TaxTMI 
TaxTMI 
2018 (12) TMI 1327
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....al in ITANo.222/Ind/2017 "Whether on the facts and in the circumstances of the case, the ld. CIT(A) was justified in restricting the addition made on account of bogus purchase to 6% of total bogus purchases of Rs. 67,75,050/-" The assessee (namely Sukhmni Cotton Industries) has raised following grounds of appeal in Cross Objection No.16/Ind/2018 1) That the learned Commissioner of Income tax (A) erred in law in not deciding the issue relating to validity of reopening the assessment u/s. 147 of the Act based on report of two suppliers of cotton received from sales tax department, Maharastra wherein neither the name of the appellant exist nor any statement was recorded of any of the suppliers so as to arrive at any adverse inference against the appellant. Such information from the Sales Tax Department, Maharastra cannot be made a basis to treat genuine purchases effected by the appellant as bogus hence notice so issued u/s 148 of the Act was ab-initio void. 2) That the learned Commissioner of Income tax (A) further erred in law in deciding the appeal on merits only without appreciating the fact that though notice u/s. 142(1) was issued but notice u/s 143(2) of the Act was no....
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....led on 24.09.2011 declaring income of Rs. 46,83,090/-. Case was picked up for scrutiny through CASS and assessment u/s 143(3) of the Act was framed on 22.03.2013 assessing income at Rs. 50,00,000/-. Subsequently, the case was reopened by issuance of notice u/s 148 of the Act dated 23.03.2015 on the basis of information received from DCIT investigation Mumbai for the alleged bogus purchases. Immediately, after issuance of notice u/s 148 of the Act and recording reasons the assessment proceedings u/s 143(3) r.w.s 148 of the Act were initiated and subsequently completed after making various additions. As the notice u/s 143(2) of the Act was not issued before commencing reassessment proceedings u/s 147 of the Act, the assessee has filed cross objection before us pleading that non-issuance of notice u/s 143(2) of the Act in the reassessment proceedings initiated u/s 148 of the Act is mandatory else the reassessment proceedings are void ab initio and not valid. 5. Ld. counsel for the assessee made following written submissions wherein reliance has been placed on various judgments in support of the ground raised in the cross objection: "Non-issue of notice u/s 143(2) before assessment....
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....d. (Para-9) ACIT vs. Greater Noida Industrial Development Authority (2015) 93 CCH 185 (All HC) A.Y. 2011-12 & CIT vs. Rajiv Sharma (2011) 336 ITR 678 (All.) Since the Assessing Officer failed to 52 to 57 issue notice within the specified period under Section 143(2) of the Act, the Assessing Officer had no jurisdiction to assume jurisdiction under Sector 143(2) of the Act and this defect cannot be cured by taking recourse to the deeming fiction provided under Sector 292BB of the Act.( Para 22). Indus Towers Limited vs. DCIT (2017) 99 CCH 0031 (Del HC) A.Y. 2009-10 No explanation for failure to issue notice 58 to 60 u/s 143(2) pursuant to notice u/s 148 before last date by which notice ought to have been issued. Delay in issuing notice u/s 143(2) would be fatal to reassessment proceedings. Pankaj Dutta vs. ITO, Kolkata Bench and Tiny Girl Clothing (Company (P) Limited (Mum. Bench) Kindly refer page no.11 to 17 & page no. 18 to 25 in copies of the judgments - I 7. Ld. DR vehemently argued the supporting the order of both lower authorities which also placed reliance on the Judgment of Hon'ble High Court of Jammu and Kashmir in the Pr. CIT vs. Broadway Shoe Co. (....
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....Court of Delhi in the case of PCIT vs. Shree Jai shiv Shankar Traders Pvt. Ltd. (supra) and also discussed about the judgment of Hon'ble High Court of Delhi in the case of CIT vs. Madhya Bharat Energy Corporation (supra) which was relied by the Ld. DR and Coordinate Bench of I.T.A.T., Delhi has noted this fact that the judgment relied on by Ld. DR has already been considered by Hon'ble High Court of Delhi in the case of Jai Shiv Shankar Traders Pvt. Ltd. (supra). 12. The relevant abstract of the decision given by Coordinate Bench of I.T.A.T., Delhi in the case of ACIT vs. Dimension Promoters Pvt. Ltd. (supra) along with brief facts and the judgment relied on both the parties are mentioned below: 2. At the outset, the ld. AR took up ground No. 3 of cross objections, which relates to non-issue of notice u/s. 143(2) of the IT Act. The ld. AR invited our attention to the order of assessment and submitted that nowhere in the assessment order, the Assessing Officer mentioned about the issuance of notice u/s. 143(2) of the Act. Further inviting our attention to the ld. CIT(A)'s order, the ld. AR submitted that when this ground was raised before the ld. CIT(A), the ld. CIT(A....
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....ce of notice u/s. 143(2) is mandatory requirement. The Hon'ble Delhi High court in recent case of Indus Tower Limited vs. CIT vide its judgment dated 29.05.2017 has also considered similar issue by following the judgment of Hotel Blue Moon, 321 ITR 366 (SC) and CIT vs. Jai Shree Shiv Shankar and has again decided the issue in favour of the assessee by holding as under : "13. In response to the above submissions, Mr. Dileep Shivpuri, learned Senior Standing Counsel for the Department, submitted that as far as second submission is concerned, the facts speak for themselves. He had nothing further to add because there was no explanation for the failure to issue notice under Section 143(2) of the Act pursuant to the notice under Section 148 of the Act before 30 September 2013, the last date by which the notice ought to have been issued. 14..The law on this point is fairly well settled in the decisions in ACIT v. Hotel Blue Moon 12010] 321 ITR 362 (SC) reiterated in CIT v. Madhya Bharat Energy Corporation [2011] 337 ITR 389 (Del) and Principal Commissioner of Income tax v. Jai Shiv Shankar Traders (P.) Ltd. [2016]383 ITR 448 (Del). In the last mentioned judgment, this Court hel....
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....he judgment of Delhi High court in the case of Mandhya Bharat Energy Corporation (supra) and has also considered the decision in the case of CIT vs. Vision Inc. (supra) and after considering these judgments, Hon'ble High Court decided the issue in favour of the assessee wherein it has been decided that even in the cases covered u/s. 148, the issuance of notice u/s. 143(2) is a mandatory requirement. The relevant part of the order of Delhi High Court is reproduced below : "9 Dr Rakesh Gupta, learned counsel appearing for the Assessee, at the outset drew the attention of this Court to an order passed by this Court on 17th August, 2011 in Review Petition No.441/2011 in ITA No.950/2008 (CIT v. Madhya Bharat Energy Corporation) whereby this Court reviewed its main judgment in the matter rendered on 11th July 2011 on the ground that the said appeal had not been admitted on the question concerning the mandatory compliance with the requirement of issuance of notice under Section 143(2) of the Act. In its review order, this Court noted that at the time of admission of the appeal on 17th February, 2011 after noticing that in the said case that no notice under Section 143(2) had ever b....
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.... 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 Sit anna (2011) 336ITR 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 143 is mandatory and the legislature in their wisdom by using the word 'reason to believe' had cast a duty on the Assessing Officer to apply mind to the material on record and after being satisfied with regard to escaped liability, shall serve notice specifying particulars of such claim. In view of the above, after receipt of return in response to notice under Section 148, it shall be mandatory for the AO to serve a notice under sub-Section 2 of Section 143 assigning reason therein. In absence of any notice issued under sub-Section 2 of Section 143 after receipt of fresh return submitted by the Assessee in response to notice under Section, the entire procedure adopted for escaped assessment, shall not be valid." 15. In a subsequen....
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....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 followed up with a notice under Section 143(2) of the Act. It was observed that: "Merely because the matter was discussed with the Assessee and the signature is affixed it does not mean the rest of the procedure of notice under Section 143(2) of the Act was complied with or that on placing the objection the Assessee had waived the notice for further processing of the reassessment proceedings. The fact that on the notice issued u/s 143(2) of the Act, the assessee had placed its objection and reiterated its earlier return filed as one filed in response to the notice issued u/s 148 of the Act and the Officer had also noted that the same would be considered for completing of assessment, would show that the AO has the duty of issuing the notice under Secti....