Rajeev Agrawal, Kanpur V. ACIT, Kanpur

ITA 565/LKW/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9142 (ITAT-LUCKNOW)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-03-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 31-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK MISHRA
• Keywords: Income from undisclosed sources; Reason to believe
• Section: 143(3); 142(1); 6; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, LUCKNOW BENCH 'B', LUCKNOW BEFORE SHRI H. L. KARWA, HON'BLE VICE PRESIDENT AND SHRI N. K. SAINI, ACCOUNTANT MEMBER I.T.A. NO.565/LUC/10 ASSESSMENT YEAR: 2002-2003 SHRI RAJEEV AGARWAL, VS. A.C.I.T., 7/130, SWAROOP NAGAR, RANGE-3, KANPUR. KANPUR. PAN:ABKPA4140L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMIT SHUKLA, ADVOCATE RESPONDENT BY: SHRI VIVEK MISHRA, D. R. O R D E R PER H. L. KARWA, V.P.: THIS APPEAL, FILED BY THE ASSESSEE, IS DIRECTED AG AINST THE ORDER OF CIT(A)-I, KANPUR DATED 27/07/2010 RELATING TO ASSES SMENT YEAR 2002- 2003. 2. GROUND NO. 1 AND 2 OF THE APPEAL READ AS UNDER: 1. BECAUSE THE NOTICE UNDER SECTION 143(2) DATED 3 0TH OCTOBER, 2003, HAVING NOT BEEN VALIDLY SERVED ON TH E 'APPELLANT' AS PER THE PROVISIONS CONTAINED IN SECT ION 282 OF THE 'ACT' READ WITH RELEVANT PROVISIONS OF CIVIL PR OCEDURE CODE 1908, THE ASSESSMENT ORDER DATED 30.3.2005 PASSED U NDER SECTION 143(3) AS ALSO THE 'VARIATION' CONTAINED TH EREIN (BETWEEN THE 'RETURNED INCOME' AND THE 'ASSESSED IN COME'') 2 ARE WHOLLY VITIATED IN LAW AND THE SAME ARE LIABLE TO BE DECLARED AS NULL AND VOID. 2. BECAUSE THE NOTICE UNDER SECTION 143(2) IS A JURISDICTIONAL NOTICE AND IN THE ABSENCE OF VALID S ERVICE OF SUCH A NOTICE, THE VALIDITY OF THE ASSESSMENT ORDER COUL D NOT HAVE BEEN UPHELD AND THE 'CIT (APPEALS)' HAS GROSSLY ERR ED IN LAW AND ON FACTS, IN TAKING A CONTRARY VIEW BY OBSERVIN G THAT; 'PRIMA-FACIE THAT NOTICE U/S 143(2) DATED 30.10.200 3 IS WELL WITHIN THE TIME AND THE ASSESSING OFFICER HAD THE J URISDICTION OVER THE APPELLANT'. 3. BY WAY OF ABOVE TWO GROUNDS, THE ASSESSEE HAS CH ALLENGED THE VALIDITY OF THE NOTICE U/S 143(2) OF THE I.T. ACT, 1961 (IN SHORT, THE I.T. ACT). IN THIS CASE, THE ASSESSEE FILED THE RETURN OF INCO ME ON 31 ST DECEMBER 2002 DECLARING INCOME OF ` 3,07,448/-. THE RETURN WAS PROCESSED ON 3 RD FEBRUARY 2003. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND THE NOTICES U/S 143(2) AND 142(1) WERE ISSUED. HOWEVER , THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE I.T. ACT ON 30 TH MARCH 2005 WHEREIN THE ASSESSING OFFICER MADE CERTAIN ADD ITIONS/DISALLOWANCES. THE ASSESSING OFFICER DETERMINED THE TAXABLE INCOME AT ` 41,12,505/- AS AGAINST RETURNED INCOME OF ` 3,07,448/-. THE INCOME OF THE ASSESSEE WAS COMPUTED BY THE ASSESSING OFFICER AS UNDER: ( ` ) 1. RENTAL INCOME AS SHOWN 6,152/- 2. CAPITAL GAINS AS PER PARA-6 3,10,212/- 3 3. INCOME FROM OTHER SOURCES AS SHOWN 1,79,773/- 4. INCOME FROM UNDISCLOSED SOURCES AS PER PARA-4 2 5,01,100/- 5. INCOME FROM UNDISCLOSED SOURCES AS PER PARA-4 1,25,000/- 6. INCOME FROM UNDISCLOSED SOURCES AS PER PARA-5 7,67,268/- 7. ADDITION FOR UNEXPLAINED HOUSE HOLD WITHDRAWALS 2,32,000/- --------------- GROSS TOTAL INCOME 41,21,505/- LESS: DEDUCTION U/S 80L 9,000/- TOTAL INCOME 41,12,505/- 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A). B EFORE THE CIT (A), THE ASSESSEE RAISED AN OBJECTION RELATING TO THE NOTICE ISSUED U/S 143(2) OF THE I.T. ACT VIDE GROUND NO. 1 TO 4 OF THE APPEAL. 5.1 THE LEARNED CIT (A) DISCUSSED THE ISSUE IN PARA 4 AND 5 OF THE IMPUGNED ORDER AND DISMISSED THE GROUNDS RAISED BY THE ASSESSEE RELATING TO THE VALIDITY OF NOTICE U/S 143(2). 6 AT THE VERY OUTSET, SHRI AMIT SHUKLA, ADVOCATE, L EARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY C OVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THIS BENCH OF THE TRIBUNAL DATED 19/03/2010 PASSED IN THE CASE OF ASS ESSEES REAL BROTHER SHRI SANJEEV AGARWAL IN I.T.A. NO.495/LUC/09 RELATI NG TO ASSESSMENT YEAR 2002-2003. SHRI AMIT SHUKLA, LEARNED COUNSEL FOR T HE ASSESSEE SUBMITTED THAT FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS OF THE CASE OF SHRI 4 SANJEEV AGARWAL. IN THE CASE OF SHRI SANJEEV AGARW AL, THE ASSESSEE HAS RAISED IDENTICAL GROUNDS. IN THAT CASE ALSO THE NO TICE U/S 143(2) WAS SERVED ON ONE SHRI SACHIN AGARWAL WHO WAS NOT AUTHO RIZED BY THE ASSESSEE TO RECEIVE ANY NOTICE. IN THE INSTANT CAS E ALSO IT IS ALLEGED BY THE REVENUE THAT NOTICE DATED 30 TH OCTOBER 2003 ISSUED U/S 143(2) OF THE ACT WAS SERVED ON SHRI SACHIN AGARWAL. ACCORDING TO TH E LEARNED COUNSEL FOR THE ASSESSEE, SHRI SANJEEV AGARWAL, WHO IS A STRANG ER, WAS NOT AUTHORIZED BY THE ASSESSEE TO RECEIVE ANY NOTICE. ACCORDINGLY , IT WAS SUBMITTED THAT WHEN THE NOTICE WAS NOT SERVED ON THE ASSESSEE U/S 143(2), THE ASSESSMENT FRAMED U/S 143(3) WAS INVALID. HE, THER EFORE, SUBMITTED THAT FACTS BEING IDENTICAL AND, THEREFORE, THE ORDER PAS SED BY THE TRIBUNAL IN THE CASE OF ASSESSEES BROTHER SHRI SANJEEV AGARWAL IN I.T.A. NO.495/LUC/09 RELATING TO ASSESSMENT YEAR 2002-2003 MAY BE FOLLOW ED AND THE ASSESSMENT MAY BE HELD AS INVALID. 7. SHRI VIVEK MISHRA, D. R. HEAVILY RELIED ON THE D ECISION OF HON'BLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF C IT VS. SOHAN LAL SEWA RAM JAGGI [2009] 222 CTR (ALL) 412 WHEREIN IT HAS B EEN HELD THAT ASSESSEE HAVING FAILED TO RAISE OBJECTION AS REGARD S JURISDICTION OF THE ASSESSING OFFICER WITHIN 30 DAYS OF RECEIPT OF NOTI CE UNDER SECTION 143(2) 5 AS STIPULATED U/S 142(3), THE TRIBUNAL WAS NOT JUST IFIED IN ANNULLING ASSESSMENT ON THE GROUND OF JURISDICTION. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND HAVE ALSO CAREFULLY GONE THROUGH THE MATERIAL AVAIL ABLE ON RECORD. WE FIND THAT THE DECISION RELIED UPON BY THE LEARNED D. R. HAS BEEN DULY CONSIDERED BY THE TRIBUNAL IN THE CASE OF SHRI SANJ EEV AGARWAL AND THE TRIBUNAL HELD THAT EVEN IF IT IS PRESUMED BUT NOT A DMITTED THAT THE ISSUE WAS NOT RAISED IN EARLIER PROCEEDINGS, THEN ALSO THE AS SESSEE HAS EVERY RIGHT TO RAISE THE LEGAL ISSUE AT ANY STAGE AS PER THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. 229 ITR 383 (SC). IN THAT VIEW OF THE MATTER THE DECISION REL IED UPON BY THE LEARNED D. R. IS OF NO HELP TO REVENUES CASE. 8.1 WE FIND THAT FACTS OF THE PRESENT CASE ARE SIMI LAR TO THE FACTS OF THE CASE OF ASSESSEES BROTHER SHRI SANJEEV AGARWAL (SU PRA), WHEREIN THE TRIBUNAL HAS DECIDED AN IDENTICAL ISSUE IN FAVOUR O F THE ASSESSEE OBSERVING AS UNDER: 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CA REFULLY GONE THROUGH THE MATERIALS AVAILABLE ON THE RECORD . IN THE PRESENT CASE IT IS NOT IN DISPUTE THAT THE ASSESSEE FURNISHED THE RETURN OF INCOME ON 31/12/2002 AND A NOTICE U/S 143(2) DATED 30/10/2003 WAS ISSUED. IT IS THE CLAIM OF TH E DEPARTMENT THAT THE SAID NOTICE WAS WITHIN STIPULAT ED TIME I.E. 12 MONTHS AFTER FILING THE RETURN OF INCOME, THE COPY OF THE 6 SAID NOTICE IS PLACED AT PAGE NO. 1 OF THE DEPARTME NTAL PAPER BOOK. ON PERUSAL OF THE SAID DOCUMENT, IT IS NOTIC ED THAT THE NOTICE HAS BEEN SERVED ON SHRI SACHIN AGARWAL. THE CLAIM OF THE ASSESSEE IS THAT HE HAS NOT AUTHORIZED SHRI SAC HIN AGARWAL TO RECEIVE ANY NOTICE ON HIS BEHALF. THE D EPARTMENT HAD NOT BROUGHT ON RECORD ANY OTHER DOCUMENT TO SUB STANTIATE THAT THE NOTICE U/S 143(2) DATED 30/10/2002 HAS BEE N SERVED EITHER ON THE ASSESSEE OR ANY AUTHORIZED PERSON OF THE ASSESSEE. TO RESOLVE THIS CONTROVERSY, WE HAVE TO DISCUSS THE RELEVANT PROVISIONS CONTAINED IN SECTION 143(2) OF THE ACT (BEFORE THE AMENDMENT APPLICABLE W.E.F. 01/04/2008) WHICH READ AS UNDER: (2) WHERE A RETURN HAS BEEN FURNISHED UNDER SECTION 139 , OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTION 142 , THE ASSESSING OFFICER SHALL, (I) WHERE HE HAS REASON TO BELIEVE THAT ANY CLAIM OF LOSS, EXEMPTION, DEDUCTION, ALLOWANCE OR RELIEF MADE IN T HE RETURN IS INADMISSIBLE, SERVE ON THE ASSESSEE A NOTICE SPE CIFYING PARTICULARS OF SUCH CLAIM OF LOSS, EXEMPTION, DEDUC TION, ALLOWANCE OR RELIEF AND REQUIRE HIM, ON A DATE TO B E SPECIFIED THEREIN TO PRODUCE, OR CAUSE TO BE PRODUCED, ANY EV IDENCE OR PARTICULARS SPECIFIED THEREIN 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 JUNE, 20 03;] (II) NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (I), IF HE CONSIDERS IT NECESSARY OR EXPEDIENT 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, 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 O N THE ASSESSEE AFTER THE EXPIRY OF TWELVE MONTHS FROM THE END OF THEMONTH IN WHICH THE RETURN IS FURNISHED. 7 7.1 FROM THE PROVISO TO CLAUSE (II) OF SUB SECTION 2 OF SECTION 143, IT IS CLEAR THAT NO NOTICE SHALL BE SE RVED ON THE ASSESSEE AFTER THE EXPIRY OF TWELVE MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN IS FURNISHED. THE USE OF WORD SHALL MAKES IT MANDATORY THAT THE NOTICE MUST BE SERVED O N THE ASSESSEE. IN THE INSTANT CASE, NOTHING HAS BEEN BR OUGHT ON RECORD THAT THE NOTICE U/S 143(2) WAS SERVED ON THE ASSESSEE SINCE THE DOCUMENT FURNISHED BY THE DEPARTMENT CLEA RLY REVEALED THAT THE NOTICE U/S 143(2) DATED 30/10/200 3 HAS BEEN RECEIVED BY SHRI SACHIN AGARWAL WHO WAS NOT AUTHORI ZED BY THE ASSESSEE TO RECEIVED ANY NOTICE. THE ANOTHER A RGUMENT OF THE LEARNED D.R. WAS THAT A POWER OF ATTORNEY W AS ISSUED BY THE ASSESSEE ON 05/11/2003 TO SHRI SANTOSH GUPTA , I.T.P. AND SHRI PARMOD SINGH TO REPRESENT IN INCOME TAX ASSESSMENT PROCEEDINGS RELATING TO THE ASSESSMENT Y EAR 2002-2003, THEREFORE, IT IS PRESUMED THAT THE ASSES SEE MUST HAVE RECEIVED THE NOTICE. IN OUR OPINION, THERE IS NO PLACE FOR THE PRESUMPTION WHEN THE PROVISIONS OF THE ACT ARE VERY CLEAR AND THERE IS NO AMBIGUITY AS REGARDS TO THE SERVICE OF NOTICE WHICH MUST BE BEFORE THE STIPULATED PERIOD. IN THE INSTANT CASE, SINCE THE NOTICE DATED 30/10/2003 HAS NOT BEE N SERVED ON THE ASSESSEE OR ANY AUTHORIZED PERSON OF THE ASS ESSEE, SO THE ASSESSMENT FRAMED WITHOUT SERVICE OF NOTICE WAS VOID ABINITIO. AS REGARDS TO THE SERVICE OF NOTICE IS C ONCERNED, THE PROVISIONS ARE CONTAINED IN SECTION 282 OF THE ACT WHICH READ AS UNDER: 282. (1) THE SERVICE OF A NOTICE OR SUMMON OR REQUISITIO N OR ORDER OR ANY OTHER COMMUNICATION UNDER THIS ACT (HE REAFTER IN THIS SECTION REFERRED TO AS COMMUNICATION) MAY BE MADE BY DELIVERING OR TRANSMITTING A COPY THEREOF, TO THE P ERSON THEREIN NAMED, (A) BY POST OR BY SUCH COURIER SERVICES AS MAY BE APPROVED BY THE BOARD; OR (B) IN SUCH MANNER AS PROVIDED UNDER THE CODE OF C IVIL PROCEDURE, 1908 (5 OF 1908) FOR THE PURPOSES OF SER VICE OF SUMMONS; OR (C) IN THE FORM OF ANY ELECTRONIC RECORD AS PROVID ED IN CHAPTER IV OF THE INFORMATION TECHNOLOGY ACT, 2000 (21 OF 2 000); 8 (D) BY ANY OTHER MEANS OF TRANSMISSION OF DOCUMENT S AS PROVIDED BY RULES MADE BY THE BOARD IN THIS BEHALF. (2) THE BOARD MAY MAKE RULES PROVIDING FOR THE ADDR ESSES (INCLUDING THE ADDRESS FOR ELECTRONIC MAIL OR ELECT RONIC MAIL MESSAGE) TO WHICH THE COMMUNICATION REFERRED TO IN SUB- SECTION (1) MAY BE DELIVERED OR TRANSMITTED TO THE PERSON THEREIN NAMED. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, THE EXPRESSIONS ELECTRONIC MAIL AND ELECTRONIC MAIL MESSAGE SHALL HAVE THE MEANINGS AS ASSIGNED TO THEM IN EXPL ANATION TO SECTION 66A OF THE INFORMATION TECHNOLOGY ACT, 2000 (21 OF 2000). ] 7.2 FROM THE ABOVE PROVISIONS IT IS CLEAR THAT THE NOTICE IS TO BE SERVED ON THE PERSON NAMED THEREIN I.E. THE ASSE SSEE, EITHER BY POST OR AS IF IT WERE A SUMMON ISSUED BY A COURT IN SUCH A MANNER AS PROVIDED UNDER THE CPC. THE PROVI SIONS CONTAINED IN ORDER (V) RULE 12 OF THE CPC 1908 PROV IDES THAT WHEREVER IT IS PRACTICAL, SERVICE SHALL BE MADE ON THE DEFENDANT IN PERSON WHEN PRACTICABLE OR ON HIS AGEN T. THE SAID PROVISIONS READ AS UNDER: SERVICE TO BE ON DEFENDANT IN PERSON WHEN PRACTICA BLE OR ON HIS AGENT WHENEVER IT IS PRACTICABLE, SERVICE SHALL BE MADE ON THE DEFENDANT IN PERSON, UNLESS HE HAS AN AGENT EMP OWERED TO ACCEPT SERVICE, IN SUCH CASE, SERVICE ON SUCH AG ENT SHALL BE SUFFICIENT. 7.3 IN THE PRESENT CASE, AS WE HAVE ALREADY NOTED I N THE FORMER PART OF THIS ORDER THAT THE NOTICE HAS NEITH ER BEEN SERVED ON THE ASSESSEE OR ANY OTHER PERSON AUTHORIZ ED BY THE ASSESSEE. THEREFORE, THE SERVICE ON SHRI SACHIN AG ARWAL, WHO WAS NOT AUTHORIZED, WAS NOT A VALID SERVICE. IN TH AT VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT IN THE I NSTANT CASE THE NOTICE U/S 143(2) BEFORE COMPLETING THE ASSESSM ENT U/S 143(3) HAS NOT BEEN SERVED UPON THE ASSESSEE. THER EFORE, THE ASSESSMENT FRAMED U/S 143(3) WAS INVALID. ON A SIMILAR ISSUE THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. IQBAL SINGH [2007] 162 TAXMAN 107 HAS HELD HAS UNDER: 9 SO, FROM THE ENTIRE MATERIAL AVAILABLE ON RECORD, WE HAVE NO HESITATION IN HOLDING THAT NO NOTICE U/S 143(2) OF THE ACT HAD BEEN SERVED UPON THE ASSESSEE WITHIN THE PRESCRIBED PERIOD AND, THEREFORE, THE ASSESSMENT MADE BY THE ASSESSIN G OFFICER, IS INVALID. 7.4 SIMILARLY IN THE CASE OF VIPIN KHANNA VS. CIT [ 2002] 255 ITR 220 (P&H), THEIR LORDSHIPS, AFTER TAKING NOTICE OF CIRCULAR NO. 549 OF 1989 OBSERVED AND HELD AS UNDER: 'THEREFORE, IN A CASE WHERE A RETURN IS FILED AND I S PROCESSED UNDER SECTION 143(1) (A) OF THE ACT AND NO NOTICE U NDER SUB- SECTION(2) OF SECTION 143 OF THE ACT THEREAFTER SER VED ON THE ASSESSEE WITHIN THE STIPULATED PERIOD OF 12 MONTHS THE ASSESSMENT PROCEEDINGS UNDER SECTION 143 COME TO AN END AND THE MATTER BECOMES FINAL. THUS, ALTHOUGH TECHNI CALLY NO ASSESSMENT IS FRAMED IN SUCH A CASE, YET THE PROCEE DINGS FOR ASSESSMENT STAND TERMINATED. THE CENTRAL BOARD OF D IRECT TAXES VIDE ITS CIRCULAR NO.549, DATED OCTOBER 31, 1 989 [1990] 182 ITR(ST.) 1, HAS EXPLAINED THE NEW PROCEDURE OF ASSESSMENT IN PARAS 5.12 AND 5.13 AS UNDER (PAGE 24 ): '5.12 SINCE, UNDER THE PROVISIONS OF SUB-SECTION (1 ) OF THE NEW SECTION 143, AN ASSESSMENT IS NOT TO BE MAD E NOW, THE PROVISIONS OF SUBSECTIONS (2) AND (3) HAVE ALSO BEEN RECAST AND ARE ENTIRELY DIFFERENT FROM THE OLD PROVISIONS. A NOTICE UNDER SUB-SECTION (2) WHICH WI LL BE ISSUED ONLY IN CASES PICKED UP FOR SCRUTINY, IS NOW ISSUED ONLY TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED HIS INCOME OR HAS NOT COMPUTED EXCESSIV E LOSS OR HAS NOT UNDERPAID THE TAX IN ANY MANNER WHI LE FURNISHING HIS RETURN OF INCOME. THIS MEANS THAT, U NDER THE NEW PROVISIONS, IN AN ASSESSMENT ORDER PASSED UNDER SECTION 143(3) IN A SCRUTINY CASE, NEITHER TH E INCOME CAN BE ASSESSED AT A FIGURE LOWER THAN THE RETURNED INCOME, NOR LOSS CAN BE ASSESSED AT A FIGU RE HIGHER THAN THE RETURNED LOSS, NOR A FURTHER REFUND CAN BE GIVEN EXCEPT WHAT WAS DUE ON THE BASIS OF THE RETURNED INCOME, AND WHICH WOULD HAVE ALREADY BEEN ALLOWED UNDER THE PROVISIONS OF SECTION 143(1)(A)(I I). 10 5.13 A PROVISO TO SUB-SECTION (2) PROVIDES THAT A N OTICE UNDER THE SUBSECTION CAN BE SERVED ON THE ASSESSEE ONLY DURING THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED OR WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN IS FURNISHED, WHICHEVER IS LATE R. THIS MEANS THAT THE DEPARTMENT MUST SERVE THE SAID NOTIC E ON THE ASSESSEE WITHIN THIS PERIOD, IF A CASE IS PI CKED UP FOR SCRUTINY. IT FOLLOWS THAT IF AN ASSESSEE, AFTER FURNISHING THE RETURN OF INCOME DOES NOT RECEIVE A NOTICE UNDER SECTION 143(2) FROM THE DEPARTMENT WITHIN THE AFORESAID PERIOD, HE CAN TAKE IT THAT THE RETURN FI LED BY HIM HAS BECOME FINAL AND NO SCRUTINY PROCEEDINGS AR E TO BE STARTED IN RESPECT OF THAT RETURN.' (EMPHASIS SUPPLIED). THUS, IT IS EVIDENT THAT THE BOARD ITSELF CONCEDES THAT IF THE ASSESSEE AFTER FURNISHING THE RETURN OF INCOME DOES NOT RECEIVE A NOTICE UNDER SECTION 143(2) OF THE ACT WI THIN THE STIPULATED PERIOD HE CAN TAKE IT THAT THE RETURN FI LED BY HIM HAS BECOME FINAL AND NO SCRUTINY PROCEEDINGS ARE TO BE STARTED IN RESPECT OF THAT RETURN. HERE IT NEEDS TO BE CLARIFI ED THAT IN THE BOARD'S CIRCULAR (SEE [1990] 182 ITR(ST.) I) THE ST IPULATED PERIOD HAS BEEN REFERRED TO AS SIX MONTHS AS IT WAS THE PERIOD SPECIFIED ORIGINALLY WHEN THE NEW PROVISION WAS INT RODUCED WITH EFFECT FROM APRIL 1, 1989. HOWEVER, VIDE AMEND MENT MADE BY THE FINANCE (NO.2) ACT, 1991, THIS PERIOD W AS ENHANCED TO TWELVE MONTHS WITH EFFECT FROM OCTOBER 1, 1991. IN THE PRESENT CASE IT IS AN ADMITTED POSITION THAT NO NOTICE UNDER SECTION 143(2) OF THE ACT HAD BEEN SERVED TO THE PETITIONER WITHIN THE STIPULATED PERIOD AND AS SUCH HIS RETURN HAD BECOME FINAL.' 7.5 THE RATIO LAID DOWN IN THE AFORESAID CASE HAS B EEN FOLLOWED BY HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. M. CHELLAPPAN AND ANOTHER [2006] 281 ITR 444 (MAD). 11 7.6 ON A SIMILAR ISSUE, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MOHAN DAIRY VS. UOI [2006] UPT C 461 (ALLAHABAD) HAS HELD AS UNDER: '7. HAVING HEARD LEARNED COUNSEL FOR THE PARTIES, I N MY VIEW, ORDER OF TRIBUNAL IS NOT SUSTAINABLE. THERE IS NO D ISPUTE THAT BEFORE PASSING THE ASSESSMENT ORDER UNDER SECTION 1 43(3) OF THE ACT, ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT WITHIN THE SPECIFIED TIME, IS MANDATORY AND IN CASE IF IT IS NOT ISSUED, ASSESSMENT ORDER PASSED STAND ILLEGAL. THUS , IN MY OPINION, GROUND, WHICH HAS BEEN RAISED AND SOUGHT T O BE ADDED IN THE GROUNDS OF APPEAL, IS A LEGAL GROUND W HICH GOES TO THE ROOT OF THE MATTER, AND THUS, THE TRIBUNAL O UGHT TO HAVE ALLOWED THE APPLICATION AND THE GROUND SOUGHT TO BE ADDED BE PERMITTED TO BE ADDED IN THE GROUNDS OF APPEAL. IN THE CASE OF NATIONAL THERMAL POWER COMPANY LTD. V. COMMISSIONER OF INCOME TAX (SUPRA), THE APEX COURT HELD AS FOLLOWS: 'THE VIEW THAT THE TRIBUNAL IS CONFINED ONLY TO ISS UES ARISING OUT OF THE APPEAL BEFORE THE COMMISSIONER O F INCOME TAX (APPEALS) TAKES TOO NARROW A VIEW OF THE POWERS OF THE APPELLATE TRIBUNAL (VIDE, E.G., COMMISSIONER OF INCOME TAX V. ANAND PRASAD (1981) 128 I.T.R. 388(DELHI); COMMISSIONER OF INCOME TAX V . KARAMCHAND PREMCHAND P LTD., (1969) 74 ITR 254 (GUJ) AND COMMISSIONER OF INCOME TAX V. CELLULOSE PRODUCTS OF INDIA LTD., (1985) 151 ITR 499 (GUJ)(FB ). UNDOUBTEDLY, THE TRIBUNAL WILL HAVE THE DISCRETION TO ALLOW OR NOT ALLOW A NEW GROUND TO BE RAISED. BUT W HERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER A QUESTIO N OF LAW ARISING FROM THE FACTS WHICH ARE ON RECORD IN T HE ASSESSMENT PROCEEDINGS, WE FAIL TO SEE WHY SUCH A QUESTION SHOULD NOT BE ALLOWED TO BE RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO COR RECTLY ASSESS THE TAX LIABILITY.' 7.7 THEIR LORDSHIPS OF THE HON'BLE JURISDICTIONAL HIGH COURT WHILE INTERPRETING THE PROVISIONS OF SECTION 143(2) OF THE ACT IN 12 THE CASE OF HARSINGAR GUTKHA (P) LTD. (SUPRA), OBSE RVED AT PAGE NO. 7 & 8 AS UNDER (COPY ON RECORD): PERUSAL OF THE PROVISIONS OF SECTION 143(2) OF THE ACT SHOWS THAT THE SERVICE OF THE NOTICE ON THE ASSESSE E WITHIN THE PERIOD PROVIDED UNDER THE PROVISO IS MANDATORY. IN THE ABSENCE OF THE NOTICE BEING SERVED WITHIN THE STIPU LATED PERIOD UNDER SECTION 143(2) OF THE ACT, ASSESSMENT PROCEED ING COMES TO AN END AND DEEMED TO HAVE BECOME FINAL. R ELIANCE IS BEING PLACED ON THE DECISIONS IN THE CASE OF COM MISSIONER OF INCOME TAX VERSUS M. CHELLAPPAN (SUPRA), VIPAN K HANNA VERSUS COMMISSIONER OF INCOME TAX & OTHERS (SUPRA) COMMISSIONER OF INCOME TAX VERSUS PALANIAPPAN (SUPR A), COMMISSIONER OF INCOME TAX VERSUS BHAN TEXTILES PVT . LTD. (SUPRA), COMMISSIONER OF INCOME TAX VERSUS LUNAR DI AMONS LTD. (SUPRA) AND DEPUTY COMMISSIONER OF INCOME TAX VERSUS MAHI VALLY HOTELS & RESORTS (SUPRA). 7.8 IN THE AFORESAID REFERRED TO CASES, THE RATIO L AID DOWN BY THE VARIOUS HON'BLE HIGH COURTS IS IN FAVOUR OF THE ASSESSEE. IN THAT VIEW OF THE MATTER, WE ARE OF THE CONFIRMED VIEW THAT SINCE THE NOTICE U/S 143(2) BEFORE COMPLETING THE A SSESSMENT U/S 143(2) HAS NOT BEEN SERVED ON THE ASSESSEE WITH IN THE STIPULATED PERIOD, THEREFORE, THE ASSESSMENT FRAMED WAS INVALID. 7.9 AS REGARDS TO THE CASE LAWS RELIED BY THE LEARN ED CIT, D.R. APPEARING ON BEHALF OF THE REVENUE IS CONCERNE D, THOSE CASES ARE DISTINGUISHABLE ON FACTS AND ARE NOT APPL ICABLE TO THE FACTS INVOLVED IN THE ASSESSEES CASE. BEFORE PARTING, WE MAY MENTION THAT THE LEARNED D.R. STATED THAT THIS ISSUE IS NOT ARISING OUT OF THE ORDER OF THE LEARNED CIT(A). AS WE HAVE ALREADY POINTED OUT IN THE FORMER PART OF THIS ORDE R THAT THE ASSESSEE AGITATED THIS ISSUE BEFORE THE ASSESSING O FFICER AS WELL AS LEARNED CIT(A) AND EVEN IF IT IS PRESUMED BUT NOT ADMITTED THAT THE ISSUE WAS NOT RAISED IN EARLIER P ROCEEDINGS, THEN ALSO THE ASSESSEE HAS EVERY RIGHT TO RAISE THE LEGAL ISSUE AT ANY STAGE AS PER THE RATIO LAID DOWN BY THE HON' BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. 13 229 ITR 383 (SC). SINCE WHILE DECIDING THE LEGAL ISSUE OF THE ASSESSEE WE HAVE HELD THAT THE ASSESSMENT FRAMED WA S ILLEGAL, THEREFORE, THE REMAINING GROUNDS RAISED BY THE ASSESSEE ARE NOT BEING ADJUDICATED. 8.2 RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUN AL PASSED IN THE CASE OF SHRI SANJEEV AGARWAL IN I.T.A. NO.495/LUC/09 RELATI NG TO ASSESSMENT YEAR 2002-2003 DATED 19/03/2010 (SUPRA), WE ANNUL THE AS SESSMENT ORDER DATED 30/03/2005 PASSED U/S 143(3) OF THE ACT. 9. SINCE WE HAVE ANNULLED THE ASSESSMENT, THEREFORE , WE DO NOT THINK IT NECESSARY TO DISCUSS AND DECIDE THE REMAINING GR OUNDS OF APPEAL, WHICH ARE ON MERITS. 10. IN THE RESULT, THE APPEAL IS ALLOWED AS INDICAT ED ABOVE. (THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 07/ 03/2011) SD/. (N. K. SAINI) ACCOUNTANT MEMBER SD/. ( H. L. KARWA ) VICE PRESIDENT DATED: 07/03/2011 *SINGH COPY FORWARDED TO THE: - 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR