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Income Tax Appellate Tribunal, BENCH “H”,MUMBAI
Before: SHRI R.C.SHARMA & SHRI PAWAN SINGH
O R D E R
PER PAWAN SINGH, JM:
This appeal u/s 253 of the Income-tax Act (Act) by the Revenue and Cross Objection(C.O) by assessee are directed against the order of CIT(A)-9, Mumbai dated 01.10.2014 for Assessment Year (AY) 2008-09.
Brief facts of the case are that the assessee-company filed its return of income for relevant AY on 30.09.2008 declaring total income of Rs. 1,89,15,831/-. The assessment was completed u/s 143(3) of the Act on the return income itself on 2 & C.O. 123/M/2016 M/s Hardcastle Petrofer Pvt. Ltd. 30.11.2010. Subsequently, the assessment was re-opened u/s 147 of the Act. Notice u/s 148 dated 28.03.2013 was issued on the ground that there is existed reason to believe that income had escaped assessment on account of non-disclosure of full and true all material facts necessary for assessment. Further, a notice dated 11.07.2013 was also issued to the assessee for furnishing return in response to the notice u/s 148. The assessee vide its letter dated 03.04.2013 replied the same and contended therein that return of income filed on 30.09.2008 for relevant AY may be treated as return income. The AO proceeded to make the re-assessment and reduced the amount of deduction u/s 80IB of the Act to Rs. 4,33,62,912/- against Rs. 5,31,15,829/-. Aggrieved by the order of assessment u/s 143(3) r.w.s. 147 of the Income-tax Act, the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), assessee challenged the re-opening of the assessment as well as reducing the claim of deduction claimed u/s 80IB of the Act. The ld. CIT(A) allowed the appeal of the assessee holding that re-opening was mere change of opinion which is not allowable u/s 147 of the Act. Thus, aggrieved by the order of Ld CIT(A) the Revenue has filed the present appeal and the assessee has filed C.O. after service of notice of appeal.
We have heard the ld. Departmental Representative (DR) for the Revenue and ld. Authorized Representative (AR) of the assessee and perused the material available on record. At the time of making submission, ld. AR of the assessee brought out attention to his application dated 28.09.2016 wherein assessee has filed additional ground of C.O. In additional ground of C.O., assessee has raised ground that order of re-assessment dated 31.10.2013 passed by AO u/s 143(3) r.w.s 147 is void ab- initio as such no mandatory notice u/s 143(2) of Income-tax Act was issued or served upon the assessee and as such re-assessment is invalid. In support of filing of additional ground of C.O., the ld. AR of the assessee relied upon the decision of (i) National Thermal Power Corporation v. CIT [219 ITR 383(SC)], (ii) Jute Corporation of India Ltd. v. CIT [187 ITR 688(SC)], (iii) Ahmedabad Electricity Co. Ltd. v. CIT [199 ITR 351(Bom) (FB)]. The ld AR for assess argued that additional ground of C.O. may be admitted as the same is purely question of fact and that no new facts are required to be brought on record. Ld. On the other hand 3 & C.O. 123/M/2016 M/s Hardcastle Petrofer Pvt. Ltd. the ld DR for the Revenue argued that no such ground was taken before the First Appellate Authority (FAA) and this ground of appeal may not be admitted. On the merit of the case ld DR for Revenue supported the order of AO and argued that the reopening was not based on mere change of opinion. The ld DR for revenue prayed that the order of Ld CIT (A) be set aside and the order passed by AO may be restore. On the specific of the Tribunal about the service of notice u/s 143(2), the ld DR for the revenue fairly admitted that there is no record in the file of AO about the service of such notice after reopening of case u/s 148.
4. We have considered the rival contention of the parties and seen the order of authorities below. We have noticed that the additional ground of C.O. is purely question of law and does not require any new fact to be brought on record, thus, we admit the additional ground of C.O. The Hon’ble jurisdictional High Court in Commissioner of Wealth-tax vs. HUF of H.H. Late J.M. Scindia [300 ITR 193 (Bom)] held that while invoking the power u/s 17( wealth tax Act), the AO is bound by the mandate of the proviso to section 16(2) (wealth tax Act) and on failure the order of reassessment will be without jurisdiction and consequently the order of reassessment will have to be set aside. Further, in case of ACIT vs. Geno Pharmaceuticals Ltd. [32 taxmann.com 162 (Bom)], the Hon’ble jurisdictional High Court held as under: “It is an admitted position that no notice under Section 143(2) had been issued while making assessment under Section 143(3) read with Section 147. The Apex Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 has held that the Tribunal has discretion to allow or not to allow a new ground to be raised. But in a case where the Tribunal is only required to consider the question of law arising from facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. The I TAT, after relying on the judgment of the Apex Court in R. Dalmia v. CIT [1999] 236 ITR 480/ 102 Taxman 702, came to the conclusion that issuance of notice under Section 143(2) was mandatory. The ITAT has taken into consideration the relevant provisions and has also taken into consideration the judgment of the Apex Court and relying on the said judgments, the ITAT has held that notice under Section 143(2) is mandatory and in the absence of such service, the Assessing Officer cannot proceed to make an inquiry on the return filed in compliance with the notice issued under Section 148. 6. Under these circumstances, no case is made out for interfering with the Tax Appeals No.77/2012 and 78/2012 since no substantial question of law is raised in both the appeals.”
4 & C.O. 123/M/2016 M/s Hardcastle Petrofer Pvt. Ltd. Further, the Co-ordinate Bench of Chandigarh Tribunal in Sanjeev Aggarwal v. DCIT [159 ITD 302(Chd.)] in ITA Nos. 102, 103, 169 & 170 (CHD.) of 2006 while dealing with almost identical grounds held as under: “From the perusal of the above provisions, it is quite clear that the Assessing Officer has to issue and serve a notice under section 148 of the Act to the assessee before making assessment under section 147 of the Act. The notice under section 148 of the Act requires the assessee to furnish his return of income within the time specified in the notice. This return has to be in the prescribed form and in the prescribed manner. It has been very categorically provided in the section that afterwards the provisions of this Act shall 'so far as may be, apply accordingly as if such return were a return required to be furnished under section 139' of the Act. Therefore, the provisions of section itself negate the arguments taken b the learned D.R. that once issuing notice under section 148 of the Act, the Assessing Officer cannot go into the provisions of other sections. Once the assessee files return in pursuance of notice under section 148 of the Act, which is deemed to be filed under section 139 of the Act and in case the Assessing Officer wants to proceed with the return filed by the assessee, he has to issue a notice under section 143(2) of the Act. Any assessment framed without issue of notice und r section 143(2) of the Act, suffers from Jurisdictional error. This position of law has also clarified by Delhi High Court in the case of Alpine Electronics Asia Pte Ltd. (supra). In view of the above, we hereby quash the order of the Assessing Officer, which was made without issue of notice under section 143(2) of the Act.”
Now coming to the fact of the present case, there is no dispute that AO has not issued notice u/s 143(2) after the reopening of the case. Thus, the proceeding initiated by AO is void ab-initio. Consequently, all the subsequent proceeding became invalid. Thus, the C.O. of the assessee is allowed.
As we have already allowed the C.O. of the assessee vide C.O. No. 123/Mum/2016 and held that proceedings initiated by AO is void ab-initio, thus the present appeal filed by the Revenue has become infructuous and the same is dismissed.
In the result, C.O. filed by the assessee is allowed and appeal of the Revenue is dismissed. Order pronounced in the open court on this 21st October, 2016. Sd/-d/- Sd/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 21/10/2016 S.K.PS