Shrikant Gopaldas Khatod, Jalgaon V. Asstt.CIT,Cir.1, Jalgaon, Jalgaon

ITA 442/PUN/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2470 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-03-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 01-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Sale consideration of property below Jantri Value; Business income; Assessment record
• Section: 143(3); 50C; 142(1); 139

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.442/PN/2012 ASSESSMENT YEAR : 2005-06 SHRIKANT GOPALDAS KHATOD, 134, SHUBASH CHOWK, JALGAON 425 001. PAN : ANDPK2325A . APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 1, JALGAON. . RESPONDENT / APPELLANT BY : SMT. DEEPA KHARE / RESPONDENT BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 30.03.2016 / DATE OF PRONOUNCEMENT: 31.03.2016 & / ORDER PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL PREFERRED BY THE ASSESSEE IS A GAINST THE ORDER OF CIT(A)-II, NASHIK FOR ASSESSMENT YEAR 2005-06 DATED 09.01.2012 PASSED UNDER SECTION 143(3) R.W.S. 148 OF THE INCOME-TAX ACT, 19 61 (IN SHORT THE ACT). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL :- 1] ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCE S OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ASSESSMENT ORDER PASSED U/S.143(3) RWS. 148 DT.29-12-2009, EVEN THOUGH, LEARNED A.O. FAILED TO ISSUE AND SERVE THE NOTICE U/S.143(2),WHICH IS CONDITION PRECEDENT FOR PASSING THE ORDER U/S.143(3) RWS.148 OF THE I T ACT, ON THE GROUND THAT APPELLANT DID NOT R AISED THIS GROUND BEFORE A.O. 2] ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCE S OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ASSESSMENT ORDER PASSED U/S.143(3) R W S. 148 DT.29-12-2009, INVOKING PROVISION OF SECTION 292 BB OF THE I T ACT, WITHOUT APPRECIATING THE FACTS, AS TO HOW AND WHEN THE APPE LLANT TOOK THE OBJECTIONS, WHEN NO SUCH NOTICE U/S.143(2) WAS RECEIVED BY THE APPEL LANT. 2 ITA NO.442/PN/2012 3] ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCE S OF THE CASE, AND WITHOUT CONSIDERING AND APPRECIATING ALL SUBMISSIONS SUBMIT TED FROM TIME TO TIME BY THE APPELLANT, THE LEARNED CIT(A) HAS ERRED HOLDING THA T IMPUGNED PROFIT ON SALE OF LAND AT MOHADI IS LIABLE TO TAX UNDER THE HEAD CAPITAL G AINS INVOKING THE PROVISIONS OF SECTION 50C OF THE I T ACT, INSTEAD OF BUSINESS INC OME/LOSS AS SHOWN BY THE APPELLANT. THE FINDING OF THE CIT(A) MAY PLEASE BE DELETED AND SAID PROFIT/LOSS BE HELD AS A BUSINESS INCOME AS SHOWN BY THE APPELLANT . 4] THE APPELLANT CRAVES THE PERMISSION TO ADD, AME ND, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF APPEAL, IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 3. ONE OF THE GROUNDS TAKEN BY THE ASSESSEE IS THAT NOTICE UNDER SECTION 143(2) OF THE ACT HAS NOT BEEN ISSUED TO THE ASSESS EE WHILE FRAMING THE ASSESSMENT ORDER UNDER SECTION 143(3) R.W.S. 148 OF THE ACT DATED 29.12.2009. SINCE THE ISSUE RAISED BY THE ASSESSEE CONCERNS THE VALIDITY OF RE-ASSESSMENT ORDER ITSELF WHICH IS A PRELIMINARILY ISSUE, WE CON SIDER IT EXPEDIENT TO ADJUDICATE THE AFORESAID PRELIMINARILY ISSUE FIRST. 4. THE RELEVANT FACTS GERMANE TO THE ISSUE ARE THAT THE REGULAR ASSESSMENT UNDER SECTION 143(3) FOR THE ASSESSMENT YEAR 2005-0 6 WAS FINALIZED ON 28.12.2007. SUBSEQUENTLY, A NOTICE UNDER SECTION 1 48 OF THE ACT DATED 18.03.2009 WAS DULY ISSUED TO THE ASSESSEE TO RE-OP EN THE COMPLETED ASSESSMENT. PURSUANT THERETO, THE ASSESSEE FILED R ETURN OF INCOME ON 07.12.2009 DECLARING TOTAL INCOME OF RS.81,420/-. AS A SEQUEL TO THE ISSUE OF NOTICE UNDER SECTION 148, THE ASSESSING OFFICER COM PLETED THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 148 OF THE ACT, WHICH I S THE SUBJECT-MATTER OF THE PRESENT APPEAL BEFORE US. 5. SMT. DEEPA KHARE, THE LD. AUTHORIZED REPRESENTAT IVE FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE AVERMENTS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT NOTICE UNDER SECTION 143(2) W AS ISSUED IS INCORRECT. NO SUCH NOTICE WAS EVER ISSUED AND SERVED ON THE ASSES SEE AND THEREFORE THE RE- ASSESSMENT ORDER ITSELF IS BAD IN LAW AND VOID AB INITIO . SHE ADVERTED OUR ATTENTION TO THE COPY OF THE ORDER-SHEET ENTRY ANNE XED AT PAGE NO.18 OF THE PAPER BOOK AND SUBMITTED THAT FROM THE PERUSAL OF T HE ORDER-SHEET IT IS CLEAR THAT THERE IS NO REFERENCE TO ISSUANCE OF NOTICE UN DER SECTION 143(2) ON THE 3 ITA NO.442/PN/2012 ASSESSEE. SHE SUBMITTED THAT ISSUE OF NOTICE UNDER SECTION 143(2) IS MANDATORY AND CANNOT BE BYPASSED. THEREFORE, NON-COMPLIANCE OF SUCH MANDATORY PROVISION ENABLING JURISDICTION FOR THE RE-ASSESSME NT IS FATAL AND THEREFORE THE RE-ASSESSMENT ORDER REQUIRES TO BE QUASHED. 6. SHRI HITENDRA NINAWE, THE LD. DEPARTMENTAL REPRE SENTATIVE FOR THE REVENUE, ON THE OTHER HAND, PRODUCED THE ASSESSMENT RECORDS AS REQUIRED BY THE BENCH AND FAIRLY ADMITTED THAT THE RECORDS DO N OT INDICATE ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT. HE ALSO FI LED COMMUNICATION DATED 22.09.2014 FROM THE ADDL. COMMISSIONER OF INCOME TA X, RANGE 1, JALGAON ADDRESSED TO THE DR, ITAT, PUNE WHEREIN THE FACT NO N-ISSUANCE OF NOTICE UNDER SECTION 143(2) HAS BEEN ADMITTED. 7. ON PERUSAL OF THE AFORESAID NOTED FACTS, IT IS C LEAR THAT PURSUANT TO THE ISSUANCE OF NOTICE UNDER SECTION 148, THE ASSESSEE DULY FILED RETURN OF INCOME IN COMPLIANCE THEREOF. ONCE THE RETURN HAS BEEN FI LED IN COMPLIANCE OF NOTICE UNDER SECTION 148, THE ASSESSING OFFICER IS UNDER L EGAL OBLIGATION TO ISSUE NOTICE UNDER SECTION 143(2) OF THE ACT TO ASSUME JU RISDICTION FOR COMPLETION OF THE RE-ASSESSMENT PROCEEDINGS IN CONSEQUENCE OF SUC H NOTICE UNDER SECTION 148 OF THE ACT. WE FIND THAT THE PRESENT ISSUE IS SQUA RELY COVERED IN FAVOUR OF THE ASSESSEE BY THE RECENT DECISION OF THE PUNE BENCH O F THE TRIBUNAL IN THE CASE OF KRISHI UTPANNA BAZAR SAMITTE VS. ITO IN ITA NOS.338 & 339/PN/2014, ORDER DATED 29.02.2016 WHERE THE CORUM OF THE BENCH IS TH E SAME. THE OPERATIVE PORTION OF THE AFORESAID DECISION CONCERNING THE IS SUE IS EXTRACTED HEREUNDER :- 11. WE HAVE GIVEN OUR CAREFUL CONSIDERATIONS TO TH E RIVAL SUBMISSIONS AND PERUSED VARIOUS CASE LAWS CITED. TO BEGIN WITH, TH E SHORT QUESTION BEFORE US IS WHETHER NON-ISSUANCE OF NOTICE UNDER SECTION 143(2) WILL INVALIDATE THE RE- ASSESSMENT ORDER FRAMED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT IN THE FACTS OF THE CASE SET OUT OR NOT. WE OBSERVE THAT THE RETURN OF INCOME FILED DATED 29.05.2009 IS NOT A RETURN UNDER SECTION 139(1) OR UNDER SECTION 139(4) OF THE ACT. HOWEVER, WE SIMULTANEOUSLY OBSERVE THAT THE ASSESSEE HAS FILED A LETTER DATED 01.04.2011 WHEREBY IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT RETURN FILED EARLIER ON 29.05.2009 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTIC E UNDER SECTION 148 DATED 22.03.2011. BY VIRTUE OF THIS AFORESAID COMMUNICAT ION, THE EARLIER RETURN STOOD 4 ITA NO.442/PN/2012 VALIDATED AND IS DEEMED TO BE RETURN FILED UNDER SE CTION 139 OF THE ACT AS SPECIFIED IN SECTION 148(1) OF THE ACT. 12. ON A COMBINED READING OF SECTION 143(2) TOGETHE R WITH SECTION 148(1) OF THE ACT, WE OBSERVE THAT WHEN THE ASSESSING OFFICER SER VES NOTICE UNDER SECTION 148 OF THE ACT, THE ASSESSEE IS REQUIRED TO FILE RETURN IN RESPONSE THERETO. THE PROVISIONS OF SECTION 148 SEEKS TO TREAT THE RETURN FILED IN RESP ONSE TO NOTICE SERVED UNDER SECTION 148 AS RETURN FILED UNDER SECTION 139 OF THE ACT. T HIS IS FOLLOWED BY NOTICE UNDER THE PROVISIONS OF SECTION 143(2) AND SECTION 142(1) TO ENABLE THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT PURSUANT THERETO. WE FIND THAT A VALID RETURN IS DEEMED TO HAVE BEEN FILED IN THE PRESENT CASE IN RESPONSE TO IMPUGNED NOTICE UNDER SECTION 148 OWING TO AN EXPRESS LETTER DATED 01.04.2011 ADDRESS ED TO THE ASSESSING OFFICER AS NOTED ABOVE. IN OTHER WORDS, A VALID RETURN IS DEE MED TO HAVE BEEN FILED BY THE ASSESSEE IN THE PRESENT CASE UNDER SECTION 139 OF T HE ACT IN COMPLIANCE OF NOTICE UNDER SECTION 148 OF THE ACT. AS NOTED ABOVE, RETU RN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 IS DEEMED TO RETURN FILED UNDER S ECTION 139 AND ALL THE PROVISIONS OF THE ACT SHALL APPLY ACCORDINGLY. AS A COROLLARY, AS PER THE MANDATE OF SECTION 143(2) OF THE ACT, THE NOTICE FOR ASSESSMENT HAS TO BE NECESSARILY ISSUED IN SO FAR AS THE RETURN DEEMED TO HAVE BEEN FILED UNDER SECTION 139 OF THE ACT. 13. A PLAIN READING OF SECTION 143(2) SUGGESTS THAT WHERE A RETURN HAS BEEN FURNISHED UNDER SECTION 139 OR IN RESPONSE TO NOTIC E UNDER SECTION 142(1), THE PROVISIONS OF SECTION 143(2) WILL COME INTO PLAY. IN VIEW OF THE REGULARIZATION OF THE EARLIER RETURN FILED AS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 WHICH IN TURN DEEMS SUCH RETURN AS RETURN FILED UNDER SECTIO N 139 OF THE ACT, THE REQUIREMENT OF ISSUANCE OF NOTICE UNDER SECTION 143(2) CANNOT B E DISPENSED WITH. WE FIND THAT THE AFORESAID CONTENTION IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF HOTEL BLUE MOON (SUPRA) AND OT HER JUDICIAL DECISION IN THE CASE OF GENO PHARMACEUTICALS LTD. (SUPRA). THE REVENUE, WHILE ADMITTING THE FACT OF NON-ISSUANCE OF NOTICE UNDER SECTION 143(2) IN THE PRESENT CASE, HAS CONTENDED IN THE ALTERNATIVE THAT SECTION 292BB BAILS OUT THE DEPART MENT FOR SUCH ALLEGED DEFICIENCY IF ANY. THE REVENUE HAS SOUGHT TO PLACE RELIANCE O N PROVISIONS OF SECTION 292BB OF THE ACT WHEREBY, ACCORDING TO THE REVENUE, NON-ISSU ANCE OF NOTICE UNDER SECTION 143(2) WILL NOT INVALIDATE THE RE-ASSESSMENT PROCEE DINGS AS THE ASSESSEE HAS FULLY COOPERATED IN THE PROCEEDINGS AND HAS NOT RAISED AN Y OBJECTION IN THIS REGARD IN THE COURSE OF THE RE-ASSESSMENT PROCEEDINGS. WE FIND T HAT THIS ASPECT OF THE MATTER IS ALSO SQUARELY COVERED AGAINST THE REVENUE BY THE DE CISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SHRI JAI SHIV SHANKAR TRA DERS PVT. LTD. (SUPRA). IN THE AFORESAID DECISION, THE HONBLE DELHI HIGH COURT AF TER RELYING ON THE SEVERAL JUDICIAL PRECEDENTS HAS HELD THAT THE FAILURE OF TH E ASSESSING OFFICER IN THE COURSE OF RE-ASSESSMENT PROCEEDINGS TO ISSUE NOTICE UNDER SEC TION 143(2) PRIOR TO FINALIZATION OF RE-ASSESSMENT ORDER CANNOT BE CONDONED BY RESORT ING TO SECTION 292BB OF THE ACT. IN THE AFORESAID DECISION, IT HAS BEEN OBSERVED THA T ISSUE OF NOTICE UNDER SECTION 143(2) IS MANDATORY REQUIREMENT AND IS NOT A MERE P ROCEDURAL IRREGULARITY AND THEREFORE THE SAME IS NOT CURABLE DEFECT UNDER SECT ION 292BB OF THE ACT. IN VIEW OF THE JUDICIAL PRECEDENT AVAILABLE ON THE ISSUE, WE F IND NO MERIT IN THE PLEA OF THE REVENUE. 14. IN THE LIGHT OF AFORESAID DISCUSSION, WE ARE IN CLINED TO AGREE WITH THE PLEA OF THE ASSESSEE THAT IN THE ABSENCE OF NOTICE UNDER SE CTION 143(2) PURSUANT TO NOTICE UNDER SECTION 148, THE RE-ASSESSMENT ORDER PASSED B Y THE ASSESSING OFFICER IS 5 ITA NO.442/PN/2012 RENDERED BAD IN LAW AND THEREFORE REQUIRES TO BE QU ASHED. AT THIS JUNCTURE, WE ALSO OBSERVE THAT THE DECISION RELIED UPON BY THE LD. DE PARTMENTAL REPRESENTATIVE FOR THE REVENUE IN THE CASE OF CHAWARA EDUCATIONAL TRUST (S UPRA) IS TOTALLY DISTINGUISHABLE ON FACTS. THE AFORESAID ITAT DECISION WAS RENDERED IN ITS PECULIAR FACTS. IN THAT CASE, THE RETURN WAS NOT FILED AT ALL AND NO VALID RETURN WAS EXISTING UNDER SECTION 139(1) OR UNDER SECTION 139(4) OR IN RESPONSE TO NO TICE UNDER SECTION 148 OF THE ACT AND THEREFORE IT WAS HELD THAT SECTION 143(2) DOES NOT GET TRIGGERED IN THE CIRCUMSTANCES AT ALL. UNLIKE THE AFORESAID CASE, I T IS APPARENT THAT A VALID RETURN IS DEEMED TO HAVE COME INTO EXISTENCE UNDER SECTION 13 9 OF THE ACT IN THE PRESENT CASE IN VIEW OF THE SPECIFIC REQUEST OF THE ASSESSEE TO CONSIDER THE RETURN FILED EARLIER AS RETURN IN RESPONSE TO NOTICE UNDER SECTION 148 OF T HE ACT. THEREFORE, THE AFORESAID DECISION OF THE PUNE BENCH OF THE TRIBUNAL (SUPRA) IS OF NO ASSISTANCE TO THE REVENUE. SINCE WE HAVE HELD THAT THE RE-ASSESSMENT ORDER IS BAD IN LAW AND IS THEREFORE A NULLITY, THE OTHER GROUNDS CONCERNING T HE MERITS EMANATING FROM THE AFORESAID RE-ASSESSMENT ORDER BECOMES INFRUCTUOUS A ND DOES NOT CALL FOR ANY ADJUDICATION. 8. THE RATIO IN THE AFORESAID DECISION WOULD APPLY MUTATIS MUTANDIS TO THE FACT SITUATION EXISTING IN THE PRESENT APPEAL. WE ARE OF THE VIEW THAT FAILURE TO ISSUE NOTICE UNDER SECTION 143(2) TO THE ASSESSEE H AS RENDERED THE RE- ASSESSMENT PROCEEDINGS VOID AND NON-EST . AS A CONSEQUENCE, THE RE- ASSESSMENT ORDER DATED 29.12.2009 WHICH IS SUBJECT- MATTER OF THE PRESENT APPEAL IS SET-ASIDE AND QUASHED. THUS, FOR THE PAR ITY OF REASONING, WE ALLOW THE APPEAL OF THE ASSESSEE ON THIS GROUND. 9. ONCE, IT IS DETERMINED THAT THE RE-ASSESSMENT OR DER IS NOT MAINTAINABLE IN LAW OWING TO INHERENT JURISDICTIONAL INFIRMITY, OTH ER GROUNDS RAISED BY THE ASSESSEE ARE RENDERED INFRUCTUOUS AND DOES NOT REQU IRE ANY ADJUDICATION. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON THIS 31 ST DAY OF MARCH, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 31 ST MARCH, 2016. 6 ITA NO.442/PN/2012 & ' ()* +*( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, NASHIK; 4) THE CIT-II, NASHIK; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. &, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE