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M/S Mohan Dairy v. Union Of India Thru' Secy. Finance & Another - WRIT TAX No. 1071 of 2005 [2006] RD-AH 1995 (25 January 2006)


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Court no. 55

Civil Misc. Writ Petition no.   1071 Of  2005.

M/S Mohan Dairy, Bulandshahar ... Applicant.


The Union of India through Secretary Finance, Union Secretariat, New Delhi and others. ...Respondents.

Hon'ble Rajes Kumar, J.

By means of the present writ petition under Article 226 of the Constitution of India, petitioner is seeking for quashing the order dated 26.05.2005 which is Annexure-1 to the writ petition, by which, the petitioner's application for addition of additional ground in appeal has been rejected.

The Application, which is annexure-2, petitioner sought addition of the ground no. 7 which reads as follows:-

"That the assessment proceedings and consequential assessment order is without jurisdiction and barred by limitation in view of non service of statutory notice under Section 143 (2) within the period allowed as per proviso to Section 143 (2) of the Act."

The aforesaid ground was sought to be added and be adjudicated on the ground that it was a legal ground and goes to the root of the matter.  Tribunal rejected the application on the ground that in an identical matter of Smt. Sujata Grover in appeal no. ITA no. 2577/Delhi/2003, application for additional ground was rejected.  No independent reason has been given in the case of the petitioner for rejecting the application.

Heard learned Counsel for the parties.

Learned Counsel for the petitioner submitted that the ground, which has been sought to be added and be adjudicated, is a pure legal ground and goes to the root of the matter.  He submitted that unless a notice is served under Section 143 (2) of the Act within the period prescribed under the proviso to Section 143 (2) of the Act, no valid assessment order could be passed and in case if the notice is not issued within the period prescribed, the entire assessment order stand time barred.  According to the petitioner, a notice under Section 143 (2) of the Act has not been served.  In support of his contention, he relied upon the decisions of Apex Court in the cases of National Thermal Power Company Ltd. Vs. Commissioner of Income Tax reported in 229 ITR page 383, Gedore Tools Pvt. Ltd. Vs. CIT reported in ITR 238 page 268 (Delhi), Asstt. Collector of Central Excise, Guntur Vs. Ramdev Tobacco Company reported in AIR 1991 SC 506 and Shri Rattan Lal Sharma Vs. Managing Committee, Dr. Hari Ram (Co-education), Higher Secondary School & others reported in AIR 1993 (3) page 487.

Sri R. K. Upadhayay, learned Standing Counsel appearing on behalf of the revenue submitted that it is wrong to say that the notice under Section 143 (2) of the Act has not been issued to the petitioner within the time prescribed and thus, the ground sought to be added, has no force and the application has been rightly rejected by the Tribunal.

Having heard learned Counsel for the parties, in my view, order of Tribunal is not sustainable.  There is no dispute that before passing the assessment order under Section 143 (3) of the Act, issuance of notice under Section 143 (2) of the Act within the specified time, is mandatory and in case if it is not issued, assessment order passed, stand illegal.  Thus, in my opinion, ground, which has been raised and sought to be added in the grounds of appeal, is a legal ground, which goes to the root of the matter, and thus, the Tribunal ought to have allowed the application and the ground sought to be added be permitted to be added in the grounds of appeal.  In the case of National Thermal Power Company Ltd. Vs. Commissioner of Income Tax (supra), the Apex Court held as follows:-

"The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income Tax (Appeals) takes too narrow a view of the powers of the Appellate Tribunal (vide, e. g. CIT Vs. Anand Prasad (1981) 128 ITR 388 (Delhi), CIT Vs. Karamchand Premchand P. Ltd. (1969) 74 ITR 254 (Guj.) and CIT Vs. Cellulose Products of India Ltd. (1985) 151 ITR 499 (Guj.) (FB).  Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised.  But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings, we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability."

The argument of learned Standing Counsel that it is not correct to say that the notice under Section 143 (2) of the Act has not been issued within the specified time, may be correct, but this aspect of the matter has to be adjudicated by the Tribunal after entertaining the ground in this respect and for the purposes of admission of new ground, this aspect of the matter is not relevant.

In the result, petition is allowed.  Order of Tribunal dated 26.5.2005 (Annexure-1 to the writ petition) is quashed.  The application for addition of additional ground, which is Annexure-2 stand, allowed.  The Tribunal is directed to permit the petitioner to add the additional ground as ground no. 7 mentioned in the application and adjudicate the said ground while disposing of the appeal.  There shall be no order as to costs.




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