Vijay Kumar Aggarwal, New Delhi vs Department Of Income Tax

Dy.Commissioner of Income Tax, vs Shri Vijay Kumar Aggarwal, Central Circle-12, New Delhi. J-83, Extension, Guru Ramdas Nagar, Laxmi Nagar, Delhi. (Appellant) (Respondent) Appellant by: Smt. A. Mishra, CIT DR Respondent by: Shri Rajiv Saxena, Adv.

PER CHANDRAMOHAN GARG, J.M.

This appeal has been preferred by the revenue against the order of the

CIT(A)-I, New Delhi dated 14.12.2010 in Appeal No. 347/07-08 for AY 2006-

07.

2. The grounds raised by the revenue read as under:-

"1. The order of the Ld. CIT (A) is not correct in law and facts.

2. In the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in holding the assessment order void ab initio for failure to issue notice under section 143(2) of Income Tax Act, 1961 within stipulated time whereas it was

1 ITA No.1306/D/2011 AY: 2006-07

beyond control of the AO to issue such notice within such time when case was centralized and transferred to him.

3. In the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in holding the assessment order void ab initio for failure to issue notice under section 143(2) of Income Tax Act, 1961 within stipulated time whereas the assessee did not object to the assessment proceedings and did not raise this ground before Learned CIT (A) until 11.02.2010 and therefore, such defect is curable by invoking provisions of section 292 BB of Income Tax Act, 1961.

4. In the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in holding the assessment order void ab initio on account of procedural irregularity of not issuing notice under section 143(2) within stipulated time whereas such irregularity was removed once the case was remanded by Ld. CIT (A) to the AO.

5. In the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in holding the assessment order void ab initio in the AO required the assessee and allowed opportunity to produce or cause to be produced evidence in support of particulars shown in return of income within the meaning of section 143(2) during Assessment proceedings and such procedural deficiency being curable under section 292 BB of Income Tax Act, 1961. "

3. We have heard arguments of both the sides and carefully perused the

relevant material placed on record before us. Ld. DR submitted that in the facts

and circumstances of the case, the first appellate authority has grossly erred in

holding that the assessment order is void ab initio for failure to issue notice u/s

143(2) of the Income Tax Act within stipulated time whereas it was beyond

control of the AO to issue notice within such time when all the relevant cases

were centralised and transferred to him for further proceedings. Ld. DR further

contended that the CIT(A) grossly erred in holding that the assessment order is

2 ITA No.1306/D/2011 AY: 2006-07

void ab initio as notice under section 143(2) of the Act was not issued within

stipulated prescribed limits whereas the assessee did not object during the

assessment proceedings and did not raise this ground before the CIT(A) until

10.02.2010 and, therefore, such defect was curable by invoking provisions of

section 292BB of the Act.

4. Ld. DR further contended that the CIT (A) also erred in law and on facts

in holding the assessment order void ab initio on account of procedural

irregularity which was removed once and the case was remanded by ld. CIT (A)

to the AO. Ld. DR vehemently contended that since the AO allowed the

opportunity to produce or cause to be produced evidence in support of

particulars shown in the return of income within the meaning of section 143(2)

of the Act during assessment proceedings and such procedural deficiency was

very well curable u/s 292BB of the Act. Ld. DR finally prayed that the

impugned order may be set aside by restoring that of the AO.

5. Replying to the above, ld. Counsel of the assessee has drawn our attention

towards operative para at page 13 of the impugned order and submitted that as

per decision of Hon'ble Supreme Court in the case of ACIT vs Hotel Blue

Moon (2010) 321 ITR 362 (SC), if an assessment has to be completed u/s

143(3) r/w section 158BC of the Act, then notice u/s 143(2) should be issued

within one year from the date of filing of the block return. Ld. Counsel further

submitted that omission on the part of the assessing authority to issue notice u/s 3 ITA No.1306/D/2011 AY: 2006-07

143(2) of the Act cannot be a procedural irregularity and is not curable,

therefore, the requirement of section 143(2) cannot be dispensed with.

Supporting the impugned order, ld. Counsel of the assessee also contended that

omission on the part of AO to issue notice u/s 143(2) of the Act within

prescribed time cannot be held as procedural irregularity which is not curable

u/s 292BB of the Act.

6. On careful consideration of above submissions, we note that the CIT(A)

allowed relief for the assessee with following observations, findings and

conclusion:-

" In regards to the service of notice beyond the time allowed under proviso to section 143(2) the appellant had relied on the judgment of Hon'ble Supreme Court in the case of ACIT Vs Hotel Blue Moon 321 ITR 362 (2010). In the said judgment the Hon'ble Supreme Court observed that omission on the part of the assessing authority to issue notice u/s 143(2) cannot be procedural irregularity and the same is not curable and therefore the requirement of notice under section 143(2) cannot be dispensed with. The court further observed "even for purposes of chapter XIVB of the Act for determination of undisclosed income for a block period under the provisions of section 158BC, the provision of section 142 and sub section 2 and 3 of section 143 are applicable and no assessment could be made without issuing notice u/s 143(2) of the Act. In view of the above judgment of the Hon'ble Supreme Court the contention of the AO in the remand report that the non issue of notice u/s 143(2) in time is only procedural defect which is curable is not tenable as per law. From the facts of the case it is undisputed that the notices u/s 143(2) should have been issued and served on or before 30.6.2007 as the return of income for the relevant AY 2006-07 was filed on 15.6.2006 but the same was issued only on 12.11.2007 and served on 14.11.2007 which is clearly beyond the time allowed as per the 4 ITA No.1306/D/2011 AY: 2006-07

proviso of section 143(2). In view of the above facts and law I have no alternative but to allow the appeal of the appellant on this issue that the assessment made without the notice u/s 143(2) in time was ab initio".

7. At the outset, we respectfully take notice of the decision of Hon'ble Apex

Court in the case of ACIT vs Hotel Blue Moon (supra) wherein it was held that

omission on the part of AO to issue notice u/s 143(2) of the Act cannot be a

procedural irregularity and the same is not curable and hence, the requirement

of notice u/s 143(2) of the Act cannot be dispensed with. However, ld. Counsel

of the assessee has pointed out that section 292BB has been inserted by Finance

Act, 2008 and the same is effective from 1.4.2008 only, therefore, the said

section is not applicable in the case of assessee for AY 2006-07 the assessment

of which was completed on 28.12.2007. Ld. DR has not disputed this fact on

the legal proposition that section 292BB was inserted by Finance Act 2008

w.e.f. 1.4.2008. Thus, we are of the considered opinion that the said section is

not applicable to the present case pertaining to AY 2006-07 wherein assessment

was completed on 28.12.2007.

8. Turning to the facts and circumstances of the present case, we note that

undisputedly, notice u/s 143(2) of the Act should have been issued and served

on or before 30.6.2007 as the return of income for the relevant AY 2006-07 was

filed on 15.6.2006 but the same was issued on 12.11.2007 and served on

14.11.2007 and the same was issued and served beyond the prescribed time

limit as per proviso to section 143(2) of the Act. In this situation, we reach to a 5 ITA No.1306/D/2011 AY: 2006-07

logical conclusion that the CIT(A) was right in holding that section 292BB of

the Act is not applicable to the present case and omission on the part of AO to

issue notice u/s 143(2) of the Act within prescribed time limit is not a

procedural irregularity and the same is not curable, therefore, the CIT(A) was

justified in holding that the assessment made without notice u/s 143(2) of the

Act within prescribed limit was void ab initio. Consequently, we uphold the

findings and conclusion of the CIT(A) and, therefore, factual and legal grounds

no. 2 to 5 of the revenue being devoid of merits are dismissed.

9. In the result, the appeal of the revenue is dismissed.

Order pronounced in the open court on 30.1.2015.

Sd/- Sd/-

(G.D. AGRAWAL) (CHANDRAMOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER

DT. 30th January, 2015 'GS'

Copy forwarded to:-

1. Appellant 2. Respondent 3. C.I.T.(A) 4. C.I.T. 5. DR By Order

Asstt. Registrar

6