ITO,Wd.-3(3), Latur V. Shri Nasir Mahmadsab shaikh, Latur

ITA 791/PUN/2011

• Counselvise Citation: 79124514 RSA 2011
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2012
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 09-06-2011
• Court: TRIBUNAL
• Department Lawyers: ALOK MISHRA
• Keywords: Unexplained investment; Procedural lapse; Block assessment; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI G.S.PANNU, ACCOUNTANT MEMBER. ITA.NO.791/PN/2011 (ASSTT. YEAR : 2002-03) INCOME TAX OFFICER, WARD-3(3), LATUR. .. APPELLANT VS. SHRI NASIR MOHMADSAB SHAIKH, GANDHI MARKET, LATUR. PAN: ADIPS7223G .. RESPONDENT APPELLANT BY : SHRI ALOK MISHRA RESPONDENT BY : SHRI M.K.KULKARNI DATE OF HEARING : 26.06.2012 DATE OF PRONOUNCEMENT : 26.06.2012 O R D E R PER SHAILENDRA KUMAR YADAV, JM : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) ON FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) AURANGABAD HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT SEC. 292BB INSERTED BY THE FINANCE ACT 2008 W.E.F. 1 ST APRIL 2008 HAS NO RETROSPECTIVE OPERATION AND APPLI ES TO PROCEEDINGS TO AND FROM ASST. YEAR 2008-09 ONLY. 2. THE LEARNED CIT(A) AURANGABAD HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE PROVISIONS OF SEC. 292BB ARE NOT A PPLICABLE IN THE CASE OF THE APPELLANT AS THE APPEAL PERTAINS TO ASS T. YEAR 2002-03. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) AURANGABAD HAS ERRED IN APPRECIATING THE FAC TS THAT THE PROCEEDINGS U/S.148 IN THE INSTANT CASE WAS INITIAT ED AFTER 1-4-2008 I.E., AFTER INSERTION OF SEC. 292BB BY THE FINANCE ACT 2008 AND NOTICE U/S.143(2) WAS ALSO SERVED ON THE A SSESSEE ON 7-10-2009 WHICH IS AFTER 1-4-2008, IN RESPONSE TO W HICH THE 2 ASSESSEE APPEARED AND CO-OPERATED IN ENQUIRIES RELA TING TO REASSESSMENT, AS SUCH THE LEGAL FICTION CREATED BY SEC.292BB WILL HAVE TO BE GIVEN FULL EFFECT FROM 1-4-2008 IRRESPEC TIVE OF THE ASSESSMENT YEAR INVOLVED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF EARNING AGENT COMMISSION ON SALE OF BETEL LEAVES ON BEHALF OF ITS PRINCIPAL. THE ASSESSEE FI LED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.96,000/- AND AGRICULTU RAL INCOME OF RS.2,00,000/-. THE A.O. NOTICED THAT THE ASSESSEE HAS MADE FIXED DEPOSITS WITH THE SIDDESHWAR SAHAKRI BANK LTD., TO THE TUNE OF RS.22,85,000/- ON VARIOUS DATES DURING THE F.Y. 200 1-02. HE FURTHER NOTICED THAT THE ASSESSEE HAS NOT SHOWN THE ABOVE F IXED DEPOSITS IN THE BALANCE SHEET ATTACHED WITH THE RETURN OF INCOME. CONSIDERING THE SAME, THE A.O. ISSUED NOTICE U/S.148 ON 12.02.2009. IN RESPONSE TO THE NOTICE U/S.148, THE ASSESSEE FILED REVISED RETURN O F INCOME DECLARING TOTAL INCOME OF RS.94,500 AND AGRICULTURAL INCOME O F RS.2 LAKHS ON 20.03.2009. THE A.O. COMPLETED THE ASSESSMENT U/S. 143(3) R.W.S. 147 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 24,31,335/- AND AGRICULTURAL INCOME AT RS.2,00,000 BY MAKING ADDITI ON OF RS.22,85,000/- TOWARDS UNEXPLAINED INVESTMENT IN FIXED DEPOSITS WI TH THE SIDDESHWAR SAHAKRI BANK LTD., AND RS.51,835/- TOWARDS INTEREST ACCRUED ON THE SAME FIXED DEPOSITS. 3. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLAT E AUTHORITY WHO HAS GRANTED RELIEF TO THE ASSESSEE. THE SAME HAS B EEN OPPOSED BEFORE US ON BEHALF OF REVENUE, INTER ALIA STATED THAT THE CIT(A), AURANGABAD, HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT SECTI ON 292BB INSERTED BY THE FINANCE ACT, 2008 W.E.F. 01.04.2008 HAS NO RETR OSPECTIVE OPERATION AND APPLIES TO THE PROCEEDINGS TO AND FROM A.Y. 200 8-09 ONLY. THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT PROVISION OF SECTION 292BB ARE NOT APPLICABLE IN CASE OF THE ASSESSEE AS THE APPEA L PERTAINS TO A.Y. 2002-03. ACCORDINGLY, THE ORDER OF THE CIT(A) BE S ET ASIDE AND THAT OF THE A.O. BE RESTORED. ON THE OTHER HAND, THE LD. A R SUPPORTED THE ORDER OF THE CIT(A). 4. AFTER GOING THROUGH THE ABOVE SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE AFTER SEEKING THE REMAND REPORT. IN FACT THE A.O. HAS RE LIED UPON THE DECISION IN THE CASE OF P.KUMAR HAR SARAN LAL VS. A .O. REPORTED IN (1998) 229 ITR 46 (ALL.) IN THE SAID CASE, QUESTION DECID ED WAS WHETHER THE A.O. IS COMPETENT TO INITIATE REASSESSMENT PROCEEDI NGS AFTER FAILURE OF THE A.O. TO TAKE STEPS U/S.143(2) AFTER INTIMATION U/S.143(1)(A). THE ADDITION WAS MADE BY APPENDING AN ADJUSTMENT STATEM ENT TO THE INTIMATION U/S.143(1)(A) WITHOUT GIVING OPPORTUNITY TO THE ASSESSEE. HON'BLE HIGH COURT HELD THAT IF THE A.O. WANTED TO MAKE ADDITION FOR COGENT REASON THEN IT WAS NECESSARY TO MAKE A REGUL AR ASSESSMENT U/S.143(3) GIVING DUE NOTICE U/S.143(2). IT WAS FU RTHER HELD THAT FAILURE OF THE A.O. TO TAKE STEPS U/S.143(2) AFTER INTIMATI ON U/S.143(1)(A) WILL NOT RENDER THE A.O. INCOMPETENT TO INITIATE REASSES SMENT PROCEEDINGS IF THE REQUIREMENT OF THE SECTION 147 ARE FULFILLED, W HICH IS NOT THE FACT IN THE PRESENT CASE. HON'BLE SUPREME COURT IN THE CAS E OF ACIT AND OTHERS VS. HOTEL BLUE MOON REPORTED IN (2010) 229 C TR (SC) 219, HELD THAT OMISSION ON PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE U/S. 143(2) WOULD BE PROCEDURAL IRREGULARITY AND SAME IS NOT CURABLE AND THEREFORE THE REQUIREMENT OF NOTICE U/S. 143(2) CAN NOT BE DISPENSED WITH. THIS RATIO IN HOTEL BLUE MOON (SUPRA) MAKES IT CLEAR THAT SERVICE OF NOTICE U/S.143(2) WITHIN THE TIME PRESCRIBED IN THE PROVISO THERETO IS MANDATORY AND THE DEFECT, IF ANY, IN SERVICE OF THE SAME IS NOT CURABLE. SO IN CASE OF HOTEL BLUE MOON (SUPRA) ISSUE WAS THA T SERVICE OF NOTICE ON ASSESSEE U/S.143(2) WITHIN THE PRESCRIBED PERIOD OF TIME IS 4 PREREQUISITE FOR FRAMING THE BLOCK ASSESSMENT UNDER CHAPTER XIV-B OF INCOME TAX ACT, AND IT WAS MADE CLEAR IN SAID CASE THAT SERVICE OF NOTICE U/S.143(2) IS ESSENTIAL IN FRAMING BLOCK ASSESSMENT . SO THE NOTICE U/S.143(2) IS MANDATORY AND ANY DEFECT IN SERVICE O F THE SAME IS NOT CURABLE. THE ITAT DELHI SPECIAL BENCH IN THE CASE OF KUBER TOBACCO PRODUCTS (P) LTD. VS. DCIT REPORTED IN (2009) 120 T TJ (DEL.)(SB) 577, HAS HELD THAT SECTION 292BB INSERTED BY FINANCE ACT 200 8 W.E.F. 01.04.2008 HAS NO RETROSPECTIVE OPERATION AND APPLIES TO THE P ROCEEDINGS TO AND FROM A.Y. 2008-09 ONLY. IN VIEW OF ABOVE, THE PROV ISIONS OF SECTION 292BB IS NOT APPLICABLE IN THE CASE OF ASSESSEE AS APPEAL PERTAINS TO A.Y. 2002-03. ON PERUSAL OF PROVISIONS OF SECTION 143(2) AND PROVISO THERETO, IT IS CLEAR THAT WORDS USED ARE SHALL SER VE ON THE ASSESSEE AND NO NOTICE UNDER THIS SUBJECT-SECTION SHALL BE SERVE D ON THE ASSESSEE AFTER EXPIRY OF SIX MONTHS FROM THE END OF THE YEAR IN WHICH RETURN OF INCOME IS FILED. THE WORDS USED IN SECTION 143(2) AND PROVISO THERETO CONNOTES THAT PROVISIONS ARE MANDATORY. IN VIEW O F THE ABOVE, ASSESSMENT COMPLETED WITHOUT SERVICE OF NOTICE U/S. 143(2) WITHIN TIME PRESCRIBED THEREIN IS LIABLE TO BE HELD AS INVALID AND VOID AB INITIO. THIS LEGAL VIEW ARRIVED ON REMAND REPORT AND REASONED FA CTUAL FINDING NEED NO INTERFERENCE FROM OUR SIDE. 5. AS A RESULT, THE ORDER OF THE CIT(A) IS UPHELD A ND THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 26 TH DAY OF JUNE 2012. SD/- SD/- ( G.S.PANNU ) ( SHAILENDRA KUMAR Y ADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER GSPS PUNE, DATED THE 26 TH JUNE, 2012 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE ITO, WARD-3(3), LATUR. 3. THE CIT(A), AURANGABAD. 4. THE CIT, AURANGABAD. 5. THE DR B BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.