Allahabad High Court
The Commissioner Of Income ... vs M/S Bora Polyclinic Pvt. Ltd. on 5 July, 2010
Author: Devi Prasad Singh
Bench: Devi Prasad Singh
[1]
High Court of Judicature at Allahabad Lucknow Bench Lucknow
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A.F.R.
Court No. - 27
1. Case :- INCOME TAX APPEAL No. - 134 of 2005
Appellant :- The Commissioner Of Income Tax-I,Lucknow
Respondent :- M/S Bora Polyclinic Pvt. Ltd.
Appellant Counsel :- D.D. Chopra,
Respondent Counsel: Jaideep Narain Mathur
AND
2. Case :- INCOME TAX APPEAL No. - 135 of 2005
Appellant :- The Commissioner Of Income Tax-I,Lucknow
Respondent :- M/S Bora Polyclinic Pvt. Ltd.
Appellant Counsel :- D.D. Chopra
Respondent Counsel: Jaideep Narain Mathur
Hon'ble Devi Prasad Singh,J.
Hon'ble S.C. Chaurasia,J.
[Delivered by Hon'ble Mr. Justice Devi Prasad Singh]
1. Heard Sri D.D. Chopra, learned counsel for the appellant and Sri J.N. Mathur, learned Senior Counsel on behalf of the respondent and perused record.
2. Since common question of law are involved in both the appeals, with the consent of parties counsel, we proceed to decide present appeals by the present common judgment.
3. The respondent assessee, a Company, runs a Hospital at Sitapur Road, Lucknow. The income tax returns for the assessment year 1998-99 and 1999-2000 were filed showing loss of Rs.221974.00 which was processed under Section 143 (1) of the Income Tax Act (In short the Act). The assessment for both the assessment years, were reopened under Section 148 of the Act and notice under Section 148 of the Act was issued on 8.3.2002. A notice under Section 142 (1) was also issued on 28.1.2003 and the assessment was completed under Section 147/148 of the Act on 13.3.2003 on the total income of Rs.27,44,310.00 and Rs.27,54,870.00 for both years. The assessee preferred appeal which was rejected by the appellate [2] authority. Hence the assessee approached the Tribunal.
4. It has been stated by Sri J.N. Mathur, learned Senior Counsel that before the appellate authority, a plea was raised by the assessee that on account of non-issuance of notice under Section 143 (2) of the Act, the entire assessment vitiates. Submission is that in spite of raising plea, the appellate authority has not considered substantial question of law. Before the Tribunal, the same plea was raised and the Tribunal allowed the appeal with the finding that since no notice was issued under Section 143 (2) of the Act, the entire assessment vitiates.
5. Feeling aggrieved, Revenue appellant filed the present appeals.
By the order dated 17.10.2005 passed by a Division Bench of this Court, the appeals were admitted on the following substantial question of law numbered as No.1, 2 and 6:
I. Whether the learned Income Tax Appellate Tribunal was justified in holding that the assessments completed u/s 143 (3)/147 read with Section 148 are not valid when the ratio of M/s. Nawal Kishor & Sons Jeweller V/s. DCIT, Central Circle-VI, Kanpur by the Income Tax Appellate Tribunal (Special Bench), Lucknow camp at New Delhi clearly held that non issuance of notice u/s 143 (2) is not a nullity but is an irregularity.
II. Whether where the assessing officer makes assessments or reassessment u/s 147 of the Income Tax Act, 1961 and where all the provisions of Sections 148 to 153 have been duly complied with, the learned Income Tax Appellate Tribunal was justified in imposing another condition that the provisions of Section 143 (2) of the Income Tax Act 1961 are also required to be complied with. III. Whether the learned Income Tax Appellate Tribunal has failed to appreciate that the assessee had acquiesced in or waived an irregularity, if any, in the notice under section 143 (2) of the Income Tax Act, 1961 by participating in the assessment proceeding before the assessment officer without agitating the issue of non-issuance of the said notice and ignoring the law laid down by the Hon'ble Gujrat High court in the case of Setlavad Brothers. Vs. M. K. Meerani, ACIT (2002) 253 [3] ITR, 513.
6. While assailing the impugned order of Tribunal, it has been vehemently argued by Sri D.D. Chopra that this plea was never raised by the assessee before the assessing authority. He relied upon the judgment reported in (2003) 301 ITR 301 ITR 301 (Ker): K.J. Thomas. Vs. Commission of Income Tax.
7. It has been submitted by the learned counsel for the appellant that non-issuance of notice under Section 142 (1) is regulatory or directory. It shall not affect the merit of the case. It has further been stated that the matter should be remanded by this Court.
8. On the other hand, Sri J.N. Mathur, learned Senior counsel appearing for respondent, has relied upon the judgment and order dated 24.5.2010 passed by this Division Bench in Income Tax Appeal No.19 of 2004( Commissioner Of Income Tax-Ii Lucknow. Vs. Rajeev Sharma, Lucknow) and Income Tax Appeal No.19 of 2004( Commissioner Of Income Tax-Ii Lucknow. Vs. Rajeev Sharma, Lucknow) as well as recent judgment of Hon'ble Supreme Court in (2010) 3 SCC 259:
Assistant Commissioner of Income Tax & another. Vs. M/s. Hotel Blue Moon). Submission of respondent's counsel is that provisions of Section 143 (2) of the Act is mandatory and non- issuance of notice shall vitiate the assessment. In the case of Rajiv Sharma (supra), after considering the catena of judgments of various High Courts as well the Hon'ble Supreme Court, it has been held that the provisions of Section 143 (2) of the Act, is mandatory. It has been further held that non-issuance of notice is not procedural irregularity and the same is not curable. Therefore, requirement of notice under Section 143 (2) of the Act, cannot be dispensed with. Relevant portion from the judgment of Rajiv Sharma (supra) is reproduced as under:
"49. In the case of R. Dalmia (supra), Hon'ble Supreme court held that for assessment or re-assessment under Section 147 of the Act, the procedure laid down in Section 139 including Section 144 B [4] should be followed. To reproduce relevant portion from the judgment of R. Dalmia as under:
"As to the argument based upon sections 144A, 246 and 263, we do not doubt that assessments under section 143 and assessments and reassessments under Section 147 are different, but in making assessments and reassessments under section 147 the procedure laid down I n sections subsequent to section 139, including that laid down by section 144B, has to be followed"
50. In the case of Rama Singh, the High Court has reiterated the principle of law that while proceeding with the escaped assessment under Section 148, the procedure under Section 139 should be followed.
51. In the case of J.M. Scindia (supra) Hon'ble Supreme court has held that provisions contained in Section 143 (2) with regard to undisclosed income applies. Hon'ble Supreme Court further held that provisions contained under Section 143 (2) cannot be dispensed with. Relevant portion of the judgment of J.M. Scindia is reproduced as under:-
"...However, if an assessment is to be completed under s. 143 (3) r/w s.
158BC, notice under s. 143 (2) should be issued within one year from the date of filing of block return.
Omission on the part of the assessing authority to issue notice under s. 143 (2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under s. 143 (2) cannot be dispensed with."
9. In the case of Hotel Blue Moon (supra), their lordships of Hon'ble Supreme Court, after considering various provisions of the Act and in earlier cases, observed that provisions contained in Section 143 (2) is mandatory. Relevant portion from the judgment of Hon'ble Supreme Court in the case of Hotel Blue Moon (supra), is reproduced as under:
"15. ... However, if an assessment is to be completed under Section 143 (3) read with Section [5] 158-BC, notice under Section 143 (2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under Section 143 (2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143 (2) cannot be dispensed with."
10. In view of the above, keeping in view the judgment of Hon'le Supreme Court in the case of Hotel Blue Moon (supra) and the judgment of this Court, the argument raised by the appellant's counsel, does not seem to be sustainable. Once their lordships of Hon'ble Supreme Court settled that non-issuance of notice under Section 143 (2) is not curable, then it is not open for the appellant to proceed afresh.
11. In view of the above, both the appeals fail and are hereby dismissed. The substantial questions framed in these appeals, are answered in favour of the assessee.
[Justice Devi Prasad Singh]
Order Date :- 5.7.2010
Rajneesh) [Justice S.C. Chaurasia]