Case Law Details
Dr. Shri Gurunath Shankarappa Wachche Vs ITO (ITAT Pune)
Section 292BB provides that where an assessee has appeared in any proceedings etc., it shall be deemed that any notice under any provision of this Act, has been duly served upon him in time and such assessee shall be precluded from taking any objection in any proceeding that the notice was not served upon him; or was not served upon him in time; or was served upon him in an improper manner. It is clear from the language of the section that the same deals with only improper service of notice, meaning thereby, that participation in proceedings validates the improper service of notice also. However, the facts of the instant case are on a little different footing. The case of the assessee is that no notice u/s 148 was issued, which is a condition precedent for exercising jurisdiction u/s 147. It is evident that recourse to reassessment under section 147 can be taken only after notice u/s 148. In the absence of any notice u/s 148, there can be no re-assessment. Here is a case in which there is no evidence of the AO issuing notice u/s 148 of the Act, which fact has also transpired from the remand report furnished by the AO. Once it is proved that notice u/s 148 was not issued, there cannot be any question of making any reassessment. Reliance of the ld. CIT(A) on the provisions of section 292BB is misplaced because the said section only stipulates that participation in the assessment proceedings / reassessment proceedings would be deemed as a proper service of notice. This section does not deal with the issuance of the requisite notice. The Hon’ble Supreme Court in the case of CIT vs. Laxman Das Khandelwal (2019) 417 ITR 325 (SC) has held that section 292BB deals with failure of service of notice and not failure to issue notice. Since, admittedly, no notice was issued u/s 148 in this case, I am satisfied that the entire edifice of reassessment created by the AO is without any bedrock. Ex consequenti, the re-assessment order is vitiated and the resultant impugned order gets set aside.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal by the assessee is directed against the order dated 19-08-2019 passed by the CIT(A)-9, Pune, in relation to the assessment year 2011-12.
2. The first issue raised in this appeal is against non-issuance of notice u/s 148 of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟).
3. Briefly stated, the facts of the case are that from the scrutiny proceedings u/s 143(3) of the Act for the A.Y. 2010-11, the AO came to know that the assessee constructed a new hospital-cum-residential building. The matter of valuation of the building was referred to the Departmental Valuation Officer (DVO), Solapur. The assessee had declared an investment of Rs.88,44,129, as against valuation done by DVO at Rs.1,19,76,000. The Assessing Officer (AO) held that the differential amount of Rs.31,31,871 was liable to be taxed in four years during which the construction of the building continued. He, therefore, initiated re-assessment proceedings for the year under consideration and accordingly made an addition of Rs.23,76,776. The assessee contended before the ld. CIT(A) that no notice u/s 148 was issued before taking up the reassessment proceedings. The ld. CIT(A) called for a remand report from the AO. The AO, after verifying the records, submitted a report dated 19.08.2015 informing that notice issued u/s 148 was not on record. He however, emphasized that the participation of assessee in the re-assessment proceedings evidenced that notice u/s 148 was issued. The ld. CIT(A), in para 9.1 of his order, observed that section 292BB of the Act would come to the rescue of the Revenue and since the assessee participated in the assessment proceedings, it was a clear case of service of notice. Aggrieved thereby, the assessee has come up in appeal before the Tribunal.
4. I have heard both the sides and gone through the relevant material on record. The ld. CIT(A) has discussed this issue in para 9.1 on pages 15 and 16 of his order and returned a categorical finding that “there is no mention in the order sheet of the actual issue notice u/s 148 in response to the direction” From the above finding recorded by the ld. CIT(A), it is manifest that no notice u/s 148 was issued. He however, took recourse to section 292BB to validate the assessment. At this juncture, it is relevant to mention that section 292BB provides that where an assessee has appeared in any proceedings etc., it shall be deemed that any notice under any provision of this Act, has been duly served upon him in time and such assessee shall be precluded from taking any objection in any proceeding that the notice was not served upon him; or was not served upon him in time; or was served upon him in an improper manner. It is clear from the language of the section that the same deals with only improper service of notice, meaning thereby, that participation in proceedings validates the improper service of notice also. However, the facts of the instant case are on a little different footing. The case of the assessee is that no notice u/s 148 was issued, which is a condition precedent for exercising jurisdiction u/s 147. It is evident that recourse to reassessment under section 147 can be taken only after notice u/s 148. In the absence of any notice u/s 148, there can be no re-assessment. Here is a case in which there is no evidence of the AO issuing notice u/s 148 of the Act, which fact has also transpired from the remand report furnished by the AO. Once it is proved that notice u/s 148 was not issued, there cannot be any question of making any reassessment. Reliance of the ld. CIT(A) on the provisions of section 292BB is misplaced because the said section only stipulates that participation in the assessment proceedings / reassessment proceedings would be deemed as a proper service of notice. This section does not deal with the issuance of the requisite notice. The Hon’ble Supreme Court in the case of CIT vs. Laxman Das Khandelwal (2019) 417 ITR 325 (SC) has held that section 292BB deals with failure of service of notice and not failure to issue notice. Since, admittedly, no notice was issued u/s 148 in this case, I am satisfied that the entire edifice of reassessment created by the AO is without any bedrock. Ex consequenti, the re-assessment order is vitiated and the resultant impugned order gets set aside. In view of my decision on the legal issue, there is no need to go into the merits of the appeal.
5. In the result, the appeal is allowed.
Order pronounced in the Open Court on 7th March, 2022.
Glad to state that I was associated as a Legal Representative in this case during First Appeal proceedings