NIRMAN SHELTERS (BANGALORE) PVT.LTD, Bangalore v. ACIT, Bangalore

ITA 1104/BANG/2010 | 2001-2002
Pronouncement Date: 30-11-2011 | Result: Allowed

Appeal Details

RSA Number 110421114 RSA 2010
Assessee PAN AAACN5731G
Bench Bangalore
Appeal Number ITA 1104/BANG/2010
Duration Of Justice 1 year(s) 2 month(s) 7 day(s)
Appellant NIRMAN SHELTERS (BANGALORE) PVT.LTD, Bangalore
Respondent ACIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 30-11-2011
Date Of Final Hearing 25-11-2011
Next Hearing Date 25-11-2011
Assessment Year 2001-2002
Appeal Filed On 23-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI N.K.SAINI ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K JUDICIAL MEMBER I.T.A. NOS.1101 TO 1107/BANG/2010 (ASSESSMENT YEARS : 1998-99 TO 2004-05) M/S. NIRMAN SHELTERS (BANGALORE) PVT. LTD. 71 K.R. ROAD BASAVANAGUDI BANGALORE-560 004 PAN AAACN5731G THE ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(2) BANGALORE. APPELLANT VS. RESPONDENT. APPELLANT BY : MR. H.N. KHINCHA. RESPONDENT BY : MR.G.V. GOPALA RAO. DATE OF HEARING : 25.11.2011. DATE OF PRONOUNCEMENT : 30.11.2011. O R D E R PER BENCH : THESE APPEALS BY THE ASSESSEE ARE DIRE CTED AGAINST THE COMMON ORDER DATED 12.08.2010 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VI BANGALORE FOR THE ASSESSMENT YEARS 1998-99 TO 2004-05. SINCE COM MON ISSUES ARE INVOLVED IN THESE APPEALS THESE WERE HEARD TOGETHER AND ARE DIS POSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NOS.1101 TO 1107BANG/10 2. IN ALL THESE APPEALS COMMON GROUNDS ARE RAISED B Y THE ASSESSEE. FOR THE SAKE OF CONVENIENCE THE GROUNDS RAISED FOR THE ASSESSMEN T YEAR 1998-99 ARE REPRODUCED WHICH READ AS UNDER : 1. THE LEARNED ASSESSING OFFICER HAS ERRED I N PASSING THE ORDER IN THE MANNER PASSED. THE ORDER PASSED IS WI THOUT JURISDICTION BAD IN LAW ABINITIO VOID AND IS LIABLE TO BE QUASH ED. THE LEARNED CIT(A) INSTEAD OF QUASHING THE ORDER IN TOTO HAS ERRED IN CONFIRMING THE SAME. 2. IN ANY CASE AND WITHOUT PREJUDICE IT IS SUBMIT TED THAT NO RETURN OF INCOME HAVING BEEN PRESCRIBED UNDER THE LAW THE NO TICE ISSUED WAS NOT VALID AND FURTHER THERE BEING NO VALID RETURN BEFOR E THE ASSESSING OFFICER THE PASSING OF AN ORDER BASED ON A RETURN WHICH IS NOT VALID IN LAW VITIATES THE ORDER WHICH BECOMES LIABLE IS T O BE QUASHED. 3. WITHOUT FURTHER PREJUDICE IT IS SUBMITTED THA T THE COMMENCING AND MAKING THE COMPUTATION BASED ON CERTAIN PIECE OF PA PER WHICH WAS NOT AVAILABLE TO THE ASSESSING OFFICER IN THE PROCEEDIN GS AS SOUGHT TO BE INITIATED (IN AS MUCH THE EARLIER RETURN HAD ABATED ) VITIATES THE ENTIRE PROCEEDINGS MAKING THE ORDER PASSED AS VOID AND LI ABLE TO BE QUASHED. 4. IN ANY CASE ISSUING THE NOTICE U/S. 143(2) WITHOUT FIRST PROCESSING THE RETURN ALSO VITIATES THE PROCEEDINGS. 5. (I) IN ANY CASE AND WITHOUT PREJUDICE IT IS SUB MITTED THAT MAKING VARIOUS DISALLOWANCES WITHOUT PROPER FOUNDATION W ITHOUT EVIDENCE AND WITHOUT BASIS AND NOT PROPERLY APPRECIATING THE FAC TS AND CIRCUMSTANCES OF THE CASE AND WITHOUT APPRECIATING LEGAL AND ACCO UNTING PRINCIPLES IS NOT CORRECT. (II) THE DISALLOWANCE U/S.40A(3) OF THE I.T. ACT 1 961 IS NOT CORRECT. THE FACTS AND CIRCUMSTANCES OF THE CASE NECESSITATED CA SH PAYMENTS. IN ANY CASE NOT ALL SUCH PAYMENTS ARE CLAIMED AS EXPENDIT URE FOR THE YEAR. FURTHER THE BASIS OF QUANTIFICATION IS ALSO NOT CLE AR. (III) THE LOWER AUTHORITIES HAVE ALSO ERRED IN DIS ALLOWING A PORTION OF LAND DEVELOPMENT EXPENSES WHICH WERE INCURRED FOR BUSINE SS ONLY. THE QUANTIFICATION / DISALLOWANCE IS MADE WITHOUT ANY B ASIS. FURTHER NOT ALL SUCH PAYMENTS ARE CLAIMED AS EXPENSES. 3 ITA NOS.1101 TO 1107BANG/10 (IV) IN ANY CASE AND WITHOUT PREJUDICE IT IS SUBM ITTED THAT THERE HAS BEEN DOUBLE ADDITION AND FURTHER DISALLOWANCES ARE EXCESSIVE. (V) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PROPER APPRECIATION OF ALL ANGLES NO DISALLOWANCE IS CALL ED FOR AND THE ENTIRE DISALLOWANCE IS TO BE DELETED. 6. THE APPELLANT ALSO DENIES THE LIABILIT Y TO PAY INTEREST. THE INTEREST UNDER VARIOUS PROVISIONS HAVING BEEN LEVIE D ERRONEOUSLY IS TO BE DELETED. IN ANY CASE AND WITHOUT PREJUDICE IT IS SUBMITTED THAT THE INTEREST LEVIED IS EXCESSIVE AND WRONGLY CALCULATED . 7. IN VIEW OF THE ABOVE AND ON OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING IT IS REQUESTED THAT ORDER PASSED BE QUASHED AND/OR OTHER APPROPRIATE RELIEF BE ALLOWED TO THE APPELLAN T. 3. VIDE COMMON GROUNDS NOS.1 TO 4 THE ASSESSEE HAD CHALLENGED THE VALIDITY OF THE ASSESSMENT FRAMED BY HE ASSESSING OFFICER. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A LAND DEVELOPER. A SEARCH U/ S. 132 OF THE INCOME TAX ACT 1961 (HEREIN AFTER CALLED AS THE ACT) WAS CONDUCTED IN THE ASSESSEES BUSINESS PREMISES AND ON THE DIRECTORS RESIDENCE ON 13.11.2003. DURI NG THE COURSE OF SEARCH CERTAIN INCRIMINATING DOCUMENTS SUCH AS BOOKS OF ACCOUNTS A ND OTHER DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED. THE ASSESSING O FFICER ISSUED NOTICE U/S.153A OF THE ACT TO THE ASSESSEE ON 3.8.2004 TO FILE THE RET URN OF INCOME WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF THE SAID NOTICE. SINCE THER E WAS NO RESPONSE TO THE SAID NOTICE THE ASSESSING OFFICER ISSUED NOTICE U/ 142( 1) ON 20.7.2005 ASKING THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS SUCH AS C ASH BOOK LEDGER AND BANK PASS BOOK FOR EXAMINATION. IN RESPONSE TO THAT THE ASSE SSEE FILED RETURN OF INCOME FOR THE A.Y. 1998-99 DISCLOSING A TOTAL INCOME OF RS. 1 78 95 620. THE ASSESSING OFFICER 4 ITA NOS.1101 TO 1107BANG/10 NOTICED THAT IN THE SAID RETURN THE ASSESSEE HAD E STIMATED THE INCOME @ 18% OF THE TURN OVER MADE BY IT. THEREAFTER THE ASSESSING OFF ICER ISSUED NOTICE U/ 143(2) TO THE ASSESSEE ON 5.12.2005. IN RESPONSE THE ASSESS EE APPEARED TO PRODUCE THE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER POINTED OUT THA T THE ASSESSEE HAD FILED ORIGINAL RETURN OF INCOME DISCLOSING A TOTAL INCOME OF RS. 8 21 510 AND THE INCOME DISCLOSED IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/ 153A OF THE ACT WAS AT RS.1 78 95 620. THE ASSESSING OFFICER ALSO POINTED OUT THAT WHILE FILING THE RETURN OF INCOME THE ASSESSEE HAD GIVEN CERTAIN REASONS S TATING THAT THE BOOKS OF ACCOUNTS MAINTAINED REGULARLY DID NOT MATCH WITH THE VOUCHER S PREPARED PAYMENTS MADE AND LAND DEVELOPMENT EXPENSES. THEREFORE TO BUY PEACE FROM THE DEPARTMENT IT HAS ESTIMATED THE INCOME AT 18% OF THE TURNOVER WITH AN INTENTION TO COVER UP ALL THE OMISSIONS AND COMMISSIONS THAT MIGHT HAVE OCCURRED IN THE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER AFTER CONSIDERING THE ABOVE SUBMI SSIONS MADE BY THE ASSESSEE AND EXAMINING THE BOOKS OF ACCOUNTS REJECTED THE ESTIMA TION OF INCOME MADE BY THE ASSESSEE AND THE ASSESSMENT WAS CONCLUDED ON THE BA SIS OF REGULAR BOOKS OF ACCOUNTS AND MATERIAL SEIZED AT THE TIME OF SEARCH. THE ASS ESSING OFFICER FRAMED ASSESSMENT FOR THE A.Y. 1998-99 AT AN INCOME OF RS. 85 21 898. 4. THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND CHALLENGED THE JURISDICTION OF THE ASSESSING OFFICER AS WELL AS VA LIDITY OF THE ASSESSMENT FRAMED. THE LEARNED CIT(A) HELD IN PARAS 2.2 TO 2.4 IN THE IMPUGNED ORDER AS UNDER : 5 ITA NOS.1101 TO 1107BANG/10 2.2 GROUND NO.2 (COMMON FOR ALL ASSESSMENT YEARS ) IN ANY CASE AND WITHOUT PREJUDICE IT IS SUBMITTED THAT NO RETURN OF INCOME HAVING BEEN PRESCRIBED UNDER THE LAW THE NO TICE ISSUED WAS NOT VALID AND FURTHER THERE BEING NO VALID RETURN BEFOR E THE A.O. THE PASSING OF AN ORDER BASED ON A RETURN WHICH IS NOT VALID IN LAW VITIATES THE ORDER WHICH BECOMES LIABLE IS TO BE QUASHED. THE APPELLANT DURING THE APPELLATE PROCEEDINGS FAIL ED TO SUBSTANTIATE THE ABOVE GROUND WHICH IS NOT TENABLE IN VIEW OF THE RE ASONS GIVEN BELOW :- I) CLAUSE (A) OF SUB-SECTION (1) OF SECTION 153A OF IN COME TAX ACT PROVIDE THAT THE PERSON IN WHOSE CASE SEARCH UNDER SECTION 132(1) IS CONDUCTED IN CONSEQUENCE TO THE NOTICE ISSUED UNDER SECTION 153A HAS TO FILE THE RETURN OF INCOME IN RESPECT OF EACH OF ASS ESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE ( B) IN THE PRESCRIBED FORM AND VERIFIED IN PRESCRIBED MANNER AND SETTING FORTH OTHER SUCH PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL SO FAR AS MAY BE APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139 OF THE INCOME TAX ACT WHICH CLEARLY MEANS THAT IF NO SEPARATE FORM IS PRESCRIBED FOR FI LLING OF THE RETURN UNDER SECTION 153A THE ASSESSEE HAS TO FILE THE RE TURNS OF INCOME IN THE FORM AND MANNER PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 139. II) THE APPELLANT FAILED TO SUBSTANTIATE THE ARGUMENT T HAT NO VALID NOTICE UNDER SECTION153A IS ISSUED IT IS APPARENT FROM RE CORD THAT THE NOTICE U/S. 153A WAS ISSUED ON 3.8.2004 IN CONSEQUENCE TO THE SEARCH U/S.132(1) OF INCOME TAX ACT INITIATED IN THE CASE OF THE APPE LLANT ON 13.11.2003. THE RETURN IN RESPONSE TO THE ABOVE NOTICE U/S.153A WAS FILED ON 2.11.2005. SUB-SECTION (1) OF SECTION 153A PROVIDE THAT IN THE CASE OF PERSON WHERE SEARCH IS INITIATED UNDER SECTION 132 THE A.O. SHALL ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITH IN SUCH PERIOD AS MAY BE SPECIFIED IN THE NOTICE THE RETURN OF INCOME IN RESPECT OF EACH OF THE ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B) AND ASSESSEE OR REASSESS THE TOTAL INCOME OF SI X ASST. YEARS. THE RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 15 3A CANNOT BECOME INVALID MERELY BY THE FACT THAT THE RETURN HAS BEEN FILED BEYOND THE TIME PRESCRIBED IN THE NOTICE OR NO SEPARATE FORM OF THE RETURN HAS BEEN PRESCRIBED. 6 ITA NOS.1101 TO 1107BANG/10 IN VIEW OF THE ABOVE THE APPEALS FOR ALL THE ABOVE ASSESSMENT YEARS ON THE ABOVE GROUND ARE DISMISSED. 2.3 GROUND NO.3 (COMMON FOR ALL ASSESSMENT YEARS ) WITHOUT FURTHER PREJUDICE IT IS SUBMITTED THAT TH E COMMENCING AND MAKING THE COMPUTATION BASED ON CERTAIN PIECE WHICH WAS NOT AVAILABLE TO THE ASSESSING OFFICER IN THE PROCEEDINGS AS SOUGHT TO BE INITIATED (IN AS MUCH THE EARLIER RETURN HAS ABATED) VITIATES THE E NTIRE PROCEEDINGS MAKING THE ORDER AS VOID AND LIABLE TO BE QUASHED. THE APPELLANT DURING THE APPELLATE PROCEEDINGS FAI LED TO SUBSTANTIATE THE ABOVE GROUND WHICH IS OTHER WISE NOT TENABLE IN VIE W OF THE FACT THAT SECOND PROVISO TO SUB-SECTION (1) OF SECTION 153A P ROVIDE THAT THAT THE ASSESSMENT OR REASSESSMENT IF ANY RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS R EFERRED TO IN THIS SUB- SECTION PENDING ON THE DATE OF INITIATION OF THE SE ARCH UNDER SECTION 132 OR REQUISITION UNDER SECTION 132A AS THE CASE MAY BE SHALL ABATE. THUS ONLY THE PROCEEDING PENDING ON THE DATE OF THE SEAR CH SHALL ABATE. THE PROCEEDINGS WHICH ARE CONCLUDED SHALL NOT ABATE SI MILARLY THE ISSUE BECOME FINAL BEFORE THE INITIATION OF THE SEARCH WI LL NOT ABATE WHICH IS CLEAR FROM PLAIN READING OF LANGUAGE IN CLAUSE (B) I.E. ASSESS OR REASSESS THE TOTAL INCOME WHICH MEANS THAT IN THE CASES WHER E THE ORIGINAL ASSESSMENT HAVE BEEN COMPLETED THE REASSESSMENT HAS TO BE MADE UNDER SECTION 153A AND IN THE CASES WHERE NO ASSESS MENT HAS BEEN MADE OR THE ASSESSMENT HAVE BEEN ABATED THE ASSESSMENT HAS TO BE MADE BY THE A.O. ACCORDINGLY THE APPEAL ON THE ABOVE GROU ND FOR ALL THE ASSESSMENT YEARS ARE DISMISSED. 2.4 GROUND NO.4 (COMMON FOR ALL ASSESSMENT YEARS) IN ANY CASE ISSUING THE NOTICE U/S.143(2) WITHOU T FIRST PROCESSING THE RETURN ALSO VITIATES THE PROCEEDINGS. THE APPELLANT DURING THE APPELLATE PROCEED INGS FAILED TO SUBSTANTIATE THE GROUND WHICH IS NOT TENABLE IN VIE W OF THE FACT THAT THERE IS NO PROVISION UNDER THE INCOME TAX ACT TO B AR THE ISSUE OF NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT PRIOR TO THE PROCESSING OF THE RETURN UNDER SECTION 143(1). SUB-SECTION (1) A ND SUB-SECTION (2) OF SECTION 143 ARE INDEPENDENT WHICH IS EVIDENT FROM T HE FACT THAT BOTH THE SUB-SECTIONS BEGINS WITH WHERE A RETURN HAS BEEN M ADE UNDER SECTION 139 OR IN RESPONSE TO NOTICE UNDER SUB-SECTION (1) OF SECTION 142. SUB- 7 ITA NOS.1101 TO 1107BANG/10 SECTION (2) OF SECTION 143 PROVIDES THAT WHERE A R ETURN HAS BEEN FURNISHED UNDER SECTION 139 OR IN RESPONSE TO NOTIC E UNDER SUB-SECTION (1) OF SECTION 142 THE A.O. SHALL IF HE CONSIDER IT N ECESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDER STATED THE A SSESSMENT OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDER PAID THE T AX 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 TO PRODUCE OR CAUSE TO BE PRODUCED ANY EVIDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETURN. HOWEVER THE NOTICE UNDER SUB-SECTIO N (2) OF SECTION 143 SHALL BE SERVED ON THE ASSESSEE BEFORE THE EXPIRY O F 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN IS FURNISHED A S PER THE PROVISO TO SUB-SECTION (2) OF SECTION 143 OF THE INCOME TAX AC T. IN THE CASE OF THE APPELLANT NOTICES UNDER SECTION143(2) FOR THE RELE VANT ASSESSMENT YEARS HAVE BEEN ISSUED IN THE TIME LIMIT PRESCRIBED APPE ALS ON THIS GROUND FOR ALL THE ABOVE ASSESSMENT YEARS ARE ACCORDINGLY DISM ISSED. ON BEING AGGRIEVED THE ASSESSEE IS IN APPEAL BEFOR E US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A) AND FURTHER SUBMITTED THAT THE ASSESSMEN T HAD BEEN FRAMED BY THE ASSESSING OFFICER BY CONSIDERING THE ORIGINAL RETUR N FILED BY THE ASSESSEE UNDER SECTION 139(1) OF THE ACT BUT NO NOTICE UNDER SECTI ON 143(2) HAD BEEN ISSUED FOR THAT RETURN. IT WAS FURTHER SUBMITTED THAT THE NOTICE U /S. 143(2) HAS BEEN ISSUED BY THE A.O. FOR THE RETURN OF INCOME WHICH HAD BEEN FILED UNDER SECTION 153A OF THE ACT. IT WAS POINTED OUT THAT THE ASSESSING OFFICER IN FACT HAD ADMITTED IN THE BODY OF THE ASSESSMENT ORDER ITSELF THAT THE RETURNS FILED UNDE R SECTION 153A OF THE ACT WERE REJECTED. IT WAS FURTHER SUBMITTED THAT THE ISSUAN CE OF NOTICE UNDER SECTION 143(2) OF THE ACT IS MANDATORY AS PER THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF ACIT & ANOTHER VS. HOTEL BLUE MOON (201 0) 321 ITR 362 (SC). HOWEVER 8 ITA NOS.1101 TO 1107BANG/10 IN THE PRESENT CASE NO NOTICE UNDER SECTION 143(2) WAS ISSUED TO THE ASSESSEE FOR THE RETURN FILED UNDER SECTION 139(1) OF THE ACT ON TH E BASIS OF WHICH INCOME HAS BEEN ASSESSED THEREFORE THE ASSESSMENT ORDERS PASSED B Y THE ASSESSING OFFICER WERE INVALID AND THE CIT(A) WAS NOT JUSTIFIED IN REJECTI NG THE PLEA OF THE ASSESSEE. 6. IN HIS RIVAL SUBMISSIONS THE LEARNED CIT DEPAR TMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS PASSED BY THE ASSESSI NG OFFICER AND THE CIT(A) AND FURTHER SUBMITTED THAT THE ASSESSEE FILED THE RETUR NS OF INCOME UNDER SECTION 153A OF THE ACT AND THE NOTICES U/S.143(2) OF THE ACT W ERE ISSUED TO THE ASSESSEE FOR THOSE RETURNS AND EVEN IF THERE WAS A MISTAKE WHILE COMPUTING THE INCOME BY TAKING THE FIGURES OF INCOME DECLARED BY THE ASSESSEE IN O RIGINAL RETURN OF INCOME FILED U/S.139(1) OF THE ACT IT WAS A CURABLE MISTAKE AND WAS RECTIFIABLE. THEREFORE THE LEARNED CIT(A) WAS JUSTIFIED IN REJECTING THE GROUN DS CHALLENGING THE VALIDITY OF THE ASSESSMENTS RAISED BY THE ASSESSEE. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE P RESENT CASE IT IS NOTICED THAT THE ASSESSEE ORIGINALLY FILED THE RETURNS OF INCOME UND ER SECTION 139(1) OF THE ACT. LATER ON A SEARCH WAS CONDUCTED AT THE PREMISES OF THE A SSESSEE AND CERTAIN INCRIMINATING DOCUMENTS AND MATERIAL WERE FOUND. THEREAFTER NOT ICE UNDER SECTION 153A OF THE ACT WAS ISSUED ON 3.8.2004 AND THE ASSESSEE FILED R ETURNS OF INCOME ON 2.11.2005. 9 ITA NOS.1101 TO 1107BANG/10 THOSE RETURNS OF INCOME FILED ON 2.11.2005 UNDER S ECTION 153A OF THE ACT WERE BELATED RETURNS AND IN THOSE RETURNS THE ASSESSEE D ECLARED INCOME ON ESTIMATE BASIS @ 18% OF THE TURNOVER. THE INCOME DECLARED BY THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER WHO STATED IN PARA 7.2 OF THE ASSESSMENT ORDER THAT THE ESTIMATION OF INCOME MADE BY THE ASSESSEE @ 18% WA S REJECTED. FROM THE ABOVE NOTING OF THE ASSESSING OFFICER IT IS OBSERVED THA T THE RETURN FILED BY THE ASSESSEE UNDER SECTION 153A OF THE ACT WERE REJECTED BY THE ASSESSING OFFICER. THE LEARNED COUNSEL FOR THE ASSESSEE FURNISHED A CHART WHEREIN DETAILS OF THE INCOME DECLARED IN ORIGINAL RETURN OF INCOME UNDER SECTION 139 OF THE ACT AND THE INCOME DECLARED IN THE RETURNS FILED UNDER SECTION 153A OF THE ACT AS WELL AS THE ASSESSED INCOME HAD BEEN MENTIONED. THE SAID DETAILS READ AS UNDER : ASST. YEAR INCOME AS PER RETURN OF INCOME FILED ORIGINALLY RS. INCOME AS PER RETURN OF INCOME FILED U/S. 153A. RS. ASSESSED INCOME. RS. 1998-99 8 21 510 (U/S.139) 1 78 95 620 85 21 899 1999-2000 15 08 232 (U/S.139) 1 28 49 492 1 87 86 508 2000-01 21 03 648 (115JB PROFIT) (U/S.142) 1 29 19 590 3 41 93 968 2001-02 30 92 054 (115 JB PROFIT) (U/S.142) 27 36 450 81 66 449 2002-03 *(12 23 357) (U/S.139) 48 91 930 86 93 003 10 ITA NOS.1101 TO 1107BANG/10 2003-04 11 18 650 (U/S.139) 82 27 470 2 26 77 527 2004-05 49 93 890 (U/S.139) 85 13 910 2 21 83 628 * REVISED RETURN FILED ON 28.8.2003 DECLARING TOTAL I NCOME OF RS.27 82 969 ALSO NOT CONSIDERED. FROM THE ABOVE DETAILS IT IS CLEAR THAT FOR ASSESS MENT YEAR 1998-99 THE ASSESSEE DECLARED INCOME AT RS. 8 21 510 IN THE ORIGINAL RET URN FILED UNDER SECTION 139(1) OF THE ACT AND THE INCOME OF RS. 1 78 95 620 WAS DECLARED IN THE RETURN OF INCOME FILED UNDER SECTION 153A OF THE ACT WHILE THE INCOME ASSE SSED WAS AT RS. 85 21 899 WHICH CLEARLY SHOWS THAT THE INCOME ASSESSED WAS MUCH LES S THAN THE INCOME DECLARED UNDER SECTION 153A OF THE ACT WHICH ALSO PROVES THAT THE ASSESSING OFFICER DID NOT ACCEPT THE INCOME DECLARED BY THE ASSESSEE UNDER SECTION 1 53A OF THE ACT. IN THE PRESENT CASE IT IS AN UNDISPUTED FACT THAT THE ASSESSING O FFICER ISSUED THE NOTICE UNDER SECTION 143(2) OF THE ACT FOR THE RETURN OF INCOME FILED BY THE ASSESSEE UNDER SECTION 153A OF THE ACT BUT THOSE RETURNS WERE REJE CTED BY THE ASSESSING OFFICER (AS MENTIONED IN PARA 7.2 OF THE ASSESSMENT ORDER D ATED 24.3.2006 FOR THE ASST. YEAR 1998-99). 8. IN THE INSTANT CASE IT IS ALSO AN ADMITTE D FACT THAT NO NOTICE U/S. 143(2) WAS ISSUED FOR THE RETURN ORIGINALLY FILED BY THE ASSES SEE U/S. 139(1) OF THE ACT. HOWEVER THE ASSESSMENT HAD BEEN FRAMED BY THE ASSE SSING OFFICER ONLY BY CONSIDERING THE INCOME DECLARED BY THE ASSESSEE IN THOSE ORIGINAL RETURNS OF INCOME FILED U/S.139(1) OF THE ACT. AS REGARDS TO THE IS SUANCE OF NOTICE U/S.143(2) BEFORE 11 ITA NOS.1101 TO 1107BANG/10 COMPLETING THE ASSESSMENT U/S.143(3) OF THE ACT IS CONCERNED THE HONBLE SUPREME COURT IN THE CASE OF ACIT & ANOTHER VS. HOTEL BLUE MOON (SUPRA) HAS HELD AS UNDER : IF THE ASSESSING OFFICER FOR ANY REASON REPUDIA TES THE RETURN FILED BY AN ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 158BC(A) OF THE INCOME TAX ACT 1961 RELATING TO A BLOCK ASSESSMENT THE A.O. MUST NECESSARILY ISSUE NOTICE U/S.143(2) OF THE ACT WITH IN THE TIME PRESCRIBED IN THE PROVISO TO SECTION 143(2). BY MAKING THE ISSUE OF NOTICE MANDATORY SECTION 1 58BC DEALING WITH BLOCK ASSESSMENTS MAKES SUCH NOTICE THE VERY FOUNDATION FOR JURISDICTION. SUCH NOTICE IS REQUIRED TO BE SERVED ON THE PERSON WHO IS FOUND TO HAVE UNDISCLOSED INCOME. SECTION 158BC PROVIDES FOR ENQUIRY AND ASSESSMENT. AFTER THE RETURN IS FILED CLAUSE (B) OF SECTION 158BC PROVID ES THAT THE A.O. SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCOME OF THE BLOCK PERIOD IN THE MANNER LAID DOWN IN SECTION 158BB AND THE PROVISIO NS OF SECTION 142 SUB-SECTIONS (2) AND (3) OF SECTION 143 SECTION 14 4 AND SECTION 145 SHALL SO FAR AS MAY BE APPLY. THIS INDICATES THAT THIS CLAUSE ENABLES THE A.O. AFTER THE RETURN IS FILED TO COMPLETE THE AS SESSMENT UNDER SECTION 143(3) BY FOLLOWING THE PROCEDURE LIKE ISSUE OF NOT ICE UNDER SECTION 143(2)/142. THIS DOES NOT PROVIDE ACCEPTING THE RE TURN AS PROVIDED UNDER SECTION 143(1)(A): THE OFFICER HAS TO COMPLET E THE ASSESSMENT UNDER SECTION 143(3) ONLY. IF AN ASST. IS TO BE CO MPLETED UNDER SECTION 143(3) READ WITH SECTION 158BC NOTICE UNDER SECTIO N 143(2) SHOULD BE ISSUED WITHIN ONE YEAR FROM THE DATE OF FILING OF T HE BLOCK RETURN. OMISSION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE UNDER SECTION 143(2) CANNOT BE A PROCEDURAL IRREGULARITY AND IS NOT CURABLE. THEREFORE THE REQUIREMENT OF NOTICE UNDER SECTION 143(2) CANNOT BE DISPENSED WITH. 9. FROM THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE AFORESAID REFERRED TO CASE OF ACIT & ANOTHER VS. HOTEL BLUE M OON IT IS CLEAR THAT THE OMISSION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOT ICE UNDER SECTION 143(2) CANNOT BE CONSIDERED AS A PROCEDURAL IRREGULARITY AND IT IS NOT CURABLE. THEREFORE THE 12 ITA NOS.1101 TO 1107BANG/10 REQUIREMENT OF THE ISSUANCE OF NOTICE U/S.143(2) OF THE ACT CANNOT BE DISPENSED WITH. HOWEVER IN THE PRESENT CASE THE A.O. FRAMED THE A SSESSMENT BY CONSIDERING THE RETURNS OF INCOME FILED BY THE ASSESSEE U/S.139(1) OF THE ACT AND NOT THE RETURN OF INCOME FILED U/S.153A OF THE ACT BUT NO NOTICE U/S . 143(2) OF THE ACT WAS ISSUED AGAINST THOSE RETURNS OF INCOME FOR THE OMISSION ON THE PART OF THE ASSESSING OFFICER TO ISSUE NOTICE U/S.139(1) OF THE ACT ON T HE BASIS OF WHICH THE ASSESSMENT HAS BEEN FRAMED BY THE A.O. CANNOT BE DISPENSED WI TH AND SINCE THERE WAS NO NOTICE ISSUED U/S.143(2) OF THE ACT FOR THE RETURNS OF INC OME FILED BY THE ASSESSEE U/S.139(1) OF THE ACT WHICH HAS BEEN CONSIDERED WHI LE FRAMING THE ASSESSMENT UNDER CONSIDERATION. THEREFORE THE ASSESSMENT FRAMED BY THE A.O. WITHOUT ISSUING NOTICE U/S.143(2) OF THE ACT WERE INVALID AND DESERVES TO BE QUASHED. WE ORDER ACCORDINGLY. 10. AS REGARDS TO THE SUBMISSIONS OF THE LEARNED CI T DR THAT EVEN IF THE A.O. HAD TAKEN THE FIGURE OF THE ORIGINAL RETURN OF INCO ME WHILE COMPUTING THE INCOME IT WAS RECTIFIABLE MISTAKE IS CONCERNED IT IS NOTICED THAT THE A.O. DID NOT ISSUE ANY NOTICE U/S.154 OF THE ACT. MOREOVER THE A.O. HIMS ELF ADMITTED IN THE BODY OF THE ASSESSMENT ORDER THAT THE RETURN FILED BY THE ASSES SEE U/S.153A OF THE ACT WERE ON ESTIMATE BASIS THEREFORE THOSE WERE REJECTED. WE DO NOT SEE ANY MERIT IN THE ABOVE CONTENTION OF THE LEARNED CIT D.R. THAT THE MISTAK E COMMITTED BY THE A.O. WAS A RECTIFIABLE MISTAKE. ON THE CONTRARY THE RATIO LA ID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF ACIT & ANOTHER VS. HOTEL BLUE MOON HAS CLEARLY STATED THAT THE 13 ITA NOS.1101 TO 1107BANG/10 OMISSION ON THE PART OF ASSESSING AUTHORITY TO ISSU E NOTICE BEFORE COMPLETING THE ASSESSMENT U/S.143(3) CANNOT BE A PROCEDURAL IRREGU LARITY AND IS NOT CURABLE. IN THE INSTANT CASE ALSO THE A.O. ALTHOUGH CONSIDERED THE INCOME DECLARED BY THE ASSESSEE IN THE ORIGINAL RETURNS OF INCOME FILED U/S. 139 OF TH E ACT BUT DID NOT ISSUE ANY NOTICE U/S.143(2) OF THE ACT FOR THOSE RETURNS. THE A.O. I SSUED THE NOTICES U/S.143(2) OF THE ACT FOR THE RETURNS OF INCOME WHICH WERE FILED BY THE ASSESSEE U/S.153A OF THE ACT BUT THOSE RETURNS WERE NOT ACCEPTED BY THE A.O. BY STATING THOSE WERE ON THE ESTIMATE BASIS. IN THAT VIEW OF THE MATTER WE DO NOT SEE ANY MERIT IN THIS ARGUMENT OF THE LEARNED CIT DR THAT THE NOTICE U/S.143(2) W AS ISSUED FOR THE RETURNS OF INCOME FILED U/S.153A OF THE ACT THEREFORE THE AS SESSMENTS FRAMED BY THE A.O. WERE JUSTIFIED AND IF THERE WAS ANY MISTAKE THAT WA S A CURABLE MISTAKE. WE THEREFORE CONSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HEREIN ABOVE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND THE ASSESSMENT ORDERS PASSED BY THE A.O. BY CONSIDERING THE INCOME DECLARED BY THE ASSESSEE IN THE RETURNS OF INCOME FILED U/S.139(1) OF THE ACT FOR WHICH NOTICE U/S.143(2) W AS ISSUED ARE QUASHED. SINCE WE HAVE DECIDED THE LEGAL ISSUE IN FAVOUR OF THE ASSES SEE AND THE ASSESSMENT ORDERS ARE QUASHED THEREFORE NO SEPARATE FINDINGS ARE GIVEN ON THE ISSUE RAISED BY THE ASSESSEE ON MERIT I.E. QUANTUM OF ADDITION. 11. IN THE RESULT THE APPEALS OF ASSESSEE FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION ARE ALLOWED AS INDICATED ABOVE. 14 ITA NOS.1101 TO 1107BANG/10 (ORDER PRONOUNCED IN THE OPEN COURT ON 30.11.2011 .) SD/- SD/- (GEORGE GEORGE) (N.K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED: 30.11.2011. *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR -ABENCH. 6. GUARD FILE. BY ORDER ASSTT. REGISTRAR ITAT BANGALORE