KARANRAJ M JAIN, RAIGAD V. ITO WD 3, PANVEL

ITA 2563/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93000 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 16-04-2014
• Court: TRIBUNAL
• Department Lawyers: MRS N V NADKARNI
• Section: 143(3); 148; 139

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 2563/M/2014 ( AY: 2005 - 2006 ) SHRI KARANRAJ M. JAIN, PROP. OF M/S. R.K. CONSTRUCITON, AT POST - POYNAD, TAL. ALIBAG, DIST. RAIGAD 402108. / VS. THE INCOME TAX OFFICER, WARD - 3, PANVEL. ./ PAN : ABCPJ9941J ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI PIYUSH CHHAJED / RESPONDENT BY : MRS. N.V. NADKARNI / DATE OF HEARING : 24.6.2015 / DATE OF PRONOUNCEMENT :24.6.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 16.4.2014 IS AGAINST THE ORDER OF THE CIT (A) - 1, THANE DATED 23.12.2013 FOR THE ASSESSMENT YEAR 2005 - 2006. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) ERRED IN UPHOLDING THE RE - OPENING UNDER SECTION 148 WITHOUT APPRECIATING THAT IN ABSENCE OF REASONS RECORDED FOR THE RE - OPENING PROVIDED TO THE APPELLANT, THE PROCEEDINGS ARE BAD - IN - LAW AND THEREFORE, THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 NEEDS TO BE ANNULLED / CANCELLED. 2. THE LD CIT (A) ERR ED IN CONFIRMED THE RE - OPENING UNDER SECTION 147 WITHOUT APPRECIATING THAT THERE WERE NO REASONS TO BELIEVE THAT THE INCOME HAD ESCAPED TAX AND THEREFORE, ERRED IN UPHOLDING THE SAME. 3. THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S 147 IS BAD IN LAW AND DE SERVES TO BE SET ASIDE SINCE THE MANDATORY NOTICE U/S 143(2) WAS NOT ISSUED. 4. THE LD CIT (A) ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS. 2,77,490/ - BEING 8% OF RECEIPTS OF RS. 34,68,625/ - WITHOUT APPRECIATING THAT THE SAID RECEIPTS WERE ALREADY INCLUDED IN THE TURNOVER AND THEREFORE, OFFERED TO TAX IN THE RETURN OF INCOME FILED U/S 139. 2. THIS IS THE CASE OF RE - ASSESSMENT MADE U/S 147 R.W.S. 143(3) OF THE ACT. BEFORE US , LD COUNSEL FOR THE ASSESSEE BROUGHT MY ATTENTION TO THE ABOVE GROUNDS 2 A ND MENTIONED THAT , IN THE PRESENT APPEAL, ASSESSEE RAISED A LEGAL ISSUE RELATING TO THE ISSUANCE OF MANDATORY NOTICE U/S 143(2) OF THE ACT. IN THIS REGARD, HE BROUGHT MY ATTENTION TO PAGES 1 AND 2 OF THE ASSESSMENT ORDER AND READ OUT THE LIST OF ALL NOTIC ES ISSUED BY THE AO TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. BRINGING OUR ATTENTION TO PAGE 2 OF THE ASSESSMENT ORDER, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER FAILED TO ISSUE THE MANDATO RY NOTICE U/S 143(2) OF THE ACT AN D IT IS EVIDENT FROM THE TABLE GIVEN ON THE SAID PAGE 2 OF THE AOS ORDER. FURTHER, LD COUNSEL SUBMITTED THAT , THIS BEING A LEGAL ISSUE, THE GROUND S 1 TO 3 SHOULD BE ADMITTED AND DECIDED IN FAVOUR OF THE ASSESSEE. IN SUPPORT OF HIS CONTENTION, LD COUNSEL FOR THE ASSESSEE RELIED ON THE BINDING JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ACIT VS. GENC PHARMACEUTICALS LTD [2013] 84 CCH 0117, WHICH IS RELEVANT FOR THE FOLLOWING PROPOSITION. CONCLUSION: NOTICE U/S 143(2) IS MANDATORY AND IN THE ABSENCE OF SUCH SERVICE, THE AO CANNOT PROCEED TO MAKE AN INQUIRY ON THE RETURN OF INCOME IN COMPLIANCE WITH THE NOTICE ISSUED U/S 148. 3. HE ALSO RELIED ON THE SPECIAL BENCH DECISION OF THE ITAT, DELHI IN THE CA SE OF RAJ KUMAR CHAWLA & ORS VS. INCOME TAX OFFICER[2005] 94 ITD 1 (DEL.) (SB), WHICH IS RELEVANT FOR THE FOLLOWING CONCLUSION. CONCLUSION: IN VIEW OF THE LEGAL FICTION CREATED BY SECTION 148 THAT A RETURN FILED UNDER THAT SECTION IS TO BE TR EATED AS ONE UNDER SECTION 139 .. AND NO ASSESSMENT CAN BE MADE IF THE NOTICE UNDER SECTION 143(2) IS NOT SERVED WITHIN THE TIME PRESCRIBED BY THE PROVISO UNDER SECTION 143(2) . 4. FURTHER, LD COUNSEL ALSO RELIED ON ANOTHER JUDGMENT OF THE HONBLE JURISDICTIONAL H IGH COURT IN THE CASE OF CIT VS. MR. SALMAN KHAN IN INCOME TAX APPEAL (L) NO. 2362 OF 2009, DATED 1.12.2009, WHEREIN, UNDER THE WEALTH TAX PROVISIONS, THE HIGH COURT HELD THAT THE ISSUE OF MANDATORY NOTICE U/S 143(2) IS ESSENTIAL AND FOR THE PROPOSITION, T HE HIGH COURT RELIED ON ITS OWN JUDGMENT IN THE CASE OF CIT VS. HUF OF H.H. LATE J.M. SCINDIA (2008) 300 ITR 193 (BOM.). FURTHER ALSO, LD COUNSEL RELIED ON ANOTHER JUDGMENT IN THE CASE OF CIT VS. MR. SALMAN KHAN IN INCOME TAX APPEAL NO. 508 OF 2010, DATED 6.6.2011, WHEREIN THE HONBLE HIGH COURT HAS RELIED ON ITS OWN JUDGMENT IN THE CASE OF MR. SALMAN KHAN IN IT APPEAL (L) NO.2363 OF 2009 (SUPRA) AND HELD THAT THE FAILURE OF THE ASSESSING OFFICER IN ISSUING SUCH STATUTORY NOTICE U/S 143(2) IS NOT CURABLE U /S 292BB OF THE ACT. 3 5. ON THE OTHER HAND, LD DR FOR THE REVENUE SUBMITTED THAT THE LIBERTY MAY BE GIVEN TO THE DEPARTMENT FOR MOVING A MISCELLANEOUS APPLICATION, IF NOTICE U/S 143(2) IS FOUND ISSUED TO THE ASSESSEE. 6. ON HEARING BOTH PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES, I FIND THE ORDERS OF THE AO AS WELL AS THE CIT (A) ARE CLEAR IN MENTIONING THAT THE STATUTORY NOTICE U/S 143(2) OF THE ACT WAS NEVER ISSUED BEFORE MAKING RE - ASSESSMENT. IT IS NOT THE CASE OF THE REVENUE THAT SUCH NOTICE WAS ISSUED AND THE RELEVANT PROVISIONS ARE COMPLIED WITH. IN SUCH CIRCUMSTANCES, AFTER CONSIDERING THE ABOVE CITED BINDING JUDGMENTS OF THE JURISDICTION HIGH COURT, I AM OF THE OPINION, THE RE - ASSESSMENT IS NO T LEGALLY SUSTAINABLE. ACCORDINGLY, THE LEGAL ISSUE RAISED BY THE ASSESSEE IS ADMITTED AND ADJUDICATED IN FAVOUR OF THE ASSESSEE. CONSIDERING THE ADJUDICATION OF THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE, I FIND THE ADJUDICATION OF OTHER GROUNDS RELATING TO THE MERITS OF THE ADDITION BECOMES AN ACADEMIC EXERCISE. ACCORDINGLY, THE OTHER GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED AS ACADEMIC. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24TH JUNE, 2015. SD/ - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 24.6 .201 5 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT - 4. / 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI