TaxTMI 
TaxTMI 
2017 (11) TMI 317
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....ssessing Officer to initiate fresh reassessment proceedings by issue of notice u/s 148 of the Act and such directions of the Id. CIT (A) is illegal, bad in law, beyond his jurisdiction and competence and which will lead to second round of reassessment proceedings against the assessee appellant and thus deserves to be quashed. 2. That on the facts and in the circumstances of the case, the ld. CIT (A) grossly erred in not deciding the grounds on merits of the case and he ought to have decided the case on merits of the case as well otherwise it will lead to second round of litigation against the assessee appellant. 2.1. That the learned Assessing Officer grossly erred in restricting the benefit of exemption claimed by the assessee appellant u/s. S4F of the Income-tax Act to Rs. 2,939,001/-instead of Rs. 11,756,003/- claimed by the assessee appellant and thus disallowing Rs. 8,817,002/- by holding that the assessee has invested in (4) four different flats and the benefit is to be restricted to only 1 (one) flat. 2.2. That the learned Assessing Officer grossly erred in disallowing the brokerage paid by the assessee appellant of Rs. 1,537,000/- by account payee cheques towards s....
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.... provision under the law to make reassessment twice. Further, he submitted that the Ld. CIT(A) has no power to remand the matter to the Assessing Officer, for making fresh assessment. 4.2 On the contrary, Ld. D/R supported the order of the authorities below. 4.3 We have heard the rival contentions, perused the material available on record and gone through the order of the authorities below. We find that Ld. CIT(A) has decided the issue of reopening as under:- "(ii) I have duly considered the submissions of the appellant, remand report of the AO and its rejoinder by the appellant, material placed on record and the various judicial pronouncements relied upon by the appellant. It is evident from the above remand report of the AO that no notice u/s 143(2) of the Act was issued by the AO at any time within the stipulated time. Further, according to the AO, the appellant has not filed any return of income in compliance to notice issued u/s 148 of the Act and thus there was no occasion for the AO to issue notice u/s 143(2) of the Act. It is an undisputed fact that vide letter dated 26.03.2015, the appellant stated that earlier return of income filed by it on 31.07.2011 may be treated ....
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....otice under Section 143(2) of the Act was not issued to the Assessee pursuant to the filing of the return. In other words, it was held mandatory to serve the notice under Section 143(2) of the Act only after the return filed by the Assessee is actually scrutinized by the AO. 14. The interplay of Sections 143 (2) and 148 of the Act formed the subject matter of at least two decisions of the Allahabad High Court. In CIT v. Rajeev Sharma [2011] 336 ITR 6781[2010] 192 Taxman 197 (All.) it was held that a plain reading of Section 148 of the Act reveals that within the statutory period specified therein, it shall be incumbent to send a notice under Section 143 (2) of the Act. It was observed: "the provisions contained in sub-Section (2) of Section 143 is mandatory and the legislature in their wisdom by using the word 'reason to believe' had cast a duty on the Assessing Officer to apply mind to the material on record and after being satisfied with regard to escaped liability, shall serve notice specifying particulars of such claim. In view of the above, after receipt of return in response to notice under Section 148, it shall be mandatory for the AO to serve a notice under su....
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....er Section 143(2) cannot be dispensed with." 17. The Madras High Court held likewise in Sapthagiri Finance & Investments v. ITO (2012] 25 taxmann.com 341/210 Taxman 78 (Mad.) (Mag.). The facts of that case were that a notice under Section 148 of the Act was issued to the Assessee seeking to reopen the assessment for AY 2000-01. However, the Assessee did not file a return and therefore a notice was issued to it under Section 142 (1) of the Act. Pursuant thereto, the Assessee appeared before the AO and stated that the original return filed should be treated as a return filed in response to the notice under Section 148 of the Act. The High Court observed that if thereafter, the AO found that there were problems with the return which required explanation by the Assessee then the AO ought to have followed up with a notice under Section 143(2) of the Act. It was observed that: "Merely because the matter was discussed with the Assessee and the signature is affixed it does not mean the rest of the procedure of notice under Section 143(2) of the Act was complied with or that on placing the objection the Assessee had waived the notice for further processing of the reassessment proceedi....
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....able. (vii) In the instant case under consideration, it is an admitted fact that no notice u/s 143(2) of the Act was issued by the AO to the appellant when the appellant stated vide its letter dated 26.03.2015 that the original return of income filed on 31.07.2011 may be treated as return of income in compliance to notice issued u/s 148 of the Act. The issue of notice u/s 143(2) of the Act is mandatory in nature and since in the instant case under consideration, no notice u/s 143(2) of the Act was issued, the AO has no jurisdiction to make the assessment. Further, non issue of notice u/s 143(2) of the Act is even not curable by the provisions of section 292BB of the Act as held by a number of Judicial Authorities as stated earlier in this order and as relied upon by the appellant. (viii) Therefore, in view of the above discussion and the judicial pronouncements, it is held that the assessment order under consideration was void ab initio and thus quashed. However, the AO is free to initiate fresh assessment proceedings by issue of notice u/s 148 of the Act, if deemed fit. It is clarified that these are not to be considered as the directions to the AO for issue of notice u/s 14....