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Asstt. Commissioner of Income Tax, Circle-3 Noida Versus M/s. Greater Noida Industrial Development Authority

2015 (8) TMI 620 - ALLAHABAD HIGH COURT

Reopening of assessment - requirement of issuance of notice - exemption claimed by the assessee under Section 10(20) was not tenable as it was not a local authority within the meaning of Section 10(20) - ITAT allowed assessee's appeal - Held that:- It is clear that the essential requirement is "issuance of notice" under Section 143(2) of the Act. The deeming fiction under Section 292BB of the Act is with regard to "service of notice". Since the initial requirement of issuance of notice was not m .....

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ion 292BB of the Act. Consequently, the Tribunal was justified in setting aside the order of the Assessing Officer as well as the order of the Appellate Authority. - Decided in favour of assessee. - Income Tax Appeal No.142 of 2015, Income Tax Appeal No.143 of 2015, Income Tax Appeal No.146 of 2015, Income Tax Appeal No.147 of 2015, Income Tax Appeal No.148 of 2015, Income Tax Appeal No.149 of 2015 - Dated:- 4-8-2015 - Hon'ble Tarun Agarwala And Hon'ble Surya Prakash Kesarwani,JJ. ORDER .....

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fter obtaining approval from the Joint Commissioner of Income Tax under Section 151 (2) of the Act, pursuant to which notice under Section 148 of the Act was issued. Upon receipt of the notice under Section 148 of the Act, a return of income was filed declaring an income of ₹ 1,04,30,38,635/-, which was claimed as exempted under Section 10(20) of the Act. The Assessing Officer after considering the matter, passed an assessment order holding that the assessee was not a local authority as pe .....

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. 3. The assessee, being aggrieved, filed a second appeal before the Income Tax Appellate Tribunal on various grounds. However, at the time of consideration of appeal only ground no.5 was attacked namely: "That the order of Ld. AO is void ab initio in as much as, no mandatory notice u/s 143(2) of IT Act, 1961 was issued at any stage of the assessment proceedings." 4. The Tribunal allowed the appeal and quashed the assessment orders passed by the Assessing Officer as well as the order o .....

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ibunal, has filed the present appeal under Section 260A of the Act. 5. The Tribunal, while allowing the appeal and holding that no notice under Section 143(2) was issued, came to this conclusion on the basis of the inspection of the records and the notings of the order sheet made by the assessee as well as on account of the fact that inspite of time being granted, the Department failed to produce the original records of the assessment proceedings. The Tribunal further found that the Department h .....

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ssessee. It was also contended that the requirement of issuance of notice under Section 143(2) of the Act was not a mandatory requirement as no format has been provided under the Act or the Rules for the issuance of the notice. Further, the assessee participated in the reassessment proceedings and, therefore, could not assert at the stage of the Tribunal that notice was not served under Section 143(2) of the Act. It was contended that in view of Section 292BB of the Act, the assessee, after havi .....

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assessment records as well as the order sheet of the Tribunal. 9. A supplementary affidavit was filed by the Department to show that on the basis of the order sheet of the Tribunal, adequate opportunity was not given, inasmuch as the order sheet was silent on the question of production of the original records. In paragraph 16 of the Supplementary Affidavit, it was urged that a notice was issued by the Assessing Officer even though it was not specifically mentioned in the order sheet and that the .....

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essential to be issued and served upon the assessee in reassessment proceedings it would be appropriate to refer to the said section. For facility, the provisions of Section 143(2) of the Act is extracted hereunder: "Section 143 (2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall, - (i) where he has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the .....

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e (i), if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced, any evidence on which the assessee may rely in support of the return: Provided that no notice under clause (ii) shall be served on the assessee after the expiry of .....

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-paid the tax in any manner. Under the proviso to clause(ii), it has been specified that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. Service on the assessee of a notice within the period prescribed by the proviso presupposes the issuance of a notice for, it is only when a notice is issued, that it can be served. Thereafter, the provisions of sub-section (3) of Section 143 of the Ac .....

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e Act is premised on the issuance of a notice under clause (ii) of Section 143(2) of the Act. The proviso to clause (ii) of sub-section (2) of Section 143 of the Act stipulates that a notice must be served on the assessee not later than the expiry of six months from the end of the financial year in which the return has been furnished. If a notice is not even issued within the period of six months from the end of the financial year in which the return is furnished, there would be no occasion to s .....

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come 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 date of filing of block return. Omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice .....

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sh Travel Bus Service, (2012) 17 taxmann. Co 140(All.) as well as in Commissioner of Income-tax Vs. Mukesh Kumar Agrawal, 345 ITR 29 and Commissioner of Income -tax Vs. Rajeev Sharma, (2010) 192 Taxman 197 (All.). 15. In the light of the aforesaid decisions, it is apparently clear that the jurisdiction of the Assessing Officer to make an assessment under Section 143(3) (ii) of the Act is based on the issuance of a notice under Section 143(2)(ii) of the Act. The proviso to clause (ii) of sub Sect .....

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lementary Affidavit is a notice dated 10.12.2013, which accompanies the questionnaire dated 10.12.2013. The last paragraph of the questionnaire indicates that the accompanying notice is being issued under Section 142(1) of the Act. From the said notice, it is clear that the notice which the appellant is asserting to be a notice under Section 143(2) is patently erroneous and mischievous. It is nothing else but a notice under Section 142(1) of the Act. The record does not indicate any other notice .....

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BB of the Act is extracted hereunder: "292 BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was- (a) n .....

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oceeding or cooperated in any enquiry relating to an assessment or reassessment, it shall be deemed that any notice under the provisions of the Act, which is required to be served on the assessee, has been duly served upon him in time in accordance with the provisions of the Act. The assessee is precluded from taking any objection in any proceeding or enquiry that the notice was (i) not served upon him; or (ii) not served upon him in time; or (iii) served upon him in an improper manner. In other .....

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onal condition. For the Assessing Officer to make an order of assessment under Section 143 (3) of the Act, it is necessary to issue a notice under Section 143 (2) of the Act and in the absence of a notice under Section 143(2) of the Act, the assumption of jurisdiction itself would be invalid. 19. In view of the aforesaid, we are of the opinion that Section 292BB, which was inserted with effect from 01.04.3008 is not applicable to the proceedings for the assessment year 2006-07, 2007-08, 2008-09. .....

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t the notice was not served upon him or was not served upon him in time or was not served upon him in a proper manner, in our view, is not applicable for the following reason. 20. There is a clear distinction between "issue of notice" and "service of notice". In R.K.Upadhyaya Vs. Shanabhai P. Patel, 166 ITR 163, the controversy was that a notice under Section 148 was issued on 31.03.1970 i.e. the last date of limitation, which notice was served on the assessee on 03.04.1970, .....

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has been made between "issue of notice" and "service of notice" under the Act. The Supreme Court held that once a notice is issued within the period of limitation, the Income Tax Officer gets the jurisdiction to proceed to reassess and make the assessment order. The mandate of Section 148(1) of the Act is, that reassessment shall not be made until there has been a service of notice which is a condition precedent to making an order of assessment. The Supreme Court further held .....

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vice of notice within limitation was the foundation of jurisdiction. The same view has been taken by this Court in Janni v. Indu Prasad Bhat, 72 ITR 595 as also in C.I.T. v. Robert, 48 ITR 177. The High Court in our opinion went wrong in relying upon the ratio of 53 ITR 100 in disposing of the case in hand. The scheme of the 1961 Act so far as notice for reassessment is concerned is quite different. What used to be contained in section 34 of the 1922 Act has been spread out into three sections, .....

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tation, jurisdiction becomes vested in the Income-tax Officer to proceed to reassess. The mandate of section 148(1) is that reassessment shall not be made until there has been service. The requirement of issue of notice is satisfied when a notice is actually issued. In this case, admittedly, the notice was issued within the prescribed period of limitation as March 31, 1970, was the last day of that period. Service under the new Act is not a condition precedent to conferment of jurisdiction in th .....

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been no appearance on behalf of the respondents, we make no orders for costs." 21. From the aforesaid, it is clear that the essential requirement is "issuance of notice" under Section 143(2) of the Act. The deeming fiction under Section 292BB of the Act is with regard to "service of notice". Since the initial requirement of issuance of notice was not made by the Assesssing Officer, the deeming fiction of service of notice under Section 292BB of the Act, consequently, doe .....

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