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TMI Blog2018 (2) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... rved on 06/06/2013 through notice server. Return of income was filed on 22/4/2014. Notice U/s 142(1) of the Act was issued alongwith questionnaire on 30/4/2014. The assessment was made on 05/3/2015 at ₹ 1,01,20,000/-, that is the amount paid for purchase of the agricultural land, treated as unexplained investment. The ld. CIT(A) has confirmed the action of the Assessing Officer. 3. Now the assessee is in appeal before the ITAT by taking following grounds of appeal: 1. In the facts and circumstances of the case the Learned CIT(A) has erred in upholding the action of Learned Assessing Officer in completing the assessment u/s 143(3) of the Income Tax Act, 1961 without issuing notice u/s 143(2) of the Income Tax Act, 1961. 2. In the facts and circumstances of the case the Learned CIT(A) has erred in holding the mistake of non-issuance of notice u/s 143(2) before completion of assessment u/s 143(3) as curable u/s 292BB of the Income Tax Act, 1961. 3. In the facts and circumstances of the case the Learned CIT(A) has erred in observing that it was for the assessee to have objected during the assessment proceedings itself that notice u/s 143(2) had not been issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce u/s 143(2) though the assessee had filed the return of income in response to such notice u/s 148. The chronology of the events are as under: - on 31.05.2013 notice u/s 148 was issued and served upon assessee on 06.06.2013; - on 03.04.2014, notice u/s 142(1) was issued fixing date of hearing on 16.04.2014; - on 22.04.2014, Return of Income was filed by assessee; - on 30.04.2014, further Query letter u/s 142(1) as well as show cause notice u/s 271(1)(b) was issued; - notices u/s 142(1) were issued on 17.11.2014 and 06.02.2015 and the proceedings were attended by the A/R of the assessee from time to time - Assessment order was passed u/s 143(3)/ 147 of the Act by Ld. AO vide order dated 05.03.2015. From the perusal of the summary of chronological events it is clearly evident that notice u/s 143(2) was never issued by ld.AO before completion of the assessment and this fact has categorically been admitted by ld.AO in remand report submitted before the ld. CIT(A) (APB 15-18). With this background of chronological events, kind attention of Hon ble bench is invited to the provisions of section 148 of the Act, which reads as under: 148. [(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the order passed is void ab initio. This contention was also raised before ld.CIT(A) who sought remand report from ld. AO in this regard. The ld. AO in remand report dated 12/02/2016 at page 2 in last para observed that: (APB -17) During the assessment proceedings in this case for the assessment year under consideration, the assessee or her authorized representative did not oppose that the notice u/s 143(2) of the income Tax Act, 1961 was not issued after filing return of income in response to the notice u/s 148 of the Income Tax Act, 1961. Therefore, under the provisions of Income Tax Act, 1961, the notice u/s 148 can t be issued Ld. CIT(A) confirmed the validity of assessment order so passed without issue of notice u/s 143(2) by observing that assessee had attended the hearing on several occasions and no objection was raised during the proceedings before the ld. AO, thus non issuance of notice u/s 143(2) of the Act would not make assessment order invalid. Ld. CIT(A) further held that such mistake of ld. AO of non issue of notice u/s 143(2) is curable u/s 292BB of the Act. At this juncture, provisions of section 292BB of the Act are reproduced herewith f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62 (SC) (Case laws Paper book pages 93-99) Search and Seizure - Undisclosed Income Detected - Block Assessment - Issue of Notice u/s 143(2) within prescribed time - Mandatory - Income Tax Act, 1961, ss. 132, 143(2), 158BA, 158BC, 158BH - CBDT Circular No. 717 Dated 14.08.1995. Though in the above case, assessment was completed by ld.AO u/s 153A, without issuing notice u/s 143(2), the same is applicable to assessments completed under Act, irrespective of the fact under which section assessment is to be completed as legislature has provided for issuance of such notice before completion of assessment under whatever section it may be. CIT v. Salarpur Cold Storage (P.) Ltd. [2014] 50 taxmann.com 105 (All) 10. Section 292BB of the Act was inserted by the Finance Act, 2008 with effect from April 1, 2008. Section 292BB of the Act provides a deeming fiction. The deeming fiction is to the effect that once the assessee has appeared in any proceeding or cooperated in any enquiry relating to an assessment or reassessment, it shall be deemed that any notice under the provisions of the Act, which is required to be served on the assessee, has been duly served upon him in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice u/s 142(1), the Hon ble Delhi court in the case of PCIT-08 vs. Shri Jai Shiv Shankar traders Pvt. Ltd. reported in 383 ITR 448 - (Delhi) (Case laws Paper book pages 29-31) has held that the issue of notice u/s 143(2) is not a procedural requirement and is mandatory and completion of assessment without issue of notice u/s 143(2) is fatal to the assessment. In this case, notice u/s 148 was issued on 30.03.2010, in response to which no return of income was filed. On 01.10.2010, Ld.AO issued notice u/s 143(2), which was duly served. Subsequently notices u/s 142(1) were also issued on certain occasions. Authorized representative of assessee, on 16.12.2010 presented and stated that return of income filed u/s 139 may be treated as furnished in response to notice u/s 148. Assessment was completed vide order dated 31.12.2010, in that situation also, the Hon ble Court held that AO ought to have issued notice after 16.12.2010, in absence of which assessment was held invalid. In our case also, the return was filed after the issue of notice u/s 142(1), thus is squarely covered by the decision of Hon ble Delhi high court, as stated above. Further reliance is placed on the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the same would be considered for completing of assessment, would show that the Assessing Officer has the duty of issuing the notice under section 143(3) to lead on to the passing of the assessment. In the circumstances, with no notice issued under section 143(3) and there being no waiver, there is no justifiable ground to accept the view of the Tribunal that there was a waiver of right of notice to be issued under section 143(2) of the Act. Recently Jaipur bench of ITAT in the case of Cameron (Singapore) Pte Ltd Vs. ADIT in ITA No. 2/JP/14 vide orders dt. 27/7/2017 held that where notice u/s 143(2) is not served upon the assessee within the stipulated time period, the consequent order passed cannot be sustained. In that case though the notice u/s 143(2) was issued but the same was not served upon the assessee within the stipulated time period however, in our case the notice u/s 143(2) was never served upon the assessee. The Hon ble ITAT Delhi bench in the case of DR. S.B. KALIDHAR Vs. ITO in ITA No. 1082/Del/2016 dated 27.11.2017 has given a finding in favour of the assessee, by placing reliance on the decision of the Hon ble ITAT, SMC-2, Delhi Bench dated 16.10.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver I will not take cognizance of your request or he has to accept the request of the assessee and treat the earlier returns as one filed pursuant to the notice u/s 148 of the IT Act. In the former two scenarios, AO has to follow the procedure set out for a best of judgment assessment and cannot make an assessment under section 143(3). On the other hand, if the AO chose to accept assessee's request, he can indeed make an assessment under section 143(3). In the case before us, assessments were completed under section 143(3) read with section 147. Or in other words AO accepted the request of the assessee. This in turn makes it obligatory to issue notice u/s 143(2) after the request by the assessee to treat his earlier return as filed in pursuance to notices u/s 148 of the IT Act was received. This request, in the given case, has been made only on 05- 10-2010. Any issue of notice prior to that date cannot be treated as a notice on a return jiled by the assessee pursuant to a notice u/s 148 of the Act. Or in other words, there was no valid issue of notice u/s 143(2) of the IT Act, and the assessments were done without following the mandatory requirement u/s 143(2) of the IT Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO, in re-assessment proceedings, to issue notice under Section 143(2) of the Act, prior to finalising the re-assessment order, cannot be condoned by referring to Section 292BB of the Act. (Para 18) The resultant position was that as far as the present case was concerned the failure by the AO to issue a notice to the Assessee under Section 143(2) of the Act subsequent to 16th December 2010 when the Assessee made a statement before the AO to the effect that the original return filed should be treated as a return pursuant to a notice under Section 148 of the Act, was fatal to the order of re-assessment. (Para 19) Consequently, there was no legal infirmity in the impugned order of the ITAT. No substantial question of law arises. The appeal was dismissed. (Para 20) Thus, the facts of the assessee s case are similar to the facts of the case involved in the decision of the Hon ble Delhi High Court wherein it has been categorically held that the issue of notice U/s 143(2) in reassessment proceedings, prior to finalizing re-assessment order, cannot be condoned by referring to Section 292BB and is fatal to the order of re-assessment. Respectfully foll ..... X X X X Extracts X X X X X X X X Extracts X X X X
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