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2015 (10) TMI 1765

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..... atement before the AO to the effect that the original return filed should be treated as a return pursuant to a notice under Section 148 of the Act, is fatal to the order of re-assessment. - Decided in favour of assessee. - ITA 519/2015 - - - Dated:- 14-10-2015 - Dr. Justice S. Muralidhar And Mr. Justice Vibhu Bakhru, JJ. For the Appellant : Ms. Suruchi Aggarwal, Senior Standing counsel with Ms. Lakshmi Gurung, Junior Standing counsel with Ms.Radhika Gupta and Mr. Abhishek Sharma, Advocates For the Respondent : Dr. Rakesh Gupta, Ms Poonam Ahuja, Mr. Somil Agarwal and Mr. Rohit Kumar Gupta, Advocates ORDER 1. This appeal by the Revenue is against an order dated 18th February, 2015 passed by the Income Tax Appellate T .....

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..... urn filed pursuant to the notice under Section 148 of the Act. 6. The AO then proceeded to pass an assessment order on 31st December, 2010 whereby, inter alia, an addition of ₹ 1 crore was made to the income of the Assessee under Section 68 of the Act as unexplained credits. In the appeal before the Commissioner of Income Tax (Appeals), the Assessee, inter alia, raised the issue that in the absence of a notice under Section 143(2) of the Act the order of re-assessment was invalid. The CIT (A) negatived the above contention holding that no specific notice was required to be issued under Section 143(2) of the Act and that questionnaires dated 11th November, 2003 and 21st January, 2004 issued by the AO had provided the Assessee s suff .....

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..... tition No.441/2011 in ITA No.950/2008 (CIT v. Madhya Bharat Energy Corporation) whereby this Court reviewed its main judgment in the matter rendered on 11th July 2011 on the ground that the said appeal had not been admitted on the question concerning the mandatory compliance with the requirement of issuance of notice under Section 143(2) of the Act. In its review order, this Court noted that at the time of admission of the appeal on 17th February, 2011 after noticing that in the said case that no notice under Section 143(2) had ever been issued, the Court held that no question of law arose on that aspect. The upshot of the above discussion is that the decision of this Court in CIT v. Madhya Bharat Energy Corporation (supra) is not of any as .....

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..... f the Act was issued to the Assessee after 16th December 2010, the date on which the Assessee informed the AO that the return originally filed should be treated as the return filed pursuant to the notice under Section 148 of the Act. 13. In DIT v. Society for Worldwide Interbank Financial Telecommunications (2010) 323 ITR 249 (Del), this Court invalidated an reassessment proceedings after noting that the notice under Section 143(2) of the Act was not issued to the Assessee pursuant to the filing of the return. In other words, it was held mandatory to serve the notice under Section 143(2) of the Act only after the return filed by the Assessee is actually scrutinised by the AO. 14. The interplay of Sections 143 (2) and 148 of the Act fo .....

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..... eding 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 words, once the deeming fiction comes into operation, the assessee is precluded from raising a challenge about the service of a notice, service within time or service in an improper manner. The proviso to Section 292 BB of the Act, however, carves out .....

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..... treated as a return filed in response to the notice under Section 148 of the Act. The High Court observed that if thereafter, the AO found that there were problems with the return which required explanation by the Assessee then the AO ought to have followed up with a notice under Section 143(2) of the Act. It was observed that: Merely because the matter was discussed with the Assessee and the signature is affixed it does not mean the rest of the procedure of notice under Section 143(2) of the Act was complied with or that on placing the objection the Assessee had waived the notice for further processing of the reassessment proceedings. The fact that on the notice issued u/s 143(2) of the Act, the assessee had placed its objection and r .....

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