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TMI Blog2014 (9) TMI 1218X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the assessee has not furnished any particulars/documents whatsoever. In these circumstances, assessment was completed ex-parte by assessing the income of the assessee at Rs..1,86,34,729/- for the assessment year 2008-09 taking into account the materials available on record. 3. Aggrieved, the assessee carried the matter in appeal before the ld. CIT(Appeals). The main grievance of the assessee before the ld. CIT(Appeals) was that the Assessing Officer has completed the assessment under section 147 r.w.s. 144 of the Act without serving notice under section 143(2) of the Act. The ld. CIT(Appeals) called specific information from the I.T.O., Salary Ward IV(4) vide office letter in ITA Nos.853 & 857/13-14 dated 16.09.2013 and vide letter in ITA Nos. 853 & 857/13-14 dated 22.10.2013 and the contents of the relevant letter dated 22.10.2013 addressed to the ITO, Salary Ward IV(4) are as under: "In response to this office letter dated 06.09.2013, you had submitted vide referred letter dated 20.09.2013 that the notice u/s 143(2)/142(1) issued to the assessee during the course of assessment proceedings before the finalization of the assessment u/s 147 r.w.s. 144 of the IT Act in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s categorically submitted in the remand report that the assessee's ground no.2 and 3 are not maintainable. Besides to the above facts that it is submitted that assessee's ground No.2 and 3 are not maintainable in the context and purpose of section 292BB since the assessee has co-operate in reassessment proceedings by filing the return in response to the notice u/s 148. The relevant assessment records for the A. Y 2008-09 and 2009-10 are submitted herewith." 5. By considering the reply given by the Assessing Officer, the ld. CIT(Appeals) came to a conclusion that no statutory notices either under section 143(2) or 142(1) of the Act were issued to the assessee by the Assessing Officer during the course of assessment proceedings. The relevant portion of the order is extracted as under: "I have also perused the order sheet maintained by the AO in respect of the assessment record forwarded to the undersigned alongwith the report dated 24.10.2013. The order sheet of the assessment record also did not reveal the basic fact of issuance of notices u/s 143(2) or 142(1) of the IT Act, if any, during the course of assessment proceedings. The first date 26.06.2011 of order sheet refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the case records forwarded by the Assessing Officer. I have also gone through the decisions relied upon by the A.R. of the appellant. The Assessing Officer did not raise any query to the assessee on the issues/information in his possession except communication of the reasons vide his letter dated 13.06.2011. No statutory notice either u/s 143(2) or section 142(1) was issued to initiate an inquiry. As the assessee was never called by the AO to appear before him, the assessee did not appear in the reassessment proceedings. As no query was made by AO to furnish information/evidences in respect of the proposed additions on the basis of the information in his possession, the appellant could not avail of the opportunity to make either objection to the proposed additions or acceptance to the same. The present Assessing Officer did not furnish any evidence that his predecessor raised any query / questionnaire to the assessee and also confronted the assessee on the issues on which the assessment was reopened. The mere communication to the assessee of the reasons recorded for reopening of assessment without further raising query/questionnaire against the proposed addition cannot be termed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he remand proceedings are also not applicable to the assessee as the decision rendered by the Jurisdictional High Court in the case of M/s. Sapthagiri Finance & Investment (supra) following the decision of the Apex Court in the case of M/s. Hotel Blue Moon (supra) is law of the land and binding upon the appellate authorities. 6.6 Hence, respectfully following the ratio of the decision of jurisdictional High Court in the case of Sapthagiri Finance & Investment (supra) and also decision of the. ITAT ' D' BENCH, CHENNAI in the case of M/s. Indo Swiss (supra), decision of the Gujarat High Court in the case of K.M. Ravji in Tax Appeal No.771 of 2010 (supra), I am inclined to hold that reassessment was not validly made and the appellant succeeds on the grounds of appeal 1, 2, 3. 7. The other grounds raised by the appellant are not adjudicated as the appellant succeeds on the issue of validity of the reassessment made. In the absence of further inquiry and collection of the information, the legality of the entire addition of Rs. 1,72,42,923/- made by the Assessing Officer in the reassessment order cannot be decided on merits. In respect of the grounds of appeal nos. 6 & 7, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue notice under Section 143(2) of the Act is only curable defect is concerned, the decision relied on by the assessee reported in 321 ITR 362 ASST. CIT v. HOTEL BLUE MOON also covers the said issue. It is no doubt true that the said decision dealt with the assessment done under Chapter XIV relating to block assessment. The assessee therein raised a contention that the failure to issue notice under Section 143(2) within the prescribed time for the purpose of block assessment could be fatal to the validity of the assessment made under Chapter XIVB of the Income Tax Act, 1961. In other words, the assessee contended that the issuance of notice under Section 143(2) within the prescribed period of time for the purpose of block assessment is mandatory for assessing the assessee's undisclosed income found during the search. The Revenue took the stand that issue of notice under Section 143(2) of the Act was only procedural irregularity which was curable. The Apex Court pointed out to Section 158BC(b) provided for determination of the undisclosed income of the block period in the manner laid down in Section 158BB and the provisions of section 142, sub sections (2) and (3) of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn required to be furnished under Section 139". Thus, understanding this provisions in the background of the decision of the Apex Court, on the facts available, we are of the view that in completing the assessment under Section 148 of the Act, compliance of the procedure laid down under Sections 142 and 143(2) is mandatory. On the admitted fact that beyond notice under Section 142(1), there was no notice issued under Section 143(2), and in the light of the fact that the very basis of the reassessment was the failure on the part of the assessee in not disclosing the capital gains arising on the transfer of property for assessment and that admittedly the assessee had requested the officer to accept the original return as a return filed in response to Section 148 of the Act, we hold that there was total failure on the part of the Revenue from complying with the procedure laid down under Section 143(2) of the Act, which is mandatory one as held by the Apex Court. 14. Although on merits, we do not agree with the contention of the assessee that the capital gains would not be assessable at the hands of the firm, yet for the reasons stated in the preceding paragraph that in the absenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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