Case Law Details
Tiny Girl Clothing Company (P) Ltd. Vs. DCIT (ITAT Mumbai)
In the case on hand we see that the notice under section 143(2) itself is dated 19-1-2015 which is beyond the date prescribed for issue of notice i.e. 30-9-2012. In such circumstances the assessing officer could not have issued any notice prior to 30-9-2012. Therefore, admittedly in this case as the notice under section 143(2) was issued beyond 30-9-2012 and in view of the decision of the Hon’ble Allahabad High Court the assessing officer could not have assumed jurisdiction in the absence of valid issue of notice under section 143(2) of the Act. Thus, respectfully following the said decision, we hold that there is no valid issue of notice under section 143(2) of the Act in this case and consequently the Assessment Order passed under section 143(3) is a nullity. Hence we quash the Assessment Order passed under section 143(3) read with section 147 of the Act. As we have held that the Assessment Order is a nullity we are not adjudicating the grounds on merits as they become only academic.
FULL TEXT OF THE ITAT JUDGMENT
This appeal is filed by the assessee against the order of the Learned Commissioner (Appeals)–21, Mumbai dated 28-3-2016 for the assessment year 2011-12. The assessee in its appeal raised several grounds of appeal both on validity of issue of service of notice under section 143(2)/148 of the Act as well on merits of the dis-allowances.
2. Learned Counsel for the assessee, at the outset submits that there is no valid service of notice under section 148 of the Act, as the notice was issued on a different address where the assessee was conducting business prior to the assessment year 2008-09. Learned Counsel for the assessee referring to page Nos. 11 to 18 which are the copies of acknowledgements of returns filed for the assessment years 2008-09 to 2014-15, submitted that the returns were filed before the assessing officer showing the new address i.e. 3A-3B, Prime Plaza, J. V. Patel Compound, B.S. Madhukar Road, Elphinstone (W), Mumbai. Learned Counsel for the assessee submits that the assessing officer seems to have issued notice at the address which the assessee was earlier used to conduct business i.e. Galano 18, Ashish Ind Estate, Gokhale Road (South), Dadar (W), Mumbai. Learned Counsel for the assessee submits that assessing officer very well knew the new address of the assessee and instead of issuing the notice under section 148 of the Act to the new address of the assessee he chose to issue the notice to old address and in view of this the notice under section 148 of the Act could not be served on the assessee.
3. The Learned Counsel for the assessee further submits that the notice under section 143(2) of the Act was not issued within the time limit specified under the provisions of the Act and was issued beyond the time and was served only in the course of Assessment Proceedings just before completion of the assessment. Therefore, he submits that the proceedings pursuant to notice under section 143(2) became null and void for the reason that the notice was issued beyond the time limit specified under section 143(2) of the Act. He placed reliance on the decision of the Hon’ble Allahabad High Court in the case of CIT v. M/s. Salarpur Cold Storage (Pvt.) Ltd. in (ITA No. 24 of 2014, dt. 19-8-2014). Learned Counsel for the assessee submits that in the case of CIT v. Gitsons Engineering Co. 370 ITR 87 the Hon’ble Madras High Court held that the provisions of section 143(2) makes it clear that service of notice under that section within the time limit prescribed is mandatory and it is not a mere procedural requirement. Therefore, the Learned Counsel for the assessee submits that since there was no proper service of notice under section 148/143(2) of the Act the assessment made by the assessing officer is null and void.
4. Learned Departmental Representative strongly supported the orders of the authorities below. Learned Departmental Representative further submits that in view of the provisions of section 292BB of the Act even if there is defect in service of notices, as the assessee participated and appeared in the proceedings before assessing officer, the Assessment Order cannot be said to be null and void.
5. We have heard the rival submissions, perused the orders of the authorities below and the case laws relied upon. Before coming to the merits of the addition/dis allowance, the preliminary issue in this case is regarding the invalid issue of service of notice under section 143(2) of the Act. On a reading of the learned Commissioner (Appeals) order, it is an admitted fact that notice under section 143(2) dated 19-1-2015 was issued and served on the assessee in the course of Assessment Proceedings. Proviso to section 143(2)(ii) mandates that no notice shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. In this case the return of income was furnished by the assessee on 20-9-2011 for the assessment year 2011-12 and the period for issue of notice under section 143(2)(ii) expired on 30-9-2012 i.e. six months from the end of the financial year in which return was furnished by the assessee. In the Remand proceedings also the assessing officer stated that notice under section 143(2) dated 19-1-2015 was issued and served on the assessee.
6. In the case of CIT v. M/s. Salarpur Cold Storage (Pvt.) Ltd. (supra) the Hon’ble Allahabad High Court considered a situation where the notice was issued beyond the period specified in the section and in such circumstances whether such notice is valid and consequent Assessment Order is valid or not. It was held that where the assessing officer fails to issue a notice within a period of six months as specified in the provisions of clause (ii) of section 143(2) of the Act the assumption of the jurisdiction under section 143(3) of the Act would be invalid. While coming to such conclusion the Hon’ble Allahabad High Court also considered the decision of the ACIT v. M/s. Hotel blue Moon (321 ITR 362) and held as under :–
“Under clause (ii) of sub-section (2) of section 143, the assessing officer is required to serve, on the assessee, a notice requiring him to attend the office or to produce evidence on which the assessee may rely in support of the return, if the assessing officer considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner. Under the proviso to clause (ii), it has been specified that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. Service on the assessee of a notice within the period prescribed by the proviso presupposes the issuance of a notice for, it is only when a notice is issued, that it can be served. Thereafter, the provisions of sub-section (3) of section 143 of the Act stipulate that on the date specified in the notice issued under clause (ii) of sub-section (2) of section 143 of the Act, the assessing officer shall, after hearing the evidence as the assessee may produce and considering such other evidence as he may require and upon taking into account all relevant material, by an order in writing make an assessment of the total income or loss of the assessee. The jurisdiction of the assessing officer to make an assessment under section 143(3)(ii) of the Act is premised on the issuance of a notice under clause (ii) of section 143(2) of the Act. The proviso to clause (ii) of sub-section (2) of section 143 of the Act stipulates that a notice must be served on the assessee no later than the expiry of six months from the end of the financial year in which the return has been furnished. If a notice is not even issued within the period of six months from the end of the financial year in which the return is furnished, there would be no occasion to serve it upon the assessee within the stipulated period.
In the present case, the facts which are not in dispute are that the assessee had filed its return of income on 30-9-2008 for assessment year 2008-09. The notice under section 143 (2) of the Act ought to have been issued by 30-9-2009 which was the date of the expiry of the period of six months from the end of the financial year in which the return was furnished. A notice was, however, issued on 6-10-2009 much beyond the period of six months. In such a situation, there could be no occasion to serve the notice within six months since the very act of issuance was beyond six months.
Now, it is in this background that it would be necessary to consider the provisions of section 292 BB of the Act. Section 292 BB provides as follows :–
“292 BB. Where an assessee has appeared in any proceeding 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 upon 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.”
Section 292 BB of the Act was inserted by the Finance Act, 2008 with effect from 1 April 2008. Section 292 BB of the Act provides a deeming fiction. The deeming fiction is to the effect that once the assessee has appeared in any proceeding or cooperated in any enquiry relating to an assessment or reassessment, it shall be deemed that any notice under the provisions of the Act, which is required to be served on the assessee, has been duly served upon him in time in accordance with the provisions of the Act. The assessee is precluded from taking any objection in any proceeding or enquiry that the notice was (i) not served upon him; or (ii) not served upon him in time; or (iii) served upon him in an improper manner. In other words, once the deeming fiction comes into operation, the assessee is precluded from raising a challenge about the service of a notice, service within time or service in an improper manner. The proviso to section 292 BB of the Act, however, carves out an exception to the effect that the Section shall not apply where the assessee has raised an objection before the completion of the assessment or reassessment. Section 292 BB of the Act cannot obviate the requirement of complying with a jurisdictional condition. For the assessing officer to make an order of assessment under section 143 (3) of the Act, it is necessary to issue a notice under section 143 (2) of the Act and in the absence of a notice under section 143(2) of the Act, the assumption of jurisdiction itself would be invalid.
This principle is no longer in doubt having due regard to the law laid down by the Supreme Court in the decision in Assistant Commissioner & Another v. M/S Hotel Blue Moon. While construing the provisions of Chapter XIV-B of the Act in relation to block assessments, the Supreme Court in that decision considered the effect of section 143 (2) of the Act. The Supreme Court held as follows :–
“…But Section 143(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, why the authorities should issue notice under section 143(2). However, if an assessment is to be completed under section 143(3) read with section 158-BC, notice under section 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under section 143(2) cannot be dispensed with.
The Supreme Court has, therefore, clearly held that the omission on the part of the assessing officer to issue a notice under section 143(2) of the Act is not a procedural irregularity and is not curable. The requirement of a notice under section 143(2) of the Act cannot be dispensed with.
In our view, where the assessing officer fails to issue a notice within the period of six months as spelt out in the proviso to clause (ii) of section 143 (2) of the Act, the assumption of jurisdiction under section 143 (3) of the Act would be invalid. This defect in regard to the assumption of jurisdiction cannot be cured by taking recourse to the deeming fiction under section 292 BB of the Act. The fiction in section 292 BB of the Act overcomes a procedural defect in regard to the non-service of a notice on the assessee, and obviates a challenge that the notice was either not served or that it was not served in time or that it was served in an improper manner, where the assessee has appeared in a proceeding or cooperated in an enquiry without raising an objection. Section 292 BB of the Act cannot come to the aid of the revenue in a situation where the issuance of a notice itself was not within the prescribed period, in which event the question of whether it was served correctly or otherwise, would be of no relevance whatsoever. Failure to issue a notice within the prescribed period would result in the assessing officer assuming jurisdiction contrary to law.”
7. In the case on hand we see that the notice under section 143(2) itself is dated 19-1-2015 which is beyond the date prescribed for issue of notice i.e. 30-9-2012. In such circumstances the assessing officer could not have issued any notice prior to 30-9-2012. Therefore, admittedly in this case as the notice under section 143(2) was issued beyond 30-9-2012 and in view of the decision of the Hon’ble Allahabad High Court the assessing officer could not have assumed jurisdiction in the absence of valid issue of notice under section 143(2) of the Act. Thus, respectfully following the said decision, we hold that there is no valid issue of notice under section 143(2) of the Act in this case and consequently the Assessment Order passed under section 143(3) is a nullity. Hence we quash the Assessment Order passed under section 143(3) read with section 147 of the Act. As we have held that the Assessment Order is a nullity we are not adjudicating the grounds on merits as they become only academic.
8. In the result, appeal of the assessee is allowed.
