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Shri. P. Shanmugam Versus Income Tax Officer, Non Corporate Ward I (5) , Coimbatore

2017 (7) TMI 418 - ITAT CHENNAI

Validity of reopening of assessment - no issuance of notice u/s.143(2) - whether non issue of such notice was cured by Sec. 292BB? - Held that:- There can be no quarrel that issue of notice u/s.143(2) of the Act is mandatory even in a re-assessment proceedings. - Sec. 292BB of the Act can cure a case of non service of notice and not a non-issue of notice. In the case before us, as already mentioned by us, there was no issue of notice u/s.143(2) of the Act. Thus, we are of the opinion that no .....

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tion of the ld. Assessing Officer to pass the assessment order without issuing notice u/s.143(2) of the Income Tax Act, 1961 (herein after referred to as the Act ). 2. The appeal has been filed with a delay of Two Hundred and Sixty Eight days. In the condonation petition filed, it is stated that assessee had approached one Shri. V. Ramnath, Chartered Accountant on 25.03.2015 for advising on the course of action that was to be taken on the order of the ld. Commissioner of Income Tax (Appeals) rec .....

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matter came to his notice, he ensured that the appeal was filed. As per assessee the delay of 268 days, in filing the appeal was not due to any negligence. 3. Opposing the delay petition, ld. Departmental Representative submitted that there was nothing on record to show that delay was due to a failure which happened in the office of Shri. V. Ramnath, Chartered Accountant. 4. We have perused the affidavits and also carefully heard the parties. We find that condonation petition of the assessee is .....

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tative for disbelieving the affidavit filed by Shri. V. Ramnath, Chartered Accountant. We therefore, deem it fit to condone the delay. Delay is condoned and appeal is admitted. 5. Ld. Counsel for the assessee submitted that there was no issuance of notice u/s.143(2) of the Act. As per ld. Authorised Representative it was an assessment which was reopened pursuant to a survey u/s.133A of the Act in the premises of the assessee. As per ld. Authorised Representative assessee had filed return of inco .....

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without issuing notice u/s.143(2) of the Act. Ld. Authorised Representative submitted that ld. Commissioner of Income Tax (Appeals) had rejected these arguments taken by the assessee observing that judgment of Apex Court in the case of ACIT vs. Blue Moon 321 ITR 362 would not apply to a re-assessment proceedings u/s.147 of the Act. Ld. Authorised Representative submitted that appearance of the assessee or his representative before ld. Assessing Officer pursuant to a summons issued u/s.131 of the .....

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recalled by Delhi High Court in a review petition filed by the concerned assessee. Reliance was placed on the judgment of Hon ble Madras High Court in the case of Sapthagiri Finance & Investments vs. ITO (2013) 90 DTR 289 that of Hon ble Delhi High Court in the cases of Pr. Commissioner of Income Tax vs. Silver Line, 383 ITR 455 and Pr. Commissioner of Income Tax vs. Shri Jai Shiv Shankar Traders Pvt. Ltd 383 ITR 448. 6. Per contra, ld. Departmental Representative submitted that the assessm .....

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ld. Assessing Officer during the course of re-assessment proceedings. We have also perused the assessment records. Nothing whatsoever is mentioned regarding issue of any notice u/s.143(2) of the Act, either in the order sheet or at any place in the concerned file. Ld. Departmental Representative has also not strongly contested the claim of the assessee that there was no issue of notice u/s.143(2) of the Act. The question whether issue of notice u/s.143(2) of the Act is mandatory in a re-assessme .....

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e that the said decision dealt with the assessment done under Chapter XIV relating to block assessment. The assessee therein raised a contention that the failure to issue notice under Section 143(2) within the prescribed time for the purpose of block assessment could be fatal to the validity of the assessment made under Chapter XIVB of the Income Tax Act, 1961. In other words, the assessee contended that the issuance of notice under Section 143(2) within the prescribed period of time for the pur .....

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Section 145 shall, so far as may be, apply. The Apex Court pointed out after return is filed, the Assessing Officer has to follow the procedure like the issue of notice under Section 143(2)/142 and complete the assessment under Section 143(3). In the event, the assessee is not filing the return or not complying with the notice under Section 143(2)/142, the Officer is authorised to complete the assessment ex parte under section 144. The Apex Court further pointed out that notice under Section 143 .....

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therefore, the requirement of notice under Section 143(2) cannot be dispensed with. The legislation referring to the compliance of the provisions under Section 143, 144 and 145 of the Act is a legislation by incorporation. Thus, where the Assessing Officer repudiates the return filed by the assessee in response to notice under Section 158BC(a), the Assessing Officer must necessarily issue notice under Section 143(2) of the Act. Dealing with the contention that the issue of notice is not mandato .....

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pleting the assessment, when the officer repudiates the return filed under Section 158BC(a) proceeds to make an enquiry, he has necessarily to follow the provisions of section 142 and 143 (2) and (3) of the Act. 13. As far as the present case is concerned, the provisions of Section 148 also uses the expression so far as may be apply accordingly as if such return were a return required to be furnished under Section 139 . Thus, understanding this provisions in the background of the decision of the .....

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r assessment and that admittedly the assessee had requested the officer to accept the original return as a return filed in response to Section 148 of the Act, we hold that there was total failure on the part of the Revenue from complying with the procedure laid down under Section 143(2) of the Act, which is mandatory one as held by the Apex Court . Thus there can be no quarrel that issue of notice u/s.143(2) of the Act is mandatory even in a re-assessment proceedings. 8. Coming to the question w .....

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provides a deeming fiction. The deeming fiction is to the effect that once the assessee has appeared in any proceeding 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 .....

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or reassessment. Sec. 292BB of the Act cannot obviate the requirement of complying with a jurisdictional condition. For the AO to make an order of assessment under s. 143(3) of the Act, it is necessary to issue a notice under s. 143(2) of the Act and in the absence of a notice under s. 143(2) of the Act, the assumption of jurisdiction itself would be invalid. 16. In the same decision in CIT vs. Salarpur Cold Storage (P) Ltd. (supra), the Allahabad High Court noticed that the decision of the Supr .....

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f the Act was issued to the assessee seeking to reopen the assessment for asst. yr. 2000-01. However, the assessee did not file a return and therefore a notice was issued to it under s. 142(1) of the Act. Pursuant thereto, the assessee appeared before the AO and stated that the original return filed should be treated as a return filed in response to the notice under s. 148 of the Act. The High Court observed that if thereafter, the AO found that there were problems with the return which required .....

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ct, the assessee had placed its objection and reiterated its earlier return filed as one filed in response to the notice issued under s. 148 of the Act and the officer had also noted that the same would be considered for completing of assessment, would show that the AO has the duty of issuing the notice under s. 143(3) to lead on to the passing of the assessment. In the circumstances, with no notice issued under s. 143(3) and there being no waiver, there is no justifiable ground to accept the vi .....

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Allahabad High Court. That provision would apply insofar as failure of service of notice was concerned and not with regard to failure to issue notice. In other words, the failure of the AO, in reassessment proceedings, to issue notice under s. 143(2) of the Act, prior to finalising the reassessment order, cannot be condoned by referring to s. 292BB of the Act . Thus, it is clear that Sec. 292BB of the Act can cure a case of non service of notice and not a non-issue of notice. In the case before .....

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udgment. 8. When this appeal was first listed before this Court on 29th July, 2015 reliance was placed by Ms. Suruchi Aggarwal, learned senior standing counsel for the Revenue on the decision of this Court in CIT vs. Madhya Bharat Energy Corpn. Ltd. (2011) 245 CTR (Del) 35: (2011) 62 DTR (Del) 37: (2011) 337 ITR 389 (Del) which purported to hold that non-issue of notice under s. 143(2) of the Act on an assessee prior to completion of the reassessment would not be fatal to the reassessment. She a .....

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