INCOME TAX OFFICER, AYAKAR BHAVAN V. SUKANIYA PROPERTIES PVT LTD, MUMBAI

ITA 3711/MUM/2024

AI Insights

The case involves cross-appeals by M/s. Sukanya Properties Pvt. Ltd. and the Income Tax Department against the order of the CIT(A)-51, Mumbai, concerning the assessment year 2008-09. The primary contention was the validity of the reassessment initiated under section 147 of the Income Tax Act. The Tribunal examined whether the approval for reopening the assessment was granted with due application of mind or was merely mechanical. The Tribunal referenced several judicial precedents to emphasize that a mechanical approval without substantive examination is insufficient to uphold a reassessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 39654 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Other Referred Cases: Smt. Kalpana Shantilal Haria vs. ACIT, Avani Premises Pvt. Ltd. vs. ITO, Chhugamal Rajpal vs. S.P. Chaliha and Others, CIT vs. S. Goyanka Lime & Chemicals Ltd., PCIT vs. N.C. Cables Ltd., ACIT vs. Geno Pharmaceuticals Ltd., PCIT vs. Kamla Devi Sharma, Assistant Commissioner of Income Tax vs. Hotel Blue Moon, CIT vs. Salarpur Cold Storage (P.) Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHANGEPATIL PUSHKARAJ RAMESH; DR
• Assessee Lawyers: DHARMESH SHAH; MITALI PAREKH; ARS
• Keywords: Set aside; Question of law; Unexplained cash credit; Period of limitation; Reopening of assessment; Principle of natural justice; Search and seizure; Block assessment; Competent authority; Procedural lapse
• Section: 147; 148; 143(3); 142(1); 292BB; 143(2); 48; 68; 139; 73; 80IB; 101

Judgement Text

" | आयकर अपीलीय अिधकरण \fा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 3309 /Mum/2024 Assessment Year: 2008-09 M/s. Sukanya Properties Pvt. Ltd. B-306, Dynasty Business Park JB Nagar, Sangam Cinema Andheri East Mumbai - 400059 [PAN: AADCS9585J] Vs DCIT, Central Circle -3(4), Mumbai अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) I.T.A. No. 3711 /Mum/2024 Assessment Year: 2008-09 Income Tax Officer, Ayakar Bhavan Vs M/s. Sukanya Properties Pvt. Ltd. B-306, Dynasty Business Park JB Nagar, Sangam Cinema Andheri East Mumbai - 400059 [PAN: AADCS9585J] अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Dharmesh Shah & Mitali Parekh, A/Rs Revenue by : Shri Bhangepatil Pushkaraj Ramesh, Sr. D/R सुनवाई की तारीख/Date of Hearing : 11/02/2025 घोषणा की तारीख /Date of Pronouncement : 14/02/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: I.T.A. No. 3309 /Mum/2024 & I.T.A. No. 3711 /Mum/2024 are cross-appeals by the assessee and the revenue preferred against the order of the ld. CIT(A)-51, Mumbai, dated 24/05/2024 pertaining to AY 2008-09. I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 2 2. These cross-appeals were heard together and are disposed off by this common order for the sake of convenience and brevity. 3. The assessee has raised the following grounds of appeal:- “1. The Ld. CIT(A) has erred in law and in facts in passing order u/s.250 of the Act and confirming the addition made by Ld. A.O. 2. The Ld. CIT(A) has erred in law and in facts in not appreciating that the reopening of the assessment u/s. 147 of the Act is invalid and bad in law. 3. The Ld. CIT(A) has erred in law and in facts in confirming the assessment order passed by Ld. A.O. in gross violation of principles of natural justice. 4. The Ld. CIT(A) has erred in law and in facts in confirming the addition made by Ld. A.O. to the extent of Rs. 16,00,000/-on account of share capital and securities premium treating the same as unexplained cash credits u/s. 68 of the Act. 5. The appellant craves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal.” 4. Ground No. 1 is general in nature and needs no separate adjudication. 5. Vide Ground No. 2, the assessee has challenged the validity of the re-opening of the assessment u/s 147 of the Act claiming it to be invalid and bad in law. 6. Representatives were heard at length. Case records carefully perused and the relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules, 1963. 7. Vide notice dated 20/02/2015 issued u/s 148 of the Act, the AO initiated re-assessment proceedings asking the assessee to file its return of income and proposing to assess/re-assess the income/re-compute the loss/deprecation loss for the impugned assessment year. The I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 3 reasons for reopening the assessment were recorded and approval was sought from the Addl. Commissioner of Income-Tax, Central Range-3, Mumbai. The approval was granted as under:- I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 4 7.1. As mentioned above, the notice was issued on 20/02/2015 and the approval was sought on 11/02/2015 but it can be seen that no date is mentioned for granting approval, therefore, we do not know whether it was before issuing the notice u/s 148 of the Act or after. 8. The ld. Counsel vehemently argued that the approval is not only mechanical but cryptic and full of errors inasmuch as, at point no. 7., the question is “Whether the provisions of Sec. 147(a) or 147(b) are applicable or both the sections are applicable” and the answer is “Only 147(b)”. We find that the provisions of Section 147(b) have been deleted long bank. 9. On identical set of facts, the Co-ordinate Bench in ITA Nos. 92- 94/Mum/2019, dated 28/10/2020, had the occasion to consider an identical approval and held as under:- “5.3. We find that the reopening in the instant case has been made beyond four years from the end of the relevant assessment year which requires sanction of approval from the ld. PCIT u/s.151(1) of the Act. We find from page 1 of the Case Law Paper book filed by the assessee before us containing proforma in the prescribed format seeking sanction of approval u/s.151(1) of the Act, that the said proforma was sent by the ld. AO to the ld. PCIT through proper channel i.e. Additional CIT on 08/01/2016. For the sake of convenience, the entire proforma is reproduced herein:- I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 5 I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 6 5.4. From the aforesaid proforma, it could be seen that question No.7 specifically mandate the ld. AO to mention whether the provisions of Section 147(a) or 147 (b) or both the sections are applicable. In response thereto, the ld. AO had mentioned only 147(b). We find that the provisions of Section 147(b) has been omitted from the statute book long back and was certainly not in force for A.Y.2010-11. We find that the ld. CIT(A) without looking into these facts had accorded a mechanical approval without due application of mind. We find that reliance placed by the ld. AR on the decision of Hon’ble Jurisdictional High Court squarely clinches the issue before us in this regard in the case of Smt. Kalpana Shantilal Haria vs. ACIT referred to supra, wherein it was held that:- “6. The grievance of the petitioner is that there is no proper sanction in view of non application of mind by the Joint Commissioner of Income Tax. The Assessing Officer has invoked a provision of law to sustain the impugned notice which is admittedly not in the statute and the Joint Commissioner has yet approved it. 7. Mr. Chanderpal, learned Counsel appearing for the Revenue tendered a copy of the letter dated 19th December, 2017 issued to the petitioner wherein the Assessing Officer has stated that the words “147(b)” were inadvertently filled in the prescribed form, instead of Section 147 of the Act while obtaining the sanction from the Joint Commissioner of Income Tax. It is further submitted on behalf of the Revenue that the same is a curable defect under section 292B of the Act. Therefore, the impugned notice cannot be held to be bad for mere incorrect mentioning of section on account of the mistake. (emphasis supplied by us) 8. There can be no dispute with regard to the application of Section 292B of the Act to sustain a notice from being declared invalid merely on the ground of mistake in the notice. However, the issue here is not with regard to the mistake / error committed by the Assessing Officer while taking a sanction from the Joint Commissioner of Income Tax but whether there was due application of mind by the Joint Commissioner of Income Tax while giving the necessary sanction for issuing the impugned notice. It is a settled principle of law that sanction granted by the higher Authority for issuing of a reopening notice has to be on due application of mind. It cannot be an mechanical approval without examining the proposal sent by the Assessing Officer. Prima facie, it appears to us that if the Joint Commissioner of Income Tax would have applied his mind to the application made by the Assessing Officer, then the very first thing which would arise is the basis of the notice, as the provision of law on which it is based is no longer in the statute. Non-pointing out the mistake / error by the Joint Commissioner of Income Tax on the part of the I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 7 Assessing Officer is prima facie evidence of non-application of mind on the part of the sanctioning authority while granting the sanction.” (emphasis supplied by us) 5.5. From the aforesaid proforma, it is also evident that the question No.11 mandate the ld. AO to specify the reasons which enabled him to form the belief that income of the assessee had escaped assessment and in reply to the said question, the ld. AO had mentioned “As per Annexure”. The said annexure containing the reasons recorded for reopening the assessment is enclosed in page 7 of the paper book of the assessee which is reproduced herein for the sake of convenience:- I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 8 5.6. We find from the aforesaid annexure containing the reasons recorded for reopening of assessment year, the same was prepared by the ld. AO only on 14/01/2016 whereas the proforma was sent in the prescribed format by him on 08/01/2016 itself. Actually, the reasons recorded for reopening of assessment is supposed to go alongwith proforma in the prescribed format before the ld. CIT while according the sanction of approval u/s.151(1) of the Act. The aforesaid decision clearly goes to prove that at the time of seeking of approval in the prescribed proforma dated 08/01/2016, the ld. AO had not even recorded the reasons for reopening of assessment and that there was absolutely no other material available before the ld. PCIT to apply his mind and come to a conclusion that it is a fit case for reopening of assessment. Hence, it could be safely concluded that the approval given by the ld. PCIT for reopening is only a mechanical approval without due application of mind on his part. One more strange point which we note from page 1 of the case law paper book containing the prescribed proforma for reopening is that the ld. PCIT had not even mentioned the date and his name while according approval in the prescribed proforma. 5.7. From the aforesaid proforma, it could be seen that the ld. PCIT had only mentioned for question No.13 as under:- “Question Number 13. Whether the Pr. Commissioner is satisfied on the reasons recorded by the DCIT, that it is a fit case for the issue of a notice under section 148. Reply: Yes, it is fit case for issue of notice u/s.148.” 5.8. We find that the aforesaid approval granted by the ld. PCIT does not constitute proper sanction in terms of the Section 151(1) of the Act and rather it would only tantamount to mechanical approval granted by him without due application of mind. In this regard, we would like to place reliance on the Co-ordinate Bench decision of this Tribunal which has been rightly relied upon by the ld. AR in the case of that Avani Premises Pvt. Ltd., vs. ITO in ITA No.1664/Mum/2019 dated 09/01/2020 wherein the approval was obtained from Additional CIT in terms of Section 151 of the Act and question No.12 thereon and the reply given by the Additional CIT was as under:- “Whether the Addl. Commissioner is satisfied on the reasons recorded by the DCIT, that it is a fit case for the issue of a notice under Section 148.” Reply: Yes, I am so satisfied 5.8.1. The operative portion of decision of this tribunal in ITA No.1664/Mum/2019 dated 09/01/2020 is reproduced hereunder:- I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 9 6. The learned Counsel for the assessee stated that this issue is squarely covered in favour of assessee by wherein mechanical approval is held to be no approval by Hon’ble Madhya Pradesh High Court in the case of CIT vs. S. Goyanka Lime & Chemicals Ltd. (2015) 231 Taxman 73 (Madhya Pradesh), wherein Hon’ble High court has considered the satisfaction accorded by the Joint Commissioner of Income Tax, wherein it is recorded that “Yes I am satisfied” and Hon’ble High court held that the mechanical way of recording satisfaction by the JCIT, which accords sanction for issuing notice under section 148 of the Act is unsustainable. The Hon’ble Madhya Pradesh High court held as under: - “7. We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax has only recorded so \"Yes, I am satisfied\". In the case of Arjun Singh (supra), the same question has been considered by a Coordinate Bench of this Court and the following principles are laid down: — 'The Commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format \"Yes, I am satisfied\" which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown to have been performed in less than 24 hours of time which also goes to indicate that the Commissioner did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material.' 8. If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by the Joint Commissioner, which accords sanction for issuing notice under section 148, is clearly unsustainable and we find that on such consideration both the appellate authorities have interfered into the matter. In doing so, no error has been committed warranting reconsideration. 9. As far as explanation to Section 151, brought into force by Finance Act, 2008 is concerned, the same only pertains to issuance of notice and not with regard to the manner of recording satisfaction. That being so, the said amended provision does not help the revenue. 10. In view of the concurrent findings recorded by the learned appellate authorities and the law laid down in the case of Arjun Singh (supra), we see no question of law involved in the matter, warranting reconsideration.” 7. The learned Counsel for the assessee then drew our attention to the decision of Hon’ble Supreme Court in SLP, wherein SLP is being dismissed against the judgement of Hon’ble Madhya Pradesh High Court in the case of CIT vs. S Goyanka Lime & Chemical Ltd. (2016) 237 Taxman 378 (SC). The learned Counsel for the assessee also relied on the decision of Hon’ble Delhi High Court in the case of PCIT vs. N.C. Cables Ltd. (2017) 391 ITR 11 (Delhi), wherein Hon’ble Delhi High Court has considered the issue of application of mind while according sanction for issue of notice under section 147 or 148 of the Act and this provision of section 151 of the Act was considered by Hon’ble Delhi High Court and held as under: - “11. Section 151 of the Act clearly stipulates that the Commissioner of Income-tax (Appeals), who is the competent authority to authorize the reassessment notice, has I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 10 to apply his mind and form an opinion. The mere appending of the expression \"approved\" says nothing. It is not as if the Commissioner of Income-tax (Appeals) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the court is satisfied that the findings by the Income-tax Appellate Tribunal cannot be disturbed.” 8. The learned Counsel for the assessee also relied on the decision of Hon’ble Supreme Court in the case of Chhugamal Rajpal vs. S.P. Chaliha and Others and stated that Hon’ble Supreme Court long back in 1971 while adjudicating the issue of according of sanction for issue of notice under section 148 of the Act has considered this issue and finally observed as under: - “Further his report mentions: \"Hence proper investigation regarding these loans is necessary\". In other words his conclusion is that there is a case for investigating as to the truth of the alleged transactions. That is not the same thing as saying that there are reasons to issue notice under section 148. Before issuing a notice under section 148, the Income-tax Officer must have either reasons to believe that by reason of the omission or failure on the part of the assessee to make a return under section 139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year or alternatively notwithstanding that there has been no omission or failure as mentioned above on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year. Unless the requirements of clause (a) or clause (b) of section 147 are satisfied, the Income-tax Officer has no jurisdiction to issue a notice under section 148. From the report submitted by the Income-tax Officer to the Commissioner, it is clear that he could not have had reasons to believe that by reason of the assessee's omission to disclose fully and truly all material facts necessary for his assessment for the accounting year in question, income chargeable to tax has escaped assessment for that year; nor could it be said that he, as a consequence of information in his possession, had reasons to believe that the income chargeable to tax has escaped assessment for that year. We are not satisfied that the Income-tax Officer had any material before him which could satisfy the requirements of either clause (a) or clause (b) of section 147. Therefore, he could not have issued a notice under section 148. Further, the report submitted by him under section 151(2) does not mention any reason for coming to the conclusion that it is a fit case for the issue of a notice under section 148. We are also of the opinion that the Commissioner has mechanically accorded permission. He did not himself record that he was satisfied that this was a fit case for the issue of a notice under section 148. To question No. 8 in the report which reads \"Whether the Commissioner is satisfied that it is a fit case for the issue of notice under section 148\", he just noted the word \"Yes\" and affixed I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 11 his signature thereunder. We are of the opinion that if only he had read the report carefully, he could never have come to the conclusion on the material before him that this is a fit case to issue notice under section 148. The important safeguards provided in sections 147 and 151 were lightly treated by the Income-tax Officer as well as by the Commissioner. Both of them appear to have taken the duty imposed on them under these provisions as of little importance. They have substituted the form for the substance.” 9. On the other hand, the learned Sr. Departmental Representative, Shri Michael Jerald strongly opposed the issue raised because this issue was never raised before CIT(A) by the assessee and even now before Tribunal this issue is not raised, hence, he strongly opposed the adjudication of this issue. When it was pointed out to the learned Sr. Departmental Representative that the Revenue itself has filed this information regarding according of approval for issuance of notice under section 148 of the Act and approval accorded under section 151 of the Act, still he opposed the adjudication of this issue because this issue has not been raised before the lower authorities by the assessee. 10. We have heard rival contentions and gone through the facts and circumstances of the case. We noted that this is purely a legal issue and legal issue regarding reopening was raised before CIT(A) by the assessee, and CIT(A) has adjudicated the issue of reopening. This is one of the facet of reopening and that facts relating to this issue are available on record and no new facts are to be brought on record. Even the Revenue vide order dated 30.09.2019 has filed this information, which is part of the record of the assessment, that the Addl. CIT while granting approval for issuance of notice under section 148 of the Act issued by the AO, the satisfaction recorded is just that “Yes I am so satisfied”. We noted that this issue has time and again came up before Hon’ble High courts and Hon’ble High courts and Hon’ble Supreme Court has categorically held that the satisfaction should not be mechanical satisfaction and the important safe guards provided in section 147 to 151 of the Act, are not to be taken lightly by the department as well as by the concern Additional CIT or CIT as the case may be. While granting approval, the concern authority should be satisfied objectively. We also noted that in the present case, the authorities have accorded the satisfaction in a mechanical way which is unsustainable in law. Hence, on this very jurisdictional issue, we set aside the orders of the lower authorities and allow this appeal of the assessee. 11. As regards to the other grounds raised by the assessee, since we have adjudicated the issue on jurisdiction and quash the reopening, we need not to go into the other issues raised on jurisdiction as well as the merits of the case. 12. In the result, the appeal of the assessee is allowed.” 5.9. We find that the aforesaid decision of Mumbai Tribunal considers the decision of the Hon’ble Madhya Pradesh High Court in 231 Taxman 73, wherein revenue SLP was subsequently dismissed by the Hon’ble Supreme Court in 237 Taxman 378. We also find similar view was expressed by the Hon’ble Supreme Court in the case of Chhugamal Rajpal vs. S.P.Chaliha & Others reported in 79 ITR 603 (SC) supra I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 12 wherein the Hon’ble Supreme Court had emphasised the fact that the Additional Commissioner of Income Tax granting mechanical permission by simply saying the words “yes” and affixing the signature in the prescribed proforma does not tantamount to proper sanction in terms of Section 151 of the Act. In view of the aforesaid decisions of various other High Courts and also by the decision of the Hon’ble Supreme Court on the impugned issue, it could be safely concluded that the ld. PCIT, being a competent authority had granted mechanical approval without due application of mind on the prescribed proforma for reopening of assessment in terms of Section 151 of the Act. We find that the case law relied upon by the ld. DR of Hon’ble Andhra Pradesh High Court in the case of P. Munirathnam Chetty and P.Satyanarayana Chetty reported in 101 ITR 385 does not advance the case of the revenue and there is no need for us to go into it at this juncture in view of various other High Court decisions and Supreme Court decision in favour of the assessee on the similar issue. Respectfully following the aforesaid judicial precedents, we have no hesitation to hold that the entire re-assessment has been initiated without obtaining proper sanction in terms of Section 151(1) of the Act from the ld. PCIT and hence, we hold that the approval accorded by the ld. PCIT in a mechanical way is unsustainable in law, hence, on this very jurisdictional issue, we set aside the orders of the lower authorities and allow the appeal of the assessee. 5.10. We find the ld. DR vehemently argued the validity of reopening by placing reliance on the following decisions:- a. GKN Drive Shafts case rendered in 259 ITR 19 (SC) on providing reasons recorded for reopening the assessment to the assessee. b. Raymond Wollen Mills Ltd., case reported in 236 ITR 34 (SC) on the aspect of sufficiency of reasons while reopening the assessment. c. Rajesh Jhaveri Stock Brokers Pvt. Ltd., reported in 291 ITR 500 (SC) on the aspect of sufficiency of reasons while reopening the assessment. d. Decision of Hon’ble Madras High Court in the case of Sterlite Industries (India) Ltd., vs. ACIT reported in 302 ITR 275 wherein it was held that information from Enforcement Directorate showing inflation of purchases could be a good ground for issuing notice u/s.148 of the Act. e. Decision of the Hon’ble Delhi High Court in the case of AGR Investment Ltd., reported in 333 ITR 146 and the decision of Jaipur Bench in the case of Shalimar Buildcon 136 TTJ 701 wherein it was held that the notice u/s.148 of the Act could be issued based on information from Investigation Wing about tainted transactions carried out by the assessee. 5.11. We find that all the aforesaid case laws referred by the ld. DR did not address on the crucial point canvassed by the ld. AR that ld. PCIT had only granted mechanical approval u/s.151(1) of the Act without proper application of mind. Hence the reliance placed on the aforesaid decisions by the ld. DR does not come to the rescue of the revenue in the instant case. I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 13 5.12. Since the entire reopening of assessment had been quashed on the aforesaid aspect, we need not go into other grounds raised by the assessee both on law as well as on merits and they are hereby left open. 6. In the result, appeal of the assessee in ITA No.92/Mum/2019 for A.Y.2010- 11 is allowed.” 9.1. In this common order, ITA No. 94/Mum/2019 is of the assessee for AY 2010-11. On finding parity of facts, respectfully following the decision of the Co-ordinate Bench, we have no hesitation in quashing the impugned assessment order. 10. The validity of the impugned assessment order can be looked upon from another angle. The assessee filed its return of income on 29/09/2008 and in response to the notice u/s 148 of the Act on 02/03/2015, the assessee requested to treat the return of income originally filed on 29/09/2018 declaring total income at Rs. 24,560/- as the return filed in response to the notice u/s 148 of the Act dated 20/02/2015. Accordingly, the return filed on 29/09/2008 was treated as return filed pursuant to notice u/s 148 of the Act on 02/03/2015. 10.1. As per the provisions of Section 143(2) of the Act, the notice has to be served on the assessee within 6 months from the end of the Financial Year in which the return in furnished. Since the return of income pursuant to notice u/s 148 of the Act was treated to be filed on 02/03/2025, which means from the end of the Financial Year 2014-15, the notice u/s 143(2) of the Act was supposed to be served on or before 30/09/2015 and since the notice u/s 143(2) is dated 01/02/2016, the same is beyond the period of limitation. I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 14 11. Before us, the ld. D/R strongly contended that notice u/s 143(2) of the Act is for the return furnished u/s 139 or in response to notice u/s 142(1) of the Act and there is no mention of any return furnished u/s 148 of the Act. We do not find any merit in this contention of the ld. D/R. Firstly, the return of income is furnished only u/s 139 of the Act and Section 148 is only for issue of notice where income has escaped assessment, asking the assessee to furnish return of income. The status of the return of income furnished pursuant to notice u/s 148 of the Act has been explained in Section 148(2) of the Act which provides as follows:- [Issue of notice where income has escaped assessment. 148. (1)……………………………………………………………. …………………………………………………………….. (2) The return of income required under sub-section (1) shall be furnished in such form and verified in such manner and setting forth such other particulars, as may be prescribed, and the provisions of this Act shall, apply accordingly as if such return were a return required to be furnished under section 139: Provided that any return of income required under sub-section (1), furnished after the expiry of the period specified in the notice under the said sub-section, shall not be deemed to be a return under section 139.” 11.1. It can be seen that such return is a return required to be furnished u/s 139 of the Act and, therefore, the provision of Section 143(2) of the Act clearly apply. 12. The Hon’ble Bombay High Court in the case of ACIT vs. Geno Pharmaceuticals Ltd. [32 taxmann.com 162], had the occasion to consider I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 15 identical circumstances where a return was filed pursuant to the notice u/s 148 of the Act. The relevant findings read as under:- “4. So far as Tax Appeals No.77/2012 and 78/2012 are concerned, in both these appeals, the ITAT has held that the issuance of notice after reopening of the case was mandatory and this order is under challenge. It is contended that the said order is contrary to the provisions of Sections 292BB which was introduced by the Finance Act 2008 w.e.f. 01.04.2008, in which it is stated that in a case where an assessee has appeared in any proceedings or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of the said Act which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of the said Act. Perusal of the order of the ITAT reveals that this aspect was not canvassed before the ITAT. 5. Apart from that, it is an admitted position that no notice under Section 143(2) had been issued while making assessment under Section 143(3) read with Section 147. The Apex Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 has held that the Tribunal has discretion to allow or not to allow a new ground to be raised. But in a case where the Tribunal is only required to consider the question of law arising from facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. The ITAT, after relying on the judgment of the Apex Court in R. Dalmia v. CIT [1999] 236 ITR 480/102 Taxman 702, came to the conclusion that issuance of notice under Section 143(2) was mandatory. The ITAT has taken into consideration the relevant provisions and has also taken into consideration the judgment of the Apex Court and relying on the said judgments, the ITAT has held that notice under Section 143(2) is mandatory and in the absence of such service, the Assessing Officer cannot proceed to make an inquiry on the return filed in compliance with the notice issued under Section 148. 6. Under these circumstances, no case is made out for interfering with the Tax Appeals No.77/2012 and 78/2012 since no substantial question of law is raised in both the appeals. 7. So far as Tax Appeals No.75/2012 and 76/2012 are concerned, the CIT (Appeals) and the Hon'ble ITAT have recorded concurrent finding of fact that from the material which was on record, the assessee had established that it was entitled to claim the deduction under Section 80IB of the Act and as such, it will not be possible to interfere with the finding of fact recorded by both the Authorities below. No substantial question of law is raised in these appeals as well.” I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 16 13. Similarly, the Hon’ble High Court of Rajasthan in the case of PCIT vs. Kamla Devi Sharma [2018] 96 taxmann.com 659 (Rajasthan) again considered the return filed pursuant to notice u/s 148 of the Act held that the issue of notice u/s 143(2) in re-assessment proceedings prior to finalising the re-assessment order cannot be condoned by referring to Section 292BB of the Act and was fatal to order of re-assessment. The relevant findings read as under:- “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 Tax v. Hotel Blue Moon [2010] 188 Taxman 113/321 ITR 362 (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 105/228 Taxman 48 (Allahabad) \"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 I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 17 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 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 issue a notice under section 143(2) of the Act and in the absence of a notice under section 143(2) of the Act, the assumption of jurisdiction itself would be invalid.” 14. Considering the facts of the case, in light of the date of return filed and the date of issue of notice u/s 143(2) of the Act qua the decisions discussed hereinabove, the impugned assessment order deserves to be quashed. Since we have quashed the assessment order, we do not find it necessary to delve into the merits of the case. 15. In the result, appeal of the assessee is allowed and that of the revenue is dismissed. Order pronounced in the Court on 14th February, 2025 at Mumbai. Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE-PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 14/02/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs I.T.A. No. 3309 /Mum/2024 I.T.A. No. 3711 /Mum/2024 18 आदेश की \u0014ितिलिप अ\u0019ेिषत /Copy of the Order forwarded to : 1. अपीलाथ\u001b / The Appellant 2. \u0014\u001cथ\u001b / The Respondent 3. संबंिधत आयकर आयु! / Concerned Pr. CIT 4. आयकर आयु! ) अपील ( / The CIT(A)- 5. िवभागीय \u0014ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड% फाई/ Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai "