TMI Blog2019 (7) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... he same and, consequentially, not issue notice u/s. 143(2). The ensuing assessment, as also observed in Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] is an assessment u/s. 144. The instant assessment is an assessment u/s. 144, and not, as stated, u/s. 143(3). Rather, a return is not filed has to be supplemented by physical return, of which there is no mention or contention, in the absence of which the same cannot be said to have been filed. In fact, the completion of the said procedure after 20.03.2013, the date of assessment, even if so, is to moment, as the assessment stand already completed on that date. The assessment in the instant case, is accordingly, to be regarded as u/s. 144 r/w s. 147, and the AO is incorrect stating it to be u/s. 143(2) r/w s. 147. Considered whichever way, the assessee s legal challenge is without merit, both on facts as well as, and for that reason as well, in law. In fact, the assessment as framed is in u/s. 144, and the Revenue authorities, were in law, under no obligation to accept the additional evidences sought to be furnished by the assessee in the appellate proceedings. An appellate authority, when he so does, converts a s. 144 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O). The assessee shall cooperate in the matter lest the AO draw adverse inference as admissible under the circumstances. The AO shall complete the said verification in a time bound manner, being also required to observe the time limit u/s. 153 of the Act, as specified after 01.06.2016. - assessee s appeal is partly allowed on the afore-said terms - I.T.A. No. 426/Asr/2015 - - - Dated:- 1-7-2019 - Sh. Sanjay Arora, Accountant Member For the Appellant : Sh. Ashwani Kalia (Adv.) For the Respondent : Sh. Charan Dass (D.R.) ORDER PER SANJAY ARORA, AM: This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-2, Amritsar ('CIT(A)' for short) dated 09.6.2015, partly allowing the assessee s appeal contesting his assessment u/s. 143(3) read with section 147 of the Income Tax Act, 1961 ('the Act' hereinafter) dated 20.3.2013 for the Assessment Year (AY) 2005-06. 2. The appeal raises a legal issue, per an additional ground, as under, which shall therefore be taken a first in-as-much as the same, challenging the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g sans the issue of the mandatory notice u/s. 143(2), were held as without jurisdiction, rejecting the argument by the Revenue that the said returns were not valid in law, so that there was under the circumstances no occasion for the Assessing Officer (AO) to issue notice u/s. 143(2), who in fact had time only up to 31.12.2008 for framing the assessment, i.e., barely 1-2 days after the filing of the return, while in the present case, the AO had time up to 31.3.2013, though yet chose to complete the assessment on 20.3.2013. On being queried by the Bench qua the valid assumption of jurisdiction for framing an assessment u/s. 147 by the issue of notice u/s. 148(1) on 28.3.2012, as explained in R.K. Upadhyaya v. Shamabhai P. Patel [1987] 166 ITR 163 (SC), he could not furnish any satisfactory answer. On being further asked about the prejudice caused to the assessee by the non-issue or, as the case may be, the non-service of the notice u/s. 143(2), he would submit that the question is not of prejudice caused, but of the assumption of jurisdiction to frame a valid assessment, which is, in view of the admitted non-issue of notice u/s. 143(2), absent. The Tribunal had, in arriving at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 without appreciating that no prejudice was caused to the assessee by non-issuance of notice under s. 143(2), particularly, when the assessee was participating in the assessment proceeding without objecting to the assessment proceedings on this account at the assessment stage ? The Hon ble Court upheld the assessment. It s decision was on the basis that the assessee had participated in the proceedings and, in fact, raised no objection to the service of notice u/s. 143(2), and which could, therefore, not be before the higher forums for the first time in view of s. 292 BB, even as noted by it earlier in CIT v. Panchvati Motors (P.) Ltd . [2011] 59 DTR 289 (P H). The Hon ble Court also relied upon the decision in K.J. Thomas v. CIT [2008] 301 ITR 301 (Ker) wherein, again, a reassessment made without observing the procedure u/s. 143(2) was not regarded, for that reason, invalid; the Hon ble Court reproducing the relevant part of the said decision, which is as follows: The procedure under s. 143(2) of the Act is to ensure that an adverse order is issued only after proper opportunity is given to the assessee. In this case, it is conceded that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Blue Moon (supra), the said return cannot be repudiated, in view of proviso to section 143(2), unless the AO serves on the assessee the said notice within the stipulated time period. (The requirement of the service of notice u/s. 143(2) has been read down by the Hon ble jurisdictional High Court in V.R.A. Cotton Mills Pvt. Ltd. v. Union of India [2013] 359 ITR 495 (P H) to an issue of notice u/s. 143(2) within the prescribed time.) That is, the notice u/s. 143(2) assumes a nature of a jurisdictional notice, i.e., for framing an assessment u/s. 143(3), invalidating the assessment framed without observing the same. The jurisdiction to frame an assessment qua an assessment u/s. 147, on the other hand, is upon issue of a valid notice u/s. 148, so that it is this notice which is the jurisdictional notice in such a case, as shall be presently seen. 3.4 It might appear that the Hon'ble Court in Ram Narain Bansal (supra) had decided the question of law raised before it on equitable grounds in-as-much as the assessee was provided reasonable opportunity to state his case in the assessment proceedings. It is so said as in the facts of that case, unlike in the insta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17/2/2003); Jai Prakash Singh (supra); Estate of Late Rangalal Jajodia (supra)), is to put the assessee (noticee) to notice about the contemplated proceedings; in the present case of the proceedings for reassessment in his case for the relevant year having been initiated, requiring him to furnish his return for the said year. The assessee not complying therewith by filing the said return, was, after awaiting the same, the AO issued notice u/s. 142(1), requiring him to furnish the details as called for, being considered fit and proper by the assessing authority to examine the issue at hand, or, verify the information furnished in response. The matter in fact stands discussed at length by the Tribunal in Rakesh Gupta v. ITO (ITA No. 222/Asr/2016,dated 31/1/2019) and Asst. CIT v . Khosla International (in ITA No. 307/Asr/2016, dated 28/3/2019). 3.5 Without prejudice, there is, in the facts of the instant case, no occasion, much less a requirement in law, for the AO to issue a notice u/s. 143(2), which is only toward the verification of a return. The assessment order is dated 20.3.2013, so that the hearing had been closed prior thereto. There is, in any case, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instant case, choose not verify the same and, consequentially, not issue notice u/s. 143(2). The ensuing assessment, as also observed in Hotel Blue Moon (supra) is an assessment u/s. 144. The instant assessment is an assessment u/s. 144, and not, as stated, u/s. 143(3). Rather, a return is not filed has to be supplemented by physical return, of which there is no mention or contention, in the absence of which the same cannot be said to have been filed. In fact, the completion of the said procedure after 20.03.2013, the date of assessment, even if so, is to moment, as the assessment stand already completed on that date. The assessment in the instant case, is accordingly, to be regarded as u/s. 144 r/w s. 147, and the AO is incorrect stating it to be u/s. 143(2) r/w s. 147. 3.6 The decision in Anil Kumar (supra) is distinguishable in-as-much as the hearing, for both the years, took place on 30.3.2008, as noted by the Tribunal, so that, clearly, the hearing had not been closed before that date. The AO, where he wanted to, could therefore take cognizance of those returns, even as it appears (from the order-sheet entry), that he was not aware of the said returns, fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingh s/o Tarlochan Singh. Granting the assessee the benefit of doubt, the ld. CIT(A), even as he observed the affidavit to be a self-serving document, accepted the assessee s plea, accepting the same as the source of cash deposit of ₹ 4 lacs on 18.02.2005 (albeit in five installments of ₹ 80,000/- each.). An affidavit dated 05.04.2004 by S. Jagjit Singh, the assessee s father-in-law, was also filed in the remand proceedings, who though could not be produced in person as he had expired since (on 01.11.2011). No corroborative evidence as regards his financial worth was, however, furnished, apart from stating him to own 21.82 acres of agricultural land. The plea of cash gift being wholly unevidenced, was not accepted by the ld. CIT(A). The assessee had also, alternatively, filed a cash flow statement in the remand proceedings, which was not commented upon by the AO in his remand report dated 17.7.2014. The opening cash (on 01.4.2004) therein was taken at ₹ 10.50 lacs on the basis of cash flow statement for f.y. 2003-04, showing a balance of ₹ 8.11 lacs on 31.3.2004. The balance as on 01.4.2004, i.e., at the beginning of the year, was however taken by the AO at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gift, is not stated, the explanation of cash gift has, in my view, been rightly not accepted by the Revenue. Sh. Kalia, would, with reference to the cash flow statement (at PB pgs. 13-15 of the impugned order IO), state that once the sum of ₹ 9 lacs, included in the cash flow statement on 03/4/2004, is regarded as unexplained income, there would be no need for any further addition as the assessee would, in that case, have sufficient cash-in-hand on any date during the year. The ld. CIT(A) had, it was submitted, wrongly added a further sum of ₹ 6 lacs, confirming the addition based on the cash flow statement at ₹ 15 lacs. A revised cash flow statement was filed (at PB pgs. 10-12) to exhibit the same, introducing cash at ₹ 9 lacs (on 08.4.2004) as addition as made by the ld. CIT(A) . The argument is valid. The cash-in-hand being at ₹ 1 lac on 01.4.2004, ranges from a minimum of nil (on 08.04.2004) the next lowest being at ₹ 30,000 on 24.4.2004, to a maximum of ₹ 16.53 lacs on 31.3.2005. The addition, thus, should be restricted to ₹ 9 lacs instead of ₹ 15 lacs by the ld. CIT(A). There are, howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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