TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 1952
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....ively u/s. 143(3) r.w.s. 147 of the Act by bringing to tax the non-genuine purchases from various parties referred in the Assessment Order. Before the Ld.CIT(A) the assessee challenged the validity of the reassessment order made u/s. 143(3) r.w.s. 147 of the Act contending that in the absence of issue of notice u/s. 143(2) of the Act the reassessment order made u/s. 147 of the Act is bad in law. 3. Ld.CIT(A) rejected the contentions of the assessee that the assessment is a nullity in the absence of issue of notice u/s. 143(2) of the Act observing that the assessee has not filed any return in response to notice u/s. 148 of the Act and assessee has filed only a letter stating that return filed originally on 30.09.2009 and 30.09.2010 for the A.Y. 2009-10 and 2010-11 may be taken as if the return filed in response to notice u/s.148 of the Act, and since the assessee filed no returns and the returns filed are non-est in the eyes of law and therefore he sustained the validity of assessment relying on the decision of the Pune Bench of the Tribunal in the case of Chawara Educational Trust v. ITO [66 taxmann.com 127]. 4. Ld. Counsel for the assessee submits that the Assessing Officer neve....
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....ice u/s.148 of the Act. The assessee filed no returns and the returns filed are non-est in the eyes of law and therefore he sustained the validity of assessment relying on the decision of the Pune Bench of the Tribunal in the case of Chawara Educational Trust v. ITO [66 taxmann.com 127]. 8. In the case before me the Ld. DR could not produce any evidence to show that notice u/s. 143(2) was in fact issued and served on the assessee before completion of reassessment. 9. In the case of ACIT v. Hotel Blue Moon (supra), the Hon'ble Supreme Court held that no assessment can be made without issuing notice u/s. 143(2) of the Act. It has been held that omission on the part of the Assessing Authority to issue notice u/s. 143(2) cannot be a procedural irregularity and the same is not curable. It has been held that the requirement of issue of notice u/s. 143(2) of the Act cannot be dispensed with. 10. The Hon'ble Bombay High Court in the case of ACIT v. Geno Pharmaceuticals Ltd. (supra) held as under: - "4. So far as Tax Appeals No.77/2012 and 78/2012 are concerned, in both these appeals, the ITAT has held that the issuance of notice after reopening of the case was mandatory and th....
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....e Act in view of the proviso to section 292BB of the Act. The Hon'ble High Court observed that in the case of CIT v. Parikalpana Estate Development Pvt. Ltd., 40 taxmann.com 248] held that section 292BB is a rule of evidence and it has nothing to do with the mandatory requirement of giving a notice and especially a notice u/s.143(2) which is a notice giving jurisdiction to the Assessing Officer to frame an assessment. The Hon'ble High Court held that the reassessment order cannot be passed without compliance with the mandatory requirement of notice being issued by the Assessing Officer to the assessee u/s. 143(2) of the Act and the ITAT was right in concluding that the re-assessment orders were legally unsustainable. While holding so it has been observed as under: - "12. The Court first proposes to consider the question as to whether in terms of the proviso to Section 292BB of the Act, the Assessee was precluded, at the stage of the proceedings before the ITAT, from raising a contention regarding failure of the AO to issue a notice under Section 143(2) of the Act. The legal position appears to be fairly well settled that Section 292BB of the Act talks of the drawing of a ....
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.... 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 permitting the Assessee to raise the point concerning non-issuance of notice under Section 143(2) of the Act for the first time in the appeal before the ITAT, the Court is of the considered view that in view of the settled legal position that the requirement of issuance of such notice is a jurisdictional one, it does go to the root of the matter as far as the validity of the reassessment proceedings under Section 147/148 of the Act is....
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....e 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 under Section 143 (2) of the Act, the AO would have been obliged to let the Assessee know why he was being asked to file a return notwithstanding his letter dated 1st April 2011. In the circumstances, the Assessee was justified in proceeding on the basis that it had not committed any default in communicating to the AO that the return already filed should be treated as the return filed pursuant to the notice un....
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.... Storage (P.) Ltd. (supra) also reiterate the above legal position. As far as this Court is concerned, the decision in Director of Income Tax v. Society For Worldwide Interbank Financial Telecommunications (2010) 323 ITR 249 (Del) and the recent decision in Pr. CIT v. Shri Jai Shiv Shankar Traders Pvt. Ltd. (supra) hold likewise. 23. With the legal position being abundantly clear that a reassessment order cannot be passed without compliance with the mandatory requirement of notice being issued by the AO to the Assessee under Section 143(2) of the Act, the ITAT was in the present case right in concluding that the reassessment orders in question were legally unsustainable." 12. In the case of Pr.CIT v. Oberoi Hotels Pvt. Ltd., [96 taxmann.com 104] the Hon'ble Calcutta High Court held that when the Assessing Officer completed the assessment u/s. 143(3) r.w.s. 147 of the Act without issuing any notice u/s. 143(2) of the Act, re-assessment order passed was legally unsustainable and the same could not be justified by invoking the provisions of section 292BB of the Act. While holding so, the Hon'ble High Court held as under: - "11. Apropos the second question framed above, it....
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....ce under Section 143(2) of the Act has expired or the time for completing the reassessment proceedings under Section 153(2) of the Act has run out, the failure to issue such notice under Section 143(2) of the Act would result in the entire proceedings, including any order of assessment, to be quashed. (2) Section 292BB of the Act does not dispense with the issuance of any notice that is mandated to be issued under the Act, but merely cures the defect of service of such notice if an objection in such regard is not taken before the completion of the assessment or reassessment. In addition, it is held that in the light of the Supreme Court dictum in Hotel Blue Moon, the view expressed in Humboldt Wedag India Pvt. Ltd is per incuriam and, as such, not good law." 13. Similar view has been taken by the Mumbai Bench of the Tribunal in the case of M/s. Kanchanjunga Implex Pvt. Ltd., v. ITO in ITA.No. 6057/Mum/2013 dated 23.09.2015. 14. In the case of ITO v. Gravity Systems Pvt. Ltd., in ITA.No. 5626/Del/2012 dated 30.03.2017 the Coordinate Bench of this Tribunal held as under: - "9. We have heard the rival submissions and carefully considered the same on this issue. We noted that thi....
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.... the Act before completion of the assessment under section 147/148 of the Act will not make the assessment to be illegal and void ab-initio and in this regard he relied on the decision of the Hon'ble Delhi High Court in the case of CIT vs. Madhya Bharat Energy Corporation Ltd., 337 ITR 389. 11. After hearing the rival submission and going through the orders of the authorities below as well as the case laws relied on by both the parties, we noted that the issue involved is duly covered in favour of the assessee by the decision of the Hon'ble jurisdictional High Court in the case of Principal CIT vs. Jai Shiv Shankar Traders Pvt. Ltd., 383 ITR 448 (Del) which is binding on us. In this decision, we noted that the Hon'ble High Court discussed the decision of the Hon'ble Delhi High Court in the case of CIT vs. Madhya Bharat Energy Corporation Ltd. (supra) on which the ld. D.R. has relied on. The Hon'ble Delhi High Court did not agree and distinguished the decision of the Hon'ble Delhi High Court in the impugned case. The facts involved in the case of Principal CIT vs. Jai Shiv Shankar Traders Pvt. Ltd. (supra) are similar to the case of the assessee. In this de....
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..... The said judgment held that since on the facts of that case the Assessee had been properly served with the notice under Section 143(2) of the Act within the statutory time limit prescribed under the proviso thereto, the ITAT should not have set aside the re-assessment in toto. Ms Aggarwal placed reliance on Section 292BB of the Act and urged that the Assessee having not raised any objection about non service of the notice under Section 143(2) of the Act either at any time before the AO or prior to, or during the reassessment proceedings, the Assessee was precluded from raising such an objection in the subsequent stages of the proceedings. 11. Dr Rakesh Gupta for the Assessee on the other hand placed reliance on a large number of decisions of the High Courts apart from the decision of the Supreme Court in ACIT v. Hotel Blue Moon (supra). He submitted that the failure to issue a notice under Section 143(2) of the Act subsequent to the Assessee having 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, was fatal to the order of re-assessment. 12. The narration of facts as noted above by the C....
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....any notice under the provisions of the Act, which is required to be served on the assessee, has been duly served upon him in time in accordance with the provisions of the Act. The assessee is precluded from taking any objection in any proceeding or enquiry that the notice was (i) not served upon him; or (ii) not served upon him in time; or (iii) served upon him in an improper manner. In other words, once the deeming fiction comes into operation, the assessee is precluded from raising a challenge about the service of a notice, service within time or service in an improper manner. The proviso to Section 292 BB of the Act, however, carves out an exception to the effect that the Section shall not apply where the assessee has raised an objection before the completion of the assessment or reassessment. Section 292 BB of the Act cannot obviate the requirement of complying with a jurisdictional condition. For the Assessing Officer to make an order of assessment under Section 143 (3) of the Act, it is necessary to issue a notice under Section 143 (2) of the Act and in the absence of a notice under Section 143 (2) of the Act, the assumption of jurisdiction itself would be invalid." 16. In ....
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....Court that service of the notice had been effected on the Assessee under Section 143 (2) of the Act. As already further noticed, the legal position regarding Section 292BB has already been made explicit in the aforementioned decisions of the Allahabad High Court. That provision would apply insofar as failure of "service" of notice was concerned and not with regard to 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. 19. 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 to the order of re-assessment. 20. Consequently, there is no legal infirmity in the impugned order of the ITAT. No substantial question of law arises. The appeal is dismissed." 12. Respectfully....
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....ue Moon [321 ITR 362] and held as under: - "Under clause (ii) of sub-section (2) of Section 143, the Assessing Officer is required to serve, on the assessee, a notice requiring him to attend the office or to produce evidence on which the assessee may rely in support of the return, if the Assessing Officer 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 the tax in any manner. Under the proviso to clause (ii), it has been specified that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. Service on the assessee of a notice within the period prescribed by the proviso presupposes the issuance of a notice for, it is only when a notice is issued, that it can be served. Thereafter, the provisions of sub-section (3) of Section 143 of the Act stipulate that on the date specified in the notice issued under clause (ii) of sub-section (2) of Section 143 of the Act, the Assessing Officer shall, after hearing the evidence as the assessee may produce and considering such other evidence ....
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.... of the Act provides a deeming fiction. The deeming fiction is to the effect that once the assessee has appeared in any proceeding or cooperated in any enquiry relating to an assessment or reassessment, it shall be deemed that any notice under the provisions of the Act, which is required to be served on the assessee, has been duly served upon him in time in accordance with the provisions of the Act. The assessee is precluded from taking any objection in any proceeding or enquiry that the notice was (i) not served upon him; or (ii) not served upon him in time; or (iii) served upon him in an improper manner. In other words, once the deeming fiction comes into operation, the assessee is precluded from raising a challenge about the service of a notice, service within time or service in an improper manner. The proviso to Section 292 BB of the Act, however, carves out an exception to the effect that the Section shall not apply where the assessee has raised an objection before the completion of the assessment or reassessment. Section 292 BB of the Act cannot obviate the requirement of complying with a jurisdictional condition. For the Assessing Officer to make an order of assessment under....
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....on. Section 292 BB of the Act cannot come to the aid of the revenue in a situation where the issuance of a notice itself was not within the prescribed period, in which event the question of whether it was served correctly or otherwise, would be of no relevance whatsoever. Failure to issue a notice within the prescribed period would result in the Assessing Officer assuming jurisdiction contrary to law." 7. In the case on hand we see that the notice u/s. 143(2) itself is dated 19.01.2015 which is beyond the date prescribed for issue of notice i.e. 30.09.2012. In such circumstances the Assessing Officer could not have issued any notice prior to 30.09.2012. Therefore, admittedly in this case as the notice u/s. 143(2) was issued beyond 30.09.2012 and in view of the decision of the Hon'ble Allahabad High Court the Assessing Officer could not have assumed jurisdiction in the absence of valid issue of notice u/s. 143(2) of the Act. Thus, respectfully following the said decision, we hold that there is no valid issue of notice u/s. 143(2) of the Act in this case and consequently the Assessment Order passed u/s. 143(3) is a nullity. Hence we quash the Assessment Order passed u/s. 143(3)....