TMI Blog2017 (12) TMI 1331X X X X Extracts X X X X X X X X Extracts X X X X ..... AM : The captioned three appeals are by two different assessees belonging to one family and since common issues are involved, they have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. 2. We may first take-up appeal in ITA No. 1105/Mum/2014 which is directed against the order of CIT(A)-38, Mumbai dated 29.11.2013 pertaining to the Assessment Year 2002-03, which in turn has arisen from the order dated 24.03.2005 passed by the Assessing Officer u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short the Act ). Although in the Memo of appeal the following Grounds have been raised :- 1. The learned CIT (Appeals) erred in confirming the action of the Assessing Officer in treating the long term capital gain of ₹ 1,06,95,000/- earned on redemption of IDBI deep discount bonds as interest income under the head of Income from Other Sources. 2. The learned CIT (Appeals) erred in confirming the transaction of transfer of bonds as a colourable device and thereby also erred in not granting the benefit of CBDT Circular dated 12/03/1996. 3. Without prejudice to the above grounds, the learned CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of notice u/s 143(2) of the Act and the CIT(A) has decided the issue after obtaining a report from the Assessing Officer, though he has decided against the assessee. Be that as it may, we are only pointing out the aforesaid to bring out that the Additional Ground raised by the assessee does not involve a point which is new to the Revenue inasmuch as at the first appellate stage, the Assessing Officer was confronted on it and a Remand report was also obtained. Considering the aforesaid aspects, we admit the Additional Ground for adjudication. This aspect was made known to the parties at the time of hearing and accordingly the rival counsels were heard on the merits of the said Ground also. 6. Before we proceed to take-up the issue raised in the Additional Ground of appeal, we may briefly touch upon the background in which the present appeal has come up before the Tribunal. In this case, assessee-individual had filed return of income for Assessment Year 2002-03 on 29.07.2002, which was subsequently revised on 07.08.2003. The discussion in the assessment order reveals that the notice u/s 148 of the Act was issued on 29.01.2004, which was also revised on 13.05.2004 and, in response, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the amount paid by IDBI on the premature redemption of the Bond was also ₹ 12,000/- per each Bond, which corresponded with the amount at which assessee and his brother transacted with each other. In the revised return filed by the assessee, the Capital Gain on sale of the Bonds was computed at ₹ 1,06,95,000/-, being the difference between the sale price, i.e. ₹ 12,000/- per Bond as reduced by the original subscribed value of ₹ 31,05,000/-. In the assessment finalised by the Assessing Officer on 24.03.2005, the Assessing Officer held that the transaction of sale and purchase of Bonds effected by the assessee with his brother was a sham transaction, which was done with the objective of enabling the assessee to treat the income from the transfer of Bonds as Capital Gain, and not as interest income because if assessee would have received the equivalent proceeds from IDBI on account of redemption of originally held Bonds on maturity, the differential would have been taxed as interest income under the head income from other sources . Ostensibly, Long Term Capital Gain is assessable at a concessional rate of tax, whereas interest income under the head incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out that even before the CIT(A) when the said point was raised, there has been no specific assertion by the Assessing Officer in the Remand proceedings. The learned representative for the assessee pointed out that CIT(A) has erroneously referred to a communication dated 23.11.2004 as being a notice purportedly issued u/s 143(2) of the Act. In this context, the learned representative referred to page 7 of the Paper Book wherein is placed a copy of the communication of the Assessing Officer dated 23.11.2004 which, as per the learned representative, is not a notice contemplated u/s 143(2) of the Act. According to him, it is only a reply to letters of the assessee dated 23.03.2004 and 31.05.2004 asking for reasons for issuance of notice u/s 148 of the Act. For all the said reasons, it was therefore contended that in this case notice u/s 143(2) of the Act has not been issued prior to the finalisation of assessment u/s 143(3) r.w.s. 147 of the Act and, therefore, the assessment was void and illegal. On the legal position, reliance has been placed on the following decisions to contend that issuance of notice u/s 143(2) of the Act is mandatory before completion of assessment :- i) As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-02 however the facts mentioned in the said notice relating to re-opening of assessment proceeding relates to the A.Y. 2002-03. Therefore the mistake committed due to typing error and inadvertence cannot be the basis of order to be annulled. Further, the assessee has submitted the information in relation to the said notice for the AY 2002-03 only. Decision: 11.0 I have carefully examined the facts of the case, the stand taken by the A.O in the assessment order and the remand report, the grounds of appeal, the written submissions filed by the appellant during the hearing proceedings. 11.1 The above mistake as pointed out by the appellant is a curable mistake u/s. 292B of the Act since in substance, the contents of the notice issued u/s. 143(2) dated 23.11.2004 relates to the A.Y 2002-03, though wrongly mentioned as A.Y 2001-02. The intention of the A.O is clearly expressed as one relating to A.Y 2002-03 though mistakenly the assessment year is mentioned as 2001-02. Therefore, the ground no. 2 of the appellant is hereby dismissed. 9. We have carefully considered the rival submissions. Insofar as the legal position on the point canvassed by the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r.w.s. 147 of the Act dated 24.03.2005, the Assessing Officer did not issue the mandatory notice u/s 143(2) of the Act. Firstly, our attention has been drawn to the tabulation in the assessment order itself, which does not contain reference to any notice issued u/s 143(2) of the Act. The same is also emerging from a perusal of the certified copy of the order sheet entries, which has been placed in the Paper Book at pages 138-142. Now, in the order of the CIT(A), a reference has been made to a communication dated 23.11.2004 as being notice issued u/s 143(2) dated 23.11.2004 relates to the A.Y 2002-03, though wrongly mentioned as A.Y 2001-02 . The said averment of the CIT(A) has been contested by the assessee before us by referring to the copy of the said communication, which is placed at page 7 of the Paper Book. We have examined the said communication dated 23.11.2004 and do not find the same to have been issued in the context of Sec. 143(2) of the Act. The contents of the said communication addressed to the assessee by the Assessing Officer have been perused by us. Firstly, it refers to the some office note issued u/s 148 of the Act on 29.01.2004 in response to which assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, as has been found by us on the examination of the contents of the communication dated 23.11.2004 in the earlier paras, it could not be said that the same is in substance and effect a notice u/s 143(2) of the Act. The said communication merely seeks to reply to the communications of the assessee seeking reasons recorded for issuance of notice u/s 148 of the Act and no further. Thus, the stand of the CIT(A) as well as that of the Revenue before us, on the basis of Sec. 292B of the Act, is not justified. 12. Sec. 292BB of the Act has also been pressed into service by the Revenue, which prescribes that 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) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner. With reference to Sec. 292BB of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act before finalising the reassessment proceedings, the impugned assessment is illegal and unsustainable and is hereby directed to be quashed. Since we have held the assessment order itself to be illegal and unsustainable, the other Grounds raised by the assessee in the Memo of appeal reproduced above, are rendered academic and are not being adjudicated for the present. 15. Thus, insofar as appeal of assessee in ITA No. 1105/Mum/2014 is concerned, the same is hereby allowed, as above. 16. Now, we may take-up the appeal filed by the assessee in ITA No. 1106/Mum/2014, which is directed against the order of CIT(A)-38, Mumbai dated 28.11.2013 pertaining to the Assessment Year 2002-03, which in turn has arisen from the order dated 27.11.2008 passed by the Assessing Officer u/s 153A r.w.s. 143(3) of the Income Tax Act, 1961. 17. The said assessment has been made in pursuance to a search action carried out on the assessee u/s 132(1) of the Act dated 30.11.2006. The Assessing Officer notes that in response to the notice issued u/s 153A of the Act, assessee filed his return of income declaring income of ₹ 1,20,28,255/-, which was the same as declared in the revised return ..... X X X X Extracts X X X X X X X X Extracts X X X X
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