M/S. INDO AMERICAN HYBRID SEEDS (INDIA) vs. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-11(4)

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ITA/667/2016HC KarnatakaKAHC01048804201605 September 2022Bench: P.S.DINESH KUMAR,UMESH M ADIGA6 pages
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What did the High Court hold?

The High Court held that an assessment order passed without issuing a notice under Section 143(2) of the Act is void ab initio. Therefore, the ITAT's order upholding the assessment was unsustainable in law.

What were the facts?

The assessee filed its return of income, but the Assessing Officer (AO) allegedly did not issue a mandatory notice under Section 143(2) within the prescribed time. The ITAT held that the AO's jurisdiction was not affected if a reasonable opportunity of hearing was given.

What were the issues?

Whether the ITAT was justified in holding that the AO's jurisdiction was not affected by the non-issuance of a notice under Section 143(2) and whether Section 292BB of the Act was applicable in such a scenario.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 148,Section 139(1),Section 292BB,Section 143(3)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 5TH DAY OF SEPTEMBER, 2022

PRESENT

THE HON'BLE MR. JUSTICE P.S.DINESH KUMAR

AND

THE HON'BLE MR. JUSTICE UMESH M. ADIGA

I. T. A. NO.667 OF 2016

BETWEEN:

M/S. INDO AMERICAN HYBRID SEEDS (INDIA) PRIVATE LIMITED REP. BY ITS MANAGING DIRECTOR SRI. ARTHUR SANTOSH ATTAVAR PB NO.7099, 7TH KM, BANASHANKARI-KENGERI LINK ROAD, CHANNASANDRA VILLAGE RAJARAJESHWARI NAGAR POST BANGALORE - 560 098. … APPELLANT (BY SRI. A. SHANKAR, SR. COUNSEL FOR SRI. ANNAMALAI S., ADVOCATES)

AND:

THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE - 11 (4) 80 FEET ROAD, BMTC BUILDING KORAMANGALA 6TH BLOCK BANGALORE - 560 095.

… RESPONDENT (BY SRI.K.V. ARAVIND, ADVOCATE)

THIS ITA IS FILED UNDER SECTION 260-A OF I.T.ACT 1961, ARISING OUT OF ORDER DATED 11.08.2016 PASSED IN ITA No.1283/BANG/2014 & CROSS OBJECTION NO.142/BANG/2015, FOR THE ASSESSMENT YEAR 2009-2010 (ANNEXURE-A) PRAYING

TO: A) FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED ABOVE AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT. B) ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TO THE EXTENT AGAINST THE APPELLANT IN THE ORDER PASSED BY THE ITAT, BENGALURU 'C' BENCH, IN ITA NO. 1283/BANG/2014 AND CROSS OBJECTION NO. 142/BANG/2015 DATED:11/08/2016 FOR THE ASSESSMENT YEAR 2009-10 (ANNEXURE-A) AND C) PASS SUCH OTHER ORDERS, AS THIS HON'BLE COURT DEEMS FIT AND PROPER TO MEET THE ENDS OF JUSTICE.

THIS ITA COMING ON FOR HEARING, THIS DAY, P.S. DINESH KUMAR J., DELIVERED THE FOLLOWING:

JUDGMENT

Heard Shri.A. Shankar, learned Senior Advocate for the appellant and Shri. Aravind K V, learned Standing counsel for the Revenue. In our considered view only the following substantial questions of law arise for consideration;

"(1) Whether the Tribunal was justified in law in holding that there is a valid issue and service of notice under Section 143(2) of the Act when admittedly no notice under Section 143(2) was issued by the learned Assessing Officer and consequently passed a perverse order on the facts and circumstances of the case.

(2) Whether the Tribunal was justified in law in holding that the provisions of section 292BB of the Act are applicable for non-issue of notice under Section 143(2) of the Act on the facts and circumstances of the case."

2.

The other three questions i.e., questions 3, 4 and 5 have been rendered academic for the reasons recorded herein below and same are kept open.

3.

Brief facts of the case are, Assessee filed its return of income on 25.09.2009 for the Assessment Year 2009-10 under Section 139(1) of the Income tax Act (the 'Act' for short). Notices under section 143(2) and 142(1) were issued. Appellant filed its reply on 22.06.20211. But order was passed by the Assessing Officer ('AO' for short), pursuant to notice under section 143(2) of the Act within the time prescribed. Later, AO issued notice under section 148 of the Act on 29.03.2012 and the Assessee submitted its reply requesting the AO to treat the return originally filed under section 139(1) of the Act as its return filed pursuant to notice under section 148 of the Act. The AO passed the Assessment order on 31.10.2012.

4.

Shri.A.Shankar, learned Senior Advocate submitted that the mandatory notice under Section 143(2) of the Act was not issued within the time prescribed to assume jurisdiction to act upon the returns filed. Therefore, assessment order is not sustainable in law. The assessee challenged the assessment order before the CITA by his order dated 27.06.2014 in ITA No.84/AC-11(4)/A-I/12-13

(Annexure-D) allowed the appeal holding that the Assessing Officer ought to have issued notice under Section 143(2) of the Act within the time prescribed in the proviso to Section 143(2) of the Act; that omission on the part of the Assessing Officer to issue the said notice under Section 143(2) is not a procedural irregularity and cannot be cured.

5.

The Revenue challenged the said order in ITA No.1283/Bang/2014. The ITAT has set aside the CIT(A)'s order holding that the jurisdiction of the Assessing Officer is not affected for want of notice under Section 143(2) of the Act or non-service of the said notice, if reasonable opportunity of hearing is given to the assessee.

6.

Shri. Shankar further submitted that the issue on this aspect is no longer res integra. The Division Bench of this Court in ITA No.192/2012 decided on 24.06.2020 between Commissioner of Income Tax (Central) vs. M/s C.Ramaiah Reddy has held that an assessment order passed under Section 143(3) of the Act without issuing notice under Section 143(2) order is ab initio void. Accordingly, he prayed for allowing this appeal.

7.

Shri. K.V Aravind, learned Senior standing counsel for the Revenue in his usual fairness did not dispute that the notice was not issued to the assessee under Section 143 (2) of the Act.

8.

Heard the arguments on both sides and perused the records.

9.

This Court in Ramaiah Reddy's case after considering the authorities on the point, has held in paragraph No. 8 of the judgment that an assessment order without issuance of notice under Section 143(2) of the Act is ab initio void. In view of this settled position, the order passed by the ITAT's is unsustainable in law.

10.

Hence, the following; JUDGMENT 1) The appeal is allowed in part. 2) Substantial questions of law - 1 and 2 are

answered in favour of the assessee and

against the Revenue.

3) Questions of law No. 3, 4 and 5 are kept

open. 4) No costs.

Sd/- JUDGE

Sd/- JUDGE RU

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