TMI Blog2020 (1) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. - ITA No. 347/JP/2017, ITA No. 348/JP/2017 - - - Dated:- 23-12-2019 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Vedant Gupta (Advocate) And Shri Satish Gupta (CA) For the Revenue : Ms. Chanchal Meena (JCIT) ORDER PER VIJAY PAL RAO, J.M. These two appeals by two connected assessees (group concerns) are directed against two separate orders of ld. CIT (A) both dated 30.03.2017 arising from the common facts for the assessment year 2007-08. Therefore, both these appeals are clubbed together for the purposes of hearing and disposal. For the purpose of recording the facts, the appeal in case of M/s. Mangala Product Pvt. Ltd. in ITA No. 348/JP/2017 is taken as lead case wherein the assessee has raised the following grounds :- 1. On the facts ci rcumstances of the case and in law also Ld A.O. grossly erred in reopening the assessment by invoking the provisions of section 147 of the Act without having any material forming the belief of escapement of Income. Ld CIT (A) also erred in confirming the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity of cross examination. We rely on Hon'ble Supreme Court the case of Kishan Chand Chelaram 125 ITR 713(SC) on the case of Andman Timber Industries in appeal no 4228 of 2006 (SC). Ld CIT (A) also erred in confirming the A.O's order in this respect. 5. On the facts circumstance of the case in law also Ld. A.O. grossly erred in making addition of ₹ 45, 00,000/- u/s 68 of the Income Tax Act, 1961 simply on assumptions, presumption, surmises conjectures ignoring the following facts:- (i) That no where the name of Assessee company has been stated by Praveen Kumar Jain. (ii) That the assessee company has no relation with Praveen Kumar Jain. (iii) That the assessee company has proved all the three ingredients i.e., identity, genuineness of the transaction and credit worthiness beyond doubt and there is no material before Ld A.O. to prove them wrong except alleged statements. (iv) That the assessee company has also allotted shares of the company to the applicants, which is not possible in case of any name lender. (v) That Ld A.O. did not consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el Blue Moon 321 ITR 362 (SC) CIT vs. Laxman Das Khandelwal 108 taxmann.com 183 (SC) PCIT vs. Kamla Devi Sharma Dated 10th July, 2018 in DBIT Appeal No. 197/2018 (Raj.) M/s. Kaizen Organics Pvt. Ltd. vs. ACIT (In ITA No. 834/JP/2017 dated 19.12.2018. Thus the ld. A/R has contended that the notice under section 143(2) is mandatory requirement for completing the scrutiny assessment under section 143(3). It is not a procedural irregularity, and omission to issue the notice is not a curable defect. Therefore, the notice under section 143(2) is a jurisdictional condition and in the absence of notice, the assessment framed by the AO is a nullity. 3. On the other hand, the ld. D/R has submitted that the AO has given the date of notice issued under section 143(2) as well as under section 142(1) of the Act. The assessee has never raised any objection regarding the service of the notice during the assessment proceedings and has duly participated in the proceedings before the AO, therefore, the asessee cannot be allowed to raise this objection after completion of the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passing the assessment order when the AO realized this defect of not issuing notice under section 143(2) of the Act, he has just mentioned that notice under section 143(2)/142(1) was issued on 30th May, 2014. Therefore, stating a notice under section 143(2) with notice under section 142(1) in the assessment order without actually issuing any notice under section 143(2) would not satisfy the mandatory condition of such notice to be issued by the AO within the period of limitation provided under section 143(2) of the Act. Hence we find that there is no notice issued by the AO under section 143(2) in the case of the assessee. The AO has not stated anything about the issuance of notice under section 143(2) in the proceeding sheet of the assessment record which gives the details of the proceedings conducted by the AO in chronological order. Thus the AO did not issue any notice under section 143(2) prior to completion of reassessment in the case of the assessee. The notice under section 143(2) is a mandatory requirement and gives the jurisdiction to the AO to proceed with the scrutiny assessment. It is a jurisdictional condition and in the absence of the notice under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. The other important feature that requires to be noticed is that the Section 158 BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the assessing officer while completing the block assessments under Chapter XIV-B of the Act. This legislation is by incorporation. This Section even speaks of subsections which are to be followed by the assessing officer. 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 assessing officer, if for any reason, repudiates the return filed by the assessee in response to notice under Section 158 BC(a), the assessing officer must necessarily issue notice under Section 143(2) of the Act within the time prescribed in the proviso to Section 143(2) of the Act. Where the legislature intended to exclude certain provisions from the ambit of Section 158 BC(b) it has done so specifically. Thus, when Section 158 BC(b) specifically refers to applicability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 143 strictly for the purpose of block assessments. We do not agree with the submissions of the learned counsel for the revenue, since we do not see any reason to restrict the scope and meaning of the expression 'so far as may be apply'. In our view, where the Assessing Officer in repudiation of the return filed under section 158BC( a ) proceeds to make an enquiry, he has necessarily to follow the provisions of section 142, sub-sections (2) and (3) of section 143. 17. Section 158BH provides for application of the other provisions of the Act. It reads : Save as otherwise provided in this Chapter, all the other provisions of this Act shall apply to assessment made under this Chapter . This is an enabling provision, which makes all the provisions of the Act, save as otherwise provided, applicable for proceedings for block assessment. The provisions which are specifically included are those which are available in Chapter XIV-B of the Act, which includes section 142 and sub-sections (2) and (3) of section 143. 18. On a consideration of the provisions of Chapter XIV-B of the Act, we are in agreement with the reasoni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceedings in response to notice under section 143(2), the assessee is not allowed to take objection of service of the notice issued under section 143(2) after completion of assessment. It is a case of non issuance of notice under section 143(2), therefore, the initiation of proceedings itself was without jurisdiction conferred by the provisions of section 143 of the Act. The Hon ble Delhi High Court in case of PCIT vs. Silver Line (supra) has again considered this issue in para 18 to 20 as under :- 18. The wording of Section 143(2)(ii) of the Act, which is applicable in the present case, requires the AO to be satisfied on examining the return filed that prima facie the Assessee has understated the income or has computed excessive loss or has underpaid the tax in any manner . The AO has the discretion to issue a notice under Section 143 (2) if he considers it necessary or expedient to do so. This exercise by the AO under Section 143 (2) of the Act is qualitatively different from the issuance of a notice under Section 142(1) of the Act, which as noted hereinbefore, is in a standard proforma. 19. The Court is unable to ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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