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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI RAJESH KUMAR
Instant appeal by the assessee is directed against the order dated 16th October 2012, passed by the learned Commissioner (Appeals)–34, Mumbai, for the assessment year 2004–05.
There is a delay of 19 days in filing the present appeal. The assessee has filed an affidavit stating the reasons for delay and with a prayer to condone the delay.
2 Smt. Rukmini V. Chorgade
After considering the reasons of delay, we are satisfied that the 3. delay was for a reasonable cause, hence, condoning the delay, we admit the assessee’s appeal for hearing on merit.
Brief facts are, the assessee an individual is engaged in trading and brokerage. As alleged by the Assessing Officer, originally, assessee did not file any return of income for the impugned assessment year. Therefore, the Assessing Officer initiating action under section 147 of the Income Tax Act, 1961 (for short "the Act"), issued notice under section 148 of the Act to the assessee. In response to the said notice, assessee on 11th July 2010, filed her return of income declaring total income of ` 49,790 from long term capital gain, however, simultaneously, she claimed exemption under section 54 of the Act. In the course of assessment proceedings, the Assessing Officer on verifying the balance sheet attached to the return of income noticed that the value of the property was shown at ` 7.40 lakh. It was noticed by him that the assessee had credited an amount of ` 5,00,000 to her capital account claiming it to have been received from Goenka Associates. As stated by the Assessing Officer in response to the query raised by him to furnish source of investment in immovable property and also the details of ` 5,00,000 credited to the capital account, the assessee explained that the investment of `
3 Smt. Rukmini V. Chorgade 7,40,000 towards purchase of property comprises of ` 4,50,000 towards construction cost made out of ` 5,00,000 received from Goenka Associates and ` 2,40,000 towards wood work etc., for explaining the sourse of ` 5,00,000 received from Goenka Associates, it was submitted that such amount was given against the right of lease of properties. Assessing Officer after going through the explanation of the assessee, however, did not find it convincing or acceptable. He observed, assessee explained the details of investment in property of ` 7,50,000 but she failed to explain the source of ` 5,00,000 as claimed to have been received from Goenka Associates. Accordingly, he treated the amount of ` 5,00,000 as undisclosed income of the assessee for the year under consideration. Against the addition made by the Assessing Officer, assessee preferred appeal before the learned Commissioner (Appeals).
The learned Commissioner (Appeals) also confirmed the addition by rejecting the claim of the assessee. Being aggrieved by the order passed by the learned Commissioner (Appeals), assessee preferred the present appeal challenging the addition made by the Assessing Officer and confirmed by the learned Commissioner (Appeals). The assessee has also raised the following additional grounds:–
4 Smt. Rukmini V. Chorgade
“1. In the facts and in the circumstances, the impugned assessment order confirmed by learned CIT(A) is beyond jurisdiction as no notice u/s 143(2) was issued and served. 2. In the facts and in the circumstances, the impugned assessment order confirmed by the learned CIT(A) is bad in law in view of the decision of Hon'ble Jurisdictional High Court in CIT v/s Jet Airways Pvt. Ltd., 331 ITR 236, since no addition was made for the ground of reopening.”
We have considered the submissions of the parties and perused the material available on record. As per additional ground no.1, assessee has challenged the validity of assessment order passed under section 143(3) r/w section 147 of the Act in the absence of issuance of notice under section 143(2). It is the contention of the assessee that before completing the assessment, the Assessing Officer has not issued any notice under section 143(2) of the Act, which is a condition precedent for completing the assessment under section 143(3). In this context, assessee has relied upon the decision of the Hon'ble Supreme Court in ACIT and Anr. v/s Hotel Blue Moon, [2010] 321 ITR 362 (SC) and the decision of the Tribunal in V.R. Shri Kumar v/s ITO, [2012] 74 DTR (Cochin) (TM) (Trib.) 210. to ascertain the fact whether notice under section 143(2) was issued to the assessee. Learned Departmental Representative was directed to obtain instruction from the Assessing Officer. In pursuance to such direction, the learned Departmental Representative has placed before the Bench a letter dated 4th May 2016, from the Assessing Officer stating as under:–
5 Smt. Rukmini V. Chorgade
“Kindly refer to the above. 2. As desired case records (1 Vol) in the above mentioned case for A.Y. 2004–05 is enclosed herewith for your kind perusal. 3. It is submitted that on verification of case records, no notice u/s 143(2) for A.Y. 2004–05 found to be issued.”
Thus, from the aforesaid letter, it is clear that no notice under section 143(2) was issued before completion of assessment under section 143(3) r/w section 147, in assessee’s case for the impugned assessment year. Therefore, in the aforesaid factual context, it needs to be examined whether in the absence of notice issued under section 143(2), the Assessing Officer can proceed to make an assessment under section 143(3) r/w section 147. To deal with the issue, it is necessary to refer to the relevant statutory provisions. Section 147 empowers the Assessing Officer to assessee or re–assess the income of the assessee for a particular assessment year if it has escaped assessment or has been under assessed. However, section 148 of the Act, provides that before making an assessment under section 147, the Assessing Officer must issue a notice under section 148 requiring the assessee to furnish his return of income for the assessment year under consideration in the prescribed manner. The said provision also provides that the return of income filed in pursuance to notice under section 148, shall be treated as a return of income required to be 6 Smt. Rukmini V. Chorgade furnished under section 139 and the provisions of the Act insofar as may be apply as if such return is a return furnished under section 139. In the present case, the impugned assessment order reveals that the Assessing Officer has completed the assessment under section 143(3) r/w section 147. On a reading of the provisions contained under section 143, in its entirety, it is apparent that in a case where the assessee has furnished return under section 139, as per sub–section (2), the Assessing Officer must serve on the assessee a notice stating the particulars to be produced by the assessee to justify his claim of exemption, deduction, allowance, etc., and also specify the date on which such particulars are to be produced. Sub–section (3) of section 143 provides on the basis of information submitted by the assessee in response to notice under section 143(2) the Assessing Officer shall proceed to complete the assessment. As stated herein above, the return of income filed by the assessee in response to the notice under section 148, has to be treated as return of income under section 139 and the provisions of the Act will apply, accordingly. It is evident from the letter of the Assessing Officer placed on record by the learned Departmental Representative, notice under section 143(2) in the instant case has not been issued before completion of the assessment. As held by the Hon'ble Supreme Court in Hotel Blue Moon (supra), issuance of notice under section 143(2), is a mandatory requirement
7 Smt. Rukmini V. Chorgade of law and not a mere curable procedural irregularity. Therefore, non– issuance of notice under section 143(2) affects the jurisdiction of the Assessing Officer in proceeding to complete the assessment under section 143(3). That being the case, the impugned assessment order is invalid in law, hence, deserves to be quashed. We do so accordingly. As we have decided the present appeal on the legal issue by quashing the assessment order, it is not necessary to deal with the merits of the addition as it is of mere academic interest.
In the result, assessee’s appeal is allowed. Order pronounced in the open Court on 13.05.2016