Notice under section 143(2) crucial in reassessment proceedings. Verify issuance for valid orders.

The Tribunal emphasized the mandatory nature of issuing notice under section 143(2) in reassessment proceedings. The case was remanded to the CIT (A) to verify whether such notice was issued and served, as this would affect the validity of the reassessment orders. The Tribunal did not express any opinion on the merits of the additions or other grounds raised by the assessee, as these could only be decided after resolving the primary procedural issue. The appeals filed by the assessee were allowed for statistical purposes.

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Issues Involved:
1. Validity of the reopening of assessment under section 147 of the Act.
2. Non-issuance of notice under section 143(2).
3. Confirmation of additions on account of training and development expenses.
4. Reliance on the statement of Sh. S.K. Gupta without cross-examination.
5. Rejection of evidence submitted in support of the expenditure incurred.
6. Eligibility for deduction under section 10B.

Issue-wise Detailed Analysis:

1. Validity of the reopening of assessment under section 147 of the Act:
The assessee contended that the reasons recorded for reopening the assessment were bad in law, and thus, the reassessment should be quashed. The CIT (A) upheld the validity of the reopening, which was challenged by the assessee on the grounds that the assessment order was made without disposing of the objections raised against the reopening. The Tribunal did not provide a specific ruling on this issue but focused on the procedural aspects related to the issuance of notice under section 143(2).

2. Non-issuance of notice under section 143(2):
The primary contention of the assessee was that no notice under section 143(2) was issued during the reassessment proceedings, a fact admitted by the Assessing Officer (A.O.) in the remand report. The Tribunal acknowledged that the issuance and service of notice under section 143(2) is mandatory and not merely procedural. Referring to the decisions of the Hon'ble Supreme Court in ACIT vs. Hotel Blue Moon and the Hon'ble Delhi High Court in CIT vs. Pawan Gupta, the Tribunal emphasized that the absence of such notice invalidates the reassessment order. Consequently, the Tribunal directed the CIT (A) to verify whether the notice under section 143(2) was issued and served, as this would affect the validity of the reassessment orders.

3. Confirmation of additions on account of training and development expenses:
The CIT (A) confirmed the additions made by the A.O. on account of training and development expenses amounting to Rs. 32,85,500/- for the assessment year 2005-06 and Rs. 30,41,975/- for the assessment year 2006-07. The assessee challenged these additions, arguing that the evidence submitted in support of the expenditure was arbitrarily rejected. However, the Tribunal did not express any opinion on the merits of these additions, as the primary issue regarding the issuance of notice under section 143(2) had to be resolved first.

4. Reliance on the statement of Sh. S.K. Gupta without cross-examination:
The assessee contended that no reliance should be placed on the statement of Sh. S.K. Gupta, which was recorded at the back of the assessee without providing an opportunity for cross-examination. The CIT (A) rejected this contention, but the Tribunal did not address this issue in detail, as the case was remanded to the CIT (A) for verification of the issuance of notice under section 143(2).

5. Rejection of evidence submitted in support of the expenditure incurred:
The assessee argued that the A.O. misinterpreted the statement of Sh. S.K. Gupta and wrongly used it against the assessee. Additionally, the evidence submitted in support of the expenditure incurred was arbitrarily rejected. The Tribunal did not delve into this issue, as the primary focus was on the procedural validity of the reassessment proceedings.

6. Eligibility for deduction under section 10B:
The assessee claimed that the deduction under section 10B should be recomputed on the assessed income and the benefit of the same should have been allowed. The CIT (A) rejected this contention, but the Tribunal did not provide a specific ruling on this issue, as the case was remanded for verification of the procedural aspects related to the issuance of notice under section 143(2).

Conclusion:
The Tribunal emphasized the mandatory nature of issuing notice under section 143(2) in reassessment proceedings. The case was remanded to the CIT (A) to verify whether such notice was issued and served, as this would affect the validity of the reassessment orders. The Tribunal did not express any opinion on the merits of the additions or other grounds raised by the assessee, as these could only be decided after resolving the primary procedural issue. The appeals filed by the assessee were allowed for statistical purposes.

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