TMI Blog2015 (4) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... f the present case and the arguments raised by the ld. counsel, we are of the view that the issue raised in additional ground regarding the non-issuance of notice u/s. 143(2) of the Act which goes to the root of the matter, needs to be admitted. We are of the view that the AO has not issued notice u/s. 143(2) of the Act which is mandatory. We are also of the view that in completing the assessment u/s. 148 of the Act, compliance of the procedure laid down u/s. 142 and 143(2) is mandatory. As per record, we find that there was no notice issued u/s. 143(2) of the Act which is very much essential for reassessment and it is a failure on the part of the AO for not complying with the procedure laid down in section 143(2) of the Act. If the notice is not issued to the assessee before completion of the assessment, then the reassessment is not sustainable in the eyes of law and deserves to be cancelled. In view of above facts and circumstances of the present case, the issue in dispute raised in additional ground relating to non issue of the mandatory notice u/s. 143(2) of the Act is decided in favour of the assessee and we hold that the impugned assessment order dated 31.12.2009 passed u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of appeal proceedings without verifying the facts of the case and also erred in holding that the AO has not been able to bring on record any material evidence. 5. That on the facts and circumstances of the case and in law the Ld.CIT(A) has failed to appreciate the entire facts discussed in the assessment order about the modus operandi of M/s Aayushi Stock Brokers P. Ltd.(an established entry operator) from whom the assessee shown to have received an amount of ₹ 50.00,000/- as sale consideration of shares, ₹ 10,00,000/- as refund of share application money and ₹ 12,50,000/- as share application money. Even the learned CIT(A) failed to verify the contention of the assessee from the Balance-Sheet and Annexures of M/s Aayushi Stock Brokers P. Ltd. 6. That on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in relying upon the decision given in the case of Lovely Exports (P) Ltd 216 CTR 199 (SC), the AO did not ask the assessee to produce any of the investor shareholders However, in the instant case the notice issued u/s 133(6) to M/s Aayushi Stock Brokers P. Ltd was received back unserved. 3. The Assessee has raised the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s-objections has been filed before us. 6. At the time of hearing Ld. Counsel of the assessee Sh P.C. Yadav, raised the additional ground relating to non-service of notice u/s. 143(2) of the Act. Ld. Counsel of the assessee stated that the assessment order has been passed without issuing the notice u/s. 143(2) of the Act. He stated that on a perusal of the impugned reassessed order and the record will clearly show that the AO has not issued the mandatory notice u/s. 143(2) of the Act before completion of the reassessment in dispute. He submitted that the assessee has filed his written submissions on this issue before the Ld. First Appellate Authority but he has rejected the said legal ground of the assessee in a routine and casual manner by stating that non-issue of notice u/s. 143(2) of the Act does not render the reassessment invalid. According to him, the said finding of the Ld. CIT(A) is contrary to the settled law on the issue. So, as per him, if the said mandatory notice is not served to the assessee within the prescribed period, the assessment order is invalid, hence, the same deserve to be quashed and section 292BB cannot cure the defect because the AO did not even issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e arguments raised by the ld. counsel, we are of the view that the issue raised in additional ground regarding the non-issuance of notice u/s. 143(2) of the Act which goes to the root of the matter, needs to be admitted and should be taken up first and decided, so we will adjudicate this issue 10. A perusal of the assessment order reveals that return of income declaring income of ₹ 5,148/- was filed on 31.10.2002. The case was processed u/s 143(1) of the Act. Subsequently, it was noticed from the record that the assessee company was incorporated on 23.12.1997 and the share capital has increased by ₹ 60,00,000/- during the assessment year under consideration and information was received from the Assistant Director of Income Tax (Investigation), Unit-1, Agra that the assessee company is also one of the beneficiaries of accommodation entries receiver from certain established entry operators (i.e. M/s Cosmos Financial (M/s Aayushi Stock Brokers P. Ltd (M/s Aayush in short) identified by the investigation Wing of Agra, relevant to assessment year 2002-03 and the assessee is shown to have received unexplained sums/ accommodation entry from the alleged entry operators. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory in respect of returns filed on or after 1st October 2005, since it is clarified that the first and second proviso to section 148(1) has no application on or after 1st October 2005 onwards. In the instant case the first second proviso has no application and a reading of section 143 of the Act, contemplates two circumstances i.e. when return is filed u/s 139 and return filed in response to notice u/s 142(1), the said return should be processed in the manner prescribed u/s 143 of the Act. 13. Now, in this case notice u/s 148 142(1) was issued and the assessee in response to 142(1) notice has submitted that its original return filed on 31.10.2002 vide receipt no. 2591 be treated as the return filed u/s 142(1) notice. Once return has been filed pursuant to notice u/s 142(1), thus the provision of Sec. 143(2) namely issuance of notice for scrutiny gets triggered, so that assessee is given an opportunity to produce its books of accounts, other documents before the AO and assessment can be completed u/s 143(3) of the Act. The issuance of notice u/s 143(2) within the statutory time limit is mandatory and issuance of the said notice is mandatory as held by the Hon ble Delhi High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then the reassessment is not sustainable in the eyes of law and deserves to be cancelled. In view of above facts and circumstances of the present case, the issue in dispute raised in additional ground relating to non issue of the mandatory notice u/s. 143(2) of the Act is decided in favour of the assessee and we hold that the impugned assessment order dated 31.12.2009 passed u/s. 147/143(3) of the Act by the AO as invalid. Our view is supported by the various judgments of the Hon ble Supreme Court, and Hon ble Jurisdictional High Court. The relevant portion of the head- notes of various judgments of the Hon ble Courts are reproduced as under:- ACIT Anr. vs. Hotel Blue Moon: [(2010) 321 ITR 362 (SC)] HELD: It is mandatory for the AO to issue notice u/s 143 (2). The issuance and service of notice u/s 143 (2) is mandatory and not procedural. If the notice is not served within the prescribed period, the assessment order is invalid Reassessment-----Notice-----Assessee intimating original return be treated as fresh return---Reassessment proceedings completed despite assessee filing affidavit denying serviced of notice under section 143(2)----Assessing Officer not representing b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d original return of income and at the reassessment proceedings, the assessee contended before the AO that the original return filed earlier may be treated to have been filed in response to the notice u/s. 147, which is also supported by order sheet entry dated 09.08.2006 (PB-20). It is also not in dispute that AO never issued any notice u/s. 143(2) of the IT Act. The Revenue merely contended that the CIT (A) should have appreciated the provisions of section 292BB of the IT Act. Section 292 BB of the IT Act provides as under: 292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, 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 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 object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided that the re-assessment proceedings concluded u/s 147 r/w 143(3) of the Act were invalid for the AYs under dispute, the issues raised by the revenue in its appeals and also the Cross objections of the assessee firm based on the invalid assessment orders have not been addressed to. 16. In the backdrop of the aforesaid discussions and precedents relied upon, we find that the AO has not issued the notice u/s 143(2) of the Act in this case before completing the scrutiny assessment, therefore the impugned assessment order before us is invalid, void abnitio and so the impugned order is not sustainable in the eyes of law and hence, we cancel the same by allowing the additional ground raised in the cross objection filed by the Assessee on this issue. 17. In the result, the Cross Objection filed by the Assessee is allowed. Since the assessment order is held to be void abnitio, the other grounds raised by the assessee in the Cross Objection have become academic in nature, hence, the same are not being adjudicated upon. 18. As we have already quashed the impugned order of the Assessing Officer and allowed the Cross Objection of the assessee, the Appeal of the Revenue has becom ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
