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TMI Blog2025 (5) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... e as under: 1. Without prejudice to addition deleted by the Ld. CIT(A) on merits, the reassessment order passed by the AO is illegal and void ab-initio inasmuch as notice u/s 143(2) was not issued by AO within prescribed time. The reassessment order being illegal deserves to be quashed. 2. The cross objector reserves the right to add, amend or alter any of the ground/s of cross objection. 4. The brief facts of the case are that "Smt. Peyusha Shukla", the assessee is an individual, has filed her Return of Income (ROI) for the AY 2015-16, electronically on 28.12.2015, declaring total income of Rs. 36,64,280/-. During the year under consideration, the assessee had derived income from salary, house property and capital gain. Subsequently, the survey was conducted in the case of M/s Green Wood Four Seasons Pvt. Ltd. (GWFSPL) on 01.05.2017. During the course of survey and the post survey proceedings, the statement of Smt. Peyusha Shukla, who happen to be the Managing Director of the company "GWFSPL" was recorded u/s 131 of the Income Tax Act on 01.05.2017 and 16.05.2017. On verification, it was revealed that Smt Peyusha Shukla, the assessee had claimed a deduction u/s 54F of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the capital gain was accrued to the assessee. Ld. AO further discussed the provisions of section 54 and 54F and after deliberations have concluded the assessment by making the addition of Rs. 3,05,19,169/- in the hands of assessee for the AY 2015-16. 6. Aggrieved with the aforesaid addition made by the Ld. AO, assessee preferred an appeal before the Ld. CIT(A), wherein the contention of assessee qua the addition made by the Ld. AO were found acceptable, therefore, the addition made by Ld. AO on account of denial of claim u/s 54F has been vacated by Ld. CIT(A). The relevant observations of Ld. CIT(A) while vacating the addition are culled out here under for the sake of clarity and completeness of facts: 5.3.3 I have perused the assessment order as well as above submission of the appellant. During the course of assessment proceedings, the assessee in its reply dated 23.03.2022 submitted the building construction permission certificate along with layout plan, land use conversion certificate along with other documents in support other claim that the said building (Van Awas) was being constructed by the assessee for residential purpose only (and according to the layout plan subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s very clear on this, that in case the residential house, on which the deduction under section 54F is claimed, is transferred within the stipulated period, then in the year it is transferred the taxability of the earlier capital gain claimed will arise. Hence where there is a clear provision in the Act, there is no reason for Assessing Officer to doubt the intention of the assessee and burden her with the tax liability which she has already discharged in financial year 2017-18. 5. The Assessing Officer has given Google images in the assessment order. The appellant contended that if an assessee has earned capital gain of Rs. 100 and the same has already been spent in purchase of land for the house and in construction of the house, the law clearly confirms that the completion of the house can happen over a period of three years from the date of sale of original asset. The AO has not given any contrary findings regarding completion of construction. The assessee has submitted that she has followed all the provisions of section 54F and has accordingly claimed the deduction. The house has been completed well within the 3 years period stipulated in the section 54F. The assessee has offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me. 5.3.7 Further, it is also found from the perusal of post survey statement of the assessee dated 16.05.2017that she has honoured the disclosure made during survey in the case of M/s Green Wood Four Seasons Pvt. Ltd. 5.3.8 In the light of the above, it is clear that, the appellant has duly submitted all the evidential documents in order to prove the genuineness of the claim u/s 54F of the Act. Hence, after perusal of the submission made and taking into account the entire conspectus of this case including the various judicial pronouncements, I see no reason to uphold with the findings of the assessing officer regarding addition on account of denial of claim u/s 54F of Rs. 3,95,19,169/-. Hence, ground of appealno.2 on merit is Allowed. 7. As relief is granted by the Ld. CIT(A) to the assessee by vacating the addition of Rs. 3,05,19,169/- made by the Ld. AO, on account of Capital Gain by refusing the claim of deduction u/s 54F of the Act, aggrieved thereby, the revenue preferred an appeal before us, which is under consideration in the present case. 8. To adjudicate the present matter, first we shall be taking up the legal issue raised in cross objection filed by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income-tax (Appeals), the additions made under section 68 of the Income-tax Act, 1961 should be deleted or set aside." 15. We may now revert back to Section 158 BC(b) which is the material provision which requires our consideration. Section 158 BC(b) provides for enquiry and assessment. The said provision reads "that the assessing officer shall proceed to determine the undisclosed income of the Block period in the manner laid down in Section 158 BB and the provisions of Section 142, sub-section (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be, apply." An analysis of this 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 asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, for the determination of undisclosed income for a block period under the provisions of Section 158 BC, the provisions of Section 142 and sub-sections (2) and (3) of Section 143 are applicable and no assessment could be made without issuing notice under Section 143(2) of the Act. However, it is contended by Sri Shekhar, learned counsel for the department that in view of the expression "So far as may be" in Section 153 BC(b), the issue of notice is not mandatory but optional and are to be applied to the extent practicable. In support of that contention, the learned counsel has relied 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 couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Although we have quashed the assessment for want of valid assumption of jurisdiction by the A.O. but for the sake of completeness, we shall now deal with the claim of the Ld. AR that the assessment order passed u/s. 147 r.w.s. 143(3) of the Act dated 28.10.2016 in absence of a valid notice issued u/s. 143(2) of the Act was even otherwise liable to be quashed. 23. As observed herein above, the A.O. had framed the assessment order u/s.147 r.w.s. 143(3) of the Act dated 28.10.2016 on the basis of notice u/s. 143(2) of the Act dated 13.10.2016. Admittedly, the notice u/s.143(2) of the Act could have been issued to the assessee by 30.09.2016. As observed by us herein above, the Ld. DR, on being confronted with the aforesaid claim of the assessee's counsel, could not rebut the same. As the impugned assessment in the case of the assessee had been framed in the absence of any valid notice u/s.143(2) of the Act, which is the foundation for passing a valid assessment order, we find substance in the claim of the Ld. AR that the impugned order passed by the A.O u/s. 147 r.w.s. 143(3) of the Act dated 28.10.2016 could not be sustained on the said count itself and was liable to be struck d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of 86[three] months from the end of the financial year in which the return is furnished.( 86. Sub. for "six" by the Act No. 13 of 2021, w.e.f. 1-4-2021.) Section 148 148. [(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, 7[* * *] 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:] [Provided that in a case- (a) where a return has been furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een furnished on or after the 1st day of October, 2005 in response to a notice served under this section." In view of the said explanation, the issuance of notice u/s 143(2) which is qua the returns filed u/s 139 of the Act shall apply in cases where the returns are filed u/s 148 also, as going by the provisions of section 148, it is clarified that, the provisions of the Act shall, so far as may be, apply accordingly as if such return (u/s 148 r.w.s. 139) were a return required to be furnished under section 139. 16. Accordingly, in the present case which pertains to AY 2015-16, for issuance of notice u/s 143(2), the time limitation as provided proviso to sub-clause (ii) of section 143(2) shall be applied, which have come into existence effective from 01.04.2021, reads as under: "Provided that no notice under this sub-section shall be served on the assessee after the expiry of [three] months from the end of the financial year in which the return is furnished." 17. Adverting the facts of present case, the Return of Income in response to notice u/s 148 was filed by the assessee on 31.03.2021, and the notice u/s 143(2) was issued on 20.11.2021, which in accordance with the applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully following the principle of law laid down by Hon'ble Apex Court, in the Judgments referred to supra, which is followed by ITAT, Raipur in the case of ACIT Vs. Akshay Lodha (supra), further supported by the judgment of Hon'ble Madras HC in the case of Amec Foster Wheeler Iberia SLU- India Project Office Vs. DCIT (supra), in absence of any plausible explanation or contradictory material or decision to dislodge the aforesaid view, we find substance in the contention of the Ld. AR in the cross objection that in absence of a valid notice u/s 143(2), which was not issued within the prescribed time limit for the purpose of making the assessment is a violation of mandatory provisions of law, therefore, the reassessment impugned order passed u/s 147 r.w.s. 144B of the Act dated 30.03.2022, dehors a valid notice u/s 143(2) is a nullity and liable to be quashed. 19. Considering the aforesaid facts, circumstances and observations, the first ground of the cross objection filed by the assessee is allowed and the impugned assessment order stands quashed. 20. As the impugned reassessment order u/s 147 r.w.s. 144B dated 30.03.2022 is quashed by us in terms of our aforesaid observations, there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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