Jaya Bothra, Purba Barddhaman V. I.T.O.,Ward-1(1), Burdwan

ITA 1632/KOL/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 9937 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 07-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Procedural lapse; Assessment record; Benefit of exemption
• Section: 68; 69C; 143(3); 142(1); 260A; 250; 292BB; 143(2)

Judgement Text

आयकर अपीलीय अधिकरण कोलकाता 'एसएमसी' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA डॉ मनीष बोरड, ल े खा सदस्य क े समक्ष Before DR. MANISH BORAD, ACCOUNTANT MEMBER आयकर अपील संख्या: 1632/कोल/2019 धनिा ा रण वष ा ः 2015-16 I.T.A. No.: 1632/Kol/2019 Assessment Year: 2015-16 Jaya Bothra............................................................Appellant [PAN: AJVPB 2144 C] Vs. ITO, Ward-1(1), Kolkata........................................Respondent Appearances by: Sh. Somnath Ghosh, Adv., appeared on behalf of the Assessee. Sh. Biswanath Das, CIT, Sr. D/R, appeared on behalf of the Revenue. Date of concluding the hearing : August 24 th , 2022 Date of pronouncing the order : September 28 th , 2022 आद े श ORDER Per Manish Borad, Accountant Member: This appeal filed by the assessee pertaining to the Assessment Year (in short “AY”) 2015-16 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the “Act”) by ld. Commissioner of Income-tax (Appeals), Burdwan [in I.T.A. No.: 1632/Kol/2019 Assessment Year: 2015-16 Jaya Bothra. Page 2 of 10 short ld. “CIT(A)”] dated 07.05.2019 arising out of the assessment order framed u/s 143(3) of the Act dated 25.10.2017. 2. The assessee is in appeal before this Tribunal raising the following grounds: “1. FOR THAT on a true and proper interpretation of the scope of the provisions of s. 68 of the Income Tax Act, 1961, the Ld. Commissioner of Income Tax (Appeals)-Burdwan was absolutely in error in upholding the impugned addition of Rs. 10,89,000/- resorted to by the Ld. Income Tax Officer, Ward 1(1), Burdwan by failing to consider that no adverse evidence was adduced on record against the appellant and the purported adverse conclusion reached on that behalf is wholly arbitrary, unreasonable and perverse. 2. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-Burdwan was remiss in upholding the impugned addition in the sum of Rs. 10,89,000/-made by the Ld. Income Tax Officer, Ward 1(1), Burdwan by denying the benefit of exemption claimed on account of the Long Term Capital Gains without considering the factual matrix of the instant case and the specious finding based upon such wrong assumption is entirely opposed to law. 3. FOR THAT the Ld. Commissioner of Income Tax (Appeals)- Burdwan was wholly in error in sustaining the purported addition in an amount of Rs. 10,89,000/- resorted to by the Ld. Income Tax Officer, Ward 1(1), Burdwan exclusively relying on the investigation report of the DGIT(Inv), WB, Sikkim & NER, Kolkata by misreading the facts and circumstances of the instant case and the adverse conclusion reached on that behalf in violation of the statutory prescription is completely unfounded, unjustified and untenable in law. 4. FOR THAT the alleged action of the Ld. Commissioner of Income Tax (Appeals)-Burdwan in impliedly upholding the invocation of the provisions of s. 69C of the Income Tax Act, 1961 on an amount of Rs. 33,652/- alleging commission paid by the appellant in the instant case by the Ld. Income Tax Officer, Ward 1(1), Burdwan basing on extraneous considerations not germane to the issue is wholly illegal, illegitimate and infirm in law.” 3. The assessee has raised the following additional ground: I.T.A. No.: 1632/Kol/2019 Assessment Year: 2015-16 Jaya Bothra. Page 3 of 10 “FOR THAT in the facts and circumstances of the instant case, the Ld. Commissioner of Income Tax (Appeals)-Burdwan acted unlawfully in not appreciating that none of the conditions precedent existed for and/or were fulfilled by the Ld. Income Tax Officer Ward 1(1), Burdwan for his specious action of framing the assessment order u/s. 143(3) of the Income Tax Act, 1961 on 25-10-2017 in the instant case de hors any notice u/s. 143(2) of the Income Tax Act, 1961 and without complying to the mandatory tenets of s. 127 of the Act and the impugned inaction on that account renders the assessment order framed ab initio void, ultra vires and null in law.” 4. At the outset, ld. Counsel for the assessee submitted that the additional ground being legal in nature relates to the validity of the assessment framed by ld. Assessing Officer (in short ld. “AO”) and the same may be adjudicated first and if the issue is decided in favour of the assessee then the grounds on merit will be merely academic in nature. Ld. D/R did not object to the same. We, therefore, proceed to hear the legal issue raised by the assessee in the additional ground. 5. Ld. Counsel for the assessee submitted that the case of the assessee was selected for scrutiny through CASS and notices u/s 143(2) of the Act dated 20.09.2016 was issued by ITO, Ward-1(3), Burdwan and duly served upon the assessee. Further, the assessee appeared before the ld. AO on 29.09.2016. Thereafter, on 16.04.2017 directions were received by ld. AO for transferring the assessment records to ITO, Ward-1(1), Burdwan who had the jurisdiction over the assessee. Ld. Counsel for the assessee submitted that after the case was transferred to ITO, Ward-1(1), Burdwan there was no issuance of fresh notice u/s 143(2) of the Act and since no such notice has been issued, the impugned assessment proceedings are null and void. In support of this claim reliance was placed on the judgment of Hon’ble High Court of I.T.A. No.: 1632/Kol/2019 Assessment Year: 2015-16 Jaya Bothra. Page 4 of 10 Calcutta in the case of PCIT vs. Nopany & Sons reported in [2022] 136 taxmann.com 414 (Calcutta) dated 04.02.2022. 6. On the other hand, ld. D/R contended that a valid notice u/s 143(2) was issued to the assessee for initiating the scrutiny proceedings and the assessee has participated in the assessment proceedings and the transfer of assessment records was on account of orders of the higher authority who has directed so for the reason that as per the alphabetical jurisdiction, ITO, Ward- 1(1), Burdwan had the jurisdiction over the assessee. He, further, stated that when the case of the assessee is selected for scrutiny the ITO under whom the PAN of the assessee exists, issues the notice and thereafter, as per the alphabetical jurisdiction the case is transferred to the Ld. AO having jurisdiction over the assessee. 7. I have heard rival contentions and perused the records placed before me. Through the legal issue raised in the additional ground has been raised for the first time before me, I find that the same being legal in nature can be raised at any stage as held by Hon’ble Supreme Court of India in the case of National Thermal Power Co. Ltd. vs. Commissioner of Income-tax reported in [1998] 229 ITR 383 (SC). 8. After hearing ld. Counsel for the assessee, I find that the case of the assessee was selected for scrutiny after issuance of notice u/s 143(2) of the Act dated 20.09.2016 by ITO, Ward-1(3), Burdwan. Perusal of the copy of the order sheet placed on record reveals that after the issuance of notice the assessee through its Authorized Representative appeared on 29.09.2016. The case was adjourned to 31.12.2016. Then on 16.04.2017 ITO, Ward-1(3), I.T.A. No.: 1632/Kol/2019 Assessment Year: 2015-16 Jaya Bothra. Page 5 of 10 Burdwan transferred the assessment records to ITO, Ward-1(1), Burdwan stating that the alphabetical jurisdiction of the assessee belongs to ITO, Ward-1(1), Burdwan. After the records were transferred, there was no issuance of fresh notice u/s 143(2) of the Act by ITO, Ward-1(1), Burdwan. The claim of the assessee is that once the assessment records were transferred to the ld. AO having the correct jurisdiction over the assessee then for initiating the assessment proceedings again a fresh notice u/s 143(2) of the Act should have been issued. Before me ld. D/R failed to file any evidence to prove that any such new/fresh notice u/s 143(2) of the Act was issued by ITO, Ward-1(1), Burdwan having jurisdiction over the assessee. Now whether such non-issuance of notice u/s 143(2) of the Act by ld. AO having jurisdiction over the assessee before completing the assessment proceedings is necessary and if such notice u/s 143(2) of the Act is not issued then whether such non-issuance of notice u/s 143(2) of the Act can render the assessment proceedings bad in law. 9. I observe that Hon’ble Jurisdictional High Court in the case of Nopany & Sons (supra) adjudicated the similar issue and has held as follows: “4. This appeal by the revenue filed under section 260A of the Income- tax Act, 1961, (the Act, in brevity) is directed against the order dated 20-7-2016 passed by the Income-tax Appellate Tribunal, "C" Bench, Kolkata (Tribunal) in ITA Nos.1621 & 1301/Kol/2011 for the assessment year 2007-08. The revenue has raised the following substantial question of law for our consideration. a. Whether on the facts and in the circumstances of the case the Learned Income-tax Appellate Tribunal, "C" Bench, Kolkata is illegally justified to hold that since notice under section 143(2) was not issued I.T.A. No.: 1632/Kol/2019 Assessment Year: 2015-16 Jaya Bothra. Page 6 of 10 by the ITO - Ward 56(4), Kolkata, the assessment order passed by him is a nullity and without jurisdiction? 5. We have heard Mr. Mitra, learned senior standing counsel for the appellant and Mr. Ananda Sen, learned counsel assisted by Ms. Atasi Sarkar for the respondent/assessee. 6. The short issue which falls for consideration is whether the assessing officer, who had jurisdiction over the assessee at the relevant time had issued notice under section 143(2) of the Act before taking up the scrutiny assessment under section 143(3). Before we go into the facts, we take note of the legal position as laid down by the Hon'ble Supreme Court in Asstt. CIT v. Hotel Blue Moon [2010] 188 Taxman 113/321 ITR 362, wherein the Hon'ble Supreme Court held that omission on the part of the assessing officer to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under section 143(2) cannot be dispensed with. Further, we also take note of the decision in the case of CIT v. Gitsons Engineering Co. [2015] 53 taxmann.com 108/231 Taxman 506/370 ITR 87 (Mad.), wherein it was held that the word 'shall' employed in section 143(2) of the Act, contemplates that the assessing officer should issue notice to the assessee so as to ensure that the assessee has not understated income or has not computed excessive loss or has not under paid the tax in any manner. It was further held that when the assessing officer considers it necessary and expedient to ensure that tax is paid in accordance with law, he should call upon the assessee to produce evidence before him to ensure that the tax is paid in accordance with law. The section makes it clear that service of notice under section 143(2) of the Act within the time limit prescribed is mandatory and it is not a mere procedural requirement. At this juncture, it would be relevant to take note of the definition of assessing officer as defined in section 2(7A) of the Act. The said provision defines 'assessing officer' to mean the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer, who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of the Act, and the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director, who is directed under clause (b) of sub-section (4) of section 120 to exercise or perform all or any of the powers and functions conferred on, or assigned to, an assessing officer under this Act. In the instant case, the order of assessment was challenged on several grounds and, particularly, on I.T.A. No.: 1632/Kol/2019 Assessment Year: 2015-16 Jaya Bothra. Page 7 of 10 the ground that no notice under section 143(2) of the Act was issued within the time prescribed by the assessing officer, who had jurisdiction over the assessment file of the assessee at the relevant time. The Commissioner of Income-tax (Appeals)-XXXVII, Kolkata, (CIT(A)) did not agree with the contentions raised by the assessee that there is failure to comply with the mandatory statutory requirement. The CIT(A) opined that the assessing officer, who originally dealt with the e-return filed by the assessee had issued notice under section 143(2) of the Act. With regard to the merits of the matter, the CIT(A) held it in favour of the assessee. Therefore, the revenue was on appeal before the Tribunal and cross-objection was filed by the assessee questioning that portion of the order of the CIT(A) which held that there is no procedural irregularity committed by the assessing officer. The Tribunal considered the correctness of the finding of the CIT(A) and, on facts, found that both the assessing officers, namely, the assessing officer, who had jurisdiction over the assessee till 6-4- 2009 and the assessing officer, who had jurisdiction post the said date had not issued notice under section 143(2) of the Act within the prescribed period of six months from the end of the financial year in which the return was filed. This factual position could not be controverted by the revenue before us. As pointed out by the Hon'ble Supreme Court in the case of Hotel Blue Moon (supra), non-issuance of notice under section 143(2) is not a procedural irregularity and, therefore, it is not curable. Thus, on facts, it having been established that no notice was issued under section 143(2) of the Act, the order passed by the Tribunal was perfectly legal and valid. The revenue also sought to rely upon section 292BB of the Act to justify their stand that notice is deemed to be valid and sought to bring the assessee's case under the circumstances mentioned in section 292BB. This question was considered by the Tribunal and it was pointed out that section 292BB provides that 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 of the provision of the Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of the Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under the Act that the notice was not served upon him or not served upon him in time or served upon him in an improper manner. This amendment to the Act was introduced with effect from 1-4-2008 and the assessment year under consideration is AY 2007-08. In any event, the Tribunal examined as to whether at all the revenue can rely upon section 292BB of the Act I.T.A. No.: 1632/Kol/2019 Assessment Year: 2015-16 Jaya Bothra. Page 8 of 10 and noted that the assessee has filed an objection vide letter dated 16-11-2009 objecting to the issuance of notice under section 142(1) of the Act without valid service of notice under section 143(2) of the Act. Taking note of the said letter the Tribunal, in our view, rightly held that the proviso to section 292BB would not stand attracted and the said section cannot be made applicable to the assessee's case. The Tribunal, thereafter, analysed as to the correctness of the submission of the revenue seeking to sustain their stand by referring to a notice issued by the assessing officer, who at the relevant point had no jurisdiction over the assessee and, on facts, found that there is no valid compliance of section 143(2) of the Act as the notice issued under section 143(2) of the Act by the assessing officer/Income Tax Officer, Ward-3(1) had no jurisdiction over the assessee at the relevant time. The Tribunal to support its conclusion placed reliance in the case of CIT v. Mukesh Kumar Agrawal [2012] 25 taxmann.com 112/345 ITR 29 (Allahabad), wherein it was held that the assessing officer did not have jurisdiction to proceed further and make assessment since notice under section 143(2) of the Act was admittedly not issued. As in the case on hand, the revenue sought to take coverage under section 292BB of the Act which was rejected on the ground that the very foundation of the jurisdiction of the assessing officer was on the issuance of notice under section 143(2) of the Act and the same having been complied with, the revenue cannot take shelter under the provisions of section 292BB of the Act. 7. Thus, we are of the clear view that the Tribunal was right in rejecting the revenue's appeal. In the result, this appeal is dismissed and the substantial question of law is answered against the revenue.” 10. From perusal of the above finding of the Hon’ble Jurisdictional High Court, I find that the same is squarely applicable in favour of the assessee as in the instant case also the ld. AO having jurisdiction over the assessee proceeded to commence and complete the assessment proceedings without issuing a fresh notice u/s 143(2) of the Act. 11. Hon’ble Supreme Court also in the case of ACIT vs. Hotel Blue Moon reported in [2010] 321 ITR 362 (SC) has held that the service of the statutory notice u/s 143(2) of the Act is sine-qua-non to I.T.A. No.: 1632/Kol/2019 Assessment Year: 2015-16 Jaya Bothra. Page 9 of 10 initiate/commence the assessment proceedings u/s 143(3) of the Act. This ratio laid down by the Hon’ble Apex Court was recently followed by the Coordinate Bench of Gauhati in the case of Smt. Kene Welly vs. I.T.O., Ward-1, TPS, Tezpur in ITA No. 146/Gau/2020 order dated 18.03.2021 while dealing with similar issue pertaining to AY 2015-16 and held the assessment invalid and quashed the same. 12. Thus, respectfully following the ratios laid down by the Hon’ble Courts referred above, the assessment proceedings carried out u/s 143(3) of the Act vide order dated 25.10.2017 are held to be invalid and bad in law and are hereby quashed. Thus, the legal issue raised in the additional ground by the assessee is allowed. 13. As far as the grounds on merits of the case are concerned to deal with them is merely academic in nature since I have already quashed the assessment proceedings being bad in law therefore, the additions made in the said assessment order stands deleted. Thus, the grounds on merits becomes infructuous. 14. In the result, the appeal of the assessee in ITA No. 1632/Kol/2019 is allowed. Kolkata, the 28 th September, 2022. Sd/- [Manish Borad] Accountant Member Dated: 28.09.2022 Bidhan (P.S.) I.T.A. No.: 1632/Kol/2019 Assessment Year: 2015-16 Jaya Bothra. Page 10 of 10 Copy of the order forwarded to: 1. Jaya Bothra, C/o. S.N. Ghosh & Associates, Advocates “Seben Brothers’ Lodge”, P.O. Buroshibtala, P.S. Chinsurah, Dist.-Hooghly, West Bengal-712 105. 2. ITO, Ward-1(1), Kolkata. 3. CIT(A), Burdwan. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. True copy By order Assistant Registrar ITAT, Kolkata Benches Kolkata