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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI D.KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
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.
Assessee filed the Cross Objection No.42/PUN/2017 raising a
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.
On hearing this preliminary issue, we find it relevant to accept
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.”
Briefly stated relevant facts are that the assessee is a company
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.
Before us, at the outset, Ld. AR for the assessee brought our
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.”
Referring to the way the said additional ground was adjudicated
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.
On the other hand, Ld. DR for the Revenue relied heavily on the
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.
We heard both the parties on the limited factual issue of issuance
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.”
The above para is self-explanatory so far as the fact relating to the
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.
In the result, appeal of the revenue is dismissed and the cross
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