TaxTMI 
TaxTMI 
2026 (7) TMI 943
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....ding assessee. The assessee is a money lender as well as one of the partners in certain concerns of "Doshi Group". Pursuant to search, the notices were issued on 08.06.2015 for framing assessments u/s. 153A of preceding six (6) AYs 2008-09 to 2013-14. In response, the assessee filed returns of those six (6) years. The position of those six (6) years, as noted by AO, in Para 4 of assessment-year is as under: A.Y. Date of filing of Return u/s. 139(1) Returned income (in Rs.) Date of filing of Return in response to the notice u/s. 153A Income declared in Return u/s. 153A (In Rs.) Additional income offered, if any (In Rs.) 2008-09 15/10/2008 11,98,860/- 21/12/2015 11,98,860/- NIL 2009-10 23/10/2009 4,94,600/- 21/12/2015 3,81.170/- (-) 1.13,430/- 2010-11 10/12/2010 10,81,630/- 21/12/2015 46,01.190/- 35,19.560/- 2011-12 04/02/2012 53,47,190/- 21/12/2015 55,52,560/- 2.05.370/- 2012-13 07/12/2012 11,59,670/- 21/12/2015 18,82,500/- 7,22,830/- 2013-14 26/03/2014 12,60,260/- 21/12/2015 16,71,810/- 4,11.550/- (ii) Further, for AY 2014-15 relevant to the previou....
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....ge all his personal and legal matters despite advanced age and ailing condition. This apart, the hearings initially granted by CIT(A) from 29.08.2017 to 16.01.2020 could not be attended due to lack of preparation and thereafter, Covid-19 started from March, 2020. Hence, the assessee filed adjournment applications on 23.12.2020 & 04.03.2021. The Covid-19 continued till March, 2022 and during this entire period of Covid-19, there were disruptions and the assessee was not in a position to make representation. Subsequently, the CIT(A) issued notices dated 01.02.2023, 11.10.2023 & 07.05.2024 after a substantial gap which remained unnoticed by assessee. Therefore, the assessee could not represent his cases before CIT(A). Ld. AR submitted that these are search matters and involve substantial issues which require an apt adjudication by CIT(A). He asserted in open court that the assessee, despite of advanced age and ailing condition, is now ready and willing to make an effective representation and extend full co-operation to CIT(A). He prayed that, in the interest of justice and fair play, these six (6) matters must be restored at the level of CIT(A). He acknowledged that the assessee shall....
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....vant assessment year on the strength of an invalid Notice issued under sub-section (2) of section 143 of the Income-Tax Act, 1961 on 18-09-2015, without first having any return of income on record. Such an action of the Ld. AO has rendered the entire assessment proceedings as void ab initio, invalid, illegal and a nullity." 2. That, the learned AO has grossly erred, in law, in passing the Assessment Order for the relevant assessment year without first issuing and serving a valid Notice under sub-section (2) of section 143 of the Income-Tax Act, 1961 subsequent to the filing of the return of income by the appellant under the provisions of section 139 of the Act. The failure to issue such notice vitiates the assessment proceedings and renders the assessment order as void ab initio, without jurisdiction, illegal and non-est in law." 9. By means of these additional grounds, the assessee is raising a legal claim that the assessment-order passed by AO u/s. 143(3), without issuing notice u/s. 143(2) on the return filed by assessee, is invalid. 10. Learned Representatives of both sides fairly agree that the additional grounds are legal in nature; go to the root of the matter....
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....ppeal, the Hon'ble Supreme upheld order of ITAT and Hon'ble High Court. The relevant paras of decision of Hon'ble Supreme Court read as under: "3. The relevant facts leading to the filing of aforementioned Income Tax Appeal No.97 of 2018 before the High Court, as culled out from the judgment and order dated 27.04.2018 presently under appeal are as under:- "The assessee is an individual carrying a business of brokerage. Search and seizure operation was conducted under Section 132 of the Act of 1961 on 11.03.2010 at his residential premises. The assessee submitted return of income on 24.08.2011, declaring total income of Rs. 9,35,130/-. The assessment was completed under Section 143(3) read with Section 153(D) of 1961 Act. Rupees 9,09,110/- was added on account of unexplained cash under Section 69 of 1961 Act. Rs. 15,09,672/- was added on account of unexplained jewellery. Rupees 45,00,000/- was added on account of unexplained hundies and Rs. 29,53,631/- was added on account of unexplained cash receipts. Aggrieved, the assessee filed an appeal before the Commissioner Income Tax (Appeal). The Commissioner of Income Tax (Appeal) deleted an amount of Rs. 7,48,4....
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.... the proceedings, the defect, if any, stood completely cured. 5. At the outset, it must be stated that out of two questions of law that arose for consideration in Hotel Blue Moon's case (supra) the first question was whether notice under Section 143(2) would be mandatory for the purpose of making the assessment under Section 143(3) of the Act. It was observed:- "3. The Appellate Tribunal held, while affirming the decision of CIT(A) that non-issue of notice under Section 143(2) is only a procedural irregularity and the same is curable. In the appeal filed by the assessee before the Gauhati High Court, the following two questions of law were raised for consideration and decision of the High Court, they were: "(1) Whether on the facts and in circumstances of the case the issuance of notice under Section 143(3) of the Income Tax Act, 1961 within the prescribed time-limit for the purpose of making the assessment under Section 143(3) of the Income Tax Act, 1961 is mandatory? And (2) Whether, on the facts and in the circumstances of the case and in view of the undisputed findings arrived at by the Commissioner of Income Tax (Appeals), the additions ....
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.... Not served upon him in time; or (c) Served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment." 7. A closer look at Section 292BB shows that if the assessee has participated in the proceedings it shall be deemed that any notice which is required to be served upon was duly served and the assessee would be precluded from taking any objections that the notice was (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner. According to Mr. Mahabir Singh, learned Senior Advocate, since the Respondent had participated in the proceedings, the provisions of Section 292BB would be a complete answer. On the other hand, Mr. Ankit Vijaywargia, learned Advocate, appearing for the Respondent submitted that the notice under Section 143(2) of the Act was never issued which was evident from the orders passed on record as well as the stand taken by the Appellant in the memo of appeal. It was further submitted that issuance of notice under Section 143(2) of the Act being prerequi....
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....(1)(a), were to be issued to furnish the return of income in respect of each assessment year falling within the six assessment years as referred to in clause (b), meaning thereby, the six assessment years immediately preceding the assessment years relevant to the previous year in which the search was conducted. As the search in this case, was conducted from 11.03.2010 to 12.03.2010, i.e., during the previous year 2009-10 relevant to assessment year 2010-11, the six preceding years were 2003-04, 2004-05, 2005-06, 2006-07, 2007-08 and 2008-09 relevant to assessment year 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10, for the purpose of issue of notice u/s. 153A(1)(a) of the Act. 11. We find that the year under consideration being the search year, notice u/s. 153A was neither required to be issued, nor was issued in the case of the assessee. The return of income was furnished on 24.08.2011, as per the provisions of section 139 of the Act. The assessment for the previous year (Financial year) 2009-10 relevant to assessment year 2010-11 was completed u/s. 143(3) of the Act, vide assessment order dated 23.12.2011 under the regular assessment procedure, as the AO noted t....
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....unt all relevant material which he has gathered, the Assessing Officer shall, by an order inviting, 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." Therefore, in view of this, the prerequisite condition for issuance of notice u/s. 143(2) prior to making assessment u/s. 143(3) of the Act, is embodied in the provisions of sections 143(3) and 158BC of the Act. 15. The decision of the Hon'ble Supreme Court in the case of 'Hotel Blue Moon' (supra) is in relation to assessment completed u/s. 158BC, holding that the non-issue of notice u/s. 143(2) is not curable. The requirement of issue of notice u/s. 143(2) of the Act is embodied in the provisions of section 143(3) of the Act itself. Therefore, the issue involved in the impugned appeal under consideration is covered by the decision in the case of 'Hotel Blue Moon' (supra) and ratio involved in this decision will apply to the present appeal also. In the case of 'Hotel Blue Moon' (supra) it was held that if the Assessing Officer, for any reason, repudiates the return filed ....
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....y foundation of the assessment proceedings is bad in law. Hence, these proceedings culminating in the assessment order, as well as the impugned order stand quashed. Nothing else remains to be adjudicated. In consequence, the revenue's appeal is dismissed. 20. In the result, the Cross objection of the assessee is allowed and the appeal of the revenue is dismissed" (ii) ITAT, Indore in Asst. Commissioner of Income-tax Vs. G.M. Infrastructure (2017) 3 ITJ Online 183 (Trib. - Indore): "4. The facts, in brief, are that search u/s. 132(1) and survey operation u/s. 133A were carried out on 16.9.2005. Certain documents related to assessee firm were found during the course of said search, hence, notice u/s. 153C read with section 153A was issued in this case on 22.3.2006, whereby the assessee was required to file the return within 30 days from the date of service of such notice. However, no return was filed within 30 days so stipulated. Subsequently, the assessee vide its letter Dated 21.8.2006 submitted that returns filed earlier u/s. 139 for various years could be considered as filed in compliance to said notice. The A.O., however, rejected this plea of the ....
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....rovisions of section 292BB were brought on statute with effect from 1.4.2008 and were of prospective nature, hence, the same could not also be of any help to the cause of Revenue. 6. The ld. Departmental Representative, first of all, pointed out the approach of the assessee in adopting the dilly delaying tactics. Thereafter, he contended that notice issued u/s. 143(2) on 31.8.2007, was valid notice and referred to page 91 of the paper book. The Bench, on reading the contents of said notice, required the Department to clarify on the aspect whether the assessee had filed any return of income prior to issue of such notice as in para 1 of the said notice, the A.O. had stated that there were certain points in connection with the return of income submitted by you for the assessment year 2005-06, on which the A.O. required some further information, the ld. CIT DR admitted that it was an incorrect fact as the assessee had filed return of income only on 15.10.2007. This fact was also corroborated by the Learned counsel for the assessee. The ld. CIT(A), thereafter, contended that in Notice issued u/s. 153A read with section 153C time of 30 days had been given to the assessee to file....
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.... action of the assessee in filing return in October, 2007, could not result into an adverse inference against the assessee. He further contended that, in this case, the return had been filed nearly one and a half months before the time barring period and not on the last date for passing assessment order. Hence, the relevant the contentions of the ld. CIT DR had to be rejected. 8. The ld. CIT DR, at this stage, submitted that matter could be heard on merits as well. Accordingly, he took up the issue of deletion of addition of Rs. 32,73,930/- made by the Assessing Officer on account of undisclosed sale proceeds. The ld. CIT DR, thereafter narrated the facts and took us through the assessment order as well as seized documents to support the order of the A.O. 9. The Learned counsel, on the other hand, submitted that the seized documents were only of planning nature and the interpretation of the same made by the Assessing Officer was a case of suspicion or presumption only. He further referred to pages 64 to 87 of the paper book containing detailed submissions made before the Revenue authorities, wherein the various aspects of the issue involved had been clarified. On ....
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....e state that the Revenue Authorities have been given ample powers to compel the assessee to file the returns and in case the assessee does not comply with the notices issued by the Assessing Officer, in this regard, then penal provision exists, which can be invoked to penalize the assessee. The assessee can also be made liable to pay interest for the period of failure. Apart from that Assessing Authorities can make an assessment u/s. 144 read with section 142(1). Hence, we do not find any merit in the contention of the Revenue that the assessee by not filing the return in accordance with the notice issued by the Assessing Officer can cause prejudice to the interests of the revenue. In this regard, it is further noteworthy that the A.O. issued notice u/s. 153A read with section 153C on 22.3.2006 and, thereafter, till 31.8.2007 he has not bothered to take other measures as provided in the statute to get the return of income filed. It is further noted that even in the notice issued u/s. 142(1), he has required the assessee to produce the accounts or documents and not the return of income. Similarly, in the notice issued u/s. 142(1) on 3.10.2007, he has called certain information only.....
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....ns cannot be taken lightly and the action of the A.O. cannot be justified, merely because no prejudice has been caused to the assessee as held by the Ld. CIT(A). We also find that provisions of section 292BB, are of prospective nature, particularly having regard to the proviso thereto hence, do not come to the rescue of the Revenue. On the contrary, in our view, the very enactment of this provision makes it clear that legislature does not treat such nature and scope of section 143 merely as a formality and that is why the assessee has been given an opportunity even u/s. 292BB to raise such plea before the completion of assessment. 14. It is also noteworthy that prior to such new procedure of assessment in search cases, the undisclosed income found as a consequence of search had to be assessed in accordance with the provisions of sections 158BC/158BD under Chapter XIVB of the Act. The provisions of section 153A serve the same purpose. Rather, if we take note of Explanation 1 to Section 153A, then it becomes apparent that provisions of section 143(2) have to be applied in its fullest scope in respect of assessment or reassessment to be made u/s. 153A. Having stated so, we fi....