceed to frame assessment under sub-section (3) of Section 143 of the Act. This provision, therefore, envisages a situation where a return under Section 139 or in response to notice under Section 142 (1) of the Act has been filed. Section 144 of the Act, which pertains to best judgment assessment covers various situations, including Clause (a) of Sub-section (1), where a person fails to make return required under sub-section (1) of Section 139 or under sub-section (4) or (5) of the said Section, and in Clause (b), in case of assessee, who fails to comply with the terms of a notice issued under sub-sectionof Section 142 or fails to comply with the direction issued under subsection (2A) of Section 142. The clause (c) of sub- section (1) covers the case where the assessee fails to comply with the terms of a notice issued under sub-section (2) of Section 143. In such situations, the Assessing Officer would have the authority to frame the assessment, which is popularly referred to as the best judgment assessment. Had the assessee in the present case not filed the return in

ITA No.278/Bang/2016 Page 12 of 37 response to the notice issued by the Assessing Officer or for some reasons such return was held to be invalid or non-est, revenue's contention that no notice under sub-section (2) of Section 143 of the Act was necessary and the Assessing Officer could have proceeded to frame the assessment under Sub-section (1) of Section 144 would merit further consideration 6. In the present case, however, the assessee did file the return, though belatedly. The Assessing Officer did not discard such return but proceeded on the basis of such return and framed an assessment assessing the income higher than the returned income. Under the circumstances, before rejecting such income, notice under Section 143 of the Act was necessary. Such notice not having been issued, the Tribunal correctly upheld the judgment of the CIT (Appeals). Tax Appeal is dismissed". 6.10 In the above judgement, the Hon'ble Gujarat High Court has taken note of the provisions of section 143[2] of the Act as well as the provisions of section 144 of the Act, that permits a best judgement assessment and how failure to file the return of income would result in a best judgement assessment. Thereupon, the Hon'ble Gujarat High Court has held that only where the assessee has failed to furnish the return or the return filed is treated as invalid or non-est, the contentions of the revenue that no notice u/s.143[2] of the Act, was required to be issued would merit consideration. Ultimately, the view taken by the Hon'ble Gujarat High Court in the case of DevendranathG.Chaturvedi [supra] is that even a return filed belatedly would still be a return furnished in response to notice u/s.158BC and it cannot be discarded as an invalid return. 6.11 It is submitted that under the provisions of section 139[9] of the Act, defective, non-est and invalid return are contemplated. In terms of Section 139[9] of the Act, the A.O. has to intimate the assessee that the return of income furnished by him is defective and must also allow an opportunity to remove such defects before declaring the return as an invalid return. The Explanation to section 139[9] of the Act, also sets out the circumstances under which the return of income filed could be treated as a defective return, which could be declared as invalid in case the defects are not removed by the assessee. In other words, there is a statutory provision under the Act to consider a return of income filed as defective and to hold that the same is invalid in case the defects are not removed. It is submitted that in terms of the said provisions, the delay in filing the return in response to the

ITA No.278/Bang/2016 Page 13 of 37 notice issued does not result in the return of income being treated as a defective one. 6.12 Be that as it may, on the facts of the appellant's case it is submitted that the learned A.O. has not invoked the aforesaid provisions or for that matter rendered any finding in the assessment order that the return of income filed by the appellant in response to the notice issued u/s. 148 of the Act was an invalid return. In fact the learned A.O. has noticed the return of income filed by the appellant and has acted upon the same while completing the assessment since the impugned assessment order is not an order passed u/s. 144 of the Act for the failure of the appellant to file the return of income in response to the notice issued. Under these circumstances the appellant invites the attention of the Hon'ble Bench to the judgement of the jurisdictional high court in the case of H.Gouthamchand reported in ITA No.131/2010 dated 2010/2011 [placed at page 57 of the list of citation relied upon]. Paras [6 Et 7] of the aforesaid judgement read as under "6. These undisputed facts clearly demonstrates that the Assessing Officer took note of the return filed by the assessee for the assessment year 2005-06 and has passed an order not accepting the said return and therefore, he has made additions. In the case of best judgement assessment under section 144, if any person, fails to make the return required by any notice given under sub- section (2] of section 139 or fails to comply with all the terms of a notice issued under sub-section[1] of section 142 or having made a return, fails to comply with all the terms of a notice issued under sub-section (2] of section 143, the Assessing Officer after taking into account all the relevant materials which the Assessing Officer has gathered, shall after giving an opportunity to the assessee of being heard make the assessment of the total income or loss to the best of his judgement and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment. 7. From the aforesaid provisions it is clear that if a return is made and thereafter, a notice is issued under section 142(1] of the Act and if the assessee fails to comply with the terms of the said notice, it is only then best judgement assessment can be made. From the aforesaid facts it is clear that a return was filed on 19.11.2007. The Assessing Authority took note of the said return. After taking note of the said return, he has not issued any notice under sub-section 2 of section 142 calling upon him to furnish particulars or to substantiate the entries in the returns. Though in the aforesaid paragraph, it is stated that after receipt of return, the assessee was asked to give the particulars of

ITA No.278/Bang/2016 Page 14 of 37 transactions, he has not disclosed the interest income from the partnership concern. It is not in dispute that no notice as required under section 143(2] of the Act has been issued. Therefore, as rightly held by the Tribunal when an order of assessment is made under section 144 on the ground that the assessee having made a return failed to comply with all the terms of the notice issued under sub-section 2 of Section 143, when no such notice is issued, even if that order is said to have been passed under section 144 is void ab initio as being contrary to the aforesaid statutory requirement. Realising the said mistake, the revenue contents that though a return is filed it was filed beyond the time and therefore, it was not taken into consideration. It is an invalid return. That is the arguments canvassed by the revenue in the High Court and that was not the plea taken before the lower authorities. Nowhere in the entire order passed by the Assessing Authority, there is any whisper about the same. On the contrary, the Assessing Authoirty has taken note of the return filed and finds faults with the assessee suppressing the income in that return and then, makes additions for the reasons set out therein. Therefore, it is too late for the revenue to contend that the order passed under section 144 ignoring the return in which event no notice under section 143[2] is required" 6.13 It is submitted that the ratio of the aforesaid judgement of the Hon'ble Karnataka High Court is squarely applicable to the instant case, as nowhere in the assessment order, the learned A.O. has taken the view that the return filed by the appellant in response to notice u/s.148 of the Act, was an invalid return. The said return has been noticed and acted upon by the learned A.O. who completed the assessment by the impugned order u/s.144 rws 147 of the Act, dated 30/12/2013 remarking in para [8] of the assessment order that a best judgement assessment is made for the failure of the assessee to reply to the proposal to complete the assessment in a particular manner. In otherwords, the provisions of section 144[1][b] of the Act, have been invoked by the learned A.O. and it is not an assessment framed u/s.144 of the Act, for the failure to file the return of income as mentioned in section 144[1][a] of the Act. Hence, the decision of the Hon'ble ITAT, Patna Bench in the case of Chand Bihari Agrawal [supra] is not applicable to the facts of the appellant's case. 6.14 The appellant also wishes to rely upon a recent judgement of the Hon'ble ITAT, Mumbai Bench in the case of Smt. Amina IsmilRangari in ITA No.6261/Mum/2013 dated 15/09/2013 [placed at page 85 of the list of citation relied upon] wherein the issue regarding the validity of

ITA No.278/Bang/2016 Page 15 of 37 the return filed beyond the time allowed in the notice u/s.148 of the Act, was examined by the Hon'ble ITAT, Mumbai Bench. It has been held by the Hon'ble ITAT, Mumbai Bench in the case of Smt. Amina IsmilRangari [supra] that a return filed beyond the time allowed under the notice cannot be considered as invalid and non-est. Para [8] of the aforesaid decision of the Hon'ble ITAT, Mumbai Bench, reads as under :- "8. We shall first advert to the observation of the A.0 that as the `return of income' filed by the assessee pursuant to notice issued u/s 148 was filed beyond the specified time period of 30 days from the date of service of notice, therefore, the same would be rendered as invalid, and resultantly the claim of exemption raised by the assessee u/s 54F in the said non est 'return of income' could not be allowed. We are unable to persuade ourselves to accept the aforesaid observation of the lower authorities. We are of the considered view that though a statutory obligation is cast upon the assessee to comply with the notice issued u/s 148 and file the 'return of income' in compliance thereto within the stipulated time period of 30 days, however, in case the same is filed by the assessee beyond the stipulated time period, then merely for the reason that some delay is involved in filing of the said 'return of income' would not render the same as invalid and non est. We are of the considered view that a 'return of income' filed by an assessee beyond the specified time period contemplated in the notice issued u/s 148, would though lead to characterizing the same as a 'return of income' filed beyond the stipulated time period, but however, the same would not cease to be a 'return of income' filed pursuant to the notice issued u/s 148, though involving some delay. We find that our aforesaid view is supported from the very fact that as per section 234A(3), where the 'return of income' in compliance to a notice u/s 148 is filed beyond the stipulated time period, then interest under the said statutory provision is imposed on the assessee till the date of furnishing of the same. We may herein observe that Clause (a) of Section 234A(3) clearly contemplates that a 'return of income' filed after the expiry of the stipulated time period shall still continue to be a 'return of income' filed by the assessee pursuant to the notice u/s 148. We find that our aforesaid view also stands fortified from the very fact that after the assessee had filed the 'return of income' pursuant to the notice u/s 148 on 10.08.2010, the same was acted upon by the A.0 and a Notice u/s 143(2) was issued to the assessee, followed by culmination of the same into an assessment u/s. 143(3) r.w.s 147 of the 'Act'. We are of the considered view that now when issuance of a notice u/s 143(2) presupposes the availability of a 'return of income'

ITA No.278/Bang/2016 Page 16 of 37 of the assessee on record, therefore, now when in the present case the A.0 acted upon the 'return of income' filed by the assessee, and issued a notice u/s 143(2), which thereafter had culminated into an assessment u/s 147 r.w.s 143(3), therefore, it would not be permissible on the part of the revenue to turn around and claim that no valid 'return of income' was filed by the assessee". 6.15 In view of the above, it is submitted that even if there are two different views in the matter with regard to the treatment of the return of income filed beyond the time allowed under the notice issued u/s. 148 of the Act, as a valid return, the recent judgement of the Hon'ble ITAT, Mumbai Bench in the case of Smt. Amina IsmilRangari [supra] has to be applied on the facts of the appellant's case in preference to the views taken by the Hon'ble ITAT, Patna Bench in the case of Chand Bihari Agrawal [supra] since, the aforesaid decision is favourable to the assessee as held by the judgement of the Hon'ble Supreme Court in the case of Vegetable Products reported in 88 ITR 192 [SC]. 6.16 Thus, in fine the appellant submits that the assessment order passed by the learned A.O. u/s.144 rws 147 dated 30/12/2013 is bad in law and void-ab-initio in as much as, it is founded on an invalid notice u/s.143[2] dated 13/12/2013 and consequently, the assessment order so passed deserves to be cancelled. It is prayed accordingly. 7. RE-OPENING: Ground No.2 of the concise grounds: In so far as this ground raised by the appellant is concerned, the relevant facts are that the appellant had filed its return of income in response to the notice issued u/s. 148 of the Act on 25/02/2013. Copy of the return filed is placed at Page 5 of the paper book. After filing the return of income, the appellant sought for the reasons recorded vide letter dated 25/02/2013, which is placed at pages 2 to 4 of the paper book. However, the learned A.O. did not furnish the reasons recorded for issuance of notice u/s.148 of the Act before he passed the assessment order and this is not in dispute. The learned CIT[A] has tried to make out a case that the appellant was acutely aware of the reasons recorded, which is not relevant as reasons recorded have to be furnished to the appellant before the completion of the assessment. 7.1 It is submitted that the failure to furnish the reasons recorded transgresses the ratio of the decision of the Hon'ble Supreme Court in the case of GKN DRIVESHAFT reported in 259 ITR 19 and consequently, the assessment requires to be cancelled. Reliance is placed on the decision of the Hon'ble

ITA No.278/Bang/2016 Page 17 of 37 jurisdictional High Court in the case of M/s. KOTHARI METALS reported in 377 ITR 481 [Kar.] [copy placed at page 32 of the list of citations relied upon] wherein it has been held [Head notes] :- "Held, allowing the appeal, that the non-furnishing of the reasons for reopening an already concluded assessment goes to the very root of the matter. Since such reasons had not been furnished to the assessee even though o request for them had been made, proceedings for the reassessment could not have been taken further on this ground alone. Besides this, the statement of some other person which was recorded was the basis of reassessment and the assessee was asked to explain it but the statement was itself not furnished to the assessee. As such, besides non-furnishing of reasons for reopening there was also a gross violation of the principles of natural justice. The reassessment was not valid"

7.2 Reliance is also placed on the decisions of the Hon'ble ITAT, Bangalore Bench, Bangalore in the case of K G VIJAYAKUMAR in ITA No. 119/Bang/2014 dated 09/01/2015 [placed at page 35 of the list of citations relied upon] and in the case of C JAYARAM [HUF] in ITA No. 1287Bang/2015 dated 27/11/2015 [placed at page 43 of the list of citations relied upon] wherein the same view has been taken. 7.3 In respect of this ground raised by the appellant, the learned DR relied upon the judgement of the Hon'ble Madras High Court in the case of Home Finders Housing Limited reported in 93 taxmann.com 371 [Mds] wherein, the Hon'ble Madras High Court has taken the view that the failure to dispose of the objections of the appellant by passing a speaking order was a mere procedure irregularity and not fatal to the reassessment. It was submitted that the Hon'ble Supreme Court in 94 taxmann.com 84 [SC] has since rejected the SLP of the assessee against the judgement of the Hon'ble Madras High Court and hence, the non-furnishing of the reasons would not invalidate the assessment. 7.4 In so far as this contention of the learned DR is concerned, it is submitted that the judgement of the Hon'ble Madras High Court in the case of Home Finders Housing Limited [supra] and the rejection of the SLP by the Hon'ble Supreme Court have no application to the facts of the appellant's case. It is submitted that the case of the appellant is that the failure to furnish the reasons recorded by the learned A.O. as requested for by the appellant would render the reassessment fatal, having regard to the judgement of the Hon'ble jurisdictional High Court in the case of KOTHARI

ITA No.278/Bang/2016 Page 18 of 37 METAL [supra] wherein the jurisdictional High Court has clearly laid down the law that the failure to furnish the reasons would render the reassessment invalid. The Hon'ble Madras High Court in the case of Home Finders Housing Limited [supra] was concerned with the failure of the learned A.O. to pass a speaking order on the objections filed by the assessee, which was after the reasons recorded were supplied by the A.O. Thus, the decision of the Hon'ble Madras High Court in the case of Home Finders Housing Limited [supra] turns on a different set of facts and it is not on the validity of the reassessment order passed without furnishing the reasons recorded, as requested by the appellant. 7.5 Furthermore, it is welt settled that the mere dismissal of the SLP does not amount to declaration of law by the Hon'ble Supreme Court and that on dismissal of SLP, there is no opinion expressed by the Hon'ble Supreme Court on the merits of the issue. At any rate, the judgement of the Hon'ble Madras High Court in the case of Home Finders Housing Limited [supra] is not binding upon the Hon'ble Tribunal since it is not the judgement of the jurisdictional High court. On the other hand, the judgement of the Hon'ble Karnataka High Court in M/s. Kothari Metals [supra] which has considered similar facts as that of the appellant's case would apply with all force to the case of the appellant and the same requires to be followed. 7.6 In this view of the matter, it is submitted that the impugned assessment order passed without furnishing the reasons recorded as prayed for by the appellant be quashed and the same cannot be upheld on the ground that the appellant was made aware of the reasons. It is prayed accordingly. 8. ASSESSMENT ON DISRUPTED HUF: Ground No.3 of the concise grounds: In so far as this ground raised by the appellant is concerned, the relevant facts are that the Sri Kempanna, the kartha of the erstwhile appellant HUF was a retired employee of ITI. He stood possessed of certain ancestral properties that belonged to his Hindu Undivided Family [HUF] and there is no dispute on this score. The ancestral property of the HUF came to be partitioned orally by the appellant and his sons before they had entered into a Memorandum of Understanding [MOU] dated 23.12.2004 with Sri P.Srinivas, Partner of the Developer firm [placed at page 08 to 18 of the paper book]. 8.1 In as much as the properties of the erstwhile HUF were fully partitioned orally, the parties of the first part as mentioned in the MOU are Sri B.K.Kempanna and his sons, Mr.

ITA No.278/Bang/2016 Page 19 of 37 B.K.Nagaraju, Mr. B.K.Suryanarayana, Mr. B.K.Revathi Kumar and Mr. B.K.Umashankar, who are described as absolute owners of the property, which is given for development. It may be pointed out here that nowhere in the MOU there is any mention of the fact that the property given for development was the ancestral property of Sri. Kempanna. 8.2 Similarly, in the registered Joint Development Agreement [JDA] dated 24/08/2005 [placed at pages 19 to 52 of the paper book] Sri Kempanna and his sons along with their respective spouses are all described as the absolute owners of the property that is given for development. Thus, neither the MOU nor the JDA contains any whisper to suggest that the property give for development belonged to the joint family of the appellant. Nevertheless, considering the ancestral nucleus, the property having joint family character, the assessment of the appellant's joint family was reopened. However, the authorities below failed to appreciate that it is only pursuant to the oral partition amongst the members of the erstwhile joint family that the divided members became the owners of the property that was given for development and were described as owners. Hence, the appellant contented before the learned A.O. and CIT[A] that the joint family of Sri Kempanna, was completely partitioned and was not in existence when the assessment proceedings were being taken up. In as much as the appellant HUF was not hitherto assessed to tax, the fiction u/s. 171 [1] of the Act was not attracted and hence, no assessment order could be made on the appellant HUF when it was not in existence. 8.3 This contention raised by the appellant has not been properly appreciated by the learned CIT[A], who held that the appellant has not given any documentary evidence in support of the partition. The learned CIT[A] ought to have appreciated that the very fact that both the MOU and registered JDA were entered into by the divided members of the erstwhile joint family would go to show that there was an anterior oral partition and since the divided members are all described as owners in the agreements entered into by the appellant and the developer, the erstwhile HUF of the appellant was no longer in existence. It is submitted that the authorities below have not even cared to examine the members of the erstwhile HUF about the claim of partition and have unilaterally concluded that there was no partition and that the appellant HUF continues to exist as undivided. It is submitted that this finding rendered by the learned A.O. and CIT[A] is opposed to law and facts of the appellant's case especially the documents executed by the divided

ITA No.278/Bang/2016 Page 20 of 37 member of the HUF and hence, the same ought to be vacated. 8.4 In so far as the legal position on the assessability of the disrupted HUF, which hitherto was not assessed, it is submitted that the said position is explained by the Hon'ble Karnataka High Court in the case of Lakanna Et Sons in ITRC No. 57/1994 dated 26/05/2005 [copy placed at page 1 to 31 of the list of citation relied upon]. It has been held by the Hon'ble High Court that no assessment order can be passed in respect of a Hindu Undivided Family after it has been disrupted since the existence of the assessee on the date of passing the assessment order is an absolute necessity. It has also been held by the Hon'ble High Court that there must be a mechanism to make an assessment on an assessee who is no longer in existence when the assessment order is passed and that the provisions of section 171 of the Act that provide such a mechanism to frame on assessment after the partition of a HUF would apply only to a certain category of Hindu Undivided families that have been hitherto assessed as undivided. It has also been held by the Hon'ble High Court that where a HUF has not been assessed to tax in the past, the mechanism provided under section 171 of the Act will have no application and hence, no order of assessment could be made in respect of the income of such joint families after its disruption even in respect of the period when the joint family was in existence. Having regard to the said position of law, the impugned assessment framed on the disrupted HUF of the appellant is bad in law and requires to be quashed. It is prayed accordingly. 9. COMPLETION OF ASSESSMENT U/s.144: Ground No.4 of the concise grounds: It is submitted that the A.O. is not justified in completing the assessment u/s.144 of the Act, especially, when the appellant has participated in the assessment proceedings before the learned A.O. The A.O. has justified the invoking of section 144 of the Act, on the ground that the appellant did not respond to the show-cause notice dated 13/12/2013 proposing to complete the assessment in a particular manner. It may be mentioned here that the appellant has contended that there was no transfer of any capital asset and no capital gains and hence, there was no question of making any submission with regard to the computation of capital gains. Hence, the impugned order passed u/s.144 of the Act, ought to have been cancelled by the learned CIT[A]. It is prayed accordingly. 10. LEVY OF CAPITAL GAINS: Ground Nos.5 a 6 of the concise grounds: In so far as this ground raised by the appellant is concerned, it is submitted that the mere execution of the joint development agreement during the year will not

ITA No.278/Bang/2016 Page 21 of 37 amount to a transfer u/s.2[47[v] read with Section 53A of the Transfer of Property Act on the basis of the decision of the Hon'ble Karnataka High Court in the case of Dr. T K Dayalu reported in 60 DTR 403 [Kar]. At any rate, it is submitted that the event of entering into the joint development agreement also did not take place during the previous year relevant to the assessment year 2006-07 under appeal. This is because the JDA entered into by the appellant on 24/08/2005 was based on the earlier MOU executed on 23/12/2004, which is clearly found mentioned in the registered JDA itself. Following the MOU dated 14/12/2004, the appellant received a sum of Rs.10 lakhs by cheque bearing No.414446 dated 14/12/2004 drawn on Oriental Bank of Commerce, Indiranagar Branch, Bangalore from the partner of the Developer firm. Thus, the MOU entered into on 23/12/2004 was later confirmed by the registered JDA dated 24/08/2005 and hence, the alleged transfer in terms of section 2[47][v] of the Act, would be only on 23/12/2004 i.e., for the assessment year 2005-06. Hence, the question of assessing capital gains for the assessment year 2006-07 does not arise. Consequently, the reliance placed on the ratio of the decision of Hon'ble Karnataka High Court in the case of Dr.T.K.Dayalu [supra] is misconceived and misplaced for the assessment of capital gains for assessment year 2006-07 and the same requires to be deleted. 10.1 Furthermore and without prejudice to the above, it is submitted that the consideration receivable by the appellant is also not specified monetarily in the Joint Development Agreement since it was in the shape of certain flats to be given to the appellant by the developer. Therefore, the determination of the full value of the consideration for purposes of the transfer is not determinable or ascertainable and consequently, the transaction does not attract the provisions of section 2[47][v] of the Act read with Section 53A of the Transfer of Property Act prior to enactment of Section 50-D of the Act which is with effect from 01/04/2013 and consequently, no capital gains was assessable at all from this angle of the matter as well. 10.2 Thirdly and without prejudice to the above, the learned CIT[A] ought to have appreciated that the consideration for the joint development was in the shape of delivering certain flats in the shape of consideration and therefore even in extreme case, the guideline value of the extent of land transferred by the appellant to the share of the developer on the date Joint Development and not the value of the flats to be received by the appellant based on

ITA No.278/Bang/2016 Page 22 of 37 the cost of construction of the developer was to be adopted for computing capital gains as per the decision of the Hon'ble ITAT in the case of Shankar Vittal Motor Co. in ITA No.35/Bang/2015 dated 18/03/2016, which is enclosed as Annexure-2. Hence, the extent of capital gains determined by the authorities below was highly excessive and liable to reduced substantially. It is prayed accordingly. 11. EXEMPTION U/s.54F OF THE ACT: Ground No.7 of the concise grounds: The last issue in this appeal relates to the exemption claimed by the appellant u/s. 54F of the Act that has been rejected by the learned CIT[A] in the appellate order for reasons that have been set-out above. As submitted, the appellant did not compute capital gains on the alleged transfer of the undivided interest in land in favour of the developer by virtue of the JDA in the return of income filed in response to notice issued u/s. 148 of the Act taking the view that there was no transfer at all. Hence, the question of making any claim for deduction u/s. 54F of the Act did not arise at all since there was no capital gain offered to tax. However, when the learned A.O. has rejected the said claim of the appellant and has sought to tax capital gains in course of the assessment, he ought to have also examined the eligibility of the appellant to claim exemption u/s. 54F of the Act since ultimately the correct taxable income alone ought to be taxed. Be that as it may, it is submitted that the appellant raised a claim for allowance of deduction u/s. 54F of the Act, before the learned CIT[A] in first appeal. However, the learned CIT[A] has rejected the claim that there was no claim made before the learned A.O. and also on the ground that the eligibility conditions have not been satisfied. The learned CIT[A] ought to have appreciated that the appellant was entitled to deduction and he ought not to have rejected the claim in the aforesaid manner. 11.1 In this regard, it is submitted that the rejection of the claim for deduction u/s. 54F of the Act on this count is bad in law and the Hon'ble ITAT, Bangalore Bench in the case of Smt. K.R.Yashoda in ITA No.745/Bang/2017 dated 06/10/2017 has taken the view that the exemption u/s. 54F of the Act cannot be denied on this score that the appellant has not made any claim in the return of income. A copy of the order of the Hon'ble ITAT in the case of Smt. K.R.Yashoda is enclosed as Annexure-3. 11.2 That apart, on merits of the claim made u/s. 54F of the Act, it is submitted that the Hon'ble ITAT, Bangalore Bench in the cases of T.A.V.Gupta in ITA No.209/Bang/2018 dated

ITA No.278/Bang/2016 Page 23 of 37 25/04/2018 and in the case of Smt. Nethravathi in ITA No.2630/Bang/2017 have already examined the eligibility of the appellant to claim exemption u/s. 54F of the Act in the case of multiple residential units falling to the share of the appellant upon joint development. Copies of the orders of the Hon'ble ITAT in the case of TAV Gupta [supra] and Nethravathi [supra] are enclosed herewith as Annexures-4 Et 5 respectively. 11.3 In the aforesaid judgments, the Hon'ble ITAT has taken a view that in case of joint development, the entire built-up area received upon development would be a single house for the purpose of section 54F of the Act. In coming to the aforesaid conclusion has relied upon the judgement of the Hon'ble jurisdictional High Court in the case of Anand Basappa in 309 ITR 329 [Kar] and Smt.K.G.Rukminiyammareported in 331 ITR 211 [Kar]. The Hon'ble ITAT has also considered the amendment made to Section 54F of the Act, in Finance No.2 Act, 2014 w.e.f. 01/04/2015 wherein, the word "a" residential house has been replaced with the word "one" residential house. Considering all these aspects, the Hon'ble ITAT has observed that the erstwhile provisions of section 54F of the Act, permitted reinvestment in more than one residential house and that all residential flats in a single project falling to the share of the landowners would have to be regarded as only one residential house for the purposes of section 54F of the Act. The ratio of the aforesaid decisions would be squarely applicable to the appellant's case since the facts of the appellant's case are parallel. 11.4 In view of the above, it is submitted that the appellant is entitled to exemption u/s.54F of the Act, in respect of all the residential flats that fall to the share pursuant to the development of the property and hence, the learned CIT[A] ought not to have refused to allow the same. Accordingly, it is prayed that the exemption u/s.54F of the Act, may please be directed to be allowed by the authorities below. 12. GENERAL GROUNDS No.1 & 9 and levy interest u/s.234A, 234B and 234C of the Act as per Ground No.8 of the concise ground may kindly be disposed off in accordance with law. Dated this the 14th Day of August, 2018; at BENGALURU” 5. The ld. DR of revenue has also filed written submissions which are also reproduced hereinbelow. “1. As to the Additional Ground of Appeal : that no valid notice u/s 143(2) of the Act has been issued within the time allowed under the

ITA No.278/Bang/2016 Page 24 of 37 proviso to section 143C2) of the Act, and as such the order passed u/s 144 rws 147 of the Act is bad in law and void-ab-initio : 1.1 In this case, the notice u/s 148 was issued on 23-11-2012 in response to which the assessee-HUF filed the return of income on 25-02-2013, beyond the time limit of 31 days stipulated in the notice u/s 148 of the Act. 1.2 Notice u/s 143(2) was issued on 13-12-2013, approximately 10 months after furnishing of return of income in response to notice u/s 148. The assessee's contention is that the said notice u/s 143(2) was issued beyond the time limit allowed under the proviso to section 143(2) of the Act and hence, it is bad in law. 1.3 In this connection, it is respectfully submitted that as per the ratio laid down by Hon'ble SUPREME COURT OF INDIA in the case of Brij Mohan vs. CIT [1979] 2 Taxman 209 (SC) the law that ruled during the assessment year 200637 in respect of which total income was assessed in the instant case, has to be considered for determining the time limit for issue of notice u/s 143(2). Relevant extract of the decision of Supreme Court (supra) is as under (para 4) : "In the case of the assessment of income and the determination of the consequent tax liability, the relevant law is the law which rules during the assessment year in respect of which the total income is assessed and the tax liability determined. The rate of tax is determined by the relevant Finance Act." 1.4 For AY 2006-07, the time limit for issue of notice u/s 143(2) was twelve months from the end of the month in which the return is furnished. Extract of the proviso to clause (ii) to section 143(2) relevant to the AY 2006-07 is as under: 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 shall,- (i)…….. (ii) notwithstanding anything contained in clause (i), if he 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, 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 twelve months from the end of the month in which the return is furnished.

ITA No.278/Bang/2016 Page 25 of 37 (emphasis supplied) As per the above law that ruled during the assessment year 2006-07 in respect of which total income was assessed in the instant case, the time limit for the service of notice u/s 143(2) of the Act was available upto 28-02-2014 i.e., 12 months from the end of the month in which the return was filed (on 25-02-2013). Since the AO issued the notice u/s 143(2) on 13-12-2013, it was well within the time limit and hence valid. 1.5 WITHOUT PREJUDICE TO THE ABOVE, it is respectfully submitted that in the instant case, the assessee-HUF furnished the return beyond the time prescribed in the notice u/s 148 of the Act. In other words, it may be said that the return was not filed within the statutory period fixed for filing the return or was not otherwise in conformity with law. In view of this, it is respectfully submitted that the return filed by the assessee-HUF is not-est in law. As held by Hon'ble Patna Tribunal in the case of Chand Bihari Agrawal Patna vs. ACIT, Central Circle 2, Patna in IT(SS)A No. 05/PAT/2010 (para 12) (copy enclosed) "the assessee cannot be heard to say that the AO is bound by the time prescription of section 143(2) but he himself is not bound by the statutory period of limitation as laid down in section 148. The period of limitation as laid down in section 143(2) and 148 applies to both of them in equal measure and with equal force. A return furnished after the expiry of statutory time limit as laid down in notice u/s 148 would not be in conformity with law and therefore non-est. In view of this, as held by Patna Tribunal in Chand Bihari Agarwal Patna vs. ACIT (supra), the AO was not required to issue notice under section 143(2) on the basis of the aforesaid return which was non-est in law. The ratio decidendi of this judgement is that the AO is not required to issue notice u/s 143(2) at all, in a case where the assessee filed the return beyond the time limit prescribed for furnishing such return. It follows from this judgement that since in the case in hand, the return of income was filed beyond the time prescribed in notice u/s 148, the AO was not required to issue the notice u/s 143(2) of the Act before completion of the assessment. 1.6 In view of the above legal provision, it is respectfully submitted that the assessee's contention that the notice u/s 143(2) is issued beyond the time period prescribed under law may be rejected. Accordingly, the Additional Ground filed by the assessee may be rejected and it may not be admitted. 2. That the reasons recorded for reopening of the assessment were not furnished before completion of the assessment and hence the assessment order so passed was a nullity and out to be cancelled. Assessee-HUF relying on the decision of Hon'ble Supreme

ITA No.278/Bang/2016 Page 26 of 37 Court in the case of GKN Driveshaft reported in 259 ITR 19 contended that the assessment order passed in this case is a nullity, as the reasons for reopening were not furnished before completion of the assessment. In this connection, it is respectfully submitted that Hon'ble Supreme Court in the case of Home Finders Housing Ltd. vs. ITO (2018) 94 taxmann.com 84 (SC) dismissed the SLP filed against the Madras High Court's order that non-compliance of direction of Supreme Court in GKN Driveshafts (India) Ltd. vs. ITO (2012) (supra) would not make reassessment void ab initio. Since, the decision of Hon'ble High court of Madras in the above case reported in (2018) 93 taxmann. Com 371 (Madras) that noncompliance of procedure indicated by Supreme Court would not make order void or non- est and such a violation is a procedural irregularity which could be cured, has become final; it is respectfully prayed that this ground of the assessee may be rejected. 3. That the oral partition among the members of the HUF is a colourable device or ruse to avoid tax: The assessee contended that the HUF was not in existence when the assessment order was passed on account of oral partition among the members of HUF and that an assessment made on disrupted and non-existent HUF was bad in law. A similar contention was made before the Assessing Officer. This contention by the assessee is a colourable device to avoid tax on account of Joint Development Agreement (JDA) and hence liable to be rejected in view of the following reasons : i) Assessee-HUF never filed the return of income and the notice u/s 148 was issued to assess the escaped income on account of JDA. Thus, the assessment in question u/s 144 rws 147 was made for the first time. ii) As brought out by the AO in para 4 of his order both the MOU dated 23/12/2004 and the Joint Development Agreement dated 24-08-2005 were silent about the (oral) partition of the HUF. Both these documents clearly indicate that the property was held by the assessee as HUF along with coparceners and female members. Following clauses /paras of the aforesaid documents show beyond reasonable doubt that the HUF was intact during the assessment year in question and that the flats fallen to the share of the land owners were meant to be for the HUF. MOU dated 23-12-2004 (Page 8-18 of Assessee's Paper Book) : • Page 8 of Paper Book : Recital indicates the names of five(5) family members residing at 'Byrasandra village, Bangalore -75' • Page 9 of Paper Book :Last para shows that the development of the schedule

ITA No.278/Bang/2016 Page 27 of 37 property is "for the benefit of their family" • Page 11 of Paper Book : Para III (1) : Permission for development : 1.1) Owners are in possession and enjoyment of the schedule property…… 1.2) The Owners hereby undertake…….. However, the Owners shall always be entitled to inspect…… These clauses show that the owners have 'collectively' given permission for joint development which is an indication that it is a HUF property • Page 15 of Paper Book : Para 11 : Refundable consideration – An amount of Rs. 15,00,000/- was given to the parties of the first part (owners) as refundable deposit. Here the refundable deposit is given to the family but not to the individuals. Nowhere the breakup of this refundable deposit to the individual members of the family is mentioned, which is a clear indication that the JDA was entered into by the members in the HUF capacity. Issuing the cheque in the name of the karta of the HUF, will not in any way alter the position that the property was held by the HUF. Joint Development Agreement dated 24-08-2005 ( Page 19 - 52 of Assessee's Paper Book): • Page 19 of Paper Book : The recital shows the names of 13 members of the HUF (MOU shows the names of only 5 members) • Page 24 of Paper Book : Paras 'a', 'b' & 'c' talk about owners as a collective entity. Para 'c' of JDA refers to the MOU previously entered, by indicating that the 'owners' have entered into MOU with one Sri P. Srinivas, one of the partners of M/s. Sai Sreeja Constructions.

ITA No.278/Bang/2016 Page 28 of 37

• Page 32 - 36 of Paper Book : Para 5.6 indicate the flats fallen to the share of the LAND OWNERS. This shows 10 flats in Block- I (Western side) and 32 flats in Block-II (Eastern side) in the collective share of the land owners. If the HUF was disrupted or if there was oral partition, then flats falling in the individual share of the respective land owners should have been indicated in the JDA. The fact that such a division was conspicuously absent shows that it was HUF which entered into the MOU/ JDA. • Page 37 of Paper Book : Para 6 : Delivery - The flats will be delivered to 'owners' only without mentioning the names of individual members. iii) It may be noted that the number of owners as per MOU are 5, whereas as per the JDA number of owners are 13. The MOU was entered by only the elder male members of the HUF, whereas the JDA was entered by all the coparceners and female members of the HUF. This fact alone shows that the term 'owners' referred in both the documents relates to 'HUF'. Otherwise, by no stretch of imagination, 5 persons entering into MOU cannot be equated with 13 members entering JDA. iv) All the above facts prove beyond doubt that the HUF was intact at the time of entering into MOU/ JDA. Further, no internal agreement (entered at a subsequent date) between the individual members of the family further bifurcating the 42 flats fallen in the collective share of the family/HUF was brought on record. This fact further strengthens the argument that the assessee-HUF existed as such even after handing over of the flats to the members of the HUF. v) The property in question is an ancestral property coming from the grand father of Sri Kempanna, karta of the assessee-HUF. This fact is borne out from Q.No. 2 of the deposition dated 29- 05-2013 of Sri Kempanna u/s 131 of the Act. (para 4 of the Asst. Order). The AO annexed copy of the Record of Rights to the Assessment order as Annexure-A, which clearly establishes beyond doubt that the property in question is an inherited property. Such an ancestral property is thrown into the common hotchpotch of the joint family.

ITA No.278/Bang/2016 Page 29 of 37

In Mulla's Principles of Hindu Law (15th Edition), it is stated at page 289: ...... A person inheriting property from his three immediate paternal ancestors holds it, and must hold it, in coparcenary with his sons, sons' sons and sons' sons' sons' but as regards other relations he holds it and is entitled to hold it, as his absolute property." In the instant case, nothing was brought on record by the assessee- HUF that the property in question was not a HUF property. vi) As held by Ld. CIT (A) in para 6.1 of his order, the assessee's contention of an oral partition cannot be accepted on face value as there is no supporting evidence in the form of either a HUF return or partition deed. The assessee failed to substantiate the existence of a partition agreement before the Lower Authorities. Further, the JDA nowhere contains any mention of partition of the property. Ld. CIT (A) further held that there is no reference of partition, if any, in the sharing agreement nor is there any division of flats amongst the members and in the circumstances, the property remained in the hands of the HUF along with the coparceners. vii) Thus, the assessee-HUF failed to prove that the HUF was disrupted due to an oral partition before the completion of the assessment in question. In view of this it is submitted that this contention of the assessee is a colourable device to avoid tax. 4. Jurisdictional High Court's decision in the case of CIT vs. M/s. Lakkanna& Sons can be differentiated on facts and is not applicable to the assessee's case : Assessee-HUF relied upon the case of CIT vs. M/s. Lakkanna& Sons in ITA No. 57/1994 dated 26-05-2005 decided by the Jurisdictional High Court. The facts of this case are different from the facts of the case on hand. The assessee in case of CIT vs. M/s. Lakkanna& Sons (supra) has filed the return of income in the HUF capacity and as such it was presumed by the AO that the HUF has been "hitherto assessed" as Hindu Undivided Family and passed an order in the hands of the HUF, even though there was a disruption of the HUF by a partition made on 25-04-1980. Hon'ble Karnataka High Court on page 20 of its order recorded a finding That the AO after enquiry and verification recognises the partition on 2.1.1984 for the assessment year, but for the assessment year 1980-81 proceeds to accept the return of income filed by the HUF. In the instant case, the assessee-HUF has not filed the return of income and the AO has NOT accepted / recognised the partition/ disruption of the assessee-HUF. In the present case, the AO disputed the claim of oral partition based on circumstantial evidence and the assessee also failed to prove beyond doubt that the HUF was indeed

ITA No.278/Bang/2016 Page 30 of 37 disrupted before passing the assessment order. In view of the matter, the case of CIT vs. M/s. Lakkanna& Sons (supra) relied by the assessee is of no help to it. 5. Claim of deduction u/s 54F Assessee is not eligible for the claim of deduction u/s 54F because of the following reasons i) Assessee has not filed the return of income voluntarily declaring the capital gains along with the claim u/s 54F of the Act. ii) Even in the return of income filed in response to notice u/s 148 of the Act assessee offered 'NIL' income and no claim u/s 54F was made. iii) No claim was made before the Assessing Officer. Assessee has not built any factual foundation before the lower authorities as to the allowability of its claim u/s 54F. iv) None of the time limits for purchase / construction of new residential property as prescribed u/s 54F were met by the assessee. The JDA was entered into in the year 2005, and the flats to the share of the assessee-HUF were handed over much beyond the time limit of 3 years. v) Exemption under section 54F has to be claimed only by purchasing or constructing a new residential property in assessee's own name i.e., Sri Kempanna (HUF). Assessee-HUF failed to bring on record in whose names the flats falling in its share were ultimately registered. vi) Non-fulfilment of the conditions laid down in the provisions of Act to avail such an exemption cannot be categorized as a technical flaw. The very intention of the Legislature in allowing such an exemption in lieu of fulfilling certain conditions laid down in the Act, would be defeated and become farce as held by the Bangalore Tribunal in the case of Sri Sabir Salim Ahmed vs. The Income Tax Officer, Ward 11(1), Bangalore. ITA No.941/Bang/2010 dated 21.01.2011. vii) In view of the above, it is respectfully prayed that the contention of the assessee it is eligible for the deduction u/s 54F of the Act may be rejected. 6. PRAYER : In view of the above facts and circumstances and legal position, it is prayed that the assessee's appeal may be dismissed and the order of the Ld. CIT (A) may be upheld. 7. ALTERNATE PRAYER Without prejudice to any of the above submissions, it is prayed that if the Hon'ble ITAT holds that the HUF was disrupted and the assessment made on it was a nullity, a clear finding may kindly be given in whose hands the Capital Gains resulting out of the JDA have to be assessed. This gives jurisdiction to the Assessing officer u/s 153(3)(ii) and Explanation -2 to section 153 of the Act (as existing at the relevant time) to assessee / reassess the capital gains in the suitable hands.” 6. We have considered the rival submissions. As per the written submissions filed by ld. AR of assessee, it has been stated that in the present case, the notice

ITA No.278/Bang/2016 Page 31 of 37 issued by the AO u/s. 143(2) is time barred because the return of income was filed by the assessee on 25.02.2013 as per the copy of acknowledgement available on page no. 5 of the paper book and notice u/s. 143(2) was issued by the AO on 13.12.2013 as per the copy of notice available on page no. 6 of the paper book. It is submitted that such notice u/s. 143(2) could have been issued upto 30.09.2013 i.e. within 6 months from the end of the Financial Year in which the return of income was filed by the assessee. But since such notice was issued by the AO on 13.12.2013, the said notice is time barred and therefore, the assessment order should be quashed. Regarding this observation of bench on an earlier occasion that as per Tribunal order rendered in the case of Chand Bihari Agrawal Vs. ACIT in IT(SS)A No. 05/PAT/2010, copy of which is brought on record by ld. DR of revenue along with his written submissions, it has been submitted by ld. AR of assessee that as per judgement of Hon’ble Gujarat High Court rendered in the case of PCIT Vs. Devendranath G. Chaturvedi in Tax Appeal No. 306 of 2017 dated 12.06.2017 copy submitted along with the written submissions filed by ld. AR of assessee, this was the question framed by Hon’ble Gujarat High Court as to whether the delayed return can be treated as non-est return as held by the Patna Bench of Tribunal in the case of Chand Bihari Agrawal Vs. ACIT (supra) and It has been submitted that in that case, the AO does not discard the belated return filed by the assessee and the AO proceeded on the basis of that belated return and assessed the income higher than the returned income and under these facts, it was held by Hon’ble Gujarat High Court that the AO must have issued notice u/s. 143(2) of IT Act and since such notice was not issued, the Tribunal correctly upheld the order of CIT(A) as per which the assessment order was set aside by CIT(A) on the ground that no notice u/s. 143(2) of IT Act was issued. It has been submitted that in view of this judgement of Hon’ble Gujarat High Court, the Tribunal order rendered in the case of Chand Bihari Agrawal Vs. ACIT (supra) does not survive. 7. We have considered the rival submissions. We find merit in the submissions of ld. AR of assessee because we find that in the present case, the notice issued by the AO u/s. 143(2) is time barred because the same has been issued after the expiry of six months from the end of relevant Financial Year in which the

ITA No.278/Bang/2016 Page 32 of 37 return was filed by the assessee. As per the submissions of ld. DR of revenue, reliance has been placed by him on the judgment of Hon’ble Apex Court rendered in the case of Brij Mohan Vs. CIT as reported in [1979] 2 Taxman 209 (SC) and this contention has been raised that since the assessment year involved is Assessment Year 2006-07, the provisions of Act as applicable in that year should be followed and as per the provisions applicable in Assessment Year 2006-07, the AO could have issued the notice u/s. 143(2) within 12 months from the end of the month in which the return was filed and therefore, the time available to the AO for issuing the notice u/s. 143(2) was upto 28.02.2014 and the AO has issued the notice on 13.12.2013 and therefore, the AO has complied with the requirements of section 143(2) of IT Act. As per this judgement of Hon’ble Apex Court rendered in the case of Brij Mohan Vs. CIT (supra), it was held that in the case of the assessment of income and the determination of the consequent tax liability, the relevant law is the law which rules during the assessment year in respect of which the total income is assessed and the tax liability is determined. In the present case, the dispute is different. In the present case, the dispute is regarding the time within which the AO should issue the notice u/s. 143(2) of IT Act. On this aspect, the ld. AR of assessee in his written submissions has referred to CBDT Circular No. 1 of 2009 dated 27.03.2009 and it has been submitted in the written submissions that the relevant portion is available on page no. 83 of the case law paper book. The relevant portion of this CBDT Circular are paras 42.8 and 42.9 which are reproduced from page no. 83 of the case law paper book. The same are as under. “42.8 Similarly the amended provision of sub-section (2) of section 143 shall apply to all such returns (irrespective of the assessment year to which the returns pertain) where notice under sub-section (2) of section 143 can still be issued on 1st April, 2008 under the pre- amended provision.

42.9 For example, assessee "A" files his tax return on 31st March, 2007, assessee "B" files his tax return on 15th April, 2007 and assessee "C" files his tax return on 16th October, 2007. As on 1st April, 2008 notice under the pre-amended provision of sub-section (2) of section 143 could not have been issued in case of "A" and could have been issued in cases of "B" and "C". Hence, the new provision shall apply for returns filed by "B" and "C" but not for return filed by

ITA No.278/Bang/2016 Page 33 of 37 "A". In cases of returns filed by "B" and "C", the notice under sub- section (2) of section 143 can be served on the assessee on or before 30th September, 2008. Any notice served on assessee in these two cases, after this date, will not be valid.” 8. From the above two paras of CBDT Circular No. 1 of 2009 dated 27.03.2009 reproduced above, it is seen that this has been prescribed by CBDT that the amended provisions of sub-section (2) of section 143 shall apply to all such returns irrespective of the Assessment Year to which the returns pertain where notice under sub-section (2) of section 143 can still be issued on 1st April 2008 under the pre-amended provision. In our considered opinion, in view of this clear guideline of CBDT regarding applicability of section 143(2) of IT Act after the amendment thereof, this contention of ld. DR of revenue that with regard to the issue of notice u/s. 143(2) , the old provisions for Assessment Year 2006-07 should be applied has no merit. In the facts of the present case and in view of this CBDT Circular No. 1/2009 dated 27.03.2009 and in view of the amended provisions of section 143(2) of IT Act, we hold that the notice issued by the AO u/s. 143(2) is time barred and therefore, the assessment order framed by AO in pursuance to this invalid notice is not as per law and the same is quashed. In this view of the decision, no further adjudication is called for on merit. 9. Now we summarize the entire dispute and our decision. The claim of the assessee in the present case is this that the notice issued by the AO u/s. 143(2) of IT Act is time barred because the same is issued after the expiry of six months from the end of the Financial Year during which the return of income was filed by the assessee. As against this, the stand of the revenue is this that this claim of the assessee is liable to be rejected for two reasons. First reason given by the revenue is this that as per the Tribunal order of the Patna Bench of the Tribunal rendered in the case of Chand Bihari Agrawal Vs. ACIT (supra), the AO was not required to issue any notice u/s. 143(2) of IT Act because it was held by the Tribunal in that case that if the return filed by the assessee pursuant to the notice issued by the AO u/s. 148 is not filed in time, such return of income filed by the assessee is non-est and therefore, the AO is not required to issue any notice u/s. 143(2) of IT Act. The second reason given by the revenue is this that even if it is held that the AO is required to issue notice u/s. 143(2) of IT Act then also it should be held in the facts of present case that the

ITA No.278/Bang/2016 Page 34 of 37 same was issued in time. In support of this contention, ld. DR of revenue has placed reliance on a judgment of Hon’ble Apex Court rendered in the case of Brij Mohan Vs. CIT (supra) in support of this contention that since the assessment year involved in the present case is Assessment Year 2006-07, the provisions of IT Act as applicable in that year should be followed and as per the provisions applicable in Assessment Year 2006-07, the AO could have issued notice u/s. 143(2) of IT Act within 12 months from the end of the month in which the return was filed and therefore, the time available with the AO for issuing the notice u/s 143(2) of IT Act was up to 28.02.2014 and the AO has issued such notice on 13.12.2013. Against these submissions of ld. DR of revenue, ld. AR of assessee has placed reliance on a judgment of Hon’ble Gujarat High Court rendered in the case of PCIT Vs. Devendranath G. Chaturvedi (supra) and it was submitted that in this case, this Tribunal order of Patna Bench rendered in the case of Chand Bihari Agrawal Vs. ACIT (supra) was also cited and still it was held by Hon’ble Gujarat High Court in that case that although the return was filed by assessee belatedly but since the AO did not discard such return but proceeded on the basis of such return and framed the assessment assessing the income higher than the returned income, the AO should have issued notice u/s. 143(2) of IT Act and since no such notice u/s. 143(2) of IT Act was issued in that case, it was held that the Tribunal correctly upheld the order of CIT(A) as per which he set aside the assessment order on the ground that no notice u/s. 143(2) of IT Act was issued by the AO. It is submitted by ld. AR of assessee that in view of this judgement of Hon’ble Gujarat High Court, the Tribunal order of Patna Bench of the Tribunal rendered in the case of Chand Bihari Agrawal Vs. ACIT (supra) does not survive. Regarding the second argument of ld. DR of revenue that as per the judgement of Hon’ble Apex Court rendered in the case of Brij Mohan Vs. CIT (supra), the provisions of IT Act for relevant year are to be applied, it is submitted by him that this judgment is not applicable in the present case because that judgement is in the context of determination of taxable income and consequent tax liability and not in respect of time within which the notice is required to be issued. The ld. AR of assessee has submitted copy of the CBDT Circular No. 01/2009 dated 27.03.2009 and it was pointed out that as per this Circular, it was made clear by the department

ITA No.278/Bang/2016 Page 35 of 37 that for issue of notice u/s. 143(2) of IT Act after the amendment in law, the amended provisions of section 143(2) of IT Act are applicable even for the earlier assessment years. 10. First we take note of relevant dates which are undisputed. This is undisputed that notice u/s. 148 of IT Act was issued by the AO on 23.11.2012 asking the assessee to file the return of income before the expiry of 31 days from the date of the service of that notice. Subsequently, the AO issued the reminder letter dated 23.01.2013 to the assessee providing him an opportunity to file the return. The return of income was filed by the assessee on 25.02.2013 declaring Nil income. Hence, this is admitted position that the return of income filed by the assessee is a belated return. But the AO has not discarded this belated return filed by the assessee because the AO has issued notice u/s. 143(2) and 142(1) of IT Act on 13.12.2013 posting the case for hearing on 24.12.2013. Hence it is seen that the AO has not held that the return of income filed by the assessee belatedly is non-est. In the light of these facts, when we examine the applicability of the Tribunal order of the Patna Bench of the Tribunal rendered in the case of Chand Bihari Agrawal Vs. ACIT (supra) and subsequent judgment of Hon’ble Gujarat High Court rendered in the case of PCIT Vs. Devendranath G. Chaturvedi (supra), we find that in view of this subsequent judgement of Hon’ble Gujarat High Court in which the Tribunal order rendered in the case of Chand Bihari Agrawal Vs. ACIT (supra) was duly taken note of, it has to be accepted that even if belated return is filed by the assessee which has not been discarded by the AO, the AO has to issue notice u/s. 143(2) of IT Act if the AO wants to assess the income of the assessee at a figure higher than the income declared by the assessee in that return of income. In the present case also, the AO has not discarded the belated return of income filed by the assessee because the AO has issued notice u/s. 143(2) of IT Act on the basis of such return filed by assessee belatedly and therefore, it has to be accepted and ought to be held by respectfully following this judgement of Hon’ble Gujarat High Court rendered in the case of PCIT Vs. Devendranath G. Chaturvedi (supra) that the AO was required to issue notice u/s. 143(2) of IT Act. Now the question is whether the AO has to issue notice u/s. 143(2) of IT Act within prescribed time or he can issue such notice at any

ITA No.278/Bang/2016 Page 36 of 37 point of time. In our considered opinion, once it is held that the AO has to issue the notice u/s. 143(2) of IT Act, the same has to be issued within prescribed time and if the AO fails to issue the notice u/s. 143(2) of IT Act within the prescribed time and he issues the notice after that time than, it amounts to non- issue of notice u/s. 143(2) of IT Act. 11. The next aspect of the matter to be decided by us is as to whether the AO could have issued notice u/s. 143(2) of IT Act within one year from the end of the month in which the return of income was filed by the assessee as per the pre-amended provisions of section 143 (2) or the AO was required to issue notice u/s. 143(2) of IT Act within six months from the end of the Financial Year in which the return of income was filed by the assessee as per the amended provisions of section 143(2) of IT Act. When we consider and examine the applicability of this judgement of Hon’ble Apex Court rendered in the case of Brij Mohan Vs. CIT (supra) on which reliance is placed by ld. DR of revenue, we find that this judgement is in the context of assessment of income and determination of the consequent tax liability and it was held in this case in this context that for the purpose of assessment of income and determination of consequent tax liability, the relevant law is the law which rules the assessment year in respect of which the total income is assessed and the tax liability is determined. In the present case, we are examining the applicability of this judgement in the context of time limit within which the notice was to be issued by the AO u/s. 143(2) of IT Act and hence, in our considered opinion, this judgment of Hon’ble Apex Court is not relevant in the present case. Moreover as per the CBDT Circular No. 01/2009 dated 27.03.2009, it was prescribed that amended provisions of sub section 2 of section 143 shall apply to all such returns (irrespective of the assessment year to which the returns pertain) where notice under sub-section 2 of section 143 can still be issued on 01.04.2008 under the pre-amended provisions i.e. in the context of return filed by the assessee before 1st April, 2008 and notice u/s. 143(2) of IT Act was not issued up to 31.03.2008 and in that situation, it was to be seen as to whether the notice could have been issued u/s. 143(2) of IT Act as on 01.04.2008 as per unamended provisions and if it is found that such notice could have been issued u/s. 143(2) of IT Act as on 01.04.2008 as per the pre-amended

ITA No.278/Bang/2016 Page 37 of 37 provisions of section 143(2) of IT Act then for issuing of notice u/s. 143(2) of IT Act, the amended provisions will be applicable. In the present case, even the return of income was filed after 01.04.2008 and therefore, in our considered opinion, the amended provisions of section 143(2) of IT Act are applicable in the present case and as per such amended provisions, the AO could have issued notice u/s. 143(2) of IT Act within 6 months from the end of the Financial Year in which the return of income was filed by the assessee. The return of income in the present case was filed by the assessee during the Financial Year 2012-13 and therefore, the AO could have issued the notice u/s. 143(2) of IT Act up to 30.09.2013 i.e. within six months from the end of the Financial Year 2012-13 in which the return of income was filed by the assessee. But the AO has issued the notice on 13.12.2013 and hence, the notice issued by the AO u/s. 143(2) of IT Act is time barred and therefore, the consequent assessment framed by the AO is bad in law and hence, quashed. In view of this decision, no further adjudication on merit is called for.

Sd/- Sd/- (SUNIL KUMAR YADAV) (ARUN KUMAR GARODIA) Judicial Member Accountant Member Bangalore, Dated, the 28th September, 2018. /MS/ Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order

Senior Private Secretary, Income Tax Appellate Tribunal, Bangalore.