TMI Blog2018 (11) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... way of this appeal, the appellant has assailed the judgment and order of the tribunal whereby tribunal has allowed the appeal of the assessee. 2. Counsel for the appellant has framed following substantial questions of law:- (i) Whether on the facts and circumstances of the case the ITAT was right in quashing the reassessment proceeding u/s 147/144 {mistakenly mentioned 143(3)} for the reason of non issuance of notice u/s 143(2) before finalizing reassessment whereas the assessee did not file her return of income within the period of 30 days stipulated by notice issued u/s 148? (ii) Whether on the facts and in circumstances of the case the ITAT was right in quashing the reassessment proceeding u/s 147/144 {mistakenly mentioned 143(3)} for the reason of non issuance of notice u/s 143(2) wherein the assessee filed her return of income on 22.4.2014 which is 10 months 17 days beyond 5.7.2013 i.e. after expiry of 30 days time from service of notice on 6.6.2013 stipulated in the notice issued u/s 148? (iii) Whether on the facts and in circumstances of the case the AO was under statutory obligation to issue notice u/s 143(2) before completing the assessment u/s 144 wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cause notice u/s 271(1)(b) was issued; - notices u/s 142(1) were issued on 17.11.2014 and 06.02.2015 and the proceedings were attended by the A/R of the assessee from time to time - Assessment order was passed u/s 143(3)/ 147 of the Act by Ld. AO vide order dated 05.03.2015. From the perusal of the summary of chronological events it is clearly evident that notice u/s 143(2) was never issued by ld.AO before completion of the assessment and this fact has categorically been admitted by ld.AO in remand report submitted before the ld. CIT(A) (APB 15-18). With this background of chronological events, kind attention of Hon ble bench is invited to the provisions of section 148 of the Act, which reads as under: 148. [(1)] Before making the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention 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 notice u/s 148 of the Income Tax Act, 1961. Therefore, under the provisions of Income Tax Act, 1961, the notice u/s 148 can t be issued Ld. CIT(A) confirmed the validity of assessment order so passed without issue of notice u/s 143(2) by observing that assessee had attended the hearing on several occasions and no objection was raised during the proceedings before the ld. AO, thus non issuance of notice u/s 143(2) of the Act would not make assessment order invalid. Ld. CIT(A) further held that such mistake of ld. AO of non issue of notice u/s 143(2) is curable u/s 292BB of the Act. At this juncture, provisions of section 292BB of the Act are reproduced herewith for the sake of convenience: 292BB. Where an assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome 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 such notice before completion of assessment under whatever section it may be. CIT v. Salarpur Cold Storage (P.) Ltd. [2014] 50 taxmann.com 105 (All) 10. Section 292BB of the Act was inserted by the Finance Act, 2008 with effect from April 1, 2008. Section 292BB of the Act 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 obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted 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 occasions. Authorized representative of assessee, on 16.12.2010 presented and stated that return of income filed u/s 139 may be treated as furnished in response to notice u/s 148. Assessment was completed vide order dated 31.12.2010, in that situation also, the Hon ble Court held that AO ought to have issued notice after 16.12.2010, in absence of which assessment was held invalid. In our case also, the return was filed after the issue of notice u/s 142(1), thus is squarely covered by the decision of Hon ble Delhi high court, as stated above. Further reliance is placed on the following: 323 ITR 249 - DIT V/s Society for Worldwide Inter Bank Financial Telecommunications (Delhi) (Case laws Paper book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice 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 assessee within the stipulated time period, the consequent order passed cannot be sustained. In that case though the notice u/s 143(2) was issued but the same was not served upon the assessee within the stipulated time period however, in our case the notice u/s 143(2) was never served upon the assessee. The Hon ble ITAT Delhi bench in the case of DR. S.B. KALIDHAR Vs. ITO in ITA No. 1082/Del/2016 dated 27.11.2017 has given a finding in favour of the assessee, by placing reliance on the decision of the Hon ble ITAT, SMC-2, Delhi Bench dated 16.10.2015 passed in ITA Nos. 4171- 4175/Del/2015 ((AY 2003- 04) in the case of Ms. Meenakshi Aggarwal vs. ITO Ors(Case laws paper book pages 7- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 notice u/s 143(2) after the request by the assessee to treat his earlier return as filed in pursuance to notices u/s 148 of the IT Act was received. This request, in the given case, has been made only on 05- 10-2010. Any issue of notice prior to that date cannot be treated as a notice on a return jiled by the assessee pursuant to a notice u/s 148 of the Act. Or in other words, there was no valid issue of notice u/s 143(2) of the IT Act, and the assessments were done without following the mandatory requirement u/s 143(2) of the IT Act. This in our opinion, render the subsequent proceedings all invalid In view of above judicial pronouncements, it is submitted that so f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferring 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 reassessment. (Para 19) Consequently, there was no legal infirmity in the impugned order of the ITAT. No substantial question of law arises. The appeal was dismissed. (Para 20) Thus, the facts of the assessee s case are similar to the facts of the case involved in the decision of the Hon ble Delhi High Court wherein it has been categorically held that the issue of notice U/s 143(2) in reassessment proceedings, prior to finalizing re-assessment order, cannot be condoned by referring to Section 292BB and is fatal to the order of reassessment. Respectfully following the same, we hereby set aside the order of the authorities below and allow the grounds No. 1 to 4 of the assessee s appeal. 8. Since we have quashed the reassessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X
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