Appeal details
Counselvise Citation
[2024] 139 COUNSELVISE.COM (IT) 7660 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
11 month(s) 9 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-10-2024
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
A
Next Hearing Date
07-10-2024
Assessment Year
2010-2011
Appeal Filed On
21-11-2023
Judgement Text
"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ \nIN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH \n \nHEARING THROUGH: PHYSICAL MODE \nŵी आकाश दीप जैन, उपाȯƗ एवं ŵी िवŢम िसंह यादव, लेखा सद˟ \nBEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM \n \nआयकर अपील सं./ ITA NO.709/Chd/2023 \nिनधाŊरण वषŊ / Assessment Year : 2010-11 \n \nAnand Sawroop \nS/o Sh. Ravinder Sawroop Sainwala \nMajra, Paonta Sahib, Sirmour-\n173025, Himachal Pradesh \nबनाम \n \nThe ITO \nNahan (H.P.) \n˕ायी लेखा सं./PAN NO: AUDPS3233L \nअपीलाथŎ/Appellant \n \nŮȑथŎ/Respondent \n \nिनधाŊįरती की ओर से/Assessee by : \nShri Abhimanyu Jhamba, Advocate \n \n \n \n \n \nShri M.L. Jhamba, Advocate and \n \n \n \n \n \nShri Abhishek Jhamba, Advocate \n \nराजˢ की ओर से/ Revenue by : \nShri Vivek Vardhan, JCIT, Sr. DR \n \nसुनवाई की तारीख/Date of Hearing : \n07/10/2024 \nउदघोषणा की तारीख/Date of Pronouncement : 30/10/2024 \n \nआदेश/Order \n \nPER VIKRAM SINGH YADAV, A.M. : \n \nThis is an appeal filed by the Assessee against the order of the Ld. \nCIT(A)/NFAC, Delhi dt. 11/10/2023 pertaining to Assessment Year 2010-11. \n2. \nIn the present appeal, the assessee has raised the following grounds of \nappeal: \n1. \nThat on the facts and circumstances of the case and in taw, the Ld. \nCommissioner of Income tax (Appeals) [hereinafter referred to as 'Ld. CIT (A)] has \ngrossly erred in sustaining the addition of Rs 1,25,81,068 made by the Ld, Assessing \nOfficer. \n \n2. \nThat on the facts and circumstances of the case and in law, the Ld. CIT \n(A) has grossly erred in not appreciating that the classification of land either as \nBanjar Kadeem or Nakabil Jhund would not make the land non-agricultural \nand it would still retain its nature and character of agricultural land. \n \n\n2 \n \n3. \nThat on the facts and circumstances of the case and in law, the Ld. CIT \n(A)has grossly erred in holding that carrying out agricultural operation is a sinequa \nnon for characterising the land as agricultural land. \n4. \nThat on the facts and circumstances of the case and in law, the Ld. CIT \n(A) has grossly erred in not appreciating the revenue records which clearly \nexhibits the nature and character of the land to be agricultural land. \n \n5. \nThat on the facts and circumstances of the case and in law, the Ld. CIT \n(A) has failed to appreciate that the assessment framed u/s 147 is bad in law \nsince the notice u/s 148 was not served upon the Appellant. \n \n \n6. \nThat on the facts and circumstances of the case and in law, the Ld. CIT \n(A) has failed to appreciate that the notice u/s 148 is bad in law for want of \nproper sanction in terms of section 151 of the Act. \n \n7. \nThat on the facts and circumstances of the case and in law, the Ld. CIT \n(A) and the Assessing Officer have wrongly construed and applied section 50C in \nthe present case. \n \n8. \nThat on the facts and circumstances of the case and in law, the Ld. CtT \n(A) has failed to appreciate that it was incumbent upon the Ld. AO to refer the \nvaluation to Valuation Officer in terms of section 50 C(2) of the Act. \n9. \nThat on the facts and circumstances of the case and in law, the Ld. CIT \n(A) has erred in not appreciating that section 50C would have no applicability \nparticularly when the agricultural land is sold to a Govt. entity viz. Himachal \nPradesh Power Corporation Limited and the consideration thereof is discharged \nthrough banking channel / cheque. \n10. \nThat on the facts and circumstances of the case and in law, the Ld. CIT \n(A) has erred in not appreciating that the assessment framed by the Ld. Assessing \nOfficer is bad in law since it could not have been framed without issuing the \nmandatory notice u/s 143(2) of the Act. \n11. \nThat on the facts and circumstances of the case and in law, the Ld. CIT \n(A) erred in not appreciating that the assessment framed u/s 144 of the Act is bad \nin law. \n12. \nThat on the facts and circumstances of the case and in law, the Ld. CIT \n(A) has grossly erred in passing a non-speaking order. \n \n3. \nBriefly the facts of the case are that basis information that the assessee \nhas sold certain immovable property during the F.Y. 2009-10 relevant to \nimpugned assessment year 2010-11, the AO recorded reasons to the effect that \nincome to the tune of Rs. 30,00,000/- has escaped assessment and it is a fit case \nto issue notice under section 148 of the Act. Notice under section 148 dt. \n\n3 \n \n31/03/2017 was subsequently issued to the assessee requiring him to file return of \nincome. As per the AO, the assessee has failed to file his return of income till the \ndate of passing of the assessment order and has also not complied to the \nvarious notices and therefore, he proceeded and pass the assessment order \nunder section 144 r.w.s 147 of the Act, wherein short term capital gains of Rs. \n1,25,81,068/- was determined by the AO on sale of land by the assessee to M/s \nHimachal Pradesh Power Cooperation Ltd. (HPPCL) under Section 50C of the \nAct, which, on appeal, has been confirmed by the Ld. CIT(A). \n4. \nAgainst the said findings and the order of the Ld. CIT(A), the assessee is in \nappeal before us. \n5. \nDuring the course of hearing, the Ld. AR submitted that the assessee is an \nagriculturist and has sold a piece of agriculture land to HPPCL vide registered \nsale deed dt. 11/02/2010 and the sale consideration was discharged by the \nHPPCL for an amount of Rs. 91,28,374/- which is duly reflected in the bank \nstatement of the assessee. It was submitted that being a sale of agriculture land, \nthe same was exempt from tax, hence the assessee did not file his return of \nincome coupled with the fact that he had no other taxable income exceeding \nthe exemption limit. It was submitted that the assessment proceeding were \ninitiated by issuance of notice under section 148 at the fag end of expiry of sixth \nyear from the end of the impugned assessment year 2010-11 on 28/03/2017. \nThereafter, the AO issued notice under section 142(1) which were duly complied \nwith by the assessee. In the course of such compliance, the assessee also filed \nhis return of income declaring NIL income on 07/12/2017 and placed on record \nthe relevant documents including purchase deed and sale deed of the \nagriculture land in question. It was submitted that without issue of mandatory \nnotice under section 143(2) of the Act, the AO has proceeded to frame best \njudgment assessment under section 144 of the Act which is in clear violation of \nthe provisions of the Act and therefore deserves to be set aside. \n\n4 \n \n5.1 \nIn this regard, it was submitted that notice issued under section 148 gave \nthe assessee an option to furnish the return form manually and even Rule 12 of \nthe Income Tax Rules, 1962 as relevant to A.Y. 2010-11 allows the assessee to file \nreturn manually and given that the assessee was facing difficulty in filing the \nreturn electronically, the return of income was furnished manually before the AO \nas evident from page 2 of the assessment order wherein the AO has stated as \nunder: \nS.No \nNotice \nFixed For \nRemarks \n7 \n \n07-12-2017 \nThe assessee was called telephonically. He was \napprised about his case and was told to file ITR in \nresponse to (notice) u/s 148. He has submitted a \nprint out of ITR, he stated trying to file \nelectronically and on his request the case was \nadjourned for 11-12-2017 \n \n5.2 \nIt was submitted that once the return of income was filed even though \nmanually, it was obligatory upon the AO to issue notice under section 143(2) \nbefore framing the assessment under section 147 of the Act. It was submitted \nthat the assessee had infact appeared before the AO and there is no reason for \nthe AO not to issue notice under section 143(2) and proceeded to frame the \nassessment under section 144 of the Act. \n5.3 \nIt was submitted that the law is well settled that issuing of notice under \nsection 143(2) is mandatory and Section 292BB does not came to the aid of the \nAO and in this regard, reliance was placed on the decision of Hon’ble Supreme \nCourt in case of CIT Vs. Laxman Das Khandelwal reported in (2019) 310 CTR 8 \nwherein it was held as under: \n“7. \nA closer look at Section 292BB shows that if the assessee has participated \nin the proceedings it shall be deemed that any notice which is required to be \nserved upon was duly served and the assessee would be precluded from taking \nany objections that the notice was (a) not served upon him; or (b) not served \nupon him in time; or (c) served upon him in an improper manner. According to Mr. \n\n5 \n \nMahabir Singh, learned Senior Advocate, since the Respondent had participated \nin the proceedings, the provisions of Section 292BB would be a complete answer. \nOn the other hand, Mr. Ankit Vijaywargia, learned Advocate, appearing for the \nRespondent submitted that the notice under Section 143(2) of the Act was never \nissued which was evident from the orders passed on record as well as the stand \ntaken by the Appellant in the memo of appeal. It was further submitted that \nissuance of notice under Section 143(2) of the Act being prerequisite, in the \nabsence of such notice, the entire proceedings would be invalid. \n8. The law on the point as regards applicability of the requirement of notice under \nSection 143(2) of the Act is quite clear from the decision in Hotel Blue Moon's case \n(supra). The issue that however needs to be considered is the impact of Section \n292BB of the Act. \n9. According to Section 292BB of the Act, if the assessee had participated in the \nproceedings, by way of legal fiction, notice would be deemed to be valid even if \nthere be infractions as detailed in said Section. The scope of the provision is to \nmake service of notice having certain infirmities to be proper and valid if there \nwas requisite participation on part of the assessee. It is, however, to be noted that \nthe Section does not save complete absence of notice. For Section 292BB to \napply, the notice must have emanated from the department. It is only the \ninfirmities in the manner of service of notice that the Section seeks to cure. The \nSection is not intended to cure complete absence of notice itself. \n10. Since the facts on record are clear that no notice under Section 143(2) of the \nAct was ever issued by the Department, the findings rendered, by the High Court \nand the Tribunal and the conclusion arrived at were correct. We, therefore, see \nno reason to take a different view in the matter. \n11. These Appeals are, therefore, dismissed. No costs. \n \nOn this ground also, the entire proceedings would stand vitiated and the \nassessment so framed by the Ld. Assessing Officer may be quashed by your \nhonour. \n \n5.4 \nIt was accordingly submitted that in absence of notice under section \n143(2), the entire assessment proceedings u/s 147 stands vitiated and the \nassessment so framed by the AO deserves to be quashed. \n5.5 \nIt was submitted that similar contentions were raised before the Ld. CIT(A) \nhowever the Ld. CIT(A) has failed to record any findings in this regard. It was \nsubmitted that the said issue goes to the root of the matter and it was submitted \nthat the same may be decided by the Bench instead of remanding the matter \n\n6 \n \nback to the file of the Ld. CIT(A) as all the relevant facts are on record an no \nnew facts are required to verify or examine the same. \n6. \nPer contra, the Ld. DR has relied on the order passed by the AO and \nsubmitted that in the assessment order, the AO in para 2 and thereafter, in para \n3 and 3.1 has clearly stated that the assessee has not filed his return of income \ntill the date of passing of this order. In this regard, during the course of hearing \nour reference was drawn to para 3 of the assessment order and contents \nthereof read as under: \n“3. Before framing assessment in the case, it is important to discuss conduct of \nassessee during assessment proceedings. The detail of notices compliances \nmade by the assessee and status of notices issued to him are as under: \n \nS.No. \nNotice Fixed for \nRemarks \n1. \nu/sl48 dated \n28-03-2017 \nThe assessee was \nrequired to furnish \nincome tax return within \n30 days. \nTill date no return has been filed. \n2. \nNotice u/s \n142(1) dated \n15-05-2017 \n24-05-2017 \nA letter was received in this office on 23-05-\n2017 under the signatures of assessee. \nThe assesee had stated, \"As per notice \nissued by your good office u/s148. As 1 \nneed time to produce document please \ngive me next date\". \n3. \n \nNotice u/s \n142(1) dated \n29-05-2017 \n12-06-2017 \nSh. Anand Swaroop, the assesee attended \nthe \nproceedings. \nHe \nhas \nsubmitted \ndocument regarding sale and purchase of \nland. He stated that the land is agricultural \nland which has been acquired by Himachal \nPradesh Power Cooperation Limited. He also \nstated that he will represent his case on its \nown. The case was adjourned for 27-06-\n2017. \n4. \n \n27-06-2017. \nNone attended. \n5. \nNotice u/s \n142(1) dated \n17-08-2017 \n05-09-2017 \nReceived back undelivered. \n6. \nNotice u/s \n142(1) dated \n04-10-2017 \n16-10-2017 \nNone attended. \n7. \n \n07-12-2017 \nThe assessee was called telephonically. He \nwas apprised about his case and was told \nto file ITR in response to u/s 148. He has \nsubmitted a printout of 1TR, he stated trying \nto file electronically and on his request the \ncase was adjourned for 11-12-2017. \n8. \n \n11-12-2017 \nNone attended. \n \n\n7 \n \n7. \nIt was submitted that at S.No. 7, the AO has stated that the assessee was \ncalled telephonically. He was apprised about his case and was told to file ITR in \nresponse to notice under section 148. Thereafter, the AO has further stated that \nthe assessee has submitted the printout of ITR and he has stated that the \nassessee was trying to file return electronically and which could not filed and \nthereafter the case was adjourned to 11/12/2017. Further reference was drawn \nto para 3 of the assessment order wherein the AO has stated that despite \nissuance of first notice dated 28/03/2017, the assessee has not filed the return of \nincome till the date of the assessment order. The AO has further stated that the \nassessee had personally attended the hearing twice and had been apprised \nabout the proceedings and procedure but he didn’t comply with it. The AO has \nfurther stated that in every notice issued u/s 142(1), the assessee was specifically \nrequired to file his return of income which has not been done. The ld DR \naccordingly submitted that no return of income has been filed by the assessee \nin response to notice u/s 148 and in absence thereof, there was no requirement \nto issue notice u/s 143(2) and the assessment proceedings have rightly been \nconducted and concluded by the AO by passing of the assessment order u/s \n144 r/w 147 of the Act and the contentions so advanced by the ld AR deserve \nto be dismissed. \n8. \nWe have heard the rival contentions and purused the material available \non record. The proceedings under consideration were initiated by the AO by \nissuance of notice u/s 148 of the Act dated 28/03/2017 requiring the assessee to \nfile return of income within 30 days from the service of notice, in a prescribed \nform for the impugned assessment year 2010-11. Thereafter, notices issued u/s \n142(1) were issued from time to time wherein the assessee was specifically \nrequired to file his return of income. On 07/12/2017, the assessee was called \ntelephonically by the AO and he was apprised about his case and was told to \nfile ITR in response to notice u/s 148 and in response, the assessee appeared \n\n8 \n \nbefore the AO and submitted that he was trying to file his return electronically \nwhich apparently couldn’t be filed and a printout of his ITR was submitted to the \nAO and our reference was drawn to the return of income so prepared and \nverified by the assessee in prescribed ITR Form 2 on 07/12/2017 and filed \nmanually before the AO which is available as part of APB pages 91-97. We \ntherefore find that a manual return of income has been filed by the assessee in \nresponse to notice u/s 148 and a copy thereof personally handed over to the \nAO during the course of assessment proceedings. It is also a fact that the \nassessee couldn’t file the return of income electronically and as pointed by the \nld AR, Rule 12 of the Income tax Rules as applicable for the impugned \nassessment year 2010-11 allows the assessee to file the return in paper form and \ntherefore, there is compliance with the said Rules. However, the fact remains \nthat the assessee has filed his return of income in prescribed form and duly \nverified in response to notice u/s 148 of the Act. Once the return of income has \nbeen filed in response to notice u/s 148 of the Act, the AO has to consider and \nexamine the same and for the purposes, he has to necessarily issue notice u/s \n143(2) of the Act which has admittedly not happened in the instant case. It is a \nsettled position that issuance of notice u/s 143(2) is mandatory required in \nproceedings u/s 147 of the Act and the law in this regard is well settled. \n9. \nAs observed by the Hon’ble Supreme Court in the case of ACIT & Anr. Vs. \nHotel Blue Moon (2010) 321 ITR 362 (SC), the omission on the part of the assessing \nauthority to issue notice under Sec. 143(2) cannot be held to be a procedural \nirregularity, and the same is not curable. It was held by the Hon’ble Supreme \nCourt that for the purpose of framing of a valid assessment, issuance of a notice \nunder Section 143(2) cannot be dispensed with. In this regard, useful reference \ncan also be drawn to decisions of Hon’ble Allahabad High Court in case of CIT \nvs Rajeev Sharma (2010) 192 Taxman 197 (All), Hon’ble Bombay High Court in \ncase of ACIT vs Geo Pharmaceuticals Ltd (2013) 32 taxmann.com 162 (Bom), \n\n9 \n \nHon’ble Madras High Court in case of Sapthagiri Finance & Investments vs ITO \n(2013) 90 DTR (Mad) 289, Hon’ble Delhi High Court in case of PCIT vs Silver line \n(2016) 383 ITR 445 (Del) and in case of PCIT vs Jai Shiv Shankar traders (P) Ltd \n(2016) 383 ITR 448(Del), Hon’ble Calcutta High Court in case of PCIT vs Oberoi \nHotels (P) Ltd (2018) 96 taxmann.com 104 (Cal) wherein it has been consistently \nheld by the Hon’ble High Courts that reassessment order u/s 147 cannot be \npassed without compliance with the mandatory requirement of notice u/s \n143(2) of the Act. No contrary authority including that of the jurisdictional \nHimachal Pradesh High Court has been brought to our notice. \n10. \nFurther, we agree with the contention of the ld AR that the provisions of \nsection 292BB doesn’t come to the aid of the AO as the said provisions talks \nabout the situation where the notice has actually been issued and there are \nsituations in terms of infirmities in respect of service of notice, etc and in the \ninstant case, where notice itself has not been issued, the question of invocation \nof provisions of section 292BB doesn’t arise for consideration and our view is \nfortified by the decision of the Hon’ble Supreme Court in case of CIT Vs. Laxman \nDas Khandelwal (Supra) wherein the Lordships have held that “The scope of the \nprovision is to make service of notice having certain infirmities to be proper and \nvalid if there was requisite participation on part of the assessee. It is, however, to \nbe noted that the Section does not save complete absence of notice. For \nSection 292BB to apply, the notice must have emanated from the department. \nIt is only the infirmities in the manner of service of notice that the Section seeks to \ncure. The Section is not intended to cure complete absence of notice itself.” \n11. \nIn light of aforesaid discussions, we find that where the return of income \nhas been filed in response to notice u/s 148 and no notices has been issued by \nthe AO u/s 143(2), the subsequent assessment proceedings u/s 147 stand \nvitiated and the order so passed by the AO u/s 144 r/w 147 deserve to be set-\n\n10 \n \naside and is hereby set-aside. The ground of appeal no. 10 so taken by the \nassessee is thus allowed. \n12. \nIn light of the aforesaid, where we have set-aside the reassessment \nproceedings for want of issuance of notice u/s 143(2), the other grounds of \nappeals have become academic in nature and the same are thus left open. \n13. \nIn the result, the appeal of the assessee is partly allowed. \nOrder pronounced in the open Court on 30/10/2024. \n \n Sd/- \n \n \n \n \n \n \n \nSd/- \n आकाश दीप जैन \n \n \n \n \n िवŢम िसंह यादव \n (AAKASH DEEP JAIN) \n \n \n \n ( VIKRAM SINGH YADAV) \n उपाȯƗ / VICE PRESIDENT \n \n \n लेखा सद˟/ ACCOUNTANT MEMBER \n \n \n \n \nAG \n \n \nआदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : \n \n1. \nअपीलाथŎ/ The Appellant \n2. \nŮȑथŎ/ The Respondent \n3. \nआयकर आयुƅ/ CIT \n4. \nआयकर आयुƅ (अपील)/ The CIT(A) \n5. \nिवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH \n6. \nगाडŊ फाईल/ Guard File \n \nआदेशानुसार/ By order, \nसहायक पंजीकार/ Assistant Registrar \n \n"
Mehul