ITO, Ludhiana V. Sh. Hukam Chand, Ludhiana

ITA 581/CHANDI/2011

• Counselvise Citation: 58121514 RSA 2011
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-02-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 26-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JAI SHREE SHARMA
• Section: 148; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 581/CHD/2011 ASSESSMENT YEAR: 2002-03 THE ITO-I(1), VS SHRI HUKAM CHAND, LUDHIANA S/O SHRI SANT RAM, LUDHIANA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SMT. JAISHREE SHARMA DATE OF HEARING : 23.2.2012 DATE OF PRONOUNCEMENT : 24.2.2012 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF CIT(A)-II, LUDHIANA DATED 17.3.2011 RELATING TO ASS ESSMENT YEAR 2002-03 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS:- 1. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN HO LDING THAT THE ASSESSMENT MADE BY AO U/S 144 OF I.T ACT, 1961 WAS INVALID AS NO NOTICE U/S 143(2) WAS ISSUED TO THE ASSESSEE, IGNOR ING THE FACT THAT NO RETURN WAS FILED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S 148 ISSUED BY AO ON 25.03.2009. 2 2. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN HO LDING THAT THE ASSESSMENT MADE BY AO U/S 144 OF IT ACT, 1961 WAS I NVALID AS NO NOTICE U/S 143(2) WAS ISSUED TO THE ASSESSEE, IGNOR ING THE REPLY OF AO (ATTACHED AS ANNEXURE-A) SUBMITTED VIDE LETT ER NO. ITO/WARD- I(I)/LDH/2010-LL/1398 DATED 14.03.2011 WHEREIN IT I S STATED THAT NO RETURN HAS BEEN FILED BY THE ASSESSEE INSPITE OF GI VING NUMEROUS OPPORTUNITIES. 3. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DE LETING THE ADDITION OF RS. 13,70,0007- MADE BY AO U/S 144 WITHOUT GOING INTO THE MERITS OF THE CASE. 3. AS REGARDS GROUND NOS. 1 & 2 OF THE APPEAL, THE BRIEF FACTS OF THE CASE ARE THAT NOTICE U/S 148 OF THE INCOME TAX ACT WAS I SSUED ON 25.3.2009 AND THE ASSESSEE WAS ASKED TO FILE HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2002- 03. IN RESPONSE TO THE NOTICE ISSUED U/S 148, THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002-03 AND ALSO INT IMATED ABOUT THE FILING OF THE RETURN TO THE ITO, RANGE I(1), LUDHIANA ON DATE D 29.4.2009 AND 30.4.2009 RESPECTIVELY. IN THIS CASE, THE ASSESSING OFFICER FRAMED THE ASSESSMENT U/S 144 OF THE ACT ON 18.12.2009 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 13,70,000/- 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) AND CONTENDE D THAT NO NOTICE U/S 143(2) OF THE ACT WAS EVER ISSUED BY THE ASSESSING OFFICER AFTER THE SUBMISSION OF THE INCOME TAX RETURN ON 29.4.2009 IN RESPONSE TO THE NOTICE U/S 148. ACCORDINGLY, IT WAS SUBMITTED BY THE ASSE SSEE BEFORE THE CIT(A) THAT THE ASSESSMENT MADE WITHOUT ISSUE AND SERVICE OF NOTICE U/S 143(2) OF 3 THE ACT WAS WITHOUT JURISDICTION AND, THEREFORE, THE SAME IS NULL AND VOID AND VOID AB INITIO. 5. THE CIT(A) ANNULLED THE ASSESSMENT ORDER, OBSER VING AS UNDER:- 6. I HAVE GONE THROUGH THE WRITTEN SUBMISSIONS OF THE APPELLANT'S COUNSEL AND ALSO PERUSED THE RELEVANT ASSESSMENT RE CORD. THOUGH THE APPELLANT HAS DULY FILED THE INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2002- 2003 IN RESPONSE TO THE NOTICE ISSUED U/S 148 BUT A CCORDING TO THE ORDER PASSED BY THE A.O., THE REQUISITE NOTICE U/S 143(2) WAS NEVER ISSUED ON THE APPELLANT. THE CASE WAS REFERRED TO A.O. AND ASKED TO SPECIFY THAT WHETHER OR NOT THE NOTICE U/S 143 (2) WAS ISSUED TO THE ASS ESSEE VIDE MY OFFICE LETTER NO. 1528 DATED 10.01.2011. IN RESPONSE TO THE SAME, THE A.O. GAVE THE REPLY VIDE NO. 1225 DATED 10.01.2011 MENTIONING THEREIN T HAT THE ASSESSMENT PROCEEDINGS ARE AS PER THE ORDER SHEET. HOWEVER ONC E AGAIN THE APPELLANT'S COUNSEL REQUESTED TO CALL FOR THE MORE SPECIFIC AND CATEGORICAL INFORMATION FROM THE A.O. THAT WHETHER OR NOT A NOT ICE U/S 143(2) WAS ISSUED TO THE ASSESSEE AFTER THE RECEIPT OF THE I.T .R. FILED IN RESPONSE TO THE NOTICE ISSUED U/S 148. IN REPLY THERETO VIDE LETTER NO. 1398 DATED 14.03.2011, THE A.O. MENTIONED INTER-ALIA THAT NO NOTICE U/S 14 3 (2) WAS EVER ISSUED. ACCORDING TO THE PROVISIONS OF SECTION 143(2) OF TH E ACT THE ISSUANCE OF A NOTICE UNDER THAT SECTION IS A MANDATORY PROVISION WHERE A RETURN HAS BEEN FURNISHED U/S 139 AND IN FURTHERANCE SECTION 1 48 OF THE ACT READS OUT THAT THE ITR FILED IN RESPONSE TO THE NOTICE IS SUED U/S 148 WILL BE AT PAR WITH THE RETURN U/S 139OF THE ACT. CHAPTER 2 OF THE MANUAL OF OFFICE PROCEDURES II (TECHNICAL) ON ASSESSMENT PROCEDURE (SCRUTINY) ALSO MAKES IT MANDA TORY TO ISSUE NOTICE U/S 143(2) BEFORE THE COMMENCEMENT OF SCRUTINY PROC EEDINGS UNDER THE ACT. 8. AS HELD VIDE A CATENA OF JUDICIAL DECISIONS, THE ISSUANCE AND SERVICE OF THE NOTICE U/S 143(2) IS MANDATORY AND NOT PROCE DURAL. HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. HOTEL BLUE MOON 321 I TR 362 (SC) AND HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. PAW AN GUPTA AND ORS. 318 ITR 322 (DEL) HELD THAT IF THE ASSESSMENT IS FRAMED WITHOUT ISSUE OF NOTICE U/S 143(2), THE SAME IS LIABLE TO BE QUASHED AS THA T IS NOT MERELY PROCEDURAL, BUT, MANDATORY. THE SAME VIEW IS HELD I N THE FOLLOWING: UKT SOFTWARE TECHNOLOGIES VS-ITO (ITAT DELHI) IT A NO. 5294/DEC/2010 ASSESSMENT YEAR 2005-2006 & 2006-2007 (ORDER DATED 11/2/2011) 4 VIPAN KHANNA VS. COMISSIONER OF INCOME TAX AND OTHE RS [2002] 255 ITR 220 (P&H) MRS. RAMA SINGH VS. CIT (2002) 256 ITR 481 (P&H) CIT VS. RAJEEV SHARMA (ITA NO. 19 OF 2004. HIGH COU RT OF ALLAHABAD) ORDER DATED 24/5/2010. SHRI R.K. GUPTA VS. ITO (CO. NO. 27/DEC/2006 IN IT A NO. 1736/DEC. 12003) O RDER DATED 18/9/2008. 6. THE CIT(A) DID NOT DECIDE THE GROUNDS RAISED BY THE ASSESSEE ON MERITS. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE IS SUE IN HAND IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE BY THE DECISION OF THE ITAT A BENCH, CHANDIGARH IN THE CASE OF ITO-I (1) LUDHIANA VS SHRI AMARJIT SINGH S/O SHRI KUNWAR CHAND, LUDHIANA IN IT A NO.580/CHD/2011. THE TRIBUNAL VIDE ORDER DATED 30.11.2011 DECIDED ID ENTICAL GROUNDS OF APPEAL OBSERVING AS UNDER:- 4. WE HAVE HEARD LD. DR AND ALSO PERUSED THE MATER IAL AVAILABLE ON RECORD. PERUSAL OF THE ORDER PASSED B Y THE CIT(A) SHOWS THAT THE ORDER OF ASSESSMENT WAS CANCELLED ON ACCOUNT OF THE FACT THAT STATUTORY NOTICE REQUIRED TO BE SERVE D U/S 143(2) WAS NEITHER ISSUED BY THE AO NOR SERVED UPON THE AS SESSEE. PERUSAL OF PARA 6 OF THE ORDER PASSED BY THE CIT(A) SHOWS THAT THE AO HIMSELF, VIDE HIS LETTER DATED 14.03.2011, H AS ADMITTED THAT NO NOTICE U/S 143(2) WAS ISSUED. LD. DR COULD NOT REBUT THE FINDINGS RECORDED BY THE CIT(A) IN THIS BEHALF. SINCE THE AO HIMSELF ACCEPTED THE FACTUM OF NON-ISSUE AND NON -SERVICE OF NOTICE U/S 143(2) ON THE ASSESSEE, THE LD. COMMISSI ONER WAS JUSTIFIED IN CANCELING THE ASSESSMENT ORDER. WE SE E NO VALID REASON TO INTERFERE WITH HIS ORDER. 5 8. THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THA T OF SHRI AMARJIT SINGH S/O SHRI KUNWAR CHAND LUDHIANA (SUPRA). IN THIS CA SE, IN RESPONSE TO NOTICE ISSUED U/S 148 OF THE ACT, THE ASSESSEE FILED HIS R ETURN OF INCOME ON 29 TH APRIL, 2009. ADMITTEDLY, THE NOTICE U/S 148 OF THE ACT WAS ISSUED ON 25.3.2009. IT IS SETTLED LAW THAT THE ISSUANCE AND SERVICE OF NOTICE U/S 143(2) IS MANDATORY AND NOT PROCEDURAL. IN THE INSTANT CAS E, THE ASSESSING OFFICER VIDE LETTER NO. 1398 DATED 14.3.2011, SUBMITTED THA T NO NOTICE U/S 143(2) WAS EVER ISSUED. CONSIDERING THE ENTIRE FACTS AND CIRC UMSTANCES OF THE PRESENT CASE AND ALSO SETTLED LEGAL POSITION, WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 9. SINCE WE HAVE UPHELD THE ORDER OF CIT(A) IN ANNU LLING THE ASSESSMENT ORDER AND, THEREFORE, WE DO NOT THINK IT NECESSARY TO DECIDE GROUND NO.3 OF THE APPEAL. 10. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF FEBRUARY, 2012 SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 24 TH FEBRUARY, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR 6 7