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Krishi Utpanna Bazar Samittee Versus The Income Tax Officer, Ward 2 (3) , Jalgaon

2016 (4) TMI 865 - ITAT PUNE

Validity of reopening of assessment - Held that:- In the absence of notice under section 143(2) pursuant to notice under section 148, the re-assessment order passed by the Assessing Officer is rendered bad in law and therefore requires to be quashed. - Decide in favour of assessee - ITA Nos.338 & 339/PN/2014 - Dated:- 29-2-2016 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant : Shri Nikhil Pathak For The Respondent : Smt. Ann Kaptuama ORDER PER PRADIP KUMAR KEDIA, AM : B .....

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wing Grounds of Appeal :- 1] The learned CIT(A) erred in holding that the reassessment u/s. 147 was valid in law without appreciating that no notice u/s. 143(2) was issued to the assessee and accordingly, the reassessment order should have been held to be null and void. 2] The learned CIT(A) erred in holding that since the assessee had attended during the asst. proceedings and had not raised the objection of non issue of notice u/s. 143(2), the assessee was precluded from the said objection in t .....

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reassessment order was not valid and accordingly, the same should have been declared null and void. 5] Without prejudice to the above grounds, the learned CIT(A) erred in holding that the assessee was not entitled to claim exemption u/s. 10(20) of the Act without appreciating that the assessee was entitled to the said exemption. 6] Without prejudice to the above grounds, the learned CIT(A) erred in not allowing the expenditure incurred on repairs of road, compound wall, canteen, toilet, sundry s .....

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3) r.w.s. 148 of the Act. Ground Nos.5 and 6 concerns merits of the issues involved. 5. Since the assessee has questioned the validity of the re-assessment order itself which is a preliminarily issue, it would be expedient to adjudicate Ground Nos.1 to 4 first. 6. The relevant facts concerning Ground Nos.1 to 4 are that the assessee namely Krishi Utpanna Bazar Samittee (Agriculture Produce Market Committee - APMC ) filed its return of income for the assessment year 2007- 08 belatedly on 29.05.20 .....

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sment year is already filed on 29.05.2009 which may be treated as return filed in response to the aforesaid notice under section 148 of the Act. Thereafter, notice under section 142(1) of the Act was issued by the Assessing Officer on 18.08.2011 and re-assessment order was passed under section 143(3) r.w.s. 148 of the Act on 16.12.2011 whereby chargeable income of the assessee was assessed at ₹ 27,99,940/-. 7. Aggrieved by the re-assessment order, the assessee preferred an appeal before th .....

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. The assessee submitted that the Assessing Officer ought to have issued notice under section 143(2) within prescribed time limit to enable him proceed with the re-assessment proceedings. He pointed out that as can be seen from para 2 of the assessment order, it is manifest that issuance of notice under section 142(1) of the Act only is in reference. There is no assertion to the effect that notice under section 143(2) has been issued. He further added that the defect in non-issuance of notice un .....

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/questionnaire dated 18.08.2011. The Assessing Officer made out a case in the remand report that the assessee has filed reply to the aforesaid questionnaire wherein he has not denied the receipt of aforesaid notice under section 143(2) mentioned in the letter dated 18.08.2011. Also, the assessee cooperated with the Department and attended from time to time and furnished the information called for without any objection in this regard. The Assessing Officer also asserted that the objection by the .....

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eiterated that notice under section 143(2) has not been served upon the assessee and therefore impugned re-assessment orders for assessment years 2007-08 and 2008-09 framed under section 143(3) r.w.s. 147 of the Act is void ab initio and is without jurisdiction. He submitted that it is apparent from the assessment orders as well as from the orders of the CIT(A) for these years that notice issued is only with reference to section 142(1) of the Act. No notice under section 143(2) of the Act has be .....

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are not met with, it affects the validity of the assessment order itself. He contended that section 143(2) is not merely procedural but is a mandatory provision and cannot be bypassed. For this proposition, he cited various decisions viz: ACIT vs. Hotel Blue Moon, (2010) 321 ITR 362 (SC); ACIT vs. Geno Pharmaceuticals Ltd., (2013) 32 taxmann.com 162 (Bom.); Sapthagiri Finance & Investments vs. ITO, (2013) 90 DTR 289 (Mad.) and the decision of the Co-ordinate Bench of the Tribunal in the case .....

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Departmental Representative for the Revenue, on the other hand, relied upon the order of the CIT(A) and submitted that mere nonissuance of notice under section 143(2) by itself will not invalidate the reassessment order. He submitted that the assessee was duly informed of the reassessment proceedings and notice under section 142(1) was duly issued in any case. He next submitted that the assessee has fully cooperated in the reassessment proceedings and full opportunity has been provided to the as .....

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at non-issuance of notice under section 143(2) is not fatal and will not impinge upon the legality of the impugned re-assessment. 11. We have given our careful considerations to the rival submissions and perused various case laws cited. To begin with, the short question before us is whether non-issuance of notice under section 143(2) will invalidate the re assessment order framed under section 143(3) r.w.s. 147 of the Act in the facts of the case set out or not. We observe that the return of inc .....

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of the Act as specified in section 148(1) of the Act. 12. On a combined reading of section 143(2) together with section 148(1) of the Act, we observe that when the Assessing Officer serves notice under section 148 of the Act, the assessee is required to file return in response thereto. The provisions of section 148 seeks to treat the return filed in response to notice served under section 148 as return filed under section 139 of the Act. This is followed by notice under the provisions of sectio .....

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Act. As noted above, return filed in response to notice under section 148 is deemed to return filed under section 139 and all the provisions of the Act shall apply accordingly. As a corollary, as per the mandate of section 143(2) of the Act, the notice for assessment has to be necessarily issued in so far as the return deemed to have been filed under section 139 of the Act. 13. A plain reading of Section 143(2) suggests that where a return has been furnished under section 139 or in response to n .....

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and other judicial decision in the case of Geno Pharmaceuticals Ltd. (supra). The Revenue, while admitting the fact of non-issuance of notice under section 143(2) in the present case, has contended in the alternative that section 292BB bails out the Department for such alleged deficiency if any. The Revenue has sought to place reliance on provisions of section 292BB of the Act whereby, according to the Revenue, non-issuance of notice under section 143(2) will not invalidate the re-assessment pr .....

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ssing Officer in the course of re-assessment proceedings to issue notice under section 143(2) prior to finalization of re-assessment order cannot be condoned by resorting to section 292BB of the Act. In the aforesaid decision, it has been observed that issue of notice under section 143(2) is mandatory requirement and is not a mere procedural irregularity and therefore the same is not curable defect under section 292BB of the Act. In view of the judicial precedent available on the issue, we find .....

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(supra) is totally distinguishable on facts. The aforesaid ITAT decision was rendered in its peculiar facts. In that case, the return was not filed at all and no valid return was existing under section 139(1) or under section 139(4) or in response to notice under section 148 of the Act and therefore it was held that section 143(2) does not get triggered in the circumstances at all. Unlike the aforesaid case, it is apparent that a valid return is deemed to have come into existence under section 1 .....

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