Assessee's appeal allowed for statistical purposes, remitted for Section 143(2) notice examination.

The appeal filed by the Assessee was allowed for statistical purposes, and the matter was remitted to the Commissioner for further examination regarding the issuance of notice under Section 143(2) of the Income-tax Act, 1961. The Tribunal emphasized the mandatory nature of the notice under Section 143(2) and the implications of its absence on the validity of the assessment order.

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Issues Involved:
1. Validity of proceedings under Section 148 of the Income-tax Act, 1961.
2. Addition on account of capital gains on the sale of house property.
3. Issuance and service of notice under Section 143(2) of the Income-tax Act, 1961.

Detailed Analysis:

1. Validity of Proceedings under Section 148 of the Income-tax Act, 1961:
The Assessee challenged the validity of the proceedings initiated under Section 148 of the Act on the grounds of the validity of the service of notice and the framing of the order consequent to the said notice. The Assessee filed a return of income in response to the notice under Section 148 and participated in the assessment proceedings. As per Section 292BB of the Act, once the Assessee has filed a return and participated in the reassessment proceedings, the validity of the assessment proceedings cannot be questioned. The Commissioner concluded that there was no infirmity in the service of notices and the consequential reassessment order under Sections 148/143(3) of the Act, and thus, the grounds of appeal relating to this issue were rejected.

2. Addition on Account of Capital Gains on Sale of House Property:
The Assessee did not disclose the capital gains from the sale of house property No. 88, Hill Street, Meerut Cantt. The Assessing Officer (AO) made an addition by applying the provisions of Section 50C of the Act, taking the market value as per the circle rate. The Assessee argued that since possession of the property was not given, capital gains had not accrued, and thus, Section 50C was not applicable. However, the Commissioner noted that the property was sold through a registered sale deed, and consideration was received. The AO rightly took the value as per the circle rate and calculated the capital gains. There was no infirmity in the AO's order, and it was confirmed.

3. Issuance and Service of Notice under Section 143(2) of the Income-tax Act, 1961:
The Assessee raised additional grounds challenging the reassessment order on the basis that the AO did not issue the mandatory notice under Section 143(2) of the Act. The Assessee contended that issuance of notice under Section 143(2) is mandatory before finalizing an assessment order under Section 143(3), and in its absence, the assessment order is void ab initio. The Assessee referred to the judgment of the Hon'ble Allahabad High Court in U.P. State Industrial Development Corporation Ltd. vs. CIT-II, Kanpur, 2016 SCC Online (All) 2348.

The Department argued that the Assessee's participation in the assessment proceedings precludes them from challenging the assessment order under Section 292BB of the Act. However, the Tribunal noted that Section 292BB does not save the complete absence of notice; it only cures infirmities in the manner of service. The Tribunal referred to the Supreme Court's judgments in ACIT vs. Hotel Blue Moon and CIT vs. Laxman Das Khandelwal, which emphasized that the issuance of notice under Section 143(2) is mandatory.

Given the AO's reply that no notice under Section 143(2) was issued, the Tribunal remitted the issue to the Commissioner to adjudicate by examining the facts and the assessment record. The Assessee was directed to cooperate fully with the Commissioner.

Conclusion:
The appeal filed by the Assessee was allowed for statistical purposes, with the matter remitted to the Commissioner for further examination regarding the issuance of notice under Section 143(2). The Tribunal's order emphasized the mandatory nature of the notice under Section 143(2) and the implications of its absence on the validity of the assessment order.

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