Shri Bipin Kishor Tondon, Anand V. The Income tax Officer,Ward-3, Anand

ITA 2487/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6646 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-05-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 10-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P TALATI
• Assessee Lawyers: J M TRIVEDI
• Keywords: Invalid notice; Period of limitation; Block assessment; Set aside
• Section: 143(3); 195; 292BB; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.2487/AHD/2010 A. Y.: 2007-08 SHRI BIPIN KISHORE TONDON, 502, ABHISHEK APARTMENT, GOKULWADI, BEHIND CIVIL COURT, ANAND VS THE INCOME TAX OFFICER, WARD 3, ANAND PA NO. ABDPT 8588 L (APPELLANT) (RESPONDENT) APPELLANT BY SHRI J. M. TRIVEDI, AR RESPONDENT BY SHRI S. P. TALATI, SR. DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-IV , BARODA DATED 10 TH MAY, 2010 FOR ASSESSMENT YEAR 2007-08 ON THE FOLLO WING GROUNDS: 1. THAT THE I. T. O. AS WELL AS CI(A) ERRED IN NOT APPRECIATING THAT AS THE NOTICE ISSUED AND SERVED O N 30.09.08 BEING BAD, ILLEGAL AND WITHOUT JURISDICTIO N, THE ASSESSMENT BASED ON SUCH NOTICE WAS ILLEGAL AND REQUIRES TO BE CANCELLED. 2. IN VIEW OF THE ABOVE AND OTHERS THAT MAY BE URGE D AT THE TIME OF HEARING, APPELLANT PRAYS THAT NOTICE ISSUED ON 30.09.08 BEING BAD AND ILLEGAL, THE ASSESSMENT BASED ON SUCH NOTICE BE CANCELLED. ITA NO.2487/AHD/2010 SHRI BIPIN KISHOR TONDON VS ITO, WARD 3, ANAND 2 2. DURING THE APPELLATE PROCEEDINGS, ADDITIONAL GRO UND:- NOTICE U/S 143(2) OF THE IT ACT ISSUED AND SERVED ON 30-09-200 8 IN RESPECT OF RETURN OF INCOME FILED ON 4-7-2007, BEING INVALID W AS ALSO TAKEN. THE ASSESSEES CONTENTION IS THAT THE PROVISO TO SECTIO N 143(2) (II) OF THE IT ACT AS AMENDED W. E. F. 1-4-2008, AS PER WHICH P ERIOD FOR ISSUE OF NOTICE U/S 143(2) OF THE IT ACT WAS MADE SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH RETURN WAS FURNISHED, I S APPLICABLE W. E. F. ASSESSMENT YEAR 2008-09. ASSESSEES SUBMISSION IS T HAT PRIOR TO AMENDMENT, PERIOD AVAILABLE TO THE AO WAS 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN WAS FURNISHED AND THER EFORE, IN THE ASSESSEES CASE, NOTICE COULD BE SERVED UP TO 31-08 -2008 AS PER THE EARLIER PROVISIONS. AS PER THE ASSESSEE, SINCE THE NOTICE WAS ISSUED AND SERVED ON 30-09-2008 FOR ASSESSMENT YEAR 2007-0 8, IT WAS AN INVALID NOTICE. FURTHER, THE ASSESSEE SUBMITTED THA T ANY PROCEEDINGS BASED ON INVALID NOTICE ARE NULL, AS HELD IN THE CA SE OF KHI MITHIBORWALA 82 ITR 821 (SC). THE ASSESSEES CONTEN TION IS THAT THE LAW APPLICABLE IS THE LAW THAT PREVAILS ON THE DATE OF FILING OF RETURN OF INCOME, AS HELD IN OMKAR SARANS CASE 195 ITR 1 (SC ). THE ASSESSEE HAS ALSO RELIED UPON THE DECISION IN THE C ASE OF BHAN TEXTILE (PVT.) LTD. 287 ITR 370 HOLDING THAT SERVIC E OF NOTICE WITHIN THE TIME PRESCRIBED U/S 143(2) IS ESSENTIAL. THE ASSESS EE FURTHER RELIED UPON THE DECISION OF ITAT SPECIAL BENCH IN THE CASE OF KUBER TOBACCO PRODUCTS PVT. LTD. 120 TTJ 577 IN WHICH THE ISSUE WAS REGARDING AMENDMENT OF SECTION 292 BB W. E. F. 1-4- 2008. ITA NO.2487/AHD/2010 SHRI BIPIN KISHOR TONDON VS ITO, WARD 3, ANAND 3 3. THE LEARNED CIT(A) HOWEVER, DISMISSED THE ADDITI ONAL GROUND OF APPEAL. HIS FINDINGS IN PARA 2.1 OF THE APPELLAT E ORDER ARE REPRODUCED AS UNDER. 2.1 I HAVE CAREFULLY CONSIDERED THE MATTER. THE IS SUE IS WHETHER THE TIME LIMIT FOR SERVING NOTICE U/S.143(2 ) IN RESPECT OF THE APPELLANT FOR A.Y. 2007-08 ON 4.7.20 07 WOULD BE GOVERNED AS SUBSTITUTED BY FINANCE ACT, 20 08, W.E.F. 1.4.2008 OR STOOD BEFORE THAT. THE MATTER IS AMPLY CLARIFIED IN PARE CIRCULAR NO. 1 OF 2009 DATED 27.3 .2009 REPRODUCING EXPLANATORY NOTES ON PROVISIONS RELATIN G TO DIRECT TAXES IN FINANCE ACT, 2008 AS UNDER:- '42.8. SIMILARLY THE AMENDED PROVISION OF SUB- SECTION (2) OF SECTION 143 SHALL APPLY TO ALL SUCH RETURNS (IRRESPECTIVE OF THE ASSESSMENT YEAR TO WHICH THE RETURNS PERTAIN) WHERE NOTICE UNDER SUB- SECTION (2) OF SECTION 143 CAN STILL BE ISSUED ON 1 ST APRIL, 2008 UNDER THE PRE-AMENDED PROVISION. 42.9. FOR EXAMPLE, ASSESSEE 'A' FILES HIS TAX RETUR N ON 31 ST MARCH 2007, ASSESSES 'B' FILES HIS TAX RETURN ON 15 TH APRIL, 2007 AND ASSESSEE 'C' FILES HIS TAX RETURN ON 16 TH OCTOBER 2007. AS ON 1 ST APRIL, 2008 NOTICE UNDER THE PRE-AMENDED PROVISION OF SUB- SECTION (2) OF SECTION 143 COULD NOT HAVE BEEN ISSUED IN CASE OF 'A' AND COULD HAVE BEEN ISSUED IN CASES OF 'B' AND 'C'. HENCE, THE NEW PROVISION SHALL APPLY FOR RETURNS FILED BY 'B' AND 'C' BUT NO T FOR RETURN FILED BY 'A'. IN CASES OF RETURNS FILED BY ' B' AND 'C', THE NOTICE UNDER SUB-SECTION (2) OF SECTIO N 143 CAN BE SERVED ON THE ASSESSEE ON OR BEFORE 31 ST SEPTEMBER, 2008. ANY NOTICE SERVED ON ASSESSEE IN THESE TWO CASES, AFTER THIS DATE, WILL NOT BE VALID.' THUS, THERE IS NO DOUBT THAT NOTICE U/S. 143(2) IN APPELLANT'S CASE FOR A.Y. 2007-08 SERVED ON 3O.9.20 08, ITA NO.2487/AHD/2010 SHRI BIPIN KISHOR TONDON VS ITO, WARD 3, ANAND 4 WAS A VALID NOTICE. IN THE CASE OF KUBER TOBACCO PRODUCTS PVT. LTD. RELIED UPON BY THE AP PELLANT, THE SPECIAL BENCH OF ITAT REFERRED TO THE DECISION IN THE CASE OF H. V. THAKUR VS. STATE OF MAHARASHTRA AIR 1 94 (SC) 2623 HOLDING THAT LAW RELATING TO LIMITATION I S PROCEDURAL IN NATURE AND WHILE EVERY LITIGANT HAS A VESTED RIGHT IN SUBSTANTIVE LAW, NO SUCH RIGHT EXISTS IN P ROCEDURAL LAW. THE ITAT'S SPECIAL BENCH CONSIDERED OPERATION OF SECTION 292BB TO BE AN EXCEPTION TO THIS PRINCI PLE ON THE GROUND THAT SECTION 292BB CREATED A NEW DISABILITY ON THE ASSESSEE LITIGANT. AS AGAINST THI S, PROVISO BELOW SECTION 143(2)(II) IS ONLY DEALING WITH LI MITATION IMPOSED ON SERVICE OF NOTICE U/S.143(2), I.E. PURE LY A PROCEDURAL ASPECT, NOT CREATING A NEW DISABILITY IN THE SENSE CONSTRUED BY THE ITAT FOR SECTION 292BB. THE DECISION IN THE CASE OF KUBER TOBACCO PRODUCTS PVT. LTD. CANNOT THEREFORE, BE APPLIED FOR INTERPRETING APPLI CABILITY OF PROVISO BELOW SECTION 143(2)(II). IN ANY CASE, T HE POSITION IS AMPLY CLARIFIED IN THE EXPLANATORY NOTE S TO THE FINANCE ACT, 2008 ISSUED BY THE FINANCE MINISTRY. I N VIEW OF THIS, THIS GROUND OF APPEAL IS DISMISSED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) AND RELI ED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF DCIT VS MAXIMA SYSTEM LTD. 40 DTR 49. ON THE OTHER HAND, TH E LEARNED DR RELIED UPON THE ORDER OF THE LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT THE ASSESSEE FILED RETURN OF INCOME ON 04-07-2 007 FOR THE ASSESSMENT YEAR UNDER APPEAL. THE AO ISSUED NOTICE U/S 143(2) OF THE IT ACT ON 30-09-2008 AND SERVED UPON THE ASSESS EE ON THE SAME DAY. THE RELEVANT PROVISIONS OF SECTION 143 (2) (II ) OF THE IT ACT WITH PROVISO READ AS UNDER: ITA NO.2487/AHD/2010 SHRI BIPIN KISHOR TONDON VS ITO, WARD 3, ANAND 5 ( II ) NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE ( I ), IF HE CONSIDERS IT NECESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDER-PAID THE TAX IN ANY MANNER, SERVE ON THE ASSESSEE A NOTICE REQUIRING HIM, ON A DATE TO BE SPECIFIED THEREIN, EITHER TO ATTEND HIS OFFICE OR T O PRODUCE, OR CAUSE TO BE PRODUCED, ANY EVIDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETURN: [ PROVIDED THAT NO NOTICE UNDER [CLAUSE ( II )] SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF TWELVE MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED.] 6. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF MA XIMA SYSTEMS LTD. (SUPRA) CONSIDERED THE FACTS THAT THE ASSESSE E HAD FILED RETURN OF INCOME ON 29-11-1995 AND THE NOTICE U/S 143 (2) OF THE IT ACT WAS ISSUED ON 29-11-1996 BUT WAS SERVED UPON THE ASSESS EE ON 2-12-1996. THUS, THE NOTICE WAS SERVED AFTER EXPIRY OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN IS FU RNISHED. THEREFORE, IT WAS HELD THAT THE AO HAD NO JURISDICTION TO FRAM E THE ASSESSMENT. THE CONCLUSION OF THE HONBLE GUJARAT HIGH COURT IS AS UNDER: CONCLUSION: NOTICE UNDER S. 143(2) HAVING BEEN SERVED BEYOND THE STATUTORY PERIOD OF 12 MONTHS, THE TRIBUNAL WAS CORRECT IN HOLDING THAT THE ASSESSMENT WAS INVALID. 7. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT O F THE RELEVANT PROVISION OF PROVISO TO SECTION 143(2) OF THE IT AC T IN THE LIGHT OF THE ITA NO.2487/AHD/2010 SHRI BIPIN KISHOR TONDON VS ITO, WARD 3, ANAND 6 DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF MAXIMA SYSTEMS LTD. (SUPRA) WE ARE OF THE VIEW THAT AS PE R PROVISO TO SECTION 143(2) OF THE IT ACT, NO NOTICE U/S 143(2) CAN BE SERVED UPON THE ASSESSEE AFTER EXPIRY OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN IS FURNISHED. FROM THE LANGUAGE US ED IN THE PROVISO, IT IS CLEAR THAT JURISDICTION TO FRAME ASSESSMENT U /S 143 (3) OF THE IT ACT PURSUANT TO NOTICE U/S 143(2) IT ACT CAN BE ASS UMED ONLY IF THE NOTICE IS SERVED ON THE ASSESSEE WITHIN 12 MONTHS O F THE END OF THE MONTH IN WHICH THE RETURN WAS FILED. THE NOTICE U/S 143(2) OF THE IT ACT IS THE FOUNDATION FOR ASSUMING JURISDICTION TO MAKE ASSESSMENT U/S 143(3) OF THE IT ACT. THE AO HOWEVER, IN THIS C ASE ISSUED AND SERVED THE NOTICE U/S 143(2) OF THE IT ACT ON THE A SSESSEE ON 30-09-2008 ON FILING OF RETURN OF INCOME ON 04-07-2 007. THUS, THE NOTICE U/S 143(2) OF THE IT ACT HAS BEEN SERVED ON THE ASSESSEE AFTER EXPIRY OF 12 MONTHS FROM THE END OF THE MONTH IN WH ICH THE RETURN IS FURNISHED. THEREFORE, THE AO HAD NO JURISDICTION TO FRAME THE ASSESSMENT. SINCE, THE NOTICE U/S 143(2) OF THE IT ACT HAS BEEN SERVED BEYOND THE PERIOD OF LIMITATION PRESCRIBED B Y THE PROVISO TO SECTION 143(2) OF THE IT ACT, THE ASSESSMENT WOULD NOT BE VALID AND ACCORDING TO LAW. THE SPECIAL BENCH OF ITAT DELHI I N THE CASE OF KUBER TOBACCO PRODUCTS PVT. LTD. (SUPRA) HELD AS UN DER: CONCLUSION: SEC. 292BB INSERTED BY THE FINANCE ACT, 2008, W. E. F. 1 ST APRIL, 2008 HAS NO RETROSPECTIVE OPERATION AND APPLIES TO AND FROM ASSTT. YR. 2008-09 ONLY, THEREF ORE, ASSESSEE COULD CHALLENGED THE VALIDITY OF BLOCK ASSESSMENT IN APPELLATE PROCEEDINGS ON THE GROUND ITA NO.2487/AHD/2010 SHRI BIPIN KISHOR TONDON VS ITO, WARD 3, ANAND 7 OF NON-ISSUANCE OF NOTICE UNDER S. 143(2) FOR THE BLOCK PERIOD 1 ST APRIL, 1988 TO 25 TH JAN., 1999. THE ASSESSMENT IN APPEAL IS HOWEVER, ASSESSMENT YEA R 2007-08. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND QUASH THE ASSESSMENT ORDER. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13-05-2011 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 13-05-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD