TaxTMI 
TaxTMI 
TaxTMI 
2020 (1) TMI 40
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....red in confirming the same. 1.1 On the facts & circumstances of the case and in law also Ld A.O. grossly erred in initiating reassessment proceedings simply on the basis of information received from Inv. Wing, Mumbai without independent application of mind. 1.2 On the facts & circumstances of the case and in law also Ld A.O. grossly erred in initiating reassessment proceedings mechanically without giving copy of satisfaction recorded by superior authority on the approval in regards to escapement of income by the assessee. 1.3 On the facts & circumstances of the case and in law also Ld A.O. grossly erred in initiating reassessment proceedings even without having copy of statements & details at the time of recording reasons. 1.4. On the facts & circumstances of the case the notice issued u/s 148 is time barred as the notice was issued after expiry of 4 years ignoring the fact that no allegation in the reasons have been made that some material facts were not disclosed fully and truly by the assessee as prescribed in first proviso to section 147 of the Act. 2. On the facts & circumstances of the case & in law also Ld. A.O. grossly erred in passing the order on 22/03/2015 i.e.....
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....gh an affidavit and Sh. Praveen Kumar jain was not cross examined by the department thereafter. Therefore reliance on rebutted statements is unlawful." In ground no. 3 which is also common in both the appeals, the assessee has challenged the validity of reassessment framed by the AO without issuing a notice under section 143(2) of the IT Act. 2. The ld. A/R of the assessee has submitted that the assessee filed its return of income under section 139(1) of the IT Act on 26.10.2007 declaring loss of Rs. 35,81,940/-. The original assessment was completed under section 143(3) of the IT Act on 1st December, 2009 on total loss of Rs. 23,31,940/-. Thereafter, the AO initiated the proceedings under section 147/148 by issuing notice under section 148 on 27th March, 2014 on the reason that as per the information received from the Investigation Wing, Mumbai it was found that the assessee has received accommodation entries in the shape of share application money from the entities controlled and managed by Shri Praveen Kumar Jain. The assessee filed its return of income in response to notice under section 148 on 22nd April, 2014 declaring the same income as declared in the return of income fil....
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....on 143(2) issued on the same date cannot be disputed. She has relied upon the orders of the authorities below. 4. We have considered the rival submissions as well as the relevant material on record. The ld. D/R has produced the assessment record as directed by the Bench and after verification of the assessment record, the ld. D/R has fairly admitted this fact that there is no notice available on record issued under section 143(2) of the Act, however, notice under section 142(1) dated 30th May, 2014 is available on record. The ld. D/R has also admitted that there is no proceeding recorded by the AO regarding the notice issued under section 143(2) and the proceedings were recorded by the AO only from the month of August, 2014 and not prior to that. We find that the AO has stated in para 2.2 of the assessment order as under :- " Notice under section 143(2)/142(1) of the Act was issued on 30.05.2014 " This statement of the AO in the assessment order is recorded only at the time of passing the assessment order and does not lead to the conclusion that the notice under section 143(2) was actually issued by the AO when there is no record of issuing the said notice either in the form of....
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....eld in para 15 to 18 as under :- "15. We may now revert back to Section 158 BC(b) which is the material provision which requires our consideration. Section 158 BC(b) provides for enquiry and assessment. The said provision reads "that the assessing officer shall proceed to determine the undisclosed income of the Block period in the manner laid down in Section 158 BB and the provisions of Section 142, subsection (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be, apply." An analysis of this sub section indicates that, after the return is filed, this clause enables the assessing officer to complete the assessment by following the procedure like issue of notice under Sections 143(2)/142 and complete the assessment under Section 143(3). This Section does not provide for accepting the return as provided under Section 143(i)(a). The assessing officer has to complete the assessment under Section 143(3) only. In case of default in not filing the return or not complying with the notice under Sections 143(2)/142, the assessing officer is authorized to complete the assessment exparte under Section 144. Clause (b) of Section 158 BC by referring to Section 143(2) a....
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....ction 158 BC, the provisions of Section 142 and sub-sections (2) and (3) of Section 143 are applicable and no assessment could be made without issuing notice under Section 143(2) of the Act. However, it is contended by Sri Shekhar, learned counsel for the department that in view of the expression "So far as may be" in Section 153 BC(b), the issue of notice is not mandatory but optional and are to be applied to the extent practicable. In support of that contention, the learned counsel has relied on the observation made by this Court in Dr. Pratap Singh's case [1985] 155 ITR 166 (SC). In this case, the Court has observed that Section 37(2) provides that "the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under Section 37(2). Reading the two sections together it merely means that the methodology prescribed for carrying out the search provided in Section 165 has to be generally followed. The expression "so far as may be" has always been construed to mean that those provisions may be generally followed to the extent possible. The learned counsel for the respondent has brought to our notice the observations made by this Court in the ca....
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....d to be valid even if there be infractions as detailed in said Section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself. 10. Since the facts on record are clear that no notice under Section 143(2) of the Act was ever issued by the Department, the findings rendered. by the High Court and the Tribunal and the conclusion arrived at were correct. We, therefore, see no reason to take a different view in the matter." Thus section 292BB of the Act can be pressed into service only when the notice is issued by the AO but the service of the same is disputed by the assessee after completion of the assessment. Therefore, we do not find any force in the contention of the ld. D/R that the assessee has participated in the proceedings and did not raise ....
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....o let the Assessee know why he was being asked to file a return notwithstanding his letter dated 1st April 2011. In the circumstances, the Assessee was justified in proceeding on the basis that it had not committed any default in communicating to the AO that the return already filed should be treated as the return filed pursuant to the notice under Section 148 of the Act. 20. The proposal to reopen an assessment under Section 147 of the Act is to be based on reasons to be recorded by the AO. Such reasons have to be communicated to the Assessee. However, merely because the Assessee participates in the proceedings pursuant to such notice under Section 148 of the Act, it does not obviate the mandatory requirement of the AO having to issue to the Assessee a notice under Section 143(2) of the Act before finalising the order of the reassessment." In view of the above facts and circumstances where the reassessment was completed without issuing a notice under section 143(2), then the reassessment order is not sustainable in law and the same is invalid. Hence, following the binding precedents of Hon'ble Supreme Court as well as the Hon'ble High Courts as referred above, we quash the impu....