M.SURESH EXPORTS P. LTD, MUMBAI V. DCIT RG 8(2), MUMBAI

ITA 6307/MUM/2011

• Counselvise Citation: 630719914 RSA 2011
• Duration Of Justice: 4 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 10-02-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 13-09-2011
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SONI CIT DR
• Assessee Lawyers: B V JHAVERI
• Keywords: Reopening of assessment; Retrospective amendment; Assessment record; Block assessment; Right to appeal; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.6307/MUM/2011 ASSESSMENT YEAR: 2003-04 SURESH EXPORTS P. LTD.,(FORMERLY KNOWN AS DEVIDOLL JEWELLERY LIMITED) G-38, GEMS & JEWELLERY COMPLEX-III, ANDHERI (EAST) MUMBAI-400096 / VS. DCIT RANGE 8(2) MUMBAI ( '#$ /ASSESSEE) ( / REVENUE) P.A. NO. AA ACD5693D '#$ / ASSESSEE BY SHRI B.V. JHAVERI (AR) / REVENUE BY SHRI VIJAY KUMAR SONI CIT- DR % & ' ( / DATE OF HEARING : 19/08/2015 ' ( / DATE OF ORDER: 23 /09/2015 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST ORDER DATED 30.06.2011, PASSED BY THE LD. COMMISSIO NER OF INCOME TAX (APPEALS)17,MUMBAI PASSED FOR THE ASSES SMENT SURESH EXPORTS PVT. LTD. 2 YEAR 2003-04. THE ASSESSEE HAS RAISED FOLLOWING GRO UNDS OF APPEAL:- 1. THE CIT (A) ERRED IN UPHOLDING THE ASSUMPTION O F JURISDICTION BY ASSESSING OFFICER (AO) U/S 147 OF T HE ACT. HE FAILED TO APPRECIATE THAT THE JURISDICTIONAL PRE - CONDITIONS NECESSARY FOR ASSUMING JURISDICTION UNDE R THE SAID SECTION HAD NOT BEEN FULFILLED IN THE PRESENT ONE. 2. THE CIT (A) OUGHT TO HAVE HELD THAT NO REASONS W ERE RECORDED BY THE AO BEFORE ISSUING THE NOTICE U/S 14 8 OF THE ACT, AS, TILL NOW THE REASONS HAVE NOT BEEN PRO VIDED TO THE APPELLANT. COMMUNICATION OF THE ALLEGED REASONS BY A LETTER WHICH MAY NOT BE THE ACTUAL REASONS DOES NOT FULFILL THIS REQUIREMENT. 3. ON THE ALTERNATIVE AND WITHOUT PREJUDICE TO THE ABOVE, THE CIT(A), OUGHT TO HAVE HELD THAT NO BELIE F WAS FORWARD BY THE AO AS REQUIRED BY SECTION 147 OF THE ACT AND THE AO HAD ONLY RELIED ON THE FINDINGS GIVEN BY THE COMMISSIONER OF CUSTOMS WITHOUT ANY INDEPENDENT APPLICATION OF MIND WHICH IS NOT PERMISSIBLE IN LAW . 4. IN THE ALTERNATIVE AND WITHOUT PREJUDICE TO THE ABOVE, THE CIT(A), OUGHT TO HAVE HELD THAT THERE WAS NO MA TERIAL BEFORE AO WHICH COULD LEAD TO THE FORMATIVE OF BELI EF THAT APPELLANTS INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY WAY OF GRANT OF EXCESS DEDUCTION UNDE R SECTION 10A OF THE ACT. THE MATERIAL, IF ANY, HAS N O NEXUS WITH THE BELIEF FORMED BY THE AO. 5. THE CIT(A) OUGHT TO HAVE HELD THAT THE JURISDICT IONAL PRE-CONDITIONS NECESSARY TO THE FULFILLED U/S 143 ( 2) OF THE ACT HAD NOT BEEN FULFILLED IN THE PRESENT CASE AND, THEREFORE, THE REASSESSMENT ORDER WAS ILLEGAL AND B AD IN LAW. 6. THE CIT(A) FAILED TO APPRECIATE THAT FAIR TRADIN G CO. AND TWINKLEDIAM HONGKONG LTD. ARE NOT CLOSELY CONNECTED TO THE APPELLANT. 7. THE CIT(A) FAILED TO APPRECIATE THAT THE CONDITI ONS NECESSARY FOR INVOLVING THE POSITION OF SECTION 80- IA (10) HAD NOT BEEN FULFILLED IN THE CASE. 8. THE CIT (A) FAILED TO APPRECIATE THAT THE SALE P ROCEEDS RECEIVED ON ACCOUNT OF EXPORT IS RS.7,02,10,134/- I .E. THE SALE PRICE AGREED BETWEEN THE APPELLANT AND THE PURCHASER OF GOODS, SUCH AMOUNT CANNOT BE SUBSTITUT ED SURESH EXPORTS PVT. LTD. 3 BY THE ESTIMATE OF ALLEGED FAIR VALUE OF THE GOODS OF RS.5,83,97,338/-. 9. THE CIT (A) ERRED IN UPHOLDING DENIAL OF DEDUCTI ON U/S 10A OF THE ACT IN RESPECT OF THE AMOUNT OF RS.1,18,12,796/- (BEING RS.7,02,10,134/- LESS RS.5,83,97,338/-) 2. DURING THE COURSE OF HEARING THE LD. COUNSEL STA TED THAT GROUNDS NO.1 TO 4 ARE NOT PRESSED. THEREFORE, THESE GROUNDS ARE DISMISSED. 3. GROUND NO.5 DEAL WITH GRIEVANCE OF THE ASSESSEE THAT JURISDICTIONAL NOTICE U/S 143(2) OF THE ACT HAD NOT BEEN SERVED UPON THE ASSESSEE COMPANY IN THIS CASE. LD COUNSEL MADE DETAILED SUBMISSIONS WITH REGARD TO THIS GROUND. LD DR REFUTED ARGUMENTS OF LD COUNSEL. AFTER HEARING LD. COUNSEL AND LD. DR, IT WAS FELT NECESSARY BY US THAT THE PE RUSAL OF THE ASSESSMENT RECORDS WAS REQUIRED TO EXAMINE THE ASPE CTS OF ISSUANCE AND SERVICE OF NOTICE U/S 143(2). IN COMPL IANCE TO OUR DIRECTION, LD. DR PRODUCED THE FILE CONTAINING ASSESSMENT RECORDS BEFORE THE BENCH AND SAME WAS EXAMINED. 4. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT N O NOTICE HAS BEEN ISSUED AND SERVED U/S 143(2), AS RESULT OF WHICH THE AO DID NOT GET JURISDICTION TO MAKE ASSESSMENT OF T HE RETURN FILED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S 148 . IT WAS FURTHER SUBMITTED THAT ISSUANCE OF NOTICE U/S 143(2 ) IS SINE QUA NON FOR VALID ASSUMPTION OF JURISDICTION BY THE AO TO MAKE ANY VARIATION IN THE RETURN FILED BY THE ASSESSEE. IT WAS SUBMITTED THAT THE ISSUE IS COVERED WITH THE JUDGME NT OF SURESH EXPORTS PVT. LTD. 4 HONBLE SUPREME COURT IN THE CASE OF ACIT VS. HOTEL BLUE MOON 321 ITR 362 (SC). IT WAS SUBMITTED THAT THERE ARE MANY OTHER JUDGMENTS OF VARIOUS HIGH COURTS AND VARIOUS JUDGMENTS OF ITAT ON THIS ISSUE. IT WAS SUBMITTED T HAT WHEN THIS ISSUE WAS RAISED BEFORE THE LD. CIT(A), IT HAS BEEN ACCEPTED IN THE APPELLATE ORDER BY THE LD. CIT(A) T HAT THERE IS NO EVIDENCE OF SERVICE OF THE MANDATORY NOTICE. BUT LD. CIT(A) DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE ON T HE GROUND THAT THE ASSESSEE IS DEBARRED BY THE PROVISIONS OF SECTION 292BB TO RAISE ANY OBJECTIONS WITH REGARD TO THE SE RVICES OF NOTICE IN THE COURSE OF APPELLATE PROCEEDINGS AS NO SUCH OBJECTIONS WERE RAISED BEFORE THE AO. IT WAS SUBMIT TED THAT THE ORDER OF LD. CIT(A) IS CONTRARY TO LAW AND IS A GAINST THE JUDGMENT OF HONBLE SUPREME COURT AND HIGH COURTS. IT WAS ALSO SUBMITTED THAT PROVISIONS OF SECTION 292BB ARE NOT APPLICABLE ON THE FACTS OF THIS CASE BECAUSE PROVIS IONS OF SECTION 292BB CANNOT BE APPLIED, RETROSPECTIVELY, A S THE SAME CAME INTO EFFECT FROM 01.04.2008, WHEREAS IMPUGNED PROCEEDINGS WERE INITIATED BEFORE THE SAID DATE. 5. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF LD. CIT(A) AND PRODUCED ASSESSMENT RECORDS. IT WAS SUBM ITTED THAT ALTHOUGH LD CIT(A) HAS RECORDED A FINDING THAT EVIDENCE OF SERVICE OF IMPUGNED NOTICE WAS NOT AVAILABLE ON RECORD, BUT ASSESSEE WAS PRECLUDED FROM RAISING THIS ISSUE BEFO RE CIT(A) DUE TO RESTRICTION UPON THE ASSESSEE CREATED BY SEC TION 292BBOF THE ACT. LD DR HAS SUBMITTED THAT AS PER PROVISIONS OF SECTI ON 292BB, THE ASSESSEE CANNOT RAISE ANY OBJECTION IN RESPECT OF NON SURESH EXPORTS PVT. LTD. 5 SERVICE OF NOTICE U/S 143(2), AT LATER STAGE, IF NO OBJECTION WAS RAISED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. LD DR REQUESTED TO UPH O E LD ORDER OF LD. CIT(A) ON THIS ISSUE. 6. WE HAVE HEARD BOTH THE PARTIES CAREFULLY AND HAV E GONE THROUGH CASE RECORDS. WE HAVE ALSO GONE THROUGH VAR IOUS CASE LAWS CITED BEFORE US. THE BRIEF FACTS AS CULLED OUT FROM THE ASSESSMENT ORDER IN THIS CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY, FILED ITS RETURN OF INCOME FOR A.Y. 2003-04. THE ORIGINAL ASSESSMENT WAS DONE BY THE AO U/S 143(3) OF THE ACT. SUBSEQUENTLY, THE AO REOPENED TH E CASE OF THE ASSESSEE AND A NOTICE U/S 148 WAS ISSUED ON 29. 08.2007. IN RESPONSE TO NOTICE U/S 148, THE ASSESSEE FILED I TS RETURN OF INCOME ON 14.09.2007. SUBSEQUENTLY, THE AO PASSED ASSESSMENT ORDER U/S 143(3) READ WITH SECTION 147 O F THE INCOME TAX ACT, 1961. AGAINST THE SAID ASSESSMENT O RDER, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) AND INTER ALIA RAISED ITS GRIEVANCE OF NON SERVICE OF MANDATORY N OTICE U/S 143(2) OF THE ACT. THE ASSESEE ALSO FILED AN AFFIDA VIT DATED 28 TH MAY 2009 IN SUPPORT OF ITS CLAIM THAT NO NOTICE U/S 143(2) HAS BEEN SERVED UPON THE ASSESSEE. 7. FROM THE PERUSAL OF THE ASSESSMENT RECORDS, IT W AS NOTED BY US THAT ONE NOTICE U/S 143(2) DATED 11 TH AUGUST, 2008 WAS AVAILABLE IN THE ASSESSMENT FILE. THERE WAS NO EVID ENCE OF ITS ISSUANCE AND DISPATCH. THERE WAS NO EVIDENCE OF SER VICE OF THIS NOTICE IN THE FILE. ALTHOUGH, IN THE ORDER SH EET, IT HAS BEEN MENTIONED THAT NOTICE WAS ISSUED U/S 143(2) OF THE ACT. BUT THERE WAS NOTHING TO SHOW THAT IT WAS DISPATCHE D BY THE SURESH EXPORTS PVT. LTD. 6 AO TO THE ASSESSEE. THERE WAS NOTHING TO SHOW THAT IT WAS HANDED OVER BY THE AO TO THE NOTICE SERVER. THERE W AS NOTHING TO SHOW THAT THE NOTICE HAS BEEN ISSUED OUT OF THE BOUNDS OF THE AO MEANT TO BE DELIVERED TO THE ASSESSEE. IT IS FURTHER NOTED BY US THAT THE LD. CIT(A) HAS ALSO CONFIRMED THIS FACT IN HIS ORDER AT PARA 3.5.1 THAT APPARENTLY THERE IS NO EVIDENCE ON RECORD WITH REGARD TO SERVICE OF NOTICE U/S 143(2). DURING THE HEARING BEFORE US SPECIFIC QUERY WAS RAISED BY US T O LD. DR TO SHOW US ANY EVIDENCE WITH REGARD TO ISSUANCE AND SE RVICE AND FOR THIS PURPOSE SUFFICIENT TIME WAS ALSO GIVEN TO LD. DR. HOWEVER LD. DR EXPRESSED ITS INABILITY TO PRODUCE ANY SUCH EVIDENCE FROM THE ASSESSMENT RECORDS OR FROM ANYWHE RE ELSE. THUS, TAKING INTO CONSIDERATION ALL THE FACTS AND E VIDENCES PLACED BEFORE US, WE FIND THAT THERE IS NO EVIDENCE OF ISSUANCE OR SERVICE OF IMPUGNED NOTICE U/S 143(2)DATED 11.08 .2008. 8. HAVING HELD SO, LET US NOW EXAMINE LEGAL EFFECT OF NON- ISSUANCE AND NON-SERVICE OF MANDATORY NOTICE U/S 14 3(2), IN THE REASSESSMENT PROCEEDINGS INITIATED UNDER SECTIO N 147 READ WITH SECTION 148 OF THE INCOME TAX ACT,1961. 9. IN THIS REGARD, WE FIRST REFER TO THE REQUIREMEN T OF LAW FOR SERVICE OF NOTICE U/S 143(2). FIRST OF ALL, WE REFE R TO PROVISIONS OF SECTION 143(2) WHICH PRESCRIBE THAT AO SHALL SER VE NOTICE, WITHIN PRESCRIBED TIME LIMIT, FOR MAKING ASSESSMENT OF THE RETURN FILED BY THE ASSESSEE. IN THIS CASE, IMPUGNE D ASSESSMENT ORDER HAS BEEN PASSED U/S 143(3) R.W.S. 147 OF THE ACT. WITH RESPECT TO ASSESSMENTS TO BE FRAMED U/S 147, REQUISITE PROVISIONS WITH REGARD TO ISSUANCE AND SE RVICE OF SURESH EXPORTS PVT. LTD. 7 NOTICE, FOR REOPENING OF ASSESSMENT AND FRAMING OF REASSESSMENT ORDER, HAVE BEEN PROVIDED U/S 148 OF T HE ACT, WHEREIN IT HAS BEEN CLARIFIED BY WAY OF AN EXPLANAT ION TO SECTION 148(1) INSERTED BY FINANCE ACT 2006 W.E.F. 01.10.2005 THAT FOR MAKING ASSESSMENT OF THE RETURNS FILED AF TER 1-10- 2005 ( IN PURSUANCE TO NOTICE U/S 148), THE AO IS O BLIGED UNDER THE LAW TO SERVE NOTICE U/S 143(2) UPON THE ASSESSEE AS PER LAW WITHIN 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN HAS BEEN FILED BY THE ASSESSEE IN PURSUANCE TO NOTICE ISSUED U/S 148 OF THE ACT. IT IS WORTH NOTING THAT AMENDMENT MADE BY FINANCE ACT 2006 WITH RETROSPECTIVE EFFECT FROM 01.10.2005 CLARIFIED THAT PRIOR TO 01.10.2005, SERV ICE OF NOTICE U/S 143(2) WAS NOT MANDATORY WITHIN THE STIPULATED TIME FROM THE DATE OF FILING OF RETURN BY THE ASSESSEE IN PUR SUANCE TO NOTICE ISSUED BY THE AO U/S 148. BUT FOR THE RETURN S FILED SUBSEQUENT TO THIS DATE, SERVICE OF NOTICE U/S 143( 2) WAS MANDATORY. THUS, IT IS CLEARLY ESTABLISHED THAT LEG ISLATURE IS VERY MUCH CONSCIOUS OF THE REQUIREMENT OF LAW THAT SERVICE OF NOTICE U/S 143(2) IS MANDATORY FOR THE AO TO ASSUME JURISDICTION TO MAKE ASSESSMENT OF THE RETURN FILED BY THE ASSESSEE. THUS, IN SIMPLE WORDS AND AS PER PLAIN RE ADING OF LAW, SERVICE OF NOTICE UPON THE ASSESSEE U/S 143(2) WITHIN THE 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN IS FILED BY THE ASSESSEE IN PURSUANCE TO NOTICE U/S 148 ISSU ED BY THE AO FOR REOPENING OF THE ASSESSMENT, IS MANDATORY TO ENABLE THE AO TO ASSUME JURISDICTION TO MAKE ASSESSMENT OF THE AFORESAID RETURN. SURESH EXPORTS PVT. LTD. 8 THIS ISSUE IS NO MORE RES-INTEGRA AS THERE ARE UMPTEEN NUMBERS OF JUDGMENTS ON THIS ISSUE FROM VARIOUS COU RTS. WE DERIVE SUPPORT FROM JUDGMENT OF HONBLE SUPREME COU RT IN THE CASE OF HOTEL BLUE MOON (SUPRA). WE FURTHER DER IVE SUPPORT FROM THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE OF ACIT VS. GENO PHARMACEUTICALS LTD. 84 CCH 1 17(BOM) HOLDING THAT SERVICE OF NOTICE U/S 143(2) IS MANDAT ORY AND IN ABSENCE OF SUCH SERVICE, THE AO CANNOT MAKE AN INQU IRY ON THE RETURN FILED IN COMPLIANCE WITH THE NOTICE ISSU ED U/S 148. THUS, AS PER LAW, ISSUANCE AND SERVICE OF JURISDICT IONAL NOTICE U/S 143(2) IS MANDATORY, AND IN ABSENCE OF THE SAME , THE ASSESSMENT FRAMED WOULD BE FATAL. 10. HAVING HELD SO , LET US NOW EXAMINE THE OBJECTI ON RAISED BY THE LD. CIT(A) AND LD. DR WITH RESPECT TO OBSTRU CTION SOUGHT TO HAVE BEEN CREATED BY SECTION 292BB. IT HA S BEEN ARGUED BY THE LD. DR THAT IN VIEW OF PROVISIONS OF SECTION 292BB, THE ASSESSEE IS PRECLUDED FROM TAKING ANY OB JECTION ABOUT NON- SERVICE OF NOTICE AFTER CLOSURE OF THE A SSESSMENT PROCEEDINGS, THEREFORE, LD. CIT(A) RIGHTLY REJECTED THE OBJECTION OF THE ASSESSEE WITH REGARD TO SERVICE OF NOTICE. 11. WE HAVE CAREFULLY EXAMINED THE ARGUMENTS MADE BY THE LD. DR. FIRST OF ALL, IT IS NOTED BY US THAT SECTIO N 292BB HAS BEEN BROUGHT ON THE STATUTE W.E.F. 01.04.2008. ON T HIS ISSUE, FOLLOWING THREE QUESTIONS ARISE FOR OUR CONSIDERATI ON, BEFORE SECTION 292BB COULD BE APPLIED UPON THIS CASE TO RE JECT THE GRIEVANCE OF THE ASSESSEE: SURESH EXPORTS PVT. LTD. 9 (I) WHETHER SECTION 292BB CAN BE APPLIED RETROSPECT IVELY AND, IF NOT, WHETHER IT WOULD BE APPLICABLE ON THE PROCEEDINGS OF THE CASE BEFORE US. (II) WHETHER, WITH THE HELP OF PROVISIONS OF SECTION 292BB, DEFECT IN ISSUANCE OF A NOTICE CAN BE CURED BY TH E AO OR DISABILITY SOUGHT TO BE CREATED BY SECTION 292B B IS MEANT TO TAKE CARE OF ASPECTS OF SERVICE OF NOTIC E ONLY. (III) WHETHER PROVISIONS OF SECTION 292BB CAN BE EXTENDED TO THE EXTENT THAT SERVICE OF NOTICE CAN BE DEEMED TO HAVE BEEN DONE ALSO WITHIN THE STIPULATED TIME, AS PRESCRIBED UNDER THE ACT. 12. WE HAVE PONDERED OVER THIS ISSUE AND FIND THAT AS FAR AS FIRST QUESTION IS CONCERNED, IT HAS ALREADY BEEN AN SWERED IN FEW JUDGMENTS. WE NOTE THAT HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. MOHAMMAD KHALEEQ (2014) 44 TAXMANN.COM 484 (ALLAHABAD) HELD THAT THE PROVISION S OF SECTION 292BB OF THE ACT HAS BEEN INSERTED BY THE F INANCE ACT, 2008 W.E.F. 01.04.2008 AND THUS, THESE PROVISI ONS WERE APPLICABLE FROM A.Y. 2008-09 ONWARDS AND THESE ARE NOT APPLICABLE PRIOR TO THAT THE HONBLE DELHI HIGH COU RT IN THE CASE OF CIT VS. MANI KAKKAR (178 TAXMANN 315) HAS O BSERVED THAT SECTION 292BB IS NOT APPLICABLE TO A.Y.2001-02 . SIMILAR VIEW WAS TAKEN BY THE SPECIAL BENCH OF THE ITAT IN THE CASE OF KUBER TOBACCO PRODUCTS PVT. LTD. VS. DCIT, 117 ITD 273 (SB). IT HAS BEEN HELD BY HONBLE KERALA HIGH COURT IN TH E CASE OF DR. K. M. MEHABOOB VS. DCIT 76 DTR 0090 THAT SECTIO N SURESH EXPORTS PVT. LTD. 10 292BB DOES NOT HAVE RETROSPECTIVE EFFECT. FURTHER, HONBLE ALLAHABAD HIGH COURT IN THE CASE OF ACIT VS GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY (IN INCOME TAX APP EAL NO 142 OF 2015 DT. 04-08-2015) HAS HELD THAT SECTION 2 92BB DOES NOT CURE DEFECT IN ISSUANCE OF NOTICE,IT DOES NOT H AVE RETROSPECTIVE OPERATION AND IT SHALL NOT BE APPLICA BLE TO ASSESSMENT YEAR 2008-09 AND YEARS PRIOR TO THAT. RELEVANT EXTRACTS OF THIS JUDGMENT ARE REPRODUCED B ELOW: 14. THE SUPREME COURT CLEARLY HELD THAT OMISSION O N THE PART OF THE ASSESSING OFFICER IS NOT A PROCEDUR AL IRREGULARITY AND IS INCURABLE AND, THEREFORE, THE REQUIREMENT OF NOTICE UNDER SECTION 143(2) OF THE A CT CANNOT BE DISPENSED WITH. 15. SIMILAR VIEW WAS HELD BY A DIVISION BENCH OF TH IS COURT IN COMMISSIONER OF INCOME TAX II LUCKNOW VS. SALARPUR COLD STORAGE (P) LTD. , (2014) 50 TAXMAN.COM 105, COMMISSIONER OF INCOME-TAX, FAIZABAD VS. ADARSH TRAVEL BUS SERVICE, (2012) 17 TAXMANN. CO 140(ALL.) AS WELL AS IN COMMISSIONER OF INCOME-TAX VS. MUKESH KUMAR AGRAWAL, 345 ITR 29 AND COMMISSIONER OF INCOME -TAX VS. RAJEEV SHARMA, (2010) 192 TAXMAN 197 (ALL). 15. IN THE LIGHT OF THE AFORESAID DECISIONS, IT IS APPARENTLY CLEAR THAT THE JURISDICTION OF THE ASSES SING OFFICER TO MAKE AN ASSESSMENT UNDER SECTION 143(3) (II) OF THE ACT IS BASED ON THE ISSUANCE OF A NOTIC E UNDER SECTION 143(2)(II) OF THE ACT. THE PROVISO TO CLAUSE (II) OF SUB SECTION (2) OF SECTION 143 CLEAR LY STIPULATES THAT A NOTICE MUST BE SERVED ON THE ASSESSEE -------------- 19. IN VIEW OF THE AFORESAID, WE ARE OF THE OPINION THAT SECTION 292BB, WHICH WAS INSERTED WITH EFFECT FROM 01.04.2008 IS NOT APPLICABLE TO THE PROCEEDINGS FOR THE ASSESSMENT YEAR 2006-07, 2007-08, 2008-09. WE ARE ALSO OF THE OPINION THAT SECTION 292BB OF THE ACT I S NOT APPLICABLE ALSO FOR THE ASSESSMENT YEARS 2009-10, SURESH EXPORTS PVT. LTD. 11 2010-11 AND 2011-12. THE DEEMING FICTION THAT ONCE AN ASSESSEE HAS APPEARED IN ANY PROCEEDING OR PARTICIPATED IN ANY QUERY RELATING TO ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT THE NOTICE UN DER THE PROVISIONS OF THE ACT, WHICH IS REQUIRED TO BE SERVED HAS BEEN DULY SERVED UPON HIM IN ACCORDANCE WITH TH E PROVISIONS OF THE ACT AND, THEREFORE, IS PRECLUDED FROM CONTENDING THAT THE NOTICE WAS NOT SERVED UPON HIM OR WAS NOT SERVED UPON HIM IN TIME OR WAS NOT SERVED UPON HIM IN A PROPER MANNER, IN OUR VIEW, IS NOT APPLICABLE FOR THE FOLLOWING REASON. ---------------- 21. FROM THE AFORESAID, IT IS CLEAR THAT THE ESSENT IAL REQUIREMENT IS 'ISSUANCE OF NOTICE' UNDER SECTION 1 43(2) OF THE ACT. THE DEEMING FICTION UNDER SECTION 292BB OF THE ACT IS WITH REGARD TO 'SERVICE OF NOTICE'. SINC E THE INITIAL REQUIREMENT OF ISSUANCE OF NOTICE WAS NOT M ADE BY THE ASSESSSING OFFICER, THE DEEMING FICTION OF S ERVICE OF NOTICE UNDER SECTION 292BB OF THE ACT, CONSEQUEN TLY, DOES NOT ARISE AND IS NOT APPLICABLE. 22. IN THE LIGHT OF THE AFORESAID, SINCE THE ASSESS ING OFFICER FAILED TO ISSUE NOTICE WITHIN THE SPECIFIED PERIOD UNDER SECTION 143(2) OF THE ACT, THE ASSESSING OFFI CER HAD NO JURISDICTION TO ASSUME JURISDICTION UNDER SE CTION 143(2) OF THE ACT AND THIS DEFECT CANNOT BE CURED B Y TAKING RECOURSE TO THE DEEMING FICTION PROVIDED UND ER SECTION 292BB OF THE ACT. CONSEQUENTLY, THE TRIBUNA L WAS JUSTIFIED IN SETTING ASIDE THE ORDER OF THE ASS ESSING OFFICER AS WELL AS THE ORDER OF THE APPELLATE AUTHO RITY. THUS, FROM THESE JUDGMENTS, IT IS CLEAR THAT SECTIO N 292BB HAS NO RETROSPECTIVE OPERATION. 13. IT IS FURTHER SEEN BY US THAT IN THE CASE BEFOR E US, PROCEEDINGS WERE INITIATED BY THE AO BY ISSUING NOT ICE U/S 148 DATED 29 TH AUGUST 2007. IN RESPONSE TO THE SAME RETURN HAS BEEN FILED BY THE ASSESSEE ON 14.09.2007. THUS, BOT H THE DATES SURESH EXPORTS PVT. LTD. 12 FELL BEFORE 01.04.2008, BEING THE DATE OF COMING IN TO OPERATION OF SECTION 292BB. IT IS WELL ESTABLISHED PRINCIPLE OF LAW THAT RIGHT TO FILE AN APPEAL IS A SUBSTANTIVE RIGHT. THU S, WHEN THE ASSESSEE FILED ITS RETURN OF INCOME ON 14.09.2007, A VALUABLE SUBSTANTIVE RIGHT ACCRUED TO THE ASSESSEE I.E. RIGH T TO BE SERVED WITH THE MANDATORY NOTICE, AS PER LAW PREVAILING ON THE DATE OF FILING OF RETURN AND STATUTORY RIGHT OF FILING OF A PPEAL AGAINST ANY ACTION IN THE FORM OF FRAMING OF THE ASSESSMENT UPON THE ASSESSEE, WITHOUT BEING SERVED WITH THE MANDATORY JURISDICTIONAL NOTICE , THE DEEMING PROVISIONS OF SECTION 292BB COULD NOT HAVE BEEN APPLIED RETROSPECTIVELY TAKING AWAY THIS VALUABLE RIGHT FROM THE ASSESSEE. ANY SUCH CURTAILM ENT OF VESTED RIGHT CANNOT BE CONSTRUED TO BE RETROSPECTIV E ESPECIALLY WHEN NEW LAW HAS BEEN SPECIFICALLY STATED TO BE EFF ECTED FROM 1ST APRIL, 2008. FOR FRAMING ASSESSMENT UNDER S. 14 3(3), SERVICE OF NOTICE UNDER S. 143(2) IS A PRECONDITION . THEREFORE, SERVICE OF NOTICE UNDER SECTION 143(2) IS VESTED AS WELL AS SUBSTANTIVE RIGHT AND NOT MERELY PROCEDURAL IN NA TURE. ONLY AFTER SERVICE OF NOTICE, THE AO ASSUMES JURISDICTIO N TO FRAME ASSESSMENT UNDER SECTION 143(3). IN OUR CONSIDERED VIEW ANY AMENDMENT IN LAW AFFECTING VESTED RIGHT IS ALWAYS P ROSPECTIVE IN NATURE, UNLESS PROVIDED OTHERWISE BY THE STATUTE ITSELF. ON THIS ISSUE FOLLOWING OBSERVATIONS OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RAMAN INDUSTRIES 121 ITR 405 (P&H) ARE RELEVANT HERE: '...FROM THE ABOVE OBSERVATION IT EMERGES THAT A ST ATUTE DEALING WITH PROCEDURE IS ALWAYS RETROSPECTIVE AND ITS PROVISIONS ALSO APPLY TO THE PROCEEDINGS PENDING AT THE TIME OF ITS ENACTMENT BUT WHERE SOME PROVISIONS OF A SURESH EXPORTS PVT. LTD. 13 STATUTE OF PROCEDURE AFFECT VESTED RIGHTS, THESE AR E PROSPECTIVE IN OPERATION UNLESS THERE IS AN INDICAT ION IN THE STATUTE TO THE CONTRARY...' WE FURTHER REFER TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOVINDAS & ORS. VS.ITO 103 ITR 123 (SC) WHEREIN IT WAS OBSERVED AT PAGE132 AS UNDER: NOW, IT IS A WELL-SETTLED RULE OF INTERPRETATION HA LLOWED BY TIME AND SANCTIFIED BY JUDICIAL DECISIONS THAT, UNL ESS THE TERMS OF A STATUTE EXPRESSLY SO PROVIDE OR NECESSAR ILY REQUIRE IT, RETROSPECTIVE OPERATION SHOULD NOT BE G IVEN TO A STATUTE SO AS TO TAKE AWAY OR IMPAIR AN EXISTING RI GHT OR CREATE A NEW OBLIGATION OR IMPOSE A NEW LIABILITY O THERWISE THAN AS REGARDS MATTERS OF PROCEDURE. THE GENERAL R ULE AS STATED BY HALSBURY IN VOL. 36 OF THE LAWS OF ENGLAN D (3RD EDN.) AND REITERATED IN SEVERAL DECISIONS OF THIS C OURT AS WELL AS ENGLISH COURTS IS THAT ALL STATUTES OTHER T HAN THOSE WHICH ARE MERELY DECLARATORY OR WHICH RELATE ONLY T O MATTERS OF PROCEDURE OR OF EVIDENCE ARE PRIMA FACIE PROSPECTIVE AND RETROSPECTIVE OPERATION SHOULD NOT BE GIVEN TO A STATUTE SO AS TO AFFECT, ALTER OR DESTRO Y AN EXISTING RIGHT OR CREATE A NEW LIABILITY OR OBLIGAT ION UNLESS THAT EFFECT CANNOT BE AVOIDED WITHOUT DOING VIOLENC E TO THE LANGUAGE OF THE ENACTMENT. IF THE ENACTMENT IS EXPR ESSED IN LANGUAGE WHICH IS FAIRLY CAPABLE OF EITHER INTER PRETATION, IT OUGHT TO BE CONSTRUED AS PROSPECTIVE ONLY.' WE FURTHER DERIVE SUPPORT FROM THE JUDGMENT OF HON BLE SUPREME COURT IN THE CASE OF GEM GRANITES VS CIT 27 1 ITR 322 (SC) HOLDING THAT EVERY STATUTE IS PRIMA FACIA PROSPECTIVE UNLESS IT IS EXPRESSLY OR BY NECESSARY IMPLICATION MADE TO HAVE RETROSPECTIVE OPERATION. SURESH EXPORTS PVT. LTD. 14 WE ALSO REFER TO FOLLOWING JUDGMENTS ON THIS ISSUE: (I) R. RAJAGOPAL REDDY & ORS. VS. PADMINI CHANDRASE KHARAN 213 ITR 340 (SC) AND (II) M.G. PICTURES (MADRAS) LTD. VS. ASSTT. CIT 26 3 ITR 83 (MAD) THUS, IN OUR CONSIDERED VIEW, PROVISIONS OF SECTION 292BB COULD NOT HAVE BEEN APPLIED UPON THE FACTS OF THIS CASE AND THUS THIS QUESTION CAN BE ANSWERED IN FAVOUR OF THE ASSESSE. 14. SECOND QUESTION ARISING HERE FOR OUR CONSIDERA TION IS THAT WHETHER SECTION 292BB CURES DEFECT IN ISSU ANCE OF NOTICE ALSO. IN THIS REGARD, IT HAS BEEN SEEN BY US , FROM THE PERUSAL OF THE ASSESSMENT RECORDS, THAT THERE IS NO EVIDENCE OF ISSUANCE OF THE NOTICE, AS HAS BEEN DISCUSSED BY U S IN EARLIER PART OF THIS ORDER ALSO. UNDER THESE CIRCUMSTANCES, A QUESTION ARISES THAT WHETHER REVENUE CAN TAKE RECOURSE TO TH E PROVISIONS OF SECTION 292BB TO CURE THE DEFECT IN I SSUANCE OF THE JURISDICTIONAL NOTICE. THE ANSWER TO THIS QUEST ION HAS ALREADY BEEN GIVEN BY HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. PANORAMA BUILDERES (P.) LTD. 45 TAXMANN. COM 159 (GUJARAT) IN WHICH IT HAS BEEN HELD THAT SECTION 29 2BB IS CONFINED TO SERVICE OF NOTICE ONLY AND DOES NOT A PPLY TO ISSUANCE OF NOTICE. THE RELEVANT PORTIONS OF OBSERV ATIONS OF HONBLE HIGH COURT ARE REPRODUCED HEREUNDER:- THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT SECTION 292BB DOES NOT APPLY TO ISSUANCE OF NOTICE, SURESH EXPORTS PVT. LTD. 15 NEITHER IT CURES THE DEFECT OR ENLARGES STATUTORY P ERIOD WHERE A MANDATORY NOTICE UNDER SECTION 143 (2) OF T HE ACT IS REQUIRED TO BE ISSUED WITHIN LIMITATION FIXE D UNDER THE ACT. IN ABSENCE OF ISSUANCE OF 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 INITIATED BY 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 TI ME BARRED AND THE ENTIRE PROCEEDINGS IN PURSUANCE OF SUCH NOTICE IS NULL AND VOID. FURTHER, MUMBAI BENCH OF ITAT IN THE CASE OF CHANDR A R. GANDHI V. ITO 120 TTJ 786 HAS HELD THAT REASSESSMEN T MADE U/S 147, IN ABSENCE OF SERVICE OF NOTICE U/S 143 IS INVALID. IT HAS BEEN FURTHER HELD BY THE HONBLE BENCH THAT AME NDMENT TO SECTION 148 RETROSPECTIVELY BY THE FINANCE ACT 2 006 DOES NOT COME TO THE RESCUE OF THE REVENUE WHERE NOTICE U/S 143 HAS NOT BEEN ISSUED AT ALL. IT WAS FURTHER HELD B Y THE HONBLE BENCH THAT SECTION 292BB IS PROSPECTIVE AND DOES NO T HAVE RETROSPECTIVE OPERATION. SIMILAR VIEW HAS BEEN EXPRESSED BY HONBLE PUNJAB A ND HARYANA HIGH COURT IN THE CASE OF CIT VS CEBON INDI A LTD 347 ITR 583 HOLDING THAT MERE GIVING OF DISPATCH NUMBER , CANNOT BE TAKEN AS AN EVIDENCE OF ISSUANCE OF NOTICE AND T HE CONTENTION OF THE REVENUE THAT WHERE NOTICE HAS BEE N DULY DISPATCHED TO THE ASSESSEE, THE IRREGULARITY OR DEF ECT IN ISSUING NOTICE WAS CURABLE U/S 292BB OF THE ACT, WAS REJECT ED BY THE HONBLE HIGH COURT. IT WAS FURTHER HELD BY HONBLE HIGH COURT THAT IN THE ABSENCE OF NOTICE BEING SERVED, THE AO HAS NO SURESH EXPORTS PVT. LTD. 16 JURISDICTION TO MAKE ASSESSMENT AND ABSENCE OF SERV ICE OF NOTICE COULD NOT BE HELD TO BE CURABLE U/S 292BB OF THE ACT. THUS, VIEWED FROM THIS ANGLE ALSO PROVISIONS OF SEC TION 292BB COULD NOT HAVE BEEN APPLIED ON THE FACTS OF THIS CA SE. FURTHER, RELIANCE HAS BEEN PLACED BY LD COUNSEL ON THE JUDGMENT OF COORDINATE BENCH OF MUMBAI IN THE CASE OF SANJAY BROTHERS (ITA NO 947/MUMBAI/2013 DT 9-1-2015. IT IS SEEN BY US THAT SIMILAR VIEW HAS BEEN TAKEN IN THE SAID JUD GMENT AND WE DERIVE FURTHER SUPPORT THERE FROM. 15. THIRD QUESTION THAT ARISES FOR OUR CONSIDERATIO N IS WHETHER THE AO COULD TAKE RECOURSE TO THE PROVISION S OF SECTION 292BB TO EXTEND THE STATUTORY PERIOD WITHIN WHICH NOTICE COULD HAVE BEEN SERVED UPON THE ASSESSEE. WE FIND THAT ON THIS ASPECT ALSO JUDGMENTS HAVE BEEN GIVEN BY TH E COURTS, AS MAY BE NOTED IN THE CASE OF PANORAMA BUILDERES (P.) LTD. (SUPRA), IT WAS HELD BY THE HONBLE GUJARAT HIGH COURT THA T SECTION 292BB DOES NOT ENLARGE THE STATUTORY PERIO D WHERE MANDATORY NOTICE SECTION 143(2) OF THE ACT IS REQUI RED TO BE ISSUED WITHIN THE LIMITATION FIXED UNDER THE ACT. S IMILARLY HONBLE DELHI HIGH COURT IN THE CASE OF ALPINE ELECTRONICS ASIA PTE. LTD. V. DGIT 341 ITR 247 HELD THAT AO CANNOT RELY UPON SECTION 292BB TO CLAIM THAT NOTICE U/S 143(2) IS DE EMED TO BE SERVED WITHIN STIPULATED TIME. THUS, WE FIND THAT A RGUMENT OF THE LD. DR THAT BECAUSE OF SECTION 292BB, SERVICE OF NOTICE SHOULD BE DEEMED NOTWITHSTANDING THE CLEAR FINDING OF THE LD. CIT(A) THAT THERE WAS NO EVIDENCE OF SERVICE OF NOT ICE, IS CONTRARY TO LAW AND FACTS AND THE SAME IS REJECTED. SURESH EXPORTS PVT. LTD. 17 16. WE HOLD THAT IN THIS CASE MANDATORY NOTICE U/S .143(2) HAS NEITHER BEEN ISSUED NOR SERVED UPON THE ASSESSE E AND THEREFORE THE AO CANNOT ASSUME JURISDICTION TO FRAM E ASSESSMENT OF THE RETURN FILED BY THE ASSESSEE ON 1 4.09.2007 IN RESPONSE TO NOTICE ISSUED U/S 148 DATED 29.08.20 07. THUS, THE IMPUGNED ASSESSMENT ORDER IS HELD TO BE ILLEGAL AND THE SAME IS HEREBY QUASHED. THE APPEAL OF THE ASSESSEE IS ALLOWED ON THE JURISDICTIONAL GROUND. SINCE THE ASSESSMENT HAS BEEN ANNULLED, OTHER GROUNDS I.E. GROUNDS NO. 6,7,8 & 9 ARE NOT BEING ADJUDICATED. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED SD/- (JOGINDER SINGH ) SD/- (ASHWANI TANEJA) '# / JUDICIAL MEMBER $# / ACCOUNTANT MEMBER % & MUMBAI; ) DATED : 23/9/2015 CTX? P.S/. . . %'&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 % 1 ( + ) / THE CIT, MUMBAI. 4. 0 0 % 1 / CIT(A)- , MUMBAI 5. 34 .' , 0 +( ' 5 , % & / DR, ITAT, MUMBAI 6. 6# 7& / GUARD FILE. / BY ORDER, /3+ . //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % & / ITAT, MUMBAI