TaxTMI 
TaxTMI 
2021 (12) TMI 1179
X X X X Extracts X X X X
X X X X Extracts X X X X
....efore dismissing the appeal of the appellant and upholding the order of the Assessing Officer wherein huge additions were made. Addition of Rs. 176,11,00,000/- towards unexplained investments: 5. The Ld. CIT (A) erred in confirming the addition of Rs. 176,11,00,000/- made by the A.O towards unexplained investments for purchase of lands by the appellant. 6. The Ld. CIT (A) erred in relying on the finding of the A.O that the liabilities of Dr. p.s. Prasad have been settled by the appellant, whereas these findings are baseless. 7. The Ld. CIT (A) ought to have appreciated the fact that the image copies taken from the hard disk seized, on the basis of which the A.O made addition towards unexplained investments, have no evidentiary value. 8. The Ld. CIT (A) ought to have appreciated the fact that the appellant has not paid any amount for purchase of lands and therefore the question of unexplained investment to the extent of Rs. 176.11 crores by the appellant does not arise. 9. The Ld. CIT (A) ought to have appreciated the fact that the findings of the A.O that Dr. P.S. .Prasad entered into agreement with the appellant for transfer of land and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the A.O made additions without giving reasonable opportunity of being head to the appellant. 21. The Ld. CIT (A) ought to have appreciated the fact that the A.O resorted to addition of Rs. 176.11 crores towards unexplained investments on the basis of dumb material and on suspicion and surmises and without any corroborative evidence and therefore cannot be sustained before law. 22. The Ld. CIT (A) ought to have appreciated the fact that the A.O erred in making addition towards unexplained investment in the hands of the appellant on protective basis. 23. The Ld. CIT (A) ought to have appreciated the fact that the documents on which the A.O relied on for making addition towards unexplained investment are draft agreements which have not been materialised. Addition of Rs. 6,50,00,000 towards undisclosed income 24. The Ld. CIT (A) erred in confirming the addition of Rs. 6.50 crores made by the A.O towards undisclosed income on the basis of the declaration made by the appellant under section 132(4) of the Income Tax Act, 1961. 23. The Ld. CIT (A) ought to have appreciated the fact that the appellant had withdrawn the declaration made b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ar under consideration. 35. The AO erred in issuing notice u/s 143(2) for the A.Y. 2010-11 beyond the parameters as laid down in the guidelines/ criteria issued by the CBDT u/s, l19 of the Act for selection of scrutiny of the return of income for the assessment year relevant to the previous year in which period such search u/ s 132 is conducted." 3. As the said additional grounds are legal grounds, wherein, the facts are on record and facts do not require fresh investigation, following the decision of Hon'ble Supreme Court in the case of National Thermal Power Co., Limited Vs. CIT 229 ITR 383 (SC), we admit the said additional grounds of assessee. 4. Briefly the facts of the case are that a search and seizure operation u/s 132 of the Act was carried out in the case of Shri Sukesh Gupta, the assessee on 11/03/2010 and accordingly, a notice u/s 153A was issued to the assessee on 26/10/2010. In response to the said notice, the assessee filed return of income for the AY 2010-11 on 08/12/2011 declaring a total income of Rs. 59,00,000/-, which is a searched year. 4.1 As per the assessment order the AO issued notices u/s 143(2) and 142(1) of the Act and questionnaire to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he AO is required to issue notice u/s 143(2) for acquiring his jurisdiction and for this proposition, he relied on the judgment of the Apex Court in the case of ACIT & Anr. Vs. M/s Hotel Blue Moon reported in [2010] 188 Taxman 113 (SC). 7. The ld. DR, on the other hand, relied on the orders of revenue authorities below and submitted a paper book containing pages 1 to 278, which is placed on record. He filed a written synopsis in support of revenue's case, which is as under: "The following written submissions are made for kind consideration of Hon'ble ITAT in relation to the above appeal filed by the assessee. 1. It is humbly submitted that in this case, search action was conducted on 11/03/2012 and incriminating evidence was seized. During the search the assessee disclosed an amount of Rs. 12.50 Cr. Admittedly notice u/s 142(1) was also issued on 17/10/2011 to the assessee calling for the return of income. Thereafter another notice along with questionnaire was issued on 18/11/2011. The assessee filed a belated return of income on 07/12/2011 declaring income of Rs. 59 lakhs just before the time barring date for completion of assessment. On 26/12/2011, a noti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e CIT(A) sustained the addition of Rs. 176.11 Cr. On the addition of Rs. 6.5 Cr also, the CIT(A) held that the fact of coercion or pressure could not be substantiated by the assessee with any evidence and therefore, the retraction dated 26/12/2011 is not acceptable. 4. Aggrieved by the decision of the CIT(A), the assessee filed the present appeal. Ground nos: 1 to 4 are general in nature except that in ground no:4, the assessee states that due opportunity was not granted by the CIT(A). However, as seen from the order of CIT(A), six hearings spanning over 4 years were granted and the ground taken by the assessee is devoid of merit. Ground no: 3 is also devoid of merit because the CIT(A) duly considered the submissions of the assessee. 5. Ground nos: 5 to 23 are on the issue of addition of Rs. 176.11 Cr. The sum and substance of these grounds is that the addition is based on dumb documents (the MOUs, the purchase of land and rigging of shares) which have no evidentiary value, the parties on whose statements reliance was placed by the AO are not known to the assessee and their assertions are not relatable to him. 6. It is submitted that on the face ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....diamonds and pearls etc were paid in lieu of losses incurred in manipulation of shares of Mis Gold Stone Technologies Limited. It is clearly evident from the seized record that as per the instructions of Dr. P.S.Prasad, Mr. Sukesh Gupta (the assessee) has settled the amounts due to various parties for losses incurred in the manipulation of share price. Share purchase agreements with the share holders of Mis. Gold Stone Technologies Limited were also seized during the search. Transfer of land to assessee group is also evident from various sale deeds. 9. It is submitted that it is evident from the statement of the assessee recorded from 132(4) dated 11.03.2010, that there are unaccounted transactions between both the groups, when the transaction of payments of unaccounted cash for settlement of liabilities were confronted to him, in response to question no. 13, he stated "I am not denying any transaction with the said parties. However, the quantum of the transactions need to be verified and I need some time." In response to question no. 39 of the same statement, he also admitted that there were inadvertent omissions due to business compulsions and declared additional income.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a party acting on behalf of the assessee and his group companies. 12. It is also submitted that Shri Bhandhakavi Phani Madhav, Director of M/s. Summit Communications Private Limited in his statement u/s 131 dated 21.04.2010 stated that details of the transactions are known to Mr. Sukesh Gupta (the assessee) only. The statements of concerned operators cited by the AO in the assessment order also indicate that there was manipulation and rigging. The statement of one of the operators, Shri Santosh Doshi recorded by ADIT(lnv), Unit - IV(2), Mumbai also clearly indicates that Mr Sukesh Gupta (the assessee) promised him to compensate the losses on account of manipulation of share price of Goldstone Technologies Ltd. He also stated that he received off market shares from Mr Mangesh Kane and given them to Mr Gopal Marathe off market as per telephonic instructions of the assessee. It is also on record that about Rs. 4.35 Cr were transferred from the account of Goldstone Export to the account of RJL Infrastructure Ltd. The funds to Goldstone Export were provided from the account of Aashi Realtors, which is a concern managed by the assessee. The names of the operators are also availa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee before the CIT(A) and before Hon'ble ITAT in the present proceedings with regard to 2.10 acres is dated 09/12/2013 and is nothing but a document of convenience prepared after the assessments are completed. 17. It is also submitted that, in the statement recorded uls 132(4) of the IT Act, 1961 of Shri sukesh Gupta dated 11/03/2010, he disclosed additional income of Rs. 12.5 Cr out of which Rs. 6.5 Cr is on his own account. The later retraction is without any basis. Therefore, appropriate decision in light of the fact that the disclosure was to cover up the defects and there was no coercion or pressure. In light of the above, the appeal may kindly be dismissed." 7.1 Further, the ld. DR submitted that there is no need to issue notice u/s 143(2) and mentioned the issuance of notice u/s 143(2) in the order sheet. He submitted that the ld. AR stated in the written synopsis filed before the CIT(A) that notices u/s 143(2) and 142(1) were issued to the assessee and the assessment was completed u/s 143(3) of the Act, which is evident at page 6 at para 5 of the CIT(A)'s order. He, therefore, submitted that the assessee himself has accepted that the notice was issu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mber, 2011 calling for information. As per the order sheet filed by the ld. AR, which is placed on record, clearly shows that there is no issuance of the 143(2) notice. Even, if we go through the assessment order, assessee filed his return of income on 7th December, 2011 in response to the notice u/s 142(1) dated 26/10/2010, whereas, notices u/s 143(2) & 142(1) were issued on 18th November, 2011, the date of which is before filing of the return of income, how is it possible to issue a notices before filing of return of income. The assessee also filed his return of income u/s 139(1) of the Act on 30/08/2010 under the acknowledgment No. 4400001008/Ward - 4(4). Even if we correlate the notice u/s 143(2) with the assessment order, the issue of notice is time barred. This is a search year, in which, assessment has been framed u/s 143(3) of the Act, but, the assessment has not been framed u/s 153A. Therefore, even if notice issued u/s 143(2) is time barred or not issued at all or notice u/s 143(2) is invalid in the eye of law, the assessment framed u/s 143(3) will not survive. As held by the Hon'ble High Court of Madras in the case of B. Kubendran Vs. DCIT, [2021] 126 Taxmann.com 107 (Ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished." 14. On a plain reading of the above provision, it is manifest that it contemplates that when an assessee files a return under section 143 of the Act, and the Assessing Officer finds that any claim as described therein is inadmissible, he is required to serve a notice to the assessee specifying particulars of such claim and a date on which he should produce or caused to be produced, any evidence or particulars specified therein on which the assessee may rely in support of such claim. 15. Section 292BB of the Act reads thus; "292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or re-assessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was - (a) not served upon him; or (b) not served upon ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, why the authorities should issue notice under section 143(2). However, if an assessment is to be completed under section 143(3) read with section 158BC, notice under section 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under section 143(2) cannot be dispensed with." 19. Thus, the Court held that if an assessment has to be completed under section 143(3) read with section 158BC of the Act, then notice under section 143(2) of the Act should be issued within a period of one year from the date of filing of block return. The Court held that omission on the part of the Assessing Officer to issue notice under section 143(2) of the Act cannot be said to be a procedural irregularity and the same is not curable, and therefore, the requirement of notice under section 143(2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 143(2) of the Act has been issued after the assessee had filed its return of income and hence, section 292BB of the Act would not be attracted. 23. In the light of the above discussion, this Court does not agree with the view adopted by the Punjab and Haryana High Court in case of Commissioner of Incometax v. Ram Narain Bansal (supra). Insofar as the decision of the Madras High Court in case of Venkatesan Raghuram Prasad Incometax officer, NonCorporate Ward2(3), Chennai (supra) is concerned, that was a case where notice was in fact, issued, but it was contended that such notice was not served properly. Therefore, the said case was a case of defective service of notice, which would be squarely covered by the provisions of section 292BB of the Act. The said decision, therefore, has no applicable to the facts of the present case. 24. In the light of the fact that non issuance of a notice under section 143(2) of the Act is not a procedural irregularity, the same cannot be cured under section 292BB of the Act and hence, the assessment order passed without issuance of notice under section 143(2) of the Act, would be rendered invalid. The Tribunal as well as the Comm....