DCIT 1(3), MUMBAI vs. STANDARD CHARTERED FINANCE LTD, MUMBAI

ORDER PER G.S.PANNU,A.M:

The captioned appeal filed by the Revenue pertaining to assessment year 2003-04 is directed against an order passed by CIT(A)-11, Mumbai dated 31/03/2014, which in turn, arises out of an order passed by the Assessing Officer under section 143(3) r.w.s. 144C of the Income Tax Act, 1961 (in short ‘the Act’) dated 24/01/2012.

(Assessment Year 2008-09) 2. The Grounds of appeal raised by the Revenue read as follows:-

1. Whether on the, facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in annulling the order of assessment passed U/s. 143(3) r.w.s. 144C(1) of the Act on the ground that the assessee itself after putting in the objection vide his letter filled before A.O. on 13/12/2011, did not object to the draft order and even consented to final order of assessment U/s. 143(3) vide his letter filed before A.O. on 16/01/2012, thereby nullifying the objection contained in letter dated 13/12/2011 and thus making section 292BB applicable on the facts of the case." 3. In this appeal, the short grievance of the assessee is that the CIT(A) has erred in holding that the assessment order passed by the Assessing Officer dated 24/01/2012 was non-est in the eyes of law.

4. In brief, the facts relevant to appreciate the controversy in this appeal can be summarized as follows. The respondent assessee is a company incorporated under the provisions of the Companies Act, 1956 and is inter-alia engaged in the business of providing marketing services in respect of financial products offered by the Standard Chartered Bank in India and also providing back office transaction processing services for the Indian branches of Standard Charted Bank. For the assessment year 2008-09, assessee company filed a return of income on 30/09/2008 declaring a total income of Rs.26,10,08,955/-. In para-2 of the assessment order, it is noted by the Assessing Officer that the case was selected for scrutiny and a notice under section 143(2) of the Act dated 23/08/2010 was issued and served on the assessee. The Assessing Officer completed the ensuing assessment on 24/1/2012 under section 143(3) r.w.s. 144C(1) of the Act determining the total income at Rs.59,21,42,960/- after making an addition of Rs.33,11,34,000/- on account of determination of arm's length price of the international transactions entered with the associated enterprises. The aforesaid assessment was carried in appeal before the CIT(A) raising various grounds on facts and in law. A preliminary point was (Assessment Year 2008-09) raised to the effect that the assessment order dated 24/1/2012 was invalid as the notice issued under section 143(2) on 23/08/2010 was beyond the period stipulated in law. On this preliminary aspect, CIT(A) has found it factually correct that the notice under section 143(2) of the Act was issued beyond the period prescribed and, therefore, the consequent assessment order dated 24/01/2012 was bad in law.

5. Before us, the Ld.CIT-DR appearing for the Revenue has not controverted any of the factual matrix brought out by the CIT(A), but submitted that having regard to section 292BB of the Act, the objections of the assessee that notice under section 143(2) of the Act was not served in time could not have been entertained as assessee did not object to the passing of the draft assessment order. According to the Ld. CIT-DR, assessee had appeared in the assessment proceedings and, therefore, it was precluded from taking objection with regard to the validity of such proceedings thereafter.

6. On the other hand, Ld. Representative for the assessee pointed out that assessee had appeared before the Transfer Pricing Officer as well as before the Assessing Officer during the assessment proceedings, so however, vide letter dated 12/12/2011, filed before the Assessing Officer on 13/12/2011 assessee had clearly brought out that the notice under section 143(2) of the Act dated 23/08/2010 was invalid inasmuch as, it was issued after the stipulated period and, therefore, the assessment was barred by limitation. The Ld. Representative for the assessee pointed out that the aforesaid aspect has been clearly appreciated by the CIT(A) and thereafter it has been held that having regard to the proviso to section 292BB of the Act, the validity of the impugned

(Assessment Year 2008-09) assessment could not be saved as notice under section 143(2) of the Act was belatedly.

7. We have carefully considered the rival submissions. On facts, there is no dispute and the same lie in a narrow compass. In this case, the return of income was filed by the assessee on 30/09/2008 and, therefore, having regard to the then existing provisions of section 143(2) of the Act, no notice under section 143(2) could have been issued after expiry of six months from the end of the financial year in which the return of income was filed by the assessee. Therefore, in the facts of the present case, the period available for issuance of notice under section 143(2) of the Act was on or before 30th September, 2009, whereas it has actually been issued on 23/08/2010, as recorded by the Assessing Officer in para -2 of the assessment order. In this background of the matter, there can be no dispute to the inference drawn by the CIT(A) that the ensuing assessment, being passed on an invalid notice, was non-est in law.

7.1 However, the defence of the Revenue is based on the provisions of section 292BB of the Act, which provides that where an assessee has appeared in any proceedings or co-operated in any enquiry relating to assessment or re- assessment, it shall be deemed that any notice which was required to be served was indeed served and assessee would be precluded from objecting thereafter that the notice was not served or was served upon him in an improper manner or not served upon him in time. In the instant case, it is seen that vide letter dated 12/12/2011, assessee brought to the notice of the Assessing Officer during the assessment proceedings itself that the notice under section 143(2) of the Act dated 23/08/2010 was beyond the period specified in law and, therefore, the assessment was time barred. The plea of (Assessment Year 2008-09) the Revenue is that inspite of said assertion made by the assessee, the assessee continued to appear in the assessment proceedings and, therefore, the provisions of section 292BB of the Act come into operation and disentitle the assessee from raising the objection of invalid notice before the CIT(A).

7.2 In our considered opinion, the stand of the Revenue is completely misconceived . Ostensibly, assessee brought to the notice of the Assessing Officer the invalidity of the proceedings and merely because it continued to appear and co-operated in the ongoing assessment proceedings would not validate an otherwise unauthorized action of the assessing authority. Moreover, proviso to section 292BB of the Act provides that the estoppels against the assessee prescribed in the main section would not operate if the assessee had raised the objection before the completion of the assessment or reassessment. In the present case, it is quite clear that before completion of assessment, assessee had duly raised the point of invalidity of the notice issued under section 143(2) of the Act and therefore, in our view the plea of the Revenue is completely unfounded. As a consequence, we find no error on the part of the CIT(A) in holding that the assessment order was non-est in the eyes of law as it was based on a notice issued under section 143(2) of , which was time barred. Accordingly, we hereby affirm the order of the CIT(A) and Revenue fails.