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TMI Blog2015 (8) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be deemed to be a valid notice. Further, the new Explanation inserted with effect from 1st October, 2005, specifically clarifies that the aforestated (newly inserted) provisos shall not apply to any return which has been furnished on or after 1st October, 2005, in response to a notice served under section 148(1) of the Act. The purpose of the amendment is to ensure that notices which were issued and barred by limitation and those which were not issued and which could not have been issued should be validated by the Finance Act, 2006 with retrospective effect from 1st April, 1990 amending section 142 for the purpose of validating notices which were otherwise not issued or served within the time-limit. The invalidity of notice as well as the absence of any notice became fatal to the proceedings and are sought to be validated and justified by the retrospective amendments. The explanation clarifies that the amended provisions will not apply to any return which has been furnished on or after 1st October, 2005, in response to a notice served under section 148(1) of the Act. Thus the legislature has accepted the position that issue and service of notice u/s.143(2) of the Act within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... <![endif]--><!--[if gte mso 10]> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} table.MsoTableGrid {mso-style-name:"Table Grid"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-priority:59; mso-style-unhide:no; border:solid windowtext 1.0pt; mso-border-alt:solid windowtext .5pt; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-border-insideh:.5pt solid windowtext; mso-border-insidev:.5pt solid windowtext; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as on 31/03/2007. However, there is no variation in the figures of both the balance sheets. But, there is variation in figures for F.Y. 2007-08 under certain heads like closing stock WIP, Provisions, Profit before tax, Provision for current tax, Reserves Surplus, etc. During the course of survey, a copy of signed audit report for F.Y. 2007-08 was obtained. When compared the figures in the said signed audit report and the figures appearing in the balance sheets under the head Option-I and Option-II , substantial variation have been noticed. Some of the important variations are discussed as under: Sl. No. Head in the Balance Sheet Figures as per Balance sheet under the head Option-II Figures as per Balance sheet under the head Option-I Figures as per signed Balance sheet for F.Y.2007-08 Difference Col. (4) (5) 1 2 3 4 5 6 1 Reserve Surplus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .C. 485 C.K.V. Shivakumar Vs Appropriate Authority, Supreme Court has held that equity or hardship are not relevant consideration for interpretation of taking law. The assessee s contention that no notice u/s 143(2) has been served, is not tenable as the assessee has been informed vide this office letter dated 09.09.2010 the reasons for reopening the assessment. In response to the above, the assessee filed a letter dated 10.02.2011 objecting to the reopening of the assessment. The assessee was further informed vide this office letter dated 07.03.2011 that the objections filed are rejected and the proceedings u/s 148 cannot be dropped. Sri K Seshadri, C.A. Authorised Representative of the assessee appeared on 14.09.2011; 13.10.2011; 02.12.2011; 14.12.2011 and on 21.12.2011 (notings in the order sheet enclosed) and was asked to explain the details in respect of the work-in-progress as per impounded materials and on payments of money. These issues were not substantiated with any valid reasons. 7. The CIT(Appeals), on the aforesaid issue, decided the issue against the assessee observing as follows:- In the light of the above, it is seen that the A.O. had issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, clear from the record that assessee was represented by a CA and he had participated in the proceedings throughout. 11. On the factual details as narrated above, the ld. DR relied on the provisions of section 292BB of the Act and submitted that non-issue of notice u/s. 143(2) within the time specified under the proviso to sec. 143(2)(ii) will not render the order of reassessment null and void. On the other hand, the ld. counsel for the assessee placed reliance on the decision of this Tribunal rendered in the case of M/s. Amithi Software Technologies Pvt. Ltd. v. ITO, ITA No.540/Bang/2012 for AY 2008-09, order dated 7.2.2014 . In the aforesaid decision, the factual position was that return of income was filed by the assessee on 1.10.2008 for AY 2008-09, beyond the period prescribed u/s. 139(1) of the Act and intimation u/s. 143(1) was issued by the AO on 27.8.2009. The assessee filed a revised return of income on 30.9.2009. This return was treated as non est by the AO and a notice u/s. 143(2) was issued on 19.8.2010 with reference to original return of income filed by the assessee on 1.10.2008. The question before the Tribunal was as to, whether assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. 292BB Notice deemed to be valid in certain circumstances. Where an assessee has appeared in any proceeding or cooperated 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. 16. As far as section 292B is concerned, we do not think that the notice issued by the AO u/s. 143(2) of the Act in the present case will fall within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as given above, it is clear that the only notice issued u/s. 143(2) was dated 13.10.2011 and the same was beyond the period contemplated under proviso to sec. 143(2)(ii) of the Act. Two questions arise for our consideration; (i) Whether notice u/s. 143(2) of the Act is mandatory before completion of proceedings u/s. 147 of the Act? (ii) Whether provisions of section 292BB of the Act will come to the rescue of the Revenue so as not to render the order of assessment u/s. 147 null and void? 14. As far as first question is concerned, in the case of C. Ramaiah Reddy (supra) , this Tribunal has considered the non-issue of notice u/s. 143(2) of the Act within the period of limitation in response to notice u/s. 148 of the Act as fatal and had annulled the assessment u/s. 147 of the Act. Similar view has also been taken in the case of H. Goutham Chand (supra) . The Special Bench of the Delhi Tribunal in Raj Kumar Chawla Ors. Vs. ITO (2005) 94 ITD 1 (Del)(SB) was confronted with similar/ identical facts. The questions required to be answered by the Special Bench were as under:- 1. Whether the proviso to s. 143(2) of the I.T. Act.1961, which mandates the service of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 139 of the Act and the assessment must thereafter be made under s. 143 or 144 of the Act after complying with all the mandatory provisions. Accordingly, it is incumbent upon the assessing authority to issue notice under s. 143 (2) of the Act within the period as stipulated in the proviso thereunder. In this view of the matter, the first question before the Special Bench is answered in affirmative. 15. Sec.148 of the Act was amended by the Finance Act, 2006 by insertion of two proviso below Sub-section (1) and an Explanation. The amended provisions read as follows: Sec.148: Issue of notice where income has escaped assessment. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified in the relevant proviso but before the expiry of the time-limit for making the assessment, reassessment or re-computation as specified in section 153(2), such (otherwise time-barred) notice shall be deemed to be a valid notice. Further, the new Explanation inserted with effect from 1st October, 2005, specifically clarifies that the aforestated (newly inserted) provisos shall not apply to any return which has been furnished on or after 1st October, 2005, in response to a notice served under section 148(1) of the Act. The purpose of the amendment is to ensure that notices which were issued and barred by limitation and those which were not issued and which could not have been issued should be validated by the Finance Act, 2006 with retrospective effect from 1st April, 1990 amending section 142 for the purpose of validating notices which were otherwise not issued or served within the time-limit. The invalidity of notice as well as the absence of any notice became fatal to the proceedings and are sought to be validated and justified by the retrospective amendments. The explanation clarifies that the amended provisions will not apply to any return which has been furnished on or ..... 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