DR. ANISUR RAHAMAN,KOLKATA vs. ITO, WARD -55(2), KOLKATA, KOLKATA

आदेश /O R D E R

PER Waseem Ahmed, Accountant Member:-

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-XXXVI, Kolkata dated 09.02.2011. Assessment was framed by ITO Ward-55(2), Kolkata u/s 147/143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 30.12.2009 for assessment year 2001-02. Shri Somnath Ghosh, Ld. Advocate appeared on behalf of assessee and Shri M.K. Clalda, Ld. Departmental Representative appeared on behalf of Revenue. 2. The grounds raised by assessee, per its appeal are as under:- “1. For that the assessment order dated 30.12.2009 framed u/s 147/143(3) is void and nullity in the eye of law as there are no recorded reasons to belief that income chargeable to tax has escaped assessment.

ITA No. 462/Kol/2011 A.Y. 2001-02 Dr. Anisur Rahaman Vs. ITO Wd-55(2) Kol. Page 2 2. Without prejudice to the ground no. 1 stated above, the recorded reasons are invalid and improper and as such, the assessment framed vide order dated 30.12.2009 is bad in law. 3. For that the assessment u/s. 147(143(3) is bad in law in the absence of proper sanction for the notice u/s. 148. 4. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the addition of Rs.3,57,575/- made by the AO on account of undisclosed deposits in the bank accounts. 5. For that on the facts and in the circumstances of the case, the L. CIT(A) erred in confirming the addition of Rs.5,17,999/- made by the AO on account of alleged difference in opening and closing capital.” 3. At the outset we find that the assessee has challenged the re- assessment order u/s. 147/143(3) of the Act on the ground that no notice u/s. 143(2) was issued by Assessing Officer before making the assessment under section 147 of the Act. 4. Before us Ld. AR for the assessee filed a paper book comprising of pages from 1 to 51 and submitted that in the instant case the AO assumed jurisdiction on 31-03-2008 to issue notice u/s 148 of the Act. There is no dispute that in response to the notice issued u/s 148 of the Act by the Ld. Assessing Officer the appellant had filed a return on 29-04-2009. However, the Ld. Assessing Officer did not at any point of time issue notice u/s. 143(2) of the Income Tax Act 1961 in the course of the reassessment proceeding. The issuance of notice u/s 143(2) of the Income Tax Act 1961 is a sine qua non for scrutinizing a return and the failure to comply with such mandatory requirement will render the proceeding and the re-assessment order passed invalid. The assessee is required to be served with notice u/s143(2) of the Act for scrutinizing the return filed u/s. 148 of the Act in the same manner as in the case of a return filed u/s 139 of the Act and such omission invalidates the order passed u/s. 147/143(3) of the Act, where the AO had failed to serve notice u/s 143(2) within the stipulated period as provided under that section. The AO lost his jurisdiction to make a re-assessment order u/s. 143(3)/147 of the Act. Lastly, Ld AR requested the Bench to decide the issue on merit after quashing the re-assessment proceeding issued by Assessing Officer.

ITA No. 462/Kol/2011 A.Y. 2001-02 Dr. Anisur Rahaman Vs. ITO Wd-55(2) Kol. Page 3 5. On the other hand, Ld. DR vehemently relied on the order of Authorities below. 6. We have heard rival submissions and gone through facts and circumstances of the case. We have also perused the assessment records. It is a fact that the assessee company filed return of income on 9.1.2002 and subsequently notice u/s. 148 of the Act was issued on 31.03.2008. The assessee in response to the notice under section 148 of the Act filed its return of income on 29.4.2009. From the assessment records, it is noticed that there is no notice u/s. 143(2) of the Act was issued. The issuance of notice under section 143(2) of the Act is also not appearing from the assessment order passed under section 147 of the Act. Similarly the order sheet of the AO which is placed on pages 51-52 of the paper book is silent about the issuance of notice. We find that by virtue of section 143(2) of the Act the assessee has been given opportunity to substantiate the return filed. Therefore, for initiating scrutiny assessment or reassessment proceedings service of notice u/s. 143(2) of the Act is a condition precedent. Hon'ble Supreme Court in the case of ACIT Vs. Hotel Blue Moon (2010) 321 ITR 362 (SC) and also the decision of Hon'ble Allahabad High Court in the case of CIT Vs. Rajeev Sharma (2010) 232 CTR (All.) 303 has held that non issue of notice u/s. 143(2) of the Act after filing of return by assessee in response to notice u/s. 148 of the Act vitiates the assessment order or reassessment proceedings. Considering the facts of the case and respectfully following the judicial pronouncements in the case of Hotel Blue Moon, supra and also Rajeev Sharma, supra, we are of the view that the AO is bound to serve on the assessee a notice u/s. 143(2) of the Act, which he never did in this case. Similarly, Ld. Counsel for the assessee also relied on the decision of Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Cebon India Ltd. (2012) 347 ITR 583 (P&H), wherein Hon'ble High Court has noted the facts that CIT(A) found that there is no evidence to show that notice u/s. 143(2) of the Act has been served on the assessee before November 30, 1997, i.e. within one year from the date of filing of return of income and therefore, Hon'ble High Court held as under:

ITA No. 462/Kol/2011 A.Y. 2001-02 Dr. Anisur Rahaman Vs. ITO Wd-55(2) Kol. Page 4 "We find that concurrent finding has been recorded by the Commissioner of Income-tax (Appeals) as well as the Tribunal on the question of date of service of notice. Notice was not served within the stipulated time. Mere giving of dispatch number will not render the said finding to be perverse. In the absence of notice being served, the Assessing Officer had no jurisdiction to make assessment. Absence of notice cannot be held to be curable under section 292BB of the Act." We also find that the service of the notice under section 143(2) of the Act is mandatory and for this defect the AO cannot even take the resort to the provisions of section 292BB of the Act. From the bare perusal of section 292BB we find that a deeming fiction has been created by this section. In case, an assessee co-operates during the assessment even if no notice has been served on him, it is deemed to be served upon him in time as per the provisions of the Act. The provisions of this section clearly laid down the circumstances under which the deeming fiction has to come into force. These conditions have been stated to be as (a), (b) and (c), which talks about the situation where the notice was not served upon the assessee or not served upon him in time or served upon him in an improper manner respectively. Therefore, section talks about only the situation where the assessee raises the issue of non-service of a notice and still co-operates with the Department. Otherwise also, the requirement for the issuance of statutory notice cannot be dispensed with by the co-operation of the assessee. Since this notice forms the basis for Assessing Officer to assume jurisdiction under respective sections. In this connection we are placing reliance on the judgment of the Hon’ble Punjab & Haryana High Court in the case of CIT v. Cebon India Ltd. [2012] 347 ITR 583/[2009] 184 Taxman 290 whereby it has been very categorically held that absence of a statutory notice cannot be held to be curable under section 292BB of the Act. The relevant extract of the judgment is reproduced below:-

“Assessment—Validity—Absence of notice under s. 143(2)—Concurrent finding has been recorded by the CIT(A) as well as the Tribunal that the notice under s. 143(2) was not served within the stipulated time—Mere giving of dispatch number will not render the said finding to be perverse—In the absence of service of notice the AO had no jurisdiction to make assessment—

ITA No. 462/Kol/2011 A.Y. 2001-02 Dr. Anisur Rahaman Vs. ITO Wd-55(2) Kol. Page 5 Absence of notice cannot be held to be curable under s. 292BB—Cebon India Ltd. vs. Addl. CIT (2008) 12 DTR (Del)(Trib) 402 affirmed

CIT(A) as well as the Tribunal having recorded concurrent finding that the notice under s. 143(2) was not served on the assessee within the stipulated time, impugned assessment was not valid; absence of notice is not a curable defect under s. 292BB.”

Once notice u/s. 143(2) of the Act is not issued, assessment framed by the AO and confirmed by the CIT(A) is void-ad-initio. Therefore we reverse the same. As the AO order is not maintainable as per the provisions of the Act on technical grounds i.e. non-issuance of notice under section 143(2) of the Act. Therefore we are not inclined to adjudicate the appeal on merits. Accordingly the appeal of Assessee is allowed.

Sd/- Sd/- (�या�यक सद�य) (लेखा सद�य) (N.V.Vasudevan) (Waseem Ahmed) (Judicial Member) (Accountant Member) Kolkata, *Dkp, Sr.P.S �दनांकः- 09/12/2016 कोलकाता । आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ�/Appellant-Dr Anisur Rahaman, 175, Park Street, Kolkata-700 017 2. ��यथ�/Respondent-ITO Ward,55(2), 54/1 Rafi Ahmed Kidwai Road, Kolkata-17 3. संबं�धत आयकर आयु�त / Concerned CIT Kolkata 4. आयकर आयु�त- अपील / CIT (A) Kolkata 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कोलकाता / DR, ITAT, Kolkata 6. गाड� फाइल / Guard file. By order/आदेश से, /True Copy/ उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, कोलकाता ।