ACIT, Bangalore V. M/s Ashed Properties and Investments Pvt. Ltd., Bangalore

ITA 1302/BANG/2012

• Counselvise Citation: 130221114 RSA 2012
• Duration Of Justice: 2 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 05-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R RAVICHANDRAN CITIIIDR
• Assessee Lawyers: K SHESHADRI
• Keywords: Search and seizure; Period of limitation; Retrospective amendment; Validity of assessment; Assessment record; Revised return
• Section: 143(3); 133A; 147; 148; 132; 144; 10; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ITA NO.1302/BANG/2012 ASSESSMENT YEAR : 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), BANGALORE. VS. M/S. ASHED PROPERTIES AND INVESTMENTS PVT. LTD., NO.807, BARTON CENTRE, 8 TH FLOOR, 84, M.G. ROAD, BANGALORE 560 001. PAN : AABCA 2198K APPELLANT RESPONDENT CO NO.66/BANG/2013 [IN ITA NO.1302/BANG/2012] ASSESSMENT YEAR : 2008-09 M/S. ASHED PROPERTIES AND INVESTMENTS PVT. LTD., BANGALORE 560 001. PAN : AABCA 2198K VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), BANGALORE. CROSS OBJECTOR RESPONDENT REVENUE BY : SHRI R. RAVICHANDRAN, CIT-III(DR) ASSESSEE BY : SHRI K. SHESHADRI, C.A. DATE OF HEARING : 06.07.2015 DATE OF PRONOUNCEMENT : 30.07.2015 ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 2 OF 17 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER ITA NO.1302/BANG/2012 IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 30.7.2012 OF CIT(APPEALS)-VI, BANGALORE RELATING TO ASSESSMENT YEAR 209-10. THE ASSESSEE HAS FILED A C ROSS OBJECTION AGAINST THE VERY SAME ORDER OF THE CIT(APPEALS). 2. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMENT AND REAL ESTATE. FOR AY 2008- 09, ASSESSEE FILED A RETURN OF INCOME ON 30.9.2008 DECLARING A TOTAL INC OME OF RS.4,75,22,320. AN INTIMATION U/S. 143(1) OF THE INCOME-TAX ACT, 19 61 [ THE ACT ] DATED 29.9.09 WAS ISSUED IN RESPECT OF THE RETURN OF INCO ME SO FILED BY THE ASSESSEE. 3. THERE WAS A SEARCH AND SEIZURE OPERATION U/S. 13 2 IN THE CASE OF ONE M/S. ZEENATH TRANSPORT CO., BELLARY [ ZTC FOR SHORT]. ZTC HAD BOOKED A FLAT IN A PROJECT THAT WAS BEING DEVELOPED BY THE ASSESSEE. THEY HAD PAID ADVANCE BY ACCOUNT PAYEE CHEQUE TO THE ASS ESSEE. TO VERIFY THE GENUINENESS OF THE CLAIM OF ZTC, A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE BY THE REVENUE ON 25.2.2009. BASED ON THE MATERIAL IMPOUNDED DURING THE SURVEY, ASSESSMENT WAS REOPENED FOR AY 2008-09 BY ISSUE OF NOTICE DATED 11.8.2010 U/S. 148 OF THE ACT. THE ASSESSEE VIDE L ETTER DATED 22.8.2010 ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 3 OF 17 REQUESTED THE AO TO TREAT THE ORIGINAL RETURN FILED ON 30.9.2008 AS A RETURN FILED IN RESPONSE TO NOTICE U/S. 148. THE ASSESSIN G OFFICER COMPLETED THE ASSESSMENT BY MAKING AN ADDITION OF RS.9,75,24,011 TO THE TOTAL INCOME OF THE ASSESSEE FOR THE FOLLOWING REASONS:- DURING THE SCRUTINY PROCEEDINGS IT WAS SEEN THAT P AGE NO. 72 TO 122 OF THE IMPOUNDED MATERIALS CONTAIN TWO SETS OF BALANCE SHEETS OF M/S. ASHED PROPERTIES & INVESTMENT PVT. L TD AS ON 31/03/2008. PAGE NO. 72 TO 100 CONTAINS BALANCE SHE ER AS ON 31/03/2008 AND ITS SCHEDULE UNDER THE HEAD OPTION- II. PAGE NO. 101-122 CONTAINS THE SIMILAR SET OF BALANCE SHEET A ND ITS SCHEDULE AS ON 31/03/2008 UNDER THE HEAD OPTION-I. BOTH TH E BALANCE SHEETS DISPLAY FIGURES AS ON 31/03/2007. HOWEVER, T HERE IS NO VARIATION IN THE FIGURES OF BOTH THE BALANCE SHEETS . BUT, THERE IS VARIATION IN FIGURES FOR F.Y. 2007-08 UNDER CERTAIN HEADS LIKE CLOSING STOCK & WIP, PROVISIONS, PROFIT BEFORE TAX, PROVISION FOR CURRENT TAX, RESERVES & SURPLUS, ETC. DURING THE CO URSE OF SURVEY, A COPY OF SIGNED AUDIT REPORT FOR F.Y. 2007-08 WAS OBTAINED. WHEN COMPARED THE FIGURES IN THE SAID SIGNED AUDIT REPORT AND THE FIGURES APPEARING IN THE BALANCE SHEETS UNDER THE H EAD OPTION-I AND OPTION-II, SUBSTANTIAL VARIATION HAVE BEEN NO TICED. SOME OF THE IMPORTANT VARIATIONS ARE DISCUSSED AS UNDER: SL. NO. HEAD IN THE BALANCE SHEET FIGURES AS PER BALANCE SHEET UNDER THE HEAD OPTION-II FIGURES AS PER BALANCE SHEET UNDER THE HEAD OPTION-I FIGURES AS PER SIGNED BALANCE SHEET FOR F.Y.2007-08 DIFFERENCE COL. (4)(5) 1 2 3 4 5 6 1 RESERVE & SURPLUS 12,29,28,388 18,86,29,209 7,42,52,765 11,23,76,444 2 CLOSING STOCK & WIP 114,13,13,652 116,44,04,346 31,81,18,837 84,62,85,509 3 PROVISION 4,66,92,189 40,82,082 1,76,65,756 (-) 1,30,83,695 4 PROFIT BEFORE TAX 12,17,43,218 14,48,33,912 4,73,09,901 9,75,24,011 5 PROVISION FOR CURRENT TAX 4,26,10,126 NIL 1,65,58,465 (-) 1,65,58,465 ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 4 OF 17 A PLAIN READING OF THE CHART SUGGEST THAT THE ASSES SEE COMPANY HAS SUPPRESSED NET PROFIT TO THE TUNE OF RS.9,75,24 ,011/- AND THE SAME IS ADDED TO THE TOTAL TAXABLE INCOME OF THE AS SESSEE. 4. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE FILED APPEAL BEFORE THE CIT(APPEALS). AMONGST OTHER GROUNDS, ASSESSEE ALSO CHALLENGED THE VALIDITY OF THE PROCEEDINGS COMPLETED U/S. 147 OF T HE ACT ON THE GROUND THAT NO NOTICE U/S. 143(2) HAD BEEN ISSUED TO THE ASSESS EE BEFORE COMPLETION OF THE ASSESSMENT U/S. 147 OF THE ACT. 5. THE CIT(APPEALS) DELETED THE ADDITION OF RS.9,75 ,24,011 MADE BY THE AO. AGGRIEVED BY THE IMPUGNED ORDER, THE REVEN UE HAS FILED THE APPEAL. 6. AS FAR AS GROUND OF APPEAL RAISED BY THE ASSESSE E CHALLENGING THE VALIDITY OF ORDER PASSED U/S. 147 FOR NON-ISSUE/SER VICE OF NOTICE U/S. 143(2) WITHIN THE TIME REQUIRED, THE CIT(APPEALS) CALLED F OR A REMAND REPORT FROM THE AO. THE AO IN THE REMAND REPORT SUBMITTED AS F OLLOWS:- COMMENTS ON GROUND NO.2: THE ORDER U/S 147 R. W.S. 143(3) OF I.T. ACT IS A VALID ONE IN TERMS OF PROVISIONS U/S 292BB. FAILURE TO ISSUE NOTICE U/S 143(2) DOES NOT RENDER THE ASSE SSMENT UNSUSTAINABLE WHEN THE ASSESSMENT IS IN RESPONSE TO A NOTICE U/S 148. THE A.O. HAS THE BASIC JURISDICTION TO ASSESS INCOME IN TERMS OF SEC 147 AND SEC 148. THE SCHEME OF PROVISIONS OF SEC 147 AND SEC 148 DO NOT PROVIDE ISSUE OF NOTICE U/S 143(2). IN (2000) 3 S.C. 485 C.K.V. SHIVAKUMAR VS APPROPRIATE AUTHORITY , SUPREME COURT HAS HELD THAT EQUITY OR HARDSHIP ARE NOT RELE VANT CONSIDERATION FOR INTERPRETATION OF TAKING LAW. THE ASSESSEES CONTENTION THAT NO NOTICE U/S 143(2) HAS BEEN SERVE D, IS NOT ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 5 OF 17 TENABLE AS THE ASSESSEE HAS BEEN INFORMED VIDE THIS OFFICE LETTER DATED 09.09.2010 THE REASONS FOR REOPENING THE ASSE SSMENT. IN RESPONSE TO THE ABOVE, THE ASSESSEE FILED A LETTER DATED 10.02.2011 OBJECTING TO THE REOPENING OF THE ASSESSMENT. THE A SSESSEE WAS FURTHER INFORMED VIDE THIS OFFICE LETTER DATED 07.0 3.2011 THAT THE OBJECTIONS FILED ARE REJECTED AND THE PROCEEDINGS U /S 148 CANNOT BE DROPPED. SRI K SESHADRI, C.A. & AUTHORISED REPRE SENTATIVE OF THE ASSESSEE APPEARED ON 14.09.2011; 13.10.2011; 02 .12.2011; 14.12.2011 AND ON 21.12.2011 (NOTINGS IN THE ORDER SHEET ENCLOSED) AND WAS ASKED TO EXPLAIN THE DETAILS IN R ESPECT OF THE WORK-IN-PROGRESS AS PER IMPOUNDED MATERIALS AND ON PAYMENTS OF MONEY. THESE ISSUES WERE NOT SUBSTANTIATED WITH ANY VALID REASONS. 7. THE CIT(APPEALS), ON THE AFORESAID ISSUE, DECIDE D THE ISSUE AGAINST THE ASSESSEE OBSERVING AS FOLLOWS:- IN THE LIGHT OF THE ABOVE, IT IS SEEN THAT THE A.O . HAD ISSUED NOTICE U/S 148. THE A.O. HAD EXPLAINED THE VARIOUS ISSUES TO THE ASSESSEE DURING THE COURSE OF VARIOUS PERSONAL HEAR INGS THAT TOOK PLACE. IT IS SEEN FROM THE ORDER SHEET NOTINGS THAT NOTICES U/S 143(2) WAS ALSO ISSUED. THE A.O. HAD ALSO INFORMED THE ASSESSEE VIDE HIS LETTER DATED 09.09.2010 THE REASONS FOR RE -OPENING THE ASSESSMENT. THE ASSESSEE HAD OBJECTED TO THE RE-OPE NING OF THE ASSESSMENT. HOWEVER, THE A.O. HAD FURTHER INFORMED HIM VIDE HIS LETTER DATED 07.03.2011 THAT THE OBJECTIONS FILED W ERE REJECTED. THE A.R. OF THE ASSESSEE APPEARED ON SEVERAL DATES BEFORE THE A.O. WHICH IS CLEAR FROM THE ORDER SHEET NOTINGS AN D THEY HAD BEEN ASKED TO EXPLAIN THE VARIOUS DISCREPANCIES WHI CH THE A.O. WANTED TO VERIFY. IN THE LIGHT OF THE ABOVE, THE ASSESSEES CONTENTI ON THAT THE ASSESSMENT U/S 147 R.W.S. 143(3) IS NOT VALID IN LA W, IS NOT TENABLE AND THIS GROUND IS DISPOSED OFF ACCORDINGLY. 8. AGGRIEVED BY THE AFORESAID FINDINGS OF THE CIT(A PPEALS), THE ASSESSEE HAS FILED CROSS OBJECTION BEFORE THE TRIBU NAL. ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 6 OF 17 9. WE HAVE HEARD THE LD. COUNSEL FOR THE ASSESSEE A ND THE LD. DR ON THE ISSUE OF NON-ISSUE/SERVICE OF NOTICE U/S. 143(2 ) WITHIN THE TIME REQUIRED UNDER THOSE PROVISIONS AS RAISED BY THE ASSESSEE IN ITS CROSS-OBJECTION. THE ASSESSMENT RECORDS WERE CALLED FOR WITH A VIEW TO ASCERTAIN THE FACTUAL DETAILS. FROM A PERUSAL OF THE SAID RECORDS, THE F ACTS THAT EMERGE ARE THAT; THE DATE OF FILING OF RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 148 OF THE ACT WAS 23.8.2010. IN TERMS OF PROVISO TO SECTION 143(2)(II), NOTICE U/S.143(2) OF THE ACT OUGHT TO BE ISSUED AND SERVED ON THE ASSESSEE WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE FINANCIA L YEAR IN WHICH THE RETURN IS FURNISHED. THE END OF FINANCIAL YEAR IN WHICH R ETURN OF INCOME IS FURNISHED IN THIS CASE IS 31.3.2011. IN TERMS OF PROVISO TO SECTION 143(2)(II), THE SIX MONTHS PERIOD FROM THE END OF F INANCIAL YEAR WOULD END ON 30.9.2011. A PERUSAL OF ASSESSMENT RECORDS REVE ALS THAT FIRST NOTICE U/S. 143(2)(II) PROVISO, RATHER THE ONLY NOTICE, WAS ISS UED BY THE AO ONLY ON 13.10.2011, WHICH IS WELL BEYOND THE PERIOD OF LIMI TATION PRESCRIBED FOR SERVICE OF NOTICE UNDER PROVISO TO SEC. 143(2)(II). 10. IT IS THUS CLEAR FROM PERUSAL OF ASSESSMENT REC ORDS, THAT NO NOTICE U/S. 143(2) WAS ISSUED WITHIN THE PERIOD OF LIMITAT ION CONTEMPLATED UNDER PROVISO TO SEC. 143(2)(II). IT IS, HOWEVER, CLEAR FROM THE RECORD THAT ASSESSEE WAS REPRESENTED BY A CA AND HE HAD PARTICI PATED IN THE PROCEEDINGS THROUGHOUT. ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 7 OF 17 11. ON THE FACTUAL DETAILS AS NARRATED ABOVE, THE L D. DR RELIED ON THE PROVISIONS OF SECTION 292BB OF THE ACT AND SUBMITTE D THAT NON-ISSUE OF NOTICE U/S. 143(2) WITHIN THE TIME SPECIFIED UNDER THE PROVISO TO SEC. 143(2)(II) WILL NOT RENDER THE ORDER OF REASSESSMEN T NULL AND VOID. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THIS TRIBUNAL RENDERED IN THE CASE OF M/S. AMITHI SOFTWARE TECHNOLOGIES PVT. LTD. V. ITO, ITA NO.540/BANG/2012 FOR AY 2008- 09, ORDER DATED 7.2.2014 . IN THE AFORESAID DECISION, THE FACTUAL POSITION WAS THAT RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 1.10.2008 FOR A Y 2008-09, BEYOND THE PERIOD PRESCRIBED U/S. 139(1) OF THE ACT AND IN TIMATION U/S. 143(1) WAS ISSUED BY THE AO ON 27.8.2009. THE ASSESSEE FILED A REVISED RETURN OF INCOME ON 30.9.2009. THIS RETURN WAS TREATED AS NON EST BY THE AO AND A NOTICE U/S. 143(2) WAS ISSUED ON 19.8.2010 WITH REF ERENCE TO ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE ON 1.10.2008. THE QUESTION BEFORE THE TRIBUNAL WAS AS TO, WHETHER ASSESSMENT PROCEEDINGS ARE BAD IN LAW FOR WANT OF ISSUE OF NOTICE U/S. 143(2) WITHIN THE PERI OD MENTIONED UNDER THE PROVISO TO SEC. 143(2)(II) OF THE ACT. THE TRIBUNA L DEALT WITH THE VALIDITY OF NOTICE ISSUED BEYOND THE PERIOD OF LIMITATION SPECI FIED UNDER PROVISO TO SEC. 143(2)(II) AND THE EFFECT OF PROVISIONS OF SECTION 292BB OF THE ACT, AND HELD AS FOLLOWS:- 14. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS. THE ADMITTED FACTUAL POSITION IS THAT THE NOTICE U/S. 143(2) OF THE ACT DATED 09.08.2010 WAS ADMITTEDLY B EYOND THE PERIOD OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 8 OF 17 THE RETURN OF INCOME WAS FILED BY THE ASSESSEE, AS LAID DOWN IN PROVISO TO SECTION 143(2)(II) OF THE ACT. IT IS AL SO NOT IN DISPUTE THAT THIS IS THE ONLY 143(2) NOTICE ISSUED BY THE A O. THE ORDER OF ASSESSMENT IS VERY CLEAR ON THIS ASPECT. THE LAW I S BY NOW WELL SETTLED THAT ISSUANCE OF A NOTICE U/S. 143(2) OF TH E ACT WITHIN THE STATUTORY TIME LIMIT IS MANDATORY AND IT IS NOT A P ROCEDURAL REQUIREMENT WHICH IS INCONSEQUENTIAL. REFERENCE MA Y BE MADE TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ALPINE ELECTRONICS ASIA PVT. LTD. V. DGIT, 341 ITR 247 (DEL) , CIT V. VARDHANA ESTATES PVT. LTD., 287 ITR 368 AND ACIT V. HOTEL BLUMOON, 321 ITR 362 (SC) . THE CONTRARY VIEW EXPRESSED BY THE HONBLE MADRAS HIGH COURT, IN OUR VIEW, CANNOT BE FOLLOWED AS THE DECISIONS RELIED ON BY TH E LD. COUNSEL FOR THE ASSESSEE OF HONBLE PUNJAB & HARYANA HIGH C OURT AND ALLAHABAD HIGH COURT ALSO TOOK THE VIEW THAT NON-IS SUANCE OF NOTICE U/S. 143(2) OF THE ACT RENDERS ASSESSMENT OR DER INVALID. ADMITTEDLY, NOTICE U/S. 143(2) OF THE ACT NOT HAVIN G BEEN SERVED ON THE ASSESSEE WITHIN THE PERIOD CONTEMPLATED UNDE R LAW, THE ORDER OF ASSESSMENT HAS TO BE HELD TO BE INVALID AN D ANNULLED. 15. THE LD. DR HAS, HOWEVER, PLACED RELIANCE ON T HE PROVISIONS OF SECTIONS 292B & 292BB OF THE ACT. TH E AFORESAID PROVISIONS READ AS FOLLOWS:- 292B RETURN OF INCOME, ETC., NOT TO BE INVALID ON CERTAI N GROUNDS NO RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDINGS, FURNISHED OR MADE OR ISSUED OR TAKEN O R PURPORTED TO HAVE BEEN FURNISHED OR MADE OR ISSUED OR TAKEN I N PURSUANCE OF ANY OF THE PROVISIONS OF THIS ACT SHALL BE INVAL ID OR SHALL BE DEEMED TO BE INVALID MERELY BY REASON OF ANY MISTAK E, DEFECT OR OMISSION IN SUCH RETURN OF INCOME, ASSESSMENT, N OTICE, SUMMONS OR OTHER PROCEEDING IF SUCH RETURN OF INCOM E, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDIN G TO THE INTENT AND PURPOSE OF THIS ACT. 292BB NOTICE DEEMED TO BE VALID IN CERTAIN CIRCUMSTANCES. WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDING OR CO- OPERATED IN ANY INQUIRY RELATING TO AN ASSESSMENT O R REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UN DER ANY PROVISION OF THIS ACT, WHICH IS REQUIRED TO BE SERVED UPON HIM, HAS BEEN DULY SERVED UPON HIM IN TIME IN ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 9 OF 17 ACCORDANCE WITH THE PROVISIONS OF THIS ACT AND SUCH ASSESSEE SHALL BE PRECLUDED FROM TAKING ANY OBJECTI ON IN ANY PROCEEDING OR INQUIRY UNDER THIS ACT THAT THE N OTICE 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 SHA LL APPLY WHERE THE ASSESSEE HAS RAISED SUCH OBJECTION BEFORE THE COMPLETION OF SUCH ASSESSMENT OR REASSESSMENT. 16. AS FAR AS SECTION 292B IS CONCERNED, WE DO NOT THINK THAT THE NOTICE ISSUED BY THE AO U/S. 143(2) OF THE ACT IN THE PRESENT CASE WILL FALL WITHIN ANY MISTAKE, DEFECT O R OMISSION WHICH IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT. THE REQUIR EMENT OF GIVING OF NOTICE BECAUSE COMPLETION OF THE ASSESSMENT PROC EEDINGS CANNOT BE DISPENSED WITH BY TAKING RECOURSE TO THE PROVISIONS OF SEC.292B OF THE ACT. AS FAR AS PROVISIONS OF SECTION 292BB IS CONCERNED, AS LAID DOWN IN THE DECISIONS OF THE ALL AHABAD HIGH COURT IN THE CASE OF MANISH PRAKASH GUPTA (SUPRA) & PARIKALPANA ESTATE DEVELOPMENT (P) LTD. (SUPRA) AND HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CEBONG INDIA LTD. (SUPRA) , PROVISIONS OF SECTION 292BB CANNOT BE APPLIED IN A CASE WHERE ADMITTEDLY NO NOT ICE U/S. 143(2) HAD BEEN ISSUED WITHIN THE TIME LIMIT PRESCR IBED IN LAW. WE MAY ALSO CLARIFY THAT THE DISPUTE IN THE P RESENT CASE IS NOT WITH REGARD TO ISSUE AND SERVICE OF NOTICE U /S. 143(2) OF THE ACT, AS ADMITTEDLY THERE WAS ONLY ONE NOTICE U/ S. 143(2) DATED 19.08.2010 ISSUED AND SERVED ON THE ASSESSEE BEFORE COMPLETION OF THE ASSESSMENT PROCEEDINGS. THE QUES TION IS AS TO, WHETHER THE SAID NOTICE WAS ISSUED AND SERVED W ITHIN THE TIME CONTEMPLATED U/S. 143(2) OF THE ACT. THE PROVISIONS OF SEC.292BB LAY DOWN PRESUMPTION IN A GIVEN CASE. IT CANNOT BE EQUATED TO A CONCLUSIVE PROOF. THE PRESUMPTION IF REBUTTABLE. THE PROVISIONS OF SECTION 292BB CANNOT EXTEND TO A CASE WHERE THE QUESTION OF LIMITATION IS RAISED ON ADMITTED FA CTUAL POSITION IN A GIVEN CASE. WE THEREFORE HOLD THAT THE PROVISION S OF SECTION 292BB OF THE ACT WILL NOT BE APPLICABLE TO THE PRES ENT CASE. 17. IN LIGHT OF THE DISCUSSION AS AFORESAID, WE H OLD THAT THE ASSESSMENT PROCEEDINGS ARE INVALID FOR THE REASON T HAT THE NOTICE ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 10 OF 17 U/S. 143(2) OF THE ACT HAD NOT BEEN ISSUED AND SERV ED WITHIN THE TIME LIMIT PRESCRIBED BY THOSE PROVISIONS. THE ORD ER OF ASSESSMENT IS ACCORDINGLY ANNULLED. (EMPHASIS SUPPLIED) 12. THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED BEFORE US THAT EVEN BEFORE COMPLETING THE PROCEEDINGS U/S. 147, PROVISI ONS OF SECTION 143(2) ARE APPLICABLE AND IN THIS REGARD PLACED RELIANCE O N THE DECISION OF THIS TRIBUNAL IN THE CASE OF C. RAMAIAH REDDY V. DCIT , ITA NO.121/BANG/2011 FOR AY 2005-06, ORDER DATED 27.1.2012 AND H. GOUTHAM CHAND V. ADDL. CIT, 8 ITR (TRIB) 269 . 13. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO T HE RIVAL SUBMISSIONS. FROM THE NARRATION OF THE FACTUAL DETAILS AS GIVEN ABOVE, IT IS CLEAR THAT THE ONLY NOTICE ISSUED U/S. 143(2) WAS DATED 13.10.2011 AND THE SAME WAS BEYOND THE PERIOD CONTEMPLATED UNDER PROVISO TO SEC . 143(2)(II) OF THE ACT. TWO QUESTIONS ARISE FOR OUR CONSIDERATION; (I) WHE THER NOTICE U/S. 143(2) OF THE ACT IS MANDATORY BEFORE COMPLETION OF PROCEEDIN GS U/S. 147 OF THE ACT? (II) WHETHER PROVISIONS OF SECTION 292BB OF THE AC T WILL COME TO THE RESCUE OF THE REVENUE SO AS NOT TO RENDER THE ORDER OF ASS ESSMENT U/S. 147 NULL AND VOID? 14. AS FAR AS FIRST QUESTION IS CONCERNED, IN THE CASE OF C. RAMAIAH REDDY (SUPRA) , THIS TRIBUNAL HAS CONSIDERED THE NON-ISSUE OF NOT ICE U/S. 143(2) OF THE ACT WITHIN THE PERIOD OF LIMITATION I N RESPONSE TO NOTICE U/S. ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 11 OF 17 148 OF THE ACT AS FATAL AND HAD ANNULLED THE ASSESS MENT U/S. 147 OF THE ACT. SIMILAR VIEW HAS ALSO BEEN TAKEN IN THE CASE OF H. GOUTHAM CHAND (SUPRA) . THE SPECIAL BENCH OF THE DELHI TRIBUNAL IN RAJ K UMAR CHAWLA & ORS. VS. ITO (2005) 94 ITD 1 (DEL)(SB) WAS CONFRONT ED WITH SIMILAR/ IDENTICAL FACTS. THE QUESTIONS REQUIRED TO BE ANSWE RED BY THE SPECIAL BENCH WERE AS UNDER:- '1. WHETHER THE PROVISO TO S. 143(2) OF THE I.T. AC T.1961, WHICH MANDATES THE SERVICE OF NOTICE WITHIN 12 MONTHS FRO M THE END OF THE MONTH IN WHICH RETURN IS FILED, ALSO APPLIES TO THE RETURNS FILED PURSUANT TO NOTICE UNDER S. 148 OF THE I.T. ACT, 19 61? 2. IF THE ANSWER TO THE AFORESAID QUESTION IS IN TH E AFFIRMATIVE THEN WHAT IS THE EFFECT OF NON-SERVICE OF NOTICE UNDER T HE PROVISO TO S. 143(2) WITHIN THE TIME PRESCRIBED, TO THE RETURN FI LED PURSUANT TO S. 148 OF THE I.T. ACT, 1961?' THE HON'BLE SPECIAL BENCH, CONCLUDED THAT IN VIEW O F THE LEGAL FICTION CREATED BY SEC. 148 THAT A RETURN FILED UNDER THAT SECTION IS TO BE TREATED AS ONE UNDER SEE. 139, PROVISO TO SEC. 143(2) ALSO APP LIES TO A RETURN FILED IN RESPONSE TO NOTICE U/S, 148 AND NO ASSESSMENT CAN B E MADE, IF THE NOTICE U/S. 143(2) IS NOT SERVED WITHIN THE TIME PRESCRIBE D BY THE PROVISO U/S. 143(2). IN THE OPERATIVE PART. THE HON'BLE SPECIAL BENCH, HELD AS UNDER :- '39. IT MAY BE NOTED THAT NO DOUBT, THE FOUNDATION TO ASSESS OR REASSESS IS LAID BY ISSUE OF A VALID NOTICE UNDER S . 148 BUT SUCH JURISDICTION IS SUBJECT TO FURTHER COMPLIANCE WAS H AS BEEN STIPULATED IN THE STATUTE ITSELF. IF COMPLIANCE OF THE PROVISO IS NOT MADE, THE VERY PURPOSE OF CREATING THE PROVISO IS D EFEATED, I.E. UNCERTAINTY OF ASSESSEE WITH RESPECT TO ASSESSMENT SHALL CONTINUE. IT IS AGAIN A SETTLED PRINCIPLE OF INTERPRETATION T HAT NO CONSTRUCTION OF A STATUTE SHOULD BE MADE IN A MANNER, WHICH LEAV ES A STATUTE ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 12 OF 17 REDUNDANT, ON THE CONTRARY LAW REQUIRES A STRICT IN TERPRETATION OF THE PROVISO. WE MAY HERE CLARIFY THAT PROVISIONS OF LIMITATION ARE TO BE STRICTLY CONSTRUED. AN ILLUMINATING REFERENCE TO THIS ASPECT CAN BE FOUND IN THE FOLLOWING OBSERVATION OF THE SU PREME COURT IN THE CASE OF K. M. SHARMA VS. ITO (SUPRA). 'A FISCAL STATUTE MORE PARTICULARLY A PROVISION SUC H AS THE PRESENT ONE REGULATING PERIOD OF LIMITATION MUST RE CEIVED STRICT CONSTRUCTION. THE LAW OF LIMITATION IS INTEN DED TO GIVE CERTAINTY AND FINALITY TO LEGAL PROCEEDINGS AN D TO AVOID EXPOSURE TO RISK OF LITIGATION TO LITIGANTS F OR AN INDEFINITE PERIOD ON FUTURE UNFORESEEN EVENTS.' IF LIMITATIONS ARE NOT FOLLOWED STRICTLY, CHAOTIC S ITUATION WOULD FOLLOW. 40. IN THE LIGHT OF THE ANALYSIS OF THE RELEVANT PR OVISIONS OF LAW AND JUDICIAL PRECEDENTS, WE ARE OF THE CONSIDERED V IEW THAT THE RETURN FILED PURSUANT TO NOTICE UNDER S. 148 OF THE ACT MUST BE ASSUMED AND TREATED TO BE A RETURN FILED UNDER S. 1 39 OF THE ACT AND THE ASSESSMENT MUST THEREAFTER BE MADE UNDER S. 143 OR 144 OF THE ACT AFTER COMPLYING WITH ALL THE MANDATORY P ROVISIONS. ACCORDINGLY, IT IS INCUMBENT UPON THE ASSESSING AUT HORITY TO ISSUE NOTICE UNDER S. 143 (2) OF THE ACT WITHIN THE PERIO D AS STIPULATED IN THE PROVISO THEREUNDER. IN THIS VIEW OF THE MATT ER, THE FIRST QUESTION BEFORE THE SPECIAL BENCH IS ANSWERED IN AF FIRMATIVE. 15. SEC.148 OF THE ACT WAS AMENDED BY THE FINANCE ACT, 2006 BY INSERTION OF TWO PROVISO BELOW SUB-SECTION (1) AND AN EXPLANA TION. THE AMENDED PROVISIONS READ AS FOLLOWS: SEC.148: ISSUE OF NOTICE WHERE INCOME HAS ESCAPED ASSESSMENT. (1) BEFORE MAKING THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION UNDER SECTION 147, THE ASSESSING OFFI CER SHALL SERVE ON THE ASSESSEE A NOTICE REQUIRING HIM TO FUR NISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, A R ETURN OF HIS INCOME OR THE INCOME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YE AR ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 13 OF 17 CORRESPONDING TO THE RELEVANT ASSESSMENT YEAR, IN T HE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETT ING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED; AND THE PRO VISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS I F SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTIO N 139: PROVIDED THAT IN A CASE (A) WHERE A RETURN HAS BEEN FURNISHED DURING THE PE RIOD COMMENCING ON THE 1ST DAY OF OCTOBER, 1991 AND ENDI NG ON THE 30TH DAY OF SEPTEMBER, 2005 IN RESPONSE TO A NOTICE SERVED UNDER THIS SECTION, AND (B) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER SUB -SECTION (2) OF SECTION 143 AFTER THE EXPIRY OF TWELVE MONTHS SP ECIFIED IN THE PROVISO TO SUB-SECTION (2) OF SECTION 143, AS IT ST OOD IMMEDIATELY BEFORE THE AMENDMENT OF SAID SUB-SECTION BY THE FIN ANCE ACT, 2002 (20 OF 2002) 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 REFERRED TO IN THIS CLAUSE SHALL BE DEEMED TO BE A VALID NOTICE: PROVIDED FURTHER THAT IN A CASE (A) WHERE A RETURN HAS BEEN FURNISHED DURING THE PE RIOD COMMENCING ON THE 1ST DAY OF OCTOBER, 1991 AND ENDI NG ON THE 30TH DAY OF SEPTEMBER, 2005, IN RESPONSE TO A NOTIC E SERVED UNDER THIS SECTION, AND (B) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER CLA USE (II) OF SUB- SECTION (2) OF SECTION 143 AFTER THE EXPIRY OF TWEL VE MONTHS SPECIFIED IN THE PROVISO TO CLAUSE (II) OF SUB-SECT ION (2) OF SECTION 143, BUT BEFORE THE EXPIRY OF THE TIME LIMIT FOR MA KING THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION AS SPECIF IED IN SUB- SECTION (2) OF SECTION 153, EVERY SUCH NOTICE REFER RED TO IN THIS CLAUSE SHALL BE DEEMED TO BE A VALID NOTICE. EXPLANATION : FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THE FIRST PROVISO OR THE SECOND PROVISO SHALL APPLY TO ANY RETURN WHICH HAS BEEN FURNISHED ON OR AFTER THE 1ST DAY OF OCTOBER, 2005 IN RESPONSE TO A NOTICE SE RVED UNDER THIS SECTION. ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 14 OF 17 THE TWO PROVISOS IN SUB-SECTION (1) TO SECTION 148 HAS BEEN INSERTED WITH RETROSPECTIVE EFFECT FROM 1ST OCTOBER, 1991. THE GI ST OF THE TWO PROVISOS MAY SUITABLY BE STATED THUS WHERE A RETURN HAS BEE N FURNISHED DARING THE PERIOD COMMENCING ON 1ST OCTOBER, 1991 AND ENDI NG ON 30TH SEPTEMBER, 2005, IN RESPONSE TO A NOTICE OF REASSES SMENT SERVED UNDER SECTION 148, AND SUBSEQUENTLY A NOTICE HAS BEEN SER VED UNDER SECTION 143(2) [OR 143(2)(II), AS THE CASE MAY BE] AFTER TH E EXPIRY OF TWELVE MONTHS AS SPECIFIED IN THE RELEVANT PROVISO BUT BEFORE THE EXPIRY OF THE TIME-LIMIT FOR MAKING THE ASSESSMENT, REASSESSMENT OR RE-COMPUTATI ON AS SPECIFIED IN SECTION 153(2), SUCH (OTHERWISE TIME-BARRED) NOTICE SHALL BE DEEMED TO BE A VALID NOTICE. FURTHER, THE NEW EXPLANATION INSER TED WITH EFFECT FROM 1ST OCTOBER, 2005, SPECIFICALLY CLARIFIES THAT THE AFOR ESTATED (NEWLY INSERTED) PROVISOS SHALL NOT APPLY TO ANY RETURN WHICH HAS BE EN FURNISHED ON OR AFTER 1ST OCTOBER, 2005, IN RESPONSE TO A NOTICE SERVED U NDER SECTION 148(1) OF THE ACT. THE PURPOSE OF THE AMENDMENT IS TO ENSURE THAT NOTICES WHICH WERE ISSUED AND BARRED BY LIMITATION AND THOSE WHIC H WERE NOT ISSUED AND WHICH COULD NOT HAVE BEEN ISSUED SHOULD BE VALIDATE D BY THE FINANCE ACT, 2006 WITH RETROSPECTIVE EFFECT FROM 1ST APRIL, 1990 AMENDING SECTION 142 FOR THE PURPOSE OF VALIDATING NOTICES WHICH WERE OT HERWISE NOT ISSUED OR SERVED WITHIN THE TIME-LIMIT. THE INVALIDITY OF NOT ICE AS WELL AS THE ABSENCE OF ANY NOTICE BECAME FATAL TO THE PROCEEDINGS AND A RE SOUGHT TO BE VALIDATED AND JUSTIFIED BY THE RETROSPECTIVE AMENDM ENTS. THE EXPLANATION CLARIFIES THAT THE AMENDED PROVISIONS WILL NOT APPL Y TO ANY RETURN WHICH HAS ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 15 OF 17 BEEN FURNISHED ON OR AFTER 1ST OCTOBER, 2005, IN RE SPONSE TO A NOTICE SERVED UNDER SECTION 148(1) OF THE ACT. THUS THE L EGISLATURE HAS ACCEPTED THE POSITION THAT ISSUE AND SERVICE OF NOTICE U/S.1 43(2) OF THE ACT WITHIN THE TIME LIMIT LAID DOWN IN THOSE PROVISIONS IS MANDATO RY. 16. IN THE LIGHT OF THE PRECEDENTS ON THE ISSUE, W E ARE, THEREFORE, OF THE VIEW THAT ISSUE AND SERVICE OF NOTICE U/S. 143(2) O F THE ACT WITHIN THE PERIOD OF LIMITATION CONTEMPLATED UNDER THE PROVISO TO SEC . 143(2)(II) IS MANDATORY FOR VALIDITY OF ASSESSMENT U/S. 147 OF THE ACT. 17. THE NEXT ISSUE IS WITH REGARD TO APPLICABILITY OF PROVISIONS OF SECTION 292BB OF THE ACT. IT IS CLEARLY FROM THE STATUTOR Y PROVISIONS THAT THESE PROVISIONS ONLY INSULATE THE AO FROM THE PROOF OF SERVICE OF NOTICE U/S. 143(2) OF THE ACT. IT DOES NOT IN ANY WAY INSULATE THE AO FROM DEFAULT IN ISSUING NOTICE U/S. 143(2) WITHIN THE PERIOD OF LIM ITATION CONTEMPLATED THEREIN. WHEN THE RECORDS SHOW THAT THERE WAS NO I SSUE OF NOTICE U/S. 143(2) WITHIN THE PERIOD OF LIMITATION PRESCRIBED U NDER THE SAID PROVISO, THE REVENUE CANNOT TAKE ADVANTAGE OF THE PROVISIONS OF SECTION 292BB. IN OTHER WORDS, ISSUE OF NOTICE AND SERVICE OF NOTI CE ARE TWO DIFFERENT ASPECTS AND WHAT IS COVERED BY SECTION 292BB IS ONL Y SERVICE OF NOTICE. NON-ISSUE OF NOTICE U/S. 143(2) WITHIN THE PERIOD O F LIMITATION WOULD NOT BE COVERED UNDER THE AMBIT OF SECTION 292BB OF THE ACT . THE DECISION OF THE TRIBUNAL IN THE CASE OF AMITHI SOFTWARE TECHNOLOGIES PVT. LTD. (SUPRA) REFERRED TO IN THE EARLIER PART OF THIS ORDER CLEAR LY SUPPORTS THE PLEA OF THE ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 16 OF 17 ASSESSEE IN THIS REGARD. WE THEREFORE HOLD THAT AS SESSMENT PROCEEDINGS ARE INVALID FOR THE REASON THAT NOTICE U/S. 143(2) HAD NOT BEEN ISSUED AND SERVED WITHIN THE TIME LIMIT PRESCRIBED BY THOSE PR OVISIONS. ACCORDINGLY, THE ORDER OF ASSESSMENT IS ANNULLED. IN VIEW OF TH E CONCLUSIONS ON THE PRELIMINARY ISSUE RAISED IN THE CROSS OBJECTION, WE ARE OF THE VIEW THAT THERE IS NECESSITY TO GO INTO THE MERITS ON THE ISS UES RAISED BY THE REVENUE IN ITS APPEAL. 18. ACCORDINGLY, THE APPEAL BY THE REVENUE IS DIS MISSED, WHILE THE CROSS OBJECTION BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF JULY, 2015. SD/- SD/- ( ABRAHAM P. GEORGE ) ( N.V. VASU DEVAN ) ACCOUNTANT MEMBER JUDICIAL M EMBER BANGALORE, DATED, THE 30 TH JULY, 2015. /D S/ ITA NO.1302/BANG/2012 & CO 66/BANG/2013 PAGE 17 OF 17 COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.