Case Law Details

Case Name : Income Tax Office Vs M/s. Industrial Syndicate (ITAT Delhi)
Appeal Number : I.T. A. No.2589/Del/2011
Date of Judgement/Order : 11/05/2012
Related Assessment Year : 2007-08
Courts : All ITAT (4439) ITAT Delhi (983)

From the assessment order it is clear that the assessee has not raised any objection as to service of notice u/s 143(2) during the course of assessment proceedings. Therefore, the provisions of Proviso to sec. 292BB will not be pressed into service after completion of assessment. Further CBDT vide Circular No.1 of 2009 clarified that the provisions of sec. 292BB shall be applicable in all proceedings which were pending on 1.04.2008. Hon’ble Punjab & Haryana High Court in the case of CIT vs. Panchvati Motors (P) Ltd. in ITA No.292 of 2008, dated 3.05.2011 has held that in a case where no objection regarding valid service was taken before the completion of assessment, provisions of sec. 292BB will be applicable to all pending assessments as on 1.04.2008.

Since the provisions of sec. 292BB(1) are applicable for Assessment Year in question as the proceedings were pending as on that date and the assessee had not raised any objection during the course of assessment proceedings and had participated in the assessment proceedings, the assessment cannot be annulled on the ground that valid notice u/s 143(2) was not served on the assessee. Accordingly in our considered opinion as held by the Hon’ble Punjab & Haryana High Court in the case of Panchvati Motors (P) Ltd. (supra), assessment cannot be annulled. We therefore, set aside the order of the learned CIT(A) and restore the order of the assessing officer on assumption of jurisdiction.

INCOME TAX APPELLATE TRIBUNAL, DELHI

I.T. A. No.2589/Del/2011 – Assessment Year: 2007-08

Income Tax Office

Vs.

M/s. Industrial Syndicate

O R D E R

PER K.D. RANJAN, ACCOUNTAT MEMBER:

This appeal by the Revenue for Assessment Year 2007-08 arises out of the order of the Commissioner of Income-tax (Appeals), Faridabad. The grounds of appeal raised by the Revenue are reproduced as under:-

“1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in quashing the assessment despite the specific saver provided under the Act by way of section 292BB because section 292BB of the Income Tax Act, 1961 provides that;

 

“Where an assessee has appeared in any proceedings or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was-

 

(a) not served jupon him; or

(b) not served upon him in time; or

(c) served upon him in an improper manner

 

Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.”

 

2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in quashing the assessment even though the defects in service of notice is a irregularity curable u/s 292BB of the Income Tax Act, 1961.

3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in quashing the assessment even though the explanatory notes to the provisions of Finance Act issued by the CBDT under Circular No.1 of 2009 makes it clear that provisions of new section 292BB shall apply in all proceedings which are pending on 1st April, 2008. The amended provision of sub-section (2) of section 143 shall apply to all such returns (irrespective of the assessment year to which the returns pertain) where notice under sub-section (2) of section 143 can still be issued on 1st April 2008 under the preamended provision. Since the notice u/s 143(2) was served through affixture on 30.09.2008 is covered by the provisions of section 292BB of the Act.”

2. The only issue for consideration relates to cancellation of assessment made u/s 143(3) on the ground that assessment has been made without serving valid notice u/s 143(2) of the Act. The facts of the case stated in brief are that the return of income filed on 8.11.2007 was processed u/s

143(1). The AO issued notice u/s 143(2) and 142(1) along with questionnaire. In response thereto Shri Pradeep Bansal, CA, counsel of the assessee appeared along with Shri V.P. Sharma, husband of Smt. Neena Sharma, partner of the assessee firm and attended the assessment proceedings from time to time. The Assessing Officer completed assessment on 29.12.2009 assessing the total income at Rs.46,20,530/- as against returned income of Rs.1,87,650/-.

3. On appeal, the assessee challenged the additions made on the ground of merits as well as assumption of jurisdiction that assessment was made u/s 143(3) without serving valid notice under sec. 143(2). The learned CIT(A) after detailed discussion and relying on various decisions observed that there has been no valid service of notice issued u/s 143(2) of the Act upon the assessee. Therefore, the AO could not be stated to have assumed jurisdiction to pass order and assessment order passed by the AO without proper service of notice was invalid and was liable to be quashed. As regards contention of the AO that provisions of sec. 292BB of the Act came into force with effect from 1.04.2008 was of no help in view of decision of Hon’ble Punjab & Haryana High Court in the case of CIT vs. Cebon India Ltd., 184 Taxman 290, wherein it has been held that when there was no evidence to show that notice u/s 143(2) was served within the stipulated time, the assessment made was bad in law. The learned CIT(A) accordingly annulled the assessment.

4. Before us, the learned Sr.DR submitted that provisions of sec. 292BB have been inserted in the statute by the Finance Act, 2008 w.e.f. 1.04.2008 according to which in a case where the assessee has appeared in any proceedings or cooperated in any enquiry relating to assessment or reassessment it shall be deemed that any notice under any provision of this Act which is required to be served upon, has been duly served upon him in time in accordance with the provisions of Income-tax Act and such assessee shall be precluded from taking any objection in any proceeding or enquiry under this Act, that the notice was not served upon the assessee or not served upon him in time or served upon him in improper manner. He further submitted that the AO has issued notice u/s 143(2) and 142(1) in response thereto, the AR of the assessee Shri Pradeep Bansal has attended the proceedings. He further submitted that provisions of sec. 292BB are applicable for all the pending proceedings as on 1.04.2008 and since notice u/s 143(2) was served through affixture on 30th September, 2008, the provisions of sec. 292BB were applicable. Accordingly, the learned CIT(A) was not justified in cancelling the assessment. On the other hand, then learned AR of the assessee supported the order of CIT(A) by submitting that notice u/s 143(2) was not served on the assessee.

5. We have heard both the parties and gone through the material available on record. In this case, the AO issued notice u/s 143(2) and 142(1), in response thereto Shri Pradeep Bansal, CA, the AR of the assessee attended along with Shri V.P. Sharma, the husband of Smt. Neena Sharma, the partner of the assessee firm. Thus, there is no dispute about the fact that the AR of the assessee had participated in the assessment proceedings. Notice u/s 143(2) was served on the assessee through affixture on 30th September, 2008. Provisions of sec. 292BB have been inserted by the Finance Act, 2008, applicable w.e.f. 1.04.2008 which reads as under:-

 

“292BB. Where an assessee has appeared in any proceedings or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was-

 

(d) not served upon him; or

 

(e) not served upon him in time; or

 

(f) served upon him in an improper manner

 

Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.”

From the assessment order it is clear that the assessee has not raised any objection as to service of notice u/s 143(2) during the course of assessment proceedings. Therefore, the provisions of Proviso to sec. 292BB will not be pressed into service after completion of assessment. Further CBDT vide Circular No.1 of 2009 clarified that the provisions of sec. 292BB shall be applicable in all proceedings which were pending on 1.04.2008. Hon’ble Punjab & Haryana High Court in the case of CIT vs. Panchvati Motors (P) Ltd. in ITA No.292 of 2008, dated 3.05.2011 has held that in a case where no objection regarding valid service was taken before the completion of assessment, provisions of sec. 292BB will be applicable to all pending assessments as on 1.04.2008. Since the provisions of sec. 292BB(1) are applicable for Assessment Year in question as the proceedings were pending as on that date and the assessee had not raised any objection during the course of assessment proceedings and had participated in the assessment proceedings, the assessment cannot be annulled on the ground that valid notice u/s 143(2) was not served on the assessee. Accordingly in our considered opinion as held by the Hon’ble Punjab & Haryana High Court in the case of Panchvati Motors (P) Ltd. (supra), assessment cannot be annulled. We therefore, set aside the order of the learned CIT(A) and restore the order of the assessing officer on assumption of jurisdiction.

6. From the order of the CIT(A) we find that he has observed that the discussion on merits of addition was only of academic importance. The learned CIT(A) has again allowed the appeal in respect of addition of Rs.3,300/- being difference in the outstanding liability in the case of SS Steels. This addition has been deleted by him that by observing that the AO had disallowed the amount without further query or verification.

7. Since we have restored the order of the Assessing Officer on assumption of jurisdiction and since the CIT(A) has not decided the issue on merits, we set aside the appeal to the file of the CIT(A) with the direction to decide the appeal on merits. The learned CIT(A) will provide necessary opportunity of being heard to the assessee as also to the Assessing Officer.

8. In the result, appeal filed by the Revenue is allowed.

9. This decision is pronounced in the Open Court on 11th May, 2012.

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