TaxTMI 
TaxTMI 
2015 (4) TMI 764
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....u/s 68 on account of income from undisclosed sources being the amount shown received as refund of share application money from M/s Aayushi Stock Brokers Pvt. Ltd. an identified entry operator. 3. That on the facts and circumstances of the case and in law the learned CIT(A) has erred In deleting the addition of Rs. 12,50,000/- made u/s 68 as income from undisclosed sources being the amount shown received as share application money from M/s Aayushi Stock Brokers P. Ltd, an identified entry operator. 4. That on the facts and circumstances of the case and in law the ld CIT(A) has erred in relying upon the paper book filed by the assessee during the course of appeal proceedings without verifying the facts of the case and also erred in holding that the AO has not been able to bring on record any material evidence. 5. That on the facts and circumstances of the case and in law the Ld.CIT(A) has failed to appreciate the entire facts discussed in the assessment order about the modus operandi of M/s Aayushi Stock Brokers P. Ltd.(an established entry operator) from whom the assessee shown to have received an amount of Rs. 50.00,000/- as sale consideration of shares, Rs. 10,00,000/- as refun....
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....ials, the AO has reopened the assessment of the impugned Assessment Year, vide its notice dated 31.2.2009 under section 148 of the Act. During the course of reassessment proceedings, AO made certain additions on account of earning of commission income and under section 68 of the Act. 5. Against the re-assessment order, Assessee filed an Appeal before the Ld. CIT(A), on the jurisdictional aspects as well as on merits. The CIT(A) vide his impugned order dated 30.11.2010 confirmed the jurisdiction of the AO to re-open the assessment, however, allowed the appeal of the assessee on merits and hence, the present cross-objections has been filed before us. 6. At the time of hearing Ld. Counsel of the assessee Sh P.C. Yadav, raised the additional ground relating to non-service of notice u/s. 143(2) of the Act. Ld. Counsel of the assessee stated that the assessment order has been passed without issuing the notice u/s. 143(2) of the Act. He stated that on a perusal of the impugned reassessed order and the record will clearly show that the AO has not issued the mandatory notice u/s. 143(2) of the Act before completion of the reassessment in dispute. He submitted that the assessee has filed h....
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.... in dispute. Regarding admission of this additional ground before us, which is challenging the very jurisdiction of the AO to pass the reassessment order, is no longer res-integra and it is well settled that an assessee can raise a legal ground at any stage of the proceedings as held by Apex Court in the case of CIT Vs. Varas International reported in 284 ITR 80(SC) and National Thermal Power Co. Ltd. Vs. CIT reported in 229 ITR 383 (SC)and the Special Bench decision in the case of DHL operators reported in 108 TTJ 152 (SB). Keeping in view the facts and circumstances of the present case and the arguments raised by the ld. counsel, we are of the view that the issue raised in additional ground regarding the non-issuance of notice u/s. 143(2) of the Act which goes to the root of the matter, needs to be admitted and should be taken up first and decided, so we will adjudicate this issue 10. A perusal of the assessment order reveals that return of income declaring income of Rs. 5,148/- was filed on 31.10.2002. The case was processed u/s 143(1) of the Act. Subsequently, it was noticed from the record that the assessee company was incorporated on 23.12.1997 and the share capital has incr....
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....ions of Act shall apply as if such return was filed as required u/s 139 of the Act. The first proviso and second proviso to section 148 cures the defect in not serving 143(2) notice within specified period i.e. from 01.10.1991 to 30.09.2005. So the legislative intent is clear that during section 148 proceeding the notice u/s 143(2) shall be issued before the completion of assessment proceeding even though it is served beyond the prescribed time limit prescribed u/s 143(2) of the Act. Further, the explanation to section 148(1) clarifies that serving of notice u/s 143(2) is mandatory in respect of returns filed on or after 1st October 2005, since it is clarified that the first and second proviso to section 148(1) has no application on or after 1st October 2005 onwards. In the instant case the first & second proviso has no application and a reading of section 143 of the Act, contemplates two circumstances i.e. when return is filed u/s 139 and return filed in response to notice u/s 142(1), the said return should be processed in the manner prescribed u/s 143 of the Act. 13. Now, in this case notice u/s 148 & 142(1) was issued and the assessee in response to 142(1) notice has submitted ....
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.... above, we are of the view that the AO has not issued notice u/s. 143(2) of the Act which is mandatory. We are also of the view that in completing the assessment u/s. 148 of the Act, compliance of the procedure laid down u/s. 142 and 143(2) is mandatory. As per record, we find that there was no notice issued u/s. 143(2) of the Act which is very much essential for reassessment and it is a failure on the part of the AO for not complying with the procedure laid down in section 143(2) of the Act. If the notice is not issued to the assessee before completion of the assessment, then the reassessment is not sustainable in the eyes of law and deserves to be cancelled. In view of above facts and circumstances of the present case, the issue in dispute raised in additional ground relating to non issue of the mandatory notice u/s. 143(2) of the Act is decided in favour of the assessee and we hold that the impugned assessment order dated 31.12.2009 passed u/s. 147/143(3) of the Act by the AO as invalid. Our view is supported by the various judgments of the Hon'ble Supreme Court, and Hon'ble Jurisdictional High Court. The relevant portion of the head- notes of various judgments of the Hon'ble Co....
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.... the reassessment year involved relates to the period prior to the insertion of Section 292BB. In this view of the matter, the appeal is dismissed with no order as to costs. DCIT Vs. M/s Silver Line, ITA No.1809,1504,1505 & 1506/Del/2013 vii. The Hon'ble ITAT of Agra Bench, in the case of ITO v. Aligarh Auto Centre reported in 152 TTJ (Agra) 767, on an identical issue that of the present issue, has recorded its findings as under: "5. We have considered the rival submissions and the material on record. It is not in dispute that the assessee filed original return of income and at the reassessment proceedings, the assessee contended before the AO that the original return filed earlier may be treated to have been filed in response to the notice u/s. 147, which is also supported by order sheet entry dated 09.08.2006 (PB-20). It is also not in dispute that AO never issued any notice u/s. 143(2) of the IT Act. The Revenue merely contended that the CIT (A) should have appreciated the provisions of section 292BB of the IT Act. Section 292 BB of the IT Act provides as under: "292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessme....