Income Tax Appellate Tribunal - Ahmedabad
M.S. Khurana Engineering Limited,, ... vs The Acit, (Osd)-I, Range-4,, Ahmedabad on 9 October, 2018
ITA No.1606 & 1607/Ahd/2014
MS Khurana Engg Ld Vs. ACIT (OSD)
Assessment year: 2005-06 & 2006-07
Page 1 of 6
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "A" BENCH, AHMEDABAD
[Coram: Pramod Kumar AM and Mahavir Prasad JM]
ITA Nos. 1606 & 1607/Ahd/2014
Assessment Year: 2005-06 & 2006-07
M S Khurana Engineering Limited ..............................Appellant
2nd Floor, "MSK",
Passport Office to Panjrapole Road,
Ambawadi, Ahmedabad - 380 015
[PAN : AABCM 4514 F]
Vs.
ACIT (OSD)-I ...........................Respondent
Range -4, Ahmedabad
Appearances by:
SN Soparkar & Urvashi Shodhan, for the Appellant
Rajdeep Singh, for the Respondent
Date of concluding the hearing : 11.07.2018
Date of pronouncing the order : 09.10.2018
O R D E R
Per Pramod Kumar, AM:
1. By way of these appeals, the assessee appellant has challenged correctness of learned CIT(A)'s common order dated 24.02.2014 in the matter of assessments under section 143(3) r.w.s 147 of the Income-tax Act, 1961 for the assessment years 2005-06 and 2006-07.
2. A common set of grievance raised in both the appeals is as follows:-
"2. Regarding notice u/s 143(2) 2.1 The Learned Commissioner of Income Tax (Appeals)-VIII, Ahmedabad erred in upholding validity of reassessment although neither formal notice u/s 143(2) was issued by the Assessing Officer nor is it mentioned in reassessment order.
2.2 The Learned Commissioner of Income Tax (Appeals)-VIII, Ahmedabad erred in treating show-cause notice issued by the Assessing Officer as notice u/s 143(2) of the Act."
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3. There is no dispute about the fact that notices under section 143(2) are issued in these cases. Yet, the assessments are completed in section 143(3) and the CIT(A) has confirmed the action by observing as follows:-
"2.3.1.2 The second ground of appeal for this year is regarding the non- issuance of notice under section 143(2). The appellant has claimed that no statutory notice under section 143(2) was issued by the AO. I have examined the case records and various submissions given by the appellant. The appellant has also submitted a chart showing sequence of relevant rates which has enabled me to examine the issue properly. It is noted that the notice under section 148 was issued on 30/03/2011. Thereafter the appellant filed an objection letter demanding reasons recorded under section 148 on 11/04/ 2011. The appellant did not file return at the time. Thereafter the AO disposed the objection raised by the appellant on 18/04/2011. The appellant thereafter also did not file any return of income nor replied to the objections disposed by the AO. Thereafter since the appellant did not file any return of income the AO went ahead with the assessment proceedings and issued a show cause notice on 03/11/2011. Subsequently after receiving the show cause notice, which asked for certain details on verification in respect of the claim of 80 I-A(4) made by the appellant the appellant, filed the return of income on 22/11/2011 by indicating that the original return filed may be treated as return filed in compliance of notice under section 148. The above sequence of events clearly show that though the assessment has been completed without any formal statutory notice under section 143(2) no illegality has been done by the AO. The appellant did not file any return of income in response to the notice under section 148 and therefore, the AO proceeded ahead with the assessment of the undisclosed income in response to notice under section 148. He issued a show cause notice before filing of the return. Therefore, when the appellant filed the return of income after receipt of show cause notice the return was not a valid return as it was filed beyond the time provided for filing of return under section 148 and also it was filed after the date of issue of show cause notice and questionnaire by the appellant. All the judgements of various courts regarding non-issue of notice u/s. 143(2) have different facts. In all those cases, the assessee had filed the returns and thereafter, the AO proceeded with assessment without issuing the notice under section 143(2). The reliance placed by the appellant on the judgements mentioned by it in the written submission are therefore, respectfully distinguished. Therefore, in my considered opinion the AO has not committed any illegality in completing the proceedings in the case of the appellant. The claim of the appellant that no notice under section 142 (1) was issued is also not valid as the show cause notice issued by the AO is a questionnaire and there is no necessity to write any section on the notice issued. The AO might have inadvertently not mentioned the section as the Income tax Act does not prescribe any statutory format of the notice under section 142(1). Not mentioning the section will not make the notice invalid. The ground of appeal is accordingly, dismissed.
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2.3.2.2 In second ground of appeal for AY 2006-07 the appellant has submitted that no notice under section 143 (2) was issued and accordingly the assessment without issue of notice is invalid.
I have carefully examined the issue and the related facts. It is noted that the AO issued notice under section 148 on 24/03/2011. Thereafter the AO issued a show cause on 05/08/2011 seeking certain replies from the appellant. In the notice the appellant has been clearly asked as to why the deduction under section 80 I-A claim in the return of income may not disallowed. The AO has also show-caused the appellant regarding the adjustment of credit against the existing demand. Subsequently the AO also issued another show cause notice on 11/11/2011. These proceedings clearly show that the appellant was given due opportunity to explain its case and no prejudice has been caused. It is further observed that notice under section 143(2) is a non-statutory notice and no fix format has been given for that notice in the Income Tax Act. The AO had issued to notices within one year from the date of filing of return under section 148. These notices were not issued under any specific section but were related to the subject matter and was regarding the claim of deduction u/s. 80 I-A(4) made by the appellant in the return of income. Therefore, these notices are sufficient compliance of the provisions of section 143(2). Further it is noted that the appellant has duly taken part in the assessment proceedings. It submitted replies to the show cause notices issued. The appellant cannot now raise the ground that it has not been given an opportunity to present its case. The notices/show-cause issued by the AO are sufficient compliance for issue of notice U/s 143(2). The appellant has submitted that the submissions for this ground of appeal for this year are similar to those furnished for A Y 2005-06. I have already dealt with the submissions of the appellant for that year while disposing the grounds of appeal for that year in the preceding discussion. Therefore, for the sake of brevity the same is not repeated here.
In view of the above discussion, the ground of appeal is dismissed."
4. The assessee is not satisfied and is in further appeal before us.
5. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.
6. We find that the issue in appeal is squarely covered by Hon'ble jurisdictional High Court 's judgment in the case of CIT vs. Panorama Builders Pvt Ltd [(2014) 45 taxmann.com 159 (Guj)] wherein Their Lordships have observed as follows:-
"11. The learned counsel for the Revenue has relied on the decision of the Madhya Pradesh High Court in Premium Capital Market & Investment Ltd.'s (supra). In this case, the assessee has alleged that the notice under ITA No.1606 & 1607/Ahd/2014 MS Khurana Engg Ld Vs. ACIT (OSD) Assessment year: 2005-06 & 2006-07 Page 4 of 6 section 143(2) was not served on him. The Division Bench took the view that with regard to service of notice, the assessee has not taken any objection either before the Assessing Officer or before the CIT(A) and the assessee had submitted to the jurisdiction of the Assessing Officer, therefore, the notice could not be said to be invalid on the ground that it was not served upon the assessee within time stipulated by the section. It further held that no such ground was not taken in the appeal. The Court was of the opinion that even before the Tribunal, a point was not raised in the memo of appeal, but was sought to be raised by way of an amendment. The Division Bench came to the conclusion that whether the notice was properly served or not on the assessee was a mixed question of law and fact and the Tribunal should not have allowed the assessee to raise the plea of service of notice for the first time in second appeal as an additional ground when there was no factual material available for recording a finding on the merits.
12. The decision in Premium Capital Market & Investment Ltd.'s case (supra) is not applicable to the facts of case in hand. From the facts of the instant case it is clear that no notice was issued at all under 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. Therefore, there was no question of service of any notice on the assessee within the time frame fixed by the proviso to section 143(2) of the Act. No doubt, the assessee had not raised any objection before the Assessing Officer with regard to validity of notice under section 143(2), but in appeal before the CIT(A), he had raised this question which had been accepted by the CIT(A) and the Tribunal has also affirmed the finding. The assessee could have challenged the notice issued 6.7.2006 under section 143(2) before CIT(A) as it was related with the jurisdiction of the Assessing Officer. The question raised by the assessee went to the root of the power and jurisdiction of the Assessing Officer, who had no power to issue the notice under section 143(2) after the expiry of 12 months statutory period from the end of the month in which return was furnished by the assessee under section 139 of the Act.
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, 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 ITA No.1606 & 1607/Ahd/2014 MS Khurana Engg Ld Vs. ACIT (OSD) Assessment year: 2005-06 & 2006-07 Page 5 of 6 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."
7. It is now a settled legal position that issuance of notice under section 143(2) is a sine qua non for assuming jurisdiction to frame the assessment under section 143(3). Hon'ble Supreme Court, in the case of ACIT vs. Hotel Blue Moon [(2010) 321 ITR 362 (SC)], has upheld this proposition.
8. In view of the above discussions, and bearing in mind entirety of the case, we uphold the plea of the assessee and quash the impugned assessment itself. As the assessment itself is quashed, there is no need to deal with the other grounds of appeal on merits. That aspect of the matter is wholly academic as on now.
9. In the result, the appeals are allowed. Pronounced in the open court today on the 9th October, 2018 Sd/- Sd/-
Mahavir Prasad Pramod Kumar
(Judicial Member) (Accountant Member)
Ahmedabad, the 9th day of October, 2018
**bt
Copies to: (1) The appellant
(2) The respondent
(3) Commissioner
(4) CIT(A)
(5) Departmental Representative
(6) Guard File
By order
TRUE COPY
Assistant Registrar
Income Tax Appellate Tribunal
Ahmedabad benches, Ahmedabad
1. Date of dictation: ....09.10.2018.......
2. Date on which the typed draft is placed before the Dictating Member: ... 09.10.2018....
3. Date on which the approved draft comes to the Sr. P.S./P.S.: ...09.10.2018.......
4. Date on which the fair order is placed before the Dictating Member for Pronouncement: .. ... 09.10.2018...
5. Date on which the file goes to the Bench Clerk : . ...09.10.2018.
6. Date on which the file goes to the Head Clerk : ..................................
7. The date on which the file goes to the Assistant Registrar for signature on the order: ....
8. Date of Despatch of the Order: ........................ ITA No.1606 & 1607/Ahd/2014 MS Khurana Engg Ld Vs. ACIT (OSD) Assessment year: 2005-06 & 2006-07 Page 6 of 6