KANCHANJUNGA IMPEX P.LTD, MUMBAI V. ITO WD 9(2)(2), MUMBAI

ITA 6057/MUM/2013

• Counselvise Citation: 605719914 RSA 2013
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-09-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 15-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAGHUVEER MADNAPPA
• Assessee Lawyers: ASHWIN S CHHAG
• Keywords: Invalid notice; Period of limitation; Additional evidence; Question of law; Tangible material; Difference of opinion; Validity of assessment; Procedural lapse; Assessment record; Block assessment; Time period of passing order; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 80HHC; 133A; 147; 148; 144

Judgement Text

, ' INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A,BENCH , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMB ER & SANJAY GARG,JUDICIAL MEMBER /. ITA NO. 6057 /MUM/201 3 , / ASSESSMENT YEAR - 20 02 - 03 M/S. KANCHANJUNGA IMPEX PVT. LTD. 113 - 114, UDYOG BHAVAN SHARMA INDL. ESTATE GOREGAON(E ) , MUMBAI - 400 0 63 . PAN: AA ACK 4208 P VS INCOME TAX OFFICER WARD - 9(2) - 2 ROOM NO.22, AAYAKAR BHAVAN MUMBAI - 400 020. ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY :SHRI ASHWIN S. CHHAG / REVENUE BY : SHRI RAGHUVEER MADNAPPA / DATE OF HEARING : 1 0 - 0 9 - 2015 / DATE OF PRONOUNCEMENT : 23 - 09 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDERS DT.08.07.2013 OF CIT(A) - 20,MUMBAI,THE ASSESSEE HAS FILED FOLLOWING GROUNDS OF APPEAL: (1)THAT THE ID. CIT(A) HAS EXCEEDED HIS JURISDICTION WHILE CONCURRING WITH THE VIEW OF THE / ASSESSING OFFICER THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL IS LEGALLY NOT SUSTAINABLE FOR TH E REASON THAT THE SAME IS NOT EMANATING FROM ASSESSMENT ORDER OR FROM CIT(A)'S ORDER WHICH IS APPEALED AGAINST BEFORE THE ITAT. (2)THAT THE ID. CIT(A) IS ERRED TO ADJUDICATE THE ISSUE OF JURISDICTION MERELY FOLLOWING THE REMAND REPORT OF THE AO WITHOUT REFERRING TO THE CASE RECORD AS MUCH AS COPY OF REASONS RECORDED U/S.147 IN CONTRAST TO DIRECTION OF H'BLE ITAT WITHOUT APPRECIATING THAT HIS DIRECTION TO THE AO WAS VERY PRECISE IN ACCORDANCE TO THE DIRECTION OF TRIBUNAL. (3)THAT THE ID. CIT(A) IS ER RED TO CONCUR WITH THE VIEW OF THE ASSESSING OFFICER AND HOLD, WHERE IT IS ADMITTED FACT THAT REOPENING IS WITHOUT ANY ADDITIONAL EVIDENCE OR TANGIBLE MATERIAL, THAT THE AO ACQUIRES JURISDICTION U/S.147 IF HE HAS REASON TO BELIEVE THAT ANY INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR IGNORING THE CITED JUDICIAL PRONOUNCEMENT. (4)THAT THE ID. CIT(A) IS ERRED TO CONCUR WITH THE VIEW OF THE ASSESSING OFFICER AND HOLD THAT THE AO IS NOT BOUND TO SERVE NOTICE U/S.143(2) BUT CAN PROCEED TO COMPLETE THE REASSESSMENT ON THE BASIS OF NOTICES ISSUED U/S.148 AND 142(1) WHICH ARE DULY COMPLIED BY THE AO. (5)THAT THE ID. CIT(A) IS ERRED TO CONCUR WITH THE VIEW OF THE ASSESSING OFFICER AND HOLD, WHERE CLAIM MADE BY THE APPELLANT THAT THE REOPENING PROCEEDING INITIATED U/S.147/148 IS BY CIRCUMVENTING S.143(2) TO EXTEND THE LIMITATION PERIOD IS WITHOUT ANY BASIS WITHOUT APPRECIATING THE FACT THAT RE OPENING WAS SUBJECT TO CHANGE OF OPINION. (6)THAT THE ID.CIT(A) IS ERRED TO HOLD THAT THE DECISIONS RELIED UPON BY THE APPELLANT, IN THE CASE OF GK DRIVE SHAFT 259 ITR 19(5C),HOTEL BLUE MOON(201O) 321 ITR 362(SC),CWT VS.HUF OF LATE J M SCINDIA (2008)300 ITR 193(BOM) ARE INAPPLICABLE AND DECISION OF CIT VS. SALMAN KHAN ITA NO.508 DATED 1 0.06.2011 GOES AGAINST THE APPELLANT. (7) LD. CIT(A) ERRED TO INVOKE S.292BB, INSERTED BY FINANCE ACT 2008 W.E.F.1.04.2008, TO A PROCEEDING RELEVANT TO A.Y.2002 03 WITHOUT APPRECIATING THAT ITS APPLICABILITY IS PROSPECTIVE. 6057 /M/13 KANCHANJUNGA I MPEX 2 WITHOUT PREJUDICE TO THIS , S.292BB WILL HAVE NO APPLICABILITY WHERE IT IS ADMITTED BY BOTH THE LOWER AUTHORITY THAT, NO NOTICE U/S. 143(2) WAS EVER ISSUED. (8) THAT THE APPELLANT SEEKS LEAVE OF THE HON'BLE TRIBUNAL TO ADD, AMEND, MODIFY, ALTER THE AFORESAID GROUNDS DURING TH E COURSE OF HEARING OF THE APPEAL OR AT AN EARLIER POINT OF TIME. BRIEF HISTORY: 2. IN THIS MATTER THE TRIBUNAL HAD DECIDED THE MAIN ISSUE RELATING TO REWORKING OF 80HHC DEDUCTION ON 30.09.2010 WHILE DECIDING THE APPEALS ITA/2596 - 7016/MUM/2006 - 2008).WHILE DEALING WITH THE ADDITIONAL GROUND RAISED BY THE ASSESSEE WITH REGARD TO NON ISSUANCE OF NOTICE U/S.143(2)OF THE ACT THE TRIBUNAL HELD THAT ASSESSMENT RECORDS WERE NOT AVAILABLE TO DECIDE THE ISSUE,THAT THE FIRST APPELLATE AUTHORITY(FAA)SHOULD ADJUDICATE THE ISSUE AS PER LAW.IN PURSUANCE OF THE DIRECTIONS OF THE TRIBUNAL THE FAA HEARD THE ASSESSEE AND CALLED FOR A REPORT FROM THE ASSESSING OFFICER(AO).HE SUPPLIED A COPY OF THE COMMENTS OF THE AO TO THE ASSESSEE AND MAKE FURTHER SUBMISSION. BEFORE HIM THE A SSESSEE ARGUED THAT NO NOTICE U/S.143(2)OF THE ACT WAS ISSUED BY THE AO ON OR BEFORE 30.10.2003,THAT THE REASONS RECORDED WERE DEMANDED BUT WERE NOT GIVEN BY THE AO,THAT THE ORDER PASSED BY THE AO U/S.143(3)R.W.S.147 WAS VOID AB INITIO,THAT NO FRESH MATERI AL WAS BROUGHT ON RECORD BY THE AO FOR RE - OPENING THE ASSESSMENT,THAT ADDITIONAL GROUND RAISED BEFORE THE TRIBUNAL WAS A LEGAL GROUND.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE AO,THE FAA HELD THAT THERE WAS NO VIOLATION OF PRINCIPLES OF NAT URAL JUSTICE,THAT IT WAS NOT DEPRIVED OF HAVING REASONS OF REOPENING,THAT THE ASSESSEE HAD NOT ASKED FOR REASONS FOR REOPENING,THAT AUTHORISED REPRESENTATIVE(AR)OF THE ASSESSEE PARTICIPATED IN THE ASSESSMENT PROCEEDINGS,THAT BEFORE THE THEN FAA ISSUE OF NO N SUPPLY OF REASONS WAS NOT AGITATED,THAT THE ASSESSEE HAD FOR THE FIRST TIME VIDE ITS LETTER DATED 21.09.2008 HAD ASKED FOR THE REASONS FOR REOPENING AND COPY OF THE NOTICE ISSUED U/S.143(2)OF THE ACT,THAT THERE WAS NO PROPRIETY ON PART OF THE ASSESSEE T O RAISE AN OBJECTION BY WAY OF ADDITIONAL GROUND OF APPEAL REGARDING SERVICE OF NOTICE U/S.143(2)OF THE ACT.HE REFERRED TO THE PROVISIONS OF SECTION 292BB OF THE ACT AND HELD THAT THE ASSESSEE HAD NOT RAISED ANY OBJECTION BEFORE COMPLETION OF RE - ASSESSMENT PROCEEDINGS, THAT IT WAS NOT ENTITLED TO RAISE ANY SUCH OBJECTION WITHOUT ANY VALID REASON SUBSEQUENTLY, THAT IT HAD NOT RAISED ANY OBJECTION BEFORE THE THEN FAA,THAT ADDITIONAL GROUND WAS NOT EMANATING FROM ASSESSMENT ORDER OR THE APPELLATE ORDER , THAT SAME WAS NOT LEGALLY TENABLE,THAT ISSUE OF NOTICE U/S.143(2)WAS INCIDENTAL TO RE - ASSESSMENT PROCEEDINGS,THAT REASSESSMENT WAS NOT VITIATED BECAUSE A NOTICE U/S.143(2)WAS NOT ISSUED.FINALLY,HE DECIDED THE ISSUE, REMANDED BY THE TRIBUNAL,AGAINST THE ASSESSEE . 3. BEFORE US,THE AUTHORISED REPRESENTATIVE(AR)STATED THAT THE PROCEEDINGS INITIATED U/S.147 WERE WITHOUT JURISDICTION,THAT SAME WERE INITIATED TO CIRCUMVENT THE NON ISSUANCE OF NOTICE U/S.143(2) OF THE ACT,THAT IT WAS NOT PERMISSIBLE UNDER THE LAW AS WHA T COULD NOT BE DONE DIRECTLY COULD NOT BE DONE INDIRECTLY,THAT NO TANGIBLE MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT INCOME HAD ESCAPED ASSESSMENT,THAT AO HIMSELF HAD ADMITTED THAT NOTICE U/S.143(2)OF THE ACT WAS NOT ISSUED. HE RELIED UPON THE CASES OF C EBON INDIA LIMITED(347ITR583)SANTOSH G SAWANT(ITA/ 830/MUM/2011 - AY.2005 - 06 DATED 30.05.2015),SRI ISHWAR SADAN CO - OP. HOUSING SOCIETY(ITA/2441/MUM/2011 - AY.2001 - 02,DTD.27.08.2014),BEDROCK LIMITED (ITA/ 5450/MUM/2011,AY. - 2005 - 06,DTD.25.07.2012).DEPARTMENTAL R EPRESENTATIVE(DR)SUPPORTED THE ORDER OF THE FAA. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD.WE FIND THAT IN THIS 6057 /M/13 KANCHANJUNGA I MPEX 3 CASE THE ASSESSEE HAD FILED RETURN OF INCOME ON 30.12.2002,THAT THE RETURN WAS PROCESSED ON 19.02.2003,THAT THE AO HAD REOPENED THE ASSESSMENT AFTER ISSUING NOTICE U/S.148 OF THE ACT, THAT HE ISSUED NOTICE U/S.142(1)OF THE ACT ON 11.01.2005,THAT THE AO COMPLETED THE ASSESSMENT ON 31.03.2005,THAT THE THEN FAA HAD DECIDED THE APPEAL 20.02.2006,THAT IN THE SECOND ROUND OF LITIGATION THE FAA DECIDED THE ISSUE AGAINST THE ASSESSEE. AFTER CONSIDERING THE SUBMISSIONS WE ARE OF THE OPINION THAT FOLLOWING TWO QUESTIONS HAVE TO BE ANSWERED BY US: I.WHETHER NON ISSUANCE OF NOTICE U/S.143(2)OF THE ACT IN RE - ASSESSMENT PROCEEDING S WAS FATAL RESULTING IN HOLDING THE ASSESSMENT COMPLETED U/S.147 INVALID AND II.WHETHER THE NON ISSUANCE OF 143(2)NOTICE IS A DEFECT THAT IS CURABLE BY THE PROVISIONS OF SECTION 292 BB OF THE ACT. WE ARE OF THE OPINION THAT BOTH THE QUESTIONS STAND DECIDE D BY VARIOUS JUDGMENTS.IN THE CASE OF BEDROCK LIMITED(SUPRA)ONE OF THE GROUNDS READ AS UNDER: 3.THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT WITHOUT PROPER ISSUE AND SERVICE OF NOTICE U/S.143(2) WITHIN TIME STIPULATED UNDER THE ACT, THE ORDER PASSED IN PURSUANCE THERETO WAS BAD IN LAW AND AB INITIO VOID. HE ERRED IN HOLDING THAT ISSUING THE NOTICE U/S.143(2) WAS A PROCEDURAL MATTER. THE TRIBUNAL HAD DISCUSSED AND DECIDED THE ISSUE AS UNDER: 4. BEFORE US, THE AUTHORISED REPRESENTATIVE (AR) SUBMITT ED THAT THERE WAS NO ESCAPEMENT OF INCOME, THAT THE REASSESSMENT WAS RESULT OF CHANGE OF OPINION BY THE AO AND HENCE WAS NOT AS PER THE PROVISIONS OF THE ACT, THAT NO NEW TANGIBLE MATTER FOR REOPENING THE ASSESSMENT WAS AVAILABLE WITH THE AO,THAT NOTICE UN DER SECTION 143 (2) WAS ISSUED AFTER 6 MONTHS, THAT THE NOTICE ISSUED UNDER SECTIONS 143 (2) WAS BEYOND TIME LIMIT PRESCRIBED BY THE ACT. HE RELIED UPON CASES OF HOTEL BLUE MOON (321 ITR 362), LATE J. M. SCINDIA (300 ITR 193) AND (227 CTR 387).HE FURTHER SUBMITTED THAT IF THE ASSETS WERE INTRODUCED IN AOP, THEN, AS PER THE PROVISIONS OF SECTION 45 (3) OF THE ACT, THAT MARKET VALUE COULD NOT BE REPLACED FOR ORIGINAL VALUE,THAT WHILE FILING THE RETURN OF INCOME AMOUNT RECORDED IN THE BOOKS OF ACCOUNTS WAS RI GHTLY SHOWN AS THE CONSIDERATION FOR THE PLOT OF LAND.HE ALSO REFERRED TO THE DECISION DELIVERED BY THE B BENCH OF THE ITAT MUMBAI IN THE CASE OF MEENAKSHI METALLICS PVT. LTD (IT(SS)A NO.116/MUM/2007. DTD.13.04.2012). 5. DEPARTMENTAL REPRESENTATIVE (DR) SUB MITTED THAT NOTICE ISSUED UNDER SECTION 143 (2) OF THE ACT WAS NOT CONTESTED BY THE APPELLANT COMPANY DURING ASSESSMENT PROCEEDINGS, THAT SECTION 292BB OF THE ACT WAS APPLICABLE IN THE CASE UNDER CONSIDERATION, THAT THE ASSESSEE COMPANY WAS BARRED FROM TAK ING THE ISSUE OF SERVICE OF NOTICE ISSUED UNDER SECTION 143 (2) ONCE IT WAS NOT RAISED BEFORE THE AO. HE RELIED UPON JUDGEMENTS OF PANCHAVATI MOTORS PRIVATE LTD. (12 TAXMANN.COM111), ARAVALI ENGINEERS (P) LTD.(11TAXMANNN.COM291). IN REJOINDER AR SUBMITTE D THAT ISSUE WITH REGARD TO THE APPLICABILITY OF SECTION 292 BB HAS BEEN DELIBERATED UPON AND DECIDED BY THE DECISION OF THE SPECIAL BENCH IN THE CASE OF KUBER TOBACCO PRODUCTS PRIVATE LTD.(117 ITD273),THAT THE PROVISIONS OF THE SECTION 292 BB WERE APPLICA BLE FROM THE ASSESSMENT YEAR 2008 09,THAT THE SAID PROVISIONS WERE NOT RELEVANT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THAT IN THE MATTER OF ARAVALI ENGINEERS RETROSPECTIVE APPLICABILITY OF THE SECTION 292BB WAS NOT CONSIDERED. 6. WE HAVE HEARD THE RI VAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL SUBMITTED BY THE REPRESENTATIVES OF BOTH THE SIDES. WE ARE OF THE OPINION THAT BEFORE DECIDING OTHER GROUNDS OF APPEAL WE SHOULD ADDRESS THE QUESTION OF ISSUE OF NOTICE U/S.143(2) OF THE ACT. IN OTHER WORDS BA SIC QUESTION TO BE DECIDED IS WHETHER THE LAPSE OF ISSUING NOTICE UNDER SECTION 143 (2) OF THE ACT BEYOND PRESCRIBED TIME LIMIT CAN BE CURED BY THE PROVISIONS OF SECTION 292BB OF THE ACT ? SECTION 6057 /M/13 KANCHANJUNGA I MPEX 4 292BB OF THE ACT IS ABOUT NOTICE DEEMED TO BE VALID IN CER TAIN CIRCUMSTANCES. PROVISIONS OF THE SAID SECTION, HAVE BEEN SUBJECT MATTER OF A LOT OF DELIBERATIONS FROM THE TIME THEY FOUND PLACE IN THE ACT. THE LEGAL POSITION EMERGING FROM VARIOUS JUDGMENTS, SPECIALLY THEIR RETROSPECTIVE APPLICABILITY, HAVE BEEN SU MMARISED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF KUBER TOBACCO PRODUCTS PRIVATE LTD.(SUPRA).IN THAT CASE IT WAS HELD SECTION 292 BB CANNOT BE CONSTRUCTED TO HAVE RETROSPECTIVELY EFFECTIVE AND IT HAS TO BE APPLIED PROSPECTIVELY . CONSEQUENTLY, UPTO 31 ST MARCH, 2008,THE ASSESSEE IS NOT PRECLUDED FROM TAKING ANY OBJECTIONS REGARDING INVALIDITY OF ASSESSMENT ETC. ON THE GROUND OF INVALID IMPROPER ISSUANCE / SERVICE OF NOTICE IN APPELLATE PROCEEDINGS, BUT THE ASSESSEE IS PRECLUDED FROM DOING SO FOR AND FROM AY 2008 09. 7. WE FIND THAT BEFORE THE FAA THE ASSESSEE COMPANY HAD RAISED THE OBJECTION WITH REGARD TO ISSUE OF NOTICE BEYOND THE PRESCRIBED TIME LIMIT. IN THE GROUNDS OF APPEAL FILED BEFORE THE FAA AND IN THE STATEMENTS OF FACTS SUBMITTED TO HI M, THE ASSESSEE HAD CLEARLY MENTIONED THAT NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AFTER 6 MONTHS I.E. AFTER PERIOD STIPULATED BY THE ACT LAPSED. WE FIND THAT IN THE MATTERS OF PANCHAVATI MOTORS PRIVATE LTD. AND ARAVALI ENGINEERS (SUPRA) OBJECTI ON, WITH REGARD TO ISSUANCE OF NOTICE AFTER THE PRESCRIBED LIMIT, WAS RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL. BUT, IN THE CASE UNDER CONSIDERATION, THE ASSESSEE HAD RAISED THE OBJECTION BEFORE THE FAA AND THE ISSUE WAS DECIDED AGAINST THE ASSESSEE C OMPANY BY THE FAA. THE ASSESSEE HAS CHALLENGED THE SAID ADJUDICATION OF THE FAA BEFORE US. IN FORM NUMBER 36 FILED BY THE ASSESSEE, IT HAS BEEN CLEARLY MENTIONED THAT THERE WAS VIOLATION OF PROVISIONS OF SECTION 143(2) OF THE ACT. THUS, THE FACTS OF THE CASE UNDER CONSIDERATION ARE DIFFERENT FROM THE CASE LAWS RELIED UPON BY THE DR. IT IS TRUE THAT IN THE CASE OF HOTEL BLUE MOON, THE ISSUE BEFORE THE HONBLE SUPREME COURT WAS ABOUT BLOCK ASSESSMENT AND THAT THE MATTER UNDER CONSIDERATION IS NOT RELATED W ITH CHAPTER XIVB OF THE ACT. BUT, THE BROAD PARAMETERS LAID DOWN BY THE APEX COURT IN THAT MATTER ARE OF BINDING NATURE. HERE, WE WOULD LIKE TO MENTION A FEW IMPORTANT FACTS REGARDING ISSUE UNDER CONSIDERATION: I). NOTICE UNDER SECTION 143 (2) OF THE ACT W AS ISSUED BY THE AO BEYOND THE STIPULATED TIME PROVIDED IN THE ACT. II). ASSESSMENT YEAR UNDER CONSIDERATION IS PRIOR TO ASSESSMENT YEAR 2008 09. III). PROVISIONS OF SECTION 292BB ARE APPLICABLE FROM 1ST OF APRIL 2008. 7.1.IN LIGHT OF ABOVE FACTS WE A RE OF THE OPINION THAT NOTICE UNDER SECTION 143(2)OF THE ACT WAS ISSUED BEYOND THE PRESCRIBED LIMIT, HENCE, IT WAS NOT A VALID NOTICE. AS THE ASSESSMENT YEAR UNDER CONSIDERATION IS PRIOR TO AY 2008 09, SO, PROVISIONS OF SECTION 292BB OF THE ACT ARE ALSO NOT APPLICABLE. IN OUR OPINION ASSESSMENT PROCEEDINGS COMPLETED IN PURSUANCE OF A TIME BARRED NOTICE WERE BAD IN LAW AND INVALID. 8. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE UNDER CONSID ERATION GROUND NUMBER 3 IS DECIDED IN FAVOUR OF THE ASSESSEE. IN THE MATTER OF A LPINE E LECTRONICS A SIA PVT.LT D. (341ITR247)THE HONBLE DELHI HIGH COURT HAS HELD AS UNDER: SECTION 143(2) OF THE INCOME TAX ACT, 1961, IS APPLICABLE TO PROCEEDINGS UNDER SECTI ON 147 / 148 OF THE ACT.THE PROVISO TO SECTION 148 OF THE ACT GRANTS LIBERTY TO THE REVENUE TO SERVE NOTICE UNDER SECTION 143(2) OF THE ACT BEFORE PASSING THE ASSESSMENT ORDER FOR RETURNS FU RNISHED ON OR BEFORE OCTOBER 1, 2005. IN RESPECT OF RETURNS FILED P URSUANT TO NOTICE UNDER SECTION 148 OF THE ACT AFTER OCTOBER 1, 2005, IT IS MANDATORY TO SERVE NOTICE UNDER SECTION 143(2) OF THE ACT, WITHIN THE STIPULATED TIME LIMIT. NOW,WE WOULD LIKE TO DISCUSS THE CASE OF CEBON INDIA LTD.(SUPRA).FACTS OF THE CASE WER E THAT T HE ASSESSEES RETURN FOR THE ASSESSMENT YEAR 1996 - 97 ON 30 .11.1 996, WAS PROCESSED UNDER SECTION 143(1)(A) OF THE ACT, ON 30 .05. 1997, AND ASSESSMENT WAS FRAMED UNDER SECTION 144 OF THE ACT AND AFFIRMED IN APPEAL. THE TRIBUNAL REMANDED THE MATTER TO THE FAA,WHO IN THE SECOND ROUND, 6057 /M/13 KANCHANJUNGA I MPEX 5 ALLOWED THE APPEAL ON THE GROUND THAT THERE WAS NO EVIDENCE TO SHOW THAT NOTICE UNDER SECTION 143(2) OF THE ACT HAD BEEN SERVED ON THE ASSESSEE BEFORE 30 .11. 1997, I.E., WITHIN ONE YE AR OF THE FILING OF THE RETURN.THEREFORE, HE HELD THE ASSESSMENT VOID.THIS FINDING WAS AFFIRMED BY THE TRIBUNAL. THE HONBLE P & H HIGH COURT,DECIDED THE APPEAL ,FILED BEFORE IT,AS UNDER : ...THAT A CONCURRENT FINDING HAD BEEN RECORDED BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL ON THE QUESTION OF DATE OF SERVICE OF NOTICE. THE NOTICE WAS NOT SERVED WITHIN THE STIPULATED TIME. MERE GIVING OF DISPATCH NUMBER WOULD NOT RENDER THE FINDING PERVERSE. IN THE ABSENCE OF NOTICE BEING SERVED, THE ASSESSING OFFICER HAD NO JURISDICTION TO MAKE ASSESSMENT. ABSENCE OF NOTICE WAS NOT CURABLE UNDER SECTION 292BB OF THE ACT. WE WOULD NOW REPRODUCE THE RELEVANT PORTION OF THE DECISION OF SRI ISHWAR SADAN CO - OP. HOUSING SOCIETY(SUPRA).ONE OF US WAS PARTY TO THAT ORDER AND IT READS AS UNDER: 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A REGISTERED CO OPERATIVE HOUSING SOCIETY. THE RETURN OF INCOME WAS FILED ON 22.08.2002 DECLARING THE TOTAL INCOME AT RS.NIL. THE SAME WAS PROCESSED U/S. 143(1) OF THE L. T. ACT. SUBSEQUENTLY, IT WAS LEARNT THA T THE ASSESSEE HAD ENTERED INTO AN AGREEMENT FOR SALE/TRANSFER OF TDR / FSI WITH NARANG DEVELOPERS PVT. LTD., FOR A CONSIDERATION OF RS.55,OO,OOO/ . SINCE THIS TRANSACTION WAS NOT DISCLOSED IN THE RETUM OF INCOME FILED, THE ASSESSMENT WAS REOPENED U /S.147 OF THE L.T. ACT BY ISSUE OF NOTICE U/S.148 OF THE L.T. ACT. 3. THROUGH GROUNDS NO. 1 & 2, THE ASSESSEE HAS RAISED THE CONTENTION THAT NO NOTICE U/S.143(2) WAS ISSUED TO THE ASSESSEE UNDER THE REOPENED ASSESSMENT PROCEEDINGS U/S.147 R.W.S. 143 (3) OF THE ACT. THE ID. AR HAS SUBMITTED THAT THE ISSUANCE OF NOTICE BEFORE REOPENING OF THE ASSESSMENT WAS MANDATORY. HE HAS RELIED UPON A DECISION OF HON'BLE SUPREME COURT STYLED AS CIT & ANOTHER VS. HOTEL BLUE MOON' (2010) 229 CTR (SC) 362, WHERE IN HON'BIE SUPREME COURT, WHILE ADJUDICATING UPON THE CASE OF BLOCK ASSESSMENT UNDER THE INCOME TAX ACT, HAS OBSERVED THAT IF THE A.O., FOR ANY REASON, REPUDIATES THE RETURN FILED BY THE ASSESSEE IN RESPONSE TO A NOTICE UNDER SECTION 158BC(A), HE MUST NECESSARILY ISSUE NOTICE UNDER SECTION 143(2) WITHIN THE TIME PRESCRIBED IN THE PROVISO TO SECTION 143(2); OMISSION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE UNDER SECTION 143(2) CANNOT BE SAID TO BE A MERE PROCEDURAL IRREGULARITY AND, THAT THE SAME IS NOT CURABLE. 4. ON THE OTHER HAND, LEARNED DR HAS SUBMITTED THAT VIDE FINANCE ACT 2008, W.E.F. 1.4.2008 SECTION 292 BB IN THE INCOME TAX ACT HAS BEEN INSERTED. HE HAS FURTHER SUBMITTED THAT ANY RIGHT WHICH HAS BEEN ACCRUING TO THE ASSESSEE FOR NON SERVICE OF NOTICE U/S. 143(2) OF THE INCOME TAX ACT HAS BEEN TAKEN AWAY WITH THE INSERTION OF SECTION 292BB IN THE I.T. ACT. 5. WE MAY OBSERVE THAT THE ISSUE RELATING TO THE INTRODUCTION AND OPERATION OF SECTION 292BB CAME INTO CONSIDER ATION BEFORE THE SPECIAL BENCH OF THE TRIBUNAL AT DELHI IN THE CASE OF 'KUBER TOBACCO PRODUCTS (P) LTD. VS. DCIT' IN IT(SS)A NO. 261IDELJ2001. THE SPECIAL BENCH OF THE HON'BLE DELHI TRIBUNAL IN THE CASE OF KUBER TOBACCO PRODUCTS (P) LTD. (SUPRA) HAS SUMMARIZED THE LEGAL POSITION AS UNDER: '(I) SECTION 292 BB EVEN IF IT IS PROCEDURAL IT IS CREATING A NEW DISABILITY AS IT PRECLUDES THE ASSESSEE FROM TAKING A PLEA WHICH COULD BE TAKEN A RIGHT, CANNOT BE CONSTRUED RETROSPECTIVELY AS THE SAME IS MADE APPLICABLE BY THE STATUTE W.E.F 1 .4.2008. (II) SECTION 292 BB IS APPLICABLE TO THE ASSESSMENT YEAR 2008 09 AND SUBSEQUENT ASSESSMENT YEARS.' FURTHER, THE HON'BLE JURISDICTIONAL HIGH COURT OF BOMBAY IN THE CASE OF 'CIT VS. M R. SALMAN KHAN' IN INCOME TAX APPEAL (L) NO. 2362 OF 2009 DATED 1.12.2009 HAS CATEGORICALLY HELD THAT SECTIONS 292 BB & 292 B OF THE INCOME TAX ACT HAVE BEEN AMENDED FROM 1.4.2008 AND THUS HAVE COME INTO OPERATION PROSPECTIVELY FOR THE A.Y. 2009 10. FURTHER, THIS VIEW HAS BEEN AGAIN REITERATED BY HON'BLE BOMBAY HIGH COURT IN ANOTHER CASE STYLED AS 'CIT VS. VIRENDRA KUMAR AGARWAL' INCOME TAX APPEAL NO. 2429 OF 2009 DATED 7.1.2010'. 6057 /M/13 KANCHANJUNGA I MPEX 6 SINCE THE ASSESSMENT YEAR INVOLVED IN THIS CASE IS 2001 02, HE NCE, THE NEWLY INSERTED PROVISION OF SECTION 292BB IS NOT APPLICABLE TO THIS YEAR. IN VIEW OF THE SAID LEGAL POSITION AS DISCUSSED ABOVE, THE ASSESSMENT PROCEEDINGS IN CONSEQUENCE OF REOPENING U/S.147 WERE BAD IN LAW AND CANNOT BE SUSTAINED AND ARE ACCO RDINGLY SET ASIDE. 6. SINCE, WHILE DECIDING THE ABOVE GROUND NOS. 1 AND 2, WE HAVE SET ASIDE THE REOPENED ASSESSMENT PROCEEDINGS ITSELF, HENCE, THE CONSEQUENTIAL OTHER GROUNDS OF APPEAL (I.E., GROUND NOS. 3 & 4) HAVE BECOME INFRUCTUOUS AND RENDE RED ACADEMIC IN NATURE AND AS SUCH DO NOT REQUIRE ANY ADJUDICATION AT THIS STAGE. IN VIEW OF OUR ABOVE FINDINGS, THE ADDITIONS MADE/CONFIRMED BY THE LOWER AUTHORITIES ARE ACCORDINGLY SET ASIDE. FINALLY,WE WOULD LIKE TO REFER TO THE DECISION OF SANT OSH G SAWANT(SUPRA).IN PARAGRAPHS NO.5 - 6 AND 8 - 12 THE ISSUE HAS BEEN DISCUSSED ELABORATELY AS FOLLOW: 5. BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESSEE HAS RAISED A PRELIMINARY OBJECTION THAT THE ASSESSMENT PURSUANT TO ISSUANCE OF NOTICE UNDER SECTI ON 148 IS NULL AND VOID AB INITIO, BECAUSE THE MANDATORY NOTICE U/S 143(2) OF THE ACT WAS NOT ISSUED BEFORE COMPLETION OF ASSESSMENT. HE SUBMITTED THAT THE IMPUGNED NOTICE U/S 143(2) OF THE ACT IS MANDATORY IN NATURE AND IN THE ABSENCE OF ISSUANCE OF SU CH NOTICE, THE IMPUGNED REASSESSMENT PROCEEDINGS COULD NOT HAVE BEEN PROCEEDED WITH. FOR THIS PROPOSITION, HE HAS RELIED UPON THE FOLLOWING DECISIONS: I) ACIT VS. HOTEL BLUE MOON 3211TR 362 (SC) II) NIKESH A. GADA (HUF VS. ITO IN ITA NO. 2714/MUM/ 2014 (MUM) III) RAMESH B. CHANDAK VS. ITO IN ITA NO. 1643/PN/2011 (PUNE) IV) SHRI ISHWAR SADAN COOPERATIVE HOUSING SOCIETY LTD. VS. DCIT IN ITA NO.2441/MUM/2011 (MUM) V) SHRI SHASHI KALA M. PAWAR VS. ITO IN ITA NO. 4821/MUM/2011 (MUM); 6. NOTABLY, B EFORE THE CIT(A) ALSO, ASSESSEE HAD RAISED AN ADDITIONAL GROUND OF APPEAL CHALLENGING THE VALIDITY OF THE ASSESSMENT PROCEEDINGS BY ISSUANCE OF NOTICE U/S. 147/148 OF THE ACT, INTER ALIA CONTENDING THAT THE ASSESSMENT U/S 143(3) R.W.S 147 OF THE ACT HAS BEEN COMPLETED WITHOUT ADHERING TO THE PROCEDURE LAID DOWN IN THE ACT. THE CASE SET UP BY THE ASSESSEE WAS THAT, AFTER FILING OF RETURN OF INCOME BY THE ASSESSEE IN RESPONSE TO THE NOTICE ISSUED U/S 148 OF THE ACT, THE ASSESSING OFFICER PROCEEDED TO M AKE INQUIRY BY ISSUE OF NOTICE U/S 142(1) OF THE ACT AND COMPLETING THE ASSESSMENT WITHOUT SERVING NOTICE U/S 143(2) OF THE ACT. BY WAY OF DISCUSSION IN PARA 2 OF THE IMPUGNED ORDER, THE CIT(A) HAS DISMISSED THE GROUND ON THE PLEA THAT IT WAS NOT PRESSE D BEFORE HIM. THE AFORESAID GROUND DISMISSED BY THE CIT(A) HAD NO IMPACT ON THE ULTIMATE DECISION, WHEREBY THE ADDITION MADE DURING ASSESSMENT WAS DELETED, WHICH RESULTED IN RESTORATION OF THE INCOME AS PER THE RETURN OF INCOME. 8. ON THE BASIS OF THE DECISIONS RELIED UPON BY THE ASSESSEE, IT CLEARLY EMERGES THAT OMISSION TO ISSUE NOTICE U/S 143(2) RENDERS AN ASSESSMENT ORDER PASSED U/S 143(3) R.W.S 147 OF THE ACT BAD IN LAW AND NON EST. THE ISSUANCE OF NOTICE U/S 143(2) IS MANDATORY AND A CONDITION PRECEDENT BEFORE EMBARKING UPON THE ASSESSMENT. MERE ISSUANCE OF NOTICE U/S 147 DOES NOT EMPOWER THE ASSESSING OFFICER TO FRAME THE ASSESSMENT ORDER. APART FROM THE DECISIONS CITED ABOVE, A REFERENCE CAN ALSO BE MADE TO THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ACIT VS. GENO PHARMACEUTICALS LTD. (TAX APPEALS NOS. 75 TO 78 OF 2012) DATED 14/02/2013. IN THE SAID CASE, THE REVENUE WAS CHALLENGING THE DECISION OF THE TRIBUNAL HOLDING THAT THE ISSUANCE OF NOTICE U/S 143(2) OF THE ACT AFTE R REOPENING OF THE CASE WAS MANDATORY. THE HONBLE HIGH COURT REPELLED THE CHALLENGE OF THE REVENUE, AND THE FOLLOWING DISCUSSION IN THE JUDGMENT OF THE HON'BLE HIGH COURT IS RELEVANT: '4. SO FAR AS TAX APPEALS NO.77/2012 AND 78/2012 ARE CONCERNED, IN BO TH THESE APPEALS, THE ITAT HAS HELD THAT THE ISSUANCE OF NOTICE AFTER REOPENING OF THE CASE WAS MANDATORY AND THIS ORDER IS UNDER CHALLENGE. IT IS CONTENDED THAT THE SAID ORDER IS CONTRARY TO THE PROVISIONS OF SECTIONS 292BB WHICH WAS INTRODUCED BY THE FINANCE ACT 2008 W.E.F. 01.04.2008, IN WHICH IT IS STATED THAT IN A CASE WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDINGS OR CO - OPERATED IN ANY INQUIRY RELATING TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UNDER ANY PROVISION O F THE SAID ACT WHICH IS REQUIRED TO 6057 /M/13 KANCHANJUNGA I MPEX 7 BE SERVED UPON HIM, HAS BEEN DULY SERVED UPON HIM IN TIME IN ACCORDANCE WITH THE PROVISIONS OF THE SAID ACT. PERUSAL OF THE ORDER OF THE ITAT REVEALS THAT THIS ASPECT WAS NOT CANVASSED BEFORE THE ITAT. 5. APART FRO M THAT, IT IS AN ADMITTED POSITION THAT NO NOTICE UNDER SECTION 143(2) HAD BEEN ISSUED WHILE MAKING ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 147. THE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. COMMISSIONER OF INCOME - TAX, REP ORT IN 229 ITR 383 HAS HELD THAT THE TRIBUNAL HAS DISCRETION TO ALLOW OR NOT TO ALLOW A NEW GROUND TO BE RAISED. BUT IN A CASE WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER THE QUESTION OF LAW ARISING FROM FACTS WHICH ARE ON RECORD IN THE ASSESSMENT P ROCEEDINGS, THERE IS NO REASON WHY SUCH A QUESTION SHOULD NOT BE ALLOWED TO BE RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO CORRECTLY ASSESS THE TAX LIABILITY OF AN ASSESSEE. THE ITA T, AFTER RELYING ON THE JUDGMENT OF THE APEX COUR T IN R. DALMIA VS. CIT, REPORTED IN 236 ITR 480, CAME TO THE CONCLUSION THAT ISSUANCE OF NOTICE UNDER SECTION 143(2) WAS MANDATORY. THE IT AT HAS TAKEN INTO CONSIDERATION THE RELEVANT PROVISIONS AND HAS ALSO TAKEN INTO CONSIDERATION THE JUDGMENT OF THE APEX COURT AND RELYING ON THE SAID JUDGMENTS, THE ITAT HAS HELD THAT NOTICE UNDER SECTION 143(2) IS MANDATORY AND IN THE ABSENCE OF SUCH SERVICE, THE ASSESSING OFFICER CANNOT PROCEED TO MAKE AN INQUIRY ON THE RETURN FILED IN COMPLIANCE WITH THE NOTICE ISSUED UNDER SECTION 148. 6. UNDER THESE CIRCUMSTANCES, NO CASE IS MADE OUT FOR INTERFERING WITH THE TAX APPEALS NO. 77/2012 AND 78/2012 SINCE NO SUBSTANTIAL QUESTION OF LAW IS RAISED IN BOTH THE APPEALS. 9. IN THE BACKGROUND OF THE ABOVE LEGAL POSITIO N, THE REVENUE WAS ALLOWED OPPORTUNITY TO PROVE THAT ANY NOTICE U/S 143(2) OF THE ACT WAS ISSUED WHILE MAKING THE IMPUGNED ASSESSMENT UNDER SECTION 143(3) R.W.S 147 OF THE ACT BECAUSE, THE IMPUGNED ASSESSMENT ORDER PASSED U/S 143(3) R.W.S 147 OF THE AC T DOES NOT CONTAIN ANY REFERENCE TO ISSUANCE OF NOTICE U/S 143(2) OF THE ACT WHILE MAKING THE ASSESSMENT. THE REVENUE HAS NOT PRODUCED ANY MATERIAL TO PROVE ISSUING OF NOTICE U/S 143(2) OF THE ACT WHILE MAKING THE IMPUGNED ASSESSMENT, IN SPITE OF REQUIS ITE OPPORTUNITY. IN FACT, ON THE LAST DATE OF HEARING OF THE APPEAL ON 12.06.2015, THE FOLLOWING REPORT OF THE CONCERNED ASSESSING OFFICER DATED 8/6/2015 WAS FURNISHED: ' SUB: M R. SANTOSH SAWANT. ITA NOS. 830/M/11 (A. Y. 2005 - 06) & CO 97/M/14 PAN - AA DPS5520L REF: LETTER NO. JT. CIT (SR. AR)/ITAT/ H BENCH/2015 - 16, DATED 02.06.2015. KINDLY REFER TO THE ABOVE. 2. I ONCE AGAIN STATE THAT AFTER RESTRUCTURING, I HAVE TAKEN OVER THIS CHARGE W.E.F. 17 - 12 - 2014. THE ITO - 30(2)(3), MUMBAI WHO WAS H AVING JURISDICTION OF THE ABOVEMENTIONED ASSESSEE HAS HANDED OVER ONLY TIME - BARRING CASES. ON RECEIPT OF LETTERS FROM YOU, TIME AND AGAIN I HAVE REQUESTED THE ITO - 30(2)(3) TO TRANSFER THE CASE RECORDS IMMEDIATELY TO THIS OFFICE TO ENABLE ME TO SUBMIT TH E REPORT IN TIME. THE ITO - 30(2)(3) HAS NOW FORWARDED ON 8 - 06 - 2015 SOME FOLDERS (EXCEPT A. Y.2005 - D6 BEING NOT TRACEABLE) INCLUDING ONE SURVEY FOLDER, WHICH WERE AVAILABLE WITH HIM. 3. I AM THEREFORE SUBMITTING THE 3 SETS OF COPIES OF (I) SURVEY REPORT AND (II) STATEMENTS RECORDED OF SHRI SANTOSH SAWANT, OWNER AND ASSESSEE, SHRI VIPIN S. RANDIVE AND SHRI SAMPAT J. THUBE, MANAGER OF M/S. BATATAVADA SAMRAT ON 18 - 11 - 2004 DURING THE COURSE OF SURVEY PROCEEDINGS U/S. 133A OF THE IT ACT, 1961 WHICH ARE AVAIL ABLE IN THE SAID FOLDERS. 10. THE ENTIRE MATERIAL ON RECORD DOES NOT ESTABLISH THAT ANY NOTICE U/S 143(2) OF THE ACT WAS ISSUED WHILE COMPLETING THE IMPUGNED ASSESSMENT. IN FACT, LEAVE ALONE ANY PROOF OF ISSUANCE OF NOTICE U/S 143(2), REVENUE HAS NOT E VEN ASSERTED THAT THE REQUISITE NOTICE U/S 143(2) WAS ISSUED WHILE MAKING THE IMPUGNED ASSESSMENT. THEREFORE, FACTUALLY SPEAKING, ONE HAS TO PROCEED ON THE BASIS THAT NO NOTICE U/S 143(2) HAD BEEN ISSUED WHILE MAKING ASSESSMENT U/S 143(3), R.W.S 147 OF THE ACT. 11. THUS, IN THE ABOVE FACTUAL BACKGROUND, CONSIDERING THE RATIO OF THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GENO PHARMACEUTICALS LTD. (SUPRA) THE IMPUGNED ASSESSMENT ORDER IS NON MAINTAINABLE IN LAW. WE HOLD SO. THUS AS SESSEE SUCCEEDS ON THIS ASPECT. 6057 /M/13 KANCHANJUNGA I MPEX 8 12. SINCE WE HAVE HELD THE IMPUGNED ASSESSMENT AS NON MAINTAINABLE, THE ISSUE RAISED BY THE REVENUE IN ITS APPEAL REGARDING THE ADDITION TO RETURNED INCOME DELETED BY THE CIT(A) IS RENDERED ACADEMIC, AND INFRUCTUOUS. FROM THE ABOVE DISCUSSION IT IS CLEAR THAT ASSESSMENT COMPLETED U/S.147 OF THE ACT WITHOUT ISSUING A NOTICE U/S.143(2)IS NOT A VALID ASSESSMENT AND THAT PROVISIONS OF SECTION 292BB CANNOT CURE THE BASIC DEFECT NON ISSUANCE OF 143(2)NOTICE.IN THE CASE BEF ORE US,THERE IN EVIDENCE OF SERVICE OF NOTICE ISSUED,U/S.143(2)OF THE ACT,BY THE AO.THEREFORE,WE ARE OF THE OPINION THAT THE FAA WAS NOT JUSTIFIED IN HOLDING THAT THE ORDER PASSED BY THE AO U/S.147 WAS A VALID ORDER. REVERSING HIS ORDER,WE DECIDE THE EFFEC TIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER ,2015. 23 , 2015 SD/ - SD/ - ( / SANJAY GARG) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 23 .09.2015 . . . JV. SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.