2004-VIL-252-ITAT-JDP

Equivalent Citation: TTJ 084, 689,

Income Tax Appellate Tribunal JODHPUR

Date: 09.06.2004

ASSISTANT COMMISSIONER OF INCOME TAX.

Vs

SMT. JYOTI DEVI.

BENCH

Member(s)  : HARI OM MARATHA., JOGINDER PALL.

JUDGMENT

These three appeals have been filed by the Revenue against the three orders (all dt. 12th March, 1998) of CIT(A), Jodhpur for the asst. yrs. 1988-89, 1992-93 and 1993-94 respectively. Since the issues raised in all these appeals are identical, these were heard together and are being disposed of by this consolidated order for the sake of convenience.

2. The common grievance of the Revenue is that the learned CIT(A) was not justified in cancelling the assessments completed by the AO in all the cases on the ground that notices issued under s. 143(2) beyond statutory time allowed were invalid in law. The facts of the case are that the assessee had filed returns of income on 20th June, 1988, 2nd Sept., 1992 and 30th Nov., 1993 for the asst. yrs. 1988-89, 1992-93 and 1993-94 declaring therein income of Rs. 20,335, Rs. 41,350 and Rs. 56,200 and agricultural income of Rs. 5,27,092, Rs. 3,34,552 and Rs. 1,45,546 respectively. These returns were accepted under s. 143(1)(a). Thereafter the AO issued notices under s. 148 for all the assessment years on 23rd March, 1995. In response to such notices, the assessee submitted that the returns filed earlier may be treated to have been filed in response to notices under s. 148. Thereafter, the AO issued notices under s. 142(1) on 4th Sept., 1996 and further notices under ss. 143(2) and 142(1) were issued on 11th Sept., 1996. In response to such notices, the assessee contended that, since these notices have not been issued within a period of 12 months from the letter of the assessee dt. 21st April, 1995 asking the AO to treat the returns filed earlier in compliance to returns under s. 148, the notices issued under ss. 143(2) and 142(1) were illegal and bad in law. However, the AO completed the assessments for all the assessment years on 12th Feb., 1997, ignoring the objections raised by the assessee during the course of assessment proceedings.

3. Being aggrieved, the assessee filed appeals against the orders of AO challenging the validity of the assessments on the ground that notices under s. 143(2)/142(1) have been issued beyond the statutory time allowed under the Act and, therefore, the assessments completed on the basis of such illegal notices were bad in law. Reliance was also placed on various judgments. Accepting the contentions of the assessee, the CIT(A) has cancelled the assessments completed by the AO on the ground that notices under s. 143(2) have been issued beyond the period allowed under the Act. Thus, these assessments are bad in law. The relevant identical findings recorded by the CIT(A) in para 5 of the orders are as under:

"I have given due consideration to the submissions of the learned counsel that since the assessment was completed by the AO under s. 143(3) based on notice issued under s. 143(2) and served upon the appellant beyond the statutory period of 12 months as provided under s. 143(3), the assessment framed by the AO was void and illegal. I have also given careful thought to the reasoning of the AO for holding that he had correctly followed the provisions of law for completing the assessment under s. 143(3) and also his reasoning that since assessment was completed by initiating action under s. 148, such statutory limit of serving notice under s. 143(2) within stipulated period did not apply to the case of the appellant. After due consideration, I find that since the assessment proceedings were completed on the basis of notice under s. 143(2) and the assessment was made under s. 143(3) there is no distinction between the procedure of making assessment where return is filed under ss. 139, 142(1) or 148. The procedure for making assessment is provided under s. 143, and the procedure as laid down in that section has to be followed correctly and, accordingly, I hold that the requirement of law for serving notice upon the appellant within a period of 12 months was not fulfilled by the AO because notice under s. 143(2) was served upon the appellant after expiry of a period of 12 months from the end of the month in which the appellant intimated the AO vide letter dt. 21st April, 1993 that return originally filed may be treated as having been filed in compliance of notice under s. 148. It is not disputed by the AO that notice under s. 143(2) was served upon the appellant beyond a period of 12 months. Accordingly, in view of the observation of the Hon’ble Supreme Court in case of CIT vs. Kurban Hussain Ibrahimji Mithiborwala 1973 CTR (SC) 454 : (1971) 82 ITR 821 (SC), I hold that the notice under s. 143(2) served upon the appellant was not valid and, therefore, the assessment passed by the AO in pursuance of invalid notice is illegal and void. Therefore, the assessment order passed by the AO in pursuance of invalid notice under s. 143(2) is hereby cancelled."

The Revenue is aggrieved by the orders of CIT(A). Hence these appeals before us.

4. The learned Departmental Representative, Shri K.L. Meena did not advance any specific argument except relying on the orders of the AO.

5. The learned counsel for the assessee, on the other hand, heavily relied on the orders of the CIT(A) and reiterated the submissions made before the authorities below. He submitted that the provisions of s. 147 were amended w.e.f. 1st April, 1989. However, the amended provisions are only procedural in nature. Therefore, the same would apply with retrospective effect. In this regard he referred to the CBDT’s Circular reported in (1990) 182 ITR (St) 33. He particularly drew our attention to para 7.13 of the circular where the Board has clarified that these amendments shall come into force w.e.f. 1st April, 1989 and since these are procedural, the same shall have retrospective effect. Thus, he contended that the amended provisions being procedural in nature shall also apply for the asst. yr. 1988-89. He further relied on the judgment of Hon’ble Rajasthan High Court in the case of Chandi Ram vs. ITO & Anr. (1996) 131 CTR (Raj) 256 where the High Court has held that amended provisions of s. 147 would be applicable where limitation under old law had not expired. He, therefore, submitted that even for the asst. yr. 1988-89, the AO was duty bound to issue a notice under s. 143(2)/142(1) within a period of one year from the end of month in which returns in response to notices under s. 148 were filed which in the present case was 21st April, 1995 when the assessee sent a letter requesting the AO to treat the original returns in response to notices under s. 148. Relying on the decision of Tribunal, Agra Bench in the case of Asstt. CIT vs. Baikunth Nath Singhal (2004) 86 TTJ (Agra) 706 : (2004) 89 ITD 109 (Agra), the learned counsel submitted that the issue of a notice under s. 143(2) within the prescribed statutory period is a mandatory in nature. Non-issue of notice under s. 143(2) within the time-limit prescribed under the Act shall render the assessment completed under s. 143(3) invalid. He also relied on the decision of Tribunal, Mumbai Bench in the case of Uma Polymers (P) Ltd. vs. Asstt. CIT (2002) 123 Taxman 226 (Mum)(Mag) a copy of the decision was also placed on our record. Thus, he contended that the learned CIT(A) has rightly cancelled the assessments on the ground that notices under s. 143(2) had not been issued within the prescribed statutory period.

6. We have heard both the parties and given our thoughtful consideration to the rival submissions with reference to facts, evidence and material on record. From the facts discussed above, it is obvious that the notices under s. 143(2) for all the assessment years have been issued beyond a period of 12 months from the date of filing the returns in response to notices issued under s. 148. As per the proviso to s. 143(2), such notices could have been issued only within a period of 12 months from the end of the month in which the return was filed. As mentioned above, amended provisions of s. 147 came into effect w.e.f. 1st April, 1989. However explanatory notes referred to in the CBDT Circular clearly show that these amendments shall be applicable with retrospective effect. Thus, even for the asst. yr. 1988-89, it was mandatory for the AO to issue a notice under s. 143(2)/142(1) within a period of 12 months from the end of month in which return in response to notice under s. 148 was filed. The issue of notice within a period of 12 months is a mandatory requirement of law. Such view finds support from the decision of the Tribunal, Agra Bench in the case of Asstt. CIT vs. Baikunth Nath Singhal and the decision of Tribunal, Mumbai Bench in the case of Uma Polymers vs. Asstt. CIT where it has been clearly held that failure to issue notice under s. 143(2) within the prescribed statutory limit shall render the assessment invalid. Thus, in the light of these facts and circumstances of the case and the legal position discussed above, we are of the considered opinion that the CIT(A) was justified in cancelling the assessments as completed under s. 143(3) r/w s. 147. We do not find any legal and factual infirmity in the orders of CIT(A). The same are upheld and all the grounds of appeals of the Revenue are dismissed.

7. In the result, appeals filed by the Revenue for all the three assessment years are dismissed.

 

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