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TMI Blog2020 (12) TMI 1362X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case and in law also ld. CIT (Appeal) grossly erred in holding that the A.O. was not required to issue notice u/s 143(2) of the Act as the return of income filed on 23.01.2015 is nothing but a non est return in eyes of law and no cognizance can be given it. 5. On the facts & circumstances of the case and in law also ld. A.O. grossly erred in finalizing the reassessment without establishing that whether the alleged property is Capital asset or not and without establishing whether the DLC value is market value or not or without making enquiries that how much consideration was actually paid by the buyer. 6. On the facts & circumstances of the case and in law also ld. A.O. grossly erred in applying the provisions of section 50C on the alleged transactions as the said provisions are not applicable on the facts of the case of the assessee. Moreover, no opportunity u/s 50C(2) was given to assessee as the alleged property was under the dispute and taking of market value was necessary and lawful. Moreover assessee was having only khatedari rights and not the ownership on the land. 7. On the facts & circumstances of the case ld. A.O. grossly erred in making addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: "2. There is a delay of 27 days in filing the present appeal. The assessee has filed an application for condonation of delay and also filed an affidavit in support of the application. The assessee has explained the delay in filing the appeal as he was suffering from illness and was advised complete bed rest from 01.03.2017 to 04.04.2017. The assessee has also filed a copy of Doctor's advice showing the illness and bed rest advised to the assessee for one month. The ld. D/R has objected to the condonation of delay. 3. Having considered the cause of delay explained by the assessee which is also supported by the medical record as well as affidavit of the assessee, we are satisfied that the assessee was having a reasonable cause for presenting the appeal belated by 27 days. Accordingly, in the interest of justice, the delay in filing the appeal is condoned." 5. The brief facts of the case are that the assessee had not filed return of income. Subsequently, a notice U/s 148 of the Income Tax Act, 1961 (in short, the Act) was issued to the assessee on 14/05/2012 and the assessment was completed by the A.O. U/s 147 r.w.s. 143(3) of the Act determining total income at Rs. 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 259 (SC) 2. CIT Vs Laxman Das Khandelwal (2019) SCC Online SC 1020 (SC) 3. PCIT Vs Kamla Devi Sharma ITA 197/2018 (Rajasthan High court) 4. CIT Vs Shri Moins Iqbal Cantt Road ITA 168/2009 (Allahabad High Court. 5. M/s Mararikulam Service Vs ITO ITA No. 146/Coch/2018 (Cochin Trib) 10. On the other hand, the ld CIT-DR has relied upon the order passed by the ld. CIT(A) and submitted that return of income filed by the assessee was beyond the prescribed time limit and after issuing of show cause notice U/s 144 of the Act, therefore, the said return was a nonest in the eyes of law and no cognizance could have been taken to the said return. Therefore, there is no mistake on the part of the A.O. in finalizing the order of reassessment passed U/s 147/143(3) of the Act. 11. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. From perusal of the record, we noticed that the assessee had specifically raise this ground before the ld. CIT(A) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 10/07/2018 wherein under the similar circumstances, the Hon'ble Rajasthan High Court had concluded that issuance and service of notice U/s 143(2) of the Act was a mandatory requirement and was not a procedural requirement and completion of assessment without issuance of notice U/s 143(2) is fatal to the assessment. It has further been held by the Hon'ble High court that in case, any assessment is done without following the mandatory requirement U/s 143(2) then in that eventuality, it renders all the subsequent proceedings as invalid. We have gone through the above decision in detail and found that in the above judgment, specific substantial questions of law were framed which are as under: "Whether on the facts and in circumstances of the case the ITAT was right in quashing the reassessment proceeding u/s 147/144 {mistakenly mentioned 143(3)} for the reason of non issuance of notice u/s 143(2) wherein the assessee filed her return of income on 22/04/2014 which is 10 months 17 days beyond 05/7/2013 i.e. after expiry of 30 days' time for service of notice on 6.6.2013 stipulated in the notice issued u/s 148?" On which a detailed finding has been recorded by the Hon'ble Jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be (6 of 13) [ITA-197/2018] deemed to be issued". Thus, it is evident that deeming provisions of section 292BB are with respect to notices issued but not served/ not served in time / not served in proper manner. It does not cure the defect so far as notice has not been issued at all. In this regard, it is further submitted that there are catena of judicial pronouncements, which hold that Omission to issue notice u/s 143(2), is not a procedural irregularity and the same is not curable. Further, ld. AO in the remand report dated 12/02/2016 (APB 15-18) has stated that return of income has been filed belatedly thus he not required to issue such notice mandatorily. Your honours would appreciate that it has nowhere been provided in the Act that AO shall be absolved with the requirement of issuing notice u/s 143(2) in the event of late filing of return. In fact, proviso to section 148 provides that notice u/s 143(2) can be issued at any time before completion of assessment. Thus, so far as return of income has been filed, AO ought to have issued notice u/s 143(2), which has not been done in the instant case. In this regard, reliance is placed on: Assistant Commissioner of Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oticed that the decision of the Supreme Court in Asst. CIT v. Hotel Blue Moon (supra) where in relation to block assessment, the Supreme Court held that the requirement to issue notice under section 143(2) was mandatory. It was not "a procedural irregularity and the same is not curable and, therefore, the requirement of notice under section 143(2) cannot be dispensed with". [2017] 390 ITR 167 (Ker) Travancore Diagnostics (P) Ltd. Vs. ACIT (Case laws Paper book pages 58-61) Reassessment- Notice- Validity- Reassessment can be made within time for regular assessment- Reassessment under section 147 read with section 143(3)- Condition precedent- Notice u/s 143(2) Omission to issue notice under section 143(2)- Deject not curable - Section 292BB not applicable- Reassessment not valid- Income Tax Act, 1961, ss. 143,147,292BB 336 ITR 678 - CIT V/s Rajeev Sharma (Allahabad) (Case laws Paper book pages 62-68) Reassessment - Procedure - Return in response to Notice u/s 148 - Assessing Officer (8 of 13) [ITA-197/2018] must apply his mind and issue Notice u/s 143(2) - Procedure must be followed strictly -- Income Tax Act, 1961, ss. 143, 148. It is further submitted that even if the return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocedure (9 of 13) [ITA-197/2018] laid down u/s 143(2) which is mandatory -- In the absence of notice u/s 143(2), reassessment could not be held to be validly made. The facts of that case were that a notice under section 148 of the Act was issued to the assessee seeking to reopen the assessment for the assessment year 2000-01. However, the assessee did not file a return and therefore a notice was issued to it under section 142(1) of the Act. Pursuant thereto, the assessee appeared before the Assessing Officer and stated that the original return filed should be treated as a return filed in response to the notice under section 148 of the Act. The High Court observed that if thereafter, the Assessing Officer found that there were problems with the return which required explanation by the assessee then the Assessing Officer ought to have followed up with a notice under section 143(2) of the Act. It was observed that: "Merely because the matter was discussed with the assessee and the signature is affixed, it does not mean the rest of the procedure of notice under section 143(3) of the Act was complied with or that on placing the objection the assessee had waived the notice for furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court had reached this conclusion after considering the decision of the Hon'ble Apex Court in the case of Hotel Blue Moon (supra). At para-24 of the judgment their Lordship has held that Section 143(2) was applicable to a proceedings u/s 147/148 also, since proviso to section 148 of the Act, granted certain specific liberties to the revenue, with regard to extension of time for serving such notices. No doubt, Hon'ble Madras High Court in the case of Areva T and D India Ltd., (supra) had held that issue of notice u/s 143(2) was procedural in nature. However, Co-ordinate Bench in the case of M/s Amit Software Technologies Pvt. Ltd., (supra) after considering the decision of the Hon'ble Madras High Court as well as Delhi High Court had held that Section 143(2)of the Act, was a mandatory requirement and not a procedural one. Once notice u/s 148 of the Act, issued to the assessee required it to file a return within 30 days from the date of service of such notice. There is no provision in the Act, which would allow an AO to treat the return which was already subject to a processing u/s 143(1) of (11 of 13) [ITA-197/2018] the IT Act, as a return filed pursuant to a notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Pr. CIT Vs Jai Shiv Shankar Traders Pvt. Ltd. 383 ITR 0448 (Delhi), in the similar circumstances, has held as under: "No notice under Section 143(2) of the Act was issued to the Assessee after 16th December 2010, the date on which the Assessee informed the AO that the return originally filed should be treated as the return filed pursuant to the notice under Section 148 of the Act. (Para 12) The Madras High Court held likewise in Sapthagiri Finance & Investments v. ITO (2013) 90 DTR 289 (Mad). The facts of that case were that a notice under Section 148 of the Act was issued to the Assessee seeking to reopen the assessment for AY 2000-01. However, the Assessee did not file a return and therefore a notice was issued to it under Section 142 (1) of the Act. Pursuant thereto, the Assessee appeared before the AO and stated that the original return filed should be treated as a return filed in response to the notice under Section 148 of the Act. The High Court observed that if thereafter, the AO found that there were problems with the return which required explanation by the Assessee then the AO ought to have followed up with a notice under Section 143(2) of the Act. (Para 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 days but before finalization of the proceedings U/s 147/143(3) of the Act. Therefore, the decision of the Hon'ble Jurisdictional High Court referred above (supra) is squarely covered on the facts of the present case. 13. Apart from this, we have also gone through the decision of the Hon'ble Supreme Court in the case of ACIT Vs Hotel Blue Moon (2010) 3 SCC 259 wherein it has been held as under: 13. The only question that arises for our consideration in this batch of appeals is, whether service of notice on the assessee under Section 143(2) within the prescribed period of time is a pre-requisite for framing the block assessment under Chapter XIV-B of the Income Tax Act, 1961? 14) Chapter XVI-B prescribes the special procedure for making the assessment of search cases. 15) Section 158 B defines "undisclosed income", and "block period" which are the two basic factors for framing the block assessments. Section 158 BA is an enabling section, empowering the assessing officer, to assess "undisclosed income" as a result of search initiated or requisition made after June 30, 1995, in accordance with the provisions of this Chapter and tax the same at the fixed rate specified in Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to provide a mode of assessment of undisclosed income, which has been detected as a result of search. It is not intended to be substitute for regular assessment. Its scope and ambit is limited in that sense to materials unearthed during search. It is in addition to the regular assessment already done or to be done. The assessment for the block period can only be done on the basis of evidence found as a result of search or requisition of books of accounts or documents and such other materials or information as are available with the assessing officer. Therefore, the income assessable in Block assessment under Chapter XIV-B is the income not disclosed but found and determined as the result of search under Section 132 or requisition under Section 132A of the Act. 19) Section 158 BC stipulates that the Chapter would have application where search has been effected under Section 132 or on requisition of books of accounts, other documents or assets under Section 132A. By making the notice issued under this Section mandatory, it makes such notice the very foundation for jurisdiction. Such notice under the Section is required to be served on the person who is found to be having undisclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of block return. Omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. 23) The other important feature that requires to be noticed is that the Section 158 BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the assessing officer while completing the block assessments under Chapter XIV-B of the Act. This legislation is by incorporation. This Section even speaks of sub- sections which are to be followed by the assessing officer. Had the intention of the legislature was to exclude the provisions of Chapter XIV of the Act, the legislature would have or could have indicated that also. A reading of the provision would clearly indicate, in our opinion, if the assessing officer, if for any reason, repudiates the return filed by the assessee in response to notice under Section 158 BC(a), the assessing officer must necessarily issue notice under Section 143(2) of the Act within the time prescribed in the proviso to Section 143(2) of the Act. Where the legislature in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he revenue is that the expression `so far as may be apply' indicates that it is not expected to follow the provisions of Section 142, sub-sections 2 and 3 of Section 143 strictly for the purpose of Block assessments. We do not agree with the submissions of the learned counsel for the revenue, since we do not see any reason to restrict the scope and meaning of the expression `so far as may be apply'. In our view, where the assessing officer in repudiation of the return filed under Section 158 BC(a) proceeds to make an enquiry, he has necessarily to follow the provisions of Section 142, sub-sections (2) and (3) of Section 143. 28) Section 158 BH provides for application of the other provisions of the Act. It reads : ""158-BH- Application of other provisions of this Act.- Save as otherwise provided in this Chapter, all the other provisions of this Act shall apply to assessment made under this Chapter." This is an enabling provision, which makes all the provisions of the Act, save as otherwise provided, applicable for proceedings for block assessment. The provisions which are specifically included are those which are available in Chapter XIV-B of the Act, which includes S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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