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2013 (11) TMI 215 - ITAT BANGALOREValidity of notice u/s 148 - Notice issued to agent of the assessee - Notice issued without passing an order u/s.163(2) - Held that:- As per the provisions of section 163(2) of the Act, before treating a person as an agent, an opportunity of being heard has to be given to such person for it to file objections it may have in that regard - no proper opportunity was afforded to the assessee company of being heard in the matter and that the proper procedure for issue of notice u/s.148 of the Act to the Indian Company i.e. TESA for treating it as an agent of the assessee company was not adhered to. It is also relevant to mention here that before treating any person as an agent of a foreign company or person, an order has to be passed in accordance with the provisions of section 163 of the Act and that order requires to be communicated to the parties concerned - it is seen that no there is no order passed by the Assessing Officer u/s.163 of the Act treating TESA as an agent of the assessee company for A.Y. 2002-03. Consequently, the notice u/s.148 of the Act dt.31.3.2005 issued by the Assessing Officer to TESA on behalf of the assessee company is bad in law and all subsequent proceedings culminating in the passing of the order of assessment would not the test of judicial scrutiny. In this view of the matter, the order of assessment passed u/s.143 r.w.s. 147 of the Act on 31.3.2006 for Asst. Year 2002-03, based on the invalid notice issued u/s.148 of the Act on 31.3.2005 is cancelled - Following decision of Commissioner Of Income-Tax, Bombay City III Versus Belapur Sugar And Allied Industries Limited [1981 (9) TMI 19 - BOMBAY High Court] - Decided in favour of assessee. It is undisputed that the notice under section 148 of the Act dt.31.3.2005 for Assessment Year 2002-03 is issued in the name of TESA, as an agent of the assessee company, whereas the order of assessment for the said period was passed in the name of the assessee company instead of being concluded in the hands of the Indian company i.e. TESA as an agent of the assessee company. In our view, this action on the part of the Assessing Officer is not curable. It is a well settled position of law that the notice cannot be regarded as a mere procedural requirement. Rather, it is a condition precedent to the initiation of assessment proceedings - if a notice is issued on one person in a particular company and the order of assessment is passed on another person who has not been served the said notice, then such order is bad in law and ab-initio, null and void. Records of assessment admittedly reveal that the reasons recorded by the Assessing Officer for initiating proceedings under section 147 / 148 of the Act were not communicated / made available to the assessee by the Assessing Officer before the completion of assessment proceedings - it is amply clear that the reasons as recorded by the Assessing Officer for initiating reassessment proceedings for Assessment Year 2002-03 in the case on hand were not provided, communicated or made available to the assessee by the Assessing Officer during the pendency of assessment proceedings, but the same were provided to the assessee at the stage of appellate proceedings by the learned CIT(Appeals). The letter dt.24.6.2005 relied on by the learned Departmental Representative cannot be construed as the communication of reasons recorded to the assessee - The failure of the Assessing Officer in providing the assessee with the reasons recorded for initiation of proceedings under section 148 of the Act, within a reasonable period of time so that the assessee could efficiently represent / file objections to the same is, in our opinion, amply evident beyond any doubt from the facts on record and our observations thereon. The fact of non-provision of the reasons recorded for initiation of proceedings under section 147 / 148 of the Act before the completion of assessment proceedings for the relevant period and the furnishing of the said reasons recorded at the appellate stage by the learned CIT(Appeals) will render the order of assessment dt.31.3.2006 for Assessment Year 2002-03 invalid and unsustainable in law.
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