TMI Blog2011 (2) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 143 (2) before completion of the re-assessment proceedings - the addition and other grounds which have been agitated by the assessee in the present appeals as they can be decided only after determination of the legal issue regarding issuance and service of notice u/s 143 (2) - matter remanded back to CIT(A). - ITA No.5293 & 5294/Del/2010 - - - Dated:- 11-2-2011 - SHRI I.P. BANSAL, SHRI B.C. MEENA, JJ. Assessee by : Shri Ved Jain, CA Revenue by : Shri Amrendra Kumar, Sr. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER Both these appeals are filed by the assessee. They are directed against the consolidated order passed by the CIT (A) dated 29th October, 2010 for assessment years 2005-06 and 2006-07. Grounds of appeal in both the appeals read as under:- ITA No.5293/Del/2010 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in upholding the validity of the reopening of assessment u/s 147 of the Act. 3. On the facts and circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case, the learned CIT (A) has erred both on facts and in law in upholding the validity of the reopening of assessment u/s 147 of the Act. 3. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in rejecting the contention of the appellant that the reasons recorded for reopening are bad in law as such the reassessment done in consequence to that needs to be quashed. 4. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in rejecting the contention of the appellant that the assessment order is bad in law is liable to be quashed as the same has been made without first disposing of the objections raised by the appellant against the reopening. 5. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in upholding the reassessment framed under section 143 (3) despite the fact that no notice under section 143 (2) has been issued, a fact admitted by the A.O. in remand report. 6. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the addition of Rs.30,41,975/- on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for that matter u/s 142 (1) has been issued, as such, the assessment is liable to be quashed. He submitted that learned CIT (A) has not recorded any finding upon that issue and according to the decision of Hon ble Supreme Court in the case of ACIT vs. Hotel Blue Moon 321 ITR 362 (SC) and the decision of Hon ble Delhi High Court in the case of CIT vs. Pawan Gupta and Ors. 318 ITR 322 (Del), if the assessment is framed without issue of notice u/s 143 (2), the same is liable to be quashed as that is not merely procedural, but, mandatory. He submitted that in the remand report the Assessing Officer has admitted this fact and for this purpose he referred to the remand report submitted by the Assessing Officer to CIT (A) dated 15th September, 2010 in respect of assessment year 2005-06 wherein the Assessing Officer has himself admitted that notice u/s 143 (2) could not be issued and he drew our attention towards the observations of the Assessing Officer in the said remand report, the copy of which is placed at pages 178 to 185. The relevant observations are as under:- Ground No.1 : Assessment order is in bad in law and no notice under section 143 (3) was issued: The perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serve notice upon the assessee as per Section 143 (2) and such issuance of notice is not mere procedural, but mandatory and it is clear from the following observations of their lordships from the said decision:- We are of the view that s.143(2) is a mandatory provision whether we look at it from the standpoint of a regular assessment or from the standpoint of an assessment under Chapter XIV-B. If the A.O., on receipt of the return of undisclosed income in the Form 2B from the assessee, is satisfied with the same as reflecting the true state of affairs then it is not necessary for him to embark upon any further enquiry or investigation. No further information or explanation is called for from the assessee. In such an eventuality he can straightaway pass the order under s.158BC (c) of the said Act. And, if he does so, the assessee cannot be heard to complain that no notice under s. 143 (2) was served upon him because his return as filed has been accepted. It is here that the expression so far as may be, apply comes into play. Sec. 143 (2) has no application in such a situation and therefore no notice under that provision would be necessary. If the A.O. makes the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be followed by the A.O. while completing the block assessment under Chapter XIV-B of the Act. This legislation is by incorporation. This section even speaks of sub-sections which are to be followed by the A.O. Had the intention of the legislature was to exclude the provisions of Chapter XIV of the Act, the legislature would have or could have indicated that also. A reading of the provision would clearly indicate, in our opinion, if the A.O., if for any reason, repudiates the return filed by the assessee in response to notice under s. 158 BC (a), the A.O. must necessarily issue notice under s. 143 (2) of the Act within the time prescribed in the proviso to s. 143 (2) of the Act. 10. In respect of re-assessment proceedings, there has been a variance in law so as it relates to return of income filed between the period from 1st October, 1991 to 30th September, 2005 wherein notice u/s 143 (2) could be served upon the assessee before the completion of re-assessment proceedings, but, there also, the requirement of service of notice u/s 143 (2) was not waived altogether, but, it was also necessary to serve notice on assessee u/s 143 (2) before completion of the re-assessment proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide letter dated 23rd April, 2009, the assessee had submitted that the return originally filed may kindly be deemed as return in compliance to the notice. Copy of such reply is filed at page 39 of the paper book. Therefore, the return in the present case as per that letter is deemed to be filed on 23rd April, 2009. 14. In both the cases, thus, the return was filed in response to notice u/s 148 on 23rd April, 2009. It has already been mentioned above that if the Assessing Officer want to assess the income of the assessee by way of assessment proceedings, then, the issue of notice u/s 143 (2) is mandatory. The relevant observations of the Assessing Officer in the remand report of respective years has already been reproduced. The contention of the assessee vide which it was submitted that the assessment is invalid due to non-issuance of notice u/s 143 (2) have been recorded at page 5 of the order of CIT (A). These contentions were raised by the assessee before the CIT (A) and these contentions were also forwarded to Assessing Officer. Therefore, it was necessary for learned CIT (A) to record a finding on that fact that whether or not any notice u/s 143 (2) was issued to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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