DEPUTY COMMISSIONER OF INCOME-TAX vs. DEMAG CRANES & COMPONENTS (I) PVT. LTD., PUNE

आदेश आदेश / ORDER आदेश आदेश

PER D. KARUNAKARA RAO, AM :

The appeal ITA No.1644/PUN/2015 is filed by the Revenue against the order of CIT(A)-1, Pune, dated 07-09-2015 for the Assessment Year 2009-10.

legal issue relating to the failure to issue statutory notice u/s.143(2) of

the Income Tax Act, 1961. In preference to the other cross objections,

Ld. AR for the assessee brought our attention to Cross Objection No.4

and submitted that the said ground is legal in nature and the CIT(A)

erred in not appreciating the fact that the defect is incurable. Ld. AR

further submitted that if the said Cross Objection No.4 is adjudicated in

favour of the assessee, adjudication of other cross objections and the

grounds raised by the Revenue become infructuous.

Ld. AR’s contention and proceed to adjudicate the cross objection No.4

raised by the assessee in the following paragraphs. For the sake of

reference, the said cross objection No.4 is extracted as follows :

“On the facts and in the circumstances of the case, the Ld. AO : 4. erred in upholding the validity of the reassessment proceedings u/s.147 of the Act, even though no notice u/s.143(2) of the Act have been issued by the AO.”

engaged in providing state of art material handling solutions,

particularly in the crane manufacturing industry. Assessee filed the

return of income on 30-10-2009. Subsequently, it was revised on

26-05-2010 declaring total income of Rs.2,21,69,251/-. AO issued

notice u/s.143(2) of the Act on 29-08-2011. Meanwhile the draft

assessment order was passed by the AO on 13-03-2013. Appellant filed

its objections on 02-05-2013. In the meantime, the AO issued notice

u/s.148 of the Act on 31-03-2013. Further, the AO passed an order

u/s.143(3) r.w.s.147 of the Act which is the subject matter of the

litigation before us.

attention to the order of the AO and submitted that the said order is

deficient on the information relating to issuance of the statutory notice

u/s.143(2) of the Act. Further, he submitted that the reassessment was

completed on 10-03-2014 u/s.143(3) r.w.s.147 of the Act without

issuance of notice u/s.143(2) of the Act. Further, bringing our attention

to the grounds/additional grounds raised before the CIT(A), Ld. AR

brought our attention to Para No.3 of the order of CIT(A) and submitted

that similar legal ground was raised vide Additional Ground No.14 and

the same reads as under :

“14. Challenging the validity of initiating the reassessment proceeding u/s.147 of the Act without completing the regular assessment proceedings u/s.143(2) of the Act.”

by the CIT(A), Ld. AR for the assessee brought our attention to the

contents of Para No.24 and 25 of order of the CIT(A). Ld. AR submitted

that despite the chronology of events provided in Para No.25, the

conspicuous absence of the date relating to the issuance of statutory

notice u/s.143(2) of the Act indicates the making of reassessment

without issuing said notice. Referring to contents of Para No.22 which

contains relevant adjudication on the issue relating to the issue of

notice u/s.143(2) of the Act, Ld. AR for the assessee submitted that

CIT(A) acknowledged the fact that the notice was never issued and

accordingly proceeded to adjudicate the issue stating that the said

deficiency is curable under the provisions of section 292BB of the I.T.

Act, 1961.

orders of the AO and the CIT(A) and submitted that the relevant records

were directed to be produced before the court in the past but due to

some reasons the case was adjourned from time to time.

of notice u/s.143(2) of the Act before reassessment is made u/s.147

r.w.s.143(3) of the Act. On perusal of the order of the AO, it is evident

that there is no reference to the fact of issue of notice u/s.143(2) of the

Act, which is mandatory before making the impugned re-assessment.

Further, on perusal of the order of CIT(A) in general and the contents of

Para Nos. 22, 24 and 25 in particular, the failure to issue the said

notice is an obvious inference. It is also a fact that the CIT(A) in Para

No.22 has only attempted to justify the said failure on the ground of

curability u/s.292BB of the Act which is again a proposal which is

unsustainable in law. For the sake of completeness, we proceed to

extract the contents of Para No.22 of the order of CIT(A) and the same

reads as under :

“22. I have carefully considered the facts of the case as well as reply of the appellant. In this case the order passed by the Assessing Officer is covered by the provisions of sec.292BB of the I.T. Act, 1961. For the sake of clarity provisions of sec.292BB are reproduced as under :

. . . . . . . . . . Since the appellant has not raised this issue before AO, the same is barred to be taken up in further proceedings as per the above section. Accordingly, Ground No.12 is dismissed.”

issuance of notice u/s.143(2) of the Act. We have also perused the cited

Supreme Court judgment in the case of ACIT and Another Vs. Hotel

Blue Moon 321 ITR 362 wherein it is held that the statutory

requirement of issuing the notice u/s.143(2) of the Act constitutes an

incurable defect. Similar views are upheld by the number of judgments

viz., (1) CWT Vs. HUF of H.H. Late Shri J.M. Scindia 300 ITR 193

(Bombay High Court), Alpine Electronics Asia Pte Ltd. Vs. Director

General of Income Tax and Others 341 ITR 247 (Delhi High Court),

Virendra Dev Dixit Vs. ACIT 331 ITR 483 (Allahabad High Court), Pai

Vinod Vs. DCIT 353 ITR 622 (Karnataka High Court) etc.

Considering the same, we are of the view that the cross objection

No.4 raised by the assessee is required to be allowed in favour of the

assessee. Consequently, adjudication of other cross objections raised

by the assessee as well as the grounds raised by the revenue, in our

view, becomes an academic exercise. Accordingly, all of them are

dismissed as academic. Thus, the grounds raised by the revenue are

dismissed and the cross objection raised by the assessee is partly

allowed.

objection of the assessee is partly allowed.

Order pronounced in the open court on this 09th day of March, 2018.

Sd/- Sd/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) �याियक �याियक सद�य �याियक �याियक सद�य सद�य /JUDICIAL MEMBER लेखा सद�य लेखा लेखा सद�य लेखा सद�य सद�य / ACCOUNTANT MEMBER सद�य

पुणे Pune; �दनांक Dated : 09th March, 2018 सतीश आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत

अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. 3. The CIT(A)-1, Pune 4. CIT-1, Pune िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “B Bench” Pune; 5. गाड� फाईल / Guard file. 6. आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार

स�यािपत �ित //True Copy// //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune