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Case Law Details

Case Name : ACIT Vs Dr. P. S. Prasad (ITAT Hyderabad)
Appeal Number : I.T.A. No.1570/HYD/2019
Date of Judgement/Order : 21/03/2022
Related Assessment Year : 2010-11

ACIT Vs Dr. P. S. Prasad (ITAT Hyderabad)

Learned CIT-DR vehemently reiterated the Revenue’s foregoing pleadings that the issuance of Section 143(2) notice is nowhere mandatory in Section 153A proceedings initiated in furtherance to a search in light of the various case law cited therein. We find no merit in the Revenue’s instant grievance since it has come on record that this is AY. 2010-11 before us where the search itself was conducted on 11-03-2010. This is the year of search in other words not covered under the specified period of six assessment years u/s. 153(1)(a) of the Act.

Coupled with this, the hon’ble apex court’s decision in CIT Vs. Laxman Das Khandelwal [2019] 108 taxmann.com 183 (SC) holds that issuance of a valid 143(2) notice is very much a condition precedent for framing Section 143(3) assessment in the year of search. We thus find no infirmity in the Ld.CIT(A)’s order under challenge quashing the impugned assessment.

FULL TEXT OF THE ORDER OF ITAT HYDERABAD

This Revenue’s appeal for AY.2010-1 1 arises from the CIT(A)- 11, Hyderabad’s order dated 10-07-2019 passed in case No.312 / 2017-18 / CIT(A)- 11 / Hyd, involving proceedings u/s.143(3) of the Income Tax Act, 1961 [in short, ‘the Act’]. Heard both the parties. Case file perused.

Issuance of Section 143(2) notice mandatory in Section 153A proceedings

2. Coming to the Revenue’s sole substantive grievance that the CIT(A) herein has erred in law and on facts in quashing the impugned assessment u/s.143(3) of the Act for want of a valid Section 143(2) notice, we note that the lower appellate discussion to this effect reads as under:

“6.On perusal of the Assessment record, it is seen that the assessee has filed return of income originally on 16.07.2010 with ITO, Ward-24(1), New Delhi which is on the record. The time limit for issue of notice u/s. 143(2) w. r. t. the above return expires on 30.09.2011. Even as per the assessment order, the notice u/s. 143(2) was issued on 18.11.2011 which is beyond the time limit prescribed under the Act as above. The said order cannot be said to be validly made in pursuance of the above Return also”.

3. The Revenue has sought to raise the following substantive pleadings in the instant appeal:

“1. The ld.CIT(A) erred both in law and on facts of the case in allowing relief to the assessee.

2. The order of the ld. CIT(A) in deleting the addition made that notice u/s. 143(2) of the Act is not issued is not acceptable in view of the provisions of sub-section (2) of section 1 53C of the Act.

3. The ld. CIT(A) failed to appreciate the fact that issue and service of notice u/s. 143(2) commences a scrutiny assessment in regular cases, while in search cases, the assessments falling u/s. 1 53A commences with the issue of notice u/s. 1 53A of the IT Act.

4. The ld.CIT(A) erred in ignoring the decision in the case of CIT vs. Pavan Gupta (2009) 181 Taxmann 299 (Del) wherein it was held that when the Assessing Officer accepts the return filed by the assessee after the search without verification, there was no need for issue of notice u/s. 143(2). Here the expression “so far as it may” appearing in section 153A comes into operation.

5. The ld.CIT(A) failed to appreciate the fact that the issue of notice u/s. 143(2) is not required has found judicial approval in the case of Ashok Chaddha vs. ITO (2012) 20 com 387 wherein it was held that “The words ‘so far as may be’ in col. (a) of sub-sec(1) of sec. 1 53A could not be interpreted that the issue of notice u/s. 143(2) as mandatory in case of assessment u/s. 1 53A. The use of words ‘so far as may be’ cannot be stretched to the extent of mandatory issue of notice under scc. 143(2). As is noted, a specific notice was required to be issued under col. (a) of sub.sec.(1) of sec. 153A calling upon the persons searched 01 requisitioned to file return. That being so, no further notice u/s. 143(2) could be contemplated for assessment u/s. 153A.”

6. The ld.CIT(A) failed to appreciate the fact that the decision in the case of Ashok Chaddha vs. ITO (2012) 20 com 387 is in context of assessment u/s. 1 53A and has clearly held that the use of words “so far as may be” in section 153A cannot be .stretched to the extent of mandatory issue of nonce u/s. 143(2) and that being so no further notice u/s. 143(2) could be contemplated for assessment u/s. 1 53A of the Act, similarly the decision in the case of CIT vs. Promy Kuriakose (2017) 79 Taxmann.com 405 (Kerala) is clearly in context of assessment u/s. 1 53C of the Act (which is also the relevant provision for this case under consideration).

7. The ld. CIT(A) failed to appreciate the fact that there is no specific provision in the Act regarding the assessments made u/ s.1 53A to be after issue of notice u/s. 143(2) of the Act.

8. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary”.

4. Learned CIT-DR vehemently reiterated the Revenue’s foregoing pleadings that the issuance of Section 143(2) notice is nowhere mandatory in Section 153A proceedings initiated in furtherance to a search in light of the various case law cited therein. We find no merit in the Revenue’s instant grievance since it has come on record that this is AY. 2010-11 before us where the search itself was conducted on 11-03-2010. This is the year of search in other words not covered under the specified period of six assessment years u/s. 153(1)(a) of the Act.

Coupled with this, the hon’ble apex court’s decision in CIT Vs. Laxman Das Khandelwal [2019] 108 taxmann.com 183 (SC) holds that issuance of a valid 143(2) notice is very much a condition precedent for framing Section 143(3) assessment in the year of search. We thus find no infirmity in the Ld.CIT(A)’s order under challenge quashing the impugned assessment.

No other ground has been pressed before us.

3. This Revenue’s appeal is dismissed in above terms.

Order pronounced in the open court on 21st March, 2022

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