ITO, Ward - 9(1), Kolkata, Kolkata V. M/s. Mrinal Securities Services Pvt. Ltd., Kolkata

ITA 969/KOL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48129 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 1996-1997
• Appeal Filed On: 04-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PRAMANICK
• Assessee Lawyers: A K BANERJEE
• Keywords: Question of law; Non compliance; Procedural lapse; Assessment record; Block assessment
• Section: 143(3); 142(1); 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . . , ! '# '# '# '# /AND ' # , ! ) [BEFORE HONBLE SHRI S. V. MEHROTRA, AM & HONBLE S RI MAHAVIR SINGH, JM] #$ #$ #$ #$ / I.T.A NO. 969/KOL/2009 %& ''( %& ''( %& ''( %& ''(/ // / ASSESSMENT YEAR: 1996-97 INCOME-TAX OFFICER, WD-9(1), KOLKATA. VS M/S. M RINAL SECURITIES SERVICES (P) LTD. (*+ /APPELLANT ) (,-*+/ RESPONDENT ) *+ . / /FOR THE APPELLANT: SHRI A. K. PRAMANICK ,-*+ . / /FOR THE RESPONDENT: SHRI A. K. BANERJEE 0 / ORDER PER MAHAVIR SINGH, JM/ ' # ' # ' # ' # , ! ! ! ! : THIS APPEAL BY REVENUE IS ARISING OUT OF THE ORDER OF CIT(A)-VI, KOLKATA IN APPEAL NO.571/CIT(A)-VI/2001-02/CIR-6 VIDE DATED 27.03.200 9. THE ASSESSMENT WAS FRAMED BY ITO, CW-2(3)/CAL, NOW DCIT, CIRCLE-6, KOLKATA U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSME NT YEAR 1996-97 VIDE HIS ORDER DATED 27.03.2009. 2. THE ONLY ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) QUASHING THE ASSESSMENT BY HOLDING THAT NOTICE U/S. 143(2) IS NO T AT ALL ISSUED, WHICH IS MANDATORY. FOR THIS, REVENUE HAS RAISED FOLLOWING TWO GROUNDS: 1. WHETHER, ON FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) IS CORRECT IN ANNULLING THE ASSESSMENT ORDER SPECIALLY ORDER WHEN THE ASSESSEE RAISES NO OBJECTION BEFORE ASSESSING OFFICER AND PARTICIPATED IN THE PR OCEEDINGS AND THE ASSESSMENT ORDER CLEARLY MENTIONS THE SERVICE OF NOTICE U/S. 143(2)? 2. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) IS CORRECT IN ACCEPTING THE CONTENTION OF THE ASSESSEE THAT THE D OCUMENTS ARE SEIZED BY THE DEPARTMENT AND SO THEY ARE NOT IN A POSITION TO PROVE THE SERV ICE OF NOTICE BEYOND STIPULATED TIME APPRECIATING THE WRONG STATEMENT OF FACTS? 3. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT, ASSESSEE FILED ORIGINAL RETURN OF INCOME FOR ASSESSMENT YEAR 1996-97 ON 08.05.1997, WHICH WA S DULY PROCESSED U/S. 143(1)(A). ACCORDING TO AO, NOTICES U/S. 143(2) AND 142(1) WER E SERVED ON THE ASSESSEE, IN RESPONSE TO WHICH SHRI S. BANDYOPADHYAY, AR OF THE ASSESSEE APP EARED. IN THE ASSESSMENT ORDER THE DATES OF HEARING NOTED ARE 3.9.1998, 7.9.1998 AND 10.9.19 98 AND THE ASSESSMENT ORDER IS DATED 30.3.1999. THE ASSESSEE CHALLENGED BEFORE THE CIT( A) THAT NO NOTICE U/S. 143(2) WAS ISSUED TO 2 ITA 969/K/2009 MRINAL SECURITIES SERVICES (P) LTD. . A.Y.96-97 THE ASSESSEE AND FOR THIS, ASSESSEE HAS RAISED THE ISSUE BEFORE CIT(A) THAT THE PROVISO TO SECTION 143(2) OF THE ACT CAST A DUTY UPON THE AO TO SERVE A NOTICE U/S. 143(2) OF THE ACT BEFORE EXPIRY OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH RET URN IS FURNISHED BY THE ASSESSEE. THE CIT(A) ALLOWED OPPORTUNITY TO THE ITO AND FOR THIS, HE REQUIRED ASSESSMENT RECORDS IN FEBRUARY, 1999 BUT NO RECORDS WERE SUBMITTED FOR PE RUSAL OF THE CIT(A) AND CIT(A) AGAIN ISSUED REMINDERS FOR THE SAME. FINALLY, HE ISSUED LETTER DATED 4.11.2008 ADDRESSED TO ADDL. COMMISSIONER, RANGE-6, KOLKATA AND FURTHER LETTER D ATED 10.11.2008 ADDRESSED TO ADDL. COMMISSIONER, RANGE-9, KOLKATA REQUIRING THE RECORD S IN THIS CASE. BUT, NEITHER THE ASSESSMENT RECORDS NOR REPORT AS REGARDS TO SERVICE OF NOTICE U/S. 143(2) OF THE ACT WAS RECEIVED BY CIT(A) AND THE RECORDS WAS NOT TRACED IN THE RANGE. THE C IT(A) ALSO MADE ENQUIRIES FROM THE ASSESSEE BUT ALL THE FILES AND BOOKS OF ACCOUNT OF THE ASSESSEE WAS SEIZED BY THE DEPARTMENT IN A SEARCH ACTION. THE CIT(A) ACCORDINGLY, NOTED THAT DESPITE REMINDERS, THE AO FAILED TO PRODUCE DOCUMENTARY EVIDENCE IN SUPPORT OF THE DATE OF SERV ICE OF NOTICE ON THE ASSESSEE U/S. 143(2) OF THE ACT AND ACCORDINGLY, HE QUASHED THE ASSESSMENT PROCEEDINGS. AGGRIEVED REVENUE PREFERRED APPEAL BEFORE TRIBUNAL. 4. THE LD. COUNSEL FOR THE ASSESSEE, IN VIEW OF THE ABOVE FACTS, STATED THAT SEC. 143(2) OF THE ACT IS MANDATORY AND IN THE PRESENT CASE NO NOT ICE U/S. 143(2) OF THE ACT WAS ISSUED WITHIN THE PRESCRIBED TIME I.E. 12 MONTHS FROM THE DATE OF FILING OF RETURN. HE RELIED ON THE CASE LAW OF HONBLE APEX COURT IN THE CASE OF ACIT VS HOTEL BL UE MOON (2010) 321 ITR 362 (SC), RAJ KUMAR CHAWLA VS ITO (2005) 94 ITD 1 (DEL.SB) AND TH E DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. MA KAMAKHYAYA ENTERPRI SES, ITAT NO.15 OF 2011, GA NO. 141 & 142 OF 2011 DATED 23.02.2011. 5. ON THE OTHER HAND, THE LD. DR STATED THAT THE CI T(A) HAS RELIED ON THE ORDER OF THE AO. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT, IT IS ADMITTED POSITION THAT NOTICE U /S. 143(2) OF THE ACT WAS NOT ISSUED WITHIN THE PRESCRIBED TIME OF 12 MONTHS FROM THE DATE OF FILIN G OF RETURN. THIS FACT IS EVIDENT FROM THE ORDER OF CIT(A), WHEREIN HE HAS CONCLUDED THAT IN T HE PROCEEDING FOR COMPLETION OF ASSESSMENT U/S. 143(3) OF THE ACT, THERE IS NO NOTICE U/S. 143 (2) OF THE ACT ISSUED BY THE AO AND THIS FINDING IS BASED ON THE FACT THAT THE CIT(A) HAS RE QUIRED THE ASSESSMENT RECORDS BUT DESPITE REMINDERS NEITHER REPORT WAS SENT REGARDING ISSUANC E OF NOTICE U/S. 143(2) OF THE ACT NOR RECORDS WERE SENT BY THE AO OR BY THE ADDL. CIT. W E FIND THAT THE HONBLE APEX COURT IN THE 3 ITA 969/K/2009 MRINAL SECURITIES SERVICES (P) LTD. . A.Y.96-97 CASE OF HOTEL BLUE MOON (SUPRA) HAS HELD THAT PROCE DURE OF SECTION 143(2) IS MANDATORY AND TO BE FOLLOWED IN AN ASSESSMENT. HONBLE APEX COURT HE LD AS UNDER (SUMMARIZED): (I) WHILE NOTICE U/S 143 (2) IS NOT NECESSARY IF TH E AO ACCEPTS THE RETURN AS FILED, THE NOTICE WITHIN THE PRESCRIBED TIME IS MANDATORY IF THE AO P ROPOSES TO MAKE AN ASSESSMENT U/S 158BC R.W.S143 (3). OMISSION TO ISSUE NOTICE U/S 14 3(2) IS NOT A PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE AND, THE REQUIREMENT OF NOTICE U/S 143(2) CANNOT BE DISPENSED WITH. IF THE INTENTION OF THE LEGISLATURE WAS TO EX CLUDE THE PROVISIONS OF S. 143 (2), THE LEGISLATURE WOULD HAVE INDICATED THAT. (II) IN CIRCULAR NO.717 DATED 14.8.1995 THE CBDT HA S DIRECTED THAT THE AO SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCOME OF THE BLOCK PERIOD AND THE PROVISIONS OF S. 142, SUB-S (2) AND (3) OF S. 143 AND S. 144 SHALL A PPLY ACCORDINGLY. THIS CIRCULAR CLARIFIES THE REQUIREMENT OF LAW IN RESPECT OF SERVICE OF NOT ICE U/S 143 (2). THE CIRCULAR IS BINDING ON THE DEPARTMENT THOUGH NOT ON THE COURT. (III) A SEARCH IS THE SINE QUA NON FOR A BLOCK ASSE SSMENT UNDER CH. XIV-B. A BLOCK ASSESSMENT IS IN ADDITION TO REGULAR ASSESSMENTS PR OCEEDINGS AND NOT IN SUBSTITUTION THEREOF. THE SCOPE AND AMBIT OF A BLOCK ASSESSMENT IS LIMITED TO MATERIALS UNEARTHED DURING SEARCH AND CAN ONLY BE DONE ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION. SIMILARLY, HONBLE CALCUTTA HIGH COURT IN THE CASE OF MA KAMAKHYAYA ENTERPRISES (SUPRA) EXACTLY ON SIMILAR CIRCUMSTANCES HELD THAT NOTICE U /S. 143(2) OF THE ACT WITHIN A PERIOD OF 12 MONTHS IS MANDATORY. HONBLE CALCUTTA HIGH COURT D ISCUSSED THE FACTS AS UNDER: THERE IS NO DISPUTE THAT THE ASSESSEE FILED RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 31 ST OCTOBER, 2006 AND THE SAID RETURN WAS TAKEN UP FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED O N 25 TH OCTOBER, 2007, AS IT APPEARS FROM THE POSTAL RECEIPT PLACED ON RECORD BY THE REV ENUE. HOWEVER, THE SAID NOTICE WAS RECEIVED BY THE ASSESSEE ON 3 RD NOVEMBER, 2007 I.E. AFTER THE EXPIRY OF THE PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETUR N WAS FILED BY THE ASSESSEE. AND FINALLY, HONBLE HIGH COURT HAS HELD AS UNDER: ON A PLAIN READING OF THE AFORESAID PROVISION, IT IS ABUNDANTLY CLEAR THAT SERVICE ON THE ASSESSEE WITHIN 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FURNISHED IS THE ESSENTIAL REQUIREMENT OF LAW AND NOT MERE ISSU E OF SUCH NOTICE WITHIN THE SAID DATE. WE, THUS, FIND THAT IN THE CASE BEFORE US, THE TRIB UNAL WAS QUITE JUSTIFIED IN HOLDING THAT BY MERE ISSUE OF NOTICE BEFORE THE EXPIRY OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FURNISHED, IF THE SAME WAS RECEIVED AFTE R THE EXPIRY OF 12 MONTHS BY THE ASSESSEE WILL NOT VALIDATE THE PROCEEDING FOR ASSES SMENT. WE, THEREFORE, FIND THAT NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APP EAL AND, CONSEQUENTLY, WE DISMISS THIS APPEAL SUMMARILY. 7. IN VIEW OF THE ABOVE ADMITTED FACTS THAT NO NOTI CE U/S. 143(2) OF THE ACT WAS ISSUED WITHIN THE PRESCRIBED TIME OF TWELVE MONTHS FROM TH E DATE OF FILING OF RETURN. THE RATIO LAID DOWN BY HONBLE APEX COURT IN THE CASE OF HOTEL BLU E MOON (SUPRA) AND ALSO BY HONBLE CALCUTTA HIGH COURT IN THE CASE OF MA KAMAKHYAYA EN TERPRISES (SUPRA) EXACTLY ON SIMILAR 4 ITA 969/K/2009 MRINAL SECURITIES SERVICES (P) LTD. . A.Y.96-97 CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT T HE ASSESSMENT FRAMED WITHOUT ISSUING NOTICE U/S. 143(2) OF THE ACT WITHIN THE PRESCRIBED TIME L IMIT OF TWELVE MONTHS FROM THE DATE OF FILING OF RETURN IS WITHOUT JURISDICTION. IN A CASE WHERE A RETURN IS FILED AND PROCESSED U/S. 143(1)(A) OF THE ACT AND NO NOTICE U/S. 143(2) THEREAFTER IS SERVED ON THE ASSESSEE WITHIN THE STIPULATED PERIOD OF TWELVE MONTHS AS ENVISAGED IN THE PROVISO , THE ASSESSMENT PROCEEDINGS U/S. 143 COMES TO AN END AND THE MATTER BECOMES FINAL ALTHOU GH TECHNICALLY NO ASSESSMENT IS FRAMED IN SUCH CASE, YET THE PROCEEDINGS FOR ASSESSMENT STAND TERMINATED. SECTION 143(2) INCORPORATES THE RULE OF AUDI ALTEREM PARTEM I.E., NO MAN SHOULD BE CONDEMNED UNHEARD. THE WORDS SHALL SERVE ON THE ASSESSEE A NOTICE OCCURRING IN SECTIO N 143(2) IMPLY A DUTY TO BE PERFORMED AND THE WORD SHALL CONNOTES THAT THE PROVISIONS ARE M ANDATORY AND NON COMPLIANCE OF THE SAME GOES TO VITIATE THE ORDER OF ASSESSMENT ITSELF. ACC ORDINGLY, WE UPHELD THE ORDER OF CIT(A) QUASHING THE ASSESSMENT IN THE PRESENT CASE. APPEA L OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 9. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- . . ! ' # ' # ' # ' # , ! (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 1 1 1 1) )) ) DATED 2ND JUNE, 2011 '23 %45 6' JD.(SR.P.S.) 0 . ,7 87'9- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT ITO, WARD-9(1), KOLKATA. 2 ,-*+ / RESPONDENT, M/S. MRINAL SECURITIES SERVICES (P) L TD., 9, JAGMOHAN MULLICK LANE, KOLKATA-7. 3 . 0% ( )/ THE CIT(A), KOLKATA 4. 0% / CIT, KOLKATA 5 . '? ,% / DR, KOLKATA BENCHES, KOLKATA -7 ,/ TRUE COPY, 0%@/ BY ORDER, #5 /ASSTT. REGISTRAR .