TMI Blog2015 (7) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... enquiry relating to assessment or reassessment shall be deemed to be served with any notice which was required to be served and would be precluded from objecting that the notice was not served upon him or was served upon him in an improper manner or was not served upon him in time. However, the proviso states that the principle of estoppels incorporated in the main section would not apply, if the assessee has raised objection in reply to the notice before completion of assessment or reassessment. In the present case, as we have already noted that the notice u/s 143(2) of the Act was neither issued nor served upon the assessee before making an order of assessment u/s 143(3) r.w.s. 147 of the Act. It is well settled that the issuance of notice u/s 143(2) of the Act is not procedural irregularities and the same is not curable, therefore, the requirement of issuance of notice u/s 143(2) of the Act cannot be dispensed with and no assessment can be framed u/s 143(3) r.w.s. 147 of the Act without issuance of notice u/s 143(2) of the Act. - Decided in favour of assessee. - ITA No. 5879/Del/2014 - - - Dated:- 26-6-2015 - Sh. N. K. Saini And Sh. I. C. Sudhir, JJ. For the Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities below have erred in granting credit for TDS by allottees and banks and ignored the huge amounts of tax appearing in Form 26AS/Form 16A. 10. That the authorities below have failed to appreciate the fact that Appellant can be held to be carrying out charitable activities and, therefore, its receipts are not amenable to tax. For the sake of brevity, the Grounds of Appeal filed before Ld. (IT (Appeal) are reproduced below- (i) That having regard to the facts and circumstances of the case, The Ld. AO has acted against the principles of Natural justice in completing the assessment within a short period of 39 days; (ii) That the Ld. AO erred in treating the excess of receipts over expenditure as taxable income though the Appellant is performing Sovereign functions as mandated by the Section 3 of Uttar Pradesh Industrial Development Act, 1976 and is not mandated to carry out any business activity. (iii) That the Ld. AO has erred in disallowing the expenses in the form of grants to ITTUP, GB University and UPSRTC despite the documentary evidences submitted to Ld. AO. These grants are the part of Statutory functions discharged by the Appellant as mandated by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to as the Act) before completion of the assessment. 4. The facts related to this issue in brief are that in this case proceedings u/s 147/148 of the Act were initiated by the AO after recording the reasons and the notice u/s 148 of the Act dated 06.03.2013 was issued and duly served in the office of CEO, Noida Authority on 12.03.2013. As per the said notice the assessee was required to file its return of income within 30 days from the date of the service of the notice. The return of income was filed on 13.12.2013 declaring Nil income. The AO noticed that the assessee had mentioned that it was not liable for audit u/s 44AB of the Act. However, alongwith return, balance sheet and income expenditure account accompanied with schedules and notes on account was furnished. The AO noticed that the assessee for the current year had excess of income over expenditure amounting to ₹ 4,51,57,86,991/- which had been allocated for appropriation under two heads viz., i) Appropriation for new infrastructure facility ii) Appropriation for maintenance creation of public utility. 5. The AO noticed that prior to its claim of exemption u/s 10(20) of the Act, the assessee cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the form of grant to ITTUP, GB University, USRTC, the contention of the assessee was that the said grant was on the part of statutory function discharged by the assessee as mandated by the UP Industrial Development Act, 1976. The ld. CIT(A) observed that the assessee failed to produce relevant details and necessary evidence to explain the view on the nature of impugned grant which had been claimed to be an expenditure. He also observed that the submissions of the assessee was silent regarding nature as well as treatment of grant to organization and it was not clear as to whether these grants were in the nature of expenses/investment or loan/advances etc. He, therefore, for want of necessary details found no infirmity in the order of the AO in rejecting the claim of the assessee. 8. Being aggrieved the assessee is in appeal. The ld. Counsel for the assessee at the first instance argued the issuance of notice u/s 143(2) of the Act raised vide Ground No. 4 and submitted that no notice u/s 143(2) of the Act had been issued after issuance of notice u/s 148 of the Act. It was further stated that the assessee took inspection of the file of the AO on 30.10.2014 and did not find any not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee s paper book). The said letter is having the stamp of the A.C.O s office. It was further stated that from the A.C.O s office the letter moved to F.C s office vide receipt no. 4492 dated 28.01.2014 (copy of which is placed at page no. 201 of the assessee s paper book) and from there it moved to Senior Finance and Accounts Office vide receipt no. 3753 dated 28.01.2014 (copy of which is placed at page no. 219 of the assessee s compilation). On the basis of aforesaid entries in various department of the assessee and receipt register, it was submitted that the notice dated 16.01.2014 bearing the stamp and receipts of the various offices, is a contemporary evidence which conclusively established the fact that the claim of the department was merely an afterthought. It was submitted that when the assessee stated that no notice had been received, the burden was on the department to prove the service of the same but no such service of the notice u/s 143(2) of the Act on the assessee was proved by the department. It was submitted that issuance of notice u/s 143(2) of the Act is mandatory and failure to issue the notice u/s 143(2) of the Act within the prescribed period cannot be cure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Lal Tikku Vs CIT 97 ITR 553 (J K) Intracraft India Vs CIT 154 ITR 662 (Del) Sant Baba Mohan Singh 90 ITR 197 (All) Areva T D India Ltd. Vs ACIT 207 CTR (Mad) 497 Travancore Cements Ltd. Vs ACIT (2008) 305 ITR 170 (Ker) UOI Vs R. C. Jain Ors. 1981 AIR 951 Vidarbha Irrigation Development Corp. Vs JCIT (2006) 114 TTJ 524 (Mum) 11. It was further submitted that section 148(1) of the Act clearly states that the assessee is to be served a notice clearly specifying that the assessee should be told about the period (30 days in this case) and the assessee is required to file the return of income in the prescribed manner and setting forth such other particulars as may be prescribed, and thereafter provisions of section 139 of the Act would be applicable. It was contended that in the present case, notice u/s 148 of the Act had been issued on 06.03.2013 to the assessee and the return of income was filed on 13.12.2013 by showing Nil income. It was contended that for filing the return of income, there is no need to issue the notice u/s 143(2) of the Act and as the assessment was framed by taking into consideration the return filed by the assessee. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 24.12.2012 . However, nowhere it was stated that notice u/s 143(2) of the Act was issued to the assessee. At page no. 4 of the assessment order, the AO has mentioned as under: After giving sufficient time to the assessee to make stipulated compliance, this office had no option to issue show cause notice to the assessee vide letter dated 16.01.2014 wherein, it was given final opportunity to represent and explain on 23.01.2014 failing which this office had no alternative except the complete the assessment on merit and on the basis of the material facts available on record . Copy of the said letter dated 16.01.2014 is placed at page no. 110 of the assessee s paper book-II. The said letter is reproduced as under: To, The Chief Executive Officer, New Okhla Industrial Development Authority, Main Administrative Building, Sector-6, Noida. Kind Attn: Mr. G.P. Singh, Finance Controller, Noida Sir, Sub: Assessment proceedings for the AY 2009-10 in the case of New Okhla Industrial Development Authority-Regarding Please refer to the assessment proceedings initiated through notice u/s 148 dated 06.03.2013 and served to your office on 12.03.2013. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circle-1, Noida 13. From the contents of the aforesaid letter, it is crystal clear that nothing was mentioned in this letter about the issuance of notice u/s 143(2) of the Act. The claim of the department was that the notice u/s 143(2) was issued on 16.01.2014, however, nothing was brought on record that apart from the aforesaid letter dated 16.01.2014 any other notice or letter or document was issued by the department to the assessee. In the present case, it was also claimed by the department that an entry was made at serial no. 1326 of the dispatch register. To verify the above said claim we asked the department to produce dispatch register which was produced during the course of hearing and it is noticed that at serial no. 1326 the contends mentioned were as under: Sl. No. Date Name Address Place Subject FileHead/ No. Stamps Received Stamps Affixed Stamps Balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f filing of the block return. Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and is not curable. Therefore, the requirement of notice under section 143(2) cannot be dispensed with. 16. Similarly, the Hon ble Jurisdictional High Court in the case of CIT VS Rajeev Sharma (2011) 336 ITR 678 held as under: When the statute provides for a particular procedure, the authority has to follow it and cannot be permitted to act in contravention of the same. It has been provided that after receipt of notice under section 148 of the Income-tax Act, 1961, a fresh return may be filed and in consequence thereof, the Assessing Officer has to apply his mind to the contents of the fresh return and then issue a notice under section 143(2) of the Act. While computing escaped assessment, the return filed in response to a notice under section 148 shall be deemed to be furnished under section 139 of the Act. Meaning thereby, that the procedure of section 139 of the Act shall be followed while dealing with the case of escaped assessment under section 148 of the Act. The plain reading of section 148 of the Act further reveal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect on the judgment in Hotel Blue Moon (2010) 321 ITR 362 (SC). It was held in Hotel Blue Moon s case (2010) 321 ITR 362 (SC) that the very foundation of the jurisdiction of the Assessing Officer is on the issuance of the notice under section 143(2). 18. From the ratio laid down in the aforesaid referred to judicial pronouncements, it is crystal clear that where notice u/s 143(2) of the Act is not issued to the assessee before framing the assessment u/s 143(3) of the Act, the AO does not have the jurisdiction to make the assessment. In the present case, the AO issued the notice u/s 148 of the Act and the assessee furnished the return of income in response to the said notice. Thereafter the AO asked the assessee to furnish certain details by issuing the questionnaire u/s 142(1) of the Act but nowhere issued the notice u/s 143(2) of the Act. Therefore, the assumption of jurisdiction for framing the assessment was invalid. 19. Now question arises as to whether the provisions of section 292BB of the act come to the rescue of the department, even when the notice u/s 143(2) of the Act is not issued within the stipulated time. On this issue the Hon ble Jurisdictional High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in section would not apply, if the assessee has raised objection in reply to the notice before completion of assessment or reassessment. 21. In the present case, as we have already noted that the notice u/s 143(2) of the Act was neither issued nor served upon the assessee before making an order of assessment u/s 143(3) r.w.s. 147 of the Act. It is well settled that the issuance of notice u/s 143(2) of the Act is not procedural irregularities and the same is not curable, therefore, the requirement of issuance of notice u/s 143(2) of the Act cannot be dispensed with and no assessment can be framed u/s 143(3) r.w.s. 147 of the Act without issuance of notice u/s 143(2) of the Act. We, therefore, considering the legal position in view of the ratio laid down by the Hon ble Supreme Court and the Hon ble High Courts in the aforesaid referred to cases, hold the assessment order dated 29.01.2014 as invalid void and quash the same as such. 22. For the aforesaid view we are also fortified by the decision of the Co-ordinate Bench i.e. ITAT Delhi Bench C , New Delhi in the case of Greater Noida Industrial Development Authority Vs ACIT, Circle-3 in ITA Nos. 5821 to 5826/Del/2014 for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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