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2019 (7) TMI 1960 - AT - Income TaxValidity of reopening of assessment u/s 147 - as argued notice u/s 143(2) of the Act was issued beyond the prescribed time - Whether it is compulsory to make an application in writing to invoke the provisions of rule 27 of ITAT rules? - HELD THAT - We note that the dispute regarding the non-issuance of notice under section 143(2) of the Act was very much in the notice of the Ld. DR as evident from the order sheet entries maintained by the registry office of the ITAT who sought times to revert on the issue raised under rule 27 of ITAT Rules on the reasoning that he will take the report from the office of the AO. Therefore, there remains no ambiguity that the affected party was duly given the opportunity - we are of the view the issue raised under rule 27 of ITAT rules was very much in the knowledge of the Ld. DR. As such the case was fixed for hearing on several occasions as part heard, meaning thereby the Ld. DR was very familiar with the issue as discussed above. We also note that the assessee has also made an application under rule 27 of ITAT rules vide letter dated 13-03-2019. The relevant extract of the application has already been extracted in the preceding paragraph. The above application was also supplied to the Ld. DR as well and the matter was heard up to 30th April 2019. Therefore it is clear that the other party was well-informed about the invocation of the issue under the rule 27 of ITAT Rules. Therefore we conclude that the Ld. AR has rightly invoked the provisions of rule 27 of ITAT rules. Non-adjudication of the issue by CIT - Notice issued u/s 143(2) was time-barred - whether the non-adjudication of the issue raised by the assessee before the Ld. CIT (A) amounts to deemed rejection the ground of appeal of the assessee? - HELD THAT - CIT (A) decided the technical issue in favor of the assessee on other reasons except for the issue on hand, i.e., nonissuance of the statutory notice. Thus the question arises whether the assessee was aggrieved because of non-adjudication of the ground of appeal by the Ld. CIT(A). The answer is certainly in affirmative. But the assessee chose not to appeal as it succeeded on other reasons/ contentions raised before the ld. CIT(A). Accordingly, the Revenue filed an appeal before us on those points which were decided by the Ld. CIT (A) in favor of the assessee. Now the controversy arises whether the assessee can raise the issue not decided by the Ld.CIT (A) under rule 27 of ITAT rules before us. In our considered view, the assessee was very much entitled to raise the issue under rule 27 of ITAT Rules which was not decided by the Ld. CIT (A) as the point of contention of the assessee relates to the same issue raised by the Revenue. Non-issuance of notice u/s 143(2) - We conclude that there was not issued the statutory notice under section 143(2) of the Act within the prescribed time. Thus in the absence of the statutory notice, the assessment framed under section 143(3)/147 of the Act is not sustainable. Hence the ground raised by the assessee in the application under rule 27 is allowed. Reopening based on revenue audit objection - CIT(A) has passed a speaking order, which is self-explanatory and reproduced herein above. Thus,we are in agreement with the finding of the ld. CIT-A that the reopening of the assessment under section 147 of Act based on revenue audit objection is not permissible. Therefore we concur with the finding of the learned CIT(A) after placing the reliance on the judgment in the case of CIT Vs. K.Y. Pilliah And Sons 1966 (10) TMI 35 - SUPREME COURT - Decided against revenue.
Issues Involved:
1. Validity of the notice under section 148 of the Income Tax Act, 1961. 2. Reference to the Transfer Pricing Officer (TPO) and assessment order's limitation. 3. Invocation of Rule 27 of the ITAT Rules by the assessee. 4. Issuance of notice under section 143(2) within the prescribed time. 5. Application of section 292BB of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Validity of the Notice under Section 148 of the Income Tax Act, 1961: The Revenue contended that the Commissioner of Income Tax (Appeals) [CIT(A)] erred in holding the notice under section 148 as invalid and quashing the assessment order. The CIT(A) found that the issues mentioned in the reasons recorded by the Assessing Officer (AO) had already been examined during the original assessment proceedings under section 143(3). The CIT(A) concluded that the reassessment was based on a change of opinion, which is not permissible under the law. The CIT(A) also noted that the AO had no fresh material to justify the reopening of the assessment, as the reasons were based on the perusal of existing records and audit memos, which do not constitute new information. 2. Reference to the Transfer Pricing Officer (TPO) and Assessment Order's Limitation: The CIT(A) found that the AO made a reference to the TPO immediately after issuing the notice under section 148, even before the reassessment proceedings effectively commenced. The CIT(A) held that the AO had no authority to make such a reference as the issue of international transactions was not part of the reasons recorded for reopening the assessment. Consequently, the CIT(A) concluded that the assessment order was time-barred as it was not completed within the prescribed time limit. 3. Invocation of Rule 27 of the ITAT Rules by the Assessee: The assessee invoked Rule 27 of the ITAT Rules, challenging the validity of the reassessment on the basis that the notice under section 143(2) was issued beyond the prescribed time. The Tribunal noted that Rule 27 allows the respondent to support the order appealed against on any ground decided against them. The Tribunal concluded that the non-adjudication of the issue by the CIT(A) is deemed as decided against the assessee, thus allowing the assessee to raise the issue under Rule 27. 4. Issuance of Notice under Section 143(2) within the Prescribed Time: The Tribunal examined whether the statutory notice under section 143(2) was issued within the prescribed time. The facts revealed that the notice under section 143(2) was issued on 26/11/2008, whereas the return was filed on 26/04/2007, making the notice time-barred. The Tribunal held that the assessment framed under section 147/143(3) is not sustainable in the absence of a valid notice under section 143(2). 5. Application of Section 292BB of the Income Tax Act, 1961: The Tribunal addressed whether section 292BB, which pertains to the validity of notices in certain circumstances, applies to the present case. The Tribunal noted that the assessee had objected to the validity of the notice under section 143(2) during the assessment proceedings. Consequently, the provisions of section 292BB do not apply, as the objection was raised in a timely manner. Conclusion: The Tribunal allowed the ground raised by the assessee under Rule 27 of the ITAT Rules, holding that the assessment framed under section 147/143(3) was invalid due to the time-barred notice under section 143(2). The Tribunal also dismissed the Revenue's appeal, upholding the CIT(A)'s decision to quash the reassessment proceedings and the assessment order.
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