Section 292BB of the Income Tax Act cannot be given a retrospective effect

Name of Appeal: PR.CIT-I Vs. M/S MAHLA REAL ESTATE PVT. LTD.
ITA Number of the appeal: D.B. ITA/47/2020
Assessment Year: 2007-08
Under Section: 148
Date of order: 09/11/2021
Bench: Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Income Tax Appeal No. 47/2020
Principal Commissioner Of Income Tax-I, New Central Revenue
Building, Statue Circle, Jaipur (Raj) ---- Appellant
Versus
M/s Mahla Real Estate Pvt. Ltd., 12-13, Patel Colony, Laxmi Path
Sardar Patel Marg, Jaipur.---- Respondent
For Appellant(s) : Mr. Anuroop Singhi
For Respondent(s) : Mr. Mahendra Gargieya
Mr. Devang Gargieya

HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI
 HON'BLE MS. JUSTICE REKHA BORANA

Judgment
09/11/2021

This appeal has been filed challenging the judgment of the Income Tax Appellate Tribunal raising the following questions for our consideration:-

i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the notice issued u/S. 148 was not served upon the assessee, contrary to the findings recorded in Assessment order as well as in remand report, which duly mentions that the notice was served on the authorized representative of the assessee as well as on one Shri Chandan under the instructions of Director of the assessee-company?

ii) Whether, on the facts and in the circumstances of the case and in law, the Tribunal, Jaipur was justified in holding that Section 292BB is applicable prospectively, without appreciating the clarification issued by the CBDT vide its Circular No.01/2009 dated 27/03/2009, clarifying that the provisions of new Section 292BB shall apply in all proceedings which are pending on 01/04/2008, thereby not restricting the applicability of the provisions to A.Y. 2009-10 onwards?

The issue pertains to the re-opening of assessment of the respondent-assessee for the assessment year 2007-08. The Tribunal in the impugned judgment came to the factual finding that before passing the order of assessment, notice of re-opening
of the assessment was never served on the assessee or its authorised representative. The following observation of the Tribunal need to be noted:-

“After having heard the ld. Counsels for both the parties at length and after going through the facts of the present case, we find that there are certain undisputed facts in this case i.e. the AO has not admittedly sent any notice issued under Section 148 of the IT Act to the registered office address of the assessee company at 12-13, Patel Colony, Laxmi Path, Sardar Patel Marg, Jaipur either through registered post or speed post and further the AO has made no efforts to serve notice through Affixture at the above registered office address. Although the assessee has categorically raised the objection about non service of notice under section 148 of the Act but still no copy of notice issued under Section 148 of the Act was served upon the assessee at any subsequent point of time but before completing the order of assessment on 24.03.2015. From the record, we also notice that there is no power of attorney of Shri Anand Sharma, CA given by the assessee, therefore, in such circumstances even if any notice was served on Shri Anand Sharma under Section 148 of the Act, but the same is of no consequence in the absence of any valid authority/authorization given by the assessee company to the said Shri Anand Sharma, CA. The ld. CIT (A) has also pointed out that in the completed order sheet there no indication of the fact that any point of time any Power of Attorney or Authorization was filed by the assessee company in favour of Shri Anand Sharma on or before 14.03.2014 for the year under consideration.

Although the ld. D/R submitted before us that the service of notice was effected on Shri Chandan but the fact remains that the said Shri Chandan was neither the employee of the assessee nor was authorized to receive such notice, and, therefore, in such a situation we canon treat the said alleged service on Shri Chandan to be a valid service in view of the provisions of Section 282 of the Act read with Order 5 of the Code of Civil Procedure 1908. Even otherwise, the said Shri Chandan while allegedly receiving the notice on 14.03.2014 had affixed the stamp of M/s. Durga Motor Company which also goes to show that the said notice was never served upon the assessee.”

In that view of the matter, we do not find that the Tribunal has committed any error in setting aside the assessment. The counsel for the revenue however has strenuously argued that in view of Section 292BB inserted in the Income Tax Act, mere defect in service of notice had to be factually ignored. The Tribunal has however correctly observed as held by the Delhi High Court in CIT Vs. Chetan Gupta (2015) 62 Taxman.com 249 (Delhi) that Section 292BB of the Act cannot be given a retrospective effect.

Admittedly, the said provision was inserted in the Income Tax Act in 2008.

In the result, no question of law arises. The income tax appeal is dismissed.

(REKHA BORANA),J
(AKIL KURESHI),CJ