BAHAR BUILDERS, PANVEL V. ITO WD 15(3)(2), MUMBAI

ITA 336/MUM/2013

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7416 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-02-2015
• Assessment Year: 1996-1997
• Appeal Filed On: 11-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: A K SHARMA
• Keywords: Principle of natural justice; Validity of assessment; Reassessment proceedings
• Section: 143(3); 142(1); 292BB; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.336/MUM/2013(A.Y.1996-97) ITA NO.3612/MUM/2013(A.Y.1997-98) ITA NO.337/MUM/2013 (A.Y.1998-99) M/S. BAHAR BUILDERS, C/O.SAJID MURGHEY BUSHRA PARK, TPS PLOT NO.524, 7-A/524 BHAWAN BUNGALOW AREA, PANVEL 410 206 PAN: AAAFB 4606P ...... APPELLANT VS. THE ITO WARD 15(3)(2), MATRU MANDIR, GRANT ROAD, MUMBAI. ..... RESPONDENT APPELLANT BY : SHRI A.K.SHARMA RESPONDENT BY : SHRI S.K.JAIN DATE OF HEARING : 16/09/2019 DATE OF PRONOUNCEMENT : 15/10/2019 ORDER PER VIKAS AWASTHY, JM: THESE THREE APPEALS BY THE ASSESSEE INVOLVE IDENTI CAL LEGAL ISSUE AND ADDITION ON MERITS HAVE ALSO BEEN MADE ON SIMI LAR SET OF FACTS. THEREFORE, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DECIDED BY THIS CONSOLIDATED ORDER. 2 ITA NO.336/MUM/2013(A.Y.1996-97) ITA NO.3612/MUM/2013(A.Y.1997-98) ITA NO.337/MUM/2013 (A.Y.1998-99) ITA NO.336/MUM/2013: 2. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 28, MUMBAI DATED 22/08/2012 FOR THE ASSESSMENT YEA R 1996-97. 3. SHRI A.K. SHARMA APPEARING ON BEHALF OF THE ASSE SSEE SUBMITTED THAT ASSESSMENT ORDER HAS BEEN PASSED UNDER SECTION 143(3) R.W.S. 254 OF THE INCOME TAX, 1961 (IN SHORT THE ACT) WITHOUT S ERVING MANDATORY NOTICE UNDER SECTION 143(2) OF THE ACT ON THE ASSES SEE. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THOUGH IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS MENTIONED THAT NOTICE UN DER SECTION 143(2) DATED 08/12/2009 WAS SERVED ON THE ASSESSEE, HOWEVE R, NO SUCH NOTICE WAS EVER SERVED ON THE ASSESSEE. THE LD. AUTHORIZE D REPRESENTATIVE POINTED OUT THAT ASSESSEE HAD RAISED SPECIFIC GROUN D OF NON-SERVICE OF STATUTORY NOTICE UNDER SECTION 143(2) OF THE ACT IN FIRST APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER GIVING THE FINDING THAT T HERE IS NO DIRECT EVIDENCE OF SERVICE OF NOTICE UNDER SECTION 143(2) OF THE AC T DECIDED THE ISSUE AGAINST THE ASSESSEE ON THE GROUND THAT THE PURPOSE OF NOTICE UNDER SECTION 143(2) HAS BEEN SERVED AS THE ASSESSEE HAD PARTICIPATED IN THE ASSESSMENT PROCEEDINGS. THE LD. AUTHORIZED REPRESE NTATIVE SUBMITTED THAT SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT IS MANDATORY. IN THE ABSENCE OF SUCH NOTICE THE ASSESSMENT FRAMED IS INV ALID AND THE SUBSEQUENT PROCEEDINGS ARISING THEREFROM ARE VITIAT ED. IN SUPPORT OF HIS SUBMISSIONS, THE LD. AUTHORIZED REPRESENTATIVE PLA CED RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL I N THE CASE OF RAMESH SALECHA HUF VS. ITO IN ITA NO.3312/MUM/2015,ASSESS MENT YEAR 2011-12 DECIDED ON 25/10/2017. 3 ITA NO.336/MUM/2013(A.Y.1996-97) ITA NO.3612/MUM/2013(A.Y.1997-98) ITA NO.337/MUM/2013 (A.Y.1998-99) 4. ON THE OTHER HAND, SHRI S.K.JAIN APPEARING FOR T HE DEPARTMENT VEHEMENTLY DEFENDED THE FINDINGS OF THE CIT(A) ON T HE ISSUE OF VALIDITY OF ASSESSMENT PROCEEDINGS SANS SERVICE OF NOTICE UN DER SECTION 143(2) OF THE ACT ON THE ASSESSEE. THE LD. DEPARTMENTAL REPR ESENTATIVE SUBMITTED THAT AS OF NOW HE IS NOT IN POSSESSION OF THE ASSE SSMENT FOLDER TO CONTEND WHETHER NOTICE UNDER SECTION 143(2) WAS SERVED ON T HE ASSESSEE OR NOT. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER CONTEND ED THAT A PERUSAL OF THE IMPUGNED ORDER WOULD MAKE IT CLEAR THAT THE ASS ESSEE PARTICIPATED IN THE ASSESSMENT PROCEEDINGS AND HAD NOT RAISED ANY O BJECTION BEFORE THE ASSESSING OFFICER ON THE ISSUE OF NON-SERVICE OF NO TICE UNDER SECTION 143(2) OF THE ACT. THE LD. DEPARTMENTAL REPRESENTA TIVE FURTHER SUBMITTED THAT ASSESSEE WAS GIVEN FULL OPPORTUNITY OF HEARING BY THE ASSESSING OFFICER AND CIT(A), HENCE, THE PRINCIPLES OF NATURAL JUSTICE HAVE NOT BEEN VIOLATED. THE LD. DEPARTMENTAL REPRESENTA TIVE VEHEMENTLY SUPPORTING THE FINDINGS OF CIT(A) PRAYED FOR DISMIS SING THE APPEAL OF ASSESSEE. 5. WE HAVE HEARD RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. SERVICE OF NOTICE UNDER SECTIO N 143(2) OF THE ACT IS A MANDATORY CONDITION BEFORE RETURN OF INCOME OF THE ASSESSEE IS TAKEN UP FOR SCRUTINY ASSESSMENT/REASSESSMENT. FAILURE ON T HE PART OF ASSESSING OFFICER TO ENSURE ISSUE AND SERVICE NOTICE UNDER S ECTION 143(2) OF THE ACT, BEFORE TAKING UP THE RETURN OF INCOME FOR ASSESSMEN T WOULD RENDER THE ASSESSMENT/ REASSESSMENT PROCEEDINGS VOID. 4 ITA NO.336/MUM/2013(A.Y.1996-97) ITA NO.3612/MUM/2013(A.Y.1997-98) ITA NO.337/MUM/2013 (A.Y.1998-99) 6. IN THE INSTANT CASE WE OBSERVE THAT THE ASSESSEE IN FIRST APPELLATE PROCEEDINGS HAD TAKEN SPECIFIC GROUND BEFORE CIT(A ) WITH RESPECT TO NON- SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT. THE CIT(A) OBSERVED THAT THERE IS NO DIRECT EVIDENCE IN SUPPORT OF THE CLAIM OF THE DEPARTMENT THAT NOTICES UNDER SECTION 143(2) AND 142(1) WERE S ERVED ON THE ASSESSEE. AFTER HAVING GIVEN FINDING OF FACT ON NON-SERVICE O F STATUTORY NOTICE UNDER SECTION 143(2) OF THE ACT, THE CIT(A) UPHELD VALIDI TY OF ASSESSMENT PROCEEDINGS MERELY ON THE GROUND THAT THE ASSESSEE PARTICIPATED IN THE ASSESSMENT PROCEEDINGS. THE HONBLE APEX COURT IN THE CASE OF ASST.CIT VS. HOTEL BLUE MOON, 321 ITR 362 HELD THAT NO ASSES SMENT COULD BE MADE WITHOUT ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ASSTT.CIT VS. GENO PHARMACEUTICALS LTD., 214 TAXMAN 83 (BOMBAY) UPHOLDING THE DECISIO N OF TRIBUNAL HELD THAT NOTICE UNDER SECTION 143(2) IS MANDATORY AND IN THE ABSENCE OF SERVICE OF SUCH NOTICE, THE ASSESSING OFFICER CANNO T PROCEED TO MAKE AN INQUIRY ON THE RETURN FILED. 7. THE HONBLE SUPREME COURT OF INDIA IN THE CASE O F LAXMANDAS KHANDELWAL REPORTED AS 108 TAXAMANN.COM 183(SC) HE LD THAT FAILURE ON THE PART OF ASSESSING OFFICER TO ISSUE NOTICE UNDER SECTION 143(2) WOULD MAKE THE ASSESSMENT INVALID. THE NOTICE UNDER SEC TION 143(2) FOR COMPLETION OF REGULAR ASSESSMENT IS A STATUTORY REQ UIREMENT AND NON- ISSUANCE OF NOTICE IS NOT A CURABLE DEFECT UNDER TH E PROVISIONS OF SECTION 292BB OF THE ACT. AS REGARDS APPLICATION OF PROVIS IONS OF SECTION 292BB OF THE ACT, THE HONBLE COURT HELD:- 9. ACCORDING TO SECTION 292BB OF THE ACT, IF THE A SSESSEE HAD PARTICIPATED IN THE PROCEEDINGS, BY WAY OF LEGAL FICTION, NOTICE WO ULD BE DEEMED TO BE VALID 5 ITA NO.336/MUM/2013(A.Y.1996-97) ITA NO.3612/MUM/2013(A.Y.1997-98) ITA NO.337/MUM/2013 (A.Y.1998-99) EVEN IF THERE BE INFRACTIONS AS DETAILED IN SAID SE CTION. THE SCOPE OF THE PROVISION IS TO MAKE SERVICE OF NOTICE HAVING CERTA IN INFIRMITIES TO BE PROPER AND VALID IF THERE WAS REQUISITE PARTICIPATION ON PART OF THE ASSESSEE. IT IS, HOWEVER, TO BE NOTED THAT THE SECTION DOES NOT SAVE COMPLETE ABSENCE OF NOTICE. FOR SECTION 292BB TO APPLY, THE NOTICE MUST HAVE EMANAT ED FROM THE DEPARTMENT. IT IS ONLY THE INFIRMITIES IN THE MANNER OF SERVICE OF NOTICE THAT THE SECTION SEEKS TO CURE. THE SECTION IS NOT INTENDED TO CURE COMPLE TE ABSENCE OF NOTICE ITSELF. IN THE PRESENT CASE, THE DEPARTMENT HAS NOT BEEN AB LE TO SHOW SERVICE OF NOTICE AT ALL. IT IS NOT THE CASE OF THE REVENUE T HAT NOTICE UNDER SECTION 143(2) WAS SERVED AT ONE OF THE ADDRESSES OF THE AS SESSEE. IT IS A CASE OF ABSENCE OF SERVICE OF NOTICE ON THE ASSESSEE. 8. THUS, IN VIEW OF THE FACT THAT THE REVENUE HAS N OT BEEN ABLE TO REBUT THE CONTENTIONS OF THE ASSESSEE THAT NOTICE U NDER SECTION 143(2) HAS NOT BEEN SERVED AND IN THE LIGHT OF LAW LAID DOWN BY THE HONBLE APEX AND HONBLE JURISDICTIONAL HIGH COURT WE FIND MERIT IN THE CONTENTIONS OF THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. THE ASSESSMENT ORDER FRAMED UNDER SECTION 143(3) OF THE ACT WITHOUT SER VICE OF NOTICE UNDER SECTION 143(2) OF THE ACT IS BAD IN LAW AND SUBSEQU ENT PROCEEDINGS ARISING THERE FROM ARE HENCE, VITIATED. CONSEQUENTLY, THE IMPUGNED ORDER IS SET- ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED ON THIS LEGAL GROUND ALONE. 9. SINCE, WE HAVE ACCEPTED THE APPEAL OF ASSESSEE O N LEGAL ISSUES, TRAVELLING TO MERITS OF THE ADDITION WOULD BE PUREL Y AN ACADEMIC EXERCISE. HENCE, WE ARE NOT TAKING UP THE GROUNDS RAISED ON M ERITS OF THE ADDITION. ITA NO.3612/MUM/2013 (A.Y. 1997-98) & ITA NO.337/M UM/2013 (A.Y.1998-99) 10. THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST ORDERS PASSED BY THE CIT(A)-26 DATED 28/02/2013 FOR A.Y 1997-98 A ND CIT(A)- 28 DATED 6 ITA NO.336/MUM/2013(A.Y.1996-97) ITA NO.3612/MUM/2013(A.Y.1997-98) ITA NO.337/MUM/2013 (A.Y.1998-99) 28/02/2012 FOR A.Y.1998-99, RESPECTIVELY. IN THESE APPEALS ASSESSEE HAS ASSAILED VALIDITY OF ASSESSMENT ORDER ON THE GROUND OF NON-SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT. AT THE TI ME OF HEARING OF THE APPEALS, BOTH THE SIDES WERE UNANIMOUS IN STATING T HAT IN APPEALS FOR THE ASSESSMENT YEARS 1997-98 AND 1998-99 THE ISSUES R AISED AND FACTS ARE SIMILAR TO ASSESSMENT YEAR 1996-97. THUS, THE DECI SION RENDERED IN APPEAL FOR ASSESSMENT YEAR 1996-97 SHALL APPLY MUTATIS MUTANDIS TO THE APPEALS FOR ASSESSMENT YEARS 1997-98 AND 1998-99. 11. IN THE RESULT, ALL THE APPEALS BY THE ASSESSEE ARE ALLOWED AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON TUESDAY, THE 15 TH DAY OF OCTOBER, 2019. SD/- SD/- (RAJESH KUMAR ) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 15/10/2019 VM , SR. PS(O/S) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI