The Commissioner Of Income Tax-Ii v. Shri Subhash Govind Pingale…

bsb IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 389 OF 2012 The Commissioner of Income Tax-II … Appellant v/s Shri Subhash Govind Pingale… Respondent Mr.Vimal Gupta, senior counsel i/by Vipul Arun Bajpayee for the appellant. CORAM: S.C. DHARMADHIKARI & G.S. KULKARNI, JJ. DATED : 19TH MARCH, 2014 P. C. : 1Mr.Gupta, learned senior counsel appearing for the revenue submits that the Tribunal has seriously erred in rendering a finding particularly at paragraph 4 of the impugned order. Therefore, the same directly raises substantial question of law for determination and for consideration in this appeal. The two questions which have been framed in the memo of appeal are as under :- (a) Whether on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal did not err in quashing the block assessment order dated 28.12.2001 made in the subject assessee's case as null and void on the ground that notice under Section 143(2) had not been issued to the assessee within the time limit of twelve months prescribed in the proviso to Section 143(2) ? (b) Whether on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal did not err in refusing to take cognizance of the earlier notice under Section 143(2) issued by the Joint Commissioner of Income Tax, Special Range-3, Pune, on 8.5.2011 which had also been served well within the period of twelve months from the end of the month in which the assessee had filed his block return and, therefore, the ratio of the decision of the Hon'ble Apex Court in the case of Hotel Blue Moon, 321 ITR 362 (SC), is not applicable to the assessee's case ? 2We have perused very carefully said questions and the order of the Tribunal. Paragraph 4 of the order of the Tribunal and from which the issues directly arise, according to Shri Gupta, reads as under :- “4.Considering the above submissions, in view of orders of the authorities below and the decisions cited, we find that there is no dispute on the facts especially in the chronology of events stated by learned A.R. Hereinabove. There is also no dispute that the assessee was being assessed at Thane where he furnished the block return in response to the notice issued under Section 158 BC by the DCIT, Thane on 23.6.2000. Admittedly, a valid transfer order under Section 127(2) has been passed on 22.10.2001. Thus, the notice under Section 143(2) issued by assessing authority at Pune on 8.5.2001 as argued by the learned D.R. for computing the period of limitation under proviso to Sec.143(2) of the Act, cannot be accepted. For a ready reference, the relevant provision of Section 143(2) is being reproduced hereunder : “143(2) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall, if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return; Provided that no notice under this sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished.” It is assumed that transfer order under Section 127(1) of the Act dt. 17.5.2000 was proper, then, in our view, there was no need to pass another transfer order under Section 127(2) on 22.10.2001 transferring the file of the assessee to CIT, Pune from Thane. Under these circumstances, notice issued under Provided that no notice under this sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished.” It is assumed that transfer order under Section 127(1) of the Act dt. 17.5.2000 was proper, then, in our view, there was no need to pass another transfer order under Section 127(2) on 22.10.2001 transferring the file of the assessee to CIT, Pune from Thane. Under these circumstances, notice issued under Section 143(2) on 2[nd] November, 2001 by DCIT, Pune is undisputedly beyond the period of 12 months from the end of the month in which the return was furnished i.e. 23.6.2000. The A.O. was supposed to issue notice under Section 143(2) by 30[th] June, 2001. Thus, notice under Section 143(2) dated 2[nd] November, 2001, beyond doubt, has been issued after the prescribed time limit in the proviso to Section 143(2), hence it is barred by time. The Hon'ble Supreme Court in its recent decision in the case of ACIT v/s Hotel Blue Moon (supra) has been pleased to hold that if the A.O., for any reason, repudiates the return filed by an assessee in response to notice under Section 158 BC(a) of the Income Tax Act, 1961, relating to a block assessment, the A.O. Must necessarily issue notice under Section 143(2). We, thus, respectfully following the above decision of Hon'ble Supreme Court in the case of Hotel Blue Moon (supra), hold that notice dated 2[nd] November, 2001, issued under Section 143(2), is invalid. In consequence, the assessment framed on the basis of said notice is also not valid in law. The assessment order is accordingly quashed as null and void. The issue raised in Ground is thus decided in favour of the assessee. The Ground is, accordingly, allowed.” 3Having perused this paragraph in the light of the admitted facts and which have been noted in the order of the Tribunal, we are of the opinion that the Tribunal could not be said to be in error in reckoning the date of issuance within the meaning of sub-section (2) of Section 143 as 23[rd] June, 2000. The intervening circumstances from the date of filing of this block return including two orders of transfer would not save the proceedings from being vitiated in law. Admittedly, the notice from the Assessing Officer having jurisdiction over the assessee is dated 2[nd] November, 2001. That could not have been issued beyond 30[th] June, 2001. This finding of fact is consistent with the language and wording of sub-section (2) of Section 143 of the Income Tax Act, 1961. That also accords with the view taken by the Hon'ble Supreme Court in the case of Assistant Commissioner of Income Tax v/s Hotel Blue Moon, reported in 321 ITR 362 (SC). 4In such circumstances, we do not think that any substantial question of law arise for determination and consideration in this appeal. The proceedings were clearly barred. The appeal is, therefore, dismissed. 5To be fair to Mr.Gupta, our order and equally the findings of the Tribunal ought not be construed as vitiating all proceedings initiated in such manner as have been noted by us in the present case. In the event Section 143(2) has been construed to mean that the proceedings can be initiated only by a jurisdictional Assessing Officer or if issued or initiated by another officer, the period contemplated by sub-section (2) must run from the date from which the jurisdictional Assessing Officer acts, then, our order passed today shall not mean that certain issues are not open for the revenue to be agitated and urged in an appropriate case. Our order should not be construed as expressing any opinion on the issue of jurisdiction and competence of the Assessing Officer particularly in the light of the time that is stipulated in sub-section (2) of Section 143 and the impact of transfer of proceedings from one Assessing Officer to the file of another Assessing Officer. (G.S. KULKARNI, J.) (S.C.DHARMADHIKARI, J.)