TMI Blog2019 (2) TMI 2058X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 2001-02. 2. The assessee, apart from challenging the various additions made in the assessment order, has challenged the validity of reassessment proceedings. However, the assessee has also filed an additional ground which reads as under:- That having regard to the facts and circumstances of the case, reassessment order framed u/s 147/143(3) is bad in law for want of jurisdiction in as much as notice u/s 143(2) has not been issued and served in accordance with law after the filing of return. 3. The ld. counsel for the assessee, referring to various decisions including the decision of the Hon'ble Supreme Court in the case of NTPC Ltd. vs. CIT reported in 229 ITR 383 (SC), submitted that the above ground is purely a legal ground and goes to the root of the matter and does not require fresh facts to be investigated and therefore, should be admitted. Referring to the information received under RTI Act, the ld. counsel for the assessee submitted that in the instant case, no notice u/s 143(2) of the Act was issued subsequent to filing of the return by the assessee in response to notice u/s 148 of the IT Act. Only notice u/s 142(1) of the Act was issued and served ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arat Energy Corporation Ltd. (supra) and relying on various decisions it has been held that failure by the Assessing Officer to issue a notice to the assessee u/s 143(2) of the Act subsequent to 16th December, 2010 when the assessee made a statement before the Assessing Officer to the effect that the original return filed should be treated as a return pursuant to a notice u/s 148 of the Act is fatal to the order of the reassessment. He accordingly submitted that both the issues raised by the ld. DR i.e., non-admission of the additional ground raised before the Tribunal for the first time challenging the non-issuance of notice u/s 143(2) and the decision in the case of Madhya Bharat Energy Corporation Ltd. (supra) are decided against the Revenue. Therefore, the reassessment order passed by the Assessing Officer without complying with the mandatory requirement of notice being issued by the Assessing Officer to the assessee u/s 143(2) is legally unsustainable. 8. We have considered the rival arguments made by both the sides and perused the orders of the authorities below. We have also considered the various decisions cited before us. It is an admitted fact that in response to the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 an 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 v. Commissioner of Income Tax (supra) is also to the same effect. 13. In Pr. CIT v. Shri Jai Shiv Shankar Traders Pvt. Ltd. (supra), this Court has also discussed the distinction between a failure to 'issue' notice and a ..... 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. v. Commissioner of Income Tax (supra) and the decision of this Court in Gedore Tools (P) Ltd. v. Commissioner of Income Tax (supra). 10. Similarly, so far as the mandatory requirement of notice u/s 143(2) of the Act is concerned, the Hon'ble High Court in the said decision, from para 20 onwards, has observed as under:- 20. The proposal to reopen an assessment under Section 147 of the Act is to be based on reasons to be recorded by the AO. Such reasons have to be communicated to the Assessee. However, merely because the Assessee participates in the proceedings pursuant to such notice under Section 148 of the Act, it does not obviate the mandatory requirement of the AO having to issue to the Assessee a notice under Section 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 Sapthagiri Finance Investments v. Income Tax Officer (supra) where again the Assessee did not file a return pursuan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Delhi High Court, after considering the earlier decision in the case of Madhya Bharat Energy Corporation Ltd. (supra), has held that failure by the Assessing Officer to issue a notice to the assessee u/s 143(2) of the Act after the assessee files the return in response to notice u/s 148 is fatal to the order of reassessment. The relevant observation of the Hon'ble High Court from para 12 onwards read as under:- 8. When this appeal was first listed before this Court on 29 th July, 2015 reliance was placed by Ms Suruchi Aggarwal, learned Senior Standing counsel for the Revenue on the decision of this Court in 'Commissioner of Income Tax v. Madhya Bharat Energy Corporation Ltd. (2011) 337 ITR 389 ) Del which purported to hold that non-issue of notice under Section 143(2) of the Act on an Assessee prior to completion of the reassessment would not be fatal to the reassessment. She also sought to distinguish the decision in ACIT v. Hotel Blue Moon (supra) on the ground that it pertained to a block assessment. 9. Dr Rakesh Gupta, learned counsel appearing for the Assessee, at the outset drew the attention of this Court to an order passed by this Court on 17th Augus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginally filed should be treated as the return filed pursuant to the notice under Section 148 of the Act. 13. In DIT v. Society for Worldwide Interbank Financial Telecommunications (2010) 323 ITR 249 (Del), this Court invalidated an reassessment proceedings after noting that the notice under Section 143(2) of the Act was not issued to the Assessee pursuant to the filing of the return. In other words, it was held mandatory to serve the notice under Section 143(2) of the Act only after the return filed by the Assessee is actually scrutinised by the AO. 14. The interplay of Sections 143 (2) and 148 of the Act formed the subject matter of at least two decisions of the Allahabad High Court. In CIT v. Rajeev Sharma (2011) 336 ITR 678 (All.) it was held that a plain reading of Section 148 of the Act reveals that within the statutory period specified therein, it shall be incumbent to send a notice under Section 143(2) of the Act. It was observed: the provisions contained in sub-Section (2) of Section 143 is mandatory and the legislature in their wisdom by using the word 'reason to believe' had cast a duty on the Assessing Officer to apply mind to the material on record and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to block assessment, the Supreme Court held that the requirement to issue notice under Section 143(2) was mandatory. It was not a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. 17. The Madras High Court held likewise in Sapthagiri Finance Investments v. ITO (2013) 90 DTR 289 (Mad). The facts of that case were that a notice under Section 148 of the Act was issued to the Assessee seeking to reopen the assessment for AY 2000-01. However, the Assessee did not file a return and therefore a notice was issued to it under Section 142 (1) of the Act. Pursuant thereto, the Assessee appeared before the AO and stated that the original return filed should be treated as a return filed in response to the notice under Section 148 of the Act. The High Court observed that if thereafter, the AO found that there 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. It was observed that: Merely because the matter was discussed with the Assessee and the signature is affixed it does not mea ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
