TaxTMI 
TaxTMI 
2018 (6) TMI 1321
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....of the Income Tax Act, as not pressed, even after indicating at the time of hearing that if the issue on jurisdiction is decided against the Appellant, opportunity would be given to present the case on merits in respect of claim u/s.54 of the Income Tax Act? (iii) Whether on the facts and in the circumstances of the case, the Income-Tax Appellate Tribunal was right in law in upholding the reassessment, in spite of notice u/s.148 dated 31.03.2012 being neither issued nor served on the Appellant; and can the Respondent take shelter u/s.292BB of Income Tax Act, 1961, to validate such action of reassessment? (iv) Whether on the facts and in the circumstances of the case, the Income-Tax Appellate Tribunal is right in law in upholding that impugned reassessment by observing that such non-issue or non-service of notice u/s.148 cannot make the reassessment void or a nullity in view of the provision of Section 292BB of Income Tax Act, 1961? (v) Whether on the facts and in the circumstances of the case the Income-Tax Appellate Tribunal is right in law in holding that the onus lies on the Appellant to exhibit that the Assessing Officer retained control over the noti....
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....service of notice, under Section 148, was before the first appellate authority for the first time. The same, however, did not find his favour, in view of Section 292BB of the Act, inasmuch as, without doubt no objection qua the service of notice, under Section 148(1) was raised during the course of the assessment proceedings. 3. Aggrieved, the assessee was in second appeal in I.T.A.No.3119/Mds/2016, before the Income-Tax Appellate Tribunal, which dismissed the appeal on 12.07.2017, as follows: "3.1 The question that arises is if s. 292BB is applicable to the impugned assessment or not. The assessee's case, relying on the decisions in CIT v. Chetan Gupta [2016] 382 ITR 613 (Del) and Kuber Tobacco Products (P.) Ltd. v. Dy. CIT [2009] 117 ITD 273 (Del)(SB), is that the provision is prospective, so that it shall apply to proceedings for AY 2008-09 and subsequent years. The Revenue, on its part, places reliance on the decision in CIT v. Panchvati Motors (P.) Ltd. [2011] 59 DTR 289 (P&H). Section 292BB of the Act, inserted on the statute book by Finance Act, 2008 w.e.f. 01.04.2008, reads as under: 'Notice deemed to be valid in certain circumstances. 292BB. Where an a....
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....ame operating as a restriction on the right of the assessee to raise an objection/s qua service of notice, i.e., to the assessee's prejudice, there is no question of the said provision being retrospective in operation. In fact, even the Circular by the Board admits this position, making it abundantly clear that only the proceedings pending as on 01.04.2008, the date on which amendment comes into effect, would be subject to the amended law. That is, the proceedings concluded or assessment completed before 01.04.2008 is not impacted by the said amendment in any manner; the curb on the assessee's untrammeled right to raise objection/s qua service of a notice at any stage (even where he participates or cooperates in the proceedings) coming into effect from 01.04.2008 only. That is, the curbbecomes applicable from a particular, specified date. How, then, one wonders,could it possibly relate to or have reference to a particular assessment year, stated to be AY 2008-09 onwards? It is a mere coincidence that the specified date is from the beginning of a previous year, and may well have been from any other date, viz. 01/2/2008; 01/06/2008, et. al. Further, even the Hon'ble Court in Chet....
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.... thing relevant is that the said restriction shall be operative from a particular date, so that the provision shall stand attracted, irrespective of the year to which the proceedings or assessment relate, the pendency of the relevant proceedings on the said date. The Board Circular (supra), which is in the nature of contemporaneous exposito, referred and relied upon in Panchvati Motors (P.) Ltd. (supra), clearly spells out the correct legal position in this regard. 3.2 On the mind of the Bench in this regard being conveyed during hearing to the ld. AR, he would raise another objection, claiming that notice u/s. 148(1) dated 31.03.2012 was not validly issued. In-as-much as the same raises a legal issue, the ground, raised orally, was admitted in pursuance to r. 11 of the Income Tax (Appellate Tribunal) Rules, 1963, making it at the same time clear that the same, i.e., the said ground, raised for the first time before the tribunal, could be answered only on the basis of undisputed facts, i.e., as borne out by the record. The assessee's charge is that the notice u/s. 148 is not issued in-as-much as it had not travelled outside the control of the issuing officer, the AO, so th....
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....ion has been made out between "issue of notice" and "service of notice" under the 1961 Act. Section 149 prescribes the period of limitation. It categorically prescribes that no notice under section 148 shall be issued after the prescribed limitation has lapsed. Section 148(1) provides for service of notice as a condition precedent to making the order of assessment. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the Income-tax Officer to proceed to reassess. The mandate of section 148(1) is that reassessment shall not be made until there has been service. The requirement of issue of notice is satisfied when a notice is actually issued. In this case, admittedly, the notice was issued within the prescribed period of limitation as March 31, 1970, was the last day of that period. Service under the new Act is not a condition precedent to conferment of jurisdiction on the Income-tax Officer to deal with the matter but it is a condition precedent to the making of the order of assessment.' (pg. 165) How could then, one may ask, even de hors s. 292BB, and assuming non service of notice u/s. 148, lead to the assessment under the Act being void....
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....lity, but only its' set aside for fresh assessment. 3.3 Coming back to the question of the assessee disputing the issue of notice u/s. 148 on the ground that the issuing authority retains control over the same, and that it was not handed over to the postal department, which only shall mark its issue. This, given the settled law that 'issue' implies the notice being put in the process of service, with the issuing authority loosing effecting control over the same, is a question of fact, precluding its admission in-as-much as the relevant facts are disputed. Further, even otherwise, it is the assessee on whom the burden lies to exhibit, at least prima facie, that the apparent is not real, and that, though signed, the AO retained control over the notice and was not put in the process of its' service. So however, to ensure that the Revenue has some basis to claim issue of notice on 31.03.2012, the ld. DR was called upon by the Bench to furnish any material with the Revenue in this regard. He submitted the following documents: a). List of approved cases, which bears assessee's name with the approval date (for issue of notice u/s. 148(1)) as at 31.03.2012 (a system gener....
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....2014. No material rebutting the said documents or contradicting the said explanation has been brought on record. The same, even so, would make the facts disputed, precluding the legal challenge to admission of the legal aspect as to jurisdiction for want of issue of notice u/s. 148 on 31.03.2012. The said objection by the ld.AR cannot therefore, i.e., in any case, be admitted. 4. In sum: The decision in Chetan Gupta (supra) does not, in ratio, lay down the law as being ascribed to it; there being in fact no discussion on that aspect of the matter therein. The decision in Panchvati Motors (P.) Ltd. (supra), on the other hand, clearly lays down the stated legal position. The assessment year involved in that case was AY 1998-99, and the assessee had, as in the present case, admittedly not raised any objection in respect of the service of notice u/s. 148. The Hon'ble Court, whose order is thus squarely applicable, clarified that where no objection regarding a service of notice u/s. 148 of the Act was raised before the AO, the argument that there was no valid service of notice, as advanced by the assessee before it, fails (refer para 13 of the decision). The questi....
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.... assessee qua service of notice, which s. 292BB seeks to regulate, implies a disputed set of facts, and not an admitted fact on the basis of which no jurisdiction stands assumed. Sec. 292BB is squarely applicable in the present case, precluding the assessee from raising any objection with regard to the service of notice u/s. 148(1). The decision by the ld. CIT(A) is accordingly upheld, dismissing the assessee's Grounds 1.1 to 1.4. Needless to add, there has accordingly been no examination of the assessee's objections qua service of the said notice on merits, and this order may not be construed as expressing any opinion thereon. Without prejudice to the foregoing, the concomitant of non-service or an invalid service of notice u/s. 148, assuming an objection/s in its regard could be validly raised, is a set aside to the stage of the said service for framing the assessment pursuant thereto, for which the time limit shall run from the date of the service (s. 153(2)). The same renders the controversy as to the applicability of s. 292BB qua the impugned assessment as of little consequence. The plethora of materials brought on record by the Revenue, which are also saved ....
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....s raised for the first time before the Tribunal and no contradicting materials disputing or rebutting the presumption as to regularity of official acts in respect of issue of notice u/s.148(1) in view of Section 292BB of the Act, as inadmissible. The Income-Tax Appellate Tribunal ought to have considered the submission made by the Appellant on 15.04.2017 in proper perspective. (v) The Income-Tax Appellate Tribunal erred in observing that provisions of Section 292BB of Income Tax Act, 1961 is applicable to the impugned assessment, empowering such presumption with regard to issue and service of notice u/s.148. The Income-Tax Appellate Tribunal erred in observing that the provisions of section 292BB of Income Tax Act, 1961 shall stand attracted to the pending proceedings as on 01.04.2008, irrespective of the year to which the proceedings or assessment relate. (vi) The Income-Tax Appellate Tribunal erred in placing reliance on Clause 42.7 of Circular 1 of 2009 dated 27.03.2009 issued by Central Board of Direct Taxes. The Income-Tax Appellate Tribunal erred in placing reliance on various decisions, which are distinguishable on the facts of the case of the appellant and....
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....t take shelter u/s.292BB of the Act, to validate its action in reopening the assessment even without issue and / or service of notice u/s.148 of Income Tax Act, 1961. The Income-Tax Appellate Tribunal ought to have appreciated that the Assessing Officer had issued notice u/s.142(1) on 11.12.2012 and Notice u/s.143(2) and thus it cannot be presumed that the Assessee had appeared or co-operated in response to notice u/s.148 which was neither issued nor served on the Assessee. (xi) The Income Tax Appellate Tribunal being final fact finding authority is duty bound to give a finding on fact, grossly failed by not admitting the grounds raised in respect of non-service of notice u/s.148 while challenging the jurisdiction of the Assessing Officer in reopening the assessment. (xii) The Income Tax Appellate Tribunal erred in dismissing the ground Nos.2.1 to 2.3 raised on merits in respect of claim u/s.54 of the Income Tax Act, as not pressed, even after indicating at the time of hearing that if the issue on jurisdiction 1st decided against the Appellant, opportunity would be given to present the case on merits in respect of claim under Section 54 of the Income Tax Act. The ....
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....h due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2.-For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (ba) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under section 92E; (c) where an assessment has been made, but- (i) income chargeable to tax has been underassessed; or (ii) such income has been assessed at too low a r....
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....he period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005 in response to a notice served under this section, and (b) subsequently a notice has been served under subsection (2) of section 143 after the expiry of twelve months specified in the proviso to sub-section (2) of section 143, as it stood immediately before the amendment of said subsection by the Finance Act, 2002 (20 of 2002) but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in sub-section (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice : Provided further that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005, in response to a notice served under this section, and (b) subsequently a notice has been served under clause (ii) of sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to clause (ii) of subsection (2) of section 143, but before the expiry of the time limit for making the assessment, reas....
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....the end of the relevant assessment year unless the income chargeable to tax has escaped assessment by reason for the failure on the part of the taxpayer to disclose fully and truly all material facts necessary for his assessment. 7. When a notice under section 148 of the Income-tax Act, 1961, is issued, the proper course of action, to be followed is (a) file the return, (b) If he so desires, to seek reasons for issuing the notices. (c) The Assessing Officer is bound to furnish reasons within a reasonable time. (d) On receipt of reasons, the assessee is entitled to file objections to issuance of notice, and (e) The Assessing Officer is bound to dispose of the same by passing a speaking order. (f) The assessee if desires can file a writ challenging the order or can proceed with the assessment. However the assessee has still a right to challenge the reopening of assessment after the assessment order is passed, before Appellate Authority. 8. In Mayawati v. CIT reported in (2010) 321 ITR 349, the Delhi High Court observed as under:- "Various issues had arisen in that case, none of which, in our opinion, are of any rele....
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....ble period of time" as used by the Supreme Court in GKN Driveshafts (supra) cannot be stretched to such an extent that it extends even beyond the six years stipulated in Section 149." 9. In Mayawati's case, the Delhi Court, after considering various decisions of different High Courts, recorded that in the context of Section 143(2) of the Income Tax Act, held that the word "issuance of notice" and "service of notice", are not synonymous and interchangeable, and accordingly, Delhi High Court held that notice under this section would lose all its legal efficacy, if it had not been actually served on the assessee, within the scheduled and stipulated time. The Delhi High Court held that in this dialectic, a fortiori, since the word, "served" is conspicuous by its absence in Section 149 and that the legislature has deliberately used the word "issue", actual service within the period of four and six years specified in the section, would not be critical. The Delhi High Court held as under:- "5. On a plain reading of these Sections it is palpably plain that Section 148 of the IT Act enjoins that the AO must serve on the assessee a notice requiring him to furnish a return of ....
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.... has succeeded in proving its service before August 31, 1998. On the other hand, the assessee has failed to prove a statement that he received the notice only on 1.9.1998. Where a statute postulates the issuance of a notice and not its service, a fortiori the presumption of fiction of service must be drawn on the lines indicated in Section 27 of the General Clauses Act, 1897. 10. In Commissioner of Income-Tax v. Three Dee Exim reported in 2011 (055) DRT 147, the Delhi High Court, was is in complete agreement with the reasoning of the Hon'ble Division Bench judgment in the aforesaid case of Mayawati (supra) and held that what is contemplated under Section 149 is "issuance of notice" under Section 148 and not the service thereof on the assessee and further held that the "service of notice" under Section 148 is only required before the assessment, reassessment or re- computation. At the end, the Hon'ble Delhi High Court, held as follows: "18. In view of our discussions as above, we are of the view that service of notice, a contemplated pre-condition before assessment would be a question of fact depending upon the facts and circumstances of each case. In the present....