DCIT, New Delhi V. Sh. Vijay Kumar Aggarwal, New Delhi

ITA 1306/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86665 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-01-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 14-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A MISHRA
• Keywords: Procedural lapse
• Section: 143(3)

Judgement Text

ITA NO.1306/D/2011 AY: 2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES A NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER ITA NO.1306/DEL/2011 ASSTT.YEAR: 2006-07 DY.COMMISSIONER OF INCOME TAX, VS SHRI VIJAY KUMAR AGGARWAL, CENTRAL CIRCLE-12, NEW DELHI. J-83, EXTENSION, GURU RAMDAS NAGAR, LAXMI NAGAR, DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. A. MISHRA, CIT DR RESPONDENT BY: SHRI RAJIV SAXENA, ADV. O R D E R PER CHANDRAMOHAN GARG, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER OF THE CIT(A)-I, NEW DELHI DATED 14.12.2010 IN APPEAL NO. 347/07-08 FOR AY 2006- 07. 2. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER :- 1. THE ORDER OF THE LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THE ASSESSMENT ORDER VOID AB INITIO FOR FAILURE TO ISSUE NOTICE UNDER SECTION 143(2) OF INCOME TAX ACT, 1961 WITHIN STIPULATED TIME WHEREAS IT WAS ITA NO.1306/D/2011 AY: 2006-07 2 BEYOND CONTROL OF THE AO TO ISSUE SUCH NOTICE WITHI N SUCH TIME WHEN CASE WAS CENTRALIZED AND TRANSFERRED TO HIM. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THE ASSESSMENT ORDER VOID AB INITIO FOR FAILURE TO ISSUE NOTICE UNDER SECTION 143(2) OF INCOME TAX ACT, 1961 WITHIN STIPULATED TIME WHEREAS THE ASSESSEE DID NOT OBJECT TO THE ASSESSMENT PROCEEDIN GS AND DID NOT RAISE THIS GROUND BEFORE LEARNED CIT (A) UNTIL 11.02.2010 AND THEREFORE, SUCH DEFECT IS CURABLE BY INVOKING P ROVISIONS OF SECTION 292 BB OF INCOME TAX ACT, 1961. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THE ASSESS MENT ORDER VOID AB INITIO ON ACCOUNT OF PROCEDURAL IRREGULARIT Y OF NOT ISSUING NOTICE UNDER SECTION 143(2) WITHIN STIPULAT ED TIME WHEREAS SUCH IRREGULARITY WAS REMOVED ONCE THE CASE WAS REMANDED BY LD. CIT (A) TO THE AO. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THE ASSESS MENT ORDER VOID AB INITIO IN THE AO REQUIRED THE ASSESSEE AND ALLOWED OPPORTUNITY TO PRODUCE OR CAUSE TO BE PRODUCED EVID ENCE IN SUPPORT OF PARTICULARS SHOWN IN RETURN OF INCOME WI THIN THE MEANING OF SECTION 143(2) DURING ASSESSMENT PROCEED INGS AND SUCH PROCEDURAL DEFICIENCY BEING CURABLE UNDER SEC TION 292 BB OF INCOME TAX ACT, 1961. 3. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFORE US. LD. DR SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE FIRST APPELLATE AUTHORITY HAS GROSSLY ERRED IN HOLDING THAT THE ASSESSMENT ORDER IS VOID AB INITIO FOR FAILURE TO ISSUE NOTICE U/S 143(2) OF THE INCOME TAX ACT WITHIN STIPULATED TIME WHEREAS IT WAS BEYOND CONTROL OF THE AO TO ISSUE NOTICE WITHIN SUCH TIME WHEN ALL THE RELEVANT CASES WERE CENTRALISED AND TRANSFERRED TO HIM FOR FURTHER PROCEEDINGS. LD. DR FURTHER CONTENDED THAT THE CIT(A) GROSSLY ERRED IN HOLDING THAT THE ASSESSMENT ORDER IS ITA NO.1306/D/2011 AY: 2006-07 3 VOID AB INITIO AS NOTICE UNDER SECTION 143(2) OF TH E ACT WAS NOT ISSUED WITHIN STIPULATED PRESCRIBED LIMITS WHEREAS THE ASSESSEE D ID NOT OBJECT DURING THE ASSESSMENT PROCEEDINGS AND DID NOT RAISE THIS GROUN D BEFORE THE CIT(A) UNTIL 10.02.2010 AND, THEREFORE, SUCH DEFECT WAS CURABLE BY INVOKING PROVISIONS OF SECTION 292BB OF THE ACT. 4. LD. DR FURTHER CONTENDED THAT THE CIT (A) ALSO E RRED IN LAW AND ON FACTS IN HOLDING THE ASSESSMENT ORDER VOID AB INITIO ON A CCOUNT OF PROCEDURAL IRREGULARITY WHICH WAS REMOVED ONCE AND THE CASE WA S REMANDED BY LD. CIT (A) TO THE AO. LD. DR VEHEMENTLY CONTENDED THAT SINCE THE AO ALLOWED THE OPPORTUNITY TO PRODUCE OR CAUSE TO BE PRODUCED EVID ENCE IN SUPPORT OF PARTICULARS SHOWN IN THE RETURN OF INCOME WITHIN TH E MEANING OF SECTION 143(2) OF THE ACT DURING ASSESSMENT PROCEEDINGS AND SUCH P ROCEDURAL DEFICIENCY WAS VERY WELL CURABLE U/S 292BB OF THE ACT. LD. DR FINA LLY PRAYED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT O F THE AO. 5. REPLYING TO THE ABOVE, LD. COUNSEL OF THE ASSESS EE HAS DRAWN OUR ATTENTION TOWARDS OPERATIVE PARA AT PAGE 13 OF THE IMPUGNED O RDER AND SUBMITTED THAT AS PER DECISION OF HONBLE SUPREME COURT IN THE CASE OF ACIT VS HOTEL BLUE MOON (2010) 321 ITR 362 (SC) , IF AN ASSESSMENT HAS TO BE COMPLETED U/S 143(3) R/W SECTION 158BC OF THE ACT, THEN NOTICE U/ S 143(2) SHOULD BE ISSUED WITHIN ONE YEAR FROM THE DATE OF FILING OF THE BLOC K RETURN. LD. COUNSEL FURTHER SUBMITTED THAT OMISSION ON THE PART OF THE ASSESSIN G AUTHORITY TO ISSUE NOTICE U/S ITA NO.1306/D/2011 AY: 2006-07 4 143(2) OF THE ACT CANNOT BE A PROCEDURAL IRREGULARI TY AND IS NOT CURABLE, THEREFORE, THE REQUIREMENT OF SECTION 143(2) CANNOT BE DISPENSED WITH. SUPPORTING THE IMPUGNED ORDER, LD. COUNSEL OF THE A SSESSEE ALSO CONTENDED THAT OMISSION ON THE PART OF AO TO ISSUE NOTICE U/S 143( 2) OF THE ACT WITHIN PRESCRIBED TIME CANNOT BE HELD AS PROCEDURAL IRREGU LARITY WHICH IS NOT CURABLE U/S 292BB OF THE ACT. 6. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, W E NOTE THAT THE CIT(A) ALLOWED RELIEF FOR THE ASSESSEE WITH FOLLOWING OBSE RVATIONS, FINDINGS AND CONCLUSION:- IN REGARDS TO THE SERVICE OF NOTICE BEYOND THE TI ME ALLOWED UNDER PROVISO TO SECTION 143(2) THE APPELLANT HAD R ELIED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF AC IT VS HOTEL BLUE MOON 321 ITR 362 (2010). IN THE SAID JUD GMENT THE HON'BLE SUPREME COURT OBSERVED THAT OMISSION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE U/S 143(2) CANNOT BE PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE AND THEREFORE THE REQUIREMENT OF NOTICE UNDER SECTION 1 43(2) CANNOT BE DISPENSED WITH. THE COURT FURTHER OBSERVE D 'EVEN FOR PURPOSES OF CHAPTER XIVB OF THE ACT FOR DETERMINATI ON OF UNDISCLOSED INCOME FOR A BLOCK PERIOD UNDER THE PRO VISIONS OF SECTION 158BC, THE PROVISION OF SECTION 142 AND SUB SECTION 2 AND 3 OF SECTION 143 ARE APPLICABLE AND NO ASSESSME NT COULD BE MADE WITHOUT ISSUING NOTICE U/S 143(2) OF THE AC T. IN VIEW OF THE ABOVE JUDGMENT OF THE HON'BLE SUPREME COURT THE CONTENTION OF THE AO IN THE REMAND REPORT THAT THE NON ISSUE OF NOTICE U/S 143(2) IN TIME IS ONLY PROCEDURAL DEFECT WHICH IS CURABLE IS NOT TENABLE AS PER LAW. FROM THE FACTS O F THE CASE IT IS UNDISPUTED THAT THE NOTICES U/S 143(2) SHOULD HA VE BEEN ISSUED AND SERVED ON OR BEFORE 30.6.2007 AS THE RET URN OF INCOME FOR THE RELEVANT AY 2006-07 WAS FILED ON 15. 6.2006 BUT THE SAME WAS ISSUED ONLY ON 12.11.2007 AND SERVED O N 14.11.2007 WHICH IS CLEARLY BEYOND THE TIME ALLOWED AS PER THE ITA NO.1306/D/2011 AY: 2006-07 5 PROVISO OF SECTION 143(2). IN VIEW OF THE ABOVE FAC TS AND LAW I HAVE NO ALTERNATIVE BUT TO ALLOW THE APPEAL OF THE APPELLANT ON THIS ISSUE THAT THE ASSESSMENT MADE WITHOUT THE NOT ICE U/S 143(2) IN TIME WAS AB INITIO. 7. AT THE OUTSET, WE RESPECTFULLY TAKE NOTICE OF TH E DECISION OF HONBLE APEX COURT IN THE CASE OF ACIT VS HOTEL BLUE MOON (SUPRA ) WHEREIN IT WAS HELD THAT OMISSION ON THE PART OF AO TO ISSUE NOTICE U/S 143( 2) OF THE ACT CANNOT BE A PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE AND HENCE, THE REQUIREMENT OF NOTICE U/S 143(2) OF THE ACT CANNOT BE DISPENSED WITH. HOWEVER, LD. COUNSEL OF THE ASSESSEE HAS POINTED OUT THAT SECTION 292BB HAS BEEN INSERTED BY FINANCE ACT, 2008 AND THE SAME IS EFFECTIVE FROM 1.4.2008 O NLY, THEREFORE, THE SAID SECTION IS NOT APPLICABLE IN THE CASE OF ASSESSEE F OR AY 2006-07 THE ASSESSMENT OF WHICH WAS COMPLETED ON 28.12.2007. LD. DR HAS N OT DISPUTED THIS FACT ON THE LEGAL PROPOSITION THAT SECTION 292BB WAS INSERT ED BY FINANCE ACT 2008 W.E.F. 1.4.2008. THUS, WE ARE OF THE CONSIDERED OP INION THAT THE SAID SECTION IS NOT APPLICABLE TO THE PRESENT CASE PERTAINING TO AY 2006-07 WHEREIN ASSESSMENT WAS COMPLETED ON 28.12.2007. 8. TURNING TO THE FACTS AND CIRCUMSTANCES OF THE PR ESENT CASE, WE NOTE THAT UNDISPUTEDLY, NOTICE U/S 143(2) OF THE ACT SHOULD H AVE BEEN ISSUED AND SERVED ON OR BEFORE 30.6.2007 AS THE RETURN OF INCOME FOR THE RELEVANT AY 2006-07 WAS FILED ON 15.6.2006 BUT THE SAME WAS ISSUED ON 12.11 .2007 AND SERVED ON 14.11.2007 AND THE SAME WAS ISSUED AND SERVED BEYON D THE PRESCRIBED TIME LIMIT AS PER PROVISO TO SECTION 143(2) OF THE ACT. IN THIS SITUATION, WE REACH TO A ITA NO.1306/D/2011 AY: 2006-07 6 LOGICAL CONCLUSION THAT THE CIT(A) WAS RIGHT IN HOL DING THAT SECTION 292BB OF THE ACT IS NOT APPLICABLE TO THE PRESENT CASE AND O MISSION ON THE PART OF AO TO ISSUE NOTICE U/S 143(2) OF THE ACT WITHIN PRESCRIBE D TIME LIMIT IS NOT A PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE , THEREFORE, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSMENT MADE WITHO UT NOTICE U/S 143(2) OF THE ACT WITHIN PRESCRIBED LIMIT WAS VOID AB INITIO. CO NSEQUENTLY, WE UPHOLD THE FINDINGS AND CONCLUSION OF THE CIT(A) AND, THEREFOR E, FACTUAL AND LEGAL GROUNDS NO. 2 TO 5 OF THE REVENUE BEING DEVOID OF MERITS AR E DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.1.2015. SD/- SD/- (G.D. AGRAWAL) (CHANDRAMOHAN GARG) VICE PRESIDENT JU DICIAL MEMBER DT. 30TH JANUARY, 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER AS STT. REGISTRAR