Income Tax Appellate Tribunal - Chennai
Amarchand Dilipchand, Tiruvannamalai vs Wto Ward 1, Tiruvannamalai on 25 February, 2022
आयकर अपीलीय अिधकरण, 'बी' यायपीठ, चे ई IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, CHENNAI ी महावीर संह, उपा य एवं ी मनोज कुमार अ वाल, लेखा सद य के सम BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER धनकर अपील सं./WTA Nos.: 51, 52 & 53/CHNY/2017 नधारण वष /Assessment Years: 2011-12, 2012-13 & 2013-14 Shri Amarchand Dilipchand, The Wealth Tax Officer, No.402/105, Car St., v. Ward-1, Tiruvannamalai - 606601 Thiruvannamalai.
PAN : AADPD 9553G
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ क ओर से/Appellant by : Shri K. Balasubramanian, Advocate
यथ क ओर से/Respondent by : Shri P. Sajit Kumar, JCIT
सन
ु वाई क तार ख/Date of Hearing : 17.02.2022
घोषणा क तार ख/Date of Pronouncement : 25.02.2022
आदे श /O R D E R
PER MAHAVIR SINGH, VP:
These three appeals by the assessee, relating to Wealth Tax, are arising out of the different orders of Commissioner of Wealth Tax (Appeals)-13, Chennai in ITA No.85, 86 & 87/CIT(A)- 13/2011-12 vide orders of even date 01.08.2017. The assessments were framed by the Wealth Tax Officer, Ward-1, Thiruvannamalai for the relevant assessment years 2011-12, 2 W.T.A. Nos. 51 to 53/CHNY/2017 2012-13 & 2013-14 u/s. 16(3) r.w.s. 17 of the Wealth Tax Act, 1957 (hereinafter 'the Act') vide orders of even date 30.12.2016.
2. At the outset, the ld.counsel for the assessee drew our attention to the first issue, which is common in all the three appeals, that no notice u/s.16(2) of the Act was issued before proceeding to complete the reassessment and hence, the order of WTO is illegal, void and without jurisdiction. The ld.counsel stated that the facts and circumstances are exactly identical in all the three assessment years and hence, he requested to take up the facts from assessment year 2011-12 in WTA No.51/Chny/2017. The grounds regarding non-issuance of notice u/s.16(2) of the Act before proceeding to complete the re-assessment reads as under:-
1.1 The order of the learned WTO is illegal, void and without jurisdiction in as much as:-
a) No notice u/s 16(2) was issued before proceeding with the reassessment
b) Notice of demand is issued in Form No 7 - under Rule 15 of I. T. Act instead of in FORM C under Rule 4 read worth Sec. 30 of the W.T.Act.
1.2 Learned CT (A) failed to appreciate that notice issued u/s 17(2) dt. 6- 6-2016 cannot be equated to mandatory issue of notice u/s 16(2) and thus he erred in agreeing with the A/O that it is only a typographical error. He further failed to appreciate Sec. 17(2) refers to 'time limit for giving effect asst' and hence issue of a notice under that Sec. cannot be equated to Sec.16(2) under the garb of typographical error and even the alleged 3 W.T.A. Nos. 51 to 53/CHNY/2017 error, was never rectified at any stage of the assessment or appellate proceedings.
1.3 Learned CIT (A) failed to appreciate the fact that notice issued u/s 17(2) on 6-6-2016 precedes the date of filing of return of wealth on 19-8- 2016, filed in response to notice u/s 17 dt.30-3-2016 and hence erred in not declaring the above notice u/s 17(2) as invalid as it cannot precede date of filing a return of wealth.
1.4 He further failed to appreciate that delay in filing Return of wealth has its consequence u/s l7B which cannot over ride the mandatory provision of Sec.16(2).
1.5 Learned CIT (A) erred in relying on Sec.42, which speaks of 'validity of service of notice in certain circumstances' but not on the issue of notice u/s 16(2) and hence his decision in agreeing with the A/O on this issue is incorrect. Even his reliance on Sec.42C is incorrect because the alleged notice u/s 17(2) was issued much before the filing of ROW which notice is invalid one.
3. Brief facts are that the assessee filed his return of wealth for assessment year 2011-12 declaring net wealth at Rs.25,66,600/-. The assessee's case was reopened by issuance of notice u/s.17 of the Wealth Tax Act and reassessment was framed u/s.16(3) r.w.s. 17 of the Act. The AO after granting basic exemption assessed the net wealth at Rs.2,02,80,308/- after making addition on account of true value of the wealth of the Ruby for Rs.64,07,590/-, value of wealth of Navratna Stones at Rs.56,05,500/-, value of wealth of Navratna Beeds at Rs.78,78,000/-, value of wealth of Diamonds at Rs.4,84,000/- and held value of taxable wealth of cash at Rs.3,38,618/-. 4 W.T.A. Nos. 51 to 53/CHNY/2017 Aggrieved, assessee preferred appeal before CWT(A) and CWT(A) dismissed this issue of jurisdiction by observing in para 2 to 6 as under:-
2. In the course of appellate proceedings assessee has contended that no notice u/s 16(2) was issued to the assessee while re-opening the assessment, and re- opening is bad in law. In this connection the Ld. CWT(A)-13 called for relevant records and directed the A.O. to furnish a written reply.
3. In this connection it is submitted that Notice u/s 17 dated 30-03-2016 calling upon the assessee to furnish Return of net wealth within 30 clays from the date of receipt of notice. This statutory notice u/s 17 which is equivalent to Section 148 of Income Tax Act, was followed by Notice u / s 17(2) of the Wealth Tax Act. It is submitted that due to inadvertence instead of 16(2) it was wrongly typed as 17(2). In the Wealth Tax Act Section 17(2) deals with limitation for issue of Notice in order to give effect to the finding and direction of the Appellate Authorities. This has occurred due to typographical error.
4. It is further submitted that assessee has not complied with terms of Notice u / s 17 dated 30-03-2016 by filing Return within 30 days instead he has chosen to furnish the reply on 19-08-2016 stating that Return filed on 23-03-2016 may be treated as the Return filed in response to Notice u/s
17. There is an apparent delay of three and half months. Therefore, pre-
assessment notice u/s 16(4) of the Wealth Tax Act, 1957 dated 10-11- 2016 was issued proposing to consider the enhancement of taxable wealth. In response the assessee filed detailed objections dated 07-12-2016 filed on 22-12-2016.Under the statute there is no necessity for issue of Notice u/s 16(2) when there was no compliance to Notice u/s.17 within 30 days. Further, in the course of proceedings assessee was represented by Shri Rohit Kumar, FCA of M/s Sanklecha Associates, Chennai or 30- 11-2016. In the back ground of pre-assessment notice u/s 16(4) and assessee's appearance through his A/ R on 30- 11-2016. It is submitted that there is no statutory violation by not issuing Notice u/s 16(2). In other words Notice u/s 17(2) dated 06-06-2016 was wrongly typed instead of 16(2). 5 W.T.A. Nos. 51 to 53/CHNY/2017
5. It is submitted that u/s 42 of the Wealth Tax Act 1957, (which is equivalent to Sec. 292BB of the Income Tax Act, 1961), when the assessee has appeared in any proceedings or co-operated in any enquiry relating to assessment, it shall be deemed that notice required to be served is served upon him and the assessee shall be precluded from objecting. The assessee ought to have raised the issue of notice u/s 16(2) in the assessment proceedings and he cannot take recourse to objecting at the appellate stage. As per Section 42C of the Wealth Tax Act which is equivalent to Sec. 292B of the Income Tax Act, notice is valid if correct in substance. In other words notice inadvertently issued u/s 17(2) dated 06- 06-2016 instead of Sec. 16(2) shall not be invalid merely by reason of any mistake, if such notice is substance and effect in conformity with or according to the intent and purpose of the Act.
6. For the reasons stated herein above it is humbly prayed that the Ld. Commissioner of Wealth Tax -- 13(Appeals) may kindly reject the ground of the assessee that no notice u/s 16(2) was issued before finalization of assessments."
Aggrieved, now assessee raised this jurisdictional issue before Tribunal.
4. We have heard rival contentions and gone through facts and circumstances of the case. Admitted fact is that no notice u/s.16(2) of the Act was issued but notice u/s.17(2) of the Act was issued, as admitted by AO in his order clarifying the position vide letter dated 04.04.2017 before CIT(A). This fact is recorded by CIT(A) in his appellate order and not even contested by ld.Senior DR now. We noted that in all the three assessment years, reassessment was completed u/s.16(3) r.w.s.17 of the Act and not ex-parte assessment. Even, it was claimed that the 6 W.T.A. Nos. 51 to 53/CHNY/2017 return filed in response to notice u/s.17 of the Act was not filed within 30 days as mandated by the Act, assessee chose to furnish reply on 19.08.2016 as against the notice u/s.17 dated 30.03.2006 mandated for filing of return within 30 days. But this contention of the Revenue was controverted by relying on the decision of Hon'ble Gujarat High Court in the case of PCIT vs. Marck Biosciences Ltd., Tax Appeal No.1374 of 2018, order dated 04.02.2019. The facts before the Hon'ble Gujarat High Court was recorded in para 5 as under:-
"5. It was the case of the assessee before the Commissioner (Appeals) that the notice under section 143(2) of the Act was issued on 12.03.2010, before the assessee had filed a letter dated 19.07.2010 requesting the Assessing Officer to accept the earlier return filed by it as the return in response to the notice under section 148 of the Act, and, therefore, the notice under section 143(2) of the Act was invalid. The Commissioner (Appeals) called for a report from the Assessing Officer, to which, the assessee filed a rejoinder. Considering the facts as emerging from the record, the Commissioner (Appeals) was of the view that the notice under section 143(2) of the Act, having been issued prior to the filing of the return of income, was invalid. He, accordingly, held that the assessment having been completed without issuance of a valid notice under section 143(2) of the Act is invalid, and consequently, quashed the assessment order."
The Hon'ble Gujarat High Court answered that notice u/s.143(2) of the Act before completion of assessment u/s.143(3) r.w.s. 147 of the Act is a mandatory notice and Hon'ble Gujarat High Court in para 20 observed as under:-
"20. In the facts of the present case also, if the contention of the appellant were to be accepted, it would amount to dispensing with the notice under 7 W.T.A. Nos. 51 to 53/CHNY/2017 section 143(2) of the Act in view of the fact that it is an admitted position that no such notice had been issued after the return of income was filed by the assessee. After the filing of the return of income, unless a notice under section 143(2) of the Act is issued to the assessee, he would have no means of knowing as to whether or not the Assessing Officer has accepted the return of income as filed by him. As held by the Supreme Court in the above decision, omission to issue a notice under section 143(2) of the Act is not a procedural irregularity and is not curable. It is, therefore, mandatory to issue notice under section 143(2) of the Act.
4.1 Further, ld.counsel for the assessee relied on the Co-
ordinate Bench decision of this Tribunal in the case of M/s. Ratna Stores (Firm) in ITA Nos.2576 to 2578/Mds/2016 & 2640 to 2645/Mds/2016 vide order dated 16.11.2018, wherein the view of third member is cited as under:-
"11. Having carefully perused this clause 4 of section 249, I find that once the return is filed, the assessee is bound to pay the tax due on the returned income before filing the appeal before the CIT(A). If he does not pay the tax, appeal filed by it would not be admitted by the CIT(A). In the instant case, undisputedly, the assessee has filed the return of income though not within the period prescribed in the notice issued under section 148 of the Act and has not paid the tax on the returned income while filing an appeal before the CIT(A). Moreover, in section 249(4) there is no reference of valid or invalid return. It talks about the return filed by the assessee. As per provisions of section 139 of the Act, assessee is required to file the return of income before a particular date. Once the return is filed the AO has to take cognizance of the same and if any defects are there, he has to issue a defect memo to the assessee and if defects are not removed despite affording opportunity to the assessee, the AO may declare the return to be invalid return. Under these circumstances, I am of the view that section 249(4), talks about the filing of return. It does not talk about valid or invalid returns. Once the returns are filed, provisions of section 249(4) are to be applied and as per its clause, assessee is required to pay the taxes due on the returned income. If he fails to do so, the CIT(A) may not admit the appeal of the assessee. Though I am not supposed to give a finding in this 8 W.T.A. Nos. 51 to 53/CHNY/2017 regard as the question referred before me is only with regard to validity of return filed beyond the period prescribed in the notice issued under section 148 of the Act. In that regard, 1 am of the view that any return filed in response to notice issued under section 148 whether it may be in time or belated, it is a valid return unless and until the AO declare the same to be invalid return by passing a specific order under section 139(9) of the Act. In the instant case, since the AO has not passed any order under section 139(9) declaring the return filed by the assessee beyond the specified period to be invalid return, the return filed in response to section 148 is a valid return. Accordingly, I hold that the return filed in response to notice issued u/s 148 beyond the prescribed period is not an invalid return."
4.2 Another decision of Hon'ble Karnataka High Court in the case of CWT vs. Prameela Krishna, [2012] 18 taxmann.com 181 wherein exactly on similar facts Hon'ble Karnataka High Court held that notice u/s.16(2) is a mandatory notice and observed as under:-
"5. The assessee instead of producing those documents, then filed a return under Section 16(4)(i) of the Act. The Assessing Authority has not taken note of the said returns filed. He has no other material on record. Even if we were to make an order on best judgment assessment, the proviso to Section 16(5) of the Act mandates that a notice is to be given. The Assessing Authority has neither given a notice under Section 16(2) nor a notice as contemplated in the proviso to Section 16(5) of the Act and has passed the impugned order. Hence, not only the impugned order violates the mandatory provisions of law inasmuch as Section 16(2) of the Act, as rightly held by the Tribunal, but also the order is also violative of principles of natural justice."
4.3 In the present case before us, the facts are exactly identical and admittedly no notice u/s.16(2) of the Act is issued, once notice u/s.16(2) of the Act is not issued, no re-assessment 9 W.T.A. Nos. 51 to 53/CHNY/2017 can be framed u/s.16(3) r.w.s. 17 of the Act. Hence, we quash the re-assessment.
5. Similar are the facts in other two appeals. Hence, taking a consistent view, we quash the re-assessment orders in the assessment years 2012-13 & 2013-14 also.
6. In the result, all the three appeals of the assessee are allowed.
Order pronounced in the court on 25th February, 2022 at Chennai.
Sd/- Sd/-
(मनोज कु मार अ वाल) (महावीर सह )
(MANOJ KUMAR AGGARWAL) (MAHAVIR SINGH)
लेखा सद य /ACCOUNTANT MEMBER उपा य /VICE PRESIDENT
चे ई/Chennai,
दनांक/Dated, the 25th February, 2022
RSR
आदेश क ितिलिप अ ेिषत/Copy to:
1. अपीलाथ /Appellant 2. यथ /Respondent 3. धनकर आयु त (अपील)/CWT(A)
4. धनकर आयु त /CWT 5. वभागीय त न ध/DR 6. गाड फाईल/GF.