March 2009
Whether order of reassessment u/s.147 r.w. S. 143(3) without valid notice u/s.143(2) is null & void — Held, Yes. Whether amendment to S. 148 saves reassessment done without notice u/s.143(2) — Held, No. Whether provisions of S. 292BB are retrospective — H
By Jagdish D. Shah, Jagdish T. Punjabi, Chartered Accountants
fiogf49gjkf0d
New Page 2
Part B — Unreported Decisions
(Full texts of the following Tribunal decisions are available
at the Society’s office on written request. For members desiring that the
Society mails a copy to them, Rs.30 per decision will be charged for
photocopying and postage.)
28 Chandra R. Gandhi v. ITO
ITAT ‘K’ Bench, Mumbai
Before M. A. Bakshi (VP) and
Rajendra Singh (AM)
ITA No. 6006/Mum./2007
A.Y. : 2000-01. Decided on : 23-12-2008
Counsel for assessee/revenue : G. P. Mehta/
Ankur Garg
Income-tax Act, 1961 — S. 143(2), S. 147, S. 148 and S. 292BB
— A.Y. 2000-01 — Whether an order of reassessment passed u/s.147 r.w. S. 143(3)
of the Income-tax Act, 1961 without issue of a valid notice u/s.143(2) of the
Act is null and void — Held, Yes. Whether the amendment to S. 148 by the Finance
Act, 2006 saves the reassessment done without issue of notice u/s.143(2) — Held,
No. Whether provisions of S. 292BB of the Act are retrospective — Held, No.
Per M. A. Bakshi :
Facts :
The assessee filed his return of income on 18-12-2001.
Assessment u/s.143(3) r.w. S. 147 was made vide order dated 19-3-2004 at an
income of Rs.1,54,070 as against the returned income of Rs.43,970. The addition
made was on account of disallowance of interest of Rs.1,10,100.
The assessee challenged the validity of proceedings on the
ground that (a) no notice u/s.143(2) had been issued; and (b) that the assessee
having filed the return of income in respect of which no assessment was made,
notice u/s.148 could not be issued as the assessee’s return was to be considered
as pending on the date of issue of notice u/s.148.
The CIT(A) dismissed the appeal of the assessee. Aggrieved,
the assessee preferred an appeal to the Tribunal.
Held :
(a) In view of the ratio laid down by the Apex Court in the
case of Rajesh Jhaveri Stock Brokers Pvt. Ltd., the contention of the assessee
that since no regular assessment was made in this case, the AO was precluded
from issuing notice u/s.148 is not based on correct appreciation of law, as
amended w.e.f. 1-4-1998.
(b) In the case of Raj Kumar Chawla, the Special Bench of
the Tribunal has held that issue of notice u/s.143(2) within the prescribed
time is also mandatory in the proceedings initiated u/s.147 and in the absence
of the same, the reassessment made shall be null and void.
(c) The Tribunal followed the decision of the Special Bench
of the Tribunal in the case of Raj Kumar Chawla and held that reassessment
made in the absence of service of notice u/s. 143(2) is invalid. It was of the
view that the Division Bench of the Tribunal is bound by the decision of the
Special Bench of the Tribunal until it is superseded by any superior
authority. Since the decision of the Madras High Court in the case of Areva T
& D India Ltd. was not a decision of jurisdictional High Court, either of
Bombay (being jurisdictional High Court in the present case) or of Delhi
(Special Bench decision being of Delhi jurisdiction), the Tribunal followed
the decision of the Special Bench of Delhi Tribunal though this decision of
the Special Bench was contrary to the decision of Madras High Court in the
case of Areva T & D India Ltd.
(d) The Tribunal held that the amendment to S. 148 by
Finance Act, 2006 w.e.f. 1-10-1991 does not save the reassessment u/s.147 in
this case, since the amendment precludes the assessee from raising the issue
of validity on the ground of late service of notice u/s.143(2). It noted that
in the present case no notice has been issued.
(e) The Tribunal noted that S. 292BB has been incorporated
by the Finance Act, 2008 w.e.f. 1-4-2008. This provision is applicable w.e.f.
1-4-2008 and is not retrospective and hence the same has got to be ignored.
The Tribunal quashed the reassessment and allowed the appeal
of the assessee.
Cases referred to :
1. Raj Kumar Chawla v. ITO, 94 ITD 1 (Del.) (SB)
2. Areva T&D India Ltd. v. ACIT, 294 ITR 233 (Mad.)
3. ACIT v. Rajesh Jhaveri Stock Brokers P. Ltd., 291
ITR 500 (SC)
4. CIT v. K. M. Pachayappan, 304 ITR 264 (Mad.)
5. CIT v. Jai Prakash Singh, 219 ITR 737 (SC)
