TMI Blog2022 (4) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the CIT(A)-11, Hyderabad's order dated 1/1/2020 in case No. 10046/2019-20 involving proceedings u/s. 143(3) of the Income Tax Act, 1961, in short, the Act. Heard both the parties. Case files perused. 2. We first of all advert to the Revenue's cross appeal ITA No. 467/Hyd/2020 challenging correctness of CIT(A)'s action quashing the impugned assessment for want of a valid section 143(2) notice vide following lower appellate discussion:- 6. I have considered the assessment order, submissions of the assessee. I have also perused the documents placed before me and the original assessment record as produced before me. It is seen from the order sheet that the Aa has issued notice u/s. 142(1) on 08.11.2011 calling for return of income. The return of income in response to above notice was filed' on 28.11.2011. The AO mentioned in the order that notice u/s. 143(2) and 142(1) Were issued on 14.12.2011. But perusal of order sheet shows that no such notice is mentioned therein. Further, there is no copy of notice nor acknowledgement of service of such notice is available on the record. The Aa who was present during the hearing was also enquired with. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary for the purpose of this case, clause (e) is extracted and it reads as under:- (e) Procedure for making block: assessment: (i) The Assessing Officer shall serve a notice on such person requiring him to furnish within such time, not being less than 15 days, as may be specified in the notice, a return in the prescribed form and verified in the same manner as a return under clause (i) of sub-section (1) of section 142 setting forth his total income including undisclosed income for the block period. The officer shall proceed to determine the undisclosed income of the block period arid the provisions of section 142, sub-sections (2) and (3) of section 143 and section 144 shall apply accordingly. 12) Chapter XIV-B provides for an assessment of the undisclosed income unearthed as a result of search without affecting the regular assessment made or to be made. Search is the sine qua non for the Block assessment. The special provisions are devised to operate in the distinct field of undisclosed income and are clearly in addition to the regular assessments covering the previous years falling in the block period. The special procedure of Chapter XW-B is intended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is sub-section indicates that, after the return is filed, this clause enables the assessing officer to complete the assessment by following the procedure like issue of notice under Sections 143(2)/142 and complete the assessment under Section 143(3). This Section does not provide for accepting the return as provided under Section 143(i)(a). The assessing officer has to complete the assessment under Section 143(3) only. In case of default in not filing the return or not complying with the notice under Sections 143(2)/142, the assessing officer is authorized to complete the assessment ex-parte under Section 144. Clause (b) of Section 158BC by referring to Section 143(2) and (3) would appear to imply that the provisions of Section 143(1) are excluded. But Section 143(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, Why the authorities should issue notice under Section 143(2). However, if an assessment is to be completed under Section 143(3) read with Section 158-BC, notice under Section 143(2) should be issued within one year from the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the observation made by this Court in Dr. Pratap Singh's case [1985] 155 ITR 166 (SC). In this case, the Court has observed that Section 37(2) provides that the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under Section 37(2). Reading the two sections together it merely means that the methodology prescribed for carrying out the search provided in Section 165 has to be generally followed. The expression so far as may be has always been construed to mean that those provisions may be generally followed to the extent possible. The learned counsel for the respondent has brought to our notice the observations made by this Court in the case of Maganlal Vs. Jaiswal Industries, Neemach and Ors., [ (1989) 4 SCC 344], wherein this Court while dealing with the scope and import of the expression as far as practicable has stated without anything more the expression 'as far as possible' will mean that the manner provided in the code for attachment or sale of property in execution of a decree shall be applicable in its entirety except such provision; therein which may not be practicable to be applied. 16) The case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 proceedings or inquiry under the act that the notice was not served upon him or not served upon him in time or served upon him in an improper manner. 7. In the present case, the Tribunal has returned the findings that the notice u/s. 143(2) of the act was admittedly not issued in this case. The Assessing authority thus did not have jurisdiction to proceed further and make assessment. 8. We do not find that the non-consideration of sec. 292BB which is rule of evidence, and a deeming provision to validate the notice in certain circumstances, will have any effect on the judgment in Hotel Blue Moon(supra). It was held in Hotel Blue Moon's case (supra) that the very foundation of the jurisdiction of the AO is on the issuance of the notice under sec. 143(2). 6.1.3 In the case of CIT, Lucknow Vs. Salarpur Storage Ltd 228 Taxmann 48 (Allahabad], the Hon'ble High Court held as under: 2. The assessee filed its return of income for AY 2008-09 on 30 September 2008. The Assessing Officer issued a notice under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue is that the CIT(A) as well as the Tribunal have failed to consider the provisions of Section 292BB of the Act. That is the submission which falls for consideration in, these proceedings. 6. Section 143(2) of the Act provides as follows: (2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall: (i) Where he has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, serve on the assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him, on a date to be specified therein to produce, or cause to be produced, any evidence Or particulars specified therein or on which the assessee may rely, in support of such claim: Provided that no notice under this clause shall be served on the assessee on or after the 1st day of June, 2003; (ii) notwithstanding anything contained in clause (i), if it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the facts which are not in dispute are that the assessee had filed its return of income on 30 September 2008 for AY 2008-09. The notice under Section 143(2) of the Act ought to have been issued by 30 September 2009 which was the date of the expiry of the period of six months from the end of the financial year in which the return was furnished. A notice was) however, issued on 6 October 2009 much beyond the period of six months. In such a situation, there could be no occasion to serve the notice within six months since the very act of issuance was beyond six months. 9. Now, it is in this background that it would be necessary to consider the provisions of Section 292BB of the Act. Section 292BB provides as follows: 292BB. Where an assessee has appeared iii 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities, there is no reason, why the authorities should issue notice under Section 143(2). However, if an assessment is to be completed under Section 143(3) read with Section 158-BC, notice under Section 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedural irregularity 'and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. 12. The Supreme Court has, therefore, dearly held that the omission on the part of the Assessing Officer to issue a notice under Section 143(2) of the Act is not ii procedural irregularity and is not curable. The requirement of a notice under Section 143(2) of the Act cannot be dispensed with. 13. In our view, where the Assessing Officer fails to issue a notice within the period of six months as spelt out in the proviso to clause (ii) of Section 143(2) of the Act, the assumption of jurisdiction under Section 143(3) of the Act would be invalid. This defect in regard to the assumption of jurisdiction cannot be cured by to Icing recourse to the deeming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that Section 292BB of the Act was a rule of evidence which validated service of notice in certain circumstances. It introduces a deeming fiction that once the Assessee appears in any proceeding or has cooperated in any enquiry relating to assessment or reassessment it shall be deemed that any notice under any provision of the Act that is required to be served has been duly Served upon him in accordance with the provisions of the Act and the Assessee in those circumstances would be precluded from objecting that a notice that was required to be served upon him under the Act was not served upon him or not served in time or was served in art improper manner. It was held that Section 292BB of the Act is a rule of evidence and it has nothing to do with the mandatory requirement of giving a notice and especially a notice under Section 143(2) of the Act which is a notice giving jurisdiction to the AO to frame an assessment. The decision of the Allahabad High Court in Manish Prakash Gupta (supra) is also to the same effect. 13. In Shri Jai Shiv Shankar Traders (P.) Ltd. (supra), this Court has also discussed the distinction between a failure to 'issue' notice and a failure to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law, the ITAT was not in error in permitting the Assessee to raise such a point before it this finds support in the decision of the Supreme Court in. National Thermal Power Co. Ltd. (supra) and the decision of this Court in Gedore Tools (P) Ltd. (supra). 17. On the question of whether the notice under Section 143(2) of the Act was in the facts and circumstances mandatory, Mr. Sahni sought to distinguish the long line of decisions including the recent decision of this Court in Shri Jai Shiva Shankar Traders Pvt. Ltd. (supra) on the ground that there was no occasion for the AD to issue any notice under Section 143(2) Of the Act since the Assessee had,' in fact, not filed Cl return. He submitted that the original return was filed in the 'Saral Form' which had since been replaced with a different form for filing of returns. Consequently, the said return could not have been treated as a return filed pursuant to the notice issued to the Assessee under Section 148 of the Act. He further submitted that with no discrepancy having been found by the AO in the returns for AYs 2005-06 till 2007-08, which were processed under Section 143(1) of the Act, there was no occasion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 143(2) of the Act before finalising the order of the reassessment. 21. In this context reference may be made to the decision of the Madras High Court in Saptagiri Finance Investments (supra) where again the Assessee did not file a return pursuant to Section 148 of the Act. The AO then issued a notice to it under Section 142(1) of the Act. The Assessee thereafter appeared before the AO and stated that the original return filed should be treated as the return filed in response to the notice under Section 148 of the Act. In those circumstances, the High Court observed that if there was some explanation that was required la be offered by the Assessee, notwithstanding the above submission made by it, the AO ought to have issued a notice under Section 143(2) of the Act. The Madras High Court observed:- Merely because 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(2) 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 u/s. 143(2) of the Act; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n recorded by the CIT(A) as well as the Tribunal on the question of date of service of notice. Notice was not served within stipulated time. Mere giving of dispatch number will not render the said finding to be perverse. In absence of notice being served, the AO had no jurisdiction to make assessment. Absence of notice cannot be held to be curable under sec. 292BB of the act. 6.1.6 In the case of M/s. Sanjeev Agarwal Vs. DCIT 159 ITD 302 (Chandigarh Tribunal) held as under: 7. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. From the order of the learned CIT (Appeals); we observe that there is no quarrel to the fact that in the present case notice under section 143(2) of the Act was not issued to the assessee. The fact of issuing notice under section 143(2) of the Act is also not coming out from the order of the Assessing Officer. This fact has not been controverted by the learned D.R. even before us. In view of this, since the learned CIT (Appeals) dismissed the ground of the assessee on the basis of provisions of section 292BB of the Act, the only issue remainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be curable under section 292BB of the Act. 9. As regards the arguments of the learned D.R. that section 147 r.w.s. 148 of the Act, are a complete code in itself and there is no need for the Assessing Officer to go into other sections to assess or re-assess income under the said section. We would like to observe the substantive part of provisions of section 148, which reads as under: Issue of notice where income has escaped assessment. 148. [(i)] 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 provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: 10. From the perusal of the above provisions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment records is not disputed even by the Ld. D.R. He, however, has relied on the provisions of section 292BB introduced in the Statute w.e.f. 1st April, 2008 in support of the revenue's case that the assessee having participated in the assessment proceedings without raising the issue of non-issuance of notice under section 143(2), he is precluded from taking any objection now before the Tribunal about the non-issuance of notice under section 143(2). The provisions of section 292BB relied upon by the Ld. D.R. are reproduced here under: 292BB: Notice deemed to be valid in certain circumstances Where an assessee has appeared in any proceeding or cooperative 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. Provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if a notice under section 143(2) has not been issued, the Assessing Officer cannot claim the benefit under section 29288 of the Act and in the absence of notice under section 143(2), proceedings of assessment initiated, conducted and completed for the assessment year 2009-10 will have to fail. 8. Keeping in view the legal position emanating from the various judicial pronouncements discussed above and, having regard to the facts of the present case, I find merit in the additional ground No. 2 raised by the assessee and allow the same by holding that the assessment made by I.T.A. No. 526/KOL/2017 17 Assessment year: 2008-2009 the Assessing Officer under section 143(3)/147 without issuance of the statutory notice under section 143(2) is bad in law and the same is liable to be cancelled. I order accordingly. 6.1.8 The Hon'ble Kerala High Court in the case of M/s. Travancore Diagnostics P. Ltd. Vs. ACIT has held that: 28. The issue that, however, engages out attention more than the other issues is the contention of the learned counsel for the appellant that before making an assessment under Section 143(3) read with Section 147 of the Act, they ought to have been giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment for the A.Y. 2009-10 is posted for hearing at my office at Kollam on 19-12-12 at 3.30 p.m. You are requested to appear before me on the date of hearing either in person or through an Authorized Representative. Failure on your part, the assessment will be finalized on the basis of material available on record. Yours faithfully, Sd/- (V. VINODKUMAR) Asst. Commissioner of Income-tax Circle-1, Kollam. From a reading of this notice, we believe that the submission that this may be treated as one issued under Section 143(2) of the Act is a contention bordering on brinkmanship by the Revenue and not one with real conviction. The order sheet very clearly shows that this is a notice that had been issued as a posting notice and nothing else. The above extracted notice ineffably refer to a notice under Section 143(2) dated 11.01.2012. However, the learned counsel for the Revenue took a defence that it was only a typographical error and in fact) refers to Section 148 notice that was issued on 11.01.2012. In any event of the matter, the fact that the above extracted notice can no way qualify itself to be a notice under Section 143(2) becomes obvious from the way S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeding or cooperated 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 proceedings 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: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment. This section was introduced by the Finance Act, 2008 with effect from 01.04.2008. This section incorporates the principle of estoppel. It stipulates that the assessee, who has appeared in a proceeding and has co-operated in an enquiry relating to the assessment or re-assessment, shall be deemed to be served with the notice, which was required to be served and that he would, thereafter, be precluded from objecting that notice was not served upon him, or that it was served upon him in an improper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings under Section 143 for the assessment year 2009-10. However, when the statute makes it imperative that notice under Section 143(2) is to be issued, the omission or failure would then hit at the root of the jurisdiction applying the principles enunciated in Anisminic Ltd. v. Foreign Compensation Commission [1969] 2 AC 147, which has been approved by the Hon'ble Supreme Court in several judgments. 33. The extended question then is whether even if the assessee is deemed to have participated in the proceedings under Section 143, even without the Assessing Officer having issued the mandatory notice, would the Revenue be entitled to the benefit provided under Section 292BB of the Act. Section 292BB creates an estoppel against the assessee in claiming that no notice has been served on him, if he has participated in the proceedings. However, the said section does not in any manner grant any privilege to the Assessing Officer in dispensing with the issuance of a notice under Section 143(2) Of the Act. Since the jurisdiction 'under Section 143 is founded on the issuance of a notice under Section 143(2), the assessing officer could have assumed jurisdiction only after issui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2009-10 when the same was issued for the year 2010-11. The order sheet, Annexure-A2 annexed along with the papers in ITA 221/2015, shows that the Assessing Officer was aware of the need for issuance of the said notice as early as in April 2012. The only reason for not issuing a Section 143(2) notice has been recorded by him in the order sheet as it is not possible to generate notice under Section 143(2) through an AST, since the assessee has not filed the return, electronically . The order sheet further shows that the assessee was again requested to file their return in response to Section 148 electronically. This conduct of the Assessing Officer is rather surprising and it defies logic, since the assessee cannot be forced and coerced to file their return electronically so as to then enable the Assessing Officer to issue a notice under Section 143(2) of the Act. This is more so because even in the absence of such an electronic return for the year 2010-11, the Assessing Officer had in fact issued the mandatory notice for that year on 11.01.2012. It is beyond comprehension that even though the Assessing Officer had time till 30.09.2011 to issue notice under Section 143(2) and even ..... X X X X Extracts X X X X X X X X Extracts X X X X
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