Assistant Commissioner of Income Tax Central Circle-2(3), Bangalore V. Shri C J Vishwanath , Chikkamagaluru

MA 32/BANG/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3218 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-08-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-08-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 02-05-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAVI KIRAN
• Keywords: Unexplained cash credit; Rectification of order; Search and seizure; Period of limitation; Time period of passing order; Revised return
• Section: 132; 143(3); 142(1); 139(5); 143(1); 143(2); 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES “A”, BANGALORE Before Shri Chandra Poojari, AM & Smt.Beena Pillai, JM MA No.32/Bang/2022 : Asst.Year 2013-2014 (Arising out of ITA No.1896/Bang/2018) The Assistant Commissioner of Income-tax, Central Circle 2(3) Bangalore. v. Sri.C.J.Vishwanath Shanti Nivas, Chanapura Road, Kote, Chickamangaluru – 577 101 PAN : ADAPV3014C. (Applicant) (Respondent) Applicant by : Sri.K.V.Arvind, Standing Counsel Respondent by : Sri.Guruswamy H, ITP & Sri.Ravi Kiran, CA Date of Hearing : 05.08.2022 Date of Pronouncement : 16.08.2022 O R D E R Per Chandra Poojari, AM : This miscellaneous application filed by the Revenue seeking rectification of order of the Tribunal in ITA No.1896/ Bang/2018 dated 29.11.2021. 2. In this case, the Revenue came in appeal before the Tribunal for assessment year 2013-2014, raising following grounds:- “1.Whether on the facts and circumstances of the case, the CIT(A) has erred in not considering the fact that the return of income filed on 29.10.2014 was filed beyond the date allowed by notice u/s 142(1) and had also shown higher income than the original return of income and thus, this return of income filed on 29.10.2014 was in the nature of revised return of income as per section 139(5) and hence issue of notice u/s 143(3) in respect of this return of income was valid & legal. 2. Whether on the facts and circumstances of the case, the CIT(A) was correct in deleting the addition of Rs. 2,61,04,258 on account of unexplained cash credits on the ground that the service of notice was not within the stipulated time rendering the notice invalid when in the instant case the return has been filed on 29.10.2014 and as such the notice u/s 143(2) could be validly issued and served on or before 30.09.20 15 MA No.32/Bang/2022. Sri C.J.Viswanath. 2 3. Whether on the facts and circumstances of the case the CIT(A) is correct in allowing the assesee's appeal without appreciating the fact that notice u/s 143(2) was issued consequent to return of income filed on 29.10.2014 and not any earlier return of income and the time for issue and service of such notice u/s 143(2) was available upto 30/09/2015. 4. Whether on the facts and circumstances of the case the CIT(A) was correct in deleting the additions, disallowances made in the assessment order without any reasoning on the merits.” 3. The Tribunal disposed of the above grounds vide its order dated 29.11.2021, as under:- “39. We have heard both the parties and perused the materials on record. In this asst. year 2013-14, the assessment is a regular assessment and not covering block period. Notice u/s 143(2) dated 30/10/2014 served on 3/11/2014 on one Smt. Pankaja, spouse of assessee. Relating to this, there is no dispute. In this case, the return of income for the assessment year 2013-14 has been filed by the assessee on 30/9/2013. The time limit to issue notice u/s 143(2) is within 6 months from the end of financial year in which the return is furnished. The contention of the AR is that this notice served on assessee on 3/11/2014 is time barred which should have been served within 6 months from the end of financial year 31/3/2014 i.e on or before 30/9/2014. Since notice u/s 143(2) was served on 3/11/2014, obviously barred by limitation of time. The Hon’ble Madras High Court in the case of CIT Vs. Gitsons Engineering Co. Ltd., 370 ITR 87 (Mad), where it has been held that the service of notice within the prescribed time is mandatory. Being so, the CIT(A) is justified in quashing the asst. by holding that issue of notice us/ 143(2) is beyond time. Accordingly, we do not find any infirmity in the order of CIT(A). The same is confirmed. Accordingly for the assessment year 2013- 14, the appeal filed by the Revenue is dismissed.” 4. Now the Revenue has filed the present miscellaneous application seeking to rectify the order of the Tribunal, by stating as under:- “1. The assessee has filed his original return of income for the aforesaid AY:2013-14 on 30.09.2013 for which the limitation for issuance of notice u/s 143(2) was 30.09.2014. However, as per the records of this office, the assessee has filed a revised return for the aforesaid Assessment Year on 29.10.2014 against which the notice u/s 143(2) of the Income Tax Act, has been issued on 30.10.2014. It is to be MA No.32/Bang/2022. Sri C.J.Viswanath. 3 noted herein that, in the presence of original return filed in time, the assessee is rightfully entitled to file a revised return of income by the end of the succeeding financial year. As such the return of income filed by the assessee on 29.10.2014, enhancing his agricultural income is considered as a valid revised return against which notice u/s 143(2) can be issued upto 30.09.2015. The same has however, been issued on 30.10.2014 itself and served on the assessee on 03.11.2014, which is well within the period of limitation and hence VALID. 2. Both the learned CIT(A) and the Hon'ble ITAT while adjudicating the matter, have failed to take cognizance of the above mentioned fact, that the service of notice u/s 143(2) is well within the time period specified in the Act. 3. The CIT(A) has erred in not considering the fact that the return of income filed by the assessee on 29.10.2014 was filed beyond the date allowed in notice u/s 142(1) and thus return of income filed on this date was in the nature of revised return of income as per the section 139(5) and hence issue of notice u/s 143(2), dated:30.10.2014 i.r.o this return of income is valid and legal. 4. The Hon'ble ITAT has also failed to appreciate the fact that the notice u/s 143(2) has been issued against the return filed on 29.10.201~and not against the return filed on 30.09.2013. 5. It is pertinent to bring on record herein, that a valid revised return of income has been filed by the assessee on 29.10.2014, whereby the assessee has claimed agricultural income to the sum of Rs.40,26,700/- which was erstwhile not claimed by the assessee in his original return of income. The enhanced agricultural income claimed by the assessee in his revised return of income has been allowed and the same was also accepted by the assessee and so the same holds good for issuance of notice u/s 143(2) too which is not considered by CIT(A). The honorable ITAT has also failed to take note of this very vital and relevant issue on hand.” 5. On the other hand, the learned AR submitted the miscellaneous application filed by the Revenue is not sustainable in law. In support of his contention, the learned AR has filed a written submission, which reads as follows:- MA No.32/Bang/2022. Sri C.J.Viswanath. 4 MA No.32/Bang/2022. Sri C.J.Viswanath. 5 MA No.32/Bang/2022. Sri C.J.Viswanath. 6 MA No.32/Bang/2022. Sri C.J.Viswanath. 7 6. The learned AR also filed an additional written submission, which reads as follows:- MA No.32/Bang/2022. Sri C.J.Viswanath. 8 MA No.32/Bang/2022. Sri C.J.Viswanath. 9 MA No.32/Bang/2022. Sri C.J.Viswanath. 10 7. We have heard rival submissions and perused the material on record. In this case, the assessee filed original return of income on 30.09.2013 for the assessment year 2013- 2014. The Assessing Officer issued notice u/s 142(1) of the Act on 29.01.2014 requiring the assessee to file the return of income. The assessee filed one more return of income on 29.10.2014. Subsequently, notice u/s 143(2) of the Act was issued on 30.10.2014 and served on the assessee on 03.11.2014 and notice u/s 142(1) of the Act was issued and served on the assessee on 07.11.2014. The contention of the learned Departmental Representative is that notice u/s 143(2) of the Act was issued to the assessee on 30.10.2014 consequent to the filing of the return of income by the assessee on 29.10.2014 and the notice u/s 143(2) dated 30.10.2014 was not at all relates to original return filed by the assessee on 30.09.2013. According to the learned DR, notice issued u/s 143(2) is relating to the return filed by the assessee on 29.10.2014, which is within the limitation period and on that basis, the assessment order cannot be cancelled. Admittedly, there was a search in the case of the assessee on 08.06.2012, and thus, the assessment year 2013-2014 is not covering the block period and the same is a regular assessment. The A.O. issued notice u/s 142(1) of the Act on 29.01.2014 requiring the assessee to file the return of income. As mentioned earlier, the assessee has already filed his return of income u/s 139(1) of the Act on 30.09.2013 and it was not culminated with the assessment order. In our opinion, when the valid return is pending before the A.O., if the A.O. wanted to complete the MA No.32/Bang/2022. Sri C.J.Viswanath. 11 assessment, he should have issued notice u/s 143(2) of the Act within the limitation period. In our considered opinion, once the valid return was available on record, requiring the assessee to file return of income again by issuance of notice u/s 142(1) of the Act 29.01.2014 is invalid and making subsequent proceedings is void ab initio. Considering these facts of the case, the Tribunal held that notice issued u/s 143(2) of the Act on 30.10.2014 and served on the assessee on 03.11.2014 was relating to the original return of income filed by the assessee on 30.09.2013 and not relating to the return of income filed on 29.10.2014 in response to the notice issued u/s 142(1) of the Act on 29.01.2014. Being so, the argument of the learned DR is totally devoid of merits and to be rejected. For this purpose, we place reliance on the order of the Delhi Bench of the Tribunal in the case of Sajan Kumar Jain v. DCIT in ITA No.6793/Del/2018 (order dated 16.03.2021). The relevant finding of the Tribunal reads as follows:- “2. Before us, the ld. counsel for the assessee challenged the jurisdiction of the Assessing Officer by raising the following additional ground of appeal: “That on the facts and in the circumstances of the case and in law, Id CIT- A erred in sustaining the order passed by Ld AO u/s 143(3) without appreciating that as stated in opening portion of impugned assessment order regular return u/s 139(1) of the Act was submitted on 20.03.2017 and notice u/s 143(2) is admittedly issued on 16/10/2017 as noted at second page of assessment order, which is manifestly time barred as last date for issuance of notice u/s 143(2) as reckoned for period under consideration (which is search year) from 31.03.2017 would be 30.09.2017 and so notice u/s 143(2) issued on 16/10/2017 is time barred and accordingly assessment framed u/s 143(3) and order of CIT-A may please be quashed.” 3. Admittedly, this issue was never raised before the lower authorities. But since the challenge to the jurisdiction of the Assessing Officer goes to the MA No.32/Bang/2022. Sri C.J.Viswanath. 12 root of the matter, in light of the ratio laid down by the Hon'ble Supreme Court in the case of NTPC 229 ITR 383, the same deserves to be admitted and adjudicated. Accordingly, the additional plea raised for the first time is admitted, since it requires no verification of facts and the facts are very much in the body of the assessment order in the first page itself. 4. The challenge is in respect of validity of notice issued u/s 143(2) of the Act, which according to the assessee, is barred by limitation. 5. Facts on record show that the original return of income u/s 139(1) of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] was filed on 20.03.2017 declaring income of Rs. 6.22 crores. The said return of income was processed u/s 143(1) of the Act on 20.05.2017. Subsequently, pursuant to search and seizure operation u/s 132 of the Act, which was carried out on 18.11.2015, the case of the appellant was centralised from Circle -1 Faridabad to Central Circle 25, New Delhi. 6. Consequently, the notice u/s 142(1) of the Act was issued on 22.09.2017 asking the assessee to file return within 15 days of receipt of notice. The said notice reads as under: OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 25,ROOM NO. 322, 3 RD FLOOR, E-2, ARA CENTER, JHANDEWALAN EXTENSION, NEW DELHI. NOTICE UNDER SECTION 142(1) OF THE INCOME TAX ACT, 1961 FAN: ACSPJ6904A Sit. Sajan Kumar Jain, H.No. 1443-1446, Sector-14, Faridabad, Haryana In connection with the assessment for the assessment year 2016-17 you are required to: - (a) Prepare a true and correct return of your income/ the firm’s income/ family’s income/ the local authority’s income/ the company’s income/ income of the A.O.P./ income of the body of individuals/ income of A.Y. 2016-17 in respect of which you are assessable under the Income Tax Act, 1961, for the previous year relevant to the assessment year mentioned above. The return should be in the appropriate form as prescribed in rule 12 of. the Income Tax Rules, 1962. It should be duly verified and signed in accordance with the' provisions of section 140 of the Income Tax Act, 1961 and should be delivered at my office on or before 09-10-2017. (b) Produce or cause to produce before me at my office at New Delhi on 09-10- 2017 at 11:00 AM, the accounts and or documents as specified in the letter annexed herewith. (c) . Furnish in writing and verified in the prescribed manner, information called for as per combined questionnaire for ................. may be filed which are relevant to the Assessment Year 2016-17 dated -— and on the point or matters specified therein, before me at my office at New Delhi on 09-10-2017 at 11:00 AM. Yours faithfully MA No.32/Bang/2022. Sri C.J.Viswanath. 13 (Ramesh Kumar) Deputy Commissioner of Income Tax Central Circle-25, New Delhi CERTIFIED TRUE COPY RAMESH KUMAR Dy.Commissioner of Income Tax Central Circle-25, New Delhi” Dated: 22-09-2017 7. A perusal of the aforementioned notice shows that the Assessing Officer required the assessee to furnish his return of income. As mentioned elsewhere, the assessee had already filed return of income on 20.03.2017 which was processed u/s 143(1) of the Act on 20.05.2017. These glaring facts are very much available on the face of the assessment order which have been totally ignored by the Assessing Officer while issuing notice u/s 142(1) of the Act dated 22.09.2017. 8. Subsequently, notice u/s 143(2) of the Act was issued on 16.10.2017. Once again, the Assessing Officer completely ignored the fact that notice u/s 143(2) of the Act was to be issued and served upon the assessee within six months from the end of the F.Y. in which the return of income was filed, i.e. 20.03.2017. This makes the notice issued u/s 143(2) of the Act barred by limitation. 9. In our considered opinion, once a valid return of income was available on record, which was already processed issuing notice u/s 142(1) of the Act asking the assessee to furnish fresh notice in itself is invalid making subsequently proceedings void ab initio. 10. Considering the facts of the case in totality in light of the relevant provisions of the Act discussed hereinabove, we are inclined to quash the assessment order dated 29.12.2017 framed u/s 143(3) of the Act for want of jurisdiction as notice issued u/s 143(2) of the Act is barred by limitation. Since we have quashed the assessment order on the validity of jurisdiction, we do not find it necessary to dwell into the merits of the case. 11. In the result, the appeal filed by the assessee in ITA No. 6793/DEL/2018 is allowed.” 8. In view of the aforesaid reasoning and the order of the Delhi Bench of the Tribunal in the case of Sajan Kumar Jain v. DCIT (supra), we hold that the impugned order of the Tribunal is correct and in accordance with law. Hence, the miscellaneous application filed by the Revenue is dismissed. MA No.32/Bang/2022. Sri C.J.Viswanath. 14 9. In the result, the miscellaneous application filed by the Revenue is dismissed. Order pronounced on this 16 th day of August, 2022. Sd/- (Beena Pillai) Sd/- (Chandra Poojari) JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore; Dated : 16 th August, 2022. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT(A)-11, Bangalore 4. The CIT, Bangalore. 5. The DR, ITAT, Bangalore. 6. Guard File. Asst.Registrar/ITAT, Bangalore.