We have heard Shri Ashish Bansal, learned counsel for the appellant and Shri Shubham Agrawal, learned counsel for the Department.
2. Several substantial questions of law have been prayed which according to the appellant arise for consideration but in our opinion it is sufficient to deal only with one such question of law, namely, "whether the AO was justified in making an assessment order without serving a notice under s. 143(2) of the IT Act within the stipulated period of 12 months from the end of the month when the returns were filed".
3. The present appeal relates to the asst. yr. 1997-98. At that point of time, the law was that a notice under s. 143(2) of the Act was required to be issued within 12 months from the end of the month when the return was filed.
4. In the instant case, the assessee filed the return on 28th Nov., 1997 as is evident from the assessment order. Accordingly, the 12 months for issuance of a notice under s. 143(2) of the Act expired on 30th Nov., 1998. The assessment order indicates that a notice under s. 143(2) of the Act along with a questionnaire was issued on 21st June, 1999 Le. almost after 7 months from the expiry of the period. Assessment order was thereafter made on 27th July, 2000.
5. The Supreme Court in Asstt. CIT & Anr. us. Hotel Blue Moon (20 I 0) 229 CTR (SC) 219 : (2010) 35 DTR (SC) 1 : (2010) 321 ITR 362 (SC) has held that the proviso to s. 143(2) of the Act itself creates an embargo on the AO to exercise jurisdiction after the expiry of 12 months from the end of the month in which the return was filed by the assessee. The Supreme Court held that it is the discretion of the AO to accept the return as it is or to proceed further with the assessment of income and once the AO decides to proceed, he has to issue notice under s. 143(2) of the Act within the prescribed time-limit to make the assessee aware that his retum has been selected for scrutiny purposes.
6. In the instant case, we find that the notice under s. 143(2) of the Act was issued beyond the period of limitation. Mter the expiry of 12 months, AO has no jurisdiction to proceed to make an assessment and had to accept the retum as it was filed by the assessee. Consequently, the assessment order passed by the AO cannot be sustained. The order of the first appellate authority as well as the order of the Tribunal also cannot be sustained.
7. The learned counsel for the Department submitted that the aforesaid question was never raised by the assessee before the Tribunal and, therefore, such ground cannot be taken into consideration, for the first time in an appeal filed by the assessee before this Court under s. 260A of the IT Act. In support of his submission, the learned counsel has relied upon a decision of Delhi High Court in CIT us. Chand Ratan Bagri (2010) 230 CTR (Del) 258 : (2010) 36 DTR (Del) 244 wherein the Delhi High Court held that issue which was not raised before the lower authority cannot be permitted to be raised before the High Court in an appeal under s. 260A of the Act.
8. In our view, the said judgment stands impliedly overruled in view of the decision of the Supreme Court in CIT & Anr. us. Distillers Co. Ltd. (2007) 209 CTR (SC) 177 : (2007) 290 ITR 419 (SC) wherein the Supreme Court held as under :
"From a reading of sub-so (I) of S. 260A of the Act, it is clear that an appeal is provided to the High Court from every order passed by the Tribunal, if the case involves a substantial question of law. Therefore, the conditions that are required to be satisfied for entertaining the appeal are: (I) that the order appealed against should arise out of an order made by the Tribunal; and (2) that the case involves substantial question of law. Therefore, if the case or a proceeding, out of which an appeal is presented before the High Court involves a substantial question of law, such an appeal would be maintainable before the High Court under S. 260A of the Act. Therefore, if the case or a proceeding, out of which an appeal is presented before the High Court involves a substantial question of law, such an appeal would be maintainable before the High Court under s. 260A of the Act. Therefore, even if the contention is not urged before the appellate authority, but on the basis of the records, without investigation of any facts, if the substantial question of law is made out by the appellant before the High Court. in our view, it would be permissible for the High Court to entertain an appeal for consideration of such a question. Therefore, as noticed by us earlier, the language employed under sub-so (1) of S. 260A of the Act is that the case should involve a substantial question of law. The meaning attached to the words 'substantial question of law', in our view. should not be given a restricted meaning to understand it as it should involve substantial error of law in the order. While interpreting a provision which provides for a right of appeal, the Court should not narrow down the scope of the right of appeal provided to the parties. Sub-so (2) of S. 260A of the Act cannot be read de hors sub-so (1) of S. 260A of the Act. Sub-so (1) of the said section confers power on the High Court to entertain an appeal against every order passed by the Tribunal. Sub-so (2) of the said Act provides for a right to a party to file an appeal. Therefore, a reading of sub-ss. (1) and (2) of S. 260A of the Act makes it clear that if the CIT(A) or the assessee is aggrieved by an order passed by the Tribunal, he could prefer an appeal to the High Court provided the case involves a substantial question of law. As noticed by us earlier, while interpreting the provision relating to right to appeal, the Court should not impose a restricted meaning limiting the power given to the Appellate Court to interfere against the orders passed by the subordinate Courts or Tribunals. Therefore. in our considered view. if a question urged before this Court involves a substantial question of law. even if it is not raised before the Tribunal, the said question could be raised and urged before this Court and in that event the same is required to be considered by this Court. Therefore. in the light of the discussions made above. we do not find any merit in the preliminary objection raised by Sri Prasad. refet:red to above."
9. The contention of the Department that it is no longer open to the assessee to question the service of notice in view of the provision of s. 292BB of the Act cannot be accepted in as much as the said section carne into existence w.e.f. 2008 whereas the present appeal is of the financial year 1997-98. Further. the Supreme Court has held that the jurisdiction of the AD starts if the notice is issued within 12 months from the end of the month when the return was filed. It has nothing to do with the service of the notice which is contemplated under s. 292BB of the Act. In view of the aforesaid authoritative decision of the Supreme Court. we are of the opinion that a substantial question arises for consideration which is based on the records and which does not require investigation of any facts and. therefore. in our view. we entertain the appeal on the aforesaid question of law.
10. Preliminary objection raised by the learned counsel for the Department is accordingly rejected for the reasons stated aforesaid.
11. In view of the admitted position that no notice under s. 143(2) of the Act was issued. we are of the opinion that the order of the Tribunal. the first appellate authority. and the assessment order cannot be sustained and are quashed.
12. The appeal is allowed. The question of law is answered in favour of the assessee .