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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 ..... refore, in our view, it relates all the subsequent proceedings as invalid. In view of the above facts and circumstances, we set aside the orders of the authorities below and quash the reassessment proceedings initiated U/s 147 of the Act and allow grounds of assessee. - ITA No. 264/JP/2017 - - - Dated:- 7-12-2020 - SHRI SANDEEP GOSAIN, JM And SHRI VIKRAM SINGH YADAV, AM For the Assessee : Shri Vedant Agarwal (Adv) Shri Satish Gupta (CA) For the Revenue : Shri Ambrish Bedi (CIT-DR) ORDER PER: SANDEEP GOSAIN, J.M. The present appeal has been filed by the assessee against the order of the ld. CIT(A)-1, Jaipur dated 05/12/2016 for the A.Y. 2007-08. Following grounds have been taken by the assessee: 1. On the facts circumstances of the case and in law also ld. Lower authorities grossly erred in initiating reassessment proceedings u/s 147 of the Act. 2. On the facts circumstances of the case and in law also ld. A.O. grossly erred in resuming jurisdiction without serving notice u/s 148 on the appellant assessee as notice issued u/s 148 was not served on the appellant. 3. On the facts circumstances of the case and in law also ld. A.O. grossl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22.01.2006. 12. On the facts circumstances of the case and law also ld. Ld. CIT (A) grossly erred in modifying the assessment order passed u/s 147/143(3) of the Act to the order passed u/s 147/144 of the Act without giving any opportunity for same to the assessee. 13. On the facts circumstances of the case and in law also Id. Lower authorities grossly erred in not giving the credit of index cost of improvement for Rs. 26,80,377/- even the said claim was not disallowed in assessment order. 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. Earlier, the present appeal of the assessee has also been dismissed by the Coordinate Bench vide its order dated 02/12/2019 for want of prosecution. Against the order of the ITAT, the assessee has filed Misc. application being M.A. No. 49/JP/2020 and vide its order dated 21/09/2020, the ITAT has recalled its order dated 02/12/2019 and fixed the case for hearing. 4. There is delay of 27 days in filing the present appeal and for which an application for condonation as well as an affidavit in support thereof have also been filed by the assessee. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout issuing and serving of notice U/s 143(2) of the Act. 9. The ld AR appearing on behalf of the assessee has submitted that the A.O. had grossly erred in finalizing the reassessment proceedings without issuing and serving notice U/s 143(2) of the Act. It was further submitted that although the assessee had raised a specific ground before the ld. CIT(A) thereby challenging the finalizing the reassessment proceedings by the A.O. without issuing and serving of notice U/s 143(2) of the Act. However, the ld. CIT(A) also grossly erred in concluding that the A.O. was not required to issue notice U/s 143(2) of the Act, as the return of income filed by the assessee on 23/01/2015 was nothing but a non est return in the eyes of law and no cognizance can be taken. The ld AR has further submitted that issuance of notice U/s 143(2) of the Act was a mandatory requirement under the Income Tax Act, however, no such notice U/s 143(2) was ever issued or served upon the assessee and even no such mention is found in the assessment order. It was further submitted that the assessment order passed U/s 147/143(3) of the Act is void ab initio. The return of income was filed by the assessee on 23/01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued U/s 148 of the Act. The ld. CIT(A) by referring to the facts of the case have concluded that since the notice U/s 148 of the Act was served upon the assessee on 07/08/2013 and the return in response to the said notice was required to be furnished within 30 days from the date of receipt of notice i.e. 7/08/2013. However, in the instant case, the return was furnished only on 23/01/2015 which was beyond statutory period of 30 days, therefore, it was considered as non est return and no cognizance was taken to the same. According to the ld. CIT(A), the purpose of issuance of notice U/s 143(2) of the Act was to provide an opportunity to the assessee to substantiate its return of income. Since the A.O. had already required the details U/s 142(1) of the Act and had issued show cause notice U/s 144 of the Act prior to filing of the alleged non est return of income on 23/01/2015, therefore, no prejudice was caused to the assessee by non issuance of notice U/s 143(2) of the Act. 12. After having gone through the entire facts of the present case and specific order passed by the ld. CIT(A), we found that it is an admitted fact that no notice U/s 143(2) of the Act was ever issued or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce 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 for the sake of convenience: 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 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.] In this regard, it is submitted that section 292BB provides that a notice shall be deemed to be served in a situation that assessee has coope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect 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 (7 of 13) [ITA-197/2018] served on the assessee, has been duly served upon him in time in accordance with the provisions of the Act. The assessee is precluded from taking any objection in any proceeding or enquiry that the notice was (i) not served upon him; or (ii) not served upon him in time ; or (iii) served upon him in an improper manner. In other words, once the deeming fiction comes into operation, the assessee is precluded from raising a challenge about the service of a notice, service within time or service in an improper manner. The proviso to section 292BB of the Act, however, carves out an exception to the effect that the section shall not apply where the assessee has raised an objection before the completion of the assessment or reassessment. Section 292BB of the Act cannot obviate the requirement of complying with a jurisdictional condition. For the Assessing Officer to make an order of assessment under section 143(3) of the Act, it is necessary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorized 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 following: 323 ITR 249 - DIT V/s Society for Worldwide Inter Bank Financial Telecommunications (Delhi) (Case laws Paper book pages 49-50) Assessment - Enquiry - Notice - Only upon Examination of Return - Notice u/s 143(2) served upon assessee before filing of Return - Not valid - Assessment completed on basis of Notice invalid - Income Tax Act, 1961, s. 143(2) 90 DTR 289 - Saptha Giri Finance Investments V/s ITO (Madras) Reassessment -- Validity - Absence of notice u/s 143(2) - In completing the assessment u/s 148, compliance of the procedure laid down under ss. 142 and 143(2) is mandatory- Once the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (10 of 13) [ITA-197/2018] 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 16.10.2015 passed in ITA Nos. 4171- 4175/Del/2015 ((AY 2003-04) in the case of Ms. Meenakshi Aggarwal vs. ITO Ors(Case laws paper book pages 7-9) in which reliance was placed on the decision of the Hon'ble ITAT, 'C' Bench, Bangalore dated 10.10.2014 in the case of Shri GN Mohan Raju vs. ITO passed in ITA No. 242 243(Bang)2013, wherein it was held as under: 7. This brings us to the crux of the issue i.e. whether notices under section 143(2) is mandatory in a reopened procedure and whether notices issued prior to the reopening would satisfy the requireme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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. This in our opinion, render the subsequent proceedings all invalid In view of above judicial pronouncements, it is submitted that so far as assessee furnished return of income u/s 148, Ld.AO was duty bound to issue notice u/s 143(2) of the Act. And the non-issuance of notice u/s 143(2) was not a procedural error which could have been corrected in the wake of deeming provisions of sec 292BB of the Act. Thus, in the case of assessee, since no notice was issued u/s 143(2), it is prayed that assessment completed u/s 143(3)/ 147 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice under Section 148 of the Act, was fatal to the order of re- assessment. (Para 19) Consequently, there (13 of 13) [ITA-197/2018] 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 following the same, we hereby set aside the order of the to 4 of the assessee's appeal. 8. Since we have quashed the reassessment proceedings, therefore, there is no need to to 9 of the appeal. 5. In our considered opinion, the tribunal is bound by the decision of Delhi High Court in the case of Pr. CIT vs. Jai Shiv Shankar Traders Pvt. Ltd. reported in 383 ITR 448 (Delhi) and has rightly followed the same, which is not challenged. 6. In that view of the matter, we are in complete agreement with the view taken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des for abolition of the scheme in cases of search after 31.5.2003. 17) The scheme of Block assessment has been explained by Central Board of Direct Taxes in paragraph 39.3 of Circular No.717 dated 14th August, 1995 ([1995] 215 ITR.70). We may only notice clause (e) of the circular which provides for the procedure for making Block assessment. Omitting what is not necessary for the purpose of this case, clause (e) is extracted and it reads as under :- 39.3(e) Procedure for making block assessment: (i) The Assessing Officer shall serve a notice on such person requiring him to furnish within such time, not being less than 15 days, as may be specified in the notice, a return in the prescribed form and verified in the same manner as a return under clause (i) of sub-section(1) of section 142 setting forth his total income including undisclosed income for the block period. The officer shall proceed to determine the undisclosed income of the block period and the provisions of section 142, sub-sections (2) and (3) of section 143 and section 144 shall apply accordingly. 18) Chapter XIV-B provides for an assessment of the undisclosed income unearthed as a result of search wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides for enquiry and assessment. The said provision reads that the assessing officer shall proceed to determine the undisclosed income of the Block period in the manner laid down in Section 158 BB and the provisions of Section 142, sub-section (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be, apply. An analysis of this sub section indicates that, after the return is filed, this clause enables the assessing officer to complete the assessment by following the procedure like issue of notice under Sections 143(2)/142 and complete the assessment under Section 143(3). This Section does not provide for accepting the return as provided under Section 143(i)(a). The assessing officer has to complete the assessment under Section 143(3) only. In case of default in not filing the return or not complying with the notice under Sections 143(2)/142, the assessing officer is authorized to complete the assessment ex-parte under Section144. 22) Clause (b) of Section 158 BC by referring to Section 143(2) and (3) would appear to imply that the provisions of Section 143(1) are excluded. But Section 143(2) itself becomes necessary only where it becomes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made without issuing notice under Section 143(2) of the Act. 25) However, it is contended by Sri Shekhar, learned counsel for the department that in view of the expression So far as may be in Section 153 BC(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. Pratap Singh's case [1985] 155 ITR 166(SC). In this case, the Court has observed that 12 Section 37(2) provides that the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under Section 37(2). Reading the two sections together it merely means that the methodology prescribed for carrying out the search provided in Section 165 has to be generally followed. The expression so far as may be has always been construed to mean that those provisions may be generally followed to the extent possible. 26) The learned counsel for the respondent has brought to our notice the observations made by this Court in the case of Maganlal Vs. Jaiswal Industries, Neemach and Ors., [(1989) 4 SCC 344], wherein this Court whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mandatory one and the conclusion of the assessment without issuance of notice U/s 143(2) is fatal to the assessment. Although in the impugned order, ld. CIT(A) has mentioned that the A.O. had issued notice to the assessee dated 23/12/2014 U/s 144 of the Act. However, the said notice was U/s 142(1)/144 of the Act, wherein the A.O. had provided last opportunity to the assessee to appear before him. Hence, it is a case of complete absence of notice U/s 143(2) of the Act which is an uncurable defect. 14. In the present case, the assessee had filed return, though, after stipulated period of 30 days but before finalization of assessment and in case the A.O. had found that there were problems with the return which required explanation by the assessee, then the A.O. ought to have followed up with a notice U/s 143(2) of the Act. However, no notice U/s 143(2) of the Act was issued which is mandatory requirement in reopen procedure and in our view issuance of notice U/s 143(2) is mandatory in reassessment proceedings initiated U/s 148 of the Act which has also been clearly laid down by the Hon ble Delhi High Court in the case of Alpine Electronics Asia PTE Ltd. (supra). The Hon ble Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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