Case Law Details
ITO Vs S. M. Batha Education Trust (ITAT Pune)
In the absence of pending return of income, the provisions of section 143(2) of the Act is clear that notice can be issued only when a valid return is pending for assessment. Reassessment proceedings is invalid if notice U/sec.143(2) is issued prior to filing of return in pursuance of notice under section 148 since income tax return is not pending for issue of notice under section 143(2) and no statutory notice u/s 143(2) of the Act was issued after the said return of income was filed in response to the notice u/s 147/148 of the Act.
FULL TEXT OF THE ITAT JUDGEMENT
The appeal filed by the Revenue is against the order of CIT(A)-10, Pune dated 05.10.2016 for the Assessment Year 2012-13. The Cross Objection filed by the assessee is against the appeal of the Revenue.
2. Briefly stated the relevant facts include that the assessee is a trust and is engaged in the educational activities. The assessee claimed to have filed the return of income. However, there is no evidence in support of the same. The Assessing Officer issued notice u/s 148 of the Act dated 29.09.2014. There is no compliance by the assessee and did not file the return of income. The Assessing Officer issued two separate notices u/s 143(2) of the Act on couple of occasions i.e. 29.04.2015 and 01.07.2015. At this point of time, the assessee filed the return of income on 21.10.2015. As per the ld. AR, no statutory notice u/s 143(2) of the Act was issued after the said return of income was filed in response to the notice u/s 147/148 of the Act. On these facts, ld. Counsel for the assessee filed following additional grounds before us through the cross objection filed against the appeal of the Revenue, which read as under :-
“6] The reassessment proceedings is bad in law since, no notice under section 143(2) of the Income-tax Act, 1961 (the Act) was issued after filing the return of income on 21st October, 2015 pursuant to notice issued under section 148 of the Act. The two notices issued under section 143(2) of the Act on 29th April, 2015 & 01st July, 2015 are before filing of return of income on 21st October, 2015 and therefore is illegal and hence the reassessment order passed by the ld. Assessing Officer is bad in law.”
3. Deviating from the regular grounds raised by the Revenue in the appeal memo and also leaving alone the issue on merits of addition made in the reassessment, ld. Counsel for the assessee filed the cross objection raising the said legal issue relating to the validity of the reassessment order passed by the Assessing Officer without issuing statutory notice u/s 143(2) of the Act. In this regard, ld. Counsel submitted that the reassessment made by the Assessing Officer without issuance of notice u/s 143(2) of the Act posterior to i.e. after the return of income was filed in response to the notice u/s 148 of the Act, is invalid and illegal. The ld. Counsel brought our attention to the various decisions in this regard.
4. Referring to the decision of the Mumbai Bench of the Tribunal in the case of Shri Sudhir Menon vs. ACIT in ITA No.1744/Mum/2016 for the assessment year 2010-11 order dated 03.10.2018, a copy of the said decision is placed at page 68 of the Paper Book, ld. Counsel submitted that in the said decision, the notice u/s 148 of the Act was issued to the assessee on 01.04.2013 and subsequently, a statutory notice u/s 143(2) was issued on 23.05.2013. However, the return of income was filed by the assessee only on 23.05.2013 i.e. much after the statutory notice and the notice u/s 148 of the Act were issued. No notice u/s 143(2) of the Act was issued subsequent to the filing of the return of income in response to notice u/s 148 of the Act. On these facts, the Tribunal in the case of Shri Sudhir Menon (supra) held that the reassessment made by the Assessing Officer is invalid relying on the judgement of the Hon’ble Bombay High Court in the cases of (i) ACIT vs. Geno Pharmaceuticals Ltd. (2013) 32 taxmann.com 162 (Bom.-HC) & (ii) CIT vs. Ms. Malvika Arun Somaiya (2010) 2 taxmann.com 144 (Bom.-HC) and the judgement of the Hon’ble Delhi High Court in the case of DIT vs. Society for Worldwide Inter Bank Financial, Telecommunications (2010) 323 ITR 249 (Del.-HC), etc. and appreciated the requirement of issue of notice u/s 143(2) of the Act after the return of income is filed. For the sake of completeness, the operative para 9 of the said order of the Tribunal (supra) is extracted hereunder :-
“9. In view of the fact that notice under section 148 of the Act dated 1.04.2013 was issued and AO before filing of return by assessee in response to this notice, a notice under section 143(2) of the Act dated 03.05.2013 requiring the assessee to attend the office on 13.05.2013 was also issued. Up to this date i.e. 13.05.2013 no return of income was filed by the assessee in response to notice under section 148 of the Act. According to us, in view of consistent view of jurisdictional High Court and Delhi High Court, in the absence of pending return of income, the provisions of section 143(2) of the Act is clear that notice can be issued only when a valid return is pending for assessment. Accordingly, this notice has no meaning. The assessee filed return of income under section 148 of the Act vide letter dated 23.05.2013 stating that the original return of income can be treated as return filed in response to notice under section 148 of the Act. It means that the assessee has filed return of income only on 23.05.2013. No notice under section 143(2) of the Act was issued by the Department on or after 23.05.2013. According to us the assessment framed without issuing a notice under section 143(2) of the Act when the return was filed by the assessee in response to notice under section 148 of the Act, the assessment framed is bad in law. Accordingly, assessment is quashed. This issue of assessee raised by way of additional ground is allowed.”
5. It is the requirement of the judgemental laws that the Assessing Officer is required to issue statutory notice u/s 143(2) of the Act once the assessee filed the return of income in response to notice u/s 148 of the Act. Considering the above cited legal proposition on this issue and after hearing both the sides, we are of the opinion the reassessment made by the Assessing Officer is invalid and illegal. Thus, the additional grounds raised by the assessee in the cross objection are allowed. Consequently, all the grounds raised by the Revenue in its appeal and the grounds raised by the assessee in its cross objection become academic exercise. Accordingly, they are dismissed as such.
6. In the result, the appeal of the Revenue is dismissed and the cross objection of the assessee is partly allowed.
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