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Income Tax Appellate Tribunal, “ C ” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA, JM & SHRI RAJESH KUMAR, AM
अऩीराथी की ओय से/: Assessee by Shri B P Purohit and Ms.Lavanya Raj Purohit प्रत्मथी की ओय से/ Revenue by : Shri Love Kumar सुनवाई की तायीख / Date of Hearing : 6.10.2016 घोषणा की तायीख /Date of Pronouncement : 26.10.2016 आदेश / O R D E R
PER RAJESH KUMAR, AM :
This is an appeal filed by the assessee challenging the order dated 19.3.2013 passed by the ld.CIT(A)-26, Mumbai upholding the impugned assessment order without service notice u/s 143(2) for the assessment year 2007-08.
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Facts of the case are that the assessee filed its return of income on 31.10.2007 declaring total income of Rs.1,81,140/-. Thereafter the case was selected for scrutiny and statutory notices under section 143(2) and 142(1) of the Income Tax act, 1961 was issued and served upon the assessee. The assessment was framed u/s 143(3) by assessing the total income at Rs.23,85,750/- by making following disallowances : a) Interest payable to partner Rs.71,078/- b) Addition u/s 40(a)(ia) Rs.21,33,526/- It is mentioned in the order that in response to notice under section 143(2) and 142(1) of the Act, the assessee attended the proceedings from time to time. Aggrieved by the order of the AO, the matter carried before the ld. CIT(A) and the assessee challenged the validity of the assessment on the ground of non-service of notice u/s 143(2) of the Act which was dismissed by the ld.CIT(A) vide para 3.3. and is extracted below:- “3.3 I have carefully considered the submissions of the appellant as well as the findings of the AO in the remand report. I have also gone through the case records. It is seen that the assessment record does not have any proof of service of the notice u/s.143(2) of the IT.Act, as also has been honestly admitted by the A.O. in the remand report, however, there is an unsigned and undated noting of the A.O. in the order sheet regarding issue of notice. It is also a fact that the partner of the firm have attended the assessment proceedings and has also furnished the details during the assessment proceedings. Though in the affidavit filed by the partner during the appeal proceedings, it is claimed that he has raised objection to the assessment proceedings at the time of assessment but this fact is not borne out from the conduct of the appellant who
3 I T A N o . 3 8 8 1 / Mu m/ 1 3 has co-operated in the assessment proceedings. There is no documentary evidence in form of any correspondence which could indicate that at any point of time it was contended that notices u/s.143(2) has not been received. The provisions of sec.292BB of LT.Act, were introduced to avoid such trivial litigation after completion of the assessment. After considering all these material facts as well as the case laws cited by the appellant as well as A.O. and the intention of the provisions of sec.292BB, I am not inclined to agree with the appellant that in want of proof of service of notice u/s.143(2) which is not available with the A.O., the assessment becomes null and void. Accordingly, this ground of appeal is dismissed.”
3. Now, the assessee has challenged the order of the ld.CIT(A) before us submitting vehemently that the assessment order was ab-initio null and void in absence of service of notice u/s 143(2) of the Act on the assessee. The ld. AR argued before us that the issue and service of notice u/s 143(2) of the Act was mandatory provision of law without which no inquiry could be conducted and any assessment framed without issuing such notice was ab-initio null and void in the eyes of law.
The ld.AR placed before us a series of decisions in defence of his argument namely : A) ACIT V/s Hotel Blue Moon (2010) 321 ITR 362 (SC); B) CIT V/s Virendeer Kumar Agarwal in of 2009, order dated 7.1.2010, Bombay High Court; C) CIT V/s Ms. Mudra G. Nanawati* (2009) 227 CTR (Bom) 387; D) Mangilal Jain V/s ITO (2009) 315 ITR 105 (Mad); E) CIT V/s Cebon India Ltd (2009) 347 ITR 583 (P&H); F) DCIT V/s Mahi Valley Hotels and Resorts (2006) 287 ITR 360 (Guj) G) CIT V/s Parikalpana Estate Development P Ltd (2012) 79 DTR (all) 246 and H) CIT V/s Pawan Gupta (2008) 304 ITR 177 (Del).
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The ld. AR further submitted that the provisions of section 292BB could not be applied in case of non-service notice u/s 143(2) of the Act. The ld. AR further submitted that section 292 BB of the Act was applicable prospectively with effect from assessment year 2008-09 whereas the year under consideration was assessment year 2007-08. Therefore, the ld.AR finally prayed before the Bench that the orders of the authorities below are null and void for want of service of notice u/s 143(2) upon the assessee and therefore the assessment proceedings and the order of assessment be quashed as non-est.
The ld. DR heavily relied upon the orders of authorities below. However, the ld. DR fairly agreed that there was no copy of notice issued u/s 143(2) of the Act in the assessment record of the assessing officer or proof of service thereof and there the same could also not be issued to the assessee when the assessee required the assessment record by means RTI application. 7. We have considered the rival submissions and perused the material placed before us including the impugned orders under consideration. The ld. DR conceded before us that the was no copy of notice issued under section 143(2) of the Act to the assessee in the assessment record and as a result there was no proof of service of the said notice . In our opinion, the issue of notice and service thereof u/s 143(2) of the Act is mandatory and necessary requirement of law of law which is not a curative
5 I T A N o . 3 8 8 1 / Mu m/ 1 3 defect in the assessment and in case , the assessment is framed without issuing and service notice u/s 143(2) of the Act , it is ab-initio bad in law. In the case of Hotel Blue Moon it has been held : “Section 158BC, read with section 143(2), of the Income-tax Act, 1961 - Block assessment in search cases - Procedure for - Whether for determination of undisclosed income for a block period under provisions of section 158BC, provisions of section 142 and sub- sections (2) and (3) of section 143 are applicable and no assessment can be made without issuing notice under section 143(2) - Held, yes - Whether, therefore, where Assessing Officer, for any reason, repudiates return filed by assessee in response to notice under section 158BC(a), he must necessarily issue a notice under section 143(2) within time prescribed in proviso to section 143(2) - Held, yes In the case of CIT V/s Ms. Mudra G. Nanawati* (BHC) it has been held: “Section 143 of the Income-tax Act, 1961 - Assessment - Additions to - Block Period 1991-92 to 2001-02 - No question of law arose from Tribunal's order holding that where notice under section 143(2) had not been issued within one year of filing of return by assessee, block assessment was not valid [In favour of assessee]”
In view of the above discussion, we are of the considered opinion that any defect of non issue and non service of notice u/s 143(2) is a substantive defect in the assessment which cannot be cured. In view of the ratio laid down in the various decision as referred to, we hold that the assessment made by the AO without issue of notice u/s 143(2) is non est as null and void and accordingly quashed. This ground is of the appeal is allowed.
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Since issue raised regarding non issue of notice is decided in favour of the assessee, the remaining issues are rendered academic in nature and accordingly dismissed.