ING BEEWAAR MAATSCHAPPIJ I B.V. AS TRUSTEE OF ING,MUMBAI vs. ADDL DIT (IT) RG 3, MUMBAI

In all the four appeals, assessee raised identical grounds and the additional ground, legal one, which is common and relates the issue of notice u/s 143(2) reads as under:-

Briefly stated relevant facts of the case are that the assessee, who is a non- resident, is a „Fund‟ (viz ING Emerging Market Equity Funds) (ING EMEF) established in Netherlands and registered with Securities and Exchange Board of India (SEBI) as sub-account of ING Asset Management BV. Assessee filed the return of income declaring the total income of Rs. NIL. Assessment was completed u/s 147 r.w.s 143(3) of the Act and the assessed income was determined at 39,66,10,670/-. During the year under consideration, assessee invested in equity shares of Indian companies and earned short term capital gains of Rs. 26.59 Crs and long term capital gains of Rs. 13.08 Crs. In the return of income, assessee claimed the entire income (STCG + LTCG) as non-taxable in India in accordance with Article 13 of the India- Netherlands DTAA. In the assessment, after considering the submissions of the assessee in support of its claim as well as on perusal of the relevant provision of India-Netherlands DTAA, AO came to the conclusion that since the assessee is not fulfilled the conditions laid down in Article 1 read with Article 4 of the India- Netherlands DTAA, assessee is not eligible to claim benefit of the DTAA and accordingly AO denied the claim. Aggrieved with the said decision of the AO, assessee carried the matter in appeal before the first appellate authority.

During the proceedings before us, at the very outset, Shri Dhanesh Bafna, Ld Counsel for the assessee briefly narrated the above facts of the case and brought our attention to the additional ground, commonly raised in all the four appeals, ie Ground no.1.5 in appeal and Ground no.3 in rest of the three appeals, and submitted that in all the four assessments, the Assessing Officer completed the re-assessment u/s 147 read with 143(3) of the Act, which provides for the basic jurisdiction for the officers to complete the re-assessment. Further, Ld Counsel for the assessee filed written submissions stating that the issue of notice u/s 143(2) of the Act is mandatory. In the absence of the said notice issued and served on the assessee, AO cannot proceed to make enquiries required u/s 148 of the Act. In this regard, Ld Counsel for the assessee relied on the following decisions.

ACIT vs. Geno Pharmaceuticals Ltd (2013) 214 Taxman 83 (Bom) 2. Commissioner of Wealth Tax vs. HUF of H.H. Late J.M. Scindia (2008) 300 ITR 193 (Bom.) 3. R. Dalmia vs. CIT [1999] 236 ITR 480 4. CIT vs. Mr. Salman Khan (ITA (L) No. 2363 of 2009, dt 1.12.2009) 5. ACIT vs. Hotel Blue Moon [2010] 321 ITR 362 (SC) 7. Further, in response to the Ld DR‟s argument for the defects, if any, in issuance and service of notice u/s 143(2) of the Act, are curable b the provisions of section 292BB of the Act, Ld Counsel for the assessee brought our attention to various decisions viz (i) Travancore Diagnostics (P.) Ltd vs. ACIT (2016) 74 Taxmann.com 239 (Kerla); (ii) Pr. CIT vs. Shri Jai Shiv Shankar Traders (P) Ltd (2016) 383 ITR 448 (Delhi HC); (iii) CIT vs. Salarpur Cold Storage (P.) Ltd (2015) 228 Taxman 48 (Allahabad) and submitted that the provisions of section 292BB of the Act do no cure the defects of this kind. In this regard, Ld Counsel for the assessee relied on various other decisions ie (i) Rajib Saikia vs. ACIT [2015] 154 ITD 405 (Guwahati Trib) (ii) ACIT vs. Ashed Properties & Investments (P.) Ltd (2015) 62 Taxmann.com 340 (Bangalore Trib).

On the other hand, Ld DR for the Revenue brought our attention to the facts of the case and submitted that the assessee cooperated the re-assessment proceedings and the assessee was aware of the events relating to the re-assessment proceedings for the AYs under consideration. When comes to the issue of notice u/s 143(2) r.w.s 148 of the Act, Ld DR for the Revenue relied on the contents of paras 4 and 45 of the letter of the AO dated 17.10.2016, which read as under:- “4. It was also requested by Authorized Representative of the assessee M/s. S.R. Batliboi & Co to treat the original return filed dated 16.7.2006 as return filed in response to notice u/s 148 of the Income Tax Act, 1961. The same request was reiterated by letter dated 15.4.2011. It is seen that the assessee has not filed any return in response to the notice under section 148 of the Income Tax Act, 1961 dated 16.3.2011.

Further, it is to be noted that during the course of the assessment proceedings the assessee was given ample opportunity to appear before the Assessing Officer and the assessee did not raise the any question of service of the notice under section 143(2) of the Income Tax Act, 1961 at any point of time during the assessment proceedings.”

The above paras from the AO‟s letter to the ld DR, categorically silent on the fact relating to the issue of notice and the service of the same as required u/s 143(2) of the Act. It is obvious the re-assessment was made in this case without issuance of the said statutory and mandatory notice u/s 143(2) of the Act.

We have heard both the parties and perused the orders of the Revenue Authorities as well as the relevant material placed before us and the cited decisions relied on by the Ld Counsel for the assessee. On hearing both the parties and on perusal of the ratios laid down in the above cited decisions as well as the contents of the AO‟s letter dated 17.10.2016, we find, considering the passive admission of the AO on the issue of the non-issuance of the statutory notice u/s 143(2) of the Act, which provides the basic jurisdiction in matters of scrutiny assessment, this is not a curable defect as argued by the Ld DR for the Revenue. Further, as discussed in para 6 above, the said provisions of section 292BB of the Act do not provide jurisdiction to the AO from the duty of issue of service of statutory notice u/s 143(2) of the Act. It does not, in any way, insulate the AO from default in issuing notice u/s 143(2) of the Act within the period of limitation contemplated therein. Considering the same, we are of the opinion, all the four appeals of the assessee are required to be allowed on technical grounds. We order accordingly. Thus, the other grounds and the additional ground raised