Madras High Court
Commissioner Of Income Tax vs M/S. Alstom T & D India Limited on 3 September, 2012
Author: Chitra Venkataraman
Bench: Chitra Venkataraman, K.Ravichandrabaabu
In the High Court of Judicature at Madras Dated: 03.09.2012 Coram The Honourable Mrs.JUSTICE CHITRA VENKATARAMAN and The Honourable Mr.JUSTICE K.RAVICHANDRABAABU Tax Case (Appeal) Nos.1183 and 1186 of 2006 Commissioner of Income Tax Chennai ... Appellant in both the appeals Vs. M/s. Alstom T & D India Limited No. 19/1, GST Road Pallavaram Chennai 43 ... Respondent in both the appeals [Cause title amended vide order of Court dated 3.9.2012 made in TCMP.Nos. 1 and 1 of 2012] APPEALs under Section 260 A of the Income Tax Act against the order dated 29.7.2005 made in I.T.A.Nos.1686/MDS/2000 and 1747/MDS/2000 on the file of the Income Tax Appellate Tribunal 'A' Bench for the assessment years 1994-95. For Appellant : Mr.T.Ravikumar For Respondents: Mr.M.P.Senthil Kumar ------- J U D G M E N T
(Judgment of the Court was delivered by CHITRA VENKATARAMAN,J.) The above Tax Case (Appeals) arise out of the order of the Tribunal relating to assessment year 1994-95. Following are the questions of law raised for consideration in the above Tax Case (Appeals):-
"(i) 1. Whether in the facts and circumstances of the case, the Tribunal was right in holding that the re assessment framed under section 143(3) r/w 147 for the assessment year 94-95 is invalid on the ground that no notice under section 143(2) was served before framing the re-assessment ?
2. Whether in the facts and circumstances of the case, the Tribunal was right in holding that expenditure on renting a guest house is allowable as a business expenditure as per section 37(4) ?
3. Whether in the facts and circumstances of the case, the Tribunal was right in holding that Lucknow property which was exchanged for another property in respect of which the assessee had forgone the tenancy rights was acquired for a valuable consideration and allowing depreciation under section 32 ?"
2. T.C.(A).No. 1183 of 2006 relates to jurisdictional aspect in not issuing notice under Section 143(2) of the Act. T.C.(A).No. 1186 of 2006 deals with merits of the reassessment.
3. It is seen from the order of assessment that a notice under Section 148 of the Act was issued on 17.3.1997. Since there was no response, notice under Section 142 of the Act was issued on 26.11.1997. The assessee is stated to have filed a letter dated 16.4.1997 stating that the company has already filed its return of income on 30.11.1994 declaring loss and requested to treat the said return as the correct and conclusive return. In response to the notice under Section 142 of the Act, the assessee filed a letter dated 11.1.1999 seeking reasons for reopening of the assessment. The letter dated 11.1.1999 further pointed out to the letter dated 16.4.1997 requesting the Assessing Officer to treat the return filed earlier as a return filed pursuant to the notice under Section 148 of the Act. The Officer however replied on 29.1.1999 by stating that the reasons for reopening the assessment need not be communicated to the assessee as per the decision of the Apex Court reported in 63 ITR 219 S.NARAYANAPPA v. CIT, thus the Assessing Officer called upon the assessee to comply with the notice issued under Section 148 of the Act. The said letter from the Joint Commissioner of Income Tax revealed receipt of the letter dated 11.1.1999 and the assessee was asked to comply with the notice issued under Section 148 of the Act. Ignoring the contents of the assessee's letter dated 11.1.99, the Assessing Officer however viewed that since the assessee had not filed the return, after discussing the matter, the assessment was completed. Aggrieved by this, the assessee went on appeal before the Commissioner of Income Tax (Appeals) questioning the reopening of the assessment on merits as well as on non compliance of the requirements under Section 143(2) of the Act.
4. The first Appellate Authority upheld the reopening of the assessment under Section 147 of the Act. On the quantum, the Commissioner of Income Tax (Appeals) granted partial relief. reassessment. As against the same, assessee filed an appeal before the Income Tax Appellate Tribunal. The Revenue too on its part filed the appeal as against the order of the Commissioner of Income Tax (Appeals) granting partial relief to the assessee. The Tribunal pointed out that the Assessing Officer had not issued notice under Section 143(2) of the Act before completing the assessment. Placing reliance on the decision of this Court rendered in CIT v. M.CHELLAPPAN T.C.(A).No. 696 to 698 and 707 to 709 of 2004 dated 9.11.2004, the Tribunal held that completion of the assessment proceedings under Section 143(3) read with 147 without issue of notice under Section 143(2) was bad in law. Hence, the Tribunal cancelled the assessment. In view of the same, jurisdictional issue raised was decided in favour of the assessee. The Revenue's appeal on the merits of the assessment was dismissed. Aggrieved by the same, the Revenue is before this Court.
5. The facts as stated above are not in dispute. As rightly pointed out by the learned counsel for the assessee, even in the matter of finalisation of the assessment under Section 148 of the Act, compliance of the procedure laid down under sections 142 and 143(2) is mandatory vide order dated 17.7.2012 in T.C.(A).No. 159 of 2006 M/s.SAPTHAGIRI FINANCE & INVESTMENTS V. THE INCOME TAX OFFICER, WARD 1(4), KANCHIPURAM. Referring to the Apex Court in the decision reported in 321 ITR 362 ASST. CIT v. HOTEL BLUE MOON holding that completion of the assessment proceedings under Section 143(3) read with 147 without issue of notice under Section 143(2) was bad in law, this Court held that when there was failure on the part of the Revenue from complying with the procedure laid down under Section 143(2) of the Act, the assessment had to fail.
CHITRA VENKATARAMAN,J.
AND K.RAVICHANDRABAABU,J.
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6. As already seen, the facts of the case are no different from the case already decided by this Court. When the assessee had requested the officer to treat the return already filed as one in response to Section 148 proceedings, further proceedings regarding compliance of the procedure under Section 143(2) is mandatory in nature. On the admitted fact position that there was no notice issued under Section 143(2) of the Act, we have no hesitation in confirming the order of the Tribunal. Consequently, T.C.(A).No. 1183 of 2006 is dismissed.
7. In view of the decision taken in T.C.(A). No. 1183 of 2006, T.C.(A). No. 1186 of 2006 is also dismissed. There is no necessity to go into the merits of the assessment. Accordingly, both the appeals are dismissed. No costs.
(C.V.,J) (K.R.C.B.,J)
03.09.2012
Index : Yes/No
Internet : Yes/No
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To
1. The Income Tax Appellate Tribunal 'A' Bench.
2. The Commissioner of Income Tax, Chennai
Tax Case (Appeal) Nos.1183 & 1186 of 2006