GAJANAN TOWERS P LTD., Jaipur V. ITO, Jaipur

ITA 143/JPR/2011

• Counselvise Citation: 14323114 RSA 2011
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 21-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R PAREEK
• Assessee Lawyers: S L PODDAR
• Keywords: Bonafide belief; Question of law; Reasonable cause; Procedural lapse; Condonation of delay; Revised return
• Section: 271(1)(c); 143(3); 148; 139

Judgement Text

1 ITA 143(2)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 143/JP/2011 & 1350/JP/10 ASSTT. YEAR : 2004-05. GAJANAN TOWERS PVT. LTD., VS. THE INCOME-TAX OFFI CER, BEHIND OIL MILL COMPOUND, WARD 4(1), NAHARGARH ROAD, JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.L.PODDAR RESPONDENT BY : SHRI G.R. PAREEK ORDER DATE OF ORDER : 10/06/2011. PER R.K. GUPTA, J.M. THESE ARE TWO APPEALS BY ASSESSEE RELATING TO ASSE SSMENT YEAR 2004-05. APPEAL LISTED AS ITA NO. 143/JP/2011 IS AGAINST THE QUANTU M ORDER PASSED BY LD. CIT (A) DATED 3.2.2009. ANOTHER APPEAL LISTED AS ITA NO. 1350/JP /2010 IS AGAINST CONFIRMING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE IT ACT. 2. FIRST WE WILL TAKE UP THE APPEAL IN QUANTUM APPE AL. 3. THE APPEAL FILED BY ASSESSEE IS LATE BY 654 DAYS . THE CONDONATION APPLICATION ALONG WITH AFFIDAVIT OF THE LD. COUNSEL WHO DELAYED THE FILING OF THE APPEAL HAS BEEN FILED. FIRST, WE WILL TAKE CONDONATION APPLICATION. 4. IN THIS CASE THE APPEAL FOR ASSESSMENT YEAR 2004 -05 WAS DECIDED BY THE LD. CIT (A) ON 3.2.2009. ORDER OF LD. CIT (A) WAS COMMUNIC ATED TO THE ASSESSEE ON 4.3.2009. 2 4.1. SUBSEQUENT TO THE COMPLETION OF ASSESSMENT, TH E AO IMPOSED PENALTY UNDER SECTION 271(1)(C) ON 12.3.2010. THE APPEAL IN CASE OF PENALTY WAS DECIDED BY LD. CIT (A) ON 1.11.2010. AGAINST THIS ORDER ASSESSEE PREFERRE D APPEAL BEFORE THE TRIBUNAL ON 24.11.2010. AS PER CONDONATION APPLICATION, DURING THE COURSE OF PROCESSING FOR PREPARATION OF SUBMISSION BEFORE THE TRIBUNAL AGAIN ST THE ORDER OF LD. CIT (A) CONFIRMING THE PENALTY LEVIED UNDER SECTION 271(1)(C), IT TRAN SPIRED THAT THE ADVOCATE OF THE ASSESSEE SHRI S.L. PODDAR UNDER WRONG IMPRESSION/MISUNDERSTA NDING HAD NOT FILED APPEAL IN THE QUANTUM CASE I.E. AGAINST THE ORDER OF LD. CIT (A) DATED 3.2.2009 CONFIRMING THE ORDER OF AO PASSED UNDER SECTION 143(3). IT IS FURTHER STAT ED THAT ASSESSEE WAS UNDER BONAFIDE BELIEF THAT APPEAL AGAINST THE ORDER DATED 3.2.2009 OF LD. CIT (A) STOOD FILED BY THE ADVOCATE OF THE ASSESSEE. HOWEVER, AS THE APPEAL C OULD NOT BE FILED, AND IN THESE CIRCUMSTANCES THE APPEAL WAS FILED LATE. IN SUPPOR T OF THE CONTENTS OF THE CONDONATION APPLICATION, AN AFFIDAVIT OF THE ADVOCATE SHRI S.L. PODDAR IS ALSO PLACED ON RECORD. IN THE AFFIDAVIT IT HAS BEEN MENTIONED THAT HE IS REGULAR COUNSEL OF THE ASSESSEE WHO APPEARED BEFORE THE LD. CIT (A) AND BEFORE THE TRIBUNAL. IT IS FURTHER STATED THAT THE PAPERS REQUIRING FOR FILING OF THE APPEAL AGAINST THE ORDE R OF LD. CIT (A) DATED 3.2.2009 WERE GIVEN TO HIM IN TIME BY HIS CLIENT. BUT DUE TO INA DVERTENCE, THE APPEAL COULD NOT BE FILED IN TIME. IT IS FURTHER MENTIONED THAT DURING PREPA RATION OF SUBMISSIONS IN CASE OF ASSESSEE AGAINST PENALTY CONFIRMED BY LD. CIT (A), IT WAS TRANSPIRED THAT APPEAL AGAINST THE ORDER DATED 3.2.2009 COULD NOT BE FILED. IN P ARA 6 OF THE AFFIDAVIT IT HAS BEEN MENTIONED THAT THE LAPSE IN NOT FILING THE APPEAL I N TIME AGAINST THE ORDER DATED 3.2.2009 IS EXCLUSIVELY ON HIS PART PURELY ON ACCOUNT OF BON AFIDE IMPRESSION DUE TO INADVERTENCE THAT APPEAL STOOD FILED. 3 5. DURING THE HEARING OF THE CONDONATION APPLICATIO N, THE LD. COUNSEL OF THE ASSESSEE FURTHER EXPLAINED THAT IN FACT THE PAPERS WERE RECE IVED FOR FILING THE APPEAL IN TIME. HOWEVER, THEY WERE MISPLACED AND, THEREFORE, DUE TO OVERSIGHT THE APPEAL COULD NOT BE FILED NEITHER THOSE PAPERS WERE TRACEABLE AND WHEN THE PREPARATION OF SUBMISSIONS FOR FILING BEFORE THE TRIBUNAL IN CASE OF PENALTY CONF IRMED BY LD. CIT (A) WERE IN PROGRESS THEN ONLY IT WAS REALIZED THAT THE APPEAL COULD NOT BE FILED BY HIS OFFICE. RELIANCE WAS PLACED ON VARIOUS CASE LAWS WHEREIN IT HAS BEEN HEL D THAT ON ACCOUNT OF MISTAKE OF COUNSEL THE ASSESSEE SHOULD NOT SUFFER. 6. ON THE OTHER HAND, THE LD. D/R HAS OBJECTED IN C ONDONING THE DELAY IN FILING OF APPEAL. A WRITTEN NOTE WAS ALSO FILED BY LD. D/R. IT WAS FURTHER STATED THAT THE CAUSE EXPLAINING THE DELAY HAS BEEN GIVEN IN THE FORM OF AFFIDAVIT OF LD. A/R DOES NOT EXPLAIN THE SUFFICIENCY OF DATE OF FILING OF APPEAL. NO RE ASONABLE JUSTIFICATION HAS BEEN FURNISHED BY THE LD. A/R IN SUPPORT OF HIS AFFIDAVIT. THE FA CT OF BEING INADVERTENCE AND IMPRESSION OF APPEAL FILED AGAINST THE ORDER AS MENTIONED IN P ARA 4 OF THE AFFIDAVIT IS FACTUALLY INCORRECT IN AS MUCH AS ON 31.3.2010 WHEN APPEAL WA S FILED BEFORE THE LD. CIT (A) BY THE SAME A/R ON PENALTY ISSUE, HE WAS SUPPOSED TO BE WE LL AWARE OF THE FACT OF NON FILING OF APPEAL ON THE QUANTUM ISSUE. AT LEAST THERE IS NO SUFFICIENT CAUSE AFTER THIS DATE I.E. 31.3.2010. THE APPEAL HAS ONLY BEEN FILED AFTER OB SERVING THE FACT THAT LD. CIT (A) HAS CONFIRMED THE PENALTY IN THIS CASE. 7. WE HAVE HEARD RIVAL SUBMISSIONS ON THIS ISSUE AN D AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND TAKING INTO CON SIDERATION THE AFFIDAVIT OF THE LD. COUNSEL WHO WAS SUPPOSED TO FILE THE APPEAL OF THE ASSESSEE, WE ARE OF THE VIEW THAT THE DELAY IN FILING OF THE APPEAL IS LIABLE TO BE CONDO NED. THERE MAY BE SUFFICIENT CAUSE OR 4 THERE MAY NOT BE BUT THE FACT REMAINS THAT THE COU NSEL HAS COME FORWARD BY FILING HIS AFFIDAVIT THAT DELAY IN FILING THE APPEAL WAS BECAU SE OF HIS OFFICE AS APPEAL PAPERS RECEIVED IN TIME WERE MISPLACED AND DUE TO OVERSIGH T APPEAL COULD NOT BE FILED IN TIME. AS THE APPEAL AGAINST THE PENALTY ORDER WAS FILED B EFORE THE LD. CIT (A) ON 31.3.2010 THEN ON THAT DATE THE LD. COUNSEL OF THE ASSESSEE SHOULD HAVE REALIZED THAT APPEAL AGAINST THE QUANTUM MATTER IS ALSO PENDING TO BE FILED, IN OUR VIEW ONCE THE LD. A/R IS ADMITTING BY FILING A VALID DOCUMENT NOT LESS THEN AN AFFIDAVIT, IT SHOULD BE TAKEN THAT THERE WAS SUFFICIENT CAUSE IN NOT FILING THE APPEAL IN TIME. 8. IN THE CASE OF KATIJI & OTHERS, 167 ITR 471 (SC) , THE HONBLE SUPREME COURT HAS HELD THAT WHEN SUBSTANTIAL JUSTICE IS PITTED AGAINS T TECHNICALITIES THEN THE CAUSE OF SUBSTANTIAL JUSTICE SHOULD BE PREVAILED UPON. IN T HIS CASE ALSO THERE WOULD BE DENIAL OF SUBSTANTIAL JUSTICE TO THE ASSESSEE IF THE DELAY IS NOT CONDONED AS THE SAME WAS ON ACCOUNT OF COUNSELS FAULT. 9. IN THE CASE OF ORACLE INDIA PVT. LTD., 13 DTR 37 1, THE E BENCH OF ITAT DELHI HAS HELD THAT THERE WAS A REASONABLE CAUSE FOR DELA Y IN FILING THE APPEAL BY 1297 DAYS ON ACCOUNT OF LAPSE ON THE PART OF THE CONSULTANT. IT WAS HELD THAT THERE WAS NO MALAFIDE ON THE PART OF THE ASSESSEE AND THERE WAS VALID REASON WARRANTING CONDONATION OF DELAY AND ADMISSION OF APPEAL. ACCORDINGLY, THE DELAY WAS CO NDONED AND THE APPEAL WAS ADMITTED. 10. IN THE CASE OF IMPROVEMENT TRUST VS. UJAGAR SIN GH IN CIVIL APPEAL NOS. 2395 OF 2008 DATED 26.06.2010 THE HONBLE SUPREME COURT HAS HELD THAT UNLESS MALAFIDE ARE NOT PROVED, THE DELAY SHOULD BE CONDONED AND THE MATTER SHOULD BE DISPOSED OFF ON MERIT AND NOT ON TECHNICALITIES. IN VIEW OF THE RATIO OF THE SE CASES AND IN VIEW OF THE REASONS 5 DISCUSSED ABOVE, WE ARE OF THE VIEW THAT THE DELAY IN FILING APPEAL LATE SHOULD BE CONDONED AND ACCORDINGLY WE CONDONE THE DELAY IN FI LING THE APPEAL. 11. NOW WE WILL TAKE UP THE GROUNDS OF THE ASSESSE E ON MERIT. 12. THE ASSESSEE HAS FILED AN APPLICATION FOR ADMIT TING FOLLOWING ADDITIONAL GROUNDS :- (A) NO NOTICE WAS ISSUED UNDER SECTION 143(2) AGAINST T HE ORIGINAL RETURN OF INCOME WHICH WAS FILED ON 31.03.2005 WITHIN THE LIMITATION OF 12 MONTHS AS AVAILABLE AT THAT POINT OF TIME. THE FIRS T NOTICE UNDER SECTION 143(2) WAS ISSUED ONLY ON 16.05.2006 BEYOND THE EXP IRY OF ONE YEAR FROM THE FILING OF THE ORIGINAL RETURN. NO ASSESSME NT COULD BE FRAMED UNDER SECTION 143(3) AGAINST RETURN FILED ORIGINALL Y ON 31.03.2005. (B) AS THE ORIGINAL RETURN WAS FILED ON 31.03.2005 BEYO ND THE TIME PRESCRIBED UNDER SECTION 139(1), THEREFORE THE ASSE SSEE WAS NOT ELIGIBLE FOR FILING A REVISED RETURN UNDER SECTION 139(5). THIS FACT HAS ALSO BEEN MENTIONED BY THE LEARNED ASSESSING OFFICER ON PAGE 3 OF THE ASSESSMENT ORDER. HENCE THE REVISED RETURN FILED ON 31.03.2006 WAS NONEST. NO NOTICE UNDER SECTION 143(2) COULD BE ISS UED IN PURSUANCE OF SUCH A RETURN. THUS NO ASSESSMENT COULD BE MADE UND ER SECTION 143(2) AGAINST SUCH RETURN. WHAT WAS REQUIRED WAS ISSUE OF NOTICE U/S 148 IN ORDER TO REGULARIZE THE RETURN FILED ON 31.03.2006 AND ONLY THEREAFTER NOTICE UNDER SECTION 143(2) COULD BE ISSUED. BUT IN THIS CASE NOTICE UNDER SECTION 148 WAS NOT ISSUED. (C) IN THE AFORESAID CIRCUMSTANCES IT IS CLEAR THAT THE LEARNED ASSESSING OFFICER HAS ERRED IN MAKING ASSESSMENT UNDER SECTIO N 143(2) IN THE CASE OF THE ASSESSEE. THE SAME THEREFORE DESERVES TO BE HELD AS AB- INITIO VOID. 13. THE LD. A/R HAS PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NTPC, 229 ITR 383, IN CASE OF SHARWAN BENIW AL VS. ITO DECIDED IN ITA NO. 292/JU/2008 DATED 14.1.2009, IN CASE OF JORA SINGH VS. ITO, 42 DTR 409, IN CASE OF 6 KERALA STATE MARKETING FEDERATION, 193 ITR 624, IN CASE OF CIT VS. COMMONWEALTH TRUST (INDIA) LTD., 221 ITR 474, IN CASE OF MAHINDR A & MAHINDRA LTD., 122 TTJ 577 (SB). 14. IT WAS FURTHER SUBMITTED THAT ADDITIONAL GROUND S RAISED BY ASSESSEE ARE PURELY LEGAL GROUND WHICH DO NOT REQUIRE ANY INVESTIGATION OR VE RIFICATION. THEREFORE, THEY ARE LIABLE TO BE ADMITTED. 15. ON THE OTHER HAND, THE LD. D/R HAS OBJECTED IN ADMITTING THE ADDITIONAL GROUND. RELIANCE HAS BEEN PLACED ON THE DECISION OF HONBLE M.P. HIGH COURT IN THE CASE OF TOLA RAM HASOMAL, 298 ITR 22. 16. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE RATIO OF VARIOUS CASE LAWS RELIED UPON BY BOTH THE PARTIES, WE FIND THAT THE A DDITIONAL GROUND RAISED BY ASSESSEE ARE LIABLE TO BE ADMITTED AS THEY ARE PURELY LEGAL GROU NDS. 17. THE HONBLE APEX COURT IN CASE OF NTPC HAS CLEA RLY HELD THAT THE TRIBUNAL WILL HAVE THE DISCRETION TO ALLOW OR NOT ALLOW NEW GROUN D TO BE RAISED. BUT THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER A QUESTION OF LAW ARISING FROM THE FACTS WHICH ARE ON RECORD IN THE ASSESSMENT PROCEEDINGS. SUCH A QUESTION SHOULD BE ALLOWED TO BE RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO COR RECTLY ASSESS THE TAX LIABILITY OF AN ASSESSEE. 18. THE ABOVE GROUNDS RAISED BY ASSESSEE ARE PURELY ON ACCOUNT OF QUESTION OF LAW AND, THEREFORE, THEY ARE LEGAL GROUNDS. ALL THE FAC TS ARE ON RECORD, WHICH DOES NOT REQUIRE ANY FURTHER VERIFICATION. THEREFORE, IN OUR CONSIDE RED VIEW, IN VIEW OF THE DECISION OF HONBLE APEX COURT, THE LEGAL GROUNDS ARE LIABLE TO BE ADMITTED. ACCORDINGLY WE ADMIT THE LEGAL GROUNDS. 7 19. THE LEARNED COUNSEL OF THE ASSESSEE, ON MERIT, HAS ARGUED THAT THE NOTICE ISSUED UNDER SECTION 143(2) WAS BARRED BY LIMITATION. THE REFORE, THE ASSESSMENT COMPLETED IS LIABLE TO BE ANNULLED. FURTHER, RELIANCE WAS PLACE D ON VARIOUS CASE LAWS MENTIONED IN THE WRITTEN SUBMISSION. 20. ON THE OTHER HAND, THE LD. D/R STATED THAT THE ASSESSEE HAS FILED TWO RETURNS. FIRST RETURN WAS FILED BEYOND THE PRESCRIBED LIMIT UNDER SECTION 139 (1) AND THEREAFTER A SECOND RETURN WAS FILED WHICH WAS A NONEST RETURN. HOWEVER , THE NOTICE ISSUED UNDER SECTION 143(2) WHICH IS WITHIN 12 MONTHS PERIOD FROM THE DA TE OF FILING OF SECOND RETURN. THEREFORE, THERE IS NO DELAY IN ISSUING NOTICE UNDE R SECTION 143(2). FURTHER, RELIANCE WAS PLACED ON THE DECISION OF TRIBUNAL IN CASE OF AMRAV ATI MARBLES PVT. LTD. DECIDED IN ITA NO. 614/JP/2003 FOR ASSESSMENT YEAR 1996-97 DATED 2 9.3.2006, COPY OF THE ORDER WAS ALSO FILED. IT WAS FURTHER SUBMITTED THAT IN THE C ASE OF JAI PRAKASH, 219 ITR 737, THE HONBLE SUPREME COURT HAS HELD THAT LIABILITY TO TA X IS CREATED BY CHARGING PROVISIONS OF THE ACT AND OMISSION TO SERVE NOTICE OR DEFECTIVE N OTICE, ASSESSMENT WOULD BE IRREGULAR BUT NOT NULL AND VOID. IT WAS FURTHER STATED THAT IN THIS VERY CASE ANOTHER JUDGMENT IN 79 ITR 505 WHEREIN THE COURT HAS OBSERVED THAT LACK OF NOTICE DOES NOT MEAN REVENUE AUTHORITY HAD NO JURISDICTION TO ASSESS BUT ASSESSM ENT IS ONLY DEFECTIVE BY REASON OF NOTICE NOT GIVEN TO ASSESSEE. AN ASSESSMENT PROCEE DING UNDER THE ACT DOES NOT CEASED TO BE A PROCEEDING MERELY BY REASON OF WANT OF NOTICE. FURTHER ATTENTION OF THE BENCH WAS DRAWN ON COPY OF WRITTEN SUBMISSIONS FILED BY LD. D /R 21. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERI AL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED ON THE LEGAL ISSUE RAISED. THE RE IS NO DISPUTE THAT FIRST RETURN FILED BY 8 ASSESSEE ON 31.3.2005 WAS BEYOND THE TIME LIMIT PRE SCRIBED UNDER SECTION 139(1). THEREAFTER, A REVISED RETURN WAS FILED BY THE ASSES SEE ON 28.3.2006. THE AO AT PAGE 3 OF HIS ORDER HAS HIMSELF ADMITTED THIS FACT THAT FIRST RETURN FILED WAS BEYOND THE TIME PRESCRIBED UNDER SECTION 139(1) AND, THEREFORE, WAS NOT ELIGIBLE FOR FILING A REVISED RETURN AS PER SECTION 139(5). FROM THIS FACT ALONE IT IS ESTABLISHED THAT THE NOTICE UNDER SECTION 143(2) HAS TO BE ISSUED WITHIN 12 MONTHS FROM THE D ATE OF FILING OF FIRST RETURN I.E. ON 31.3.2005. 21.1. AS STATED ABOVE, THE AO HIMSELF HAS OBSERVED THAT ASSESSEE WAS NOT ELIGIBLE FOR FILING THE SECOND REVISED RETURN. FOR ISSUING NOTI CE UNDER SECTION 143(2) FROM THE DATE OF FILING OF SECOND REVISED RETURN, IT WAS THE DUTY OF THE AO TO REGULARIZE THE SECOND RETURN FIRST BY ISSUING NOTICE UNDER SECTION 148 AND THEN HE COULD HAVE ISSUED NOTICE ON THE BASIS OF SECOND REVISED RETURN. UNDISPUTEDLY, NO NOTICE UNDER SECTION 148 WAS ISSUED AND, THEREFORE, THE SECOND REVISED RETURN REMAINED NON E ST AND, THEREFORE, ON THE BASIS OF SECOND REVISED RETURN NOTICE ISSUED UNDER SECTION 1 43(2) CANNOT BE HELD THAT THE SAME HAS BEEN ISSUED WITHIN THE PERIOD OF 12 MONTHS. 21.2. THE NOTICE UNDER SECTION 143(2) HAS BEEN ISSU ED ON 16.5.2006 WHICH IS BEYOND THE TIME PERIOD OF 12 MONTHS. THEREFORE, NO VALID JURISDICTION HAS BEEN ASSUMED BY THE AO TO START THE ASSESSMENT PROCEEDINGS. THE CONTEN TION OF THE DEPARTMENT THAT THE NOTICE UNDER SECTION 143(2) HAS BEEN ISSUED TAKING INTO CO NSIDERATION THE DATE OF FILING OF REVISED RETURN IS NOT TENABLE IN THE EYES OF LAW BE CAUSE THE SECOND REVISED RETURN WAS NON EST RETURN AND THE ASSESSEE WAS NOT ELIGIBLE FOR FI LING THE REVISED RETURN AS PER SECTION 139(5). THEREFORE, FOR ASSUMPTION OF JURISDICTION FOR COMPLETION OF ASSESSMENT THE NOTICE 9 HAS TO BE ISSUED WITHIN 12 MONTHS FROM THE DATE OF FILING OF THE FIRST RETURN FILED ON 31.3.2005. 21.3. THE ISSUE IN RESPECT OF ISSUANCE OF NOTICE UN DER SECTION 143(2) HAS BEEN DECIDED BY THE HONBLE APEX COURT IN LATEST DECISION IN CAS E OF HOTEL BLUE MOON, 229 CTR 219 (SC) AND ALSO REPORTED IN 35 DTR 1. IN THIS DECISI ON THE HONBLE APEX COURT HAS HELD THAT ISSUANCE OF NOTICE UNDER SECTION 143(2) WITHIN THE PRESCRIBED TIME LIMIT IS MANDATORY. OMISSION ON THE PART OF THE AO TO ISSUE NOTICE UNDE R SECTION 143(2) CANNOT BE A PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE . THEREFORE, REQUIREMENT OF NOTICE UNDER SECTION 143(2) CANNOT BE DISPENSED WITH. 21.4. IN ANOTHER DECISION, THE HONBLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS. MAXIMA SYSTEMS LTD., 236 CTR 443 (GUJ.) AGAIN HAS H ELD THAT ISSUANCE OF NOTICE UNDER SECTION 143(2) IS MANDATORY. IN THIS CASE ASSESSEE FILED RETURN OF INCOME ON 29 TH NOVEMBER, 1995 AND NOTICE UNDER SECTION 143(2) WAS ISSUED ON 29 TH NOVEMBER, 1996 BUT WAS SERVED ON THE ASSESSEE ON 2 ND DECEMBER, 1996. NOTICE HAVING BEEN SERVED AFTER EXPIRY OF 12 MONTH FROM THE END OF THE MONTH IN WHI CH RETURN WAS FURNISHED, IT WAS HELD THAT THE AO HAD NO JURISDICTION TO FRAME THE ASSESS MENT. WHILE HOLDING SO, THE HONBLE GUJARAT HIGH COURT HAS RELIED ON THE DECISION OF HO NBLE APEX COURT IN THE CASE OF HOTEL BLUE MOON (SUPRA) AND THE DECISION RELIED UPON BY T HE DEPARTMENT IN CASE OF JAI PRAKASH SINGH, 132 CTR 262 (SC) AND IN CASE OF MADANLAL MAT HURDAS VS. CHUNNI LAL, 44 ITR 325 (GUJ.) WERE FOUND DISTINGUISHABLE. HERE ALSO T HE LD. D/R HAS PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF JA I PRAKASH SINGH, 219 ITR 737 (SC) AND THIS DECISION OF HONBLE APEX COURT HAS ALREADY BEEN FOUND DISTINGUISHABLE BY THE HONBLE GUJARAT HIGH COURT WHO ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE HOLDING THAT 10 NOTICE UNDER SECTION 143(2) HAVING BEEN SERVED BEYO ND THE STATUTORY PERIOD OF 12 MONTHS, THE TRIBUNAL WAS CORRECT IN HOLDING THAT THE ASSESS MENT WAS INVALID. THEREFORE, THE CASE ON WHICH RELIANCE HAS BEEN PLACED BY LD. D/R ARE NO T HELPFUL TO THE DEPARTMENT AS THE ISSUE IS NOW SQUARELY COVERED BY THE DECISION OF HO NBLE APEX COURT IN CASE OF HOTEL BLUE MOON (SUPRA). SINCE NOTICE ISSUED UNDER SECTI ON 143(2) WAS BEYOND THE PRESCRIBED TIME LIMIT OF 12 MONTHS, THEREFORE, IT HAS TO BE HE LD THAT AO WAS NOT HAVING VALID JURISDICTION FOR COMPLETION OF ASSESSMENT AND SINCE THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE APEX COURT INCASE OF HOTEL BLUE MOON (SUPRA), WE HOLD THAT ASSESSMENT COMPLETED BY THE AO WAS INVALID. ACCORD INGLY, THE SAME IS QUASHED. 22. SINCE WE HAVE QUASHED THE ASSESSMENT, THEREFORE , WE ARE NOT INCLINED TO DISPOSE OFF THE OTHER GROUND OF THE ASSESSEE ON MERIT AT TH IS STAGE. WE ORDER ACCORDINGLY. 23. NOW WE WILL TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO. 1350/JP/2010 WHICH RELATES TO CONFIRMING THE LEVY OF PENALTY UNDER SEC TION 271(1)(C). 24. BASIS OF LEVY OF PENALTY NOW DOES NOT SURVIVE A S WE HAVE ALREADY QUASHED THE ASSESSMENT COMPLETED BY THE AO. THEREFORE, WE CANC EL THE LEVY OF PENALTY CONFIRMED BY THE LD. CIT (A). 25. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED. 26. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 10 .6.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- 11 COPY FORWARDED TO :- GAJANAN TOWERS PVT. LTD., JAIPUR. THE ITO WARD 4(1), JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 143(2)/JP/2010) BY ORDER, AR ITAT JAIPUR.