SHRI. VILAS DATTATRAY JOSHI, Mumbai V. DY. CIT OF ITC CC2 (4), Mumbai

ITA 5730/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6812 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 05-09-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Search and seizure; Question of law; Procedural lapse; Reassessment proceedings
• Section: 143(3); 142(1); 133A; 153A; 143(2); 113; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5730/M/2019 ASSESSMENT YEAR: 2011-12 SHRI VILAS DATTATRAY JOSHI, OFFICE NO.57, 4 TH FLOOR, ALLI CHAMBERS, TAMRIND STREET, FORT, MUMBAI 400 023 PAN: AAAPJ5714A VS. DY. CIT OF ITC, CC 2(4), R.NO.802, OLD CGO ANNEX BLDG., M.G. ROAD, MUMBAI 400020 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NISHIT GANDHI, A.R. REVENUE BY : MS. SMITA VERMA, D.R. DATE OF HEARING : 23.06.2021 DATE OF PRONOUNCEMENT : 23.06.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST ORDER DATED 28.06.2019 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A )] RELEVANT TO ASSESSMENT YEAR 2011-12. 2. THE FIRST GROUND OF APPEAL IS AGAINST THE ORDER OF LD. CIT(A) UPHOLDING THE ORDER OF AO FRAMED UNDER SECTION 143 (3) READ WITH SECTION 148 OF THE ACT BY IGNORING THE FACT TH AT THE AO HAS NO JURISDICTION TO FRAME THE ASSESSMENT AS NO MANDA TORY NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED. ITA NO.5730/M/2019 SHRI VILAS DATTATRAY JOSHI 2 3. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT WAS F RAMED UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT VIDE ORDER DATED 25.03.2014 ASSESSING THE TOTAL INCOME A T RS. 89,04,460/-. THEREAFTER, THE CASE OF THE ASSESSEE W AS REOPENED AFTER A SURVEY WAS CONDUCTED UNDER SECTION 133A OF THE ACT ON PMC MACHINE LTD. SIMULTANEOUSLY WITH THE SEARCH AND SEIZURE ACTION ON M/S. STERLING BIOTECH GROUP OF COMPANIES ON 28.06.2011. IN THE SAID SURVEY SOME DOCUMENTS REVE ALED THAT SOME PAYMENT HAS BEEN MADE TO THE ASSESSEE OF RS.5 ,22,000/- AND ACCORDINGLY THE CASE OF THE ASSESSEE WAS REOPEN ED BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT DATED 2 8.03.2018. NOTICE UNDER SECTION 142(1) DATED 25.07.2013 WAS AL SO ISSUED AND SERVED UPON THE ASSESSEE ALONG WITH REASONS REC ORDED FOR REOPENING WHICH WAS REPLIED BY THE ASSESSEE BY FILI NG OBJECTION TO THE REOPENING AND FINALLY THE ASSESSMENT WAS COM PLETED BY MAKING AN ADDITION OF RS.5,22,000/- UNDER SECTION 147 READ WITH SECTION 143(3) OF THE ACT DATED 18.12.2018. 4. THE ASSESSEE CHALLENGED THE SAID ASSESSMENT BEFO RE THE LD CIT(A) ON LEGAL ISSUE THAT THE ASSESSMENT FRAMED IS INVALID AND WITHOUT JURISDICTION AS NOT NOTICE U/S 143(2) OF T HE ACT WAS EVER ISSUE TO THE ASSESSEE. BUT THE LD CIT(A) DISMISSED THE SAME BY OBSERVING AND HOLDING THAT ASSESSEE HAS BEEN GIVEN PROPER OPPORTUNITY AFTER SERVING LETTER ON THE ASSESSEE TH OUGH THE SECTION 143(2) WAS NOT MENTIONED. THE LD. A.R. SU BMITTED BEFORE THE BENCH THAT THE MANDATORY STATUTORY NOTIC E UNDER SECTION 143(2) OF THE ACT WAS NOT ISSUED AND NOT SE RVED UPON THE ASSESSEE. THE LD. A.R. SUBMITTED BEFORE THE BENCH THAT WHILE REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE A CT THE AO ITA NO.5730/M/2019 SHRI VILAS DATTATRAY JOSHI 3 HAS FAILED TO ISSUE THE NOTICE UNDER SECTION 143(2) OF THE ACT. THE LD. A.R. SUBMITTED THAT IN ABSENCE OF NON ISSUA NCE OF STATUTORY NOTICE, THE AO CAN NOT PROCEED TO COMPUTE THE INCOME IN THE REASSESSMENT PROCEEDINGS. THE LD. A.R. SUBM ITTED THAT THE ORDER PASSED UNDER SECTION 143(3) READ WITH SEC TION 147 OF THE ACT IS THEREFORE WITHOUT JURISDICTION AND IS B AD IN LAW AS THE REVENUE HAS NOT COMPLIED WITH THE MANDATORY ISS UANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT. THE LD. A. R. SUBMITTED THAT THE SAID LAPSE ON THE PART OF THE AO IS NOT A PROCEDURAL IRREGULARITY AND IS NOT CURABLE AS THE REQUIREMENT OF NOTICE UNDER SECTION 143(2) CAN NOT BE DISPENSED WITH. THE LD. A.R. SUBMITTED THAT THE NON ISSUANCE OF NOTICE UNDER SEC TION 143(2) GOES TO THE ROOT OF THE ASSESSMENT AND IS NOT A PRO CEDURAL DEFECT BUT RENDERS THE ENTIRE ASSESSMENT AS NULLITY IN THE EYES OF LAW. IN DEFENCE OF HIS ARGUMENT THE LD. A.R. RELIED ON T HE FOLLOWING JUDICIAL DECISIONS: 1. CIT VS LAXMAN DAS KHANDELWAL (2019) 108 TAXMAN N.COM 183(SC) 2. ACIT V. HOTEL BLUE MOON: [2010] 188 TAXMAN 113 ( SC) 3. ACIT V. GENO PHARMACEUTICALS LTD.: [2013] 32 TAX MANN.COM 162 (BOMBAY) 4. PCIT V. SILVER LINE: [2016] 65 TAXMANN.COM 137 ( DELHI) 5. AJAYSINGH GAJANANSINGH GOUR V. ITO: ITA NO.398/N AG./2017 (NAGPUR- TRIB) 5. THE LD. A.R., THEREFORE PRAYED BEFORE THE BENCH THAT THE ASSESSMENT SO FRAMED BY THE AO UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT DATED 18.12.2018 BE QUASHED AS INVALID AND WITHOUT JURISDICTION AS THE SAME SUFFERS FROM T HE INCURABLE DEFECTS OF NON ISSUANCE AND NON SERVICE OF NOTICE U NDER SECTION 143(2) OF THE ACT. ITA NO.5730/M/2019 SHRI VILAS DATTATRAY JOSHI 4 6. THE LD. D.R. SUBMITTED THAT SINCE THE FACT OF HAVIN G ISSUED LETTER AND SERVED UPON THE ASSESSEE WAS DONE AND AS SESSEE ATTENDED THE ASSESSMENT PROCEEDINGS AND THEREFORE T HE LD AR CAN NOT BE ALLOWED TO TAKE THIS ISSUE AT LATTER DAT E. THE LD DR STATED THE LD CIT(A) DULY MENTIONED THE FACT OF HAV ING GRANTED PROPER OPPORTUNITY TO THE ASSESSEE AND CONSIDERING THESE FACT THE LEGAL ISSUE RAISED BY THE ASSESSEE MAY BE DISMI SSED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE IM PUGNED ORDER. WE OBSERVE FROM THE FACTS BEFORE US AND THE RIVAL SUBMISSIONS MADE BEFORE US THAT THERE IS A CONTROV ERSY AS TO NON ISSUANCE AND NON SERVICE OF NOTICE UNDER SECTIO N 143(2) OF THE ACT IN THE REASSESSMENT PROCEEDINGS. EVEN LD CI T(A) HAS RECORDED THIS FACT THAT LETTER GRANTING OPPORTUNITY TO THE ASSESSEE WAS DULY ISSUED AND SERVED ON THE ASSESSEE IN WHICH THE AO OMITTED TO MENTION SECTION 143(2). IN OUR OP INION THE NON ISSUANCE OF NOTICE U/S 143(2) IS A FATAL DEFECT WHICH CAN NOT BE CURED AND GOES TO THE ROOT OF THE ASSESSMENT FRA MED. IN THIS BACKGROUND OF THE CASE, WE ARE OF THE CONSIDERED VI EW THAT ASSESSMENT SO FRAMED BY THE AO WITHOUT ISSUING NOTI CE UNDER SECTION 143(2) IS INVALID AND LIABLE TO BE QUASHED. ACCORDINGLY, WE HOLD THAT THE ASSESSMENT FRAMED BY THE AO UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT DATED 18.12 .2018 IS WITHOUT JURISDICTION AND IS INVALID. THE CASE OF TH E ASSESSEE IS SQUARELY COVERED BY THE VARIOUS DECISIONS RELIED AN D REFERRED TO ABOVE AS IN THE CASE OF ACIT VS. GENO PHARMACEUTICA LS LTD. (SUPRA) THE HONBLE BOMBAY HIGH COURT HAS HELD THAT WHERE NO NOTICE UNDER SECTION 143(2) HAS BEEN ISSUED WHILE M AKING ITA NO.5730/M/2019 SHRI VILAS DATTATRAY JOSHI 5 ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 1 47, THE ASSESSMENT SO FRAMED IS BAD IN LAW AS THE AO CAN NO T PROCEED TO MAKE AN ENQUIRY ON THE RETURN FILED IN COMPLIANC E TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT AND THUS DISMISSED THE APPEAL OF THE REVENUE BY HOLDING THAT NO SUBSTA NTIAL QUESTION OF LAW AROSE OUT OF THE APPEAL OF THE REVE NUE. SIMILARLY, IN THE CASE OF CIT VS. LAXMAN DAS KHANDE LWAL (2019) 108 TAXMANN.COM 183 (SC) THE HONBLE APEX COURT HAS HELD THAT NO NOTICE UNDER SECTION 143(2) WAS EVER ISSUED BY THE DEPARTMENT, THEREFORE, THE FINDING RENDERED BY HIGH COURT AND THE TRIBUNAL AND THE CONCLUSION ARRIVED AT WERE COR RECT AND THERE IS NO REASON TO TAKE A DIFFERENT VIEW IN THE MATTER. PERTINENT TO MENTION THAT HONBLE MADHYA PRADESH HI GH COURT IN THE CASE OF CIT VS. LAXMAN DAS KHANDELWAL (SUPRA ) HAS HELD THAT AO HAD NO VALID JURISDICTION TO PASS THE ASSES SMENT ORDER AS THE VERY FOUNDATION OF ASSESSMENT PROCEEDING IS BAD IN LAW AND HENCE THESE PROCEEDINGS CULMINATED IN THE ASSES SMENT ORDER AS WELL AS IMPUGNED ORDER STAND QUASHED AND T HUS DISMISSED THE APPEAL OF THE REVENUE. 8. AFTER TAKING INTO CONSIDERATION THE FACTS OF THE CASE VIS-- VIS THE RATIO LAID DOWN BY THE HONBLE SUPREME COUR T AND VARIOUS HIGH COURTS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSMENT PROCEEDINGS AND THE CONSEQUENT REASSESSM ENT ORDER DATED 18.12.2018 PASSED UNDER SECTION 143(3) READ W ITH SECTION 147 ARE BAD IN LAW AS THE MANDATORY NOTICE UNDER SE CTION 143(2) WAS NOT ISSUED. ACCORDINGLY, WE QUASH THE PROCEEDI NGS INITIATED BY THE AO UNDER SECTION 147 AND ALSO THE CONSEQUENT REASSESSMENT ORDER. THE GROUND NO. 1 IS ALLOWED. SINCE WE ITA NO.5730/M/2019 SHRI VILAS DATTATRAY JOSHI 6 HAVE DECIDED THE LEGAL ISSUE AS RAISED IN GROUND NO 1 IN FAVOUR OF THE ASSESSEE OTHER GROUNDS NEED NO ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.06.2021. SD/- SD/- ( SAKTIJIT DEY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 23.06.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.