Durgadas K. Prabhu Shastri., Mapusa vs Assessee

IN THE INCOME TAX APPELLATE TRIBUNAL,PANAJI BENCH, PANAJI [Before Shri P. K. Bansal, AM & Shri D.T Garasia, JM]

C.O No.59/PNJ/2013 A.Y 2007-08 [arising out of ITA No.178/PNJ/2013]

Shri Durgadas K Prabhu Shastri Vs. A.C.I.T, Circle 1(1), Panaji PAN: AHQPS4691G (Cross Objector/Assessee) (Respondent)

For the Cross Objector/Assessee: Shri Vardhman Jain, CA, ld.AR For the Respondent/Department : Dr. S. Sundaresan, ld.DR

Date of hearing: 14-01-2015 Date of pronouncement: 14-01-2015

ORDER Per Shri P. K. Bansal, AM:

This cross objection has been filed by the assessee by taking the following grounds:-

1. The learned.CIT(A) erred in not adjudicating the ground that the Assessing Officer erred in law and on facts in assuming assessment jurisdiction.

2. The learned CIT(A) erred in law in not adjudicating the ground that the Assessing Officer further erred in law and on facts in assuming jurisdiction u/s 148 and consequently the assessment order passed u/s 147 r.w.s 144 in bad in law.

2. At the outset the ld.AR before us contended that the CIT(A) has not disposed of the grounds taken before him as ground nos. 1 & 2. For this our attention was drawn towards Form No.35 along with the grounds of appeal taken before the CIT(A).

3. The ld. DR was fair enough to concede the position.

4. After hearing rival submissions and going through the order of CIT(A) as well as the grounds of appeal taken by the assessee before the CIT(A), we noted that the assessee has also taken before the CIT(A) following grounds of appeal:-

Ground No.1 The learned Assessing Officer has erred in law and on facts in assuming assessment jurisdiction.

Your Honors' attention is invited to the fact that the original return of the assessee was filed with the ACIT, Circle 1(1), Panaji. The same is acknowledged 2 CO No.59/PNJ/2013-AM [ITA No.178/PNJ/13 A Y '07-08] Shri Durgadas K Prabhu Shastri

by the Range of Additional commissioner of Income Tax, Range 1, Panaji, Goa on 30/08/2007 vide acknowledgement number 0151012607. The return u/sec. 148 was filed on 14/12/2009 has been acknowledge by Income Tax Officer Ward 2(3), Panaji Goa vide acknowledgement number 0241007754.

Similarly, the assessment is proceeded with by issuing a notice under sec 148 dated 20/01/2010 and a notice u/s142(1) dated 22/07/2010 which was, inter alia, asking the appellant to prepare a return of income and file the same before Learned ACIT Circle 1(1).

Before the assessment was completed on 23/12/2010, the Assessing Officer had before him, the return filed on 30/08/2007 as also the return filed on 14/121/2009. Sec 143(2) (ii) of the Income Tax Act 1961 require that the Assessing Officer serve on the assessee a notice requiring him to attend his office or to produce evidence. It needs to be noted that no such notice has been issued by the Assessing Officer. A best judgment assessment cannot be legally made without the issuance of notice u/s143(2). Reliance for this proposition is placed on the Gauhati High Court decision in Smt. Kamala Devi Todi vs. CIT (174 ITR 414).

The Gauhati High Court in Smt. Bandana Gogoi vs. CIT (289 ITR 28) has held that in the absence of notice u/s.143(2), assessment order passed by the Assessing Officer suffers from both procedural and jurisdictional error.

The Channai Bench of the tribunal in Mrs. C.Malathy vs. ITO (88 ITD

37) has held that the provisions of sec 143(2) would also apply to any assessment that is framed in response to notice u/s148 and an assessment framed otherwise is invalid.

The special Bench, Delhi in Rajkumar Chawla vs. ITO (94 ITD 1) has held that no assessment can be made if the notice u/s143(2) is not served within the time prescribed by the proviso u/s143(2).

In view of the aforesaid legal provisions, it is concluded that the assessment is invalid and bad in law.

Ground No.2 The learned Assessing Officer erred in assuming jurisdiction u/s148 and consequently the assessment order passed u/s147 r.w.s 144 is bad in law.

The original return for A.Y 2007-08 was filed on 30/08/2007. The assessment pursuant to such a return can be validly completed by 31/12/2009. This return was pending before the Assessing Officer when the notice u/s148 was issued on 20/01/2010. This being the factual position, it is contended that the action initiated u/s147 during the pendency for the return is invalid. Reliance for this proposition is placed on the Madras High Court decision in CIT vs. KM Pachayappan (304 ITR 264) and the Delhi High Court decision in KLM Royal Dutch Airlines vs. ADIT (292 ITR 49) and the Supreme Court decision in Trustees of H.E.H The Nizam's Supplemental Family Trust vs. CIT (244 ITR

381).

It is also to be noted that the assessee's participation in the proceedings does not absolve the Assessing Officer of the statutory duty to serve the notice u/s143(2) within the stipulated time. Reliance for this proposition is place on the Delhi High Court decision in ITO vs. R.K Gupta (21 DTR 44).

3 CO No.59/PNJ/2013-AM [ITA No.178/PNJ/13 A Y '07-08] Shri Durgadas K Prabhu Shastri

5. After perusing the order of CIT(A), we noted that these two grounds have not been disposed of by the CIT(A). We, therefore, set aside the order of the CIT(A) to this extent and restore both the grounds taken by the assessee before the CIT(A) with the direction that the CIT(A) shall decide both the grounds after giving the assessee adequate opportunity of hearing in accordance with the law.

6. In the result, cross objection filed by the assessee is allowed for statistical purpose.

Order is pronounced in the open court on 14-01-2015

Sd/- Sd/-

( D.T Garasia ) ( P. K. Bansal ) Judicial Member Accountant Member Dated : 14-01-2015

**PRADIP(Sr.P.S.)

Copy of the order forwarded to: 1. Appellant -

2 Respondent -

3. The CIT(A) concerned 4. The CIT concerned

5. The D.R 6. Guard File

True Copy, By order Asstt. Registrar