Sections 143(2), 147 – A notice u/s. 143(2) issued by the AO before the assessee files a return of income has no meaning. If no fresh notice is issued after the assessee files a return, the AO has no jurisdiction to pass the reassessment order and the same has to be quashed

3.  Sudhir Menon vs. ACIT

Members
: Mahavir Singh, JM and N K
Pradhan, AM

ITA
No.: 1744/Mum/2016

A. Y.:
2010-11  
Dated: 3^rd October, 2018.

Counsel for assessee / revenue: S E Dastur / R. Manjunatha Swamy

Sections 143(2), 147 – A notice u/s. 143(2)
issued by the AO before the assessee files a return of income has no meaning.
If no fresh notice is issued after the assessee files a return, the AO has no
jurisdiction to pass the reassessment order and the same has to be quashed

FACTS

The assessee filed his return of
income on 30.7.2010 declaring total income of Rs. 46,76,95,780 which return of
income was processed u/s. 143(1) of the Act on 21.3.2012.  Thereafter, the case was reopened by issuing
notice u/s. 148 of the Act dated 1.4.2013 which was served on the assessee on
8.4.2013. The ACIT, Central Circle – 45, Mumbai (AO) issued notice u/s. 143(2)
of the Act dated 3.5.2013 requiring assessee to attend his office on
13.5.2013.  The assessee in response to
notice issued u/s. 148 of the Act, filed a letter dated 23.5.2013 stating that
the return originally filed be treated as a return filed in response to notice
u/s. 148 of the Act.

Since no notice u/s. 143(2) was
issued after filing of return by the assessee, it was contended that the
assessment framed is invalid and bad in law. For this proposition, reliance was
placed on the following decisions –

i)    ACIT
vs. Geno Pharmaceuticals [(2013) 32 taxmann.com 162 (Bom.)]

ii)    CIT
vs. Ms. Malvika Arun Somaiya [(2010) 2 taxmann.com 144 (Bom)]

iii)   DIT vs. Society for Worldwide Inter Bank Financial,
Telecommunications [(2010) 323 ITR 249 (Delhi)]

iv)   Decision
of Delhi Tribunal in ITA Nos. 5163 & 5164/Del/2010, 5554/Del/2012 for AY
2004-05 and 2005-06 vide order dated 2.7.2018

HELD

The Tribunal noted the factual
position and observed that the question is can the AO issue notice u/s. 143(2)
of the Act in the absence of pending return of income.  It held that the provisions of section 143(2)
of the Act is clear that notice can be issued only when a valid return is
pending assessment.  It held that the
notice issued before 23.5.2013 had no meaning as the assessee filed return of
income u/s. 148 vide letter dated 23.5.2013 stating that the original return of
income can be treated as return filed in response to notice u/s. 148 of the
Act.  It observed that it means return
was filed only on 23.5.2013. 

The issue as to whether assessment
can be framed without issuing a notice u/s. 143(2) of the Act when the return
was filed by the assessee in response to notice u/s. 148 of the Act has been
considered by the Bombay High Court in the case of Geno Pharmaceuticals Ltd.
(supra).   Having noted the
observations of the Bombay High Court in the case of Geno Pharmaceuticals
Ltd. (supra), the Tribunal observed that similar is the position in the
case of Malvika Arun Somaiya (supra). 
The Tribunal also noted the observations of the Delhi High Court in the
case of Society for Worldwide Inter Bank Financial, Telecommunications
(supra) and held that in view of the consistent view of jurisdictional High
Court and Delhi High Court, in the absence of a pending return of income, the
provisions of section 143(2) of the Act is clear that notice can be issued only
when a valid return is pending for assessment. Accordingly, the notice issued
on 3.5.2013 has not meaning.  Since no
notice was issued by the Department after 23.5.2013 (date of filing of return
of income by the assessee) the Tribunal held that the assessment framed without
issuing a notice u/s. 143(2) of the Act when the return was filed by the
assessee in response to notice u/s. 148 of the Act is bad in law. The Tribunal
quashed the assessment framed by the AO.

The issue raised by the assessee by
way of additional ground was allowed. 
The appeal filed by the assessee was allowed.