TaxTMI 
TaxTMI 
2020 (4) TMI 85
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.... as under: "1. Whether on the facts and in the circumstances of the case the Ld. CIT(A) has erred in holding the impugned assessment order as invalid, void ab initio. 2. Whether on the facts and in the circumstances of the case the Ld. CIT(A) has erred by not considering the provision as laid down in Sec. 292BB where it has been stated that. " Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or re assessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him has been duly served upon him in time in accordance with the provision of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was a) Not served upon him; or b) Not served upon him on time; or c) Served upon him in an improper manner ... " 3. That the appellant craves for leave to add, delete, amend or modify, any ground before or at the time of appellate proceedings." 4. Briefly stated the facts as noted by the AO are that the assessee company is engaged in the business of....
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....hen there is no need to issue notice u/s. 143(2) of the Act: "4. After hearing rival contentions perusing the papers on record and order of the authorities below, I hold as follows. 5. I have perused the assessment record produced by the Ld. Departmental Representative. On perusal of the order sheet entries made from 20.03.2014, it is clear that no notice under section 143(2) of the Income Tax Act, 1961 (Act) was issued to the assessee. The submission of the learned DR that the assessee did not file a return of income and hence no notice is required to be issued under section 143(2) of the Income Tax Act, 1961 (Act) is factually incorrect. The assessee had filed its return of income. On these facts the proposition of law is brought out by the 'SMC - 2', Bench, New Delhi, in the case of Ms. Meenakshi Aggarwal, ITA No. 4171/Del/2015 order dated 16.10.2015 wherein at para 4 and 5 it is held as follows: 4. On this factual matrix, I find that the issue is squarely covered in favour of the Assessee and against the Revenue. The ITAT, 'C' Bench, Bangalore in its order dated 10.10.2014 in the case of Shri G.N. Mohan Raju vs ITO passed in ITA No. 242 & 243(Bang) 20....
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...., assessment will be completed bringing to tax Rs. 1.00 (Rs. One Crore) as revenue receipt as per the provisions of sec. 28 (va) of the Act. 8. A look at section 143(2) is called for at this juncture. It is reproduced hereunder: 143(2) where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the AO shall - (i) where he has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, serve on the assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him, on a date to be specified therein to produce, or cause to be produced any evidence or particulars specified therein or on which the assessee may rely, in support of such claim: (Provided that no notice under this clause shall be served on the assessee on or after the 1st day of June, 2003). (ii) notwithstanding anything contained in clause (1), if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under paid his tax in any manner, ser....
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....or to that date cannot be treated as a notice on a return filed by the assessee pursuant to a notice u/s 148 of the Act. Or in other words, there was no valid issue of notice u/s 143(2) of the IT act, and the assessments were done without following the mandatory requirement u/s 143(2) of the IT act. This in our opinion, render the subsequent proceedings all invalid. Learned CIT (A) had only adjudicated on a position where there was no service of notices u/s 143(2) of the IT Act. He had not dealt with the scenario, where notice was issued prior to the filing of return by the assessee. We, therefore, quash the assessment done for the impugned assessment years. Since the appeals of the assessee are allowed on its ground 3, other grounds are not adjudicated. ......... 6. Respectfully following the propositions of law laid down in various case laws cited in this Tribunal order referred above, I hold that the assessment made in this case as bad in law. Hence the same is quashed."(Emphasis given by us) 6. Thereafter, the Ld. CIT, DR drew our attention to the order of the Hon'ble J&K High Court in PCIGT Vs. M/s. Broadway Shoe Co. (supra) wherein the Hon'ble High Court ....
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....he should have only framed assessment u/s. 143(3) of the Act and not u/s. 144 of the Act. The Ld. AR also relied on the order of the Hon'ble Allahabad High Court in the case of U. P. State Industrial Development Corporation Ltd. Vs. CIT 2016(7) TMI 1327 wherein the Hon'ble High Court has upheld the contention of the assessee on this legal issue and also relied upon the case laws of Hon'ble Apex Court in Hotel Blue Moon (supra) and heavily relied upon the decision of Hon'ble Delhi High Court in Shrijai Shiv Shankar Traders (P.) Ltd. (supra) in which similar issue arose and also placed reliance on other case laws cited by the Ld. CIT(A) to quash the reassessment order. And he does not want us to interfere in the order of Ld. CIT(A). 9. After hearing both parties it is noted that assessee is a company engaged in the business of commodity broking trading in shares and securities and trading in derivatives. For the relevant assessment year, it filed its return of income u/s. 139(1) of the Act on 15.09.2010 declaring loss of Rs. 15,13,240/-. The said return of income was picked up for scrutiny assessment and an order of assessment u/s. 143(3) of the Act was framed on 22.03.2013 at ....
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....ncome has escaped assessment, on AO is having the power to issue notice u/s 148 of the I T Act. Notice u/s 148 of the Act, issued to the assessee required it to file a return within 30 days from the date of service of such notice. In the light of the above, I am of the view that the AO has not issued notice u/s 143(2) which is mandatory. I also of the view that in completing the assessment u/s 148 of the Act, compliance of the procedure laid down u/s 143 and 143(2) is mandatory. As per record, I find that there was no notice issued u/s 143(2) of the Act which is very much essential for reassessment and it is a failure on the part of the AO for not complying with the procedure laid down in section 143(2) of the Act. If the notice is not issued to the assessee before completion of the assessment, then the reassessment is not sustainable in the eyes of the law and deserves to be cancelled. In view of above facts and circumstances of the present case, the issue in dispute raised in additional ground relating to non-issue of the mandatory notice u/s. 143(2) of the Act is decided in favour of the assessee and I hold that the Impugned assessment order dated 22.12.2017 passed u/s.143(3)/15....
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.... Held, yes The appellate Tribunal held that non-issue of a notice under section 143(2) is only a procedural, irregularity and the same is curable. On appeal, the High Court, disagreeing with the Tribunal, held that the provisions of section 142 and sub-sections (2) and (3) of section 143 would have mandatory application in a case where the Assessing Officer in repudiation of return filed in response to' a notice issued under section 158BC(a) proceeds to make an inquiry. A reading of the provision would clearly indicate that if the Assessing Officer, for any reason repudiates the return filed by the assessee in response to notice under section 158BC (a), he must necessarily issue notice under section 143(2) within the time prescribed in the proviso to section 143(2). Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of a notice under section 143(2) cannot be dispensed with. The clarification given by the CBDT in its circular No. 717, dated 14-8-1995, has a binding effect on the department, but not on the Court. Thi....
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....T V. m. Chellappan [2006] 281 ITR 444, A Division Bench of this court, in which one of us was a party (P.D. Dinakaran j.) applying the ratio laid down by the Punjab and Haryana High Court in Vipan Khanna v. CIT [2002] 255 ITR 220 (P & h), held as follows (page 445): " ..... admittedly, no notices under section 143(2) of the Act were served on the assesses within the stipulated period of twelve months and, therefore, the proceedings under section 143 of the Act come to an end and the matter becomes final." In view of the above, the first question now raised, therefore, stands concluded in favour of the assessee." [Emphasis given by us] iii) Similarly, Hon'ble Calcutta High Court in the case of Ma Kamakhyaya enterprises (supra) exactly on similar circumstances held that notice u/s. 143(2) of the Act within a period of 12 months is mandatory. Hon'ble Calcutta High Court discussed the facts as under: "There is no dispute that the assessee filed return for the assessment year under consideration on 31st October,2006 and the said return was taken up for scrutiny and notice under section 143(2) of the Act was issued on 25th October, 2007, as it ....
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....ce under section 143(2) of the Act within the time prescribed in the proviso to section 143(2). It was further held that by making the issue of notice mandatory, section 158BC, dealing with block assessments, makes such notice the very foundation for jurisdiction. Such notice is required to be served on the person, who is found to have undisclosed income. The requirement of notice under section 143(2) cannot be dispensed with. Section 292BB is a rule of evidence, which validates the notice in certain circumstances. The newly inserted section 292BB provides that where an assessee has appeared in any proceedings or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under the Act that the notice was not served upon him or not served upon him in time or served upon him in an improper manner. In the present case, the Tribunal has returned the findings that the notice und....
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....ng Officer having to issue to the assessee a notice under section 143(2) before finalizing the order of the re-assessment. The Assessing Officer 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 Assessing Officer under section 143(2) is qualitatively different from the issuance of a notice under section 142(1). With the legal position being abundantly clear that a re-assessment order cannot be passed without compliance with the mandatory requirement of notice being issued by the Assessing Officer to the assessee under section 143(2), the Tribunal was right in concluding that the re-assessment orders in question were legally unsustainable. viii) The Hon'ble High Court of Delhi in the case of Shri Jai Shiv Shankar Traders (P.) Ltd. [2015] 64 taxmann.com 220 (Delhi) on similar facts as in the present case has held as under.- "This appeal by the Revenue is against an order dated 18th February, 2015 passed by the Income Tax Appellate Tribuna (ITAT) in ITA No.l068/Del/2013 for the Assessment Year ('AY') 2008-09. The Assessee filed its return of income for the ....
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....ion 143(2) of the Act was issued to the Assessee after 16th December 2010, the date on which the Assessee informed the AO that the return originally filed should be treated as the return filed pursuant to the notice under Section 148 of the Act ~ The resultant position is that as far as the present case is concerned the failure by the AO to issue a notice to the Assessee under Section 143(2) of the Act subsequent to 16th December 2010 when the Assessee made a statement before the AO to the effect that the original return filed should be treated as a return pursuant to a notice under section 148 of the Act, is fatal in the order of reassessment." ix) The Madras High Court held in Sapthagiri Finance & Investments v. ITO [2012] 25 taxman.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 respons....
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.... order." The assessment was completed u/s 143(3)/154/147/144 on 22.12.2017. On the process of such assessment the notices, refixation and sufficient opportunities were given. Date of issue of notice Date of hearing fixation Remarks u/s. 148 31.3.2017 Within 30 days the return was required to file. But the assessee not filed the return in response to the said notice. u/s. 142(1) 29.06.2017 12.07.2017 Not attended Refixation letter dated 06.09.2017 22.09.2017 Not attended Show cause letter dated 03.11.2017 08.11.2017 Not attended even not filed any written compliance. This is for your kind information that the assessee not filed any letter of filing return with the copy of the return. (With the enclosures of your remand letter, it is found that the assessee filed the return on 20.11.2017. As no compliance was made even several opportunities were given to the assessee and no documentary evidence was found in record for filing of return, which assessee was required to submit within 30 days of service of the notice u/s 148, omitting to file before the AO at the time of assessment, the notice u/s 143(2) was no....
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....d on 30.10.2014 u/s. 143(3) r.w.s. 147 of the Act. Thereafter, for the second time, reopening notice was issued u/s. 148 allegedly on 31.03.2017 via e-mail; and from a perusal of the remand report (supra) it is understood that the assessee had responded by a letter firstly to AO on 21.09.2017 which fact the AO in his Remand Report, states in his own words "It is pertinent to mention that acknowledgement of-return filed before original assessment u/s 143(3) was submitted at the time of assessment u/s 147 on 21.09.2017 which the acknowledgement for the year 2010-11 on 03.09.2011". Thereafter, we note from the Remand Report that AO had issued show cause notice dated 03.11.2017, wherein we note that he has not rejected the return of income as reiterated by assessee in the letter dated 21.09.2017. Thereafter before the AO, the assessee filed a copy of the return originally filed dated 15.09.2010 on 21.11.2017 [see Remand Report of AO, supra.] We note that the AO has not bothered to reject the letter dated 21.09.2017 of assessee in which the assessee reiterated the Return of Income pursuant to notice u/s. 148 of the Act or even the copy of return of income filed on 20.11.2017. Thereaf....
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....n 142 has been issued prior to the making of an assessment under this section.] (2) ^9 The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988 ), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988 , or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.]" 14. From a reading of the aforesaid provision it is under stood that clause (a) and (b) of sub-section (1) of section 144 is not applicable to the f acts of the case as discussed after going through the remand report of the AO. So coming to clause (c), we note that if the assessee has filed the return, and thereafter assessee fails to comply with all the terms of a notice issued under sub-section (2) of section 143, then AO can resort to Best Judgment Assessment. Here in this case the assessee had filed return of income before the AO on 21.09.2017 and 20.11.2017, therefore, as per clause (c) the AO was duty....
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.... 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier." 17. From a reading of the aforesaid provision it is understood that if the assessee did not furnish the return within the time (in this case as specified by AO in the notice u/s. 148) then the assessee is allowed to file the return before the completion of the assessment. That means in the present case though the assessee did not file the return of income within the specified time given by AO, the assessee had filed the return of income on 21.09.2017 and on 20.11.2017 before the reassessment was framed on 22.12.2017. So, on a con-joint reading of section 148(1) with sec. 139(4) and section 144 makes it abundantly clear that pursuant to a notice u/s. 148 of the Act, if an assessee files belatedly a return or a letter reiterating his earlier return then the AO is bound to issue notice u/s. 143(2) of the Act, if he has to frame re-assessment order u/s 143(3)/144 of the Act. Therefore, the contention raised by the Ld. CIT, DR and reasoning given by AO cannot be countenanced. Since,....