TaxTMI 
TaxTMI 
2012 (6) TMI 180
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.... 31-10-2000. The return was processed u/s. 143(1) on 19-1-2001. Subsequently, notice u/s.148 dated 7-4-2006 was issued on the ground that the cash flow statement filed on 8-9-2005 for the assessment year 2001-02 shows an amount of Rs. 1,15,948/- as credit of profit from proprietary business and the same has been credited to his current account and has not been withdrawn therefrom. Hence, unexplained investment on this account comes to Rs. 1,15,948. Further during the assessment year 2000-01 the assessee had purchased a property in MG Road, Thrissur for a consideration of Rs.14,64,380 and the assessee had sold a property at Palakkad for a consideration of Rs. 38,64,000 but no income on account of capital gain were returned in the return of income for the assessment year 2000-01. Therefore, the Assessing Officer was of the view that the assessee has concealed particulars of income and has also filed inaccurate particulars. Hence, this first notice u/s. 148 was issued on 7-4-2006. In response to this, assessee filed a return of income showing the same income as shown in the original return filed on 22-5-2006. Thereafter, notice u/s. 143(2) dated 14-7-2006 was issued. During the course....
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....el submitted that while making assessment and reassessment u/s. 147 the procedure laid down in section subsequent to section 139 including that laid down by section 144B has to be followed. In other words the ld. counsel's objection is that without issue of notice u/s. 143(2), which is mandatory, it should have been held that the assessment under appeal completed u/s. 143(3) r.w.s. 147 is non est in law. The ld. counsel further submitted that when there is no notice as required under the statute, the assessment is ab initio void and the ld. CIT(Appeals)'s observation that these are procedural infirmities and the. provisions of section 292B take care of the wrongful assumption of jurisdiction is totally misconceived, in view of the specific finding of the Hon'ble Apex Court in the case of R. Dalmia v. CIT, cited (supra). The ld. counsel further relied on the decision of the Hon'ble Supreme Court in the case of Asstt. CIT v. Hotel Blue Moon [2010] 321 ITR 362/188 Taxman 113 (SC) wherein also the Apex Court reiterated the findings that even for block assessments, if an assessment is to be completed u/s.143(3) r.w.s. 158BC, notice u/s.143(3) should be issued within one year from the da....
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....'ble Supreme Court in the case of R. Dalmia it has been specifically laid down that all the provisions of the income-tax that is applicable to the regular assessments that is subsequent to section 139 including that laid down by 144 has to be followed. It has not been followed and this is clear violation of the mandatory requirement. Violation of mandatory requirement cannot be cured by taking the shelter u/s.292B and this has already been reiterated by the Hon'ble Supreme Court in the case of ACIT v. Hotel Blue Moon, cited (supra). Hence, respectfully following the above two decisions, we have no hesitation in coming to the conclusion that the assessment framed u/s. 143(3) r.w.s.147 dated 28-12-2007 is non est in law and it is a nullity. Further in the recent decision of the Income-tax Appellate Tribunal, Chandigarh Bench, in the case of ITO v. Smt. Kuldip Kaur [2012] 20 Taxmann.com 99 (Chd.) held that re-assessment made without issuing notice u/s. 143(2) is invalid. 8. In view of the aforesaid discussion and following the decisions of the Hon'ble Apex Court and that of the Chandigarh Bench of Income-tax Appellate Tribunal, we accept the arguments of the ld. counsel for the asses....
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....notice on 14/12/2007 and considering the assessee's objections thereto, filed on, as it appears, 19/12/2007. These facts, stated in the assessment order (at different pages), stand further confirmed by the ld. CIT(A) (per paras 2.1 & 2.2 of the appellate order). Filing a copy of the return furnished earlier, which is again much after the time stipulated per the notice u/s. 148, cannot by any means be considered as the furnishing of a return of income, the distinguishing and characteristic feature of which - a return of income - is its Verification' (refer s. 140), lest it be no more than a document filed by the assessee, and neither can it be said by any count that the notice u/s. 148 is complied with. In fact, as clarified by the ld. CIT(A), the appellant himself argues before him that no return of income was filed in response to the notice u/s. 148 dated 4/12/2006. That being the case, the question that arises is, how could a notice u/s. 143(2), whereby the assessing authority seeks to subject the return to the verification procedure under the Act, be issued to and served on the assessee, when no return stands furnished by him? The language of the provision would itself abundant....
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....ew that the non-issue and, consequently, the non-service of the notice u/s. 143(2) in the absence of the furnishing a return of income would not be fatal to the assessment; rather, could not have possibly been issued and served on the assessee, i.e., both factually and legally. Reliance for the purpose, i.e., apart from the clear language of the provision and the entire procedure for assessment, is placed on the decision by the apex court in the case of Hotel Blue Moon (supra), as well as on the decision by the Delhi High Court in the case of DIT v. Society for Worldwide Interbank Financial Telecommunications [2011] 9 Taxmann.com 142 (Delhi), wherein the hon'ble court has explained that the notice u/s. 143(2) could only be issued/served after an examination of the return of income as furnished. The Tribunal in the case of Asstt. CIT v. Harinder Sachdev [IT Appeal No. 4776 (Delhi) of 2009 dated 10/9/2010) referring thereto, wondered as to how the notice u/s. 143(2) could be issued by the AO with whom the return was not available at the relevant time, so that the notice issued was not one as contemplated by the Act (paras 11, 12). Accordingly, notice u/s. 143(2) by the AO in the pres....
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....tion that confers validity (to the exercise), rather than one which renders it nugatory [ref: L. Hazari Mal Kuthiala v. ITO [1961] 41 TR 12 (SC)]. There has been due observance of the procedure for assessment by the AO in the present case. Conclusion For the detailed reasons aforestated, the assessment of income in the instant case has been validly made pursuant to the issue of notice u/s. 148 dated 4/12/2006, and in view of the non-furnishing by the assessee of any return of income in response thereto or otherwise complying therewith, is an assessment u/s. 144 of the Act, and not an assessment u/s. 143(3) r/w s. 147, which difference is, however, of no material consequence. The premises of the notice u/s. 143(2) being only the verification of the return for the purpose of framing an assessment, the same could neither be issued in fact or in law. The finding by the ld. CIT(A) of the assessment as valid, rejecting the assessee's challenge thereto per his ground #5 before him (which, though, wrongly mentions the date of the notice u/s. 148 as '4/12/2007', as also apparent from the assessee's ground # 1 & 3 before us) merits being upheld. Further, as the order proposed by my ld. bro....
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.... for consideration and disposal u/s.255(4) of the IT Act, 1961. 2. The questions referred to me are the following : (i) Question framed by the Hon'ble Judicial Member : "Whether the Assessing Officer has the jurisdiction to frame the assessment u/s. 143(3) r.w.s.147 of the IT Act, 1961 without the service of notice u/s. 143(2) of the IT Act, 1961 ?" (ii) Questions framed by the Horible Accountant Member : (a) Whether, in view of the accepted position that the issue of notice u/s, 143(2) is the first, preliminary step to be taken by the Assessing Officer, when he has a return before him which is not accepted by him (under the summary procedure), is there any requirement in law, or indeed the Assessing Officer, the necessary jurisdiction, to issue such a notice in the absence of any return filed by the assessee ? (b) Whether, the assessment framed by the issue of notice u/s. 142(1); the non-furnishing of any return by the assessee in response to the notice u/s. 148 being admitted, legally valid, or suffers from the vice of the non-issue of notice u/s.l43(2)?" 3. I have carefully considered the above questions drawn by the Hon'ble Members of the Cochin B....
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....ce cannot be considered invalid. He also held that order to be a valid order as per the provisions of Section 292B. Aggrieved by this order of the Commissioner of Income-tax(A), the assessee moved an appeal before the Tribunal with various grounds of appeal- on jurisdiction and on merits. 5. The Hon'ble Judicial Member has dealt with the grounds relating to jurisdiction (ground nos.2, 3 and 4 of the condensed grounds of appeal raised by the assessee). After considering the rival submissions, he came to the conclusion that after issue of notice u/s. 148, the Assessing Officer did not issue notice u/s. 143(2) but only 142(1) notice was issued. Following the Supreme Court decisions in the case of R. Dalmia (supra) Hotel Blue Moon (supra) and also the decision of the Chandigarh Bench of the Tribunal in the case of Smt. Kuldip Kaur (supra) for the assessment year 2005-06, the Hon'ble Judicial Member held that the reassessment which was made without issue of notice u/s. 143(2), is invalid. However, the learned Accountant Member did not concur with the decision of the Hon'ble Judicial Member and he wrote a separate order. His conclusion is as under: "For the detailed reasons aforestated....
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....020/-, by making various additions to the returned income of Rs. 1, 43,760/-. 2. The learned JM as per his reference order, has rightly concluded that the reassessment made without issuing notice under section 143(2) is invalid, based on decisions of the Hon'ble Supreme Court in the cases reported at 236 ITR 480 and 321 ITR 362. In pursuance of the order, he has rightly framed the question as per his reference dated. 26/04.2011, as to whether the Assessing Officer has jurisdiction to frame the assessment u/s.143(3) read with section 147 of the Act without the service of notice u/s. 143(2). 3. As against this the learned AM by his order dated 18.4.2011 has concluded that in view of the non-furnishing of the return of income by the assessee the asst. completed by the Assessing Officer is an asst. u/s. 144 and not u/s. 143(3) r.w.s. 147, which is of no material consequence. Pursuant to this finding he framed two questions for reference as per his order dated 21.4.2011 as to (i) whether there is any requirement in law to issue a notice u/s. 143(2) in the absence of any return, and (ii) whether the asst. framed by issue of notice u/s. 142(1) on non-furnishing of return in response to ....
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...., which cannot be treated as return filed in response to notice u/s. 148 served on 7.12.2006 being a copy only and no return was filed within time allowed u/s. 148 of I. T. Act, 1961.. (iii) By following the ratio in the case of GKN Driveshafts (India) Ltd., reported in 259 ITR 19, the proper course of action for the assessee when notice u/s.148 is received, is to file a return in response to said notice. If the assessee has not filed the return or has failed to file the return within the period as allowed as by the Assessing Officer in response to notice u/s.148, then the Assessing Officer is not bound to issue any notice u/s. 143(2) of the I T. Act, 1961. The same view has been duly taken by the Hon'ble Accountant Member in the said case. (iv) Even otherwise, the Assessing Officer is protected for his action of making an assessment u/s. 143(3) r.w.s.148 or 144 r.w.s.148 to protect interest of Revenue where income has escaped due assessment u/s.292B. During the assessment proceedings as per the assessment order, the assessee has not objected of any non-issue of notice u/s. 143(2) for the said assessment year 2000-01, as assessee has not submitted any return in respon....
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....on 4.12.2006). I find from the assessment order that in response to this fresh notice u/s. 148, dated.30.11.2006, the assessee has filed the same copy of the return as filed originally along with copies of statement of accounts on 15.10.2007. Now, I have to consider whether this is sufficient compliance as envisaged under the IT Act. It is not uncommon that an assessee in response to notice u/s.148 intimates the Assessing Officer that the original return filed may be treated as one filed in response to notice u/s.148. The Hon'ble Rajasthan High Court in the case of Tiwari Kanhaiya Lal v. CIT [1985] 154 ITR 109/[1984] 19 Taxman 497, has observed as under: "The notice issued u/s.148 of the IT Act, 1961 requiring the assessee to file afresh return carried with it an obligation to file the fresh return in pursuance of the said notice. In case the assessee feels that it is not necessary to file afresh return and that the earlier return filed by him u/s.139 of the Act should be treated as the return for the purpose of reassessment u/s. 147 and 148 of the Act, he may inform the ITO of his decision to treat his previous return as the return filed in response to the notice u/s.148 of the A....
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....er in response to notice u/s.148 and he has proceeded from the figures of such return only to complete the assessment. If the assessee has intimated that the original return may be treated as one filed in response to notice u/s.148 and if the Assessing Officer is duty-bound to issue notice u/s. 143(2) in such cases, definitely in this case on hand, the Assessing Officer ought to have issued notice u/s. 143(2). If such notice was not issued, the reassessment would not be valid. 12. Since I have come to the conclusion that there was a return in response to notice u/s.148 before the Assessing Officer and the Assessing Officer also had acted upon such return, it is crystal-clear legal position that the Assessing Officer ought to have issued notice u/s. 143(2) before passing the order u/s. 143(3) r.w.s. 147. 13. I find that the learned Judicial Member has rightly come to the above conclusion and applied the ratio of the following decisions of the Hon'ble Supreme Court: (i) R. Dalmia (supra) and (ii) Hotel Blue Moon (supra). The Hon'ble Supreme Court in the case of R. Dalmia (supra) has observed that assessments under section 143 and assessments and reassessments under se....