Ramesh B Chandak, Pune V. Income-tax Officer, Pune

ITA 1643/PUN/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4324 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 21-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV HARITT
• Assessee Lawyers: S N DOSHI
• Keywords: Procedural lapse
• Section: 143(3); 142(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1643/PN/2011 (ASSESSMENT YEAR : 2005-06) RAMESH B. CHANDAK AJINKYA COLONY, AAKASHWANI HADAPSAR, PUNE 411 028 PAN : AIJPC 1637 Q . APPELLANT VS. INCOME TAX OFFICER CIB (3), PUNE . RESPONDENT APPELLANT BY : MR. S.N. DOSHI RESPONDENT BY : MR. RAJIV HARITT DATE OF HEARING : 07-03-2013 DATE OF PRONOUNCEMENT : 22-04-2013 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) CENTRAL, PUNE DATED 31.10.2011 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 31.1 2.2007 PASSED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) OF THE INCO ME TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2005-06. 2. GROUND OF APPEAL NO. 1, ASSESSEE HAS RAISED A PO INT OF LAW AND HAS CONTENDED THAT THE ASSESSMENT ORDER PASSED BY THE A SSESSING OFFICER UNDER SECTION 143(3) OF THE ACT IS BAD IN LAW FOR THE REA SON THAT THERE HAS BEEN AN OMISSION TO ISSUE THE NOTICE UNDER SECTION 143(2) O F THE ACT, BEFORE FINALIZATION OF ASSESSMENT. SINCE THE AFORESAID GROUND GOES TO T HE ROOT OF THE MATTER, HENCE THE SAME IS BEING ADJUDICATED AT THE OUTSET. ITA NO. 1643/PN/2011 RAMESH B. CHANDAK A.Y. 2005-06 3. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER H AS NOTED IN PARA-1 THAT ON THE BASIS OF ANNUAL INFORMATION RETURN (AIR) DAT A, A NOTICE UNDER SECTION 142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE AS IT WAS FOUND THAT THERE WERE DEPOSITS OF RS. 82,30,000/- IN ASSESSEES BANK ACCO UNT WITH COSMOS CO-OPERATIVE BANK LTD., AND THAT THE ASSESSEE FILED RETURN OF INCOME ON 14.12.2007 SHOWING TOTAL INCOME AT RS 1,07,360/-. T HE ASSESSEE CLAIMED THAT HE HAD CARRIED OUT SUGAR RETAIL BUSINESS. THE ASSES SING OFFICER DID NOT ACCEPT THE PLEA OF THE ASSESSEE AND IN THE ABSENCE OF ANY PROPER EXPLANATION IN RESPECT OF THE BANK DEPOSITS MENTIONED IN THE AIR, HE HELD THAT SUCH DEPOSITS AMOUNTING OF RS. 82,30,000/- WAS INCOME OF THE ASSE SSEE FROM UNDISCLOSED SOURCES. ACCORDINGLY, THE TOTAL INCOME WAS DETERMIN ED AT RS. 82,30,000/- IN THE ORDER PASSED UNDER SECTION 143(3) OF THE ACT DA TED 31.12.2007. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). APART FROM OTHER GROUNDS, ASSESSEE CHALLENGED THE AFORESA ID ASSESSMENT ON THE GROUND THAT THE ASSESSING OFFICER DID NOT ISSUE ANY NOTICE UNDER SECTION 143(2) OF THE ACT BEFORE FINALISING THE ASSESSMENT. AS PER THE ASSESSEE, IN VIEW OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT & ANOTHER VS. HOTEL BLUEMOON REPORTED IN 321 ITR 362 (SC), THE OMISSION ON THE PART OF THE ASSESSING OFFICER TO ISSUE NOTICE U/S 1 43(2) IS NOT A PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE AND THEREF ORE THE REQUIREMENT OF NOTICE UNDER SECTION 143(2) CANNOT BE DISPENSED WITH. FOR THE AFORESAID REASON THE ASSESSEE CONTENDED THAT THE ASSESSMENT ORDER DATED 31.12.2007 (SUPRA) WAS BAD IN LAW. 5. THE CIT(A) WAS NOT CONVINCED WITH THE AFORESAID ARGUMENT FOR THE REASON THAT THE ASSESSING OFFICER HAS NOTED THE FOL LOWING IN THE ASSESSMENT ORDER :- SHRI V.M. NAVNADER ATTENDED ON BEHALF OF THE ASSES SEE ON 31.12.2007 AND IN VIEW OF LIMITATIONS INVOLVED IN T HE CASE AS OPTED TO WAIVE THE RIGHT TO NOTICE UNDER SECTION 143(2). ITA NO. 1643/PN/2011 RAMESH B. CHANDAK A.Y. 2005-06 6. ACCORDING TO THE CIT(A) THE AUTHORIZED REPRESENT ATIVE OF THE ASSESSEE WAIVED THE RIGHT TO NOTICE UNDER SECTION 143(2) OF THE ACT, AND SUCH A WAIVER CAN BE UNDERSTOOD AS DEEMED SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT ON THE ASSESSEE ON 31.12.2007. 7. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY POINTED OUT THAT NON-ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT IS A NON-CURABLE DEFECT AND THAT SUCH A REQUIREMENT IS A JURISDICTIO NAL REQUIREMENT TO MAKE AN ASSESSMENT AND THAT THERE CAN BE NO WAIVER OF SUCH REQUIREMENT EVEN BY THE CONSENT OF THE ASSESSEE. APART FROM RELYING ON THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF HOTEL BLUEMOON (SUPRA) RELIANCE HAS ALSO BEEN PLACED ON THE FOLLOWING JUDGEMENTS TO SUBMIT THAT T HERE CAN BE NO WAIVER OF A CONDITION PRECEDENT, COMPLIANCE OF WHICH CAN ALONE CONFER JURISDICTION UPON THE ASSESSING OFFICER TO MAKE AN ASSESSMENT :- I) CIT VS. RAMSUKH MOTILAL REPORTED IN 27 ITR 54(BO MBAY) II) P.V. DOSHI VS. CIT REPORTED IN 113 ITR 22 (GUJ ARAT) III) CIT VS. MS. MUDRA G. NANAWATI REPORTED IN 227 CTR 387 (BOMBAY) ACCORDINGLY, IT HAS BEEN CONTENDED THAT THE ASSESS MENT FRAMED IS BAD IN LAW, AND THE ASSESSMENT ORDER DESERVES TO BE QUA SHED. 8. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE VEHEMENTLY POINTED OUT THAT ISSUANC E OF NOTICE UNDER SECTION 143(2) OF THE ACT WAS A MERE FORMALITY IN THE PRESE NT CASE AS THE ASSESSEE WAS REPRESENTED BEFORE ITS ASSESSING OFFICER. IT WA S ALSO POINTED OUT THAT THE ASSESSMENT WAS GETTING TIME-BARRED ON 31.12.2007 AN D IN THE PECULIAR CIRCUMSTANCES OF THE PRESENT CASE THE NON-ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT CANNOT BE CONSIDERED AS FATAL TO THE VALIDITY OF THE ASSESSMENT. ITA NO. 1643/PN/2011 RAMESH B. CHANDAK A.Y. 2005-06 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE SHORT POINT IN THE PRESENT APPEAL ARISES FROM NON-ISSUANCE OF NOTI CE UNDER SECTION 143(2) OF THE ACT BY THE ASSESSING OFFICER BEFORE FINALISING THE IMPUGNED ASSESSMENT UNDER SECTION 143(3) OF THE ACT DATED 31.12.2007. T HE HONBLE SUPREME COURT IN THE CASE OF HOTEL BLUEMOON (SUPRA) HAS OPI NED THAT AN OMISSION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE UNDER SECTION 143(2) OF THE ACT CANNOT BE CONSTRUED AS A PROCEDURAL IRREGULARIT Y AND THE SAME IS NOT CURABLE AND THEREFORE THE REQUIREMENT OF ISSUING NO TICE UNDER SECTION 143(2) OF THE ACT CANNOT BE DISPENSED WITH. IN OTHER WORDS , IN TERMS OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF HOTEL B LUEMOON (SUPRA), IT HAS TO BE UNDERSTOOD THAT OMISSION TO ISSUE NOTICE UNDER S ECTION 143(2) OF THE ACT IS A NON-CURABLE DEFECT AND THAT THE REQUIREMENT OF IS SUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT IN ORDER TO MAKE AN ASSES SMENT UNDER SECTION 143(3) OF THE ACT IS NOT A MERE PROCEDURAL REQUIREM ENT BUT IS A MANDATORY REQUIREMENT. FACTUALLY SPEAKING, IN THE PRESENT CAS E, THERE IS NO DISPUTE TO THE FACT SITUATION THAT THE ASSESSMENT UNDER SECTION 14 3(3) OF THE ACT DATED 31.12.2007 HAS BEEN FINALISED BY THE ASSESSING OFFI CER WITHOUT ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT. 10. SO, HOWEVER, THE CASE SETUP BY THE REVENUE IS T HAT THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE WAIVED THE RIGHT TO NOTICE UNDER SECTION 143(2) OF THE ACT, AND THEREFORE, THE OMISSION TO I SSUE NOTICE UNDER SECTION 143(2) OF THE ACT WOULD NOT INVALIDATE OR VITIATE T HE IMPUGNED ASSESSMENT IN THE EYES OF LAW. 11. WE HAVE NOTED ON THE BASIS OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF HOTEL BLUEMOON (SUPRA) THAT TH E REQUIREMENT OF ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT IS A COND ITION PRECEDENT AND THEREFORE COMPLIANCE WITH THE SAME WOULD ALONE CONF ER JURISDICTION UPON THE ASSESSING OFFICER TO MAKE THE IMPUGNED ASSESSMENT U NDER SECTION 143(3) OF ITA NO. 1643/PN/2011 RAMESH B. CHANDAK A.Y. 2005-06 THE ACT. THE MOOT POINT IS AS TO WHETHER CAN THERE BE WAIVER OF A CONDITION PRECEDENT, COMPLIANCE WITH WHICH ALONE CAN CONFER J URISDICTION UPON THE ASSESSING OFFICER TO MAKE THE ASSESSMENT UNDER SECT ION 143(3) OF THE ACT. IN THIS CONTEXT WE MAY REFER TO THE JUDGEMENT OF THE H ONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RAMSUKH MOTILAL (SUPRA) WHER EIN A NOTICE UNDER SECTION 34 OF THE ERSTWHILE INCOME TAX ACT, 1922 WAS ISSUED REQUIRING THE ASSESSEE TO COMPLY WITH ITS REQUIREMENTS WITHIN A PERIOD OF LES S THAN 30 DAYS WHEREAS SECTION 34 REQUIRED THE ASSESSEE TO COMPLY WITH THE REQUIREMENTS WITHIN A PERIOD OF NOT LESS THAN 30 DAYS. IN THE CASE BEFORE THE HONBLE HIGH COURT THE NOTICE GAVE ONLY SIX DAYS TO THE ASSESSEE TO MAKE A RETURN UNDER SECTION 34 OF THE ERSTWHILE ACT. THE ASSESSEE, HOWEVER, MADE A RETURN AND HE WAS ASSESSED. THE ASSESSEE CHALLENGED THE VALIDITY OF T HE NOTICE AND IN RESPONSE IT WAS CONTENDED BY THE REVENUE THAT EVEN IF THE NO TICE ISSUED WAS BAD IN LAW, IT WAS WAIVED BY THE ASSESSEE, FIRSTLY, BY HIS ACTION OF MAKING A RETURN PURSUANT TO SUCH A NOTICE AND SECONDLY, BY APPEARIN G BEFORE THE ASSESSING OFFICER AND ALLOWING THE ASSESSMENT ORDER TO BE MAD E AND NOT OBJECTING TO THE ASSESSMENT TILL HE WENT IN AN APPEAL. THE AFORESAID ARGUMENT OF THE REVENUE HAS BEEN NEGATED BY THE HONBLE BOMBAY HIGH COURT B Y OBSERVING THAT A PROPER NOTICE UNDER SECTION 34 OF THE ERSTWHILE ACT IS A CONDITION PRECEDENT TO ASSUMPTION OF JURISDICTION AND THERE COULD BE NO WA IVER OF A CONDITION PRECEDENT, SO AS TO INFER THAT THE CONSEQUENT ASSES SMENT WAS VALID IN EYES OF LAW. THE FOLLOWING OBSERVATIONS OF THE HONBLE HIGH COURT ARE WORTHY OF NOTICE:- WITH VERY GREAT RESPECT TO THE LEARNED CHIEF JUSTI CE, IT IS DIFFICULT TO UNDERSTOOD HOW THERE CAN BE A WAIVER OF THE CONDITI ON PRECEDENT, COMPLIANCE WITH WHICH ALONE CAN CONFER JURISDICTION UPON AN AU THORITY OR A TRIBUNAL. IT IS WELL SETTLED THAT NO CONSENT CAN CONFER JURISDICTIO N UPON A COURT IF THE COURT HAS NO JURISDICTION, AND IF WE TAKE THE VIEW THAT T HE ITO CAN HAVE JURISDICTION ONLY PROVIDED HE COMPLIES WITH THE CONDITIONS LAID DOWN IN S. 34, THEN NO CONSENT BY THE ASSESSEE OR NO WAIVER ON HIS PART CA N CONFER JURISDICTION UPON THE ITO. THEREFORE, WHILE AGREEING WITH THE CALCUTT A HIGH COURT THAT THE NOTICE ITA NO. 1643/PN/2011 RAMESH B. CHANDAK A.Y. 2005-06 PROVIDED FOR IN S. 34 IS A CONDITION PRECEDENT TO T HE ASSUMPTION OF JURISDICTION, WITH RESPECT WE ARE UNABLE TO ACCEPT THE VIEW THAT A DEFECT IN A NOTICE GIVEN UNDER S. 34 OR A FAILURE TO GIVE NOTICE UNDER S. 34 CAN BE WAIVED BY THE ASSESSEE. 12. TO THE SIMILAR EFFECT IS THE JUDGEMENT OF THE H ONBLE GUJARAT HIGH COURT IN THE CASE OF P.V. DOSHI (SUPRA) WHEREIN THE NOTI CE UNDER SECTION 148 OF THE ACT REOPENING THE ASSESSMENT WAS FOUND TO HAVE BEEN ISSUED WITHOUT RECORDING OF REASONS BY THE ASSESSING OFFICER. AS P ER THE RATIO OF THE JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT, A JURI SDICTIONAL REQUISITE CANNOT BE WAIVED BY THE ASSESSEE AND EVEN THOUGH IN THE FI RST ROUND OF APPEAL AGAINST THE RE-ASSESSMENT THE ASSESSEE HAD GIVEN UP THIS POINT AND THE TRIBUNAL HAD REMANDED THE CASE TO THE ASSESSING OFF ICER FOR A LIMITED PURPOSE OF ASCERTAINING THE VALIDITY OF ADDITION, THE APPEL LATE ASSISTANT COMMISSIONER OF APPEALS WAS JUSTIFIED IN ANNULLING THE RE-ASSESS MENT IN APPEAL ARISING FROM THE REMAND ORDER ON THE GROUND THAT NO REASONS WERE RECORDED BY THE INCOME TAX OFFICER BEFORE REOPENING THE ASSESSMENT UNDER S ECTION 148 OF THE ACT. 13. IN VIEW OF THE AFORESAID LEGAL POSITION, THE P LEA OF THE REVENUE THAT ASSESSEE WAIVED THE RIGHT TO NOTICE UNDER SECTION 1 43(2) OF THE ACT WOULD NOT DISTRACT FROM THE FACT THAT THE JURISDICTIONAL REQU IREMENT OF ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT IN THE PRESENT CASE HAS BEEN OMITTED TO BE DONE BY THE ASSESSING OFFICER BEFORE FINALISING OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT DATED 31.12.2007. THERE IS NO MER IT IN THE PLEA SETUP BY THE DEPARTMENT THAT THERE IS A DEEMED SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT BECAUSE ASSESSEES REPRESENTATIVE WAIVED TH E RIGHT TO NOTICE UNDER SECTION 143(2) OF THE ACT. 14. WE THEREFORE, HOLD THAT THE IMPUGNED ASSESSMENT ORDER DATED 31.12.2007 WAS INVALID FOR THE REASON THAT THERE WA S AN OMISSION ON THE PART ITA NO. 1643/PN/2011 RAMESH B. CHANDAK A.Y. 2005-06 OF THE ASSESSING OFFICER TO ISSUE NOTICE UNDER SECT ION 143(2) OF THE ACT BEFORE FINALIZATION OF ASSESSMENT, AND THE ASSESSMENT ORDE R IS HEREBY QUASHED. 15. SINCE THE ASSESSMENT HAS BEEN HELD TO BE INVALI D ON THE PRELIMINARY GROUND OF APPEAL, THE GROUNDS RAISED BY THE ASSESSE E WITH REGARD TO THE MERITS OF THE ADDITION HAVE BEEN RENDERED ACADEMIC AND ARE NOT BEING ADJUDICATED FOR THE PRESENT. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND APRIL, 2013. SD/- SD/- SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 22 ND APRIL, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT, PUNE; 5) THE DR, B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY I.T.A.T., PUNE