UKT Software Technologies Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 5294/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0396 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2006-2007
• Appeal Filed On: 26-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRENDRA KUMAR
• Keywords: Reopening of assessment; Procedural lapse; Assessment record
• Section: 10B; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : H : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.5293 & 5294/DEL/2010 ASSESSMENT YEARS : 2005-06 & 2006-07 UKT SOFTWARE TECHNOLOGIES PVT. LTD., AALIANZ HOUSE, II FLOOR, 273, CAPT. GAUR MARG, SRINIWAS PURI, NEW DELHI 110 065. PAN : AABCN7897E VS. INCOME TAX OFFICER, WARD 18 (1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, CA REVENUE BY : SHRI AMRENDRA KUMAR, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER BOTH THESE APPEALS ARE FILED BY THE ASSESSEE. THEY ARE DIRECTED AGAINST THE CONSOLIDATED ORDER PASSED BY THE CIT (A) DA TED 29 TH OCTOBER, 2010 FOR ASSESSMENT YEARS 2005-06 AND 2006-07. GROUNDS OF APPEAL IN BOTH THE APPEALS READ AS UNDER:- ITA NO.5293/DEL/2010 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDE R PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN UPHOLDI NG THE VALIDITY OF THE REOPENING OF ASSESSMENT U/S 147 OF THE ACT. ITA NO.5293 & 5294/DEL/2010 2 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTIN G THE CONTENTION OF THE APPELLANT THAT THE REASONS RECORDED FOR REOPENING ARE BAD IN LAW & AS SUCH THE REASSESSMENT D ONE IN CONSEQUENCE TO THAT NEEDS TO BE QUASHED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTIN G THE CONTENTION OF THE APPELLANT THAT THE ASSESSMENT ORDER IS BAD IN LAW & IS LIABLE TO BE QUASHED AS THE SAME HAS BEEN MADE WITHOUT FIRST DISPOSING OF THE OBJECTIONS RAISED BY THE APPELLANT AGAINST THE REOPENING. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN UPHOLDI NG THE REASSESSMENT FRAMED UNDER SECTION 143 (3) DESPITE THE FACT THAT NO NOTICE UNDER SECTION 143 (2) HAS BEEN ISSUE D, A FACT ADMITTED BY THE A.O. IN REMAND REPORT. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRM ING THE ADDITION OF RS.32,85,500/- ON ACCOUNT OF TRAINING & DEVELOPMENT EXPENSES. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTIN G THE CONTENTION OF THE APPELLANT THAT NO RELIANCE CAN BE PLACE D ON THE STATEMENT OF SH. S.K. GUPTA RECORDED AT THE BACK OF THE ASSESSEE WITHOUT PROVIDING CROSS EXAMINATION. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTIN G THE CONTENTION OF THE APPELLANT THAT THE A.O. HAS MISINTERPRETED THE STATEMENT OF SH. S.K. GUPTA & HAS WRONGLY USED THE SAME AGAINST THE ASSESSEE, AS THE APPELLANT HAS NOT BEEN NAMED IN THE SAID STATEMENT & THERE IS NO ALLEGATION AGAINST IT COMING OUT OF THE SAID STATEMENT. 9. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN ARBITRAR ILY REJECTING THE EVIDENCE SUBMITTED IN SUPPORT OF THE EXPENDITURE INCURRED DESPITE THE FACT THAT EVEN IN THE REMAND REPORT A.O. HAS NOT POINTED OUT ANY DEFECT AND HA S NOT GIVEN ANY ADVERSE COMMENT ON THAT. 10. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR A LTER ANY OF THE GROUNDS OF APPEAL. ITA NO.5293 & 5294/DEL/2010 3 ITA NO.5294/DEL/2010 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDE R PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN UPHOLDI NG THE VALIDITY OF THE REOPENING OF ASSESSMENT U/S 147 OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTIN G THE CONTENTION OF THE APPELLANT THAT THE REASONS RECORDED FOR REOPENING ARE BAD IN LAW & AS SUCH THE REASSESSMENT D ONE IN CONSEQUENCE TO THAT NEEDS TO BE QUASHED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTIN G THE CONTENTION OF THE APPELLANT THAT THE ASSESSMENT ORDER IS BAD IN LAW & IS LIABLE TO BE QUASHED AS THE SAME HAS BEEN MADE WITHOUT FIRST DISPOSING OF THE OBJECTIONS RAISED BY THE APPELLANT AGAINST THE REOPENING. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN UPHOLDI NG THE REASSESSMENT FRAMED UNDER SECTION 143 (3) DESPITE THE FACT THAT NO NOTICE UNDER SECTION 143 (2) HAS BEEN ISSUE D, A FACT ADMITTED BY THE A.O. IN REMAND REPORT. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRM ING THE ADDITION OF RS.30,41,975/- ON ACCOUNT OF TRAINING & DEVELOPMENT EXPENSES. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTIN G THE CONTENTION OF THE APPELLANT THAT NO RELIANCE CAN BE PLACE D ON THE STATEMENT OF SH. S.K. GUPTA RECORDED AT THE BACK OF THE ASSESSEE WITHOUT PROVIDING CROSS EXAMINATION. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTIN G THE CONTENTION OF THE APPELLANT THAT THE A.O. HAS MISINTERPRETED THE STATEMENT OF SH. S.K. GUPTA & HAS WRONGLY USED THE SAME AGAINST THE ASSESSEE, AS THE APPELLANT HAS NOT BEEN NAMED IN THE SAID STATEMENT & THERE IS NO ALLEGATION AGAINST IT COMING OUT OF THE SAID STATEMENT. 9. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN ARBITRAR ILY ITA NO.5293 & 5294/DEL/2010 4 CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN ARBITRAR ILY REJECTING THE EVIDENCE SUBMITTED IN SUPPORT OF THE EXPENDITURE INCURRED DESPITE THE FACT THAT EVEN IN THE REMAND REPORT A.O. HAS NOT POINTED OUT ANY DEFECT AND HA S NOT GIVEN ANY ADVERSE COMMENT ON THAT. 10. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTION OF THE APPELLANT THAT THE APPELLANT BEING ELIGIBLE FOR DEDUCTION U/S 10B THE SAME WAS REQ UIRED TO BE RECOMPUTED ON THE ASSESSED INCOME AND BENEFIT OF THE SAME OUGHT TO HAVE BEEN ALLOWED. 11. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR A LTER ANY OF THE GROUNDS OF APPEAL. 2. AS IT CAN BE SEEN FROM THE GROUNDS OF APPEAL, FOR B OTH THE YEARS ONE COMMON GROUND IS REGARDING CHALLENGING THE VALID ITY OF THE RE- ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER ON THE GROUN D OF NON-ISSUANCE OF NOTICE U/S 143 (2) AND SUCH FACT IS RECO GNIZED BY THE ASSESSING OFFICER IN BOTH THE YEARS IN THE REMAND REPORT SUBMITTED BY HIM TO LEARNED CIT (A) 3. BOTH THE PARTIES WERE HEARD ON THE SHORT ISSUE RELA TING TO NON- ISSUE OF NOTICE U/S 143 (2). 4. LEARNED AR SUBMITTED THAT ONE OF THE GROUNDS ON WH ICH THE ASSESSEE HAD ASSAILED THE VALIDITY OF RE-ASSESSMENT ORDER WAS THAT NO NOTICE U/S 143 (2) WAS ISSUED DURING THE COURSE OF RE-ASSE SSMENT PROCEEDINGS. HE SUBMITTED THAT SUCH GRIEVANCE OF THE ASSESSEE HAS BEEN MENTIONED BY LEARNED CIT (A) AT PAGE 5 OF THE APPELLATE ORDER. HE SUBMITTED THAT IT WAS PLEADED BEFORE HIM THAT NO NOTICE U/S 143 (2) OR FOR THAT MATTER U/S 142 (1) HAS BEEN ISSUED, AS SU CH, THE ASSESSMENT IS LIABLE TO BE QUASHED. HE SUBMITTED THAT LE ARNED CIT (A) HAS NOT RECORDED ANY FINDING UPON THAT ISSUE AND ACCOR DING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ACIT VS. HOTEL BLUE MOON 321 ITR 362 (SC) AND THE DECISION OF HONBLE DE LHI HIGH COURT IN ITA NO.5293 & 5294/DEL/2010 5 THE CASE OF CIT VS. PAWAN GUPTA AND ORS. 318 ITR 322 ( DEL), IF THE ASSESSMENT IS FRAMED WITHOUT ISSUE OF NOTICE U/S 143 (2), T HE SAME IS LIABLE TO BE QUASHED AS THAT IS NOT MERELY PROCEDURAL, BUT, MANDATORY. HE SUBMITTED THAT IN THE REMAND REPORT THE ASSESSING OFF ICER HAS ADMITTED THIS FACT AND FOR THIS PURPOSE HE REFERRED TO THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER TO CIT (A) DAT ED 15 TH SEPTEMBER, 2010 IN RESPECT OF ASSESSMENT YEAR 2005-06 WH EREIN THE ASSESSING OFFICER HAS HIMSELF ADMITTED THAT NOTICE U/S 143 (2) COULD NOT BE ISSUED AND HE DREW OUR ATTENTION TOWARDS THE OBSERVA TIONS OF THE ASSESSING OFFICER IN THE SAID REMAND REPORT, THE COPY OF WHICH IS PLACED AT PAGES 178 TO 185. THE RELEVANT OBSERVATIONS ARE AS UNDER:- GROUND NO.1 : ASSESSMENT ORDER IS IN BAD IN LAW A ND NO NOTICE UNDER SECTION 143 (3) WAS ISSUED: THE PERUSAL OF ASSESSMENT RECORDS SHOWS THAT THE A.O. D ID PROVIDE OPPORTUNITY TO THE ASSESSEE TO PLACE ITS CLAIM IN ITS DEFENCE. THE STATUTORY NOTICE U/S 143 (2) COULD NOT BE ISSUED IN THIS CASE. 5. SIMILARLY, FOR ASSESSMENT YEAR 2006-07, HE INVITED O UR ATTENTION TOWARDS THE FOLLOWING OBSERVATIONS OF THE ASSESSING OFFICE R (COPY OF REMAND REPORT IS FILED AT PAGES 138 TO 142 OF THE PAP ER BOOK):- GROUND NO.1 : ASSESSMENT ORDER IS IN BAD IN LAW A ND NO NOTICE UNDER SECTION 143 (3) WAS ISSUED: THE PERUSAL OF ASSESSMENT RECORDS SHOWS THAT THE A.O. D ID PROVIDE OPPORTUNITY TO THE ASSESSEE TO PLACE ITS CLAIM IN ITS DEFENCE. THE STATUTORY NOTICE U/S 143 (2) COULD NOT BE ISSUED IN THIS CASE. 6. THUS, IT WAS PLEADED BY HIM THAT EITHER THE CASE OF THE ASSESSEE SHOULD BE ACCEPTED ON THE SUBMISSIONS MADE BY THE ASSESSING OFFICER BEFORE THE CIT (A) IN THE REMAND REPORT OR TO DETER MINE THIS FACT THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE CIT ( A) AS THIS ISSUE WILL ITA NO.5293 & 5294/DEL/2010 6 GO TO THE ROOT OF THE MATTER AND IF NO NOTICE HAS BE EN ISSUED OR SERVED ON THE ASSESSEE U/S 143 (2), THEN, THE RE-ASSESSMENT ORDER P ASSED BY THE ASSESSING OFFICER WILL BE INVALID. 7. ON THE OTHER HAND, LEARNED DR SUBMITTED THAT FOR VERIFICATION OF THE FACT THAT WHETHER OR NOT NOTICE U/S 143 (2) WAS I SSUED DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS THE MATTER MAY BE REST ORED BACK TO THE FILE OF THE CIT (A) TO RECORD A FINDING IN THIS REGARD AND, THEN, THE MATTER CAN BE DECIDED. 8. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. THE LA W RELATING TO VALIDITY OF THE ASSESSMENT PROCEEDINGS IN ABSENCE OF ISSUAN CE OF NOTICE U/S 143(2), IN A CASE WHERE THE ASSESSING OFFICER PROCEED ED TO FRAME THE ASSESSMENT IN PURSUANCE OF A RETURN IS WELL ESTABLISHED . IF THE ASSESSMENT IS FRAMED U/S 143 (3), EITHER READ WITH SECTIO N 158 BC OR READ WITH SECTION 147 OF THE ACT, THEN, IT IS MANDAT ORY FOR HIM TO ISSUE NOTICE U/S 143 (2). THE ISSUANCE AND SERVICE OF NOTICE U/S 143 (2) IS MANDATORY AND NOT PROCEDURAL. EARLIER, THERE HAD B EEN A DOUBT THAT WHETHER ISSUANCE OF SERVICE OF NOTICE U/S 143 (2) IS PRO CEDURAL OR MANDATORY, BUT BY THE PRONOUNCEMENT OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PAWAN GUPTA (SUPRA), IT HAS BECOME CLEAR THAT IN CASES WHERE THE ASSESSING OFFICER PROCEEDS TO FRAME ASSESSMENT U/S 143 (3), THEN, THERE IS NO OPTION TO THE ASSESSING OFFICER, EXCEPT TO ISSUE AND SERVE NOTICE UPON T HE ASSESSEE AS PER SECTION 143 (2) AND SUCH ISSUANCE OF NOTICE IS NO T MERE PROCEDURAL, BUT MANDATORY AND IT IS CLEAR FROM THE F OLLOWING OBSERVATIONS OF THEIR LORDSHIPS FROM THE SAID DECISION:- WE ARE OF THE VIEW THAT S.143(2) IS A MANDATORY PR OVISION WE ARE OF THE VIEW THAT S.143(2) IS A MANDATORY PR OVISION WE ARE OF THE VIEW THAT S.143(2) IS A MANDATORY PR OVISION WE ARE OF THE VIEW THAT S.143(2) IS A MANDATORY PR OVISION WHETHER WE LOOK AT IT FROM THE WHETHER WE LOOK AT IT FROM THE WHETHER WE LOOK AT IT FROM THE WHETHER WE LOOK AT IT FROM THE STANDPOINT OF A REGU LAR ASSESSMENT STANDPOINT OF A REGULAR ASSESSMENT STANDPOINT OF A REGULAR ASSESSMENT STANDPOINT OF A REGULAR ASSESSMENT OR FROM THE STANDPOINT OF AN ASSESSMENT UNDER CHAPT ER XIV OR FROM THE STANDPOINT OF AN ASSESSMENT UNDER CHAPT ER XIV OR FROM THE STANDPOINT OF AN ASSESSMENT UNDER CHAPT ER XIV OR FROM THE STANDPOINT OF AN ASSESSMENT UNDER CHAPT ER XIV- -- -B BB B . IF THE A.O., ON RECEIPT OF THE RETURN OF UNDISCLOSED INCOM E IN THE FORM 2B FROM THE ASSESSEE, IS SATISFIED WITH THE SAME A S REFLECTING THE TRUE STATE OF AFFAIRS THEN IT IS NOT NECESSA RY FOR HIM ITA NO.5293 & 5294/DEL/2010 7 TO EMBARK UPON ANY FURTHER ENQUIRY OR INVESTIGATION. N O FURTHER INFORMATION OR EXPLANATION IS CALLED FOR FROM THE ASSE SSEE. IN SUCH AN EVENTUALITY HE CAN STRAIGHTAWAY PASS THE ORDER U NDER S.158BC (C) OF THE SAID ACT. AND, IF HE DOES SO, THE A SSESSEE CANNOT BE HEARD TO COMPLAIN THAT NO NOTICE UNDER S. 143 (2) WAS SERVED UPON HIM BECAUSE HIS RETURN AS FILED HAS BEE N ACCEPTED. IT IS HERE THAT THE EXPRESSION SO FAR AS MAY BE, APPLY COMES INTO PLAY. SEC. 143 (2) HAS NO APPLICATION IN SUCH A SITUATION AND THEREFORE NO NOTICE UNDER THAT PROVISION WOULD BE NECESSARY. IF THE A.O. MAKES THE ASSESSMENT ORDER IN TERMS OF THE RETURN OF UNDISCLOSED INCOME FILED BY THE ASSESSEE WITHOUT ISSUING A NOTICE UNDER S.143 (2) THEN HE WOULD NOT HAV E COMMITTED ANY MISTAKE. THIS IS A SITUATION WHERE THE S.1 43(2) NOTICE WOULD NOT BE NECESSARY AT ALL. (EMPHASIS OURS) 9. THE AFOREMENTIONED VIEW OF HONBLE JURISDICTIONAL HIGH COURT HAS NOW BEEN CONFIRMED BY THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. HOTEL BLUE MOON (SUPRA) WHEREIN THEIR LORDSHIPS HAV E OBSERVED AS UNDER:- 15. WE MAY NOW REVERT BACK TO S.158BC(B) WHICH IS THE MATERIAL PROVISION WHICH REQUIRES OUR CONSIDERATION. SEC.158BC (B) PROVIDES FOR ENQUIRY AND ASSESSMENT. THE SAID P ROVISION READS THAT THE A.O. SHALL PROCEED TO DETERMINE THE UNDIS CLOSED INCOME OF THE BLOCK PERIOD IN THE MANNER LAID DOWN IN S.158BB AND THE PROVISIONS OF S.142, SUB-SS. (2) AND (3) OF S.143, S.144 AND S.145 SHALL, SO FAR AS MAY BE, APPLY. AN ANAL YSIS OF THIS SUB-SECTION INDICATES THAT, AFTER THE RETURN IS FILED, THIS CLAUSE ENABLES THE A.O. TO COMPLETE THE ASSESSMENT BY FOLLOWIN G THE PROCEDURE LIKE ISSUE OF NOTICE UNDER S.143(2)/142 AN D COMPLETE THE ASSESSMENT UNDER S.143 (3). THIS SECTION DOES NOT PROVIDE FOR ACCEPTING THE RETURN AS PROVIDED UNDER S.143 (1)(A ). THE A.O. HAS TO COMPLETE THE ASSESSMENT UNDER S.143 (3) ONL Y. IN CASE OF DEFAULT IN NOT FILING THE RETURN OR NOT COMPLYIN G WITH THE NOTICE UNDER S.143 (2)/142, THE A.O IS AUTHORIZED TO CO MPLETE THE ASSESSMENT EX PARTE UNDER S.144. CLAUSE (B) OF S. 158BC BY REFERRING TO SS.143 (2) AND 143 (3) WOULD APPEAR TO I MPLY THAT THE PROVISIONS OF S.143 (1) ARE EXCLUDED. BUT S.143 (2) ITSELF BECOMES NECESSARY ONLY WHERE IT BECOMES NECESSARY TO CHECK THE RETURN, SO THAT WHERE BLOCK RETURN CONFORMS TO THE UNDISCLOSED INCOME INFERRED BY THE AUTHORITIES, THERE IS NO REASON, WHY THE AUTHORITIES SHOULD ISSUE NOTICE UNDER S . 143 (2). HOWEVER, IF AN ASSESSMENT IS TO BE COMPLETED UNDER S. 143 (3) R/W.S. 158 BC, NOTICE UNDER S. 143 (2) SHOULD BE ISS UED WITHIN ONE YEAR FROM THE DATE OF FILING OF BLOCK RETURN. OMI SSION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE UNDER S. 143 (2) ITA NO.5293 & 5294/DEL/2010 8 CANNOT BE A PROCEDURAL IRREGULARITY AND THE SAME IS NO T CURABLE AND, THEREFORE, THE REQUIREMENT OF NOTICE UNDER S. 143 (2) CANNOT BE DISPENSED WITH. THE OTHER IMPORTANT FEATURE THAT REQUIRES TO BE NOTICED IS THAT THE S. 158 BC (B) SPECIFI CALLY REFERS TO SOME OF THE PROVISIONS OF THE ACT WHICH REQUIRES TO B E FOLLOWED BY THE A.O. WHILE COMPLETING THE BLOCK ASSESS MENT UNDER CHAPTER XIV-B OF THE ACT. THIS LEGISLATION IS BY INCORPORATION. THIS SECTION EVEN SPEAKS OF SUB-SECTIO NS WHICH ARE TO BE FOLLOWED BY THE A.O. HAD THE INTENTION OF THE LEGISLATURE WAS TO EXCLUDE THE PROVISIONS OF CHAPTER XI V OF THE ACT, THE LEGISLATURE WOULD HAVE OR COULD HAVE INDICATED THAT ALSO. A READING OF THE PROVISION WOULD CLEARLY INDICATE, I N OUR OPINION, IF THE A.O., IF FOR ANY REASON, REPUDIATES THE RETURN F ILED BY THE ASSESSEE IN RESPONSE TO NOTICE UNDER S. 158 BC (A), TH E A.O. MUST NECESSARILY ISSUE NOTICE UNDER S. 143 (2) OF THE ACT WITHIN THE TIME PRESCRIBED IN THE PROVISO TO S. 143 (2) OF THE ACT. 10. IN RESPECT OF RE-ASSESSMENT PROCEEDINGS, THERE HAS BEE N A VARIANCE IN LAW SO AS IT RELATES TO RETURN OF INCOME F ILED BETWEEN THE PERIOD FROM 1 ST OCTOBER, 1991 TO 30 TH SEPTEMBER, 2005 WHEREIN NOTICE U/S 143 (2) COULD BE SERVED UPON THE ASSESSEE BEFORE THE COMPLETION OF RE-ASSESSMENT PROCEEDINGS, BUT, THERE ALSO, THE REQUI REMENT OF SERVICE OF NOTICE U/S 143 (2) WAS NOT WAIVED ALTOGETHE R, BUT, IT WAS ALSO NECESSARY TO SERVE NOTICE ON ASSESSEE U/S 143 (2) BEFORE CO MPLETION OF THE RE-ASSESSMENT PROCEEDINGS. THAT AMENDMENT WAS BROUGH T INTO THE STATUTE BY VIRTUE OF PROVISO TO SECTION 148 INSERT ED BY FINANCE ACT, 2006 AND SUCH POSITION OF LAW HAS BEEN EXPLAINED BY HO NBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. MRS. C. MALATHY (200 7) 294 ITR 532 (MAD). 11. FOR AN AUTHORITY THAT FOR RE-ASSESSMENT PROCEEDINGS ALSO THE REQUIREMENT OF ISSUING NOTICE U/S 143 (2) WITHIN 12 MO NTHS IS MANDATORY, REFERENCE CAN BE MADE TO THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. C. PALANIAPPAN (200 6) 284 ITR 257 (MAD) WHEREIN IT HAS BEEN HELD THAT COMPLETION OF RE -ASSESSMENT WITHOUT ISSUE OF NOTICE U/S 143 (2) WITHIN 12 MONTHS IS INVALID. ITA NO.5293 & 5294/DEL/2010 9 FROM THE ABOVE DISCUSSION OF LAW, IT IS CLEAR THAT EVEN IN RESPECT OF RE- ASSESSMENT PROCEEDINGS IF THE ASSESSING OFFICER, ON RECEIPT OF RETURN IN RESPONSE TO NOTICE U/S 148, REQUIRES FURTHER INFORMATI ON OR EXPLANATION, THEN, HE HAS TO SERVE NOTICE U/S 143 (2) AND ISSUE OF NO TICE U/S 143 (2) IS NOT NECESSARY IN A CASE WHERE HE ACCEPT THE RETURN A S IT HAS BEEN FILED BY THE ASSESSEE. 12. THE FACTS OF THE PRESENT CASE ARE THAT FOR ASSESSMENT YEAR 2005- 06, THE ASSESSEE HAD ORIGINALLY FILED THE RETURN OF INC OME ON 28 TH OCTOBER, 2005. VIDE NOTICE DATED 27 TH MARCH, 2009 ISSUED U/S 148 OF THE INCOME-TAX ACT, THE ASSESSEE WAS REQUIRED TO FURNISH THE RETURN OF INCOME WITHIN 30 DAYS FROM THE DATE OF SERVICE OF SUCH NOTICE. THE COPY OF SUCH NOTICE IS FILED AT PAGE 40 OF THE PAPER BOOK. VIDE REPLY DATED 23 RD APRIL, 2009, THE ASSESSEE HAD SUBMITTED TO THE ASSESSING OFFICER THAT THE RETURN ORIGINALLY FILED IN THIS REG ARD MAY KINDLY BE DEEMED AS RETURN IN COMPLIANCE TO SUCH NOTICE. COPY OF THE SAID REPLY IS FILED AT PAGE 41 OF THE PAPER BOOK. THEREFORE, A RETURN OF INCOME IS DEEMED TO BE FILED ON 23 RD APRIL, 2009 IN RESPONSE TO NOTICE U/S 148 AS PER THAT LETTER AND THE RE-ASSESSMENT ORDER IS FRAMED BY THE ASSESSING OFFICER VIDE ORDER DATED 24 TH DECEMBER, 2009. 13. FOR ASSESSMENT YEAR 2006-07, THE RETURN OF INCOME W AS ORIGINALLY FILED ELECTRONICALLY BY THE ASSESSEE ON 25 TH NOVEMBER, 2006 BY PROVISIONAL ACKNOWLEDGEMENT AND, THEREAFTER, COPY OF THE SAME WAS SUBMITTED ON 27 TH NOVEMBER, 2006. COPY OF THE ACKNOWLEDGEMENT IS FILED AT PAGE 1 OF THE PAPER BOOK. VIDE NOTICE DATE D 27 TH MARCH, 2009 ISSUED U/S 148, THE ASSESSEE WAS REQUIRED TO FILE RETURN OF INCOME WITHIN 30 DAYS FROM THE DATE OF SERVICE OF SUCH NOTICE AND IN RESPONSE THERETO VIDE LETTER DATED 23 RD APRIL, 2009, THE ASSESSEE HAD SUBMITTED THAT THE RETURN ORIGINALLY FILED MAY KINDLY BE DEEM ED AS RETURN IN COMPLIANCE TO THE NOTICE. COPY OF SUCH REPLY IS FILE D AT PAGE 39 OF THE ITA NO.5293 & 5294/DEL/2010 10 PAPER BOOK. THEREFORE, THE RETURN IN THE PRESENT CA SE AS PER THAT LETTER IS DEEMED TO BE FILED ON 23 RD APRIL, 2009. 14. IN BOTH THE CASES, THUS, THE RETURN WAS FILED IN RE SPONSE TO NOTICE U/S 148 ON 23 RD APRIL, 2009. IT HAS ALREADY BEEN MENTIONED ABOVE T HAT IF THE ASSESSING OFFICER WANT TO ASSESS THE INCOME OF THE A SSESSEE BY WAY OF ASSESSMENT PROCEEDINGS, THEN, THE ISSUE OF NOTICE U /S 143 (2) IS MANDATORY. THE RELEVANT OBSERVATIONS OF THE ASSESSING OF FICER IN THE REMAND REPORT OF RESPECTIVE YEARS HAS ALREADY BEEN REP RODUCED. THE CONTENTION OF THE ASSESSEE VIDE WHICH IT WAS SUBMITTED TH AT THE ASSESSMENT IS INVALID DUE TO NON-ISSUANCE OF NOTICE U/S 143 (2) HAVE BEEN RECORDED AT PAGE 5 OF THE ORDER OF CIT (A). T HESE CONTENTIONS WERE RAISED BY THE ASSESSEE BEFORE THE CIT (A) AND THESE CONTENTIONS WERE ALSO FORWARDED TO ASSESSING OFFICER. THEREFORE, IT WAS NECESSARY FOR LEARNED CIT (A) TO RECORD A FINDING ON THAT FAC T THAT WHETHER OR NOT ANY NOTICE U/S 143 (2) WAS ISSUED TO THE ASSESSEE OR SERVED UPON IT. LEARNED CIT (A) HAS NOT RECORDED SUCH FINDINGS. THE ISSU ANCE AND SERVICE OF NOTICE U/S 143 (2) WILL GO TO THE ROOT OF THE MATTER AS, ACCORDING TO THE LAW EXPLAINED ABOVE, IF NOTICE IS N OT ISSUED AND SERVED U/S 143 (2), THEN, IT WILL AFFECT THE VALIDITY OF RE -ASSESSMENT ORDER. IN THIS VIEW OF THE SITUATION, WITHOUT GOING INTO OTHER GROUNDS, WE ARE OF THE OPINION THAT THESE MATTERS REQUIRES TO GO BACK TO THE CIT (A) TO DETERMINE SUCH FACT AND RE-ADJUDICATE THE MATTER AGA IN BY KEEPING IN VIEW THE AFOREMENTIONED LAW EXPLAINED IN THE ABOVE PART OF THIS ORDER. WE DIRECT ACCORDINGLY. SINCE WE ARE RESTORING THESE APPEALS TO THE FILE OF CIT (A), TO ADJUDICATE ON THE LEGAL ISSUE WHICH AF FECTS THE VERY VALIDITY OF THE ASSESSMENT ORDERS, WE DO NOT EXPRESS ANY O PINION ON MERITS OF THE ADDITION AND OTHER GROUNDS WHICH HAVE B EEN AGITATED BY THE ASSESSEE IN THE PRESENT APPEALS AS THEY CAN BE DECIDED ONLY AFTER DETERMINATION OF THE LEGAL ISSUE REGARDING ISSUANCE AND SERVICE OF NOTICE U/S 143 (2). ITA NO.5293 & 5294/DEL/2010 11 15. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED IN THE MANNER AFORESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 11.02.20 11 SD/- SD/- [B.C. MEENA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 11.02.2011. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES