TaxTMI 
TaxTMI 
2015 (11) TMI 809
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....oceedings under Sections 147/148 of the Act? 3. The Assessee firm is engaged in the business of trading in silver and gold jewellery and also in precious and semi-precious stones. A return of income in the "Saral Form" was initially filed by the Assessee for AY 2005-06 on 20th September 2005. The return was processed under Section 143(1) of the Act. The return filed by the Assessee for the subsequent AY 2006-07 was also processed under Section 143(1) of the Act. For AY 2007-08, the return was picked up for scrutiny and a notice under Section 143(2) of the Act was issued. Subsequently, the assessment was finalised by the AO by passing an order under Section 143 (3) of the Act. The return for AY 2008-09 was processed under Section 143(1) of the Act. 4. Information was received from the Director of Income Tax (Investigation), Jaipur by letter dated 10th May 2010 that the Assessee was making bogus purchases for which cheques were issued and bills were obtained without any physical delivery of goods. It was stated that the purchases shown were bogus and the purchase bills obtained had been used to suppress the profits and, therefore, income to that extent had escaped assessment. On th....
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....r 2011 making an addition of Rs. 7,05,600 on account of deduction wrongly made. The taxable income was computed at Rs. 2,02,19,273. Similar orders of reassessment were passed by the AO for AYs 2006-07, 2007-08 and 2008-09. 8. The Assessee appealed to the Commissioner of Income Tax (Appeals) ["CIT (A)") questioning the initiation of the reassessment proceedings as well as the reassessment orders on merits. By the order dated 31st December 2012 for AY 2005-06, the CIT (A) upheld the re-opening of the assessment but held on merits that the addition was not justified. Similar orders were passed in the Assessee's appeals for the other three AYs. 9. Against the said orders of the CIT (A), the Revenue filed four appeals before the ITAT. The Assessee filed cross-objections. During the course of hearing of the appeals before the ITAT, the Assessee raised an additional ground that no notice under Section 143(2) of the Act had been issued prior to finalisation of the reassessment orders by the AO and therefore those orders were without jurisdiction. In the impugned common order, the ITAT considered the said ground and decided it in favour of the Assessee and against the Revenue. 10. Mr....
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....s in question i.e. 2005-06, 2006-07 and 2007-08, Section 292 BB of the Act could not be invoked since that provision was introduced in the statute book with effect from 1st April 2008. Referring to the decision in Commissioner of Income Tax v. Mohammad Khaleeq (2015) 229 Taxman 566 (All.) and the decision of this Court dated 6th October 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 AY 2008-09. Finally Dr. Gupta submitted that in any event the question as to the legal effect of the failure of the AO 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. Commissioner of Income Tax (1998) 229 ITR 383 (SC) and Gedore Tools (P) Ltd. v. Commissioner of Income Tax (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....
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.... (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 AO, in re-assessment proceedings, to issue notice under Section 143(2) of the Act, prior to finalising 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 AYs 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 AY 2008-09 onwards. The legal position in this regard appears to be well settled as explained in CIT v. Kuber Tobacco Producers P. Ltd. (supra) and Commissioner of Income Tax v. Mohammad Khaleeq (supra). 16. As regards the objection of the Revenue to the ITAT pe....
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.... 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 AO 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 AO 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 hereinbefore, 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 1st April 2011 of the Assessee the AO 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 AO 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 unde....