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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 ..... 8-09: 2.1. Similarly, the assessee firm, in its Cross Objections, had also raised more or less identical grounds. For ready reference the grounds raised in the cross objections for the AY 2005-06 are extracted as under: (i) That the appealof the Revenue is non-maintainable on account of low tax effect in view of CBDT Instruction No.3/2011 dt.9.2.2011 (for the AY 2005-06 only); (ii) That under the facts and circumstances, initiation of proceedings u/s 147/148 are illegal, without application of mind, mechanical, without jurisdiction and unsustainable in law as well as on merits; & (iii) That the CIT (A) has been fully justified in law as well as on merits in deleting the addition of Rs. 7,05,600/- for alleged bogus purchases. 3. Since common issues being involved in these appeals/cross objections and they pertain to the same assessee, they were heard together and disposed off by this consolidated order. 4. Briefly stated, the facts of the issues are as under: The assessee firm is engaged in the business of trading in silver and gold jewellery and also in precious/semi-precious stones. The return of income furnished by the assessee for the AY 2005-06 was initially processed u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .85 Cr. Sales are of Rs. 12.73 Cr., the declared GP is @ 19.26% and NP as per P & L is of Rs. 1.94 Cr. These facts and figures, otherwise also do not speak that the appellant would make bogus purchases to the extent of Rs. 7,05,600/- only. The appellant has also filed copy of assessment order, CIT (A) order and the Hon'ble ITAT order of AY 2007-08. In this year also, additions for similar bogus purchases from Jaipur were made amounting to Rs. 2,75,82,141/- and the addition made by the assessing officer was deleted by CIT (A) and further deletion stood confirmed by the Hon'ble ITAT. Under these facts, I am of the view that even on merits the purchases of Rs. 7.05,600/- cannot be held as bogus purchases without bringing any adverse material on record. Therefore, the addition of Rs. 7,05,600/- made by the assessing officer on account of bogus purchases is hereby deleted..........." 5. Aggrieved by the orders of the CIT (A) on the issue for all the AYs under consideration, the Revenue has come up before us with the present appeals. 6. In the meanwhile, during the course of hearing, the assessee firm in its identical applications for admission of additional ground dated 26.8.2013 soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken up in a Cross Objection. 6.3 Further, the learned D.R. has given a short written submission dated 06.08.2014 the content of the same is reproduced below:- "Note on applicability of Delhi High Court judgment in Alpine Electronics Asia P Ltd. (341 ITR 247 Del) in CO No. 122/D/2013 in ITA 1809/D/2013 filed by Silverline for AY 2008-09 Before discussing as to how the facts of the Delhi High Court judgment in Alpine Electronics Asia Pvt. Ltd. ( 341 ITR 247 Del) are distinguishable it will be relevant to keep in mind the provisions of section 292BB of the Income Tax Act, 1961 which provide that after 31-04-2008 in a ease where assessee has appeared or co-operated in any inquiry relating to assessment or reassessment, he after the completion of the assessment/reassessment cannot question the notice service of any notice on the following grounds; (a) that notice has not been served; or (b) that notice has not been served in time; or (e) that notice has been served upon him in an improper manner. 1.2 In the case before the High Court (as seen from para 26 of the Order), assessment proceedings had not got completed (only a draft order was proposed) by the time when service of no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR contended that there was no difference between a cross objection and an appeal and, therefore, the additional ground raised by the assessee deserves to be admitted as it is within the parameter of law. It was, further, submitted that it was an undisputed fact that in the absence of a notice u/s 143(2) of the Act, whether the assessment prevails or not, is purely a legal issue. In this connection, the learned AR drew strength from the findings of the earlier Bench of this Tribunal in ITA No. 6020/Del/2012 dated 29.5.2014 in the case of B.R.Arora v. ACIT. 6.5 Further, it was submitted by the learned counsel that Section 292BB is applicable only from A.Y. 2008-09 onward in light of dictum laid down by the Hon'ble Special Bench of the Tribunal in case of Kuber Tabacco Products (Pvt.) Ltd. reported in 117 ITD 273 (Delhi) (S.B), which was affirmed by the Hon'ble Delhi H.C. by judgment dated 06.10.2010 in Writ Petition No. 1159 & 1161/2010. It was submitted further that when no notice u/s 143(2) is issued. Section 292BB does not have any application. For above proportion, the learned AR relied on the following case laws: i) Manish Gupta 259 CTR 57 (All.) H.C. ii) Parikalpana Estate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at fun would it make when the notice so issued is not even served. Kinldy appreciate without service the assessee cannot be legally expected to appear in the proceedings for which service of the relevant notice is a must. How an assessee can participate in the proceedings without there being any notice (written or oral). Upon participation in the proceedings one can conclude that there was notice about which assessee had the knowledge. 2.4 Since, the Income Tax Act is silent for obvious reasons which even lay person (as shown above) can appreciate about the crucial aspect of the 'issuance of notice or the form (whether written or oral) in which it is to be served we have to form understanding with the help of other sources like Dictionaries which define the 'Notice' to mean information, knowledge of the existence of a fact or to apprise a person of some proceeding in which his interest are involved. Black's Law Dictionary (5th Edition) provides 'a person has notice of a fact if he knows the fact' and that it can be in many ways like implied, constructive etc. When seen in the context of the present case undisputed service of notice u/s 148 and thereafter participation of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kindly be appreciated that Finance Act is always for the financial year for which budget is being laid before the Parliament. It is why, Finance Act is generally in the context of the income which has been earned on which likely revenue realization can be worked out as such except where it is specifically provided as to form which particular date that will apply. But this has no relation with the procedural provisions which would apply with effect from the date from which it is inserted on the statute book dealing with the procedures taking place on that date or thereafter. 4. Thus, the interpretation that law requires issuance of notice deserves to be rejected. 5.0 In the light of the aforesaid submission alone it would become clear that none of the decisions referred to in para 1 above are applicable. Though in view of the discussion made above it is clear that all the three judgments referred to above do not need further submissions yet for the sake of further clarity qua the inapplicability these are being dealt with in the following paragraph 5.1 to 5.3. 5.1 In so far as Delhi High Court judgment in Kuber Tobacco Products P Ltd. Delhi HC 06.10.2010 is concerned it is humbly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgments of (i) the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd 229 ITR 383 (SC) and (ii) the Hon'ble Delhi High Court in Gedore Tools Pvt. Ltd reported in 238 ITR 268 (Del), we are inclined to admit the same and taken up for consideration. 7.1. Now, the moot question for consideration is: Whether the non-issuance of a notice u/s 143(2) of the Act as alleged by the assessee-firm had vitiated the conclusion of the assessments u/s 147 read with s. 143(3) of the Act? On receipt of information from the DIT (Inv), Jaipur that there were alleged bogus purchases resorted to by the assessee firm, the AO had re-opened the assessments of the assessee for the assessment years under dispute by issuance of notices u/s 148 of the Act. Subsequently, notice u/s 142(1) of the Act along with questionnaire was issued to the assessee. In the reassessment proceedings, after having considered the asssessee's submissions, the AO had concluded the re-assessments making certain additions. While doing so, however, no notices u/s 143(2) of the Act were issued to the assessee, even though notice u/s 142(1) of the Act was ordered to be issued on 14.11.2011. This was apparent f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount but on other points also. In view of the aforementioned discussion it can safely be held on a point of law that there is absolutely no difference between an appeal and a cross-objection......" 7.3. Further, in the absence of a notice u/s 143(2) of the Act, the assessment prevails or not is to be examined:Whether it is a legal question or not?.In an identical issue to that of the issue under consideration, the earlier Bench of this Tribunal in the case of B.R.Arora v. ACIT in ITA No.6020/Del/2012 dated 29.5.2014 has decided the issue in favour of the assessee. The issue, in brief, wasthat the assessee had filed an application before the Tribunal for admitting additional ground and proceeding sheet of assessment as additional evidence to the following effect: "1. That following ground be please admitted as additional ground of appeal Additional ground: 'That in the absence of notice issued u/s 143 (2), the reassessment proceedings and consequential assessment order is without jurisdiction and unsustainable in law as well as on merits. 2. that it is a pure legal ground which goes to the root of the matter and no new facts are required to be investigated or placed on records fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Income-tax (supra), the Apex Court held as follows: 'The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) takes too narrow a view of the powers of the Appellate Tribunal (vide, e.g., CIT v. Anand Prasad (1981) 128 ITR 388 (Del), CIT v. Karamchand Premchand P. Ltd (1969) 74 ITR 254 (Guj), and CIT v. Cellulose Products of India Ltd (1985) 151 ITR 499 (Guj) (FB). Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But wherethe Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings, we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability.' The argument of learned Standing Counsel that it is not correct to say that the notice under section 143(2) of the Act has not been issued within the specified time, may be correct, but this aspect of the matter has to be adjudicated by the Tribunal after entertaining the ground in this respect and for the purposes of admission of new ground, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he proviso to s. 143(2). Where the legislature intended to exclude certain provisions from the ambit of s. 158BC(b) it has done so specifically. Thus, when s. 158BC (b) specifically refers to s. 143(2), applicability of the proviso thereto cannot be excluded. The clarification given by CBDT in its Circular No. 717, dt. 14th Aug., 1995, has a binding effect on the Department, but not on the Court. This circular clarifies the requirement of law in respect of service of notice under sub-s. (2) of s. 143. Accordingly, even 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). The submissions of the counsel for the Revenue that the expression 'so far as may be apply' indicates that it is not expected to follow the provisions of s. 142, sub-ss. (2) and (3) of s. 143 strictly for the purpose of block assessments cannot be accepted, since there is no reason to restrict the scope and meaning of the expression 'so far as may be apply'. Sec. 158BH provides f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court reported in (2010) 233 CTR (Del) 230 referring to S. 143(2), 153, Expln. 1(v), 158BC, 158BE, 245C, 245D,has held as under: "Clause (v) of Expln. 1 to s. 153 provides that the period commencing from the date on which an application is made under s. 245C and ending with the date on which an order under sub-s. (1) of s. 245D is received by the CIT under sub-s. (2) of that section, shall be excluded in computing the period of limitation for, inter alia, making an order of assessment under s. 143. This clause will obviously apply in a case where an application is made before the Settlement Commission under s. 245C and in the event such an application is rejected by the said Settlement Commission or is not allowed to be proceeded with by it. It is pertinent to note herein that the exclusion of time consumed before the Settlement Commission is in respect of computing the period of limitation, for making an order of assessment under s. 143. It does not pertain to exclusion of time for the purposes of serving a notice on the assessee under s. 143(2).(Para 14)" (iii) The Hon'ble Karnataka High Court in the case of Pai Vinod vs. DCIT reported in(2013) 353 ITR 622 (Karn) had held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t." (iii) The issue before the Hon'ble P & H High Court [CIT v. Cebon India Ltd reported in 347 ITR 583 (P & H), was that the Revenue proposed to raise following substantial questions of law: "1. Whether on the facts and in the circumstances of the case, the learned Tribunal is right in law in holding that there was no valid service of notice under s. 143(2) before the due date even though the AO had issued the notice under s. 143(2) on 11/13th Nov., 1997 vide dispatch No. 2640 and subsequently, the assessee participated in the proceedings ?" 2. Without prejudice to above, whether the Tribunal is right in not treating the defect if any in service of notice under s. 143(2) as an irregularity curable under s. 292BB of the IT Act, 1961 ?" Briefly, the assessee filed return for the A.Y in question on 30.11. 1996, which was processed under s. 143(1)(a) on 30.5.1997. Thereafter, assessment was framed u/s. 144 of the Act, which was affirmed in appeal. The Tribunal, however, remanded the matter to CIT (A). The CIT (A) allowed the appeal on the ground that there was no evidence to show that notice u/s. 143(2) of the Act had been served on the assessee before 30.11.1997 i.e. within one ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue merely contended that the CIT (A) should have appreciated the provisions of section 292BB of the IT Act. Section 292 BB of the IT Act provides as under: "292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was- (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment. " The above provision has been inserted by the Finance Act, 2008 w.e.f. 01.04.2008. ITAT, Delhi Special Bench in the case of Kuber Tobacco Product Pvt. Ltd. vs. DCIT, 117 ITD 273 held that section 292BB has been inserted by Finance Act, 2008, has no retrospective effect and is to be construed prospectively. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act were inserted with retrospective effect from 1.10.1991 vide Finance Act, 2006. For ready reference, it has been clarified that - Proviso (1) provides that where 148 return has been furnished during 1.10.1991 to 30.9.2005, the notice issued u/s 143(2) even after the expiry of 12 months from the end of the month in which the return is filed i.e., after the expiry of time specified as per the proviso to s. 143(2) in such cases even if notice u/s 143(2) has been issued after such specified time, it shall be deemed to be a valid notice. (applicable for the cases up-to 31.5.2002 i.e., prior to substitution of s. 143(2) by the Finance Act, 2002, w.e.f. 1.6.2002). Proviso (2) provides that where 148 return has been furnished during the same period i.e., 1.10.1991 to 30.9.2005, the notice issued u/s 143(2) even after expiry of 12 months from the end of the month in which the return is filed i.e., after the expiry of time specified as per the proviso to clause (ii) to s. 143(2), in such cases even if notice u/s 143(2) has been issued after such specified time, it shall be deemed to be a valid notice. (applicable for the cases from 1.6.2002 up-to 30.9.2005 i.e., on account of substit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FB) [Source: Article from Hon'ble Justice N.K.Jain - http://justicenagendrakjain.com/Law_of_Precedents5.php]has held that "in case of conflict between two Supreme Court decisions by the Benches of equal strength, the later decision would be binding on the High Court, it having impliedly overruled the earlier decision. Merely because the earlier decision was not brought to the Court's notice, the latter decision is not rendered in-curiam."Therefore, we follow the two subsequent judgments of the Hon'ble jurisdictional High Court, namely, (i) Alpine Electronics Asia Pte. Ltd. V. DGIT 341 ITR 247 (Del); & (ii) V.R. Educational Trust in ITA NO.510/2011 - Order dated 10.02.2012 which are directly in favour of the assessee. Further, it has been held by the Hon'ble Apex Court in the case of CIT v. Vegetable Products Ltd., reported in 88 ITR 192 (SC) while interpreting a taxing statute when two views are possible, the one in favour of the assessee is to be followed. For aforesaid reasons, we allow the additional grounds raised in the cross objection. 8. In the result: (i) the cross objections (additional grounds) of the assessee firm for all the AYs under dispute are partly allowed. (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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