Smt. Meera Devi, FATEHGARH V. I.T.O., Wardc-2 (1), Farrukhabad

ITA 330/AGR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89190 (ITAT-AGRA)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 31-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT SHUK LA
• Assessee Lawyers: ANIL VERMA
• Keywords: Procedural lapse; Block assessment; Reassessment proceedings
• Section: 147; 145; 148; 144; 143(3); 142(1)

Judgement Text

I.T.A. NO.330/AGRA/2014 ASSESSMENT YEAR 2009-10 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, SMC, AGRA [CORAM: PRAMOD KUMAR AM] ITA NO.330/AGRA/2014 ASSESSMENT YEAR: 2009-10 SMT. MEERA DEVI, .......................A PPELLANT W/O. SHRI OM PRAKASH TRIPATHI, JAI NARAIN VERMA ROAD, FATEHGARH (U.P.) [PAN: AYGPD 6160 L] VS. INCOME TAX OFFICER, ......RESPONDENT WARD 2(1), FARRUKHABAD. APPEARANCES BY: ANIL VERMA, FOR THE APPELLANT AMIT SHUKLA, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 18 TH JUNE, 2015 DATE OF PRONOUNCING THE ORDER : 24 TH JUNE, 2015 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF THE CIT(A)S ORDER DATED 25 TH AUGUST 2014, IN THE MATTER OF ASSESSMENT UNDER SEC TION 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) , FOR THE ASSESSMENT YEAR 2009-10. 2. ONE OF THE ISSUES THE ASSESSEE APPELLANT HAS RAI SED IN THIS CASE IS REGARDING VALIDITY OF REASSESSMENT PROCEEDINGS IN A SITUATION IN WHICH NO NOTICE UNDER SECTION 143(2) OF THE ACT HAS BEEN ISSUED AFTER ISSUING NOT ICE UNDER SECTION 148 OF THE ACT. 3. TO ADJUDICATE UPON THIS ISSUE, ONLY A FEW UNDISP UTED MATERIAL FACTS NEED TO BE TAKEN NOTE OF. IT IS A CASE OF REOPENED ASSESSMENT . THE ASSESSMENT WAS REOPENED AFTER ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT ON 14.10.2010. IT IS ALSO NOT IN DISPUTE I.T.A. NO.330/AGRA/2014 ASSESSMENT YEAR 2009-10 PAGE 2 OF 5 THAT NO NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AFTER THE INITIATION OF REASSESSMENT PROCEEDINGS. IT WAS IN THIS BACK DROP THAT THE ASSESSEE HAD CHALLENGED THE VALIDITY OF REASSESSMENT PROCEEDINGS ON THE GROUND THAT UNLESS THE A.O. ISSUES NOTICE UNDER SECTION 143(2), HE DOES NOT ASSUME JURISDICTI ON FOR PASSING ORDER UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT. HOWEVER, THE LD. CIT(A) REJECTED THIS PLEA AND, WHILE DOING SO, OBSERVED AS FOLLOWS:- 7.1 ALL THE GROUNDS ARE RELATED TO EACH OTHER AND APPERTAIN TO ONLY ONE ISSUE IN THIS CASE WHICH IS REGARDING ADDITION OF R S.7,50,000/- AS UNEXPLAINED DEPOSIT WITH BANK. ALL THESE GROUNDS A RE THEREFORE BEING DECIDED JOINTLY. THE APPELLANTS COUNSEL ARGUED TH AT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ZARDOJI ON JOB WORK BASIS AND TH E CREDIT BALANCE IN THE BANK A/C APPEARED IN THE BALANCE SHEET OF THE ASSES SEE. IT HAS ALSO BEEN ARGUED THAT NOTICES U/S 143(2) OR 142(1) WERE NOT I SSUED TO THE ASSESSEE AND THEREFORE, THE ORDER WAS NOT MAINTAINABLE. THI S CLAIM OF THE APPELLANT IS NOT ACCEPTABLE AS IT IS COVERED BY SECTION 292BB . IN THE ASSESSMENT ORDER IT IS CATEGORICALLY MENTIONED THAT THE APPELLANTS COUNSEL HAS FILED INCOME EXPENDITURE STATEMENT AND CAPITAL ACCOUNT IN WHICH RS.3,65,000/- WAS SHOWN AS OPENING BALANCE OF CAPITAL AND RS.7,50,000 /- WAS DEPOSITED ON 30.03.2009. THIS FACT HAS NOT BEEN DENIED AND IT A PPROVES THAT THE COUNSEL OF THE APPELLANT ATTENDED THE HEARINGS BEFORE THE A SSESSING OFFICER. THE ASSESSING OFFICERS IN THE REMAND REPORT SUBMITTED T HAT SERVICE OF NOTICE WAS NOT CONTESTED DURING THE ASSESSMENT PROCEEDINGS. T HIS HAS NOT BEEN CONTROVERTED IN REJOINDER. THEREFORE THE CASE IS SQ UARELY COVERED BY PROVISIONS OF SECTION 292BB. BESIDES, THERE ARE RU LINGS TO THE EFFECT THAT IF PROCEEDINGS ARE ATTENDED TO THE ISSUE OF NON-SERVIC ES OF THE NOTICES CAN NOT BE RAISED AT THE LATER STAGE. IN CASES OF THE ASSE SSMENT U/S 148, NOT GIVING STATUTORY NOTICE U/S 143(2) AMOUNTED TO NOTHING BUT PROCEDURAL IRREGULARITIES AND, HENCE, THE SAME WOULD NOT MAKE REASSESSMENT A NULLITY IN LAW [AREVA T & D INDIA LTD. V. ACIT [2007] 165 TAXM AN 123 (MAD).]. THEREFORE, THE ARGUMENT OF THE COUNSEL OF THE APPEL LANT REGARDING NON- ISSUANCE OF NOTICE U/S 143(2) IS REJECTED. 4. THE ASSESSEE AGGRIEVED AND IS IN FURTHER APPEAL BEFORE ME. 5. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF T HE APPLICABLE LEGAL POSITION. 6. I FIND THAT IT IS ONLY ELEMENTARY THAT THE A.O. ASSUMES POWER TO PASS ORDER UNDER SECTION 143(3), WHETHER IN THE COURSE OF REASSESSME NT PROCEEDINGS OR OTHERWISE, ONLY I.T.A. NO.330/AGRA/2014 ASSESSMENT YEAR 2009-10 PAGE 3 OF 5 AFTER HE ISSUES NOTICE UNDER SECTION 143(2) OF THE ACT. IT IS SO FOR THE REASON THAT IN SITUATION IN WHICH REASSESSMENT PROCEEDINGS HAS BEE N INITIATED BUT IN THE COURSE OF RETURN FILED AS A RESPONSE TO INITIATION OF SUCH RE ASSESSMENT PROCEEDINGS THE ASSESSEE DISCLOSES THE AMOUNT WHICH, IN THE OPINION OF THE A .O., HAD ESCAPED ASSESSMENT, THERE MAY NOT BE ANY REASON TO RESORT TO SCRUTINY ASSESSM ENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT. IN OTHER WORDS, IT IS NOT ALWAY S NECESSARY THAT INITIATION OF REASSESSMENT PROCEEDINGS MUST BE VISITED WITH ASSES SMENT UNDER SECTION 143(3) IN RESPECT OF RETURN FILED IN THE COURSE OF REASSESSME NT PROCEEDINGS. AS FOR THE DECISION OF HONBLE MADRAS HIGH COURT, IN THE CASE OF AREVA T& D INDIA LIMITED (SUPRA), RELIED UPON BY THE LEANED CIT(A), IT IS NO LONGER GOOD LAW. THI S IS SO HELD BY HONBLE MADRAS HIGH COURT, IN A SUBSEQUENT DECISION IN THE CASE OF SAP TGIRI FINANCE & INVESTMENTS VS ITO (90 DTR 289) AND IN THE LIGHT OF HONBLE SUPREME COURT S JUDGMENT IN THE CASE OF ACIT VS HOTEL BLUE MOON (321 ITR 362), IN THE FOLLOWING WOR DS: 12. AS FAR AS THE CONTENTION OF THE REVENUE THAT FA ILURE TO ISSUE NOTICE UNDER SECTION 143(2) OF THE ACT IS ONLY CURABLE DEF ECT IS CONCERNED, THE DECISION RELIED ON BY THE ASSESSEE REPORTED IN 321 ITR 362 ASST. CIT V. HOTEL BLUE MOON, ALSO COVERS THE SAID ISSUE. IT IS NO DOUBT TRUE THAT THE SAID DECISION DEALT WITH THE ASSESSMENT DONE UNDER CHAPTER XIV RELATING TO BLOCK ASSESSMENT. THE ASSESSEE THEREIN RAISED A CON TENTION THAT THE FAILURE TO ISSUE NOTICE UNDER SECTION 143(2) WITHIN THE PRE SCRIBED TIME FOR THE PURPOSE OF BLOCK ASSESSMENT COULD BE FATAL TO THE V ALIDITY OF THE ASSESSMENT MADE UNDER CHAPTER XIVB OF THE INCOME TAX ACT, 1961 . IN OTHER WORDS, THE ASSESSEE CONTENDED THAT THE ISSUANCE OF NOTICE UNDE R SECTION 143(2) WITHIN THE PRESCRIBED PERIOD OF TIME FOR THE PURPOSE OF BL OCK ASSESSMENT IS MANDATORY FOR ASSESSING THE ASSESSEE'S UNDISCLOSED INCOME FOUND DURING THE SEARCH. THE REVENUE TOOK THE STAND THAT ISSUE O F NOTICE UNDER SECTION 143(2) OF THE ACT WAS ONLY PROCEDURAL IRREGULARITY WHICH WAS CURABLE. THE APEX COURT POINTED OUT TO SECTION 158BC(B) PROVIDED FOR DETERMINATION OF THE UNDISCLOSED INCOME OF THE BLOCK PERIOD IN THE M ANNER LAID DOWN IN SECTION 158BB AND THE PROVISIONS OF SECTION 142, SU B SECTIONS (2) AND (3) OF SECTION 143, SECTION 144 AND SECTION 145 SHALL, SO FAR AS MAY BE, APPLY. THE APEX COURT POINTED OUT AFTER RETURN IS FILED, THE A SSESSING OFFICER HAS TO FOLLOW THE PROCEDURE LIKE THE ISSUE OF NOTICE UNDER SECTION 143(2)/142 AND COMPLETE THE ASSESSMENT UNDER SECTION 143(3). IN TH E EVENT, THE ASSESSEE IS NOT FILING THE RETURN OR NOT COMPLYING WITH THE NOT ICE UNDER SECTION 143(2)/142, THE OFFICER IS AUTHORISED TO COMPLETE T HE ASSESSMENT EX PARTE UNDER SECTION 144. THE APEX COURT FURTHER POINTED O UT THAT NOTICE UNDER SECTION 143(2) WOULD BECOME NECESSARY ONLY WHERE TH E BLOCK RETURN DOES NOT CONFORM UNDISCLOSED INCOME INFERRED BY THE AUTH ORITIES. THUS, IF AN I.T.A. NO.330/AGRA/2014 ASSESSMENT YEAR 2009-10 PAGE 4 OF 5 ASSESSMENT IS TO BE COMPLETED UNDER SECTION 143(3) READ WITH SECTION 158BC, NOTICE UNDER SECTION 143(2) SHOULD BE ISSUED WITHIN ONE YEAR FROM THE DATE OF FILING OF THE BLOCK RETURN. THE APEX CO URT FURTHER HELD THAT OMISSION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE UNDER SECTION 143(2) CANNOT BE A PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE, AND THEREFORE, THE REQUIREMENT OF NOTICE U NDER SECTION 143(2) CANNOT BE DISPENSED WITH. THE LEGISLATION REFERRING TO THE COMPLIANCE OF THE PROVISIONS UNDER SECTION 143, 144 AND 145 OF THE AC T IS A LEGISLATION BY INCORPORATION. THUS, WHERE THE ASSESSING OFFICER RE PUDIATES THE RETURN FILED BY THE ASSESSEE IN RESPONSE TO NOTICE UNDER S ECTION 158BC(A), THE ASSESSING OFFICER MUST NECESSARILY ISSUE NOTICE UND ER SECTION 143(2) OF THE ACT. DEALING WITH THE CONTENTION THAT THE ISSUE OF NOTICE IS NOT MANDATORY BUT OPTIONAL AND IS TO BE APPLIED TO THE EXTENT PRA CTICABLE, IN VIEW OF EXPRESSION 'SO FAR AS MAY BE' IN SECTION 153BC(B), THE APEX COURT POINTED OUT THAT THE EXPRESSION 'SO FAR AS MAY BE' HAS ALWA YS BEEN CONSTRUED TO MEAN THAT THOSE PROVISIONS MAY BE GENERALLY FOLLOWE D TO THE EXTENT POSSIBLE. REJECTING THE CONTENTION OF THE REVENUE T HAT IT IS NOT EXPEDIENT TO FOLLOW THE PROVISIONS UNDER SECTIONS 142 AND 143 (2 ) AND (3) STRICTLY FOR THE PURPOSE OF BLOCK ASSESSMENT, THE APEX COURT HEL D THAT IN COMPLETING THE ASSESSMENT, WHEN THE OFFICER REPUDIATES THE RET URN FILED UNDER SECTION 158BC(A) PROCEEDS TO MAKE AN ENQUIRY, HE HAS NECESS ARILY TO FOLLOW THE PROVISIONS OF SECTION 142 AND 143 (2) AND (3) OF TH E ACT. 13. AS FAR AS THE PRESENT CASE IS CONCERNED, THE PR OVISIONS OF SECTION 148 ALSO USES THE EXPRESSION 'SO FAR AS MAY BE APPLY AC CORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139'. THUS, UNDERSTANDING THIS PROVISIONS IN THE BACKGROUND OF THE DECISION OF THE APEX COURT, ON THE FACTS AVAILABLE, WE ARE OF THE V IEW THAT IN COMPLETING THE ASSESSMENT UNDER SECTION 148 OF THE ACT, COMPLIANCE OF THE PROCEDURE LAID DOWN UNDER SECTIONS 142 AND 143(2) IS MANDATORY. ON THE ADMITTED FACT THAT BEYOND NOTICE UNDER SECTION 142(1), THERE WAS NO NOTICE ISSUED UNDER SECTION 143(2), AND IN THE LIGHT OF THE FACT THAT T HE VERY BASIS OF THE REASSESSMENT WAS THE FAILURE ON THE PART OF THE ASS ESSEE IN NOT DISCLOSING THE CAPITAL GAINS ARISING ON THE TRANSFER OF PROPER TY FOR ASSESSMENT AND THAT ADMITTEDLY THE ASSESSEE HAD REQUESTED THE OFFICER T O ACCEPT THE ORIGINAL RETURN AS A RETURN FILED IN RESPONSE TO SECTION 148 OF THE ACT, WE HOLD THAT THERE WAS TOTAL FAILURE ON THE PART OF THE REVENUE FROM COMPLYING WITH THE PROCEDURE LAID DOWN UNDER SECTION 143(2) OF THE ACT , WHICH IS MANDATORY ONE AS HELD BY THE APEX COURT. 7. IN ANY EVENT, HONBLE JURISDICTIONAL HIGH COURT HAS, IN THE CASE OF CIT VS RAJEEV VERMA (336 ITR 678), HELD THAT NON ISSUANCE OF NOTI CE UNDER SECTION 143(2) VITIATES THE VALIDITY OF REASSESSMENT PROCEEDINGS UNDER SECTION 143(3) R.W.S. 147. I.T.A. NO.330/AGRA/2014 ASSESSMENT YEAR 2009-10 PAGE 5 OF 5 8. IN VIEW OF THE ABOVE LEGAL POSITION, I HOLD THAT IN THE ABSENCE OF ANY NOTICE UNDER SECTION 143(2) HAVING BEEN ISSUED, SUBSEQUENT TO RE OPENING OF THE ASSESSMENT, THE IMPUGNED ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT WAS INDEED BAD IN LAW. I, THEREFORE, QUASH THIS IMPUGNED ASSE SSMENT ORDER. 8. IN VIEW OF THE FACT THAT REASSESSMENT ORDER ITSE LF IS SET ASIDE, I DO NOT FIND IT NECESSARY TO DEAL WITH OTHER ISSUES IN THE APPEAL. 9. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TERM S INDICATE ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON 24 TH JUNE, 2015. SD/- PRAMOD KUMAR (ACCOUNTAN T MEMBER) AGRA, THE 24 TH JUNE, 2015 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA