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2015 (5) TMI 464 - ITAT MUMBAI

2015 (5) TMI 464 - ITAT MUMBAI - TMI - Validity of assessment for want of notice u/s 143(2) - no notice u/s 143 (2) of the Act was not served upon the assessee within the statutory mandatory time prescribed by the proviso to section 143 (2) - Held that:- A notice u/s 143(2) gives the jurisdictional power to the Assessing Officer to frame the assessment and failure on the part of the Assessing Officer to serve the notice within the stipulated period of 12 months which renders the assessment void .....

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ijay Pal Rao, JM And N. K. Billaiya, AM,JJ. For the Appellant : Shri Surinder Jeet Singh For the Respondent : Shri J D Mistry ORDER Per Vijay Pal Rao,JM. This appeal by the revenue and cross objection by the assessee are directed against the order dated 21.04.2009 of CIT|(A) for A.Y. 2006-07. The revenue has raised following grounds in its appeal:- "1. "On the facts and in the circumstances of the case, Ld. CIT(A) erred in admitting the evidence in respect of FMV as on 01/04/1981 and a .....

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der of Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored." In the Cross Objection, the assessee has raised following grounds:- "1. Preliminary objections: (a) The appeal has been filed by the Assistant Commissioner of Income Tax, Circle-6 (3), Mumbai [hereafter the ACIT], whereas the assessment was made by the Income Tax Officer, Ward-6(3)(2), Mumbai [hereafter the ITO], and even to-day the ITO is having jurisdiction over the case of the assesse .....

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urisdiction, particularly because: (a) Any valid notice u/s 143 (2) of the Income Tax Act, 1961 [hereafter the Act] was not issued within the statutory mandatory time prescribed by the proviso to section 143 (2) of the Act, (b) Any notice u/s 143 (2) of the Act was not served upon the assessee within the statutory mandatory time prescribed by the proviso to section 143 (2) of the Act, (c) The proceedings were initiated by the ACIT, but were completed by the ITO, without there being any order tra .....

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see is in the business of real estate. 4.2 The ld. CIT (A) failed to appreciate that the result of local enquiry conducted by the ld. AO was never confronted to the assessee. 4.3 The ld. CIT (A) failed to appreciate the municipal valuation. 4.4' Without prejudice the addition is highly excessive. 2. Since the assessee has raised an issue of validity of assessment in the cross objection which goes to the root of the matter, therefore, we first take up the cross objection filed by the assessee .....

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specifically raised the objection that any notice u/s 143(2) of the Act has not been received till date. Thus the Ld. Senior Counsel has submitted that this is not a new plea or ground raised by the assessee before the Tribunal but the objection was raised by the assessee before the Assessing Officer. Since the notice u/s 143(2) gives the jurisdiction to Assessing Officer to frame the scrutiny assessment and it is not a procedural irregularity, therefore, the same is not curable. Failure on the .....

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idavit in support of the case of the revenue that the notice u/s 143(2) was duly issued and served upon the assessee on 23.10.2007. The Ld. Counsel has submitted that the assessee has denied the service of the alleged notice. Even there is no mention on the alleged service of the notice as to whom the notice was served by the Assessing Officer. He has pointed out that the Assessing Officer has claimed to have served the notice in person through Inspector but there is nothing on record as to whom .....

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tice u/s 143(2) on the assessee. The Ld. Senior Counsel has also relied upon the following decisions:- (i) ACIT & ANR Vs. Hotel Blue Moon 321 ITR 362 (ii) Commissioner of Wealth-Tax Vs. HUF of H.H. Late J.M. Scindia 300 ITR 193 (iii) Income Tax Officer Vs. Bedi Enterprises 114 TTJ (Lucknow) 706 (iv) Harsingar Gutkha (P) Ltd. Vs. Deputy Commissioner of Income Tax 138 TTJ(Lucknow) 318 (v) Dr. Y.D. Singh Vs. Deputy Commissioner of Income Tax 143 TTJ (All) 467 (vi) Assistant Commissioner of Inco .....

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at the service has been affected on the assessee or its agent. He has pointed out that in the series of decisions, the Tribunal has time and again reiterated that the service of notice should be on the assessee or its authorized person. The onus is on the Assessing Officer to establish that there was a valid service on the assessee within the stipulated time. He has referred the alleged notice u/s 143(2) and submitted that there is no identification to whom the notice was served and in the absen .....

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issued to the assessee through Speed Post was served upon the assessee. Once the assessee has appeared and participated in the assessment proceedings, then the case falls u/s 292 BB of the Income Tax Act and it shall be deemed as the notice u/s 143(2) was duly served upon the assessee in accordance with the provisions of the Act. He has further submitted that the assessee has not raised any objection for non receipt of notice u/s 115WE(2) which was served along with notice u/s 143(2), therefore, .....

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avit in which he denied any service of notice u/s 115WE(2). He has also referred the fringe benefit tax assessment and submitted that since the Assessing Officer has accepted the return, therefore, there was no question of any objection or any proceedings under the fringe benefit assessment. 6. We have considered the rival submissions as well as relevant material on record. The revenue has not denied the fact that vide letter dated 08.08.2008, the assessee has raised the objection regarding non .....

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not denied. Further the Assessing Officer has not adjudicated the objection raised by the assessee and proceeded to complete the assessment. Though the assessee has not raised this objection before the CIT(A), however, it is not a fresh plea as it is manifest from the assessment record that the assessee raised this objection during the course of assessment proceedings. We further note that in the proceedings recorded on 08.08.2008, the Assessing Officer has duly recorded the presence of represe .....

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the appellate authority. Therefore, we do not find any legal hurdle in considering the objections raised by the assessee in Cross Objection regarding validity of assessment for want of service of notice u/s 143(2). We find that the first entry in the assessment proceedings is dated 08.08.2008 and prior to that date there is nothing on the assessment records to show that any notice u/s 143(2) was issued by the Assessing Officer except the copy of notice dated 20.10.2007 purported to be served on .....

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was served. Even, otherwise the assessee is a company and the notice served on the assessee must bear the signature of the authorized person of the assessee along with seal and at least the name and designation of the person who received the notice. In the case in hand there is nothing on record to show that to whom the notice was served and whether the recipient of the notice was authorized person of the assessee or at least belonging to the assessee. The affidavits filed by the revenue of one .....

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d to the assessee. Further when the return filed by the assessee was accepted by the Assessing Officer then there was no question of any proceedings or raising the objection by the assessee against the service of notice u/s 115WE(2). Therefore, the affidavit filed by the revenue as well as assessment u/s 115WE(2) would not help the case of the revenue. As regards the plea that the case of the assessee is covered u/s 292 BB, it is pertinent to note that that this provision has been inserted in th .....

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o adjudicate the objection raised by the assessee clearly raise the presumption against the revenue that no such notice was served upon the assessee. Further when there is nothing on record to show that the alleged notice was served upon the assessee or the authorized person of the assessee then, we find that the objection raised by the assessee vide letter dated 08.08.2008 remained uncontroverted. Once the notice u/s 143(2) remained unserved on the assessee within the stipulated period then it .....

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reads "that the assessing officer shall proceed to determine the undisclosed income of the Block period in the manner laid down in Section 158 BB and the provisions of Section 142, subsection (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be, apply." An analysis of this sub section indicates that, after the return is filed, this clause enables the assessing officer to complete the assessment by following the procedure like issue of notice under Sections 14 .....

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ppear to imply that the provisions of Section 143(1) are excluded. But Section 143(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, why the authorities should issue notice under Section 143(2). However, if an assessment is to be completed under Section 143(3) read with Section 158-BC, notice under Section 143(2) should be issued within one year from the d .....

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ments under Chapter XIV-B of the Act. This legislation is by incorporation. This Section even speaks of subsections which are to be followed by the assessing officer. Had the intention of the legislature was to exclude the provisions of Chapter XIV of the Act, the legislature would have or could have indicated that also. A reading of the provision would clearly indicate, in our opinion, if the assessing officer, if for any reason, repudiates the return filed by the assessee in response to notice .....

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No.717 dated 14th August, 1995, has a binding effect on the department, but not on the Court. This circular clarifies the requirement of law in respect of service of notice under sub-section (2) of Section 143 of the Act. Accordingly, we conclude even for the purpose of Chapter XIV-B of the Act, for the determination of undisclosed income for a block period under the provisions of Section 158 BC, the provisions of Section 142 and sub-sections (2) and (3) of Section 143 are applicable and no asse .....

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e, the Court has observed that Section 37(2) provides that "the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under Section 37(2). Reading the two sections together it merely means that the methodology prescribed for carrying out the search provided in Section 165 has to be generally followed. The expression "so far as may be" has always been construed to mean that those provisions may be generally followed to the extent possible. .....

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le in its entirety except such provision therein which may not be practicable to be applied." 8. A similar view was taken by the Hon'ble Jurisdictional High Court in the case of Commissioner of Wealth-Tax Vs. HUF of H.H. Late J.M. Scindia (supra) in para 10 as under:- "16. Even independently, we have examined the scope and effect of sections 14 to 16 on the one hand and section 17 on the other. In our opinion, there is no escape from arriving at the conclusion that when the Assessi .....

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e invoking the powers under section 17, the Assessing Officer is bound by the mandate of the proviso to section 16(2) and on failure the order of reassessment will be without jurisdiction and consequently the order of reassessment will have to be set aside." 9. Thus it is clear that a notice u/s 143(2) gives the jurisdictional power to the Assessing Officer to frame the assessment and failure on the part of the Assessing Officer to serve the notice within the stipulated period of 12 months .....

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position that the return of income was filed on March 30, 1997, for the assessment year 1997-98 and the notice under section 143(2) of the Act came to be issued for the first time only on August 20, 1998. Therefore, the notice was admittedly beyond the period of 12 months which is the statutory period of limitation prescribed under the proviso to subsection (2) of section 143 of the Act. 6. Section 143(2) of the Act requires that where a return has been made by an assessee, if the Assessing Off .....

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