Sh Anil Bedi, Prop. of M/s Bedi Medical Hall, Phagwara V. The Income-tax Officer, Phagwara

CO 59/ASR/2014

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4030 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 23-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARMINDER SYAL
• Keywords: Validity of assessment; Procedural lapse; Assessment record; Block assessment
• Section: 143(3); 292BB; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.450(ASR)/2014 ASSESSMENT YEAR: 2008-09 ITO, WARD-1, PHAGWARA. VS. SH. ANIL BEDI, PROP. M/S BEDI MEDICAL HALL, G.T. ROAD, PHAGWARA PAN:ABUPB1093M (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.59(ASR)/2014 (ARISING OUT OF ITA NO.450(ASR)/2014) ASSESSMENT YEAR: 2008-09 SH. ANIL BEDI, PROP. M/S BEDI MEDICAL HALL, G.T. ROAD, PHAGWARA PAN:ABUPB1093M VS. ITO, WARD-1, PHAGWARA. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY: SH. UMESH TAKYAR (DR.) RESPONDENT BY: SH. HARMINDER SYAL (ADV.) DATE OF HEARING: 02.06.2016 DATE OF PRONO UNCEMENT: 27.07.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDER OF LEARNED CIT(A), JALANDHAR DATED 21.04.2014 FOR ASST. YEAR:2 008-09. 2. THE REVENUE IS AGGRIEVED WITH THE ACTION OF LEARNED CIT(A), BY WHICH HE HAD DELETED THE ADDITION OF RS.30,00,000/- WHICH WAS MADE BY ASSESSING OFFICER. ITA NO.450 & C.O.NO .59 (ASR)/2014 ASST. YEAR: 2008-0 9 2 3. THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTION S TO THE APPEAL FILED BY REVENUE WHEREIN THE ASSESSEE HAS RA ISED THE ISSUE OF NON SERVICE OF NOTICE U/S 143(2) OF THE AC T. IN THE CROSS OBJECTIONS, THE ASSESSEE HAS RAISED THE ISSUE THAT SEC.292BB CANNOT CURE THE DEFECT OF NON SERVICE OF NOTICE U/S 143(2) OF THE ACT. 4. AT THE TIME OF HEARING, THE LEARNED AR SUBMITTED THAT THE CROSS OBJECTIONS RAISED BY ASSESSEE WERE LEGAL IN N ATURE AND THEREFORE, THIS SHOULD BE HEARD FIRST AND THEREFORE , LEARNED AR WAS DIRECTED TO PROCEED WITH HIS ARGUMENTS. THE LEA RNED AR SUBMITTED THAT LEARNED CIT(A) HAS HIMSELF HELD THAT NOTICE U/S 143(2) WAS NOT SERVED WITHIN THE PRESCRIBED PERIOD OF TIME BUT HE HAS DISMISSED THE GROUND OF APPEALS REGARDING NO N SERVICE OF NOTICE BY HOLDING THAT SEC.292BB HAD CURED THE D EFECT OF NON SERVICE OF NOTICE. TO SUPPORT OF HIS ARGUMENTS, THE LEARNED AR INVITED OUR ATTENTION TO PARAS 6.12 TO 6.14 OF T HE LEARNED CIT(A)S ORDER. THE LEARNED AR SUBMITTED THAT ONCE IT WAS ESTABLISHED THAT NOTICE U/S 143(2) WAS NOT ISSUED T HE ASSESSMENT ITSELF WAS BAD IN LAW AND NEEDED TO BE Q UASHED IN VIEW OF THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF ACIT VS. HOTEL BLUE MOON REPORTED IN 321 ITR 0632. THE LEARNED AR ALSO INVITED OUR ATTENTION TO A CONSOLIDATED DECISION OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT, ITA NO.450 & C.O.NO .59 (ASR)/2014 ASST. YEAR: 2008-0 9 3 JALANDHAR VS. SUNIL KUMAR CHHABRA, IN ITA NO.85 OF 2011& CIT VS. KHANNA MALEABLE, JALANDHAR IN ITA NO.287 OF 2011. THE LEARNED AR SUBMITTED THAT THE HONBLE PUNJAB & HARYANA HIGH COURT HAS ALSO HELD THAT IN CASE THE NOTICE IS NOT SERVED WITHIN THE PRESCRIBED PERIOD OF TIME U/S 143(2) OF THE ACT, THE ASSESSMENT ORDER CANNOT BE SUSTAINED. 5. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDER OF LEARNED CIT(A). 6. SINCE, THE CROSS OBJECTIONS WERE HEARD AND IT IN VOLVED A JURISDICTIONAL ISSUE, THEREFORE, IT WAS DEEMED APPR OPRIATE TO FIRST DECIDE THE ISSUE OF CROSS OBJECTIONS AND APPE AL OF THE DEPARTMENT ON MERITS WAS NOT HEARD. 7. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT LEARNED CIT(A) IN HIS ORDER AT PARAS. 6.12 TO 6.14 HAS HELD THAT NOTI CE WAS NOT ISSUED U/S 143(2) OF THE ACT WITHIN THE PRESCRIBED PERIOD OF TIME, HOWEVER, HE DISMISSED THIS GROUNDS OF APPEAL OF ASSESSEE HOLDING THAT THE PROVISIONS OF SEC. 292BB HAD CURED DEFECT OF NON SERVICE ON NOTICE. THE LEARNED CIT(A) HAS ALSO HELD THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE RELATED TO PERIOD BEFORE INTRODUCTION OF SEC.292BB OF THE A CT, THEREFORE, THEY WERE NOT APPLICABLE. THE RELEVANT P ART OF ITA NO.450 & C.O.NO .59 (ASR)/2014 ASST. YEAR: 2008-0 9 4 LEARNED CIT(A)S ORDER AS CONTAINED IN PARA 6.12 TO 6.14 ARE REPRODUCED BELOW. 6.12 FROM THE ABOVE STATED FACTS, IT APPEARS THAT NO NOTICE U/S 143(2) OF THE ACT HAS BEEN ISSUED TO THE ASSESSEE EVEN ON 20.05.2010. THEREAFTER, THERE IS NO NOTICE U/S 143(2) OF THE ACT ON RECORD WHICH HAS BEEN ISSU ED AFTER 20.05.2010. FROM THESE FACTS IT CAN SAFELY BE SAID THAT NO VALID NOT ICE U/S 143(2) OF THE ACT HAS BEEN SERVED ON THE ASSESSEE WITHIN PRESCRIBED TIME PERIO D IN THIS CASE. 6.13. WHEN THIS FACT WITH REGARD TO NON SERVICE O F NOTICE UNDER SECTION 143(2) OF THE ACT WAS CONFRONTED TO THE ASSESSING OFFICER, HE STATED THAT EVEN IF IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE IT IS PRESUMED WITHOUT ADMITTING THAT NO NOTICE U/S 143(2) OF THE ACT HAS BEEN SERVED ON THE ASSESSEE WITHIN THE PRESCRIBED TIME, THE ASSESSEE CANNOT CHALLENGE IT NOW DURING A PPELLATE PROCEEDINGS IN VIEW THE PROVISIONS OF SECTION 292BB OF THE ACT. WHEN TH IS SUBMISSION OF THE ASSESSING OFFICER WAS CONFRONTED TO THE LEARNED AR OF THE ASS ESSEE, HE SUBMITTED THAT THE PROVISIONS OF SECTION 292BB OF THE ACT ARE NOT APPL ICABLE IN THE CASE OF ASSESSES, AS THE VALIDITY OF NOTICE AND SERVICE OF NOTICE UND ER SECTION 143(2) OF THE ACT WAS CHALLENGED BY THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS VIDE LETTERS DATED 07.06.2010 AND 17.08.2010. TO VERIFY THE CLAIM OF THE ASSESSEE, THE ASSESSMENT RECORDS ONCE AGAIN WERE GONE THROUGH. I HAVE ALSO GONE THROUGH THE CONTENTS OF LETTERS DATED 07.06.2010 AND 17.08.2010 CAREFULLY AND COULD NOT LAY MY HAND ON ANY CONTENTION OF THE ASSESSEE VIDE WHIC H THE VALIDITY OF NOTICE AND SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT H AS BEEN CHALLENGED. IN FACTS, THE ASSESSEE VIDE THESE LETTERS CHALLENGED THE SELECTIO N OF HIS CASE FOR SCRUTINY AS IN HIS OPINION THE CASE OF THE ASSESSEE CANNOT COME UN DER SCRUTINY AS HE DISCLOSED INCOME AS PER PROVISIONS OF SECTION 44AF OF THE ACT . NOWHERE IN THESE LETTERS, HAVE THE VALIDITY AND SERVICE OF NOTICE UNDER SECTI ON 143(2) OF THE ACT BEEN CHALLENGED. 6.14 IN VIEW OF THESE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT ASSESSEE IS DEBARRED FROM C HALLENGING THE VALIDITY AND SERVICE OF NOTICE U/S 143(2) OF THE ACT AT APPELLAT E STAGE IN VIEW OF SPECIFIC PROVISIONS OF SECTION 292BB OF THE ACT AS THE SAME HAS NOT BEEN CHALLENGED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. MOREOV ER, THE ASSESSEE FULLY COOPERATED DURING THE COURSE OF ASSESSMENT PROCEEDI NGS AND VALIDITY OF ASSESSMENT MADE CANNOT BE CHALLENGED AT APPELLATE S TAGE IN VIEW OF THE FACT THAT NO SUCH OBJECTION HAS BEEN RAISED BY THE ASSESSEE D URING THE COURSE OF ASSESSMENT PROCEEDINGS AND MORE PARTICULARLY IN VIEW OF SPECIF IC PROVISIONS OF SECTION 292BB OF THE ACT. THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE RELATES TO THE PERIOD BEFORE INTRODUCTION OF SECTION 292BB OF THE ACT AND THE RATIO OF THESE DECISIONS DO NOT APPLY TO THE FACTS OF THE CASE OF THE ASSESSEE. IN VIEW OF ABOVE STATED FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE ASSESSMENT FRAMED BY THE ASSESSEE EVEN WITHOUT SERVICE OF VALI D NOTICE UNDER SECTION 143(2) OF THE ACT CANNOT BE TREATED AS INVALID IN VIEW OF PROVISIONS OF SECTION 292BB OF ITA NO.450 & C.O.NO .59 (ASR)/2014 ASST. YEAR: 2008-0 9 5 THE ACT. IN THE RESULT, THE ADDITIONAL GROUND OF A PPEAL TAKEN BY THE ASSESSEE WITH REGARD TO VALIDITY AND SERVICE OF NOTICE IS DISMISS ED. 8. WE FIND THAT HONBLE SUPREME COURT IN THE CASE O F HOTEL BLUE MOON VIDE ITS DECISION HAS HELD THAT IN THE CA SE OF ASSESSMENT U/S 158 BC(A) ISSUE OF NOTICE U/S 143(2) WITHIN THE PRESCRIBED PERIOD OF TIME CANNOT BE A MERE PROC EDURAL IRREGULARITY AND THE SAME IS NOT CURABLE. THE HONB LE PUNJAB & HARYANA HIGH COURT IN THE CASE LAWS RELIED UPON BY LEARNED AR HAS ALSO HELD SIMILAR VIEWS. HOWEVER, THE HONBL E PUNJAB & HARYAN HIGH COURT HAS NOT REFERRED TO SECTION 292BB OF THE ACT REGARDING CURABILITY OF DEFECT OF NON SERVICE OF NOTICE U/S 143(2). HOWEVER, THE HONBLE ALLAHABAD HIGH COURT I N THE CASE OF CIT, LUCKNOW VS. SALARPUR COLD STORAGE (P.) LTD. HAS CLEARLY HELD THAT ASSUMPTION OF JURISDICTION WITHOUT ISSUIN G OF NOTICE U/S 143(2) CANNOT BE CURED BY TAKING RECOURSE TO DE EMING FICTION U/S 292BB OF THE ACT. THE RELEVANT FINDINGS OF THE HONBLE COURT ARE REPRODUCED BELOW. SECTION 292BB WAS INSERTED BY THE FINANCE ACT, 20 08 WITH EFFECT FROM 1-4- 2008. SECTION 292BB PROVIDES A DEEMING FICTION. THE DEEMING FICTION IS TO THE EFFECT THAT ONCE THE ASSESSEE HAS APPEARED IN ANY PROCEEDINGS O R COOPERATED IN ANY ENQUIRY RELATING TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEME D THAT ANY NOTICE UNDER THE PROVISIONS OF THE ACT, WHICH IS REQUIRED TO BE SERVED ON THE A SSESSEE, HAS BEEN DULY SERVED UPON HIM IN TIME IN ACCORDANCE WITH THE PROVISIONS OF THE AC T. THE ASSESSEE IS PRECLUDED FROM TAKING ANY OBJECTION IN ANY PROCEEDING OR ENQUIRY T HAT 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 NOT ICE, SERVICE WITHIN TIME OR SERVICE IN AN IMPROPER MANNER. THE PROVISO TO SECTION 292BB HOWEV ER, CARVES OUT AN EXCEPTION TO THE EFFECT THAT THE SECTION SHALL NOT APPLY WHERE THE A SSESSEE HAS RAISED AN OBJECTION BEFORE THE COMPLETION OF THE ASSESSMENT OR REASSESSMENT. S ECTION 292BB CANNOT OBVIATE THE REQUIREMENT OF COMPLYING WITH A JURISDICTIONSAL CON DITION. FOR THE ASSESSING OFFICER TO ITA NO.450 & C.O.NO .59 (ASR)/2014 ASST. YEAR: 2008-0 9 6 MAKE AN ORDER OF ASSESSMENT UNDER SECTION143(3) IT IS NECESSARY TO ISSUE A NOTICE UNDER SECTION 143(2) AND IN THE ABSENCE OF A NOTICE UNDER SECTION 143(2) THE ASSUMPTION OF JURISDICTION ITSELF WOULD BE INVALID. [PARA 9 AND 10] THIS PRINCIPLE IS NO LONGER IN DOUBT HAVING DUE REG ARD TO THE LAW LAID DOWN BY THE SUPREME COURT IN THE DECISION IN ASSTT. CIT V. HOTEL BLUE MOON [20101 321 ITR 362/188 TAXMAN 113 . WHILE CONSTRUING THE PROVISIONS OF CHAPTER XIV-B OF THE ACT IN RELATION TO BLOCK ASSESSMENTS, THE SUPREME COURT IN THAT DECISION CONSIDERED THE EFFECT OF SECTION 143(2) AND HAS, THEREFORE, CLEARLY HELD THA T THE OMISSION ON THE PART OF THE ASSESSING OFFICER TO ISSUE A NOTICE UNDER SECTION 1 43(2) IS NOT A PROCEDURAL IRREGULARITY AND IS NOT CURABLE. THE REQUIREMENT OF A NOTICE UND ER SECTION 143(2) CANNOT BE DISPENSED WITH. [PARAS 11 AND 12] IN OUR VIEW, WHERE THE ASSESSING OFFICER FAILS TO I SSUE A NOTICE WITHIN THE PERIOD OF SIX MONTHS AS SPELT OUT IN THE PROVISO TO CLAUSE (II) OF SECTION 143(2),THE ASSUMPTION OF JURISDICTION UNDER SECTION 143(3) WOULD BE INVALID. THIS DEFECT IN REGARD TO THE ASSUMPTION OF JURISDICTION CANNOT BE CURED BY TAKIN G RECOURSE TO THE DEEMING FICTION UNDER SECTION 292BB. THE FICTION IN SECTION 292BB O VERCOMES A PROCEDURAL DEFECT IN REGARD TO THE NON SERVICE OF A NOTICE ON THE ASSESS EE, AND OBVIATES A CHALLENGE THAT THE NOTICE WAS EITHER NOT SERVED OR THAT IT WAS NOT SER VED IN TIME OR THAT IT WAS SERVED IN AN IMPROPER MANNER, WHERE THE ASSESSEE HAS APPEARED IN A PROCEEDING OR COOPERATED IN AN ENQUIRY WITHOUT RAISING AN OBJECTION. SECTION 292BB CANNOT COME TO THE AID OF THE REVENUE IN A SITUATION 1 WHERE THE ISSUANCE OF A NOTICE ITSELF WAS NOT WITH IN THE PRESCRIBED PERIOD, IN WHICH EVENT THE QUESTION OF WHETHER IT W AS SERVED CORRECTLY OR OTHERWISE, WOULD BE OF NO RELEVANCE WHATSOEVER. FAILURE TO ISS UE A NOTICE WITHIN THE PRESCRIBED PERIOD WOULD RESULT IN THE ASSESSING OFFICER ASSUMI NG JURISDICTION CONTRARY TO LAW. [PARA 13] FOR THE AFORESAID REASONS, THERE IS NO ERROR IN THE VIEW WHICH WAS TAKEN BY THE TRIBUNAL. THE APPEAL IS ACCORDINGLY, DISMISSED. [PA RA 15] IN THE PRESENT CASE IT IS AN UNDISPUTED FACT THAT N OTICE U/S 143(2) WAS NOT ISSUED WITHIN THE PRESCRIBED PERIOD OF TIME AS HELD BY LEARNED CIT(A). THE PROVISIONS OF SEC.292BB OF THE ACT CANNOT COME TO CURE THE DEFECT OF NON SERVICE OF NO TICE AS HELD BY HONBLE ALLAHABAD HIGH COURT IN THE CASE LAW CIT ED ABOVE, THEREFORE, WE HOLD THAT THE GRIEVANCE OF THE ASSESS EE IS JUSTIFIED. RESPECTFULLY FOLLOWING THE ABOVE JUDGMEN TS, WE ALLOW THE GROUNDS OF APPEAL OF CROSS OBJECTIONS. ITA NO.450 & C.O.NO .59 (ASR)/2014 ASST. YEAR: 2008-0 9 7 9. IN VIEW OF THE OUR DECISION ON CROSS OBJECTIONS IN FAVOUR OF ASSESSEE THE APPEAL FILED BY REVENUE HAS BECOME INFRUCTUOUS AND THEREFORE, SAME IS DISMISSED AS INF RUCTUOUS. 10. IN NUTSHELL, THE CROSS OBJECTIONS OF ASSESSEE A RE ALLOWED WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.07.2016 . SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOU NTANT MEMBER DATED:27.07.2016 /PK/PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER