TaxTMI 
TaxTMI 
2017 (7) TMI 660
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.... by the AO and affirmed by CIT(A) is bad in law as no notice under section 143(2) after the issuance of notice under section 148 has ever been issued before the completion of assessment proceedings by the AO. 3. Without prejudice to the above the proceedings of 147 read with 148 are ab-initio-void, as no notice u/s 148 has ever been served on the assessee before the completion of assessment proceedings and the notice alleged to have been served by affixture has been served in an arbitrary manner and not at the correct address. 4. The Ld CIT (A) has failed to appreciate that the AO has solely relied on the information of investigation wing and has reopened the assessment in a mechanical manner, without any independent application of mind. 5. The CIT(A) has failed to appreciate that for assuming jurisdiction u/s 147 the AO has borrowed the satisfaction of the investigation wing of the department and has not applied his mind independently to the vague material sent by investigation wing of the department. 6. The CIT(A) has failed to appreciate that expression used by the AO in reasons recorded i.e accommodation entry is a very wider term and for assumption of jurisdiction of 1....
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....hat this Tribunal vide order dated 28.11.2016 directed the Departmental Representative to produce the assessment record on the next date of hearing on 31.1.2017, but no such record was produced by the ld. D.R. and therefore the case was adjourned to 31.1.2017 and ultimately it was adjourned for 16.3.2017. When the Bench asked the ld. D.R. to produce the record to prove whether any notice under section 143(2) of the Act has been issued or served on the assessee, the ld. D.R. was fair enough to admit that he has written to the Assessing Officer but the Assessing Officer has stated that the record has been misplaced and is not traceable. We are of the view that once this Tribunal has directed the Revenue to produce the record with regard to the assessment so that it can be verified whether notice under section 143(2) of the Act has been issued and served on the assessee before completing the assessment under section 147/148 of the Act, the Revenue was bound to produce the record. But the Revenue could not produce the record and just explained in the Bar that the record has been misplaced. Under these circumstances, we are bound to take an adverse inference in view of the provisions of....
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....s decision, the Hon'ble jurisdictional High Court has dealt with this issue as under:- "7. The Assessee's further appeal has been allowed by the ITAT by the impugned order. Relying, inter alia, on the decision of the Supreme Court in ACIT v. Hotel Blue Moon (2010) 321 ITR 362 and a plethora of judgments of the High Courts, the ITAT concluded that for completing the assessment under Section 148 of the Act compliance with the procedure under Section 143 (2) was mandatory. It was held that if notice was not issued to the Assessee before completion of the re-assessment, then such reassessment was not sustainable in law. 8. When this appeal was first listed before this Court on 29th July, 2015 reliance was placed by Ms Suruchi Aggarwal, learned Senior Standing counsel for the Revenue on the decision of this Court in 'Commissioner of Income Tax v. Madhya Bharat Energy Corporation Ltd. (2011) 337 ITR 389 ) Del which purported to hold that non-issue of notice under Section 143(2) of the Act on an Assessee prior to completion of the reassessment would not be fatal to the reassessment. She also sought to distinguish the decision in ACIT v. Hotel Blue Moon (supra) on the ground that it....
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....Court makes it clear that no notice under Section 143(2) of the Act was issued to the Assessee after 16th December 2010, the date on which the Assessee informed the AO that the return originally filed should be treated as the return filed pursuant to the notice under Section 148 of the Act. 13. In DIT v. Society for Worldwide Interbank Financial Telecommunications (2010) 323 ITR 249 (Del), this Court invalidated an reassessment proceedings after noting that the notice under Section 143(2) of the Act was not issued to the Assessee pursuant to the filing of the return. In other words, it was held mandatory to serve the notice under Section 143(2) of the Act only after the return filed by the Assessee is actually scrutinised by the AO. 14. The interplay of Sections 143 (2) and 148 of the Act formed the subject matter of at least two decisions of the Allahabad High Court. In CIT v. Rajeev Sharma (2011) 336 ITR 678 (All.) it was held that a plain reading of Section 148 of the Act reveals that within the statutory period specified therein, it shall be incumbent to send a notice under Section 143(2) of the Act. It was observed: "the provisions contained in sub-Section (2) of Section....
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.... the same decision in v. Salarpur Cold Storage (P.) Ltd.( supra), the Allahabad High Court noticed that the decision of the Supreme Court in ACIT v. Hotel Blue Moon (supra) where in relation to block assessment, the Supreme Court held that the requirement to issue notice under Section 143(2) was mandatory. It was not "a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with." 17. The Madras High Court held likewise in Sapthagiri Finance & Investments v. ITO (2013) 90 DTR 289 (Mad). The facts of that case were that a notice under Section 148 of the Act was issued to the Assessee seeking to reopen the assessment for AY 2000- 01. However, the Assessee did not file a return and therefore a notice was issued to it under Section 142 (1) of the Act. Pursuant thereto, the Assessee appeared before the AO and stated that the original return filed should be treated as a return filed in response to the notice under Section 148 of the Act. The High Court observed that if thereafter, the AO found that there were problems with the return which required explanation by the Assessee then the AO ought to have follo....
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....ly following the aforesaid decision, we quash the assessment framed by the Assessing Officer. 13. Grounds No.4, 5 & 6 relate to the issue that the reasons recorded by the Assessing Officer were not bona-fide and are based on the basis of the borrowed satisfaction of the Investigation Wing of the Department. 14. Since we have already quashed the assessment, in our view, there is no need to adjudicate other grounds taken by the assessee in the cross objection, but since both the parties has extensively argued, we have decided to deal with this issue. 15. After hearing both the parties, we noted that in this case the Assessing Officer has reopened the assessment by recording the following reasons to believe:- "As per information received from the office of the DIT (Inv.), New Delhi vide letter F.No./Addl.DIT(Inv.)/Unit-IV/ Beneficiaries/2008-09/392 dated 31.03.2009, the assessee company has taken following accommodation entry totaling to Rs. 98,50,000/-: Value of entry taken From whom taken Rs. 23,50,000/- M/s Sadguru Finman Pvt. Ltd. Rs. 25,00,000/- M/s Karot Bagh Trading Ltd. Rs. 25,00,000/- M/s Deep Sea Drilling Pvt. Ltd. Rs. 25,00,000/- M/s Adonis Finance L....
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.... in understanding whether the AO applied his mind to the materials that he talks about particularly since he did not describe what those materials were. Once the date on which the so called accommodation entries were provided is known, it would not have been difficult for the AO, if he had in fact undertaken the exercise, to make a reference to the manner in which those very entries were provided in the accounts of the Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: "it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries". In the considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case. 13. Mr. Sawhney took the ....
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....these decisions will not assist the assessee. We do not deny that at the time of recording the reasons, the Assessing Officer should have prima-facie belief but that belief must be arisen out of the material. Until and unless the ingredients stipulated under section 147 of the Act are not complied with, the reasons recorded cannot be regarded to be bona-fide. We accordingly on this basis also, following the decision in the case of Principal CIT vs. G & G Pharma India Ltd. (supra) quash the assessment order. Thus grounds No.1 to 6 of the cross objection taken by the assessee are allowed. 19. Now coming to the ground taken by the Revenue, the only issue involved relates to the deletion of addition of Rs. 98.50 lakhs made by the Assessing Officer under section 68 of the Act. 20. After hearing the rival submissions and considering the orders of the authorities below, we noted that the ld. CIT(A) has categorically held that the assessee has discharged his onus to prove all the ingredients as stipulated under section 68 of the Act inasmuch as he has clearly stated that the Assessing Officer has not made any enquiry to examine the contents of the information submitted by the assessee. T....
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....2007, wherein the Hon'ble Court concurred with the findings of the Appellate Tribunal, Delhi Bench 'F' that once the identity of the investor has been manifest and is proved, the investment cannot be said to be the Undisclosed income of the assessee. At best, the amount could be added in the hands of the investor but it certainly could not be treated as undisclosed income of the assessee. The appeal filed against the said decision, was dismissed by the Hon'ble Supreme Court in C.C. 12860/2007 dated 08/01/2008. 8.13. On the similar facts in the recent decision of Hon'ble Delhi High Court in the case of CIT vs Goel Sons Golden Estate Pvt Ltd (ITA 212/2012) dated 11th April, 2012 have deleted the addition made by holding in Para 3 of their order as under: "......We have examined the said contention and find that the assessee during the course of assessment proceedings has filed confirmation letters from the companies, their PAN Number, copy of bank statements, affidavits and balance sheet. Thereafter the Assessing Officer had asked the assessee to produce the said Directors/ parties. Assessee expressed its inability to produce them. The Assessing Officer did no....