ITO 22(3)-3, NAVI MUMBAI V. PRAKASH SHANKAR JAGTAP, NAVI MUMBAI

ITA 3404/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7636 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 25-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment
• Section: 143(2); 139(1); 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI T.R. SOOD, AM AND SHRI V.DURGA RAO, JM I.T.A. NO. 3404/MUM/09 ASSESSMENT YEAR :2002-03 INCOME-TAX OFFICER-22(3)-3, 3 RD FLOOR, TOWER NO. 6, VASHI RLY STATION COMPLEX, VASHI, NAVI MUMBAI. VS. SHRI PRAKASH SHANKAR JAGTAP, SHOP NO.1, PLOT NO. 213, SECTOR-1, NERUAL, NAVI MUMBAI. PAN: ADSPJ 5838 N (APPELLANT) (RESPONDENT) C.O. NO. 221/MUM/2009 (ARISING OUT OF I.T.A. NO. 3404/MUM/09) ASSESSMENT YEAR :2002-03 SHRI PRAKASH SHANKAR JAGTAP, SHOP NO.1, PLOT NO. 213, SECTOR-1, NERUAL, NAVI MUMBAI. PAN: ADSPJ 5838 N VS. INCOME-TAX OFFICER-22(3)-3, 3 RD FLOOR, TOWER NO. 6, VASHI RLY STATION COMPLEX, VASHI, NAVI MUMBAI. (CROSS OBJECTOR) (APPELLANT IN APPEAL) REVENUE B Y :: SHRI VIJAY VERMA ASSESSEE BY :: MS. RITIKA GARG O R D E R PER T.R. SOOD (AM): THESE CROSS APPEALS FILED BY THE REVENUE AND THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 17.02.2009 OF THE LEARNED C OMMISSIONER OF INCOME- TAX(APPEALS)-XXII, MUMBAI AND RELATE TO THE ASSESSM ENT YEAR 2002-03. ITA NO.3404/MUM/2009 (REVENUES APPEAL) 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN TREATING THE ORDER U/S. 143 (3) R.W.S. 147 PASSED BY THE A.O. WAS INVALID. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) FAILED TO APPRECIATE THAT IN THE CASE OF KIRAN NAGJI NISAR (114 ITD 319) THE HONBLE MUMBAI ITAT HAS HEL D THAT THE NON-COMPLIANCE WITH PROVISION OF SECTION 143(2) WOU LD NOT RENDER ASSESSMENT AS NULL AND VOID WHEN VALID JURIS DICTION IS VESTED IN ASSESSING OFFICER BY VIRTUE OF PROVISION OF SECTION 147/148. ITA NOS. 3404/M/09 & C.O.NO. 221/M/02 ITO V. SHRI PRAKASH SHANKAR JAGAP 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE AS SESSEE HAD PARTICIPATED IN THE PROCEEDINGS AND HAD NOT RAISED ANY OBJECTION BEFORE THE A.O. ON THE ISSUE. 3. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE RE-ASSESSMENT WAS ANNULLED BY THE LEARNED CIT(A) BECAUSE NO VALID NOTICE UNDER SECTION 143(2) WAS SERVED ON THE ASSESSEE. FOR THIS PURPOSE, THE LEARNED CIT(A) REFERRED TO VARIOUS DECISIONS. 4. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIV E FILED WRITTEN SUB MISSIONS IN WHICH IT IS MAINLY CONTENDED THAT THE A SSESSEE HAD NOT FILED ANY RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT AND HAD MERELY STATED THAT THE ORIGINAL RETURN FILED SHOULD BE TREATED AS RETURN I N RESPONSE TO THE NOTICE UNDER SECTION 148 AND, THEREFORE, THE SAME WAS NOT A VAL ID RETURN AND THUS THERE WAS NO NEED TO ISSUE NOTICE UNDER SECTION 143(2). IN THIS RESPECT HE RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ELECTRI CAL INSTRUMENTS CO. VS. CIT (250 ITR 734) AND ON THE DECISION OF THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF KHIALDAS & SONS VS. CIT (225 ITR 960). 5. ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASSES SEE POINTED OUT THAT IN VIEW OF RETROSPECTIVE AMENDMENT TO SECTION 148 THE ISSUANCE OF NOTICE U/S.143(2) IS MANDATORY. SHE ALSO SUBMITTED THAT BOTH THE DECISIO NS RELIED ON BY THE DEPARTMENT ARE DISTINGUISHABLE AND SUBMITTED THAT THE LETTER W RITTEN PROPOSING TO CONSIDER THE RETURN FILED UNDER SECTION 139(1) TO HAVE BEEN FILE D IN RESPONSE TO SECTION 148, THE NOTICE IS EQUALLY A VALID RETURN AND SHE RELIED ON THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF TIWARI KANHAIA LAL VS. CIT (154 ITR 109). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. WE FIND THAT SECTION 148 HAS BEEN AMENDED AND THE FOLLOWING PROVISIOS WE RE INSERTED WITH RETROSPECTIVE EFFECT FROM 01.10.1991 BY THE FINANCE ACT 2006, WHI CH READ AS UNDER: PROVIDED THAT IN A CASE ITA NOS. 3404/M/09 & C.O.NO. 221/M/02 ITO V. SHRI PRAKASH SHANKAR JAGAP 3 (A) WHERE A RETURN HAS BEEN FURNISHED DURING THE PERIOD COMMENCING ON THE LST DAY OF OCTOBER, 1991 AND ENDING ON THE 30 TH DAY OF SEPTEMBER,2005 IN RESPONSE TO A NOTICE SERVED UNDER THIS SECTION, AN D (B) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER SU B-SECTION (2) OF SECTION 143 AFTER THE EXPIRY OF TWELVE MONTHS SPECIFIED IN THE PROVISO TO SUB-SECTION (2) OF SECTION 143, AS IT STOOD IMMEDIATELY BEFORE THE AMENDMENT OF SAID SUB- SECTION BY THE FINANCE ACT, 2002 (20 OF 2002) BUT B EFORE THE EXPIRY OF THE TIME LIMIT FOR MAKING THE ASSESSMENT, REASSESSMENT OR RE-COMPUTATION AS SPECIFIED IN SUB-SECTION (2) OF SECTION 153, EVERY SUCH NOTICE REFERRED TO IN THIS CLAUSE SHALL BE DEEMED TO A VALID NOTICE. 7. THE ABOVE PROVISIONS CLEARLY SHOW THAT ISSUANCE OF NOTICE U/S.143(2) IS MANDATORY. THE ONLY EXCEPTION TO VARIOUS CONTROVERS IAL DECISIONS IS THAT IT WAS NOT NECESSARY TO ISSUE NOTICE WITHIN 12 MONTHS BUT THE SAME SHOULD BE ISSUED AT ANY POINT OF TIME BEFORE EXPIRATION OF LIMITATION PROVI DED UNDER SECTION 2 TO SECTION 153. THEREFORE, WITHOUT GOING INTO VARIOUS DECISION, IT IS CLEAR THAT NOTICE U/S.143(2) HAS TO BE SERVED ON THE ASSESSEE. IN THIS CASE, ADMITT EDLY NO NOTICE HAS BEEN SERVED ON THE ASSESSEE AND, THEREFORE, THE LEARNED CIT(A) HAS RIGHTLY ANNULLED THE RE- ASSESSMENT PROCEEDINGS. 8. WE ARE NOT IMPRESSED WITH THE ARGUMENT OF THE LE ARNED DEPARTMENTAL REPRESENTATIVE THAT THE ASSESSEE HAD MERELY FILED A LETTER STATING THAT THE RETURN FILED UNDER SECTION 139(1) MAY BE CONSIDERED AND TH E RETURN FILED IN RESPONSE TO SECTION 148 IS NOT A VALID RETURN. WE FIND THAT IN THE CASE OF ELECTRIC INSTRUMENT CO. (SUPRA) THE ISSUE BEFORE THE HONBLE DELHI HIGH COU RT WAS WHETHER THE RETURN FILED WHICH WAS UNSIGNED AND UNVERIFIED WAS A VALID ONE O R NOT AND IT WAS HELD THAT THE SAME WAS NOT VALID. SIMILARLY, IN THE CASE OF KHIAL DAS & SONS (SUPRA) THE HONBLE MADHYA PRADESH HIGH COURT OBSERVED THAT THE RETURN HAS TO BE SIGNED AND VERIFIED BY THE ASSESSEE TO BE A VALID RETURN, WHEREAS IN TH E CASE OF TIWARI KANHAIYA LAL VS. CIT(SUPRA), IT WAS OBSERVED AS UNDER: THE NOTICE ISSUED UNDER S.148 OF THE I.T.ACT, 1961 REQUIRING THE ASSESSEE TO FILE A RETURN CARRIES WITH IT AN OBLIG ATION TO FILE THE FRESH RETURN IN PURSUANCE OF THE SAID NOTICE. IN CA SE THE ASSESSEE FEELS THAT IT IS NOT NECESSARY TO FILE A FRESH RETU RN AND THAT THE EARLIER RETURN FILED BY HIM UNDER S. 139 OF THE ACT SHOULD BE TREATED AS THE RETURN FOR THE PURPOSE OF REASSESSMENT UNDER SS.147 AND ITA NOS. 3404/M/09 & C.O.NO. 221/M/02 ITO V. SHRI PRAKASH SHANKAR JAGAP 4 148 OF THE ACT, HE MAY INFORM THE ITO OF HIS DECISI ON TO TREAT HIS PREVIOUS RETURN AS THE RETURN FILED IN RESPONSE TO THE NOTICE UNDER S.148 OF THE ACT. IN THAT EVENT, THE EARLIER RETURN WILL BE TREATED AS THE FRESH RETURN SUBMITTED IN RESPONSE TO THE NOTIC E UNDER S.148 OF THE ACT. THE ABOVE CLEARLY SHOWS THAT IF A REQUEST IS MADE B Y THE ASSESSEE THAT THE RETURN FILED U/S.139(1) MAY BE CONSIDERED TO HAVE BEEN FILED IN RESPONSE TO THE NOTICE UNDER SECTION 148 THEN THE SAME IS A VALID R ETURN. THEREFORE, THE FAILURE TO ISSUE NOTICE UNDER SECTION 143(2) AGAINST THE VALID RETURN WOULD RENDER SUCH RE- ASSESSMENT PROCEEDINGS NOT MAINTAINABLE. IN THESE CIRCUMSTANCES, WE FIND NOTHING WRONG WITH THE ORDER OF THE LEARNED CIT(A) AND CONF IRM THE SAME. 9. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . C.O. NO. 221/MUM/2009 (FILED BY THE REVENUE) 10. IN THE CROSS OBJECTION THE ASSESSEE HAS RAISED THE FOLLOWING GROUND: THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN UP HOLDING THE VALIDITY OF REASONS RECORDED FOR REOPENING OF ASS ESSMENT FOR IMPUGNED ASSESSMENT YEAR DE HORS ANY EVIDENCE OR MA TERIAL. 11. SINCE THE RE-ASSESSMENT WHICH WAS ANNULLED BY T HE LEARNED CIT(A) AND THAT ORDER HAS BEEN CONFIRMED BY US BECAUSE THE ASSESSIN G OFFICER FAILED TO ISSUE NOTICE UNDER SECTION 143(2) OF THE ACT, THE CROSS OBJECTIO N HAS BECOME INFRUCTUOUS AND THE SAME ARE, THEREFORE, REJECTED. ORDER PRONOUNCED ON THIS 3 RD DAY OF MARCH, 2010. SD. SD . (V. DURGA RAO) (T.R. SOOD ) JUDICIAL MEMBER ACCOUNTANT MEMBR MUMBAI, DATED THE 3 RD MARCH, 2010. KN COPY TO: 1. THE ASSESSEE. 2. THE ITO-22(3)-3, MUMBAI 3. THE CIT XXII, MUMBAI 4. THE CIT(A)-XXII, MUMBAI 5. THE DR, C BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, I.T.A.T.MUMBAI