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TMI Blog2014 (10) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... based on the invalid assessment orders have not been addressed to - there is always a requirement of issuing of a notice u/s 143(2) of the Act in a case of an assessment u/s 147 of the Act - Relaxation has been given for issuance of such a notice where a notice u/s 148 was issued between 1.10.1991 to 30.9.2005 - notice issued u/s 148 of the Act on or after 1.10.2005; a notice u/s 143(2) has to be issued within the time stipulated in 143(2) of the Act – where Asstt. Has been framed without issuance of notice u/s. 143(2), Asstt. is invalid, Sec 292BB is not attracted in such cases. - Decided in favour of assessee. - ITA Nos. 1809, 1504, 1505 & 1506 /Del/ 2013, C.O. Nos.122, 109, 107 & 108 /Del/2013 - - - Dated:- 26-9-2014 - Shri George George K. And Shri T. S. Kapoor,JJ. For the Appellant : Shri Ramesh Chandra, CIT D.R. And Shri Rakesh Kumar, Sr. D. R. For the Respondent : Shri Raj Kumar Gupta Shri Sumit Goyal, C.A. ORDER Per Bench 1. These four appeals at the instance of the Revenue as well as the identical number of Cross Objections of the assessee firm are directed against the appellate orders of the CIT (A)-XXVI, Delhi dated 31.12.2012 for the AYs 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. After due consideration of the assessee s contentions put-forth during the course of reassessment proceedings for the AY 2005-06 and for the detailed reasons recorded therein, the AO had added a sum of ₹ 7.05 lakhs to the total income of the assessee on account of claiming wrong deduction. For similar reasons, additions were also made for the AYs 2006-07, 2007-08 and 2008-09 under re-assessment proceedings u/s 147 of the Act. 4.1. Aggrieved, the assessee firm took up the issue, among others, before the CIT (A) for all the AYs under dispute. After taking into account the assessee s elaborate submissions and for havingscrutinised the evidences produced, the CIT (A) had deleted the additions made by the AO for all the assessment years under dispute. The relevant portion of the findings of the CIT (A) for the AY 2005-06 is extracted, for ready reference, as under: 15 .. (On page 14) The AO has not pointed out any discrepancy in the evidence filed by the appellant. He also did not reject books of accounts. These documents show that the purchases were evidence by proper purchase vouchers. These purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional ground deserves to be admitted: National Thermal Power Company Ltd 229 ITR 383 (Del) Gedore Tools Pvt. Ltd 238 ITR 268 (DEL) 6.1. Since the additional ground raised by the assessee firm, according to us, being a legal issue which goes to the root of the matter, we were of the view that it was paramount to take up this issue for adjudication before addressing the other issues raised by the rival parties in their respective appeals/ cross objections [supra]. 6.2. The learned DR, on his part, by extensively quoting theprovisions of s. 253(4) of the Act, argued that the assessee had failed to file a Memorandum of cross objection/additional ground against the any part of the CIT (A) within the time specifiedin sub-section (3) and, therefore, it cannot be acted upon now. He had, further, contended that whether a notice u/s 143(2) of the Act is issued or not was only a question of fact and not a question of law. It was also pointed out by the learned DR that the alleged non-issuance of a Notice u/s 143(2) of the Act was neither raised before the assessing officer or nor before the first appellate authority and, therefore, it was argued, a new case (issue) cannot now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alidity or service of notice has not at all been questioned ill any manner. 03. From the above facts it is clear that since the assessee did not challenge at all the service of notice till the conclusion of the assessment proceedings by virtue of provisions of section 292BB the assessee is estopped from challenging the re-assessment proceedings on account of non-service or improper service or nonservice in time of notice u/s 143(2) of the Act. 04. From the above, it is clear that reliance placed by the Cc-Object on Delhi High Court judgment on Alpine Electronics Asia Pvt. Ltd. (341 ITR 247 Del) is misplaced and it on the contrary is in favour of Revenue. On this ground itself COs filed by the assessee Silverline need to be dismissed with costs. 6.4. On the other hand, the learned AR submitted that during the course of reassessment proceedings, no notice u/s 143(2) of the Act was issued. To strengthen his argument, he had cited the re-assessment order dated 28.12.2011 [Para 3 for the AY 2005-06] and also produced a copy of the order-sheet obtained from the assessing authority [source: P 88 of PB-I]. According to the learned AR, the assessing authority had admitted also in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ma Builders Pvt. Ltd (Tax Appl.No.435/2011 order dt. 30.8.2012) 6.7. The learned D.R., in reply filed a written submission dated 22.09.2014. The gist of same read as follows:- A Note on applicability of decisions/judgments relied by the assessee 1. The assessee has basically placed reliance on the following judgments/decisions:- (i) Manish Gupta 259 CTR 57 All HC: (ii) Parikalpana Estate 79 DTR 246) P H HC: (iii) Kuber Tobacco Products P Ltd. Delhi HC 06.10.2010: 2.1 Before dealing with the applicability of the aforesaid judgments which hover around the provisions of section 143(2), 292BB in the context of issuance of the notice and service thereof etc. It is pointed out that all these provisions as contained in the Income Tax Act or the Income Tax Rules talk about the service of the notice alone obviously become upon service issuance is implicit. That is why, the law also as contained u/s 143(2) etc. does not provide for the factum of issuance of the notice to be proved but just talk about the service of the notice. Further, law does not provide that notice intended to be served should necessarily be issued in writing or in a particular form (format). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.04.2008. 2.6 As mentioned in this particular case the procedure of reassessment started with the service of notice u/s 148 (served on 28.03.2011) by which time amendment on the statute has already become effective. Accordingly, the procedural provisions of section 292BB which provide that there cannot be challenges like that notice has not been served; or that notice has not been served in time; or that notice has been served upon him in an improper manner once it is not agitated in the proceedings, will disable the assessee from impugning the notice u/s 143(2) in any manner that too at a belated stage before the Tribunal because of its participation in the proceedings without challenge as mandated in the laws. 2.7. In short, it is pointed out that law as contained u/s 143(2) etc. does not provide that notice intended to be issued has to be necessarily in writing or in a particular proforma. Participation in the proceedings is undisputedly the best evidence to prove issuance or service of the notice that is why section 292BB taking note of this crucial aspect post participation has disabled the participants from challenging the frivolous grounds of non service of the notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der consideration before the High Court. When it is so clearly the observations of the High Court We hold that section 292BB is applicable to AY 08-09 and later years are just obiter dictum. Even without these words the judgment of the High Court would have remained the same which further proves that above were just by the way remarks and not the ratio which is a must for applying any High Court judgment. In this context, attention is invited to the Supreme Court judgment in Rekha Mukherjee v. Ashok Kumar Das {(2005) 3 SCC 427, 440-41 (para 29)} where it was held that the Court is bound by the ratio decidendi and not by mere observation. Very clearly thus judgment of the High Court does not help the appellant. 5.2 In so far as the Allahabad High Court judgment in the case of Manish Gupta {259 CTR 57 All HC} is concerned it is submitted that it proceded on the assumption that law mandates issuance of the notice whereas as a matter of fact (demonstrated above) the law does not lay emphasis on issuance at all. 5.3 Likewise the Punjab and High Court judgment in Parikalpana E-state 79 DTR 246) also proceeds on the assumption that law mandates issuance of the notice whereas (as dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Therefore, the learned DR s objection that even a pure question of law cannot be taken up in a cross objection is without any merit. It has been observed by the Hon ble Court as under: Sec. 253(4) clearly envisages the filing of cross-objections both by the assessee as well as by the AO against the order in appeal. Upon filing of such cross-objections it has been made obligatory upon the Tribunal to decide such memorandum of crossobjections as if it was an appeal. There is absolutely no ambiguity in the provision made under sub-s. (4). Rule 22 of the ITAT Rules makes it further clear that memorandum of cross-objections which has been so filed under sub-s. (4) of s. 253 shall be registered and numbered as if it was an appeal. These two provisions stand on a better footing than the provisions made in O. 41, r. 22 of the CPC which deals with filing of cross-objections. Whereas there is no provision in the CPC to number the cross-objection as an appeal, such a provision has been made by the rule-making authority in the ITAT Rules, 1963. A combined reading of s. 253(4) and r. 22 makes it abundantly clear that any party aggrieved against the order of the appellate authority can fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded its findings as under: 6. (On Page 13) ..Apropos, the issue of notice u/s 143(2) from the assessment order and the proceedings sheets filed by the assessee, it is clear that no notice u/s 143(2) was either issued or served on the assessee. In view of these facts, respectfully following Hon ble Delhi High Court judgment in the case of Alpine Electronics Asia Pte Ltd (supra) and V.R. Educational Trust (supra), we hold the reassessment invalid for not serving mandatory notice u/s 143(2) on the assessee. The ressessment is quashed accordingly. 7.4. The Hon ble Allahabad High Court in Civil Misc. Writ Petition No.1071 of 2005 [judgment dated 25.1.2006] had held that the Tribunal was not justified in not entertaining the additional ground raised by the assessee. The additional ground raised by the assessee was whether the assessment order is invalid on account of non-service of a notice u/s 143(2) within the stipulated time? It was held by the Hon ble Court as under: Having heard learned Counsel for the parties, in my view, order of Tribunal is not sustainable. There is no dispute that before passing the assessment order under section 143(3) of the Act, issuance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to serve notice under s. 143(2) before passing of the assessment order for returns furnished on or before 1st Oct., 2005. In respect of returns filed pursuant to notice under s. 148 after 1st Oct., 2005, it is mandatory to serve notice under s. 143(2), within the stipulated time limit. 7.6. While dealing with the above case, the Hon ble Delhi High Court had referred to the judgment of the Hon ble Supreme Court in the case of the Asst. CIT v. Hotel Blue moon (2010) 321 ITR362 (SC). In the said case, it has been held by the Hon ble Supreme Court that: ..if an assessment is to be completed under s. 143(3) r/w s. 158BC, notice under s. 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under s. 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under s. 143(2) cannot be dispensed with. The other important feature that requires to be noticed is that the s. 158BC (b) specifically refers to some of the provisions of the Act which requires to be followed by the AO while completing the block assessments under Chapter XI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Hotel Bluemoon (supra) has been followed in the following cases: (i) In the case of Virendra Dev Dixit vs. ACIT reported in (2010) 233 CTR (All) referring to s. 143(2), 158BC, 292B, the Hon ble Court had held that The service of notice on the assessee under s. 143(2) within the prescribed period of time is a pre-requisite for framing the block assessment under Chapter XIV-B. It is mandatory. Non-issuance of notice is not a mere procedural irregularity and the same is not curable. For the purpose of Chapter XIV-B for the determination of undisclosed income for a block period under the provisions of s. 158BC the provisions of s. 142 and sub-ss. (2) and (3) of s. 143 are applicable and no assessment could be made without issuing notice under s. 143(2) within the time specified. Where the AO in repudiation of the return filed under s. 158BC (a) proceeds to make an enquiry, he has necessarily to follow the provisions of s. 142 and subss. (2) and (3) of s. 143. Admittedly, in the present case, the notice under s. 143(2) has not been issued. The period of limitation has already expired and, therefore, such notice cannot be issued. Thus, the remand of the case to the AO to cure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment under the provisions of Section 1583C[sic. 158BC], the provisions of Section 142 and sub-Section (1) (3) of sub-Section 143 were applicable, No assessments could be made without issuance of notice u/s. 143(2) of the Act where the AO in repudiation of the return filed u/s. 158, proceeded to make an enquiry he had to necessarily follow the provisions of Section 142, sub-Sections (2) and (3) of Section 143. Thus if there was violation of the mandatory provision then the assessment order passed was illegal and liable to be set aside. Assistant Commissioner of Income-Tax and Another vs. Hotel Blue Moon reported in (2010) 321 ITR 362(SC), relied on (para3 4). 7.8. Further, the provisions of s. 292BB of the Act are not applicable in the case of non-issuance of a notice u/s 143(2) of the Act. For this proposition, we refer to the (i) judgment of the Hon ble Gujarat High Court in the case of CIT v. K.M.Ravji [Tax Appeal No.771/2010 dated 18.7.2011 wherein the Hon ble High Court has held that Section 292 BB does not save non-issuance of Notice before the expiry of limitation period. In our view, section 292 BB can cure only a defect in service, service within time, or improper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said finding to be perverse. In absence of notice being served, the AO had no jurisdiction to make assessment. Absence of notice cannot be held to be curable under s. 292BB of the Act. iv) Naval Kishore Sons Jewellers Vs. CIT 79 DTR 241(All) When the notice u/s 143(2) was not issued question of service, or improper service is no relevant. Therefore, Sec. 292BB is not attracted. v) CIT Vs. Parikalpana Estate Development (P) Ltd. 79 DTR 246 (All.) In this case also, it has been held that where Asstt. Has been framed without issuance of notice u/s. 143(2), Asstt. is invalid, Sec 292BB is not attracted in such cases. vi) Manish Prakash Gupta Vs. CIT 68 DTR 112 (All.) CIT Vs. Mukesh Prakash Agarwal 345 ITR 29 (All.) CIT Vs. Biharilal Agarwal 346 ITR 67 (All.) In these cases it has been held that Sec. 292BB is a rule of evidence which validates the notice in certain circumstances. In this case, since, no notice u/s. 143(2) was issued, therefore, the AO did not have the jurisdiction to proceed further and make the Asstt. (vii) The Hon ble ITAT of Agra Bench, in the case of ITO v. Aligarh Auto Centre reported in 152 TTJ (Agr) 767, on an identical issue t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire assessment order. We, therefore, do not find any infirmity in the order of the ld. CIT (A) for interference. (v) The Hon ble Mumbai Bench of the ITAT has, in the case of Sanjeev R Arora v. ACIT [IT (SS)A No.103/Mum/2004 dated 25.7.2012], recorded its findings as under: Even, the irregularity in proper service of notice which can be treated as curable under section 292B of the Income-tax Act is only in the cases where the notice under section 143(2) was issued properly and within the period of limitation and the assessee did not raise any objection regarding the service of the notice during the assessment proceedings and also participated in the assessment proceedings then at a later stage the assessee is precluded from raising such objection. Therefore, the provisions of section 292B are not applicable in the case where the assessing officer has not at all issued notice under section 143 (2) within the period as prescribed. 7.9. Taking into account the facts and circumstances of the issue as deliberated upon in the fore-going paragraphs and also in view of the judicial pronouncements (supra), we are of the view that the re-assessments made for the assessment years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice u/s 148 was issued between 1.10.1991 to 30.9.2005. In other words, notice issued u/s 148 of the Act on or after 1.10.2005; a notice u/s 143(2) has to be issued within the time stipulated in 143(2) of the Act. This aspect of law and the interpretation relating thereto has been dealt with by the Hon ble Delhi High Court in the case of Alpine Electronics Asia Pte Ltd (supra). For ready reference, the relevant portion of the Hon ble Court s ruling is extracted verbatim as under: 24. Sec. 143(2) is applicable to proceedings under ss. 147/148 of the Act. Proviso to s. 148 of the Act protects and grants liberty to the Revenue to serve notice under s. 143(2) of the Act before passing of the assessment order for returns furnished on or before 1st Oct., 2005. In respect of returns filed pursuant to notice under s. 148 of the Act after 1st Oct., 2005, it is mandatory to serve notice under s. 143(2) of the Act, within the stipulated time limit . 7.12. Further, we notice that there is a judgment of Hon ble jurisdictional High Court in favour of the revenue, namely, CIT v. Madhya Bharat Energy Corporation Ltd reported in (2011) 337 ITR 389 (Del) which states that the non issuance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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