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2018 (2) TMI 597

e-assessment order, cannot be condoned by referring to Section 292BB and is fatal to the order of re-assessment. See Pr.CIT Vs Jai Shiv Shankar Traders Pvt. Ltd. [2015 (10) TMI 1765 - DELHI HIGH COURT] - Decided in favour of assessee. - ITA No. 1026/JP/2016 - Dated:- 6-2-2018 - Shri Vijay Pal Rao, JM And Shri Bhagchand, AM Assessee by : Shri Manish Agarwal & Shri S.B, Natani (CA) Revenue by : Smt. Seema Meena (JCIT) ORDER Per : Bhagchand, A. M. This is an appeal filed by the assessee emanates from the order of the ld. CIT(A)-3, Jaipur dated 20/09/2016 for the A.Y. 2009-10. 2. The assessee is an individual. The assessee had purchased agricultural land on 30/4/2008 for a consideration of ₹ 1,01,20,000/- and paid in cash. Notice U/s 148 of the Income Tax Act, 1961 (in short the Act) was issued on 31/5/2013. Notice was served on 06/06/2013 through notice server. Return of income was filed on 22/4/2014. Notice U/s 142(1) of the Act was issued alongwith questionnaire on 30/4/2014. The assessment was made on 05/3/2015 at ₹ 1,01,20,000/-, that is the amount paid for purchase of the agricultural land, treated as unexplained investment. The ld. CIT(A) has confirmed the action .....

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was also made by the ld AR of the assessee on the issue of non-issue of notice U/s 143(2) of the Act prior to finalization of the assessment U/s 143(3) of the Act. The submissions of the ld AR on this issue is reproduced hereunder: In these grounds of appeal, assessee has challenged the action of Ld. C1T(A) in confirming the action of ld. AO in completing assessment without issuing notice u/s 143(2), which is sine qua non once assessee furnished return of income. Since all these grounds of appeal are inter related, thus have been dealt with together for the sake of convenience. Brief facts as stated above are that the case of assessee was reopened by issue of the notice u/s 148 of the Act and thereafter the assessment was completed without issue of notice u/s 143(2) though the assessee had filed the return of income in response to such notice u/s 148. The chronology of the events are as under: - on 31.05.2013 notice u/s 148 was issued and served upon assessee on 06.06.2013; - on 03.04.2014, notice u/s 142(1) was issued fixing date of hearing on 16.04.2014; - on 22.04.2014, Return of Income was filed by assessee; - on 30.04.2014, further Query letter u/s 142(1) as well as show caus .....

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basis of date of filing return of income. Thus, it is not discretionary rather mandatory for an assessing officer to issue notice u/s 143(2) once the return of income is filed by assessee. The only relaxation in the case of re assessment is that notice u/s 143(2) can be issued at any time before the expiry of time limit for completing assessment/ re assessment and the same would be deemed as valid notice. However, as stated above, no notice u/s 143(2) was ever issued in the case of the assessee even though the return of income was filed by the assessee. Thus the completion of the re-assessment proceedings and completion of the assessment is without any valid jurisdiction and therefore the order passed is void ab initio. This contention was also raised before ld.CIT(A) who sought remand report from ld. AO in this regard. The ld. AO in remand report dated 12/02/2016 at page 2 in last para observed that: (APB -17) During the assessment proceedings in this case for the assessment year under consideration, the assessee or her authorized representative did not oppose that the notice u/s 143(2) of the income Tax Act, 1961 was not issued after filing return of income in response to the no .....

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me has been filed belatedly thus he not required to issue such notice mandatorily. Your honours would appreciate that it has nowhere been provided in the Act that AO shall be absolved with the requirement of issuing notice u/s 143(2) in the event of late filing of return. In fact, proviso to section 148 provides that notice u/s 143(2) can be issued at any time before completion of assessment. Thus, so far as return of income has been filed, AO ought to have issued notice u/s 143(2), which has not been done in the instant case. In this regard, reliance is placed on: Assistant Commissioner of Income Tax v. Hotel Blue Moon 321 ITR 362 (SC) (Case laws Paper book pages 93-99) Search and Seizure - Undisclosed Income Detected - Block Assessment - Issue of Notice u/s 143(2) within prescribed time - Mandatory - Income Tax Act, 1961, ss. 132, 143(2), 158BA, 158BC, 158BH - CBDT Circular No. 717 Dated 14.08.1995. Though in the above case, assessment was completed by ld.AO u/s 153A, without issuing notice u/s 143(2), the same is applicable to assessments completed under Act, irrespective of the fact under which section assessment is to be completed as legislature has provided for issuance of su .....

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ction 143(3)- Condition precedent- Notice u/s 143(2) Omission to issue notice under section 143(2)- Deject not curable - Section 292BB not applicable- Reassessment not valid- Income Tax Act, 1961, ss. 143,147,292BB 336 ITR 678 - CIT V/s Rajeev Sharma (Allahabad) (Case laws Paper book pages 62-68) Reassessment - Procedure - Return in response to Notice u/s 148 - Assessing Officer must apply his mind and issue Notice u/s 143(2) - Procedure must be followed strictly - Income Tax Act, 1961, ss. 143, 148. It is further submitted that even if the return of income was filed after the issue of notice u/s 142(1), the Hon ble Delhi court in the case of PCIT-08 vs. Shri Jai Shiv Shankar traders Pvt. Ltd. reported in 383 ITR 448 - (Delhi) (Case laws Paper book pages 29-31) has held that the issue of notice u/s 143(2) is not a procedural requirement and is mandatory and completion of assessment without issue of notice u/s 143(2) is fatal to the assessment. In this case, notice u/s 148 was issued on 30.03.2010, in response to which no return of income was filed. On 01.10.2010, Ld.AO issued notice u/s 143(2), which was duly served. Subsequently notices u/s 142(1) were also issued on certain occas .....

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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(3) 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 under section 143(2) of the Act, the assessee had placed its objection and reiterated its earlier return filed as one filed in response to the notice issued under section 148 of the Act and the Officer had also noted that the same would be considered for completing of assessment, would show that the Assessing Officer 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 under section 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 under section 143(2) of the Act." Recently Jaipur bench of ITAT in the case of Cameron (Singapore) Pte Ltd Vs. ADIT in ITA No. 2/JP/14 vide orders dt. 27/7/2017 held that where notice u/s 143(2) is not served upon the assesse .....

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here is no provision in the Act, which would allow an AO to treat the return which was already subject to a processing u/s 143(1) of the IT Act, as a return filed pursuant to a notice subsequently issued u/s 148 of the Act. However, once an assessee itself declare before the AO that his earlier return could be treated as filed pursuant to notice u/s 148 of the IT Act, three results can follow. Assessing Officer can either say no, this will not be accepted, you have to file a fresh return or he can say that 30 days time period being over I will not take cognizance of your request or he has to accept the request of the assessee and treat the earlier returns as one filed pursuant to the notice u/s 148 of the IT Act. In the former two scenarios, AO has to follow the procedure set out for a best of judgment assessment and cannot make an assessment under section 143(3). On the other hand, if the AO chose to accept assessee's request, he can indeed make an assessment under section 143(3). In the case before us, assessments were completed under section 143(3) read with section 147. Or in other words AO accepted the request of the assessee. This in turn makes it obligatory to issue noti .....

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re 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. (Para 17) As already further noticed, the legal position regarding Section 292BB has already been made explicit in the aforementioned decisions of the 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 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. (Para 18) The resultant position was that as far as the present case was concerned the failure by the AO to issue a notice to the Assessee under Section 143(2) of the Act subsequent to 16th December 2010 when the Assessee made a statement 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, was fatal to the order of re-assessment. (Para 19) Consequently, there was no legal infirmity in the impugned .....

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