Renuka G., Bellary V. DCIT, Bangalore

ITA 416/BANG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9506 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-06-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 20-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Invalid notice; Period of limitation; Application of stay; Procedural lapse; Assessment record; Reason to believe
• Section: 143(3); 142(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.416/BANG/2015 ASSESSMENT YEAR : 2011-12 MS. RENUKA G., NO.36, HRISHIKESH, GOLDSMITH STREET, BELLARY 583 101. PAN: ABYPR5731L VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(3), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S. VENKATESAN, CA RESPONDENT BY : DR. SIBICHEN K. MATHEW, CIT-III(DR) DATE OF HEARING : 02.06.2016 DATE OF PRONOUNCEMENT : 05.08.2016 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT(APPEALS)-11, BANGALORE DATED 29.12.2014 FOR THE ASSESSMENT YEAR 2011-12 INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE ORDERS OF THE LEARNED LOWER AUTHORITIES AR E BAD IN LAW AND CONTRARY TO THE EVIDENCES AND FACT ON RECOR D. ITA NO.416/BANG/2015 PAGE 2 OF 13 2. THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE VA LIDITY OF THE ASSESSMENT PROCEEDINGS IN REGARD TO THE ISSUE A ND SERVICE OF NOTICE U/S.143(2) OF THE ACT. 3. THE LEARNED CIT(A) WITHOUT PREJUDICE TO THE ABOV E GROUND, HAS ERRED IN UPHOLDING THE ADDITIONS OF S.2 ,37,/00,000/- WITHOUT CONSIDERING THE WRITTEN SUBMISSIONS DATED: 9.10.2014 AND 14.8.2014 AND THE EVIDENCES SUBMITTED THEREWITH ENC LOSED AS ANNEXURES 'A' & 'B' TO THIS APPEAL MEMO. 4. THE LEARNED CIT(A) HAS GROSSLY ERRED IN HOLDING THAT THERE IS NO SUCH LOAN AMOUNT OUTSTANDING IN THE BAL ANCE SHEET OF KRISHNA ENTERPRISES, IGNORING ALL THE EVIDENCES PLA CED BEFORE THE LEARNED CIT(A) IN THE LETTERS / WRITTEN SUBMISSION CITED IN GROUND NO.3 ABOVE. 5. THE LEARNED CIT(A) HAS ALSO GROSSLY ERRED IN UPH OLDING THE ADDITION ON THE GROUND THAT THE APPELLANT HAS I NITIALLY STATED THAT THE RECEIPT WAS A FEE FOR CERTAIN PROJECT, WHI CH LATER GOT CONVERTED INTO LOAN AND THAT THERE ARE CERTAIN CONT RADICTION IN THE STATEMENT OF THE APPELLANT AND ON OTHER ASSUMPTIONS AND PRESUMPTIONS WHICH ARE ALL IRRELEVANT. 6. THE LEARNED CIT(A) ALSO FAILED TO APPRECIATE TH AT THE EVIDENCES AND FACTS ON RECORD ARE CONTRARY TO THE A SSUMPTIONS AND PRESUMPTIONS MADE AND EVEN IF THERE ARE ANY CONTRAD ICTIONS IN THE STATEMENT GIVEN IN THE STATE OF CONFUSION, THE AUTH ORITIES IN FAIRNESS ARE BOUND TO TAKE THE STATEMENTS WHICH ARE SUPPORTED BY THE EVIDENCES IN PREFERENCE TO THOSE WHICH ARE NOT SUPPORTED BY EVIDENCES. 7. THE APPELLANT CRAVES LEAVE TO ADD ANY OTHER GROU ND OR MODIFY OR REVISE THE GROUNDS TAKEN AT THE TIME OF H EARING BEFORE THE HON'BLE INCOME-TAX APPELLATE TRIBUNAL, BANGALOR E. FOR THESE AND ANY OTHER GROUND THAT MAY BE URGED D URING THE HEARING, IT IS PRAYED THAT THIS APPEAL MAY BE A LLOWED IN THE INTEREST OF EQUITY AND JUSTICE. 2. THE ASSESSEE HAS RAISED A PRELIMINARY OBJECTION WITH REGARD TO VALIDITY OF THE ASSESSMENT ON THE GROUND THAT THE N OTICE U/S. 143(2) OF THE ITA NO.416/BANG/2015 PAGE 3 OF 13 INCOME-TAX ACT, 1961 [THE ACT] WAS NOT SERVED WIT HIN THE PRESCRIBED TIME, THEREFORE THE NOTICE ISSUED BY THE AO IS NOT VALID AND ASSESSMENT FRAMED CONSEQUENT THERETO DESERVES TO BE ANNULLED. 3. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATT ENTION TO THE FACT THAT ASSESSEE HAS FILED RETURN OF INCOME ON 20.8.2011, T HEREFORE THE NOTICE U/S. 143(2) OF THE ACT HAS TO BE ISSUED ON OR BEFORE 30. 09.2012. THOUGH THE AO HAS CLAIMED THAT HE ISSUED A NOTICE U/S. 143(2) OF THE ACT ON 13.9.2012, BUT IT WAS NEVER SERVED ON THE ASSESSEE. IN THE OR DER ITSELF, THE AO HIMSELF HAS ADMITTED THAT SINCE NO RESPONSE FROM THE ASSESS EE WAS RECEIVED WITH RESPECT TO NOTICE DATED 13.09.2012, ANOTHER NOTICE U/S. 143(2) WAS ISSUED ON 14.12.2012. THIS NARRATION OF THE AO IS SUFFICI ENT TO ESTABLISH THAT THE FIRST NOTICE DATED 13.09.2012 WAS NOT SERVED UPON T HE ASSESSEE AND FOR THAT REASON HE HAS ISSUED ANOTHER NOTICE DATED 14.1 2.2012. SINCE NOTICE U/S. 143(2) IS NOT ISSUED WITHIN THE PRESCRIBED PER IOD, THE ASSESSMENT FRAMED CONSEQUENT TO THE INVALID NOTICE ISSUED AFTE R THE PRESCRIBED PERIOD DESERVES TO BE QUASHED. IN SUPPORT OF HIS CONTENTI ONS, HE HAS PLACED RELIANCE UPON THE JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF ACIT V. GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHOR ITY, 379 ITR 14 (ALL) IN WHICH THEIR LORDSHIPS HAVE HELD THAT IF NOTICE U /S. 143(2) WAS NOT ISSUED IN TIME, THE ASSESSMENT FRAMED CONSEQUENT THERETO I S NOT A VALID ASSESSMENT AND DESERVES TO BE QUASHED. ITA NO.416/BANG/2015 PAGE 4 OF 13 4. THE LD. DR, ON THE OTHER HAND, HAS CONTENDED THA T THE AO HAS CATEGORICALLY OBSERVED IN HIS ORDER THAT NOTICE U/S . 143(2) WAS ISSUED ON 13.09.2012, THEREFORE IT WAS ISSUED BEFORE THE SPEC IFIED DATE I.E., 30.09.2012. MOREOVER, FOR THE SAFER SIDE, THE AO H AS ALSO ISSUED A SECOND NOTICE. THE LD. DR FURTHER CONTENDED THAT IN ANY C ASE, THE ASSESSEE HAS JOINED THE PROCEEDINGS, THEREFORE, HE CANNOT RAISE A PLEA THAT NOTICE U/S. 143(2) WAS NOT SERVED. MOREOVER, THE PROVISIONS OF SECTION 292BB COVERS THIS TYPE OF MISTAKES AND AS PER THESE PROVISIONS, IF THE ASSESSEE APPEARED AND JOINED THE PROCEEDINGS, HE CANNOT RAISE A PLEA WITH RESPECT TO SERVICE OF NOTICE OF HEARING AT APPELLATE STAGE. 5. HAVING CAREFULLY EXAMINED THE ORDER OF LOWER AUT HORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT UNDISPUTEDLY THE ASSESSEE HAS FILED HER RETURN OF INCOME ON 20.8.2011 AND IN SUPPORT THEREO F, COPY OF ACKNOWLEDGEMENT IS ALSO PLACED ON RECORD DURING THE COURSE OF HEARING. THEREFORE NOTICE U/S. 143(2) IS TO BE ISSUED BY 30. 09.2012. IN THE ASSESSMENT ORDER ITSELF, THE AO HAS OBSERVED THAT N OTICE U/S. 143(2) WAS ISSUED ON 13.09.2012 AND SINCE THERE WAS NO RESPONS E TO THIS NOTICE, ANOTHER NOTICE U/S. 143(2) WAS ISSUED ON 14.12.2012 . THIS ADMISSION OF THE AO CLEARLY SPEAKS THAT NOTICE U/S. 143(2) DATED 13.09.2012 WAS NOT SERVED UPON THE ASSESSEE AND THEREFORE HE WAS FORCE D TO ISSUE SECOND NOTICE U/S. 143(2) ON 14.12.2012. MOREOVER, AS PER THE PROVISIONS OF SECTION 143(2) OF THE ACT, THE REQUIREMENT OF LAW I S TO SERVE A NOTICE WITHIN A SPECIFIED PERIOD AND NOT ONLY ISSUANCE OF NOTICE. IT IS ALSO NOTICED THAT ITA NO.416/BANG/2015 PAGE 5 OF 13 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASS ESSEE HAS FILED AN AFFIDAVIT CONTENDING THEREIN THAT NOTICE DATED 13.0 9.2012 WAS NEVER SERVED UPON THE ASSESSEE, BUT THE REVENUE HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO ESTABLISH THAT THE NOTICE DATED 13.09.201 2 WAS EVER SERVED UPON THE ASSESSEE. IN THE LIGHT OF THESE FACTS, WE HAVE NO HESITATION IN HOLDING THAT NOTICE DATED 13.09.2012 WAS NOT SERVED ON THE ASSESSEE AND ONCE THAT NOTICE IS NOT SERVED WITHIN A PRESCRIBED PERIO D, THE AO COULD NOT ASSUME JURISDICTION TO FRAME ASSESSMENT OVER THE AS SESSEE U/S. 143(3) OF THE ACT. 6. THE SCOPE OF PROVISIONS OF SECTION 292BB WAS ALS O EXAMINED BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF ACIT V. GREATER NOIDA DEVELOPMENT AUTHORITY (SUPRA) AND THEIR LORDSHIPS HAVE HELD THAT THE DEFECT OF SERVICE OF NOTICE U/S. 143(2) COULD NOT B E CURED BY RECOURSE TO DEEMING FICTION PROVIDED BY SECTION 292BB OF THE AC T. THEIR LORDSHIPS HAVE ALSO EXAMINED THE EFFECT OF NON-SERVICE OF NOT ICE U/S. 143(2) WITHIN THE PRESCRIBED PERIOD. THE RELEVANT OBSERVATIONS O F THE HONBLE HIGH COURT ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- 10. IN ORDER TO UNDERSTAND THE CONTROVERSY AS TO WHETHER A NOTICE UNDER SECTION 143(2) OF THE ACT IS ESSENTIAL TO BE ISSUED AND SERVED UPON THE ASSESSEE IN REASSESSMENT PROCEE DINGS IT WOULD BE APPROPRIATE TO REFER TO THE SAID SECTION. FOR FACILITY, THE PROVISIONS OF SECTION 143(2) OF THE ACT IS EXTRACTE D HEREUNDER: '143 (2) WHERE A RETURN HAS BEEN FURNISHED UNDER SECTION 139, OR IN RESPONSE TO A NOTICE UNDER SUB-S ECTION (1) OF SECTION 142, THE ASSESSING OFFICER SHALL, ITA NO.416/BANG/2015 PAGE 6 OF 13 (I) WHERE HE HAS REASON TO BELIEVE THAT ANY CLAIM OF LOSS, EXEMPTION, DEDUCTION, ALLOWANCE OR RELIEF MAD E IN THE RETURN IS INADMISSIBLE, SERVE ON THE ASSESSEE A NOTICE SPECIFYING PARTICULARS OF SUCH CLAIM OF LOSS, EXEMP TION, DEDUCTION, ALLOWANCE OR RELIEF AND REQUIRE HIM, ON A DATE TO BE SPECIFIED THEREIN TO PRODUCE, OR CAUSE TO BE PRODUCED, ANY EVIDENCE OR PARTICULARS SPECIFIED THE REIN OR ON WHICH THE ASSESSEE MAY RELY, IN SUPPORT OF SUCH CLAIM: PROVIDED THAT NO NOTICE UNDER THIS CLAUSE SHALL BE SERVED ON THE ASSESSEE ON OR AFTER THE 1ST DAY OF J UNE, 2003; (II) NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (I), IF HE CONSIDERS IT NECESSARY OR EXPEDIENT TO ENSURE TH AT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDERPAID THE TA X IN ANY MANNER, SERVE ON THE ASSESSEE A NOTICE REQUIRIN G HIM, ON A DATE TO BE SPECIFIED THEREIN, EITHER TO ATTEND HIS OFFICE OR TO PRODUCE, OR CAUSE TO BE PRODUCED, ANY EVIDENC E ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETUR N: PROVIDED THAT NO NOTICE UNDER CLAUSE (II) SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONT HS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN I S FURNISHED.' 11. UNDER CLAUSE (II) OF SUB-SECTION (2) OF SECTIO N 143, THE ASSESSING OFFICER IS REQUIRED TO SERVE, ON THE ASSE SSEE, A NOTICE REQUIRING HIM TO ATTEND THE OFFICE OR TO PRODUCE EV IDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETUR N, IF THE ASSESSING OFFICER CONSIDERS IT NECESSARY OR EXPEDIE NT TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDER-PAID THE T AX IN ANY MANNER. UNDER THE PROVISO TO CLAUSE(II), IT HAS BEE N SPECIFIED THAT NO NOTICE UNDER CLAUSE (II) SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANC IAL YEAR IN WHICH THE RETURN IS FURNISHED. SERVICE ON THE ASSES SEE OF A NOTICE WITHIN THE PERIOD PRESCRIBED BY THE PROVISO PRESUPP OSES THE ISSUANCE OF A NOTICE FOR, IT IS ONLY WHEN A NOTICE IS ISSUED, THAT IT CAN BE SERVED. THEREAFTER, THE PROVISIONS OF SUBSEC TION (3) OF SECTION 143 OF THE ACT STIPULATE THAT ON THE DATE S PECIFIED IN THE NOTICE ISSUED UNDER CLAUSE (II) OF SUB-SECTION (2) OF SECTION 143 OF THE ACT, THE ASSESSING OFFICER SHALL, AFTER HEARING THE EVIDENCE AS THE ASSESSEE MAY PRODUCE AND CONSIDERING SUCH OTHER EVIDENCE AS ITA NO.416/BANG/2015 PAGE 7 OF 13 HE MAY REQUIRE AND UPON TAKING INTO ACCOUNT ALL REL EVANT MATERIAL, BY AN ORDER IN WRITING MAKE AN ASSESSMENT OF THE TO TAL INCOME OR LOSS OF THE ASSESSEE. 12. THE JURISDICTION OF THE ASSESSING OFFICER TO M AKE AN ASSESSMENT UNDER SECTION 143(3) (II) OF THE ACT IS PREMISED ON THE ISSUANCE OF A NOTICE UNDER CLAUSE (II) OF SECTION 1 43(2) OF THE ACT. THE PROVISO TO CLAUSE (II) OF SUB-SECTION (2) OF SE CTION 143 OF THE ACT STIPULATES THAT A NOTICE MUST BE SERVED ON THE ASSESSEE NOT LATER THAN THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN HAS BEEN FURNISHED. IF A N OTICE IS NOT EVEN ISSUED WITHIN THE PERIOD OF SIX MONTHS FROM TH E END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED, TH ERE WOULD BE NO OCCASION TO SERVE IT UPON THE ASSESSEE WITHIN THE S TIPULATED PERIOD. 13. THE SUPREME COURT IN ASSISTANT COMMISSIONER OF INCOME TAX AND ANOTHER VS. HOTEL BLUE MOON, (2010) 321 ITR 362 (SC) = 2010-TIOL-08-SC-IT, WHILE CONSIDERING THE PROVISION OF CHAPTER XIV-B OF THE ACT IN RELATION TO BLOCK ASSES SMENTS CONSIDERED THE EFFECT OF SECTION 143(2) OF THE ACT AND HELD: '..........BUT SECTION 143(2) ITSELF BECOMES NECESS ARY ONLY WHERE IT BECOMES NECESSARY TO CHECK THE RETURN, SO THAT WHERE BLOCK RETURN CONFORMS TO THE UNDISCLOSED INCO ME INFERRED BY THE AUTHORITIES, THERE IS NO REASON, WH Y THE AUTHORITIES SHOULD ISSUE NOTICE UNDER SECTION 143(2 ). HOWEVER, IF AN ASSESSMENT IS TO BE COMPLETED UNDER SECTION 143(3) READ WITH SECTION 158-BC, NOTICE UND ER SECTION 143(2) SHOULD BE ISSUED WITHIN ONE YEAR FRO M THE DATE OF FILING OF BLOCK RETURN. OMISSION ON THE PAR T OF THE ASSESSING AUTHORITY TO ISSUE NOTICE UNDER SECTION 1 43(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.' 14. THE SUPREME COURT CLEARLY HELD THAT OMISSION O N THE PART OF THE ASSESSING OFFICER IS NOT A PROCEDURAL IRREGU LARITY AND IS INCURABLE AND, THEREFORE, THE REQUIREMENT OF NOTICE UNDER SECTION 143(2) OF THE ACT CANNOT BE DISPENSED WITH. 15. SIMILAR VIEW WAS HELD BY A DIVISION BENCH OF T HIS COURT IN COMMISSIONER OF INCOME TAX II LUCKNOW VS. SALARPUR COLD STORAGE (P) LTD. , (2014) 50 TAXMAN.COM.105 = 2014-TIOL- ITA NO.416/BANG/2015 PAGE 8 OF 13 1522-HC-ALL-IT, COMMISSIONER OF INCOME-TAX, FAIZABA D VS. ADARSH TRAVEL BUS SERVICE, (2012) 17 TAXMANN. CO 14 0(ALL.) AS WELL AS IN COMMISSIONER OF INCOME-TAX VS. MUKESH KUMAR AGRAWAL, 345 ITR 29 AND COMMISSIONER OF INCOME-TAX VS. RAJEEV SHARMA, (2010) 192 TAXMAN 197 (ALL.) = 2010-TIOL-381- HC-ALL-IT. 16. IN THE LIGHT OF THE AFORESAID DECISIONS, IT IS APPARENTLY CLEAR THAT THE JURISDICTION OF THE ASSESSING OFFICER TO M AKE AN ASSESSMENT UNDER SECTION 143(3) (II) OF THE ACT IS BASED ON THE ISSUANCE OF A NOTICE UNDER SECTION 143(2)(II) OF TH E ACT. THE PROVISO TO CLAUSE (II) OF SUB SECTION (2) OF SECTIO N 143 CLEARLY STIPULATES THAT A NOTICE MUST BE SERVED ON THE ASSE SSEE. 17. IN THE LIGHT OF THE AFORESAID, WE HAVE TO SEE AS TO WHETHER THE WORD 'NOTICE' SPECIFIED IN PARAGRAPH 16 OF THE SUPPLEMENTARY AFFIDAVIT IS IN FACT A NOTICE ISSUED UNDER SECTION 143 (2) OF THE ACT. THE LEARNED COUNSEL WAS DIRECTED TO SHOW THE S AID NOTICE FROM THE ORIGINAL ASSESSMENT RECORDS. THE RELEVANT NOTICE WAS SHOWN TO THE COURT. THE NOTICE WHICH HAS BEEN MENTI ONED IN PARAGRAPH 16 OF THE SUPPLEMENTARY AFFIDAVIT IS A NO TICE DATED 10.12.2013, WHICH ACCOMPANIES THE QUESTIONNAIRE DAT ED 10.12.2013. THE LAST PARAGRAPH OF THE QUESTIONNAIRE INDICATES THAT THE ACCOMPANYING NOTICE IS BEING ISSUED UNDER SECTI ON 142(1) OF THE ACT. FROM THE SAID NOTICE, IT IS CLEAR THAT THE NOTICE WHICH THE APPELLANT IS ASSERTING TO BE A NOTICE UNDER SECTION 143(2) IS PATENTLY ERRONEOUS AND MISCHIEVOUS. IT IS NOTHING E LSE BUT A NOTICE UNDER SECTION 142(1) OF THE ACT. THE RECORD DOES NO T INDICATE ANY OTHER NOTICE BEING ISSUED, WHICH COULD PURPORT TO B E ONE UNDER SECTION 143(2) OF THE ACT. WE ARE, THEREFORE, OF TH E OPINION THAT FROM A PERUSAL OF THE ORIGINAL ASSESSMENT RECORD, W E FIND THAT NO NOTICE UNDER SECTION 143(2) OF THE ACT WAS EVER ISS UED. 18. THE SUBMISSION OF THE LEARNED COUNSEL FOR THE APPELLANT THAT THE ASSESSEE HAD PARTICIPATED IN THE REASSESSM ENT PROCEEDINGS AND, THEREFORE, CANNOT ASSERT THAT THE NOTICE WAS N OT SERVED IN VIEW OF SECTION 292BB IS PATENTLY ERRONEOUS. FOR FA CILITY, SECTION 292BB OF THE ACT IS EXTRACTED HEREUNDER: '292BB. WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDING OR COOPERATED IN ANY INQUIRY RELATING TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UNDER ANY PROVISION OF THIS ACT, WHICH IS REQ UIRED TO BE SERVED UPON HIM, HAS BEEN DULY SERVED UPON HIM I N ITA NO.416/BANG/2015 PAGE 9 OF 13 TIME IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT A ND SUCH ASSESSEE SHALL BE PRECLUDED FROM TAKING ANY OBJECTION IN ANY PROCEEDING OR INQUIRY UNDER THIS AC T THAT THE NOTICE WAS- (A) NOT SERVED UPON HIM; OR (B) NOT SERVED UPON HIM IN TIME; OR (C) SERVED UPON HIM IN AN IMPROPER MANNER: PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHA LL APPLY WHERE THE ASSESSEE HAS RAISED SUCH OBJECTION BEFORE THE COMPLETION OF SUCH ASSESSMENT OR REASSESSMENT 19. SECTION 292BB OF THE ACT WAS INSERTED BY THE F INANCE ACT, 2008 WITH EFFECT FROM 1 APRIL 2008. SECTION 292 BB OF THE ACT PROVIDES A DEEMING FICTION. THE DEEMING FICTION IS TO THE EFFECT THAT ONCE THE ASSESSEE HAS APPEARED IN ANY PROCEEDI NG OR COOPERATED IN ANY ENQUIRY RELATING TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UN DER THE PROVISIONS OF THE ACT, WHICH IS REQUIRED TO BE SERV ED ON THE ASSESSEE, HAS BEEN DULY SERVED UPON HIM IN TIME IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. THE ASSESSEE IS PRE CLUDED FROM TAKING ANY OBJECTION IN ANY PROCEEDING OR ENQUIRY T HAT THE NOTICE WAS (I) NOT SERVED UPON HIM; OR (II) NOT SERVED UPO N HIM IN TIME; OR (III) SERVED UPON HIM IN AN IMPROPER MANNER. IN OTHER WORDS, ONCE THE DEEMING FICTION COMES INTO OPERATION, THE ASSESSEE IS PRECLUDED FROM RAISING A CHALLENGE ABOUT THE SERVIC E OF A NOTICE, SERVICE WITHIN TIME OR SERVICE IN AN IMPROPER MANNE R. THE PROVISO TO SECTION 292 BB OF THE ACT, HOWEVER, CARV ES OUT AN EXCEPTION TO THE EFFECT THAT THE SECTION SHALL NOT APPLY WHERE THE ASSESSEE HAS RAISED AN OBJECTION BEFORE THE COMPLET ION OF THE ASSESSMENT OR REASSESSMENT. SECTION 292 BB OF THE A CT CANNOT OBVIATE THE REQUIREMENT OF COMPLYING WITH A JURISDI CTIONAL CONDITION. FOR THE ASSESSING OFFICER TO MAKE AN ORD ER OF ASSESSMENT UNDER SECTION 143 (3) OF THE ACT, IT IS NECESSARY TO ISSUE A NOTICE UNDER SECTION 143 (2) OF THE ACT AND IN THE ABSENCE OF A NOTICE UNDER SECTION 143(2) OF THE ACT, THE AS SUMPTION OF JURISDICTION ITSELF WOULD BE INVALID. 20. IN VIEW OF THE AFORESAID, WE ARE OF THE OPINIO N THAT SECTION 292BB, WHICH WAS INSERTED WITH EFFECT FROM 01.04.30 08 IS NOT APPLICABLE TO THE PROCEEDINGS FOR THE ASSESSMENT YE AR 2006-07, ITA NO.416/BANG/2015 PAGE 10 OF 13 2007-08, 2008-09. WE ARE ALSO OF THE OPINION THAT S ECTION 292BB OF THE ACT IS NOT APPLICABLE ALSO FOR THE ASSESSMEN T YEARS 2009- 10, 2010-11 AND 2011-12. THE DEEMING FICTION THAT O NCE AN ASSESSEE HAS APPEARED IN ANY PROCEEDING OR PARTICIP ATED IN ANY QUERY RELATING TO ASSESSMENT OR REASSESSMENT, IT SH ALL BE DEEMED THAT THE NOTICE UNDER THE PROVISIONS OF THE ACT, WH ICH IS REQUIRED TO BE SERVED HAS BEEN DULY SERVED UPON HIM IN ACCOR DANCE WITH THE PROVISIONS OF THE ACT AND, THEREFORE, IS PRECLU DED FROM CONTENDING THAT THE NOTICE WAS NOT SERVED UPON HIM OR WAS NOT SERVED UPON HIM IN TIME OR WAS NOT SERVED UPON HIM IN A PROPER MANNER, IN OUR VIEW, IS NOT APPLICABLE FOR THE FOLL OWING REASON. 21. THERE IS A CLEAR DISTINCTION BETWEEN 'ISSUE OF NOTICE' AND 'SERVICE OF NOTICE'. IN R.K.UPADHYAYA VS. SHANABHAI P. PATEL, 166 ITR 163, THE CONTROVERSY WAS THAT A NOTICE UNDER SECTION 14 8 WAS ISSUED ON 31.03.1970 I.E. THE LAST DATE OF LIMI TATION, WHICH NOTICE WAS SERVED ON THE ASSESSEE ON 03.04.1970, AF TER THE EXPIRY OF LIMITATION. THE HIGH COURT HELD THAT SINCE THE N OTICE WAS SERVED AFTER THE EXPIRY OF THE PERIOD, THE ASSESSME NT ORDER WAS INVALID AND HAD ACCORDINGLY QUASHED THE NOTICE FOR REASSESSMENT ISSUED UNDER SECTION 147 OF THE INCOME TAX ACT, 196 1. THE SUPREME COURT HELD THAT THE SCHEME OF 1961 ACT IN S O FAR AS THE NOTICE FOR REASSESSMENT WAS CONCERNED WAS QUITE DIF FERENT THAN THAT CONTAINED UNDER SECTION 34 OF THE INCOME TAX A CT, 1922. THE SUPREME COURT HELD THAT A CLEAR DISTINCTION HAS BEEN MADE BETWEEN 'ISSUE OF NOTICE' AND 'SERVICE OF NOTICE' U NDER THE ACT. THE SUPREME COURT HELD THAT ONCE A NOTICE IS ISSUED WITHIN THE PERIOD OF LIMITATION, THE INCOME TAX OFFICER GETS T HE JURISDICTION TO PROCEED TO REASSESS AND MAKE THE ASSESSMENT ORDE R. THE MANDATE OF SECTION 148(1) OF THE ACT IS, THAT REASS ESSMENT SHALL NOT BE MADE UNTIL THERE HAS BEEN A SERVICE OF NOTIC E WHICH IS A CONDITION PRECEDENT TO MAKING AN ORDER OF ASSESSMEN T. THE SUPREME COURT FURTHER HELD THAT THE REQUIREMENT OF ISSUE OF NOTICE IS SATISFIED WHEN A NOTICE IS ACTUALLY ISSUE D AND THAT SERVICE UNDER THE ACT, 1961 IS NOT A CONDITION PRECEDENT TO CONFERMENT OF JURISDICTION ON THE INCOME TAX OFFICER TO DEAL WITH THE MATTER BUT IT IS ONLY A CONDITION PRECEDENT TO THE MAKING OF T HE ORDER OF ASSESSMENT. THE SUPREME COURT HELD: 'SECTION 34, CONFERRED JURISDICTION ON THE INCOME-T AX OFFICER TO REOPEN AN ASSESSMENT SUBJECT TO SERVICE OF NOTICE WITHIN THE PRESCRIBED PERIOD. THEREFORE, SER VICE OF NOTICE WITHIN LIMITATION WAS THE FOUNDATION OF JURI SDICTION. ITA NO.416/BANG/2015 PAGE 11 OF 13 THE SAME VIEW HAS BEEN TAKEN BY THIS COURT IN JANNI V. INDU PRASAD BHAT, 72 ITR 595 AS ALSO IN C.I.T. V. R OBERT, 48 ITR 177. THE HIGH COURT IN OUR OPINION WENT WRON G IN RELYING UPON THE RATIO OF 53 ITR 100 IN DISPOSING O F THE CASE IN HAND. THE SCHEME OF THE 1961 ACT SO FAR AS N OTICE FOR REASSESSMENT IS CONCERNED IS QUITE DIFFERENT. W HAT USED TO BE CONTAINED IN SECTION 34 OF THE 1922 ACT H AS BEEN SPREAD OUT INTO THREE SECTIONS, BEING SECTIONS 147, 148 AND 149 IN THE 45 1961 ACT. A CLEAR DISTINCTION H AS BEEN MADE OUT BETWEEN 'ISSUE OF NOTICE' AND 'SERVIC E OF NOTICE' UNDER THE 1961 ACT. SECTION 149 PRESCRIBE TH E PERIOD OF LIMITATION. IT CATEGORICALLY PRESCRIBES T HAT NO NOTICE UNDER SECTION 149 SHALL BE ISSUED AFTER THE PRESCRIBED LIMITATION HAS LAPSED. SECTION 148(1) PR OVIDES FOR SERVICE OF NOTICE AS A CONDITION PRECEDENT TO M AKING THE ORDER OF ASSESSMENT. ONCE A NOTICE IS ISSUED WI THIN THE PERIOD OF LIMITATION, JURISDICTION BECOMES VESTED I N THE INCOME-TAX OFFICER TO PROCEED TO REASSESS. THE MAND ATE OF SECTION 148(1) IS THAT REASSESSMENT SHALL NOT BE MA DE UNTIL THERE HAS BEEN SERVICE. THE REQUIREMENT OF ISSUE OF NOTICE IS SATISFIED WHEN A NOTICE IS ACTUALLY ISSUED. IN T HIS CASE, ADMITTEDLY, THE NOTICE WAS ISSUED WITHIN THE PRESCR IBED PERIOD OF LIMITATION AS MARCH 31, 1970, WAS THE LAS T DAY OF THAT PERIOD. SERVICE UNDER THE NEW ACT IS NOT A COND ITION PRECEDENT TO CONFERMENT OF JURISDICTION IN THE INCO ME-TAX OFFICER TO DEAL WITH THE MATTER BUT IT IS A CONDITI ON PRECEDENT TO MAKING OF THE ORDER OF ASSESSMENT. THE HIGH COURT IN OUR OPINION LOST SIGHT OF THE DISTINCTION AND UNDER A WRONG BASIS FELT BOUND BY THE JUDGMENT IN 5 3 ITR 100. AS THE INCOME-TAX OFFICER HAD ISSUED NOTICE WIT HIN LIMITATION, THE APPEAL IS ALLOWED AND THE ORDER OF THE HIGH COURT IS VACATED. THE INCOME-TAX OFFICER SHALL NOW PROCEED TO COMPLETE THE ASSESSMENT AFTER COMPLYING WITH THE REQUIREMENTS OF LAW. SINCE THERE HAS BEEN NO APPEARANCE ON BEHALF OF THE RESPONDENTS, WE MAKE NO ORDERS FOR COSTS.' 22. FROM THE AFORESAID, IT IS CLEAR THAT THE ESSEN TIAL REQUIREMENT IS 'ISSUANCE OF NOTICE' UNDER SECTION 1 43(2) OF THE ACT. THE DEEMING FICTION UNDER SECTION 292BB OF THE ACT IS WITH REGARD TO 'SERVICE OF NOTICE'. SINCE THE INITIAL RE QUIREMENT OF ISSUANCE OF NOTICE WAS NOT MADE BY THE ASSESSING OF FICER, THE DEEMING FICTION OF SERVICE OF NOTICE UNDER SECTION 292BB OF THE ACT, CONSEQUENTLY, DOES NOT ARISE AND IS NOT APPLIC ABLE. ITA NO.416/BANG/2015 PAGE 12 OF 13 23. IN THE LIGHT OF THE AFORESAID, SINCE THE ASSES SING OFFICER FAILED TO ISSUE NOTICE WITHIN THE SPECIFIED PERIOD UNDER SECTION 143(2) OF THE ACT, THE ASSESSING OFFICER HAD NO JUR ISDICTION TO ASSUME JURISDICTION UNDER SECTION 143(2) OF THE ACT AND THIS DEFECT CANNOT BE CURED BY TAKING RECOURSE TO THE DE EMING FICTION PROVIDED UNDER SECTION 292BB OF THE ACT. CONSEQUENT LY, THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ORDER O F THE ASSESSING OFFICER AS WELL AS THE ORDER OF THE APPELLATE AUTHO RITY. 24. THE CONTENTION THAT ADEQUATE OPPORTUNITY WAS N OT GIVEN TO THE APPELLANT BEFORE THE TRIBUNAL NOW BECOMES REDUN DANT IN VIEW OF THE SPECIFIC FINDING GIVEN BY US ON THE ISSUANCE OF THE NOTICE UNDER SECTION 143(2) OF THE ACT. HOWEVER, WE MUST O BSERVE THAT THE APPELLANT WAS NOT FAIR TO THE COURT IN ALLEGING THAT NO PROPER OPPORTUNITY WAS GIVEN OR THAT THE TRIBUNAL GAVE NO DIRECTIONS TO THE DEPARTMENT TO PRODUCE THE ORIGINAL RECORDS. WE ARE CONSTRAINED TO OBSERVE THAT THERE IS NO AFFIDAVIT O F THE DEPARTMENTAL REPRESENTATIVE WHO HAD APPEARED BEFORE THE TRIBUNAL TO STATE ON OATH THAT THE OBSERVATIONS MAD E BY THE TRIBUNAL WITH REGARD TO THE PRODUCTION OF THE ORIGI NAL RECORDS AT THE STAGE OF HEARING OF THE STAY APPLICATION AND TH EREAFTER WAS PERVERSE. IN THE ABSENCE OF ANY AFFIDAVIT BEING FIL ED, IT WAS NOT OPEN FOR THE DEPARTMENT TO ALLEGE THAT NO PROPER OP PORTUNITY WAS GIVEN. FURTHER, WE FIND THAT THE ASSERTION MADE IN PARAGRAPH 16 OF THE SUPPLEMENTARY AFFIDAVIT THAT A NOTICE WAS ISSUE D IS PATENTLY ERRONEOUS AND, AN ATTEMPT WAS MADE BY THE DEPARTMEN T TO DECEIVE THE COURT. THE NOTICE ASSERTED IN PARA 16 O F THE SUPPLEMENTARY AFFIDAVIT IS NOT A NOTICE UNDER SECTI ON 143(2) OF THE ACT BUT IS ONLY A NOTICE ISSUED UNDER SECTION 1 42(1) OF THE ACT. SUCH TACTICS ADOPTED BY THE DEPARTMENT IS TOTA LLY DEPLORABLE. 7. THE TRIBUNAL HAS ALSO TAKEN A VIEW IN A NUMBER O F CASES THAT IF NOTICE U/S. 143(2) IS NOT SERVED WITHIN THE PRESCRI BED PERIOD, THE ASSESSMENT FRAMED CONSEQUENT THERETO IS BAD IN LAW AND DESERVES TO BE QUASHED, FOLLOWING THE VARIOUS JUDGMENTS OF DIFFERE NT HIGH COURTS. WE THEREFORE, FOLLOWING THE JUDGMENT OF THE HONBLE AL LAHABAD HIGH COURT, HOLD ITA NO.416/BANG/2015 PAGE 13 OF 13 THAT THE NOTICE U/S. 143(2) WAS NOT SERVED WITHIN T HE PRESCRIBED PERIOD, THEREFORE ASSESSMENT FRAMED CONSEQUENT THERETO IS Q UASHED. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(APPEALS) AS WELL AS THE ASSESSMENT ORDER. SINCE WE HAVE QUASHED THE ASSESSMENT ORDER, WE FIND NO JUSTIFICATION TO DEAL ON THE MERITS OF THE CASE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF AUGUST, 2016. SD/- SD/- ( A.K. GARODIA ) (SUNIL KUMAR YA DAV ) ACCOUNTANT MEMBER JUDIC IAL MEMBER BANGALORE, DATED, THE 5 TH AUGUST, 2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.