Income Tax Appellate Tribunal - Ahmedabad
Mohammed Zuber Pathan, Baroda vs Income Tax Officer,Ward-2(1),, Baroda on 9 December, 2016
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'एस.एम.सी', अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH, AHMEDABAD आर.पी.तोलानी, या यक सद य।
BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER Sl. ITA No(s) Assessment Appeal(s) by Nos Year Appellant vs. Respondent Appellant Respondent
1. 127/Ahd/12 2005-06 Shri Kairfulhusan ITO B.Pathan Ward-2(1), Ramwadi Chistiya Nagar Baroda Chhani Road Baroda - 390 001 PAN: ALVPP 0082D
2. 128/Ahd/12 2005-06 Shri Hoshiyaralam -do-
301-Balaji Avenue
-address same as above-
PAN: ADHPP 6532 E
3. 129/Ahd/12 2005-06 Shri Nakialam -do-
Indrishkhan Pathan
-address same as above-
PAN: ALUPP0600 J
4. 130/Ahd/12 2005-06 Shri Abdulhassan -do-
Indrishkhan Pathan
-address same as above-
PAN: ALVPP0099G
5. 131/Ahd/12 2005-06 Shri Salimkhan Alamgir -do-
Pathan, Baroda
-address same as above-
PAN: AEYPP3027Q
6. 132/Ahd/12 2005-06 Shri Zakirkhan -do-
Jahurkhan Pathan
-address same as above-
PAN: ALYPP 0510 F
7. 133/Ahd/12 2005-06 Shri Tahhabralikhaa A. -do-
Pathan, Baroda
-address same as above-
PAN: BEPPP 6884 M
8. 134/Ahd/12 2005-06 Shri Samsulhafiz M. The ITO ITA Nos.127 to 139/Ahd/2012 Shri Kairfulhusan B. Pathan and 12 Ors. vs.ITO Asst.Year- 2005-06 -2- Pathan, Baroda Ward-2(1) PAN: BDXPP 6260J Baroda
9. 135/Ahd/12 2005-06 Shri Mohamad Taki -do-
Bhurekhan Pathan, Baroda
-address same as above-
PAN: BDXPP6302H
10. 136/Ahd/12 2005-06 Shri Anwar Akhtar -do-
Shaikh, Baroda PAN: AXEPS 0016 M
11. 137/Ahd/12 2005-06 Shri Mohd Akthar Mohd. -do-
Ismail Shaikh PAN: CMUPS 3471 H
12. 138/Ahd/12 2005-06 Shri Harunbhai Ishabhai -do-
Shaikh, Baroda PAN: BJHPS 3760 E
13. 139/Ahd/12 2005-06 Shri Mohammed Zuber -do-
Pathan, Baroda
PAN: AIYPP0375P
Assessee by : Mr. Anil R. Shah, AR
Revenue by : Mr. Jayant Jhavori, Sr.DR
ु वाई क तार ख /
सन Date of Hearing 08/12/2016
घोषणा क तार ख /Date of Pronounce ment 09/ 12 /2016
आदे श / O R D E R
The present thirteen appeals have been filed by the different assessees are directed against the consolidated order of the Commissioner of Income Tax (Appeals)-II, Baroda [CIT(A) in short] dated 21/10/2011 pertaining to Assessment Year (AY) 2005-06. Since common issues are involved and also inter-connected in all these appeals, these appeals ITA Nos.127 to 139/Ahd/2012 Shri Kairfulhusan B. Pathan and 12 Ors. vs.ITO Asst.Year- 2005-06 -3- were heard together and are being disposed of by a common order for the sake of convenience.
2. Common grounds are raised in the appeals that the ld.CIT(A) erred in law and on the facts of the case (extracted from ITA No.127/Ahd/2012 AY 2005-06 in the case of Shri Kairfulhusan B.Pathan).
(i) Provisions of Sec.292BB inserted w.e.f. 1.4.2008 are not applicable in the case of assessee for A.Y. 2005-06. The order passed without issue of notice u/s.143(2) therefore being erroneous should be treated as null and void.
(ii) The AO himself did not have reason to believe that the income has escaped assessment in the case of assessee and therefore provisions of sec.147 are not applicable in this case.
The reopening of the case therefore, is not in accordance with the provisions of law.
(iii) Confirming the addition of capital contribution made by assessee in partnership-firm.
(iii) Not allowing the set off of income/saving of earlier and current year.
(iv) Income as assessed the AO on regular and agricultural income.
3. The ld.Counsel for the assessee, at the outset, contends that all these issues are common in all the appeals and the ld.CIT(A) has passed a consolidated order dated 21/10/2011 naming all the assessees. It is also contended that by ground No.(i) the assessee has challenged the validity ITA Nos.127 to 139/Ahd/2012 Shri Kairfulhusan B. Pathan and 12 Ors. vs.ITO Asst.Year- 2005-06 -4- of reassessment as no notice u/s.143(2) of the Act which is mandatory was ever served on the assessee. This issue is clear from the remand report submitted by ld.Assessing Officer (AO) in all these cases which reads as under:-
"4.1.1. A factual report was called for from the Assessing Officer in this regard. The Assessing Officer vide letter dated 20.09.2011, has replied as under:-
"On verification of the case record, it is seen that the notice u/s.143(2) was not issued in this case. However, in response to the notice u/s.148 dated 05/08/2008 of the IT Act the assessee has filed return of income on 29.12.2009 and attended the hearing on 27.10.2009, 12.11.2009, 14.12.2009 and 28.12.2009 though his authorized representative Sh. Navnit G.Shah, CA and the order sheet noting clearly shows that the assessment proceeding were duly recorded and proper opportunity have been provided to furnish the details/explanation in respect of proposed addition. This proves that the assessee is fully aware of all facts and circumstances of the case. More importantly, the assessee has not raised any objection regarding the non-issuance of notice u/s.14392) of the IT Act during the course of assessment proceeding. Therefore, the provisions of section 292BB squarely apply in this case and therefore, the ground taken by the assessee at the appellate stage is not tenable and on this basis assessment cannot be void."
4. The ld.CIT(A), however, without disputing the remand report upheld the reassessment proceedings relying on section 292BB of the Income Tax Act, 1961 (hereinafter referred to as "the Act") by following observation:-
ITA Nos.127 to 139/Ahd/2012 Shri Kairfulhusan B. Pathan and 12 Ors. vs.ITO Asst.Year- 2005-06 -5- 4.1.2. In the rejoinder to the Assessing Officer's report, the Authorized Representative has submitted as under:-
"The assessing officer has also very well confirmed, that notice u/s.143(2) was not issued in this case. The assessing officer has also mentioned that the provisions of Se.292BB squarely apply in this case and therefore, the ground taken by the assessee at appellate stage is not tenable. In this regard this is to submit that Sec.292BB deals with non serving of notice and not with non issuance of notice. In the case of assessee and other appellants notice U/S. 143(2) have not been issued ab-initio and hence passing of order u/s.143(3) without issue of notice u/s.143(2) makes the order null and void. Without prejudice, this is further submitted that Sec.292 BB has been inserted w.e.f. 1.4.2008 whereas the assessments are for A.Y. 2005-06 and therefore, provisions of sec.292 BB are not applicable to the assessee and other appellants."
4.2. I have considered the submission of the Learned Authorized Representative, the order of Assessing Officer and the remand report. Since section 292 BB was inserted w.e.f. 01.04.2008 i.e. before the date of issue of notice u/s.148, these provisions will apply to the present case and all cases initiated after the date of insertion of this section, irrespective of the A.Y. they relate to. Further, the Assessee's contention that section 292BB cures only the non-service of notice and not the nonissue of notice, is not acceptable. Qua the assessee, both situations are in effect the same. In fact, Hon'ble Punjab & Haryana High Court in the case of CIT vs. Ram Narain Bansal 13 Taxmann.com 216 (Punjab and Haryana), has very clearly held that :-
"where assessee had participated in reassessment proceedings without raising any objection regarding ITA Nos.127 to 139/Ahd/2012 Shri Kairfulhusan B. Pathan and 12 Ors. vs.ITO Asst.Year- 2005-06 -6- issuance and service of notice under section 143(2), reassessment order could not be held invalid for non- issuance of notice under section 143(2)".
4.2.1. It is an undisputed fact that no objection to the non-issue of notice u/s.143(2) was taken during re-assessment proceedings and the Assessee appeared and submitted the details and participated in the proceedings. The Learned Authorized Representative accepted this fact vide order sheet entry date 04.10.2011. Hence the objection of the appellate is not valid and this ground of appeal is fails."
4.1. It is further contended that the view taken by the ld.CIT(A) is contrary to the consistent view held by the Hon'ble Jurisdictional Gujarat High Court in the following cases:-
Sl.No(s) In the case of..... Reported in
1. CIT vs. Sukhini P. Modi (2014) 367 ITR 682 (Guj.)
2. CIT vs. Panorama Builders (P.) Ltd. (2014) 45 taxmann.com 159 (Guj.)
3. CIT vs. Bharat G.Patel (2014) 43 taxmann.com 90 (Guj.) 4.2. In the case of Panorama Builders (P.)Ltd.(supra), the Hon'ble Gujarat High Court held as under:-
"13. In this tax appeal, we find that on 6.10.2004 the assessee had furnished his return under section 139. The notice under section 143(2) could be issued by the Assessing Officer, [as per the provisions as existed in the year 2004, ITA Nos.127 to 139/Ahd/2012 Shri Kairfulhusan B. Pathan and 12 Ors. vs.ITO Asst.Year- 2005-06 -7- 2005 and 2006] within 12 months from the end of the month in which return is furnished, that is to say on or before 31.10.2005. But the notice under proviso to section 143(2) was issued on 6.7.2006, after about 20 months. Under proviso to under section 143(2) the notice under section 143(2) was issued after the expiry of statutory period of 12 months from the end of the month in which return was filed, therefore, if the notice itself has not been issued within statutory time limit of 12 months, there was no question of deemed service of the notice within the statutory period fixed by the proviso to section 143(2) of the Act. Therefore, to such a case, section 292BB will not come to aid of the Revenue, even if we take a view that section 292BB would apply retrospectively Resort cannot be taken by the Revenue to section 292BB to give a go-bye to mandatory requirement of issuance of notice within the statutory fixed by the proviso to section 143(2) of the Act.
14. Therefore, we are of the considered opinion that section 292BB does not apply to issuance of notice, neither it cures the defect or enlarges statutory period where a mandatory notice under section 143(2) of the Act is required to be issued within limitation fixed under the Act. In absence of issuance of the notice under the proviso to section 143(2) of the Act within a period of 12 months from the end of the month in which return was furnished by the assessee, the proceedings initiated by the Assessing Officer with regard to block assessment period 1.4.1997 to 25.7.2002 on the basis of notice issued on 6.7.2006 under section 143(2), after about 20 months, was time barred and the entire proceedings in pursuance of such notice is null and void.
15. For the reasons given above, we do not find that any of the three questions raised by the Revenue in this appeal raises any substantial questions of law. This appeal is devoid of any merits and is accordingly dismissed."
4.3. The Hon'ble Gujarat High Court in the case of Bharat G.Patel (supra), vide order dated 28/01/2014 relying on the judgment of Hon'ble Supreme Court in the case of Asst.CIT vs. Hotel Blue Moon (2010) 321 ITR 362 :: 188 Taxman 113, to the same view there are provisions of section 292BB of the Act is not applicable of non-issuance of notice u/s.143(2) of the Act. The Hon'ble Gujarat High Court held as under:-
ITA Nos.127 to 139/Ahd/2012 Shri Kairfulhusan B. Pathan and 12 Ors. vs.ITO Asst.Year- 2005-06 -8- "6. Having heard learned counsel Mr. Varan Patel and having perused the documents on record, we have no hesitation in confirming the decision of the Tribunal.
7. Admitted facts are that for the block assessment, the Assessing Officer did not issue notice under section 143(2) of the Act within the time permitted.
Though such notice was issued, it was delayed by over six months. It is well settled by the decision of the Supreme Court in the case of Hotel Blue Moon (supra) that notice under section 143(2) would be mandatory even in case of block assessment proceedings. It was held that issuance of notice is mandatory, it is the notice which is the very foundation of the jurisdiction of the Assessing Officer. It was held that notice under section 143 would be necessary to check the return if the assessment is to be completed under section 143(3) read with section 158BC. Notice under section 143(2) should be issued within one year from the date of filing of the block return. Omission on the part of the Assessing Officer to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable, and therefore, the requirement of notice cannot be dispensed with. It was further held and observed as under:-
'16. The case of the Revenue is that the expression" so far as may be apply" indicates that it is not expected to follow the provisions of section 142, sub-sections (2) and (3) of section 143 strictly for the purpose of block assessments. We do not agree with the submissions of the learned counsel for the Revenue, since we do not see any reason to restrict the scope and meaning of the expression "so far as I may be apply". In our view, where the Assessing Officer in repudiation of the return filed under section / 158BC(a) proceeds to make an enquiry, he has necessarily to follow the provisions of section 142, subsections (2) and (3) of section 143.'
8. In view of this position, failure on the part of the Assessing Officer to issue notice within the prescribed time must vitiate the assessment order. Counsel for the Revenue however, harped upon the Assessing Officer having issued notice though belatedly and the assessee having participated in the assessment proceedings.
ITA Nos.127 to 139/Ahd/2012 Shri Kairfulhusan B. Pathan and 12 Ors. vs.ITO Asst.Year- 2005-06 -9-
9. He would draw our attention to section 292BB of the Act to contend that in view of the substantial compliance with the procedural requirement and in view of the assessee's participation in the assessment proceedings, no invalidity to the assessment order should be attached.
10. We are unable to accept the contention. We have noticed that Supreme Court in the case of Hotel Blue Moon (supra) has held that even in case of block assessment notice is mandatory and the very notice gives jurisdiction to the Assessing Officer. The time limit for issuing such notice has also been specified. In view of the Assessing Officer failing to issue notice within time limit merely because the assessee participated or that the notice was issued later on would not cure the jurisdictional defect. What would be the position in view of the provisions of section 292BB of the Act is not necessary for us to opine since such provision was introduced only with effect from 1.4.2008, and therefore, was not in the statute book during the period under consideration. In the result, Tax Appeal is dismissed."
5. The Ld.DR contended that the case of Sukhini P.Modi pertaining to AY 1996-97 which is prior to amendment in section 292BB of the Act.
6. I have heard the rival submissions on ground No.1. In my considered view, even if the amended provisions of section 292BB of the Act does not have any impact on the issue that section 292BB procures procedural aspects. It is settled proposition of law that service of notice u/s.143(2) is mandatory for valid requirement to assume jurisdiction to frame a proper assessment. In the admitted position of non-service of notice u/s.143(2) of these cases, it cannot be assumed that AO invested himself that valid jurisdiction to frame the assessment. This view has been unequivocally echoed by Hon'ble Jurisdictional Gujarat High Court in the case of Panorama Builders (P.) Ltd.(supra). Respectfully ITA Nos.127 to 139/Ahd/2012 Shri Kairfulhusan B. Pathan and 12 Ors. vs.ITO Asst.Year- 2005-06
- 10 -
following them, it is held that the non-service of notice u/s.143(2) of the Act, divest the AO from framing the impugned reassessment in the cases of all the assessees, consequently they are quashed. Since I have held the reassessment under appeals to be bad in law, there is no necessity to adjudicate other issues on the merits.
7. In the result, all the thirteen appeals of the assessees are allowed.
This Order pronounced in Open Court on 09 / 12 /2016 Sd/-
आर.पी.तोलानी
( या यक सद य)
( R.P. TOLANI)
JUDICIAL MEMBER
Ahmedabad; Dated 09/ 12 /2016
ट .सी.नायर, व. न.स./T.C. NAIR, Sr. PS
आदे श क त!ल"प अ#े"षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. ()यथ / The Respondent.
3. संब,ं धत आयकर आय.
ु त / Concerned CIT
4. आयकर आय.
ु त(अपील) / The CIT(A)-II, Baroda
5. /वभागीय ( त न,ध, आयकर अपील य अ,धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड5 फाईल / Guard file.
आदे शानुसार/ BY ORDER, स)या/पत ( त //True Copy// \ उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad