TaxTMI 
TaxTMI 
2019 (9) TMI 499
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....s 147 of the Income Tax Act, 1961 are bad in law and therefore needs to be quashed and entire order needs to be cancelled. 2. On the facts and in the circumstances of the case and in law, the Learned Assessing Officer has erred in reopening the reassessment proceedings u/s 147of the Income Tax Act, 1961 by presuming incorrect facts that sale of jewellery for a sum of Rs. 33,42,078/- has escaped assessment without realising the fact that your appellant has offered this income in Income Tax Return which was filed much before the date of search, further Learned CIT (Appeals) erred in not adjudicating the issue of invalid reopening proceedings u/s 147 of the Income Tax Act, 1961. 3. On the facts and in the circumstances of the case and in law, the Learned Assessing Officer has erred in passing the order u/s 143(3) r.w.s 147 without disposing off objections raised by the appellant and without passing speaking order which is prerequisite as per the direction of Hon'ble Supreme Court in the case of GKN Driveshaft (India) Ltd. Vs. ITO [2003 (259) ITR 19 (SC)]. Therefore, such order passed is bad in law. 4. On the facts and in the circumstances of the case and....
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.... 271(1)(c) on enhanced income of Rs. 1,80,63,073/- which your honour is requested to cancel. 3. The learned Authorized Representative for the assessee has raised an additional ground of appeal, which reads as under:- "On the facts and in the circumstances of the case and in law the Ld. AO erred in passing order u/s. 143(3) r.w.s. 147 without issuing notice u/s. 143(2) this being prerequisite condition, entire order is voi-ab-initio and deserves to be quashed." 4. The plea of learned Authorized Representative for the assessee before us is that the issue raised vide additional ground of appeal is the jurisdictional issue which goes to the root of the assessment and is purely legal, hence the additional ground of appeal be decided first. 5. We find that the additional ground of appeal raised by assessee is against the validity of assessment framed under section 143(3) r.w.s. 147 of the Act. The said issue decides the jurisdiction of Assessing Officer to complete assessment and does not require any investigation into facts, hence the same is admitted for adjudication. 6. Briefly, in the facts of the case, the Assessing Officer recorded reasons for reopening the ass....
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....sed that in such circumstances, the assessment under section 143(3) of the Act cannot be completed, but provisions of section 144 of the Act are applicable. In such scenario, he also stressed that provisions of section 292B of the Act cannot cure the said error. In this regard, he placed reliance on the decision of Mumbai Bench of Tribunal in S. Kumar Enterprises (Synfabs) Ltd. Vs. JCIT (2005) 4 SOT 412. 10. The learned Departmental Representative for the Revenue on the other hand, pointed out that the facts of present case are at variance, where no return of income was filed and hence, no notice under section 143(2) of the Act was to be issued. 11. We have heard the rival contentions and perused the record. The issue which needs adjudication is that where no notice under section 143(2) of the Act has been issued to assessee, can the assessment be completed under section 143(3) of the Act? Further, whether in the circumstances where no return of income has been filed and no notice under section 143(2) of the Act could be issued, then what was course of action which was available for completing the assessment? 12. In order to adjudicate the issue, we need first to look a....
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....al year in which the return is furnished. 13. The start of section is "where a return has been furnished under section 139 of the Act or in response to notice under section 142(1) of the Act". Admittedly, the aforesaid provisions has not been complied with by the assessee as no return of income had been furnished by assessee under section 139 of the Act or in response to notice under section 142(1) of the Act. 14. Now, let us look at the provisions of section 143(3) of the Act, which at the relevant time read as under:- "143(3) On the day specified in the notice issued under sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment." 15. The requirement of section is that after issuing notice under sub-section (2) and after hearing such eviden....
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....icable to the relevant assessment year." 17. Clause (a) to section 144(1) of the Act talks of failure to file any return of income under section 139(1) of the Act or under sub-sections (4) or (5) of the said section. Clause (b) talks of failure to comply with all terms of notice issued under sub-section 142(1) of the Act and clause (c) talks of failure to comply with the terms of notice issued under section 143(2) of the Act. In such scenario, the Assessing Officer is empowered to pass an order to the best of his judgment to determine the total income or loss of assessee for the relevant assessment year. 18. In the facts of present case, where the assessee had failed to file any return of income under any of the provisions of section 139 of the Act and had failed even in terms of notice issued under section 142(1) of the Act, then the provisions of section 144 of the Act are attracted and the Assessing Officer has the power to pass an order to the best of his judgment. The third condition of having filed return of income and not complying with notice issued under section 143(2) of the Act do not apply to the present facts. In such scenario, we hold that the order passed under....
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.... with the law and within the time limits available to him under these procedures, he misses the bus again. The main effect of the reopening of an assessment, in our humble understanding, is that despite the fact that the AO does not have the jurisdiction to take up the assessment proceedings because of the fact that the time frame allowed to the assessee to initiate and complete the assessment by scrutinizing the return has expired, the AO by the virtue of a legally valid reopening of assessment, can still initiate and frame the assessment. The procedure under s. 142, 143 or 144, as the case may be, is, however, to be followed. It is also not necessary that in each of the case of successful reopening of assessment, the assessment of the return filed in response to notice is to be done only under s. 143(3). There can be situations when an assessment under s. 143(3) may not be necessary and the summary assessment could be perfectly justified and desirable. Take for example a case in which an assessment is reopened because an assessee has not offered a particular income which is clearly taxable in view of the current legal position. In the return filed in response to notice u....
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....ce under s. 143(2) can be validly issued. Sec. 143(3) unambiguously refers to the "notice specified under sub-s. (2) (of s. 143)" and, therefore, it is a sine qua non for assessment under s. 143(3) that there has to be a notice under s. 143(2). When there is no valid notice under s. 143(2) in existence, there cannot be any valid assessment under s. 143(3). Since there was no valid return in existence at the time of issuance of notice, the notice has to be held as non est. The impugned assessment has to be cancelled for this reason itself and without going any further into the matter. The question then arises as to what is the remedy in case an assessee chooses to ignore the notice under s. 147. It is open to the AO in such a case to issue notice under s. 142(1) and then to collect further details under s. 142. The wordings 'where such person has not made a return within the time allowed under sub-s. (1) of s. 139', in that case and in the light of the provisions of s. 148(2), is to be read as 'where such person has not made a return within the time allowed under sub-s. (1) of s. 148'. The assessment can thus follow under s. 144 after giving an opportunity of hearing as to w....
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....entative)'s arguments on the lines that the additions made in the course of these reassessment proceedings were fully justified on merits, that the assessee is taking cover of technicalities and that once the assessee participates in the assessment proceedings, he is to be treated as acquiesced the jurisdiction, we may only add that, as is well settled in law, there cannot be acquiescence to jurisdiction and since we have decided the appeal on the question of jurisdiction, the whole theory of acquiesced is irrelevant. The question of merits of addition can only be relevant when the assessment is held to be valid. The merits of addition cannot have any role in deciding whether or not the reopening is valid. Learned CIT (Departmental Representative)'s reference to the provisions of s. 292B is also of no avail because the provisions of s. 292B cannot be pressed into service for holding an assessment valid even on non-issuance of a mandatory notice. We have held that the assessment is vitiated in law because there is no valid notice under s. 143(2) which is sine qua non for an assessment under s. 143(3). The notice under s. 143(2) has been held to be vitiated in law because there was n....