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TMI Blog2015 (8) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... Act was issued. Upon receipt of the notice under Section 148 of the Act, a return of income was filed declaring an income of Rs. 1,04,30,38,635/-, which was claimed as exempted under Section 10(20) of the Act. The Assessing Officer after considering the matter, passed an assessment order holding that the assessee was not a local authority as per Section 10(20) of the Act and added the surplus income and expenditure of the account and few other amounts on the total income. Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), who dismissed the appeal and affirmed the order of the assessing authority holding that the exemption claimed by the assessee under Section 10(20) was not tenable as it was not a local authority within the meaning of Section 10(20) of the Act. 3. The assessee, being aggrieved, filed a second appeal before the Income Tax Appellate Tribunal on various grounds. However, at the time of consideration of appeal only ground no.5 was attacked namely: "That the order of Ld. AO is void ab initio in as much as, no mandatory notice u/s 143(2) of IT Act, 1961 was issued at any stage of the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the appellant and Sri Balbir Singh, the learned Senior Advocate assisted by Sri Abhinav Mehrotra for the assessee. 8. In order to settle the controversy, we directed the Department by our order dated 08.07.2015 to produce the original assessment records as well as the order sheet of the Tribunal. 9. A supplementary affidavit was filed by the Department to show that on the basis of the order sheet of the Tribunal, adequate opportunity was not given, inasmuch as the order sheet was silent on the question of production of the original records. In paragraph 16 of the Supplementary Affidavit, it was urged that a notice was issued by the Assessing Officer even though it was not specifically mentioned in the order sheet and that the notice and the questionnaire was available in the assessment record. For facility, paragraph 16 of the Supplementary Affidavit is quoted hereunder: "That in fact while issuing the questionnaire on 10.12.2013 the Assessing Authority has issued the notice but in order sheet it has not been mentioned specifically. The notices and questionnaire are well available in the assessment record." 10. In order to understand the controversy as to whether a notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, it is only when a notice is issued, that it can be served. Thereafter, the provisions of sub-section (3) of Section 143 of the Act stipulate that on the date specified in the notice issued under clause (ii) of sub-section (2) of Section 143 of the Act, the Assessing Officer shall, after hearing the evidence as the assessee may produce and considering such other evidence as he may require and upon taking into account all relevant material, by an order in writing make an assessment of the total income or loss of the assessee. 12. The jurisdiction of the Assessing Officer to make an assessment under Section 143(3) (ii) of the Act is premised on the issuance of a notice under clause (ii) of Section 143(2) of the Act. The proviso to clause (ii) of sub-section (2) of Section 143 of the Act stipulates that a notice must be served on the assessee not later than the expiry of six months from the end of the financial year in which the return has been furnished. If a notice is not even issued within the period of six months from the end of the financial year in which the return is furnished, there would be no occasion to serve it upon the assessee within the stipulated period. 13. The Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raph 16 of the Supplementary Affidavit is a notice dated 10.12.2013, which accompanies the questionnaire dated 10.12.2013. The last paragraph of the questionnaire indicates that the accompanying notice is being issued under Section 142(1) of the Act. From the said notice, it is clear that the notice which the appellant is asserting to be a notice under Section 143(2) is patently erroneous and mischievous. It is nothing else but a notice under Section 142(1) of the Act. The record does not indicate any other notice being issued, which could purport to be one under Section 143(2) of the Act. We are, therefore, of the opinion that from a perusal of the original assessment record, we find that no notice under Section 143(2) of the Act was ever issued. 17. The submission of the learned counsel for the appellant that the assessee had participated in the reassessment proceedings and, therefore, cannot assert that the notice was not served in view of Section 292BB is patently erroneous. For facility, Section 292BB of the Act is extracted hereunder: "292 BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so for the assessment years 2009-10, 2010-11 and 2011-12. The deeming fiction that once an assessee has appeared in any proceeding or participated in any query relating to assessment or reassessment, it shall be deemed that the notice under the provisions of the Act, which is required to be served has been duly served upon him in accordance with the provisions of the Act and, therefore, is precluded from contending that the notice was not served upon him or was not served upon him in time or was not served upon him in a proper manner, in our view, is not applicable for the following reason. 20. There is a clear distinction between "issue of notice" and "service of notice". In R.K.Upadhyaya Vs. Shanabhai P. Patel, 166 ITR 163, the controversy was that a notice under Section 148 was issued on 31.03.1970 i.e. the last date of limitation, which notice was served on the assessee on 03.04.1970, after the expiry of limitation. The High Court held that since the notice was served after the expiry of the period, the assessment order was invalid and had accordingly quashed the notice for reassessment issued under Section 147 of the Income Tax Act,1961. The Supreme Court held that the scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s satisfied when a notice is actually issued. In this case, admittedly, the notice was issued within the prescribed period of limitation as March 31, 1970, was the last day of that period. Service under the new Act is not a condition precedent to conferment of jurisdiction in the Income-tax Officer to deal with the matter but it is a condition precedent to making of the order of assessment. The High Court in our opinion lost sight of the distinction and under a wrong basis felt bound by the judgment in 53 ITR 100. As the Income-tax Officer had issued notice within limitation, the appeal is allowed and the order of the High Court is vacated. The Income-tax Officer shall now proceed to complete the assessment after complying with the requirements of law. Since there has been no appearance on behalf of the respondents, we make no orders for costs." 21. From the aforesaid, it is clear that the essential requirement is "issuance of notice" under Section 143(2) of the Act. The deeming fiction under Section 292BB of the Act is with regard to "service of notice". Since the initial requirement of issuance of notice was not made by the Assesssing Officer, the deeming fiction of service of n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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