2017 (2) TMI 596 - AT - Income Tax

Validity of reopening of assessment - whether the notice under section 143(2) was issued before completion of the assessment pursuant to issue of notice under section 148 of the Act? - Held that - The decision in the case of V. R. A. Cotton Mills P. Ltd. v. Union of India 2011 (9) TMI 611 - PUNJAB AND HARYANA HIGH COURT is a latest one and considered all the precedents on the issue and therefore, in our considered opinion, this decision has no more persuasive value and reasoned one and the ratio of the decision should be applied to the instant case also. Accordingly, we hold that the jurisdiction of the Assessing Officer is not affected for non-issue of notice or non-service of notice, if otherwise reasonable opportunity of heard was given to the assessee-company. Further, the law applicable to service of notice is equally applicable to the issue of notice in view of section 27 of the General Clauses Act, 1897, and the decision in the case of Banarsi Debi v. ITO reported in 1964 (3) TMI 11 - SUPREME Court and the decision in the case of V. R. A. Cotton Mills (P) Ltd. v. Union of India 2011 (9) TMI 611 - PUNJAB AND HARYANA HIGH COURT . We hold that there was proper service of notice after taking into consideration the provisions of section 292BB of the Act. In view of the legal position narrated above, the same legal position is to be applied even for issuance of notice under section 143(2). Accordingly, we hold that there is a valid issue of notice and service under section 143(2) as well as service of notice on the assessee-company. - Decided in favour of revenue Maintainability of cross objections - Held that - Legislature has chosen to use the expression against such order or any part thereof which means that cross-objections can be filed with reference to the same ground of appeal which is adversely decided against the respondent in appeal. If, there has been no adjudication on any of the grounds of appeal raised before the Commissioner Income-tax (Appeals), the cross-objections cannot be filed on such a ground though raised but not decided specifically. If the assessee is aggrieved by non-adjudication per se, the assessee can come before the Tribunal only by way of an appeal only. Thus, having regard to plain provisions of the statute, in the absence of non-adjudication of the ground by the Commissioner Income-tax (Appeals), the assessee can come only by way of appeal before the Tribunal, not by way of cross-objections. In the present case, the Commissioner Income-tax (Appeals) had not adjudicated the grounds relating to validity of the reassessment proceedings for non-furnishing of reasons and merits of the additions involved. We hold that the cross-objections are not maintainable and dismissed as such.

Summary

Issues Involved:
1. Validity of reassessment proceedings due to non-issuance of notice under section 143(2).
2. Applicability of section 292BB regarding the preclusion of objections on non-service of notice.
3. Participation of the assessee in assessment proceedings and its implications.
4. Validity of cross-objections filed by the assessee.

Issue-Wise Analysis:

1. Validity of Reassessment Proceedings Due to Non-Issuance of Notice under Section 143(2):
The Commissioner of Income-tax (Appeals) quashed the reassessment proceedings on the ground that the Assessing Officer had not issued a notice under section 143(2) within the prescribed time. The Commissioner relied on decisions such as CIT v. Lunar Diamonds Ltd. [2006] 281 ITR 1 (Delhi), Asst. CIT v. Hotel Blue Moon [2010] 321 ITR 362 (SC), and CIT v. CPR Capital Services Ltd. [2011] 330 ITR 43 (Delhi). It was concluded that omission to issue notice under section 143(2) is not a procedural irregularity but a jurisdictional defect, rendering the assessment order void.

2. Applicability of Section 292BB Regarding the Preclusion of Objections on Non-Service of Notice:
The Revenue argued that the assessee, having participated in the assessment proceedings without raising any objection, is precluded from raising such objections later due to the provisions of section 292BB. The Tribunal noted that section 292BB, inserted by the Finance Act, 2008, precludes the assessee from raising objections regarding non-service of notice if they have participated in the proceedings. The Tribunal held that the case is governed by section 292BB, and mere non-service of notice does not render the assessment order null and void.

3. Participation of the Assessee in Assessment Proceedings and Its Implications:
The Tribunal observed that the assessee had participated in the assessment proceedings and complied with the questionnaire issued under section 142(1). The Tribunal emphasized that participation in the proceedings implies that the notice under section 143(2) was issued. The Tribunal further stated that the burden of proving non-issuance of notice lies on the assessee, which was not discharged. The Tribunal concluded that there was a valid issue and service of notice under section 143(2).

4. Validity of Cross-Objections Filed by the Assessee:
The assessee filed cross-objections challenging the non-adjudication of various grounds by the Commissioner of Income-tax (Appeals). The Tribunal noted that cross-objections can only be filed against an order or part thereof that has been adversely decided. Since the Commissioner of Income-tax (Appeals) had not adjudicated the grounds related to the validity of reassessment proceedings and merits of the additions, the Tribunal held that the cross-objections were not maintainable and dismissed them.

Conclusion:
The Tribunal allowed the appeal filed by the Revenue, holding that the reassessment proceedings were valid as the notice under section 143(2) was issued and served. The Tribunal dismissed the cross-objections filed by the assessee as they were not maintainable due to the non-adjudication of the grounds by the Commissioner of Income-tax (Appeals). The decision emphasized the applicability of section 292BB and the implications of the assessee's participation in the assessment proceedings.