KAMLA DEVI SHARMA, Jaipur V. ITO, Jaipur

ITA 1026/JPR/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2145 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 24-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEMA MEENA JCIT DHK
• Assessee Lawyers: S B NATANI
• Keywords: Unexplained investment; Search and seizure; Question of law; Validity of assessment; Procedural lapse; Block assessment; Reassessment proceedings
• Section: 143(3); 142(1); 147; 131; 148; 12; 90; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA-@ ITA NO. 1026/JP/2016 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2009-10 KAMLA DEVI SHARMA, W/O- SHRI KAILASH CHAND SHARMA, VILLAGE- DAULATPURA, BAINAD, TEHSIL- AMER, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD 7(4), SIDHNATH BHAWAN, BEHIND VIDHAN SABHA, JAIPUR. TAN/PAN NO. CQCPK 0098 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL & SHRI S.B, NATANI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. SEEMA MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01/02/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 06/02/2018 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATES FR OM THE ORDER OF THE LD. CIT(A)-3, JAIPUR DATED 20/09/2016 FOR THE A. Y. 2009-10. 2. THE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEE HAD PU RCHASED AGRICULTURAL LAND ON 30/4/2008 FOR A CONSIDERATION OF RS. 1,01,20,000/- AND PAID IN CASH. NOTICE U/S 148 OF THE INCOME TAX A CT, 1961 (IN SHORT THE ACT) WAS ISSUED ON 31/5/2013. NOTICE WAS SERVED O N 06/06/2013 ITA 1026/JP/2016_ KAMLA DEVI SHARMA VS ITO 2 THROUGH NOTICE SERVER. RETURN OF INCOME WAS FILED ON 22/4/2014. NOTICE U/S 142(1) OF THE ACT WAS ISSUED ALONGWITH QUESTIONNA IRE ON 30/4/2014. THE ASSESSMENT WAS MADE ON 05/3/2015 AT RS. 1,01,20,0 00/-, THAT IS THE AMOUNT PAID FOR PURCHASE OF THE AGRICULTURAL LA ND, TREATED AS UNEXPLAINED INVESTMENT. THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT BY T AKING FOLLOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF LEARNED ASSESS ING OFFICER IN COMPLETING THE ASSESSMENT U/S 143(3) OF THE INCO ME TAX ACT, 1961 WITHOUT ISSUING NOTICE U/S 143(2) OF THE INCOM E TAX ACT, 1961. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(A) HAS ERRED IN HOLDING THE MISTAKE OF NON-ISSUANCE OF NOTICE U/S 143(2) BEFORE COMPLETION OF ASSESSMENT U/S 143(3) A S CURABLE U/S 292BB OF THE INCOME TAX ACT, 1961. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(A) HAS ERRED IN OBSERVING THAT IT WAS FOR THE ASSESSEE TO HAVE OBJECTED DURING THE ASSESSMENT PROCEEDINGS ITSELF T HAT NOTICE U/S 143(2) HAD NOT BEEN ISSUED. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(A) HAS ERRED IN NOT HOLDING THE ASSESSMENT ORDER PASSE D BY THE LEARNED ASSESSING OFFICER AS AB-INITIO VOID. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 1,01,20 ,000/-. ITA 1026/JP/2016_ KAMLA DEVI SHARMA VS ITO 3 6. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(A) HAS ERRED IN RELYING AND ACCEPTING THE STATEMENT OF SHRI SHANKAR LAI GURJAR WHEREAS OPPORTUNITY OF CROSS EXA MINATION WAS NOT ALLOWED TO THE ASSESSEE. 7. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(A) HAS ERRED IN ASKING SOURCE OF SOURCE OF AMOUNT RECE IVED FROM SHRI RANJEET JAT. 8. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(A) HAS ERRED IN SUSTAINING ADDITION OF AMOUNT RECEIVED FROM SHRI GOPAL SHARMA AND RAM NARAYAN SHARMA ON ACCOUNT OF T HEIR DEFAULT IN NOT RESPONDING TO SUMMONS ISSUED U/S 131 OF THE INCOME TAX ACT, 1961 BY THE LEARNED ASSESSING OFFIC ER. 9. THE ASSESSEE CRAVES YOUR INDULGENCE TO ADD AMEND OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF H EARING. 4. IN THE GROUNDS NO. 1 TO 4 OF APPEAL, THE ASSESSE E HAS CHALLENGED THE ASSESSMENT U/S 143(3) OF THE ACT WITHOUT ISSUING NOTICE U/S 143(2) OF THE ACT. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT NON-ISSUE OF NOTICE U/S 143(2) OF THE ACT PRIOR TO COMPLETION OF ASSESSMENT U/S 143(3) OF THE ACT CANNOT BE CURED BY THE PROVISIONS OF SECTION 292BB OF THE ACT. THE ASSESSMENT FRAMED WITHOUT ISSUE OF NOTIC E IS AB-INITIO VOID IN VIEW OF VARIOUS DECISIONS OF HON'BLE HIGH COURTS. 5. A WRITTEN SUBMISSION WAS ALSO MADE BY THE LD AR OF THE ASSESSEE ON THE ISSUE OF NON-ISSUE OF NOTICE U/S 143(2) OF T HE ACT PRIOR TO FINALIZATION OF THE ASSESSMENT U/S 143(3) OF THE AC T. THE SUBMISSIONS OF THE LD AR ON THIS ISSUE IS REPRODUCED HEREUNDER: ITA 1026/JP/2016_ KAMLA DEVI SHARMA VS ITO 4 IN THESE GROUNDS OF APPEAL, ASSESSEE HAS CHALLENGED THE ACTION OF LD. C1T(A) IN CONFIRMING THE ACTION OF LD. AO IN COMPLETING ASSES SMENT WITHOUT ISSUING NOTICE U/S 143(2), WHICH IS SINE QUA NON ONCE ASSES SEE FURNISHED RETURN OF INCOME. SINCE ALL THESE GROUNDS OF APPEAL ARE INTER RELATED, THUS HAVE BEEN DEALT WITH TOGETHER FOR THE SAKE OF CONVENIENCE. BRIEF FACTS AS STATED ABOVE ARE THAT THE CASE OF AS SESSEE WAS REOPENED BY ISSUE OF THE NOTICE U/S 148 OF THE ACT AND THEREAFTER THE ASSESSMENT WAS COMPLETED WITHOUT ISSUE OF NOTICE U/S 143(2) THOUGH THE ASSES SEE HAD FILED THE RETURN OF INCOME IN RESPONSE TO SUCH NOTICE U/S 148. THE CHRO NOLOGY OF THE EVENTS ARE AS UNDER: - ON 31.05.2013 NOTICE U/S 148 WAS ISSUED AND SERVE D UPON ASSESSEE ON 06.06.2013; - ON 03.04.2014, NOTICE U/S 142(1) WAS ISSUED FIXIN G DATE OF HEARING ON 16.04.2014; - ON 22.04.2014, RETURN OF INCOME WAS FILED BY ASS ESSEE; - ON 30.04.2014, FURTHER QUERY LETTER U/S 142(1) AS WELL AS SHOW CAUSE NOTICE U/S 271(1)(B) WAS ISSUED; - NOTICES U/S 142(1) WERE ISSUED ON 17.11.2014 AND 06.02.2015 AND THE PROCEEDINGS WERE ATTENDED BY THE A/R OF THE ASSESSE E FROM TIME TO TIME - ASSESSMENT ORDER WAS PASSED U/S 143(3)/ 147 OF TH E ACT BY LD. AO VIDE ORDER DATED 05.03.2015. FROM THE PERUSAL OF THE SUMMARY OF CHRONOLOGICAL EV ENTS IT IS CLEARLY EVIDENT THAT NOTICE U/S 143(2) WAS NEVER ISSUED BY LD.AO BE FORE COMPLETION OF THE ASSESSMENT AND THIS FACT HAS CATEGORICALLY BEEN ADM ITTED BY LD.AO IN REMAND REPORT SUBMITTED BEFORE THE LD. CIT(A) (APB 15-18). WITH THIS BACKGROUND OF CHRONOLOGICAL EVENTS, KIND ATTENTION OF HONBLE BENCH IS INVITED TO THE PROVISIONS OF SECTION 148 OF THE ACT, WHICH READS AS UNDER: 148. [(1)] BEFORE MAKING THE ASSESSMENT, REASSESSMENT OR RECOM PUTATION UNDER SECTION 147. THE ASSESSING OFFICER SHALL SERVE ON T HE ASSESSEE A NOTICE REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, [* * *] AS MAY BE SPECIFIED IN THE NOTICE, A ITA 1026/JP/2016_ KAMLA DEVI SHARMA VS ITO 5 RETURN OF HIS INCOME OR THE INCOME OF ANY OTHER PER SON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR CORRESPONDING TO THE RELEVANT ASSESSMENT YEAR, IN THE PRESCRIBED FORM AND VERIFIE D IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED; AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDIN GLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139 : ] PROVIDED FURTHER THAT IN A CASE (A ) WHERE A RETURN HAS BEEN FURNISHED DURING THE PERIOD COMMENCING ON THE 1 ST DAY OF OCTOBER, 1991 AND ENDING ON THE 30TH DAY OF SEPT EMBER, 2005, IN RESPONSE TO A NOTICE SERVED UNDER THIS SECTION, AND (B ) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER C LAUSE (II) OF SUB-SECTION (2) OF SECTION 143 AFTER THE EXPIRY OF TWELVE MONTHS SPECI FIED IN THE PROVISO TO CLAUSE (II) OF SUB-SECTION (2) OF SECTION 143, BUT BEFORE THE EXPIRY OF THE TIME LIMIT FOR MAKING THE ASSESSMENT, REASSESSMENT OR RECOMPUTATIO N AS SPECIFIED IN SUB- SECTION (2) OF SECTION 153, EVERY SUCH NOTICE REFER RED TO IN THIS CLAUSE SHALL BE DEEMED TO BE A VALID NOTICE.] ON PERUSAL OF ABOVE, IT IS EVIDENT THAT SECTION 148 SPECIFICALLY PROVIDES THAT ALL THE PROVISIONS OF ACT SHALL BE APPLICABLE IN RESPEC T OF RETURN OF INCOME U/S 148 AS IF THE SAME WAS RETURN FURNISHED U/S 139. GOING FURTHER, FIRST AND SECOND PROVISOS TO SECTION 148, PROVIDES THE TIME LIMIT FO R ISSUANCE OF NOTICE U/S 143(2) ON THE BASIS OF DATE OF FILING RETURN OF INC OME. THUS, IT IS NOT DISCRETIONARY RATHER MANDATORY FOR AN ASSESSING OFF ICER TO ISSUE NOTICE U/S 143(2) ONCE THE RETURN OF INCOME IS FILED BY ASSESS EE. THE ONLY RELAXATION IN THE CASE OF RE ASSESSMENT IS THAT NOTICE U/S 143(2) CAN BE ISSUED AT ANY TIME BEFORE THE EXPIRY OF TIME LIMIT FOR COMPLETING ASSESSMENT/ RE ASSESSMENT AND THE SAME WOULD BE DEEMED AS VALID NOTICE. HOWEVER, AS S TATED ABOVE, NO NOTICE U/S 143(2) WAS EVER ISSUED IN THE CASE OF THE ASSES SEE EVEN THOUGH THE RETURN OF INCOME WAS FILED BY THE ASSESSEE. THUS THE COMPL ETION OF THE RE-ASSESSMENT PROCEEDINGS AND COMPLETION OF THE ASSESSMENT IS WIT HOUT ANY VALID JURISDICTION AND THEREFORE THE ORDER PASSED IS VOID AB INITIO. T HIS CONTENTION WAS ALSO RAISED BEFORE LD.CIT(A) WHO SOUGHT REMAND REPORT FROM LD. AO IN THIS REGARD. THE LD. ITA 1026/JP/2016_ KAMLA DEVI SHARMA VS ITO 6 AO IN REMAND REPORT DATED 12/02/2016 AT PAGE 2 IN L AST PARA OBSERVED THAT: (APB -17) DURING THE ASSESSMENT PROCEEDINGS IN THIS CASE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE OR HER AUTHORIZED REPRESENTATIVE DID N OT OPPOSE THAT THE NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1 961 WAS NOT ISSUED AFTER FILING RETURN OF INCOME IN RESPONSE TO THE NOTICE U /S 148 OF THE INCOME TAX ACT, 1961. THEREFORE, UNDER THE PROVISIONS OF INCOME TAX ACT, 1961, THE NOTICE U/S 148 CANT BE ISSUED LD. CIT(A) CONFIRMED THE VALIDITY OF ASSESSMENT ORD ER SO PASSED WITHOUT ISSUE OF NOTICE U/S 143(2) BY OBSERVING THAT ASSESSEE HAD ATTENDED THE HEARING ON SEVERAL OCCASIONS AND NO OBJECTION WAS RAISED DURIN G THE PROCEEDINGS BEFORE THE LD. AO, THUS NON ISSUANCE OF NOTICE U/S 143(2) OF THE ACT WOULD NOT MAKE ASSESSMENT ORDER INVALID. LD. CIT(A) FURTHER HELD T HAT 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 TH E ACT ARE REPRODUCED HEREWITH FOR THE SAKE OF CONVENIENCE: 292BB. WHERE AN ASSESSEE HAS APPEARED IN ANY PROCE EDING 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 I S 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 P RECLUDED FROM TAKING ANY OBJECTION IN ANY PROCEEDING OR INQUIRY UNDER THIS A CT 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 COOPERATED/ ATTEND ED / ITA 1026/JP/2016_ KAMLA DEVI SHARMA VS ITO 7 PARTICIPATED IN ASSESSMENT/ RE ASSESSMENT PROCEEDIN GS AND NO OBJECTION REGARDING NON RECEIPT OF NOTICE WAS FILED DURING AS SESSMENT STAGE. IT IS WORTH NOTICING HERE THAT SECTION NOWHERE PROVIDES THAT A NOTICE REQUIRED TO BE ISSUED, SHALL BE DEEMED TO BE ISSUED. THUS, IT IS EVIDENT THAT DEEMING PROVISIONS OF SECTION 292BB ARE WITH RESPECT TO NOT ICES ISSUED BUT NOT SERVED/ NOT SERVED IN TIME / NOT SERVED IN PROPER MANNER. I T 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 N OTICE 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 IS SUE SUCH NOTICE MANDATORILY. YOUR HONOURS WOULD APPRECIATE THAT IT HAS NOWHERE B EEN PROVIDED IN THE ACT THAT AO SHALL BE ABSOLVED WITH THE REQUIREMENT OF I SSUING NOTICE U/S 143(2) IN THE EVENT OF LATE FILING OF RETURN. IN FACT, PROVIS O 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 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 CIRCULA R NO. 717 DATED 14.08.1995. THOUGH IN THE ABOVE CASE, ASSESSMENT WAS COMPLETED BY LD.AO U /S 153 A, WITHOUT ISSUING NOTICE U/S 143(2), THE SAME IS APPLICABLE T O ASSESSMENTS COMPLETED UNDER ACT, IRRESPECTIVE OF THE FACT UNDER WHICH SEC TION ASSESSMENT IS TO BE ITA 1026/JP/2016_ KAMLA DEVI SHARMA VS ITO 8 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 TA XMANN.COM 105 (ALL) '10. SECTION 292BB OF THE ACT WAS INSERTED BY THE FINANCE ACT, 2008 WI TH 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 RELATIN G TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UN DER THE PROVISIONS OF THE ACT, WHICH IS REQUIRED TO BE SERVED ON THE ASSE SSEE, HAS BEEN DULY SERVED UPON HIM IN TIME IN ACCORDANCE WITH THE PROV ISIONS 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 IMPROP ER MANNER. IN OTHER WORDS, ONCE THE DEEMING FICTION COMES INTO OPERATIO N, THE ASSESSEE IS PRECLUDED FROM RAISING A CHALLENGE ABOUT THE SERVIC E OF A NOTICE, SERVICE WITHIN TIME OR SERVICE IN AN IMPROPER MANNER. THE P ROVISO TO SECTION 292BB OF THE ACT, HOWEVER, CARVES OUT AN EXCEPTION TO THE EFFECT THAT THE SECTION SHALL NOT APPLY WHERE THE ASSESSEE HAS RAIS ED AN OBJECTION BEFORE THE COMPLETION OF THE ASSESSMENT OR REASSESSMENT. S ECTION 292BB OF THE ACT CANNOT OBVIATE THE REQUIREMENT OF COMPLYING WIT H A JURISDICTIONAL CONDITION. FOR THE ASSESSING OFFICER TO MAKE AN ORD ER 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 UN DER SECTION 143(2) OF THE ACT, THE ASSUMPTION OF JURISDICTION ITSELF WOULD BE INVALID. IN THE SAME DECISION IN CIT V. SALARPUR COLD STORAG E (P.) LTD. (SUPRA), THE ALLAHABAD HIGH COURT NOTICED THAT THE DECISION OF T HE 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 NO TICE UNDER SECTION 143(2) WAS MANDATORY. IT WAS NOT 'A PROCEDURAL IRREGULARIT Y AND THE SAME IS NOT CURABLE AND, THEREFORE, THE REQUIREMENT OF NOTICE U NDER 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) ITA 1026/JP/2016_ KAMLA DEVI SHARMA VS ITO 9 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 APPL ICABLE- REASSESSMENT NOT VALID- INCOME TAX ACT, 1961, SS. 143,147,292BB 336 ITR 678 - CIT V/S RAJEEV SHARMA (ALLAHABAD) (CA SE LAWS PAPER BOOK PAGES 62-68) REASSESSMENT - PROCEDURE - RETURN IN RESPONSE TO NOTICE U/S 148 - ASSESSING OFFICER MUST APPLY HIS MIND AND ISSUE NOTICE U/S 14 3(2) - PROCEDURE MUST BE FOLLOWED STRICTLY INCOME TAX ACT, 1961, SS. 143, 148. IT IS FURTHER SUBMITTED THAT EVEN IF THE RETURN OF INCOME WAS FILED AFTER THE ISSUE OF NOTICE U/S 142(1), THE HONBLE DELHI COURT IN THE CASE OF PCIT-08 VS. SHRI JAI SHIV SHANKAR TRADERS PVT. LTD. REPORTED IN 383 ITR 448 - (DELHI) (CASE LAWS PAPER BOOK PAGES 29-31) HAS HELD THAT THE ISSUE OF NOTICE U/S 143(2) IS NOT A PROCEDURAL REQUIREMENT AND IS MANDATORY AND COMPL ETION OF ASSESSMENT WITHOUT ISSUE OF NOTICE U/S 143(2) IS FATAL TO THE ASSESSMENT. IN THIS CASE, NOTICE U/S 148 WAS ISSUED ON 30.03.20 10, IN RESPONSE TO WHICH NO RETURN OF INCOME WAS FILED. ON 01.10.2010, LD.AO IS SUED NOTICE U/S 143(2), WHICH WAS DULY SERVED. SUBSEQUENTLY NOTICES U/S 142 (1) WERE ALSO ISSUED ON CERTAIN OCCASIONS. AUTHORIZED REPRESENTATIVE OF ASS ESSEE, 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 HONB LE 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 FILE D AFTER THE ISSUE OF NOTICE U/S 142(1), THUS IS SQUARELY COVERED BY THE DECISION OF HONBLE DELHI HIGH COURT, AS STATED ABOVE. FURTHER RELIANCE IS PLACED ON THE FOLLOWING: ITA 1026/JP/2016_ KAMLA DEVI SHARMA VS ITO 10 323 ITR 249 - DIT V/S SOCIETY FOR WORLDWIDE INTER BANK FINANCIAL TELECOMMUNICATIONS (DELHI) (CASE LAWS PAPER BOOK PA GES 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 A CT, 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 COMPLE TING THE ASSESSMENT U/S 148, COMPLIANCE OF THE PROCEDURE LAI D DOWN UNDER SS. 142 AND 143(2) IS MANDATORY - ONCE THE ADMITTED FACT THAT BEYOND NOTICE U/S 142(1 ), THERE WAS NO NOTICE ISSUED U/S 143(2) AND THAT ADMI TTEDLY THE ASSESSEE HAD REQUESTED THE OFFICER TO ACCEPT THE ORIGINAL RETURN AS A RETURN FILED IN RESPONSE TO S. 148, THERE WAS TOTAL FAILURE ON THE PART OF THE REVENUE FROM COMPLYING WITH THE PROCEDURE 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 VA LIDLY MADE. THE FACTS OF THAT CASE WERE THAT A NOTICE UNDER SEC TION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE SEEKING TO REOPEN THE ASSESS MENT 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 THA T IF THEREAFTER, THE ASSESSING OFFICER FOUND THAT THERE WERE PROBLEMS WI TH THE RETURN WHICH REQUIRED EXPLANATION BY THE ASSESSEE THEN THE ASSES SING OFFICER OUGHT TO HAVE FOLLOWED UP WITH A NOTICE UNDER SECTION 143(2) OF T HE ACT. IT WAS OBSERVED THAT: 'MERELY BECAUSE THE MATTER WAS DISCUSSED WITH THE A SSESSEE AND THE SIGNATURE IS AFFIXED, IT DOES NOT MEAN THE REST OF THE PROCED URE OF NOTICE UNDER SECTION 143(3) OF THE ACT WAS COMPLIED WITH OR THAT ON PLAC ING THE OBJECTION THE ASSESSEE HAD WAIVED THE NOTICE FOR FURTHER PROCESSI NG OF THE REASSESSMENT PROCEEDINGS. THE FACT THAT ON THE NOTICE ISSUED UND ER SECTION 143(2) OF THE ACT, THE ASSESSEE HAD PLACED ITS OBJECTION AND REITERATE D ITS EARLIER RETURN FILED AS ONE FILED IN RESPONSE TO THE NOTICE ISSUED UNDER SE CTION 148 OF THE ACT AND THE OFFICER HAD ALSO NOTED THAT THE SAME WOULD BE CONSI DERED FOR COMPLETING OF ITA 1026/JP/2016_ KAMLA DEVI SHARMA VS ITO 11 ASSESSMENT, WOULD SHOW THAT THE ASSESSING OFFICER H AS THE DUTY OF ISSUING THE NOTICE UNDER SECTION 143(3) TO LEAD ON TO THE PASSI NG OF THE ASSESSMENT. IN THE CIRCUMSTANCES, WITH NO NOTICE ISSUED UNDER SECTION 143(3) AND THERE BEING NO WAIVER, THERE IS NO JUSTIFIABLE GROUND TO ACCEPT TH E VIEW OF THE TRIBUNAL THAT THERE WAS A WAIVER OF RIGHT OF NOTICE TO BE ISSUED UNDER SECTION 143(2) OF THE ACT.' RECENTLY JAIPUR BENCH OF ITAT IN THE CASE OF CAMERO N (SINGAPORE) PTE LTD VS. ADIT IN ITA NO. 2/JP/14 VIDE ORDERS DT. 27/7/2017 HELD THAT WHERE NOTICE U/ S 143(2) IS NOT SERVED UPON THE ASSESSEE WITHIN THE S TIPULATED TIME PERIOD, THE CONSEQUENT ORDER PASSED CANNOT BE SUSTAINED. IN THA T CASE THOUGH THE NOTICE U/S 143(2) WAS ISSUED BUT THE SAME WAS NOT SERVED U PON THE ASSESSEE WITHIN THE STIPULATED TIME PERIOD HOWEVER, IN OUR CASE THE NOTICE U/S 143(2) WAS NEVER SERVED UPON THE ASSESSEE. THE HONBLE 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 T HE ASSESSEE, BY PLACING RELIANCE ON THE DECISION OF TH E HONBLE ITAT, SMC-2, DELHI BENCH DATED 16.10.2015 PASSED IN ITA NOS. 4171- 417 5/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 DECI SION OF THE HONBLE ITAT, C BENCH, BANGALORE DATED 10.10.2014 IN THE CASE OF SH RI GN MOHAN RAJU VS. ITO PASSED IN ITA NO. 242 & 243(BANG)2013, WHEREIN IT W AS HELD AS UNDER: 7. THIS BRINGS US TO THE CRUX OF THE ISSUE I.E. WHETHE R NOTICES UNDER SECTION 143(2) IS MANDATORY IN A REOPENED PROCEDURE AND WHETHER NO TICES ISSUED PRIOR TO THE REOPENING WOULD SATISFY THE REQUIREMENT SPECIFIED U /S 143(2) OF THE ACT. THAT ISSUE OF A NOTICE U/S 143(2) OF THE ACT, IS MANDATORY EVE N IN A RE-ASSESSMENT PROCEEDING INITIATED U/S 148 OF THE ACT HAS BEEN CL EARLY LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF M/S ALPINE ELECTRONICS AS IA PTE LTD., (SUPRA). HON'BLE DELHI HIGH COURT HAD REACHED THIS CONCLUSION AFTER CONSID ERING 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 APPLICABL E TO A PROCEEDINGS U/S 147/148 ALSO, SINCE PROVISO TO SECTION 148 OF THE ACT, GRAN TED CERTAIN SPECIFIC LIBERTIES TO THE REVENUE, WITH REGARD TO EXTENSION OF TIME FOR SERVI NG SUCH NOTICES. NO DOUBT, HON'BLE MADRAS HIGH COURT IN THE CASE OF AREVA T AND D INDI A LTD., (SUPRA) HAD HELD THAT ISSUE OF ITA 1026/JP/2016_ KAMLA DEVI SHARMA VS ITO 12 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) A FTER CONSIDERING THE DECISION OF THE HON'BLE MADRAS HIGH COURT AS WELL AS DELHI HIGH COU RT HAD HELD THAT SECTION 143(2)OF THE ACT, WAS A MANDATORY REQUIREMENT AND NOT A PROC EDURAL ONE. ONCE NOTICE U/S 148 OF THE ACT, ISSUED TO THE ASSES SEE REQUIRED IT TO FILE A RETURN WITHIN 30 DAYS FROM THE DATE OF SERVICE OF S UCH NOTICE. THERE IS NO PROVISION IN THE ACT, WHICH WOULD ALLOW AN AO TO TR EAT THE RETURN WHICH WAS ALREADY SUBJECT TO A PROCESSING U/S 143(1) OF THE I T ACT, AS A RETURN FILED PURSUANT TO A NOTICE SUBSEQUENTLY ISSUED U/S 148 OF THE ACT. HOWEVER, ONCE AN ASSESSEE ITSELF DECLARE BEFORE THE AO THAT HIS E ARLIER RETURN COULD BE TREATED AS FILED PURSUANT TO NOTICE U/S 148 OF THE IT ACT, THREE RESULTS CAN FOLLOW. ASSESSING OFFICER CAN EITHER SAY NO, THIS W ILL NOT BE ACCEPTED, YOU HAVE TO FILE A FRESH RETURN OR HE CAN SAY THAT 30 DAYS T IME PERIOD BEING OVER I WILL NOT TAKE COGNIZANCE OF YOUR REQUEST OR HE HAS TO AC CEPT THE REQUEST OF THE ASSESSEE AND TREAT THE EARLIER RETURNS AS ONE FILED PURSUANT TO THE NOTICE U/S 148 OF THE IT ACT. IN THE FORMER TWO SCENARIOS, AO HAS TO FOLLOW THE PROCEDURE SET OUT FOR A BEST OF JUDGMENT ASSESSMENT AND CANNO T MAKE AN ASSESSMENT UNDER SECTION 143(3). ON THE OTHER HAND, IF THE AO CHOSE TO ACCEPT ASSESSEE'S REQUEST, HE CAN INDEED MAKE AN ASSESSMENT UNDER SEC TION 143(3). IN THE CASE BEFORE US, ASSESSMENTS WERE COMPLETED UNDER SECTION 143(3) READ WITH SECTION 147. OR IN OTHER WORDS AO ACCEPTED THE REQU EST 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 PU RSUANCE 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 D ATE CANNOT BE TREATED AS A NOTICE ON A RETURN JILED BY THE ASSESSEE PURSUANT T O 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 FOLLOWIN G THE MANDATORY REQUIREMENT U/S 143(2) OF THE IT ACT. THIS IN OUR O PINION, RENDER THE SUBSEQUENT PROCEEDINGS ALL INVALID IN VIEW OF ABOVE JUDICIAL PRONOUNCEMENTS, IT IS SUB MITTED 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 CA SE OF ASSESSEE, SINCE NO NOTICE WAS ISSUED U/S 143(2), IT IS PRAYED THAT ASS ESSMENT COMPLETED U/S 143(3)/ 147 DESERVES TO BE QUASHED ITA 1026/JP/2016_ KAMLA DEVI SHARMA VS ITO 13 6. ON THE OTHER HAND, THE LD DR HAS RELIED ON THE O RDERS OF THE AUTHORITIES BELOW AND PLEADED THAT THE ORDER OF THE LD. CIT(A) MAY BE SUSTAINED. 7. THE BENCH HAVE HEARD BOTH THE SIDES ON THIS ISSUE AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE HONBLE DE LHI HIGH COURT IN THE 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 ISSU ED 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 TH E RETURN FILED PURSUANT TO THE NOTICE UNDER SECTION 148 OF THE ACT. (PARA 12) THE MADRAS HIGH COURT HELD LIKEWISE IN SAPTHAGIRI F INANCE & 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 S EEKING TO REOPEN THE ASSESSMENT FOR AY 2000-01. HOWEVER, THE ASSESSEE DI D NOT FILE A RETURN AND THEREFORE A NOTICE WAS ISSUED TO IT UNDER SECTION 1 42 (1) OF THE ACT. PURSUANT THERETO, THE ASSESSEE APPEARED BEFORE THE AO AND ST ATED 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 THA T IF THEREAFTER, THE AO FOUND THAT THERE WERE PROBLEMS WITH THE RETURN WHIC H 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) AS ALREADY FURTHER NOTICED, THE LEGAL POSITION REGA RDING SECTION 292BB HAS ALREADY BEEN MADE EXPLICIT IN THE AFOREMENTIONED DE CISIONS OF THE ALLAHABAD ITA 1026/JP/2016_ KAMLA DEVI SHARMA VS ITO 14 HIGH COURT. THAT PROVISION WOULD APPLY INSOFAR AS F AILURE OF 'SERVICE' OF NOTICE WAS CONCERNED AND NOT WITH REGARD TO FAILURE TO 'IS SUE' NOTICE. IN OTHER WORDS, THE FAILURE OF THE AO, IN RE-ASSESSMENT PROCEEDINGS , TO ISSUE NOTICE UNDER SECTION 143(2) OF THE ACT, PRIOR TO FINALISING THE RE-ASSESSMENT ORDER, CANNOT BE CONDONED BY REFERRING TO SECTION 292BB OF THE ACT. (PARA 18) THE RESULTANT POSITION WAS THAT AS FAR AS THE PRESE NT CASE WAS CONCERNED THE FAILURE BY THE AO TO ISSUE A NOTICE TO THE ASSESSEE UNDER SECTION 143(2) OF THE ACT SUBSEQUENT TO 16TH DECEMBER 2010 WHEN THE ASSES SEE MADE A STATEMENT BEFORE THE AO TO THE EFFECT THAT THE ORIGINAL RETUR N FILED SHOULD BE TREATED AS A RETURN PURSUANT TO A NOTICE UNDER SECTION 148 OF TH E ACT, WAS FATAL TO THE ORDER OF RE-ASSESSMENT. (PARA 19) CONSEQUENTLY, THERE WAS NO LEGAL INFIRMITY IN THE I MPUGNED ORDER OF THE ITAT. NO SUBSTANTIAL QUESTION OF LAW ARISES. THE APPEAL W AS DISMISSED. (PARA 20) THUS, THE FACTS OF THE ASSESSEES CASE ARE SIMILAR T O THE FACTS OF THE CASE INVOLVED IN THE DECISION OF THE HONBLE DELHI HIGH COURT WHEREIN IT HAS BEEN CATEGORICALLY HELD THAT THE ISSUE OF NOTICE U/ S 143(2) IN RE- ASSESSMENT PROCEEDINGS, PRIOR TO FINALIZING RE-ASSE SSMENT ORDER, CANNOT BE CONDONED BY REFERRING TO SECTION 292BB AND IS FA TAL TO THE ORDER OF RE-ASSESSMENT. RESPECTFULLY FOLLOWING THE SAME, WE HE REBY SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND ALLOW THE GROUNDS NO. 1 TO 4 OF THE ASSESSEES APPEAL. ITA 1026/JP/2016_ KAMLA DEVI SHARMA VS ITO 15 8. SINCE WE HAVE QUASHED THE REASSESSMENT PROCEEDING S, THEREFORE, THERE IS NO NEED TO ADJUDICATE THE ISSUES RAISED IN GROUNDS NO. 5 TO 9 OF THE APPEAL. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/02/2018. SD/- SD/- FOT; IKY JKO HKKXPAN (VIJAY PAL RAO) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 06 TH FEBRUARY, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SMT. KAMLA DEVI SHARMA, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD 7(4), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1026/JP/2016) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR