9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (11) TMI 283 - AT - Income TaxRequirement to issue notice u/s 143(2) with a notice u/s 148 - Condition precedent for issuing notice fulfilled or not - Whether notices u/s 143(2) is mandatory in a reopened procedure and whether notices issued prior to the reopening would satisfy the requirement specified u/s 143(2) of the Act Held that - Issue of a notice u/s 143(2) of the Act, is mandatory even in a re-assessment proceeding initiated u/s 148 of the Act has been clearly laid down in ALPINE ELECTRONICS ASIA PTE LTD. Versus DIRECTOR GENERAL OF INCOME TAX & OTHERS 2012 (1) TMI 100 - DELHI HIGH COURT that Section 143(2) was applicable to a proceedings u/s 147/148 also, since proviso to section 148 of the Act, granted certain specific liberties to the revenue, with regard to extension of time for serving such notices - issue of notice u/s 143(2) was procedural in nature - Section 143(2) of the Act, was a mandatory requirement and not a procedural one - a notice u/s 143(2) of the Act has been issued to the assessee, but on the date when such notice was issued viz., 23-09-2010 assessee had not filed any return pursuant to the reopening notice u/s 148 of the Act. Once the original return filed by the assessee was subject to processing u/s 143(1) of the Act, the procedure of assessment pursuant to such a return, in our opinion came to an end, since AO did not issue any notice within the 6 months period mentioned in proviso to section 143(2)(ii) - if the income has been understated or the income has escaped assessment, an AO is having the power to issue notice u/s 148 of the IT Act - Notice u/s 148 of the Act, issued to the assessee required it to file a return within 30 days from the date of service of such notice - any issue of notice prior to that date cannot be treated as a notice on a return filed by the assessee pursuant to a notice u/s 148 of the Act - there was no valid issue of notice u/s 143(2) of the IT Act, and the assessments were done without following the mandatory requirement u/s 143(2) of the IT Act it rendered the subsequent proceedings all invalid - CIT(A) had only adjudicated on a position where there was no service of notices u/s 143(2) of the IT Act thus, the assessment order of the CIT(A) is set aside Decided in favour of assessee.
Issues Involved:
1. Validity of notice under Section 148 and assumption of jurisdiction under Section 147. 2. Non-service of notice under Section 143(2). 3. Taxability of the sum received under the share subscription and shareholder's agreement under Section 28(va). 4. Levy of interest under Section 234B. Issue-wise Detailed Analysis: 1. Validity of Notice under Section 148 and Assumption of Jurisdiction under Section 147: The assessee argued that the conditions precedent for issuing notice under Section 148 and assuming jurisdiction under Section 147 were not satisfied, rendering the order passed by the AO void ab initio and liable to be quashed. The Tribunal noted that the returns were initially processed under Section 143(1) and later reopened under Section 148. The AO issued the notice under Section 148 on 24-12-2009, which was dispatched on 30-12-2009. The Tribunal found that the AO had followed the procedures for reopening the assessment, thus the reopening was valid. 2. Non-service of Notice under Section 143(2): The assessee contended that no notice under Section 143(2) was served, making the assessment order under Section 143(3) read with Section 147 a nullity. The Tribunal observed that the AO had issued notices under Section 143(2) on 23-09-2010, but these were prior to the assessee's request on 05-10-2010 to treat the original returns as filed pursuant to the notice under Section 148. The Tribunal emphasized that the issuance of a valid notice under Section 143(2) is mandatory even in reassessment proceedings initiated under Section 148, as per the Hon'ble Delhi High Court in the case of M/s Alpine Electronics Asia PTE Ltd. The Tribunal concluded that the notices issued prior to the assessee's request were invalid, rendering the subsequent proceedings and assessments null and void. 3. Taxability of Sum Received under Share Subscription and Shareholder's Agreement under Section 28(va): The assessee challenged the AO's action of assessing the sum of Rs. 1.00 Crore received under the share subscription and shareholder's agreement under Section 28(va). The Tribunal did not adjudicate this issue separately as the appeals were allowed on the ground of non-service of notice under Section 143(2), which nullified the entire assessment proceedings. 4. Levy of Interest under Section 234B: The assessee disputed the levy of interest under Section 234B, asserting that it was not liable to pay such interest. Similar to the taxability issue, the Tribunal did not address this issue separately due to the quashing of the assessment on procedural grounds. Conclusion: The Tribunal quashed the assessment orders for the impugned assessment years due to the non-issuance of valid notices under Section 143(2) after the assessee's request to treat the original returns as filed pursuant to the notice under Section 148. Consequently, the appeals of the assessee were allowed, and other grounds were not adjudicated. The order was pronounced in the open Court on 10th October 2014.
|
