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TMI Blog2017 (11) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... d, inasmuch as, no valid return of income in terms of sec 148 of the IT. Act, 1961, was available on record. 4. The learned lower authorities have grossly erred in making/upholding an addition of Rs. 66.62,862/-(peak amount 61,62,862/-) by recourse to sec. 690 of the IT. Act, 1961, even though said provisions are not attracted in case of the appellant. 5. The learned lower authorities have grossly erred in making/upholding an addition of Rs.66,62,862/- (peak amount 61,62,862/-) without giving an effective opportunity of being heard, even though a specific request to cross examine the parties on whose testimony/statement the impugned addition has been made/upheld. 6. The learned lower authorities have grossly erred in making/upholding an addition of Rs. 66,62.862/-(peak amount 61,62,862/-) without bringing any cogent material or evidence on record to support their convictions. The impugned addition is wholly based on conjectures & surmises. 7. The learned CIT(A) has grossly erred in rejecting the books of account, without issuing a show cause notice and without giving any reason as to how & why the books of accounts were being rejected. 8. The learned CIT(A) has gross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 008. He strongly supported the orders of the Ld.CIT(A) in holding that the assessee has never objected in the course of Assessment Proceedings raising the contention that notice u/s. 143(2) was not served. Therefore, Ld.DR submits that the defect is curable in view of the provision of Section 292BB of the I.T. Act. 5. We have heard the rival submissions on this preliminary objection i.e. very jurisdiction of the Assessing Officer for initiation of assessment proceedings in the absence of issue and service of notice u/s. 143(2) of the Act. It is the contention of the assessee that no notice u/s. 143(2) has been issued or served on the assessee before completion of the assessment. The assessee has raised this objection for the first time before the Ld.CIT(A) and the Ld.CIT(A) relying on the remand report furnished by the Assessing Officer which stated that notice u/s. 143(2) and u/s. 142(1) were issued to the assessee and it was served through speed post as per the records maintained in the office of the Assessing Officer and taking note of the decision of the ITAT, Delhi Bench in the case of ITO v. M/s.Industrial Syndicate in ITA.No. 2589/Del/2011 for the Assessment Year 2007-08 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me; 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 an exception to the effect that the Section shall not apply where the assessee has raised an objection before the completion of the assessment or reassessment. Section 292 BB of the Act cannot obviate the requirement of complying with a jurisdictional 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. We are also of the opinion that Section 292BB of the Act is not applicable also for the assessment years 2009-10, 2010-11 and 2011-12. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, being sections 147, 148 and 149 in the 45 1961 Act. A clear distinction has been made out between 'issue of notice' and 'service of notice' under the 1961 Act. Section 149 prescribe the period of limitation. It categorically prescribes that no notice under section 149 shall be issued after the prescribed limitation has lapsed. Section 148(1) provides for service of notice as a condition precedent to making the order of assessment. Once a notice is issued within the period of limitation, 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he original records at the stage of hearing of the stay application and thereafter was perverse. In the absence of any affidavit being filed, it was not open for the Department to allege that no proper opportunity was given. Further, we find that the assertion made in paragraph 16 of the Supplementary Affidavit that a notice was issued is patently erroneous and, an attempt was made by the Department to deceive the Court. The notice asserted in para 16 of the Supplementary Affidavit is not a notice under Section 143(2) of the Act but is only a notice issued under Section 142(1) of the Act. Such tactics adopted by the Department is totally deplorable." 7. Similar view has been taken by the Hon'ble Delhi High Court in the case of Principal Commissioner of Income Tax v. Silver Line in ITA.No.578 to 581,585, 587 and 588/2015 dated 04.11.2015. The Hon'ble Delhi High Court upheld the decision of the ITAT in holding that the re-assessment order cannot be passed without complying with the mandatory requirement of notice being issued by the Assessing Officer to the assessee u/s. 143(2) of the Act and therefore the re-assessment order was legally unsustainable. While holding so the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on dated 14th October 2015 in ITA No. 519 of 2015). Dr. Gupta further pointed out that for three of the AYs in question i.e. 2005-06, 2006-07 and 2007-08, Section 292 BB of the Act could not be invoked since that ITA No. 578 of 2015 & connected matters provision was introduced in the statute book with effect from 1st April 2008. Referring to the decision in Commissioner of Income Tax v. Mohammad Khaleeq (2015) 229 Taxman 566 (All.) and the decision of this Court dated 6th October 2010 in ITA No. 1159/2010 (CIT v. Kuber Tobacco Producers P. Ltd.) he pointed out that Section 292BB of the Act has been held to be prospective, i.e., applicable only from AY 2008-09. Finally Dr. G upta submitted that in any event the question as to the legal effect of the failure of the AO to issue a notice under Section 143(2) of the Act was a pure question of law and on the strength of the decision of the Supreme Court in National Thermal Power Co. Ltd. v. Commissioner of Income Tax (1998) 229 ITR 383 (SC) and Gedore Tools (P) Ltd. v. Commissioner of Income Tax (1999) 238 ITR 268 (Del) such a point could have been raised by the Assessee during the course of hearing in the ITAT, as long as it did not req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Storage (P.) Ltd. [2014] 50 taxmann.com 105 (All.) and the decision of the Madras High Court in Sapthagiri Finance & Investments v. Income Tax Officer (2013) 90 DTR (Mad) 289), that Section 292 BB of the Act would apply insofar as failure of 'service' of notice was concerned and not with regard to the failure to 'issue' notice. In other words, the failure of the AO, in re-assessment proceedings, to issue notice under Section 143(2) of the Act, prior to finalising the re-assessment order, cannot be condoned by referring to Section 292BB of the Act. 14. Consequently, the Court does not find merit in the objection of the Revenue that the Assessee was precluded from raising the point concerning the non-issuance of notice under Section 143 (2) of the Act in the present case in view of the proviso to Section 292BB of the Act. 15. The Court also finds merit in the contention of the Assessee that in any event as far as AYs 2005-06 to 2007-08 is concerned, Section 292BB of the Act would not apply since it is prospective in its application, i.e., applicable from AY 2008-09 onwards. The legal position in this regard appears to be well settled as explained in CIT v. Kuber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 143 (2) of the Act was justified. 18. The wording of Section 143(2)(ii) of the Act, which is applicable in the present case, requires the AO to be satisfied on examining the return filed that prima facie the Assessee has understated the income or has computed excessive loss or has underpaid the tax in any manner. The AO has the discretion to issue a notice under Section 143 (2) if he considers it necessary or expedient to do so. This exercise by the AO under Section 143 (2) of the Act is qualitatively different from the issuance of a notice under Section 142(1) of the Act, which as noted hereinbefore, is in a standard proforma. 19. The Court is unable to accept the submission of the Revenue that in the present case, no return was filed by the Assessee pursuant to the notice issued to it under Section 148 of the Act. If after receiving the letter dated 1st April 2011 of the Assessee the AO was of the view that the return originally filed in the Saral Form could not be treated as the return pursuant to the notice under Section 148 of the Act, then he should have drawn the attention of the Assessee to that fact. In the present case all that the AO did was to send a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would be considered for completing of assessment, would show that the AO has the duty of issuing the notice under Section 143(3) to lead on to the passing of the assessment. In the circumstances, with no notice issued u/s 143(3) and there being no waiver, there is no justifiable ground to accept the view of the Tribunal that there was a waiver of right of notice to be issued u/s 143(2) of the Act." 22. The decisions of the Allahabad High Court in Commissioner of Income Tax v. Rajeev Sharma (supra) and Commissioner of Income-tax-II, Lucknow v. Salarpur Cold Storage (P.) Ltd. (supra) also reiterate the above legal position. As far as this Court is concerned, the decision in Director of Income Tax v. Society For Worldwide Interbank Financial Telecommunications (2010) 323 ITR 249 (Del) and the recent decision in Pr. CIT v. Shri Jai Shiv Shankar Traders Pvt. Ltd. (supra) hold likewise. 23. With the legal position being abundantly clear that a reassessment order cannot be passed without compliance with the mandatory requirement of notice being issued by the AO to the Assessee under Section 143(2) of the Act, the ITAT was in the present case right in concluding that the reassessme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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