Case Law Details
Admittedly the petitioner had filed returns of income pursuant to the notice under section 147/148 by letter dated November 19, 2009 adopting its earlier returns under section 139(1) of the Act and the notice under section 143(2) was issued only on November 23, 2010. The final assessment order had not been passed and only a draft assessment order had been passed.
The proviso to section 292BB was applicable. The principle of estoppel under section 292BB would therefore, not apply. In these circumstances, the Assistant Director could not rely upon the main section 292BB and claim that notice under section 143(2) was deemed to be served within the stipulated time. In view of this position, there was no reason why reassessment proceedings should continue as no notice under section 143(2) of the Act was served on the assessee within the stipulated time. The assessment proceedings pursuant to the notices under section 148 of the Act were to be quashed and the Assistant Director was to issue a “no objection certificate” to the petitioner as required by the Reserve Bank of India.
In view of the above, we are of the opinion that on the facts of the assessee’s case, the decision of Hon’ble Jurisdictional High Court in the case of Alpine Electronics Asia Pte. Ltd. (supra) and V.R. Educational Trust (supra) would be applicable. Respectfully following the same, we hold that the assessment completed without issue of notice under Section 143(2) of the Act was invalid.
INCOME TAX APPELLATE TRIBUNAL, DELHI
ITA No. 3523/Del/2013 – Assessment Year : 1999- 2000
Shri Mohinder Kumar Chhabra
Vs.
Income Tax Officer
ORDER
PER G.D.AGRAWAL, VP:
This appeal by the assessee is directed against the order of learned CIT(A)-XVII, New Delhi dated 26th April, 2013 for the AY 1999- 2000.
2. The assessee has raised as many as nine grounds. However, the learned counsel for the assessee stated that first ground No.2 of his appeal should be considered which goes to the root of the matter and is covered in favour of the assessee by the decision of Hon’ble Jurisdictional High Court.
3. Ground No.2 of the assessee’s appeal reads as under:-
“That the learned CIT(Appeals) erred in upholding the validity of assessment order passed u/s 147/143(3) of the Act, after recording the admission of the AO that no notice u/s 143(2) was issued in the case, ignoring the judgments of the Jurisdictional High Court, copies of which had been filed before him, and thus committing contempt of Court.”
4. At the time of hearing before us, it is submitted by the learned counsel that admittedly in this case, no notice under Section 143(2) was served. In the remand report dated 20th March, 2007, the Assessing Officer admitted this fact. He further submitted that the issue relating to validity of assessment order in the absence of notice under Section 143(2) is covered in favour of the assessee by the decisions of Hon’ble Jurisdictional High Court in the case of Alpine Electronics Asia Pte. Ltd. Vs. Director General of Income-tax and Others – [2012] 341 ITR 247 (Delhi) and Director of Income-tax Vs. V.R. Educational Trust – order dated 10th February, 2012 in ITA No.510/2011.
5. Learned DR, on the other hand, relied upon the order of learned CIT(A) and he stated that in this case, notice under Section 142(1) was duly issued, therefore, opportunity of being heard had already been allowed to the assessee. He further stated that the issue is in fact covered in favour of the Revenue by the decision of Hon’ble Jurisdictional High Court in the case of Ashok Chaddha Vs. ITO – [2011] 337 ITR 399 (Delhi). He, therefore, submitted that the order of learned CIT(A) should be sustained and thus, ground No.2 of the assessee’s appeal should be rejected.
6. In the rejoinder, it is stated by the learned counsel that the issue before the Hon’ble Jurisdictional High Court in the case of Ashok Chaddha (supra) was with regard to notice under Section 143(2) where the assessment was to be completed under Section 153A of the Income-tax Act. Thus, the issue of notice under Section 143(2) in the case of reassessment under Section 148 was not before the Hon’ble Jurisdictional High Court in the case of Ashok Chaddha (supra) while in the case of V.R. Educational Trust (supra), it was the same issue.
7. We have carefully considered the submissions of both the sides and perused the material placed before us. After considering the arguments of both the sides and the facts of the case, we find the contention of the learned counsel to be justified. The issue before the Hon’ble Jurisdictional High Court in the case of Ashok Chaddha (supra) was whether the issue of notice under Section 143(2) is necessary when the notice has been sent in a search case under Section 153A. Hon’ble Jurisdictional High Court in the said case held as under:-
“Held, dismissing the appeal, that (i) no specific notice was required under section 143(2) of the Act when the notice as required under section 153A(1)(a) of the Act was already given. In addition, the two questionnaires issued to the assessee were sufficient so as to give notice to the assessee, asking him to attend the office of the Assessing Officer in person or through a representative duly authorized in writing or produce or cause to be produced at the given time any documents, accounts, and any other evidence on which he may rely in support of the return filed by him.”
8. However, in the case of V.R. Educational Trust (supra), the issue before the Hon’ble Jurisdictional High Court was identical to the issue in the present appeal because there also, the dispute was regard to issue of notice under Section 143(2) where the assessment was reopened under Section 147/148. The contention of the department was that the notice had already been issued under Section 142(1). However, Hon’ble Jurisdictional High Court did not agree with the Revenue’s contention and held as under:-
“Even otherwise, it is difficult to accept the contention of the appellant that notice under Section 142(1) can be regarded as a notice issued under Section 143(2) of the Act. This Court in the case of Commissioner of Income Tax versus Lunar Diamonds Ltd. [20081 281 ITR 1 (Del.) has held that service of notice under Section 143(2) is mandatory. It is not disputed that in respect of the proceedings under Section 147 of the act, notice under Section 143(2) is required and is mandated except in cases covered by the first and second proviso to Section 148 of the Act. The present case is not covered by the exceptions carved out in the two provisos as the return in the present case filed on or after 1st October, 2005. In the case of Assistant Commissioner of Income Tax and Another vs. Hotel Blue Moon (2010) 321 ITR 362 (SC), the Supreme Court had examined the question of mandate and necessity to issue notice under Section 143(2) of the Act, in the case of block assessment proceedings and it was observed as under:–
23. The other important feature that requires to be noticed is that Section 158-BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the assessing officer while completing the block assessments under Chapter XIV-B of the Act. This legislation is by incorporation. This section even speaks of sub-sections which are to be followed by the assessing officer. Had the intention of the legislature was to exclude the provisions of Chapter XIV of the Act, the legislature would have or could have indicated that also. A reading of the provision would clearly indicate, in our opinion, if the assessing officer, if for any reason, repudiates the return filed by the assessee in response to notice under Section 158-BC(a), the assessing officer must necessarily issue notice under Section 143(2) of the Act within the time prescribed in the proviso to Section 143(2) of the Act. Where the legislature intended to exclude certain provisions from the ambit of Section 158-BC(b) it has done so specifically. Thus, when Section 158-BC(b) specifically refers to applicability of the proviso thereto cannot be excluded.
24. We may also notice here itself that the clarification given by CBDT in its Circular No.717 dated 14-8-1995, has a binding effect on the Department, but not on the Court. This circular clarifies the requirement of law in respect of service of notice under sub-section (2) of Section 143 of the Act. Accordingly, we conclude even for the purpose of Chapter XIV-B of the Act, for the determination of undisclosed income for a block period under the provisions of Section 158-BC, the provisions of Section 142 and sub¬sections (2) and (3) of Section 143 are applicable and no assessment could be made without issuing notice under Section 143(2) of the Act.
(emphasis supplied)
4. The aforesaid reasoning will equally apply to proceedings initiated under Section 147 of the Act.”
9. That even in the case of Alpine Electronics Asia Pte. Ltd. (supra) also, the Hon’ble Jurisdictional High Court quashed the assessment proceedings because of non-issue of notice under Section 143(2) within time. In the said case also, the assessment was reopened under Section 147/148. In the aforesaid case, their Lordships of Hon’ble Jurisdictional High Court held as under:-
“Admittedly the petitioner had filed returns of income pursuant to the notice under section 147/148 by letter dated November 19, 2009 adopting its earlier returns under section 139(1) of the Act and the notice under section 143(2) was issued only on November 23, 2010. The final assessment order had not been passed and only a draft assessment order had been passed. The proviso to section 292BB was applicable. The principle of estoppel under section 292BB would therefore, not apply. In these circumstances, the Assistant Director could not rely upon the main section 292BB and claim that notice under section 143(2) was deemed to be served within the stipulated time. In view of this position, there was no reason why reassessment proceedings should continue as no notice under section 143(2) of the Act was served on the assessee within the stipulated time. The assessment proceedings pursuant to the notices under section 148 of the Act were to be quashed and the Assistant Director was to issue a “no objection certificate” to the petitioner as required by the Reserve Bank of India.”
10. In view of the above, we are of the opinion that on the facts of the assessee’s case, the decision of Hon’ble Jurisdictional High Court in the case of Alpine Electronics Asia Pte. Ltd. (supra) and V.R. Educational Trust (supra) would be applicable. Respectfully following the same, we hold that the assessment completed without issue of notice under Section 143(2) of the Act was invalid. The same is quashed and consequentially, the assessment order passed in pursuance thereto is also cancelled.
11. Once we have quashed the assessment order, the other grounds raised by the assessee against the addition made by the Assessing Officer in the assessment order do not survive for adjudication. 12. In the result, the appeal of the assessee is allowed.
Decision pronounced in the open Court on 13th December, 2013.
