Case Law Details

Case Name : Shri Ramesh Salecha HUF Vs. ITO (ITAT Mumbai)
Appeal Number : ITA. No. 3312/Mum/2015
Date of Judgement/Order : 25/10/2017
Related Assessment Year : 2011-12
Courts : All ITAT (4788) ITAT Mumbai (1547)

Shri Ramesh Salecha HUF Vs. ITO (ITAT Mumbai)

Revenue could not produce before us any evidence to show that notice under sections 143(2) has been issued or served to the assessee the re-assessment made under sections 143(3) read with section 147 is void ab-initio in view of the above decisions of the Honorable Allahabad High Court in the case of ACIT v. Greater Noida Industrial Development Authority (supra) and the Honorable Delhi High Court in the case of ACIT v. Geno Pharmaceuticals (supra). Thus, respectfully following the said decisions we hold that the re-assessment made under sections 143(3) read with section 147 of the Act is legally unsustainable. Thus, quash the re-assessment order passed by the assessing officer under sections 143(3) read with section 147 of the Act dated 31-1-2014 for the assessment year 2011-12 under appeal.

FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-

This appeal is filed by the assessee against the order of the Learned Commissioner (Appeals)-17, Mumbai dated 19-3-2015 for the assessment year 2011-12 arising out of the Assessment Order passed under sections 143(3) read with section 147 of the Income Tax Act.

2. The assessee in his appeal raised the following grounds :–

1. The orders passed by the learned lower authorities are bad in law and bad in facts.

2. The assessment order passed under section 143(3) read with section 147 of the Income Tax Act, 1961, is ab-initio void, inasmuch as. no notice under section 143(2) of the Income Tax Act, 1961, was issued & served upon the appellant prior to completion of the assessment.

3. The assessment order passed under section 143(3) read with section 147 of the Income Tax Act, 1961, is ab-initio void, inasmuch as, no valid return of income in terms of sec 148 of the Income Tax Act, 1961, was available on record.

4. The learned lower authorities have grossly erred in making/upholding an addition of Rs. 66.62,862 (peak amount 61,62,862) by recourse to section 690 of the Income Tax Act, 1961, even though said provisions are not attracted in case of the appellant.

5. The learned lower authorities have grossly erred in making/upholding an addition of Rs. 66,62,862 (peak amount 61,62,862) without giving an effective opportunity of being heard, even though a specific request to cross examine the parties on whose testimony/ statement the impugned addition has been made/ upheld.

6. The learned lower authorities have grossly erred in making/upholding an addition of Rs. 66,62.862 (peak amount 61,62,862) without bringing any cogent material or evidence on record to support their convictions. The impugned addition is wholly based on conjectures & surmises.

7. The learned Commissioner (Appeals) has grossly erred in rejecting the books of account, without issuing a show cause notice and without giving any reason as to how & why the books of accounts were being rejected.

8. The learned Commissioner (Appeals) has grossly erred in enhancing the assessed income by increasing the G.P rate by 5 % of the turnover, without giving a notice of enhancement & without assigning any reasons. The action of enhancement is tainted with arbitrariness.

9. The learned Commissioner (Appeals) has further erred in making an addition of Rs. 22,47,628 (21,81,000 + 66,628) without giving a notice of enhancement and opportunity of being heard. The action of the learned Commissioner (Appeals) is bereft of any rational and lacks statutory sanctity.

10. Having regard to the facts of the case, provisions of law & judicial propositions, the entire amount of additions made at Rs. 66,62,862 (peak amount 61,62,862) by the assessing officer and further enhanced by the learned Commissioner (Appeals) is based on pure guess work & without appreciation of the evidences submitted, hence deserves to be annulled.

3. Learned Counsel for the assessee at the outset, submits that the Assessment Order passed under sections 143(3) read with section 147 of the Act is ab-initio void as no notice under sections 143(2) of the Income Tax Act was issued and served upon the assessee prior to completion of assessment. Learned Counsel for the assessee submits that there is no direction in the order sheet for issue of notice under sections 143(2) of the Act. Learned Counsel for the assessee referring to the decision of the Allahabad High Court in the case of ACIT v. Greater Noida Industrial Development Authority (379 ITR 14) submits that it is mandatory requirement for initiation of assessment proceedings to issue notice under sections 143(2) of the Act and in the absence of issue of notice under section 143(2) the assessment made under sections 143(3) read with section 147 is invalid and void ab-initio. He also placed reliance on the decision of the Bombay High Court in the case of ACIT v. Geno Pharmaceuticals Ltd. (2013) 214 Taxman 83 (Bombay) and submits that the Honorable High Court held that notice under sections 143(2) is mandatory and in absence of service of such notice assessing officer cannot proceed to make an inquiry on return filed in compliance with notice issued under sections 148 of the Act.

4. Learned Departmental Representative on the other hand submits that assessee has fully cooperated in the Assessment Proceedings. Therefore, it shall be deemed that any notice under any provisions of this Act which is required to be served upon the assessee has been duly served in time in view of the provisions of section 292BB of the Act which came into operation from 1-4-2008. He strongly supported the orders of the learned Commissioner (Appeals) in holding that the assessee has never objected in the course of Assessment Proceedings raising the contention that notice under sections 143(2) was not served. Therefore, learned Departmental Representative submits that the defect is curable in view of the provision of section 292BB of the Income Tax Act.

5. We have heard the rival submissions on this preliminary objection i.e., very jurisdiction of the assessing officer for initiation of assessment proceedings in the absence of issue and service of notice under sections 143(2) of the Act. It is the contention of the assessee that no notice under sections 143(2) has been issued or served on the assessee before completion of the assessment. The assessee has raised this objection for the first time before the learned Commissioner (Appeals) and the learned Commissioner (Appeals) relying on the remand report furnished by the assessing officer which stated that notice under sections 143(2) and under sections 142(1) were issued to the assessee and it was served through speed post as per the records maintained in the office of the assessing officer and taking note of the decision of the ITAT, Delhi Bench in the case of ITO v. M/s.Industrial Syndicate in ITA. No. 2589/Del/2011 for the assessment year 2007-08 concluded that as the assessee has not raised any objection as to the service of notice under sections 143(2) during the Assessment Proceedings provisions of section 292BB will be applicable and in which case it will be deemed that any notice under any provisions of this Act is served on the assessee, the preliminary objection is dismissed by the learned Commissioner (Appeals).

6. Before us the Revenue could not prove with evidences that the notice under sections 143(2) was neither issued nor served on the assessee. Now the question as whether the notice under sections 143(2) can be said to have been served on the assessee and whether the assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act and whether issue of notice under sections 143(2) is mandatory is the subject matter to be decided. Whether in the absence of issue of notice the assessment is valid or not has been considered by the Allahabad High Court in the case of ACIT v. Greater Noida Industrial Development Authority (supra) and it has been held that the jurisdiction of the assessing officer to make an assessment under sections 143(3)(ii) of the Act is based on the issuance of the notice under sections 143(2)(ii) of the Act. It was held that the proviso to Clause (ii) of Sub-section (2) of the section 143 clearly stipulates that the notice must be served on the assessee. It has been held that since the assessing officer failed to issue notice within the specified period under sections 143(2) of the Act, the assessing officer had no jurisdiction under sections 143(2) of the Act to make an assessment. It was further held that this defect could not be cured by recourse to the deeming fiction provided under sections 292BB of the Act, while holding so the Honorable Allahabad High Court held as under :–

“18. Section 292 BB of the Act was inserted by the Finance Act, 2008 with effect from 1-4-2008. 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 inquiry 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 inquiry 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.

19. In view of the aforesaid, we are of the opinion that section 292BB, which was inserted with effect from 1-4-2008 is not applicable to the proceedings for the assessment year 2006-07, 2007-08, 2008-09. We are also of the opinion that section 292BB of the Act is not applicable also for the assessment year’s 2009-10, 2010-11 and 2011-12. The deeming fiction that once an assessee has appeared in any proceeding or participated in any query relating to assessment or reassessment, it shall be deemed that the notice under the provisions of the Act, which is required to be served has been duly served upon him in accordance with the provisions of the Act and, therefore, is precluded from contending that the notice was not served upon him or was not served upon him in time or was not served upon him in a proper manner, in our view, is not applicable for the following reason.

20. There is a clear distinction between ”issue of notice” and ”service of notice”. In R.K.Upadhyaya v. Shanabhai P. Patel, 166 ITR 163, the controversy was that a notice under section 148 was issued on 31-3-1970 i.e., the last date of limitation, which notice was served on the assessee on 3-4-1970, after the expiry of limitation. The High Court held that since the notice was served after the expiry of the period, the assessment order was invalid and had accordingly quashed the notice for reassessment issued under section 147 of the Income Tax Act,1961. The Supreme Court held that the scheme of 1961 Act in so far as the notice for re-assessment was concerned was quite different than that contained under section 34 of the Income Tax Act, 1922. The Supreme Court held that a clear distinction has been made between ”issue of notice” and ”service of notice” under the Act. The Supreme Court held that once a notice is issued within the period of limitation, the Income Tax Officer gets the jurisdiction to proceed to reassess and make the assessment order. The mandate of section 148(1) of the Act is, that reassessment shall not be made until there has been a service of notice which is a condition precedent to making an order of assessment. The Supreme Court further held that the requirement of issue of notice is satisfied when a notice is actually issued and that service under the Act, 1961 is not a condition precedent to conferment of jurisdiction on the Income Tax Officer to deal with the matter but it is only a condition precedent to the making of the order of assessment. The Supreme Court held :–

“Section 34, conferred jurisdiction on the Income Tax Officer to reopen an assessment subject to service of notice within the prescribed period. Therefore, service of notice within limitation was the foundation of jurisdiction. The same view has been taken by this Court in Janni v. Indu Prasad Bhat, 72 ITR 595 as also in CIT v. Robert, 48 ITR 177. The High Court in our opinion went wrong in relying upon the ratio of 53 ITR 100 in disposing of the case in hand. The scheme of the 1961 Act so far as notice for reassessment is concerned is quite different. What used to be contained in section 34 of the 1922 Act has been spread out into three sections, being sections 147, 148 and 149 in the 45 1961 Act. A clear distinction has been made out between ‘issue of notice’ and ‘service of notice’ under the 1961 Act. Section 149 prescribe the period of limitation. It categorically prescribes that no notice under section 149 shall be issued after the prescribed limitation has lapsed. Section 148(1) provides for service of notice as a condition precedent to making the order of assessment. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the Income Tax Officer to proceed to reassess. The mandate of section 148(1) is that reassessment shall not be made until there has been service. The requirement of issue of notice is satisfied when a notice is actually issued. In this case, admittedly, the notice was issued within the prescribed period of limitation as 31-3-1970, was the last day of that period. Service under the new Act is not a condition precedent to conferment of jurisdiction in the Income Tax Officer to deal with the matter but it is a condition precedent to making of the order of assessment. The High Court in our opinion lost sight of the distinction and under a wrong basis felt bound by the judgment in 53 ITR 100. As the Income Tax Officer had issued notice within limitation, the appeal is allowed and the order of the High Court is vacated. The Income Tax Officer shall now proceed to complete the assessment after complying with the requirements of law. Since there has been no appearance on behalf of the respondents, we make no orders for costs.”

21. From the aforesaid, it is clear that the essential requirement is ”issuance of notice” under section 143(2) of the Act. The deeming fiction under section 292BB of the Act is with regard to ”service of notice”. Since the initial requirement of issuance of notice was not made by the assessing officer, the deeming fiction of service of notice under section 292BB of the Act, consequently, does not arise and is not applicable.

22. In the light of the aforesaid, since the assessing officer failed to issue notice within the specified period under section 143(2) of the Act, the assessing officer had no jurisdiction to assume jurisdiction under section 143(2) of the Act and this defect cannot be cured by taking recourse to the deeming fiction provided under section 292BB of the Act. Consequently, the Tribunal was justified in setting aside the order of the assessing officer as well as the order of the Appellate Authority.

23. The contention that adequate opportunity was not given to the appellant before the Tribunal now becomes redundant in view of the specific finding given by us on the issuance of the notice under section 143(2) of the Act. However, we must observe that the appellant was not fair to the Court in alleging that no proper opportunity was given or that the Tribunal gave no directions to the Department to produce the original records. We are constrained to observe that there is no affidavit of the departmental representative who had appeared before the Tribunal to state on oath that the observations made by the Tribunal with regard to the production of the original records at the stage of hearing of the stay application and thereafter was perverse. In the absence of any affidavit being filed, it was not open for the Department to allege that no proper opportunity was given. Further, we find that the assertion made in paragraph 16 of the Supplementary Affidavit that a notice was issued is patently erroneous and, an attempt was made by the Department to deceive the Court. The notice asserted in para 16 of the Supplementary Affidavit is not a notice under section 143(2) of the Act but is only a notice issued under section 142(1) of the Act. Such tactics adopted by the Department is totally deplorable.”

7. Similar view has been taken by the Honorable Delhi High Court in the case of Principal CIT v. Silver Line in ITA. No. 578 to 581,585, 587 and 588/2015, date 4-11-2015. The Honorable Delhi High Court upheld the decision of the ITAT in holding that the re-assessment order cannot be passed without complying with the mandatory requirement of notice being issued by the assessing officer to the assessee under sections 143(2) of the Act and therefore the re-assessment order was legally unsustainable. While holding so the Honorable Delhi High Court considered various decisions on the issue and observed as under :–

“10. Mr. N.P. Sahni, learned Senior Standing counsel for the Revenue, first submitted that the ITAT erred in permitting the assessee to raise a ground regarding non-issuance of notice under section 143(2) of the Act, when no such ground has been raised during the reassessment proceedings before the assessing officer. He accordingly submitted that in terms of the proviso to section 292BB of the Act, it was not open to the assessee to raise such a plea and that too for the first time before the ITAT. Secondly, it was submitted that the assessee had failed to file any return pursuant to the notice issued under section 148 of the Act. The return initially filed had been processed under section 143 (1) for three of the assessment year’s . There was no occasion for the assessing officer, in the absence of any return having been filed by the assessee pursuant to the notice issued under section 148 of the Act, to issue a notice under section 143 (2) of the Act. It was for the above reason that the assessing officer thought it appropriate to issue the notice under section 142 (1) of the Act. Relying on the decision in Alpine Electronics Asia Pte. Ltd. v. Director General of Income Tax (2012) 341 ITR 247, Mr. Sahni submitted that in the facts and circumstances of the present case, the failure of the assessing officer to issue a notice under section 143(2) of the Act was not fatal to the reassessment proceedings.

11. Dr. Rakesh Gupta, learned counsel for the assessee, pointed out that the requirement of issuance of notice under section 143(2) of the Act prior to finalisation of the reassessment order was a jurisdictional one and the compliance of such requirement could not be dispensed with by resorting to the proviso to section 292BB of the Act. Referring to the decisions of the Allahabad High Court in CIT v. Parikalpana Estate Development (P) Ltd. (2012) 79 DTR 246 (All.) and Manish Prakash Gupta v. CIT (2012) 259 CTR 57 (All.), he submitted that section 292BB of the Act was only a rule of evidence for dealing with service of notice and has nothing to do with the mandatory requirement of issuance of notice under section 143 (2) of the Act which is a notice giving jurisdiction to assessing officer. Reference was also made to the decision of this Court in Pr. CIT v. Shri Jai Shiv Shankar Traders (P) Ltd. (decision dated 14-10-2015 in ITA No. 519 of 2015). Dr. Gupta further pointed out that for three of the assessment year’s in question i.e., 2005-06, 2006-07 and 2007-08, section 292 BB of the Act could not be invoked since that ITA No. 578 of 2015 & connected matters provision was introduced in the statute book with effect from 1-4-2008. Referring to the decision in CIT v. Mohammad Khaleeq (2015) 229 Taxman 566 (All.) and the decision of this Court dated 6-10-2010 in ITA No. 1159/2010 (CIT v. Kuber Tobacco Producers (P) Ltd.) he pointed out that section 292BB of the Act has been held to be prospective, i.e., applicable only from assessment year 2008-09. Finally Dr. G upta submitted that in any event the question as to the legal effect of the failure of the assessing officer to issue a notice under section 143(2) of the Act was a pure question of law and on the strength of the decision of the Supreme Court in National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC) and Gedore Tools (P) Ltd. v. CIT (1999) 238 ITR 268 (Del) such a point could have been raised by the assessee during the course of hearing in the ITAT, as long as it did not require any new or disputed facts to be brought on record. Reliance, in this regard, was also placed on the decision in Assam Company (I) Ltd. v. CIT (2002) 256 ITR 423 (Gau).

12. The Court first proposes to consider the question as to whether in terms of the proviso to section 292BB of the Act, the assessee was precluded, at the stage of the proceedings before the ITAT, from raising a contention regarding failure of the assessing officer to issue a notice under section 143(2) of the Act. The legal position appears to be fairly well settled that section 292BB of the Act talks of the drawing of a presumption of service of notice on an Assessee and is basically a rule of evidence. In CIT v. Parikalpana Estate Development (P) Ltd. (supra) in answering a similar question, the Court referred to its earlier decision in CIT v. Mukesh Kumar Agrawal (2012) 345 ITR 29 (All.) and pointed out that section 292BB of the Act was a rule of evidence which validated service of notice in certain circumstances. It introduces a deeming fiction that once the assessee appears in any proceeding or has cooperated in any enquiry relating to assessment or reassessment it shall be deemed that any notice under any provision of the Act that is required to be served has been duly served upon him in accordance with the provisions of the Act and the assessee in those circumstances would be precluded from objecting that a notice that was required to be served upon him under the Act was not served upon him or not served in time or was served in an improper manner. It was held that section 292BB of the Act is a rule of evidence and it has nothing to do with the mandatory requirement of giving a notice and especially a notice under section 143(2) of the Act which is a notice giving jurisdiction to the assessing officer to frame an assessment. The decision of the Allahabad High Court in Manish Prakash Gupta v. CIT (supra) is also to the same effect.

13. In Pr. CIT v. Shri Jai Shiv Shankar Traders (P) Ltd. (supra), this Court has also discussed the distinction between a failure to ‘issue’ notice and a failure to ‘serve’ a notice on an Assessee. It was held, after noticing the decisions of the Allahabad High Court in CIT v. Rajeev Sharma (2011) 336 ITR 678 and Commissioner-II, Lucknow v. Salarpur Cold Storage (P) Ltd. in (IT Appeal No. 24 of 2014, dt. 19-8-2014) and the decision of the Madras High Court in Sapthagiri Finance & Investments v. ITO (2013) 90 DTR (Mad) 289), that section 292 BB of the Act would apply insofar as failure of ‘service’ of notice was concerned and not with regard to the failure to ‘issue’ notice. In other words, the failure of the assessing officer, in re-assessment proceedings, to issue notice under section 143(2) of the Act, prior to finalizing the re-assessment order, cannot be condoned by referring to section 292BB of the Act.

14. Consequently, the Court does not find merit in the objection of the Revenue that the assessee was precluded from raising the point concerning the non-issuance of notice under section 143 (2) of the Act in the present case in view of the proviso to section 292BB of the Act.

15. The Court also finds merit in the contention of the assessee that in any event as far as assessment year’s 2005-06 to 2007-08 is concerned, section 292BB of the Act would not apply since it is prospective in its application, i.e., applicable from assessment year 2008-09 on wards. The legal position in this regard appears to be well settled as explained in CIT v. Kuber Tobacco Producers (P) Ltd. (supra) and CIT v. Mohammad Khaleeq (supra).

16. As regards the objection of the Revenue to the ITAT permitting the assessee to raise the point concerning non-issuance of notice under section 143(2) of the Act for the first time in the appeal before the ITAT, the Court is of the considered view that in view of the settled legal position that the requirement of issuance of such notice is a jurisdictional one, it does go to the root of the matter as far as the validity of the reassessment proceedings under section 147/148 of the Act is concerned. It raises a question of law as far as the present cases are concerned since it is not in dispute that prior to finalization of the reassessment orders, notice under section 143(2) of the Act was not issued by the assessing officer to the assessee. With there being no fresh evidence or disputed facts sought to be brought on record, and the issue being purely one of law, the ITAT was not in error in permitting the assessee to raise such a point before it. This finds support in the decision of the Supreme Court in National Thermal Power Co. Ltd. v. CIT (supra) and the decision of this Court in Gedore Tools (P) Ltd. v. CIT (supra).

17. On the question of whether the notice under section 143(2) of the Act was in the facts and circumstances mandatory, Mr. Sahni sought to distinguish the long line of decisions including the recent decision of this Court in Pr. CIT v. Shri Jai Shiv Shankar Traders (P) Ltd. (supra) on the ground that there was no occasion for the assessing officer to issue any notice under section 143 (2) of the Act since the assessee had, in fact, not filed a return. He submitted that the original return was filed in the ‘Saral Form’ which had since been replaced with a different form for filing of returns. Consequently, the said return could not have been treated as a return filed pursuant to the notice issued to the assessee under section 148 of the Act. He further submitted that with no discrepancy having been found by the assessing officer in the returns for assessment year’s 2005-06 till 2007-08, which were processed under section 143 (1) of the Act, there was no occasion for the assessing officer to issue a notice under section 143 (2) of the Act. Mr. Sahni submitted that in the circumstances, the action of the assessing officer in finalizing the reassessment orders without notice under section 143 (2) of the Act was justified.

18. The wording of section 143(2)(ii) of the Act, which is applicable in the present case, requires the assessing officer to be satisfied on examining the return filed that prima facie the assessee has understated the income or has computed excessive loss or has underpaid the tax in any manner. The assessing officer has the discretion to issue a notice under section 143 (2) if he considers it necessary or expedient to do so. This exercise by the assessing officer under section 143 (2) of the Act is qualitatively different from the issuance of a notice under section 142(1) of the Act, which as noted herein before, is in a standard proforma.

19. The Court is unable to accept the submission of the Revenue that in the present case, no return was filed by the assessee pursuant to the notice issued to it under section 148 of the Act. If after receiving the letter dated 1-4-2011 of the assessee the assessing officer was of the view that the return originally filed in the Saral Form could not be treated as the return pursuant to the notice under section 148 of the Act, then he should have drawn the attention of the assessee to that fact. In the present case all that the assessing officer did was to send a notice under section 142 (1) of the Act. The assessee was not made aware as to why he was required to file a return. Had a notice been issued to him under section 143 (2) of the Act, the assessing officer would have been obliged to let the assessee know why he was being asked to file a return notwithstanding his letter dated 1-4-2011. In the circumstances, the assessee was justified in proceeding on the basis that it had not committed any default in communicating to the assessing officer that the return already filed should be treated as the return filed pursuant to the notice under section 148 of the Act.

20. The proposal to reopen an assessment under section 147 of the Act is to be based on reasons to be recorded by the assessing officer. Such reasons have to be communicated to the assessee. However, merely because the assessee participates in the proceedings pursuant to such notice under section 148 of the Act, it does not obviate the mandatory requirement of the assessing officer having to issue to the assessee a notice under section 143(2) of the Act before finalizing the order of the reassessment.

21. In this context reference may be made to the decision of the Madras High Court in Sapthagiri Finance & Investments v. ITO (supra) where again the assessee did not file a return pursuant to section 148 of the Act. The assessing officer then issued a notice to it under section 142(1) of the Act. The assessee thereafter appeared before the assessing officer and stated that the original return filed should be treated as the return filed in response to the notice under section 148 of the Act. In those circumstances, the High Court observed that if there was some explanation that was required to be offered by the assessee, notwithstanding the above submission made by it, the assessing officer ought to have issued a notice under section 143(2) of the Act. The Madras High Court observed :–

“Merely because the matter was discussed with the assessee and the signature is affixed it does not mean the rest of the procedure of notice under section 143(2) of the Act was complied with or that on placing the objection the assessee had waived the notice for further processing of the reassessment proceedings. The fact that on the notice issued under section 143(2) of the Act, the assessee had placed its objection and reiterated its earlier return filed as one filed in response to the notice issued under section 148 of the Act and the Officer had also noted that the same would be considered for completing of assessment, would show that the assessing officer has the duty of issuing the notice under section 143(3) to lead on to the passing of the assessment. In the circumstances, with no notice issued under section 143(3) and there being no waiver, there is no justifiable ground to accept the view of the Tribunal that there was a waiver of right of notice to be issued under section 143(2) of the Act.”

22. The decisions of the Allahabad High Court in CIT v. Rajeev Sharma (supra) and CIT-II, Lucknow v. Salarpur Cold Storage (P) Ltd. (supra) also reiterate the above legal position. As far as this Court is concerned, the decision in Director of Income Tax v. Society For Worldwide Inter bank Financial Telecommunications (2010) 323 ITR 249 (Del) and the recent decision in Pr. CIT v. Shri Jai Shiv Shankar Traders (P) Ltd. (supra) hold likewise.

23. With the legal position being abundantly clear that a reassessment order cannot be passed without compliance with the mandatory requirement of notice being issued by the assessing officer to the assessee under section 143(2) of the Act, the ITAT was in the present case right in concluding that the reassessment orders in question were legally unsustainable.”

8. Since the Revenue could not produce before us any evidence to show that notice under sections 143(2) has been issued or served to the assessee the re-assessment made under sections 143(3) read with section 147 is void ab-initio in view of the above decisions of the Honorable Allahabad High Court in the case of ACIT v. Greater Noida Industrial Development Authority (supra) and the Honorable Delhi High Court in the case of ACIT v. Geno Pharmaceuticals (supra). Thus, respectfully following the said decisions we hold that the re-assessment made under sections 143(3) read with section 147 of the Act is legally unsustainable. Thus, quash the re-assessment order passed by the assessing officer under sections 143(3) read with section 147 of the Act dated 31-1-2014 for the assessment year 2011-12 under appeal.

9. Since we decided the legal issue in favor of the assessee we are not adjudicating the other grounds of appeal as they are only academic.

10. In the result, appeal of the assessee is partly allowed.

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Tags : ITAT Judgments (4970) Reassessment (248) section 147 (410) section 148 (335)

One response to “In absence of issue of notice U/s. 143(2) assessment U/s. 143(3) r.w. section 147 was invalid and void ab initio”

  1. vswami says:

    OFFHAND

    In one’s longstanding firm conviction, the principal issue is centered on a very basic, rather elementary enactment; interpretation of which ought not to have posed any genuine difficulty, upfront. As such, by any sane thinking, the issue ought to have been, instead of being prolonged for years, regarded as clinched – fully finally settled long, long ago. A mere cursory look through the ITAT Order , particularly the host of case law cited and the long winding arguments of the Revenue, following beaten track, by reason of which the ITAT was obligated to discuss at such a great length , but ultimately to reach the only possible conclusion, rightly so in assessee’s favor, might have left anyone dazed and in utter bewilderment, over the rock bottom quality of the ‘legal system’, in its comprehensive sense, and the tax regime, in place !

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