Commissioner Of Income Tax, Hisar v. Ram Narain Bansal

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 814 of 2010Date of decision: 13.7.2011 Commissioner of Income Tax, Hisar --- Appellant Versus Ram Narain Bansal --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELACTING CHIEF JUSTICE HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present:Mr. Krishan Kumar Mehta, Standing Counselfor the appellant-revenue. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act,1961 (for short “the Act”) has been filed by the revenue against theorder dated 21.4.2009, passed by the Income Tax Appellate TribunalDelhi Bench ‘G’, Delhi (in short “the Tribunal”) in ITA No. 584 (Del)2009, relating to the assessment year 2002-03. 2.The following substantial question of law has beenclaimed for determination of this Court: “Whether on the facts and circumstances of the case, theITAT was right in law in concurring with the finding of CIT(A) in holding the assessment bad in law, made pursuantto the issue of notice u/s 148 without appreciating that no prejudice was caused to the assessee by non-issuance ofnotice u/s 143(2), particularly, when the assessee wasparticipating in the assessment proceeding withoutobjecting to the assessment proceedings on this accountat the assessment stage?” 3.The facts, in brief, necessary for adjudication as narratedin the appeal, are that on being transpired that the assessee hadmade deposits aggregating Rs. 21,54,32,000/- in the account ofdifferent benami/bogus concerns and source of the same could notbe explained, proceedings under Section 147 of the Act wereinitiated against it on 13.3.2007. In response to said notice, replydated 24.4.2007 was submitted wherein the assessee had statedthat he had already filed the return on 1.12.2003 for the assessmentyear 2002-03. The assessee participated in the assessmentproceedings on various dates. The re-assessment was finallycompleted by the assessing officer at a total income of Rs.1,57,70,910/- vide order dated 31.12.2007 passed under Section 143(3) /148 of the Act. 4.The Commissioner of Income-tax (Appeals) {in short “theCIT(A)”}, in the appeal filed by the assessee annulled the re-assessment vide order dated 28.11.2008 holding that the re-assessment framed by the assessing officer was void and bad in lawas no notice under Section 143(2) of the Act was issued and servedupon the assessee. 5.The appeal carried by the revenue before the Tribunalwas dismissed vide the order under appeal. 6.No one has chosen to appear on behalf of the assesseein spite of service. 7.We have heard learned counsel for the appellant and have perused the record. 8.The solitary question that arises for consideration by thisCourt is, whether in the facts and circumstances non-issuance ofnotice under Section 143(2) of the Act would render the proceedingsfor re-assessment null and void? 9.Learned counsel for the Revenue submitted that noticeunder Section 148 of the Act was issued to the assessee which wasduly served. In pursuance to the said notice, the assessee appearedbefore the assessing authority and participated in the re-assessmentproceedings on 30.11.2007, 6.12.2007, 12.12.2007, 13.12.2007,18.12.2007, 24.12.2007, 27.12.2007, 28.12.2007 and 31.12.2007and also cross-examined the witnesses who were summoned andtheir statements were recorded. The counsel drew support from ajudgment of the Kerala High Court in K.J. Thomas vs. CIT (2008)301 ITR 301 to submit that non-service of notice under Section 143(2) of the Act was not fatal to re-assessment proceedings.Reference was made to Section 292BB of the Act and according tothe counsel the said provisions were applicable to all pendingproceedings. Reliance was also placed on a judgment of this Courtin Commissioner of Income Tax, Bathinda v. M/s PanchvatiMotors (P) Ltd. (ITA 292 of 2008) decided on 3.5.2011. 10.We find considerable force in the submission of thelearned counsel. The Kerala High Court in K.J.Thomas’s case(supra), while considering similar issue, had held as under: “The procedure under S. 143(2) of the Act is to ensurethat an adverse order is issued only after proper opportunity is given to the assessee. In this case, it isconceded that the assessee got opportunity to file replyand detailed reply was in fact filed and reassessmentnotice and final order were also issued within the time-limit prescribed under the Act.” 11. Further, this Court in M/s Panchwati Motor (P) Ltd.’s case(supra) while examining the scope of Section 292BB of the Actand its applicability had noted as under: “Section 292BB of the Act was inserted by Finance Act,2008 w.e.f. 1.4.2008. It reads thus:- “292BB: Where an assessee has appeared in anyproceeding or co-operated in any inquiry relating to anassessment or reassessment, it shall be deemed that anynotice under any provision of the Act, which is required to beserved upon him, has been duly served upon him in time inaccordance with the provisions of this Act and such assesseeshall be precluded from taking any objection in any proceedingor inquiry under this Act that the notice was – a) not served upon him; or b) not served upon him in time; or c) served upon him in an improper manner. Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of suchassessment or reassessment.” A presumption has been raised under the said provision relating to service of notice upon the assesseein respect of assessment or reassessment proceedings. According to this provision, where an assessee appearsin any proceedings or cooperates in any enquiry relatingto assessment or reassessment proceedings, it shall bepresumed that the assessee has been validly served andit shall not be open to the assessee to object that thenotice was not served upon him or was not served in timeor was served upon him in an improper manner.However, an exception to the aforesaid presumption hasbeen made in a case where such objection has beenraised before completion of assessment orreassessment. The provision has been made effectivefrom 1.4.2008 and therefore, shall apply to all pendingproceedings. The Central Board of Direct Taxes issuedcircular No.1 of 2009 dated 27[th] March, 2009 (2009) 310ITR (St.) 42 giving explanatory notes on the provisionsrelating to direct taxes contained in Finance Act, 2008.Clause 42.7 (at page 86 of the report) is relevant whichrelates to applicability of this provision and reads thus: “42.7 Applicability – This amendment has been made applicable with effect from 1[st] April,2008. This means that the provision of new-section292BB shall apply in all proceedings which arepending on 1[st] April, 2008.” 12. It is not disputed that the assessee had appeared before the assessing officer on various dates and participated in the re-assessment proceedings before the finalization and no objectionregarding issuance and service of notice under Section 143(2) of theAct was raised before the assessing officer. The CIT(A) and the Tribunal were, thus, in error in nullifying the re-assessmentproceedings and declaring the re-assessment order to be invalid. 13. In view of the above, the substantial question of law isanswered in favour of the Revenue and against the assessee.Consequently, the matter is remanded to the Tribunal for decisionafresh on merits in accordance with law. (AJAY KUMAR MITTAL) JUDGE July 13, 2011*rkmalik* (ADARSH KUMAR GOEL) ACTING CHIEF JUSTICE