ANAND SAWROOP,HIMACHAL PRADESH vs. INCOME TAX OFFICER , NAHAN

आयकर अपीलीय अिधकरण,च"ीगढ़ "ायपीठ “ए” , च"ीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE "ी आकाश दीप जैन, उपा"" एवं "ी िव"म िसंह यादव, लेखा सद" BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM आयकर अपील सं./ िनधा"रण वष" / Assessment Year : 2010-11 Anand Sawroop The ITO बनाम S/o Sh. Ravinder Sawroop Sainwala Nahan (H.P.) Majra, Paonta Sahib, Sirmour- 173025, Himachal Pradesh "ायी लेखा सं./PAN NO: AUDPS3233L अपीलाथ"/Appellant ""थ"/Respondent िनधा"रती की ओर से/Assessee by : Shri Abhimanyu Jhamba, Advocate Shri M.L. Jhamba, Advocate and Shri Abhishek Jhamba, Advocate राज" की ओर से/ Revenue by : Shri Vivek Vardhan, JCIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 07/10/2024 उदघोषणा की तारीख/Date of Pronouncement : 30/10/2024 आदेश/Order PER VIKRAM SINGH YADAV, A.M. :

This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 11/10/2023 pertaining to Assessment Year 2010-11. 2. In the present appeal, the assessee has raised the following grounds of appeal:

1. That on the facts and circumstances of the case and in taw, the Ld. Commissioner of Income tax (Appeals) [hereinafter referred to as 'Ld. CIT (A)] has grossly erred in sustaining the addition of Rs 1,25,81,068 made by the Ld, Assessing Officer.

2. That on the facts and circumstances of the case and in law, the Ld. CIT

(A) has grossly erred in not appreciating that the classification of land either as Banjar Kadeem or Nakabil Jhund would not make the land non-agricultural and it would still retain its nature and character of agricultural land.

3. That on the facts and circumstances of the case and in law, the Ld. CIT (A)has grossly erred in holding that carrying out agricultural operation is a sinequa non for characterising the land as agricultural land.

(A) has grossly erred in not appreciating the revenue records which clearly exhibits the nature and character of the land to be agricultural land. 5. That on the facts and circumstances of the case and in law, the Ld. CIT

(A) has failed to appreciate that the assessment framed u/s 147 is bad in law since the notice u/s 148 was not served upon the Appellant. 6. That on the facts and circumstances of the case and in law, the Ld. CIT

(A) has failed to appreciate that the notice u/s 148 is bad in law for want of proper sanction in terms of section 151 of the Act. 7. That on the facts and circumstances of the case and in law, the Ld. CIT

(A) and the Assessing Officer have wrongly construed and applied section 50C in the present case. 8. That on the facts and circumstances of the case and in law, the Ld. CtT

(A) has failed to appreciate that it was incumbent upon the Ld. AO to refer the valuation to Valuation Officer in terms of section 50 C(2) of the Act.

9. That on the facts and circumstances of the case and in law, the Ld. CIT

(A) has erred in not appreciating that section 50C would have no applicability particularly when the agricultural land is sold to a Govt. entity viz. Himachal Pradesh Power Corporation Limited and the consideration thereof is discharged through banking channel / cheque. 10. That on the facts and circumstances of the case and in law, the Ld. CIT

(A) has erred in not appreciating that the assessment framed by the Ld. Assessing Officer is bad in law since it could not have been framed without issuing the mandatory notice u/s 143(2) of the Act. 11. That on the facts and circumstances of the case and in law, the Ld. CIT

(A) erred in not appreciating that the assessment framed u/s 144 of the Act is bad in law.

12. That on the facts and circumstances of the case and in law, the Ld. CIT

(A) has grossly erred in passing a non-speaking order.

31/03/2017 was subsequently issued to the assessee requiring him to file return of income. As per the AO, the assessee has failed to file his return of income till the date of passing of the assessment order and has also not complied to the various notices and therefore, he proceeded and pass the assessment order under section 144 r.w.s 147 of the Act, wherein short term capital gains of Rs. 1,25,81,068/- was determined by the AO on sale of land by the assessee to M/s Himachal Pradesh Power Cooperation Ltd. (HPPCL) under Section 50C of the Act, which, on appeal, has been confirmed by the Ld. CIT(A).

4. Against the said findings and the order of the Ld. CIT(A), the assessee is in appeal before us.

5. During the course of hearing, the Ld. AR submitted that the assessee is an agriculturist and has sold a piece of agriculture land to HPPCL vide registered sale deed dt. 11/02/2010 and the sale consideration was discharged by the HPPCL for an amount of Rs. 91,28,374/- which is duly reflected in the bank statement of the assessee. It was submitted that being a sale of agriculture land, the same was exempt from tax, hence the assessee did not file his return of income coupled with the fact that he had no other taxable income exceeding the exemption limit. It was submitted that the assessment proceeding were initiated by issuance of notice under section 148 at the fag end of expiry of sixth year from the end of the impugned assessment year 2010-11 on 28/03/2017. Thereafter, the AO issued notice under section 142(1) which were duly complied with by the assessee. In the course of such compliance, the assessee also filed his return of income declaring NIL income on 07/12/2017 and placed on record the relevant documents including purchase deed and sale deed of the agriculture land in question. It was submitted that without issue of mandatory notice under section 143(2) of the Act, the AO has proceeded to frame best judgment assessment under section 144 of the Act which is in clear violation of the provisions of the Act and therefore deserves to be set aside.

5.1 In this regard, it was submitted that notice issued under section 148 gave the assessee an option to furnish the return form manually and even Rule 12 of the Income Tax Rules, 1962 as relevant to A.Y. 2010-11 allows the assessee to file return manually and given that the assessee was facing difficulty in filing the return electronically, the return of income was furnished manually before the AO as evident from page 2 of the assessment order wherein the AO has stated as under:

S.No Notice Fixed For Remarks 7 07-12-2017 The assessee was called telephonically. He was apprised about his case and was told to file ITR in response to (notice) u/s 148. He has submitted a print out of ITR, he stated trying to file electronically and on his request the case was adjourned for 11-12-2017 5.2 It was submitted that once the return of income was filed even though manually, it was obligatory upon the AO to issue notice under section 143(2) before framing the assessment under section 147 of the Act. It was submitted that the assessee had infact appeared before the AO and there is no reason for the AO not to issue notice under section 143(2) and proceeded to frame the assessment under section 144 of the Act.

5.3 It was submitted that the law is well settled that issuing of notice under section 143(2) is mandatory and Section 292BB does not came to the aid of the AO and in this regard, reliance was placed on the decision of Hon’ble Supreme Court in case of CIT Vs. Laxman Das Khandelwal reported in (2019) 310 CTR 8 wherein it was held as under:

“7. A closer look at Section 292BB shows that if the assessee has participated in the proceedings it shall be deemed that any notice which is required to be served upon was duly served and the assessee would be precluded from taking any objections that the notice was (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner. According to Mr. Mahabir Singh, learned Senior Advocate, since the Respondent had participated in the proceedings, the provisions of Section 292BB would be a complete answer. On the other hand, Mr. Ankit Vijaywargia, learned Advocate, appearing for the Respondent submitted that the notice under Section 143(2) of the Act was never issued which was evident from the orders passed on record as well as the stand taken by the Appellant in the memo of appeal. It was further submitted that issuance of notice under Section 143(2) of the Act being prerequisite, in the absence of such notice, the entire proceedings would be invalid.

8. The law on the point as regards applicability of the requirement of notice under Section 143(2) of the Act is quite clear from the decision in Hotel Blue Moon's case (supra). The issue that however needs to be considered is the impact of Section 292BB of the Act.

9. According to Section 292BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said Section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself.

10. Since the facts on record are clear that no notice under Section 143(2) of the Act was ever issued by the Department, the findings rendered, by the High Court and the Tribunal and the conclusion arrived at were correct. We, therefore, see no reason to take a different view in the matter.

11. These Appeals are, therefore, dismissed. No costs.

On this ground also, the entire proceedings would stand vitiated and the assessment so framed by the Ld. Assessing Officer may be quashed by your honour.

5.4 It was accordingly submitted that in absence of notice under section 143(2), the entire assessment proceedings u/s 147 stands vitiated and the assessment so framed by the AO deserves to be quashed.

5.5 It was submitted that similar contentions were raised before the Ld. CIT(A) however the Ld. CIT(A) has failed to record any findings in this regard. It was submitted that the said issue goes to the root of the matter and it was submitted that the same may be decided by the Bench instead of remanding the matter back to the file of the Ld. CIT(A) as all the relevant facts are on record an no new facts are required to verify or examine the same.

“3. Before framing assessment in the case, it is important to discuss conduct of assessee during assessment proceedings. The detail of notices compliances made by the assessee and status of notices issued to him are as under:

S.No. Notice Fixed for Remarks 1. u/sl48 dated The assessee was Till date no return has been filed. 28-03-2017 required to furnish income tax return within 30 days.

3. Notice u/s 12-06-2017 Sh. Anand Swaroop, the assesee attended 142(1) dated the proceedings. He has submitted 29-05-2017 document regarding sale and purchase of land. He stated that the land is agricultural land which has been acquired by Himachal Pradesh Power Cooperation Limited. He also stated that he will represent his case on its own. The case was adjourned for 27-06- 2017. 4. 27-06-2017. None attended.