TaxTMI 
TaxTMI 
2026 (3) TMI 1607
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....ear under consideration. Information available on the Insight Portal indicated that the assessee had entered into multiple financial transactions amounting to Rs. 2,94,31,158/-. Accordingly, notice under section 148 was issued on 27.03.2023. 3. In response, the assessee filed return of income on 26.04.2023 declaring total income of Rs. 58,16,560/-. Thereafter, statutory notices under sections 142(1) and 143(2) were issued. According to the Assessing Officer, the assessee sought adjournments but did not furnish substantive replies or supporting documentary evidence. A show cause notice under section 144 was also issued. In absence of compliance, the assessment was completed under section 147 read with section 144B. The Assessing Officer made the following additions: (i) Short Term Capital Gain - Rs. 4,54,49,186/- It was observed that the assessee had sold multiple properties during the relevant previous year. Since no explanation regarding capital gains or cost of acquisition was furnished, the Assessing Officer treated the entire sale consideration of Rs. 4,54,49,186/- as Short Term Capital Gain, taking the cost of acquisition at Nil. (ii) Contract Rec....
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....of the assessment is not in conformity with the express legal provisions, therefore, order of CIT (Appeal)/NFAC is incorrect, the same may please be set aside as there is no independent application of mind by the AO while reopening the case. 1.1 The CIT (Appeal)/NFAC has wrongly confirmed AO‟s order which is issued without issuing notice u/s 143 (2) as per minimum prescribed requirement of law, hence the CIT (Appeal)/NFAC may please be set aside. 1.2 No relevant section of assessment is mentioned under which order dated 21/02/2024 has been framed, as was also highlighted in ground no.5 before 1st appellate authority. Therefore, assessment process is vitiated which has not been adjudicated by CIT (Appeal)/NFAC hence the order of CIT (Appeal)/NFAC may please be set aside. 2. Without prejudice to the above ground no.1, on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeal)/NFAC erred in upholding the determination of the income of the appellant at Rs. 7,22,87,823/- by the AO instead returned income of Rs. 58,16,560/- without considering any logical expenditure in this case, therefore, order of CIT (Appeal)/NFAC may please be....
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....ive (AR) submitted written submissions explaining the background facts and circumstances under which the assessee could not effectively respond before the Assessing Officer and the learned CIT(A). 8. The learned AR submitted that the assessee company was formed and registered by Mr. Vinod Malde and Mr. Sushil Bothra, who were promoter-directors of the company. It was stated that on the representation of Mr. Sushil Bothra, certain land was acquired in the name of the assessee company and warehouses were constructed thereon. Sale proceeds from the warehouses were deposited in the bank account of the assessee company. It was further submitted that disputes arose between the directors. According to the submission, litigation was initiated in relation to construction activities allegedly carried out without permission of MMRDA. It was stated that Mr. Sushil Bothra did not attend to proceedings initiated against the company and the entire burden of handling litigation fell upon Mr. Vinod Malde. 9. The learned AR submitted that the assessee company and its director were entangled in multiple civil, criminal and regulatory proceedings during the relevant period. It was stated that se....
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....the assessment stands vitiated. 13. It was further submitted that section 292BB cannot cure a foundational defect relating to jurisdiction. The deeming fiction under section 292BB, according to the learned Authorised Representative, applies only to defects in service of notice and not to cases where the statutory requirement of valid issuance by the competent authority is not satisfied. It was therefore contended that if the mandatory requirement of section 143(2) is not strictly complied with in the manner contemplated by law, the defect is incurable and the resultant assessment is liable to be quashed. 14. The learned AR accordingly prayed that the assessment framed under section 147 read with section 144B be held to be invalid in law and that the order of the learned CIT(A) confirming the same be set aside. 15. The learned Departmental Representative (DR) submitted written submissions opposing the legal ground raised by the assessee regarding non-issuance of notice under section 143(2). It was contended that in the present case notice under section 143(2) was duly issued and served upon the assessee by the Jurisdictional Assessing Officer, namely ACIT, Circle-1, Kalyan,....
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.... section 147 read with section 144B of the Act. 20. The challenge of the assessee proceeds on the premise that the officer who completes the assessment must himself issue the notice under section 143(2), and that bifurcation between issuance of notice and completion of assessment renders the proceedings void. In order to examine this contention, it becomes necessary to evaluate the issue in the context of the statutory scheme governing the assessment and reassessment process, particularly for Assessment Year 2019-20 where reassessment has been completed under the faceless regime introduced by section 144B. 21. Under the traditional assessment regime, prior to the introduction of the faceless scheme, the law required that where a return is filed, issuance of notice under section 143(2) is mandatory if the Assessing Officer seeks to proceed with scrutiny assessment. The jurisprudence has consistently held that absence of such notice is fatal. However, there has never been a statutory requirement that the very same officer who issues the notice must necessarily complete the assessment. Assessments have routinely been upheld where notice under section 143(2) was issued by one Ass....
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....under section 143(2), which is jurisdictional in nature, therefore stands satisfied. The fact that the assessment was subsequently completed by the Assessment Unit under section 144B, pursuant to the faceless scheme, does not render the foundational notice invalid. The Act nowhere provides that the officer completing the assessment must necessarily be the same officer who issued the notice under section 143(2). The bifurcation of stages between issuance of notice and completion of assessment is inherent in the statutory design of the faceless regime. 25. It is also relevant that the earlier sub-section (9) of section 144B, which provided for invalidation of assessment for certain non-compliances, has been retrospectively deleted. The legislative intent discernible therefrom is to prevent assessments from being annulled on hyper-technical procedural grounds, particularly where foundational jurisdictional requirements are satisfied. In the present case, since the notice under section 143(2) has in fact been issued by a competent Jurisdictional Assessing Officer, the argument of complete absence of notice does not survive. The provisions of section 292BB, which cure defects in serv....
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....ry and not directory, and held that an act contrary to the statutory scheme causes inherent prejudice. 29. The assessee has invoked this line of reasoning to contend that where statutory allocation is prescribed, deviation affects jurisdiction and is not merely procedural. The underlying principle emerging from Hexaware is that where the scheme expressly assigns authority for issuance of notice to a faceless mechanism, the Jurisdictional Assessing Officer cannot bypass it. The decision therefore turns upon the stage of issuance of notice under section 148 and the exclusivity of allocation under section 151A read with the scheme. 30. On the other hand, the learned DR has relied upon the decision of the Hon'ble Delhi High Court in Inder Dev Gupta v. ACIT 180 taxmann.com 805. In that case, the Hon'ble Delhi High Court examined the identical question whether the Jurisdictional Assessing Officer retains power to issue notice under section 148 after the introduction of section 151A and the 2022 Scheme. The Court referred to its earlier binding decision in TKS Builders (P.) Ltd.167 taxmann.com 759 and held that both the Jurisdictional Assessing Officer and the Faceless Assessing Off....
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....e purposes of faceless assessment itself uses the expression „concurrently‟. That word would mean contemporaneous or in conjunction with as opposed to a complete ouster of the authority otherwise conferred upon an authority under the Act. This too is clearly demonstrative of the Act not intending to deprive the JAO completely of the power to reassess..." [Para 82] In paragraph 85, the Court emphatically concluded: " ...it would be wholly incorrect to hold or construe the provisions of the Act as denuding the JAO of the authority to undertake an assessment or of the said authority being completely deprived of authority and jurisdiction. ... The Act envisaging a coexistence of the two modes." [Para 85] Finally, in paragraph 103, the Hon'ble Court harmonised the reassessment process into two stages and held: "...It thus divides the process of reassessment into two stages and when viewed in that light it is manifest that it strikes a just balance between the obligation of the JAO to scrutinise information and the conduct of assessment itself through a faceless allocation. The distribution of functions between the JAO and NFAC is complimentary and con....
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....hat issuance of notice by the Jurisdictional Assessing Officer is not ipso facto void. This decision, being subsequent and directly addressing the concurrency issue, lends support to the proposition that bifurcation of functions does not necessarily vitiate proceedings. 37. Within the territorial jurisdiction of the Hon'ble Bombay High Court, the ratio of Hexaware would ordinarily bind this Tribunal to the extent of its factual and legal context. However, Hexaware dealt with validity of notice under section 148 in light of section 151A. The present issue concerns issuance of notice under section 143(2) and subsequent completion of assessment under section 144B. There is no finding in Hexaware that a notice validly issued by a competent Assessing Officer under section 143(2) becomes invalid merely because the assessment is completed by the Assessment Unit. 38. The Hon'ble Delhi High Court's reasoning in Inder Dev Gupta, which affirms concurrent jurisdiction and recognises that both JAO and FAO may exercise statutory powers, is directly relevant in evaluating the bifurcation between issuance of notice and completion of assessment. While the divergence between Hon'ble High Court....
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....sition at Nil in respect of property transactions and by estimating income percentages on gross receipts reflected in ITS. The learned CIT(A) has also dismissed the appeal substantially on account of non-prosecution and has confirmed the additions without detailed examination of the factual matrix or evidences. 43. Before us, the learned AR has explained that due to multiple litigations, freezing of bank accounts and other extraordinary circumstances, the assessee could not effectively participate before the lower authorities. It has been submitted that the additions, particularly in respect of capital gains and rental income, have been made without considering relevant documents such as purchase deeds, cost details, computation of capital gains, and reconciliation of receipts with books of account. Additional evidences have been sought to be placed on record. 44. On perusal of the record, we find that the addition of Rs. 4,54,49,186/- towards Short Term Capital Gain has been made by treating the entire sale consideration as taxable gain without examination of cost of acquisition, indexed cost, nature of asset, period of holding or computation as per sections 45 and 48. Such ....