Re: Itat/58/2017 v. Hotel Blue Moon [2010] 321 Itr 362 [Sc]_ , Wherein The Hon’ble Supreme Court

Form No. IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE PRESENT: THE HON’BLE JUSTICE T.S. SIVAGNANAMAnd THE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA ITAT/58/2017IA NO:GA/1/2017 [OLD NO:GA/608/2017] PRINCIPAL COMMISSIONER OF INCOME TAX-11, KOLKATAVS. M/S. NOPANY & SONS ……… ITAT/58/2017IA NO:GA/2/2017 [OLD NO:GA/611/2017] PRINCIPAL COMMISSIONER OF INCOME TAX-11, KOLKATAVS. M/S. NOPANY & SONS……… For the appellant: Mr. Tilak Mitra, Adv. For the respondent: Mr. Ananda Sen, Adv. Ms. Atasi Sarkar, Adv. Heard on : February 4, 2022. Judgement on : February 4, 2022. RE: GA/1/2017 [OLD NO:GA/608/2017) T.S. SIVAGNANAM, J. : We have heard Mr. Tilak Mitra, learned seniorstanding counsel for the appellant/revenue and Mr. Ananda Sen, learnedadvocate assisted by Ms. Atasi Sarkar for the respondent/assessee. There is a delay of 55 days in filing this appeal. Since we are inclined totake up the main appeal itself for hearing, we exercise discretion and condone the delay in filing the appeal. Accordingly, the delay in filing this appeal iscondoned. The application, IA NO.GA/1/2017 [OLD No:GA/608/2017] standsdisposed of accordingly. RE: ITAT/58/2017 This appeal by the revenue filed under Section 260A of the Income TaxAct, 1961, (the Act, in brevity) is directed against the order dated 20.7.2016passed by the Income Tax Appellate Tribunal, “C” Bench, Kolkata (Tribunal) inITA Nos.1621 & 1301/Kol/2011 for the assessment year 2007-08. Therevenue has raised the following substantial question of law for ourconsideration. a.Whether on the facts and in the circumstances of the case theLearned Income Tax Appellate Tribunal, “C” Bench, Kolkata isillegally justified to hold that since notice under Section 143(2)was not issued by the ITO – Ward 56(4), Kolkata, the assessmentorder passed by him is a nullity and without jurisdiction ? We have heard Mr. Mitra, learned senior standing counsel for theappellant and Mr. Ananda Sen, learned counsel assisted by Ms. Atasi Sarkarfor the respondent/assessee. The short issue which falls for consideration is whether the assessingofficer, who had jurisdiction over the assessee at the relevant time had issuednotice under Section 143(2) of the Act before taking up the scrutinyassessment under Section 143(3). Before we go into the facts, we take note ofthe legal position as laid down by the Hon’ble Supreme Court in Asst. CIT vs.Hotel Blue Moon [2010] 321 ITR 362 , wherein the Hon’ble Supreme Court We have heard Mr. Mitra, learned senior standing counsel for theappellant and Mr. Ananda Sen, learned counsel assisted by Ms. Atasi Sarkarfor the respondent/assessee. The short issue which falls for consideration is whether the assessingofficer, who had jurisdiction over the assessee at the relevant time had issuednotice under Section 143(2) of the Act before taking up the scrutinyassessment under Section 143(3). Before we go into the facts, we take note ofthe legal position as laid down by the Hon’ble Supreme Court in Asst. CIT vs.Hotel Blue Moon [2010] 321 ITR 362 , wherein the Hon’ble Supreme Court held that omission on the part of the assessing officer to issue notice underSection 143(2) cannot be a procedural irregularity and the same is not curableand, therefore, the requirement of notice under Section 143(2) cannot bedispensed with. Further, we also take note of the decision in the case ofCommissioner of Income Tax -vs.- Gitsons Engineering Company, reported in[2015] 370 ITR 87,wherein it was held that the word ‘shall’ employed inSection 143(2) of the Act, contemplates that the assessing officer should issuenotice to the assessee so as to ensure that the assessee has not understatedincome or has not computed excessive loss or has not under paid the tax inany manner. It was further held that when the assessing officer considers itnecessary and expedient to ensure that tax is paid in accordance with law, heshould call upon the assessee to produce evidence before him to ensure thatthe tax is paid in accordance with law. The section makes it clear that serviceof notice under Section 143(2) of the Act within the time limit prescribed ismandatory and it is not a mere procedural requirement. At this juncture, itwould be relevant to take note of the definition of assessing officer as definedin Section 2(7A) of the Act. The said provision defines ‘assessing officer’ tomean the Assistant Commissioner or Deputy Commissioner or AssistantDirector or Deputy Director or the Income Tax Officer, who is vested with therelevant jurisdiction by virtue of directions or orders issued under sub-Section(1) or sub-Section (2) of Section 120 or any other provision of the Act, and theAdditional Commissioner or Additional Director or Joint Commissioner orJoint Director, who is directed under clause (b) of sub-Section (4) of Section120 to exercise or perform all or any of the powers and functions conferred on,or assigned to, an assessing officer under this Act. In the instant case, the order of assessment was challenged on several grounds and, particularly, onthe ground that no notice under Section 143(2) of the Act was issued withinthe time prescribed by the assessing officer, who had jurisdiction over theassessment file of the assessee at the relevant time. The Commissioner ofIncome Tax (Appeals)-XXXVII, Kolkata, {CIT(A)} did not agree with thecontentions raised by the assessee that there is failure to comply with themandatory statutory requirement. The CIT(A) opined that the assessingofficer, who originally dealt with the e-return filed by the assessee had issuednotice under Section 143(2) of the Act. With regard to the merits of the matter,the CIT(A) held it in favour of the assessee. Therefore, the revenue was onappeal before the Tribunal and cross-objection was filed by the assesseequestioning that portion of the order of the CIT(A) which held that there is noprocedural irregularity committed by the assessing officer. The Tribunalconsidered the correctness of the finding of the CIT(A) and, on facts, foundthat both the assessing officers, namely, the assessing officer, who hadjurisdiction over the assessee till 06.04.2009 and the assessing officer, whohad jurisdiction post the said date had not issued notice under Section 143(2)of the Act within the prescribed period of six months from the end of thefinancial year in which the return was filed. This factual position could not becontroverted by the revenue before us. As pointed out by the Hon’ble SupremeCourt in the case of Asst. CIT vs. Hotel Blue Moon (supra), non-issuance ofnotice under Section 143(2) is not a procedural irregularity and, therefore, it isnot curable. Thus, on facts, it having been established that no notice wasissued under Section 143(2) of the Act, the order passed by the Tribunal wasperfectly legal and valid. The revenue also sought to rely upon Section 292BB of the Act to justify their stand that notice is deemed to be valid and sought tobring the assessee’s case under the circumstances mentioned in Section292BB. This question was considered by the Tribunal and it was pointed outthat Section 292BB provides that where an assessee has appeared in anyproceedings or co-operated in any inquiry relating to an assessment orreassessment, it shall be deemed that any notice under any of the provision ofthe Act, which is required to be served upon him, has been duly served uponhim in time in accordance with the provisions of the Act and such assesseeshall be precluded from taking any objection in any proceeding or inquiryunder the Act that the notice was not served upon him or not served uponhim in time or served upon him in an improper manner. This amendment tothe Act was introduced with effect from 01.04.2008 and the assessment yearunder consideration is AY 2007-08. In any event, the Tribunal examined as towhether at all the revenue can rely upon Section 292BB of the Act and notedthat the assessee has filed an objection vide letter dated 16.11.2009 objectingto the issuance of notice under Section 142(1) of the Act without valid serviceof notice under Section 143(2) of the Act. Taking note of the said letter theTribunal, in our view, rightly held that the proviso to Section 292BB wouldnot stand attracted and the said Section cannot be made applicable to theassessee’s case. The Tribunal, thereafter, analysed as to the correctness of thesubmission of the revenue seeking to sustain their stand by referring to anotice issued by the assessing officer, who at the relevant point had nojurisdiction over the assessee and, on facts, found that there is no validcompliance of Section 143(2) of the Act as the notice issued under Section143(2) of the Act by the assessing officer/Income Tax Officer, Ward-3(1) had no jurisdiction over the assessee at the relevant time. The Tribunal to supportits conclusion placed reliance in the case of CIT & Another Vs. Mukesh KumarAgarwal [2012] 345 ITR 29 (Allahabad),wherein it was held that the assessingofficer did not have jurisdiction to proceed further and make assessment sincenotice under Section 143(2) of the Act was admittedly not issued. As in thecase on hand, the revenue sought to take coverage under Section 292BB ofthe Act which was rejected on the ground that the very foundation of thejurisdiction of the assessing officer was on the issuance of notice underSection 143(2) of the Act and the same having been complied with, therevenue cannot take shelter under the provisions of Section 292BB of the Act. Thus, we are of the clear view that the Tribunal was right in rejectingthe revenue’s appeal. In the result, this appeal is dismissed and thesubstantial question of law is answered against the revenue. The stay application, IA NO.GA/2/2017 [OLD NO:GA/611/2017] alsostands dismissed. (T.S. SIVAGNANAM, J.) I agree. (HIRANMAY BHATTACHARYYA, J.)