TaxTMI 
TaxTMI 
2025 (5) TMI 950
X X X X Extracts X X X X
X X X X Extracts X X X X
....3. The grounds of Cross Objections by the assessee are as under: 1. Without prejudice to addition deleted by the Ld. CIT(A) on merits, the reassessment order passed by the AO is illegal and void ab-initio inasmuch as notice u/s 143(2) was not issued by AO within prescribed time. The reassessment order being illegal deserves to be quashed. 2. The cross objector reserves the right to add, amend or alter any of the ground/s of cross objection. 4. The brief facts of the case are that "Smt. Peyusha Shukla", the assessee is an individual, has filed her Return of Income (ROI) for the AY 2015-16, electronically on 28.12.2015, declaring total income of Rs. 36,64,280/-. During the year under consideration, the assessee had derived income from salary, house property and capital gain. Subsequently, the survey was conducted in the case of M/s Green Wood Four Seasons Pvt. Ltd. (GWFSPL) on 01.05.2017. During the course of survey and the post survey proceedings, the statement of Smt. Peyusha Shukla, who happen to be the Managing Director of the company "GWFSPL" was recorded u/s 131 of the Income Tax Act on 01.05.2017 and 16.05.2017. On verification, it was revealed that Smt Pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ffered Rs. 3,05,19,169/- for the AY 2015-16 for taxation, the year in which the capital gain was accrued to the assessee. Ld. AO further discussed the provisions of section 54 and 54F and after deliberations have concluded the assessment by making the addition of Rs. 3,05,19,169/- in the hands of assessee for the AY 2015-16. 6. Aggrieved with the aforesaid addition made by the Ld. AO, assessee preferred an appeal before the Ld. CIT(A), wherein the contention of assessee qua the addition made by the Ld. AO were found acceptable, therefore, the addition made by Ld. AO on account of denial of claim u/s 54F has been vacated by Ld. CIT(A). The relevant observations of Ld. CIT(A) while vacating the addition are culled out here under for the sake of clarity and completeness of facts: 5.3.3 I have perused the assessment order as well as above submission of the appellant. During the course of assessment proceedings, the assessee in its reply dated 23.03.2022 submitted the building construction permission certificate along with layout plan, land use conversion certificate along with other documents in support other claim that the said building (Van Awas) was being constructed by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4 and 2014-15 in the year in which the conversion of land use from residential to commercial took place. 4. As per the assessee, law is very clear on this, that in case the residential house, on which the deduction under section 54F is claimed, is transferred within the stipulated period, then in the year it is transferred the taxability of the earlier capital gain claimed will arise. Hence where there is a clear provision in the Act, there is no reason for Assessing Officer to doubt the intention of the assessee and burden her with the tax liability which she has already discharged in financial year 2017-18. 5. The Assessing Officer has given Google images in the assessment order. The appellant contended that if an assessee has earned capital gain of Rs. 100 and the same has already been spent in purchase of land for the house and in construction of the house, the law clearly confirms that the completion of the house can happen over a period of three years from the date of sale of original asset. The AO has not given any contrary findings regarding completion of construction. The assessee has submitted that she has followed all the provisions of section 54F and h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The same was accepted by the AO after scrutiny assessment for the AY 2018-19. Therefore, denial of claim u/s 54F of the Act in the AY 2015-16 will result in double taxation of same income. 5.3.7 Further, it is also found from the perusal of post survey statement of the assessee dated 16.05.2017that she has honoured the disclosure made during survey in the case of M/s Green Wood Four Seasons Pvt. Ltd. 5.3.8 In the light of the above, it is clear that, the appellant has duly submitted all the evidential documents in order to prove the genuineness of the claim u/s 54F of the Act. Hence, after perusal of the submission made and taking into account the entire conspectus of this case including the various judicial pronouncements, I see no reason to uphold with the findings of the assessing officer regarding addition on account of denial of claim u/s 54F of Rs. 3,95,19,169/-. Hence, ground of appealno.2 on merit is Allowed. 7. As relief is granted by the Ld. CIT(A) to the assessee by vacating the addition of Rs. 3,05,19,169/- made by the Ld. AO, on account of Capital Gain by refusing the claim of deduction u/s 54F of the Act, aggrieved thereby, the revenue preferred a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessment under section 143(3) of the Income-tax Act, 1961 is mandatory? And (2) Whether, on the facts and in the circumstances of the case and in view of the undisputed findings arrived at by the Commissioner of Income-tax (Appeals), the additions made under section 68 of the Income-tax Act, 1961 should be deleted or set aside." 15. We may now revert back to Section 158 BC(b) which is the material provision which requires our consideration. Section 158 BC(b) provides for enquiry and assessment. The said provision reads "that the assessing officer shall proceed to determine the undisclosed income of the Block period in the manner laid down in Section 158 BB and the provisions of Section 142, sub-section (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be, apply." An analysis of this sub section indicates that, after the return is filed, this clause enables the assessing officer to complete the assessment by following the procedure like issue of notice under Sections 143(2)/142 and complete the assessment under Section 143(3). This Section does not provide for accepting the return as provided under Section 143(i)(a). The assessing o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent, but not on the Court. This circular clarifies the requirement of law in respect of service of notice under sub-section (2) of Section 143 of the Act. Accordingly, we conclude even for the purpose of Chapter XIV-B of the Act, for the determination of undisclosed income for a block period under the provisions of Section 158 BC, the provisions of Section 142 and sub-sections (2) and (3) of Section 143 are applicable and no assessment could be made without issuing notice under Section 143(2) of the Act. However, it is contended by Sri Shekhar, learned counsel for the department that in view of the expression "So far as may be" in Section 153 BC(b), the issue of notice is not mandatory but optional and are to be applied to the extent practicable. In support of that contention, the learned counsel has relied on the observation made by this Court in Dr. Pratap Singh's case [1985] 155 ITR 166 (SC). In this case, the Court has observed that Section 37(2) provides that "the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under Section 37(2). Reading the two sections together it merely means that the methodology prescribed for carrying ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....kshay Lodha in ITA No. 160/RPR/2022 dated 27.10.2023, wherein the issue is deliberated upon by the tribunal, taking support from the principle laid down by the Hon'ble Apex Court in the case of ACIT Vs Hotel Blue Moon (supra), had observed as under: 22. Although we have quashed the assessment for want of valid assumption of jurisdiction by the A.O. but for the sake of completeness, we shall now deal with the claim of the Ld. AR that the assessment order passed u/s. 147 r.w.s. 143(3) of the Act dated 28.10.2016 in absence of a valid notice issued u/s. 143(2) of the Act was even otherwise liable to be quashed. 23. As observed herein above, the A.O. had framed the assessment order u/s.147 r.w.s. 143(3) of the Act dated 28.10.2016 on the basis of notice u/s. 143(2) of the Act dated 13.10.2016. Admittedly, the notice u/s.143(2) of the Act could have been issued to the assessee by 30.09.2016. As observed by us herein above, the Ld. DR, on being confronted with the aforesaid claim of the assessee's counsel, could not rebut the same. As the impugned assessment in the case of the assessee had been framed in the absence of any valid notice u/s.143(2) of the Act, which i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be, if, 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, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of 86[three] months from the end of the financial year in which the return is furnished.( 86. Sub. for "six" by the Act No. 13 of 2021, w.e.f. 1-4-2021.) Section 148 148. [(1)] Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, ^7[* * *] as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and ve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t, which was prescribed under the Act in clause (b) of 1st proviso to section 148 was no more applicable in the year under consideration as have become otiose by insertion of explanation effective from 01.10.2005 that, "For the removal of doubts, it is hereby declared that nothing contained in the first proviso or the second proviso shall apply to any return which has been furnished on or after the 1st day of October, 2005 in response to a notice served under this section." In view of the said explanation, the issuance of notice u/s 143(2) which is qua the returns filed u/s 139 of the Act shall apply in cases where the returns are filed u/s 148 also, as going by the provisions of section 148, it is clarified that, the provisions of the Act shall, so far as may be, apply accordingly as if such return (u/s 148 r.w.s. 139) were a return required to be furnished under section 139. 16. Accordingly, in the present case which pertains to AY 2015-16, for issuance of notice u/s 143(2), the time limitation as provided proviso to sub-clause (ii) of section 143(2) shall be applied, which have come into existence effective from 01.04.2021, reads as under: "Provided that no notice un....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... applicable in the present case, as the notice was issued after 01.04.2021, i.e., on 20.11.2021, the same falls under the category of any invalid notice, which is the foundation of passing a valid assessment order, therefore, the assessment order passed in the present case on the strength of an invalid notice u/s 143(2), cannot sustained and liable to be struck down. 18. Respectfully following the principle of law laid down by Hon'ble Apex Court, in the Judgments referred to supra, which is followed by ITAT, Raipur in the case of ACIT Vs. Akshay Lodha (supra), further supported by the judgment of Hon'ble Madras HC in the case of Amec Foster Wheeler Iberia SLU- India Project Office Vs. DCIT (supra), in absence of any plausible explanation or contradictory material or decision to dislodge the aforesaid view, we find substance in the contention of the Ld. AR in the cross objection that in absence of a valid notice u/s 143(2), which was not issued within the prescribed time limit for the purpose of making the assessment is a violation of mandatory provisions of law, therefore, the reassessment impugned order passed u/s 147 r.w.s. 144B of the Act dated 30.03.2022, dehors a valid noti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mmissioner of Income Tax(ITAT), Raipur Sir, Sub: Calling of report and assessment folder(s) in the case of Peyusha Shukla in ITA No.454/RPR/2024 & co No.19/RPR/2024, A.Y.2015-16- Reg- Kindly refer to your letter F. No. CIT-ITAT/RPR/CR/2024-25 dated 24.12.2024 on the above subject vide which it has been communicated that Hon'ble ITAT Bench has directed to provide a report whether notice u/s 143(2) was issued within the prescribed time limit. 2. In this context, the requisite report sought on issuance of notice u/s 143(2) of the Act in this case is submitted as under :- (1) On perusal of record, it is found that Notice u/s 148 of the Act was issued in this case on 28.03.2021. In response to notice u/s 148 of the Act, the assessee had filed ITR for A.Y.2015-16 on 31.03.2021. Subsequently, notice u/s 143(2) of the Act was issued in this case on 20.11.2021. The notice u/s 143(2) of the Act was issued in this case within the prescribed time limit in view of the following observations :- (i) The provisions of sections of 143(2) and 148 are placed on a totally different trajectories in the sense that notice under section 143(2) is issued in order to make regular assessmen....