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2019 (10) TMI 390

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..... FCA. For the Department : Smt. Suman Malik - Sr.DR ORDER PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER These appeals by the different assessees are directed against the separate orders of Commissioner of Income Tax (Appeals), Visakhapatnam, both dated 28/06/2013 for the Assessment Year 2005-06. Since the facts in all the appeals are identical, clubbed and heard together and disposed of by way of this consolidated order. 2. In both the appeals, the assessees have raised additional grounds with regard to validity of assessment framed u/sec. 143(3) r.w.s. 147 and also issuance of notice u/sec. 148 of the Income Tax Act, 1961. The additional grounds raised by the assessees during the appeal hearing read as under:- 1. The assessment order is passed u/sec. 143(3) whereas the order ought to have been passed u/sec. 143(3) r.w.s. 147. 2. The notice issued u/sec. 148 is invalid because the approval/ sanction of the higher authority as mandated by section 151 is not obtained and therefore the assessment order is invalid. (The relevant paragraphs for approval/ sanction of higher is conspicuously struck off in the notice issued u/sec. 148) 3. The assessment order has been passed without issuing a no .....

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..... s could not be raised before the ld. CIT(A) due to in advertence and non-supply of information by the Assessing Officer in spite of specific requests made by the assessee. The ld.AR further submitted that in the instant case the Assessing Officer has not served the notice u/sec.143(2) on the assessee and the assessment was made without the service of notice, therefore the additional ground is raised for adjudication. As per Income-tax Act, notice u/sec. 143(2) required to be served within the period of six months from the end of the financial year in which the return was furnished. In this case, time limit for issuance of notice u/sec. 143(2) got expired on 30/09/2011. Since the Assessing Officer had completed the assessment without service of notice, the ld.AR argued that the additional ground raised goes to the root of the assessment and the validity of assessment framed u/sec. 143(3) is questionable and hence, requested to admit the additional grounds for adjudication. 9. On the other hand, ld.DR vehemently opposed for admission of the additional grounds raised by the assessee. 10. We have heard both the sides and perused the material available on record. 11. We find force in th .....

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..... ld.DR supported the orders of the authorities below and submitted that the notice was issued on 22/08/2011 fixing the case for hearing on 30/08/2011 and there was no response from the assessee, hence, the notice u/sec. 142(1) was issued subsequently. The assessee also participated in the assessment proceedings. Therefore argued that the assessee s case is squarely covered by the provisions of section 292BB of the Act and also on the decision of the Hon'ble Apex Court in the case of CIT Vs. Laxman Das Khandelwal in Civil Appeal Nos. 6261 & 6262/2019 dated 13/08/2019. Hence requested to uphold the validity of the assessment framed u/sec. 143(3) and dismiss the appeal of the assessee. 14. We have heard both the sides and perused the material placed on record. 15. In this case, notice u/sec. 148 was issued and served on the assessee on 28/10/2010. In response to which, the assessee has filed a letter stating that the return already filed on 30/07/2006 may be treated as return in response to the notice of 148. Thus, the assessee has complied with the notice u/sec. 148 and hence the Assessing Officer required to serve the notice u/sec. 143(2) on or before 30/09/2011 to take up t .....

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..... oned only the issue of notice u/sec. 142(1) dated 17/10/2011 which is also supported by the entries in the order sheet. Therefore, it is established beyond the doubt that no notice u/sec. 143(2) was issued to the assessee. 15.1 The Ld.AR relied on the decision of Hon ble Gujarat High court in the case of Kanubhai M. Patel (HUF).v. Hiren Bhatt or His Successors to Office, [2011] 12 taxmann.com 198 (Gujarat) wherein Hon'ble High Court while deciding the issue of notice u/s 148 held that the date of issue of notice to be reckoned from the date of dispatch of notice or the date of presentation of notice in the post office. The relevant part of the order of the Hon'ble High Court reads as under: 16. Thus, the expression to issue in the context of issuance of notices, writs and process, has been attributed the meaning, to send out; to place in the hands of the proper officer for service. The expression "shall be issued" as used in section 149 would therefore have to be read in the aforesaid context. In the present case, the impugned notices have been signed on 31-3-2010, whereas the same were sent to the speed post centre for booking only on 7-4-2010. Considering the de .....

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..... he Honble Madras High court also considered the issue of dispatch and the service of notice and held as under: 5. The word "shall" employed in Section 143(2) of the Act contemplates that the Assessing Officer should issue notice to the assessee so as to ensure that the assessee has not understated income or has not computed excessive loss or has not underpaid the tax in any manner. It is, therefore, clear that when the Assessing Officer considers it necessary and expedient to ensure that the tax is paid in accordance with law, he should call upon the assessee to produce evidence before him to ensure that the tax is paid in accordance with law. A reading of the said provision makes it clear that service of notice under section 143(2) of the Act within the time limit prescribed is mandatory and it is not a mere procedural requirement. 6. In the instant case, even though a plea is taken by the learned counsel for the Revenue that the objection in relation to non-service of notice contemplated under Section 143(2) of the Act was not an issue before the Assessing Officer and the Commissioner of Income Tax (Appeals) and the same was raised for the first time before the Tribunal .....

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..... to the rival submissions. From the narration of the factual details as given above, it is clear that the only notice issued u/s. 143(2) was dated 13.10.2011 and the same was beyond the period contemplated under proviso to sec. 143(2)(ii) of the Act. Two questions arise for our consideration; (i) Whether notice u/s. 143(2) of the Act is mandatory before completion of proceedings u/s. 147 of the Act? (ii) Whether provisions of section 292BB of the Act will come to the rescue of the Revenue so as not to render the order of assessment u/s. 147 null and void? 14. As far as first question is concerned, in the case of C. Ramaiah Reddy (supra), this Tribunal has considered the non-issue of notice u/s. 143(2) of the Act within the period of limitation in response to notice u/s. 148 of the Act as fatal and had annulled the assessment u/s. 147 of the Act. Similar view has also been taken in the case of H. Gouthamchand (supra). The Special Bench of the Delhi Tribunal in Raj Kumar Chawla v. ITO [2005] 94 ITD 1/145 Taxman 12 (Mag.) was confronted with similar/identical facts. The questions required to be answered by the Special Bench were as under:- "1. Whether the proviso to s. 143(2) of t .....

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..... iled under s. 139 of the Act and the assessment must thereafter be made under s. 143 or 144 of the Act after complying with all the mandatory provisions. Accordingly, it is incumbent upon the assessing authority to issue notice under s. 143 (2) of the Act within the period as stipulated in the proviso thereunder. In this view of the matter, the first question before the Special Bench is answered in affirmative.' 15. Sec.148 of the Act was amended by the Finance Act, 2006 by insertion of two proviso below Sub-section (1) and an Explanation. The amended provisions read as follows: "Sec.148: Issue of notice where income has escaped assessment. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisi .....

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..... ssment, reassessment or re-computation as specified in section 153(2), such (otherwise time-barred) notice shall be deemed to be a valid notice. Further, the new Explanation inserted with effect from 1st October, 2005, specifically clarifies that the aforestated (newly inserted) provisos shall not apply to any return which has been furnished on or after 1st October, 2005, in response to a notice served under section 148(1) of the Act. The purpose of the amendment is to ensure that notices which were issued and barred by limitation and those which were not issued and which could not have been issued should be validated by the Finance Act, 2006 with retrospective effect from 1st April, 1990 amending section 142 for the purpose of validating notices which were otherwise not issued or served within the time-limit. The invalidity of notice as well as the absence of any notice became fatal to the proceedings and are sought to be validated and justified by the retrospective amendments. The explanation clarifies that the amended provisions will not apply to any return which has been furnished on or after 1st October, 2005, in response to a notice served under section 148(1) of the Act. Thu .....

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