Ravindra Tukaram Kashid, Pune V. Income-tax Officer,

ITA 549/PUN/2013

• Counselvise Citation: 54924514 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 31-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 26-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DOSHI
• Keywords: Unexplained investment; Procedural lapse; Block assessment
• Section: 143(3); 6; 10; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 549/PN/2013 (ASSESSMENT YEAR : 2007-08) MR. RAVINDRA TUKARAM KASHID, FLAT NO.704, D-BUILDING, NANCY LAKE HOME, BHARTI VIDYAPEETH, PUNE 411046 PAN NO.AMWPK5967A .. APPELLANT VS. ITO, WARD-2(1), PUNE .. RESPONDENT ASSESSEE BY : SHRI S.N. DOSHI REVENUE BY : SHRI RAJESH DAMOR DATE OF HEARING : 22-04-2015 DATE OF PRONOUNCEMENT : 20-05-2015 ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 12-10-2012 OF THE CIT(A)-II, PUNE RELAT ING TO ASSESSMENT YEAR 2007-08. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF ESTATE COMMISSION AGENT. HE FILED HIS ORIGINAL RETURN OF INCOME ON 0 9-04-2008 DECLARING TOTAL INCOME OF RS.1,88,140/-. IN THIS C ASE A SURVEY U/S.133A OF THE I.T. ACT WAS CONDUCTED ON 17-09-201 0 DURING WHICH THE ASSESSEE HAD AGREED FOR ADDITION OF RS.1, 55,000/- ON ACCOUNT OF COMMISSION. SUBSEQUENTLY, THE AO ISSUED NOTICE 2 U/S.148 DATED 11-08-2011 WHICH WAS RECEIVED BY THE ASSESSEE ON 16-08-2011. A SHOW CAUSE NOTICE DATED 02-12-2011 W AS SERVED ON THE ASSESSEE ON 04-12-2011 ASKING THE ASSESSEE T O PRODUCE THE BOOKS OF ACCOUNTS, IF ANY, MAINTAINED AND ALSO THE BANK PASSBOOK FOR VERIFICATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THERE ARE WIDE VARIATIONS BETW EEN THE PROFIT AND LOSS ACCOUNT ATTACHED TO THE ORIGINAL RETURN FI LED ON 09-04- 2008 AND THE PROFIT AND LOSS ACCOUNT SUBMITTED BY T HE ASSESSEE DURING SCRUTINY ASSESSMENT PROCEEDINGS VIDE LETTER DATED 26-08- 2011. SIMILARLY, THERE WERE ALSO WIDE VARIATIONS B ETWEEN THE BALANCE SHEET ATTACHED TO THE ORIGINAL RETURN FILED ON 09-04-2008 AND THE BALANCE SHEET FILED DURING THE COURSE OF SC RUTINY ASSESSMENT PROCEEDINGS ON 26-08-2011. SINCE THE AS SESSEE WAS UNABLE TO EXPLAIN THE DIFFERENCE BETWEEN THE COMMIS SION RECEIVED, COMMISSION PAID, INVESTMENTS, INCOME AND EXPENDITURE ACCOUNT TO THE SATISFACTION OF THE AO, HE MADE ADDI TION OF RS.45,67,498/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF THE FOLLOWING : 1. DIFFERENCE IN COMMISSION RECEIVED RS.1,55,000/- 2. DIFFERENCE IN COMMISSION PAID RS.31,59,748/- 3. DIFFERENCE IN UN-RECONCILED INVESTMENT RS.10,88, 500/- 4. UNEXPLAINED CASH RS.1,64,250/- ------------------- TOTAL : RS.45,67,498/- ------------------- 2.1 IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF TH E AO. 3. BEFORE CIT(A) APART FROM DIFFERENT GROUNDS CHAL LENGING THE VARIOUS ADDITIONS MADE, THE ASSESSEE HAD ALSO T AKEN AN ADDITIONAL GROUND CHALLENGING THE VALIDITY OF THE A SSESSMENT ON 3 THE GROUND THAT NO NOTICE U/S.143(2) WAS ISSUED AND THEREFORE THE ASSESSMENT FRAMED U/S.143(3) R.W.S. 147 IS BAD IN L AW AND WITHOUT JURISDICTION OF THE AO. THE DECISION OF HO NBLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS. MAHI HOTEL VALLE Y RESORT REPORTED IN 287 ITR 60 AND THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF ESTATE OF LATE RANGELAL JOJODI YA VS. CIT REPORTED IN 79 ITR505 (SC) WERE RELIED UPON. 4. HOWEVER, THE LD.CIT(A) DISMISSED THE ADDITIONAL GROUND RAISED BEFORE HIM. WHILE DOING SO, HE OBSERVED THAT THE ASSESSEE HAD FAILED TO RAISE THE PLEA OF THE NOTICE HAVING N OT BEEN ISSUED AT THE STAGE OF ASSESSMENT AND ON THE OTHER HAND HAD P ARTICIPATED IN THE PROCEEDINGS WITHOUT ANY PROTEST. SINCE THE ASS ESSEE HAD NOT RAISED ANY OBJECTION BEFORE THE COMPLETION OF THE A SSESSMENT, THEREFORE THE BREACH, IF ANY, IS COVERED BY THE PR OVISIONS OF SECTION 292BB WHICH WAS INSERTED BY THE FINANCE ACT , 2008 EFFECTIVE FROM 01-04-2008. ACCORDING TO HIM, A NOT ICE REQUIRED TO BE SERVED UPON THE ASSESSEE UNDER ANY PROVISION OF THE ACT SHALL BE DEEMED TO HAVE BEEN SERVED UPON HIM IN TIM E AND ACCORDING TO THE ACT WHERE THE ASSESSEE HAS APPEARE D IN ANY PROCEEDING OR COOPERATED IN ANY ENQUIRY RELATING TO AN ASSESSMENT OR REASSESSMENT THE ASSESSEE IS PRECLUDE D TO CHALLENGE THE SERVICE OF NOTICE UPON HIM IN TIME OR IN AN IMP ROPER MANNER UNLESS THE ASSESSEE HAS RAISED SUCH OBJECTION BEFOR E COMPLETION OF ASSESSMENT. HE ACCORDINGLY DISMISSED THE ADDITI ONAL GROUND RAISED BEFORE HIM 4 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING CONCISE GROUNDS OF APPEAL : 1. ON THE FACTS AND CIRCUMSTANCES OF CASE THE CIT(A) H AS ERRED IN SUSTAINING THE ADDITION OF RS.10,88,500/- MAD E U/S.69 FOR UNEXPLAINED INVESTMENT. 2. ON THE FACTS AND CIRCUMSTANCES OF CASE THE CIT(A) HA S ERRED IN SUSTAINING THE DISALLOWANCE OF RS.31,59,748/- ON ACCOUNT OF UNEXPLAINED PAYMENT OF COMMISSION. ADDITIONAL GROUND : ON THE FACTS AND CIRCUMSTANCES OF CASE THE ASSESSING OFF ICER HAS ERRED IN MAKING ADDITION OF RS.1,64,250/- ON ACCOUNT OF UNEXPLAINED CASH. 6. THE ASSESSEE HAS ALSO FILED ANOTHER ADDITIONAL G ROUND WHICH READS AS UNDER : ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE ORD ER PASSED BY THE ASSESSING OFFICER U/S.143(3) RWS147 IS BAD IN LAW AS THE ASSESSING OFFICER HAS ERRED IN NOT ISSUING NOTICE U/S.143(2 ) 7. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO TH E SECOND ADDITIONAL GROUND SUBMITTED THAT SINCE THE ABOVE GR OUND IS A LEGAL ONE AND NO FRESH ENQUIRY IS REQUIRED, THEREFO RE, IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF NTPC LTD. VS. CIT REPORTED IN 229 ITR 383 (SC) THE ADDIT IONAL GROUND SHOULD BE ADMITTED. REFERRING TO THE DECISION OF T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PRUTHVI BR OKERS & SHAREHOLDERS REPORTED IN 23 TAXMANN.COM 23 HE SUBMI TTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HEL D THAT THE ASSESSEE IS ENTITLED TO RAISE BEFORE THE APPELLATE AUTHORITIES ADDITIONAL GROUNDS IN TERMS OF ADDITIONAL CLAIMS NO T MADE IN RETURN FILED BY IT. 5 8. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND OBJECTED TO THE ADMISSION OF THE SECOND ADDITIONAL GROUND. HE SUBMITTED THAT SINCE THE ASSESSEE HAS NOT RAISED TH IS ISSUE BEFORE THE ASSESSING OFFICER, THEREFORE, THE SAME SHOULD N OT BE ADMITTED. 9. AFTER HEARING BOTH THE SIDES AND CONSIDERING THA T THE ABOVE GROUND RAISED BY THE ASSESSEE IS A LEGAL ONE AND FA CTS ARE ALREADY ON RECORD AND DOES NOT REQUIRE ANY INVESTIGATION, T HEREFORE, THE SAME IS ADMITTED FOR ADJUDICATION. 10. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT NO NOTICE U/S.143(2) HAS BEEN ISSUED BY THE AS SESSING OFFICER IN THE INSTANT CASE WHICH IS AN ADMITTED FA CT. HE SUBMITTED THAT ALTHOUGH THE ASSESSEE HAS NOT RAISED THIS GROUND SPECIFICALLY BEFORE THE ASSESSING OFFICER AND HAS P ARTICIPATED IN THE ASSESSMENT PROCEEDINGS, HOWEVER, A SPECIFIC GRO UND WAS TAKEN BEFORE CIT(A) CHALLENGING THE VALIDITY OF THE ASSESSMENT ORDER PASSED U/S.143(3) R.W.S.147 IN ABSENCE OF ISS UANCE OF NOTICE U/S.143(2). HE SUBMITTED THAT THE LD.CIT(A) HAS DI SMISSED THE ABOVE GROUND RELYING ON THE PROVISIONS OF SECTION 2 92BB. REFERRING TO THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. TILAKRAJ SATIJA VIDE ITA NO.391 /DEL/2010 ORDER DATED 14-08-2013 FOR A.Y. 2000-01 HE SUBMITTE D THAT THE TRIBUNAL FOLLOWING THE DECISION OF HONBLE DELHI HI GH COURT IN THE CASE OF ALPHINE ELECTRONICS ASIA PVT. LTD. VS. DCIT REPORTED IN 341 ITR 247 HAS HELD THAT IN CASE OF RETURN FILE D PURSUANT TO NOTICE U/S.148 IT IS MANDATORY TO SERVE NOTICE U/S. 143(2) ON 6 ASSESSEE WITHIN STIPULATED TIME LIMIT. IT WAS HELD THAT MERELY BECAUSE THE ASSESSEE COOPERATED IN THE PROCEEDINGS, SECTION 292BB CANNOT CURE THIS JURISDICTIONAL DEFECT AND SU CH REASSESSMENT IS TO BE QUASHED, BEING INVALID. 10.1 REFERRING TO THE DECISION OF THE HONBLE GUJAR AT HIGH COURT IN THE CASE OF CIT VS. PANORAMA BUILDERS PVT. LTD., REPORTED IN 45 TAXMANN.COM 159 HE DREW THE ATTENTIO N OF THE BENCH TO PARA 14 OF THE ORDER WHICH READS AS UNDER : 14. THEREFORE, WE ARE OF THE CONSIDERED OPINION THA T SECTION 292BB DOES NOT APPLY TO ISSUANCE OF NOTICE, NEITHER IT CURES THE DEFECT OR ENLARGES STATUTORY PERIOD WHERE A MANDATORY NOTICE UNDER SECTION 143(2) OF THE ACT IS REQUIRED TO BE ISSUE D WITHIN LIMITATION FIXED UNDER THE ACT. IN ABSENCE OF ISSUANCE OF THE NOTICE UNDER THE PROVISO TO SECTION 143(2) OF THE ACT WITHIN A PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHI CH RETURN WAS FURNISHED BY THE ASSESSEE, THE PROCEEDINGS INITIATED B Y THE ASSESSING OFFICER WITH REGARD TO BLOCK ASSESSMENT PERIOD 1.4.1997 TO 25.7.2002 ON THE BASIS OF NOTICE ISSUED ON 6.7.2006 UNDER SECTION 143(2), AFTER ABOUT 20 MONTHS, WAS TIME BARRED AND THE ENTIRE PROCEEDINGS IN PURSUANCE OF SUCH NOTIC E IS NULL AND VOID. 10.2 REFERRING TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. PAWAN GUPTA AND OTHERS REPOR TED IN 318 ITR 322 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT SECTION 143(2) HAS NO APPLIC ATION IN A SITUATION WHERE THE ASSESSING OFFICER, ON RECEIPT O F THE RETURN OF UNDISCLOSED INCOME IN FORM NO.2B, IS SATISFIED WITH THE SAME AS REFLECTING THE TRUE STATE OF AFFAIRS AND NO FURTHER INFORMATION OR EXPLANATION IS CALLED FOR FROM THE ASSESSEE. HOWEV ER, WHERE THE ASSESSING OFFICER IS NOT INCLINED TO ACCEPT THE RET URN OF UNDISCLOSED INCOME FILED BY THE ASSESSEE, THE PROCE DURE PRESCRIBED IN S.143(2) HAS TO BE FOLLOWED AND IF AN ASSESSMENT 7 ORDER IS PASSED IN SUCH A SITUATION WITHOUT ISSUING A NOTICE UNDER S.143(2), IT WOULD BE INVALID AND NOT MERELY IRREGU LAR. 10.3 REFERRING TO THE DECISION OF THE HONBLE ALLAH ABAD HIGH COURT IN THE CASE OF CIT VS. SALARPUR COLD STORAGE PVT. LTD., REPORTED IN 50 TAXMANN.COM 105 HE SUBMITTED THAT TH E HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT FAILU RE TO ISSUE NOTICE U/S.143(2) WITHIN PRESCRIBED PERIOD CANNOT B E CURED BY TAKING RECOURSE TO SECTION 292BB. REFERRING TO THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. G.K. GUPTA REPORTED IN 122 TTJ 265 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT WHEN NO NOTICE U/S. 143(2) IS ISSUED THE ASSESSMENT U/S.143(3) R.W.S. 148 IS INVA LID. SUCH DEFECT COULD NEITHER BE CURED BY SECTION 292BB NOR SUCH ASSESSMENT COULD BE SAVED BY PROVISO TO SECTION 148 (1). REFERRING TO THE DECISION OF THE SPECIAL BENCH OF T HE TRIBUNAL IN THE CASE OF KUBER TOBACCO PRODUCTS PVT. LTD., VS. D CIT REPORTED IN 28 SOT 292 HE SUBMITTED THAT THE SPECIAL BENCH I N THE SAID DECISION HAS HELD AS UNDER : (I) SECTION 292BB EVEN IF IT IS PROCEDURAL CREATES A NEW DISABILITY AS IT PRECLUDES THE ASSESSEE FROM TAKING A PLEA WHICH COULD BE TAKEN AS A RIGHT, CANNOT BE CONSTRUED RETROSP ECTIVELY AS THE SAME HAS BEEN MADE APPLICABLE BY THE STATUTE WITH EFFECT FROM 1-4-2008. (II) SECTION 292BB IS APPLICABLE TO THE ASSESSMENT YEAR 2008- 09 AND THE SUBSEQUENT ASSESSMENT YEARS. 10.4 HE ALSO RELIED ON THE FOLLOWING DECISIONS : I. ACIT VS. HOTEL BLUE MOON REPORTED IN 321 ITR 362 (SC) II. ALPHINE ELECTRONICS ASIA PVT. LTD., VS. DCIT REPO RTED IN 341 ITR 247 (DELHI HIGH COURT) 8 III. CIT VS. ALSTROME T&D INDIA LTD., REPORTED IN 45 TAXMANN.COM 424 (MADRAS HIGH COURT IV. CIT VS. SALMAN KHAN VIDE ITA NO.508 OF 2010 ORDE R DATED 06-06-2011 11. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND WHILE RELYING ON THE ORDER OF THE CIT(A) DREW THE A TTENTION OF THE BENCH TO THE DECISION OF THE HONBLE MADRAS HIGH CO URT IN THE CASE OF AREVA T&D INDIA LTD. VS. ACIT REPORTED IN 1 65 TAXMANN 123 AND SUBMITTED THAT NON ISSUE OF STATUTORY NOTIC E U/S.143(2) IS PROCEDURAL IRREGULARITY AND THEREFORE THE SAME WOUL D NOT MAKE REASSESSMENT NULLITY IN LAW. THEREFORE, THE HONBL E HIGH COURT HAD RESTORED THE MATTER TO THE ASSESSING OFFICER FO R DISPOSAL AFRESH IN ACCORDANCE WITH LAW. HE ACCORDINGLY SUBM ITTED THAT HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE F ILE OF THE ASSESSING OFFICER WITH A DIRECTION TO ISSUE THE STA TUTORY NOTICE REQUIRED U/S.143(2) AND FRAME THE ASSESSMENT. 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THE ONLY DISPUTE RAISED IN THE ADDITIONAL GROUND IS REGARDIN G THE VALIDITY OF THE ASSESSMENT ORDER PASSED U/S.143(3) R.W.S.147 IN ABSENCE OF NOTICE ISSUED U/S.143(2). IT IS AN ADMITTED FACT T HAT THE ASSESSING OFFICER IN THE INSTANT CASE HAS NOT ISSUED ANY NOTI CE U/S.143(2). THEREFORE, THE QUESTION THAT ARISES IS AS TO WHETHE R IN ABSENCE OF ISSUANCE OF SUCH NOTICE THE ASSESSMENT ORDER PASSED U/S.143(3) R.W.S.147 CAN BE TREATED AS VOID AB-INITIO OR SUCH NON ISSUANCE OF 9 NOTICE IS ONLY A PROCEDURAL DEFECT AND SINCE THE A SSESSEE HAS PARTICIPATED IN THE ASSESSMENT PROCEEDINGS THE ASSE SSMENT ORDER CANNOT BE SAID TO BE AN INVALID ONE. 12.1 WE FIND THE HONBLE ALLAHABAD HIGH COURT IN TH E CASE OF SALARPUR COLD STORAGE PVT. LTD., (SUPRA) HAS HELD T HAT WHEN THE ASSESSING OFFICER FAILS TO ISSUE A NOTICE WITHIN TH E PERIOD OF SIX MONTHS AS SPELT OUT IN THE PROVISO TO CLAUSE (II) O F SECTION 143(2), THE ASSUMPTION OF JURISDICTION U/S.143(3) OF THE AC T WOULD BE INVALID AND THIS DEFECT CANNOT BE CURED BY TAKING R ECOURSE TO THE DEEMING FICTION U/S.292BB OF THE I.T. ACT. THE REL EVANT OBSERVATION OF THE HONBLE HIGH COURT AT PARA 8 TO 14 OF THE ORDER READS AS UNDER : 8. IN THE PRESENT CASE, THE FACTS WHICH ARE NOT IN D ISPUTE ARE THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 30 S EPTEMBER 2008 FOR AY 2008-09. THE NOTICE UNDER SECTION 143 ( 2) OF THE ACT OUGHT TO HAVE BEEN ISSUED BY 30 SEPTEMBER 2009 WHICH WAS THE DATE OF THE EXPIRY OF THE PERIOD OF SIX MONTHS FROM T HE END OF THE FINANCIAL YEAR IN WHICH THE RETURN WAS FURNISHED. A NOTICE WAS, HOWEVER, ISSUED ON 6 OCTOBER 2009 MUCH BEYOND THE PE RIOD OF SIX MONTHS. IN SUCH A SITUATION, THERE COULD BE NO OCCA SION TO SERVE THE NOTICE WITHIN SIX MONTHS SINCE THE VERY ACT O F ISSUANCE WAS BEYOND SIX MONTHS. 9. NOW, IT IS IN THIS BACKGROUND THAT IT WOULD BE NE CESSARY TO CONSIDER THE PROVISIONS OF SECTION 292 BB OF THE ACT. SECTION 292 BB PROVIDES AS FOLLOWS:- '292 BB. WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDI NG OR CO-OPERATED IN ANY INQUIRY RELATING TO AN ASSESSMENT OR REASSESSMENT. IT SHALL BE DEEMED THAT ANY NOTICE UNDER A NY PROVISION OF THIS ACT, WHICH IS REQUIRED TO BE SERVED U PON HIM, HAS BEEN DULY SERVED UPON HIM IN TIME IN ACCORDANCE W ITH THE PROVISIONS OF THIS ACT AND SUCH ASSESSEE SHALL BE PRECLUDED FROM TAKING ANY OBJECTION IN ANY PROCEEDING OR INQUIRY U NDER THIS ACT 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 SHALL APPLY WHERE THE ASSESSEE HAS RAISED SUCH OBJECTION BEFORE THE COMPLETION OF SUCH ASSESSMENT OR REASSESSMENT.' 10 10. SECTION 292 BB OF THE ACT WAS INSERTED BY THE FIN ANCE 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 PROCEEDING O R COOPERATED IN ANY ENQUIRY RELATING TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UNDER T HE PROVISIONS OF THE ACT, WHICH IS REQUIRED TO BE SERVED O N THE ASSESSEE, HAS BEEN DULY SERVED UPON HIM IN TIME IN ACCORD ANCE WITH THE PROVISIONS OF THE ACT. THE ASSESSEE IS PRECLUDED FROM TAKING ANY OBJECTION IN ANY PROCEEDING OR ENQUIRY T HAT THE NOTICE WAS (I) NOT SERVED UPON HIM; OR (II) NOT SERVED UPON H IM IN TIME; OR (III) SERVED UPON HIM IN AN IMPROPER MANNER. IN O THER WORDS, ONCE THE DEEMING FICTION COMES INTO OPERATION, THE A SSESSEE IS PRECLUDED FROM RAISING A CHALLENGE ABOUT THE SERVICE OF A NOTICE, SERVICE WITHIN TIME OR SERVICE IN AN IMPROPER MANNER. THE PROVISO TO SECTION 292 BB OF THE ACT, HOWEVER, CARVE S OUT AN EXCEPTION TO THE EFFECT THAT THE SECTION SHALL NOT A PPLY WHERE THE ASSESSEE HAS RAISED AN OBJECTION BEFORE THE COMPLETION OF THE ASSESSMENT OR REASSESSMENT. SECTION 292 BB OF THE ACT CANN OT OBVIATE THE REQUIREMENT OF COMPLYING WITH A JURISDIC TIONAL CONDITION. FOR THE ASSESSING OFFICER TO MAKE AN ORDER OF ASSESSMENT UNDER SECTION 143 (3) OF THE ACT, IT IS NECESSA RY TO ISSUE A NOTICE UNDER SECTION 143 (2) OF THE ACT AND I N THE ABSENCE OF A NOTICE UNDER SECTION 143(2) OF THE ACT, THE ASSU MPTION OF JURISDICTION ITSELF WOULD BE INVALID. 11. THIS PRINCIPLE IS NO LONGER IN DOUBT HAVING DUE R EGARD TO THE LAW LAID DOWN BY THE SUPREME COURT IN THE DECISI ON IN ASSISTANT COMMISSIONER OF INCOME TAX & ANOTHER VS. M/S. HO TEL BLUE MOON. WHILE CONSTRUING THE PROVISIONS OF CHAPTER XIV-B OF THE ACT IN RELATION TO BLOCK ASSESSMENTS, THE SUPREME CO URT IN THAT DECISION CONSIDERED THE EFFECT OF SECTION 143 (2 ) OF THE ACT. THE SUPREME COURT HELD AS FOLLOWS:- '...BUT SECTION 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 T HE 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 FROM T HE DATE OF FILING OF BLOCK RETURN. OMISSION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE UNDER SECTION 143(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. 12. THE SUPREME COURT HAS, THEREFORE, CLEARLY HELD T HAT THE OMISSION ON THE PART OF THE ASSESSING OFFICER TO ISSUE A NO TICE UNDER SECTION 143(2) OF THE ACT IS NOT A PROCEDURAL IRREGULARITY AND IS NOT CURABLE. THE REQUIREMENT OF A NOTICE UNDE R SECTION 143(2) OF THE ACT CANNOT BE DISPENSED WITH. 13. IN OUR VIEW, WHERE THE ASSESSING OFFICER FAILS TO ISS UE A NOTICE WITHIN THE PERIOD OF SIX MONTHS AS SPELT OUT IN THE PROVISO TO CLAUSE (II) OF SECTION 143 (2) OF THE ACT, THE ASSU MPTION OF JURISDICTION UNDER SECTION 143 (3) OF THE ACT WOULD BE INVALID. THIS DEFECT IN REGARD TO THE ASSUMPTION OF JURISDICTIO N CANNOT BE 11 CURED BY TAKING RECOURSE TO THE DEEMING FICTION UNDE R SECTION 292 BB OF THE ACT. THE FICTION IN SECTION 292 BB OF THE ACT OVERCOMES A PROCEDURAL DEFECT IN REGARD TO THE NON-SE RVICE OF A NOTICE ON THE ASSESSEE, AND OBVIATES A CHALLENGE THAT TH E NOTICE WAS EITHER NOT SERVED OR THAT IT WAS NOT SERVED IN TIME OR THAT IT WAS SERVED IN AN IMPROPER MANNER, WHERE THE ASSESSEE HAS APPEARED IN A PROCEEDING OR COOPERATED IN AN ENQUIR Y WITHOUT RAISING AN OBJECTION. SECTION 292 BB OF THE ACT CANN OT COME TO THE AID OF THE REVENUE IN A SITUATION WHERE THE ISSUAN CE OF A NOTICE ITSELF WAS NOT WITHIN THE PRESCRIBED PERIOD, IN WHICH EVENT THE QUESTION OF WHETHER IT WAS SERVED CORRECTLY OR OTH ERWISE, WOULD BE OF NO RELEVANCE WHATSOEVER. FAILURE TO ISSUE A NOTICE WITHIN THE PRESCRIBED PERIOD WOULD RESULT IN THE ASSESSI NG OFFICER ASSUMING JURISDICTION CONTRARY TO LAW. 14. THE JUDGMENT OF A DIVISION BENCH OF THE PUNJAB A ND HARYANA HIGH COURT IN COMMISSIONER OF INCOME TAX VS. PANCHVATI MOTORS (P) LTD.4, WHICH WAS RELIED UPON BY THE LEARNED COUNSEL FOR THE REVENUE WOULD NOT TO CARRY T HE CASE ANY FURTHER. IN THAT CASE, A NOTICE WAS ISSUED UNDER SECTIO N 148 OF THE ACT. THE ASSESSEE FILED A RETURN IN PURSUANCE OF THE NOT ICE WITHOUT RAISING ANY OBJECTION IN REGARD TO THE VALID SERVICE OF A NOTICE. THE PUNJAB AND HARYANA HIGH COURT HELD THAT ONCE THAT WAS SO, THE ARGUMENT OF THE ASSESSEE THAT THERE WAS NO VAL ID SERVICE OF THE NOTICE UNDER SECTION 148 OF THE ACT W OULD FAIL PARTICULARLY HAVING DUE REGARD TO THE PROVISIONS OF S ECTION 292 BB OF THE ACT. THESE FACTS ARE CLEARLY DISTINGUISHABLE . 12.2 THE HONBLE GUJARAT HIGH COURT IN THE CASE OF PANORAMA BUILDERS PVT. LTD. (SUPRA) HAD ALSO AN OCCASION TO DECIDE SUCH AN ISSUE AND IT WAS HELD THAT IN ABSENCE OF ISSUANCE O F THE NOTICE UNDER THE PROVISO TO SECTION 143(2) OF THE ACT WITH IN A PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN WAS FURNISHED BY THE ASSESSEE, THE PROCEEDINGS INITIATE D BY THE AO ON THE BASIS OF NOTICE ISSUED U/S.143(2) AFTER ABOUT 2 0 MONTHS WAS TIME BARRED AND THE ENTIRE PROCEEDINGS IN PURSUANCE OF NOTICE IS NULL AND VOID. IT WAS FURTHER HELD THAT SECTION 29 2BB IS ONLY CONFINED TO SERVICE OF NOTICE AND DOES NOT APPLY TO ISSUANCE OF NOTICE. THE HONBLE DELHI HIGH COURT IN THE CASE O F ALPHINE ELECTRONICS ASIA LTD., (SUPRA) HELD THAT IN CASE OF RETURN FILED PURSUANT TO NOTICE U/S.148 IT IS MANDATORY TO SERVE NOTICE U/S.143(2) ON ASSESSEE WITHIN STIPULATED TIME LIMIT . MERELY 12 BECAUSE ASSESSEE COOPERATED IN THE PROCEEDINGS PROV ISIONS OF SECTION 292BB CANNOT CURE THIS JURISDICTIONAL DEFEC T AND SUCH REASSESSMENT HAS TO BE QUASHED BEING INVALID. 12.3 WE FIND THE HONBLE BOMBAY HIGH COURT IN THE C ASE OF CIT VS. HUF OF H.H. LATE J.M. SCINDIA REPORTED IN 3 00 ITR 193 HAS HELD THAT WHEN THE AO INVOKES SECTION 17 OF THE WEALTH TAX ACT, THE PROVISIONS OF SECTION 14 TO 16 TO THE EXTE NT APPLICABLE FOR THE PURPOSE OF MAKING AN ORDER OF REASSESSMENT WILL HAVE TO BE FOLLOWED WHICH WILL INCLUDE THE TIME LIMIT FOR NOTI CE U/S.16(2). IT WAS ACCORDINGLY HELD THAT THE REASSESSMENT PROCEEDI NGS ARE NOT VALID IN ABSENCE OF ISSUANCE OF STATUTORY NOTICE U/ S.16(2) OF THE I.T. ACT BEYOND THE TIME LIMIT. FOLLOWING THE ABOV E DECISION THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SA LMAN KHAN VIDE ITA NO.2362/2009 ORDER DATED 01-12-2009 H AS HELD THAT SECTION 292BB WERE AMENDED W.E.F. 01-04-2008 A ND CAME INTO OPERATION PROSPECTIVELY FOR THE A.Y. 1999-2000 AND MANDATORY NOTICE U/S.143(2) HAS TO BE ISSUED IN THI S CASE WITHIN THE TIME LIMIT PRESCRIBED UNDER THE ACT. FOLLOWING THE ABOVE DECISION THE HONBLE HIGH COURT AGAIN IN THE CASE O F CIT VS. SALMAN KHAN VIDE ITA NO.508/2010 ORDER DATED 06-06- 2011 HELD THAT IN ABSENCE OF NOTICE U/S.143(2) PRIOR TO THE INSERTION OF SECTION 292BB THE REASSESSMENT ORDER CANNOT BE SUST AINED IN ABSENCE OF NOTICE ISSUED U/S.143(2). 13. SO FAR AS THE DECISION RELIED ON BY THE LD. DEP ARTMENTAL REPRESENTATIVE IN THE CASE OF AREVA T&D INDIA LTD., (SUPRA) WHERE THE MATTER WAS REMANDED TO THE AO FOR ISSUE O F NOTICE 13 U/S.143(2) WE FIND THE SAID ORDER IS DATED 08-11-20 06. HOWEVER, THE HONBLE MADRAS HIGH COURT IN A LATER DECISION I N THE CASE OF ALSTOM T&D INDIA LTD. VIDE ORDER DATED 03-09-2012 H AS HELD THAT COMPLETION OF THE ASSESSMENT PROCEEDINGS U/S.1 43(3) R.W.S.147 WITHOUT ISSUE OF NOTICE U/S.143(2) WAS BA D IN LAW. THE ORDER OF THE TRIBUNAL WAS ACCORDINGLY UPHELD. 14. IN VIEW OF THE ABOVE BINDING DECISIONS, WE HOLD THAT THE ORDER PASSED BY THE AO U/S.143(3) R.W.S.147 WITHOUT ISSUE OF NOTICE U/S.143(2) IS INVALID AND VOID AB-INITIO. W E ACCORDINGLY SET ASIDE THE ORDER OF LD.CIT(A) ON THIS ISSUE AND CANCEL THE ASSESSMENT ORDER U/S.143(3) R.W.S.147. THE SECOND ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWE D. 15. SINCE THE ASSESSEE SUCCEEDS ON THIS LEGAL GROUN D WE ARE NOT ADJUDICATING THE OTHER GROUNDS CHALLENGING THE VARI OUS ADDITIONS MADE BY THE AO BEING ACADEMIC IN NATURE. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 20-05-2015. SD/- SD/- (SUSHMA CHOWLA) (R.K. PA NDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 20 TH MAY, 2015 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-II, PUNE 4. THE CIT-II, PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE