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TMI Blog2012 (8) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... n the circumstances of the case the Tribunal was right in holding that the appellant has requested the Assessing Officer to complete the assessment, which amounts to waiver of notice under Section 143(2)? (iv) Whether on the facts and in the circumstances of the case the Tribunal was right in not appreciating that there cannot be any Estoppels against law and as such notice under Section 143(2) has to be issued within the prescribed time limit even assuming that there was waiver of such notice?" 2. The assessee herein is a partnership firm consisting of seven partners engaged in the business of financing. It is seen from the facts projected in the case that the landed property at No.7B/ 7B-1 at Valakarutheeswarar Koil Street, Kanchipuram was purchased by all the seven parties in the individual capacity under three separate sale deeds for an amount of Rs.10,30,000/-. The funds for the purchase of said property was however drawn from the funds of the firm. The property was brought in as additional capital to the firm, for which each partner's current account was credited by Rs.1,08,692/- each as on 31.3.1997. The property was also shown on the asset side of the balance sheet as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g from the transfer was assessable only at the hands of the firm for the assessment year 2000-01. Aggrieved by the same, the assessee went on appeal before the Commissioner of Income Tax (Appeals), who agreed with the Assessing Officer and hence, the dismissed the appeal. The Commissioner of Income Tax (Appeals) pointed out that there was no evidence recorded for transfer of property from the firm to the partners. The protective assessment made at the hands of the individual partners was also cancelled by his order dated 30.12.2004 for the assessment year 1999-2000. Aggrieved by the order of the Commissioner of Income Tax (Appeals), the assessee went on further appeal before the Income Tax Appellate Tribunal, which however dismissed the assessee's appeal. In paragraph 16 of the order, the Tribunal pointed out that the assessee appeared before the Assessing Officer on 18.12.2002 and made a submission regarding the assessability of the capital gains at the hands of the firm. The Assessing Officer for the technical reason treated the original return as the return filed for the notice issued under Section 148. Based on the finding that the assessee had made representation and given its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He further submitted that the Revenue does not dispute the fact that there was no notice issued under Section 143(2) before passing an order of assessment under Section 148 and the notice issued under Section 142(1) could not be treated as notice issued under Section 143(2) of the Act. He further pointed out that the assessee requested the Assessing Officer to treat the original return filed as one filed in response to the notice issued under Section 148. Thus, he submitted that the view of the Tribunal that there was no prayer for treating the original return as return in compliance with notice issued under Section 148 of the Act is incorrect. The view of the Tribunal is totally against the decision of the Supreme Court reported in 321 ITR 362 - ASST. CIT v. HOTEL BLUE MOON, both on points of law as well as on the facts of the present case. 4. As far as the merits of the assessment is concerned, learned counsel for the assessee reiterated the stand as had been taken before Assessing Officer and the Commissioner of Income Tax (Appeals) as well as before the Tribunal. 5. As regards the reasoning of the Tribunal that there was waiver of notice under Section 143(2) of the Act, lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Section 143(2) of the Act as it stood at the relevant point of time before substituting by the Finance Act, 2002 with effect from 1.6.2002, reads as under:- (2) Where a return has been made under Section 139, or in response to a notice under sub section (1) of Section 142, the Assessing Officer shall, if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return" 9. Thus when the return was filed under Section 139 or in response to a notice under Section 142(1), where the Assessing Officer considers it necessary or expedient to ensure that the assessee had not understated the income or had not computed excessive loss or has not under paid the tax in any manner, the Assessing Officer shall serve a notice under Section 143(2) calling upon the assessee to produce evidence on which the assessee made reliance in support of the return. It is not d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th knowledge to waive such right of notice being served on the assessee. The Apex Court pointed out that there can be no waiver unless the person who is said to have waived is fully informed as to his right and with full knowledge of such right, he intentionally abandons it. There is nothing on record to show or one could read from the letter written by the assessee dated 18.12.2002 that the assessee abandoned such right of a notice under Section 143(2) of the Act. In the light of the above, we reject the Tribunal's reasoning. 12. As far as the contention of the Revenue that failure to issue notice under Section 143(2) of the Act is only curable defect is concerned, the decision relied on by the assessee reported in 321 ITR 362 - ASST. CIT v. HOTEL BLUE MOON, also covers the said issue. It is no doubt true that the said decision dealt with the assessment done under Chapter XIV relating to block assessment. The assessee therein raised a contention that the failure to issue notice under Section 143(2) within the prescribed time for the purpose of block assessment could be fatal to the validity of the assessment made under Chapter XIVB of the Income Tax Act, 1961. In other words, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possible. Rejecting the contention of the Revenue that it is not expedient to follow the provisions under Sections 142 and 143 (2) and (3) strictly for the purpose of block assessment, the Apex Court held that in completing the assessment, when the officer repudiates the return filed under Section 158BC(a) proceeds to make an enquiry, he has necessarily to follow the provisions of section 142 and 143 (2) and (3) of the Act. 13. As far as the present case is concerned, the provisions of Section 148 also uses the expression "so far as may be apply accordingly as if such return were a return required to be furnished under Section 139". Thus, understanding this provisions in the background of the decision of the Apex Court, on the facts available, we are of the view that in completing the assessment under Section 148 of the Act, compliance of the procedure laid down under Sections 142 and 143(2) is mandatory. On the admitted fact that beyond notice under Section 142(1), there was no notice issued under Section 143(2), and in the light of the fact that the very basis of the reassessment was the failure on the part of the assessee in not disclosing the capital gains arising on the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X
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