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TMI Blog2013 (7) TMI 1025X X X X Extracts X X X X X X X X Extracts X X X X ..... ponse to notice u/s 148 of the Income Tax Act, 1961. 3. On the facts and circumstances whether the Ld. CIT(A) was right in quashing the assessment when no such opportunity has been given to the Assessing Officer during appellate proceedings to give his views in this matter. 4. The applicant craves to amend or add any one or more grounds of appeal." 2. The brief facts in the appeal of the Revenue are that earlier the case of Hotel Moti Mahal was decided by the A.O. under Section 144/147 of the Income Tax Act, 1961 vide order dated 10.12.2009. The assessment was made in the status of firm. The main reason for making the ex parte assessment was that statutory notices issued from time to time were not complied by the assessee at all. After the receipt of assessment order, Hotel Moti Mahal did not file any appeal before the learned CIT(A). It has , however, filed a petition u/s 264 of the Income Tax Act, 1961 before the Commissioner of Income Tax, J&K, Jammu challenging the assessment order passed by the undersigned. The worthy Commissioner of Income Tax vide his office F.No. CIT/JMU/ITO(T)/264-12/R-11/10-11/9804 dated 29.10.2010 has cancelled the order passed by the A.O. with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment in hotel remains unaccounted. 3. The matter was accordingly reopened u/s 148 of the I.T. Act, 1961 by recording reasons as per order sheet entry dated 19.09.2008. The assessment was completed ex parte u/s 144 as the assessee failed to file any information and co-operate with the valuation of Hotel Building also. The income was determined at ₹ 68,87,285/- as the entire investment of ₹ 83,28,100/- reduced by loan of ₹ 14,40,815/- was taken for addition (Rs. 68,87,285/-) in the Assessment Year 2006-07. However, the assessee contended before the CIT, Jammu u/s 264 of the I.T. Act, 1961 that the same was bad in law as status of the assessee was mentioned as Firm whereas the status was Individual. The CIT Jammu vide his Order No. CIT/Jmu/ITO(T)/264-12/R-11/201-11/9807 dated 29.10.2010 cancelled the assessment u/s 144 made vide Assessment Order dated 10.12.2009. 4. The matter has been thoroughly gone into by me and facts of the case are that the assessee had constructed the Hotel which was valued at ₹ 83,28,100/- as per valuation report dated 18.11.2009. The assessee has not furnished any information with regard to the Value of Unaccounted Investment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were recorded for issuing notice under section 148 and were communicated by the AO when the assessee was requested to furnish information/details as available at page 4 of AO's order. No one attended the office nor any application for adjournment was received on that date. A fresh notice under section 142(1) was issued on 12.08.2011for hearing on 26.08.2011 and none attended. Again a notice u/s 142(1) was issued on 12.03.2011 fixing the case for 6.10.2011 when the notice was served upon the son of the assessee on 22.09.2011. Further notices and letters were issued and a written reply dated 02.12.2011 was filed as mentioned in para 6 & 7 of AO's order. Thereafter, the AO after considering the reply of the assessee concluded vide para 8 to 14 which for the sake of convenience is reproduced as under: 1. On receipt of the above reply and its annexure, the case was again referred vide this office letter No. 1400 dated: 02.12.2011 to the Departmental Valuation Officers. Aayakar Bhawan, Amritsar, for further consideration at his end. This was quite necessary in order to make correct and fair assessments in this case. The Valuation Officer vide his office letter No: VO/IT/ASR/2009/CC-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e letter No. 1446 dated 19.12.2011. The contents of the said letter read verbatim as under:- "Please refer to the assessment proceedings in your case for the above said assessment years and also your consolidated written reply received in this office on 02.12.2011 filed for all the four assessment years wherein you have given the year-wise break-up of the amount spent on the construction of the Hotel Moti Mahal. This is to intimate you that on receipt of your reply, it was immediately forwarded to the Valuation Officer along with its enclosures of his reconsideration. However till date nothing has been heard from him. Since the cases for all the years are getting barred by limitation 30.12.2001, these cannot be kept pending any longer. I, therefore, propose to make the assessments for all the years keeping in view the Valuation already made by the Valuation Officer which was forwarded to the undersigned vide his office No: VO/IT/ASR/200/CC-09/150 dated 18.11.2009 dated 1811.2009 and also propose to assessee the entire unexplained investment of ₹ 68,87,285 (cost of construction determined by the VO ₹ 83,28,100 minus bank loans of ₹ 14,40,815/-). This is to fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of construction of Hotel is for the period from June 2000 to June 2005 but while making assessment, the Ld. A.O. has filed to spread over the alleged unexplained investment on the construction of the hotel building and the entire difference has been accounted for & charged to tax in the year under consideration, which is against the law & principles of accountancy. 2.6.1. That having regard to the facts and circumstances of the cases the Ld. A.O. has erred in law and facts, by relying on the Valuation Report of the Valuer which is not based on the facts & evidence as the investment made by assessee in each year not carried by the Valuer which is against the law. 2.6.2 That the addition made is purely on surmises, conjectures and suspicion and without any documentary evidences. 2.7. That the appellant carves the leave to add, amend, modify deleted any of the grounds of appeal before or at the time of hearing and all the above grounds are without prejudice to each other." 5. During the appellate proceedings before the Ld. CIT(A), detailed submissions were made by the assessee which are reproduced by the Ld. CIT(A) in para 3 at pages 2 to 9 which are not being reproduced. But ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eding as held by the Hon'ble Apex Court in the case of Hotel Blue Moon. No doubt, where a return is filed in pursuance of a notice under section 148(1) of the Act, it clearly says that provision of the would apply 'so far as may be' to it as though it was a return required to be furnished under section 139 of the Act. The term 'so far as may be' has been interpreted by Hon'ble Apex Court in the case of Hotel Blue Moon, though in relation to section 158BC(b) of the Act, as no to exclude the requirements of section 143(2). Provision contained in section 143(2), is mandatory in nature and it is obligatory for the A.O. to apply his minds to the contents of the return filed in response to the notice u/s 148. Non issue of notice u/s 143(2) after filing of return by assessee vitiated the reassessment proceedings as held in CIT Vs. Rajeev Sharma (2010) 232 CTR 303 (All). The fact of the present case is similar to the facts in the case of Indo Swiss Exports Ltd., Chennai Vs. Department of Income Tax decided by the Hon'ble I.T.A.T., Chennai in the favour of assessee. In the said case, a notice u/s 148 of the Act was issued to the assessee on 28.02.2007 proposing a re-assessment. Pursuant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but not served, served late or served in improper manner. However, if a notice is not issued, the provisions of the section are not applicable. The Hon'ble High Court of Delhi in Writ Petition (Civil) no. 7632/2010 decision dated 24th January, 2012 in the case of Alpine Electronics Asia PTE Ltd. has clarified the applicability of the provisions of section 292BB of the Act 'what is the effect of the failure to issue notice under Section 143(2) within the period stipulated in the proviso to clause (ii) and effect of Section 292BB of the Act. As per Hon'ble High Court, it is now well settled that service of notice under Section 143(2) of the Act within the statutory time limit is mandatory and is not a procedural requirement, which is inconsequential.' The A.O. treated the return of income as nonest only on the ground that return was field by the appellant after the time prescribed in the notice u/s 148 of the Act. Admittedly, the A.O. neither pointed out any defect in the return of income nor provided any opportunity to the appellant before treating the return as nonest as prescribed u/s 139(9) of the Act. I am of the considered opinion that return cannot be treated nonest only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the provisions of the Law and several judgments, I am of the considered opinion that the assessment was made without assuming proper jurisdiction which is void ab initio and assessment is thus quashed on legal issue. The merit of addition on account of unexplained investment is no longer required to be considered in view of the above findings. In the result, the appeal is allowed." 10. The Ld. DR, Mr. Tarsem Lal argued that the appeal has been allowed wrongly by the ld. CIT(A) vide his order dated14.01.2013 for the reasons that the ld. CIT(A) has gone wrong in allowing the appeal without even recording the findings that firstly whether challenge is assumption of jurisdiction/or application thereof, secondly, even before this Bench, the said aspect remained unaddressed, thirdly, there being non service of notice during the proceedings has been made for which notice u/s 142 has been served and the present appeal arises, fourthly, furnishing of partial information then what is the fate of reasons to believe and which material fact containing material particulars is available on record in the case proceedings and fifthly the initiation of the assessment is nullity because of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionommission, namely, the entitlement "to enter upon the enquiry in question". If there was an entitlement to enter upon an enquiry into the question, been any subsequent error could only be regarded as an error within the jurisdiction. The best known formulation of this theory is that made by Lord Darman in R. v. Bolton. He said that the question of jurisdiction is determinable at the commencement, not at the conclusion of the enquiry. In Anisminic Ltd. case (supra), Lord Reid said: "But there are many cases where, although the tribunal had jurisdiction to enter on the enquiry it has done or failed to do something in the course of the enquiry which is of such a nature that its decision is a nullity. It may have given its decision in bad faith. It may have made a decision which it had no power to make. It may have failed in the course of the enquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. It may have refused to take into account something which it was requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the Anismanic case", Law Quarterly Review, Vol. 85, 1969, p. 198). Why is it that a wrong decision on a question of limitation or res judicata 'was treated as a jurisdictional error and liable to be interfered with in revision ? It is a it difficult to understand how an erroneous decision on a question of limitation or res judicata would oust the jurisdiction of the Court in the primitive sense of the term and render the decision or a decree embodying the decision a nullity liable to collateral attack. The reason can only be that the error of law was considered as vital by the Court. And there is no yardstick to determine the magnitude of the error other than the opinion of the Court." 12.3. The aforesaid principle of law with greatest respect we are bound to follow. 12.4. Even as per records before us, it has been noticed that the assessee has been diligent in pursuing the remedy available through attending to the case proceedings before the AO and it is a settled law that objection regarding jurisdiction be raised at the earlier possible opportunity. Thus, there is no reason for coming forward for the assessee waiting for such long for raising said objection (legal g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non- observance of a statutory provision is that cuilibet licet renuntiare juri pro se introducto. Everyone has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any public right or public policy." The same rule is restated in "Craies on Statute Law", 6th Edn., at p. 269, thus : "As a general rule, the conditions imposed by statutes which authorise legal proceedings are treated as being indispensable to giving the court jurisdiction. But if it appears that the statutory conditions were inserted by the legislature simply for the security or benefit of the parties to the action themselves, and that no public interests are involved, such conditions will not be considered as indispensable, and either party may waive them without affecting the jurisdiction of the court." 12.5 Having noticed material facts, we consider it appropriate with great respect in accordance with the principle of law that at the most the present kind of grievance is 'merely an error within jurisdiction', which can be determined only b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the Act. Accordingly, we conclude even for the purpose of Chapter XIV-B of the Act. 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 arc applicable and no assessment could be made without issuing notice under s. 143(2) of the Act. However, it is contended by Sri Shekhar. learned counsel for the Department that in view of the expression "So far as may be" in s. 153BC(b), the issue of notice is not mandatory but optional and are to be applied to the extent practicable. In support of that contention, the learned counsel has relied on the observation made by this Court in Dr. Partap Singh's case (supra). In this case, the Court has observed that s. 37(2) provides that "the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under s. 37(2). Reading the two sections together it merely means that the methodology prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtificate' from the Income Tax Department in terms of Master Circular No.2/2008-09 dated 01.07.2008 for being submitted to the Reserve Bank of India and in accordance with the fact in para 6, there were initiation of reassessment proceedings. Thus, in consequence the Hon'ble Court's allowed the petition quashing the reassessment proceedings with a direction in the writ of Mandamus to issue that 'no objection certificate' as prayed for which relevant findings are extracted hereinbelow: "Accordingly, the writ petition is allowed and a Writ Certiorari is issued quashing the assessment proceedings pursuant to the notices under section 148 of the Act. A Writ of Mandamus is issued to the respondents to issue 'no objection certificate' to the petitioner as per the needs and requirements of the Reserve Bank of India. The no objection certificate will be issued within 6 weeks from today. There will be no order as to costs." 15. We may refer to the judgment of Hon'ble Jurisdictional High Court of Punjab & Haryana which is binding in nature titled as CIT vs Ram Narain Bansal reported in ITA No.814 of 2010 dated 13th July, 213 reported in 202 Taxman 213 (placed on record) pertaining to asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. In this case, it is conceded that the assessee got opportunity to file reply and detailed reply was in fact filed and reassessment notice and final order were also issued within the timelimit prescribed under the Act." 11. Further, this Court in M/s Panchwati Motor (P) Ltd.'s case (supra) while examining the scope of Section 292 BBof the Act and its applicability had noted as under: "Section 292BB of the Act was inserted by Finance Act, 2008 w.e.f. 1.4.2008. It reads thus:- "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 the 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 assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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